Here are my Top 10 links from around the Internet at 10 to 7 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 Friday'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. 'Permanent plutocracy' - Labour Finance spokesman David Cunliffe has a good old rant in this post at Red Alert about the power of old money and its ability to influence people in positions of power.
He's been doing some digging on South Canterbury Finance and has been surprised by what he has seen.
Now we need some details.
The Fendalton and Queen St methods are different from the Crafar one but they are even more dangerous and subversive: very polite circles of influence in the clubs and boardrooms - with massive flows of funds through anonymous trusts that violate the intent of the Electoral Finance Act. Prestigious law firms and lobbyists. This is up with the worst sort of influence peddling I saw in Washington D.C. - One dollar one vote: permanent plutocracy unless we fight back.
Beyond political donations, look at the ability of the rich and powerful to get their way while the poor and middle struggle: $2 billion a year of tax avoidance through LAQCs and trusts that National in government has refused to touch. Half the top 100 welathiest NZers are still not on the top tax rate! This post is not about SCF, but researching that issue has opened my eyes to the complexity of the company and accounting structures in daily use around the markets. One prominent international investment broker told me he tells his clients never to invest in NZ other than through an ASIC-regulated (Australian) vehicle, because our market is a wild west.
Well what is the point of getting our savings rate up (and asking hard working families to go without consumtion) if the investment vehicles we need to get the money to our struggling firms are being milked and siphoned by fees and sweet deals to the cronies in the markets?
2. A little bit rarer - A bitter trade and political battle is brewing between China and Japan as global trade and currency tensions build. China has blocked all exports of rare metals to Japan to pressure Japan into handing over a boat captain caught in disputed waters, the NY Times reports. This isn't pleasant. China is on one side. Japan and America are on the other.
Who would/should New Zealand back in any fight between China and America. China is a bigger trading partner for us than America. And it is Australia's biggest partner, which is ours.
The Chinese government has placed a trade embargo on all exports to Japan of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles.
The Chinese embargo is likely to have immediate repercussions in Washington. The House Committee on Science and Technology is scheduled on Thursday morning to review a detailed bill to subsidize the revival of the American rare earths industry. The main American rare earths mine, in Mountain Pass, Calif., closed in 2002, but efforts are under way to reopen it.
Deng Xiaoping, the late leader of China, is widely reported to have said that while the Mideast has oil, China dominates rare earths. But while Arab states used restrictions on oil exports as a political weapon in 1956, 1967 and 1973, China has refrained until now from using its near monopoly on rare earth elements as a form of leverage on other governments.
3. Tensions growing - One consequence of the stresses in the global economy is friction between China and those around it. America is often finding itself intervening against China, the NY Times reports.
Washington is leaping into the middle of heated territorial disputes between China and Southeast Asian nations despite stern Chinese warnings that it mind its own business. The United States is carrying out naval exercises with South Korea in order to help Seoul rebuff threats from North Korea even though China is denouncing those exercises, saying that they intrude on areas where the Chinese military operates.
Some Chinese military leaders and analysts see an American effort to contain China. Feng Zhaokui, a Japan scholar at the Chinese Academy of Social Sciences, said in an article on Tuesday in The Global Times, a populist newspaper, that the United States was trying to “nurture a coalition against China.” In August, Rear Adm. Yang Yi wrote an editorial for The PLA Daily, published by the Chinese Army, in which he said that on one hand, Washington “wants China to play a role in regional security issues.”
“On the other hand,” he continued, “it is engaging in an increasingly tight encirclement of China and is constantly challenging China’s core interests.” Asian countries suspicious of Chinese intentions see Washington as a natural ally. In April, an incident involving a Chinese helicopter and Japanese destroyer spooked many in Japan.
4. The dance of the zombies - America's banking system is quietly staggering to its knees under the weight of the bursting of the housing bubble, banking analyst Chris Whalen reckons.
The event this week that sparked the talk was an announcement from Ally Financial, formerly GMAC Mortgages, that it was halting foreclosures because the sheer weight of them meant it was making mistakes.
Why do we still refer to the ugly girls -- Bank of America, JP Morgan and Wells Fargo in particular -- as zombies? Because the avalanche of foreclosures and claims against the too-big-too-fail banks has not even crested.
.Democrats and Republicans alike are going to be fed into the meat grinder over the next several years as the banking sector deals with literally hundreds of billions of dollars in direct and indirect expenses from the deflation of the mortgage bubble. For the economy, this slow process of muddle along championed by Summers and Geithner will ensure that Barack Obama becomes the Herbert Hoover of the Democratic Party.
The economic carnage that will cause these losses is going to represent the worst economic contraction since WWI. Forget WWII.
Think "shrinkage" to use the Gilded Age description for economic deflation. And frankly nothing that either the Fed or Treasury does in the near-term can change this basic economic fact of restructuring. Banks such as Ally can impose moratoriums and issue press releases, but the losses remain. It is only a question of when they are recognized.
5. One very sore hand - The Ally Financial situation is eye-popping. There are so many foreclosures that banks simply can't handle the volume. The Washington Post reports on one guy at Ally who had to sign 10,000 foreclosure documents a month. That's 500 per working day or on average just over 1 a minute for each 8 hour day. He was supposed to read every one.
Now Ally officials say hundreds of other companies, including mortgage giants Fannie Mae and Freddie Mac, may also be affected because they use Ally to service their loans. As head of Ally's foreclosure document processing team, 41-year-old Jeffrey Stephan was required to review cases to make sure the proceedings were legally justified and the information was accurate.
He was also required to sign the documents in the presence of a notary. In a sworn deposition, he testified that he did neither. The reason may be the sheer volume of the documents he had to hand-sign: 10,000 a month.
6. 'Robosigner' - Ally's Jeffrey Stephan is now described as a sort of foreclosure robot in this piece by Alain Sherter at Bnet.
It highlights the sheer scale of the crisis in America.
In essence, Ally is the housing bubble’s thorny tail swinging around to smack us in the face. During the boom, lenders passed out mortgages like M&Ms, often without verifying a borrower’s most basic financial details. Big banks chopped up those loans, credit rating agencies blessed the resulting securities and investors gobbled them up. Party time! And the last thing anyone wanted to be told, as the profits rolled in, was that all that paper was worthless.
That same dynamic is visible as the bubble deflates. Stephan, a mid-level schlub in a big firm, rubber-stamped all those affidavits because Ally and the lenders it services have a financial interest in keeping the foreclosure train rolling.
The problem for these firms is that this jury-rigged system is backing up like a clogged drain.
7. 'Printing the dollar into oblivion' - Robin Griffiths, technical strategist at Cazenove Capital, tells CNBC that all fiat money eventually ends up worthless. HT Gertraud.
8. What does price stability mean? - Peter Schiff rants angrily at the US Federal Reserve over its plans to increase inflation. HT Gertraud via email.
9.How America's future was turned over to Wall St - Newsweek columnist Michael Hirsch talks here about how the middle class was hollowed out through the last 20 years and the wealth transferred to the richest. Worth a watch. He's written a book here.
Visit msnbc.com for breaking news, world news, and news about the economy
10. Totally irrelevant video - The All Blacks show off their (video editing) skills.
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