Here's my Top 10 links from around the Internet at 1 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.
It's great to be back...just in time for the sun to arrive.
1. Keep an eye on China - Bloomberg says China is expected to report on Wednesday its slowest economic growth rate for 10 quarters.
There have been mumblings in the last couple of weeks that China may be about to ease its monetary and fiscal policy.
That has helped boost US stocks and helped lift our currency.
China matters more to New Zealand than Europe.
It now drives our economic future directly through our exports to China and indirectly through our exports to Australia.
The Euro zone now buys less than 10% of our exports.
Here's Bloomberg:
“The worst is yet to come and more easing measures will be in the pipeline in coming months,” said Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc., who previously worked at the IMF. “Increasing downside risks in China will hurt the outlook for other economies especially commodities exporters such as Australia and Brazil.”
Growth may “trough” at 7.5 percent in the three months through March and 7.6 percent in the second quarter, Zhang said. That may prompt the central bank to “front-load” policy easing into the first half, with one interest-rate cut in March and three reductions to banks’ reserve requirement ratios, he said.
2. A political transition - There's so much noise around the Republican nomination in America that we're all forgetting about a much more important political transition in China, where the top two bosses, Hu Jintao and Wen Jiabao, hand over to their successors from October.
Here's the SMH with a nice backgrounder:
Most observers expect that October will see Vice-President Xi Jing Ping elevated to replace President Hu Jintao, with Prime Minister Wen Jiabao replaced by Vice-Premier Li Keqiang.
''The new guys will have to spend a couple of years getting their feet under the desk, paying due homage to their predecessors and building their own credentials in the party, in the government, with the military and among the population at large,'' said Clinton Dines, head of the Asia-focused investment fund Caledonia.
3. System D - Robert Capps at Wired has a useful interview with journalist Robert Neuwith about his book on the growth of the black economy globally where taxes are unpaid and things are done with cash.
It has grown sharply in the last year and employs half the world's people.
4. Great name for a right winger - Reuters' Kristina Than reports from Hungary about the growth of far right protests against the Euro zone's demands for austerity.
Many supporters of nationalist Jobbik believe the government should not bow to international pressure.
"Since we joined the EU we have not seen any advantages from that, Hungary should go its own way and keep its national sovereignty," Attila Gyalog, 24, said at the rally.
5. The lost decade fallacy - Japan based journalist Eammon Fingleton has written a usefully counter intuitive piece in the New York Times challenging the view that Japan's economy has stagnated for a couple of decades.
It's worth reading just to have your views challenged.
As longtime Japan watchers like Ivan P. Hall and Clyde V. Prestowitz Jr. point out, the fallacy of the “lost decades” story is apparent to American visitors the moment they set foot in the country. Typically starting their journeys at such potent symbols of American infrastructural decay as Kennedy or Dulles airports, they land at Japanese airports that have been extensively expanded and modernized in recent years.
William J. Holstein, a prominent Japan watcher since the early 1980s, recently visited the country for the first time in some years. “There’s a dramatic gap between what one reads in the United States and what one sees on the ground in Japan,” he said. “The Japanese are dressed better than Americans. They have the latest cars, including Porsches, Audis, Mercedes-Benzes and all the finest models. I have never seen so many spoiled pets. And the physical infrastructure of the country keeps improving and evolving.”
6. No wonder the Scots are grumpy - One of the stories that has emerged from left field over the summer break is the one about Scotland's push for independence.
This piece in The Independent detailing how an explosive piece of research written in 1975 showing how Scotland would have benefited if it had access to Britain's North Sea oil explains why they are a bit grumpy with the English at the moment.
In 1975, the Government faced a dilemma: how to exploit the potential of its new oil fields without fuelling demands for Scottish independence. So it buried the evidence.
It was a document that could have changed the course of Scottish history. Nineteen pages long, Written in an elegant, understated academic hand by the leading Scottish economist Gavin McCrone, presented to the Cabinet office in April 1975 and subsequently buried in a Westminster vault for thirty years.
It revealed how North Sea oil could have made an independent Scotland as prosperous as Switzerland.
7. Too good to be true - The Economist writes here about about a new book on hedge fund performance showing hedge funds lost more money in 2008 than all the money they made in the previous 10 years.
The book by Simon Lack, The Hedge Fund miracle: The Illusion of Big Money and why it's too good to be true, also shows hedge fund clients only made 2.1% per year since 1998, less than half the returns from Treasury Bills.
Even if you allow for the rebound in markets (and hedge-fund returns) in 2009 and 2010, investors have still got the short end of the stick. They have yet to recover the losses suffered in 2008. But hedge-fund managers took home almost $100 billion in fees between 2008 and 2010 (and an aggregate haul of $379 billion between 1998 and 2010).
Mr Lack’s book suggests the blind faith displayed by many institutional investors in hedge funds needs to be reconsidered. Individual managers may be brilliant but it is hard to spot them in advance.
8. What a credit crunch looks like - Bloomberg reports on problems some suppliers of Airbus parts are having getting working capital.
GKN Plc (GKN) said some of its suppliers are struggling to secure the financing needed to step up production of components for planes includingAirbus SAS (EAD)’s delayed A350 model as bank credit for new equipment dries up.
While GKN’s own ramp-up plans are on track, with a second set of A350 wing spars and trailing edges due to be delivered this month, the limited access to capital of its suppliers is of some concern, according to aerospace unit chief Marcus Bryson. “If you talk to some of the supply chain they do find it difficult in the current climate to get access to finance from the banks,” Bryson said in an interview in London.
9. Good time to be a beef farmer - Bloomberg reports on cattle futures prices hitting record highs because of shortages of supplies in America, drought in Brazil and strong demand from emerging markets.
10. Totally Jon Stewart on the Republican Primaries. Newt Gingrich gets it in the neck.
44 Comments
This must have been missed off the Top 10 - a VERY good start to the week for the future of NZ ! Go NZ etc
We're going to make significant changes to the Crown Minerals Act because conversations to date under previous ministers have found that there are opportunities to improve the way that companies can access our minerals, apply for opportunities to explore, that type of thing," Energy and Resources Minister Phil Heatley told the Herald.
A consultation paper will be released early this year to inform the Government on changes to the act.
The proposal comes as oil exploration company TAG Oil has written of turning the East Coast into the "Texas of the south" with the potential of building thousands of wells in the region.
Mr Heatley would not comment on which aspects of the Crown Minerals Act would be amended, but said "we can certainly make it more streamlined as a general high-level term for these companies to identify probable areas".
Mr Heatley said that although the Government planned to "get the best out of natural resources" to create jobs and lift the economy "we're very, very conscious of our environmental obligations".
You assume that the whole of NZ would benefit from the changes to the mining act; perhaps you should consider changing your name to Go a small sector of NZ...
Just consider article 6. Who benefitted from Scotland's oil. Not the Scots.
With any natural resource the connected people will make lots of money and the 99% will still be struggling.
..... deep breaths goNZ ...... take it easy buddy , there's always some who still believe that we should take all the wealth , divide it equally , and everyone is better off ......
..... and if that were true , why hasn't it worked in the past .....
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They never learn ..... 1 , 2 , 3 ..... relax ... exhale ....... ahhhhhhhhhhhhh !
Sorry about my delayed response; I had a small car problem to sort out before getting back on here. I visited NZ during December and enjoyed the place. It's still my country of birth and I listen to streaming NZ radio much of the time.
I'd like to see NZ 'get ahead'. But I was appalled about the lack of real discussion during the election. 'Taking the wealth and dividing it' isn't ever going to work. No-one thinks that it will. Nor will being envious of others' wealth.
But paying the CEO of Christchurch his inflated wage doesn't help NZ get ahead. Allowing an elite managerial class to steal the productivity gains from technological advances during the last decade doesn't help NZ get ahead.
Selling infrastrucure such as electricity producers doesn't help NZ get ahead. (I may even buy the shares although I wouldn't generally buy on the NZ stock exchange.)
If GoNZ wants NZ to 'get ahead', then GoNZ should argue for some decent rules on the local sharemarket. I've not owned shares in NZ since 1987. Since then, the NZ sharemarket has remained the cowboy place it was. Start-ups need access to money but there are too many shonky deals done, all legally by NZ standrads, on the NZX.
GBH - that's not, and never was, the issue.
And the Gonzo types (we pay to be propaganda'd by the like of Straterra, it's our collective loss via our collective ownership of Solid Energy) have to be dismissed as biased/vested interests.
Heatley is one player I will make sure is mentioned in the history books. I want my children's generation to know who did this to them.
This is totally parallel to every decision he''s made re fisheries - unsustainable short-term grabs at resources either finite, or dwindling.
His Bluefin Tuna decision was a discrace, so too is allowing the rape of the Patagonian (you'd breed slowly too, if you lived is such a cold habitat) Toothfish.
It's not a case comparative wealth now - it's a case of theft from a generation yet to have representation.
That's about to change.
On a personal note - you need to separate facts from wish-lists. That wee diatribe re USA oil recently, showed that your haven't been reading our comments these last few years, very well. re Saudi, it's 'at the margins'. Re expoert/import, please understand the diffo between raw and refined. Then you may recall EROEI? And the Export Land model...... The joke is that energy drives finance, so finance from here on will oscillate till it crashes - very hard to build a business case. Quite ironical, that, given that the 'business cases' will be about getting energy.....
" That wee diatribe " as you choose to call it , was a fact ....... a simple fact : that the USA produced 52 % of it's oil needs in 2011 . It only imported 48 % . And much of that import came from Mexico & from Canada .... very little from the middle-east . So much for the idiotic war mongering for oil argument !
...... call it " diatribe " if the facts don't suit your argument by all means , but the facts stand ....
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And your off-sider steven keeps whittering on that the US is " finished " , and that it has no resources ..... the facts assuredly say otherwise ........
Fact - USA was oil self-sufficient until 1970.
Fact - it's 50% self-sufficient now.
Does that suggest any kind of trend, in the consumer of 1/4 of the planet's total energy? I take it you did simple graphs in high school?
http://www.oilcrisis.com/blanchard/
http://www.globalfirepower.com/oil-consumption-by-country.asp
If you're profiting or growing by less than 10%, as the USA unquestionably is, then the Saudi-supplied 10% is needed for the profit underwrite. Unless, of course, you can triage something else, but that something else will be part of the GDP, even if you can get along without it. Or you could attempt to become more efficient - but you can only be 100% efficient at best, so that's a diminishing-return track. (If you started from being 50% efficient, the best you could ever do is double, and you won't).
Then there's the expoert land model - applies to Mexico, Canada, and Saudi Arabia.
http://oill.wikidot.com/export-land-model
Facts, GBH.
Not wish-lists, nor ignorant misunderstanding what being 50% short - and falling - in energy terms, means.
A great link posted by Speckles the other day.
Explains how investment currency flows between different asset classes. Right now there is a massive snapback from equities into precious metals. Explains when and why to buy PM's, and when to sell. The first 20min gives the main point, but the whole movie is well worth watching.
You'd be selling near the bottom, not to say he can't go lower. The only good thing he has done, is the way he built bridges with the Maori Party after CB Don Brash went down the road of divide and conquer. I thought that was fantastic, other then that, not much to cheer about.
YAY! The Top 10's back!
As for the video - informative, just a shame he's selling something.
Rather than the Gold/Stocks ratio I like to look at the Gold/Average House Price ratio as that's where most kiwi's throw their money.
Never looked better for Gold - of-course past returns aren't an indication of future performance...
no. 5 is interesting
having lived in Japan in the mid 90s, and visited many times since, it certainly never feels depressed, and unemployment is still low there by international standards
It seems that it copes quite well with lowish growth, maybe thats because of the strong savings backbone and culture of the place. Culturally, the Japanese are not obsessed with property and are reluctant to take on debt. Perhaps a very good model for western countries?
Mind you, they do have some big issues there, most especially the ageing population
The japanese got burnt big time by a housing bubble, and a stock market bubble that makes the Nasdaq look normal by comparison. I'm not sure if they have govt funded super there, I don't think they do. They are all invested in bonds, now, their CB can just buy them with newly created money, same as will happen everywhere. There is a tsunami of inflation comming, best get ahead of the curve.
agree re the Japan comments. Booms/recessions etc all have winners and losers. If you had a job in the US now, and are a young family looking to buy a home - when you consider the cost of housing, groceries etc you are FAR better off there than in Aus. Conversely however, if you are a banker or real estate agent you are worse off. This shows up the difference between STRONG economies, POST BUBBLE economies and BUBBLE economies. In bubble economies like Aus (and to some degree NZ), wealth is transferred - for every winner there is a loser footing the bill via higher debt. In post bubble economies the wealth is transferred back (although admittedly some get screwed who bought in at the end).
Jimmy - not sure about bankers being worse off, those that kept their jobs got handsome bonuses after the US govt gave the banks interest free 'bailout' loans.
But yes I agree - a young family with parents that have jobs are much better off now in the US than before as house prices have MASSIVELY come down .... so they are going to pay far less interest over the course of their lifetimes and even perhaps be able to afford a much nicer house than previously.
I have been pondering the problem presented by the plonkers in various govts whenever they are asked to cut back the bloated public sector salaries for all 'senior' 'important' 'leadership' 'management critical' roles in central govt and local govt...best exposed recently when the idiots in the CCC decided somebody who was by his own words "up to par" should have a $68,000 pay rise taking his bloated salary higher than Ben Bernanke's...staggering idiocy but there you are.
The solution is of course the do away with the salary setting function of the remuneration mob higher salaries commission etc etc....but what to replace this useless entity with...?
You paying attention John?
The regulations shall change to enforce every govt dept and local body to be required by law (with hefty criminal convictions and instant dismissal for failure to comply), to select the 3 best candidates for any appointment. All information pertaining to the appointment process to remain confidential with hefty punishment and dismissal for any state servant gossiping about who is in the top three or who applied. Any attempt by any candidate to assertain the identity of any other shall bring criminal charges and black listing for all public appointments for life.
Having sorted the top three...the remaining task is to determine salary and annual adjustment policy for however long the term of appointment is.
Now for the big Kahuna...still there John?.....each candidate must submit the salary and conditions they will accept. Simple as that. Let the market determine the value. You're into the market forces thing are you not Mr Key...how about you Mr English....
The candidate with the least costly salary and adjustment process, shall be appointed. Then the public shall learn which salary bracket Mr Humphrey fits into.
A nice article by John Kay who writes in the FT each week.
http://www.johnkay.com/2012/01/11/let%E2%80%99s-talk-about-the-market-e…
I thought this was great and explained a lot.
So the business leaders of today are not capitalists in the sense in which Arkwright and Rockefeller were capitalists. Modern titans derive their authority and influence from their position in a hierarchy, not their ownership of capital. They have obtained these positions through their skills in organisational politics, in the traditional ways bishops and generals acquired positions in an ecclesiastical or military hierarchy.
Completely correct, especially in the case of NZ.
Look a Phil OReilly. Son of a trade union organiser and now heading business NZ. The values you grow up with have a big bearing on how you think when you are older.I only realised this about his background when I was reading the newspaper in the hols.
Try Catherine Beard heading Manufacurting NZ. Shes a lawyer and professional lobbyist-her last job was anti global warming lobbying.
If you read their articles you will notice they never really seem to be able to say anything specific,alwasy generalisations .They dont know what they are talking about.
Wolly, Wolly....you know that internalising a really complicated situation in your head will do you no good! Especially all this nonsense of freemarkets? Politricks, ponzis, moral hazard and bureaucratic largesse is the name of the game these days. With our porculent central planners happily gobbling up pay rises, contract$ and lashings of bacon. They're 50% of our 'economy' don't you know. All this taxing and thinking, paper here, commissions there. Going on man dates, selling off SOE's, finding new ways to churn and soft tax the people is a lot of work.
The worst thing was voting in $68,000 Marryatt pay rise (14%) and then reneging on $350 for the graves for the victims of the earthquake. He deserves it afterall.
The latest craze is 'tenderpreneurship'...I hear there's some Schedule Four land going cheap? Minor impact of course... just a large hole where some Kiwi called Dennis used to be. No public submissions allowed of course. That's modern Demockcracy for you.....they'll decide when it's a freemarket.
do some basic math. Simple science, primary school level will do. You don't need to specialise in physics.
It takes energy to remove or sequester pollutants. We are over the peak now. What are you going to triage out of the current demand, to scrub/clean/bury?
It ain't gonna happen. This is a bit like Gonzo - stalling for time on behalf of a provably doomed system.
Alle same carbon sequestration. Google it. If something exists, there are photos. When it is a figment of wishful thinking, there are artists projections.
No fiscal system can deal with CO2, or methane. It takes somewhere to put the stuff, and energy to put it there. If the pollutant is as a result of producing energy, then there's less energy available, post sequestration. In the case of lignite for example, there would quite possibly be no net energy left over. Regardless of dollars spent.
Physics - the real - always beats finance, the artificial.
Why do so many people not get this?
Why do so many people not get this?
Probably for the same reasons they can't apply simple physics to the impossibility of 3 WTC buildings falling at near free fall speed into their own foot prints within minutes and a few hours, one of which had no aircraft even hit it!
Political propaganda breeds ignorance and the mass media feed em with it until they overflow.
No, there's got to be more to it than that.
We can expect paid spin, we can expect self-interested types, and we can expect the losers-who-would-be-winners.
What I don't get is when journalists - senior ones at that - totally fail to investigate, or to rebut.
Then they come out screaming that you (I) are "hijacking every thread".
Then they beetle off and write a 'researched' (not) article about the sale of energy - yes energy - companies, without addressing the valuation method (money), or it's underwriting. Which - if they'd done real investigation, is energy. Which they've been told.
That's not journalism, in the Drew Pearson, Seymour Hersh, Douglas Reed, Jon Pilger meaning of the word, indeed I'd argue that the resultant outcome is the same as if the scribe set out to propagandise.
My physics Prof gets to discussing cognitive dissonance - acknowledges he's out of his field of expertise, but that there has to be a reason for the consistent failure-to-engage.
When not much else works anymore – humans often do stupid things.
http://www.globalresearch.ca/index.php?context=va&aid=28675
and the porking continues.......
Hamilton City Council chief executive Barry Harris rolls up to meetings in his new $70,000 Citroen 5.
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10778996
these guys just don't get it. Their sense of entitlement is obscene......
Ha, well I can tell ya for a fact they are not driving any shinny new Toyotas on the dodgy roads round the red zone... and they're still trying to work out the damage on my place from last Feb... "incomplete assessment from Spetember"; lost and found assessment from Feb - reassessing valuations; re-assessed for June; not inspected yet for new damage from December (and no time-frame for inspections)... I give 'em a ring every few days just for a little comic relief. Get a different answer each time, usually ending up with "erm, I'm not really sure. I'll have to ask my supervisor and get back to you"...
Here's another piece looking at why Japan isn't doing as badly as many people think:
It's called "The myth of Japan's lost decades" and shows how GDP is a faulty measure that makes inflation look like real growth.
Japan's relatively low rate of monetary expansion during this period made it look like the economy was stagnating, when real incomes (in terms of purchasing power) were actually rising as fast or faster than many of its counterparts.
Sure, Japan has a ghastly amount of government spending, particularly on social welfare, but this piece shows that if the capital structure of the economy isn't destroyed by debasement of the currency the overall economy can better withstand the economic black hole that is the state.
Another interesting point (also mentioned in the NYT piece) is that the real economy can do just fine even when house and stock prices are falling.
What it shows to me is we have become so accustomed to government-sponsored inflation (many people speak of it as if it's a force of nature like gravity) that we've forgotten that, absent this monetary meddling, economic growth actually causes stuff to get cheaper.
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