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Top 10 at 10: Allan Crafar's 80,000 tits; Singapore trying to cool housing market; Dilbert

Top 10 at 10: Allan Crafar's 80,000 tits; Singapore trying to cool housing market; Dilbert

Here are my top 10 links from around the Internet at 10am. I welcome your additions and insights in the comments below or please email me your suggestions for Wednesday's Top 10 at 10 to bernard.hickey@reuters.co.nz Today's Dilbert would useful for Theresa Gattung to read. Dilbert.com 1. Matt Nippert writes sympathetically at the NZHerald about the Crafar family's dairying debacle. He, and Allan Crafer Crafar seem mystified as to what went wrong. It seems not to occur to either of them that expanding too fast with too much debt might be a problem. Here's a few quotes to let Crafar (and Nippert) hang themselves.

"I've ended up in the greatest job in New Zealand - I've 20,000 girlfriends, I get to play with tits all my life, and my wife doesn't get jealous." But last year, disaster hit - and not just in court. The Fonterra payout dropped two dollars, just like that. "And, boy, it has a big effect on us. You work that out. The sensitivity in our job is massive," says Allan. Fonterra's decline in payout, down to $4.55 this year and with more bad news to come, has slashed the value of CraFarms. They had expanded rapidly by using existing farms as leverage for financing. For a while the strategy paid off spectacularly. "We had a double or quits idea, and we'd bloody near done it," says Allan.

Remember this guy borrowed NZ$200 million from Westpac, Rabobank and PGG Wrightson Finance. Was 'double or quits' a business plan the bankers accepted? And then there's this little gem about how the Crafars managed their business.

Allan says they've kept things simple and within the family. So simple, in fact, that they only recently purchased a computer and the company's business diary is a wall calendar: "I write things on the calendar, and at the end of the month I tear it off and that's it, it's gone." This approach to business administration flummoxed MAF and police officers who searched the property last year in relation to a dirty dairying case. Allan says the police told him: "You can't run a business that big like that."

There is much, much more to come with this story. Watch this space. Here's a hint of how these guys think.

Shortly before lunch, Allan takes a phone call from a friend and exchanges unkind words about (former Forest and Bird chief executive Bryce)  Johnson: "Everything he stands for pollutes waterways - the biggest contaminant of water worldwide is mallard ducks."

2. Here's how a real government moves quickly to dampen a housing boom. Singapore has announced a range of measures to stop people buying apartments with low to no deposits and opening up new land supplies, Reuters reported. Korea is also threatening to raise interest rates because of a growing speculative bubble fuelled by US interest rates at 0.25%. HT Eugene via email. Remember, most of the Asian economies are hard-coded into the US economy via fixed or managed exchange rates, which means they share America's obscenely low interest rates.  God help us all. It's happening all over again. The last global housing boom was sparked by the Federal Reserve holding its OCR at 1% for a couple of years. Many of the buyers in Auckland right now are Asian and partly fueled by low interest rate Asian money. Here's what Singapore is doing.

With immediate effect, banks and developers will not be allowed to offer loans on homes under construction where the borrower need only put down as little as a 5 percent cash downpayment and defer repayment of the principal until after building is completed. The government also said it will reinstate its "confirmed list" of land sales in the first half of 2010 and increase the supply of land available to developers. "Given the current market conditions, the government has decided to adopt several measures to temper the exuberance in the market and pre-empt any speculative bubble from forming," National Development Minister Mah Bow Tan said in Parliament. Singapore's actions come as some Asian governments warn of speculative bubbles in real estate markets and said they may take steps to cool an overheated market. For instance, Bank of Korea said on Thursday it would lift interest rates if home prices climbed further.

3. Gold watchers should keep an eye what's happening with Canada's Barrick Gold, which is raising US$3.5 billion to buy itself out of some hedges that are hurting as the gold price rises. Tyler Durden at Zerohedge points out the capital raising here and speculates it may be a sign of much more volatility to come. HT Troy Barsten via email

The massive (relatively speaking) move up in gold is not an isolated phenomenon, and has certainly got not just the gold fans following every tick, but also has some bullion bank executives likely very, very nervous. Throw in some aggressive ongoing gold repatriation, and all of a sudden this generally quiet corner of the commodities world could soon start looking very, very interesting. "We had a double or quits idea, and we'd bloody near done it," says Allan.

4. Here is Meredith Whitney, the banking analyst that predicted doom pre-Lehman, talking about how house prices have another 25% to fall in America. HT Blair Rogers via Twitter.

"No bank underwrote a loan with 10 percent unemployment on the horizon," Whitney said. "I think there is no doubt that home prices will go down dramatically from here, it's just a question of when."

5. Robert H Frank at the New York Times poses some interesting questions for the libertarians of this world about how much free market competition had to do with the last year's financial failures. HT Greg Elliott via email. Mark Hubbard: are you watching?

Of course, periodic asset bubbles occurred even when markets were less competitive. But people in earlier times were less aware of the high returns being earned by highly leveraged investors. Relaxed regulation and increased competition now confront investors with temptations that growing numbers of them are ill-equipped to resist. Alan Greenspan's erstwhile faith in the invisible hand notwithstanding, it was never reasonable to have expected market forces to protect society from the consequences of this risky behavior.

6. Why do stock markets keep rising without any reasonable fundamental support from the US or global economies? Zero Hedge has an idea: fund managers are scared of going against the market when their jobs depend on meeting the market.

Here is the punchline of how speculative frenzy coupled with job preservation will continue dislocating a market from any possible connection to an underlying economy that has yet to approach anything remotely resembling a bottom, and as we grind slowly toward the 2011-2012 cliff, likely to see another major leg down when the Commercial Real Estate threat will be the next "black swan" that nobody could have possible anticipated. Emphasis ours: According to Jeremy Grantham, "In markets, where investors hand over their money to professionals, the major inefficiency becomes career risk. Everyone's ultimate job description becomes "“ keep your job. . . . Refusing, on value principal, to buy into a bubble will, in contrast, look dangerously eccentric. And when your timing is wrong, which is inevitable sooner or later, you will, in Keynes' words "“ not receive much mercy." Indeed, performance risk, bonus risk, and ultimately job risk. And there you have it: everyone knows the market is a bubble, however if you want to keep that seat by your desk on January 2, you have no choice but to buy: after all Obama said it is safe to do so. In the meantime, Main Street, largely ignorant of the motivations behind the small minority that determines the bulk of market movement, will part with their hard earned savings, and chase whatever stocks it thinks will make it the next slot machine millionaire.

7. Another Nobel Prize winning economist has come out to say America's King has no clothes.

The massive debt being racked up by the United States to exit recession will thwart growth for decades while its "almost useless" financial sector needs deep reform, a Nobel economist said Friday. "I have a gloomy feeling about the American economy over the next couple of decades," 2006 Nobel Economics Prize winnerEdmund Phelps of the United States, said Friday at Poland's Krynica Economic Forum, known as the "Davos of the East." "I see the financial sector as almost useless in the promotion of prosperity in the United States," Phelps said. "It will have to be reformed and somehow in principle competition could do that over the decades but I don't think we can wait that long."

8. Felix Salmon at Reuters has the full Obama speech overnight on regulatory reform. Salmon makes some good points. Obama doesn't. I said a few months ago that Obama was a liar and a fool. His inaction over allowing the 'Too big to fail' banks to get even bigger and to then go on and make pots loads more bonuses by ramping up risk on top of a government guarantee just proves his stupidity and cowardice in the face of entrenched lobbies and the Goldman vampire squid wrapped around his administration.

Barack Obama said that he wants to do regulatory reform "in a way that doesn't stifle innovation and enterprise". Shame. Given how dangerous financial innovation and enterprise have been over the past decade, one would have hoped that a bit of stifling was a top priority for the Obama administration.

9. This piece from the New York Times is interesting in that it shows how deeply the US government is involved in the economy now and how reluctant it is to truly control the banks and companies it has given money to. Astonishing. As is this little gem of a fact. HT James Kwak at The Baseline Scenario.

Between financial rescue missions and the economic stimulus program, government spending accounts for a bigger share of the nation's economy "” 26 percent "” than at any time since World War II. The government is financing 9 out of 10 new mortgages in the United States. If you buy a car from General Motors, you are buying from a company that is 60 percent owned by the government. If you take out a car loan or run up your credit card, the chances are good that the government is financing both your debt and that of your bank. And if you buy life insurance from the American International Group, you will be buying from a company that is almost 80 percent federally owned. Far from eagerly micromanaging the companies the government owns, Mr. Obama and his economic team have often labored mightily to avoid exercising control even when government money was the only thing keeping some companies afloat. A few weeks ago, there were anguished grimaces inside the Treasury Department as the new chief executive of A.I.G., Robert H. Benmosche, whose roughly $9 million pay package is 22 times greater than Mr. Obama's, ridiculed officials in Washington "” his majority shareholders "” as "crazies."

10. TheOnion strikes again with warning about a Hurricane threatening to make homeless people really homeless.

In what forecasters are predicting will be the largest, most devastating disaster to hit Florida since the national economy collapsed, a Category 5 hurricane neared the Gulf coast this week, threatening thousands of repossessed and long deserted homes. According to meteorologists, the incoming tropical storm could leave as many as 3 million residents every bit as homeless as they've been for the past year or so. "Those who haven't already lost everything to the housing-market crash are urged to evacuate their homes immediately," said Robert Menken, head meteorologist at the National Weather Bureau. "That should be about 10 or 12 of you. Everyone else, please stay where you are, probably on the couch of some in-law who lives near Atlanta."

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