Here's my Top 10 items from around the Internet over the last week or so. 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.
My must read is #8 from Ambrose previewing a possible Fed rate hike.
1. The real sharing economy is dead - It was a seductive idea. We've all heard the story about how we all own drills that we only use for a total of 13 minutes in the life of the drill.
The solution was to use peer to peer sites to share the drill and avoid a lot of waste and cost. If, somehow, each neighbourhood only needed one drill then wouldn't the world be a much better place?
That was the theory. In practice, the peer-to-peer economy has thrived only when we've been able to make a buck out of something and it was comparable to something that already existed such as a hotel room or a taxi ride..
The big ones, of course, are Uber and Airbnb. I'm a regular user of both and they've helped save me plenty.
But this piece in Fast Company about the end of the sharing dream is well worth a read.
"Let me ask you this," Williams says. "For a drill, which by the way now costs $30, and you can get it on Amazon Now and have this thing delivered to you in an hour if you live in New York City—for something worth $30, is it really worth your time to trek potentially 25 minutes to go get something that you spent $15 to use for the day, and then have to trek back?"
The most successful "sharing economy" startups ended up being those that made the process as efficient and transactional as possible. "What Airbnb did quite well is that the process where you rent a room anywhere is actually quite similar to a hotel room," says Cige, the founder of Zilok. "For peer-to-peer car rental, it’s exactly the same."
Other companies that claimed space under the "sharing economy" umbrella and its halo effect, meanwhile, have transitioned away from that narrative. Lyft may have debuted its service as a more neighborly, peer-to-peer version of Uber—encouraging people to greet their drivers with a fist bump, fuzzy pink mustaches—but now it’s competing on price instead.
2. Paul Keating vs John Hewson - I covered politics in Australia in the mid 1990s and brushed up against the Paul Keating legend before he was beaten by John Howard in the 1996 election.
The shenanigans over the last few days reminded me of how wild Australian politics can be.
This rap/duet video tribute to the battle between Keating and John Hewson over GST in 1993 is a brilliant tribute. Keating won, of course, in the 1993 election "for the true believers."
3. Who's afraid of the bearded wolf? - The election of Jeremy Corbyn to the leadership of Britain's Labour Party shocked a few people. A few are rejoicing, including those on both the left and right, for different reasons.
This piece in the New Yorker is a nice summary. Here's a taster:
To those who study such arcana, it is an article of faith that you cannot hope to win a general election without securing the hearts, minds, gut feelings, and wallets of Middle England—that nebulous but sacred zone which, with its touch of Tolkien, refers to the millions of citizens who have acquired the hobbit-y habits of moderation, and who, having done O.K., would like to do better still.
To them, the nineteen-seventies are not a paradise lost but a wrecking yard where British industry went to die, and where Labour governments got snarled in the machinery of the unions. It was the epoch when the lights went out, when garbage was stacked in the streets, and when the I.R.A. planted bombs in English pubs. And who was it, such folk may now remind each other, who invited Sinn Féin—assumed, at the time, to be the public face of the I.R.A.—to the House of Commons, only weeks after a bomb, intended for Mrs. Thatcher, had exploded at a hotel during the Conservative Party conference and killed five people? Jeremy Corbyn.
4. The demise of Tony Abbott - This piece in the Guardian on the political death of Tony Abbott paints a more nuanced picture. It resonates with me. I remember him as a backbencher who came to Canberra in 1994. He was always a bit different to the usual Liberal crowd. He was more socially conservative and more economically conservative too. Much has changed.
The IPA crowd once mocked and disdained Abbott for his lack of ideological commitment. The Mad Monk worshipped at the wrong altar. He was remnant Democratic Labour party – a soft-headed person who had told John Howard that WorkChoices was a mistake, who’d once confessed boredom with economics. Now it had to be in lockstep, marching in formation to the Lodge.
To be trusted with the party leadership, Abbott needed to shrug off the ill discipline, the boundary riding, the sulking, the periodic raging, the crazy blue sky dreaming of his old life in politics. He would become the victory machine, the talking point spouting automaton, the box checker who would align his interests with fellow travellers powerful enough to set agendas in several continents, and cast shadows over democratically elected governments.
Coal would be good for humanity, and the Coalition would develop the policies to prove it. The deeply suspicious progressivism of carbon pricing would be scrapped, whatever the cost. ($7bn, but who is counting.) Abbott’s signature aggression was to be a targeted weapon, not the manifestation of random acts of pique.
5. Corbyn and austerity - Paul Krugman has a few views on the surprising success of Jeremy Corbyn in the UK. Not surprisingly, they focus on the austerity thing. Rightly, he questions the view now prevailing that the Blair/Brown Labour Government was profligate. The parallels with New Zealand are eerie. The current National Government, which has never run a surplus, accuses Labour of profligacy, even though it never ran a deficit.
Political pundits say that this means doom for Labour’s electoral prospects; they could be right, although I’m not the only person wondering why commentators who completely failed to predict the Corbyn phenomenon have so much confidence in their analyses of what it means.
On economic policy, in particular, the striking thing about the leadership contest was that every candidate other than Mr. Corbyn essentially supported the Conservative government’s austerity policies.
Was the last Labour government fiscally irresponsible? Britain had a modest budget deficit on the eve of the economic crisis of 2008, but as a share of G.D.P. it wasn’t very high – about the same, as it turns out, as the U.S. budget deficit at the same time. British government debt was lower, as a share of G.D.P., than it had been when Labour took office a decade earlier, and was lower than in any other major advanced economy except Canada.
It’s now sometimes claimed that the true fiscal position was much worse than the deficit numbers indicated, because the British economy was inflated by an unsustainable bubble that boosted revenues. But nobody claimed that at the time. On the contrary, independent assessments, for example by the International Monetary Fund, suggested that it might be a good idea to trim the deficit a bit, but saw no sign of a government living wildly beyond its means.
6. China's new capital controls - Last week without much fanfare China reimposed tougher capital controls to slow the surge to the exits that is pressing the renminbi lower.
Jamil Anderlini has the story:
The State Administration of Foreign Exchange (Safe), the unit of the People’s Bank of China in charge of managing the currency, has in recent days ordered financial institutions to step up checks and strengthen controls on all foreign exchange transactions, according to people familiar with the matter and an official memo seen by the Financial Times.
The Safe has ordered banks and financial institutions to pay particular attention to the practice of over-invoicing exports, used to disguise large capital outflows. The administration confirmed the existence of the memo, but declined to comment further.
China has long imposed limits on the amount of foreign exchange that can be bought or sold by individuals and companies, but those controls have broken down somewhat in recent years as the renminbi has become more widely used around the world.
7. Are those controls beginning to bite already? - The AFR reports those controls on Chinese capital flows are already beginning to affect demand for Australian property.
Chinese purchases of Australian property have dropped significantly in the past month, according to agents, as buyers struggle to shift money out of the country following Beijing's move to tighten capital controls.
One Chinese agent said the latest efforts by the central government to avoid large capital outflows were having a "significant impact" on his business.
"It has affected 70 to 80 per cent of current transactions and some have already been suspended," said the agent who asked not to be named.
The tighter foreign exchange rules are also set to impact the federal government's relaunched Significant Investor Visa (SIV), which provides fast-tracked residency for those investing at least $5 million into Australia.
"I think it will be big, big trouble for the SIV program because the amount of money is just too large," said one Shanghai-based adviser, who sells Australian property and advises wealthy clients on their migration plans.
8. Bracing for the Fed - Friday morning's decision by the US Federal Reserve is shaping up as epic, particularly if it's a hike.
Here's Ambrose in rip-snorting good form:
Debt ratios have reached extreme levels across all major regions of the global economy, leaving the financial system acutely vulnerable tomonetary tightening by the US Federal Reserve, the world's top financial watchdog has warned.The Bank for International Settlements said the wild market ructions of recent weeks and capital outflows from China are warning signs that the massive build-up in credit is coming back to haunt, compounded by worries that policymakers may be struggling to control events.
"We are not seeing isolated tremors, but the release of pressure that has gradually accumulated over the years along major fault lines," said Claudio Borio, the bank's chief economist.
Adding to the toxic mix, off-shore borrowing in US dollars has reached a record $9.6 trillion, chiefly due to leakage effects of zero interest rates and quantitative easing (QE) in the US.
This has set the stage for a worldwide dollar squeeze as the Fed reverses course and starts to drain dollar liquidity from global markets.Dollar loans to emerging markets (EM) have doubled since the Lehman crisis to $3 trillion, and much of it has been borrowed at abnormally low real interest rates of 1pc. Roughly 80pc of the dollar debt in China is on short-term maturities.
9. Totally John Oliver reading you your rights to an attorney.
10. Totally Clarke and Dawe talking to Homer (I can't wait for their latest on Abbott's demise)
23 Comments
Re: No 6 - China's New Capital Controls
hmmm... now Bernard didn't you tell us a few months ago that the Chinese govt were set to allow billions of dollars to head to NZ to invest in property via QDII2?
Could you please update us on the progress of QDII2 implementation?
Speaking about Chinese capital controls and its effect in property bubbles:
http://www.zerohedge.com/news/2015-09-15/aussie-property-market-collaps…
#3: What is that defamatory cartoon with the Hungarian flag in the background doing there? Did you see the pictures of violent "refugees" throwing bottles and stones at Hungarian police injuring at least 20 officers? Just before an ultimatum, yes, ULTIMATUM had expired which the "refugees" had given the police to vacate their border posts. I guess it is trendy lefty to applaud immigration anarchy and violence perpetrated by illegals - enjoy your cafe latte. Btw, I have changed my view on Germany. You were right, it is a threat to Europe with the East German woman at its helm who has obviously lost her marbles.
#4: Does not make much sense, does it? Maybe look up the recent New York Times article viciously attacking Australia's border protection policies for more enlightenment.
#5: Krugman again - yawn. Yes, yes, money printing, the holy grail of economics.
Honestly, we have had better from you.
#3 Agreed and to follow I have a question, this is a very complex subject so please forgive this clumsy attempt; Re the refugee crisis in Europe (and flowing to the rest of the world) and its costs and impacts, is it an appropriate time to consider discussing whether or not stable nations should form a coalition to establish the rule of law and democracy in these unstable countries across the world (seem to be focussed on the middle east and Africa)? Remove the reason for people being forced to flee and therefore no more refugees. As it stands now there will be a significant cost at many levels on most countries in the world because of the war swirling around Syria, regardless of whter they are actively involved or not. What will it take to stop religious fanaticism in the ME spreading across the world? Potential this issue can impact on all of us, not matter the separation.
...youre looking at the wrong cause -
"One of the most terrifying implications is the increasingly real threat of wars sparked in part by global warming. New evidence says that Syria may be one of the first such conflicts"
And it you want to understand why this is just the start, then google Grace satellites and learn how the food bowls of these countries and many other - are going to be decimated.
Far too simplistic.
"As the case of Syria demonstrates, it is not simply drought or climate change that triggers revolutions, but political and economic policy choices that worsen environmental problems and undermine local livelihoods."
http://footnote1.com/did-drought-trigger-the-crisis-in-syria/
That article is the most verbose piece of waffle I have read in a long time.
In contrast the original publications correlating drought with the civil war are masterpieces of clarity - and more importantly pass the 'bleeding obvious' test:
http://www.scientificamerican.com/article/climate-change-hastened-the-s…
The very fact that the US Defence Department recognizes the dangers speaks volumes:
''The U.S. Defense Department is taking the warning seriously. It issued a report last November declaring climate change a "threat multiplier” that will impact national security. When Scientific American asked Seager if his group’s research supports that point of view he said, “Yes. It does. Climate change is very much a cause of concern for national, regional and international security and this study makes clear how that can work. The Syrian war has now taken on a life of its own…however, a drought made worse by climate change was one important factor that initiated the social unraveling.”
So why did the citizens of Iraq, Turkey, and Iran not launch an insurrection, when they suffered a far worse weather event than Syria?
"When you look at their climate maps, you can see why this matters. In panel B, below, the big reductions in precipitation, show in darker brown, are not actually in Syria at all, but on the Turkey/Iraq border and in Iran. Referring to panel A, those biggest reductions are also taking place in the areas that already have the most rainfall. Panels C and D are about the recent drought, but are obviously over too short a period to be relevant to "climate"."
http://bishophill.squarespace.com/blog/2015/9/8/minor-drying-in-iran-ca…
And this analysis corroborates the findings of the article I linked to earlier.
I personally accept climate change is a reality, but I deplore the media's predilection for breathlessly linking any catastrophic event which has any chance of creating a media sensation with climate change and the readiness of people to uncritically accept the media line.
It just reduces an event like the Syrian Uprising with an incredibly complex web of causes into a simplistic Hollywood style melodrama. The world deserves better than this if we are to confront the very real threats which we are all faced with.
"I will argue that it was not the drought per se, but rather the government’s failure to respond to the ensuing humanitarian crisis that formed one of the triggers of the uprising, feeding a discontent that had long been simmering in rural areas. Drought forms an integral part of Syria’s (semi-)arid climate and is not an exceptional phenomenon. Countries in the region such as Iraq, Israel, Jordan, Lebanon and Palestine were also affected by drought in 2007/8, but only Syria experienced a humanitarian crisis, with large-scale migration of populations and widespread mal-nutrition. I will argue that this can be explained by the fact that the humanitarian crisis in fact predated the drought."
https://blogs.commons.georgetown.edu/rochelledavis/files/francesca-de-c…
Not so much wars but the migration. Look at those walking out of Syria at the moment, no threat of violence, no army, just ppl walking from starvation to somewhere to eat.
"we'll adapt to that" as the CEO of Exxon keeps repeating...with what? machine guns on the border? As the dry conditions get worse and the food belts move central america has to migrate north and south, or starve.
The people I see walking out of Syria look very well fed. The problem is that there are too many young men with too much energy. They are seeking to make their lives more exciting and the West beckons them through the Internet which hey are probably as much glued to as our young people are. Daily life for a young man in the Middle East or Africa can be overwhelmingly boring and miserable.
murray86, the so-called "stable countries" have absolutely no interest in establishing the rule of law, let alone democracy in Syria or Iraq. On the contrary, they are culpable for fomenting the sectarian conflict in Syria in the first place. An analysis written in 2010 by the U.S. Defense Intelligence Agency acknowledged that its Gulf State allies and Turkey were fostering the forces involved in the Syrian insurgency AND they anticipated the creation of an Islamic State sponsored by the Gulf States and Turkey, which the analysts described to be the ultimate goal of the external forces who were supporting the insurrection.
"the West, Gulf countries, and Turkey support the opposition,” while Russia, China and Iran “support the [Assad] regime.... there is the possibility of establishing a declared or undeclared Salafist Principality in eastern Syria (Hasaka and Der Zor), and this is exactly what the supporting powers to the opposition want, in order to isolate the Syrian regime, which is considered the strategic depth of the Shia expansion (Iraq and Iran).”
https://medium.com/insurge-intelligence/secret-pentagon-report-reveals-…
The Imperial Powers of Europe have a history of instigating sectarian conflict in the pursuit of their geopolitical and economic objectives. Going back to the early 20th Century, the British successfully incited a series of rebellions within the European territories of the Ottoman empire, which signed the death knell of the Ottoman Empire even before the outbreak of World War I. The purpose was to disrupt the construction of the Berlin-Baghdad Railway and the exploitation by Germany of the Middle Eastern oil reserves in Iraq. The British regarded this as a threat to their geopolitical and economic dominance and invested considerable effort in support the overthrow of the Ottoman Empire's grip on the Balkans.
We see striking parallels in current events. Syria is the focal point for the attentions of the Major Powers, primarily because of the increasingly apparent rivalry between NATO and the Gulf States on one side and China, Russia, and Iran on the other. The irony is the source of conflict is oil just like it was in the early days of the 20th Century. Instead of Germany's ambitious project to construct a transcontinental railway which would provide a crucial supply link to the oil wealth of the Middle East, it is over a transcontinental oil and gas pipeline, which the Russians are seeking to build to link Western Europe with Siberian and Iranian oil and gas field in competition with the Gulf States and the sectarian religious differences only further inflame the conflict.
http://www.engdahl.oilgeopolitics.net/History/Oil_and_the_Origins_of_Wo….
Cool, Good response. Thanks but my question still stands. How do we minimise the impact on us if that is possible? This conflagration can expand to impact the whole world and I'd rather see it fought there than here. Should the UN play a role, it'd need to have teeth and the security council vetoes will prevent any real action unless we can change that, so what can we do?
It's too late. Pandora's box has already been opened and religious extremism and conflict have been unleashed upon the world. The attempts of United States and its coalition partners to take the battle to the terrorists in Afghanistan and spread democracy in Iraq and Libya have achieved little. In fact you could clearly argue it has actually made the world less safe.
The objective of the United States and its clients in NATO is primarily to ensure continued dominance of the Eurasian continent and control of its energy supplies.They are employing the well-worn strategy of divide and rule. Pitting one religious sect against the other in a bid to keep them occupied, and relieve the pressure on the United State military. Its better to engage in a proxy war rather than daily footage of coffins containing the sons and daughters of your constituents appearing on the 6 o clock news.
"Divide and Rule focuses on exploiting fault lines between the various Salafi-jihadist groups to turn them against each other and dissipate their energy on internal conflicts. This strategy relies heavily on covert action, information operations (IO), unconventional warfare, and support to indigenous security forces... the United States and its local allies could use the nationalist jihadists to launch proxy IO campaigns to discredit the transnational jihadists in the eyes of the local populace... US leaders could also choose to capitalize on the 'Sustained Shia-Sunni Conflict' trajectory by taking the side of the conservative Sunni regimes against Shiite empowerment movements in the Muslim world.... possibly supporting authoritative Sunni governments against a continuingly hostile Iran."
http://www.theguardian.com/environment/earth-insight/2013/aug/30/syria-…
Have you read the reasons behind Syria's economic and then political collapse? Oil, http://peakoil.com/publicpolicy/syria-peak-oil-weakened-governments-fin…
Climate change impacts, http://www.scientificamerican.com/article/climate-change-hastened-the-s…
Then consider just how many rinse and repeats are probable, (Pakistan, Egypt etc) from that deduce there is little NZ can do or the UN for that matter.
In terms of "fought there than here", there is a saying I like, never fight a battle unless you have to, never fight a battle unless you can win it. ISIS are just a bunch of thugs, as a gang I dont think it is important, the bigger issue is the incompetence of those looking to influence other nations all over the world.
The scale of this is set to get huge in the coming decades, Syria is only the first. As the Americans found in Korea the waves of chinese simply over-welmed them.
Step 1 would be to stop destabilizing countries. Syria and Libya were stable before the usual suspects, US, UK, France screwed it all up. In my view people like Obama or H. Clinton are mass murderers.
Step 2, now that the mess is here, is to engage in nation building. Which will probably mean e.g. the creation of a state of Kurdistan, ackowledging that Iraq, Syria etc will no longer exist in their old boundaries but need to split along cultural, religious, ethnic lines etc. Cleary: too much reality to deal with for "our" ivory tower politicians.
Step 3 would be to replace Merkel's immigration anarchy with the rule of law. Laws that put own people first, and migrants second.
Actually really simply. Problem is that the "West" has currently a political leadership with exceptionally low levels of education and intelligence.
I agree with you PeterPen, I reckon they should be indicted for war crimes and supporting groups who their own government had designated as terrorist groups.
#2 is exactly what they are after. Their intent is to redraw the map of the Middle East, but as India-Pakistan found in the 1940s and Yugoslavia in the 1990s its a blood soaked process to divide a country along ethnic/religious lines.
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