Here are my Top 10 links from around the Internet at 10 to 2pm, 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 Monday'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
Good on them.
It's about time the property boom that skewed the economy in favour of consumption and borrowed was skewed right back to saving and investing.
Taxing the obsession with capital gains is a good first step.
It's about time some politicians had the debate we've all been having in 'private' for the last couple of years.
Acutely conscious of the political dangers of even mentioning, let alone discussing, wealth taxes, the party is moving extremely cautiously and saying little publicly about the review of its tax policy.
However, what it is saying is being worded very carefully to ensure that it does not narrow its tax reform options by ruling out introducing one or other tax before the policy is finalised. If it wins next year's election, Labour will have to find some means of broadening the tax base to provide alternative sources of revenue to pay for implementation of its policies because government finances will be so tight.
2. Now the Press Gallery are onto it - The economic malaise gripping the nation has finally filtered through to the Parliamentary Press Gallery in Wellington, who are beginning to wonder what it means for John Key. Here's John Armstrong in Saturday's NZHerald. He's probably the most influential political commentator in the country, I reckon. I sense the mood is turning against Key, rightly or wrongly.
John Key's prediction that the recovery would be "reasonably aggressive" has backfired. National is starting to look like it does not have the answers. English's talk of "rebalancing" may be sound economic theory. But the average punter has little interest in that. English is consequently sounding out of touch. National is starting to look very vulnerable.
3. I'm not going to buy a Big Mac in Switzerland - The Economist has updated its Big Mac index, which is a clever way of working out if a currency is overvalued or not. The index translates the local cost of a Big Mac into US dollars.
Not surprisingly, the currency wars mean Big Macs are overvalued in Brazil and Switzerland, but massively undervalued in China and Malaysia.
New Zealand is not included in this chart, but our research (we didn't actually buy and eat one) shows that Big Macs cost NZ$5 in New Zealand, which is about equal with the US dollar price after the currency conversion. So our currency is correctly valued...
4. Excellent graphic on why the US recovery doesn't feel like much of a recovery - Neil Irwin and Alicia Parlapiano have produced an excellent graphic at the Washington Post that shows why the US economic recovery doesn't feel like one.
They make the point that economic growth needs to be faster than 2% or unemployment there will rise to 11.9%.
The US economy is awash with debt and cannot dig itself out without either a burst of inflation or a massive debt restructure that wipes out the bondholders and shareholders of banks.
Guess which one Bernanke, Geithner and Obama are choosing?
Default via money printing and inflation
The nation’s economic woes boil down to this. Compared with a healthy economy, about 7 million working-age people and 5 percent of the nation’s industrial capacity are sitting idle, not producing what they could. The economy is growing again, but at a rate — less than 2 percent in recent months — that’s too slow to keep up with a population that keeps increasing and workers who keep getting more efficient.
This is the output gap, the divide between the amount the United States can produce and what it is actually producing. The gap, currently $900 billion, explains why we feel so miserable more than a year into what is technically classified as an economic recovery.
5. Has it started? - Perthnow.com.au reports that asking prices in Perth, the biggest real estate boom town in Australia, have started to fall. HT Hugh P
HOUSE prices in Perth are on a downward trend with sellers reducing asking prices by 6 per cent as the local market floods with properties for sale, according to the Real Estate Institute of Western Australia.
The latest statistics from REIWA indicate that the number of properties for sale across the metropolitan area has reached the highest level in almost two years. And fresh data from REIWA has confirmed the median price for Perth properties is falling after reaching a high of $500,000 in June.
6. 'The squid wants all its tentacles' - Goldman Sachs is looking to buy out all its partners in Australia and New Zealand, The Australian reports. Could be a few investment bankers with some tidy windfalls wandering around looking for some even flasher cars. There might be a few property developers who want to sell them a few of those cars...
FOR the 130 partners in the local joint venture of Goldman Sachs, this Christmas could come with a present. Its Wall Street major shareholder could make a buyout proposal valuing the group at as much as $1.5 billion. But if any offer does arise -- and insiders are greatly divided on the issue -- it may not be one that all partners will readily accept.
The chiefs of the local venture, Goldman Sachs & Partners, remain in talks with its New York-based 45 per cent shareholder on the form, structure and price of any proposal.
7. The Fraudclosure mess - The more that emerges from the foreclosure swamp in America the uglier it looks. Here's The Daily Call with its piece: One Nation under Fraud. This is becoming a big political issue.
The mood in America is turning dark as the populace realise they've just been ripped off in a monstrous way by the banking and political elites. Barack Obama continues to defend the banks' interests. He should be orchestrating a nationalisation and break-up of the big six and then a debt restructure that allows America to start again.
Tomorrow, a bank—not your bank, but any bank—could evict you from your home. Even if you didn’t know the bank was foreclosing. Even if your mortgage is paid off. Even if you never had a mortgage to begin with. Even if the bank doesn’t hold a single piece of paper that you signed. And major banks not only know this fact, but have spent millions of dollars to defend it in court. Why? The answer starts with a Jacksonville homeowner named Patrick Jeffs.
In 2007, Deutsche Bank sued Jeffs for his home, which is a necessary step in the process of foreclosing on a homeowner in the state of Florida. Curiously, despite the fact that he immediately hired a law firm to defend his property when he found out about the foreclosure, neither Jeffs nor his attorneys were at the trial. That’s because it had already happened. Deutsche won by default because Jeffs wasn’t able to travel backwards in time to attend, even though the trial featured a signed affidavit indicating that he had been served his court summons.
The only problem with the summons Jeffs supposedly received was that it had been conjured out of thin air. In June of this year, a Florida court ruled that the document was fraudulent, as the person who was supposed to make sure Jeffs was served had mysteriously received a copy of the summons before the lawsuit had even been filed, and Jeffs never even saw the copy.
The lawyers that Jeffs hired to defend his case say that fraud such as this is not uncommon. It’s a widespread problem, and it has cost countless families their homes.
“I think it’s safe to say that 95% of the foreclosure cases in Florida involve some form of fraud on the part of the bank,” David Goldman of Apple Law Firm, PLLC told The Daily Caller in a phone interview. “It’s probably closer to 99%. And the court system is helping them get away with it.”
8. Print baby print - The race to the bottom continues. Here the Centre for Economics and Business Research in Britain predicting the Bank of England will print a further 100 billion pounds to boost the economy and keep the pound falling at the same rate as the US dollar.
Whoever doesn't print will be left standing high and dry when the music stops. Will that include us?
Britain faces the largest public spending cuts since World War II as the government tackles the record budget deficit. The British Chambers of Commerce earlier this month backed a call by policy maker Adam Posen for the central bank to expand its bond stimulus plan as recent data indicate the recovery has slowed.
9. Now the Germans are grumpy - When economies get stressed the people tend to lash out at whoever is in the vicinity.
We're seeing it in America with the Tea Party, which has been directed by its big-money backers to lash out at government and taxation, (when they should really be lashing out at the banks and government).
The French are rioting over an increase in the pension age from 60 to 62 (!)
Now the Germans are having a fairly ominous debate about all the Turks and Eastern Europeans who have migrated to Germany in the last 20-30 years.
This debate was kicked off by a most unlikely source. A member of the Bundesbank's ruling council, Thilo Sarrazin, kicked off the debate a few months ago with a wildly popular book called 'Germany abolishes itself' that accused Muslims of failing to integrate. He also said that Jews shared a particular gene, which eventually forced him to resign from the Bundesbank.
Now Chancellor Angela Merkel has come out and said that Multiculturalism has failed in Germany, the BBC reports.
The German Chancellor, Angela Merkel: "lmmigrants should learn to speak German"
Attempts to build a multicultural society in Germany have "utterly failed", Chancellor Angela Merkel says. She said the so-called "multikulti" concept - where people would "live side-by-side" happily - did not work, and immigrants needed to do more to integrate - including learning German.
The comments come amid rising anti-immigration feeling in Germany. Continue reading the main story A recent survey suggested more than 30% of people believed the country was "overrun by foreigners".
10. Totally relevant video - Here's Stephen Colbert on the problem of unemployment in America. The next scapegoats might be goats because they steal landscapers' jobs...
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| People Destroying America- Goats Steal Landscaping Jobs | ||||
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40 Comments
Here's Michael Field at Stuff on a mansion in Epsom selling for 36% less than it was bought for five years ago. HT Gareth
http://www.stuff.co.nz/business/4244050/Historic-Auckland-mansion-sold-cheap
"French Polynesia has sold an Auckland estate for $5.1 million, heavily discounted on the $8 million the country paid for it five years ago.
Rocklands, a 144-year-old 169-room 8,800 square metre mansion in Epsom, has been sold to a company called Salomon Building Ltd, which is not listed in the Companies Office registry."
Why did they take a 36% loss on purchase price ( never mind about all the holding costs for 5 years!)? Because it dawned on someone that they weren't going to get any more in any future timeframe they could allocate. Still'; it's better than the $4.3m (46% loss) that was bid at the auction, I guess!
A must read from John Mauldin on Fraudclosure. It's much bigger than just a few bits of bad paper work. He's suggesting the entire US mortgage industry is fraudulent. With authority.
http://www.frontlinethoughts.com/article.asp?id=mwo101510
" In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a mortgage-backed security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the 'chain of title.'
"You can endorse the note as many times as you please...but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically, on the note, one after the other.
"If for whatever reason any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.
"To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan.
"The reason the banks are in the tank again is, if they've been foreclosing on people they didn't have the legal right to foreclose on, then those people have the right to get their houses back. And the people who bought those foreclosed houses from the bank might not actually own the houses they paid for.
"And it won't matter if a particular case...or even most cases...were on the up -and up: It won't matter if most of the foreclosures and evictions were truly due to the homeowner failing to pay his mortgage. The fraud committed by the foreclosure mills casts enough doubt that, now, all foreclosures come into question. Not only that, all mortgages come into question.
"People still haven't figured out what all this means. But I'll tell you: if enough mortgage-paying homeowners realize that they may be able to get out of their mortgage loans and keep their houses, scott-free? That's basically a license to halt payments right now, thank you. That's basically a license to tell the banks to take a hike.
"What are the banks going to do...try to foreclose and then evict you? Show me the paper, Mr. Banker, will be all you need to say.
"This is a major, major crisis. The Lehman bankruptcy could be a spring rain compared to this hurricane. And if this isn't handled right...and handled right quick, in the next couple of weeks at the outside...this crisis could also spell the end of the mortgage business altogether. Of banking altogether. Hell, of civil society. What do you think happens in a country when the citizens realize they don't need to pay their debts?"
,,,er.... cheers
Bernard
oh....black swan anyone?
Im kind of getting to the stage that to be honest its "bring it on".....Im pretty much it sure it cant be stopped just delayed at great expense to me....
So you know, do your worst....remeber the "let them eat cake" saga?
Didnt end well......
regards
And of course, if you are a mortgage holder whose loan has been transferred to some entity other than the one you took it out on - whether you built your own house or bought it from someone else ... you too may be in-to-win.
Every person in the US with a mortgage - whether underwater, in trouble or not with the house/loan - will soon be asking for the relevent paperwork.
Forget the moratorium on foreclosures - the people will be having their own moratorium on debt payment - and with the full force of the law behind them.
Socialism used to appropriate private property through diktats and commissars.
Capitalism is appropriating private property through illegal mortgages and bankers.
Funny though that Obama still has his head buried in the sand and is not realising the mess Wall Street has plunged USA into.
May be he will wake up when Goldman Sucks forecloses the White House ?
And here's more on Fraudclosure
http://www.washingtonsblog.com/2010/10/are-all-mortgage-back-securites-…
cheers
Bernard
This NYTimes piece on the Japanese malaise is worth reading.
http://www.nytimes.com/2010/10/17/world/asia/17japan.html?pagewanted=1&_r=1&hp
Like many members of Japan’s middle class, Masato Y. enjoyed a level of affluence two decades ago that was the envy of the world. Masato, a small-business owner, bought a $500,000 condominium, vacationed in Hawaii and drove a late-model Mercedes.
But his living standards slowly crumbled along with Japan’s overall economy. First, he was forced to reduce trips abroad and then eliminate them. Then he traded the Mercedes for a cheaper domestic model. Last year, he sold his condo — for a third of what he paid for it, and for less than what he still owed on the mortgage he took out 17 years ago.
Did anyone see 'Obama's America' on Documentary channel last night ? Programmme by Dr Simon Schama, a leading British historian. He gave the history of banking debacles over the last 150 years in USA and I now realise what has happened is nothing new- Americans been through it all before a number of times. Those who ignore the lessons of history are doomed to repeat them it would seem! The only positive is that they always did recover from the debacles, even if they then progressed to a point to only repeat them several decades later once more.
Yeah I caught some of that Muzza...hey that Morgan bloke had a monster hooter!...
A friend mentioned it to me. Sounds like a cracker. Will MySky it.
cheers
Bernard
You might also enjoy "The Secret of Oz":
Lawyers with expertise in property law in the USA will be laughing all the way to the bank...oops not the bank...the mint...no not there either...hey where the hell do you run to when you want to stash some loot...oh of course...you buy property!
Yet the rich get really rich. India's richest man builds a US$1 billion house (though it cost US$77 million to build...) with 27 floors, 3 helipads, 600 staff and hanging gardens...
cheers
Bernard
Got to be the ugliest highrise in a sea of humanity...just goes to show you money doesn't mean you have good taste.
Fraudclosuregate is an embarrasing debacle, but it will be sorted, and those defaulting will eventually be foreclosed. The end of the world will not arrive tomorrow.
And yes Wolly, if you had the imagination you too would build a house like Mr Ambani. Good taste (or bad) has nothing to do with it!
You don't spose he has long drops installed do you Tim?
Tim: "Fraudclosuregate is an embarrasing debacle"
Oh is that all, an embarrassment. Well that's alright then. And there's me thinking it was proof of complete contempt for the very basis of contract and property law.
John Mauldin: "This is a major, major crisis. The Lehman bankruptcy could be a spring rain compared to this hurricane. And if this isn't handled right...and handled right quick, in the next couple of weeks at the outside...this crisis could also spell the end of the mortgage business altogether. Of banking altogether. Hell, of civil society. What do you think happens in a country when the citizens realize they don't need to pay their debts?"
.......and what happens in a country when the citizens realise the law makers, the bankers and the Courts don't give a fig about the Law and what is right or wrong!
Hey Bernard : Any idea where Australia fits , on the " Big Mac " index ?
[ Luckily we have Jollibee here , and I'm a devotee of their 128 peso Champ 'burger . ]
Hey GBH: Are you in the Phillipines? If so are you all battened down for the 'Super Typhoon' headed your way?
Yup ! The ocean is cutting up rough . Black clouds looming on the horizon . We're just gonna get a side lashing from it . The epicentre is heading north , across Batanes .
Where are you hiding out Gummy Bear?
We own a beachfront property , Panay Bay , down the coast from Ilo Ilo City ( Visayas region ) .
Had my rabies shots at the Guimbal Animal Bite Treatment Centre , this morning . Should survive until Friday's boosters !
Ah , the simple life in the tropics , under the coconut palms .............. Where's the bloody airport !
Get your arse up onto the roof Gummy Bear and paint a big fat Kiwi on it( the roof not your arse)...so we can see you on Google Earth.
Look for a beach with what appears to be giant dinosaur eggs on it . That's us . We've made a concrete version of the Moeraki boulders as our breakwater !
Wishing you a 'safe' side lashing experience and continuing internet!
Thankyou ! Power back on . ......... For the time being .
No answer from Bernard re. the " Big Mac " index . Any ideas as to where Australia fits on the Big Mac graph ?
Re: #9 - "Now Chancellor Angela Merkel has come out and said that Multiculturalism doesn't work in Germany"
Where has multiculturalism ever worked?
Errr well actually something like that worked in 'Germany'! ....not sure if it was named Germany way back then but the forest people were a different culture to the other lot who didn't live in the forests...and they sort of got together...byculturalism..after much murder and mayhem and the language sort of came out of that porridge...so I'm told. Still shows up in the DNA!...
Everywhere. Any examples of a monoculture for us?
Are we finally seeing some commensense in the Climate change debate?
"The recent review of the IPCC's procedures, conducted by the InterAcademy Council (IAC), an umbrella body for the world's science academies, said that some assertions about the likelihood of severe impacts were based on little research.
"Authors reported high confidence in statements for which there is little evidence, such as the widely-quoted statement that agricultural yields in Africa might decline by up to 50 percent by 2020," it noted.
The IAC recommended that the next assessment must deal much more carefully and consistently with uncertainties - and Chris Field, co-chair of the IPCC working group on impacts, adaptation and vulnerability, indicated the message had been taken on board.
"The fact of the matter is that climate change impacts are very poorly known," he told BBC News.
"We only have mature scientific studies for a small number of topics and a small number of places, so we need to recognise that and figure out how, in an environment where the information is limited, we can still provide valuable information.
"What I expect us to do is to use the uncertainty guidance very carefully so we can avoid problems where we seem to be asserting more confidence than the data will allow; but also provide value to a discussion where the confidence isn't necessarily very high.
"After all, most people spend their lives making decisions under uncertainty, and that's what dealing effectively with climate change demands - the same kind of decisions you make when you decide to buckle your seatbelt, or buy insurance for your house or invest in the financial markets."
When I was living in Singapore a few years ago I was surprised to see multiculturalism working well there.
Re (1), where's the property boom Kim Jong? I don't see one on a house sale near me. Nor a farm. Markets are the best fix for malinvestment, as has now been proven (remembering the property bubble was the result of your Keynesian worship in the first place).
Your socialist advocacy is now fully in the open at last. So you're an avid supporter of Labour and the big push back to the caves. With your beloved capital gains tax will come a further attack through income tax on effort, innovation and risk taking, and now the full blown Gulag/Fortress New Zealand, no overseas investment at all, which of course you support also. With our minimal savings, and cut off from the savings of other nations, I wonder how you think any government is going to continue to run Nanny State? Oh, silly me, you're a Keynesian credit freak, so ever increasing foreign debt of course. Why don't you see the glaring contradictions in every post you write? You advocate the end of an economy. The race to the bottom of living standards. I expect to see you as running for Labour 2011?
But what I constantly can't get over, is how dumb the opinion pieces on this site have become (and NZ Herald). What economics have you actually read or studied? Again, please, read Paul Walker's Anti-Dismal blog, Peter Cresswell's Notpc, or even the utilitarian Matt Nolan is less harmful than the Statist rot you spin.
And so ,the breakdown of the financial system, the social systems, the immigration systems and modern day life in the West in general begins to become ever more apparent.
Oh, well. So it must be. They tried to all cheat death by QE, (STILL trying) and now they reap what they sow.
#3. The Swiss as always, ahead of the game.
I reckon Bernard could do with a few Big Macs.
The current German obsession with middle eastern immigrants and the drain they make on the economy is sounding all a bit too scarily 1930s Nazi Germany to me.
Calm down Matt, at least in Germany their version of democracy is further from fascism than BS NZ puts up with . Before you go get all upset and on the racial soapbox, stop and think (with your brain) about the pros and cons of "multicultualism" and just where for example it has brought positive outcomes to say NZ. Then think (brain again) how this "multiculturalism" was born, and who it really benefitted the most as it spread throughout the world. I think you might find that the root answer could be same answer to who was the major beneficiaries of the feminist movement, and where that has got society today....
Hope this question is not to complex for you.
What do you think happens in a country when the citizens realize they don't need to pay their debts?"
I suggest that the citizens of the country is only doing what their own goverment is doing to their own debts with foreigners.....monkey see monkey do.
Since the American dream used to be..put a small deposit down on the mansion and move in..it worked as long as you had a job..80% of Americans?...It also worked when a small number of the population stuffed up and got foreclosed,and acted as an insentive for those neighbours watching the reposesion trucks..But the tipping point has to arrive when a significant number of the population get foreclosed.If these houses are left empty for more than a year,they deteriorate to a point of large maintainence costs..not to mention rates water fees etc.
So whoopi dooo! it must have got to the point that someone realised that it would be cheaper to let the "nova poor" family live in the house, than have the population on the streets watching the houses get vandalised.These houses in reality are a liability to the banks.This problem will increase as the "dream" goes into reverse. Since it dosn't look likely that the "Job Fairy" will waggle its magic wand anytime soon..and put money into peoples pockets..and since America has no safety net worth speaking off.The Great Depresion will look like a holiday compared to whats happening now. Always remembering of course,it was the carrot of home ownership and being a Freeholder some day that makes our societies what they are.
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