90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Earthquake and tsunami warning; Labour's broader capital gains tax; China hikes rates

7th Jul 11, 8:14am by Gareth Vaughan

Gareth Vaughan details the key news overnight in 90 seconds at 9 am in association with the Bank of New Zealand, including news that a 7.6, initially thought to be 7.8, magnitude earthquake struck off the Kermadec Islands north of New Zealand. See more at the NZ Herald here.

It hit at 7.03am this morning at a depth of 48 kilometres. A tsunami warning has been issued for New Zealand and Tonga with the East Cape, North Cape, Gisborne and Auckland the focus of the New Zealand warning.

Labour's plans to introduce a capital gains tax should it win November's election may cover the sale of businesses, shares and other individual assets and not just be a 15% tax on investment property, according to Radio New Zealand. See more in Alex Tarrant's story here. Meanwhile, capital gains tax opponents are lining up to attack the concept arguing rents and property prices could rise if such a tax is introduced.

However, Victoria University professor Bob Buckle, who led the Government’s 2009 Tax Working Group, says such a property tax would be less damaging to economic growth than personal or corporate taxes, potentially making the tax system fairer. See more at Stuff here.

The People’s Bank of China has hiked interest rates for the third time this year as it continues its attempt to tame inflation. The 25-basis-point increase in lending and deposit rates lifts China's benchmark one-year lending rate to 6.56%, and its benchmark one-year deposit rate to 3.5%. See more here at Reuters.

China's central bank has also raised banks' reserve capital requirements nine times during a nine-month cycle of monetary policy tightening. Inflation was 5.5% in May driven by high food prices and the property market. China’s June inflation data is due out next week. The world's second-biggest economy expanded by more than 10% last year and 9.7% in the first-quarter of this year.

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56 Comments

by David Chaston | 7th Jul 11, 8:26am 1309983988

Tsunami warning has now been cancelled.

http://ptwc.weather.gov/ptwc/?region=1&id=pacific.2011.07.06.195959

by Wolly | 7th Jul 11, 8:28am 1309984105

Bugger....that means the sprogs will have no reason to bunk school...teachers will be pleased....not!

by Wolly | 7th Jul 11, 8:26am 1309984012

Here's something to make Gummy Bear a happy Bear....

http://www.marketoracle.co.uk/Article29092.html

...I lost count of the "ifs" in the account......!

by Gummy Bear Hero | 7th Jul 11, 11:32am 1309995166

The Gummster has a theory , Wolly , that devaluations are not assisting exports from nations with weakened currencies as much as many believe . There's a tendency of business owners to gratefully accept a " free-lunch " provided by their government , and to jack up their prices , rather than to improve or to increase production .

..... or I could just be out of my cotton-picking mango-sucking mind !

by Gareth Vaughan | 7th Jul 11, 8:38am 1309984680

Here's one I was going to talk about this morning until news of the earthquake and tsunami warning came through:

The US Federal Reserve has released data for an US$80 billion loan package to banks during the credit crunch in 2008.

It shows that Goldman Sachs took out the single biggest loan of US$15 billion.

In total 19 banks received the loans, which were all repaid in full, according to the Fed. Lehman Brothers had two loans totaling US$2 billion outstanding when it collapsed on September 15, 2008, which were repaid on October. 8, 2008.

More here at Bloomberg - http://www.bloomberg.com/news/2011-07-06/goldman-took-biggest-loan-in-f…

by steven | 7th Jul 11, 9:20am 1309987220

Some interesting names here, "A new direction for New Zealand. Our economic and environmental performance is sliding, and with it New Zealand’s single greatest opportunity to once again lead the world. It’s ours for the taking if we can foster our high value exports and build industries that will thrive in a low-carbon global economy. Green Growth for greater wealth. Together we can create a better future and harness New Zealand’s competitive advantage. Our Pure Advantage. We are determined to deliver world-leading improvements to our economy, our environmental performance and the living standards of all New Zealanders.

Sir George Fistonich, Rob Fyfe, Chris Liddell, Phillip Mills, Jeremy Moon, Lloyd Morrison, Rob Morrison, Geoff Ross, Justine Smyth, Sir Stephen Tindall, Joan Withers" regards

by powerdownkiwi | 7th Jul 11, 9:29am 1309987755

Steven - that was the most interesting news of the day.

BH should interview one of them.

None are stupid, and they don't have to get themselves voted-in, so they don't have to vomit rhetoric, spin or lies.

This will be a way to guide the Breakfast Flock towards the Far Cliffs, while still promising them unlimited scraps.

I like it a lot. Good on 'em and good luck to 'em.

by meh | 8th Jul 11, 11:50am 1310082610

I'm surprised PDK. You make no mention of their goal of "economic growth".

"so they don't have to vomit rhetoric, spin or lies."

The whole campaign is spin. The goal is money pure and simple. Their slogan is "There's money in being green".

http://www.pureadvantage.org/

"We have developed a campaign to work with communities, businesses, Government and iwi to create sustainable economic growth, and assist New Zealand to become a leading exporter of high-value produce, renewable energy and clean technology, with a top-tier in-bound tourism industry."

It's the same old economic growth mantra with environmental spin attached.

by powerdownkiwi | 7th Jul 11, 3:19pm 1310008742

By understanding that GDP is a crock of shyte - interesting that you relate to it.

There are other values in the world.: for 99.9999999999999999999999999999999999% of the time the planet has existed, and for 99.99999999999999999999999999999999% of the species that have ever existed, money hasn't figured.

But you know better?

Go figure.

by powerdownkiwi | 7th Jul 11, 3:42pm 1310010167

Careful, a pre-held mantra is showing:

"Money relates to the value of organising people into productive labour"

Interesting. Obviously, you don't consider yourself one of those to be 'organised'.

They'll be the others....

by powerdownkiwi | 7th Jul 11, 4:13pm 1310012010

actually, you only have to track the difference in the exchange. I have no problem with using a proxy for that.

What I do have a problem with, is that the money-supply (fiat-created, lever-loaned) somewhat runneth ahead of the ability of our finite planet to supply said goods and services.

Kind of leaves some of it unbacked, as it were.

So much better to value the primary driver. That way you don't raise mob expectations; so much less angs to deal with when the truth outs.

I'd suggers the calorie.

No good and no service got gotten without some.

by Ms de Meanour | 8th Jul 11, 12:23pm 1310084610

So because they have the same calorific value, there's no difference in value between a wooden table carved by a master craftsman and the same amount of wood chopped up into firewood?

by steven | 8th Jul 11, 12:38pm 1310085481

In effect, yes.

If you were freezing to death, or hungry would you care which you had to burn as long as you had one?

regards

by steven | 8th Jul 11, 4:36pm 1310099770

If to grow your economy at a rate to reduce unemployment you need 4% growth and 2.5% more energy per year, but there is less energy at 4%+ per year what does that do to spending, businesses and in turn un-employment? and and when you are unemployed what's your spending power?

When consumerism is about the biggest slice and that all but disappears, so GDP etc is half what it is today.....whats left?

A great example is the Great Depression....what was still going then? So yes your comment sounds quite possible...may not simply everything gone, but heck a hell of a lot....

regards

by Ms de Meanour | 8th Jul 11, 3:01pm 1310094097

But I'm not. Neither are you. Nor is anybody else on this forum. Are we seriously saying that human skill and ingenuity have zero value?

by steven | 8th Jul 11, 4:38pm 1310099927

Hence we need to disperse. hence for some countries their popualtion decline will be very uh severe.

regards

by steven | 8th Jul 11, 4:37pm 1310099844

No, but different values will become more valuable.....others decline.

regards

by Ms de Meanour | 8th Jul 11, 4:48pm 1310100522

Of course. That's always been the way of it. Under different sets of circumstances (personal, local, national or global), different skills and resources are likely to be needed, and they are duly developed and re-deployed in response to change - with greater or lesser efficiency depending on the extent to which Government tries to get involved.

I'm still struggling with the value of attempting to deploy resources, value skills and manage one's own and other people's lives as if we were in a set of circumstances which we are not in fact in.

by powerdownkiwi | 8th Jul 11, 1:13pm 1310087636

MdeM - welcome to the thought process........including the 'evaluation' of needs vs demands.

I've been wrestling with this for years - it was too obvious that finance (and perhaps much of our social fabric) wouldn't survive 'peak' in existing form. Steven is right - and the Greenland Norse are a classic example (via Jared Diamond) ofthat value-morph. They'd have willingly swapped all their coins and more, for firewood at the end. Indeed, their last act was to chew on the uncooked hoof-bones of next-year's herd. If offered the table or the hoof-bone.....

'Values' will indeed change.

by Anarkist | 8th Jul 11, 5:12pm 1310101923

Of course there is, though it lies in the input costs required to support the master craftsman while he produces it. Generally speaking it takes longer for a master craftsman to carve a table than it would for low skilled workers using general purpose power tools, though you'd have to account for the energy required to power those tools in the equation.

by Vera Fayed | 8th Jul 11, 4:26pm 1310099174

Your maths are terrible PDK. The planet is about 4.5 billion years old and money has been around for at least one millionth of that, so we only got along for 99.9999% of the time without it. Your figure suggests that money has only been used for the last one hundred thousandth of a second.

by powerdownkiwi | 8th Jul 11, 4:43pm 1310100231

Thanks VF - that invalidates my hypothesis completely....... :)

I'll be more careful with holding down the key.....

by steven | 8th Jul 11, 12:01pm 1310083304

My understanding is that in some areas, we do. Certainly our farming, because of the year round growth of grass seems to be both competitive and relatively green in the process compared to other countries farmers as an example. We also do seem to do good software and design.... Lead the world, if there is a shortage of food then that is a profitable industry....but yes if Apple earns 2million per employee, that is a tremendious productivity target.....our tourism earns something like <$80k per employee I believe. So, yes tourism seems a poor idea.

regards

by steven | 8th Jul 11, 1:19pm 1310087954

Hmm, I guess it depends on where you want to go....Govn is there to set the policy the ppl/voters want.....businesses then have to work within that...Also this statement could be taken as this is the functioning of rational markets, when in fact markets are not rational. Example it maybe perfectly rational for me to do something, say invest in housing by borrowing hot money from abroad to make mysef rich. this action when taken out bu too many ppl opens the banks to exposure should I default.....we have seen this with Ireland.....and we see this is a risk here....

Do individuals and companies advance a country? I would say most ppl and most companies are there to make a living/profit. Where does it say they have to advance NZ? it might be an accidental by-product, sure but there is no assuarnce of that. Take Enron, clear actions by a company to harm others and make undue profits from causing suffering and possibly death, certainly financial losses of others......so a Govn makes it illegal....

regards

by LloydM1 | 8th Jul 11, 1:33pm 1310088787

Marty do you read , where have you learnt from ? Do you have any idea how the worlds financial systems have become so broken for anyone but the top people. Do you know hat Greece was sold out by it's own PM , who was brought and paid for by Goldman Sachs, all the big banks shorting against their own clients. Nah never happened did it , or are you just being fasecious ?

by LloydM1 | 8th Jul 11, 3:50pm 1310097055

You are missing some real life inputs from the world of finance. Too much media from the big machine. You need to expand your information base. Tempted to help if you can't find them yourself

by LloydM1 | 8th Jul 11, 4:12pm 1310098368

Bob Chapman
www.theinternationalforecaster.com

Max Keiser
www.maxkeiser.com

Gerald Celente
www.trendsresearch.com

Mandatory reading for anyone who wants to understand the raw info.

by LloydM1 | 8th Jul 11, 4:40pm 1310100000

Marty had you heard of any of those three above?

by powerdownkiwi | 8th Jul 11, 4:49pm 1310100554

Actually, Marty, I'd start with physics.

Always look to investigate the sinking, before you start comparing deckchairs.

Drivers rather than the driven.

by powerdownkiwi | 8th Jul 11, 9:09pm 1310116181

OK -"MARTYH" - I'm calling you.

In no business is physics irrelevant.

No exceptions.

Something you might like to think on - chosen ignorance is still ignorance, and there's legal precedent that suggests it ain't no excuse.

You have chosen ignorance.

I specialise in energy efficiency - but I study finance, economics, biology and chemistry, as well as my hobbies (sailing, flying, structures, adventuring, teaching). I do so because I reckon ignorance is the biggest insult you can foist on yourself.

I take it you don't drive to work, use a computer, consume electricity, switch on a light, use roads to get there, work in a building, have running water there, or a sewer connection, no temperature control, pens, carpet, bins, shelves, windows, filing cabinets, desks...........

Every one of those items represent expended - never to be had again - energy.

And in your business physics is irrelevant.

Right.

by steven | 8th Jul 11, 4:45pm 1310100342

Celente is a fruity loop....he's been promising the collapse of teh USA is a week away for 3 ! 5 years.....

Max is interesting but biased....

Bob C I have not encountered.

regards

by LloydM1 | 8th Jul 11, 5:15pm 1310102133

They all have a very deep understanding of the world of global financial systems, im guessing much more than most anyone on this blog. They are all trying to offer views & insights which are very different from what the corporate , defense & bank owned media serve up. This should be applauded , as without this spectrum of information can you imagine what we would all be limited to in our thought. Like anything , the reader must digest , cross reference etc the draw their own conclusion. Keep the personal views & personalities out of it , because it means one can't remain objective when absorbing & critiquing information.

by LloydM1 | 8th Jul 11, 10:59pm 1310122791

Steven reading this again it begs the question. At what point would you say the US economy is no longer winning? Because it's being taken apart, and from what I see is getting very close to terminal. I'm not even talking about the debt ceiling red herring. Glass Steagall may save them but that's about it as far as I can see. No I'm not hoping this happens, but internally they have some crazy social evil happening , not just the economy. Your thoughts .

by LloydM1 | 8th Jul 11, 6:24pm 1310106258

Marty I think you should be able to form a picture using them & the sources you have. There is very good reason that risk is the order of the day. You can work it out I'm sure.

by powerdownkiwi | 8th Jul 11, 9:17pm 1310116646

For anything that predicts growth (in what? I note the lack of a definition) just go to Bill English, John Kety, Phil Goff, David Cunliffe, Don Brash - or any economist who's continued employment requires a toeing of the line.

Or you could try the World Bank, the IMF (hey, Strauss Kahn may have had growth temporarily) indeed any bank. They can't survive without it.

Physics says so.

If you think money outranks it, kindly explain what happened in Chch?

by LloydM1 | 8th Jul 11, 10:50pm 1310122213

PDK I'm with you about physics & thus energy. Some can't get past the man made pseudo sciences.
If you fancy something fun have a look at these links

Popupfallacies.com
Triviumeducation.com

by powerdownkiwi | 8th Jul 11, 11:15pm 1310123702

Cheers - the first requires me to borrow my partner's t-stick (our land-line is 400 metres of copper twin unreeled through the forest, bit slow)

The second is a hoot - good stuff. Thanks.

I think the frustration I have mostly, is that there's so much we could be doing, but we're not even having the conversation let alond the debate let alone doing something.

Cheers - have a good weekend. :)

by steven | 8th Jul 11, 4:43pm 1310100218

Um....not really......I prefer occams razor, the simplest reason is very much usually the reason...at least in terms I dont think its organised or rational, its simply the result of individual(s) actions.

regards

by Kate | 7th Jul 11, 3:27pm 1310009241

Here's the link;

http://pureadvantage.org/

by Billy | 7th Jul 11, 9:57am 1309989464

If all the landlords sell their rentals, there would be homes for everyone !!

RENTAL PROPERTIES

* North Shore: 18,291

* Auckland City: 52,944

* Manukau: 28,311

* Waitakere: 16,224

* Papakura: 4512

* Tauranga: 11,022

* Hamilton: 15,396

* Wellington: 23,652

* Christchurch: 36,825

* Dunedin: 11,763

* Total for NZ: 388,272

by LAJ | 7th Jul 11, 10:05am 1309989916

Everyone with a 10- 20% deposit and enough income to service the loan.

by steven | 8th Jul 11, 12:14pm 1310084048

but selling that lot off could trigger a 50% collapse, so suddenly those with 5% deposit find its 10% or more.....mind you I wouldn be surprised if the banks would be terrified to lend.

regards

by Kunst | 7th Jul 11, 10:51am 1309992673

Recent tsunamis –but nothing learned.

Even Re- insurers are financially stretched to the limit, because of worldwide natural disasters and damages by climate change, while at the same time councils are still planning and building infrastructures and awarding building consents on low laying coastal locations.

No vision – no planning ahead.

Result: Leave the financial burden in the billions for the clean up to the next generation.

From "Boom economies" to "Broom economies". = cleaning up the country on many fronts in the billions is coming.

by LloydM1 | 7th Jul 11, 1:31pm 1310002296

Correct , this happens because Nz is more corrupt than people realize. Not in the obvious ways, but broken enough that those not involved have switched off , and when local or central have almost zero accountability then this is what you end up with. Lack of vision, lack of pride lack of choice. I suspect people are hoping someone will appear on the scene to magically save Nz from the tip. Oh that was Jk's role eh, never mind maybe the next one will be the saviour.

by FCM | 8th Jul 11, 4:01pm 1310097661

Have you read the stories that are nwo coming out as people try to reinsure in chc, they are going up between 35-422 percent. Get ready for the huge increase in operational costs for next three to four years because of the natural disasters, and fingers crossed there are no more in this time, otherwsie they won't come down at all. Rates also on the up.

by steven | 8th Jul 11, 4:15pm 1310098559

Its not the 422% increase thats the worry, its the sorry we cant insure you anymore thats the worry. If that happens how can ChCh or even Wellington survive that? If a business has no way to insure the property (say) it has borrowed against to fund the business the bank will want its money back immediately.....the business is stuffed....ditto residential mortgages if I cant get ecq+ cover on my policy the bank will foreclose....

Ive been getting re-quotes and my overall policy cost per month has jumped 33%.....but of course the earthquake risk cover bit inside that as a fraction of the total payment....so that bit must be up 200% odd...

Hugh P didnt seem to think that a scenario like that is a problem, Im not sure he's right.

regards

by Wolly | 7th Jul 11, 1:10pm 1310001037

In less than an hour the circus of question time begins again. Have to say...Lockwood seems to dominate the show asking for the clowns to behave over and over and over again...Spose it's one way to exercise on the job..up down up down up down.

by Gareth Vaughan | 7th Jul 11, 1:40pm 1310002804

Hey Wolly I read somewhere the other day that the copper Beehive roof is leaking. Have you been pinching the copper?

by Wolly | 7th Jul 11, 1:46pm 1310003212

No I bleeding aint and I'm told there are now way too many drips in the beehive.

by scarfie | 7th Jul 11, 11:23pm 1310037784

Could be corrosion caused by the noxious gasses as they all talk out of their ars**

by Wolly | 7th Jul 11, 3:33pm 1310009602

Vee have vays of making you say zat zee eeyoo is not in zee sheet yah...!

"The world's leading credit ratings agencies were threatened with tighter regulation and break-up yesterday by some of Europe's most powerful politicians.

The German finance minister, Wolfgang Schuble, said he could see no justification for Moody's recent downgrade of Portugal's debt and believed that limits should be put on the rating agencies' "oligopoly" - the scene has been dominated for decades by the big three: Moody's, Standard and Poor's and Fitch." herald

by Alex Tarrant | 7th Jul 11, 3:34pm 1310009686

Here we go. European governments taking on the ratings agencies...

http://www.independent.co.uk/news/business/news/europe-threatens-mad-ratings-agencies-2308042.html

by steven | 8th Jul 11, 1:58pm 1310090306

Wow, that's mad and frightening for democracy, next they will want to shut down the FT if there is a negative artice printed....

So we have a known poor performing ratings agency being castrated becasue they have belatedly downgraded Portugal to junk which it probably is.....but the Pollies dont like it. Next we'll see Brussels creating its own ratings agency under control of the EU Parliment I suppose....and if you use any other private agency to take a rating you um, what hapepns to you exactly? go to jail? get shot at dawn?

"A statement at the end of last week by Standard and Poor's that it would treat even a voluntary roll-over of Greek debt by private bondholders as a "selective default" in effect scuppered eurozone efforts to secure a new rescue package for Greece in co-operation with the commercial banks."

It seems S&P is actually holding up some level of honesty that Pollies are obviously willing to dip even lower on.

regards

by LloydM1 | 8th Jul 11, 2:09pm 1310090942

Let's be very clear about this , the rating agencies are owned by the big 6 banks , the EU , IMF , UN etc are owned by the big six banks, & sovereign nations are the main course. Are we joining the dots in Nz yet, it's anlong way away I know but let's at least try to use our creative brain. When things simply don't stack up to logical thought , then it's time to explore other possibilities.
Oh & free markets , democracy & other nice fluffy words , also a massive fallacy.

by LloydM1 | 8th Jul 11, 2:57pm 1310093842

Yes they are , & Mr Buffet works very closely with JPM & GS. I have spent many years working on some interesting projects for both of these banks & also the FSA. I am involved on a project to investigate the holdings in such companies. The depth to which the attempts to hide the influence of the real owners is diabolical. Also the simplistic view of who holds shares etc is ratings agencies for example is too simplistic. Once you see the cross filling of key roles inside every & any influential company or agency by big banks with former & in some cases current senior management & executives , well you can imagine how that can be used eh. One example of this is having the head of US Treasury being ex GS, well not really ex, just like Nz having JK who is not ex ML yet , running our little part of the world. Can you imagine how happy the banks were to have a country run by one of their own.

by Anarkist | 8th Jul 11, 2:34pm 1310092443

Its ironic that politicians are now calling foul when they are accusing the credit ratings agencies of being oligopolies when the nature of market dominance is due solely to the fact that financial institutions are essentially forced to use them due to government regulations.

"Since 1975, the SEC has anointed a small group of firms as Nationally Recognized Statistical Rating Organizations (NRSROs), and money market funds and brokerages have no choice but to hold securities rated by them. To this day, the Fed will only accept assets as collateral if they carry high ratings from S&P, Moody's and Fitch."

http://online.wsj.com/article/SB123976320479019717.html