Monday's Top 10 with NZ Mint: More problems with compulsion; Martyn Reesby and Money Managers; Shoot property spruiking journalists; America's class system; Dilberts

Here are my Top 10 links from around the Internet at 10 to 12 pm, brought to you in association with New Zealand Mint for your reading pleasure.

 I welcome your additions and comments below, or please send suggestions for Tuesday's Top 10 at 10 via email to bernard.hickey@interest.co.nz.

I'll pop any surplus suggestions I get into the comment stream under the Top 10.

1. Martyn Reesby and Money Managers - Greg Ninness has an excellent story in the Sunday Star Times hunting down the funding connections around Nigel McKenna's Melview Developments.

The mercurial Martin Reesby and the execrable Money Managers are involved.

Sigh.

Where will it end?

Reesby was a middle man in many of the development deals done in the boom and was closely linked to Fortress Capital.

Sigh.

Funds investors are facing significant losses as the property empire of Auckland developer Nigel McKenna implodes under the weight of its debts. Investment funds managed by NZ Funds provided finance to property developments undertaken by McKenna's Melview group of companies, but several of these have since collapsed into liquidation and the funds now face substantial losses.

Many of those investors would have invested in the affected funds through NZ Funds' sister company, Money Managers, now called MMG Advisory Partners. About $100 million of investors' money was channelled through a company called Fidelity Ltd, which is largely owned by interests associated with NZ Funds' founders and major shareholders Gerald Siddall and Russell Tills and Auckland financier Martyn Reesby.  

2. 'We should look before we leap' - Rob Stock has a great piece in the Sunday Star Times about the problems with the Australian compulsory super scheme for people to chew on before we make the leap to Compulsory KiwiSaver. Well worth a read. T

he big problem with the Aussie system is that it has enriched and created a new industry of fund managers and investment bankers. There's a bunch of Macquarie Millionaires swanning around now that were created by this scheme. Are we happy to have this little spinoff?

AS NEW ZEALAND plans its future superannuation system, we should learn from the damning findings of last year's Australian Super System Review.

An expert panel found a system where the super industry and its affiliates were managing schemes more in their own interests than those of savers, and suggested some radical overhauls.

3. Israeli attack on Iran? - Jeffrey Goldberg writes in the Atlantic that there is a real prospect of Israel launching a military strike against Iran early next year. Just what everyone needs. Not. HT Nikki via email.

What is more likely, then, is that one day next spring, the Israeli national-security adviser, Uzi Arad, and the Israeli defense minister, Ehud Barak, will simultaneously telephone their counterparts at the White House and the Pentagon, to inform them that their prime minister, Benjamin Netanyahu, has just ordered roughly one hundred F-15Es, F-16Is, F-16Cs, and other aircraft of the Israeli air force to fly east toward Iran—possibly by crossing Saudi Arabia, possibly by threading the border between Syria and Turkey, and possibly by traveling directly through Iraq’s airspace, though it is crowded with American aircraft.

In these conversations, which will be fraught, the Israelis will tell their American counterparts that they are taking this drastic step because a nuclear Iran poses the gravest threat since Hitler to the physical survival of the Jewish people. The Israelis will also state that they believe they have a reasonable chance of delaying the Iranian nuclear program for at least three to five years. They will tell their American colleagues that Israel was left with no choice. They will not be asking for permission, because it will be too late to ask for permission.  

4. 'Honk if you love caviar' - This piece from Joe Bageant on America's class system is worth a read, if only to get a sense of the deepening disillusion with the political and economic elites that run the world's largest economy.

It's a rant, but with many interesting insights. It's a Marxist view of America, which I'm beginning to think is the accurate one... Lighting touch paper, standing back. Here's a taste below.  HT Rob via email.

The top one percent of Americans own more wealth than the bottom 45% of the rest of Americans combined. I have seldom met an American who thought this is a good thing, and seldom met one who understood how the ruling class got so rich. Simply put, it was through constant cultivation of bigger and more labyrinthine government, creating legal and technical complexities to sluice money nationally and globally in their direction, and to cover their asses in the process.

The results are such things as 3,000 page health care bills (defining which corporate elites get which parts of the cake), or the 2,000-page NAFTA and its 9,000 tariff product codes. Once the public was buried in such a maelstrom of legal paperwork, computer transactions, modeling, etc., it was easy to argue that the world had become so complex that the skills and brains to operate it were extremely rare and those who had them were fucking geniuses. These are people who dwell in such airy realms that we should pay them vast amounts of money and never question their decisions.

Because the revolutionary destruction of the current economic system, bad as it is, would crash the country's economy even more quickly than the current process of theft, we are not likely to see an outright revolution that overthrows the ruling class. Look at the sorry assed "Tea Party Revolution," which will have to be allied with the GOP (which its backstage leadership has been anyway) in 2012 if it wants to be even a small factor.

Media noise about the Tea Party doth not a revolution make, and it certainly does not overthrow the ruling class, who do not mind the wrath of the rabble, so long as it does not get in the way of the money. And besides, the ruling class holds all the money, not to mention the media that informs the populace as to what is going on in our country. It controls our health care, our banking and retirement funds. It controls our education or lack of education, and it controls the price, quantity and quality of the food we eat. It controls the quality of the air we breathe, and soon, through pollution credits, even the price they will pay for that air.

Most importantly, it holds concentrated legal and governmental authority, not to mention the machinery of both parties to grant itself more authority. After decades of hyper-militant consumerism and its attending alienation, and a national consciousness spun from pure capitalist bullshit and mirrors, it is testimony to the American people that they can still see to piss straight, much less recognize any sort of truth whatsoever. Yet, a portion of Americans are beginning to grasp the truth about what has happened to their country -- that it has been bought and paid for by an elite class in a nation that is supposed to be classless.

They are beginning to realize that, when it comes to actually governing our country, we are powerless as individuals -- even members of the political class -- and serve the overall will of its true owners. It's been that way so long we've become conditioned to accept it as a natural state, something we cannot change, and do not even know how to question, because, like the atmosphere, it's just there.  

5. No worries then - The New York Times reports that American consumers are now saving more by buying more US Treasury bonds than foreign investors. The chart below tells the story.

There are a couple of possible implications. No one needs to worry about US government deficits because the Americans can fund it themselves. Until they don't.

The US dollar will survive because an exodus of foreign Treasury bond holders won't happen, or if it does, American savers will soak up the bonds. Until they don't.

The austerian harbingers of doom (like me) who say the bond vigilantes will eventually force austerity are wrong. Until we're not. Your view?

In calendar year 2007, the Treasury borrowed a net $237 billion. Of that, 81 percent came from foreign governments, mostly from central banks. Private foreign investors took up the rest, as American companies, banks and individuals reduced their combined Treasury holdings by $13 billion.

In the first six months of this year, the Treasury numbers indicate that foreign governments reduced their holdings of Treasury securities by $10 billion. Not since 2000 — when the United States government was running a surplus and did not need additional funds — have foreign governments been net sellers for a full calendar year. 

6. 'Shoot the property spruiking journalists' - The Irish Independent reports here that journalists that promoted property before the Irish property bubble burst may be targeted by grumpy investors. Phew. I'm safe then.... Who were the journalists promoting property in New Zealand.... Your picks?

The big problem in Ireland was the journalists who wrote about holiday home developments in Bulgaria. They were given free trips and often offered cash. I wonder how many stories about Fijian developments got similarly soft coverage here. HT James via email.

Since the crash, those who lost a fortune or who have been left with unsellable property have been looking for someone to blame.

Now a hate figure has emerged in the form of the property journalist. Although a case has yet to be lodged, a number of aggrieved investors are said to be consulting Dublin lawyers about launching a case against certain journalists who, they believe, were responsible for misleading them into investing in developments that failed to deliver promised returns.

"Journalists fear they may be made legally liable for misleading readers who followed their advice and bought properties abroad, suffering major losses," says Richard Compton Miller, a property journalist himself. "There's a lot of anger among investors."

7. Is this fair? - Further the class system article above, bankers in New York are being paid much more than other workers in America, the WSJ reports (!).  Not a little bit more. Astoundingly more.

Did I mention I'm turning into a Marxist...

At the pit of the recession in the United States new Wall St bankers were earning US$11,759 a month, up 23% on the year before.

That’s more than double the average wage for all new hires in the city, which in turn was more than double the average wage for new hires in other major cities. The data are consistent with two trends that bankers said were happening at the time. For one, even after being rescued by the government, many banks were bidding high to poach the best talent from their competitors. Beyond that, amid efforts by the US congress to slap a supertax on bankers’ bonuses, and to help avoid the embarrassment of riches that often occurs around bonus time, banks were moving toward paying higher salaries.

More broadly, the wage data suggest that one of the major trends of the past few decades has yet to play out. Back in the 1970s, bankers’ salaries didn’t differ much from those of other folks. Amid the deregulation and financial innovation that followed, though, they began to break away from the pack. As of 2006, wages in finance were about 72% higher than the average for all professions, according to economists Ariell Reshef of the University of Virginia and Thomas Philippon of New York University.  

8. Some Chinese weaknesses -  Rodger Baker at Stratfor details in a video what he sees as the multiple fundamental weaknesses in China’s economic system.

He says China's export-based low margin economy is not sustainable and will eventually lead to economic and political stresses that cause a collapse.

9. Totally relevant video - Here's the latest AirNZ safety video. Richie McCaw can fly planes and beat the South Africans. E

veryone keeps their clothes on, but the gay hostie tries to kiss Richard Kahui. Excellent.

10. Totally irrelevant video - Jon Stewart does his thing on the issue of net neutrality and those evil-non-doers at Google. This is the best and most entertaining summary of this thorny issue I've seen.