Wednesday's Top 10 with NZ Mint: The curiously slumpy Baltic Dry Index; Key's mince a video hit; The amazing Ai WeiWei; Common currency anyone?; Dilbert

Here are my Top 10 links from around the Internet at 10 to 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 tomorrow'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. Single currency popular? - A MYOB survey found 42% of Kiwi business owners would like a common market and currency with Australia. And they don't like the idea of a Capital Gains Tax...

I'm not a fan of a common currency.

We risk becoming even more of a prisoner to our currency as it is buffeted by gold and iron ore prices rather than milk powder and meat prices.

Our current system is better than a common currency.

Australia's taxpayers guarantee our banking system via their banks, but we still have an independent fiscal and monetary policy.

Right now, we would also have to cope with Australia's higher interest rates.

And eventually the Australians would start running our budget policy.

Ready for that?

Would we be happy to pay a flood levy to help Queensland recover?

The MYOB Business Monitor reveals that most New Zealand business owners would oppose a return to three weeks annual leave for their employees (with 43% opposed and only 18% in favour), but would also prefer to see a reduction in the time for a personal grievance to be lodged (48% would like to see this reduce from three years to one year), and are split on the extension of the current trial period legislation from three to six months (34% in favour and 32% opposed).

“Perhaps one of the most surprising policies that many Kiwi business owners are interested in is the concept of a common trans-Tasman economic zone and common ANZ currency,” says Julian Smith. “This won a large amount of support, especially from the transport and professional services sector, although it found little favour in the rural sector and with retail and hospitality business owners.” “Oddly enough, Kiwi men in business – at 49% – are far more keen on the policy than Kiwi women in business, of whom only 28% would like us to move closer to our trans Tasman cousins.” And the biggest vote loser in this year’s elections?

“All parties would do well to steer clear of a capital gains tax. This would be a very unpopular policy, with 65% of business owners promising to vote against the party that has a capital gains tax as an election platform.”  

2. The plight of the honey bee - Ambrose Evans Pritchard at The Telegraph wonders whether the 'colony collapse disorder' that is hitting bee populations around the world will worsen food shortages that are driving up prices.

See the full Rabobank report he is referring to attached here.

The bee crisis has been treated as a niche concern until now, but as the UN's index of food prices hits an all time-high in real terms (not just nominal) and grain shortages trigger revolutions in the Middle East, it is becoming urgent to know whether the plight of the honey bee risks further exhausting our already thin margin of food global security. he agri-business lender Rabobank said the numbers of US bee colonies failing to survive each winter has risen to 30pc to 35pc from an historical norm of 10pc.

The rate is 20pc or higher in much of Europe, and the same pattern is emerging in Latin America and Asia. Albert Einstein, who liked to make bold claims (often wrong), famously said that "if the bee disappeared off the surface of the globe, man would have only four years to live". Such "apocalyptic scenarios" are overblown, said Rabobank. The staples of corn, wheat, and rice are all pollinated by wind.

However, animal pollination is essential for nuts, melons and berries, and plays varying roles in citrus fruits, apples, onions, broccoli, cabbage, sprouts, courgettes, peppers, aubergines, avocados, cucumbers, coconuts, tomatoes and broad beans, as well as coffee and cocoa.  

3. 'Gold Tsunami' - Fund manager Eric Sprott has written a widely distributed column describing a 'Gold Tsunami' of demand from investors. In particular he picks out heavy buying by Indian and Chinese investors who don't trust their own currencies.

This makes sense when you consider that Chinese money supply exploded so much in 2009 that it is now bigger than US money supply, even though it's economy is about a third as big as America's.

Halfway across the world, investors in China and India have never trusted paper investments as a store of value - and they’re converting their hard earned paper money into gold and silver bullion. Not that this is anything new. It isn’t. But the scale and speed with which they are accumulating precious metals IS new, and it’s driving the fundamentals that we believe will lead to higher prices in 2011.

Demand for the metals is literally exploding in Asia, and it’s creating shortages of physical bullion around the world. The statistics are extraordinary. China, the world’s largest gold producer, now requires so much of the precious metal (in addition to what it already mines) that it imported over 209 metric tons (6.7 million oz) of gold during the first ten months of 2010. This represents a fivefold increase from the estimated 45 metric tons it imported in all of 2009.1 According to the World Gold Council, Chinese retail demand for gold increased by 70% from October 2009 to September 2010, representing a total of 153.2 tonnes of gold imports.

Yet, over the same period, the demand for gold jewelry rose by only 8%.2 There is a clear trend developing for Chinese investment in gold as a monetary asset, and China is buying so much gold for investment purposes that it now threatens to supercede India as the world’s largest gold consumer.  

4. Why many feel poorer - Closely watched China watcher Andy Xie has written a perceptive column at Caixin about how the world grew wealthier but many feel poorer.

He worries about stagflation and the widening gap between rich and poor.

While the inflation of necessities keeps most people down, statistics point to rapidly rising income and wealth for a minority. The top 1 percent of the U.S.'s population is getting one fourth of the national income and nearly half of the national wealth, twice as much as two decades ago.

In China, the ratio of property prices to income more than doubled in the decade, indicating that inequality more than doubled too. While the trend may be sharpest in China and the U.S., rising inequality is a global phenomenon. The surge in income inequality has skewered economic growth toward expenditures by the affluent. Such items have high accounting value and low penetration.

Hence, the boom on paper and popular discontent can coexist.

Prolonged negative real interest rates always lead to financial crisis. As I have written many times before, the next crisis will start with either a collapse of the U.S. treasury market or inflation-induced hard landing in emerging economies. The timing is likely to be in late 2012.  

5. Blowing bubbles - David Rosenberg at the Globe and Mail nails the problem with America's super-loose monetary policy. HT Amanda via email.

Investors should realize how irrational this all is. The United States is in a radical money-easing environment, in which the Fed is keeping interest rates artificially low while pumping money into the economy. This type of policy breeds speculative rallies. It inevitably results in boom-bust cycles such as the ones we saw in 1999-2002, 2006-09 and today. This is no time for short memories.

At best, the Fed has managed to create an illusion of prosperity, but it won’t last. And that should surprise no one who has followed the Fed’s activities over the past couple of years. The Fed initially tried to create wealth by reviving the housing market through the first quantitative easing program (QE1), which concentrated on buying mortgage loans.

But the foreclosure crisis and the massive excess supply of homes are once again weighing on U.S. real estate values and the Fed has largely given up on reviving that market.  

6. UK Uncut - America had the Tea Party, which was a protest movement that was quickly captured by big business wanting to reduce taxes. Now Britain may have found something more useful. It is a genuine grass roots movement that wants big corporates such as Vodafone and Sir Philip Green's Top Shop, to pay their fair share of  taxes.

They have staged sit in protests across Britain in the last few weeks that have shut stores. This one might have legs.

Here's Altnet with the background and more detail.

UK Uncut organized entirely on Twitter, asking what it should do next and taking votes. There was an embarrassment of potential targets: the National Audit Office found in 2007 that a third of the country’s top 700 corporations paid no tax at all. UK Uncut decided to expose and protest one of the most egregious alleged tax dodgers: Sir Philip Green. He is the ninth-richest man in the country, running some of the leading High Street chain stores, including Topshop, Miss Selfridge and British Home Stores.

Although he lives and works in Britain, and his companies all operate on British streets, he avoids British taxes by claiming his income is “really” earned by his wife, who lives in the tax haven of Monaco. In 2005 the BBC calculated that he earned £1.2 billion and paid nothing in taxes—dodging more than £300 million in taxes.

But perhaps the most striking response was from the right. One of Britain’s most famous businessmen, Duncan Bannatyne, came out in support of the protests, declaring, “We need to rebel against tax dodgers…as Government won’t.” The Financial Times conceded that “the protesters have a point” but then grumbled about them.

Surprisingly, the Daily Mail, Britain’s most right-wing newspaper, became one of the movement’s most sympathetic allies. The editors could see that their Middle England readers were outraged to be paying more taxes than the superrich. So they ran their own exposé on Philip Green’s tax affairs, along with straightforward and detailed reporting of the protests.

7. The Amazing Ai Wei Wei - Here's a 60 minute documentary about controversial Chinese artist and architect Ai Wei Wei, who designed the Birds Nest stadium for the Beijing Olympics, yet criticises the Chinese government.

It includes some interesting insights into modern China.

An extraordinarily brave and brilliant man. My new blogging hero I think. HT Russell Brown via Twitter.

Why doesn't TVNZ or TV3 broadcast this documentary?

8. The curiously weak Baltic Dry Index - The Baltic Dry Index measuring the cost of shipping bulk commodities such as coal and iron ore around the world has fallen to 2 year lows in recent weeks, despite all the talk of strong growth in China, where a lot of these shipments go.

BusinessInsider wonders whether the emperor has no clothes.

There are signs that higher inflation is causing a slow-down in China’s exports (via CNBC):

“Inflation is starting to slow China’s mighty export machine, as buyers from Western multinational companies balk at higher prices and have cut back their planned spring shipments across the Pacific. Markups of 20 to 50 percent on products like leather shoes and polo shirts have sent Western buyers scrambling for alternate suppliers.

But from Vietnam to India, few low-wage developing countries can match China’s manufacturing might — and no country offers refuge from high global commodity prices.Already, the slowdown in American orders has forced some container shipping lines to cancel up to a quarter of their trips to the United States this spring from Hong Kong and other Chinese ports.”

Is the Baltic Dry Index a sign that China’s real economy is weaker than some think? It’s impossible to tell as government fueled growth in China continues to mask any real economic activity. The one thing we do know is that the Shanghai Composite continues to exhibit very poor performance and the BDI is now just points shy of its all-time lows. If these indices are pointing to slower growth in China then it would certainly be safe to say that analysts are overly optimistic about the global recovery.

9. 'Do you believe that the 2 + 2 = the pink' - Here's another cracking animated rabbits video explaining the US bank bailouts from the same guys who did "The "Bernank" video that has had over 4 million views.

'When you constantly get the bailouts you don't care about the shame. When you constantly get the bailouts you don't care about your customers.'

10. Totally irrelevant video - John Key's mince this week has caught the attention of some.

I thought it was clever politics and John Key being himself. Kiwis love it. It's why he's such a successful politician.

He doesn't take himself too seriously.