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Top 10 at 10: Extracting the Timaru from South Canterbury; Gold at US$6,000/oz?; Behind the blowout
Here are my Top 10 links from around the Internet at 10 to 1pm. I welcome your additions and comments below or please send suggestions for Friday's Top 10 at 10 via email to firstname.lastname@example.org
1. 'In loco parentis' - The NZHerald's Fran O'Sullivan has written a nice roundup of the South Canterbury Finance situation in the NZHerald.
The statutory managers can now step into Hubbard's shoes and cut any deals on "his behalf". They will be less inclined to try and make any deal fit within the labyrinthine schemata behind Hubbard's overall investment strategy. There is obviously a huge potential for conflicts of interest here. But it is not difficult to reach a conclusion that it suits a wide range of interests - including the Government - for the Aorangi statutory managers to also act as commercial in loco parentis for the Hubbards.
But to all intents and purposes Maier has been acting as a de facto statutory manager since the South Canterbury board - aka Hubbard - appointed him chief executive late last year. What's been missing is the ability for Maier to freeze the company's situation and compromise creditor claims.
2. The court action grinds on - Jenni McManus at Businessday.co.nz has the story on Nathans Finance receiver PwC filing a NZ$66 million high court action against the directors and auditors, alleging breaches of duty. One to watch.
The claim is against Nathans directors Mervyn Doolan, John Hotchin, Roger Moses and Don Young, and accounting firm Staples Rodway. All are expected to file defences. The lawsuit is separate from criminal charges laid against the directors by the Securities Commission.
But the allegations involve similar issues to those raised by the commission in a depositions hearing against the directors in Auckland District Court earlier this year. Among other claims, the commission alleged the Nathans prospectus, registered on December 15, 2006, lied about the manner and extent of its lending to related parties – in particular, to parent company VTL Group.
3. Out of Timaru - It seems the power is shifting quickly away from Timaru in the South Canterbury Finance saga. It's board, led by Bill Baylis, are meeting at Wellington airport today to discuss the multiple rewrites of its prospectus and a few things swirling around its owner Allan Hubbard, who remains President for Life, but is off the board. The NZHerald's Anne Gibson has the story.
Bill Baylis, the new chairman, said the board would meet at Wellington International Airport because it was the best venue for directors from Auckland, Queenstown and Dunedin. Allan Hubbard, Timaru-based majority shareholder via his Southbury, will not attend after leaving the board this month and becoming president for life. This will be the first time in decades that Hubbard has not chaired a board meeting.
4. Yikes - Fund manager and newsletter writer Harry Schultz has predicted a gold price jump to US$6,000/oz, Marketwatch reports. HT Nicola at NZMint. FYI and apologies I included US$4,000 in the teaser paragraph above. I have corrected. US$6,000/oz is the correct number.
One reason for Shultz' skittishness: what he sees as the extraordinary precariousness of the world financial system.
He writes: "We (collectively) are poised at a heart-stopping moment in economic times. On the one extreme side, the world is on the edge of massive deflation and depression. At the other extreme ... hyperinflation. My view is: Both these extremes are possible. Certainly deflation is, on balance, in play today and gaining ground as money supply is actually declining! Hyperinflation seems impossible when there is not much inflation in most economies. But ... hyperinflation is a monetary event, not an economic one, and will happen on an overnight basis, not via a general uptrend in inflation data."
5. Rudd is gone - How quick was that? One minute he was the hero and the next he was gone. The emissions trading scheme and the mining tax have done for him. Strange how voters don't like tax increases when their mortgage rates are rising...Something for John Key to keep an eye on. Your view? Here's News.com.au latest on the 'spill'.
6. Energy use - The Washington Post’s Ezra Klein posts a useful graphic showing where US energy comes from and how it gets used and wasted, saying it’s “the clearest visualization of our energy economy that I’ve seen.”
7. Behind the blowout - Check out these CBS videos on what really happened with the BP oil blowout. Essential viewing. HT Gertraud via email.
8. Biflation? - Here's an idea from Dian Chu at Zerohedge. Same here? Government costs and health costs are jumping. Other costs aren't.
The crisis in Europe is causing concerns about deflation in the U.S. and other developed economies after weeks of financial-market turmoil. The fears are most pronounced in Europe, where a combination of spending cuts and tax increases could weigh on economic growth and feed into deflation. Financial markets are reflecting a diverging expectation. Gold prices have been soaring—a potential indicator of inflation fears—while many other inflation indicators are going the other way. In the United States, the loose monetary policy has not resulted in any significant rise at the consumer level or changes in inflation expectations, as evidenced by the sharply slowing Consumer Price Index and plunging M3 money supply.
Biflation... Not Deflation Despite the seemingly tame headline inflation numbers, consumers never seem to see price declines in certain categories like education and health. For instance, prescription drug inflation escalated to 5% from less than 3% in 2007 and 2008. So, it is pretty obvious what we have here--biflation--instead of deflation. Biflation is a state of the economy where inflation and deflation occur simultaneously.
9. Canny bugger - Warren Buffett bet France would not win the world cup. Clever man.
France fell 2-1 to the host nation today, after drawing Uruguay and dropping 2-0 to Mexico. Berkshire Hathaway Inc. had sold insurance requiring the Omaha-based company to pay a client if France won the tournament, Buffett told CNBC in March. “I think we’re going to lose 30 million bucks or something like that” if France wins, Buffett, Berkshire’s 79-year-old chief executive officer, said at the time.
10. Totally irrelevant video - It's raining oil in Louisiana.