Tuesday's Top 10 at 10: Hong Kong's housing bubble crackdown; Australia's housing bubble nerves; The 'unforeclosure'; 'Let Ireland go bankrupt'; Dilbert

Here are my Top 10 links from around the Internet at 10 past 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. Hong Kong's crackdown - Hong Kong has announced new stamp duties and deposit limits on house sales to cool down an overheated market, Bloomberg reports.

This is supposedly the most free market country in the world but it too finds clever ways to cool down its housing market when it needs to.

Yet in New Zealand, we let ours run away off the leash for years on end, destroying our export sector and unbalancing our economy as we go...

What's wrong with a stamp duty and regulation of deposits here?

Businessman William Yue was close to buying an apartment worth about HK$11 million ($1.4 million) in Hong Kong’s Kowloon Tong district. He may not be able to afford that after the government imposed additional taxes and raised down-payments to curb prices that have surged to a 13-year high.

Financial Secretary John Tsang on Nov. 19 announced some of the toughest measures yet in a yearlong battle to rein in home values that soared more than 50 percent since the beginning of 2009, sparking outcries that housing was becoming unaffordable and prompting the International Monetary Fund to warn last week that asset inflation may derail the city’s economy.

“The down payment we need to pay would probably be a bit out of our budget,” 58-year-old Yue said yesterday.

“Imposing the extra stamp duty should’ve been enough to curb speculation. All this does is hurt real users like us.”

Weekend sales of used homes fell 83 percent from the previous week, according to data from Centaline Property Agency Ltd. Homes sold within six months of purchase incur a 15 percent stamp duty from Nov. 20, and down payments will rise to 50 percent for properties costing HK$12 million or more, and to 40 percent for those between HK$8 million and HK$12 million.  

2. 'Looks like a bubble to me' - Leith van Onselen at Unconventional Economist points out the Australian Treasury is now worried that Australia's housing market is a bubble waiting to burst.

It looks like the ducks are forming into a row.

The Congo line of analysts and commentators calling Australia's housing bubble has been growing longer recently. Now the Australian Treasury - the main custodian of Australia's economic policy - appears to have joined the chorus. In what should ring alarm bells, and scare the heck out of anyone with a highly leveraged property position, this is what the Treasury has had to say about the matter:

Phil Garton, the manager of Treasury's Macro Financial Linkages Unit, sent colleagues a draft paper on the rise in household debt, prospects for further growth in the debt-to-income ratio and the potential implications of slower household debt growth. His email prompted an exchange with Steve Morling, currently the general manager of the Domestic Economy Division, who argued the paper should "make a bit more about the risks".

"The elephant in the room is house prices or more specifically the risk of a precipitous drop in them, perhaps from an external shock or perhaps from their own internal dynamics when affordability constraints or capacity debt levels see prices and expectations of house prices start to move in the opposite direction," Mr Morling wrote on June 15.

"(I) know there are very supportive fundamentals, but prices rose by 50-60 per cent in three to four years in the early part of this decade, with largely unchanged fundamentals, so they can have a life of their own. "And given what's happened elsewhere I'm far less sanguine about this - and the interplay with debt - than in the past."

3. The unforeclosure - AngryBear reports there's a new phenomenon happening in the United States where a bank forecloses on the home owner, but then fails to take title on the property, leaving it rotting and empty.

No owner equals no property taxes paid, no insurance, and probably no maintenance. The property is left to rot, damaging the neighborhood. Ironically, due to the failure of the bank to take title, the former owner may still be on the hook for property taxes, and not know it.

4. 'Let Ireland go bankrupt' - Renowned currency trade Jim Rogers reckons Ireland should be allowed to go bankrupt. HT Zerohedge and Gertraud. Here's his thinking:

Jim Rogers says what everyone except a few bankers and corrupt (soon to be unemployed) politicians grasp: namely, that Ireland should go bankrupt.

Instead, the government is forcing the country into a tough spot, where social tensions are flaring, and could erupt into an all out social conflict, confirming that the interests of its people is the last thing the Irish government cares about, and is only concerned about preserving what is now virtually proven to be a failed model, and prevent losses at all major German and English banks.

Quote from Rogers: "It would teach everybody a good lesson, and in the end Europe would be stronger for it, and the EUR would be stronger...

"You can not spend staggering amounts of money that you don't have of other people's money that you don't have because somebody has to pay the piper. This is ludicrous. This will cripple the Irish economy for years to come. In the future Ireland will be crippled because everything they earn will go to pay off old debt. There is no reason why taxpayers around Europe or in Ireland should pay for other people's mistakes."

"The bondholders and the stockholders of banks should lose money"

5. Ireland for sale - Click here for a bigger version HT Gertraud

6. Chinese getting jumpy - Market News reports a member of China's central bank has suggested China could start selling US Treasury bonds in response to the Fed's QEII plans.

China could sell down some of its holdings of U.S. Treasuries in response to the Federal Reserve's decision to expand its quantitative easing program, an advisor to the People's Bank of China has suggested. Li Daokui, a Beijing-based economist and member of the central bank's Monetary Policy Committee, told China Central Television that the $600 billion program will trigger U.S. inflation and create losses for China.

"In order to rescue its economy, the U.S. government printed a lot of paper and once their monetary easing takes effect, they need to consider compensating other countries," he said. "We can sell some of our Treasury bonds."

7. 'You can't keep a good man down' - Fresh from being ejected from the offices of South Canterbury Finance as recently as November 5 (why did it take so long?), the Timaru Herald reports Alan Hubbard is now looking for a new office for somewhere to work with his notebooks and post it notes... There's even been talk in the town he wants to set up a new finance company....sheeesh

Any landlord should be asking for the rent money up front.

The SFO is expected to make a decision on whether or not to charge Mr Hubbard this week. On Thursday night there will be a book launch for Virginia Green's biography of Mr Hubbard at Mountainview High School Auditorium, at 6pm.

8. Finally - Some bond holders and shareholders take the pain of an Irish bank collapse as opposed to making taxpayers take the pain, Bloomberg reports.

Anglo Irish Bank Corp. said holders of 690 million euros ($950 million) of its 2017 subordinated bonds agreed to swap their debt for new notes at an 80 percent discount as the government spreads the burden of the banking crisis.

Investors with 92 percent of the 750 million euros of outstanding bonds will now receive 136.8 million euros of one- year government-guaranteed securities paying 375 basis points more than the euro interbank offered rate, Anglo Irish said in a statement today.

The discount allows the nationalized bank to generate a gain that can be used to bolster its capital ratios.

9. What good is Wall St? - John Cassidy spends 8,000 words asking this question at the New Yorker and comes up with an interesting answer.

Investment bankers are good at extracting rents from the economy rather than creating real value, he finds.

Fair enough. Off with their heads. I'm sort of serious. HT Felix Salmon at Reuters, who thinks this all may be true, but Wall St won't be shrunk.

Perhaps the most shocking thing about recent events was not how rapidly the big Wall Street firms got into trouble but how quickly they returned to profitability and lavished big rewards on themselves.

Last year, Goldman Sachs paid more than sixteen billion dollars in compensation, and Morgan Stanley paid out more than fourteen billion dollars. Neither came up with any spectacular new investments or produced anything of tangible value, which leads to the question: When it comes to pay, is there something unique about the financial industry?

Thomas Philippon, an economist at N.Y.U.’s Stern School of Business, thinks there is. After studying the large pay differential between financial-sector employees and people in other industries with similar levels of education and experience, he and a colleague, Ariell Reshef of the University of Virginia, concluded that some of it could be explained by growing demand for financial services from technology companies and baby boomers.

But Philippon and Reshef determined that up to half of the pay premium was due to something much simpler: people in the financial sector are overpaid. “In most industries, when people are paid too much their firms go bankrupt, and they are no longer paid too much,” he told me. “The exception is when people are paid too much and their firms don’t go broke. That is the finance industry.”

10. Totally irrelevant video - Jon Stewart on how George Soros plans to overthrow America.