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Friday's Top 10 with NZ Mint: Don't mention the Weimar Republic (or the war); Fed to test how US banks would handle depression scenario; The Economist sees NZ housing 25% overvalued; Clarke and Dawe

Posted in Opinion

Here's my Top 10 links from around the Internet at 5 pm in association with NZ Mint.

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

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

Steve Keen is revolutionary at #9. John Key would love what he has to say...

1. Don't mention the W word - That's Weimar, not War.

After the First World War Germany had an extremely volatile period of alleged democracy that allowed money printing and hyperinflation.

We know what happened after that.

Related Topics

So that Weimar Republic period is something people are looking at closely again.

I don't think hyper inflation is likely any time soon.

You often need more than just money printing to make it happen.

Some sort of social disruption or natural disaster often proves the catalyst. The photo below is of Angela Merkel and Nicholas Sarkozy pointing to new Italian (unelected) Prime Minister Mario Monti (via AFP and FTAlphaville)

Here's PFP Wealth Management's Tim Price quoted via Zerohedge on the W word.

Those who have studied the Weimar experience suggest that the point of no return in the inflationary process did not come about through currency depreciation alone, nor from the growing velocity of money in circulation (as German savers tried desperately to spend their fast-eroding paper wealth), nor from the balance of payments deficit.

In fact it came from a devaluation of political principles. Yale Economist Robert Shiller has suggested that one of the reasons for equity investors’ irrational exuberance in the 1990s (it was Shiller, and not Greenspan, who coined the phrase) was the fall of the Berlin Wall- which seemed to conclusively display the superiority of western free market capitalism over the discredited Soviet model.

Now the superiority of the western model is so apparent that we have cash-strapped eurocrats looking to raise money from the Communist leaders of a country, most of whose citizens live in abject poverty. This writer is proud to call himself British; he would be disgusted to be regarded as European.

2. Stress test - Reuters reports the US Federal Reserve has asked US banks to imagine what would happen if Europe's financial system imploded, sparking a depression that pushed unemployment to 13%, halved the Dow and shrank US GDP by 8% as part of new stress tests.

Comprendez vous?

Here's a nervous banking analyst:

Richard Bove, a banking analyst at Rochdale Securities, says it is irresponsible to put 31 U.S. banks through a worst-case scenario. A stress test this tough risks forcing banks to prepare for the worst, possibly creating what regulators fear.

"They are going to dump loans, they are going to stop lending and they are going to put us into the recession that the government wants to know how they will function within. "This is a really stupid stress test," Bove told Reuters Insider Television.

3. When will Merkel cave? - This is the question everyone in a bank in Europe is asking? When will Germany finally relent and allow the European Central Bank to start printing money to buy toxic sovereign bonds.

Not yet.

But it can't be far away.

Here's Bloomberg on the mess. It uses the Titanic as a metaphor.

Bunds are losing the haven status they share with Treasuries as Germany rules out common bond sales to solve the debt crisis, and argues against the European Central Bank becoming the lender of last resort. As recently as Nov. 10, bunds yielded 28 basis points less than the American debt. Ten- year yields advanced to a four-week high of 2.26 percent today in London.

“The Titanic and the single currency cannot continue in its current form,” said Stuart Thomson, who helps oversee about $121 billion at Ignis Asset Management in Glasgow. “Safety lies in another ship, RMS Political Union, which is just over the horizon. It remains to be seen whether the third-class passengers of the peripheral economies and the second-class passengers of the semi-core will be willing to decamp from their current luxury liner to this cramped tramp steamer.”

4. 'Worse than Lehman' - This Reuters piece on the mood in London's financial markets is grim. The bankers realise the game is nearly up.

Hard to feel that sorry for them.

One senior European banker, who declined to be named, said many of his colleagues had been "crisis-deniers" and were given false hope of a rapid return to big bonuses and job security by the significant economic rally in 2009.

"What they are realizing now, and it's even more brutal for them, is that this is in fact the new normal, that the industry is going back to what it was in the early 2000s," the banker said, adding that the recent round of layoffs had cut much deeper than the last, because no bank was hiring.

Money men once cynically described as the "Masters of the Universe" are feeling powerless to influence, much less prevent a potential unraveling of Europe's monetary union -- a calamity that would define their generation, possibly even the century.

"You have to think that eventually the penny will drop and they'll have to do something. But...quite sensible people were sitting around in 1914 and saying Europe's not going to tear itself apart over some arch duke being shot by a Serbian fanatic, is it?," said Rob Burgeman, a director at British investment manager Brewin Dolphin.

5. Why does she keep saying 'Nein!'? - Der Spiegel tries to explain in this piece why Angela Merkel is so implacably opposed to creating euro zone bonds and allowing the European Central Bank to print money to buy toxic euro debt.

The public see the Southern Europeans as lazy and the EU apologists for Italy and Spain and Greece as 'mercenaries for Dolce Vita countries.'

Weimar is mentioned.

Governments across the Continent are clamoring for a solution. And analysts around the world have come to the conclusion that the spread of Europe's ongoing debt crisis can only be halted by implementing one -- or both -- of two methods: Either debt must be pooled in the form of euro bonds, or the European Central Bank must become the lender of last resort by buying up massive quantities of sovereign bonds from indebted euro-zone members.

Virtually all euro-zone members have thrown their support behind one of those two antidotes. Germany, though, has firmly opposed both. Berlin fears that massive ECB bond purchases could significantly drive up inflation (indeed, it evokes fears of 1920s hyperinflation in the country) and sacrifice the independence of the Frankfurt institution, which was modelled after the German central bank, the Bundesbank, that for decades served as guardian of the highly stable deutsche mark.

 A survey performed by Emnid in August found that fully 76 percent of Germans oppose euro bonds, with only 15 percent in favor.

Furthermore, Merkel isn't the only one who has made it abundantly clear that euro bonds are not high on Berlin's wish list. On Wednesday, Alexander Dobrindt, general secretary of the Christian Social Union (CSU) -- the Bavarian sister party to Merkel's Christian Democrats (CDU) -- blasted Barroso, telling Bild that the Commission president had "made himself the mercenary of Dolce Vita countries who want to get access to our tax money."

Merkel's junior coalition partner, the Free Democrats, are no less opposed. Party head Philipp Rösler on Thursday said clearly: "We don't want euro bonds." Several others in his party have been even more vehement in recent weeks.

7. Hold on to your hats - The SMH reports Outgoing Commonwealth Bank of Australia CEO Ralph Norris has warned a second round of the Global Financial Crisis is imminent.

Norris said global money markets ''effectively froze'' this week as Germany failed to sell the entire stock of €6 billion ($8.2 billion) worth of long-term bonds.

''This has potential to be significantly worse than the Lehman Brothers collapse and the subprime crisis because now we are talking about nation states,'' Mr Norris told BusinessDay.

''If you have a situation like you had today, where markets had effectively frozen, then it doesn't matter how good your name is, you are not going to be able to access markets,'' Mr Norris said. ''As of today, no banks could access these markets.'"

8. Brilliant graphics - The Economist has updated its excellent interactive graphic of house prices globally. New Zealand is included and it shows we're still wildly over valued vs the rest of the world. Sigh. But prices in central Auckland are up 16% from a year ago...

Based on the average of the two measures, home prices are overvalued by about 25% or more in Australia, Belgium, Canada, France, New Zealand, Britain, the Netherlands, Spain and Sweden (see table). Indeed, in the first four of those countries housing looks more overvalued than it was in America at the peak of its bubble.

American prices fell sharply, even though homes were less overvalued than they were in many other countries, because high-risk mortgages and a surge in unemployment caused distressed sales. In most other countries, lenders avoided the worst excesses of subprime lending, and unemployment rose by less, so there were fewer forced sales dragging prices down. America is also unusual in having non-recourse mortgages that let borrowers walk away with no liability.

An optimist could therefore argue that our gauges overstate the extent to which house prices are overvalued, and that if markets are only a bit too expensive they can adjust gradually without a sharp fall. It is important to remember, however, that lower interest rates and rising populations were used to justify higher prices in America and Ireland before their bubbles burst so spectacularly.

Another concern is that Australia, Britain, Canada, the Netherlands, New Zealand, Spain and Sweden all have even higher household-debt burdens in relation to income than America did at the peak of its bubble. Overvalued prices and large debts leave households vulnerable to a rise in unemployment or higher mortgage rates. A credit crunch or recession could cause house prices to tumble in many more countries.

9. Steve Keen says bankrupt the banks - Renegade Australian economist Steve Keen says in this BBC Hardtalk interview the world is in a Great Depression and there is one Great Solution.

Economist Steve Keen is one of the few economists to have predicted the global financial crisis and now he says we are already in a Great Depression. He says the way to escape it is to bankrupt the banks, nationalise the financial system and pay off people's debt.

He admits what he is advocating is radical but says it is time governments gave money to debtors to pay down debt instead of to creditors such as banks who have held onto it.

10. Totally Clarke and Dawe - Qantas CEO Alan Joyce says he deeply regrets grounding the airline. And there is a large block of concrete hovering over Brian Dawe's head.

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?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

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.

53 Comments

Well, with the rats in the

Well, with the rats in the roof, mould on the ceiling and drafts in the walls this rental sure feels over valued.

Any plans to get a mobile version of interest.co.nz up and running?

You not able to read it on a

You not able to read it on a phone?

cheers

B ernard

I can read it, but its not

I can read it, but its not optimal, requiring lots of scaling and adjusting to get a good view of say, this comments column. Not a good user experience.

Look at the way the NZ Herald, or Stuff adjust their content to flow into a single column when browsing on a smart phone. Much simpler to use on a smart phone.

Not sure what your device metrics are as to whether or not its a good business case to make any changes, but it would certainly make this site much more useable. Some simple media queries in you CSS will sort it out.

I agree noponies... it sucks

I agree noponies... it sucks bunches of my data... So yes please do BH.

Good points guys. Plenty of

Good points guys.

Plenty of food for thought and work.

cheers

Bernard

#1 & #8 - For those who need

#1 & #8 - For those who need innoculation against the fear of hyperinflation, see article and comment stream here. Drill the Naked Capitalism link in one of my comments:

http://www.changenz.co.nz/posts/money-and-inflation.aspx

 

Interesting article in the

Interesting article in the naked capitilist.

I do not agree with the authors view about productive capacity.  For hyperinflation to take off all there needs to happen is a loss in confidence in the currency and a willingness of whoever to print more money.

In the same way there is a flight to the dollar when markets get gittery a flight from the dollar can happen when confidence is lost in the currency.

Imagine if you thought your US$ assets were likely to be worth 20%-30% less in a year than what they are worth now you would get out of them now and buy something that wouldn't lose value.  As everyone started to work it out a run would occur.

In the mean time govt spending would have to increase to account for the loss in value of the dollar and to pay for the same level of services, further accelllerating the decline.

All it takes is a loss of confidence in the currency, perhaps due to people understanding the debt can not possibly be paid off, fear that other countries will stop buying bonds, fear anything held in that currency will be worth substantially less at sometime in the future.

We have those conditions now, what we cant predict is human thought processes!

 

Governments have no mandate

Governments have no mandate nor responsiblity to save the banks in any way shape or form.  My taxes are not paid to bail out banks or speculators!!  I work damned hard to make a bit of money to feed the family, and pay my way.  Stuff the banks and stuff speculators.  Go broke, bust and learn to actually work for a living, instead of trying to make money from the sweat of the working man.

I get a bit fired up when

I get a bit fired up when egotistical economists try and convince me my taxes should be used to save banks and speculators.  Stuff them, they have wrecked the world, take the punishment, learn from and move on.  I'm not some whipping boy to take the pain for someone else.  When I make a bad call in my business I learn from it and move on, mistakes always cost money, and when I pay for mine, and my staff's mistakes, why should I be responsible for people I don't know, and if the deal had done well they would never ever have shared the profits with me.  In fact they would have done their best to lie, cheat and avoid paying any tax on it, happens all the time, and banks are right up there.

These scumbags would rip anyone off without blinking to make a buck, bugger giving them a bailout, from my hard honest work.

Keen is actually saying the

Keen is actually saying the (US and UK and European) banks should be allowed to go bust and then nationalised.

I don't think he wants to bail out bondholders and shareholders.

He's saying money should be printed to allow borrowers to pay out loans (after the wipeout)

cheers

Bernard

I assumed those that borrowed

I assumed those that borrowed and are unable to pay back, have not been borrowing to invest in productivity, and cashflow.  Instead they have borrowed against capital gains and unwisely.  More speculating then investing.  Either way, what responsibility of mine is it to save someone else when they fail?  Banks charge interest for a reason, it's insurance for the risk or so I'm told.  They have created an unsound business and should fail, just like the old car manufacturing plants that used to be all over NZ in the bad old days, or the meatworks, or any other business that fails.  There are a lot of speculators who borrow from the bank that are not shareholders or bondholders, and they have no right to my money.

Cheers, and thanks for the reply.

Did I misunderstand? I

Did I misunderstand? I thought he specifically didn't say that he wanted the banks nationalized and that in printing money for mortgage holders, etc., to specifically pay back the banks, it would more directly address problems at the heart of the matter: the bad loans would be paid off directly rather than giving banks money that they sit on whilst the brainwashed indebted class get to pay off their loans and keep their houses. That way, the bondholders and shareholders would be ok as well.

The only quote worth noting

The only quote worth noting from the just delivered speech by ECB executive board member José Manuel González-Páramo is the following: "We cannot completely delegate governance to financial markets. The euro area is the world’s second largest monetary area. It cannot depend solely on the opinions of ratings agencies and markets. It needs economic governance arrangements that are preventive and linear. This underscores my central point that a much more comprehensive approach to economic governance is now the priority for the euro area. And this means more economic and financial integration for the euro area, with a significant transfer of sovereignty to the EMU level over fiscal, structural and financial policies." In other words, in order to protect people from the "stupidity" of rating agencies which after years of lying have finally started telling the truth, and the market which does what it always does, and punishes those who fail, Europe must be prepared to give up "significant sovereignty" (sounds better than Anschluss) to Europe's "betters" which is another way of saying 'he who pays the piper calls the tune." And "he" in this case is, of course, Germany. In other words, courtesy of one failed monetary experiment Germany will succeed, without sheeding one drop of blood, where it failed rather historically some 70 years ago. 

Full speech here

http://www.zerohedge.com/news/behold-new-anschluss-ecbs-paramo-prepare-give-significant-sovereignty 

China seems determined to hit

China seems determined to hit the print button again:

http://www.cnbc.com//id/45431319

"My concern is that when we look at the numbers they are very reminiscent of early 2008 and that was not a good scene," said Arthur Kroeber of economics consultancy Dragonomics. He asserts that weaknesses in steel demand and construction are signs that all is not well in China.

"They see things slowing down so they will do what they can, which means all rebalancing will be kicked down the road," Kroeber said. "They are more interested in retaining growth through the channels they have."

Already, bank lending is reviving, after months of a credit crunch that starved China's private sector — the most productive in terms of jobs and taxes — forcing more and more companies to turn to underground banking and loan sharks for funds.

This week, China confirmed it is pressing ahead with a vast spending plan for so-called "strategic sectors".

And the FT is reporting the

And the FT is reporting the EU's 'Big Bazooka' bailout fund is itself failing to raise the funds it needs

Europe is well grilled bread.

Here's the FT:

A plan to boost the firepower of the eurozone’s €440bn rescue fund could deliver as little as half what the bloc’s leaders had hoped for because of a sharp deterioration in market conditions over the past month, according to several senior eurozone government officials.

http://www.google.co.nz/url?sa=t&rct=j&q=a%20plan%20to%20boost%20the%20f...

"In the absence of the gold

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.....The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

 

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

 

--Alan Greenspan, 'Gold and Economic Freedom' (1966) 

Alan Greenspan was such a

Alan Greenspan was such a retard. No wonder he was so shocked when the edifice of the financial system just about collapsed largely, because of his mishandling.

The Gold Standard was completely a "Statist" construct though the recipients of welfare were not the poor in the case of the New Deal or Johnson's Great Society, that he vehemently opposed, but wealthy robber barons who exploit market failure largely due to their capture of and abuse of the political process.

 

I admit to knowing little

I admit to knowing little about him, yet he sees value in gold, which I found suprising.

Thats because in his earlier

Thats because in his earlier days he was an Objectivist, a doubt follower of the raving loon Ayn Rand, the movement is rife with deluded gold bugs. She kicked him out after a minor theoretical dispute or something.

He describes himself as a

He describes himself as a libertarian republican....or in other words he doesnt have the balls to say he's a libertarian/objectivist at heart.....

Considering for a few years he was in effect the most powerful man in the world as he ran the US federal reseve which is the head bank of the most powerful nation on earth, reading a little on him is a must IMHO...

regards

Perhaps it was the most

Perhaps it was the most powerful nation on earth.  And that's why unfortunately WW3 is a far more likely scenario than an admission by the US that they are no longer rich nor powerful.  Lucky we're a long way from the northern hemisphere heavies I reckon.

The swift ousting of several governments/dictators recently may soon make ousting governments seem 'the thing to do' even in so called stable democracies eg, the occupy protests get bigger etc, who's next? and then?  Bang all of a sudden everthings changed.

Hyperinflation is a serious serious threat and even more so when conflicts erupt,  Buy precious metals IMHO.

He was a gold bug and

He was a gold bug and espoused theory  from that perspective....Greenspan  was a shmuck of note .

FYI from Bloomberg on the

FYI from Bloomberg on the problems with LIBOR

“The whole system is rigged,” Price says. “The banks are able to say, ‘Let’s just collude and set rates, and we have the sanction of the authorities to do it.’”

Market Manipulation

In a series of lawsuits filed in 2011 and now winding their way through courts in Europe and the U.S., investors have accused a number of banks represented on the Libor panel of distorting market prices by hiding the banks’ true borrowing costs since as early as 2007.

http://mobile.bloomberg.com/news/2011-11-23/london-banks-seen-rigging-rates-for-decades-losing-credibility-in-markets.html

It's the only way...prayer

It's the only way...prayer won't work....err...why not!

 "French appeals for Germany to sanction extra powers for the European Central Bank have been firmly rejected, despite warnings from politicians, economists and even the Vatican that it is the only way of "averting a catastrophe".

 http://www.telegraph.co.uk/finance/financialcrisis/8914163/Germany-unmoved-by-French-pleas-for-more-ECB-action.html

 

HAHA "averting a

HAHA "averting a catastrophe".  let me check the definition of avert:

  •  To turn away 
  •  To ward off (something about to happen); prevent 

Not really what would happen, I'm not going to check catastrophy.  Unlimited bond buying, well sure govts can borrow unconstrained into infinty.  They will soon be borrowing to pay interest if they are not already, they will borrow to roll over existing debt, debt will increase, the ECB can create money at no cost, the F, PIIGS will carry on living off borrowed money, the germans will continue living off wages.  Hang on if the FPIIGS don't need to work, and can live off borrowed money, so can the germans, hell so can I.  Sounds like a great way to avert a catastrophy.  Expect another bear market rally if you see that headline, followed by, yes a continuation of the bear market.  Not that stocks influence the economy, rather the economy influences stocks.

ECB's Coene says large ECB

ECB's Coene says large ECB purchases of government bonds is no solution 

http://ransquawk.com/headlines/187676 

the problem in Germany wasn't

the problem in Germany wasn't all about  inflation, it was the deflation that followed that brought Hitler to power. YOU need to do your own google this is all I could find, its late here and Im off to bed.

>>>>>

 

The Great Depression of the 1930’s originated in the United States, but also severely affected Germany. For years after the inflation, the Germans were dependent on American credit and the associated high interest rates.

The inflow of American dollars allowed the German government to pay its war reparations to other European nations, who in turn used this money to pay off the debt to the United States, which was incurred during the First World War. The Americans then loaned this money back to the Germans.

This system only worked as long as the American economy prospered. After the crash of October 1929, the inflow of money came to a halt. Unemployment started to rise and the public was becoming increasingly unhappy with the economic situation.

Foreign investors began to demand the repayment of their credits and many Germans took their money out of the country. During the summer of 1931, a number of large German banks went under.

The Reichsbank was forced to accept a reduction in the money supply, because it could not meet its standard of a gold and foreign exchange backed currency. The subsequent lack of credit brought many viable companies to ruin.

The government ordered a reduction in prices, salaries and interest rates. At the same time, other governments increased their import/export tariffs and devalued the German currency. Between 1931 and 1932, the German unemployment figure climbed to more than six million. This, along with the deflation, paved the way for Adolf Hitler’s rise to power.

Now the whole EMU is seeing

Now the whole EMU is seeing the rise of facisim.

we shouldn't let politicians

we shouldn't let politicians play with matches. Now the fire has begun how easy will it be to put out?

Waste of time and effort, got

Waste of time and effort, got marshmallows, saussies, beer, potatoes and tinfoil?

I would surmise that we  had

I would surmise that we  had our inflation period from 2000 to 2008 except AKL where it appears to have gone to 2011.  Inflation was not on wages due to globalisation and the China effect but  we  had significant inflation in the size of government and who could deny the huge asset bubble of the last 10 years. Now unable to produce enough to pay the interest bill its downhill. From here on in it gets much more interesting.

  As Keynes, wrote, once

 

As Keynes, wrote, once banks realize that deflation has significantly impaired the value of their collateral:

...they become particularly anxious that the remainder of their assets should be as liquid and as free from risk as it is possible to make them. This reacts in all sorts of silent and unobserved ways on new enterprise. for it means that banks are less willing than they would normally be to finance any project...

 

Actually, the answer to "was inflation a problem" is negative in both
cases. The 1930s in both countries were not characterised by
inflation, but rather by deflation and rapid sinking of prices
("Inflation is where the aggregate level of prices goes up and
deflation where the aggregate level of prices goes down", [6]). Prices
"fell 25%, 30%, 30%, and 40% in the UK, Germany, the US, and France
respectively from 1929 to 1933. These were the four largest economies
in the world at that time."(1)

 

Frequency of Deflation in the Historical Record

As noted above, inflation has been an all too common occurrence since 1945. The table below shows that deflation has become a much less common feature of the macroeconomic landscape. One has to go back to the 1930s before encountering successive years of deflation.3 Indeed, for the countries listed below, the number of times prices fell year over year for two years or more is a relatively small number. Hence, deflation is a fairly unusual event.

Table 2: Episodes of Deflation from the mid-1800s to 1945

Country
(year record begins)

Number of
occurrences of
deflation
until 1945

Years of persistent deflation/Crisis

Austria (1915)

1

 

Australia (1862)

5

BC: 1893
CC: 1933-33

Belgium (1851)

9

1892-96
BC, CC: 1924-26
1931-35, BC: 1931
BC,CC: 1934-35

Canada (1914)

2

CC: 1891,1893, 1908, 1921, 1929-31
1930-33

Denmark (1851)

9

1882-86, BC: 1885, 1892-96, BC: 1907-08
1921-32, BC, CC: 1921-22, 1931-32

Finland (1915)

1

BC: 1900,1921 1929-34, BC, CC: 1931-32

France (1851)

4

CC, BC: 1888-89, 1907, 1923, 1926
1932-35, BC: 1930-32

Germany (1851)

8

1892-96, BC, CC:1893, 1901,1907
1930-33, BC, CC: 1931, 1934

Ireland (1923)

2

1930-33

Italy (1862)

6

1881-84, BC, CC: 1891, 1893-94, 1907-08, 1921
1930-34, BC: 1930-31, 1934-35

Japan (1923)

1

CC, BC: 1900-01, 1907-08, 1921
1925-31, BC, CC: 1931-32

Netherlands (1881)

6

1893-96, BC, CC: 1897, 1921
1930-32
CC, BC: 1935, 1939

Norway (1902)

2

BC, CC: 1891, 1921-23
1926-33, BC CC: 1931

New Zealand (1908)

1

BC: 1920, 1924-25
1929-33, BC, CC: 1931

Spain (1915)

2

 

Sweden (1851)

9

1882-87
1930-33

Switzerland (1891)

4

1930-34

UK (1851)

8

1884-87
1926-33

US (1851)

9

1875-79
1930-33

 

Ah deflation, the boon of

Ah deflation, the boon of savers and the bane of banksters, and speculators.  Still it's comparing apples with oaranges, the metrics for measuring inflation have mutated into a government policy tool, and are no longer true and accurate.  Use the pre WW2 metrics and I guarantee we are in a recession, unemployment will be higher, inflation has been very low since 09 if not deflation.  The wealth effect has become a policy tool, and a central bank weapon. 

Oh dear ...everyone has

Oh dear ...everyone has buggered off saying ...go to bed spotty....ho hum I think i'll stay up n watch the static for a while........

Prediction for tomorrow................Epsom  housewives rescue the electorate from the clutches of  a meglomaniacle  goose stepping idiot ,  unfit to direct traffic let alone the affairs of state.  

Nat's sneak home in unwanted seat......oh dear oh dear...!                                              

THE EURO DOOMED - JEREMY

THE EURO DOOMED - JEREMY WARNER - UK TELEGRAPH

Worth reading Jeremy Warner of the UK Telegraph "Death of a currency as eurogeddon approaches".

It would appear the last lifeline has been thrown aside with Ms Merkek stating "Those who do not play by the rules deserve to be punished".

Warner explains how the whole thing is unravelling so quickly.

Worth viewing / listening to the recent Kyle Bass interview on BBC Hardtalk, to get a sense of how all this could play out globally. Well beyond the Authorities capacity to contain / control it.

Serious question, what is a

Serious question, what is a good investment in this climate? I just changed my aus super to a low risk option, with minimal exposure to shares and property. Has gold had its day? Any thoughts?

Invest in your own security,

Invest in your own security, the monetary system is imploding, so invest for independence from money.  Money is created from debt, and there is too much debt, hence the debt needs to be destroyed, and the money that is represents along with it.

The purchasing power of gold has remained constant for thousands of years, so it can be called saving not investing.  Yet I don't believe you should exchange gold for fiat, more use it to preserve your labour, and pass on to future generations.

Invest in production, things that produce real goods or services, these have value.  Shares have value limited to the intrinsic value of the company, a vlue higher is just speculation.  I watched a girl I know marry a loser, her dad bought him a small cleaning business for 80k, he sold it within 6 months for 10k, which was the intrinsic value of the cleaning equiptment.

A small farmland block, which produces things of value and worth, is an investment that keeps on generating real returns regardless of the value of fiat. 

There is too much money in the world compared to the intrinsic value of the world, this equilibriem needs to be rebalanced.

My choice in order, family, friends, staff, neighbours, community, farmland, renewable energy, precious metals.

I'm giving silver coins for christmas this year, I'm sick of buying crap that doen't last, and breaks, or needs replacing or repairing. 

If you ask my opinion on stocks and bonds, stocks will crash again, and get cheaper if you want to buy, bonds will do the inverse.  Gold will crash with stocks for a bit, then disconnect, and go way way up.  Once stocks hit 09 lows they will bounce back up in a failed attempt to make new highs, then they will crash down to intrinsic value, that will be the time to buy stocks or even just the index. 

If you can be happy with your own security, and enjoy that lifestyle regardless of what fiat is doing, you can be very wealthy indeed.

This is a

" Global debt over the last

" Global debt over the last nine years has grown at 12% per year, while GDP has grown at 4% per year."

Yikes!

Who will cop the

Who will cop the haircuts...or should we say beheadings!....bet you the end game is civil war as the peasants say no to being screwed by thieving pollies while fat bankers slip away with their loot.

The real question then is which country will see the rise of the mob army first.

Clearly we face bank failure here in NZ and Bollard's OBR game will leave savers as losers.

I see a Bernanke QE3 not far away now....QE4 by late 2012....the ECB buying bonds with illegal euro fresh off the dunny roll.

The Beijing bandits will buy time with their QE2 effort and buy gold to stash away.

World trade set to be slashed bashed and smashed.

I don't US QE comming.  There

I don't US QE comming.  There is already far too much liquidity, and too few secure places to put that liquidity.  I see austerity, and fiat collapse, followed by social collapse.  Unless WW3 were declared, and the US is fast running out of countries to invade that are not protected by either china or russia.  Labour in the summer to ensure your survival through the winter, be an ant.

 

THE "GREAT UNWINDING" JUST

THE "GREAT UNWINDING" JUST BEGINNING?

Seems this is just way too big for the Authorities to contain. The trigger for the "Great Unwinding" will likely prove to be when the Germans turned off the tap - with Ms Merkel's comment last week"Those who dont play by the rules, must be punished".

The Sydney Morning Herald has a couple of excellent articles on retiring CBA Chief Executive Ralph Norris, who has been very clear on the seriousness of the European situation. Norris is spot on as best as I can tell. This is way more serious than the 07 /08 event, and is in reality, a continuation of it.

Kyle Bass on the BBC Hardtalk put it very well, in that over the past 10 years or so with global GDP growth 4% pa and debt growth 12%, something has to give.

It would seem like Europe is going to be the first off the rank - but it certainly wont stop there.

Hugh Pavletich

www.PerformanceUrbanPlanning.org

Don't worry hugh, westpac say

Don't worry hugh, westpac say in today's herald that nz unemployment will drop to 5.2% by end of 2012,nz will recover strongly on the back of the chch rebuild according t them. According to them nz unemployment will be less than aus by then

Matt in Auck - Oh......I

Matt in Auck - Oh......I should have read the Herald more closely for the "pearls of wisdom" from the Bank economists, prior to openning my trap.

Hugh, their prediction is

Hugh, their prediction is obviously absolute garbage, based on some modelling system zoro and co developed. One only needs to read the black swan to understand how flawed these models are. I'd far rather see reasoned quantitative / qualitative analysis.
Seriously what drugs are these guys taking. The rebuild is only likely to slightly kick k in around halfway through the year, is retail., tourism, finance going to pick up? I doubt it. Construction? I doubt it, Development economics are crap, funding is going to be harder to come by, and the govt and councils can't get their planning acts together.
Part of their reasoning for dropping unemployment is the aus slowdown yet surely that could be a factor to push unemployment up? Ie. Fewer jobs in aus for kiwis and limited job growth in nz. How many of te 50000 plus grads this year will land jobs?

EVENTS DRIVE POLITICS Matt

EVENTS DRIVE POLITICS

Matt in Auck - Im sort of reminded of the words of former British Prime Minister Harold Macmillan (the Earl of Stockton), when asked what drives things in politics - responded with "Events, dear boy, events".

And as the dreadful John Banks (who I had the misfortune of dealing with when he was Local Government Minister back in the early 1990's) said in essense this evening that ACT will support the Key Government, as the "European situation comes down the track at us" - or something to that effect.

I got the sense too that EVEN the dreadful Winston Peters realizes this, if his rather surprisingly responsible comments this evening are any guide.

The National Party clearly made a strategic blunder with the hair brained idea of asset sales and has weakened its support and therefore its capacity for the necessary structural reforms.

However, I think that as the events in Europe come down the track at us, the next Government will be forced to start in to these overdue and necessary structural changes.

Key will be tested like he's never been tested before.

It would be fair enough to say that Labour's campaign can only be described as a "disaster", as it still hasnt flushed out the dinasaurs of the Clark era. This gave Key an easy ride and the Greens, what I suspect, will be a temporary home for the disillusioned left.

Plus it appears to be a very low poll. I sure would like to know who didn't turn up to vote - and why?

Hugh Pavletich

www.PerformanceUrbanPlanning.org

Hugh if key had in any way

Hugh if key had in any way progressed the necessary reform urgently in first term the nz would be better placed to face the coming tsunami

Time will tell hugh. Most

Time will tell hugh. Most kiwis don't understand the gravity of global events although an ex kiwi ralph Norris has stood up to be counted here. The aussies clearly understand the loomingand are actively preparing, unlike the kiwis. Witness the new bearishness of aussie economists versus the bullishness of Dominic stephens

Matt in Auck - with respect,

Matt in Auck - with respect, my view is that here in New Zealand, we are a lot further advanced in the public conversation of the structural issues than the Australians - particularly with respect to Local Government and housing. A view shared I might add by colleagues both here in New Zealand, Australia and elsewhere.

The major problem here, as I see it, is John Key himself. He sure is a great asset on the "happy chappie" stuff (which is important), but I just domt think the guy has a clue on public policy management. His Government sure needs to sort this out now.

If he doesn't, this country is in very serious trouble. And people will increasingly see through Key - and past the fake grin.

Hugh I'm sure you are

Hugh I'm sure you are delighted that nz is getting another 3years of those highly productive, reform minded ministers of housing and the environment

Matt in Auck - note the

Matt in Auck - note the Harold Macmillan quote above.

My guess is that PM John Keys political life is going to be a living hell from this point.

Some really serious idiocy

Some really serious idiocy here...!

 http://globaleconomicanalysis.blogspot.com/2011/11/latest-idiotic-plan-no-losses-for-banks.html

 "The concern is that forcing the private sector bondholders to take losses if a country restructures its debt is undermining confidence in euro zone sovereign bonds. If those stipulations are removed, most countries in the euro zone argue, market sentiment might improve."

Like doh......gormlessness is catching on across Europe....Dumb and Dumber must have taken charge....

You know how messed up Europe

You know how messed up Europe is when you have a German Pope and an Italian Central Banker.

http://www.youtube.com/watch?v=VBWiQlS5Qg0