Here are my Top 10 links from around the Internet at 10 past 1pm, 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 Wednesday'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.
1. 'Why worry?' - Gareth Morgan seems remarkably relaxed in this NZHerald column about foreign investment in New Zealand land.
He argues foreigners can afford to pay higher prices and seem to be more realistic about expected strong demand for protein.
He also reckons they might be easier to control and cajole than our own landowners on the issues of water rights and emissions. Good luck with that Gareth. Greenhouse gases may not be top of mind for May Wang....
Encouraging foreigners to buy our land also doesn't solve our current account problem or protect us from being swamped by newly printed US dollars.
But here's Gareth point of view.
An unexpected benefit of foreign ownership might be that by having foreigners own our land, perhaps we will be able to regulate the methane and run-off pollution caused by farms without a backlash from the Neanderthal farming lobby. Foreigners don't get a vote for a start, and China is leading the world in terms of progress on emissions now, while New Zealand is distinguished by its lethargy.
Maybe we could even get them to pay for their water. In summary, the availability of cheap credit, growing demand for animal protein and fears over food security are all adding up to this foreign demand for New Zealand farms. The only lingering question is why New Zealanders don't see the same long-term opportunity.
2.. 'Move slowly' - Michael Pettis is a Beijing-based economist who is closely watched on the hot topic of China's trade surplus and its economic relationship with America.
He reckons in this Bloomberg column everyone should be more patient with China on the issuing of revaluing its currency.
With household consumption at an astonishingly low 36 percent of GDP, a rising trade surplus and expanding investment are the main sources of China’s growth. But China is so over-reliant on investment that many say, correctly, that it already invests far too much for its level of development.
The most sustainable way of rebalancing is to engineer an increase in household consumption. Rather than lag GDP growth by two or three percentage points, as it has for the past decade, household consumption must grow faster than GDP by at least three to four percentage points for the next several years for China to achieve any meaningful rebalancing of its economy. But raising consumption has proven difficult.
China depends on constraining consumption to boost manufacturing, and it will prove impossible to increase consumption at anywhere near an acceptable rate without restraining growth dramatically or restructuring its economy. It would require that China reverse a series of transfers from households toward investment and manufacturing, whose growth would slow without such a move.
3. High frequency trading - CBS 60 minutes has done a good job of uncovering High Frequency Trading or Algo-trading for a broad audience. This is where mathematicians and IT geeks design programmes and computers and really fast connections to trade stocks and bonds in nanoseconds. They are blamed for the flash crash and the fact many individual investors are shying away from the US stock market. HT Zerohedge.
4. Google Inflation index - Google's Chief Economist Hal Variam (yes they have one) is planning to use Google's unprecedented access to real-time data and the ability to process it quickly to come up with a Google Price Index (GPI) to more quickly measure inflation, the FT.com reports.
I wonder if TradeMe could do the same here.
While the Federal Reserve is unlikely to panic just yet, Mr Varian said that the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas. Although the data are not seasonally adjusted, Mr Varian said that prices rose during the same period a year ago. The ‘core’ CPI in the US, which excludes food and energy, rose 0.9 per cent on a year ago in August.
“It’s a quite different picture if you go to the UK where you see a slight inflationary trend,” Mr Varian said. He attributed the rise in the UK GPI to the weakness of sterling. Mr Varian emphasised that the GPI is not a direct replacement for the CPI because the mix of goods that are sold on the web is different to the mix in the wider economy. Housing accounts for about 40 per cent of the US CPI, for example, but only 18 per cent of the GPI.
The GPI shows a “pretty good correlation” with the CPI for goods such as cameras and watches that are often sold on the web, but less so for others, such as car parts, that are infrequently traded online.
5. 'Just what we need' - With the Australian dollar near 10 year highs versus the New Zealand dollar and house prices at sky high levels over there, Australian property investors are looking to get into New Zealand. Anneli Knight from the Sydney Morning Herald reports.
This is how bubbles spread. Time to block the purchases? Tenants in our own land? Check out the last quote. 'It's so marvellous!' HT Gareth via IM
Pam Russell has had an interest in property investment for 30 years and owns a couple of rental properties in rural NSW. Two years ago, she went on a property education tour in New Zealand and was so enthused by the opportunities there she now owns seven investment properties.
“I’ve got two in Tokoroa [middle of the North Island] and the rest are in the South Island. My philosophy is to have cash flow positive [properties] – and there is more opportunity to do that in New Zealand than in Australia."
"Where in Australian can you get a house for $58,000 and the rent is $170 a week? There’s no stamp duty, there’s no land tax. It’s so marvellous.”
6. Here come the Australians - Australian companies are gearing up for overseas acquisitions with their newly bolstered currency, the Australian reports.
Guess where they'll look first. HT Gareth via IM.
THE soaring Australian dollar has chief executives and boards of locally listed global firms examining their acquisition opportunities abroad.
ANZ Banking Group, Orica, WorleyParsons, Ramsay Health Care, Toll Holdings, Sonic Healthcare and UGL are among a band of companies that are either publicly, or believed to be privately, looking at overseas deals to take advantage of the strong $A.
7. Now the bankers are getting worried - Yves Smith at Naked Capitalism picks up on the growing sense of panic in the US banking industry about the Robo-signer crisis.
"One senior Wall Street executive told Morning Money over the weekend: ‘President Obama should be very cautious about aligning himself with Congressional leaders who are playing politics with the foreclosure issue. With foreclosed properties comprising one in every four homes sold in the United States, the spreading moratorium could disrupt real estate deals in progress, slow down the process of clearing the backlog of troubled home loans and [endanger] the economic recovery.’
So we are back to Wall Street calling the shots, the very same Wall Street that invokes the “give us what we demand or we’ll shoot the economy” demand whenever its pet interests are threatened. Here the securitization industry was colossally irresponsible in its conduct, and has created a mess that will be monstrously difficult to remedy….and we’re supposed to plow onward in business as usual mode?
And notice the false dichotomy: the banks who screwed up yet again (and will need to be recapitalized again, trust me, foreclosure moratorium or not, there is a tsunami of litigation on the horizon that will bury servicers and the major trustees on securitizations) versus “Congressional leaders who are playing politics.”
8. 'Help the patsies' - Mike Konzcal at Rortybomb writes a nice 'How to' guide on the US Robo-signing mortgage scandal and what it might mean for the multi-trillion mortgage securitisation market in America.
We need to watch this one. It could easily blow up into the next round of the Global Financial Crisis. HT Steven via email.
Meet the robo-signer who kicked it off here at this WaPo story. I almost feel bad for this patsy; the real battle here is between junior and senior tranche holders, and this doofus could end up in jail in order to keep John Paulson rich. After reading about this guy I’m asking our elites to take care of their patsies better
9. Totally relevant video - We've all seen The Downfall scene in the bunker where Hitler unloads on his generals. This one uses the scene to do a parody on the Robo-signing scandal. Pretty good.
10. Totally irrelevant video - Liquid mountaineering. Obviously a shoe ad in disguise, but sort of fun. I hope the Ad agency paid themselves lots of money... HT Alex via IM.
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