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Friday's Top 10 with NZ Mint: South Africa slashes rates to below inflation rate; Corn pops; Italian battling to stop Sicilian default; What Ray Dalio thinks about deleveraging; Clarke and Dawe; Dilbert

Posted in Opinion

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

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

See all previous Top 10s here.

My must read today is #9 on the risk of a 'fat tail' event in Europe. These are not good events.

1. Now Seth Africa cuts - Amid a sea of money printing by central banks oop in the Northern Hemisphere, South Africa has acted to stop its currency killing its economy and cut its interest rates, Bloomberg reports.

Brazil has also cut in recent times.

It's interesting to see that South Africa's inflation target is 3 to 6% and that it has cut its official cash rate to 5%, which is below its inflation rate of over 5%. This is essentially financial repression and a type of money printing to inflate away its debts and 'beggar thy neighbour' in response to the Northern Hemisphere's money printing. Fair enough. Last one to start printing is the loser. And it looks like Australia and New Zealand will be last.

If New Zealand did the same as South Africa by cutting our official interest rate to 0.5% below inflation our OCR  would be around 0.5%, which would imply floating mortgage rates of around 3.5%.

So our OCR can't be cut that far without fueling another housing market surge.

That's why we need our Reserve Bank to introduce loan to value ratio limits and repayment-to-income limits, similar to those used by monetary authorities in Singapore, Hong Kong and Canada. That way it can cut the OCR to boost the economy without driving house prices and the New Zealand dollar into stratospheric territory.

Here's Bloomberg.

(South Africa's) Policy makers cut the repurchase rate for the first time since November 2010, joining central banks in India, Brazil, China and Europe in reducing borrowing costs this year to protect their economies from slower global growth. Marcus was provided the room to ease monetary policy after inflation eased to a 10-month low in June, slowing further from the top end of the 3 percent to 6 percent target range.

Inflation slowed to 5.5 percent in June from 5.7 percent a month earlier, the statistics office said yesterday. At the same time, export demand is coming under pressure amid a debt crisis in Europe, undermining growth in Africa’s biggest economy. The government has cut its forecast for economic growth this year to 2.7 percent, the slowest pace since a recession in 2009. TheReserve Bank also lowered its forecast to 2.7 percent for this year.

2. The weaponsiation of Economic theory - Michael Hudson writes on his website that Europe needs a debt writedown, a real central bank and a more efficient tax system if it's going to extricate itself from its current mess.

The Canadian postal workers union has an informal slogan: “A job that’s not worth doing is not worth doing well.” I might apply this to Europe by saying that a badly structured economy is not worth subsidizing or saving. It should be made well.

This entails, for starters, writing down the debt overhead. That is what created the German Economic Miracle of 1948: the Allied Monetary Reform that wiped out debts over and above minimum working balances, and wages debts owed by employers to employees. It was easy to write down debts that were owed to Nazis. It is much harder to do so when the debts are owed to powerful and entrenched institutions – especially to banks.

Take the case of a Greek debt writedown. This would hurt the Greek banks first and foremost, and also more innocent German insurance companies and banks.I have a modest suggestion as to how to handle this. First, let the Greek banks go under. They helped stymie the Greek government’s attempt to stop tax evasion and money laundering. They have been described as co-conspirators and corrupt. Of course their depositors should be made whole by a standardized, public bank insurance scheme. But bank bondholders and stockholders, and even non-insured depositors, are another matter.

As for the German institutions, if a Greek Clean Slate pushes them into insolvency, the German Government should do what the U.S. Federal Deposit Insurance Corp. (FDIC) is empowered to do: take them over, make all the depositors and policy holders whole, and operate these institutions as a public option – either temporarily or permanently.

3. What's really happening in China's coal mines - Many financial market observers don't trust the broad economic statistics produced by China's authorities and instead look for the subsdiary and more direct indicators of activity, including power production, lending growth, rail volumes and car sales. Even China's incoming Prime Minister, Li Keqiang, has said he looks beneath the headlline figures to work out what is really happening because the GDP figures are 'man-made'.

So this piece from WantChinaTimes showing the parlous state of China's coal industry is interesting. It suggests severe financial stress, slumps in sales and big buildups in stockpiles.

Lengthy technological reforms and large monthly interest payments have put coal mine owners under even heavier financial pressure. Making matters worse, declining coal prices, high inventories and a slump in operations have caused mine operators to become cautious and pessimistic.

"If the situation continues, more than half of the private coal companies here will have to shut down," an official in Luliang responsible for the coal sector said.

4. Another way to look at America's problem - Paul Krugman points to this chart showing the divergence between the gains from productivity and wages in America in the last 40 years. Something went wrong in the mid-1970s. Now it has to be rectified with higher taxes on the rich and large corporates, along with the break-up and deleveraging of the Too Big To Fail banks.

5. Keep an eye on the explosion in soft commodity prices in America - The 50 year drought in North America is causing all sorts of strife for corn, soyabean, wheat and canola prices. That may eventually flow through into higher dairy commodity prices.

This chart on corn futures prices from soberlook.com tells the story.

6. Sicily close to default - Ambrose Evans Pritchard reports Italy is having to intervene to prevent the default of regional bonds issued by Sicily. The mafia may be involved....

Mr Monti held an “urgent” meeting with the country’s president Giorgio Napolitano on Wednesday to grapple with the constitutional issue after it emerged that the region faces a deficit of up to €7bn (£5.49bn) this year and is in danger of default without sweeping cuts.

Sicily’s regional councillor Andrea Vecchio warned that the island has run out of money. “I’m afraid we will soon no longer be able to pay civil servants’ salaries,” he said.

“The developments in Sicily are very serious,” said Prof Giuseppe Ragusa from Luiss University in Rome. “It is just the sort of negative shock we don’t want right now. Everything has to go perfectly for Italy to pull through.”

7. Social strife growing in Spain - Reuters reports on growing mass protests in Spain. Youth unemployment is over 50% and general unemployment is 25%. Yet the government is slashing public sector wages and jobs, and hiking taxes to keep the Germans happy. It's not sustainable. Somethin's gotta give.

Hundreds of thousands of Spaniards marched against the centre-right government's latest austerity measures on Thursday evening, following more than a week of demonstrations across the country.

Parliament on Thursday approved a package of 65 billion euros ($80 billion) of spending cuts and tax hikes as part of measures to avert a full European bail-out, bringing more hardship in a severe economic downturn.

The sight of demonstrators on Spain's streets is nothing new. Young "Indignados" (Indignants) protested in their thousands against unemployment last year. One in four Spaniards is without work.

But since Prime Minister Mariano Rajoy announced spending cuts and tax rises last week there have been daily demonstrations drawing protests from public service workers like police that have previously stayed away.

8. Learn the lessons - Simon Johnson writes at The Guardian about the meaning of the ouster of Barclays CEO Bob Diamond.

There are three broader lessons of Diamond's demise at Barclays. First, the political backlash was not from backbenchers or uninformed spectators on the margins of the mainstream. Top politicians from all parties in the United Kingdom were united in condemning Barclays' actions, particularly with regard to its systemic cheating on the reporting of interest rates, exposed in the Libor scandal.

Indeed, chancellor of the exchequer George Osborne went so far as to say: "Fraud is a crime in ordinary business; why shouldn't it be so in banking?" His clear implication is that fraud was committed at Barclays – a serious allegation from Britain's finance minister.

After five years of global financial-sector scandals on a grand scale, patience is wearing thin. As Eduardo Porter of the New York Times put it: "Bigger markets allow bigger frauds. Bigger companies, with more complex balance sheets, have more places to hide them. And banks, when they get big enough that no government will let them fail, have the biggest incentive of all."

Second, Diamond apparently thought that he could take on the British establishment. His staff leaked the contents of a conversation he claimed to have had with Paul Tucker, a senior Bank of England official, suggesting that the BoE had told Barclays to report inaccurate interest-rate numbers.

Diamond apparently forgot that the continued existence of any bank with a balance sheet that is large relative to its home economy – and its ability to earn a return for shareholders – depends entirely on maintaining a good relationship with regulators. Barclays has total assets of around $2.5tn – roughly the size of the UK's annual GDP – and is either the fifth- or eighth-largest bank in the world, depending on how one measures balance sheets. Banks at this scale benefit from huge implicit government guarantees; this is what it means to be "too big to fail".

9. What Ray Dalio thinks - Ray Dalio at hedge fund Bridgewater is widely believed to be one of the most astute investors around. Here's his view on deleveraging, courtesy of Zerohedge.

Dalio is most worried about the possibility of a 'fat tail' event in Europe. That's code for a systemic meltdown.

At this point in time Europe is in the most critical stage of the deleveraging process, without a credible plan that will allow a transition from an "ugly" deleveraging, where incomes fall faster than debts decline, to a "beautiful" one, where income grows faster than debts. A transition from an "ugly" to a "beautiful" deleveraging requires an acceptable mix of default, redistribution and monetization. Steps have been taken in this direction, but they remain well short of what is necessary. The range of potential outcomes for Europe and the impacts on the global financial system are wide, so navigating this environment will require flexibility and an understanding of how new policy decisions will affect the path of the deleveraging.

The unresolved European imbalances and the differences in their impacts on each country have produced widening differences in the self-interests of these countries, which have led to political divergences that have magnified the risks. Unlike a year ago, Germany and France no longer stand in solidarity as backstops behind the euro system, but have been divided in their self-interest by divergent financial conditions which are leading to conflicting rather than unified political orientations. France's deteriorating finances and economy have shifted its self-interest toward alliances with "recipient" (lower credit rated) countries like Italy and Spain and away from "contributor" (higher credit rated) countries like Germany and the Netherlands, leaving Germany more isolated as a guarantor of the risks in the euro system and in its views about how to manage the imbalances.

Given these shifts in the alliances between contributor and recipient countries we think that the popular assumption that the Germans and the ECB (which requires agreement of the key factions within it) will come through with money to make all of these debts good should not be taken for granted. Said differently, we think that there are good reasons to doubt that European bank and sovereign deleveragings will be prevented from progressing to the next stage in a disorderly way, without a viable Plan B in place. This fat tail event must be considered a significant possibility.

10. Totally Clarke and Dawe on how all birds are cats, or at least some of them. It's a bit Australian, but you can't lose with Clarke and Dawe.

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?

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95 Comments

Its probably a good thing to

Its probably a good thing to put up these bits of comment and news from around the world to get people thinking  but Bernards comments betray his own thinking ( or lack of ).
The thread about the Canadian solution explains clearly enough why LVR limits and other measures to limit lending just hurt the people they are trying to help. We dont have a problem with a housing bubble in NZ. We have a short term issue in Christchurch for obvious reasons and a longer term problem in Auckland. I know, lets have interest rates for Auckland property 3% higher and a corresponding 3% reduction for the rest of the country.
 
That should spread the population out a bit.
 

Hot Dog waripori,,,you're

Hot Dog waripori,,,you're onto something there...would 3% be enough?

Your idea is okay in theory

Your idea is okay in theory but wont work in practice , People will find a way around such discrmination , for example Aucklanders who own investment property in Wellington will ramp up the Mortgage there and pay down their Auckland mortgage

I dont actually think my idea

I dont actually think my idea is OK in theory. Not that it is any worse than other ideas floated to "fix " the housing market but it would create all the distortions and evasions you suggest. Also Aucklanders have been given the vote for some reason. I thought there was some sort of IQ test you had to pass but evidently not.
All these regulations and rules turn out to be a waste of time. Anyone remember when maximum retail prices had to be printed on food packaging as a way of containing inflation?
This whole thing just has to run its course and if anyone can find a way to get the supply constraints out of the system that would certainly help.
Over time there has to be a relationship between Auckland prices and prices in other parts of the country and the world for that matter. Someone made the point on this site about broadband speeds equalising work opportunities around the country and in the end that sort of  dynamic will solve the problem. I certainly dont think we should be looking at raising interest rates nationally to solve the issue of Auckland house prices. If it is too expensive to live in Auckland go and live somewhere cheaper.
 

Mark Zuckerburg has recently

Mark Zuckerburg has recently been reported as buying a house- about 6.5million , with 100% debt. The article pointed out that he could borrow at just over 1% so  taking inflation into account the money was essentially free from interest- therefore why should he sell an asset- his shares in Facebook- to buy the house anyway.
I wonder if our government have thought of this for our Hydro Dams-  why sell them when if you need to borrow you could do it esentailly without cost- unless Zuckerburg is a better risk than New Zealand?

Re the USA drought.  For some

Re the USA drought.  For some months now there have been signs we are moving into an El Nino phase of the southern oscillation.  Perhaps some more record world temperatures are ahead.
http://www.bom.gov.au/climate/enso/

Let's hope it doesn't repeat

Let's hope it doesn't repeat the drought of the 1950's or the dustbowl of the 1930's when it was hotter, or the earlier megadroughts.
http://wattsupwiththat.com/2012/07/17/it-was-the-best-of-droughts-it-was-the-worst-of-droughts/
 

Local heat driven by

Local heat driven by unsustainable agricultural practices.
 
I have some years of spotting thermals, and a fair grasp of what generates them.
 
Meaning I can recognise hot air when I read same. Go on, reply; they pay you by the post, no?

"I have some years of

"I have some years of spotting thermals"
 
So do you wear thermals down there in tropical Otago? Please clarify your underwear fetish.

Last I heard this US summer

Last I heard this US summer was the hottest on record by at least 2ºF. I think they have had more rainfall than previous droughts. I  don't necessarily attribute all of this to AGW though, the northern jet stream is well off its normal course. Unsustainable tilling practises contributed a lot to the 1930's dustbowl. El Niño is coming, and that will give California some rain but too late for this season. El Niño are almost always net warm years for the planet.

OK that's a more reasonable

OK that's a more reasonable comment. I saw a temp chart which showed temps in the 30's were above todays for the US. The dustbowl did not make the drought though. I know US  dairy production is affected and this could possibly support prices for NZ 
http://www.agrimoney.com/news/dairy-prices-ease-despite-us-production-slowdown--4756.html

#4 Bernard you have put up

#4 Bernard you have put up this sort of chart before. It just says to me that there was a leap in technology, lets call it computing, that enables productivity growth. 
I have 22 staff, in the last 6 months we undertook a major expenditure on technology that enabled us to manage our work flow better. As a result staff are much more productive, but are in effect doing exactly the same job as before, we have just cut out wasteful activities.
Is your argument that I should then increase hourly compensation because of the benefits of the capital expenditure
  

That's partly right - there

That's partly right - there was an 'Energy Crisis' which drove a lot of efficiencies, and cut out much of the dross.
 
But
 
The ultimate driver is still the energy input, real-time, and the only thing with efficiencies is that they're a 'diminishing returns' track.

Ew, That's an interesting

Ew,
That's an interesting question. Does the productivity growth enables you to operate your business at lower cost or increase revenue? So does your product/service price fall or do you increase your profits?
The consumer benefits from the former, the shareholder from the latter. The worker should benefit from lower prices in the economy, meaning its wages stretch further. This is the upside of productivity growth. The downside is that the lower costs/extra profits have found there way into financial assets (houses primarily) and eroded the gains for the workers. 
If workers shared in the profits from productivity gains, then that may see different outcomes in the broader economy (less asset price inflation, more spending in the general economy and debt reduction).
Of course, we can't pay workers more...that would be inflationary (lol!) :-)

I think the argument is that

I think the argument is that not sharing the increased productivity with the workers for forty years leads to a giant crisis of capitalism. If we don't like these crises, maybe we ought to think about changing the rules. 

Exactly. So much of the

Exactly. So much of the profit that has accrued to the top (and inspired asset bubbles) has been gained at the expense of workers. Either they have been fired to immediately improve the bottom line (productivity gain!) or had their wages held down (with the threat of being fired - competitive marketplace for labour!).
If only the benefits had been shared just a little bit, we might not be in the current position, we find ourselves in now. 
Meanwhile, executives jostle for increased compensation packages and their share of the profits, as if they are the ones doing all the work. The bubble in executive pay has been extremely under reported. I wonder why :-)
See Jeremy Irons in "Margin Call" for his explanation as to why he is worth it.
http://margincallmovie.com/

I have posted on remuneration

I have posted on remuneration before and the comments from a senior HR professional I know is that each level of responsibility in an organisation should net a 15% rise in pay. The Catholic Church is considered by some to be the perfect structure with 5 levels, which would equate to the CEO getting double the ordinary worker.
 
Another friend of mine with BSc, BE, MBA and has worked as an oil drilling engineer says: Management is easy, Engineering is hard. 
 
It is way out of balance.

Henry Ford understood that if

Henry Ford understood that if the wage slaves could afford to buy his products his business would flourish. It worked. It's also worth noting that all of society contribute to advances in technology and to the cost of the education and the infrastructure that allow business to increase productivity.
 
As one who's been a government employee, a wage slave, a boss, and a business owner I've found that almost always the more you can do for your staff the more they will do for you. I struck one horribly expensive exceptions to that rule but I still believe it to be vitally important. And overall I've found incompetent management to be more of a problem that inadequate workers.
 
How do manufacturers expect to grow their markets if they don't give the consumers an increased wherewithal to buy their stuff? The same deadly spiral that's happening in Spain will spread.
 
Part of the problem is that manufacturers have been screwed more and more by the financiers and a burgeoning bureaucracy for 40 years and they haven't been able to pass on much of the largesse even if they wanted to.
 
JKG had it right: 
Trickle down theory:
If one feeds the horse enough oats, some will pass through to the road for the sparrows.

Henry Ford also said ~ "It is

Henry Ford also said ~
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

 

Absolutely.    Someone posted

Absolutely. 
 
Someone posted a link here a week or two ago to the Oscar-winning but tragically ignored movie "inside Job". If every person in the Western world over 12 years old could be persuaded to watch it today, the guillotines would be erected on Wall Street and the tumbrels rolling down Threadneedle Street tomorrow.
 
If you can stand an overdose of total outrage, Check it out right here.
 
 

PDK, don't you know

PDK, don't you know that:
 
Opinion of ex-weatherman > Research of 100's of climate scientists.
 
Great logic isn't it.

Interesting that the Saffers

Interesting that the Saffers have reduced their equivalent of OCR rate below inflation , this will certainly weaken a emerging market currency like theirs.
It means that the yield is LOWER THAN ZERO (which we see in Japan) .... its negative
I dont see any of this ending well for any of us

Bernard, I am puzzled by your

Bernard, I am puzzled by your comment, "Last one to start printing is the loser". How can that be? We all know that money-printing destroys savings, benefits the elite, and eventually leads to price inflation. You state that money-printing inflates away debt, but surely that depends in what currency your debt is denominated. Printing money would defraud the holder of NZ$ denominated government bonds and so reduce debt (and reduce the savings of NZers), but if the government borrows US dollars then the cost of servicing that debt would increase.
Maybe you are thinking in terms of NZ businessmen, like myself, trying to sell goods overseas. Yes, the high NZ$ makes it difficult at present, but ultimately we have to meet the market. The problem of selling to money-printing, inflationary economies is short-lived, because as inflation takes hold the costs of production for our competitors who are in those markets start to increase, and eventually the situation returns to something like "normal".
There are crazy Keynesians like Paul Krugman who observe that the USA has printed money and yet the expected inflation has not occurred, and so the link between money-printing and inflation has been mysteriously broken. I think that more careful observers are waiting to see how long the USA can defy gravity.
The fact is that for a long time most governments have been in the business of currency manipulation, with money-printing as the most favoured means.  For many decades we have been in a kind of slow competition with other countries to print money on the way to the bottom, with the occasional Zimbabwe leaping ahead of the pack. I think the back of the pack is the best place to be so we can see when the others are going over the cliff.

re ...Last one to start

re
...Last one to start printing is the loser....
 
Care to justify the dogma?
 
Any 5 year old can be trained to chant dogma. 
 
The test of an adult is when they can put up a cogent argument to justify the statement.
 
It would be useful to understand why you believe that the last one to start printing is the loser

I think it was one of those

I think it was one of those bumper sticker throwaway lines Gibber.....hanging a bait out thingy.
Clearly in lieu of a debt Jubilee every economist and his pussy cat thinks it's a race to the bottom.......I don't think  Bernake is as sure about it anymore....or maybe the political landscape has got the dogs on the leash for the mo.
Right now the dilema for all the Central Banks is how to socialise all the losses and remain in control at the same time.....
Ain't gonna happen.
 It is however a little irksome considering how Bernard jumped on the bandwagon of pointing fingers at stupid when  "everyone" wasn't doing it.

Christov, your last sentence

Christov,
your last sentence has me puzzled
 
 It is however a little irksome considering how Bernard jumped on the bandwagon of pointing fingers at stupid when  "everyone" wasn't doing it.
 
Care to clarify who "stupid" is? (or are)

Bernake

Bernake ...Gibber...Bernake...stick around I got something for you.

Hey Christov and Bernard. Not

Hey Christov and Bernard. Not much on TV tomorrow night and I've had my arm twisted and I'm going to the Australian Ballet performance of "Don Quixote"

Australian's think that he is

Australian's think that he is the guy who invented instant porridge !
 
..... so , head into the theatre with the banner which reads " Don Quick-Oatie " ......
 
Enjoy !

The nation that is the last

The nation that is the last to print would have an artifically high exchange rate and as such would be economically disadvantaged should they try to sell things to the rest of the world.
The relitive rarity of the 'last nations' currency would drive up its price, rather than comparituive economic conditions (such as GDP growth or lack of it) betwen the nations.
Which, of-course, would result in distorions in the system of free floating exchange rates where liquidity rather than actual economic performance dictated each currencies comparitive worth.
Our currently high exchange rate is due, in a great part, to the lack of supply of NZ$ to meet international demand (especially since much of the rest of the world has all this new money to spend and ours is a safe haven currency).
If we modestly increased our money supply and used that to pay off some of our external debt that would greatly reduce any domestic inflationary pressures from printing, while providing our customers with NZ dollars to buy our stuff with.
Coupled with a lower exchange rate from greater liquidity, as well as the signal that such a move would send to the markets, then NZ would export more goods to the rest of the world - the ledgenary 'export lead recovery' at last!
 

It's

It's Friday...YaY.....sigh.
It's been a turbulent week with lots of emotions flying about all over the site, and so I'd thought I'd dedicate this weeks spot to.........................emotions
Now Bernard I know this ones on the edge but hope you can bear with me on this occassion as it's the most relevant one I could remember......and so
 
  Emotional Costume Party

 

A guy decides to have a party where his guests are asked to come as

different emotions e.g. Fear etc.

 

On the night of the party, the first guest arrives and the host opens

the door to see a guy covered in green paint with the letters N and V

painted on his chest.

 

He says to this guy, "Wow, great outfit, what emotion have you come as?"

 

The guy says, "I'm green with NV". 

 

The host replies, "Brilliant, come on in and have a drink".

 

A few minutes later the next guest arrives and the host opens the door

to see a woman covered in a pink body stocking with a feather boa

wrapped around her most intimate parts.

 

He says to this woman "Wow, great outfit, what emotion have you come

as?"

 

She replies, "I'm tickled pink". 

 

The host says, "I love it, come on in and join the party".

 

A couple of minutes later the doorbell goes for the third time, and the

host opens the door to see two Irish blokes, Paddy and Mick, standing

stark naked one with his knob in a bowl of custard, and the other with

his knob stuck in a pear.

 

The host is really shocked and says, "Well, what the hell are you both

doing? You could get arrested standing like that out there in the

street. Anyhow what emotion is this supposed to be?!?! 

 

Paddy replies, "Well, Oim fokn discustard, and Mick here has just come

in despair". 

 

Cheers christov.  

Cheers christov.
 

The door bell chimes once

The door bell chimes once more , and when the host answers it , there before him is a finance company investor , from New Zealand . And the forlorn looking fellow has seagulls' testicles tied into a necklace around his neck .....
 
..... " ummm , come in "  the host invites him ..... " and what emotion do you represent ? "
 
" I'm gulli-ball ! "

Again that damn doorbell

Again that damn doorbell rings, only this time when the doors opened there stands a freind impersonating Peter Plumbley Walker on his last outing.....speechless due to the gag, the bewildered host was left to dertermine the emotion...... after a moment or two he snapped his fingers..!
Ahhhh come in you must be trussed....! 

Once more , the doorbell

Once more , the doorbell chimes ...... the host opens it to find a Catholic priest standing there , cradling in his arms an escapee  from the Gay Midgets' Circus .......
 
..... " what in God's name , ... what emotion do you represent ? "
 
" I'm feeling a little queer ! "

Three patients at a

Three patients at a psychiatric clinic are up for release. The shrink informs them that they will have to pass a simple test.
Asking the first patient: 
Q. How much is two plus two? 
A: Blue. 

At which the kind doctor calls in the orderly to escort the patient back to his room. 

Turning to the second patient, he asks what is six minus three?
To which the patient replies: Square.
Once again the orderly is called in to remove the patient.
Turning to the third and last patient, he asks, "How much is five plus five?"
The patient answers very confidentally: Ten.
The doctor, amazed then inquires how did you figure it out?
The patient: "Easy.Blue multiplied by square equals ten."
 
AND last one for now promise.!!
Patient: I'm really depressed. 
Therapist: I see. Yes. You are depressed. 
Patient: Nothing is going well. 
Therapist: Nothing well. 
Patient: I feel like killing myself.
T: You're thinking of killing yourself. 
P: Yes, I'm going to do it NOW.
T: You want to do it now.
P: [Jumps out window.] 

T: crash...thump............. OOOOh shit...!

#3 Man made statistics Why is

#3 Man made statistics
Why is it that  US unemployment statistics are so untrustworthy that John Key feels he has to quote the unofficial rate?
You've got an unemployment rate sitting at 9.2%, but you've got an unofficial unemployment rate sitting at 14%.
http://tvnz.co.nz/q-and-a-news/john-key-interview-transcript-4350989

Does anyone actually still believe the reasons they give why markets rise or fall?
One day in the future 90 at 9 might say "the markets rose today because all the markets are rigged"

Agree...

Agree...

Since the Global Community

Since the Global Community all the sudden seems to be preoccupied with Market manipulation even though the authorities knew it was a problem for over 5 years with Libor Rate Fixing. It is high time authorities look at the Crude Oil market which has been manipulated for the last decade and all the sophisticated participants know it is rigged or artificially higher than the fundamentals of the economy dictate.
http://www.econmatters.com/2012/07/forget-libor-fix-oil-market.html#more

    Village Matai tells the

 

 

Village Matai tells the story of Sione to the kitz.

 

One days Sione was cudding da grass with his sapelu, when all of a sutten da ampulance went going by. Sione straight aways drop his sapelu and run afta da ampulance. Da ampulance tryfer look to his side
mirror and see a man in a lafalafa running after him.

 

Afraids for his live, becos he was in Otara's, da ampulance tryver stepped on da cass. His ampulance go very, very farce. But Sione farce  too. Sione loose one chandal, but he keep runnings, Sione's lafalafa
 starting to falling downs but he keep runnings.

 

 Da ampulance tryfer look in da side mirror and he is amaze dat da man wiff da falling down lafalafa and one chandal is not giffing up.

 

Da ampulance tryfer is now concern finkings Sione chase him because he need medical helps.

 

 Sione, was please to see the ampulance was stoppings for him. About 3 minute later, Sione catch up to da ampulance.

 

The ampulance tryfer open da backs toor and say to Sione, 'What is da matters? You needs help??

 

 Sione with his hands on his knees, buffing like hell. Wiff his preaths back, Sione looks at da ampulance tryfer and say  'cani haf da one  snow-cones wiff da chocolate flakes blese!'
========================================================

Thanks for that Kiwi.

Thanks for that Kiwi. Brightened a really depressing decade or two. The spirit of Billy T is still with us.
:)

1. If we brought in a LVR

1. If we brought in a LVR that would compensate for a lower rate.
regards

Is that LVR with or without

Is that LVR with or without chocolate flakes?

I found this on the BBC World

I found this on the BBC World site:-
http://www.bbc.co.uk/news/magazine-18789154
Politicians or states undermining money have diabolical overtones for angst-filled Germans.
In Goethe's Faust, one of the most famous works in German culture, Mephistopheles persuades the Holy Roman Emperor to issue a new paper currency - despite one of his advisers warning that this is the counsel of Satan.
Order duly breaks down as the Emperors' subjects go on a binge bearing no relation to their real wealth.
Weimar Republic hyperinflation in the early 1920s - when "money went mad" and all moral as well as economic order was seen as collapsing - seemed a diabolical vision made real.
An illustration from the 1800s shows Faust in his study with Mephistopheles and what I presume are two small central bankers pleading for a loosening of monetary controls.

And from ye olde Londonium

And from ye olde Londonium Towne : Hear ye , hear ye : the Royal Academy of Engineers has pronounced the drilling technique of fracking to be safe !
 
Fracking does not cause earthquakes , neither does it pollute nor contaiminate .
 
.... as per the Gummster's previous posts on this subject , the planet has abundant fossil fuels , and the USA is poised to become the richest energy supplier in the world .......

GBF-types getsa special

GBF-types getsa special mention:
 
http://www.energybulletin.net/stories/2012-07-19/far-side-denial
 
 

OK if I be childish too , and

OK if I be childish too , and call you PDF ? ...
 
..... there really is no place for personal abuse here at interest.co.nz .......

No need for permission -

No need for permission - anyone who thinks finite is infinite, has a wee ways to go.

No problem being a PDF, we

No problem being a PDF, we can always convert you. 
 
http://www.primopdf.com/
 
Not sure to what, but we can do the conversion, no problem there.

Gummy has been trying to do a

Gummy has been trying to do a conversion with free tools on the internet for ages. Not yet willing to shell out for the license costs of a professional conversion tool.
 

Sorry my bad, that will

Sorry my bad, that will convert you to a PDF but GBF already has the covered.
 
Photoshop can convert just about anything to anything, that and some other features means I could restore the both of you. That should make you fracking happy.

Gummy, glad you are

Gummy, glad you are back.......

Thankyou ....... I've been so

Thankyou ....... I've been so outrageously happy lately , I had to wait a week or three , until my euphoria calmed down , before re-entering the Hickeysterical Dark Zone ......
 
.... there's more than a few around here who are happiness deniers !

So GBH did you get the

So GBH did you get the supersized Tonka truck license? Glad to see you back moderating with that above centre positive attitude. 
Anybody wanting big dollars working the mining industry in Aussie needs to check out www.miningfortalent.com.au . Credential critical however....
 

...... sadly , no ....... I

...... sadly , no ....... I came in 11'th out of 16 at the second round of preliminary testing ...... and they only took 10 in for the driver  training  ....... it's all pure BS of course , I'd be lucky to have beaten any of the other applicants for the licences !
 
And yet , life is good ....... very very good . There's still screeds of ventures here in OZ for me to attempt , and to fail at ....... so much fun , at so little cost ...... yippee Skippy !!!

Can we have a link please?

Can we have a link please?

Gummy, according to other

Gummy, according to other reports on this study, you have seriously missrepresented the conclusions. Especially if you claim it says that it doesn't produce earthquakes (it does) or that it doesn't contaminate or pollute (it does).
 

NZ Harold , business section

NZ Harold , business section , Friday last .

Somehow Harold has a more

Somehow Harold has a more balanced view.
 

Great to see you back

Great to see you back Gummy. 
Brightened my day.
cheers
bernard

Thanks , big guy ...... I've

Thanks , big guy ...... I've been so busy ( and so gloriously happy ) with all the wonderful things happening in the world lately , things which are poised to improve the lives of millions ....
 
... the latest is an Adelaide based medical company , which has gained European acceptance for their " cold " laser machine , which improves the eyesight of people suffering partial blindness after succumbing to diabetes . The older lasers cause thermal heating of delicate eye tissues , thereby doing some harm , in the attempt to do some good .
 
The new machine emits nano-second pulses , thereby stimulating cell regenerating , with no thermal damage .
 
...... I try to " gloomsterize " , really I do , but there's so much incredibly good stuff popping up all over the shop ...... what can a simple Gummibar do , but break out into wild happiness . Sorry !

That one misses the mark

That one misses the mark Gummy. Diabetes is a lifestyle disease, so pretty much self inflicted. Why would you spend all that time an effort to help people that won't help themselves? I like technological progress so you will have to find a better uplifting example:-)

Bernard had a stomach-staple

Bernard had a stomach-staple operation , some years ago . By your logic the surgeons should've done hip operations instead of helping him ?
 
..... he'd have ballooned up and exploded , like the Monsieur Creosote in Monty Python's " Meaning of Life " , without the surgery ......
 
Just one more Gummy Bear , Bernard .... come on , one eensy-teensy Gummy Bear ...

No scarfie, only a type of

No scarfie, only a type of Diabetes is a lifestyle disease, not all, A hereditary recessive gene may strike down a person who, through diet and lifestyle would never have ordinarily developed the disease. 
Interestingly enough back in the seventies the last flight out of Auckland at night to Raro was called the KFC run or flight because the plane stank of it.
In the advent of KFC going there and setting up shop....go have a look at the epidemic proportions of the disease currently in Rarotonga.
It's a connect the dots thingy.
http://www.pa.msu.edu/sciencet/ask_st/071394.html

You have to be careful with

You have to be careful with these things Count, I have looked at this issue because the cancer gene runs in my family (not me phew). The cancer gene means the body doesn't produce a defence to the relevant cancers. The catch is you actually have to get the cancer first before the gene becomes an issue, so still lifestyle factors involved. Incidence of cancer has doubled in 100 years BTW.

I don't disagree with that

I don't disagree with that scarfie... my point was there are those who are not just at risk by exposure but await the inevitable gene trigger regardless of precaution as in( juvenile onset.).
Individuals with type 1 diabetes are usually thin, and the cause of type 1 diabetes is that the pancreas, the organ that secretes insulin, is destroyed by autoantibodies. 
Really all I'm pointing out is you don't necessarily have to be overweight to be at risk.......but it certainly contributes majorly in Adult onset.

My belief is that if you have

My belief is that if you have two healthy parents then you get a good conception then there won't be a problem. The human body is capable of rejecting any disease if we maintain it right. I don't get colds or influenza and that is by design:-) Is hard to do with the poisons we have surrounded ourselves with mind you. I found a book in my local library called "Natural Farming", was a very interesting read.

Further to my comment above

Further to my comment above Count, I have conducted an experiment on myself lately. 2 1/2 years ago I needed a couple of root canals but decided I would get back to my upbringing and treat them myself. I figures a few bucks on some supplements was cheaper than the dentist, to whom I have not been back to :-) Amazing what the body can do when you treat is right. Of course it means a bit of thinking for yourself and looking beyond what the experts will tell you, ie: toothpaste is bad news.

"Incidence of cancer has

"Incidence of cancer has doubled in 100 years BTW."
Must be really careful with these types of comparisons, what is now clearly identified and known as a cancer, was once upon a time described as "old age" or "natural causes".

Agree. Although the same

Agree. Although the same source also stated that 80% of cancers are undiagnosed, people die from something else first. He speculates on that by saying you have a better chance of survival of the cancer if it remains undiagnosed:-P

In truth, we all get cancer

In truth, we all get cancer every day.  It's the bodys immune system not taking out the cancer that is the problem.  Something to think about!

Actually the latest research

Actually the latest research suggests its not over-eating...is skinny 3rd worlders who have a significant problem, hardly "self"-inflicted, and thats type2.
regards.
 

It is nothing to do with

It is nothing to do with skinny or fat and everything to do with what you eat. Same as an awful lot of americans suffer malnutrition through over consumption.

Has anyone noticed that the

Has anyone noticed that the NZ Herald is getting weirder and weirder.
They are running a 'pro Hydro Dams sale' line as hard as they can and it seems like the comentators are in a competition to see who can come up with the silliest reason to sell our Hydro dams.
John Rougan is at it today
His arguement seems to be that it will all be OK because when the corporate eleites have stuffed something up, taxpayers will allways be there to buy it back again, so it is OK we cannoy loose it, we can allways get it back.
He also points out that it does not matter who buys the dams because the power will always keep running- he does not back this up with anything at all.
In California where they tried a bunch of power privatisations, and markets for electricity and eveything else, they got Enron, a fake company manipulating markets, turning off the power to drive up prices, every dirty trick imaginable.
He said we should not worry about 'cpompetive power companies' I just can't see it. What competition? He really does not get competition at all. He seems to have no clue at all as to what competition actually looks like. 
I would really like to hears he views on imported electricity, where does he stand on this.

link please. I've been off to

link please.
I've been off to the herald site but have yet to find that article.

He's sort of right, the asset

He's sort of right, the asset is on sovereign territory....we can and we will re-nationalise IMHO.
 Also could enron happen here? I suspect not, especially in NZ and in the future, kind of an extreme example to justify not selling.....Personally I think the share market is heading for a huge fall, HUGE....so selling shares to fat cats and watching them get wiped out wont see me lose a tear.....mom and pops, yes....but they choose to play.
After the financial mess is over, then the playing field will be a lot different....I just dont know what it will look like.....
regards
 

Google news- Electricity

Google news- Electricity Price Spike- there are a few of them

"I don't think we are at the

"I don't think we are at the beginning of the recovery. I think we are at the end of a disastrous debt supercycle that has gone on for the last thirty or forty years, really. It started when Nixon defaulted on our obligations under Bretton Woods and closed the gold window. Incrementally, year after year since then, we have been going in a direction of extremely unsound money, of massive borrowing in both the private and the public sector. We now have an economy that is saturated with debt: $54 trillion or $53 trillion – 3.5 times the GDP – way off the charts from where it was for a hundred years prior to the beginning of this. The idea that somehow all of that debt is irrelevant, as the Keynesians would tell us, is fundamentally wrong – and the reason why the economy can't get up off the mat.
 
We're doing all the wrong things. We're adding to the problem, not subtracting. We are not allowing the debt to be worked down and liquidated. We're not asking people to save more and consume less, which is what we really need to do. And so therefore I think policy is just making it worse, and any day now we will have another recurrence of the kind of economic crisis we had a few years ago."
http://www.marketoracle.co.uk/Article35689.html

What an asshole....to start

What an asshole....to start with, keynesians dont tell us debt is wrong....what they do say is right now in a liquidity trap debt is the lesser problem.....plus we havent had a keynesian economy since the 70s...its been quasi-monetarist/objectivist.
If you are going to blame those responsible, blame Reagan, Greenspan and Aynn Rand.
 
regards

uh....that we had in the

uh....that we had in the 1930s....
regards

The Press today C2/3 - John

The Press today C2/3 - John McCrone "Some Home Truths" - A MUST READ...
 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org

The fool Monti..Italy out

The fool Monti..Italy out of the euro by xmas
http://globaleconomicanalysis.blogspot.co.nz/

Did you mean spain?  but its

Did you mean spain? 
but its almost a race for the exits.....one of the PIIGS or Germany...
I wonder that if one major one exits that the lot will go........means a lot of un-employed public nipple suckers in brussels, I wont shed a tear.
regards

Mario Draghi: the euro is

Mario Draghi: the euro is "irreversible"
"Currency union not in danger of collapsing, according to ECB chief."
Well......................that's a clear signal the euro is toast....

Based on past comments and

Based on past comments and outcomes that means 6 to 12 weeks and its gone.
regards

So AGW and peak oil start to

So AGW and peak oil start to show their heads in,
"Haven’t we been here before? For the third time in five years, the world is braced for a food crisis.

In 2008, a spike in the price of many of the world’s agricultural staples triggered riots across the developing world as the United Nations admitted that more than a billion people were hungry."
"hint - oil price peaked"

"Then in 2010, failed crops and an export embargo in Russia sent prices spiralling again."
Fails to mention the heat wave was a 1 in 1000 or even 2000 year event.
"This year, the finger is being pointed at America’s worst drought in half a century and environmental “food for fuel” legislation that ensures the bio-fuels industry eats first."
So a 1 in 500 year event.......
http://www.telegraph.co.uk/finance/comment/tom-stevenson/9417895/Invest-...
"The regularity of surges in soft commodity prices may be telling us something about the weird weather we are having to get used to. Whether you put it down to La Nina, climate change or just a run of bad luck, the old seasonal rules seem to have been suspended. But it also speaks to the fragility of an increasingly stretched global food supply chain and its vulnerability to shocks."
So chance "natural causes" or something more?
"The World Bank says demand for food must rise by 50pc by 2030, yet the land on which that massive increase in yield must be achieved has halved per head since 1950."
and oil output ie deisel and fertilizer will be down something like 50%....the alternative to "must" is starve and riot....aka 2008.
regards
 
 

President Francois Hollande

President Francois Hollande is set to wallop the French with a swath of increased taxes :
 
A 75 % tax on income above one million Euros per year . Lifting the tax on the lower income bands too .
 
Doubling the financial transactions tax to 0.2 % .
 
Dropping the inheritance tax free threshold from 159 000 Euros per child , to 100 000 Euros .
 
And introduction of a 3 % surtax on all dividends .
 
...... no mention was made of the government cutting spending , driving out waste , or freezing ministers' remuneration ...... haaaaaaaaaaa !

Euro and Banking

Euro and Banking issues.....interesting reading.....
 
 
Liam Halligan UK Telegraph “Is the US losing patience with the eurozone debacle?”
 
 
http://www.telegraph.co.uk/finance/comment/liamhalligan/9417866/Is-the-US-losing-patience-with-the-eurozone-debacle.html

 
Roger Bootle UK Telegraph “Euro exit would bring gains”
 
 
http://www.telegraph.co.uk/finance/comment/rogerbootle/9417612/Euro-exit-and-depreciation-would-bring-economic-gains.html
 
 
Erwin M Stelzer The Weekly Standard “When Bankers Behave Badly”
 
 
http://www.weeklystandard.com/articles/when-bankers-behave-badly_648560.html?page=2
 

Chinese Premier warns of grim