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Here are my Top 10 links from around the Internet at 10 to 2. I welcome your additions and comments below or please send suggestions for Monday’s Top 10 at 10 to bernard.hickey@interest.co.nz We try to absorb everyone’s workflow energy…

1. End of empire – The Southland Times reports that New Zealand Resorts Ltd, one of the companies in Ross Wensley’s Queenstown property ‘empire’, has been placed into liquidation.  It owns The Club development.

Mr Wensley’s developments have been hit hard by the credit crunch and a drop in apartment prices.

Last year Mr Wensley travelled to the United Kingdom to chase money owed by people who had bought apartments at the Marina Baches complex in Queenstown, leaving his company $23 million out of pocket.

2. Map of doom – Check out this county-by-county interactive chart of mortgage delinquency rates in the United States. It’s from the New York Federal Reserve. If you have any doubts about the scale of the disaster unfolding in the US then you need to look at this. Most of the West Coast, South West and South East have delinquency rates north of 10%.

3. Damaged credibility – Ron Hera makes the case at Seeking Alpha for eventual hyper-inflation in America and the destruction of the US dollar. There have been plenty of doomsayers predicting this, but so far the US dollar hasn’t collapsed and demand for US Treasuries remains strong, partly because all the money printed is sitting idle in Federal Reserve accounts. Hera reckons it’s all about credibility in the long run, rather than financial market confidence now. Eventually, the money printing will kill the US dollar, he says. It’s a long read but well worth it. HT Troy Barsten via email.

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Here are my Top 10 links from around the Internet at 10 to 12. I welcome your additions and comments below or please send suggestions for Friday’s Top 10 at 10 to bernard.hickey@interest.co.nz We have good feng shui at Interest.co.nz…

1. Price fall coming – Glenn Thomas at Gold Survival Guide has crunched the numbers to work out the ratio of New Zealand median house prices to gold (ozs) to see if the two have any sort of connection. There does seem to have been a reasonably close correlation from 1980 to about 2006, but since then gold has sprinted ahead, reducing the ratio. If the pattern followed, house prices would follow too.

I’m not sure I understand the direct connection, but it’s certainly curious and a great looking chart. I suppose it’s all about the deflated value of money and the relative value of hard assets. It suggests that house values have been pumped up by cheap debt, which I do agree with. Here’s what Glenn has to say.

If history repeats and the trends in the US and UK are similar to NZ, could we in fact be heading down close to 50 ounces again by the end of the current financial crisis?

Also worth noting is that while house prices in NZD terms peaked in 2007, priced in gold they had already topped out in 2005. So, at first glance it may seem like you’ve “missed the boat” if you didn’t sell housing and buy gold in 2005 when the top was in at 500 oz. With the ratio currently standing at about 250 oz you would have been able to buy back the same house now and still have 250 ounces left over. Or put another way you could now buy 2 houses.

That is, twice the buying power in real estate by holding gold for 4 years.
However if we consider that in the 70’s the ratio bottomed at 50, this is a further 80% drop in the ratio from today’s value!

2. Cheap at the price – This story in The Age captures the signs of the times in Australia nicely. It’s about some refugees from El Salvador who now live in Australia and are buying investment properties in America. They are essentially leveraging their capital gains from the bubbly Australian housing market to pick through the wreckage in America to pick up some bargains. Anyone in New Zealand doing this? HT Ross Palmer via email.

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Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below or please send suggestions for Thursday’s Top 10 at 10 to bernard.hickey@interest.co.nz We have no use for bathtubs at Interest.co.nz

1. Fast bank runs – Yale professor Gary Gorton, who is a pillar of the establishment, has written a piece for Zero Hedge warning about the risk still in financial markets of wholesale runs on banks and shadow banks. Here’s the full PDF and ZeroHedge’s take below.

The scariest thing is that we have still done nothing to address the propensity for institutional panic to come back, which courtesy of money now being electronic 1’s and 0’s, will certainly take an even faster time to hit its plateau when it appears next. Keep in mind that post the Lehman crisis, it only took 3 days before the money markets locked up and were in need of governmental guarantees, while the broader repo market was shut down within 48 hours.

As retail investors tend to enjoy obtaining physical delivery of their asset (read FRNs), for institutions, the wave can turn at a heartbeat, and next time around the administration will likely not even have 12 hours before a complete financial, systemic, and irrevocable lock-down is in place. The only backstop to this risk- the Federal Reserve.

2. China rate hike? – China may be about to hike interest rates within weeks, Bloomberg reports after a survey of economist’ expectations on inflation.

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Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below or please send suggestions for Wednesday’s Top 10 at 10 to bernard.hickey@interest.co.nz We never have to pretend to be inspired at Interest.co.nz

1. Due Diligence – The fallout is now raining down in Southland over the collapse of a whiffy deal involving a Maori hapu backed by Dubai money to buy 28 Southland farms. The Otago Daily Times reports Federated Farmers as criticising the real estate agents involved for not doing much due diligence on the buyers. Google is a wonderful tool…

Federated Farmers rural security spokesman and Southland farmer David Rose said a cursory check would have found the involvement in the hapu buying the land of convicted fraudster Shane Wenzel and the failure to complete the $150 million deal showed the need for higher professional standards in the real estate sector.

“When a simple Google search revealed a convicted Australian criminal was associated with the people fronting this deal, you can see why Federated Farmers was more than sceptical,” he said.

But the agent trying to close the deal, John Wright of LJ Hooker, in Invercargill, disagreed, saying the proposal was not conventional and required different thinking. ”It saddens me that Federated Farmers continue to grandstand on the Arab-hapu project, using old conventional thinking around something that is far from conventional.”

An Auckland hapu with financing from Dubai proposed to buy 28 farms in Southland and enter into a 99-year food supply contract with the Dubai interests. The deal fell over last week due to the hapu failing to meet deadlines and a breakdown in communication.

2. China’s ghost city – Regular readers might recall my links earlier this year to an Al Jazeera story about the empty city of Ordos in China where the government had spent money in a ‘bridges to nowhere’ style to artificially boost the economy. There was some controversy about the story and some people inside China (possibly connected to the government) said Ordos was plenty full.

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Here are my Top 10 links from around the Internet at 10 to 12. I welcome your additions and comments below or please send suggestions for Tuesday day’s Top 10 at 10 to bernard.hickey@interest.co.nz We welcome insubordianation at interest.co.nz

1. ‘Smiling like cats’ - Rob Alloway tells the Sunday Star Times and Radio Live’s Sunday Business (which I contribute to) all about how Hanover’s Mark Hotchin forgave the personal guarantees by some of his developer mates for loans that were then sold to Allied Farmers a few days later.

One personal guarantee was for more than $20m and the other for “several hundred thousand”, Alloway said.

He said there was no commercial reason he could think of for doing it, particularly for such a large portion of Hanover’s loan book. He said it smacked of “looking after your mates before you jump off the ship”.

“Some of these things we did not know about until after [the deal was done],” Alloway said. “We called those two borrowers in, and they were smiling like cats.”

Alloway said he believed the relationship between finance companies and some borrowers had been too cosy. “I think this is more of a systemic thing that has been running and is not just associated with Hanover, but other finance companies as well.”

2. Just Ponzi schemes – Brian Gaynor let rip in the best possible way in his NZHerald column on Saturday, arguing regulators were asleep at the wheel in allowing finance companies to operate like Ponzi schemes.

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Here are my Top 10 links from around the Internet at 10 past 11. I welcome your additions and comments below or please send suggestions for Monday day’s Top 10 at 10 to bernard.hickey@interest.co.nz We buy half as much at interest.co.nz

1. Leaky, leaky, leaky – Yesterday I talked about New Zealand being so ‘lucky, lucky, lucky’ (HT to the immortal Kylie Minogue) to be next to the Lucky Country. Today it’s worth pointing out we’re not so lucky with leaky buildings. This NZHerald report explores another aspect of the problem that is only now dawning on New Zealanders. Many of our schools and hospitals are leaky too. HT Troy Barsten via email.

Finance Minister Bill English talked a bit about this earlier this week in our video interview with him.

This school in Papamoa will cost NZ$7 million to completely rebuild. How many other rotting public buildings are out there?

Tahatai Coast School in Papamoa has begun a rebuilding project which is expected to take up to three years and cost $7 million. Principal Ian Leckie said not a single building at the modern school was unaffected by the rot.

Twelve of 33 classrooms will be demolished, with the library, a special-needs unit and teacher resource rooms. Classrooms that are not demolished will be completely refitted.

2. The missing link – Vincent Heeringa at Idealog has written a long and thoughtful piece on why our economic performance has been so poor compared to others. He rightly laments John Key’s decision in his reform speech not to reform the economy, but Heeringa goes on to ask some tough questions about New Zealand’s ability to turn our R&D into money.

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