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.
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.
1. Middle of an overvalued pack - Realestate.co.nz CEO Alistair Helm writes here at unconditional about The Economist's latest measures of house prices globally, which he says suggests New Zealand house prices are not out of line with those of other developed Western economies.
I suspect Alistair and I may beg to differ on the interpretation, but the data and charts are interesting.
The over-valuation in Australia is startling.
No wonder the Australian banks are running around arguing to international investors saying their market is not over valued.
Nothing to see here. Move along now.
Please.
The most interesting analysis is undoubtedly the evaluation as to how over priced (or under priced) each countries properties are. New Zealand is judged to have property prices over priced by 20%. This places NZ bang on the median spot on the podium with Australia taking its usual gold medal with property prices accessed as 63.2% over priced.
It is interesting also to see our often comparatively benchmarked country of Ireland being judged as 13.2% overpriced – that after seeing a year on year negative appreciation of 17%. Just shows the extent to which that country’s property market had bubbled up in the past decade.
2. Printing money to buy paper - Bloomberg reported the Bank of Japan is planning to print money to buy corporate bonds only slightly less risky than junk bonds and unit trusts in property companies. This will somehow improve their economy. You couldn't make this stuff up.
This is what happens when America opens the Pandora's box of money printing. Competitive devaluations fueled by quantitative easing.
How long before the Fed and BoJ start giving money away on street corners for people to spend?
The BOJ said it will buy corporate debt with lower credit ratings than it previously purchased, including BBB rated corporate bonds and a-2 commercial paper, according to a statement today in Tokyo.
Board members will meet on Nov. 4-5 to discuss purchases of exchange-traded funds and real-estate investment trusts, more than a week earlier than scheduled.
Governor Masaaki Shirakawa’s decision to change the meeting date to follow the Federal Reserve’s Nov. 2-3 gathering signals he wants scope to react to any Fed easing, said economist Hideo Kumano. New York Fed President William Dudley set expectations of about $500 billion in bond purchases by the U.S. central bank, a step that may spur the yen and pose risks to Japan’s growth.
“The surprise was that the BOJ changed its schedule for the monetary policy meeting to right after the FOMC, indicating they are ready to address any market movements, especially in currencies,” said Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former BOJ official. “They are ready for a currency-devaluation race.”
3. Hike your rates - Bloomberg reported the IMF is recommending the Reserve Bank of Australia lift its interest rates to contain inflationary pressures. We will see whether they've taken the advice come Melbourne Cup day next week.
“With inflation projected to remain close to the top of the 2-3 percent target band, the RBA needs to guard against inflation expectations becoming anchored at too high a level,” the IMF staff report said.
The IMF staff report said that while the mining boom is expected to be “long lived,” it brings vulnerabilities that policy will need to respond to.
“Facilitating a shift of resources to the mining sector without giving rise to inflationary pressures presents a key challenge,” the IMF staff said. “Growing dependence on mining may amplify the business cycle as the economy will be more vulnerable to swings in commodity demand and make government revenue more volatile.”
4. Hunt on for silver conspirators - Reuters reports on the class action lawsuits against HSBC and JP Morgan alleging price fixing in the silver market.
This all resonates, of course, because of the infamous case of the Hunt Brothers in the late 1970s, who managed to corner the silver market. They were later bankrupted by lawsuits and fines. HT Andrew via email.
JPMorgan Chase & Co (JPM.N) and HSBC Holdings Plc (HSBA.L) were hit with two lawsuits on Wednesday by investors who accused them of conspiring to drive down silver prices, and reaping an estimated hundreds of millions of dollars of illegal profits.
The banks, among the world's largest, were accused of manipulating the market for COMEX silver futures and options contracts from the first half of 2008 by amassing huge short positions in silver futures contracts that are designed to profit when prices fall.
5. The Doom Cycle - Former IMF economist Simon Johnson talks here about The Doom Cycle in the global financial markets.
6. Will Obama attack Iran to survive after disastrous mid-terms? - That's the thinking put forward by George Friedman at Stratfor in what he acknowledges is a speculative piece.
Obama will be paralyzed on domestic policies by this election. He can craft a re-election campaign blaming the Republicans for gridlock. This has its advantages and disadvantages; the Republicans, charging that he refused to adjust to the electorate’s wishes, can blame him for the gridlock. It can go either way.
The other option for Obama is to look for triumph in foreign policy where he has a weak hand. The only obvious way to achieve success that would have a positive effect on the U.S. strategic position is to attack Iran. Such an attack would have substantial advantages and very real dangers. It could change the dynamics of the Middle East and it could be a military failure.
I am not claiming that Obama will decide to do this based on politics, although no U.S. president has ever engaged in foreign involvement without political considerations, nor should he. I am saying that, at this moment in history, given the domestic gridlock that appears to be in the offing, a shift to a foreign policy emphasis makes sense, Obama needs to be seen as an effective commander in chief and Iran is the logical target.
7. They're saying it out loud now - Labour Secretary under Clinton Robert Reich talks in this post about the US$4.2 billion spent by lobbyists in Washington and the effect it's having on US democracy.
Anyone who doubts the corrupting effect has not been paying attention. Our elected representatives have been acutely sensitive to the needs of Wall Street bankers, hedge-fund managers, and the executives of big pharma, big oil, and the largest health insurance companies. This is not because these individuals and interests are particularly worthy or specially deserving. It is because they are effectively bribing elected officials with their donations.
Such donations are not made out of charitable impulse. They are calculated investments no less carefully considered than investments in particular shares of stock. They are shares in our democracy. Why $4.2 billion and not ten times that amount? Because the high-rolling political investors don’t need to spend a dollar more in order to exert overwhelming influence. This figure, by the way, leaves out the tens of billions of dollars dedictated to lobbying, lawyering, and public relations — all of which deliver specific legislative outcomes the campaign money fuels. T
he economy of Washington, D.C. depends on this gigantic flow of funds (supporting the polished facades of refurbished hotels, fancy restaurants, trendy bistros, office complexes of glass and polished wood, well-appointed condos, hotels with marble-floored lobbies and thick rugs, restaurants serving $75 steaks and offering $400 magnums of vintage French wine.) Washington’s seven suburban counties are listed by the Census Bureau as among the nation’s twenty with the highest per-capital incomes.
8. German surplus good; Chinese surplus bad - It's every man for themselves. That's clear when listening to Bundesbank President Axel Weber arguing there are good reasons for Germany to run a trade suplus but there are not good reasons for China to a run a surplus.
Weber reckons not all trade surpluses are equal, The Economist's FreeExchange points out.
Mr Weber’s prescription is simple. Within the euro area it is deficit countries that need to undertake the bulk of the adjustment themselves. For China and other emerging surplus countries, the good professor proposes a different medicine.
They should increase domestic demand and allow for more exchange rate flexibility. Such a cure is hard to argue with. Unfortunately it is a pill he does not think Germany should swallow. Steps by euro area countries with surpluses to raise wages or increase government spending would be “neither necessary nor helpful”, he argues.
10. Totally relevant video - Barack Obama talks to Jon Stewart. He's popular with The Daily Show audience...
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| Barack Obama Pt. 1 | ||||
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