Top 10 at 10: China moving to Copper standard?; Alexander on farm sales; US deflation
16th Apr 09, 10:09am
Here's my top 10 links from around the Internet at 10 am. I welcome your suggestions and comments below. 1. BNZ chief economist Tony Alexander notes the slump in farm sales here at Stuff. He says the market looks to have almost bottomed out. Here's a taste.
But is the rural real estate market stabilising yet? Not yet, though with turnover so low the bottom is almost at hand. Sheepmeat and venison returns are improving, and international dairy prices have also risen slightly. So perhaps come Spring the rural real estate market will look better. And prices? One can only note anecdotes of falls between 10 percent and 25 percent as the data on a monthly basis get too distorted by changes in the mix of farms sold with regard to location, type and size.2. China is NOT a currency manipulator, says Treasury Secretary Tim Geithner, Bloomberg reports. This is a flip flop from a few months ago when he said it was a manipulator. America needs China to buy its bonds and has worked out who has the power. China told America to STFU and it's doing that. Who's feeling manipulated now? 3. The pace of economic decline is slowing in some areas of the US economy, says the US Federal Reserve in its closely watched Beige Book, the WSJ reports. 4. UBS has announced it will cut 11% of its workforce after it unveiled a US$1.75 billion loss and said customers had withdrawn US$23 billion from their accounts, the FT.com reports. Investors have withdrawn a quarter of their money from UBS wealth management and Swiss banking divisions in the last 9 months, due in part to UBS' agreement with US authorities to cooperate on certain tax matters. 5. John Gapper at the FT.com argues why Goldman Sachs should not be allowed to escape the clutches of the government. 6. An excellent piece here from Ambrose Evans Pritchard at the Telegraph about how China appears to be buying metals such as copper to avoid having to buy US dollars. If true, it is potentially explosive and great news for Australia, our largest trading partner. Recommended reading. 7. The apparent Chinese move into metals has pushed the copper price up 73% in the last 4 months, Alan Kohler at Business Spectator points out, referring to Evans Pritchard above. Here's a taste from Kohler.
If this is right, and there is plenty of evidence that is, it fundamentally changes the dynamics of global finance "“ and very much in Australia's favour. The west is borrowing to finance fiscal stimulus, including Australia. China has made it clear that it is worried about the trillions it has invested in western paper, especially US bonds, of which it owns about US$1.7 trillion. By switching from holding US paper to buying and holding metals China is, in effect, switching from investing in what America has "“ the promises of capitalism "“ to something that Australia has plenty of: real metals you can stick in a warehouse, and then use later on. At a grim time for this nation, this is the best news I have seen for months. While Australia is borrowing to finance fiscal stimulus, the US has gone further by embarking on a deliberate strategy of gradual "default by inflation" "“ that is, printing money to finance its Government debt, which reduces the value of the debt over time "“ along with the value of assets.8. ANZ has been shortlisted to buy Royal Bank of Scotland's Asian assets for up to US$1.8 billion, the WSJ reports. Other bidders are HSBC and Standard Chartered. 9. US consumer prices fell 0.4% in the year to March, which was the first annual deflation since 1955. Here's the FT version. 10. Felix Salmon (now at Reuters) points out that Goldman Sachs buried a nasty December in its accounts.