Announce protest actions, general chit chat or give your opinion on issues we haven’t covered for the day.
Moderation rules are more lenient for this section, but try and play nicely.
The Daily Blog Open Mic Wednesday 12th August 2015
Announce protest actions, general chit chat or give your opinion on issues we haven’t covered for the day.
Moderation rules are more lenient for this section, but try and play nicely.
Foreign policy + Intel + Security
Subscribe | Follow | Bookmarkand join Buchanan & Manning LIVE Thursdays @ midday
MIL Public Webcast Service
http://www.businessspectator.com.au/article/2008/11/10/financial-markets/keys-house
MARKETS: Shadow banking in the spotlight
Giles Parkinson10 Nov 2008, 10:54 AM
Financial Services
Politics
Industries
Global Financial Crisis
Financial Markets
Global News
Economy
Markets
John Key is living proof that not all heads of derivatives operations for large US investment banks end up in the dog house. Some get to run their own country.
Key was elected prime minister of New Zealand last weekend after his National Party achieved a crushing victory over the incumbent Labour government of Helen Clark.
The timing of his elevation, in the midst of a financial crisis, may be quite prophetic. After all, Key’s rise to prominence in foreign exchange circles came after he struck a rewarding relationship at Bankers Trust with Andy Krieger, a daring New York-based trader who launched a legendary raid against the NZ dollar in 1987.
Krieger reportedly bet more than the country’s entire money supply against the currency, forcing it down sharply and taking massive profits in what is still described as one of the finest forex plays ever completed.
Key’s role in this raid is not entirely clear. The timing of his arrival at BT suggests he might not have had a great deal to do with it, but he benefited from Krieger’s continuing interest in the currency, which helped Key lift BT to top of the local currency tables and attract interest from international investment banks.
New Zealand’s new leader also knows a lot about job losses, having by his own admission earned the reputation of being the “smiling assassin” during his short stint at the Sydney offices of Merrill Lynch in 2001 when he reportedly helped fire some 500 staff.
He had been through this process before, after Merrills incurred massive losses as a result of the Asian crisis. Key, then head of the bank’s forex operations in London, is credited by former colleagues for his ability to hold a demoralised team together, even while sacking, in his own words “dozens fewer than 100”, a comment that reveals an early talent for political spin.
Key began his career as an auditor in Christchurch before joining Elders Finance in the mid 1980s as a foreign exchange dealer. Within two years he was the head forex trader at Elders before moving to BT in 1988 and then to Merrill Lynch, where he headed the Asian forex operations from Singapore.
From there, he quickly rose to become head of Merrills’ global forex operations in London, where he is said to have commanded a multi-million dollar salary, before deciding to turn to politics to pursue his childhood dream of becoming PM. Now that he is there, his take on what many people expect to be a heavy re-regulation of world financial markets should be interesting.
In an interview for an article jointly authored by London’s Financial Times and New Zealand’s Sunday Star-Times earlier this year, Key admitted a great admiration for Krieger.
“He was a pioneer, in the sense he was one of the few people in the world who understood the options market before it was really established. He blazed a trail and that gave him a strategic advantage early on.”
Key also said he did not believe there was a moral issue for the traders who made speculative attacks on currencies, or for the dealing rooms that carry out their orders.
“I can’t remember whether Andy Krieger was buying or selling, it might have been selling with me, but at the time it would have reflected the economic fundamentals at play in New Zealand. The markets are ultimately too large for any one individual to manipulate.
“There is much more good gained from having a fully functioning financial market than there ever is from not having that. We provided liquidity, we provided stability.
“There would be plenty of exporters today who would be cheering from the sidelines if Andy Krieger came in to sell a whole lot of New Zealand dollars. And equally if he was buying it there would be plenty of importers who would be cheering from the rafters. So it’s not as clear-cut as some people might think.”
+100 Cleangreen…I dont know why these things are not more widely known…there needs to be a book on this…it needs to be front page news….he is a wolf amongst sheep
if I can think of any appropriate changing of the flag it would be a wolf going after the sheep…lots of red splats , white woolly blotches and jagged fangs
shame on those who are falling for the changing of the New Zealand flag by this foreign cr..k
Reuters news hot off the press.
NZ dollar drops vs. greenback, gains vs, yuan after Bank of China devalues currency
“that’s bad for the New Zealand economy because we depend on them for a big chunk of exports,” said Imre Sperizer, currency strategist at Westpac Banking Corp.”
“where’s the “Rock star economy” now John? we see you trying to talk it up on CNBC today and BBC?
http://www.sharechat.co.nz/article/de0c8757/nz-dollar-drops-vs-greenback-gains-vs-yuan-after-bank-of-china-devalues-currency.html?printable=1
NZ dollar drops vs. greenback, gains vs, yuan after Bank of China devalues currency
Tuesday 11th August 2015
Text too small?
The New Zealand dollar fell after China devalued the yuan, stoking concern economic growth is weaker than expected in the nation’s biggest trading partner.
The kiwi traded at 65.52 US cents as at 5pm in Wellington, down from 66.10 cents late yesterday. The currency rose to 4.1396 yuan from 4.1033 yuan.
China is the biggest two-way trading partner with New Zealand and the second-largest export market after Australia, which in turn counts China as its biggest market. That leaves both the kiwi and the Aussie vulnerable to any downturn in China’s economic growth and demand for raw materials ranging from milk powder to iron ore and coking coal. The People’s Bank of China set the midpoint for the yuan at 6.2298 per dollar, down from the previous day’s fix of 6.1162 per dollar, and said it was aiming for 2 percent depreciation.
“It’s consistent with the Chinese economy being weak and that’s bad for the New Zealand economy because we depend on them for a big chunk of exports,” said Imre Sperizer, currency strategist at Westpac Banking Corp. “And the 2 percent devaluation today – is that the end of the story? The market believes this may be the beginning of many more to come” and could lead to a “devaluation race” among a group of currencies including the kiwi and the Aussie.
Westpac is projecting that the New Zealand dollar will fall as low as 62 US cents this year.
China’s move comes after weaker Chinese trade and manufacturing data was released at the weekend, raising concern about an economic slowdown.
“They are trying to bolster their economy and the easiest way of doing it is by making it better for their exporters and make themselves more competitive again globally,” said Tim Kelleher, head of institutional FX sales New Zealand at ASB Bank.
“It’s more monetary easing in Asia, theoretically it will decrease our competitiveness as well.” Kelleher said. “If all the countries are easing their monetary policy then it puts further pressure on the RBNZ to ease as well.”
The New Zealand dollar increased against the Australian dollar, reflecting the Australian economy’s bigger exposure to China, Kelleher said.
The kiwi recently traded at 89.44 Australian cents, from 89.29 cents late yesterday. The local currency fell to 59.67 euro cents from 60.23 cents, and declined to 42.07 British pence from 42.67 pence yesterday. It fell to 81.68 yen from 82.22 yen.
The trade-weighted index slipped to 70.32 from 70.45.
The two-year swap rate was little changed at 2.86 percent and five-year swaps rose about 3 basis points to 3.16 percent.
NZ economy stumbles & dollar drops again
NZ dollar drops vs. greenback, gains vs, yuan after Bank of China devalues currency
Tuesday 11th August 2015
Text too small?
The New Zealand dollar fell after China devalued the yuan, stoking concern economic growth is weaker than expected in the nation’s biggest trading partner.
The kiwi traded at 65.52 US cents as at 5pm in Wellington, down from 66.10 cents late yesterday. The currency rose to 4.1396 yuan from 4.1033 yuan.
China is the biggest two-way trading partner with New Zealand and the second-largest export market after Australia, which in turn counts China as its biggest market. That leaves both the kiwi and the Aussie vulnerable to any downturn in China’s economic growth and demand for raw materials ranging from milk powder to iron ore and coking coal. The People’s Bank of China set the midpoint for the yuan at 6.2298 per dollar, down from the previous day’s fix of 6.1162 per dollar, and said it was aiming for 2 percent depreciation.
“It’s consistent with the Chinese economy being weak and that’s bad for the New Zealand economy because we depend on them for a big chunk of exports,” said Imre Sperizer, currency strategist at Westpac Banking Corp. “And the 2 percent devaluation today – is that the end of the story? The market believes this may be the beginning of many more to come” and could lead to a “devaluation race” among a group of currencies including the kiwi and the Aussie.
Westpac is projecting that the New Zealand dollar will fall as low as 62 US cents this year.
China’s move comes after weaker Chinese trade and manufacturing data was released at the weekend, raising concern about an economic slowdown.
“They are trying to bolster their economy and the easiest way of doing it is by making it better for their exporters and make themselves more competitive again globally,” said Tim Kelleher, head of institutional FX sales New Zealand at ASB Bank.
“It’s more monetary easing in Asia, theoretically it will decrease our competitiveness as well.” Kelleher said. “If all the countries are easing their monetary policy then it puts further pressure on the RBNZ to ease as well.”
The New Zealand dollar increased against the Australian dollar, reflecting the Australian economy’s bigger exposure to China, Kelleher said.
The kiwi recently traded at 89.44 Australian cents, from 89.29 cents late yesterday. The local currency fell to 59.67 euro cents from 60.23 cents, and declined to 42.07 British pence from 42.67 pence yesterday. It fell to 81.68 yen from 82.22 yen.
The trade-weighted index slipped to 70.32 from 70.45.
The two-year swap rate was little changed at 2.86 percent and five-year swaps rose about 3 basis points to 3.16 percent.
http://www.sharechat.co.nz/article/de0c8757/nz-dollar-drops-vs-greenback-gains-vs-yuan-after-bank-of-china-devalues-currency.html?printable=1
What “rock star economy” is it now John”?
Just a trickster eh!
Why are you are now featured on CNBC & BBC today spinning this phoney idea still, are you trying to fool the entire world now?
I would like to know why you are blacklisting me ?
Whats up ?
Was this the last good investigative Journalism John Armstrong did?
John Armstrong: Rock-star economy loiters at rocky road to recession on quest for surplus
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11434497
Amuch-anticipated return to surplus somehow metamorphoses into yet another unwelcome deficit; dairy prices slump ever lower; the New Zealand dollar keeps rising ever higher; the overheated Auckland property market makes the South Sea Bubble of the 1700s look like an exercise in financial probity.
Is this the so-called rock-star economy? Or the rocky road to recession?
It is not raining on John Key and his colleagues. It is pouring.
Still smarting at the mass defection of erstwhile supporters which the party took for granted in the Northland byelection, National is currently exhibiting the self-absorbed demeanour of someone who cannot quite work out what is happening to himself or herself and is not sure what to do about it.
Not that National can do much anyway to halt the rise in the currency or stimulate the international milk market.
In the past week the Prime Minister and his Finance Minister have also appeared to accept they will fail to meet their long-established target date this year for a resumption of Budget surpluses.
As for Auckland house prices, well, the warning from the Reserve Bank on Wednesday of a potential downward, disruptive correction in prices could not have been blunter.
The Reserve Bank’s worry is that the trading banks, which have 60 per cent of their lending in residential mortgages, could find themselves in dire straits such that credit dries up with the result that the economy goes into a severe downturn.
Key’s response was literally “crisis, what crisis?” But that hellish scenario ought to chill Key and Bill English to the bone.
But the Reserve Bank has not stopped there. It is strongly urging the Government to give “fresh consideration” to ways and means of shutting property speculators attracted by untaxed capital gains out of the Auckland market.
Key’s difficulty is that he has long ruled out a capital gains tax. His one consolation is that Labour leader Andrew Little has effectively done likewise.
But Little is not in Government. Key is. The latter’s political pragmatism which sees him take the path of least resistance has finally caught him out.
In failing to institute some kind of tax or other disincentive to curb speculative sales, Key now has the unenviable choice of having to take tougher and less popular action to force a correction, but not one which sends prices plummeting through the floor.
The alternative is to leave intervention to the Reserve Bank. The latter argues that its tools would have only a limited impact in cooling such a pressure-cooker market.
The onus is on Key and English to come up with something. While Key is employing the “no crisis” line, it is a safe bet that a lot of midnight oil is being burned to tackle what is now the No1 issue confronting the Government.
For make no mistake, the laws of economics dictate that a correction will happen. House prices must stop rising at some point.
The very real danger is that those who have bought at the market high then panic that values may tumble and put their houses back on the market to cut their losses. The net result will be the opposite of what they intended. There will be a glut of houses on the market as sellers who bought in at lower price levels likewise try to offload their properties while they still retain their value.
Demand will dry up. Would-be buyers will either opt out of the market for fear of it collapsing, leaving them paying off a mortgage far higher than the equity left in their new home.
Or they will wait until prices stop falling in the expectation that they can count on purchasing a house at far less expense than they had expected. Those who stay put in their homes will suffer a drop in wealth.
Hindsight will be in abundance. But National will be alone in getting all the blame.
Suddenly, National is finding the business of governing far more vexed. That is not saying that the Key Administration has reached some kind of tipping point from whence it irreversibly slides to defeat in 2017.
There have been other (brief) periods when National has endured a bumpy ride during its six-plus years of occupying the ministerial suites in the Beehive only to subsequently regain its poise.
But the political atmosphere has markedly changed.
Labour’s recovery under Little has shifted the spotlight back where it should be – illuminating the actions of a Government that has an increasing tendency to cut constitutional corners, be loose with the facts and rewrite history where it suits.
Some ministers are handling this scrutiny better than others.
Sticking a microphone in front of Gerry Brownlee these days is to invite a salvo of sarcasm from the Defence Minister to any persistent line of questioning, especially on matters relating to New Zealand’s Iraq deployment.
Key on the other hand seems to spend half of every day stuck behind microphones as he seeks to both soothe voters and smooth over the cracks opened up by the likes of Brownlee.
As Prime Minister, it falls on Key to be the principal salesman for the Government’s actions. But there is no back up.
Some senior ministers are alert to the need to provide background information to the media explaining why the Government has undertaken some course of action on something.
But the notion that there is some huge spin machine operating out of the Beehive which relentlessly force feeds journalists with National’s take on events is a myth.
That did not matter during National’s first two terms.
It sure matters now. And never more so when Key is out of the country and cannot mictro-manage every domestic issue.
The third-term blues are also prompting the Prime Minister to dig into his reserves of political capital.
That was the case on Monday as he suddenly downplayed National’s surplus target as being an “artificial” one rather than a real one, saying achieving it was like “landing a 747 on a pinhead”.
There would be more sympathy for Key’s shifting of the goalposts in extra time had he and English not milked in advance what looked like being one of National’s major success stories.
The search for the lost surplus has been National’s Holy Grail. It has also become a measure of whether National can justifiably lay claim to being a better manager of the economy than Labour.
The final size of what English and Key say will be a deficit will not be known until October.
The public will not be too fussed if that figure is only a few million dollars off surplus. They may even give credit to National for a narrow miss. Even a figure of around $200 million to $300 million may be acceptable.
Key and English will have seen the Treasury’s finalised Budget forecasts. Presumably they are not crash hot for this year – the target year.
The last thing National wants is for Budget Day next month to be overshadowed by having failed to make surplus.
Moreover, a large(ish) deficit has other implications – namely the credibility and scale of National’s plan to cut taxes ahead of the 2017 election.
Debate on this article is now closed.
– NZ Herald
the mainstream media is woefully inadequate on what is happening to New Zealand right now
Not reading to well is it…..just waiting for it all to implode…
Just seen that 10,000 people signed a birthday card for John Key. The National Party as a result have 10,000 email addresses where the P.M. and other Ministers can send info on what the Government is doing. Does anyone know when Andrew Little’s birthday is?
David Seymour also made a smart move with his bill re the World Cup. Why didn’t someone in Labour think to do this? It is something which resonates with a large proportion of the population.
While Labour does need to hold the Government to account, at the same time it needs to think of novel ways to appeal to the electorate.
Comments are closed.