Amanda Morrall details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including NZD performance, anemic U.S. retail sales data, lack of progress on Greek debt swap talks and Kiwibank's four-year home loan rate.
The New Zealand dollar's lucky streak looks to have hit a wall on Friday the 13th after reaching a high of .79 U.S. making it the strongest performing G10 currency
for the latter part of this week.
Yesterday saw the Kiwi rise against the euro to a new high but analsyts are circumspect about movements today. (For analysis on the NZD performance against international currencies see contributing article by Mike Jones here).
Meanwhile sluggish retail sales in the U.S. and a increase in first-time claims for jobless benefits there took the steam out of markets bringing a pause to a three-day rally. U.S. retail sales rose at the weakest pace in seven month. The Dow Jones Industrial index fell 17 points while the S&P 500 nudged down 0.54%.
The markets also appear to have reacted to comments from European Central Bank president Mario Draghi who expressed renewed concerns about the long-term outlook for the eurozone. While Draghi said cheap loans were helping to stabilise the banking sector he admitted the future was still very much uncertain. (Reuters carries the details here).
Time is running out on a Greek debt swap deal that would see bondholders take a 50% hair cut. The Institute of International Finance (IIF), which represents banks holding Greek debt, said talks aimed at finding a way to cut the country's borrowing load failed yesterday but will resume today in Brussels. (See Bloomberg article here for more details).
An accord was signed more than two months ago on the write-down but creditors have yet to agree on the coupon value and a maturity date on new bonds to determine total losses for investors. The IIF wants the swap to be implemented by the end of this month.
And closer to home, state-owned Kiwibank is making news after cutting its four-year home loan from 6.79% to 5.99% making it the lowest four-year rate offer of any bank in New Zealand right now. Borrowers hoping to take advantage of the deal require a 30% deposit.
No chart with that title exists.
47 Comments
Amanda, you should be on the Tv.
http://www.rollingstone.com/politics/blogs/taibblog/revolving-door-from…
Italy
http://www.theglobeandmail.com/report-on-business/international-news/gl…
Gas use in the States from Mish
http://3.bp.blogspot.com/-hX-_D6jAWLo/Tw4nJOhuQUI/AAAAAAAAN2A/if237lUxI…
MF Global
http://peterlbrandt.com/an-excellent-update-article-from-forbes-on-the-…
Euro pension mess
Gold slowly claiming to US$ 1’700, then accelerating to US$ 1’800 mid-end February with the prospect of US$ 2’000 by April 2012
Oil- who bloody knows http://www.oil-price.net/ - ask the guys from Iran/ Israel/ China/ USA/ Russia and N.Korea.
Dear U.S.A.: Your Account is Overdrawn
January 12, 2012 (Mobile version)
Dear U.S.A.--your overdraft protection is about to be pulled.
Dear United States of America: We regret to inform you that your withdrawals exceeded your deposits last year by $1,600,000,000,000 ($1.6 trillion), including your "supplemental appropriations" spending.
Your account does have an overdraft protection, and so bonds were sold to cover your $1.6 trillion overdraft. While we value your business, we feel obligated to remind you that this is the third year that your overdraft protection exceeded 10% of your gross national product (GDP), and it seems your account is on course to register yet another $1.6 trillion overdraft in fiscal year 2012.
Currently, your overdraft account exceeds your GDP of $15 trillion.
Quite frankly, we are worried that you have become dependent on extensive overdraft protection--a feature designed to tide the account holder over for a short period of time in near-term expectation of higher deposits or lower withdrawals--and that relying on large-scale overdraft borrowing to cover your basic expenses is now your standard operating procedure.
This violates the intent of the overdraft feature, and as a result we must seriously consider modifying the terms of the overdraft protection on your account. Current conditions enable us to provide this overdraft, but the feature was not designed to be permanent nor on this scale.
In order to give you sufficient time to bring your deposits and withdrawals back into alignment, we will maintain the current low-interest overdraft protection on your account through fiscal year 2012. Beyond that, however, please be aware that to maintain the integrity of the system, we will have to raise the rate of interest on your overdraft and scale back the size of the overdraft line of credit.
We regret informing you of these modifications, but the overdraft protection was not intended to be permanent nor near-infinite in scale.
Yours truly,
The Global Bond Market
Oh look....somebody has dropped a live grenade into the EU farce....pin removed!
"The sea change is coming slowly, as if to protect those affected from being startled out of their festive mood. At the end of last year, the Chinese government's National Development and Reform Commission (NDRC) approved a new industrial plan that could have a devastating effect on German car manufacturers like Volkswagen, BMW and Mercedes once it takes effect in late January.
These companies have worked to make China one of their most important and successful foreign markets, while Beijing industrial planning officials looked on in frustration. In the first 11 months of last year, VW alone sold more than 2 million vehicles in there -- up more than 15 percent from 2010.
But this kind of growth could now be over. To protect the "healthy development" of their domestic auto industry, the NDRC said it would remove car manufacturing from the list of industries where it encourages foreign investment. The goal of the change is clear: Beijing wants to help its own carmakers break into the market"
http://www.spiegel.de/international/business/0,1518,807582,00.html
The laugh is that the manufacturers and their respective govts failed to see this coming..haha
So Chinese engineers now have the skills base to walk on past the rest...as they will...look for a trade war to develop soon...China has the internal market to grow on while the rest are in terminal end games.
The weakest car makers round the world will either need endless govt bailouts or they will go under, taking with them a heap of capital, both shareholders and bond owners. Which one is next?
It is the same pattern we have seen in the solar energy game. Panels are cheap as chips out of China.
Our NZ good fortune is in not having a motor vehicle manufacturing sector. We can import the best for the least and avoid the war.
Next up will be the plane makers! China is already into making smaller aircraft...I give it ten years tops. Following that we have the advanced steels and super conducting magnet electric motor market...there isn't a single sector not open to being dominated by Beijing.
Truth be told Nic we never had a car manufacturing sector....we had car and light truck assembly only....the cost was prohibitive...the fat profits for the friends of govt who owned the system were stupendous...
Everything arrived in a wooden box and stuff all parts were manufactured here. Tires were made here...oh yes and at what cost. We lived in a govt planned economy and we were not allowed to step outside...even changing currency to aus was subject to govt control...bloody awful period in NZs history.
Nic...you have posted fluff...meaningless drivel..."not all costs show up on a balance sheet"...why don't you elaborate...give us the whole story. Tell us why we would be better off paying several times the cost for components that are used by our export earning private enterprises....I am facinated by this new age economics of yours.
Actually that statement is pretty much incontrovertable. Were the 'costs' of the crisis on the balance sheets of financial institutions before the crisis? No, of course they weren't considered. Are the costs of the Rena disaster on the balance sheet of the shipping company? Of course not. Thats not new-age, its something which has been obvious for a long time and was recently worked on by Joseph Stiglitz.
I also object to your use of the word 'we' in several posts, because from the context it is clear that 'we' includes a small group involved in the transaction you are discussing. Its not a very general group but to generalise it they are usually more wealthy than the other group 'not we but NZ citizens'.
I should also point out that the non-clemanture 'China' from context, appears to mean 'primarily US owned and run firms with manufacturing plants in China', in future in would be more clear if you use the long version, not the abbrevation 'China'. You could use a brand name instead if brevity is important, e.g Wallmart.
Another classical example of failed NZeconomic management.
For years I’m advocating NZmanufacturing and how important that sector is for our country.
In many cases not only communist China, but also other countries are good examples what central government can do supporting the private sector.
http://en.wikipedia.org/wiki/Mixed_economy
Even now in difficult times the NZmanufacturing sector don’t like it and regards this as interference and the government imports infrastructure needs in the billions. These are clear signs of the 2 parties, government and private sector not working together.
I’m just wondering if New Zealand can ever strengthen its performance for domestic products and on international markets with such an attitude.
..probably only when the country will be force to - HA !
Wolly - to use your words ** you need to learn ** to see economics as a whole - in relation to society – that is when clever government legislations/ policies simulate economic sectors not only in order for better performance of businesses, but equally important as a nation. Massive structural problems in our economy are spreading, causing massive costs. (e.g. Youth unemployment/ poor job opportunities/ NZbrain drain - etc.
It is obvious that in general nations with solid manufacturing are doing better then others. Especially now in difficult time this cannot be achieved by the private sector only.
Of course the “China Challenge” is affecting us, but…….
http://www.jimpinto.com/writings/mfgstrategies.html
** we shouldn’t use this words/ term, because we have different opinions, which are right/ justifiable in it’s own way.
Are you a school- teacher or are you born in September like me ?
Sorry Walter but you are wrong."It is obvious that in general nations with solid manufacturing are doing better then others"
This is such a generalised statement as to have little meaning.
likewise when you post..." when clever government legislations/ policies simulate economic sectors not only in order for better performance of businesses, but equally important as a nation"(sic)
Wolly – I do understand and accept people having other opinions, but only when they come up with sensible ideas/ concepts, and don’t call people being wrong without presenting them.
So, I challenge you with 3 questions:
How would you tackle massive structural problems in our economy spreading, causing massive costs. (e.g. Youth unemployment/ poor job opportunities/ NZbrain drain - etc. ?
How would you tackle billions of imports in infrastructure, but NZ companies/ workforce missing out on contracts ?
How would you tackle and improve knowledge and skill levels in NZ ?
Walter you need to ease off on the sensitivity to criticism...as for your questions:
Begin with the principal that without exports we cannot afford imports...then isolate what can be produced in NZ to world or better standards at prices landed/delivered lower than all the competition.
There is no benefit from making stuff that can be imported at much lower cost..as an example, we would be stupid to make tractors.
There is plenty of scope for companies to manufacture the advanced small run stuff..Scott Tech are a classic example as are Fisher Health. There is no reason why we couldn't have advanced medical manufacturing entities budding off FPH.
Advanced studies could be subsidised with grads and students tied to do 10 years in NZ, in those subjects most likely to advance the capacity of NZ to earn foreign loot. That means legal studies would get zip ditto political science and weaving.
Wolly you need to learn (again to use your own words) that other commentators aren’t wrong having a different point of view and subjects/ issues are often more important to debate and make progress, then to be right or wrong in your view.
With your comment you are just confirming/ describing the “status quo” of our economy, but the questions are unanswered.
Anyway here another useful link: http://en.wikipedia.org/wiki/Division_of_labour
Walter, I am not certain what you want anymore...please to apply the test of 'the tractor making' to your wishes....we would be a dumb bunch if the NZ govt wasted borrowed money subsidising the local manufacture of tractors....that is my point.
Your calls for more local manufacturing are all well and good but....the market is the best judge of what shall be economic and not some fool in govt or in the bureaucracy.
If you were to plan on repainting your art gallery in Kaikoura, you would not seek to buy Kaikoura manufactured paint would you!...you buy stuff made somewhere else and it's freighted in to the local hardware and paint store,. The same is true for art supplies even though you could make your own canvas and paint in Kaikoura. That is my point. Whether for consumption or as in input into the making of other stuff, we buy the best and if that's made in Timbuktu so be it.
The last thing we need is for some bureaucrat or politician to decide they know best. The history of this economy is all about how these 'know alls' have made a complete stuff up of every thing they have done.
NZ to the rest of the world is what Kaikoura is to the rest of NZ.!
First the fundamentals.
Wolly – as I mentioned earlier New Zealand’s education is delivering great kids, a great product ready to enter the NZworkforce. But in contrary the government orders infrastructure needs in the billions from foreign companies/ workforces, then serious questions have to be asked.
As we can see massive potential is lost, thousand’s of clever youngsters don’t have decent jobs and therefore move to other countries – a massive brain drain is the result. For any nation the young generation is the financial potential for the future. This is just one aspect of many, but demonstrate how stupid, economically we are in this country.
Government and the private sector need to give up on **their positions and work closely together in form of a mixed economic strategy. http://en.wikipedia.org/wiki/Economy_of_Singapore
The balance of bilateral trade has long been strongly in Singapore’s favour - almost 2:1. The latest New Zealand figures, for the December 2010 year, show New Zealand exports at $826 million and imports at $1622 million.
One of the major hurdles I see coming from a non English speaking country is - that point doesn’t work:
**Government policy and pro-activity rather than labour legislation controls general labour and trade union matters.
Please read some of that stuff:
"... the government orders infrastructure needs in the billions from foreign companies/ workforces, then serious questions have to be asked...."
This is where you go in the wrong direction Walter.
The train contracts were left to NZRail to decide on..Chinese made or Dunedin...given the union port farce going on in Auckland it is not hard to imagine what would have happened had the electric trains been 'built' in Dunedin....however even without the union Labour Party supported work disruptions, there is no way the economies of scale could have been met here in NZ...to argue that the extra cost..huge extra cost...of doing the job in Dundedin would have created wonderful jobs and a great future industry is bollocks.
As soon as the required trains had been finished, bound to be delayed by union action, the workforce would under a Labour govt scream out for more work...think that through...can you honestly see NZ exporting electric trains on the world market...toy trains maybe!
On top of that problem, you would be lumbered with very costly trains..leading to higher freight rates...higher farm and business costs...or a govt taxpayer bailout ...again...
..again Wolly you are talking about the “status quo” – an economy, which doesn’t work – is one sided and doesn’t give NZyoungsters - the wider NZworkforce a chance for enough decent jobs.
I recommend everyone interested to read the links I mentioned above, which explains how to legislate and implement changes for better working solutions for New Zealand and it’s manufacturing industry.
Innovation, research & development are closely related to manufacturing.
What widgets New Zealand can/ must be produce/ manufacture is depending of course on various conditions.
Please Wolly, don’t take sentence out of context: I wrote: Wolly – as I mentioned earlier New Zealand’s education is delivering great kids, a great product ready to enter the NZworkforce. But in contrary the government orders infrastructure needs in the billions from foreign companies/ workforces, then serious questions have to be asked.
Nope you still don't get it Walter....the economy is unbalanced yes but it works in that manner..
You seem to think there must be jobs created for every "young" Kiwi....even the lazy.
"in contrary the government orders infrastructure needs in the billions from foreign companies/ workforces"....no this is not so Walter...and I gave you the reasoning why not...
Perhaps it would be best if you list examples of where the govt has done the above, as you claim....post us a list Walter.
Wolly – I’m not part of this blog to be right or wrong. I’m here to exchange ideas to improve the situation for New Zealand not only for a few, but the welfare and prosperity of the wider population.
In that regard the 3 questions I asked you earlier are still unanswered.
..and please don’t tell me what I think – no I don’t support the lazy ones.
Our differences are in the fundamental interpretation of economics. I believe in a “mixed economic” model.
Wolly – go to the “google book” link above - page 70 and read on. It describes some of our differences.
More about economics within modern societies:
http://igitur-archive.library.uu.nl/fss/2007-0303-200508/1999%20Unger%2…
Andrew - not mentioned in that article - the worldwide normal economic slow down could be replaced by military build up, which means massive consumption for production, maintenance, exercises and operations.
http://www.globalfirepower.com/oil-consumption-by-country.asp
Here a video explaining the issue: http://www.pakalertpress.com/2011/12/25/military-buildup-worldwide-the-…
In addition conflicts in oil rich regions will certainly not make the price collapsing.
"Recent Italian and other primary auctions suggest to us, however, that banks and other investors may still only be willing to lend longer term to governments facing market pressure if they are offered interest rates that, all other things being equal, will make fiscal consolidation harder to achieve."
http://www.telegraph.co.uk/finance/financialcrisis/9014491/France-credi…
Perhaps we are heading for a repeat of earlier failure...hidden inflation thanks to govt depts telling lies and govts telling reserve banks to print and be dammed.
http://www.marketoracle.co.uk/Article32597.html
Given the certain future of debt repayment and financing burdens across the western world, there is no...REPEAT NO way that Keynesian splurging as in the QE madness going on today, can rescue western nations from the hole.
That is not to say they will not opt to kick the cans down this same old road to ruin while spinning the BS that they have got it right and recovery is upon us all and things will be great and that if they are not..... it is the fault of the doomsters failing to believe the BS.
The S&P downgrades of last week...this is the market passing judgement on the liars and the frauds.
Now as to the NZ joke....do you think we are on track to escape the fallout from the financial banking and debt failure?....do you?
It must be megalomania – at its best.
An oil exploration company wants to turn the East Coast into the "Texas of the south", writing of the potential to build thousands of oil wells in the largely untouched region of New Zealand
http://www.stuff.co.nz/business/6258561/NZ-likely-Texas-of-the-south
"This is a great opportunity for New Zealand if we can prove it up. This is something we believe holds significant resource potential," senior affairs and new ventures advisor Alex Ferguson added.
I’m not only wonder, what our government ministers statement will be.
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Worldwide national debt levels are now so high, that infrastructure maintenance/ services are at risk. In some cases this will lead into frequently and massive failures of entire technological systems. The consequences will just add to the cycle of more costs and more debt, broken societies and more damage to environment, water, air and soil - our planet.
Tag Oil are spinning a great story , Walter ..... relax , there's little in the way of proven world class hydrocarbon deposits around NZ ......
....... Tag are wanting US investors to come on board , to fund their wild-catting ......
( 'cos Kiwis either don't have enough money to shovel into such ventures , or have learnt from history not to be an angel to an oil man's dreams )
Yes KS must have brought smiles to the dials of the fundies when Cullen dreamed it up..you don't think they planted the idea do you?
Fancy being invited to invest taxpayer funds and their savings at the same time for no fee paid to govt ...all their xmas dreams come true....the greatest freebee ever..... OMG and the employers bit too...jeez they don't even have to make positive returns...haaaahhaaaaaahahaha
The funds management industry is rumoured to be pushing JK and the Gov. Gen. to have Michael Cullen raised to peerage ..... for his services to the industry , ressucitating it from the depths of the financial gutters , where it so royally belonged ......
.... bravo , Michael can lord it over us in perpertuity .......
Front running candidates for dumbest criminal minds of the 21st century....hahahaaaahaa
http://www.guardian.co.uk/uk/2012/jan/15/manchester-mole-gang-tunnel-heist?newsfeed=true
"Plans for the £500,000 vessel to carry the Monarch during her Thames Diamond Jubilee Pageant on June 3 have been dropped – because of concerns over health and safety and security".
Parents should read this article...it will help them understand where the latest bit of tinkering with NZ schools has come from.
http://www.guardian.co.uk/theobserver/2012/jan/15/the-big-issue-education-michael-gove?newsfeed=true
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