Tuesday's Top 10 with NZ Mint: Cullen is wrong; Too big to jail; 'The drug war is a joke'; White collar penalties; Banking fast track; Dilbert

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

Bernard is on his summer break and will be back in late January 2013, probably from Wellington.

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

See all previous Top 10s here.

1. Why cyclical KiwiSaver would be an awful tool 
Matt Nolan doesn't think much of Michael Cullen's idea to allow policymakers to adjust the employee portion of KiwiSaver, instead of using the OCR. Exporters who want policy to apply to everyone else, just not them, like it. But not Nolan. He has four reasons which he lays out on TVHE:

There is little evidence Kiwisaver increases national savings – and when it does, it is because of the “credit constrained”.

It isn’t savings that is the monetary policy issue – it is investment/consumption demand.

It is not politically independent.

It is even blunter than interest rates.

2. Too big to jail
The Economist has a revealing graphic, and another story here. Notice how all the banks in this list have most of their operations outside their home countries (except perhaps Lloyds) - sort of suggests a corporate sociopathic personality - behave at home for the reputational branding, misbehave abroad for the profits.

3. Allowances and entitlements
What if families operated like governments ...

4. Today's raw market data ...
A quick holiday update:

5. A euro-less Union?
Barry Eichengreen wonders out loud ...

Europe’s crisis has entered a quiet phase, which is no accident. The current period of relative calm coincides with the approach of Germany’s federal election in 2013, in which the incumbent chancellor, Angela Merkel, will be running as the woman who saved the euro.

But the crisis will be back, if not before Germany’s upcoming election, then after. Southern Europe has not done enough to enhance its competitiveness, while northern Europe has not done enough to boost demand. Debt burdens remain crushing, and Europe’s economy remains unable to grow. Across the continent, political divisions are deepening.

For all of these reasons, the specter of a eurozone collapse has not been dispatched. Would the European Union survive? The answer depends on what one means by the EU. If one means its political organs – the European Commission, the European Parliament, and the European Court of Justice, then the answer is yes. These institutions are now a half-century old; they are not going away. As for the single market, the EU’s landmark achievement, there is no question that a eurozone breakup would severely disrupt its operation in the short run. Trucks would be halted at national borders. Banking and financial systems would be balkanized. Workers would be prevented from moving. But what would happen then?

There has always been a debate about whether it is possible to have a single market without a single currency. Critics of the euro have always asked: Why not? Under this scenario, the Single European Act, signed in 1986, would remain in place. Member states would be obliged to restore free movement of goods, capital, services, and people – the EU’s “four freedoms” – as quickly as possible. Given the clear benefits that Europe has derived from the single market, they would have every incentive to do so. Proponents of the single currency object that if Europe has separate national currencies, it will have separate banking systems, each with its own lender of last resort. So much, then, for a single market in financial services, or for harmonizing regulation and removing trade barriers behind the border. Free trade in goods and free movement of capital and labor would not survive the euro’s collapse, these diehard Europhiles warn. We may yet find out if they are right.

And what about the acquis communautaire, the body of law that enshrines member states’ obligations not just in terms of economic policies, but also in terms of democracy, the rule of law, and fundamental human rights? The intent of the acquis is not simply to make Europe more prosperous, but to make it more civilized. Spain, Portugal, and Greece had to establish functioning democracies before applying for EU membership. Even now, Hungary and Romania feel peer pressure and face sanctions from their EU partners when they engage in dubious electoral practices, compromise their courts’ independence, or discriminate against minorities.

6. 'The drug war is a joke' - Rolling Stone's Matt Taibbi says America's decision to settle with HSBC over its drug money laundering problems exposes a troubling double standard. The detail about the drug dealers boxes being designed to fit HSBC's tellers' windows is stunning. Watch the video - and you thought this was fiction?

If you've ever been arrested on a drug charge, if you've ever spent even a day in jail for having a stem of marijuana in your pocket or "drug paraphernalia" in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows."

This bears repeating: in order to more efficiently move as much illegal money as possible into the "legitimate" banking institution HSBC, drug dealers specifically designed boxes to fit through the bank's teller windows. Tony Montana's henchmen marching dufflebags of cash into the fictional "American City Bank" in Miami was actually more subtle than what the cartels were doing when they washed their cash through one of Britain's most storied financial institutions.

7. Another white collar criminal gets home detention, lawyer gets even less
If you think 9 months "home detention" is light for a crime of defrauding others by inventing $10 mln in bogus loans, then what about the masterminds? Matt Nippert has the latest update of something that actually happened in 2002.

Robert Hucker, acting for Friedlander, said his client was not the mastermind of the false loans scheme, “which was designed by solicitors assisting Mr Friedlander at the time”. The law firm at the centre of the SFO investigation is subject to a permanent suppression order.

8. Is the future 76 year old politicians?
It is one thing to announce a come-back, but will the voters want him? And if they do, what will that say about Italy and its citizens? The one thing about an ageing population might be that we get politicians well past their prime too. (Winston will be 69½ at the end of this Parliament.)

9. Banking fast track
George F. gets his man. Well before he got the top job at St George Bank, an unemployed man in Australia managed to exploit a bad case on internal oversight gone wrong. I wonder what happened to the bank employee who was supposed to be managing this customer? Heck, that is about a third of George's salary. More from the Goulburn Post:

It's called the ''Complete Freedom account'', but St George Bank probably didn't have in mind the same kind of latitude as Luke Brett Moore. The unemployed 25-year-old allegedly defrauded the financial institution to the tune of more than A$2.1 million over 18 months, simply by overdrawing his account. 

10. Certainty: the enemy of science, the reason for politics
Believe those who are seeking the truth. Doubt those who find it. André Gide