Here's my Top 10 links from around the Internet at 11 am 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.
Must be a devil between us...
1. Does New Zealand need a Billion Prices Project (BPP)? - Two MIT professors are now monitoring prices online to get a more immediate measure of inflation.
It shows US inflation at 3.2% over the year to April vs the official inflation rate of 2.1% in 12 months to February. See the chart below.
James Surowiecki writes at the New Yorker about the project.
How hard would this be to do in New Zealand?
As it is at the moment, it can take three months after inflation happens for New Zealanders to know about it.
I'd love it for the Reserve Bank and Stats NZ to get together with TradeMe etc to come up with this for New Zealand.
The B.P.P., which was designed by the M.I.T. economists Alberto Cavallo and Roberto Rigobon, gathers price data not via survey but, rather, by continuously scouring the Web for prices of online goods around the world. (In the U.S., it collects more than half a million prices daily—five times the number that the government looks at.) Using this information, Cavallo and Rigobon have succeeded in building what amounts to the first real-time inflation index.
The B.P.P. tells us what’s happening now, not what was happening a month ago. For instance, after Lehman Brothers went under, in September, 2008, the project’s data showed that businesses started cutting prices almost immediately, which suggested that demand had collapsed. The government’s numbers, by contrast, didn’t show this deflationary pressure until that November. This year, there’s been a mild uptick in annual inflation, and again the B.P.P. detected the new trend before the Consumer Price Index did.
That kind of early heads-up could help governments make more timely decisions.
2. The real problem in America - Here's what American consumers really think. They are feeling poorer and don't expect to see their income rise much. They are heavily indebted too.
It's the reason why they're not spending.
Remember, American consumers make up about 60% of the world's biggest economy.
3. Way beyond Greece - Bloomberg reports Blackrock's Larry Fink says Europe's problems are much deeper than just Greece. Europe's banking system needs a reorganisation.
Is everybody ready for this and aware of what it means?
So why is Kiwibank borrowing from this system at a rate of almost NZ$1 billion every six months?
Inspectors from the EU, International Monetary Fund and EuropeanCentral Bank are set to wrap up a review of Greece’s progress in meeting the terms of last year’s 110 billion-euro ($157 billion) bailout in coming days. The EU will then formulate its plan for further aid to Greece, which remains shut out of financial markets a year after the rescue package.
Many smaller banks in Europe will need to be recapitalized, said Fink. The largest banks on the continent are well capitalized, though devaluation of some of the sovereign credit will put stress on them, he added.
“The banking system in Europe owns all this debt,” Fink said. “If we restructure one country, we’re now basically putting huge capital stress on these banks. Before we restructure any country, we’re going to have to restructure the banking system in Europe.”
4. Goldman's American handout - The details are now emerging about how Goldman Sachs was bailed out by the American taxpayer, thanks to US Treasury Secretary Timothy Geithner, who is as close to US President Barack Obama as anyone in his administration.
Here's Robert Scheer at TruthDig.com.
What was Timothy Geithner thinking back in 2008 when, as president of the New York Fed, he decided to give Goldman Sachs a $30 billion interest-free loan as part of an $80 billion secret float to favored banks? The sordid details of that program were finally made public this week in response to a court order for a Freedom of Information Act release, thanks to a Bloomberg News lawsuit. Sorry, my bad: It wasn’t an interest-free loan; make that .01 percent that Goldman paid to borrow taxpayer money when ordinary folks who missed a few credit card payments in order to finance their mortgages were being slapped with interest rates of more than 25 percent.
One wonders if Barack Obama was fully aware of Geithner’s deceitful performance at the New York Fed when he appointed him treasury secretary in the incoming administration. The president was probably ignorant of this particular giveaway, as were key members of Congress. “I wasn’t aware of this program until now,” Barney Frank, D-Mass., who at the time chaired the House Financial Services Committee, admitted in referring to Geithner’s “single-tranche open-market operations” program. And there was no language in the Dodd-Frank law supposedly reining in the banks that compelled the Fed to reveal the existence of this program.
It was merely one small part of that reckless policy of throwing mad money at the banks while ignoring the plight of homeowners whom the banks had swindled, a plan pursued by both the Bush and the Obama administrations that set the stage for the current slide into a double-dip recession.
5. Politically unsustainable - Here's why the European debt situation is unsustainable without a restructuring. Jean Pisani-Ferry says in this video below Greece needs to run a budget surplus of 6% to dig itself out of its hole. This is impossible. HT Yves Smith at Naked Capitalism.
This INET interview with Jean Pisani-Ferry gives a useful overview of how Greece and Ireland came to have sovereign debt woes and the viability of the remedies proposed for each.
Pisani-Ferry argues, as many other economists do, that austerity measures will not succeed in Greece because they will prove to be politically unsustainable.
6. Sustainable growth? - Dick Smith of Dick Smith Electronics has launched an A$1 million 'Wilberforce' award to find a young person with an alternative to consumption-obsessed growth.
Right now I believe we could be sleepwalking to catastrophe because we are failing to both acknowledge that there are limits to growth in a finite world and to prepare for a more sustainable way of organising our economy. In the 19th Century, empires were built on the labour of slaves, and it was believed economies would collapse if slavery was abolished.
But brave people like William Wilberforce fought to end the slave trade – and economies still flourished. We need brave people like Wilberforce today, and I want to encourage a new generation of clear-thinking and inspiring young leaders.
He spoke on Radio New Zealand National on Tuesday. Here's the interview, which various people have recommended to me.
7. Here's an idea - HT to Nadine at TVNZ's AMP Business for this great device for sleeping at work. It's called the Ostrich.
It could also be used to ignore all sorts of things. Must send a few to the Beehive.
Working patterns are constantly evolving. We gradually spend more time in our working environments, and this in turn means that we often need to make work and rest fully compatible within the same space. Some cultures have assimilated this concept more naturally than others, but in general the workplace has rarely adapted to this new working-resting paradigm.
8. So what does price stability mean? - James Grant from Grant's Interest Rate Observer is one of my heroes. He's usually worth watching, so here he is in full colour and moving image below.
He makes some great points about crazy US farmland prices and is particularly critical of the US Federal Reserve.
It's 26 minutes long and well worth every second.
9. A heart warming video - For those who say I'm too grumpy by half, here's a fun video that you may have seen, but it's enjoyable to watch again.
10. Totally Gummy Bear video especially for the Gummster. It's all about an itsy bitsy bikini.
11. Here's another of my favourite songs from the great Chris Knox and Alec Bathgate (Tall Dwarfs) called Nothing's Going To Happen.
One again for the Beehive to watch when contemplating why their budget forecasts are wrong again.
12. Totally bonus video from The Pixies - Hey.
Been dying to meet you...
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.