sign up log in
Want to go ad-free? Find out how, here.

90 seconds at 9 am with BNZ: Rumoured 50% write-down of Greek debt and recapitalisation of Eurozone rescue fund triggers rally

90 seconds at 9 am with BNZ: Rumoured 50% write-down of Greek debt and recapitalisation of Eurozone rescue fund triggers rally
27th Sep 11, 9:04am by Amanda Morrall

Amanda Morrall details the key news over night in 90 seconds at 9 am in association with Bank of New Zealand, including Eurozone's emergency intervention plan, a pick-up in the markets, and good returns on 10-year U.S. Treasury bonds.


Rumours of what's being touted a "financial firepower" plan in Europe -- aimed at containing debt problems -- had stock markets in Europe rallying over night.

There is speculation the plan would include a 50% write-down of Greek debt and a possible five-fold increase to the Euro rescue fund.

Some European Union officials are downplaying the rumours but it was enough to bolster the Euro Stoxx 50 index by 3%. (Bloomberg carries the details here).

  There was a similar effect on U.S. markets.

The Dow Jones was up 123 points (as of 9am), with the S&P500 showing more modest gains. around .8% per cent. (See Reuters' article here for full coverage.)

The improved outlook for equities saw U.S. Treasury prices fall, sending 10-year bond yields higher towards 1.9%.

Betting on Federal Reserve chairman Ben Bernanke to save the U.S. economy from itself is proving profitable for bond investors who are enjoying "monster" gains.

(See Bloomberg article here for more analysis).

According to Bank of America Merrill Lynch indexes, 10 year bonds have returned 28% this year. That beats the 24.4% gain seen in 2008 during the Global Financial Crisis and is a 16-year high.

The NZ dollar continues to be tossed around through the latest volatility and is currently around the US77 cents mark.

ANZ economists said further erratic moves by the NZD underscored the illiquid nature of the currency and its dependence on external factors.

Similar trading patterns are expected to continue with markets transfixed by global developments. The Kiwi is expected to stay wihtin the 0.7650 - 0.7814 range.

No chart with that title exists.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

32 Comments

by  me  |  27th Sep 11, 9:26am 1317068780

When will it occur to the talking heads on this site that the European elite have far too much time and effort, and far too much to lose, to allow the EC to go belly-up in any way?  They will muddle through the situation, and  those who only see doom and gloom are letting their psychological disposition get ahead of that reality.  So just enjoy the RWC (an event that also is defying  the knockers)  

Up
0
by  steven  |  27th Sep 11, 9:43am 1317069797

The Great Depression wasnt stopped.....despite the "elite" not wanting it to happen....

Lots of cases of such wishful thinking or your "reality" not panning out....I will take my one thankyou.

Those who ignore such risks, fail to plan for them happening and get wiped out when they do.......

failing to plan, is planning to fail......

Come back in say 50 weeks and review....

regards

 

Up
0
by  David George  |  27th Sep 11, 10:02am 1317070926

Well there's the little matter of German co operation to get over, me.

The German constitution doesn't allow it for starters.

 

"Andreas Vosskuhle, head of the constitutional court, said politicians do not have the legal authority to sign away the birthright of the German people without their explicit consent.

"The sovereignty of the German state is inviolate and anchored in perpetuity by basic law. It may not be abandoned by the legislature (even with its powers to amend the constitution)," he said.

"There is little leeway left for giving up core powers to the EU. If one wants to go beyond this limit – which might be politically legitimate and desirable – then Germany must give itself a new constitution. A referendum would be necessary. This cannot be done without the people," he told newspaperFrankfurter Allgemeine.

The extraordinary interview comes just days before the Bundestag votes on a bill to revamp the EU's €440bn bail-out fund (EFSF), enabling it to purchase EMU bonds pre-emptively and recapitalise banks.

Tensions are running high after it emerged over the weekend that officials are working on plans sketched by the US Treasury and the European Commission to "leverage" the firepower of the EFSF to €2 trillion, in conjunction with lending from the European Central Bank."

http://www.telegraph.co.uk/finance/financialcrisis/8790785/German-turmoil-over-EU-bail-outs-as-top-judge-calls-for-referendum.html

Up
0
by  Christov  |  27th Sep 11, 10:08am 1317071327

I was discussing this with RogerW. yesterday on 90 at 9 KiwiD...have a lookie see....because I agree there would need to be an absolute mandate from the people to proceed with the bailout....

Conclude...the IMF is running this show...no conspiracy ...fact. 

Up
0
by  Justice  |  27th Sep 11, 6:41pm 1317102070

True maybe, but.......... at who's expense Me? Printing 2 trillion from nothing only passes the buck. You don't get that? Millions of people at the bottom are going to get screwed to save the very few people you talk about who don't care whether europe starves. They may save their assets but...........will they save their heads from the chopping block? I think not when this all plays out. Just think French revolution my friend 

Up
0
by  steven  |  27th Sep 11, 9:31am 1317069075

Watching greed is an interesting thing.....greed - fear - greed - fear- greed -fear.....

and what gets produced?

Diddly...

regards

Up
0
by  Christov  |  27th Sep 11, 9:37am 1317069453

We are all guilty of greed on some level at some point Steven it is inherently attached to your survival instinct.....tempered at best...unbridled at worst.

 

Up
0
by  steven  |  27th Sep 11, 9:42am 1317069733

Yep.......this though I think is unbridled.....the slightest good news and ppl jump in wanting to make "gains" but dont actually produce a good....

regards

Up
0
by  Christov  |  27th Sep 11, 9:50am 1317070250

Can't argue there Steven ...but can say I'm guilty of profit taking while not producing albeit in order to protect what I was producing that came under sever pressure....

 A hedge if you like...but straight out of  survival mode...although to be fair I guess not everyone would view it that way.

When forced to play Banky boys game ...have I not then entered the game with equal motive if not equal position. 

So guilty as charged.

Up
0
by  Andrewj  |  27th Sep 11, 9:56am 1317070581
Up
0
by  Christov  |  27th Sep 11, 10:01am 1317070887

Bloody Brilliant........absolutely love it.....ta very much....AJ

Up
0
by  speckles  |  27th Sep 11, 10:18am 1317071893

psychology of chasing the gain and then the loss...we all know people that have lost everything doing this. The sway of the mind.

Up
0
by  Kate  |  27th Sep 11, 10:23am 1317072189

This one's fun too - a flowchart of the rumored EU bailout plan;

http://www.zerohedge.com/news/presenting-mother-all-european-bailout-flowcharts 

And my favourite comment of what's been left out of the chart:

 

Your money --------------------> toilet

 

Up
0
by  Christov  |  27th Sep 11, 10:34am 1317072894

ta Kate....good fun although I'm sure I feel a complex coming on.....I don't know ..do I  don't I..? 

Up
0
by  Kate  |  27th Sep 11, 10:58am 1317074297

Hahaha - I confess - I did.

Up
0
by  powerdownkiwi  |  27th Sep 11, 10:52am 1317073977

you end up flush then - what's wrong with that?

As long as you're working to a cistern.

Up
0
by  steven  |  27th Sep 11, 11:17am 1317075437

I sold all my shares down last June.....so I removed my capital and made a little profit.....

Thats just it though in a way...its no longing investing in a business because you believe in it and it will give you are return....in time....its buying and selling for the sake of it....

regards

Up
0
by  powerdownkiwi  |  27th Sep 11, 9:38am 1317069493

Agreed        :)

Up
0
by  Christov  |  27th Sep 11, 9:40am 1317069650

My vote for best pun in a while....still laughing about ..."every little bit Alps"

Up
0
by  Andrewj  |  27th Sep 11, 9:33am 1317069238

 

 G20 Rescue plan runs into its first wall: Germany’s central bank.

 

http://hat4uk.wordpress.com/2011/09/26/crash-2-g20-rescue-plan-runs-int…      Then hit on the home page and read about gold and other news.
Up
0
by  neco  |  27th Sep 11, 10:12am 1317071559

Yes Weidmann seems to be one of the only central bankers that understands the concept of moral hazard. Appears to be a bit more tenacious than Weber/Stark and not afraid of getting in a dust-up with Merkel/Schaeuble that could get quite messy. The pollies will do their best to ignore him but eventually the voting public (if not the market beforehand) will vindicate his position. 

http://www.spiegel.de/international/germany/0,1518,787064,00.html

http://www.spiegel.de/international/europe/0,1518,788352,00.html

Up
0
by  beyerali  |  27th Sep 11, 12:06pm 1317078383

http://www.spiegel.de/international/europe/0,1518,788352,00.html

Since then, the monetary watchdogs have come to fear that they are throwing their money into a bottomless pit. Indeed, despite having already purchased over €150 billion ($200 billion) in sovereign bonds, there is no success on the horizon. Every time Trichet's securities traders stop buying, the interest rates start going back up. In this way, what was originally envisioned as emergency assistance has turned into long-term subsidization.

.

Up
0
by  goNZ  |  27th Sep 11, 1:09pm 1317082188

dont mess with the Germ-ins - " ve haf ways of making you pays,nein?

Up
0
by  Andrewj  |  27th Sep 11, 9:44am 1317069887

Chistov I love his article on gold also the thunderbird one where he can see the strings but not the money, he becoming my favorite blogger.

from the gold article

 

 

“There isn’t a single macro, geopolitical or any other event that has occurred in the last three days to give evidence of a reversal in the gold rally,” says James Steel, precious metals strategist at HSBC in New York. Which is another way of saying, “I haven’t a clue as to why this happened”. Time to get real. There is one institution upon which all the basic tenets of American growth optimism rest, and that is the stock market in New York. The Federal Reserve (and its Treasury, for they are allies) are past the Buck-defending thing. To do that simply makes the ever-present Room Elephant of Debt bigger still. The main game now is to ensure that stock market investors feel safe and sound. QE is based on this principle, and so too is American gold-dumping. For the American psyche, a run from the NYSE is on a par with a run on the banks: it is The End.   http://hat4uk.wordpress.com/  
Up
0
by  Christov  |  27th Sep 11, 9:57am 1317070635

ta AJ....you gotta say that's an encapsulation...that defies ambiguity.

If your gonna say it  ...say it.

Did just that..! 

Up
0
by  Andrewj  |  27th Sep 11, 9:54am 1317070479
Up
0
by  Andrewj  |  27th Sep 11, 11:04am 1317074689





Jamie Dimon of JPMorgan Chase launched a tirade at Mark Carney, Bank of Canada governor, in a closed-door meeting in front of more than two dozen bankers and finance officials, underscoring mounting tensions between bankers and officials over financial regulation.

 

http://www.ft.com/intl/cms/s/0/b62779c6-e7a4-11e0-9da3-00144feab49a.htm…

 

 

Up
0
by  kiwityke  |  27th Sep 11, 12:16pm 1317078990

News to expect in the coming days and weeks:

  • Greece defaults
  • Germany protects German banks but other countries cannot do the same thus quickly provoking multiple sovereign defaults and or bank failures, all of which may easily lead to a payments crisis in the global banking system. Derivatives are particularly at risk in terms of operation and execution.
  • The Euro falls in value especially against the US dollar
  • The Germans announce they are re-introducing the Deutschmark. They have already ordered the new currency and asked that the printers hurry up.
  • The Euro falls even more on any news that Germany is withdrawing from the Euro.
  •  Legal wrangling begins as to the legality of Germany’s decision. Resolution takes years.
  •  Germany insists that the Euro continues to exist even they do not use it any longer. They emphasize that European unification will continue and suggest new legal instruments to strengthen European Unification including new EU Treaties.

http://pippamalmgren.com/77.html 

    This lady had tried to join the dots and create a picture. Her viewpoint is quite compelling IMHO.    I would also suggest doing a google on the name of the lady to get a feel for credibility of this opinion. 

 

 

Up
0
by  Nicholas Arrand  |  27th Sep 11, 12:37pm 1317080234

I see another Greg Muir touched company, Pumpkin Patch, has reported a 'stellar' annual result. I wonder if he will leave this company off his CV like he does Hanover Finance...?

Up
0
by  goNZ  |  27th Sep 11, 1:12pm 1317082350

profit 50% down -  what cabbages !

Up
0
by  KW John  |  27th Sep 11, 1:44pm 1317084242

One for the Productivity Commission? Why we work too much.

Just imagine what you'd spend all that free time on (bet you can't).

Up
0