Wednesday's Top 10 with NZ Mint: Hong Kong limits non-resident buying of property to staunch capital flood from China; How China's politics work; Laffer curve excitement machine; Dilbert

Here's my Top 10 links from around the Internet at 11 am today in association with NZ Mint.

As always, we welcome your additions in the comments below or via email tobernard.hickey@interest.co.nz.

See all previous Top 10s here.

My must read is #2, which is the Atlantic's picture page on Sandy.

1. So why wouldn't we do this? - Hong Kong, a bastion of the free market, has announced a 15% tax on non-resident and corporate buyers of property to try to calm down an over-heated property market.

Money printed in China, which has its currency pegged to the US dollar, is flooding into Hong Kong. This is the inevitable result of QE Infinity.

That has pushed up property prices sharply in Hong Kong and other markets that still let in such hot capital flows.

Hong Kong has already lowered its loan to value ratio limits to cool the market there, as has Singapore.

Australia has introduced similar restrictions on non-resident buying of residential property.

Why haven't we done the same here? It's at least part of the reason for the surge in property prices in central Auckland.

Here's Bloomberg:

The new property tax doesn’t apply to Hong Kong permanent residents. Inhabitants need to live in the city for seven straight years to be eligible for permanent residency, according to immigration rules, while Chinese citizens born in the city are automatically granted that status.

Property owners, who sell their homes within six months of their purchase, will need to pay a 20 percent special stamp duty, up from 15 percent, Tsang said. For resale between seven months and 12 months, the duty will increase to 15 percent, and transactions between 13 months to 36 months, the duty will be 10 percent.

Non-local buyers account for 19.5 percent of total sales of first-hand properties in Hong Kong in 2011 and 6.8 percent of total sales of second-hand properties in 2011, Tsang said.

Hong Kong joins Singapore in efforts to cool soaring property prices by targeting non-residents. Singapore in December imposed an additional 10 percent stamp duty on foreigners and corporate entities.

Hong Kong’s central bank tightened mortgage lending on Sept. 14 after saying the Fed’s latest quantitative easing risks pushing up home prices that have already surpassed their October 1997 peak. That marked the start of a 70 percent decline to August 2003, according to an index compiled by Centaline. They have soared more than 240 percent since that trough nine years ago.

2. A Breezy and Firey Point - Here's the Atlantic with a selection of pictures from Frankenstorm Sandy. This one below is the damage after a fire at Breezy Point in Queens, New York. Click here for a great selection of pics.

3. Behind the New York Times' Wen Jiabao scoop - Here's David Barboza explaining to readers how and why he did the story about Wen Jiabao's family being worth US$2.7 billion.

China blocked the New York Times website in China after the story was published and publicly criticised the article, which I think is one of the more important published this year.

Throughout my tenure in China there has been a lot of discussion about whether the families of high-ranking government officials have benefited from the country’s economic transformation by receiving so-called secret shares in corporations. This is a regular topic of dinner conversation when bankers, lawyers and accountants gather in Shanghai and Beijing. I had been told many times that this is typically done by using “nominee investors,” friends or people not easily identifiable in the shareholder records as having ties to politicians. These nominees, I was told, often hold shares for the relatives of powerful politicians, giving them a stake in a company.

About a year ago, as I was reporting a series of articles about China’s state-managed economy, I decided to see if there was any evidence behind the theory. I started looking into the business ties of several high-ranking leaders. Anyone who knows business and finance in China knows that the conjecture about the prime minister’s relatives was particularly persistent, so my focus eventually narrowed on the Wen family. I knew this would be a time-consuming and difficult task, but I was determined to answer this question. I plowed in, and to my great surprise found that there was a tremendous amount of information available in the public record. My reporting did not find illegality or corruption. It did reveal the names of Mr. Wen’s relatives hidden behind dozens of investment vehicles that few people had ever heard of.

4. Understanding China's Political System - Here's the Congressional Research Service's guide to understanding China's Political System.

5. The Dutch anti-bonus cap - FTAlpaville reports A new Dutch coalition government plans to limit the size of bonuses for financial workers to 20% of base pay. Great.

6. Keep an eye on Greece - Ambrose Evans Pritchard points to a Der Spiegel report that the European Central Bank will have to take haircuts on its Greek debt if a deal to keep Greece in the Euro is to be done.

The Germans won't be happy.

Public sector losses are politically explosive in Germany. Chancellor Angela Merkel has told her own people that bail-out loans to southern Europe entail no risk, and have been profitable to date.

She would have to account for any losses to the Bundestag. This would poison debate on further loans for Portugal, Spain, Cyprus, or Slovenia. The fast-growing eurosceptic camp in Germany would claim vindication.

Until now all losses from debt restructuring in Greece have been concentrated on a diminishing pool of pension funds, insurers, and banks, which have suffered an implied `haircut’ of 75pc. They have been squeezed dry.

The ECB’s president chief Mario Draghi says the ECB cannot accept write-downs on its estimated €40bn holding of Greek debt since this would amount to illegal state financing, so the losses would fall on EMU governments and the bail-out fund (EFSF).

The International Monetary Fund has made it clear that it will no longer provide any money unless Greece is put on a sustainable course.

7. Some good news in the Middle East - The Telegraph reports Israeli Defence Minister Ehud Barak saying Iran has pulled back from the brink of having a nuclear weapon. But it's not over yet.

An immediate crisis was avoided in the summer when Iran quietly chose to use over a third of its medium-enriched uranium for civilian purposes, delaying the moment when it could have built a nuclear bomb. Without this decision, Mr Barak told The Daily Telegraph, the situation would “probably” have peaked before the US presidential election.

In the event, Iran delayed the “moment of truth” by “eight to 10 months”, but Mr Barak predicted that sanctions and diplomacy would still fail to resolve the stand-off. If so, he said that Israel and its allies would probably face the decision over whether to strike Iran’s nuclear facilities in 2013.

8. Totally an excellent lecture on the Laffer Curve - As seen in Ferris Bueller's Day Off. HT Amanda's Take 5.

9. Totally Tom Waits singing Rain Dogs - So much better than these so-called folk-rockish bands that are popular at the moment.

10. Totally Jon Stewart on how America's government picks winners. The Republicans don't want to pick winners...or do they...?