Friday, October 5, 2012

New Zealand to Default

Here is piece from Ambrose Evans-Pritchard that I have inserted new actors into for your thought as we act out this tragicomedy in world debt markets:

"Fear of escalating demands by China, Japan and South Korea is a key reason why New Zealand Prime Minister John Key continues to drag his feet on a full sovereign bail-out.

New Zealand's refusal to act has frozen the Asian bailout mechanism and begun to rattle markets. The Asian Central Bank will not buy New Zealand bonds until the country requests aid from the Asian Stability Fund (ASF) and signs a "Memorandum" giving up fiscal sovereignty.

Finance minister Bill English told New Zealand's parliament Wednesday that there will be no bail-out until the terms are clear. "The government will take the best decision for New Zealand and its Pacific allies when it knows all the details," he said.

Australia has become the greatest worry. "Key is terrified that the Australians will say `No' after he has requested a rescue," said an Australian economist with close ties to the Key team."

OK, so that may be a bit too 'tongue-in-cheek'. What do you think? Is this a scenario for little old New Zealand?

Gold in New Zealand dollars: $2180.76 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.57 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)

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