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, 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. UBS's lies - Felix Salmon at Reuters reports on what the FSA found
Call me naive, but after the Barclays revelations, I actually thought that I couldn’t be shocked about the extent of Libor manipulation. Boy, was I wrong. I could quote all 40 pages of the FSA notice fining UBS for Libor fraud: this is far, far worse than simply understating UBS’s borrowing costs so as to make investors think the bank was healthy. In fact, a lot of the fraud was designed to move Libor up rather than down: whatever the traders could make the most money manipulating.The FSA concludes, quite explicitly:
UBS’s misconduct is, although similar in nature, considerably more serious than Barclays’ because it was more widespread within the firm, being exacerbated by the control failings, in particular the inherent conflict of interest in its submission function. More individuals, including Managers and Senior Managers, participated in or knew about the manipulation and there were more instances of individual manipulation, across more currencies. Furthermore, the extent to which UBS colluded with others was significantly greater and involved financial rewards being paid to Broker Firms.
The latter point is key: UBS didn’t just manipulate its own submissions, but actively attempted to manipulate other firms’ submissions as well. And at points the bribery was so explicit as to beggar belief that anybody would ever communicate such things on the record:
If you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today … I will fucking do one humongous deal with you … Like a 50,000 buck deal, whatever … I need you to keep it as low as possible … if you do that …. I’ll pay you, you know, 50,000 dollars, 100,000 dollars… whatever you want.
A “50,000 buck deal” here does not mean a $50,000 deal: it means a $50 billion deal. If the broker on such a deal siphons off a fee of 0.0001%, that’s $50,000 right there.
2. Without magic, Santa would need 12 million employees
Someone figured out that there are 760 million children that need a Christmas present. Then an enterprising journalist at NPR asked around about how big the Santa Inc. logistics operation actually is.
Here are just a few of the positions Santa would need to fill to pull off Christmas. (Note: For the complete list, see the graphic at this link.)
* 46 international distribution centers, to allow Santa to reload as he crosses the globe. That means 400,000 workers for loading presents onto Santa's sleigh.
* 60,000 workers to develop optimized flight plans and communicate with the FAA, secure flyover rights, etc.
* 7,000 people monitoring demand and tweaking his route in real time.
* 100 meteorologists to make sure Santa doesn't fly into a blizzard.
* 40,000 people to help Santa clear customs.
3. Peak farmland?
If you're looking for a dash of optimism about the future - and who isn't, these days? - you can find it in a rosy new prediction about the planet's ability to produce food for the next half-century. It comes from a trio of researchers at Rockefeller University.
Their bottom line: We have more than enough land to grow all the food that the world's increasing population will desire. In fact, farmers' ability to grow more food on less land will even outrun demand for that food, and farmers will abandon land once used to grow crops.
The Rockefeller group, for instance, says that demand for meat, and in particular, beef, is not increasing as quickly as some have predicted. Chinese are eating more meat as they get richer, but they are not duplicating the meat-heavy diets of many other countries.
The single most important assumption, however, concerns farmers' ability to increase the amount of food they can grow from each acre of land.
The Rockefeller University group assumes that farmers will continue to increase their crop yields at roughly the same pace as they have since 1961 — some 1.7 percent per year. Others, like the FAO and the International Food Policy Research Institute, don't believe that's likely. Yield increases have been much lower — about 1.2 percent per year — over the past 20 years. And that's before one even considers the impact of the climate change, which could be devastating for some regions. Jesse Ausubel, who led the Rockefeller group, says that it's "arrogant" and "peculiar" to assume that the world's farmers cannot increase their productivity rapidly, if needed. Large gains in crop yields haven't been needed over the past two decades, he says, because food has been relatively abundant.
4. Today's raw market data ...
A quick holiday update:
|
Today 9:00 am |
Yesterday 11:10am |
Four weeks ago |
One year ago |
|
| NZ$1 = US$ | 0.8336 | 0.8339 | 0.8098 | 0.7677 |
| NZ$1 = AU$ | 0.7955 | 0.7959 | 0.7747 | 0.7619 |
| TWI | 74.35 | 74.38 | 73.04 | 68.62 |
| as at eob New York/London | ||||
| Gold, US$/oz | 1,650 | 1,665 | 1,615 | 1,614 |
| Dow | 13,278 | 13,251 | 12,788 | 12,104 |
| Copper, US$/tonne | 7,825 | 7,946 | 7,433 | 7,275 |
| Volatility Index | 17.74 | 17.36 | 15.02 | 23.22 |
5. Getting things sorted
Reuters reports a bunch of Chinese banks have grouped together to create a rainy day fund in case they get into trouble. They're putting up 10% and borrowing the rest ...
A group of small- and medium-sized Chinese banks including China Minsheng Banking Corp has started a 3 billion yuan ($480.3 million) rescue fund to guard against financial risks as the country frees its interest rate market and as its economy slows.
The group of 22 banks and one insurance firm have banded together to start the fund with 10 percent cash upfront, said Shi Jie, an assistant to the chairman of Minsheng Bank.
The remaining 90 percent of the fund is backed by guarantees from members to provide financing when needed, he told a news conference. Members pay at least 10 million yuan to join the fund and get up to 500 million yuan of financing when in need.
6. Here's a quite technical explanation of Quantitative Easing
from someone who may not be a fan. HT Ritholz.
7. New Record
Another record milk production month in October. The nation's dairy farmers produced 242,746 tonnes of milksolids from 2,994,000 tonnes of milk, higher by 3.6% than the previous record in October 2011. October is the 'money month' when the maximum milk flush occurs. Prices are holding in the latest globaldairytrade auctions.
8. Bonus Dilbert
9. 'A beautiful deleveraging'
Renowned hedge fund manager Ray Dalio talks a lot in this Dealbook conference video about how deleveraging is working in financial markets and global economies. HT Macrobusiness.
QE is losing its efficacy.
Rate turn probably finally coming late in 2013.
The world is still in deleveraging. Effects of QE diminishing as we do more rounds..
We’re facing austerity. And growth is flagging. This is an unprecedented risk the economy is facing. A slowdown with very little room to maneuver.
10. Today's quote
"Money is like a sixth sense - and you can't make use of the other five without it." - W. Somerset Maugham
Economic growth
Select chart tabs
11. oh, and one more thing
In case you overlooked it, today is the end of the world ...
So here is a convenient live blog of the event - you wouldn't want to miss it. And of course R.E.M. knew it was coming ... Everyone is making jokes about it like there is no tomorrow.
20 Comments
#1. These fraudulent banks. We should stop getting excited about these huge billion dollar fines the banks are getting. It seems to be a cosy relationship deal with the supposed regulators and the wrongdoers. This sort of fine is just a cost of business for the banks. And what do the bank employees (and the directors) care anyway. It's just shareholders money.
If the rules changed things might be different. Ban the dodgy fines process and insist on treating these people like criminals. I mean leading these people away in handcuffs and serious jail time.
That might make quite a difference
If ubanites don't build over good farmland,civil engineers pave it, local body's bury bodies in it or yuppies buy it in small unproductive lots for their daughters pony.
http://www.youtube.com/watch?v=TYljx_efGwc
It's Friday Yay...sorry it's late but so was the end of the world.
Like to leave you with a take care message this Christmas, so you won't make the boo boo's I do.
Be careful during the holiday parties
I would like to share a personal experience with all of you about drinking and driving.
As you well know, some of us have been known to have had brushes with the authorities on our way home from an occasional social session over the years.
A couple of nights ago, I was out for an evening with friends and had a couple of cocktails and some rather nice red wine.
Knowing full well I may have been slightly over the limit, I did something I've never done before - I took a cab home.
Sure enough, I passed a police road block but, since it was a cab, they waved it past.
I arrived home safely without incident, which was a real surprise; as I have never driven a cab before and am not sure where I got it or what to do with it now that it's in my garage. The very Best of the season and what it may bring to you all....Happy holiday !
The RBA has just come to the conclusion that interest rate movements may not work in the way they thought/ hoped. I assume the next step is to consider a few alternative tools that do address specific issues. Maybe after that, the RBNZ might even come to the same conclusion.
See today's article in the AFR.
http://www.afr.com/p/national/rba_admits_rate_cuts_are_losing_oDzCpcqg1…
If subscription rules block it; here are a few key points:
A paper from the Reserve Bank of Australia backs the view that cutting interest rates is less effective in boosting the economy than it used to be and says this is because more people depend on income from deposits.
Lower rates can help the economy as they cut repayments for families with debt. But a research paper entitled “Households’ interest-bearing assets” by RBA economists Ellis Connolly, Fiona Fleming and Jarkko Jääskelä says a growing number of people depend on income from interest-earning assets such as term deposits and so lose out from rate cuts.
Since 2006, household holdings of interest-earning assets have grown at about 8 per cent a year, while household debt has climbed at only about 7 per cent. Households now carry about $1.6 trillion of debt and have increased interest-bearing assets to $1.23 trillion.
“This implies that, in aggregate, the net effect of a change in interest rates on the cash flows of the household sector as a whole would have diminished slightly over recent years to be closer to where it was in the early 2000s,” the paper argues.
Despite the shift to saving and away from debt, the paper says cutting rates still stimulates the economy by making it more attractive to invest in property and shares.
Moreover, it appears that it is mostly older, richer people or their superannuation funds that have wealth in income-earning assets and they typically have more flexibility in budgeting.
Still, the RBA paper says it is possible that cautious older, richer people who want to leave more for their children or prepare for a rainy day may still choose to cut spending as income from deposits falls
Compliments of the season to everyone in the meantime.
Some Xmas fun in Russia ( just don't freeze to death though in the coldest temps in 70 years ! )
A couple of weeks back I read the book "Everest, A Day to Die For", which was all about the tragic day that Rob Hall and many others lost their lives. The book was about information regarding weather forecasting that was suppressed or ignored in all the official accounts of events. A good read, but Breashears film and book were part of that suppression of facts. Turns out the Rob Hall behaved questionably as well.
Sorry about being elliptic. I was referring to the Treasury forecasts of global growth that formed the basis of the Government's budgets over the last four or so years. Assuming that these growth rates were achieved we were promised balanced budgets by 2013 then 2014 then 2015......... As I say you can create any kind of rosy future a long as you make the right assumptions in the first place. If I heard the recent reports right the only sector truly glowing in NZ right now is construction and that is being paid for not by our efforts but by the re-insurance companies of Switzerland. Take the Santa Claus element out of our national accounts and ask whether the assumptions of 2008/9/10 came anywhere close.
I am sure that an institutuion renowned for its medical research expertise can tell us something about the future of global agriculture. I would like to know about what strategies they predict will enable us to produce all the extra kilojoules: land use changes, mechanisation, crop and animal breeding, more efficient distribution, dietary changes. I would like to know whether they have factored in the constraints of global warming, energy, over-extraction of natural resources like soil and water. If they have - good on them. If they haven't this is just boosterism for the "Why worry - be happy" faction.
Having written any number of bullshit reports in my time I am happy to be "negative" if it means being realistic and avoiding delusion.
Hows that NZ Current Account going when added to this dubious pitiful figure?
Hows that growth figure when including annual inflation which we all know BE loves to ignore because he doesn't actually understand the concept?
Have the REAL interest payments on Government borrowing (credit swaps) been added into this calculation of alledged 2.5% "growth"...................BS
By the term 'growth" what are we really talking about? Growth in spending? Growth in more personal and government Debt? Growth in the dubious doesn't mean a thing figure called GDP, Growth in telling more porkies?
My point: Negativity unfortunately is sometimes OUR reality. Many never believed the GFC would occur did they? Many of us predicted it as far back as 2006............ but hey...........what would "negative" loons who predicted such things know right? Bill, John, Alan, Ben, Tim, Paul & Co..............ALL knew better didn't they ?
Nahhhhhhhhhhhh
Grant A
Here's a link to my prediction Nov 11 (comment at 11.40am) that unemployment would be 7% in 2012 - most economists were predicting circa 6%:
http://www.interest.co.nz/news/56527/nz-unemployment-rate-rises-65-june…
What's it at present? About 7%
I reckon it will be about 7% this time 2013 too, maybe higher (IMHO risk is on the upside not downside). Aus is slowing, less kiwis will be able to escape to Aus to get employment. But ChCh rebuild will pick up a little more
Could be 9% plus in Auckland
Anyone following whats going on with POLi (the internet payment system) and the banks? All 3 big banks have come out to say their internet banking customers should not use POLi as it compromises the security of customers (and one assumes then that a customer suffering monetary loss would no longer be subject to the banks guarantee regarding internet fraud).
Now Air New Zealand offer 2 ways of paying when booking flights via their internet service - credit card (which attracts a scandalous 4$ PER SECTOR extra charge) and POLi (no charge). Now effectively POLi has been stripped of its legitimacy by the banks, are AirNZ in breach of Commerce Commission rules (for example) in not providing a usable non-CC option for payment which can actually be used? Anyone know the regulations here, and how is the best way to turn the heat on Air New Zealand?
Chris Martenson on shale plays,
http://oilprice.com/Interviews/Dont-Fall-for-the-Shale-Boom-Hype-Chris-…
"Here's an example, in the Barnett shale gas play, in one region where they drilled 9,000 wells, there was just this exponential increase in gas output. But then there was no more room for any more wells in that section, and within one single year the gas output from that region with all of those beautiful, technologically marvelous 9,000wells had fallen by 44%. One year!"
"The relationship between energy and the economy is the most important thing that anyone can, and should, work to understand. In the past, we've always had whatever amounts of oil we wanted to support the sort of economy we operate, and that happens to be an economy that grows exponentially. The rate of growth that seems to work best at about 3% real and 6% nominal growth."
8><----------
"So will we change through pain or insight? Those are the two main avenues of change, either at the individual or cultural level. I truly believe that pain is probably the most likely way we're going to change in this story. Maybe not - hope springs eternal - but from a betting standpoint change will follow pain."
8><----------
"
Oilprice.com: And what can cause this to happen? As you say, there's no political will to make these changes at present.
Chris Martenson: We need a different narrative. Right now, the narrative we're running is simply this: "We need our economy to grow." That's the first, second, third, and last piece of discussion that we ever seem to have.
It turns out we need another narrative in here which says, "Hold on. We can't grow infinitely, we know this." The question becomes, "When the remaining resources do run out, where would we like to be? What do we want the world, the landscape, and our energy infrastructure to look like?'' And that's the thing that's completely missing. We're just saying, 'Our strategy is we're just going to continue to grow.' It's not a strategy, it's a tactic."
See's right through it.
regards
Here we go. Jiggery-Pokery. CPI. Inflation. How to make it disappear.
If you ever doubted the CPI was a plaything of government (and any other statistic you like) check this out. John Boehner's counter-proposal includes changing the way CPI is calculated. Ronald Reagan showed the way using "substitute" products. Now Boehner wants to implement another "change". One supposes that would become the international standard for all other countries.
The new calculation, called chained CPI, includes assumptions on consumer habits in response to rising prices, such as seeking cheaper alternatives, and would result in smaller benefit increases in future years. Statistics supplied by opponents say the change would mean Social Security recipients would get $6,000 less in benefits over the first 15 years of chained CPI.
Boehner proposed changes to the way the Consumer Price Index is calculated would achieve savings of $200 billion. Sheer magic.
"The truth is that politicians are telling lies"
http://www.telegraph.co.uk/news/politics/9762510/The-truth-is-that-politicians-are-telling-lies.html
The rotten swine....and all this time I thought............
We welcome your comments below. If you are not already registered, please register to 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.