sign up log in
Want to go ad-free? Find out how, here.

Monday's Top 10 with NZ Mint: Here comes a Robin Hood tax; China's version of subprime; Gen X v.grumpy about boomers; Real estate agents dumping vendors; Dilbert

Monday's Top 10 with NZ Mint: Here comes a Robin Hood tax; China's version of subprime; Gen X v.grumpy about boomers; Real estate agents dumping vendors; Dilbert

Here's my Top 10 links from around the Internet at 12.30 pm 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.

Today's number 11 video is a cracker for all those who've sat through boring economics lectures.

1. A few more steps closer - The idea of a financial transaction tax has been bubbling away for a while. The so-called Robin Hood or Tobin Tax would impose a very small (say 0.25%) tax on every foreign exchange or financial transaction, including those on bonds and shares.

In the last week France and Germany have begun pushing very seriously for one, even if it is only in the Eurozone.

Until now everyone assumed such a tax would be a non-starter because all the major players have to be involved or the trade would simply migrate to an untaxed area.

But over the last week Denmark voted in a centre-left government that is keen on the idea. And the French and Germans are now saying they'll do one, even if it is only for the eurozone.

The key players are Britain, which has the largest financial transactions centre in the world, and the United States.

Both Britain and the United States are opposed.

But the tide of public opinion and fiscal reality is turning. Such a tax would help skim some of the revenues away from the banks and reduce activity that most now see as damaging. It would also generate revenues to help pay for all the bank bailouts in the past.

Here's Bloomberg on the latest talk of a euro area financial transactions tax:

“If it's impossible at the worldwide level, we need to organize that in the European Union and at least in the euro zone,” Belgian Finance Minister Didier Reynders said after meeting his EU counterparts today in Wroclaw, Poland. Such a tax would be set at a lower rate than one applied globally, he said.

“A tax on financial transactions should at least apply to the whole euro zone,” said Elena Salgado, Spain's finance minister.

The European Commission, the 27-nation EU's executive arm in Brussels, said in August it will present proposals for an EU financial-transactions tax, reversing an earlier position that such a measure would be unworkable without global support. It said it will unveil its plans in early October.

2. 'Our version of subprime' - Ambrose Evans Pritchard reports for The Telegraph from Dalian in China about the credit bubble blowing up inside China and the real problems with inflation there.

Cheng Siwei, head of Beijing's International Finance Forum and a former deputy speaker of the People's Congress, said interest rate rises and credit curbs to cool overheating were inflicting real pain on thousands of companies used by local party bosses to fund the construction boom.

"The tightening policy is creating a lot of difficulties for local governments trying to repay debt, and is causing defaults," he told a meeting at the World Economic Forum in Dalian. "Our version of subprime in the US is lending to local authorities and the government is taking this very seriously."

Local governments have created more than 6,000 arms-length companies to circumvent restrictions on bond issuance, creating a huge patronage machine for party bosses that has largely escaped central control.

The audit office said the loans have reached $1.7 trillion (£1 trillion). While some of the money has been used to finance much-needed investments in water systems and roads, a large part has fuelled unbridled construction with a dubious rate of return. The local governments depend on land sales for 40pc of their revenue so the process has become incestuous and self-feeding. Such reliance on property sales revenues has greatly aggravated the post-bubble crisis in Ireland.

3. Grumpy Generation X - Bloomberg reports on research by the US Centre for Work Life Policy on how Generation X feel about the world and baby-boomers in particular. They're feeling debt-ridden and blocked by baby boomers who won't stop working.

Many began their careers as companies started cutting back on pensions and health care benefits, and while people in Generation X are more educated and more diverse than boomers, they have had “no welcome in the economy,” says Neil Howe, a demographer and co-author of six books on generations in the U.S., including 2010’s “Millennials in the Workplace.”

Even those who aren’t stalled at work can feel pressured by the lingering effects of the worst economic slump in seven decades on a generation that has had rotten timing.

“You look at our generation and we’re on the cusp of financial disaster, and it’s the first time that the American dream isn’t what we all thought it was,” says Bryce Pickering, who has worked atCitigroup Inc. (C) in New York for 10 years and, at 32, is among its youngest managing directors.

“A lot of my friends have been caught up in a bad cycle of graduating at the wrong time, starting in a field that blew up, deciding to go back to school and getting into debt to do that, buying a house that’s now worth half what they bought it for.”

4. America's drug problem - The LA Times reports there were more deaths from narcotic and prescription drug overdoses than car accidents in America in 2009.

Drugs exceeded motor vehicle accidents as a cause of death in 2009, killing at least 37,485 people nationwide, according to preliminary data from the U.S. Centers for Disease Control and Prevention.

While most major causes of preventable death are declining, drugs are an exception. The death toll has doubled in the last decade, now claiming a life every 14 minutes. By contrast, traffic accidents have been dropping for decades because of huge investments in auto safety.

Public health experts have used the comparison to draw attention to the nation's growing prescription drug problem, which they characterize as an epidemic. This is the first time that drugs have accounted for more fatalities than traffic accidents since the government started tracking drug-induced deaths in 1979. Fueling the surge in deaths are prescription pain and anxiety drugs that are potent, highly addictive and especially dangerous when combined with one another or with other drugs or alcohol. Among the most commonly abused are OxyContin, Vicodin, Xanax and Soma. One relative newcomer to the scene is Fentanyl, a painkiller that comes in the form of patches and lollipops and is 100 times more powerful than morphine.

5. Russian TV looks like fun - The Daily Mail reports on how a debate about the financial crisis between a couple of klepocrat billionaires on Russian television turned violent. If only our Double-shot interviews were this good.

Of course, the puncher was a former KGB agent. Seems to be a requirement to be really rich in Russia...

6. When the agents dump the vendors - Melbourne's Herald Sun reports on how some real estate agents are dumping unrealistic venders who won't cut their prices.

Is this happening here?

Barry Plant managing director James Hatzimoisis said there came a time in the sale process when agents had to make a commercial decision and drop vendors demanding substantially more than the market was willing to pay.

"There are always a percentage of vendors on the market who will only sell if they get their price," he said. "There comes a time when you have to make a commercial decision and tell them, 'I don't think I am going to be able to sell your house at that price, so it's best we go our separate ways'."

7. A 'Killer Wave' chart - I'm no chartist, but this one from Societe Generale's uber-bear Albert Edwards is interesting. It suggests a 40% fall in the S&P 500 is imminent.

9. The problem with Germany - Ryan Avent from The Economist writes about how the Germans seem determined to shoot themselves in foot and then the head by pushing Greece out of the eurozone.

I've already mused that maybe the euro crisis is primarily about negotiation over the distribution of the costs of saving the currency area, or that maybe it's about figuring out which euro zone membership club is consistent with the political will to keep itself together. There's still another possibility, however. Maybe core economies have convinced themselves that Greece's economy has fundamental weaknesses that are dooming rescue efforts and undermining confidence, such that if the euro zone ejects Greece all problems will be fixed. That would be a dangerous mistake to make; A Greek departure would have serious ramifications across the euro zone, and it would not solve the inherent weakness of the currency area. The situation would almost certainly deteriorate, unless a Greek departure were combined with a major initiative to shore up the rest of the euro zone itself, which obviously wouldn't be forthcoming in a Europe convinced that the big problem is Greece. 

I've been a little uncomfortable with the idea that a Greek departure would represent a "Lehman moment", but that it might be, in the sense that euro powers could remain blind to their actual predicament until markets rattle them into awareness.

10. Future-proofing the nation - There's a new (to me at least) mockumentary in Australia on politics. A bit like Yes Minister with an Australian accent. The same guys that did Frontline. HT Eric Crampton.

"I like infrastructure, I just don't like specifics..."

"This is too grand a vision to be bogged down in details. Forget the details. Smell the paper..."

11. Totally hilarious video about the 10 principles of economics.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

43 Comments

Useful piece over here from Gordon Campbell at Werewolf on SOE sales

http://werewolf.co.nz/2011/09/ten-myths-about-asset-sales/

cheers

Bernard

Up
0

nice to see you used the Russian T.V. piece...I negleted to mention the loudmouth P.I. Millionare in the middle (the punchee) had just got through saying he'd like to shove his fist in their ( the puncher and smug one's)mouths .

 Now that's how you pop a property bubble..!

Up
0

Christov cheers. nice one. thanks for the heads up on the punch up

Bernard

Up
0

Great piece about the stupidity of SOE sales.

National will never, ever get a vote from me at any pont  in the future if they go through with it.

Up
0

That would have to be the best article I've read arguing against the SOE sales.

How do we get this to the average punter though so that they at least think twice about it?

Does it matter - I would't be suprised if 80% of National voters disagreed with the SOE sales and still vote for them anyway.

Up
0

Any chance of someone who 'understands'   the SOE sales replying,  point by point  to Mr Campbell's article?  Mr English, please at least try... Add some better reasons if you like.

Maybe it's just the backstop bargaining chip to get the Green's 'confidence and supply' ?

Trust...

Up
0

Great article on the SOE sales, crystalized a lot of my thinking. 

You've got to wonder if JK & co would be pushing this mad plan (and claiming a mandate) if they were behind in the polls. I don't think so - they know bloody well that most people are against it.

Why not run a referendum on it in conjunction with the general election?

And another thing, do they really believe that these so called mum and dad investors are going to be better stewards of these large companies than they are themselves?

Why are National pushing this onto us? There is so little prospect of any potential upside that you've got to wonder at the real reason. 

Up
0

A great piece IMHO......think it sums up very well how I see things....

"The reality is that the stock market in New Zealand has been on life support since the crash of 1987, and barely grown at all in the interim. Moreover, as some punters have already pointed out, one reason why the New Zealand share market holds relatively little appeal to investors is because it contains so many low performing companies, exhibiting few vital signs of life. As Goldman Sachs strategist Bernard Doyle pointed out to RNZ in early September, only 15 years ago the stockmarket was worth 56% of the overall economy, but is now worth less than 30 %.

Rather than re-invigorate the stock market….isn’t it (just as) likely that over time, those fine state-owned companies will be dragged down the same path of the undead ?"

I mean what's to add to this?

regards

 

Up
0

Keep an eye on these latest Chinese protests over the General's son who was driving a BMW under age and then started abusing fellow drivers...

http://www.bbc.co.uk/news/world-asia-pacific-14943347

The teenage boy, who is too young to drive legally, was behind the wheel of a BMW car with no licence plates when he found a middle-aged couple in another vehicle blocking his way in Beijing.

Li Tianyi and a second teenager, who was driving an Audi, leapt from their vehicles and, it is reported, assaulted the couple while shouting at shocked bystanders: "Don't you dare call police".

Many in China saw it as yet another example of the children of the rich and powerful acting as if they were above the law, our correspondent adds.

Up
0

And here's Jonathan Alter Bloomberg on America's lost decade. He lists the achievements of the various decades. Sort of sobering.

http://mobile.bloomberg.com/news/2011-09-16/batting-000-in-00-s-u-s-see…

In the 1910s, we expanded health and safety standards, established the Federal Reserve, and (unlike today) quickly lifted the limitations on civil liberties enacted during World War I.

In the ‘20s, we pioneered jazz, widespread radio use, motion pictures and the managerial approaches still used by modern business.

In the ‘30s, amid the Great Depression, we built much of the infrastructure we still use -- including, most likely, the roads you drove on today and the schools where you dropped off your children.

In the ‘40s, we not only emerged as the preeminent power in the world but also helped develop radar, antibiotics and nuclear energy.

In the ‘50s, we built the interstate highway system, cured polio and used the government to help people own their own homes.

In the ‘60s, we went to the moon, made great strides toward racial equality, directed federal money toward better education and opened our borders to many more non-Europeans.

In the ‘70s, we moved toward gender equality, began dramatic advances in medical research and started cleaning up the environment.

In the ‘80s, we strengthened Social Security, reformed the tax code and fixed the immigration system (at least temporarily), while peacefully winding down the Cold War.

In the ‘90s, we balanced the budget, reformed welfare and watched the Internet -- a government creation -- transform our world.

And the past 10 years? Shoes off in the airport. Bruising unemployment. Slipping from first to 12th in college graduation. Even classic loser decades, like the 1930s and 1970s, were more productive than the oughts.

Census figures released this week show that for the first time since the Great Depression median household income, adjusted for inflation, hasn’t risen at all in over a decade. More than 15 percent of Americans now live in poverty, and the income of the bottom 10th has fallen alarmingly. Even the suburban poverty rate is at its highest since the 1960s. The economist Lawrence Katz of Harvard University is now calling it the “Lost Decade.”

Up
0

This is also a sobering and detailed read from George Soros on the Euro.

He concludes Europe needs to urgently negotiate a common Treasury (ie eurozone bonds) and single government....

http://www.nybooks.com/articles/archives/2011/oct/13/does-euro-have-fut…

Once the principle of setting up a European Treasury is agreed upon, the European Council could authorize the ECB to step into the breach, indemnifying the ECB in advance against risks to its solvency. That is the only way to forestall a possible financial meltdown and another Great Depression.

Up
0

And just how would Georgie see this Governments make up ..? Fourth Reich...?with a William Tell Overture Anthem....

Would it not have to be a Government based on Merit and expertise......? 

 How would the P.I.G.S. gain access to the trough....?

Hand feeding is so inefficient.....

Dreamland George....absolute fantasy.

Up
0

Why do countries such as Turkey still wanna get into the EU , it's such a P.I.G.S. breakfast , swimming in grease .... don't pray for an early Christmas , turkey !

Up
0

Turkey has a motive thats not financial.

Up
0

This, a recent telegraph article confirms my fears

>>>>>

The rage and anxiety over this loss of national self-determination are already taking sinister forms in the rise of aggressively nationalist parties and neo-fascist movements in the most unlikely “liberal” countries. Add to that the fears of those recent EU member states – the former Warsaw Pact countries – which still look anxiously to the East toward a rampant Russia. Here is a recipe for real conflict both within and between the countries of Europe. Is it beyond the bounds of imagination that we might see the Muslim minorities become the Jews of the 21st century?
 

http://www.telegraph.co.uk/comment/columnists/janetdaley/8770696/The-European-dream-lies-in-ruins.html#dsq-content
Up
0

Extract from the most popular comment (of 974), recommended by 352 readers:

When the whole rotten, stinking, corrupt, edifice of the EUSSR finally comes crashing to the deck, I want all those blasted europhiles (in and out of government) arraigned on charges of High Treason.

With a reply recommended by 202 readers: I doubt that there are politicians who think it is a good thing,they favour it purely to line their own pockets.
Like you,I want them all on treason charges and that includes those no longer there but who are still on its benefits,like the Kinnocks and Mr Mandelson.

Suggestion to our politicians: Take note.

Up
0

he goes on, >>>>

It is, yet another ruddy attempt to 'unite' Europe.  I just wish to God they would stop picking at this scab and just leave it well alone.  Why is it that they have as an 'elite', never managed to learn the lessons of history.  How many times over the centuries have 'they' tried to unite Europe and got it wrong yet again?  Every bloody time its been tried its always caused a war, or a war has been started to create it.

We, in this island are in for a very rough ride, worse than many think, it is going to be horrible; of that there is no doubt.

Up
0

And here's trickle down economics at work in the new normal...Luxury car sales going gangbusters...

http://mobile.bloomberg.com/news/2011-09-14/ferrari-proves-recession-pr…

Sales of the main high-end European luxury brands -- Maserati, Lamborghini, Ferrari, Bentley, Rolls-Royce and Aston Martin -- will rise 19 percent this year to 28,090 vehicles, and gain another 13 percent in 2012, according to a forecast from industry analyst IHS Automotive.

“The rich have gotten richer and the number of millionaires in emerging countries is really growing so the demographic trend is very positive” for the ultra-luxury carmakers, said Erich Hauser, a London-based Credit Suisse automotive analyst. “Things would have to get very nasty before they face a problem.”

Up
0

And luxury car makers employ?

And luxury car service centres employ?

It not trickle down via tax & redistribution ya know.

Up
0

What generates more economic activity......one billionaire buying a million dollar car, or 33 wage earners buying a $30,000 car each?

Up
0

Ambrose is good here again on China. Why is John Key so confident on China?

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8772225/Can-China-escape-as-worlds-debt-crisis-reaches-Act-III.html

Zhu Min, the IMF's deupty chief and a former Chinese official, said loans had jumped from 100pc of GDP before the crisis to around 200pc today -- if you include off-books financing from letters of credits, trusts, and such like.

To put this in perspective, a study by Fitch Ratings found that credit in America rose by just 42pc of GDP in the five-year period before the housing bubble popped. It rose by 45pc of GDP in Japan from before the Nikkei cracked in 1990, and 47pc before the Korean crisis in 1998.

Home construction is running at 10pc of GDP, about the same as Spain in the`burbuja' of late 2006, and much higher than in either Korea or Japan at any point during their catch-up Tiger phases.

China has not abolished economic gravity. Its policy of yuan suppression against the dollar and euro has been impossible to sterilize, leading to an imported credit bubble of epic proportions. Its export-led strategy has left it with a deformed economy that relies on perma-demand from exhausted debtors in America and Europe.

As China premier Wen Jiabao said in Dalian, "China's development is not yet balanced, coordinated and sustainable." The next five-year plan is a breakneck switch towards a domestic growth. Bravo, but awfully late.

China is acutely vulnerable to the second leg of depression in the West -- should that occur -- and cannot conjure a second rabbit out of the hat. This will not stop the rise of China as the great force of 21st Century, any more than America's jolting upset in 1930 stopped US ascendancy.

Up
0

yes but the last quote above is key:

This will not stop the rise of China as the great force of 21st Century, any more than America's jolting upset in 1930 stopped US ascendancy.

So maybe some shorter term bumps, but longer term they are well placed to ascend

Up
0

I dont think so Matt - you would need the resources of an entirely new second planet to lift half the Chinese population up to a Western standard of living.

China will hit the wall of resource depletion just like everyone else.

Up
0

There is no other place to turn....I dont think JK is confident on China, I think he's praying China will be OK because everything else is so fsked....

regards

Up
0

Bauman's Ten Translations of economic principals an excellent listen...ta...

Up
0

Another piece on looming debt problems in China:

http://www.forbes.com/sites/gordonchang/2011/09/18/how-can-china-save-e…

Up
0
Up
0

What happened to number 8?  (I am an accountant!)

Up
0

Through a process of creative accounting , " 8 " became the new " 9 " , 9 the new ten , and ten became eleven ....

..... that's known as " inflation " ..... and Bernard did warn that it was on the cards !

Up
0

Not the sort of thing you announce to all the ladies TrevorS...maybe ( I am a Finance Wizard)

it's a well known drop in site for seeing who's about...to finance the Victorias Secret credit card.

Up
0

TrevorS

I'm messing with your head...

Actually. Just a dumb mistake. Go for cockup over conspiracy every time.

Still got 10 links. Just not labeled as such...

cheers

Bernard

Up
0
Up
0
Up
0

 uuuffff..... Christov – yours are very lively – accountants ???

Up
0

Just the way they really are Walter......when these boys let the comb-over down ,they really come to party......uhuh..uhuh..!

Up
0

One journalists take on unearned wealth and the current income gap.  These are the last two of a 9 part series and all worthwhile reading IMO.

 http://www.renegadeeconomist.com/blog/time-for-an-upgrade.html

 http://www.renegadeeconomist.com/blog/where-from-here.html

Up
0

Read all the commentaries, then found this... Mr Geithner tells the Europeans....  

Up
0

7) I watched that coppock curve signal the end of the recession, by then everyone knew it was over.  Few think this is the start of another leg down.

Up
0

#7 'Killer Wave' with S&P500 down 40% will mean the NZ$ will make below US60c.

How long? Maybe 12 months out.

NZ$ always follows the US stock market. Just look at any monthly chart of the cross and the peaks and hollows are uncanny.

Up
0

The managed funds industry in the UK reports that more money has been taken out of sharemarket investment funds in the 4 months since April of this year , than in the 4 months immediately after the Lehman Brothers collapse .

.. the Dow Jones Index fell 25 % in those 4 months after Lehman collapsed , not so far removed from the current sharemarket leg down . It then tracked sideways ( over-all ) for the following 4 months , but rose 18 % from that point , in the next 4 months , leading up to the first anniversary of Lehman's demise . 

The Dow ended that tortuous 12 month period just 11 % down from where it had began .

[ .. inspired by Brent Sheather's article : " Don't panic when those stocks take a plunge  " , from the NZ Herald 17 / 09 / 2011 .. ]

Up
0

And New York Mayor Mike Bloomberg is worried about angry youth rioting in America...

http://www.thestatecolumn.com/articles/michael-bloomberg-to-congress-time-to-expect-riots/

Up
0

Casino banking does more damage then riots.

The language of morality comes easily to David Cameron when he's talking about young people breaking into Comet, but it's different when financial institutions encourage reckless behaviour. How many reminders does the PM need that the culture of risk among City traders is one of our most urgent moral problems? Riots destroy property and lives in a limited area, but this white-collar vandalism threatens entire financial systems.

http://www.independent.co.uk/opinion/commentators/joan-smith/joan-smith-casino-banking-does-more-damage-than-riots-2356491.html

Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail.

Up
0