Here are my Top 10 links from around the Internet at 10 to 3 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 Tuesday'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. 'We love New Zealand' - Many thanks to Vanderlei Luxemburgo who took some snaps at the Auckland Christmas Parade on Sunday of the Natural Dairy crew (May Wang and her bunch of merry men) promoting their love for New Zealand ('We love NZ') to the good folk of Auckland on their float. (Pic below)
The float was a pirate ship.
I kid you not.
You've got to admire Natural Dairy's stickability.
May Wang is fighting off bankruptcy through the courts.
She can't get the Crafar deal past the Overseas Investment Office.
The Serious Fraud Office is also investigating the deal.
She really must love New Zealand a lot.
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2. 'Just default on the debt' - The Irish Independent reports most Irish voters want the (now) government-owned banks to default on their bonds.
Cue European banker/bureaucrat outrage. That's because this bailout is not about rescuing Ireland's economy or its people.
It's about rescuing the European banks who lent like drunken sailors to Irish banks, who were in turn bailed out by Irish taxpayers. HT Gertraud.
The finding that 57 per cent favour and 43 per cent oppose default reflects a growing view among policymakers and opinion formers that the State simply cannot support the debt burden it has taken on.
As Ireland awaited the fine details of the international bailout, which are expected tonight, it was learned last night that the Irish delegation negotiating with the EU-IMF last week raised the issue of default.
"The Europeans went completely mad," a senior government source said. Government sources have also denied an RTE News report on Friday that the average annual interest rate on the €85bn EU-IMF bailout would be 6.7 per cent. Last night the Minister for Finance, Brian Lenihan, told this newspaper that such an interest rate was "not acceptable to me".
But whatever interest rate is eventually agreed -- it is expected to be closer to 6 per cent -- the State will be burdened with a colossal annual interest payment of around €5bn over nine years, if or when the bailout is drawn down. This effective doubling of the interest payments that are already being made has helped to convince the public here that there must now be a default on a portion of the debt -- specifically, the portion lent to Irish banks, including senior bonds.
If that was to happen, it would be likely to cause a severe shock to the financial system worldwide and raise the risk of an international meltdown. However, advocates of a default say it is no longer in Ireland's national interest to prevent senior bondholders taking a hit.
3. The nub of the question - Daniel McConnell at the Independent writes this excellent analysis: Do we cut our losses and burn unsecured bondholders -- or do we sacrifice ourselves for Europe? "
The Irish Government should serve its people, not bankers. By rewarding bondholders and paying them back for their stupid mistakes, we create a moral hazard. They should be punished for their failure. Bailing them out means they'll continue to take risks with the assumption they'll be bailed out again.
The same goes for people who've been lending money to these banks. As has been pointed out, both Russia (1998) and Argentina (2002) defaulted, restructured their debt, and came out fighting.
4. 'The economy is set to starve' - Independent (and expert) US banking analyst Chris Martenson believes in Peak Oil and is saying Americans need to get ready for it. Here's more detail. HT Cosmic via email.
The global economy will have to make do with less than half the rate of growth in oil that it enjoyed over the prior 25 years. How will the economy grow with less oil available? What will happen to the valuations of financial assets that explicitly assume that prior rates of growth stretch endlessly into the future?
To cut to the chase, the admission by the IEA that we will not be achieving past levels of energy growth should be the most gigantic red flag in history, at least to those who might care that their money or other paper-based forms of wealth be worth something in the future. What if that future growth does not emerge? What happens when the collateral for a loan goes sour? The IEA report indicates an enormous set of risks for an over-leveraged world reliant on constant growth.
5. Painful and embarrassing - National Australia Bank's payments processing problem is proving difficult to unwind and fix. It's becoming a very public and painful issue across the Tasman. Why is it always the 'upgrades' that downgrade service?
One for all the bank IT and marketing people to look at and gently thank the almighty that "There by the grace of god go I..."
THE crippling NAB payment processing failure that caused chaos for thousands of customers will continue today, and has been attributed by a bank source to human error rather than the corrupted file the NAB has blamed. The crisis stands to trigger a wave of late fees by third parties.
NAB cannot say when all customers will have access to their money. The bank source said NAB made a failed attempt to upgrade its ageing legacy mainframe on Wednesday night. An attempt was then made to process the payments while the failed upgrade was being reversed, which caused crucial data to be corrupted.
6. 'I'm off to Brazil' - The Telegraph reports Young Portugese people are looking at emigrating to Brazil, where they also speak Portugese, but have a growing economy. They're even fleeing to Mozambique. HT Darryl.
The prospects for young people were bad even before their current economic woes. Their parents enjoy job security which makes them almost unsackable no matter how little work they do, especially in the bloated public sector. Many public servants are paid for a 14 month year – with extra month's pay at Christmas and in summer. Senior public servants get cars and drivers, whether they want them or not.
The young, who entered the workforce when perks and safe jobs had come to an end, must struggle through on short-term contracts and bad pay. So many of the best-educated and brightest depart – and Portugal loses the energetic, skilled people it desperately needs. Ines Grasina, 18, a friend of Miss Silva, said she would also leave when she graduates, probably for London.
"I think a lot people are leaving Portugal to find jobs," said Ines Lamas, 25, a travel agent. "A friend of mine has just left to try to set up a restaurant in Mozambique. The debt problem here is getting worse. Things don't look good at all."
7. Is it worth defaulting? - WSJ reports many Americans are starting to ask themselves that question when they see the average time that homeowners in foreclosure have managed to live in their property 'rent' free is an average of 492 days. HT Troy via email.
Banks are taking progressively longer to foreclose. The average borrower in the foreclosure process hadn’t made a payment in 492 days as of the end of October, according to LPS.
That compares to 382 days a year ago and a low of 244 days in August 2007. In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states such as New York and Florida, the number is closer to 20 months. That’s a meaningful incentive, and it’s likely to grow unless banks manage to boost their throughput.
8. 'The finger of blame should turn upon itself' - China's inflation problem is so bad now that Chinese students are rioting over the cost of food in the school canteen, the South China Morning Post reports. Yet, as the Economist points out, China's complaint that the Fed is to blame for its inflation problem is disengenuous.
Despite its best efforts, the Fed has only succeeded in raising America’s broad money supply (as measured by seasonally-adjusted M2) to about $8.8 trillion. China’s central bankers, on the other hand, have increased China’s M2 to almost 70 trillion yuan, or $10.5 trillion.
China has a greater quantity of money circulating in an economy a third of the size. Who is calling whom easy?
9. Ireland should have let its banks fail - Iceland has some advice for Ireland, Bloomberg reports.
You know you're in trouble when Iceland says it is better off than you.
Iceland’s President Olafur R. Grimsson said his country is better off than Ireland thanks to the government’s decision to allow the banks to fail two years ago and because the krona could be devalued.
“The difference is that in Iceland we allowed the banks to fail,” Grimsson said in an interview with Bloomberg Television’s Mark Barton today.
“These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”
10. Totally imcomprehensible video about something to sell the government
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