Bernard Hickey details the key news over the weekend in 90 seconds at 9 am in association with Bank of New Zealand, including news from Europe of growing concerns that contagion is spreading from the Greek sovereign debt crisis to southern Europe's banks.
Moody's put 16 mid-sized Italian banks on outlook for downgrade late last week, sparking a sharp sell-off in Italian banking stocks. There are worries that European banks holding Greek sovereign and bank debt may be forced to take heavy losses if Greece defaults. See more here at Bloomberg.
The Euro fell and the New Zealand dollar was weak at just over 81 USc as investors took 'risk' off the table on fears about what a European financial crisis could do to financial markets and global growth. Some fear a Greek default could trigger a "Lehman style" financial crisis that makes it much more difficult and expensive to refinance debt.
New Zealand's banks owe more than 40% of GDP to foreign creditors on terms of less than 90 days, which the IMF and others have warned is a vulnerability if global credit markets freeze again as they did during the Lehman Brothers crisis.
Also, the Bank for International Settlements has said central banks need to hike interest rates to contain inflation. See more here at Bloomberg.
Meanwhile, New Zealand's Local Government insurer Civic Assurance will not be covered from Friday because it has been unable to find reinsurance, NZ Herald reported.
There are also rumblings between contractors and the EQC. Stuff reported the Amalgamated Workers Union plans legal action to claim back NZ$3 million in unpaid bills to contractors.
Also, disgruntled home owners are looking at taking legal action against insurers because they are not being paid enough to replace damaged houses. There are also concerns that those receiving payouts from the red zone in Christchurch may not receive enough to buy expensive sections to rebuild, Stuff reported.
Elsewhere, Standard and Poor's said reinsurance rates were likely to triple, Stuff reported.
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33 Comments
Thought for the day...
"I really do worry about the state of reading comprehension. Or maybe it’s just that extremists can’t grasp the notion of non-extreme positions held by other people."
http://krugman.blogs.nytimes.com/2011/06/26/not-a-does-not-imply-b/
regards
Something to read...the age of greed
"And since it seems that nothing was learned from the 2008 crisis, you have to wonder just how bad the next one will be."
http://www.nybooks.com/articles/archives/2011/jul/14/busts-keep-getting…
The concern with AMI is that they have enough moeny to stay solvent if say there is another big or bigger earthquake....Say one strikes Wellington and they dont have enough re-insurance to cover it.....you lose your house.
But certainly to tar just AMI when other insurance companies are also doing theor utmost not to pay or pay the minimum is a little rich.
regards
Steven if NZ has another Big Earthquake in say Wellington, you may as well jump the ditch there would'nt be one reinsurance company in the world that would touch us. They will stay solvent as the payout from these companies is going to be over a very long time.
The quickest payout you are going to get is the government bailout at GV. You take the land bailout and then want to work with the insurance company then you will need to be prepared for a long and difficult wait. (And get a lawyer to go over your policy)
Reinsurance - At which stage the EGC/Govn is going to have to cover the earthquake risks/costs going in forward...if it doesnt our housing market collapses....ie no one will be able to get a mortgage. Then. many ppl would have to leave for OZ and these would be the backbone of earners and tax payers, in which case our economy then tanks...
regards
"Im getting reports on commercial premium lifts of 300 - 400% with excesses of as much as 10%."
If that is true, you have to ask yourself how companies will survive such additional costs and if they will tolerate them or simply move or close...
ChCh taking off like a rocket Hugh? more like a lead balloon.....if enough businesses baulk at these costs (lets not forget rates will also go up a lot for repairs and re-insurance cover) and leave, its critical mass just evaporates....it will be a nice little provincial centre....epanding the fringes wont be an issue.....
regards
Hugh : Your original point was correct , but just the species comparison was wrong .
....... Gummy does believe that 10 000 metres deep in the Pacific ocean there is a particular species of squid which actually does have less commercial nous than steven . But more testing will be required to verify this as a fact .
I shall keep you informed of progress .
regards
Point taken , Hugh . ..... The cephalopods are intelligent creatures , and as such , we would do well do not hurt their feelings by unflattering comparisons to steven's commercial nous .
..... and best not to mention being " hungry ", within their ear-shot , too ....... squids are kind of touchy on that subject , the whole " calamari " thing freaks them out no end .
Very true Hugh.....up to the point that I see no point in doing commercial work, because as far as I can see there is no future in it, or I cantr see an endevour where there is one. This is because all the negatives add up....the picture isnt one of Chch will rocket.....more like go off like a damp firework....
pffffffttt.
regards
Are mosquitoes positive thinkers who will get rich from property development, so long as they keep thinking happy thoughts?
Isn't that all it takes to get rich: "Be positive"? No doubt a bucket load of spinning and spruiking and an ocean of hype will make it seem that way. So long as you're a moron, of course.
It's interesting to note that the Hugh types (the free-marketeers) were the ones who drove the Ellwood 'reforms'. Thought that Government was their limitation, and if they reduced it, two things would happen: one was that those same free-market prophets would profit from taking over the activities, and two: There would be nobody in a position to object, on behalf of ratepayers/electors.
actually think Hugh is right in one thing here - but for a different reason - I think decision-making will revert to local, more and more.
Yes.....this is because I suspect far off Govn wont be able to cope with the changes of Peak Oil/long depression mk2. They are fundimentally blind to it and there is no one left to vote for...............so ppl will simply start to do what they have to, themselves....grow more and more local....probably not worry too much about the by-laws either and I wouldnt be surprised if the councils care much....
regards
Hugh I got a letter from my council also saying that resdential building codes have also been changed, and now it is going to be more expensive to build a home because of this.Do you know if this is the same for CHC, I'm in Selwyn.
it's all very well to say lets open up massive areas of land here and there, you need the infrastructure as well, and the labour to do it, the costs associated to make the land more compact/ suitable will increase the sections costs I would of thought?.so I am wondering in order for a section to become cheaper don't the inputs also have to become cheaper?
In regards to infrastructure Schools will be the main issue , as I understand the ministry of Education have not changed any building timeframes etc..to increase capacity in the South or West.
Billy - using which of these?
http://www.zerohedge.com/article/future-energy
Over what period?
Do you envisage that the resultant debt will be repaid in long-term mortgages, and rates?
Back to the first question - mortgages paid for by the producing of goods and/or services, I presume - goods and/or services produced using which energy source?
Sorry, but if 'spending money' and 'stimulating the economy' can't be underwritten, is it not morally reprehensible to go there?
I agree something must be done, and done cheaply, but more than that, it must be done in an energy-efficient, future-proofed manner. Not just the housing, but the format.
Yep....interesting, I like reading Paul Krugman's blog. He clearly advocates more stimulus to get us back on track and un-employment down....very laudable aims...however...he lacks the insight of no energy to do it with it seems...so he's one of the can kickers really...and wow look at the real US un-employment around 18~20% . Looks bad for youth as well, unemployment looks awful and lots of young men with nothing to do.....
regards
Another example of sovereignty being eroded by a trade deal:
http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=107347…
Big tobacco sues....So much for FTA agreements.....just why we dont want or need them
http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=107347…
Alright then ...now.. now... stand easy.....the tiger does not relish the peach......you then come at me with that banana....come on ...!come at me then....!...BANG ! you shot im.....well he was comin at me with a bannana......too silly too silly
We had a moderator once....Brian Spondre.....got on the wrong end of a crayfarmer.
"Central banks may have to be prepared to raise policy rates at a faster pace than in previous tightening episodes" bloomers
Now we wait...and wait....and wait some more because the savers are an easy target for the RBNZ...the current near zirp policy is robbing them of income they deserve...and it won't change until post the election....
bloomers? how about b*llocks....sure they can start raising interest rates....if they want to finish off whats left of the global economy.....so no I dont believe them, they would be nuts....
Not only that the rate to watch to set the OCR on is the core inflation rate, that is stuck at about 2%....funny how they are now switching to CPI....their fingers are itching....but it would be the firing squad for too many.....
You will be waiting a long time Wolly IMHO.....I dont think the OCR is going anywhere much up (maybe the odd 25basis points early next year) for 18 months, and its more likely to dip lower....
Sorry old chap having money in a deposit account which isnt producing anything shouldnt be a high earner....
regards
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