Thursday's Top 10 with NZ Mint: NZ 3rd best in OECD (at unpaid work); Stephen Roach on Zombies, steroids and balance sheet repairs; The Robin Hood tax; Dilbert

Here's my Top 10 links from around the Internet at 10 to 7 pm in association with NZ Mint.

I'll pop the extras into the comment stream. See all previous Top 10s here.

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

I'm still full of the joys of schadenfreude today. And I enjoy watching Stephen Roach.

1. We work hard - But we're not paid for it. A fascinating OECD study out overnight shows New Zealanders are really good at some things, but mostly they involve working for no pay looking after family members.

We are the 7th hardest workers in the OECD, but unpaid work is worth 43% of GDP, which is the third highest in the OECD. Brilliant.

Mind you, we can't even beat Australia at that, which has 46% of its GDP from unpaid work and Portugal with 53%. 

Oh. And apparently we're less tolerant than the Australians too.

Not sure what it all means, but here's the detail on New Zealand in the OECD report.

Total daily care time of household and non-household members in New Zealand is the second highest in the OECD at 48 minutes, just above Australia (45 minutes) and well below Ireland at the top (62 minutes). The OECD average is 26 minutes.

Unpaid work in New Zealand accounts for 43% of GDP, the third highest in the OECD after Australia (46%) and Portugal (53%).

With more than one in five foreign-born, New Zealand has the sixth highest proportion of their population born offshore in the OECD

After Canadians and Australians, at 81% New Zealanders report the highest perceived community tolerance of minority groups – ethnic minorities, migrants, and gays and lesbians – in the OECD, well above the OECD average of 61%.

2. Robin Hood tax - The Guardian reports 1,000 economists have urged the G20 to agree to a Tobin Tax on financial transactions, often referred to as the Robin Hood tax.

In a show of unity rare in the economics profession, the experts from 53 countries describe the so-called "Robin Hood tax" or Tobin tax on transactions in financial markets as "an idea that has come of age".

Signatories include Jeffrey Sachs, director of the Earth Institute at Columbia University who is an influential adviser to Ban Ki-moon, the secretary general of the United Nations; Dani Rodrik from Harvard, and Ha-Joon Chang, from Cambridge.

The economists argue that even if such a tax was levied at just 0.05%, it could raise hundreds of billions of dollars, which could be ploughed into development projects.

"The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society," the letter says, adding that a Robin Hood tax is "technically feasible" and "morally right".

3. Watch the Chinese banks - Bloomberg reports Chinese banks may have to raise US$131 billion in cash from selling shares in the next 6 years to meet stricter capital rules.

This is worth watching given the potential that their massive lending to local state-owned property developers goes pear-shaped.  

“Capital erosion is a long-term issue facing Chinese banks because they don’t really have the motivation to reduce reliance on loan expansion,” said Wen Chunling, a Beijing-based analyst at Fitch. “The focus of China’s rules is to ensure that banks arm themselves with abundant capital to be well-prepared for a crisis, so that the cost of any government bailout would be minimized.”

China’s banking regulator has drafted rules forcing banks to have Tier 1 capital ratios of at least 8.5 percent by the end of 2016, a person with knowledge of the matter said in January. The nation’s lenders had an average Tier 1 ratio of 10.1 percent at the end of last year, according to the watchdog.

That’s below the average 12.3 percent among the world’s 100 largest banks by market value, according to data compiled by Bloomberg.

4. Where were the auditors? - It turns out they were there and said nothing. Leonie Wood at BusinessDay reports on how a partner at Pricewaterhousecoopers sat through a board meeting of property owner Centro and did not raise a A$1.1 billion error in its accounts.

Under cross-examination by Leslie Glick, SC, for Centro's former chief executive, Andrew Scott, Mr Cougle agreed that as an auditor he had an obligation to draw matters of significance to the board's attention but he admitted that he had stayed silent about the error.

''We were aware of it, we had identified it, we brought it to the attention of management,'' Mr Cougle said. Asked what PwC was doing at the meeting, Mr Cougle replied: ''We were there as a courtesy.''

5. The Broadband Chicken and the Egg - Rick Boven from the NZ Institute (via NZHerald) has fallen for the line punted around by Telecom and its mates that more broadband will simply mean more opportunities for New Zealanders to slack around watching downloaded movies and watching porn.

Sigh.

Boven says there's a risk that the big new broadband network will just mean more entertainment and that many businesses are not ready to use it.

Well yes...but build it and they will come.

They don't know what it could be used for, but they'll work it out once the tool is there.

Who knew 10 years ago we would use the Internet to communicate with each other in social networks or gather information or buy stuff or do banking. We know now. That wouldn't have happened without broadband.

Just imagine what we could do with really fast broadband. HT my wife who makes plenty of export dollars selling stuff to American and European photographers via the Internet.

"We run the risk of spending a lot of money to provide very high quality entertainment," he said. 

6. You betcha' bottom dollar - Stuff reports the trustee for Nathans Finance, Perpetual Trust, has acknowledged in court it could have done better to watch what Nathans (and John Hotchin) was up to.

Apparently Perpetual raised concerns through 2006 and 2007. If only they had told the investors...\

Under cross-examination by defence lawyers representing Nathans' former directors, Perpetual Trust's head of corporate trusts Matthew Lancaster said he was "satisfied with the actions we were taking" at the time.

But in hindsight, Lancaster said he would've done some things differently, "for instance, not give them so much time to respond" to requests for information on their operations.

"I think everyone involved in the finance company sector has been able to look back and say, had we known what we know now we would've done things differently."

The trustee had been trying to monitor the high level of intercompany loans between Nathans and its parent VTL Group through an arrangement with Nathans' auditor, Staples Rodway. Various valuations, business plans and accounting adjustments were scrutinised throughout 2006 and 2007 after Perpetual raised concerns.

7. As big as America - Bloomberg reports Reserve Bank of Australia Governor Glenn Stevens thinks the Chinese economy could be as big as America's within a decade. That's pretty bullish, but Australia and New Zealand will be big beneficiaries if it happens. Here's his full speech at the RBA site.

China’s share of the global economy will surpass Europe’s in five years and approach the U.S.’s in a decade, based on the Asian nation’s projected 7 percent annual growth, Reserve Bank of Australia Governor Glenn Stevens said.

“The Chinese economy will have cycles; it will not trace out a path of steady, uninterrupted expansion,” Stevens said in remarks prepared for delivery in New York today. “But by any reckoning, the emergence of China is a huge historical event.”

8. 'Don't worry - the Chinese will buy them' - Where have we heard that before? Reuters reports Spain is now relaxed that China has pledged to keep buying Spanish government bonds. Be careful what you wish for.

China is also Fiji's best friend now...

"China is willing to buy more Spanish government debt and participate in a fund to restructure Spain's savings banks," Premier Wen Jiabao said on Tuesday after a meeting with Spanish Prime Minister Jose Luis Rodriguez Zapatero, according to state television and official news agency Xinhua.

Spain's borrowing costs have soared since early last year on investor concern that it might follow other euro zone periphery countries down the road to a bailout, and the government has struggled to find investors for the savings banks, which are riddled with bad debts.

But in recent weeks Spain has decoupled from Portugal, which has asked for European financial aid, and risk premiums on its debt have narrowed.

"China has shown itself to be a very good friend to Spain as we've confronted the difficulties of the financial crisis, which fortunately are being solved," Zapatero told Spanish radio stations from Beijing.

9. How bizarre - Michael (The Big Short) Lewis writes at Bloomberg about the US Federal Reserve's document dump on the bailouts of 2008 and 2009. He's taking the proverbial, possibly. 

A team of Bloomberg investigative reporters, led by Kram Namttip, was allowed to spend a day examining what remains of the collateral collected by the Fed during the crisis. What follows is a brief summary of their findings. To wit:

-- A vault in the Fed basement filled with young women, who claimed, in broken but excited English, they had been repo-ed by the Italian government. 

10. Totally Stephen Roach video - Where he says the world can't stand in the way of balance sheet repair. He says America is still pumped up on steroids of cheap cash and bailouts. He worries about zombie consumers. He's pretty right on all of that.