Here are my Top 10 links from around the Internet at 10 past 1 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 Thursday'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. Now Australia is worried too - Bloomberg reports Australia has announced a review of foreign farm ownership rules as it also worries about the buying demand from emerging economies such as China for protein-producing assets.
These are the sorts of concerns that weren't really addressed by the fudge agreed by the government here.
The risk is that investors and governments in emerging Asia use newly minted US dollars to buy land and other assets here and in Australia.
That would push up our currencies and destroy our non-commodity exporters.
This is the risk. We become 'landlocked' by our currencies' tight correlation with commodity prices and by our free-floating currencies.
That's why I think capital controls are necessary.
The Australian Bureau of Statistics will survey 171,000 agricultural businesses next year, Assistant Treasurer Bill Shorten said last night. The Rural Industries Research and Development Corp. will carry out a separate study on the history of foreign investment in the sector and the reasons behind it.
“This process will address some community concerns,” Shorten said in an e-mailed statement. “Whether there really are foreign ownership issues to be concerned by here or whether there is actually a gap developing between anxiety and reality is the key question.”
Nations are seeking extra farmland to meet a forecast 70 percent increase in food production expected in the next four decades. New Zealand in September tightened rules for major international purchases of farmland, requiring buyers to show how it would benefit the economy, amid a community backlash.
2. Privatising the profits and socialising the losses - RTE reports Ireland is receiving 85 billion euros of bailouts which it will use to nationalise its largest banks.
How long before the voters revolt. They are being used as cannon fodder to rescue the European and British banks.
The money will come from an €85bn facility provided by the EU and IMF and the remainder will be used to run the country on a day-to-day basis perhaps over a two to three year period. While the authorities are reluctant to fully nationalise AIB it will need significant new funds.
One option is that the State will be left with an 99.9% stake the bank in return for the new capital. It is also going to take some bad loans out of its AIB's UK subsidiary and try to sell the division again.
Bank of Ireland, currently 36% State owned, would become majority Government controlled, and authorities are hopeful of selling off EBS quickly.
3. Thinking the unthinkable - The world's biggest bond investor, PIMCO, suggests a run on Irish banks might be a possibility. Yikes. Bloomberg has the comment.
Ireland risks a “major bank run” unless European officials act quickly to calm the financial turmoil in the nation, Pacific Investment Management Co. (PIMCO) Co- Chief Investment Officer Mohamed A. El-Erian said.
“The numbers so far have shown that the Irish banking system has been bleeding deposits,” El-Erian said in Bloomberg Radio interview on “Bloomberg Surveillance” with Tom Keene.
“What you advise your sister in Ireland now is that you’d say take your money out of an Irish bank and put it in another bank headquartered elsewhere,” El-Erian said. “That’s what happened in Argentina and in emerging economies. People worry about their savings.’
4. New Deutschmark bloc? - Angela Merkel warned overnight that the euro faced an "exceptionally serious situation".
Some are now talking in this Guardian piece about a new Deutchmark bloc if the euro breaks up.
Jim O'Neill, chairman of Goldman Sachs Asset Management, warned that the Irish rescue package did not solve the problems at the heart of the single currency.
"Unless there's an underlying solution to not just the debt challenge, but also to … how European monetary union sits together involving all these domestic political partners, how can we forget about the problems lurking with Portugal and Spain," O'Neill said in a TV interview.
Other market experts were also concerned about the eurozone. Graham Turner of GFC Economics said the solution for weak members might be for Germany to walk away from the single currency. He suggested that Austria, Finland, the Netherlands and Germany could form a new deutschemark bloc which would allow the other 12 members of the eurozone to devalue and reflate their way out of the crisis.
"It has to be a better option than the present straitjacket of a single currency," said Turner.
5. Who's next? - Nouriel Roubini discusses on CNBC who might be next in any European contagion and asks who will bail out the IMF after it has bailed out the governments of peripheral Europe? Roubini also reckons Ireland and Portugal will have to leave the euro eventually.
"We have decided to socialize the private losses of the banking system. Now you have a huge increase in public debt—going from 7 percent to 100 percent of GDP. Soon it will be 120 percent." And, turning more broadly to the rest of Europe, "Greece is already at 120 percent."
Roubini believes that further attempts at intervention have only increased the magnitude of the problems with sovereign debt.
He says, "Now you have a bunch of super sovereigns— the IMF, the EU, the eurozone—bailing out these sovereigns."
Essentially, the super-sovereigns underwrite sovereign debt—increasing the scale and concentrating the problems. Roubini characterizes super-sovereign intervention as merely kicking the can down the road. He says wryly: "There's not going to be anyone coming from Mars or the moon to bail out the IMF or the Eurozone."
6. Insider trading probe - The mood of revulsion with Wall St practices is deepening as the latest insider trading probe of hedge funds and investment bankers widens to include the biggest and sharpest in Manhattan. Here's the WSJ's latest.
Money managers SAC Capital Advisors, Janus Capital Group Inc. and Wellington Management Co. have received inquiries in the ongoing insider-trading investigation on Wall Street. SAC, a giant hedge-fund manager run by Steve Cohen, received an information request, according to a person familiar with the situation. Janus Capital disclosed the inquiry on Tuesday in a filing. Federal investigators also requested general information from money manager Wellington Management Co. on Monday afternoon, according to a person familiar with the matter.
The inquiries come as a three-year insider-trading investigation shifts into high gear. On Monday, in coordinated raids in New York, Connecticut and Massachusetts, Federal Bureau of Investigation agents seized documents at the offices of Level Global Investors LP, Diamondback Capital Management LLC and Loch Capital Management LLC, The Wall Street Journal reported.
7. The mutinous Irish - Faisal Islam from Britain's Channel 4 is in Dublin to report on the crisis and captures some of the mood on the street.
The background to all of this is profound dissatisfaction with Ireland’s entire political class. The strength of feeling is incredible.
I have been stopped repeatedly in Dublin’s streets by apolitical locals who regale me with stories of which bank bondholder deserved to get burnt, and are mutinous about this political failure.
8. Read this to understand the rottenness in the heart of America which means it is effectively bankrupt both morally and financially.
It is a detailed story from the Miami Herald about a single case of a woman who is about to be evicted from her house after serial mortgage fraud by individuals and banks. The details are frightening and tragic.
All she wanted was $50,000 from the equity in her house to help pay the bills while looking for a job in nursing. What Imogene Hall got was a brutal lesson in the sometimes shady ways of the mortgage industry. It's a lesson learned by untold numbers of homeowners in Florida, epicenter of the foreclosure crisis gripping the nation.
``Everywhere I turn, someone else is scamming me,'' said Hall, a 49-year-old Jamaican immigrant who stands to lose her Miami Gardens home the Monday after Thanksgiving. ``All I do is work hard, and I get surrounded by thieves.''
A review of court records found evidence of misconduct at nearly every stage of Hall's experience. Consider:
• Johnson Cuffy, a former mortgage broker now serving an 11-year prison sentence for grand theft, handled Hall's refinancing in early 2006, using a strategy a state investigator described as ``outright mortgage fraud.'' He faces up to 30 more years in prison if convicted of 16 other mortgage fraud charges he's facing.
• The title agent who signed the crucial deed transfers that Hall's fraud claim rests on operated an unlicensed title company that stole more than $1.5 million from South Florida home buyers during closing proceedings between 2005 and 2007, according to Florida Supreme Court records.
• A man who listed his employer as a nonexistent Blockbuster Video store in New York somehow used Hall's home as collateral to secure a $230,000 loan from subprime lender Argent Mortgage.
• Hall's foreclosure was processed by the Florida Default Law Group, one of four Florida law firms being investigated by the state attorney general for using flawed documents to repossess homes from thousands of owners.
9. Kicking the can down the road - Ed Harrison at Credit Writedowns writes about how the only way that unsustainable economic situations are solved is through a crisis.
The way I see it, politicians are always focused on the short-term and that invariably means kicking the gas can down the road until it catches fire and you have to call in the fire department. Here’s the problem in Europe. The euro has acted as an internal gold standard to euro zone members in that it prevents governments from printing money and devaluing to escape economic hardship and it ensures that large fiscal imbalances cannot be sustained and eventually lead to crisis.
Now, the Europeans got themselves into the euro for just this reason – to create a more unified common market without governments free riding and weakening the currency. As a result, over the past ten years, the financial and trade relationships in Euroland have become deeply intertwined.
German banks operate in the Spanish mortgage market. French banks lend to the Greek sovereign. And Italian banks now own large parts of the German mortgage market. Of course, these ties go beyond the Eurozone to the UK, Sweden, Denmark, and Switzerland and well into eastern Europe too but its the euro zone with its restrictions on fiscal and monetary crisis where crisis has appeared first.
The EU has repeatedly tried to get through this crisis by making little fixes and tweaks without addressing the fundamental problems of excessive sovereign debt on the one hand and bank undercapitalisation on the other. They have their heads buried in the sand. Instead, politicians have argued that markets are acting like a speculating pack of wolves and creating crisis where none exists.
Well, the wolfpack is at the door and they are going to rip the Euro house to shreds unless the bank capitalisation and national solvency issues are addressed without trying to socialize the losses across the entire euro zone.
This CNBC video with fund manager Pippa Malmgren is enlightening on the European debt crisis
.
10. Totally relevant video - Now people are singing very prettily about the US dollar and QE II. We've had rapping so it make sense we should have a Renaissance style harpsichord-a-thon.
Can we re-Brettonate? You decide.
11. Totally hilarious video - For old times sake. Kim Jong Il: "Congratulations Team America you have stopped nothing."
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