Monday's Top 10 with NZ Mint: Germany distrusts Hollande; China worries about food; Australia to go nuclear?; 'don't compromise'; debt jubilee micro momentum; Swiss secrecy 'dead'; Dilbert

Here's my Top 10 links from around the Internet at 10:00 am today in association with NZ Mint.

Bernard will be back with his version tomorrow.

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

See all previous Top 10s here.
 

1. The next EU domino
German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone's second largest economy could come back to haunt Germany and the broader currency bloc.

"The biggest problem at the moment in the euro zone is no longer Greece, Spain or Italy, instead it is France, because it has not undertaken anything in order to truly re-establish its competitiveness, and is even heading in the opposite direction," Feld said on Wednesday.

"France needs labor market reforms, it is the country among euro zone countries that works the least each year, so how do you expect any results from that? Things won't work unless more efforts are made."

France and Germany have been at the core of efforts to stop the euro zone crisis spreading from the periphery to the larger economies.

While many have accepted twice bailed-out Greece is a special case, German officials say in private that they are concerned trouble in Spain and Italy could spill over to France unless Hollande takes bold steps.

2. Why not both?
Matt Nolan (of Infometrics) at TVHE takes issue with Gareth Morgan's housing analysis. He thinks he is being one-eyed.

If what Gareth said was the whole story we would be experiencing overbuilding!

The key point against supply side issues will be the fact that rental growth hasn’t gotten scary at any point – is there are “too few” houses, then we should really see the cost of housing services/rent pick up.  This suggests to me that any perceived demand side issues are also important, and should be taken into consideration.

The Productivity Commission spent a long time getting together facts and figures in order to make its case for why the supply issues were dominant. And they also made note of perceived “misallocation” issues and the such stemming from the demand side.  Gareth’s decision to just out of hand dismiss what they are saying and state that the answer is “obvious” is a touch grating.  I don’t think the Productivity Commission (or myself for that matter) would disagree with the points he raised … as they aren’t mutually exclusive – I’d say I just weight them less severely than he is because I am willing to accept that there are supply side issues which are behind part of the price lift.  And I think this is the reason the supply issues are being attacked … just to increase the “weight” people place on the demand side.  I’m not sure I agree with this.

3. Bigger than Texas
China is looking ahead and is worried about how it will feed itself. Its food security is under threat as its agriculture faces growing land, water and labour shortages over the next decade, the country's agriculture minister said on Friday. It's solution? - large scale mechanised farming.

"The next five to 10 years are a key period for the development of China's agriculture sector - with production factors like land, water and labour getting tighter," said Han Changfu at a session of the ruling Communist Party congress in Beijing.

"Agricultural production is facing greater risks - natural risks, market risks, security risks - and it is entering a period of high investment, high costs and high prices."

Han said China continued to expect bumper harvests this year despite a global decline in agricultural production. Soaring food demand from an increasingly prosperous population has piled the pressure on China's pastures, but growing rates of urbanization and the encroachment of industrial projects on precious farmland have also added to the problems.

Han said China would continue to press for the aggregation and mechanization of the farms in order to stave off the problems caused by decreasing acreage and the declining rural workforce. "Beijing will breed a new type of agricultural player and develop large-scale mechanized farming," he said.

4. We have have to learn the difference between propulsion and weapons
The current Aussie submarine fleet, built at home, has proven to be a disaster and an embarrassment. While their adversaries can stay hidden for months, the Ocker boats can stay down just 2 to 3 days. Now some opposition politicians want to debate converting their sub fleet to nuclear. That will undoubtedly strain AU:NZ relations if we get a Labour/Green government and they get a Coalition goverment. Could be fun.

Top Coalition leaders want to open the debate over the purchase of nuclear submarines to replace the navy’s diesel fleet, a huge step up in Australia’s military capability in response to China’s plan to become a major maritime power in the Pacific Ocean.

Senior Coalition frontbenchers told The Weekend Financial Review that acquiring or leasing Virginia-class nuclear submarines equipped with conventional weapons, such as cruise missiles, would be supported by the Obama Administration.

Purchasing the submarines is not yet Coalition policy but some shadow ministers have discussed the idea with United States officials. Australia’s dependence on seaborne trade and China’s ambitions make a powerful submarine fleet the most sensible naval strategy, some Coalition leaders believe, and nuclear submarines would be more reliable and lethal than Australia’s existing submarines.

5. 'Let's not make a deal'
Paul Krugman thinks President Obama should listen to Michael Cullen - "We won, you lost - eat that". The lobbyists (including the ones with a bully pulpit) are piling on the pressure already to not compromise. Actually, I have to say, I think I am with Krugman here.

President Obama has to make a decision, almost immediately, about how to deal with continuing Republican obstruction. How far should he go in accommodating the G.O.P.’s demands?

My answer is, not far at all. Mr. Obama should hang tough, declaring himself willing, if necessary, to hold his ground even at the cost of letting his opponents inflict damage on a still-shaky economy. And this is definitely no time to negotiate a “grand bargain” on the budget that snatches defeat from the jaws of victory.

In saying this, I don’t mean to minimize the very real economic dangers posed by the so-called fiscal cliff that is looming at the end of this year if the two parties can’t reach a deal. Both the Bush-era tax cuts and the Obama administration’s payroll tax cut are set to expire, even as automatic spending cuts in defense and elsewhere kick in thanks to the deal struck after the 2011 confrontation over the debt ceiling. And the looming combination of tax increases and spending cuts looks easily large enough to push America back into recession.

Nobody wants to see that happen. Yet it may happen all the same, and Mr. Obama has to be willing to let it happen if necessary.

Krugman's antithesis, Grover Norquist, thinks he has the States covered and the pressure from that quarter will bring 'tax reform' changes to Washington. As you can see in the following chart, spending cuts are relatively light and tax increases are relatively heavy for 2013 - which is why the battles will focus on the tax increase changes.

6. Heavy bank lending creates growth surge
The Chinese economy grew faster than expected last month even as inflation slowed, official statistics showed on Friday, as the government continued heavy lending through its state-owned banks to rekindle growth. More from the NY Times:

The latest data, including industrial production, retail sales, fixed-asset investment and electricity generation, were stronger than most economists had anticipated. They presented a consistent picture of an economy that is starting to show real growth again after a very weak spring and summer.

“It has become increasingly clear that the Chinese economy is now moving in a better direction,” Zhou Xiaochuan, the governor of the People’s Bank of China, the central bank, said at a news conference Thursday, before the October figures were publicly released.

Bank economists increasingly agree. “October’s growth data delivered pleasant upside surprises across the board, providing fresh evidence that the economy has indeed bottomed out thanks to the filtering through of Beijing’s policy easing,” Sun Junwei, a China economist at HSBC, wrote in a research report Friday afternoon.

7. “To tell you the truth, I’m done.”
Apopos of nothing related to interest rates, I need to report my favourite author has quit. I reckon I have read every word Philip Roth wrote, and he wrote a huge amount. I love his energy, still firing into his 70s. I have been priviledged to read such writing talent. In my view, nothing compares (although John Updike came close often).

8. Debt jubilee momentum
A group of campaigners linked to the Occupy Wall Street movement is buying-up distressed loans for pennies in the pound and cancelling them to "liberate debtors at random".

The Rolling Jubilee project is seeking donations to help it buy-up distressed debts, including student loans and outstanding medical bills, and then wipe the slate clean by writing them off.

Individuals or companies can buy distressed debt from lenders at knock-down prices if it the borrower is in default or behind with payments and are then free to do with it as they see fit, including cancelling it free of charge.

As a test run the group spent $500 on distressed debt, buying $14,000 worth of outstanding loans and pardoning the debtors. They are now looking to expand their experiment nationwide and are asking people to donate money to the cause.

David Rees, one of the organisers behind the project: "This is a simple, powerful way to help folks in need - to free them from heavy debt loads so they can focus on being productive, happy and healthy.

"Now, after many consultations with attorneys, the IRS, and our moles in the debt-brokerage world, we are ready to take the Rolling Jubilee program live and nationwide, buying debt in communities that have been struggling during the recession."

9. Swiss bank secrecy 'dead'
The head of UBS has broken a taboo in Swiss financial circles by declaring that traditional banking secrecy in Switzerland is dead.

“I have said for a long time that banking secrecy, as we knew it ten years ago, is over,” said Sergio Ermotti, CEO of the country’s largest bank a day after announcing 10,000 job cuts.

Ermotti made the comments in an interview with the Zurich-based newspaper Tages Anzeiger, published online on Wednesday, in which he predicted that 20,000 jobs would be lost in Switzerland’s banking sector.

The Swiss financial industry has for too long defended banking secrecy “against all odds,” he said, adding that it needs to be adjusted with a “new strategy”. The industry “must first be downsized before we can talk about growth again”.

UBS has paid a heavy price for its involvement with tax evasion by American clients made possible through Swiss privacy laws that provided cover for banker-client confidentiality. After former employee Bradley Birkenfeld blew the whistle on the bank’s practices, it was forced in 2009 to pay American authorities $780 million to avoid prosecution for criminally aiding tax avoidance. In addition, UBS agreed to give the names of 5,000 US clients with offshore accounts.

Ermotti took over as CEO last year and was not employed at the bank when the tax evasion affair blew up.

10. Election results
A tale of two countries. And this link is worth a look, here »

11. Bonus I

12. Bonus II

If you love Jon Stewart (Jonathan Stuart Leibowitz) you will find this a fascinating bio. By Bloomberg TV. (I found I could not pause or stop it on my browser, so you may have to watch the whole 25 mins. Or kill that browser. But it is well worth the watch, despite that SMH dodgy treatment.)

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 or click on the "Register" link below a comment.

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

30 Comments

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#3, We always get the world is running out of food story, hang in their you farmers good times are just around the corner, but keep an eye on this country its becoming an agricultural export powerhouse and its cost structure is low.
  http://www.fas.usda.gov/psdonline/circulars/livestock_poultry.pdf
 
 
http://www.dnaindia.com/mumbai/report_holy-cow-india-to-be-largest-beef-...
 

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Interesting take the US as an example and the pollution from poultry effulent is very heavy and un-sustainable. Its also putting the end producers (US "farmer")  in what looks like financial slavery.
A re-run elsewhere I wonder?
regards
 
 

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Interesting piece on "compounding" interest.  So when you buy something for cash you think its interest free, but it isnt.  The entire production train relies on financing and they pay interest at every stage.....
The comment is stunning,
"If we had a financial system that returned the interest collected from the public directly to the public, 35% could be lopped off the price of everything we buy. That means we could buy three items for the current price of two, and that our paychecks could go 50% farther than they go today."
and some ppl worry about Govn "tax" and reducing it....
Well ghere you go,
"By borrowing from their own publicly-owned banks, governments could eliminate their interest burden altogether. This has been demonstrated elsewhere with stellar results, including in Canada, Australia, and Argentina among other countries."
http://www.energybulletin.net/stories/2012-11-09/it-s-the-interest-stupi...
regards
 

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There is a fasinating debate going on at Golem, Id recommend having a read of the comments. 
 
http://www.golemxiv.co.uk/2012/11/money-makes-our-heads-go-round-guest-p...

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Yes it is a pretty useful article and comments, that good that I have had it up on my facebook wall to hopefully illustrate to disbelieving friends how banks really work. I got one positive response I didn't expect, but the funny thing is the nature of that response is that he can't others to believe how banks create money.

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Andrew, Good link thanks. 
In trying to understand the debate, it seems to be a chicken and egg one about exactly how the commercial banks create money. Do they start with capital, which they use to loan out, starting a multiplier hundreds of times over? Or do they merely loan someone money out of nothing, knowing that in aggregate enough of the loans they make will come back to them to also multiple many times over. There is in the end though some matching of total deposits (liabilities), and loans out (assets) in total. 
Am not convinced it matters. What both sides seem to agree on is that the commercial banks indeed create money; and have done so massively over the last 30 years in particular. Especially when unchecked by any regulation of note- (as in NZ, where Wheeler's only real concern for them is that they not go bankrupt; and for the money supply, whether CPI inflation is greater than 3%. No concern at all about asset bubbles, other than whether the banks are so exposed that outright bank failure is likely). So it's clear, the commercial banks in NZ have almost total control over the money supply; and have been printing furiously. 
There then is a separate argument over whether that control and printing by them is better than control and printing by the Reserve Bank; albeit then channelled through commercial banks. I would strongly vote for the Reserve Bank starting the process; it would not distort the exchange rate; their motives at least should be for NZ's interest, and not management bonuses or shareholder profits; and we would not be making a free gift to the rest of the world in interest and capital payments. 
 

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Did you see this
http://www.globalresearch.ca/its-the-interest-stupid-why-bankers-rule-th...
 
this interested me from the Golem article
 

The Dork of Cork. November 11, 2012 at 2:29 pm #

@backwards
You may not be getting what I am saying.
When they started to really build the euro post 1986 goverments could not really print their own currency.
When goverments cannot print they must export their capital outside their own borders.
What is generally not understood is that the Brics are the products of European capital export and inside Europe the PIigs capital consumption are a product of French, German & indeed UK capital export.
indeed Chinese coal consumption went vertical in 2002 at physical introduction of the Euro……….what does that tell you ?
When goverments truely print is is just a medium that can pay off the debt build up………..therefore the state need not “grow” via new machines to pay for this debt.
Its really a anti growth measure although some investments need also to be made in stuff that will be used again in a lower energy intensity envoirment. – (think of the reversing the Beeching cuts in the UK)
Believe me the banks don’t want national goverments to print as it devalues their claims on the existing physical wealth base.
Steve from Virgina says it best………
Steve from Virgina.
Credit money expansion (Banks) replaces a great debt with another, greater debt. There is never a net reduction in the debt, only a perpetual increase.
(we are reducing our debt by exporting our debt / symbolic wealth via goods export elsewhere destroying internal commerce)
Treasury money expansion is repudiation of debts => repudiation of (pre-existing) money, institutionalized default (expansion includes purposeful inflation).
Finance offers fiat debt then demands repayment in circulating currency (gold clause effect). Fiat currency offered by the government to retire fiat debt: both the debt and the currency are extinguished at once.
The creditor says, “You owe us, you must pay with circulating money!”
The debtor says, “There is no circulating money, the creditors refuse to lend …”
The creditor says, “We will seize your property instead and destroy your economy!”
The government (which is also a debtor) says:
– “We will create money without borrowing and repay the loans as they come due. We can do this because we are the government, our money is paid to our army.”
– “The loans are fiat — they were created by the lender with the stroke on a keyboard, they were not made from circulating currency. To act as if they were is a crime, a false claim. The lenders will be repaid by a stroke of the keyboard, in the same form as the debts were issued. If you or other lenders touch our property or our citizens we will throw you into prison and decide later whether to feed you or not.”
– “Because lenders have impoverished our country with endless false claims we will punish you severely whenever we can get our hands on you. You are our enemy and we will destroy you if we can, because you have sought to destroy us!”

 

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Andrew,
Again, thanks. Being a peaceful man, I would prefer not to get to the stage of imprisoning our creditors, and starving them to death; and suspect somehow if it came to that, we would be at the wrong end of the sword doing the enforcing.
Joking hopefully aside, if I understand their points; the system we are operating here is largely for the enrichment of, and controlled by, the commercial banks. No surprises or arguments there. (Apologies David, that I see this page is kindly sponsored by one of them, for which I hope they get a good share of extra business, and that you are well paid for helping them do so).
The articles talk of state printing being inflationary; as it would be if it was on top of the banks printing, and we otherwise did not have deflation. What if though the state printing replaced at least some of the banks' printing- at least to a point where the exchange rate was fairly priced? And the banks could get on with their business; albeit on some controls either with LVRs or capital funding ratios or similar, so that the ultimate money supply, inflation, housing bubbles and foreign gifting was considerably more under control than it is now?
Do you have views on how all this should be interpreted in NZ's context?
 

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Stephen what I have found useful is what engineers would call going back to first principles. When you say "capital" I assume you mean savings. But capital refers to something produced, which means the consumption of resources. Credit is a claim on future capital (and resources), but it is looking dubious as to whether the future has the ability to pay up. So it is looking increasingly likely that debts will simply be unable settled.
  If the state takes over the "printing" then what is actually happening is the state is undertaking to meet the shortfall in the production of "capital". If lack of resources is the problem then that can't happen either.
 

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Scarfie,
Am trying hard to keep up with Steve Keen, and Krugman, and others; and their respective arguments, but may not have the details down pat by any means. 
Nevertheless my understanding is that the common perception of banks is that they will have some shareholder capital; and may in theory start the process by lending some of this out. They will also chase deposits in various forms. That then lets them loan that money out. The more loans they give; assuming some balance in market shares, the more deposits they receive, and so it multiplies around as fast as they can manage; and supply and demand supports. Krugman is closer to this model, I believe, giving the state some control through interest rates, on how fast this all mulitplies around.
Keen I believe implies that banks just create a loan as soon as they can persuade a customer with collateral and likely income or assets to support paying it back, to take it.(Derivatives have made this process even less cumbersome for them). They just create a loan on their balance sheet. Noone has to check if they have enough money that day to give it out. The banks just possibly don't care about intergenerational debts (or asset bubbles); I believe they prefer though, when the ultimate macro default happens, that the excess debts are inflated away, than actually defaulted on (as their shareholders would likely lose in the latter scenario)
I personally suspect that Keen is right on day to day banking; but at a macro level someone is checking that there is reasonable balance between assets and liabilities; and the Basel type rules insist on it. Otherwise the banks borrowing billions offshore to multiply through the system wouldn't really be necessary. There is no check though on the velocity or multiples; or how big the feed in to the system from outside(offshore) is.
The banks could otherwise just create more of their own money. My view is that the state, through the RB, should be more involved, and profiting NZ, or at least not costing us as much, and therefore also having more control of factors other than just inflation, or bank failures. If printing needs to be done(and an awful lot is already being done), it should be the RB doing it, not the banks.
A long spiel, and not sure I even answered your question. 
 

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We are all just trying to make sense of it all, if that is possible. To be honest I wonder if anyone can make sense of it all, it is just one big out of control mess. Sort of the opposite to a conspiracy theory. Your analysis is as good as anything else out there. If you run some numbers through my (M.V)+i=P.Q then it becomes apparent that velocity has to trend lower. From this I am also certain of one thing, that interest will always cause a redistribution of wealth.

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#3 right so they'll use more oil/energy then.....but...um.....there isnt any more per day coming...or if it is at 0.9% more per year suggests a doubling of oil price to do it and that cant be afforded.
So "starving" chinese buying food in from abroad then.
 
regards
 

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Hugh you should forget about sideshow Bob, he is not worth the effort.
 
More interestingly is that No.2 Nolan from Infrometrics agrees with you!
 
He used economic speak to say that if NZ had ease of house building regulations combined with favourable monetary and tax policy re housing, then New Zealand would have a surplus of houses. You said something similiar by using the example of Alabama? The fact we do not have a surplus of houses indicates there is some artificial restriction on house supply. So Gareth Morgan is wrong to just focus on demand side issues.  Again something you have said (many, many times) from your indepth knowledge and experience in the housing development market.

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I think the score is: Hugh P says it's pretty much all about house supply shortages- at least so much so that he thinks Bill English is right to ignore the money/demand side. Gareth Morgan (at least according to Infometrics) says its pretty much all about money and demand. Infometrics seem to be saying it's both.
I suspect Infometrics are right; with one caveat:
There is of course one fairly real (and not artificial) constraint to house prices, and that is that they are not making any more land. Hugh may be right that freeing up planning processes and land restrictions everywhere is the answer; but if the real excess demand is say within 10-15ks of the central city (true in Auckland's case in my opinion), then I'm not convinced that opening up planning in the distant outskirts will help, even though I have no problem with them doing so. Just not sure it will fix the problem. No doubt there are planning restrictions in the existing built up areas that can be freed up as well; brownfield sites; house to land ratios; height restrictions; building types and so on. I suspect NIMBY communities will want at least some say in that process though.

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I think that is a fair call Stephen L. I just wanted to point out that Hugh is not completely alone out there, some people at least partially agree with him.
 
Re your comments about the demand for housing being within the first 10-15 km's of the city centre and this being why more development on the outscirts of Auckland will not solve the housing affordability problem. Personally I think the limit is 1/2 hour travel time. In Helsinki where I used to live we were something like 23 km from the centre and it took 25 min to get there by train, about 1/2 hour by car and 35 min by bus. They had amazing levels of investment in transport infrastructure.
 
Also to note many people do not need to go to the centre. They work, shop and do their leisure activities in other hubs.
 
So I think the housing problem is also a transport problem. Personally I think our big councils in Auckland, Wellington and Christchurch should have a bigger tax base, by getting either a regional petrol tax, income tax etc. And then be able to provide that urban transport infrastructure themselves.

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Hugh you are right cities are often polycentric and that was the case for Helsinki, it was made of three + major coucils each with their own centres. I lived in Espoo to the east of Helsinki and it in fact had 4 hubs. It was very successful and in one of those hubs was the head office of Nokia.
 
But polycentric cities need transport infrastructure too. Imagine in the Christchurch case if instead of a ring road we had a ring motorway, connecting the southern motorway Russley/johns road, QE2 and Anzac av with offshooting motorways going to Lyttleton, North, West and South. This would allow cars to travel at constant energy efficient rate while sucking cars off the smaller urban roads allowing them to be more pleasant for bicycles, pedestrians, buses etc.
 
Of course it is ironic we are forcing people to rebuild outside of Christchurch in places like Rolleston or in lifestyle blocks. Thus causing the long commutes that this tight planning restrictions were meant to prevent.
 
If Christchurch doesn't make some big investments in transport infrastructure while we are small and efficient we will grow like Auckland and be a relatively small city with big city problems.

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",I have got to comment on broader issues here".
 
We look forward to it.
 
Maybe you could start by reading #3 above, and contemplating what it might mean for your precious medium thingy, and the impact it might have on the already nonsensical idea of 'land supply'.
 
 

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#4 and the nuclear trained crew to look after the reactor?   So a considerable number of OZ officers  would have to go to the US or UK training schools....and need constant supervision and interaction with by these 3rd parties to make sure they are up to scratch....
loony.
regards

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Perfectly safe, you're not the only one capable of studying engineering, physics math etc.

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Except I actually worked at Barrow-in-furness as a test and commissioning engineer robby....
Its not the study, its the experience and then the ongoing training and study with peers. The Ozzies lack that 50 years of hard won backup....Im sure they'll get there but the security implications alone...........
Anyway there was a reason the UK went for 2400s after the ssn14 class nukes,,,quieter, you cant turn off certain pumps in a nuke.
regards

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http://www.stuff.co.nz/the-press/business/the-rebuild/7937671/Quake-hit-Bicycle-Thief-to-be-demolished
 
This is madness!
As former Mayor Gary Moore elegantly stated: "The Blue Print is a commercial contraceptive."
My question is to the Canterbury Law School: When are you going to put down your knitting needles and go into bat for these guys???

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http://www.stuff.co.nz/the-press/business/the-rebuild/7937671/Quake-hit-Bicycle-Thief-to-be-demolished
 
This is madness!
As former Mayor Gary Moore elegantly stated: "The Blue Print is a commercial contraceptive."
My question is to the Canterbury Law School: When are you going to put down your knitting needles and go into bat for these guys???

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What do you all think about the debt cancellation Rolling Jubilee idea? #8
The organisers say that for $50k they can buy $1 million worth of debt and cancel it rather than collect on it. 
Very interesting!
What kind of impact could this make?
Would the banks actually let this happen?
Would the wider population understand the motivation behind this idea and support it without really understanding how banks make money and create debt out of nothing? 
Will Occupy organisers be clearer about their message this time or will the population at large remain befuddled about what it is they are trying to achieve and why?

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#5 Fiscal Cliff
Coming out of the US over the coming weeks there will be a lot of posturing over the fiscal cliff. Best analysis heard so far is from PBS Newshour (Brooks and Shields) - raising taxes is the political kiss-of-death for any political party. Both sides will play brinksmanship, go over the cliff, allow the tax-cuts to expire, and then negotiate partial re-instatement of the tax-cuts. A political no-blame-game. Tax-cuts will look good for both parties. Getting there will "sound" painful.

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And they will have to print to make up the shortfall :-)

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re #4 - always loved the dialogue from Peter Weir's Gallipoli movie between the young guys on their way to war and the old camel driver who finds them in the desert....

 

You looking for work?

      No, I'm off to the war.

What war?

     The war against Germany.

I knew a German once. How did it start?

      Don't know exactly, but it was the Germans' fault.

The Australians fighting already?

      Yeah, in Turkey.

Turkey?! Why's that?

       Ask him.

       Cos Turkey's a German ally.

Ah, well, you learn something every day.

Still, can't see what it's got to do with us.

       We don't stop them there, they could end up here.

(while scanning across the baron horizon) .......and they're welcome to it.

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Too true. Nice one

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World cannot afford second Fiscal Cliff after Europe’s failed attempt
http://www.telegraph.co.uk/finance/comment/9670975/World-cannot-afford-s...
 
 

It is a solemn oath to the American people -- under pain of political perjury -- crafted by my old friend Grover Norquist to block retreat.

Each member of the covenant vows to “oppose any and all efforts to increase the marginal income tax rate for individuals and business; and two, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates”.

Mr Norquist can legitimately argue that the US elections have reinforced the mandate of those demanding radical action to shrink the Leviathan state. TheRepublicans held the House -- the paramount budgetary institution -- by a fat majority on a crystal clear message. The party will now hold 30 governorships, the highest in twelve years.

You can see why they might feel justified in digging in their heels, if necessary letting the nation go over the fiscal cliff at the end of the year. Taxes would go up, but not with their fingerprints on the legislation. The White House could be blamed.

 

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Yes - the Republicans won a few more seats - but their overall votes for House members dropped significantly compared to the Democrats.  In 2010 the spread was  53.5% R,    46.5% D.    And in 2012 it was 50.3% D to 49.7% R.    The Republican controlled states gerrymandered the congressional districts based on 2010 census to their advantage.   
http://thinkprogress.org/justice/2012/11/07/1159631/americans-voted-for-...
That won't make any difference to the Grover Norquist crowd nor to the results - but it does show one Republican strategy that paid off.    Hardly a proportional outcome as should be expected in the population based House.