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Top 10 at 10: Mish praises NZ; Worse than the depression; Baltic currency bomb

Posted in News

Here's my Top 10 links from around the Internet over the last 48 hours or so. I welcome your additions in the comments below. I am glad I do not need to injure myself. There were a bumper crop of Dilberts over the weekend there's a few in here today.

Dilbert.com

1. Here's my NZHerald blog with 10 suggestions for tax changes to reform New Zealand's economy and dig ourselves out of a fiscal black hole.

2. Here is a 50 minute video after the jump where Mike Shedlock of Mish's Global Economic Analysis explains what he does and details the current economic outlook to a bunch of people at Google. He has an interesting story. He was a programmer and consultant who eventually resorted to blogging to make an income. If you have 50 minutes free, it's well worth watching. He has a nice line: "The green shoots we are seeing are a mirage."

He talks about the real value of gold, fractional reserve banking, the failure of Greenspan and Bernanke, and how government spending usually makes things worse. He also calls for US troops to be brought back from Iraq and Afghanistan. He also wants the US Federal Reserve abolished.

He also compliments New Zealand and John Key as the only country that is not trying to solve its debt and overspending problems by borrowing and spending. He does this 14 minutes 35 seconds in. HT Blair Rogers from Peak Providence.

3. Those worried about Europe's economy, its banks and where the next roadside bomb might go off in the global financial markets should keep an eye on the 'Baltic Three'. Estonia, Latvia and Lithuania have fixed exchange rates vs the Euro, but are under intense pressure to devalue their currencies because of property and economic collapses. FTAlphaville has a very nice look at this issue here.

4. If anyone had any doubts about who really runs the US Congress they need to read this story on how the banking industry lobbied their way to a 7% improvement in second quarter earnings by twisting the Financial Accounting Standards Board (FASB) to change the rules on mark to market. This excellent Wall St Journal story lays it out in detail. And America thinks its democracy should be exported. God help us all.

Dilbert.com

5. Felix Salmon points out that the US unemployment number out on Friday night of 9.4% is already worse than the worse case scenario used by the Federal Reserve in its stress tests.

6. This is a cracker from Barry Eichengreen and Kevin O'Rourke at VoxEu which compares (again) the way this global recession is tracking versus the early days of the Great Depression of the 1930s. The chart above shows industrial output is tracking in line, while the blog post shows the stock market worse off this time and global trade volumes worse off this time. Plenty sobering for a Monday.

7. Daniel Gross at Slate picks apart the debate about rising US bond yields in this piece, which pits Niall Ferguson's 'inflation vigilantes' against Paul Krugman's 'signs of revivalists'. An entertaining read, but a tad partisan. I'm with Ferguson and the vigilantes.

8. It turns out there is a lot of oil stored in tankers as traders wait for prices to improve. There's some speculation the owners of this stored oil will put it back on the market and drive down the oil price, FTAlphaville reports.

9. Niall Ferguson has a go at Martin Wolf's apologia for fiscal deficits in the FT no less.

10. This is a bit off the beaten path. Here is an interview on BBCWorldService with Australian anthropologist turned soldier David Kilcullen about how to deal with terrorist insurgencies. He was a key adviser in the change in the American approach in Iraq and has some fascinating views on what to do in Afghanistan. He has written a booked called the Accidental Guerrilla. The interview is 25 minutes long, but well worth a listen.

Dilbert.com


We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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"He also compliments New Zealand

"He also compliments New Zealand and John Key as the only country that is not trying to solve its debt and overspending problems by borrowing and spending."

So according to Mish running huge Budget deficits for at least the next 10 years and multiplying the debt to GDP ratio is not borrowing and spending?

Andy : yes, that little

Andy : yes, that little fact, of our budget deficits, seems to have passed by Mish. On its way to steam-rolling the rest of us. How sweet it must be to live so far away, and be paid to make haphazard comments about other parts of the world, safe that you'll never go there and face the tar and feathers !

Bernard : excellent tax reforms, your NZ Herald piece. Halve the IRD, 'specially loved that. Can we do some kind of a Sci-Fi mad scientist thing and pop your brain into Bill English's head ? The gig will be up at the pub, of course, when "Bill-Bernard" orders a double decaf low fat latte, instead of a Speights !

Hmmmm, that graph is a

Hmmmm, that graph is a party poopa. I guess the only real chance we have is stting in Beijing sticking pins in Yanky Doodle Dandy. Let's all learn Mandarin and make paper lanterns. They might designate NZ as the land of the rising Dragon and send all the Party flunkies down here for R&R.

That industrial output graph is

That industrial output graph is incomprehensible to me. We are not 12 months into the crisis. Rather, we are 20 months on from the peak of the Dow. The selection of starting points - June 1929 v April 2008 is not explained, and seems counterintuitive. I suspect an abuse of statistics by doomsayers. I prefer the comparison of the four large bears:

http://dshort.com/charts/bears/four-bears-large.gif

And while I'm at it, mark to market was always a stupid method, and was a major source of of the gas inflating the bubble. I'm sure we see it ditched within a few years. The assumptions of perfect liquidity and stable pricing are unjustifiable. Hopefully the valuation profession will get stuck into this, and develop themselves a new revenue stream with a more sensible balance sheet valuation method.

Great links as always. Looking

Great links as always. Looking forward to watching Mish when I get the chance.

Anyone ever wanted to take Finance at Yale with Robert Shiller (of Case-Shiller fame)?

Well, now you can:

http://oyc.yale.edu/economics/financial-markets/

includes videos of all the lectures including a guest lecture from Carl Icahn which is entertaining.

Speaking of entertaining...

http://thingsthatlooklikeotherthings.tumblr.com/

"As frivolous as it sounds,

"As frivolous as it sounds, funemployment is a statement about American society. Experts say it's both a reflection of the country's cultural narcissism -- and attitudes of entitlement and self-centeredness -- and a backlash against corporate America and its "Dilbert"-like work environment."

http://www.latimes.com/news/local/la-me-funemployment4-2009jun04,0,75816...

Bernard - read your 10

Bernard - read your 10 suggestions re tax changes in the Herald - excellent! What we need is comprehensive reform and not weak-kneed tinkering.

Most of all I support your overall objective for simplification of the regime and the consequent dumping of all the exemptions and tax minimisation angles and the unnecessary and unproductive accounting expense and effort that goes with it.

If there is to be a public participation process associated with the government considerations - you might want to put this up as a submission and seek support via you blog community for it.

I'll support and vote for

I'll support and vote for you, el Presidente Bernard.........gotta keep that John Banks away from all the baubles of office !

Two points of interest. 1.

Two points of interest.

1. Obama is following the playbook that turned a bad recession into a 12+ year depression. The govt can never spend a country to prosperity - only to ruin.

2. Anybody who believes that the oil that has be purchased by China and is sitting in tankets while they build their storage tanks will ever be seen on the world market is downright stoopid. Have a listen to the financial sense news hour (www.financialsense.com) of 6 jun where they expose the upcomming global supply shocks.

Bernard please explain what you

Bernard please explain what you mean by land tax in light of your recent post
Baz

Baz Here's a good explanation

Baz
Here's a good explanation of what a land tax might mean
http://www.interest.co.nz/ratesblog/index.php/2009/05/22/opinion-the-mer...

Iain,
Just a friendly reminder to keep the number of links down to one or two
cheers
Bernard

Martin, are you suggesting that

Martin, are you suggesting that this is like a game of Monopoly and China has just pulled the trigger on buying everything on the board from distressed asset owners? I'd tend to agree.

Martin-Hamish, oil's just one being

Martin-Hamish, oil's just one being bagged tanked and stored. Copper is the metal heading for a huge supply side shortage which in part is China cornering the market. It's the metal China has too little of in the ground and they know the quantities they will need over the next 25 years. No brainpower needed to see why they are buying big time and storing the stuff. All you need is open spaces and tarps for cover.

Well said Bernard: http://blogs.nzherald.co.nz/blog/show-me-mone

Well said Bernard:

http://blogs.nzherald.co.nz/blog/show-me-money/2009/6/7/ten-tips-tax-nz-...

I thought this bit was quite feisty:

"Farmers and property owners would scream blue murder, but they have made out like bandits for decades."

However, as we've seen elsewhere in discussions on this website, some would not be screaming blue murder as they also think change of asset/property/land taxation is necessary. But,

http://www.sharechat.co.nz/article/cf29c914/key-rules-out-new-capital-ga...

Status quo here we come....

Maybe we should be asking, how might things be now for NZ, us, me, if we'd have implemented said changes a year ago, 5 years, 10 years, 20 years ago? Instead of, if we implement now, how will it be for ME in a week, a month, a quarter, a year - at the next election?

Nevertheless well said.

Thanks Bernard but I dont

Thanks Bernard but I dont think a tax on private land would cure the problem family homes farms etc have enough taxes and levies imposed on them and ever increasing local body rates etc as far as the property bubble goes remove the abilty to write of losses on rentals etc that are not viable business models ie the rent doesent cover most of the total costs etc. Last year Bernard you quoted on this site that about 700 million in losses are swept away through LAQC s
Baz