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.
1. G20 failing - Reuters reports the meeting of G20 leaders appears to be failing to find any sort of consensus or action on currencies.
China and America can't agree.
Everyone is grumpy with the Americans for their pre-emptive strike on their own currency.
The Americans and not many others are grumpy with the Chinese for holding their currency down.
Even trade talks between America and South Korea have broken down.
The G20 will agree to setting vague "indicative guidelines" for measuring global imbalances and hammer out the details next year, G20 sources said on Friday, effectively calling a timeout to let tempers cool after heated debate over currencies.
Negotiators labored until the wee hours of the morning to try to thrash out an agreement that their leaders can all endorse, despite deep divisions that were on public display in the run-up to the Group of 20 summit concluding on Friday.
G20 sources told Reuters deputy ministers had agreed on the wording for a final statement, but it is not expected to venture much beyond what was already agreed at a finance ministers' meeting last month.
The euro is falling fast and Irish bond yields have blown out.
The euro extended losses on Friday on fears Ireland may need a bailout just like Greece, while commodities eased as the U.S. dollar rose, hitting the pause button on a rally that pushed copper to record highs. Traders slowed their selling of euros a bit after knocking the currency down 4 cents in the past week, squaring up before a statement about Ireland that may be issued by Britain and France later in the day.
The possibility of a bailout for Ireland has significantly widened the difference of bond yields of high-risk European countries over those of Germany, and overshadowed a Group of 20 leaders' summit in Seoul, where a breakthrough on resolving global economic imbalances amid incongruent policies looked unattainable.
3. Roubini backs the Fed's QE II - Nouriel Roubini supports the US Federal Reserve's QE II and thinks those arguing for a return to the gold standard are weird.
Roubini made his case against the critics of quantitative easing very clear—and explained the dire consequences of inaction. "The biggest problem we're facing today is growth that is too low. And inflation that is too low. And if we don't do anything to prevent growth that is too low…then we're going to end up in deflation," Roubini said And how bad might that get?
According to Roubini, if the deflation scenario is allowed to unfold due to an absence of central bank intervention, "we end up like Japan: In a trap of near depression that can last a decade—if not longer."Essentially, opposition to fiat money generally—and QE2 specifically—always sees an inflationary bias and the government creation of money as problematic. Hence, the desire for the gold standard and other fixed rate regimes.
But according to Roubini, "Those kinds of arguments are totally senseless today."
4. Former SFO director hits back - Former SFO Director David Bradshaw has hit back in the NZHerald at current director Adam Feeley over his recent criticisms of the SFO's previous (lack) of activity.
I can't speak for what happened at the SFO in the two years before the present director's appointment. I would observe however, that the two cases he highlights as presumably showing the effectiveness of the office - Waipawa Finance and Versalko (the ASB employee) - were both substantially, if not entirely, completed by the "neglected" office. New Zealand has been well served over the years by a small but highly skilled and dedicated group of people in the SFO.
It has developed a reputation for having the utmost integrity in all of its actions. The director should look to build on that reputation rather than seeking to denigrate the achievements of his predecessors.
5. Grantham savages the Fed - Jeremy Granthan is a legendary investor who has been right more often than not about global markets. In this CNBC interview below he savages the US Federal Reserve's QE II and recommends holding cash to take advantage of bombed out assets in the wake of the markets armageddon to come.
HT Andrew Patterson. Well worth a watch.
By the way, Grantham also thinks Australian house prices are over-valued...
"It [the Federal Reserve] wants us to go out there and buy stocks, which are overpriced because bonds they have manipulated into being even less attractive," said Grantham, who is chief investment strategist of Grantham Mayo Van Otterloo.
"So, we’re being forced to choose between two overpriced assets. That is not always a terrific choice to make because there is a third choice, and that is, 'don't play the game and hold money in cash.'
"And cash has what people don't appreciate fully. And that is its 'optionality.' In other words, if anything crashes and burns in value—say the U.S. stock market—if you have no resources, it doesn't help you. If the bond market crashes, and you have no resources, it doesn't help you. And what cash is is an available resource. It buys you the right to buy the U.S. market if the S&P drops from 1,220 today to 900, which is what we think is fair value."
“The Fed has spent most of the last 15, 20 years manipulating the stock market, whenever they feel the economy needs a bit of a kick,” he added. “I think they know very well that what they do has no direct affect.”
6. 'Don't make other people take the medicine for your disease' - This is a quote which captures the mood of Chinese and other emerging countries seeing the Fed's printing blowing up inflation bubbles and currencies in other countries.
“Don’t make other people take the medicine for your disease,” Yu Jianhua, a director general at China’s Ministry of Commerce, told reporters in Seoul late yesterday.
“Quantitative easing will have a very big impact on developing countries including China.”
7. 'The drugs won't work' - A Bloomberg survey has found that 75% of global investors believe the US Federal Reserve's latest round of quantitative easing won't work.
Investors are more favorably disposed to the policies adopted by the European Central Bank than they are to the Fed’s. Two-thirds say the ECB acted wisely in deciding last week against taking additional action to stimulate the region’s economy.
Fewer than half think the same of the Fed’s decision to buy more bonds.
“The ECB looks like the most responsible central bank as QE becomes inefficient if everyone does it,” Joel Kahil, an investment analyst in London for insurance company Amlin Plc, said in an e-mail. “And the same applies if everyone does competitive devaluation that would lead to protectionism.”
The results of the poll underscore complaints by officials from China, Germany and Brazil, who say the Fed’s Treasury- purchase plan may jar other economies while failing to fuel U.S. growth. German Finance Minister Wolfgang Schaeuble called the move “clueless” and suggested it was aimed at driving down the dollar.
8. 'Vee haf vays of making zee bondholders take a haircut' - Bloomberg reports nervousness is growing among bond investors in Europe about being forced to take losses on their holdings of bonds in the PIGS (Portugal, Ireland, Greece and Spain).
If confirmed, this would cause carnage of European debt markets, and possibly wider.
Irish government bonds tumbled for a 13th day on mounting concern that the nation will be forced to restructure its finances. Spanish bonds also headed for a 13th day of declines as data showed the nation’s economic growth stalled. French Finance Minister Christine Lagarde said yesterday that investors must share in the cost of safeguarding sovereign debt.
Peripheral nations’ bonds have dropped since European Union leaders agreed on Oct. 29 to consider German Chancellor Angela Merkel’s proposal for a permanent rescue mechanism that would involve restructuring with losses for private holders of sovereign debt. The proposal is part of discussions to create a permanent crisis facility to replace the rescue fund created in May after Greece’s near-default.
9. The 'Rocket Docket' courts - Matt Taibi, the Rolling Stone reporter that painted Goldman Sachs as the Vampire Squid of the world's financial markets, has written about the fraudclosure crisis in America with his characteristic flair, anger and detail. It is a must read.
This "rocket docket," as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby rinthine derivative deals of a type that didn't even exist when most of them were active members of the bench. Their stated mission isn't to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity.
They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments.
Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.
10. Totally irrelevant video - An amazing swarm of bees on a tree in New Zealand. HT Blair via Twitter.
11. Even more irrelevant video - The Indian remix of Incey Wincey Spider. HT NZKoz via twitter.
Muntazir credits himself an awful lot.
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