Here are my Top 10 links from around the Internet at 10 to 4pm, 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
1. Is that the best we can do? - Brian Fallow expresses something that is starting to dawn on everyone in his NZHerald column. The scale of the deleveraging that has to happen is enormous and it's going to hamper growth for a long time.
Retailers and bankers are only now starting to grasp the scale of it.
We essentially need to pay back debt equivalent to about 50% of GDP.
That will take a decade or more at current rates. In the meantime we need to shift a lot of savings from property into export producing businesses.
This is what de-leveraging means.
Do we have the policy settings for that? Capital gains tax? Land tax?
There is a decent chance the economy did not grow at all over the past six months. It is troubling if that is the best we can do at a time when the stimulus from the Government is at its peak, interest rates are as low as they are going to go, and export prices close to all-time highs.
We are a quarter of the way into a financial year in which the Government expects to run a cash deficit of $13 billion (up from $9 billion last year). Likewise the average mortgage rate people are paying is as low as it is expected to go in this cycle. And world prices for a basket of New Zealand export commodities are just 1 per cent off their all-time high last May, boosting farm incomes.
The net effect is a joyless, jobless phase of the recovery, where progress is measured by the fact that we have gone from being up to our nostrils in debt to merely up to our necks.
2. Wondered why the Chinese want our nicely watered and arable farmland? - China Daily says new report out in China says the average area of the glaciers in Western China is expected to shrink 30% by 2050 because of Global Warming, which would in turn worsen water shortages and reduce crop production by 5% to 10%.
Forecasts of glacier recession patterns, summer temperatures and precipitation showed the average glacier area in western China might be reduced by 27.2 percent by 2050, said the report. Glacier shrinkage would also threaten China's agriculture sector.
The report warned that overall crop production capacity would drop by 5 percent to 10 percent by 2030 due to global warming, especially in wheat, rice and corn, and the impact would worsen after 2050.
The Chinese government had attached importance to tackling the problems caused by climate change and taken effective measures to reduce the negative impacts, said Sun Cuihua, an official with the National Development and Reform Commission (NDRC), Friday at the climate talks.
3.' Let's just reduce our standard of living' - Now Americans are starting to say heretical things such as whether it's now time to deliberately reduce America's standard of living rather than try to print their way out of trouble. Here's Sara Grillo at BusinessInsider.
US QE2 could be the final straw that ignites conflict amongst the already tense and non-cooperative world powers. The recent IMF meeting did not foster resolve. All that US QE2 is going to do is further motivate countries like Japan and Brazil to intervene and devalue their own currencies defensively. It could also spur asset bubbles in Emerging Markets like China. Europe has clearly dug its heels and stayed tight, resorting to VAT increases instead.
However, a strong Euro will ultimately be counterproductive for the recovery. We may see reactive tariffs or trade quotas against inexpensive imports. The best way to create balanced and sustainable growth of world aggregate demand is through concerted movements, but that unfortunately does not seem to be the tone. The bottom line is that unilateral movements reflect global tensions and a lack of cooperation amongst major world powers. This boosts the likelihood of another high tail risk event.
Instead of monetary policy, how about some fiscal? Taxing the rich more won’t work because they will work less or find tax shelters. Cutting spending won’t work because the Baby Boomers are starting to retire, and they get their Medicaid and Social Security. The least painful measure would be to broaden the tax base. I’m not against Volcker’s VAT tax idea. While we are at it, let’s see about higher taxes on luxury goods, tobacco, alcohol, and energy. These measures are weak at best and will only dent the $14 trillion or so that we are in the hole.
Here’s a cynical and imaginative idea: maybe there is no solution. The structural problems are too deep, and every answer creates more problems. Maybe the US should just cope with the pain that it deserves for binge overleveraging itself. Maybe the frugal nations of the world should dominate, because they have the discipline to save and invest their money wisely. Perhaps it is time that the US should step aside and accept that we just can’t compete anymore. We almost nationalized the banks a few years ago. Maybe Socialism isn’t a bad option.
This is an old-fashioned, shrewd philosophy. The US should own up to our debt addiction, accept that we are down for the count, and adopt lower standards of living until the country learns to save and invest wisely its money instead of operating like a casino or a shopping spree where everyone owns 4 cars, 2 houses, and vacations like it’s the last time the sun is going to shine.
4. Why Obama is against a foreclosure moratorium - You'd think with an election coming up the US government would take the opportunity to beat up on the banks and demand a moratorium on all foreclosures in the United States. But no. Here's Nomi Prins at Zerohedge with a possible explanation. The government can't afford to force a revaluation on the loans because it now owns so many itself. It is the Extend and Pretend economy.
The free-market, let the banks do what they do mentality was what allowed them to create a $14 trillion mountain of securities backed by precarious mortgages to begin with. Don’t look at what they’re doing, that might hurt the boom. Don’t ask them for anything in return for bailouts -- that might clog the system.
Don’t stop them from churning foreclosed properties -- that might stop the recovery. But the real reason for Geithner’s reluctance about a foreclosure moratorium is that he’s scared stiff about those securities – because even if he won’t admit it, he knows that the bailout wasn’t just about TARP and Bernanke isn’t just an economic savior.
The government owns or is backing trillions of dollars worth of assets predicated on the same or similar suspicious loans that defaulted during the 2008 crisis period, which they did nothing to stop (or force banks to restructure).
5. Here's an interesting idea - Michael Pettis is a closely watched academic economist in Beijing who has his finger on the pulse of US-China economic, currency and trade relations. He suggests one way to solve the big problem in the currency wars is to get America to organise China to build and own infrastructure in America.
That could be entertaining in a political sense, but here's the thinking.
Essentially, China needs time -- perhaps up to 10 years -- to switch its internal economy from production of exports to a lot more consumption of its own stuff. To do that it needs to maintain a trade surplus with America. Meanwhile, America's problem is a lack of spending and jobs in America. It needs spending on infrastructure but can't afford to do it itself or borrow more to do it.
The other way the US can run a rising trade deficit is for a surge in investment. With a slowing world economy it is unlikely that private investment will rise, but as Joseph Stiglitz pointed out recently the US is paradoxically in a very good position to increase investment because it has very poor infrastructure for its levels of development.
The US has tons of room for a major expansion in infrastructure and, unlike in China, almost any infrastructure spending is likely to be value creating. One way for this to happen is for the US government to fund and engineer the infrastructure spending directly. The resulting increase in the US trade deficit would of course be financed by Chinese lending to the US government as it is forced to accumulate USG bonds.
But aside from the fact that there is too much pork-barrel politicking involved in US government spending, it will result in a rapid rise in the US fiscal deficit. Would that matter? No, because this is exactly the kind of fiscal spending that is sustainable. US wealth creation would exceed the rise in debt and so the US is in the aggregate better off.
But of course the politics of a rise in the US fiscal deficit are pretty sticky. So why not have China do it directly? Let China engage in a massive rebuilding of US infrastructure – it can build airports, highways, damns, and railways – which would raise investment levels enough keep the US trade deficit high in a way that benefits the US and China.
Of course China would also have the right to charge for the use of these projects so that it can earn a positive return on its investment. The return doesn’t even need to be high – just better than the return it gets on its huge expansion in investment in China, which I suspect is negative for the country as a whole.
Talk about win-win. China will get the eight to ten years it desperately needs to engineer what will otherwise be a brutally difficult rebalancing. It will get a much higher return on its investment. And it can avoid the foolish pork-barrel domestic expenditures that have characterized the past several years. The US can sharply improve its infrastructure in a rational way without a boatload of Congressmen arguing over who gets what. It can raise employment without raising the fiscal deficit.
And as icing on the very large cake we can avert the trade war that is an almost inevitable outcome of the current imbalances. So can we get China to fund the Xin Fa’an (New Deal) in America? Probably not. Muddled Chinese public opinion will be furious that desperately poor China is investing in rich America, even though the overall returns will be better and the cost of China’s adjustment will be much lower. Muddled American opinion will be furious that America is “selling out” to China. Bumptious politicians in both countries will completely fail to get the underlying economics of the trade, and they will never allow it to happen. But it is still a pretty good idea.
6. The problem with Parity - The Australians have a curious attitude to their currency. Many of them (particularly the consumers) actually like the fact it is strong. But Elizabeth Knight writes at SMH.com.au that parity for the Australian dollar may not be such a good thing. Can you imagine a parity party in New Zealand? It would be more like a wake.
Once you look past the froth and excitement, the reality is that we are in a global currency war and Australia has yet to pick up a weapon. Perhaps there is insufficient focus on the international battle because we are so drunk from two weeks of celebrating (near) parity.
7. 'You didn't tell us' - Felix Salmon from Reuters talks in this video about how much of the US mortgage market is fundamentally flawed and how investment banks (the Too Big To Fail banks) face an almighty disaster. That's because they sliced up mortgages that they knew were impaired but didn't tell the buyer of the securities over these mortgages that they were impaired. Just plain fraud. Here's his reasoning on the video and here's his original text post.
Just about every major investment bank in the world might have huge legal risk surrounding the way that they built their mortgage bonds. The stock market in general might be relatively sanguine about the mortgage mess, but bank stocks are falling, and I suspect that the worst is yet to come.
Certainly the tail risk to the banking industry as a whole is as high as it’s been since TARP was first unveiled.
8. What Henry didn't do - Henry or 'Hank' Paulson was George Bush's Treasury Secretary and failed to stop the final stages of the housing boom before it bust with such devastating effects. There's a reason for that, as Greg Gordon from McClatchy reports.
In his eight years as Goldman's chief executive, Paulson had presided over the firm's plunge into the business of buying up subprime mortgages to marginal borrowers and then repackaging them into securities, overseeing the firm's huge positions in what became a fraud-infested market.
During Paulson's first 15 months as the treasury secretary and chief presidential economic adviser, Goldman unloaded more than $30 billion in dicey residential mortgage securities to pension funds, foreign banks and other investors and became the only major Wall Street firm to dramatically cut its losses and exit the housing market safely.
Goldman also racked up billions of dollars in profits by secretly betting on a downturn in home mortgage securities. "No one was better positioned . . . than Mr. Paulson to understand exactly what the implications of his moving against the (housing) bubble would have been for Goldman Sachs, because he knew what the Goldman Sachs positions were," said William Black, a former senior thrift regulator who delivered the harshest criticism of the former secretary. Paulson "knew that if he acted the way he should, that would have burst the bubble. Then Goldman Sachs would have been left with a very substantial loss, and that would have been the end of bonuses at Goldman Sachs."
9. New Zealand's economy is worth about the same as Arkansas'
10. Totally relevant video - Mr T talks to Bloomberg about Gold. Seriously. He wears an awful lot of Gold. He started buying gold chains in 1977. He now wears 45 pounds of gold. He must have problems at airports. "Gold is the sweat from the sun. Gold is special." He represents a company that buys gold jewellery via the post. Yikes. That's a whole new type of jingle mail.
51 Comments
Arkansas had Bill Clinton and NZ has Bill Double Dipton
Someone had a bit of fun with the matching.
Australia got Florida - is there a housing bust to come?
Russia got New York
Ireland got Wisconsin, Greece got Indiana, what that say about Netherlands being matched with Illinois
And New Zealand is stuck between Israel and Iran.... Not where we want to be right now, I think.
mouse are you looking at a knitting pattern in stead of a map :-) ?
Well spotted, I agree.
California got Italy.........
#7
"A few hundreds of billions is just the start"
http://www.zerohedge.com/article/quantifying-full-impact-foreclosure-ga…
The Cartoon between 4 & 5 is totally on the money...
Chq this....> http://thestandard.org.nz/nats-turn-blind-eye-to-peak-oil/
Dr Russel Norman: Is the Minister aware of the comments made by the chief economist from the International Energy Agency just last year in which he said “oil … is running out far faster than previously predicted and that global production is likely to peak in about 10 years—at least a decade earlier than most governments had estimated.”, and if global oil production peaks in 10 years, does he think that will result in an increase in the price of oil?
Hon BILL ENGLISH: I think that is anticipated, to a significant extent, because we are seeing any number of energy companies looking at investing in alternative sorts of energy. We are seeing significant investment in solar energy, for instance, which is bringing the price down, and investment in electric cars on a pretty large scale. I think most people expect oil prices will be pretty high, and they are looking for alternatives. In our view that is best left to the market, which has stronger incentives to get it right than Governments trying to follow political fashions. "" """"""
Best left to the Market?...Governments following political fashions!!!... Wot, like Lemmings looking for a Cliff?
I think that the IEA is being a tad optimistic with its prediction of Peak, which most commentators think has actually already occurred. Not that the IEA is reliable.
Bill just doesn't really get it, oil aint just used for gas, its used for everything. So how are those electric cars going to be made when the oil runs out exactly? It is truly depressing to think just how ignorant of this issue our politicians are.
@ No Ponies - Of course you are correct, IEA are optimistic... But Govt can't argue with IEA predictions as they speak for the OECD...
and we are part of the OECD and shimming our way up the OECD Ladder right?
I suspect one by one, they are coming to Jesus (so to Speak) ... did you see this from Jim Bolger yesterday....
"He did not wish to comment on the price the last Government paid Australia's Toll Holdings for the rail business but believed "it won't make much difference in the grand scheme of things"....
and
"He said that while NZ Post was on the wrong side of history, KiwiRail, despite its well-reported need for new investment, would prove to be on the right side as energy prices inevitably rose."
...>http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10680372
But I suspect Joyce and Guy, will be like the proverbial Camel passing through the eye of a needle... They may need a bit of a push.
Why push when we have explosives?
As you say mouse the oil supply debate... and the government is all for building a holiday highway with tax payers dollars instead of Aucklands CBD rail tunnel for electric trains. Is anyone else confused?
yeah but on the bright side, simon power has some real genuine financial reform on the way.
http://www.stuff.co.nz/business/personal-finance/4238220/Financial-reform-well-under-way
i bet you all feel much better now right?
Yes, much better - the government, Minister Steven Joyce can order our infrastructure needs from Asia – it is cheaper and it creates employment and rising prices over there and lift our account deficit. – HA – what an economy !
Anybody out ther who is wondering where Kunst is coming from... you need to read this...>
Interesting link mouse. Now in difficult times with the prospect of higher unemployment and uncertainty on the export front, New Zealand has to look for better opportunities in the secondary sector.
Full employment is the key to keep the economy and social freedom intact. The government must do everything to support our own industries, because protectionism with massive import/ tariff regulations certainly happing soon in most other nations. Again , planning, designing manufacturing and maintaining our own infrastructure needs would be an excellent start into a new area of our economy
Indeed, we need to work with what we have...Borrow and steal are not sustainable options.
and on a more serious note this article C/- http://www.energybulletin.net/stories/2010-10-14/energy-and-food-constraints-will-collapse-global-economic-recovery
"But the most significant development of the Green Revolution of the 1950's and 1960's was to put food production on a fossil fuel platform. This expanded food production and drove down prices. The result was population expansion which drove more ecological degradation and resource demands. The result is that now even more people are dependent upon an even less diverse and more fragile resource base. Declines in oil production are likely not only to reduce global food production, but to undermine the economic systems that made food accessible and affordable."
Oh Bugger!... and I'm trying to make an honest Buck as a Local Food Producer... and the likes of Bernard (See #1) Would have me hit with a Capital Gains Tax and Land Tax... The Cave 1/2 mile underground and away from Bill English, looks more appealing all of the time!
mouse
Norman is a dogmatic d^&*head, he bags roads and touts buses as a panacea, which would be ok except buses drive on roads and public transport is not about energy efficiency.
Neven911
Try looking out passed the approaching election with a Labour bunch back at the pig trough....thought that might scare you....a real chance when you consider 2011 is set to be as bad if not worse than 2010...the retail 'must end now' sales will not end any time soon....but the QE bullshit by Benanke will shove oil way past $100 and any rise in the Kiwi will be minimal given the deathly state of our economy.
Expect labour to come out roaring ...promises promises by the score...a strategy aimed at the poor and those who see themselves becoming poor.
Noddy's economy was in the shit when Cullen was playing overtax the rich while bloating the state sector. The property ponzi scheme was recognised but seen as a vote winner for Helen. English has made the mistake of not understanding the seriousness of the problem in mid 08. What the hell was he reading...comic books! Then national made it worse by throwing more cheap money at the bubble...remember the welcome home to greater debt fiasco.
Now we have the Fletcher boss and Kiwibank boss just by remote chance, both coming out with the same BS encouraging fools to splurge again. .....Go figure!
The very best that can happen is solid export returns and no disasters for twenty years...with the state sector parasite cut down to size year by year. To achieve that, the govt must be more open and honest with the peasants....end the spin..fire the spin doctors...
4 & 7 just shows the conflict of interests that happens when the Govt becomes a participant in the economy rather than regulator. The bigger the govt becomes as a % of the economy, they more likely suboptimal decisions are made that favour the insiders.
FYI L. Randall Wray, a professor of economics at the University of Missouri -- Kansas City, reckons America is just uncovering the biggest fraud in the history of the world.
http://www.businessinsider.com/mortgage-fraud-scandal-2010-10#ixzz12OxS2iiQ
Indeed, the largest financial institutions were run by their management as what my colleague Bill Black calls “control frauds”. That is, the banks used accounting fraud to manufacture fake profits so that they could pay huge bonuses to top management. The latest data out on Wall Street bonuses show that these institutions are still run as control frauds, with another record year of bonuses paid by cooking the books. The fraud continues unabated.
This is the biggest scandal in human history. Indeed, all previous scandals from around the globe combined cannot even touch this one in terms of scale and scope and stench. This is the mother of all frauds and it will be etched into the history books for all time.
Now we know that it was not just the mortgage brokers, and the appraisers, and the ratings agencies, and the accountants, and the investment banks that were behind the fraud. It was the securitization process itself that was fraudulent. Indeed, the securities themselves are fraudulent. Many, perhaps most, maybe all of them.
cheers
Bernard
Here's how a couple of independent civilians helped expose America's masssive foreclosure fraud story.
http://www.mcclatchydc.com/2010/10/13/101997/civilian-cops-take-on-beleaguered.html
Great story
cheers
Bernard
Stay 'humble' , wear gold? LOL Oh Mr T, your yet another Christian nut full of hypocrisy. Did Jesus hoard gold? did he hoard any kind of material wealth? Supposedly not.
FYI
New York University Professor Nouriel Roubini said he expects a 35 percent to 40 percent chance of the U.S. entering a double-dip recession, highlighting the risks faced by the world’s largest economy.
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aT3VMl_isx8g
That jestering japester , Roubini ! Why doesn't he just average the two figures and say that there is precisely a 37.5 % chance of a double dip recession in the USA . I put the figure at a 32 % possibility ............ but up to 97.4 % if Timmy Geithner gives up his guest spot on South Park ( Timmy ! ........ ah ... Timmy . ) and takes on the Treasury Secretary role full-time .
No 1: I can't believe these morons are just now getting it!
Here's the house that started the fraudclosure crisis.
The house that set off the national furor over faulty foreclosures is blue-gray and weathered. The porch is piled with furniture and knickknacks awaiting the next yard sale. In the driveway is a busted pickup truck. No one who lives there is going anywhere anytime soon.
There is a frenzy over foreclosures. Every attorney general in the country is participating in an investigation into the flawed paperwork and questionable methods behind many of them. A Senate hearing is scheduled, and federal inquiries have begun. The housing market, which runs on foreclosure sales, is in turmoil. Bank stocks fell on Thursday as analysts tried to gauge the impact on lenders’ bottom lines.
All of this is largely because Mr. Cox realized almost immediately that Mrs. Bradbury’s foreclosure file did not look right. The documents from the lender, GMAC Mortgage, were approved by an employee whose title was “limited signing officer,” an indication to the lawyer that his knowledge of the case was effectively nonexistent.
Mr. Cox eventually won the right to depose the employee, who casually acknowledged that he had prepared 400 foreclosures a day for GMAC and that contrary to his sworn statements, they had not been reviewed by him or anyone else.
Were it not for an "insider", changing sides.
There will always be insiders. There will always be insiders, changing sides. It's humanity.
It's just a matter of time.
And meanwhile, Barackk Obama is doing nothing... I sense some ugliness coming in markets tonight...
President Barack Obama and the federal agencies that share responsibility for housing finance are opposing calls for a nationwide foreclosure freeze, fearing further damage to the housing market. Even as bank stocks tumbled yesterday on concern that the mishandled loans will increase costs for lenders, the White House and federal regulators avoided any grand gestures designed to reassure investors.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aQ_2WXcD2EdM&pos=8
"Let China engage in a massive rebuilding of US infrastructure – it can build airports, highways, damns, and railways – which would raise investment levels enough keep the US trade deficit high in a way that benefits the US and China."
Michael Pettis obviously has never been to America and experienced first hand their zealot like Nationalism! (I was there during 9/11) The guy is talking complete BS. His idea is that of and 'idealist' who lives on Mars.
And here's the NYTimes on Fraudclosure...
An alarming report on Bank of America, compiled by Branch Hill Capital, a San Francisco hedge fund, circulated widely on Wall Street on Thursday. Branch Hill suggested that the bank, the nation’s largest, could be facing more than $70 billion in losses from mortgage securities that it may have to repurchase from Fannie Mae and Freddie Mac, as well as private investors.
aaah...cheers
Bernard
Now that would be funny....here they are accusing the 2 FMs of having/hiding huge losses when in fact its the private bansk who face huge loses and who perportrated this mess in the fisrt place.....just where are the State Prosectutors in this? whay are they not starting legal actions aganist the big banks en mass? there must be enough evidence of wrong doing and on a grand scale...........then there is the private law suits.....the two FMs must have a fantastic case, then the pension funds, etc etc.......
Forget BP.....and its 30billion....chicken feed.
regards
Paulson....it just gets better....or is that worse....
Its quite simple if it isnt FRAUD, or THEFT then the US is truely fsked....no ifs no buts. He should be in jail with the Ponzi scheme guy......
The mortgage fraud just looks mor and more like the black swan event Ive been waiting for to break this beyond repair.....though I suppose a black swan is a small event that has an effect hugely out of proportion to its size...this mess is just huge......
Anyway just like GS was able to exit the market(s) cleanly leaving the cannon fodder (you and I) delaying this just does the same thing, gives them time to exit....lets just blow it up and catch them as well.... even hang a few...no loss IMHO.
regards
Now that Donny Brash has stepped down from Kiwisaver fund provider Huljich Wealth Management , I wonder if he has time for his fellow brethren . Yes ! Those secret postcard-drop religious nut-jobs who assisted Don in losing the 2005 election , are now launching BCF , their own KiwiSaver fund .
Get thee from the temple of God yea usurious sinners !
On the recovery capsule cartoon: The situation was not to far from that with the miners and they had to keep a diet of app 200 cal a day before being fit to go in the capsule .. any silmilarity with the world economy there ?
Sorry 2000 calories per day
Read and laugh!.... "On the surface, the problem looks like foreclosures have been conducted based on improperly processed paperwork. That is a gross understatement"
http://www.marketoracle.co.uk/Article23522.html
The question being....has anything like this been going on in Noddy.....what of the 'securitised mortgages game'...you remember that rort don't you....banks in Noddy allowed to bundle up their mortgages and borrow on the strength of them being real assets...How do we know the rules are being followed...the % the banks are allowed to rort?....none of this may take place in Australia....it's considered too risky....to open to failure.
And yet Aussies are still telling themselves "There is no property bubble! There is no property bubble!"...
I LOVE this line:
"........The Australian housing bubble debate is running hot, with hedge funds looking at short-selling opportunities......"
http://www.theage.com.au/business/cba-takes-the-advice-of-the-agency-it-parodies-20100914-15b0o.html
And this one from "The Age" article:
"........At this point, if I’m an international investor, I’m thinking ‘we gotta short these chumps’......"
Google "Shorting Australian Housing" or "Shorting Australian Mortgages". If you've got money to invest at big odds, there are some hedge fund operators out there right now who want to talk to you about this. (Presumably NZ is too small to bother with). Just bear in mind that the market can stay irrational longer than you might be able to stay solvent. Michael Lewis's book "The Big Short" talks about some people who abandoned their "short" bets on mortgage backed securities after about 2 years waiting for their crash. These people must have felt SOOOO sore about the successful betters who did their "short" bets late in the piece and cleaned up.
The big banks on Wall Street who were acting as middlemen on the derivatives transactions, one by one over a matter of days, ceased to take the bets - just as they were getting a "wave" of people who "got it" and who were making inquiries how to get in on what was becoming an obvious way to gain BIIIIG from others mass stupidity. Lehmann Bros was slow reacting and got left "holding the parcel".
What I find all the more ironic about all this, is that in this part of the world, we love knocking the stupid Yanks. Yet even with their negative example to learn from, us and the Aussies are guilty today of almost exactly the same collective illusions about our property markets.
Who to believe, the research of Wolly or the research reported in the latest NBR. Wolly predicts 2011 in NZ will be worse than 2010, NBR says not so. The difference is those who think 2011 will be on the upswing will be disappointed if that doesn't materialise, whereas those who say we will be on the downswing will be absolutely delighted if it materialises.
Go back a few issues of the NBR, and point me to the one where they saw the downturn; then I might have some confidence in their prediction of the coming upturn.
Neville Bennett was not too bad in terms of his bearishness a year or two before the crash.
Don't listen to that before going to bed tonight - you may not have only bad dreams.
http://www.youtube.com/user/InflationUS
Some parallels to NZ are obvious too.
This is a bit late in the thread, but I want to point up the latest column by Nevil Gibson in the NBR.
By the way, Bernard, these "Top 10 at 10" collations are top-notch, I wish I had time to always look into every one you do.
But Nevil Gibson's latest: I wish the whole thing could be put online for everyone to link to.
It is headed "Oil plan spill sad but another may spud".
Here are some highlights, including the openining para.
"The world is awash in oil. New discoveries, plus additions to reserves, show supplies are not about to run out anytime soon. In the past 2 months alone, substantial discoveries have been reported in Bolivia (gas), Brazil (2 basins), Western India, the Central Mediterranean sea, Mozambique (deepwater offshore), Norway (2 gas fields), Pakistan (gas), Vietnam (in both the north and the south), and Western Australia (2 fields).
That's not counting major upgrades by 2 of the 3 leading producers - Iran and Iraq...........
".........In addition, a raft of announcements have come out of Africa in the past few weeks as virtually every country steps up its production capability.........Egypt, Ghana, Liberia, Mauritania, Sierra Leone and Uganda are now all headed to become substantial oil producers and exporters, joining the largest, Nigeria and Libya, along with others such as Angola and Algeria.........(and) Sudan.......
",,,,,,,,,,Money is pouring into new oil and gas related investments. For example, US oil giants led by Exxon Mobil and Chevron.........have tripled their spending in sub-Saharan Africa...........They have found twice the reserves remaining in the US.
From 1989 to 2009, Africa's estimated oil reserves more than doubled to 127 billion barrels, equivalent to about 9.6% of the world's total........
".......All this puts Exxon Mobil and Todd Energy's decision to surrender its Great South Basin exploration license into perspective.............New Zealand's oil producing prospects (have been pushed) well to the back of the world agenda. The political risks in Africa are seen as easier to overcome than the natural environment of the Southern seas..........
"........Though disappointing to the local industry, this country can still boast several promising developments as well as production success......."
Comments are invited from Powerdownkiwi and other peak oil alarmists and doomsayers...........
Then Nevil Gibson is frankly a cretin..........do your own research....
Honestly I thought better of you........
The entire point of Peak oil is not the running out, its the we are at the maximum we can pump in any one day problem.
http://www.chrismartenson.com/crashcourse/chapter-17a-peak-oil
Indeed oil is likely to be available for 50 years the problem is the daily production will decline just as the demand (from the developing world) rises....and since this is an in-elastic relationship a small shortfall will se a huge increase in price, and oops another recession.
http://www.chrismartenson.com/crashcourse/chapter-17b-energy-budgeting
BPs disaster...do you really think BP would go to the edge of technology to get as little as this if there was better? The answer is simply there isnt thats why they were there.
Further there is a very strong link / concern that once oil gets to about 6% of GDP a recession results....that 6% is somewhere around the $80USD mark but certainly below $100USD....so as long as oil is at $80USD the recovery will look weak and tepid....
http://www.youtube.com/watch?v=jzsEf6UVgUM
In terms of discoveries the peak year of discovery was 1964....in 2010 we are discovering maybe 15%....we are consuming every year more than we can find and have done for years...
Iran oil production is generally consider at or past peak, here is the graph,
http://www.wtrg.com/oil_graphs/PAPRPIR.gif
Iraq, indeed its expected it can ramp up, but there isnt a lot of sign of it yet.....however its our best bet...
http://www.wtrg.com/oil_graphs/PAPRPIQ.gif
Here's russia,
http://www.wtrg.com/oil_graphs/USSR90.gif
Nice curve that.....maxed out as we can see.
Norway, past peak....North Sea was 1999........
Equivalent of the remaining USA, the USA produces 5mbpd...and its in decline...and it was easy to get to........
127billion barrels of reserves......Saudi has?
267Billion I think from memory, their biggest field produces about 5mbpd....ghawar is 60 years old, its probably 50% depleted (if not 65%) and whats left is harder to get...and of poorer quality.
The need going forward is to find another Saudi or actually another ghawar (its a one off) at at most every two years.....Iraq might prove that as a one off "find"......even if we find another ghawar thats a one off we need one every year....
Since the second world war only one field of similar size (in the 1970s?) has been found. On the minus Mexico has/had that second biggest field....its production has collapsed...
In twenty years sure there have been finds, look at what has been consumed in that 20 years...
NZ's south Basin is in a friendly, english speaking Ist world country with good local engineering skills, first rate education, communications, transport, good harbours, stable politics, welcoming Govn ie Brownlee will blow anyone at the airport...Then getting it out, there is easy deep water access into the well heads and straight line shipping to the US....no pesky muslims to argue with etc etc....Exxon isnt here because the geology is just wrong. Am I saying there is no oil? no Im not, but at that depth its most likely to be gas, but its most likely to be dry, the odd Billion? maybe....would that quantity be economic? nope.
Indeed Bumbling Brownlee has now switched from there is oil there to look at those hydrates amongst the easier in the world to get to.....that adds up to....no oil...and a recognition of peak oil in the back rooms....if oil was to be had they wouldnt be looking at deep water hydrates....
regards
heads up ladies + gents---this has caused bulk drama right up+ down the eastern seaboard of australia---lots of snow,rain +wind--you,re in the firing line
Philbest - if you really truly want to understand the oil problem then I urge you to watch this:
Its a series of presentations recently delivered in Capitol Hill in Washington by a number of globally acknowledged experts in the oil industry detailing their concerns about supply.
Alternatively you can continue to promulgate the musings of an ill-informed hack writing for a second rate NZ financial publication who demonstrates a breathtaking lack of knowledge as to what peakoil is really about.
You can choose whether to be chaff (if so, in a few years you'll wear a surprised 'hoocoodanode' look on your face) or you can choose to be as prepared as you can be -on an individual level it doesnt really matter much to me which it is, but then a social conscience is a terrible thing.
hey andy have you got any inside juice on the recent conference about our oil resources?
i hear Farouk Al-Kasim was over from Norway....
Lindsey Williams:
"The Energy Non-Crisis"
http://video.google.com/videoplay?docid=3340274697167011147#
The main point:
Who benefits from peak oil alarmism? Which side does it PAY "big oil" to be on?
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