After a year of tectonic shifts in finance and geography, New Zealanders could do with a break. But those with an eye on matters financial may not get much of a rest over summer.
Major events could change the outlook for New Zealand's economy. Here's the five financial fault lines to watch:
1. Europe's banking system is suffering severe stress. The costs of swapping euros into US dollars are near record highs. Banks are borrowing record amounts from the European Central Bank because they have stopped trusting each other.
Investors are worried the Southern European government bonds on the balance sheets of such banks are not worth as much as they used to be. Regulators have told Europe's banks to raise €115 billion ($197 billion) this month to strengthen balance sheets. Many may have to ask for government bailouts, but many governments can't afford this either. These problems are driving interest rates higher, slowing economies and blowing budget deficits.
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2. Banks, markets and investors are praying that the European Central Bank will print money to buy European bonds, helping to support prices and keep interest rates low. But it is legally unable to buy European government bonds in a wholesale way and the German central bankers on its board are opposed to such money printing because they are worried about inflation.
But if the banking system threatens to unravel, such measures may be adopted.
3. China may loosen policy and go on another building spree. Its decision in 2008 to go on a lending and spending spree in its own economy helped cushion the blow of the Lehman crisis for New Zealand. There are signs now of a rapid slowdown in its real estate and manufacturing sectors. Many are waiting for the Government to intervene, although there are doubts because inflation remains dangerously high.
4. Australia's housing market slides dramatically. House prices are cooling rapidly, and lending and sales have slumped. Australia's economy is now on two tracks. The mining sector is experiencing a historic boom but retailing and manufacturing are struggling. Falling house prices would cool the Aussie economy and demand for Kiwi exports.
5. New Zealand's budget may need to be tightened. A more rapid slump in the European, Chinese and Australian economies, and a slow rebuild in Christchurch, would force the Government to re-evaluate its path to surplus by 2014-15. The Government will either delay the return to surplus or cut deeper into public spending.