Monday's Top 10 with NZ Mint: A New Capitalist Manifesto; Mark and Eric's quick flick for NZ$20 mln; A Mid-Western hero; The Iron Chancellor; Dilberts

Here's my Top 10 links from around the Internet at 10 past 11 pm in association with NZ Mint.

I welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.

I'll pop the extras into the comment stream.

1. The New Capitalist Manifesto - Harvard Business Review author Umair Haque was interviewed by Andrew Patterson on his Sunday Business show on Radio Live.

It's a must listen.

Click here.

I'm a big fan of Haque's stuff. See his columns here.

He's written a book called The New Capitalist Manifesto. I'm looking forward to reading it.

He goes beyond the usual response to the Global Financial Crisis.

He's not talking about a return to Keynesianism or Monetarism or Marxism.

He essentially says companies need to try to create long term value by building useful products and services that don't rip off customers and employees.

He rightly points out that the Wall St version of capitalism has failed with its short term focus on bigger bonuses for managers and financial engineering.

2. I'm no fan of Obama - Here's another reason why. He has just fired a State Department spokesman who dared to criticise the "ridiculous, counterproductive and stupid" conditions under which alleged Wikileaker Private Bradley Manning was being held.

Here's Glenn Greenwald at Salon with some obvious points.

So, in Barack Obama's administration, it's perfectly acceptable to abuse an American citizen in detention who has been convicted of nothing by consigning him to 23-hour-a-day solitary confinement, barring him from exercising in his cell, punitively imposing "suicide watch" restrictions on him against the recommendations of brig psychiatrists, and subjecting him to prolonged, forced nudity designed to humiliate and degrade. But speaking out against that abuse is a firing offense. Good to know.

Of course, it's also the case in Barack Obama's world that those who instituted a worldwide torture and illegal eavesdropping regime are entitled to full-scale presidential immunity, while powerless individuals who blow the whistle on high-level wrongdoing and illegality are subjected to the most aggressive campaign of prosecution and persecution the country has ever seen. So protecting those who are abusing Manning, while firing Crowley for condemning the abuse, is perfectly consistent with the President's sense of justice.

Also, remember how one frequent Democratic critique made of the Right generally and the Bush administration specifically was that they can't and won't tolerate dissent: everyone is required to march in lockstep? I wonder how that will be reconciled with this.

3. Our hero Hoenig - Time has a nice profile of Thomas Hoenig, the Kansas Fed Governor who regularly voted against the majority of the Fed's Open Markets Committee when they voted to print more money. He has been rotated off the FOMC now, but here's his thinking:

Hoenig's domain stretches across Oklahoma, Kansas, Nebraska, Wyoming, Colorado and parts of Missouri and New Mexico. Surveying those states, his economists find that the price of farmland is escalating wildly. "Agricultural land is appreciating almost weekly," he says. Energy prices are booming as well.

There is more going on here than a simple rise in economic activity, Hoenig thinks. Rocketing land and energy prices are telltale signs, he says, of too much money sloshing around. "When you put this much liquidity into the system, it has to go somewhere."

It won't go into savings as long as the Fed keeps interest rates near zero. So the money starts chasing assets with higher yields — like land, the once again booming stock market and energy (indeed, some savvy Wall Street investors believe quantitative easing is a major factor in the current run-up in oil prices). As more money joins the chase, asset prices rise and keep rising until ...pop.

4. Here's how Mark and Eric did it - Greg Ninness at the Sunday Star Times has a useful piece explaining how Mark Hotchin and Eric Watson personally profited by flicking a former camping ground near Queenstown onto Nigel McKenna for NZ$20 million profit.

They did it by ensuring investor's money in Hanover Finance helped McKenna buy the asset for an inflated price off Messrs Watson and Hotchin's personal company, Hanover Equity partners.

The deal was especially sweet for Hanover (Equity Partners) because it didn't even take legal possession. Ownership was transferred directly from Carter's company to Melview, with Hanover simply clipping the ticket on the way through.

And Melview didn't have to look far for the money to settle the deal. That came from Hanover Finance, which provided Melview with an $80m loan for the development, secured by a second mortgage.

Although Melview also had first mortgage funding, provided at first by Commonwealth Bank of Australia, it is usual in developments of this nature for the second mortgage funds to be drawn down first. Which meant Hanover Finance's money funded the deal.

The result was that Hanover Equity Partners ended up with $20m cash and Hanover Finance and the mum and dad investors who provided the company with its money ended up carrying the risk. That risk has since been crystalised.

5. The Iron Chancellor - Weekend meetings to try to resolve the European Sovereign Debt crisis ended with the Germans dictating austerity for Greece and Portugal. The Telegraph's Ambrose Evans Pritchard surveys the territory and has a suitably blood curdling conclusion. This is far from over.

Popular revolt is the dog that has not barked since the long slump began. This may just be a question of time. The pattern of the 1930s is that deep alienation starts in year three as austerity grinds on, and in this case tensions on the eurozone peripery can only turn nastier as the ECB tightens monetary policy.

What is clear is that sovereign states are being forced to cut wages and dismantle parts of their welfare state under foreign diktat, with a gun held to their heads. This will not be forgotten lightly. The character of the European Project has changed utterly.

6. Still buying bonds - The European Central Bank is still being forced to buy bonds from the likes of Portugal and Greece. Here's Bloomberg.

The euro leaders’ decision to buy bonds in the primary markets “looks to be an alternative to providing liquidity loans, rather than taking over the role of secondary market support that the ECB has been doing,” David Mackie, JPMorgan Chase Co.’s London-based chief European economist, said in a March 12 note.

“It looks like the ECB has failed in its attempt to have the EFSF take over this task.”

7. The Australians are saving hard - David Uren at The Australian looks at the strange reluctance of Australian consumers to spend. They're saving hard.

I think Australians know in their bones that housing is overvalued and they're getting ready for prices to stop rising at the very least.

The December quarter accounts showed clearly that household spending has stalled. Income growth over the previous year of almost 9 per cent had translated into spending growth of only 4.5 per cent in nominal terms. Retail sales are down to growth of only 2 per cent. Both results are much worse once allowance is made for inflation.

Household savings have now stood at close to 10 per cent of disposable income for the past two quarters, up from around 3 per cent before the global financial crisis. That is roughly $65 billion a year that is being saved rather than spent had pre-crisis savings patterns been maintained.

Recollecting that about $20bn a year was the most that the federal government was able to shovel out the door in a single year under its stimulus programs gives some idea of the dimensions of the wet blanket that consumers are throwing over the economy now. The Reserve Bank estimates that 35c out of every additional dollar in income growth is being saved.

8. Extend and Pretend - Germany and France are trying to block new Basel III rules that would force their banks to fess up how much debt they are relying on. Bloomberg has the story.

Germany and France are fighting global rules that would force lenders such as Deutsche Bank AG and BNP Paribas SA to reveal their reliance on debt, according to an internal note prepared by the European Commission.

The euro region’s two biggest economies are “fiercely against” proposals drawn up by the Basel Committee on Banking Supervision for lenders to reveal as soon as 2015 whether they would meet a cap on borrowing, known as a leverage ratio, that may only become binding three years later. Austria and Greece are also opposed, according to the document obtained by Bloomberg News.

The “total transparency” may put pressure on lenders to meet the leverage rules three years early, the countries argue, according to the commission document. The nations may accept publication of methods regulators use to measure “leverage risk” that don’t identify specific banks, the document says.

9. 'We're different' - Reuters reports The Irish are still confident they can convince the Iron Chancellor Angela Merkel later this month to cut the interest rate on their rescue plan. They should be ready to hear "Nein". They might lose their precious 12.5% corporate tax rate to boot.

Ireland's new government, swept into power two weeks ago, believes the country's banks are placing an unsustainable burden on the state and wants Europe to give it more time to shrink the sector and more help meeting its capital requirements.

European leaders agreed on Saturday to cut the interest rate on loans to Greece and strengthen the region's bailout fund to try and defuse a year-long debt crisis.

Ireland, which agreed to an 85-billion-euro ($118.2 billion) joint EU/IMF rescue package late last year, did not get a similar reduction after Kenny refused to give in to pressure to raise the country's 12.5 percent rate of corporate tax, viewed as anti-competitive by higher tax European nations.

10. Totally cool video - Michael Laws said some less than charitable things about a person with Aspergers Syndrome in the Sunday Star Times. He described Arie Smith as a 'looting rat' with feral features.  

Smith has Asperger's. Big deal. It was not severe enough for him to require care, nor for him not to be unaware that stealing was wrong. So he had a compulsion. Many people do. But they don't take advantage of others' misery or exploit a natural disaster to satisfy that compulsion.

In the end, justice has been done, blackened eye and all. Now let's similarly identify the other Christchurch looters and mete out similar justice. 

All I would say to Michael Laws is please watch this video about Aspergers Syndrome. My daughter has Aspergers. She's wonderful. Just like the professional surfer in this video. I don't know about Arie Smith, and I suspect Michael Laws doesn't either. He needs to do some research. Here's a start.