Top 10 at 10: China peg tensions rise; Steve Keen's mountain walk; Drugged monkey on loose; Dilbert
16th Mar 10, 12:19pm
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Here are my Top 10 links from around the Internet at 10 past 12. 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 don't have many features listed on the box...
1. Bunker busting bombs - Is America preparing to attack Iran? Rob Edwards at The Herald in Scotland thinks maybe:
Hundreds of powerful US “bunker-buster” bombs are being shipped from California to the British island of Diego Garcia in the Indian Ocean in preparation for a possible attack on Iran. The Sunday Herald can reveal that the US government signed a contract in January to transport 10 ammunition containers to the island. According to a cargo manifest from the US navy, this included 387 “Blu” bombs used for blasting hardened or underground structures. Experts say that they are being put in place for an assault on Iran’s controversial nuclear facilities. There has long been speculation that the US military is preparing for such an attack, should diplomacy fail to persuade Iran not to make nuclear weapons.2. This doesn't look good - Ambrose Evans Pritchard at The Telegraph has pointed to the growing emnity developing in rhetoric between America and China over the US$ peg and other issues. This could get ugly. Pritchard points out China may be overplaying its hand. Some of the comments from China are stunning, including this doozy below:. They key moment will be when/if America accuses China of being a 'currency manipulator'. It could then unleash all sorts of crazy trade protections. HT Andrew Wilson. Here's Paul Krugman stirring the pot at the New York Times.
(China's) State Council accused America of serial villainy. "In the US, civil and political rights of citizens are severely restricted and violated by the government. Workers' rights are seriously violated," it said. "The US, with its strong military power, has pursued hegemony in the world, trampling upon the sovereignty of other countries and trespassing their human rights," it said. "At a time when the world is suffering a serious human rights disaster caused by the US subprime crisis-induced global financial crisis, the US government revels in accusing other countries."Pritchard points out the many issues that could bubble up.
Clearly, Beijing is in denial about is own part in the global imbalances behind the credit crisis, specifically by running structural trade surpluses, and driving down long rates through dollar and euro bond purchases. No doubt the West has made a hash of things, but the Chinese view of events is twisted to the point of delusional. What interests me is Beijing's willingness to up the ante. It has vowed sanctions against any US firm that takes part in a $6.4bn weapons contract for Taiwan, a threat to ban Boeing from China and a new level of escalation in the Taiwan dispute.One little factoid caught my attention.
China's over-capacity in steel is now greater than Europe's output.This is a bad sign for Australia (and therefore for us) 3. Social cohesion risk - Moody's warned overnight that America and Britain risked losing their AAA credit rating status in the long term unless they tightened their budgets. Such a tightening could threaten social cohesion, it warned. The New York Times has the report. Social cohesion is banker talk for riots and the like. Charming.
Major Western economies have moved “substantially” closer to losing their top-notch credit ratings, with the United States and Britain under the most pressure, Moody’s Investors Service said Monday in a reminder that the global debt crisis is not limited to the small or weak. The ratings of the Aaa governments — which also include Germany, France, Spain and the Nordic countries — are currently “stable,” Moody’s analysts wrote in the report. But, it added, “their ‘distance-to-downgrade’ has in all cases substantially diminished.” “Growth alone will not resolve an increasingly complicated debt equation,” Moody’s said. “Preserving debt affordability” — the ratio of interest payments to government revenue — “at levels consistent with Aaa ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.”4. Location, location, location - The Daily Mail has a story here about a broom cupboard flat in v.central London that is worth 200,000 pounds (NZ$429,368) but smaller than a snooker table (11ft by 5.5in). I love how there is a picture of the sea on the wall to make it look bigger. I wonder how much our own broom cupboard apartments in Auckland are worth? Here's one for NZ$75,000 that seems twice as big. HT my wife (Is she hinting at something?)
For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year. Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more. Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs in the form of Treasury bonds. Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come. Social Security's shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program's finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there's concern that the looming crisis will lead to reduced benefits.8. Queensland land tax - I'm no expert on Queensland's tax regime, but it seems some changes are going through in Queensland that will increase land taxes retrospectively. That's my kind of land tax. The Courier Mail has the story. Gold Coast property bubble set to burst anyone? HT Greg out West.
UNLESS we can stop it, sometime soon (maybe this week) new laws will be passed in Queensland which are breathtaking in their scope and audacity. They will massively increase the cost of living and doing business in Queensland. Under the innocuous title of the Valuation of Land and Other Legislation Bill 2010, the Queensland Government will literally rewrite history and rewrite the dictionary. It will retrospectively change the way land tax is applied in Queensland – back to June 30, 2002.9. Great T-Shirt designs - Aussie economist Steve Keen, who has predicted the bursting of the Australian property bubble, is about to start his walk to Mt Kosciuszko, paying off the debt he lost with housing bull Rory Robertson. He has to wear a T-Shirt that says "I was hopelessly wrong on house prices. Ask me how". He's taking the opportunity to make his point with some great charts on T-Shirts. Here are the final are in all their glory. I need to buy one for my brother in Melbourne, who just bought an expensive house...
Both the Japanese and American house price bubbles are pygmies compared to Australia’s bubble. Australia’s still unburst bubble drove the real price of housing to 140 percent above the level of June 1986–that is, real house prices are now 2.4 times what they were in mid-1986
This is the biggest debt bubble in our history. The previous two record highs were in 1882 at 104% of GDP, and 1931 at 77% of GDP. Today’s record is 158% as of March 2008.
I don’t, like some analysts, blame the housing crisis solely on government policy: for me, the ultimate cause of our housing and financial crises will always be the innate willingness of the financial sector to extend debt. But it is certainly obvious that Government meddling in the housing market has seeded a bubble that the financial sector has then been only too willing to exploit.
10. Totally relevant video - Jon Stewart from the Daily Show has a look at the world of corporate espionage. It seems CIA agents can work in the private sector. Some interrogators work for hedge funds and ask CEOs questions. Apparently CEOs lie some times. Waterboarding helps get the truth. I'd quite like to ask Mark Hotchin some questions...
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| Eamon Javers | ||||
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| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| Monkey on the Lam - Florida | ||||
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