Monday's Top 10 at 10 with NZ Mint: China's Top Gun counterfeit; Govts stockpiling food; Baltic Dry Index strangely weak; China's dodgy GDP stats; Ukulele videos; Dilberts

Here are my Top 10 links from around the Internet at 10 past 12 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 tomorrow's Top 10 at 10 via email to

I'll pop any surplus suggestions I get into the comment stream.

1. Food stockpiling worsens commodity price boom - This issue of rising food prices and the ensuing social unrest is not going to go away in a hurry. It was a factor in the Tunisian and Egyptian revolutions.

Here the reports some governments are stockpiling food, which is worsening the situation. Unless of course you are selling food to the world.

This is a double edged sword.

New Zealand, in theory, benefits with higher food prices, unless of course you are a consumer and want lamb for dinner.

The other risk is that social unrest in the developing countries spills over into growth slowdowns in the only parts of the world growing quickly at the moment -- the BRICs (Brazil, India, Russia and China).

For example, the prices of staples such as ginger and garlic are up more than 70% in the last year in China. The staples of eggplant and onion in India are up more than 60%.

China is desperately trying to slow its economy, with new measures announced daily to control property price inflation and food prices.

Brazil is tightening monetary policy and trying to control capital inflows.

India tightened monetary policy for the 7th time in 10 months last week.

All this is partly because America in particular is printing money and exporting inflation.

Earlier this week, Algeria bought 800,000 tonnes of wheat – much more than usual – and Saudi Arabia announced plans to double the size of its wheat stockpile.

Bangladesh and Indonesia joined the rush on Thursday, placing extraordinary on rice orders. Traders said that Jakarta, which usually buys rice in 200,000-tonne allotments, tendered for more than 800,000 tonnes. Bangladesh said it would double rice purchases this year.  

2. What's really happening with global trade? - With lots of talk about global recovery it's very strange to see the Baltic Dry Index, which measures the price of shipping bulk goods such a iron ore, coal and soy beans, continuing to slump.

Karl Denninger over at Market ticker has the story and here's the chart courtesy of Bloomberg.

I know there's a capacity (specifically, overcapacity) issue in the ship business, but this is just plain bad. How do you make money on these vessels at that sort of pricing? The decline since September, when people were pointing to a rebound starting, is stunning - and disturbing.

Yes, the solution to too much capacity and low prices is low prices - people go under, then capacity comes off, and price goes up. But remember, the mantra we keep hearing is that the economy worldwide is growing so fast.... well, if it is, why is it that bulk carriers aren't loaded to the gills and able to maintain prices?

As an anecdote I also hear regularly from associates of mine who are involved in the goods trade across national boundaries. There was a set of memos that was circulating around the holidays about expected price increases for non-bulk (e.g. container) shipments; I am now hearing that these have been rescinded.  

3. Chinese want Australian farms too - The Australian reports China is gearing up for a multi-billion dollar investment push into Australian agriculture to secure food supplies for China's 1.3 billion people.

This push has already started in New Zealand with the arrival last week of Pengxin International to buy the Crafar Farms and the activities of Agria in buying control of PGG Wrightson.

The Australian has learned that interest from Chinese buyers across the whole spectrum of Australian agribusiness has stepped up markedly in the past six months, with the sweet spot being in "under the radar" private farms, aggregation and processing businesses worth between A$10 million and A$200m.

Austrade Beijing's senior trade commissioner, Alan Morrell, said Australia was a logical investment destination for China as the nation moved to strengthen food security.

The Chinese have shown particular interest in potential grain, meat and wool purchases.

"Given the growth of the Chinese economy, the changes in consumer demand and the strategic goals of the central government, Chinese agribusiness companies likely will seek overseas investment opportunities to secure access to supplies of commodities, to strengthen research and development capabilities and to gain access to new markets," Mr Morrell said.

4. Now they're trying to counterfeit Tom Cruise - Gizmodo reports Chinese Military propagandists tried to pass off footage from the Top Gun movie as footage of a Chinese airforce exercise...

The clips in question were reportedly aired during the News Broadcast program on China Central Television, the major state television broadcast company. They supposedly showed a J-10 fighter firing a missile at another aircraft during a practice exercise.

But an internet commenter quickly pointed out that the aircraft the J-10 was shown shooting down was an F-5, an American aircraft, and the very one Tom Cruise guns down in a scene from Top Gun. Comparing frames from the CCTV broadcast (left) and Top Gun (right), well, they're lookin' pretty much identical.

So that's amusing. There's no word yet on whether or not the Chinese fighter pilots engaged in any beach volleyball after the exercises.

5. Not enough big new technology advances? - Economist Tyler Cowen writes at the New York Times that one reason why middle and lower incomes in the developed world might have stagnated is a lack of genuinely new and big technological advances in the last thirty years.

My view is the big increase in the profit share of the economy going to financial services may have something to do with widening inequality, but here's Cowen's view...

The income numbers for Americans reflect this slowdown in growth. From 1947 to 1973 — a period of just 26 years — inflation-adjusted median income in the United States more than doubled. But in the 31 years from 1973 to 2004, it rose only 22 percent. And, over the last decade, it actually declined.

Most well-off countries have experienced income growth slowdowns since the early 1970s, so it would seem that a single cause is transcending national borders: the reaching of a technological plateau. The numbers suggest that for almost 40 years, we’ve had near-universal dissemination of the major innovations stemming from the Industrial Revolution, many of which combined efficient machines with potent fossil fuels.

Today, no huge improvement for the automobile or airplane is in sight, and the major struggle is to limit their pollution, not to vastly improve their capabilities.

6. The problem with Greece - We hear a lot about bureaucracy in Europe and we're pretty lucky when it comes to starting businesses in New Zealand. It's reasonably easy, particularly when compared to this example in Greece of a guy who owns a brewery and wants to make and sell bottled tea.

DEMETRI POLITOPOULOS says he has suffered countless indignities in his 12-year battle to build a microbrewery and wrest a sliver of the Greek beer market from the Dutch colossus, Heineken. His tires have been slashed and his products vandalized by unknown parties, he says, and his brewery has received threatening phone calls. And he says he has had to endure regular taunts — you left Manhattan to start up a beer factory in northern Greece? — not to mention the pain of losing 5.3 million euros.

Bad as all that has been, nothing prepared him for this reality: He would be breaking the law if he tried to fulfill his latest — and, he thinks, greatest — entrepreneurial dream. It is to have his brewery produce and export bottles of a Snapple-like beverage made from herbal tea, which he is cultivating in the mountains that surround this lush pocket of the country.

An obscure edict requires that brewers in Greece produce beer — and nothing else. Mr. Politopoulos has spent the better part of the last year trying fruitlessly to persuade the Greek government to strike it. “It’s probably a law that goes back to King Otto,” said Mr. Politopoulos with a grim chuckle, referring to the Bavarian-born king of Greece who introduced beer to the country around 1850.

But here's the really juicy stuff.

The Greek economy is riddled with distortions — the number of trucking licenses has remained unchanged in Greece since 1971, for example, and the country is among the world’s leaders in lawyers per capita. It has one lawyer for every 250 people, compared with about one for 272 in the United States.

The effect on Greek competitiveness could not be more pernicious. The cost of labor in Greece from 2005 to 2010 has been, on average, 25 percent higher than in Germany, according to a recent analysis by Variant Perception, a research firm based in London. (Ireland, Portugal and Spain also have relatively high labor costs.) Quite simply, Greece has had trouble producing goods and services that people want to buy — a result being a persistently high trade deficit that even now, amid the deepest of recessions, has hardly budged.  

7. Is China already bigger than America? - Most people think that China's economy is likely to be bigger than America's within 10 to 20 years if the current respective growth rates continue going up (for China) and sideways (for America). Here Arvind Subramanian reckons that China's economy is already bigger than America's on a purchasing power parity basis...

Some time in 2010, the Chinese economy overtook that of the United States. My calculations of GDP for 2010—which of course are subject to the uncertainty associated with all such exercises—are based on new estimates of GDP that will soon be published by the Penn World Tables (PWT) under the guidance of Professor Alan Heston at the University of Pennsylvania.

Cross-country comparisons of economic size and standards of living of the average citizen rely on two approaches. The first uses market exchange rates to convert the economic value of goods and services produced around the world into a common currency, usually the dollar. According to the IMF’s latest estimates for 2010, the value of total US GDP was $14.6 trillion while that of China was $5.7 trillion.

But it has long been recognized by many economists that using the market exchange rate to value goods and services is misleading about the real costs of living in two countries. Such goods and services as medical services, retail and constructions services, and haircuts—which are not traded across borders—are cheaper in poorer countries because labor is abundant. Using the market exchange rate to compare living standards across countries understates the benefits that citizens in poor countries enjoy from having access to these goods and services.  

8. Are China's numbers real ?- Closely-watched Bejing-based economic academic Michael Pettis has written a long, detailed and ultimately provocative post wondering if China's figures on GDP can be believed.

Every country wastes investment, but China does it on a massive scale. I would argue that at least 1-2 percentage points of Chinese growth, perhaps even more, might consist of this kind of misallocated investment-driven growth. When you add the impact of misallocated investment and environmental degradation, the necessary cumulative adjustment to Chinese GDP might be huge.

For example, if the two adjustments combined range from 2 to 4 percentage points annually, over one decade China’s “true” GDP (whatever that means), would be below the official numbers by anywhere from 16-31%.

Over twenty years official GDP would be overstated by 31-52%.

That means that we are massively overstating GDP today and will experience very low apparent GDP growth for many years in the future as the official number returns to some reasonable approximation of the real number.  

9. Here Yves Smith from the Naked Capitalist points to Pettis' piece.

She is sceptical too.

Having worked with the Japanese in their bubble years, I may be too conscious of the parallels to both the hype and the conditions on the ground in China. China is under more pressure (due to the state of the global economy and the expectations of its people) to keep employment high, but in the long run, building cities and office buildings that sit largely or entirely vacant is ultimately as wasteful as buying white elephant golf courses and resorts abroad.

The losses on lending against land, which went into stock market speculation and a foreign buying binge, blew back to the Japanese banking system.

As discussed earlier, the Chinese banks recovered from their 2002-3 banking crisis at the cost of considerable economic distortions, and it does not appear the officialdom can rely on the same covert bailout strategy a second time. So if they are hit again with serious loan losses, the real economy impact is likely to be more serious that the China bulls believe possible.  

10. Totally irrelevant and brilliant video - Jake Shimabukuro plays Bohemican Rhapsody on a ukelele at a TED talk. Who knew you could made a ukelele sound this good. HT Jason via email.

11. Totally irrelevant and brilliant video of Ukelele orchestra playing 'Smells like Teen Spirit' HT Gillian via Twitter

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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what i find most interesting today is that the Greens (the GREENS!) announced yesterday they would introduce a capital gains tax and there is no coverage of it.

now i know that the greens are nowhere, but it's indicative of what a bunch of poodles the nz media are that there is coverage of who john key thinks is hot (trust disgraced former celebrity wife-beater tony veitch to dig for gold eh?) and no coverage of the greens starting to push for a capital gains tax.

Nah , so busy with my new hobby , I hardly felt the stick go in :

........ pop around , about midday  for a snack Animal Lover ...... and bring some small furry friends ....... we can have them for lunch too .

.... [.... the photographer worked wonders , I'm not really that pretty.... ].....

"The heart of smart Green economics is understanding that when we look after our environment, we look after our economy," stated Dr Norman.

I'd like to see more deatils on the "how" a capital gains tax would be calcuated.  What if my family trust owns the family home, not me? Will that make a difference? What if my daughter and mother live in the property but not me? Would this still be a family home?

Would it be payable each year based on some sort of re- assessment of value of a property or only payable on the sale of a property?

Should I adopt some more children or re-marry a couple more times?


Miss Astrid 


Hi there Miss Astrid, guess Greens would look for some overseas example of a capital gains tax to emulate.  Already they've discounted 70% pf property from any such tax, so in reality their proposal is more to do with poltical branding than increasing the tax base substantially.  Any Labour government will need the support of the Greens, so their proposal can not be ignored, however, Goff has stressed his preferance to simply tighten up what he calls 'loopholes', such as disallowing losses to be offset on other income (ring fencing).  He will get anomolies if such a proposal was not general for all business operations, but I suspect he will try to exempt all businesses other than property investment in residential and commercial- he'll get howls of protest if he targets commercial, but can't see it working if he doesn't.

What do you think?


What happens if the East stockpiles food and the west stockpiles oil?




In addition since 2005 the Egyptian Pound has been pegged to the United States dollar, and the nation has undergone a cumulative 45% inflation rate in the last three years imposed on it by our Central Bank and profligate Federal spending, which Bernanke has been all too eager to monetize.

With a per-capita GDP of about $2,700 it's people are 1/17th as capable of producing income as those of The United States on average and well-below other nations such as China ($4,300) and Belize ($4,500) that are commonly regarded as quite poor. 

The nation's people are clearly incapable of absorbing a 45% increase in their cost of living and this has largely played into the causes of the current uprising.


The facts are this: We're largely responsible for what's happening over there.  We have, through our abuse of our status as the world's reserve currency and the pegs maintained by other nations, forced inflation into other countries instead of taking the hit ourselves.  Our Central Bank and Treasury continue to claim that there's "no inflationary pressure" but that's a lie.  There has been enormous inflation but we have shifted it onto the backs of other people and literally forced them to eat it, both in China and through other nations with currency pegs, such as Egypt.

America "loves" these pegs, especially in the oil-producing nations in the Middle East.  Through them we get to enjoy oil that doesn't cost $300/bbl as a consequence of our money printing. We get to force others to swallow the ever-increasing loads of monetary inflation that our government and Federal Reserve emit upon the world.  This is our definition of "stability": We print, you starve, we enjoy it.

AJ - it's the same thing. Food requires more energy from oil than it gives you, so stockpiling food is stockpiling oil in secondary form. Value added?

There was always going to come a time when food was going to be short, right after oil went short, and shortly before longevity went short.

Longevity topped out in 2007.

Food for thought  (sorry  :)

Interesting PDK, you often give me somethings to think about. For instance is being debt free a priority over being self sufficient? Im inclined to think that debt is the priority for most at present. Im self sufficient in food and have planted two thousand trees over the last 4 years including nuts, fruit trees etc.   

 I think the energy crisis will still be a few years away but Im not taking chances. Im looking at a boiler for hot water and a still for for vehicles etc. Ive read that you can water petrol down by %80 with alcohol, Im hoping its true. Im 5 km from the railway and have lots of sheep, rabbits and chickens( 4 horses). For people in town, chickens and rabbits are a great way to produce protein cheaply, get some. Its my community that worries me a little, if I have what others want it could be a problem.  I deliberately run old cars  and keep a low profile regards wealth, although Im away quite a lot.

 My main concern is to what lengths the present Government will go to maintain the status quo regards the state sector. I think we are going to pay a lot more tax in the near term as the state sector struggles to maintain funding and its dominance in the economy as taxation collapses. In the shorter term farmers will respond to high prices with increased production a bad idea but one they will all get at once.


I don't think the energy crisis is far away - Obama's speech and Bollards acknowledgement say it isn't either.

Yes, there's a lot we can do physically, but rates (I've just been lumbered with a Stadium three ways - city, regional and the govt sugared it) and taxes will rapidly get away on us.

That's just reflecting the reducing wealth in the system. I had a crazy chat with a fellow the other day, raving on about More's Law - how it was gonna save us. I pointed out that the energy required to raise a truckload of X tons up a hill of Y gradient in Z minutes, is a constant. Immutable. He didn't get it The bugger is that he gets a vote too.......

The state sector will just have to be paid less - it'll be happening all over.

Explain your last sentence AJ, please.

Belle, I suspect affordability is going to be big problem going forward. We are getting so called record prices( although my father got in todays $ 3 mill for his wool clip in 1951) I think you will see food security concerns in the middle east where they cannot feed their own people without imports and where often the average age is under 20, lead to large buying forward, in the false assumption that we can no longer feed the worlds population. The old USSR and South America will increase production along with Canada and the USA which will abandon its Ethanol program, we will flood the world with food most can no longer afford. ( China has 470 million pigs) . The volatility of the next few years is going to make life interesting for producers, beware the spin.


 Meanwhile the banks are doing this

Mr Gummy Bear sir, I see you are trying to sell your body on Trademe:

Has it come to this?

Gotcha. Yes and when you look at the globe there is still a lot of undeveloped farmland. If some of these areas are kicked into action as well, the competition might be a bit much for us.

Belle- that farmland would need energy (I do harp on) to break it in. That's on top of the existing demand, and dwindling supply. Supply doesn't just mean in volume (number of barrels) either.

 Corn biofuel, for instance, takes almost a barrel of crude oil to produce, and delivers a worse burn. In otherwords, it's a zero-sum game.

Deep water returns less too, and shale-to-oil and coal-to-oil are shockers.

The supply of that finite resource follows a gaussian curve - a bit like the old bell-curve we got at school. Starts from nothing, ramps, plateaus, then drops off. The area under the graph is the resource. If you push the plateau along flat (as we are doung now) that just makes the drop-off steeper.

All of which means, I disagree with you both (politely) about lots of land being available for breaking-in, and that it will happen.

Wealth-making ability is constrained by having the energy to do work, so we can presume there will be some ramps and bubble-bursts for energy (mainly oil) from here on - each one driving a corrsponding rise and dip in trade, but the average must be down.

Most of the competing mouths, more and more, won't be able to pay the prices you would need - did I see Egypt averaging $US 2,700 pa? Hardly Fonterra fodder.

PDK, I understand your argument, however I hear of vast areas already being brought into production. Africa and Eastern Europe, South America to name some. So I would agree, that energy will limit us shortly... the question is how does this all unfold... high prices in this initial panic phase, moving onto higher production, and excesses of food again. Then maybe higher energy prices and lower production.... who knows... what I am betting on is something unusual will come along and surprise us all. 

no excesses of food, otherwise agreed.

Unusual?  not in terms of energy - it's too late to make the morph now (you can't use it maintaining BAU as well as orchestrating a full-scale change, one ot 't'other. Nobody is going to drop BAU.

Most likely climate change will frighten the bejasus out of folk, and demand (panic driven, probably) will come on the back of a few sequential or compounding events. I delivered a super-yacht back from Tonga late last year - the water temp was 1 to 1.5 degrees warmer than it should have been, and 'a bust cyclone season' was discussed on board. Looks like queensland is about to get a biggie.

How long before fertiliser (oil) and phosphate curtail that farm-creation? How much forest was levelled for it? Water taken? Globally, it's a train wreck.

this is the best place to survive, though.     :)

PDK, even with all the talk of high prices for farm produce, I never hear the fletcher overhead ( one on the farm across the road). So even now fert is not being applied.

So somebody is going backwards.

It's only a matter of time. There are a few in Otago who try to graze uprawds of 3000ft, which they only get for a few weeks in summer in any case.

Because they only use it for a few weeks, they don't put on fertiliser - not worth it and too big.

So as it depletes, they burn the tussock. That releases a bit of nutrient (if the Nor'wester don't get it) but its still a story of depletion.

Then two or three starry-eyed idiots try it in succession.

Then DoC gets it. Along with the erosion, the rabbits and the lack of nutrient.

So it goes for Brazilian forest too - bugger, the nutrient's been extracted, clear some more trees, boys..  Can you grow a system like that? No. Sustain? No.

I think most folk have forgotten that we're a species. That 99.999% of all species that ever were, are extinct; and that our coutinuance as one is entirely in our own hands.

Oh, hang on, I forgot - the median multiple will save us all.      :)

I acknowledge that some farmers are not putting on fert because of financial constraints but there are some like us who have reduced their fert inputs and have maintained production. e.g. compared to what we applied 10years ago we are applying around 66% less kg/ha fert now.  If I compare what we applied 5years ago we are now applying 50% less. I like to think of it as being a more sustainable farming model :-)

During our time in provincial China one couldn't help but be impressed that in the area we lived, agriculture was still practised pretty much as it was a few thousand years ago. That is arable farming was largely done by hand - using hoes and manual planting etc.  Each village had their own acreage, but added together it came to thousands of acres.  Human effluent was used as fertilser, and crop stubble was burnt to return the ash back to the soil as a nutrient.

One thing that impressed us was the use of trucks consisting of a basic chassis, with an engine, an open seat, and no cab though sometimes one would see a front windshield, .  There was a tip deck on the back that held about 3-4cubic metres. These were made out of scrap and technically were illegal, though the legality or otherwise didn't appear to make a difference to people using them. The beauty of them was their mechanical simplicity. We never saw them on highways only local roads. What was really impressive was to see these things being driven in winter in temperatures of up to -20Cdegrees, by drivers who didn't have the benefit of either cab or in most cases a windshield.

There was pollution like you wouldn't believe, but most of that pollution was caused by 'modern' industrial practices, not time honoured agricultural practices.  If the world is going to regress back to living with depleted energy etc then we are going to have to be a lot more tolerant of vehicles like the ones in rural China.  In fact we have a lot we could learn from the 'peasants' around the world about sustainable living options.




fair comment. I wasn't advocating the current fertiliser practice in most of NZ, but you have to input what you output, long term.

I suspect we (you and I) have similar approaches to our land.

And I've got a jalopy-chassis around - or two or three. To see what happens when things decline over a long time, with a society which still functions, watch Cuba. Forget the 'communist' put-downs. Just see what happened to public transport, communal gardens, the training of medical expertise..........

I think I prefer bike-based tech, though. Getting too old for those cold oily bun-fights in the garage, cursing long-dead designers who never had to service things... Simplicity and lack of maintenance have a lot going for them.


PDW: I have an electric pushbike and absolutely love it.  When the knees feel like they are about to give out, I turn the power assist on and the knees can rest.  Though in the country I got a 'townie' version so have mudguards, carrier and a bag in front.  It's great for popping down to the local supermarket/post shop or RD1 for small things.  All who have seen it have been impressed but they are a bit pricey.  Will do up to 25km/hr and have a range of around 25kms on the battery.

This just in - New Zealand mortgage debt fell in December 2010, the first fall on record since monthly mortgage debt outstanding was first posted by the Reserve Bank in June 1998. Total  housing mortgage debt fell from $171,002,000,000 to $170,952,000,000, a fall of $50,000,000, compared to an average monthly increase of $776,450,000.

Unfortunately, consumer (eg credit card) debt rose $76,000,000 to $11,997,000,000, so "total household claims" are still up for the month.

Still, this is a minor historic event, surely to be celebrated by readers of


Robert M

Well spotted. Gareth was working on a story as you wrote your comment. Great minds think and research alike.

Cheers for the heads up.

We know we're doing something right when our own readers scoop us on the stories we both care about.