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Top 10 at 10: Strategic questioned; Peak oil means US$225/bbl; 'Don't donate to Haiti'; Dilbert
Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below. This is the first Top 10 for 2010 and I welcome any suggestions for Tuesday's Top 10 at 10 to bernard.hickey@interest.co.nz (Corrected to say RBNZ liquidity rules require banks to raise secure funds both locally and for longer terms internationally). 
1. Strategy questioned - Tim Hunter at the Sunday Star Times questions the relationship between Strategic Finance and Bank of Scotland International (BOSI) and concludes debenture holders have been the losers, particularly when a last minute deal gave a prior charge to BOSI.
Clearly, Strategic's management made desperate efforts at the eleventh hour to stay afloat, but hindsight suggests investors would have been better off had Strategic called in receivers rather than hand over so much value to the bank. Furthermore, it looks like Strategic was more concerned about its relationship with BOSI than its obligations to debenture holders. At the time the prior claim was signed off that July, management would have already known there was not enough cash to repay debentures. If the prior claim was the price of BOSI's participation in a management buyout, it should have been conditional on completing the deal. If it wasn't, debenture holders were simply sold down the river. Strategic's announcement on Friday of $106m in further provisions and write-offs as first mortgage holders "undertake aggressive enforcement and recovery activity" underlines the poor quality of management's decision-making. There are good reasons to call in the receivers.
2. Rebounding - The market for Kangaroo bonds (Australian dollar bonds sold to international investors) has bounded ahead in the last couple of weeks, Bloomberg reported. Five year swap rates, which is the cost in wholesale markets of swapping interest payments in Australian dollars for payments in US dollars, are only 35 basis points above the bank bill swap rate. This will increase demand for Australian dollars and raises the potential for increased demand for Uridashi and Eurokiwi bonds. Are we about to get back on the higher rates, higher currency, easy foreign money bandwagon again? Maybe not. The new prudential liquidity rules from the Reserve Bank are forcing banks to raise funds domestically (and for longer terms internationally) and stopping them from diving into the wholesale markets for 'cheap' foreign (short term) money. 3. Good value - This excellent interactive chart on housing markets from The Economist is well worth playing with. It shows New Zealand is the world's second most expensive housing market (after South Africa), when you look at prices as a multiple of average incomes after 2001. Different time periods and different measures give different answers, but New Zealand is usually right up there among the most expensive. Fair enough?
4. Anybody left? - It seems there won't be many large independent fund managers left soon in the wake of NAB's takeover of AXA Asia Pacific. ANZ is reported by The Age to be in talks to buy Australia's IOOF Holdings for more than A$1.3 billion worth of shares and cash.
IOOF nearly doubled in size last year after it merged with Australian Wealth Management. This turned it into a key mid-ranked player, with more than 700,000 customers, and funds under management, administration and advice of more than $71 billion.
5. Hail the conquering Ralph - Commonwealth Bank of Australia CEO Ralph Norris (former ASB and Air NZ CEO) surprised analysts and investors on Friday by announcing the bank's first half profit would be higher than analyst expectations because of strong volume growth. Norris has masterminded a Kiwi-led management turnaround at Australia's biggest bank (by customers and branches). It is monstering the mortgage market in particular. 
6. Rising rates and less lending growth - All around the world regulators are tightening up capital requirements for banks, forcing them to slow their lending growth rates and put aside more capital for the next rainy day (financial crisis). That is switching the focus of banks from growing lending to growing deposits. Bloomberg reports here on ANZ's views on how changes to Australian capital requirements will increase costs for the banks.
The Australian Prudential Regulation Authority outlined potential changes to bank capital requirements in September, saying it found lenders had reduced the quality of the asset buffers they must keep to protect depositors. The regulator said Dec. 18 that it will complete the new rules by mid-2011. Regulators worldwide are pushing for tighter controls on bank risk-taking after the U.S. subprime mortgage collapse triggered a global recession. The Basel Committee on Banking Supervision issued proposals last month aimed at making the banking industry more resilient. Among its suggestions was improving the quality of capital that banks hold. Commonwealth Bank of Australia, Westpac Banking Corp. and ANZ Bank raised home loan rates by between 35 basis points and 45 basis points last month, more than the Reserve Bank of Australia's 25 basis point increase to the benchmark cash rate of Dec. 1, blaming higher funding costs.
7. Don't give money to Haiti - Felix Salmon at Reuters writes a brave headline to say avoid giving money to the usual Haiti earthquake charities. He says give it to Medicins Sans Frontiere, who have been in Haiti for 19 years. He rightly points to some dodgy charities and the problems involved with Haiti being a failed state before and after the earthquake. He also points to problems with Wyclef Jean's Yele charity.
Related Topics
Yele is not the soundest of charitable institutions: it has managed only one tax filing in its 12-year existence, and it has a suspicious habit of spending hundreds of thousands of dollars on paying either Wyclef Jean personally or paying companies where he's a controlling shareholder, or paying his recording-studio expenses. If you want to be certain that your donation will be well spent, you might be a bit worried that, for instance, Yele is going to be receiving 20% of the proceeds of the telethon.
8. Goldman's Bug spray - Goldman Sachs has taken a swipe at gold bugs, arguing their whingeing about the demise of the US dollar as a reserve currency is just plain wrong, ZeroHedge reports (but doesn't buy it).
Yet, things are now different, because while the financial system did not collapse in September 2008 as it should have in order to get a fresh start, the moment of reckoning has been delayed for as long as the US can churn auction after non-failed treasury auction. In that sense, yes, it is different this time. And with that one can easily assume that all of Goldman's assumptions about a linear future are incorrect. The only question is how long into the future will the current "adjustment" period of pretend reality extend, and what happens when the emperor can not issue another $40 billion in 3 Year Bonds to buy some more non-existent clothing.
9. Peak Oil - Jeff Rubin, the former Chief Economist of CIBC World Markets, speaks in the video below at The Business of Climate Change conference, predicting US$225 per barrel oil by 2012 and with it the end of globalization, a movement towards local sourcing and a need for massive scaling up of energy efficiency. It is 45 minutes long, but well worth watching. HT Blair Rogers via Twitter.
10. Totally irrelevant video - It really is completely irrelevant and frivolous. A cat is surprised. It's now an Internet megastar.
50 Comments
For those who get a
For those who get a kick out of pooping in their nappies , I recommend reading Satyajit Das's report , The Botox Economy . Got my copy from Andrew Patterson at RadioLive . Of course it is just one man's opinion . And there are many conjectures out there ...........But forewarned is forearmed as they say . Grab the bottled water & tins of beans , ......And hunker down for a long gruelling stagnation ............. When's that truck-load of gummy-bears gonna arrive .....???
Here's the link.
http://www.eurointelligence.com/article.581+M54225b93d74.0.html
#9. $225 oil in 2012
#9. $225 oil in 2012 is hard to see with Iraq adding at least 8m bpd to world supplies over the next five years. Currently about 3m bpd, scheduled to go to 11.4m bpd.
http://www.menafn.com/qn_news_story_s.asp?storyid=1093293471
Tell that to Madjad in
Tell that to Madjad in Teheran Pete....Obama needs a conflict to win another term and with all that military gear on site...only a matter of time...Then oil will hit the roof.
The Peak Oil argument is
The Peak Oil argument is so complicated that it is not even wrong. It is the string theory of conspiracy hypotheses. It's based on untestable and untenable calculations. The real number is "0". There is a zero percent chance that Jeff Rubin is right and oil will be $225/brl by 2012.
Is F1, A1, Dakar, Indy,
Is F1, A1, Dakar, Indy, Air- & Boat Races and other nonsense still entertaining/ pleasing the BB generation and the younger petrol-heads in 2012 "“ or are they finally "driving" out of money - good make sense !
@9. best piece Ive seen
@9. best piece Ive seen for pointing the points out around peak oil....succinct...accurate....what it shows also is opportunity...I pointed out the chinese v US steel issue last year....carbon tariffs bad? really? it keeps or creates jobs at home. Nzers wont have to (or be able to) leave...
Point of interest, we lose 4mbpd per year, we are supposed to have spare of 2mbpd globally....6months excess if we recover....
This is a good series as well...
http://www.youtube.com/watch?v=C9x9rYzZfmk
regards
Kunz, motorsport as a whole
Kunz, motorsport as a whole uses far, far less fuel than transport for noddy's. Including the logistics behind the scenes.
Oh and I think A1 has gone bust, no?
The Jeff Rubin clip was interesting.
@Pete: The best estimate Ive
@Pete: The best estimate Ive seen for Iraq is 5.7mbpd....but lets go with your 8mbpd+ over 5 years for a moment...we lose 4mbpd per year, so in 5 years even if Iraq can get 8 more, we will have lost 20, shortfall 12mbpd. Its more likely they can add 3mbpd....shortfall 17mbpd....oil wont be cheap and/or the global economy will be in tatters.
Even if we get a 3 year reprieve....what about in 6 years? no more Iraq's in this world....someone said we need to find another Saudi every 2~4 years...Saudi was really "discovered" in the 1940s (ie they finally realised just how big Saudi was).....60 years ago...we found Mexico/Cantrell in the 1970s....but that was only 2mbpd....
Trouble with this is I think his comment on $225 a barrel is wrong, the global economy cant survive 1/2 that, ie $100 to $120 will send us into a huge recession...again...causing the oil price to collapse, again....
Also he comments on food from China (to the USA and Canada), same applies to NZ, we wont be shipping food overseas....the cost of transport will overwhelm it....all we will sell is high value goods, merino jerseys or goods with high value to weight ratios....data...stuff like that, the impact on NZ will be huge, no tourists, no commodity exports....and lets not forget OZ is shipping raw materials, but for how long....
@Troy: Its based on good research and maths....I agree with "There is a zero percent chance that Jeff Rubin is right and oil will be $225/brl by 2012."....though...but for the reasons Ive stated above...not for yours...so we ahve only a few years to see who's right, you or us.....
regards
@ Steve It has been
@ Steve
It has been a "few years" for a few years now. So I would put my money on "us" being a fewer more years wrong.
@Troy: go for it....oil output
@Troy: go for it....oil output peaked in 2005~2008 with an oil price of $147 and look at the mess that made of our (global) economy....
Even a few years delay assuming Iraq can get to 11million.....is only a few years.
"Our principal objective is to increase our oil production from 2.4 million barrels per day to more than four million in the next five years." Iraq is at present exporting less oil than under Saddam, but it aims to export seven million barrels a day by 2016."
Dated Dec16th 2009....
http://www.atimes.com/atimes/Middle_East/KL16Ak02.html
Which is interesting as they are now a month later suggesting maybe 11. (Pete's post)
Anyway peak isnt decade(s) away....the writing is on the wall....
For all the ASPO's estimates are just that, best estimates they have more foundation on research, geological science and know how than anything I have seen you post as contrarian.
regards
It is said that if
It is said that if asked what average barrel price for oil the major producers would like over five year periods it would be yr 1: $100, yr 2: $100, yr 3: $100, yr 4: $10, yr 5: $100. The $10 is to suck everyone back into the all-is-well, fill-er-up mindset. I rather suspect that that is what we are seeing.
Wally, you're a price watcher; Nymex.com used to have spot oil, gold, silver, nat gas, copper etc all live on the homepage. Now it's all been transferred to CME group and it seems you have to duck and dive all around the site to get the prices. Do you know a site where they are all live on the same page?
this in today,s brisbane couier
this in today,s brisbane couier mail ----re over supply problem,s in wine industry
http://www.news.com.au/couriermail/story/0,23739,26599095-3122,00.html
It is amazing, despite of
It is amazing, despite of signs of depletion and damage to the environment on many fronts, how this generation us misuse and abuse our natural resources and are obviously not learning to live in harmony with nature. The way we fish is just another example "“ for our own pleasure ?? With such an attitude - there is not much left other then hell for the next generation.
Blaming trawlers- just annother excuse - bravo !
Walter
@Pwilkie: There seems to be
@Pwilkie: There seems to be suggestions that over-supply is going to be an issue in Marlborough as well...There are some unhappy ppl over there....The ones producing grapes right now are worried they cant sell them (or at a fair price) and the council is pricing rates based on grape production, so other farmers are being forced to grow grapes to pay the council's exorbitant bill, other crops wont meet it.
regards
@Pete: oil and gas I
@Pete: oil and gas I get from here...
http://www.oil-price.net/
They took gold off....
:/
regards
Steven, www.kitco.com is the place
Steven, www.kitco.com is the place for gold prices, and the best site for relevant links and articles.
Nothing is live Pete. The
Nothing is live Pete. The delay is always at least 7 to 8 minutes. You may as well use the asx site or the nzx.
Steven...there are 23 vineyards in Marl for sale on Trademe!!!!!
Surely $US225 is very possible
Surely $US225 is very possible as the $US is worth far less than when oil was $147 and is likely to be worth even less by 2012. The only argument against is that the US economy will crash long before that point and the sheer size of their economy will stop the price rising further
Happy new year everyone... Here's
Happy new year everyone...
Here's a link to ToD with a good discussion on the Iraq oil situation.
http://www.theoildrum.com/node/6101
If you've got 30 mins, well worth reading through the reader comments.
Good on you Troy. Finally
Good on you Troy. Finally someone talking some sense about the nonsense. Im sick of all this peak oil BS. Even "proven reserves" are only a guesstimate. As Troy says, peak oil has been "a few years away" for the last 20 years.
Agree with Troy , on
Agree with Troy , on the nonsense , and conspiracy theories around oil . But the madness of crowds and speculators who pushed it to $US 147 , will surpass that one day . Was it worth $147 at the time ? If the answer is " NO ! " , then what was the justification for that price ? ............ And as someone noted , long before it got to $US 225 , it will have crushed our economies into recession , and caused it's own down-fall , a'la 2008 .
14 vineyards listed on TradeMe
14 vineyards listed on TradeMe , for Central Otago area . From hobby lifestyle blocks , up to fully fledged internationally renowned award winning vineyards with scopes of potential for further improvement , ......... or so they say . ....... If they're so flipping good , why bail out ?
@Wally: Yes wouldn't be surprised
@Wally: Yes wouldn't be surprised if that includes some those Ive met recently....not just vineyards....other farmers, its grapes or sell up the council has a shotgun to their heads.
regards
@longpockets, excluding time and hyper-inflation...$225
@longpockets, excluding time and hyper-inflation...$225 as say the next 2~5 years isnt feasible from what Ive read as you say. In fact the suggestion is $147 broke the global economy's back last time, now its weaker so it wont even get to $147 before it breaks a second time...somewhere in the $100 maybe $120 bracket....So for me I go with those who say its probable that oil wont go past $150US (in current terms), we either will use something else, or nothing...
regards
@MIke M: Sense entails some
@MIke M: Sense entails some foundations for his statements/beliefs....ie maths or solid date and analysis....I cant see any.
regards
Oh yeah the MDC is
Oh yeah the MDC is all for harvesting the money..yours. I found some more vineyards on the lifestyle lists. I heard the return on a vineyard is a fat 1.5% ! And that was before the wineries cut the quantity they would take per acre. Fancy working for the Council. Stuff that.
Some info on Grapes. My
Some info on Grapes. My friend wanted to contract bottle some wine after losing a contract with Nobilo. The best quote was $7 a bottle, thats to press and oak and then bottle includes tax of I think $1.90 a bottle but not GST. How many wineries are now dumping stock 4 years old for less than this, and this has no grape component the grower has not been paid out of the $7.The grape growers would need $2 a bottle to be economic.! (so costs per bottle of $9)this is a collapse in the NZ wine industry dont kid yourself, its a wipe out and the supermarkets are loving it. Its the previous years of unsold wine thats keeping the heat on as wineries try to increase cash flow. Big names are being affected and its getting worse as consumption isn't increasing. Vines will have to be pulled out and the Marlborough Council needs to pull its finger out and get real, its helping to kill its golden goose. The area is way to dependent on grapes and on one variety.
Nah - peak oil has
Nah - peak oil has came and wented. The effect has, anyway. The reason is exponential increase in demand - if (globally) economic activity picks up, and does so on a percentage basis, then whether we peaked in 2005 and 2008, or whether we have another 5 million barrels per day available, is irrelevant.
Perhaps that's the irrelevant in the room?
The question I have of the economists, is: If discretionary fossil fuel use (driving to the beach) becomes prohibitive or prohibited, will the transfer of it's use to 'essential' services allow the exponential growth needed to service the debt-go-round.
It will only be a temporary situation, of course. Demand will soon overtake any efficiencies - the old Jeavons Paradox.
If things keep bumping the ceiling, chances are that oil prices won't go through the roof, every time they ramp, you can expect a crash. Quite right, Roger.
For those who think you can grow forever in a finite space with finite resources, we're seeing a classic example (Haiti) of where you end up. Best avoided.
Can grapes make ethanol? Marlborough
Can grapes make ethanol?
Marlborough biodiesel
@KW John yes grapes can,
@KW John yes grapes can, just about anything can....but as someone said its $9 a litre/bottle) and $2 a litre just for the grapes, then converting it to usable fuel......does not sound economic to me. If you wanted to do that then I suppose you look for a crop that converts energy at a fraction of grapes, which are fragile, water and labour intensive. A lot of water is pumped out of the ground/rivers in Marlborough to feed grape, and more is going in at a huge rate. I mean Seddon is now surrounded, now heading towards Ward...
Which is the crux of the matter....it not practical/economic to consume costly energy and water for fuel at $4+ a litre.
Second round of US mortgage
Second round of US mortgage defaults...in 2010 and 2011...this lays it out...
http://www.youtube.com/watch?v=dFtuRnfeg1o&feature=rec-LGOUT-real_rn-1r-...
nasty...
Feb last year when we
Feb last year when we were driving back from St. Arnaud back to Picton, I couldn't believe that the rows of grapes started pretty much right there. Staggering really compared to only a few years prior.
The Grapes have been a
The Grapes have been a ridiculous bubble with people believing their own propaganda. Wine consumption in the world has been falling for years. I was in Washington State last year and the new plantings went for miles 10,000 acre blocks with Mexicans' doing the work. Grapes are %75 juice,so 1 kg makes a 750 ml bottle pretty much. Some Savi Blanc growers in Marlborough have been cropping 20 tonnes a hectare thats about 20,000 bottles a hectare. So when you drive around do a rough calculation of the area work out the number of bottles and shake your head at the stupidity.
Olives instead? We import quite
Olives instead? We import quite a lot of olive oils - I've been to pac 'n save and seen them.
Olives in NZ don't produce
Olives in NZ don't produce enough oil,if you can use some tax losses then it worth a look.
Grass?
Grass?
AndrewJ : So true !
AndrewJ : So true ! I was in an exclusive bottle-shop in North Adelaide , and they tried to foist some 20 y.o. Cab Sauv onto me for $ 35 a bottle . Must've thought I was some brainless tit from Loburn . " No ! No " , I said . " Gimme the new stuff " , the 2008 is only $ 12 per bottle . What kinda fool did they take me for . These plonkers must think we are plonkers . Clowns !
Yep, just don't get caught
Yep, just don't get caught
I have it on good
I have it on good authority that there is no money in grapes, nor has there ever been, but there has been money in land speculation...
Are you taking the piss
Are you taking the piss RT?. Strong reds are best after a few decades. It's the whites you swig when fresh and young. Reminds me of a Pommy wine expert doing the aussie tour and stopping at an outback pub, asked for a bottle of wine to go with the pie...after a long wait the barman came back with a bottle..." sorry mate..it's the only one we had left in the cellar...dam...it's got sediment in it"...and he promptly gave the bottle a bloody good shake..."there you go...that'll bring the life back into it". The expert sat gob smacked as the bottle of Château Pétrus Pomeral 1922!
...........aha ............hmmmmmmmm , just holding
...........aha ............hmmmmmmmm , just holding back the tears in me eyes ! ............ Gotta revitalize that bloody old vino , anyway you can .............Heeeeeeee heeeeeeeeeeeeeeee ! ............I wasn't taking the piss , oh no , not at $35 a pop . .............. . Don't gimmee that old stuff .......... ( gummies , need gummies , about to burst a seam ..... ........aha haaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa ! )
re wine industry---this guy,s brilliant---page
re wine industry---this guy,s brilliant---page 7
http://www.cnwinenews.com/pic/200910/28/20091028155632993.pdf
KW John, ppl I know
KW John, ppl I know in Marlborough were ripping them (olives) out for grapes....
regards
Yeah!... a top 10 at
Yeah!... a top 10 at 10.
Re # 9 check these...
a) IEA sees world oil use in 2010 highest since 2007...> http://af.reuters.com/article/investingNews/idAFJOE60E08J20100115
b) China's Round-The-Clock Auto Factories Still Cannot Meet Demand...> http://www.bloomberg.com/apps/news?pid=20601109&sid=av3dPlponcBw&pos=14
Hang on fellas... here it comes.
@Mouse: and then there is
@Mouse: and then there is India and the new cheap car....for $2500...(not sure in what currency...USD?).
The developing world is hell bent on living like us ie consumers all...cant be done, boy are there going to be some p*ssed ppl...and a few riots....from "us" because energy and consumer goods will be rationed and expensive and from "them" because they wont ever get to have what we currently have...mind you we wont be living as we are now thats for sure....
Gob smacked that this site should attract or consist of business ppl who I thought should be able to look and plan ahead for their business ie better than most....should understand risk and manage it....yet I see little evidence of this...meanwhile energy goes from a trival or marginal cost to a business to killing it off....this is what is going to cripple businesses in the next 5 years, not (directly) tax, the market forces so many ppl (in here) want is going to do to them with force what they dont want put them out of business. Let alone other shocks like the BBs retiring....I mean if 70% of your economy is consumers and a big % is the BBs and they retire and die off, what is that 70% cut by? 50%? so 35% of GDP goes by - by.....? that alone isnt trivial....
regards
Perhaps this crisis is nothing
Perhaps this crisis is nothing but 'political necessity'. Nation States are powerless to resolve this - and we are slowly being introduced to some uncomfortable realities in the west. Try as I might I still can't figure out why NZ lamb and slowly wine (despite the initial spike) gets cheaper by the month (and in the UK of all places). NZ butter has maintained its price. Yet, just today, there was an article on the breakfast news exploring the idea that the UK should ban unsaturated fats, & in particular butter, for health reasons. 'Nothing' is what it appears to be.
I would think Butter is
I would think Butter is less of a health problem than MacDonalds....or say coca cola...excess is the problem and not what I suspect.
regards
@Steven - Check this ..>
@Steven - Check this ..> http://www.foxnews.com/story/0,2933,583289,00.html
$2,000 Tata Nano Likely to Cost $8,000 in U.S.
The world's cheapest car is being readied for sale in the U.S., but by the time India's Tata Nano is retrofitted to meet emissions and safety standards, it won't be that cheap.
These bits got me:-
"the car's two-cylinder, 623cc engine would have to be engineered to meet stronger U.S. pollution standards" and
"The Spartan interior, with flat bucket seats, three knobs, a horizontal switch and a steering wheel, also would have to be changed to comply with U.S. safety standards that limit movement of passengers not wearing seat belts"
Affiliate Marketing is a performance
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We wont need to build
We wont need to build the cycle way!