Thursday's Top 10 with NZ Mint: Global economy slowing as baby-boomers go into their shells; 6 years for National Finance trial; World turning Japanese; Dilbert

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

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

I'll pop the extras into the comment stream. See all previous Top 10s here.

The Turning Japanese theme is really gathering momentum now.

1. It's the baby-boomers' fault - Well, not deliberately. Bloomberg reports on the idea that as baby-boomers age they spend relatively less of their income and leave the workforce, both of which slow economies.

It argues that this demographic drag on the US economy is one of the reasons for the very slow recovery.

It makes sense.

It also helps explain why stock markets have been so weak. Both fewer buyers of stocks and fewer buyers of their products.

And it helps explain why bond yields just keep falling despite some inflationary risks.

As baby-boomers age they tend to buy bonds and sell stocks.

Women and baby boomers entering the American workforce helped to supercharge expansions in 1975 and 1983 by filling an increasing number of jobs and purchasing more goods and services. Now as the share of women with jobs falls and older Americans age into retirement, the shrinking -- or, at best, slowly growing -- workforce will weaken economic activity for the next two decades.

The demographic changes may be the biggest and least- appreciated reason why the two-year recovery has slowed, because the rate of growth for labor and capital is “the most important determinant” of economic expansion, said James Paulsen, chief investment strategist for Wells Capital Management in Minneapolis.

More retirees mean slower household formation, reduced consumer spending and downward pressure on equity prices as retirement cuts people’s purchasing power, according to John Lonski, chief economist at Moody’s Capital Markets Group in New York, and Gus Faucher, director of macroeconomics at Moody’s Analytics Inc. in West Chester, Pennsylvania.

Household purchases rose at an average annual pace of 3.2 percent in the quarter century that began in 1972, when the oldest of the boomers turned 26, and averaged 2.8 percent since 1996, when they turned 50, according to Lonski. He forecasts the decline will continue, to between 2 percent and 2.5 percent a year, as growth slows for Americans aged 15 to 49.

2, Middle classes on the streets - The Guardian reports on a new study showing the recession and government cuts to welfare will make some British middle class people homeless.

The report by the homelessness charity Crisis, seen by the Guardian, says there is a direct link between the downturn and rising homelessness as cuts to services and draconian changes to benefits shred the traditional welfare safety net.

In the 120-page study, co-authored by academics at the University of York and Heriot-Watt University, Crisis highlights figures released over the summer that show councils have reported 44,160 people accepted as homeless and placed in social housing, an increase of 10% on the previous year and the first increase in almost a decade.

3. Justice delayed is justice denied - Sometimes I quite like the Chinese approach to running the economy. They tend not to muck around with those accused of fraud...

Yet here we take our time. Maria Slade reports at Stuff that the trial of National Finance 2000 director Allan Ludlow has been delayed until July 2012 after Ludlow appealed a decision over legal aid.

That is 6 years after the finance company collapsed.

That is longer than World War II.

That's longer than it took for National Finance to grow into something substantial.

No wonder Mums and Dads are furious with the way finance company shenanigans have been (not) handled.

4. When are New Zealand's rich going to ask for higher taxes? - The New York Times reports France's rich have started doing just that, a few weeks after Warren Buffett's call for higher taxes.

Maurice Lévy, chairman and chief executive of the French advertising firm Publicis, on Tuesday became the latest European business leader to ask for higher taxes on top earners,writing in The Financial Times that it was “only fair that the most privileged members of our society should take up a heavier share of this national burden.”

“I am not a masochist; I do not love taxes,” wrote Mr. Lévy, who is also president of a French association of private enterprises. “But right now this is important and just.”

5. Loaded...with debt - FTAlphaville points out Europe's banks went on a lending spree to companies and households from 1999 to 2008, but since then have been doing most lending to governments.

Some €460bn of the €520bn or so bonds added by eurozone financials in recent years have come in the form of government debt. Lending to governments, meanwhile, accounted for a third of the €510bn expansion in lending to non-financial eurozone entities.

In short, while government bonds used to account for just 17 per cent of eurozone banks’ total assets between 2003 and 2008, after the crisis they now account for about 41 per cent. Loans to governments, meanwhile, have increased from 7 per cent of allocations to 18 per cent.

Just like everywhere else in the world, Europe’s banks have been pushed into buying ‘super-safe’ government debt as part of new rules on regulatory capital or liquidity ratios.

6. Rising tensions over bank reform - The governing coalition in Britain is seething over the touchy issue of bank reform. The Liberal Democrats want the ringfencing of retail banks faster. The Tories agree with the bankers' that this should be delayed.

Not confidence inspiring.

Here's the Telegraph:

The row is over the timing of implementing the recommendations of the Independent Commission on Banking (ICB).

The ICB published its interim report in April in which it put forward its ideas on how banks should ring-fence their retail banking arms and their City-based investment banking operations.

Adopting the so-called “subsidiarised” model would mean in the event of a future crisis the authorities would be able to seize the retail arm of a troubled institution, protecting ordinary consumers’ accounts from losses run up by City bankers.

George Osborne, the Chancellor, has publicly backed the ring-fencing plan, but, along with David Cameron, is said to favour the measures being implemented over several years, as the banks want.

The Lib Dems originally backed the full separation of retail and investment banking, a policy that would split up major banks including RBS and HSBC.

The party has now accepted the ring-fence plan instead, but Vince Cable, the Business Secretary, is said to support immediate implementation, with the ring-fencing rules added to the Financial Services Bill currently before Parliament.

7. Turning Japanese, I think we're turning Japanese, I really think so - Renowned FT columnist Martin Wolf has returned from his summer holiday in a sober mood.

First, the debt-encumbered economies of the high-income countries remain extremely fragile; second, investors have next to no confidence in the ability of policymakers to resolve the difficulties; and, third, in a time of high anxiety, investors prefer what are seen as the least risky assets, namely, the bonds of the most highly rated governments, regardless of their defects, together with gold. Those who fear deflation buy bonds; those who fear inflation buy gold; those who cannot decide buy both. But few investors or corporate managers wish to take on any longer-term investment risks.

Welcome, then, to what Carmen Reinhart, senior fellow at the Peterson Institute for International Economics in Washington, and Harvard’s Kenneth Rogoff call “the second great contraction” (the Great Depression of the 1930s being the first). Those less apocalyptic might call it the “Japanese disease”.

In the long journey to becoming ever more like Japan, the yields on 10-year US and German government bonds are now down to where Japan’s had fallen in October 1997, at close to 2 per cent (see chart). Does deflation lie ahead in these countries, too? One big recession could surely bring about just that. That seems to me to be a more plausible danger than the hyperinflation that those fixated on fiscal deficits and central bank balance sheet find so terrifying.

8. Do they not know how this looks? - Reuters reports some US corporations spend more on their CEOs than they pay in taxes. Others spend more on lobbying than they spend on taxes.

Twenty-five of the 100 highest-paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study by a Washington think tank said on Wednesday.

At a time when lawmakers are facing tough choices in a quest to slash the national debt, the Institute for Policy Studies, a left-leaning group, said it also found many of the companies spent more on lobbying than they did on taxes. Compensation for the 25 CEOs with pay surpassing corporate taxes averaged $16.7 million, according to the study, compared with a $10.8 million average for S&P 500 CEOs.

The study found the gap between CEO and worker pay widened last year to 325 times the average worker's pay in 2010 from 263 times in 2009.

9. The US Debt Crisis in chart form - Thanks to Business Insider. Click for a bigger version

10. Totally the funniest video ever about comic sans.

New Study Explains Why Comic Sans Font So Hilarious (Season 1: Ep 8 on IFC)