Friday's Top 10 at 10 with NZ Mint: How Timaru helped Dave Henderson; The widening wealth gulf; Raise taxes to boost growth; Dilbert

Here are my Top 10 links from around the Internet at 10 past 7 pm, brought to you in association with New Zealand Mint for your reading pleasure.It's been a tad busy today. What a week.

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

Remember that registered commenters can more easily include links out in their comments. Use the box in the right hand column to register. We're turning off unregistered comments from September 12.

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

1. 'We're here to help' - It turns out South Canterbury Finance was very helpful to Dave Henderson.

He's the Christchurch property developer who wrote the book the spawned the film 'We're here to help'.

Anne Gibson has the story at the NZHerald.

Attempts are now being made to sell Auckland's five-star luxury Hyatt and Hotel So in Christchurch to recoup some of the $1.7 billion taxpayer bailout to investors in SCF after the disastrous lending. Hyatt is SCF-owned and Hotel So owes SCF millions.

SCF took the risky end of many loans, taking a subordinated position so major trading banks can sweep in and scoop up whatever cash is available to the first-ranking charge-holder.

Some of the biggest losses are expected to come from disastrous loans to three companies behind Hotel So by developer Dave Henderson's Property Ventures.  

2. 'It was a steal' - Yesterday I pointed to a story by Hank Schouten at the Dominion Post about the two property developers in Wellington who bought a distressed development off the receivers for Lombard for 6% of the loan. They said then it was almost a steal. It turns out one of the developers know a thing or two about 'steals'... Here's Hank again.

One of the two men involved in an attempt to revive the trouble-plagued Brooklyn Rise housing development has been bankrupted twice and jailed for fraud. John Mouroukis told The Dominion Post he bought a big part of the stalled subdivision from the receiver of Lombard Finance for $2.25 million – a fraction of the $42m that been sunk on the project. It transpires he has a history of financial problems.

He was bankrupted in 1995 and again in 2000. The bankruptcy proceedings in 1995 were taken by Bank of South of Australia for $1.5m when Mr Mouroukis was unable to meet payments on two Newtown commercial properties. In 1997 he was sentenced to six months' jail for obtaining $50,000 by arranging a bogus mortgage.

Mr Mouroukis acknowledged yesterday he was also involved in a legal dispute with the mortgagee of his own home. Bluestone Mortgages advertised the Miramar house for mortgagee sale after debts owed on two other properties were added to his mortgage.  

3. 'Hubbard's a winner' - South Canterbury Finance preference shareholder John Denley still thinks the world of Allan Hubbard, Marta Steeman reports at The Press.

"I've been in his house. It's never been redecorated for years. It's such a shame really, because he just didn't like spending. He used to always say that. Money to him was never personal, that's for sure.

"I always thought his life was Monopoly. It was never money, it was just sitting down playing the game. That was always my thought and I mean that in the nicest possible way. Maybe it just got too much (for Hubbard)."

4. Australians go a' gloatin' - Malcolm Maiden writes in The Age about the collapse of South Canterbury Finance and about how it is good news for the big four Australian banks. However, Maiden missed the real silver lining. The NZ$1.6 billion payout to investors will mostly be recycled into the banks. These days the banks are most interested in finding local funding rather than finding more borrowers.

The non-bank finance sector led the financing of New Zealand's developer boom (this week's casualty, South Canterbury, steered clear of property lending for many years, but wound up having about 25 per cent of its loan book exposed), and the banks will not revive that part of their business.

But when New Zealand's economy recovers, the farmers, businesses, lease companies and others who relied on the non-banks for less risky finance will once again be looking for loans, and the big four Australian banks will be very hard for them to avoid.  

5. Some are a' worryin' though - Some Australians are beginning to work out their housing is overvalued and this might be a problem. Oh dear. Here's Adam Schwab at Crickey.

Like shares last year, the property bubble is starting to wobble. Property purchasers are starting to realise the game is up. Melbourne clearance rates have slipped from more than 80% to join Sydney and Brisbane at less than 50% as vendors fail to adequately lower prices to meet the market as the perfect storm approaches.

Negative growth, low inflation, high unemployment and tougher lending standards mean that Australia’s residential property Ponzi scheme is about to collapse, just like Bernie’s.  

6. The haves (a lot more) and the have nots (a lot less) - This piece by David Ruccio at Real World Economics Review shows the enormous widening of the wealth gap in America over the last 30 years. It makes you wonder when Americans are going to catch on and revolt. If this was France in 1789 then there would be a few worried people. And it's different here right?

In other words, the bottom 80 percent lost ground and only the top 20 percent gained. And, within the latter group, the top 1 percent made out like bandits.

Why would anyone be in doubt that (a) there was a dramatic change in the distribution of income between 1979 and 2008 and (b) this was one of the causes of the current crises?  

7. 'Just one euro' - Irish truck driver Michael Dempsey is so desperate to sell his 4 bedroom new home in Ireland he'll accept any offer over 1 euro, the Irish Independent reports. HT Brendan via email.

It would have been worth €320,000 at the height of the boom, but the collapse in the economy has wrecked his plans to sell or let the bungalow.

"It's a beautiful new house with four bedrooms. It's a shame no one is living in it," he said.

Michael added: "When I decided to build it banks were giving out money all over the place. I went in at one stage looking for e25,000 and came out with €50,000.

8. The difference between China and the rest - China is about to force mobile phone users to register their name and formal identification whenever they buy a SIM card, the China economic review reports.. No more anonymous pre-paid phones. The last sentence was curious. Australia too? Who knew?

The Ministry of Industry and Information Technology (MIIT) said the new rules are part of the government's efforts to prevent spam, pornographic messages and rampant fraud through the network. Under the new rules, newspaper stands will also be banned from selling SIM cards.

Some concerns have been raised over privacy issues, however. The anonymity that protects fraudsters and spammers also allows mobile phone users to freely share information without fear of recrimination. State media reports noted that ID registration for cellphones is required in neighboring India, Japan, Singapore and Australia.  

9. Hike taxes to boost growth - Here's an interesting idea from Larry Beinhart at Huffington Post. He wrote Wag the Dog. HT John Walley via email.

Coming out of World War One we had a top marginal tax rate over 70%. From 1921-25 it was cut, in steps, down to 25%. There was a boom, particularly in the fiscal sector. The crash came in 1929.

When Ronald Reagan came into office in 1981, the top marginal rate was, once again, 70%. Reagan started cutting in 1982, down to 50%, then to 38.5% in 1987, and 28% in 1988. There was a boom in the fiscal sector. In the mid-eighties the collapse began, and over 1,600 banks failed. There was a huge bailout.

It was followed by the recession of 1990.

George H.W. Bush raised the rate to 31%. It cost him re-election. Then, under Bill Clinton, the top rate went up to 39.6%.

That was followed by the longest sustained period of economic growth in modern times.

The historical facts are that high top marginal tax rates correlate with a very healthy economy. That high tax rates on the rich don't impede growth. For whatever reasons, they promote growth. Low taxes on the rich are unhealthy. Tax cuts for the rich are dangerous.

10. Totally relevant video - Greg Morton sings along to the Candy Man song... "Who can take tomorrow, spend it all today, who can take your income and tax it all, Obamaman, Yes Obamaman can, Obama man can because he mixes it with hope and makes the world feel good..."

HT IOU in today's 90 at 9.