This Top 5 comes from interest.co.nz's Gareth Vaughan.
As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz. And if you're interested in contributing the occasional Top 5 yourself, contact gareth.vaughan@interest.co.nz.
Source: Queensland Health.
1) The best quarterly financial performance by the container ship industry ever.
The global supply chain woes flowing out of the Covid-19 pandemic have caused delays, problems and higher costs for many businesses and individuals. But they haven't been bad for everyone. John McCown, founder of New York-based Blue Alpha Capital, has crunched the numbers on just how well the container shipping industry has fared. The results are mind blowing.
According to McCown, net income for the container shipping industry in the third quarter of 2021 was US$48.1 billion. As he puts it, that's a staggering US$43 billion, nine-fold increase on the US$5.1 billion profit the industry made in the third quarter last year. Interesting that third quarter 2020 figure was already nearing record highs. The sector has now delivered record earnings for four straight quarters. (Sounds a bit like New Zealand's banks!)
McCown points out that these results are far from what was expected at the beginning of the pandemic. So what has happened?
2) How a banking crisis helped usher the Nazis into power.
Economic upheaval has long been associated with the rise of radical and extreme politicians. In recent times the Global Financial Crisis, when banks blew up the financial world, is often touted as a factor in the rise of Donald Trump, for example.
Going back a lot further fallout from the Great Depression is associated with the rise of Adolf Hitler and the road to World War II. Now, a working paper from the Bank for International Settlements, the central banks' bank, looks at the role of failing banks in the rise of the Nazis.
In Financial crises and political radicalization: How failing banks paved Hitler's path to power, the paper's authors, Sebastian Doerr, Stefan Gissler, José-Luis Peydró and Hans-Joachim Voth, look at whether financial crises radicalise voters. They look closely at the impact of the collapse of Danatbank, Germany's second-largest bank.
We study Germany's 1931 banking crisis, collecting new data on bank branches and firm-bank connections. Exploiting cross sectional variation in pre-crisis exposure to the bank at the center of the crisis, we show that Nazi votes surged in locations more affected by its failure. Radicalization in response to the shock was exacerbated in cities with a history of anti-Semitism. After the Nazis seized power, both pogroms and deportations were more frequent in places affected by the banking crisis. Our results suggest an important synergy between financial distress and cultural predispositions, with far-reaching consequences.
While different factors contributed to the financial crisis during the summer of 1931, in the public's eye it became largely synonymous with the collapse of Danatbank, Germany's second-largest bank. Following a banking crisis in Austria earlier in May, German banks had endured major foreign deposit withdrawals and interbank deposits declined. Danatbank itself faced unsustainable losses when one of its borrowers, a large textile firm, defaulted. In July 1931, it failed. Newspapers at the time quickly singled out Danat and its leading manager, Jakob Goldschmidt, as key actors during the crisis. As central bank support was limited because of depleted reserves and the political conflict between Germany and France over World War I reparations, Danatbank's troubles triggered a bank run by retail depositors, followed by a system-wide banking crisis.
We show that the German banking crisis not only reduced output, but also had important political consequences. It boosted the electoral fortunes of the Nazi Party through both economic and non-economic channels. We collect historical information on bank branch networks and bank connections for the universe of 5,610 joint stock firms. These novel data enable us to reconstruct pre-crisis cross-sectional variation in exposure to failing banks for all major German municipalities. Our empirical strategy exploits that the biggest German banks lent countrywide and that the German economy was heavily bank-based, with persistent bank-firm relations.
We establish that municipalities more exposed to collapsing Danatbank suffered sharper economic declines. Their incomes during the crisis fell by 7.8 percentage points (p.p.) more than the average 14 p.p. decline across cities. Crucially, bank distress bolstered the Nazi Party's performance at the ballot box - localities affected by Danatbank's failure voted significantly more for the Hitler movement. Figure 2 [below] summarizes our key finding: in locations exposed to Danatbank there was a clear upward shift in voting for the Nazis. It added up to 2.9 p.p. to the party's votes between September 1930 and July 1932, equal to 15% of its mean vote gain and 37% of the standard deviation.
Our findings are robust to a wide range of alternative specifications. We examine whether the memory of the hyperinflation (1921-23) or cities' export exposure could account for changes in voting patterns and find no evidence.
Pre-Global Financial Crisis the Irish "Celtic Tiger" economy got a lot of good international press, and was talked up by the likes of John Key. These days, however, it's probably best known as a tax haven for multi-nationals.
Remember the bizarre scenario in 2016 when Apple was ordered to pay Ireland €13 billion in back taxes in a court case brought by the European Commission and the Irish Government opposed the ruling? (Apple and the Government had this ruling over turned last year and the European Commission is now appealing).
In a podcast the Tax Justice Network's Naomi Fowler speaks to the authors of a new book, Tax Haven Ireland. The authors are Kieran Allen of the School of Sociology at the University College Dublin, and Brian O Boyle, lecturer in economics at St Angela’s College.
Here are a couple of excerpts from the podcast.
Naomi: “Do you have examples of things that you noticed as citizens really, of things going bad that kind of really alerted you to all not being well in Ireland?”
Brian: “One was in 2016, there was an expose where a whole series of vulture funds, or, you know, international property funds were all simultaneously declaring their taxes as 250 euros per annum. And we were saying, what's this about? So that would be one, it’s think the Apple case was the other one.”
Kieran: “Yeah. I mean, what's interesting about the Apple case is, is one of the biggest corporations in the world, has savings about 200 billion, but when it was set up in Ireland in 1980, initially it came in on the basis that it wouldn't be paying tax and then what you find over the years is that it's paying a tax rate of around 2%, but then Apple think that's far too much. And you have these periodic meetings, which the EU Commission eventually gets the minutes of, and you find they keep pressurising to reduce the tax rate down below 1%. The Irish Government won its appeal on this issue, but it's only won the appeal on the basis that Apple is not unusual! We don't give preferential treatment to Apple, this happens to a lot of multinationals. And certainly when you look at the tax, the actual tax rates that are paid by multinationals, you find that generally speaking, they're down at around 2, 3% and sometimes less.”
Brian: “Yeah, I think the Commission is going to appeal that judgement.”
Naomi: “Right. And, and Ireland famously refusing to take the taxes that it was owed is also a really bizarre situation for a nation state to be in!”
Brian: “Absolutely.”
And;
Naomi: “So, so just briefly, what, what would you say to those in Nairobi, Kigali, Johannesburg, and other places that are busy kind of expanding and setting up their own centres?”
Kieran: “I would say they're going down the wrong road, I mean, it's a fool's game, I mean this is a model of development that's promoted across the world, you know, set up an export processing zone, set up a financial services centre. But as every country's doing that, there's a sort of race to the bottom where you have to offer some even more tax incentives, more deregulation. And ultimately it's a loser's game, basically.”
(As I was working on this a report emerged saying Google’s Irish subsidiary has agreed to pay €218 million in back taxes to the Irish Government).
4) Cryptocurrency mania boosts demand for puppies.
Last November my family got a Labrador puppy. He's now 14-months old and a big dog. But he's still really a puppy and our kids have lots of fun with him. Apparently we are part of an international Covid-era trend of more and more people getting dogs.
In the US there's a quirky twist to this and a sign of the times. This, Bloomberg's Claire Ballentine reports, is an increase in demand for shiba inus, the dog breed that inspired the Dogecoin and Shiba Inu cryptocurrencies.
Not surprisingly Elon Musk, the world's richest man, has played a role in this. He has been tweeting pictures of his shiba inu puppy, Floki.
Seth Johnson, who works in IT in northern Mississippi, is one of the proud new owners of a shiba inu, purchased in June with $2,500 in U.S. dollars. (His breeder did not accept crypto.) He didn’t know much about the dogs until Dogecoin took off, and the more recent hype over Shiba Inu coin only heightened his interest. Johnson is a big believer in an obscure coin called EverRise, which became the name of his new pet.
Even with so much of our daily lives taking place in online worlds, it’s still unsettling to see the physical manifestation of a digital trend. Whenever I take my one-year-old cocker spaniel, Riley, to a dog park in New York City, there’s always at least one shiba inu there, alongside the dozens of other puppies purchased during the lonely days of lockdowns. Crypto is in everything from music to fashion to fast food; it’s now also barking at me.
For those who had shiba inus even before the meme coin madness, the newfound attention is profoundly strange. “People will ask to take a picture with her,” says Allyson Kazmucha, about her shiba inu, Kaya. “They’ll say, ‘Is that the Doge dog?’” Kazmucha, an engineering programs manager in San Jose, got her dog in 2012 before Dogecoin was created. “They seemed to be the perfect size and not super clingy or high maintenance,” she says. “I definitely didn’t realize that crypto would be a thing when we got her.” Eventually the meme became so inescapable that she decided to buy some Shiba Inu coin herself. “It felt very on-brand,” she says.
The collision of the crypto and canine worlds is confounding small breeders. Inquiries have more than tripled at Rodel Shibas in Aspers, Pa., says co-owner Sandra Rolenaitis. “You’ve got Elon saying he got a shiba inu, and then it snowballs.” She now receives about 150 to 200 applications a month for her dogs.
Floki Frunkpuppy pic.twitter.com/xAr8T0Jfdf
— Elon Musk (@elonmusk) October 4, 2021
5) The paradox of our own ignorance.
When I was younger I often thought people in social settings with strong, decisive opinions that they were keen to share were knowledgeable and impressive. Over the years my outlook has changed somewhat. Without wanting to generalise too much, I now realise some of these people are just confident types, and some others are blowhards. (Of course there are some who are both knowledgeable and confident).
These days, of course, social media provides a soapbox to anyone who wants one.
Self-help author Mark Manson covers all this and more in an article about the Dunning-Kruger Effect. This occurs when a person’s lack of knowledge and skills in a certain area causes them to overestimate their own competence. In contrast, this effect also causes those who excel in a given area to think the task is simple for everyone, and underestimate their relative abilities as well. Manson reckons we all do this.
Perhaps the most frustrating thing about the Dunning-Kruger effect is that it’s incredibly difficult to overcome. And that’s because it’s wrapped in contradiction.
How do you get someone—or yourself—to look for something they can’t even see? How do you correct an error if you don’t even know you made one?
This is the paradox of trying to overcome our own ignorance: The very thing that would help us see our mistakes is the same thing that would keep us from making them in the first place.
You can’t reason with a conspiracy theorist precisely because they didn’t form their beliefs with reason. Had they the ability to change their beliefs based on reason and evidence, they wouldn’t have believed in wild conspiracy theories in the first place. In fact, they think they’re the only ones being reasonable to begin with.
Part of the problem is that there is comfort in the feeling of knowing. People don’t like uncertainty. And so settling on a belief helps us feel like we’ve made more sense of the world. When we can make sense of the world, we feel safe. Whether that belief is true or not doesn’t matter—it just has to give us some relief from the anxiety of not knowing.
The point about uncertainty is a very good one in this Covid dominated world awash with uncertainty. Many people really struggle with uncertainty, especially when they're not used to it. Thus they're keen to grasp onto any certainty they can find. Even though it may turn out not to be certainty at all.
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Dr John Campbell, very clear analysis of immediate Omicron situation
https://www.youtube.com/watch?v=oxlYyZ08cEg
What is NZ doing proactively about this.....Nothing
EDIT: as of Sunday night Govt has acted to restrict direct flights from African countries, but since it has already spread to many other regions, just as Delta did, this will not be enough to stop it
The Queensland Health flyer is a nonsense - for starters influenza has hardly been controlled 1100 deaths in Oz in 2017 and 900 in 2019, 500 odd in NZ hardly speaks of control.
Of the 'controlled' diseases listed how many have animal reservoirs - 'we’ve got 12 different species who’ve been infected with COVID-19, usually from humans—if they can harbor it, and then infect humans, then you can’t eradicate the disease like we’ve been unable to eradicate yellow fever, because monkeys get it and they just don’t like to put their arms out to get vaccinated, and it’s really tough to get them to stand in line.'
The only thing controlled is the compliant media whose biggest advertisers are the government and big pharma.
So how would you have dealt with covid?
(BTW There were lockdowns and quarantines throughout history (from the 14th century in Dubrovnik). In New Zealand there were quarantine islands up until the early 1900s. It's a cycle we go through every few hundred years when a new disease comes along)
See #5...
Money is created as debt, when a bank lends money it is created as a debt to the borrower and when the loan is repaid the money no longer exists. This debt cannot be passed on to future generations as it belongs to the borrower.
The government also creates money as its liability when it spends and this is an asset to the private sector and it is not a liability to future generations.
Larry Randall Wray is a professor of Economics at Bard College and Senior Scholar at the Levy Economics Institute and he tells us this,
"The Government does not, indeed, cannot borrow its own currency in order to run a budget deficit. When government sells bonds it simply debits bank reserves and credits the purchaser with a treasury (essentially just reserves with higher interest); government does not obtain anything to use as a medium of exchange--it merely changes the form of its liability. Thus, bond sales and purchases are part of monetary policy—not a borrowing operation—they help the central bank to hit its interest rate target".
https://www.levyinstitute.org/pubs/Wray_Understanding_Modern.pdf
"This debt cannot be passed on to future generations as it belongs to the borrower."
Sorry. wrong.
Mind you, we could tell the keystroke-issuers where to put their keystroked issuance.....
The biggest debt is the resource-stock drawdown, done by all of us to all future inhabitants - Gareth to his kids, whether he realises it or not. Every litre of fossil energy we pour into a tank then burn - they will NEVER have access to. Ever. Not only that, but we're giving them the unmitigated-wastes legacy.
It is the bigger debt, and it is real. Long after digital representations of mentally-assumed claims (on future energy and reources) have vanished, the litre count will still be a point of angst between us and them.
“I would say they're going down the wrong road, I mean, it's a fool's game, I mean this is a model of development that's promoted across the world, you know, set up an export processing zone, set up a financial services centre. But as every country's doing that, there's a sort of race to the bottom where you have to offer some even more tax incentives, more deregulation. And ultimately it's a loser's game, basically.”
Would that include data centres at disused (and unremediated) industrial sites?
Well the Nazis , in their formative stages in search of funding, were themselves reasonably adept bank robbers and more than likely targeting the same localities that are mentioned here as giving them some electoral momentum. Hardly think that was a preconceived strategy but of some irony nevertheless.
If Germany hadn't been screwed by the Allies at Versailles, the breeding ground wouldn't have existed.
So often, we avoid the resource-clash that is what most war is. Read Daughter of the Desert, Seven Pillars of Wisdom and Allenby - even back in WW1, oil was critical.
Instead, we put emotions in and run self-justification - those dratted Nazis - to avoid the fact that we emerged on the winning side.....
There's no shortage of houses, only a distorted concentration of ownership.
38 per cent of Auckland homes are owned by investors, with similar proportions in Waikato, Bay of Plenty, and Gisborne. In Queenstown, 48 per cent are now held by investors. There is also a trend of more urban areas having a higher proportion of investors with over six properties...In Auckland, a little over 22 per cent of investors own six or more properties....
I wonder how many of those +6 investors would have that number if taxation and other incentives were not available? "But it's a business, just like any other, and should be privilege to the same benefits!".
Answer? No it isn't Shelter isn't a business, it's a necessity. One from which productive business endeavours emanate, and should be treated as such. Or do we keep going down this road until we have camps of tent-dwellers festooned across Auckland, similar to those inhabited by the poor wretches in Calais at the moment?
And how many Bankers, Politicians and Real Estate Agents have made a killing from owning rental properties.
Orr do they just rely on cheap funds from others......to loot the Housing market.
All stuff and nonsense....
Personally I hope the interst rates rise to the giddy heights of when I was a stupid Worker. 17% and 25 % on overdraft when 1987 crash hit us in pocket.
In the earlier days trading banks did not lend on residential mortgages. That was the territory of building societies, savings banks, state advances & solicitors. when the trading banks entered the fray mortgage interest rates, for occupancy households, were set well below those for commercial/business activities. Somehow that margin has disappeared more or less. Surely a landlord is a business concern and should be paying the same interest on any borrowing as any other business?
It's the different collateral that makes the difference in interest rates. The supposed purpose of the loan is irrelevant to the lender. The fact is that houses are much easier for a bank to sell, than are businesses or business assets. And that's largely because there's a much larger pool of people wanting/needing to buy a house than there are people in the market to buy a business or business equipment.
Yes point taken. Except in the earlier scenario I mentioned that lower interest rate for household mortgages was actually imposed by the RBNZ through direct government legislation. That was not uncommon. For example the meat industry was afforded, through the meat hygiene mechanism, low interest rates to assist investment into improvements to qualify for EEC regs when the UK entered there. Seems to me that those low interest rates coupled tax write offs & depreciation were far too liberal/generous for property investors/speculators in the first place. Therefore there has been precedent available to the RB to “encourage/discourage” through tiered interest rate structures.
It will be interesting to revisit these figures in 3 years, assuming the loss of interest deductibility stays in play.
Either investors will have sold and not bought back in, lowering the ratio, or they will have developed their properties and added dwellings, increasing the ratio.
Very True. With crisis be it Health, Economy and excessive money printing with stimulus, dynamic has changed, money has lost its value, today Million dollar has no value for many and for many others even raising thousand dollar is an issue - So rising inequality is bound to create some revolutionary changes in future.
Current establishment and bureaucrats, agencies have over time became Rulers instead of serving are manipulating to rule to serve their personal vested biased interest. Very hard to find leaders !
This is why the United States cannot industrialize as long as the house prices absorb this high a rate of income, and as long as the banking sector is supporting this, and as long as the political parties say we will not tax real estate so that all of the rising land value will be able to be pledged to banks to pay interest instead of to pay taxes. Essentially, it’s the (lack of) taxing of real estate in the United States that has subsidized the increase in housing prices, because housing prices are worth whatever a bank will lend to buy a house. If you have to go to a bank, and if they lend more and more and this money isn’t taxed away, the price is going to go up. So you have the government policy, the bank policy, all trying to promote this high diversion of income into paying land rent. Again, this is the exact opposite of what Adam Smith and John Stuart Mill and classical economics and the whole 19th century had advocated. This has priced American labor and industry out of world markets.
If you have to pay 43 percent of your income for rent, then even if the government were to give you all of your goods and services for nothing, all of your food, all of your clothing, all of your transportation for nothing, you’d still have to pay so much money for rent and for health care that you couldn’t compete with labor in Asia or the Third World or even Europe. And so this is what has essentially excluded the United States from having a successful empire. It’s the greed of the financial sector, basically, and the takeover of the government by the financial sector here as happened under Margaret Thatcher in England and then Tony Blair. You’ve had both countries essentially enter permanent austerity programs, and the only way to cure this is for housing prices to go down. But if the housing prices go down, then the banks will go broke. That’s why Obama said he had to support the banks: because if he’d actually lowered the housing prices to realistic levels, that would enable America to survive, but the banks would go under. Until you’re willing to restructure the banking system, you’re not going to be able to industrialise the American economy. - Link
Is this the end of Current Democratic system.........
Technology is changing fast specially after pandemic and most politicians and bureaucrats still using old tactics to lie and manipulating not realizing that world has changed and earlier could get away with interview to print media or may be one or two television and people had no option to raise their view but now with social media every word they speak, every lie and every manipulation is highlighted and exposed and politicians and bureaucrats can no longer hide behind excuse that have been misquoted ..best example Mr Orr coming out to say that rbnz has no control on housing market..............Really, he has that audacity as still living in ivory tower and not aware that he stands exposed.
Exactly:
by Audaxes | 13th Nov 21, 1:58pm
Reserve Bank governor Adrian Orr is not doing himself any favours with his revisionist approach to the house price issue. Not so long ago, he was saying increasing asset prices, including house prices, were a feature and not a bug in the bank's policy response to the pandemic because they make consumers feel wealthier and spend more. This week he suggested his bank's policy settings have only a minor impact on house prices.
He actually has quite a bit to answer for. The bank has been consistently under-forecasting increases in inflation and house prices, and overforecasting unemployment. While no one is expecting perfection in these times, the ongoing nature of the forecasting issues is concerning. Link
In a podcast the Tax Justice Network's Naomi Fowler speaks to the authors of a new book, Tax Haven Ireland.
And this link takes us to the publisher’s website, which is an interesting read.
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What kind of world view is being shared on this site?
"Amelia's coming round for dinner tonight. Can you dash off and grab some fillet steak for dinner, please?"
"Sure" I said, chastened by the fact that just a couple of weeks ago it had gone up to $50 per kilo. Today? $65. I hope Number 1 likes her spag bog tonight......
Does it explain why so many can't grasp that exponential growth ends exponentially suddenly within a bounded system?
Does it explain the woke rabbit-hole-dive of RNZ?
The thing that surprises me more as I get older, is the number of people who cannot thing logically, from first principles, sans emotion and sans assumption. At least 95% of the population; maybe more.
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