Tuesday's Top 10 with NZ Mint: China's property crackdown; Roubini on why QE II won't help the US much; The Eurozone meltdown report; Hubbard's strange Helicopters deal; Dilbert

Here are my Top 10 links from around the Internet at 10 to 2 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 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. That's how you do it - Bloomberg reports that China’s four biggest state banks will not issue any new loans to property developers for the remainder of the year.

That should do the trick. Just imagine if that's how New Zealand ran its monetary policy.

Alan Bollard would call Allan Hubbard and tell him to take a break for a while..."Go for a holiday Allan," Alan would say.

He would then call in the big four bank CEOs to a conference room and then lock the door, making sure they had handed over their phones. They would be ok with some club sandwiches and a couple of bottles of water.

Then John Key would ring up Michael Cullen and tell him to pull Kiwibank's head in.

Bill English would issue a decree that property sales faced a special land tax. Press release would do the trick.

Problem solved...

Here's Bloomberg on the Chinese way of doing things.

Industrial & Commercial Bank of China Ltd.,China Construction Bank Corp,Bank of China Ltd. and Agricultural Bank of China Ltd., had met their allotted loan targets for the year, according to a copy of a report e-mailed to Bloomberg News by the newspaper yesterday.

Approvals of new loans had ceased since the end of October, the newspaper said. China’s property prices rose at the slowest pace in 10 months in October after the government raised interest rates and expanded measures to limit the risk of asset bubbles in the world’s fastest-growing major economy. Measures to ease gains in prices included suspending mortgages for third-home purchases and a pledge to speed up trials of property taxes.

Policy makers may introduce more measures in the fourth quarter amid signs of a price recovery, according to Nomura Securities Co. The likely policies include a property tax and the enforcement of the so-called land added-value levy in the “overheated cities,” Citic said.  

2. A whirlybird of money - South Canterbury Finance's major Helicopters (NZ) transaction in February is coming under further scrutiny, with Stuff's Chalkie finding the transaction was worth a small fraction of the NZ$152.5m in new capital Sandy Maier claimed at the time. The fraction being about NZ$10 million.

This follows David Hillary's analysis of the transaction in June on his Lost Soul blog.

Watch this space on the regulatory front. . The SFO are already investigating various related party transactions around South Canterbury.

There could be more to come.

3. It's all on now - The WSJ reports that Portugal's Foreign Minister is now openly talking about the possibility that Portugal may be forced out or opt out of the euro as the scale of its debt problems weigh it down. The threat of contagion and euro collapse is not as remote as it once was.

In an interview with the Portuguese weekly Expresso published Saturday, Foreign Affairs Minister Luis Amado said Portugal faces "a scenario of exit from the euro zone" if it fails to tackle its economic challenges.

"There has to be an effort by all political groups, by the institutions, to understand the gravity of the situation we're facing," he said. Portugal is now the front line of the sovereign-debt crisis that already has claimed Greece and threatens Ireland, economists say. If economic weakness is sufficient to push an otherwise crisis-free country to the brink of default and rescue, then larger countries, such as Spain and Italy, could be threatened, analysts say.

"Portugal is different, and if markets are going to have a real go at Portugal now, then why not Italy?" says Jonathan Loynes, economist at Capital Economics.  

4. Here's what some real Americans are saying - My wife sells digital designs to American Moms and watches what they talk about on their messageboards.

It has taken an ominious turn in recent weeks as people in middle America start worrying about inflation as petrol (gas) prices rise and food prices rise. HT My wife.

Here's a sample at Twopeasinabucket:

what do you all think about the prediction that the American dollar will be so bad in the next year to two that inflation will be HUGE, resulting in prices like, $11 per ear of corn, $80 for a pound of coffee, etc... I'm hearing these rumors and recommendations to start stocking up on food now... thoughts?

5. Mish's beating drums - Mish from Global Economic Analysis has done a big piece on Australian house prices to stir up all those foreign investors in Australian banks again. This is not going away in a hurry. He says Australia is partied out.

In an act of desperation, the “Big Four” bar owners finally raised prices even more than the wholesale liqueur distributor. They did this after becoming worried about the consequences of drunks passing out on the floor, in the street, and in the outback, unable to pay their "bar tabs". Note that bar tab paying is the only real concern of the bar owners, not the mess in the streets or the outback.

Unfortunately, the actions of the distributor and the bar owners came far too late for a quiet end to the party. After singing the wildly popular hit tune "It's Different Here" at the top of their lungs more times than there are kangaroos in the outback, the party goers finally passed out in the streets and the outback in drunken stupor. "It's Different Here" was written by the vocal group R.E. Agents.

Historians will note that exhaustion from drinking, singing, and spending money they did not have ultimately did the party goers in, not excessive price hikes as currently reported in the media and by the government sponsors of the street party, all hoping to place the blame elsewhere.

6. Global Debt Clock - This global public debt clock from The Economist is a cracker and well worth a read and a favourite.

The clock is ticking. Every second, it seems, someone in the world takes on more debt. The idea of a debt clock for an individual nation is familiar to anyone who has been to Times Square in New York, where the American public shortfall is revealed.

Our clock shows the global figure for all (or almost all) government debts in dollar terms. Does it matter? After all, world governments owe the money to their own citizens, not to the Martians. But the rising total is important for two reasons. First, when debt rises faster than economic output (as it has been doing in recent years), higher government debt implies more state interference in the economy and higher taxes in the future. Second, debt must be rolled over at regular intervals.

This creates a recurring popularity test for individual governments, rather as reality TV show contestants face a public phone vote every week. Fail that vote, as the Greek government did in early 2010, and the country can be plunged into imminent crisis. So the higher the global government debt total, the greater the risk of fiscal crisis, and the bigger the economic impact such crises will have.

7. The A$55 million woman - The Sydney Morning Herald has gone to town on Westpac CEO Gail Kelly's salary package in a piece titled "The A$55 million woman" and a "CEO package fit for a Queen."

The media in Australia sure know how to make hay out of banks being unpopular. The numbers in Westpac's annual report are painful from a customer and shareholder point of view, particularly in the wake of a rash of rate hikes that were bigger than the RBA's hikes.

Here's a taste of what's in the air over the Tasman.

GAIL KELLY is poised to become the $55 million queen of banking if Westpac shareholders give their blessing to another round of long-term share incentives for the bank's chief executive.Based on Westpac's closing share price of $21.92, Mrs Kelly could be worth just in excess of $52 million once she meets performance targets under the bank's incentive plan.

Of that amount, $28.5 million of equity came her way as part of her sign-on deal when she quit her previous employer, St George Bank, mid-way through 2007 to join Westpac in February 2008. She has since become entitled to more than $23 million worth of share options and performance rights, although these remain off limits to her for a few more years under the bank's long-term incentive clauses.  

8. Bigger than America by 2020? - Standard Chartered has forecast that China's economy could be bigger than America's by 2020 at current growth rates (or recession rates from a US point of view). That's earlier than the 2027 that Goldman Sachs has forecast and frankly unbelievable given the relative sizes othe economies right now.

But even a couple of years most people were saying it would take China until 2045 to catch up.

Just imagine a world where China was bigger than America within 10 years. Hold on to your hats.

America's GDP is currently about 3 times that of China's.

But here's what Standard Chartered are saying

CHINA will overtake the US to become the world's largest economy by 2020, according to Standard Chartered. ''We believe that the world is in a super-cycle of sustained high growth,'' economists led by Gerard Lyons said in a report published yesterday.

''The scale of change over the next 20 years will be enormous.'' China's economy will be twice as large as the US's by 2030 and account for 24 per cent of global output, up from 9 per cent today, Mr Lyons said.

India will surpass Japan to be the third-largest economy in the next decade, according to the report. Goldman Sachs Group estimates China will overtake the US by 2027.  

9. What Roubini thinks of QE II - Nouriel Roubini points out why QE II won't boost the US economy much. The banks won't lend it out and other countries won't allow the US dollar to devalue much.

He points out that eventually kicking the debt can down the road doesn't work. There is no one from Mars to bail out the IMF or the Eurozone... He sees QE III and QE IV and QE V eventually.

Here's the full interview above on CNBC that's worth watching.

10. Broad opposition -  A bunch of high powered economists have come out in a letter to the WSJ calling on Fed Chair Ben Bernanke to abandon QE II. Nuff said really.

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.”

In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus. We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.  

And here's a useful interactive graphic from Reuters showing how ineffective QE II has been at reducing long term US interest rates and how effective it was at blowing up commodity prices and devaluing the US dollar.

11. Totally irrelevant video - Jon Stewart does his thing on George Bush's book.