Tuesday's Top 10 with NZ Mint: The Great Australian house price slump starts; Bernie Madoff says US govt a ponzi scheme; Salesgirlieman; Wing Chau sues; Dilbert

Here's my Top 10 links from around the Internet at 10 past 1 pm in association with NZ Mint.

Plenty of videos and cartoons today.

We must take our pleasure where we can find it.

I welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz .

1. Has the slump started? - The Australian reports Australian house prices suffered their sharpest fall in at least 5 years in January.

It wasn't just Queensland.

Everywhere fell except (of all places) Hobart.

Credit growth has halved.

Sound familiar?

Here's someone from Macquarie Bank.

Not Rory 'rate cut' Robertson though. He won the bet with Steve Keen about falling house prices.

Looks like Keen's timing was out a bit, but he was right nevertheless.

Macquarie Bank senior economist Brian Redican notes that this is half the average rate of credit growth for the past 15 years.

He said that, allowing for inflation, house prices could be falling at an annual rate of close to 5 per cent.

"People are borrowing less, having seen in the global financial crisis the danger of taking on too much debt," he said. "At the same time, the influx of the baby boomers into the housing market from the 1990s through to 2005 has probably run its course. They seem to have been the key cohort supporting housing prices.

"The banks are also taking a more cautious approach to lending, requiring larger deposits, longer savings history and a greater scepticism about the valuations of properties."  

2. Massively undervalued - The Chinese yuan/renminbi is as much as 72% undervalued vs the US dollar and that undervaluation is responsible for the loss of 6 million US jobs, Paul Jones from Tudor Investment Corp writes in this compelling 16 page report.

A must read for any exporter or watcher of that relationship between China and America. HT to various commenters in various places. This one bubbled up.

3. Why Obama is dreaming - One of my favourite movies is The Castle where Darryl Kerrigan says a few times: "He's dreamin" when hearing of someone trying to sell a pup to someone.

Here's Michael Pento from Euro Pacific Capital explaining why Barack Obama's attempt to sell massive amounts of US Treasury bonds and explain it away as sustainable is dreamin'. HT Andrew Patterson.

President Obama didn’t garner his rosy GDP estimates from historical data when estimating GDP growth rates in his 10 year budgetary projections. The White House wants you to believe that average annual GDP growth rates throughout the next decade will reach 3.22%. Our government would also have you believe that the 10 year note will average just 4.91% and that Consumer Price Inflation will average a mere 2.04%.

But, the average CPI was a much loftier 4.9% during the years 1981-2010 and the average yield on the 10 year over the past 40 years has been 7.3%. But how convenient it is for the President to produce those upbeat assumptions. Doing so makes the deficit and cumulative debt seem more palatable.

Using similar unrealistic guesstimations, the Congressional Budget Office says that our publicly traded debt will increase by $12 trillion during the coming decade. I say more palatable, but it is sort of like the relief you may feel when learning that you will be forced to only eat 200 spiders instead of the previously estimated 300.  

4. Inside Job a winner - Charles Ferguson, the Oscar winning director of Inside Job (which we gave away tickets for a few weeks back) points out that America's government is fundamentally corrupt in this piece on Reuters.

I still shake my head and wonder why there is no revolution in America. Having been there in the last two months though, I sort of understand: the rich blame the poor for being poor and the poor agree.

"The biggest surprise to me personally and biggest disappointment was that nobody in the Obama administration would speak with me even off the record -- including people that I've known for many, many years," Ferguson said backstage.

He believes Americans, who lost homes and jobs in the millions because of shady mortgage lending and bank collapses, are disappointed that "nothing has been done." "Unfortunately, I think that the reason is predominantly that the financial industry has become so politically powerful that it is able to inhibit the normal process of justice and law enforcement," said Ferguson.

5. He should know - Bernie Madoff has been in therapy while in prison. He rang New York Magazine's Steve Fishman to have a bit of a rant in this piece titled the Madoff Tapes. 

Some highlights. He doesn't think he is a sociopath. He thinks he is a good person.

And he thinks the US government is running a Ponzi scheme...

“I realized from a very early stage that the market is a whole rigged job. There’s no chance that investors have in this market.” *** “The SEC,” he says, “looks terrible in this thing.” And he doesn’t see himself as the only guilty party on Wall Street.

“It’s unbelievable, Goldman … no one has any criminal convictions. The whole new regulatory reform is a joke. The whole government is a Ponzi scheme.”  

6. Salesgirlieman - Janet Tavakoli, an expert on derivatives and a big critic of Wall St, has unleashed at BusinessInsider on Michael Lewis, the author of the Big Short. Sort of entertaining.

She accuses Lewis of defending Wall St. I'm not so sure about that. But here's what she thinks. I think they may both be right.

Michael told 60 Minutes (March 14) the financial crisis is a story of mass delusion, but he's only deluding himself. It takes courage to tell the real story. This is actually a story of Wall Street's massive, wide-spread, multi-year fraud, including accounting fraud.

I appeared on 60 Minutes (February 14) and said Wall Street's dealings with mortgage lenders, securitizations, derivatives, and investors were a massive Ponzi scheme, the biggest crime ever against the American economy. Wall Street and Washington hope you are gullible enough to believe otherwise.

7. Remember Wing Chau? - He was the fund manager made to look like an incompetent loser at the bottom of the sub-prime food chain by Michael Lewis in The Big Short. Now he is suing Lewis for defamation, WSJ reports.

Readers of the book (which I recommend completely) will remember him.

Could be a fun trial. Mr Chau (or should that be Mr Wing) should be careful what he wishes for. He might find himself on the stand being asked a few uncomfortable questions.

The lawsuit, filed in federal court in Manhattan late Friday, focuses on a passage of the book that purports to recount a conversation between Chau and Eisman, who made a successful bet in 2007 that the housing bubble was about to burst.

“The entire passage depicts Mr. Chau as someone who ignored his professional responsibilities, made misrepresentations to investors, charged money for work that was not performed, had no stake in the CDOs he managed, was incompetent or reckless in carrying out his responsibilities, and violated his fiduciary duties by putting the interests of ‘Wall Street bond trading desks’ above those of his investors,” the lawsuit said.  

8. Totally irrelevant video - I've avoided the Charlie Sheen mess until now. But this video with the animated rabbits is sort of fun.

If only because I'm used to the rabbits talking about monetary policy. Instead the rabbit say: "There's a new sheriff in town and I have an army of high priest assassin warlocks..."

9. Totally irrelevant video - Tom Hanks and his daughter are big on the toddler pageant circuit in the United States, it seems.

A very clever piece of satire on America. HT my wife, who spends a lot of time immersed in the way Middle America thinks.

10. Totally irrelevant video - The Onion with an oldie but a goodie. Al Qaeda disputes the latest conspiracy theories around the 9/11 attacks. HT Troy via email.