News and Opinion, sponsored by RaboPlus

Here’s my Top 10 links from around the Internet at 10am. I welcome your additions and comments in the comments below. Please send any suggestions for tomorrow’s Top 10 at 10 to bernard.hickey@interest.co.nz We don’t use dead or live squirrels to help us drink coffee.

1. Lloyds Banking Group, which controls Bank of Scotland International, is set to post 13 billion pounds of losses on commercial property, business loans and housing loans, The Times reported.

First-half results due to be posted in three weeks will show that its losses are accelerating, in spite of recent suggestions that the worst of the recession is over.

UBS analysts expect Lloyds to announce a bottom line half-year loss of £6.3 billion as a result of the soaring provisions.

The writeoffs for the first six months of the year would match the losses recorded by Lloyds TSB and HBOS in 2008, as they consummated their disastrous merger. The expected bad debt charge is almost twice what Lloyds paid for HBOS when they came together under the government’s watch last autumn. Total writeoffs for this year at Lloyds could exceed £20 billion.

2. This video after the jump from the American News Project on the drive to audit the Fed is well worth watching. HT Tyler Durden at Zero Hedge

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Here’s my top 10 links from around the Internet in the last day or two.

Vulnerable Credit Channel

The NZ Institute under its new leader Benedikte Jensen issued an eye-opening analysis of New Zealand’s economic problems on Sunday entitled “The Emperor has no clothes”. Jensen concluded that New Zealand cannot rely on lending growth from our banks to get the economy going again. He She says the ‘credit channel’ is vulnerable because 42% of bank funding comes from offshore investors and 63% of that is due to mature in the next year. It’s well worth a read.

And here’s a few solutions…

The NZ Institute then goes on in a companion paper entitled “Funding risks for New Zealand and proposed solutions” to suggest a few ways to prepare for a possible squeeze on foreign funding for New Zealand’s banks and therefore our companies. They include; 

• direct government financing for companies in trouble, as long as they have tried everything else and a collapse would cost lots of jobs; 
• paying for this funding with partial listings of SOEs and cuts to SOE investment plans; 
• encouraging the Cullen fund to invest in NZ companies; 
• creating a sovereign wealth fund called the NZ Growth Fund to own the SOEs and to invest in companies directly; 
• encourage foreign investment in New Zealand;
• move to a compulsory Kiwisaver scheme
• cut corporate tax rates;
• increase land and property taxes;
• consider removing our company dividend imputation credit system.

The report is well worth a read. Your views? Comments below please.

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Here are my top 10 links from the last 24 hours or so. I welcome your favourites in the comments below.

Perhaps we actually need to have coin operated machines to help restrict our savings. This from the often brilliant Rod Emmerson. 

Just a friendly chat…

Moody’s has said it will review the ratings of the big four Australian banks (Westpac, ANZ, CBA and NAB) because of the recent deterioration in the Australian economic outlook. But it pointed out the Australian banks (who also own Westpac, ANZ-National, ASB and BNZ here respectively) are among the strongest in the world and have actually gotten stronger in the last year because of extra Australian government support, successful capital raisings and the demise of rivals. Here’s more details on businessspectator.com. The review’s findings are due by early March. 

The more I see of the banking system in Britain, Europe, the United States and the Caribbean (!) the more we should thank our lucky stars that our banks were too boring, too slow, too unsophisticated and too well regulated to have gone after the easy, stupid and dangerous money flying around in London and New York in the last decade or so. Our banks have borrowed from New York and London, but they didn’t get too deeply involved in the sub-prime debacle or into investment banking. Lucky stars needed thanking. 

You don’t want to piss off these guys…

US and other authorities have been investigating Texan billionaire and cricket enthusiast ‘Sir’ Allen Stanford for 15 years, the TimesOnline reports. But the most interesting development is ABCNews’ reports that the FBI have been investigating Stanford over connections to the notorious Mexican drug runners known as the Gulf Cartel. 

 Federal authorities tell ABC News that the FBI and others have been investigating whether Stanford was involved in laundering drug money for Mexico’s notorious Gulf Cartel. Authorities tell ABC News that as part of the investigation, which has been ongoing since last year, Mexican authorities detained one of Stanford’s private planes. According to officials, checks found inside the plane were believed to be connected to the Gulf cartel, reputed to be Mexico’s most violent gang. Authorities say Stanford could potentially face criminal charges of money laundering and bribery of foreign officials.

No wonder Stanford is on the run and cannot be found. Update. CNBC say the FBI have found him. We’ll have to keep a watch out for him down here. It would be hard to find anywhere further away from the drug cartels than New Zealand. I suspect he will have shaved off that silly moustache and be wearing a baseball hat. If you see him, don’t make any sudden movements with anything that looks like a gun. He might get too much of a fright…

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By BNZ Currency Strategist Danica Hampton

The NZD/USD slipped lower last night, as risk aversion and fears about the global banking sector escalated.

GBP/USD led the move lower last night as the UK banking sector was in the spot light. Any optimism spilling from the UK government’s new banking bailout package (which extends government guarantees and will set up a fund to buy bad debt) was quickly overshadowed by RBS, who warned that it was on track to rack up a loss of GBP28b in 2008.

But the bad news wasn’t just limited to the UK. Standard & Poor’s also cut Spain’s sovereign debt rating to “AA+” from “AAA” and the European Commission cut its Eurozone GDP forecasts for 2009 to just -1.9%. Heavy losses in financial stocks and concern about the global outlook saw the FTSE fall 1%, the DAX drop 1.15% and S&P500 futures fall 1.12%.

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