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Saturday, May 30, 2009

Derivatives regulations must be strong!

We can't afford to let the powers that be slide on this.

President Obama says he has a heart for the people, well he should do battle for the American people on passing very strong derivatives trading measures.

I know it's a issue politically and logistically, but something must be done.

Here's what I was thinking:

1. We can limit the amount of trading on certain products which would in effect induce a trade ceiling.

2. We can limit what can be on the futures market, or the currency that denominates it, like the US dollar (Petro-dollar) should be replaced with a basket currency, - 20% mark up.

3. We can limit the amount of avenues trades have. We can implement a "freedom of information" act on derivatives and futures, such as CDS trades, to the consumer. Force financiers to state where they got this instrument from and, allow the regulators to put up an advisory if the debt has been collateralised or traded to third party participants.

4. Force firms to show, in detail, their overseas swaps.

This is a start. But, something must be done as well as beefing up the regulatory bodies that supervise them.

Tuesday, May 26, 2009

N Korea tests a nuke device!

Not actually a bomb. But, a nuclear device in any event. I don't know what the approach with N Korea will be, but it looks as if they are testing to hit something, sometime down the future.

What should the world, particularly Asia, do? We can't have N Kore hit Japan, China, India or S Korea....it would destabilize the entire region and set up another global economic crisis.

Something has to be done. What if the N Koreans make a "mistake" and have a humanitarian disaster on their hands of their own doing, in their country or out?

Monday, May 25, 2009

China still trying to duck the dollar!

FT Reports on why China is trying to bad mouth the US dollar!

I think its all a game. I don't think they really want to get rid of the dollar, but just tell everyone that they will get rid of the dollar and then they would have what?

This is one time where I feel political rhetoric can do more damage than good. Since the Chinese are holding onto a crap load of US assets and money, then why would they create a stir to cause folks to lose confidence in the dollar and further devalue their own investment?

I can never understand politicians....

Friday, May 22, 2009

Can China and Brazil really pull away from the dollar?

FT Report!

Can they really pull away from the US to create their own form of global currency? Perhaps they can. Pres. Obama is not really an oppressive type of guy to make a big fuss over it.

To the extent it will replace the SDR valuation at the IMF, is another issue. But, if countries are willing to take the chance of doing business with China or Brazil with their currency, then its all fine with me.

Thursday, May 21, 2009

"Mandy" for Foreign Sec.

Aside from the fact that he was instrumental in helping to frame the Lisbon treaty and that he openly gay, Peter Mandelson, the immediate past EC Trade Commissioner and current Business Secretary is set to be tapped for the new UK Foreign Secretary.

He [Lord Mandelson] should have been brought back as Foreign Secretary from the minute he was brought back from Brussels.

He is a brilliant man and a wonderful diplomat.

Wednesday, May 20, 2009

BOE to keep rates as is at .5%!

Minutes from the BOE MPC meeting!

UK equity prices had risen by 13% on the month, following a rise in the previous month, with the United Kingdom sharing a more general recovery in global equity markets. There had been further downward revisions to market analysts’ expectations of UK companies’ earnings growth in 2009.

The issue to watch, equity prices, is the first sign that things are improving. If the market maintains it's growth and the rally is sustained, things can begin the get better..however, will this be segregated growth, or will this trickle down to the rest of the folks off of Broad Street?

Inflation is still certainly the watch item and the Asset Purchase Facility seems to have that tamped down. But, are equities up on the APF alone or is this a real market strengthening?

To early to tell...we have to see consumer spending and savings on individuals, to co relate this with the "good" news!

Tuesday, May 19, 2009

Managing food inflation, critical for developing countries.

The price of food in the world market has been an unstable. Better yet, the agricultural commodities market has been destabilized, to the extent where no one knows what to expect at any time amidst this global economic crisis. The impact on developing countries is concerning.

The problem some countries are facing currently is that as a result of the drop in food prices from the developed countries and large developing countries that produce food for mass export (Ecuador and Brazil with bananas and sugar cane and Vietnam and Indonesia with rice), food inflation remains high and in some cases, rising inflation. On the other side- especially in large farm to export countries- farmers in developed countries have been losing value on their produce.

To put the matter in some context, the issue can be good for, or, “should” be good for developing countries that import food. However, if prices are rising while there is food price drops from the producer countries as well as massive deflationary pressures in global commodity company stocks, then; where is the benefit?

To understand the answer to that question, we have to take into account the issues that impact global food prices.

For starters, consumers were paying too much for food to begin with. There are three main factors as to why that was. For one, the commodities markets- which include agriculture and oil- were victims of artificial price inflation in the developed markets.

The US is by far the largest agricultural exporter out of the world’s top ten, with eight of the remaining countries in the top ten Euro-zone countries. The Euro-zone, as an aggregate, accounts for a much larger share than the US. All of these major developed markets have futures markets, which spotted the price of commodities as a result of the futures contracts to which they involved themselves into with farmers.

The second issue and which has played a major role in the additional spikes, was the fact that commodities rose on the back of oil prices. While the relationship between oil prices and food is understood and while this is true that farmers do factor in fuel costs to their production as well as traders in the financial market do too as well, the fact should also be as one commodity decreases the other should decrease as well?

This is not always the relationship. In fact, the derivatives market is slightly segregated from the real market where prices, should be denominated by aggregate demand. For the mere fact that in 2007 and 2008 as production and supply rose, oil prices rose as well as demand declined, should have us re-think the framework within today’s price and value driven market.

While the cost of facilitating additional output from OPEC should be a consideration, output gaps far outstripped supply gaps in 2008.

The third major reason is that world trade in agricultural commodities have been severely strained. Post WTO Uruguay Round, 1996, the dispute settlement mechanism has been vigorously used with agricultural complaints, second behind GATT 1994 compliance, out of the 300 plus cases brought forward since 1996.

The true realization is that protectionism, with regard to agriculture, is a major issue and currently has the current WTO Doha round, deadlocked. In fact, the concessions originally on the table at the start of the round 2001, have been watered down to the extent that makes the round meaningless.

What should developing countries be mindful of during this food crises? Everything!

Protectionism: Protectionism is on the rise in developed markets, in particular regard to the agri-commodity market, particularly in North American and the EU and now, the BRIC and other food producing countries in Asia and South East Asia. They all have been turning their supplies in agricultural and consumer goods inward, to supply their own domestic demand as well as hiking tariffs to spur their domestic consumers towards purchasing as many goods as they can at home.

This decreases global supply and in effect, raises the price for everyone that depends on their produce.

The Derivatives Market in developed countries: The US is now seriously contemplating, regulating the derivatives market more carefully. I think that now even average consumers, with no background in economics or finance, understand that the demand sets the value of the good, not the price setting the value of the good, solely.

With the exposition of the price and demand irregularities in the oil market, consumers demand to not go back to the status quo. And, as goes the USA, so goes the EU.

However, if the regulations are “weak” and are not cognizant of diminishing the factorization power of the quantitative models that evaluate prices on historical data- especially now on the artificially inflated data between the late 90’s to the beginning of the crisis- we can see price further pricing irregularities in the commodities market, which would make the impending regulations rather useless in the short term.

Production cuts: This has to be the foremost issue with regard to the food crises. While stockpiles have risen in the 00’s, as accounted by the UN and the World Bank for developing and least developed countries, the stock pile is being depleted due to the lack of food from developed countries penetrating through the current and frayed market mechanisms.

Currently, the US farm report stated that acreage in the US has decreased and is set to decrease again, as farmers cut back on production because they are not making what they used to make, pre-crises, due to the fact that demand is soft and the market pricing mechanisms- the derivatives market- is even softer. With impending legislation and soft power on its usage, the historic price levels they enjoyed during the boom years, is no more.

These factors in respect to the pricing mechanisms on commodities, have come back to bite farmers as much as it has helped them to produce in the past.

Lack of progress in the WTO Doha Round: The Doha Round is DOA. In order for it to be impactful for all, there needs to be a full completion, with the debate on tariff cuts logged back to the pre-2005 deadlock, where the cuts were meaningful and the harmonizing of modalities with non agricultural market access (NAMA), made an additional sweetener to achieving this objective.

If not, increased demand from developing countries- post crises- will envelope, with little or no global obligations put in place on the G-20 to meet the global geography and population realities and demand.

Internal inflation: This has to be the more crucial and yet paradoxical realities some countries face; while world commodity prices have sharply declined in the developed markets as well as deflationary pressure in production looming, prices in some countries rose.

The fact that there is increased protectionism, a decline in demand and as a consequence, ongoing inventory drops with respect to wastage due to over supply and more importantly as a response, intentional production cut’s, makes for a lugubrious food price reality for countries that do not have internal agricultural production to suppress food prices internally.

Coupled with aggregate supply disparities due to job losses, food retailers that have not gone out of business due to the external shocks and price deviations and irregularities, have had no choice but to raise prices as they have no control over domestic job losses in addition to the irregular- and more universally- imported inflated food prices, with the latter, being more systemic with increases in food prices to increase as the economic crises nears an end as the re-regulation of the real economy as a result of recovery, leads with demand rising with supply lagging short term.

Credit Card bill passes US Senate today...

I'm not sure if this is the type of bill what folks expected. The bill is supposed to put a clamp down on credit card companies hiking the rates arbitrarily. I think this is little more than window dressing as I think more could have been done. But, more can always be done.

Aside from the photo op, what does this mean for the average US consumer? Very little. People still have to pay their debt.

While rates may be frozen, of sorts, during this crisis and beyond, obtaining a credit card when you have no job seems as the larger issue. Also, and not to sound like a socialist, debt forgiveness and leniency as well as working out a credit rate deal with sponsoring companies, would have worked better.

Perhaps what I was thinking was too far fetched. It is a start and maybe folks can breath a sigh of relief.

UK Commons speaker announces resignation.

Michael Martin, Commons speaker resigns.

I guess it was a matter of time. This is turining out to be one of the more nastier UK elections.

Monday, May 18, 2009

Why is France ahead?

Is this a case of French exceptionalism?

Hardly some may argue. But,does this exceptionalism actually mean full recovery from the financial crisis?

We can't answer that because we probably have the wrong question with the wrong premise. The question folks would really want to ask is, was France as bad off as the other countries at the same time now and then in this crisis? the answer is no. France was the last European country to show negative figures at the mid-way of the crisis. In fact, they were the only country as of late 2008 to have positive GDP growth figures.

While France boasts of having rolled out more of it's fiscal stimulus- about 26 billion euros- does this mean that the recovery will be higher than other countries?

Perhaps not. The fact is is that France is a heavy welfare state. But, on the other hand, they have better labour relations to employment than any other country- including the Nordic countries. While other social democracies in the Northern Europe are have heavy welfare spending programs as is France, France also has a very vibrant private sector with a high amount of outward capital investment by nationals.

In fact, aside from the USA and the UK, France, has one of the highest investor classes in the world with regard to outward foreign capital investment by nationals. While this also means that France has heavy exposure, to the extent that France has had it's financial services sector exposed to US sub-prime debt is something France has not had to worry about.

While, yes, Societe & General has had it;'s issues with the rouge trader, this was an internal anomaly and this trader, was working outside of the general financial services protocol within his organization and, for that matter, French financial services regulators.

Another important thing to note is that France can also feed itself. This is crucial. This means that they are not price takers and are not sending their hard earned money overseas, to purchase food and don't have to at any time. And, also, they are the price givers, meaning that they have a very wealthy European block as well as a middle east and Northern African block, which they supply.

France also has diversified it's energy portfolio, having nuclear and other forms of energy aside form fossil fuel bases.

France is the best bet for coming out of this crisis faster and better. While they will probably not have the size of GDP growth as will the US in the time to come, they will fair better than many and be sound in the short and long run.

So, while we bash France on it's socialist tendencies, they really have a better- although not as transparent as we would like- system of laissez faire governance, which has really evolved into a great state over the last century.

Is he gone?

Michael Martin, the British House of Commons speaker.

Most likely he is. He is embroiled in an ongoing scandal about expenses by British Labour MP's. I think he should have his day in court and if it is proven that he acted in-appropriately, then they should sack him and not before.

Too many times in politics we have casualties and collateral damage.

FT Reports

Friday, May 15, 2009

Industrial Production & Treasury International Capital (TIC) Data!

Industrial production decreased 0.5 percent in April after having fallen 1.7 percent in March. Production in manufacturing declined 0.3 percent in April and was 16.0 percent below its recent peak in December 2007. The decreases in manufacturing in April remained broadly based across industries. Outside of manufacturing, the output of mines fell 3.2 percent, as oil and gas field drilling and support activities continued to drop.


Net foreign purchases of long-term securities were $55.8 billion.

Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities increased $26.7 billion. Foreign holdings of Treasury bills increased $47.9 billion.


Are their any trends we can derive from the data? It' obvious to see that as net purchases were down, industrial production shrank on all levels.

Perhaps we can runa statistical model to prove a closer relationship?

I will leave that for another day, or for the Krugman's or Mankiw's of this world.

Germany shrank by 3.8%...

Report on the German economy in the FT and how it shrank by 3.8%.

This is what you get when you first, react slowly to this credit crisis and then, react slowly knowing you have a very entrenched coordinated market economy.

The result is what you are seeing in Germany. Less innovative and less prepared to deal with a crisis and repair their economy rapidly!

Well....this is the lot we choose.

Thursday, May 14, 2009

Happy belated birth day to ME!

Hello everyone. I forgot to mention my own birth day yesterday. It did not occur to me that I can and should post my date of birth, but what the heck!

I'm not as vain as other bloggers, but just in case you missed it--HAPPY BIRTH DAY TO ME! Yesterday that is---May 13th, 2009. Mark that day on your calendar.

I think I'm going to wiki myself. LOL...

Best,

Youri

Wednesday, May 13, 2009

Small and Medium Enterprises need direct support!

Small and Medium sized enterprises (SME's) as well as Micro-enterprises, have not had it easy over the last few months. For one, they have been choked off from credit as have the larger firms and secondly, they are victims to a weak demand.

While the global credit crisis affects every one of us. The impact that it has on SME's and Micro-enterprises, .

For starters, SME's tend to employ a greater percentage of the population than larger firms do. In the USA, SME's employ over 80% of the total work force and in the EU, which employ’s 99% of their work force.

In the Latin American and Caribbean (LAC) region, the size of the SME's and micro-enterprise sector by firm works out to about 91% micro-enterprises with about 8% for SME's. But by work force, it's about 42% for micro-enterprises and and 27% for SME's.

This issue certainly becomes more complex and dire considering the size and scope. When magnified in a more global context, so-called "large" LAC companies can easily be classified as SME's by US and EU standards as do different size and standard classification hold between US and the EU. However, the impact they have on domestic LAC economies, are nonetheless vital.

To get back to the point, SME's and micro enterprises have a very hard pill to swallow in this economic crisis. The first of which is with the fact that they are not as involved with the informal sector financing as are their larger counterparts.

It's a particular trait of SME's to be unable to take advantage of the formal financing sector. From commercial bank's and, to a lesser extent, the capital markets, SME's, tend to not be in a position to qualify themselves to take advantage of formal modes of financing because they are, by the nature of their design, smaller, family owned firms that are not accountable to a board of directors or other external shareholders. In that sense, they tend to have very little standardized business infrastructure within their organization. This also means that in order to obtain financing for expansion, SME's have to rely on real estate equity, amassed savings or extended credit from other larger companies that they share business interests with.

Take for example a small fishing village with a cooperative in Peru. The co-op is made of individual fishermen from the village and they all have their own interests, as well as being a part of the larger cooperative. Because the individual fisher-folk have no formalized business structure in order to show a financial institution their savings capacity as well as their trends on income, the fishermen have to rely on- of all things- the exporters and other food based outlets in order to secure financing. This is also in addition to the need for the larger firms to provide financing in order to subsidize the individual fisher-folk’s production as well as to help sustain them in the weak or off seasons.

The larger concern with this is that the exporters or the larger companies that supported them in the past are also feeling the economic crunch at this present time. They are not as willing to support an extended employee, of sorts, during a time where they are losing value on the product they both depend upon as well as finding it difficult themselves to secure credit as well as finding markets to market that produce. All of this is with the misguided premise of the model that the financing of external fishermen by larger firms, was a sustainable business model to begin with. With larger supporting firms having to take profits to invest in an individual producer- in the hopes that his catch with be sufficient for all sides to make a sizable profit- it was an irregular business activity as done as ad-hoc as it was.

Another key issue has been the falling demand for goods and services from SME's. This, on top of scant access to formal financing, has stifled the progress of SME's and erased some of the gains they have made in the past 5-10 years.

Not only have SME's been losing a greater part of the market share. Potential start-ups are also reluctant to participate in a market, where the demand is weak in addition to consumers, choosing to go with an established dealer if they must spend their hard-earned money in order the gain maximum value and sound guarantees.

Regardless of the particular circumstances, we must move towards securing SME's under all conditions. This begins with understanding the real pressures and threats average folks, SME's and micro enterprises face at this time and then opening dialogue on doing something tangible about it.

A possible way to secure SME's now and for the future, can be in the form of a securitized market for inter-company lending.

If insured, regulated and administered by a market based entity of standing like the national Stock Exchange or a non-governmental board, this system will provide the sense of security and credibility within its financing and trading platform between the contracting companies as well as, at the same time, provide for a new financial product, in addition to inducing, at the base level, smaller firms into modernizing their business practices in order to be more transparent and accountable within their organization if they wish take part in an easier financing venture.

This will also nudge SME’s ever closer towards greater market inclusion and transparency, where they can take the next step into gaining value from the formal sector. As we have seen with the example with the fisher-folk in Peru, companies are already doing such financing and we can make it more relaxed than the formal commercial bank stircture, but slightly more secure than the arrangement the fihser-folk in Peru have.

Another way to ensure that SME's don't lose ground within the market, is in the form management training for SME principals.

While that idea sounds simple enough, the task to which we identify potential growth SME's to invest these training services in as well as provide an equitable and secure financing option as a final product, where SME's would feel comfortable that they would not lose their business to overwhelming formalized debt due to any particular market condition, is something that needs to be addressed.

While formalized debt obligations are risks in and of themselves, but if the gains are larger than the risks, then we can begin the process of formalizing SME's into higher and structured participation.

No doubt with the latter option, banks and other financing institutions must play a greater and more active in the SME's they wish finance. However, rudimentary free market fundamentals aside, with an additional insurance guarantee of the state, this business model for the bank's can be maximized using sound market intelligence on potential growth SME's and the markets they serve.

This does not suggest at all that subsidies for SME's in a downturn is the answer. On the contrary, this would move towards enhancing market based systems under an umbrella of government security, without providing the sub-optimal and wasteful blanket government subsidy program for all- the potential winners and the un-identified losers. A hyperactive market based micro-finance system is what is suggested, with insurance and assurances from the state, working in concert with market insurance providers and market leadership with inveterate probity.

Thinking for the future and forfending a developing market economy, is something, in this context, we can take into serious consideration for a healthy SME sector for the present and future in the LAC.

Tax rates falling... OECD Taxing Wages Report!

The OECD sure reported this with very little enthusiasm.

I guess everyone had to cut tax rates, to even appear to look sympathetic to the average folks.

Belgium, Hungary and Germany, have to be communist countries. With a tax wedge of over 50% of wages, i would not want to live there.

Well, to be fair, the health care has to be more in line with immortality and the job prospects, 100%.

Tuesday, May 12, 2009

UK unemployment at 2.2m!

FT reports that UK unemployment is at 2.2 million!

In the UK, that's a whole lotta folks out of work.

It's already mid-year and there is no turn around in the economic situation in the UK. 2010 there has to be an election. Prime Minister Brown should pack it in--or try to steal an election.

Friday, May 8, 2009

I think its a matter of pride..

... as to why the powers that be won't quit the Doha round and say no more to these mega rounds!/

The round seemed ill contrived after the 9-11 attacks in any event. It's a wasted effort to me.

Razeen Sally of ECIPE and the LSE admits that the concessions have been watered down so much, that they are meaningless to the overall frame of things.

I think they should scrap all of what they have done thus far and simply just move on. Repackage the round, build on smaller, mini-round dialogue styles.

Hair for hair and bristle for bristle!

What good is it...

...to have lowered the rate, as the FT reports, to have the Euro soar against the US, with the back drop of a weaker EU economy?

I don't see anything to gloat over. Especially considering the fact that the EU stock markets in France and Germany, ended down yesterday.

So, I guess a cheap Euro, is better than a rudderless dollar?

Investors always surprise me. But, they make the money and not me.

The EU banned "shorting" of sorts, so this rise against the dollar- comparatively- is unexplainable.

I guess they needed something to cheer about!

US jobless rate at 8.9%!

The labour market in the US is still correcting itself.

In the FT report, the manufacturing sector has been the hardest hit.

I think this was bound to happen. The labour market is adjusting and correcting itself to international competition from the Emerging Markets.

It will bottom out, soon, and then, make a modest return as soon as credit seeps into personal loan bank sheets as well as automobile loans pick up.

I think we can kiss goodbye to the days of Us automobile dominance.

The good news is, if this is good news, the Euro zone is weak as well.

Is Trichet a day late and a Euro short?

The ECB announced another rate cut. This puts the Euro zone rate to 1%.

The ECB panel also, as the FT reports, flirted with the idea of cutting rates to zero. I think that was the right decision, but the rate cutting should have started much earlier.

Now, they are devaluing the currency, at a time when the Euro zone is still weak and still, with a US economy, by all accounts, about to rebound to modest levels by Q3 this year.

What will Trichet do when the Euro zone faces pressure from the US dollar?

While he ruled out any form of quantitative easing (QE), I feel that this is what will have to happen once pressure builds from the dollar--as well as from the Yen, as it tends to follow suit with the US dollar and trend with it.

I know this is a time when the Germans are kicking themselves in the tail feather, for having adopted the Euro. They could have very well have been on the influence of the US economic machine and had some independence.

This rate cut, coupled with a weak Euro zone, at a time when this could have been avoided with some positive steps late last year, their own country economy, will sour until at least 2010.

The weak Euro zone and currency, has put a damper on the entire European market.

Not good at all!

UK Deposits vs Lending- mixed bag!

Analysis of bank and building society deposits from and lending to UK residents: 1st Quarter 2009, shows us a mixed bag of sorts.

It really stuns with regard to trying to figure out what to make of it all.

Is the issue settling, or are we still not yet out of the clear?

Deposits are up and lending is up. Manufacturing is down and services, is still weak.

My guess is we are not quite there yet. Still yet, with a weaker pound, this may very well be a blip on the radar for when the pound comes into pressure from the dollar.

An ever shrinking US economy-- May 7, 2009 G.19 Consumer Credit Report!

Consumer credit continues to decline.

If we take into account 2004 credit numbers, with interest rates, comparably, it doesn't look as bad now as it "should" have looked in 2004.

2004 had higher interest rates on automobile loans and equally comparable rates for personal loans as well.

I guess it's all in how we "see" the credit squeeze. I guess it had to do with the possibility, well, in this sense, the eventuality that the US presidency, would change hands and parties as well.

Banks need more money!

So says the US regulators after the stress test. I have not seen what the criteria was for this stress test, but it has to be something in the range of projected losses, in the way of illiquid assets, factored in with deflation and current investor appetite for certain instruments.

In any case, President Obama said he does not want to keep banks under his watch for long.

We will have to wait and see.

Wednesday, May 6, 2009

How Tax Havens caused the crisis?

Sol Picciotto, an emeritus professor at Lancaster University and a senior adviser to the Tax Justice Network, wrote an article in the FT on how tax havens caused the credit crisis.

Absolute garbage. If the FT would post information from this guy, then they can post my blog articles as well.

I guess, in the sense of fairness, we have to hear all sides--regardless of how insane it is.

His main issue is that the lack of international cooperation, to help weed out tax dodgers, was a cause as to why the financial crisis happened. Well, he hedges himself, to say that this was not the only reason. Really?

In any event, we all know the cause of the crisis--greedy CDS traders!

Friday, May 1, 2009

Money stats from the BOE!

Lending to individuals

Total Money stat sheet!

Going to be scarce for a while...

Dear all,

I am trying to REALLY finish this paper. I will blog from time to time, but don't expect the information to be as insightful as you have become accustomed to on all and every topic.

I have to concentrate on this and get this done, what I have been planning to do since January of this year.

I will post bland information for comment, but not so much comment of my own as it takes time to read the information and dissect what's horse radish from what's not.

You can be surprised as to how much it takes, especially with econ and financial news, to dig into and separate what's theory from what's reality and from what's just utter garbage.

Keep reading as I still have my online subscriptions to the best sources for information from Europe, the US and Latin America.

At least for the college students, who read this blog more than you imagine, would find it more than useful.

Also, I will try to keep up my once a week comment--if you have not noticed already.

So, this is not me shutting down--but, slowing the gear to focus on other things.

Best,

Youri

Better late than never....

New Zealand cuts rates to 2.5%. Better late than never folks always say.

In addition, swine flu has hit the country.

I hope this all soon blows over!