The next 6 - 24 months - are you bullish, bearish, or sitting on the fence...

[Bob Kane]

Austrokiwi .... I think it's irrelevant who owns the banks. As the poet Donne said about men, so too about economies... we are all interconnected.

The IMF etc may be able to bail out Greece, but if Spain, Portugal etc fall over, what then? Do you really think they can be bailed out too? I have my doubts.

The next 2-3 months are going to be most interesting. If one (too many) economies fall and can't be bailed out, we will all fall ..... into a great depression of epic proportions!

All very exiciting actually

Good points which sound rather scary.
I don't think any country wants to see a great depression so I think a great bailout would happen.

[ENP]

I think a great bailout would happen.

Helicopter Ben to the rescue!

[Davo36]

Yep, they just print money! The thing is, as stupid as that seems, it actually is working. Both the US and the UK have done it and so far at least have escaped a calamity.

I think the issue for us is this: China Property Bubble Bursts -> Aussie Property Bubble Bursts -> NZ Property Bubble Bursts.

Whether that will ever happen is more or less impossible to know I reckon.

[speights boy]

If it is a bubble it WILL burst.

SB

[SwissKiwi]

Agreed Davo - China/Australia have propped up KiwiLand through all this, and if they stumble so do we.

Still, although the poll is now closed, unemployment is coming down and 'I'm a bit bullish'.

[Austrokiwi]

Austrokiwi .... I think it's irrelevant who owns the banks. As the poet Donne said about men, so too about economies... we are all interconnected.

Small point I didn't suggest anything about bank ownership. Under banking regulations government issued bonds are rated the highest as far as security goes.........I was asking have any NZ/Aussi banks purchased government securities in the PIIGS group

[Bob Kane]

China - has some very unique characteristics.

I'm thinking it's almost too big to fail - because it's too corrupt to fail.

Some market forces don't seem to apply to China.

[Austrokiwi]

When Adam Smith wrote the wealth of nations, he described china as being richer than Europe.......... from what I understand it remained so until the Opium wars. Perhaps we are returning back to the "normal" situation.

[G Lin]

China - has some very unique characteristics.

I'm thinking it's almost too big to fail - because it's too corrupt to fail.

Some market forces don't seem to apply to China.

All free markets fail, that is the market cycle of capitalism.

China can make all the rules it wants, but at some point, the bubble will collapse.

[eri]

like the canary in the coal mine

gold has started singing

after months of treading water around $1150

it's just jumped through $1200 again

[muppet]

And oil is rubber ball bouncing which affects more people than the price of gold.

[Ahar]

I don't think any country wants to see a great depression so I think a great bailout would happen.

Bob...the point I was making is that there isn't the money to borrow...all the other countries are in a similar position, they have their own debt burden to service.

Small point I didn't suggest anything about bank ownership. Under banking regulations government issued bonds are rated the highest as far as security goes.........I was asking have any NZ/Aussi banks purchased government securities in the PIIGS group

Austrokiwi ... its irrelevant whether Oz/Kiwi banks own any suspect bonds! If the contagion spreads and bond markets fail in other economies, the fallout will NOT be confined to just those countries.... we are ALL interconnected!

Yep, they just print money! The thing is, as stupid as that seems, it actually is working. Both the US and the UK have done it and so far at least have escaped a calamity.

Davo ... yep, this is why I earlier on said that IF we can get thru this debt crisis, then I suspect we are in for a good dose of inflation. You just can't expect to keep printing money without some effect!

[Austrokiwi]

Austrokiwi ... its irrelevant whether Oz/Kiwi banks own any suspect bonds! If the contagion spreads and bond markets fail in other economies, the fallout will NOT be confined to just those countries.... we are ALL interconnected!

MMMM My point exactly...........but Its not irrelevant... I think we should at least know the size of the problem? I have a 6 figure sum on term deposit in NZ if the bank is exposed to the PIIGs I think it very important I know.......


Eri: that Canary is extremely volitile..... if Greece, Spain and others decide to sell their reserves that canary is going to die! IMHO gold, at the moment, is just too volitile to predict its ultimate direction.

[Ahar]

but Its not irrelevant... I think we should at least know the size of the problem? I have a 6 figure sum on term deposit in NZ if the bank is exposed to the PIIGs I think it very important I know.......

Ahhh....yes I see your point Austrokiwi....I'm talking with respect to economies not from the individual's viewpoint.

I guess all you can do is wait and perhaps spread your deposits around when the govt guarantee expires in Oct.

Just a thought, why don't you ask your bank directly if they are exposed? Mind you I think all banks will be in trouble if other countries bonds are declared junk. NZ banks might not have any "investments" but will probably suffer from funding shortages.

I wonder what this will do to interest rates?

[Austrokiwi]

.

I wonder what this will do to interest rates?

If Greece defaults then the velocity of money is going to slow down considerable ( and it is already quite sluggish). Traders may run for cover so US treasurers and the US dollar will be seen, no matter how arguable) as a safe haven.

As far as European interest rates go there is now less chance of a rise in the base interest rate. However I wonder whether the increase interest demanded for govt bonds might still force mortgage interest rates up in Europe. Likewise For NZ it could be quite challenging, as NZ is seen as a commodity currency and so will see a reluctance on the part of foreign investors to lend so the interest rates NZ banks and the NZ gvt need to pay will rise. Its hard to call which way interest rates will go. If NZ head back into recession then there will be a need to drop the interest rates, but if the NZ$ becomes unpopular then rates may have to rise to attract funds. Possible we may see the predicted OCR increase pushed out to near the end of the year while mortgage interest rates actually rise to cover the higher perceived risks.


Aussi is even more exposed especially with the, now obviously miss timed, mining tax that was just introduced. At least one large mining company is now reconsidering investment in Aussi ( to the pleasure of South African mining interests) The Aussis may economic growth may stall and the base interest rates may have to be lowered. watch the Aussi dollar over the next few weeks on symptom that all is not well is the Aussi Dollar falling.


I suspect that Greece may have to liquidate some of its gold holdings. Spain and Portugal may be next on the list though I have read reports that the UKs situation is worse than Spains.