Here's my Top 10 links from around the Internet at 10 to 2 pm in association with NZ Mint.
Plenty of videos and cartoons today.
I welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz .
1. Extraordinary story - This story overnight about SEC charges of insider trading against Rajat Gupta are amazing.
He was on the board of Goldman Sachs and is alleged to have leaked details from board meetings to hedge fundie Raj Rajaratnam minutes after such board meetings.
He is a very heavy hitter and this will reverberate around the biggest board rooms in the world.
If proved, it shows the rot reached to the very highest levels.
Gupta was on the board of Goldman and Proctor and Gamble. He was also the head of McKinsey from 1994 to 2000.
Stunning and a real blow for him at the very least.
It seems for example he leaked the news about Warren Buffett buying into Goldman Sachs so Rajaratnam could get in first, Bloomberg reported.
Simply breathtaking.
Gupta's lawyers says the allegations are baseless.
Here's the WSJ with the story.
Mr. Gupta, a friend and business associate of Mr. Rajaratnam, allegedly spoke with Mr. Rajaratnam by phone after a special telephone conference call by Goldman's board and tipped him to the Berkshire investment and Goldman's upcoming public-equity offering before it was announced in September 2008, according to the SEC.
The Berkshire investment came at the height of the financial crisis, within days of Lehman Brothers Holdings Inc. seeking bankruptcy protection. Within a minute after the call, Mr. Rajaratnam allegedly arranged for Galleon funds to purchase more than 175,000 Goldman shares, the SEC said.
Mr. Rajaratnam had begun purchasing shares earlier in the day, following another call with Mr. Gupta, the SEC said. Mr. Rajaratnam caused the Galleon funds to liquidate their Goldman holdings the day after the information became public, making $900,000 in illicit profits, the SEC said.
2. Is it the same here? - The Guardian's Richard Woolf puts all the stats together on the transfer of wealth to the richest in America.
How different is it here now our top tax rate has been cut too.
It's not sustainable.
Maybe that's why the gift duty is being removed in New Zealand.
It allows the rich to move assets to family trusts tax-free before the shutters come down and the new higher taxes come back.
I hear accountants and tax lawyers are gearing up for major gifting action once the law change kicks in from October.
It seems an excellent way to pay dividends tax free...
Over the last half century, the richest Americans have shifted the burden of the federal individual income tax off themselves and onto everybody else.
The first graph compares the official tax rates paid by the top and bottom income earners. Note especially that from the end of the second world war into the early 1960s, the highest income earners paid a tax rate over 90% for many years.
Today, the top earners pay a rate of only 35%. Note also how the gap between the rates paid by the richest and the poorest has narrowed. If we take into account the many loopholes the rich can and do use far more than the poor, the gap narrows even more.
One conclusion is clear and obvious: the richest Americans have dramatically lowered their income tax burden since 1945, both absolutely and relative to the tax burdens of the middle income groups and the poor.
Consider two further points based on this graph: first, if the highest income earners today were required to pay the same rate that they paid for many years after 1945, the federal government would need far lower deficits to support the private economy through its current crisis; and second, those tax-the-rich years after 1945 experienced far lower unemployment and far faster economic growth than we have had for years.
The lower taxes the rich got for themselves are one reason why they have become so much richer over the last half century. Just as their tax rates started to come down from their 1960s heights, so their shares of the total national income began their rise. As the two other Wikipedia graphs below show, we have now returned to the extreme inequality of income that characterised the US a century ago.
3. Shoe-Throwers index - The Economist has come up with a 'Shoe-throwers' index which tries to compile various bits of data on population ages, censorship, corruption and age of government to predict which will be the next domino to fall.
Interestingly, Iran doesn't even appear on this.
4. Index of potential unrest - Meanwhile Richard Florida over at The Atlantic has come up with his own index of potential unrest that looks at various data on GDP per capita, life satisfaction and labour market conditions.
It finds Russia, Mongolia and India are vulnerable.
Strangely, New Zealand is seen as vulnerable to potential unrest as America and more likely to see unrest than Australia and Canada.
5. 'Bernanke's pedal to the metal' - Peter Schiff comments in this video below on Ben Bernanke's determination to blow up the world with printed money.
The metal being gold of course. Funny how it hit a record high after Bernanke's comments about continued money printing overnight.
Schiff talks a lot of sense. HT Justice.
6. Amazing life insurers - This Bloomberg article on how a US life insurer insisted a man killed himself in a car accident is startling. Insurers are not always the friendliest bunch. Does this happen in New Zealand? Or are we different.
As of 2009, the latest year for which figures are available, insurers in the U.S. were disputing an accumulated total of $1.3 billion in claims, the ACLI reports. Included in that amount was $396 million in death benefits turned down in 2009.
In the same year, insurers paid out $59 billion, the ACLI reports. What those numbers don’t measure is the trauma survivors like Jane Pierce face when wrongfully denied, says Aaron Doyle, a professor of sociology and criminology at Carleton University in Ottawa.
Most survivors don’t have the stamina and knowledge to file a lawsuit, says Doyle, who has spent a decade interviewing life insurance customers, employees and regulators in the U.S. and Canada. Often, survivors are dissuaded by their insurers from taking their grievances to state regulators or to court, Doyle says.
8. A double edged sword - Jeff Rubin at Financial Sense talks in depth about the problem for the Middle East of rising oil prices -- higher food prices. One for Powerdownkiwi.
The problem facing Arab countries today is higher oil prices feed directly into higher food prices. While oil may be massively subsidized in the Middle East, it’s not in major grain exporting countries such as Canada, Russia and Australia that Arab nations increasingly count on for their food supply. From the diesel fuel that runs tractors and combines to the power needed to pump water through irrigation systems, modern agriculture is one of the most energy intensive industries.
And the Middle East is the largest food importing region of the world. As the price of oil goes up, so does the price of food imports. Egypt’s problems feeding runaway population growth is not unique to the region... They are in evidence throughout the Middle East given the masses now out in the streets in Libya, Algeria, Yemen, Jordan and Bahrain demanding regime change.
Could Saudi Arabia be next? Population growth in the Middle East is rapidly outstripping the carrying capacity of the land. Democratic reform may be what is on the protestors’ lips but demographic reform is at the heart of the region’s problems.
9. Chimerican murder-suicide - This has a nice ring to it. A Zambian economist and former Goldman Sachs analyst, Dambisa Moyo, has written a book called "How the West was lost" where she argues that one option is for America to default, which would take China and the 'Chimerica' complex down with it...
Financially MAD (Mutually Assured Destruction).
The U.S. could, she says, opt for “nuclear options,” protectionist measures including a debt default. “Default sounds like a cataclysmic option” yet shouldn’t be casually dismissed, she says. “The attraction would be for America to wipe its slate clean and for the government to reset its financial statement.” A U.S. default would amount to a “murder-suicide in Chimerica,” a lethal blow to Sino-American co-dependency that would damage Chinese interests.
China not only counts on Yankees to buy its goods; it also has up to 82 percent of its foreign reserves in dollars according to calculations by Standard Chartered Plc. If the Chinese have tilted the playing field, the argument goes, why shouldn’t the U.S. resort to brinkmanship? Economics is, as Moyo says, a form of warfare, “one country seeking dominance over another.”
And here's a video where she explains the option of America moving to protect and default.
Pleasant to watch too.
10. Totally interesting video of how liquefaction works - A Cantabrian uses a great technique to explain this phenomenon.
11. Totally irrelevant video - What the Shuttle launch looks like from an airplane.
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