Here's my Top 10 links from around the Internet at 5 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.
It's all Greek to me today...
1. Which banks are drunk on ouzo debt - The Guardian has done a nice job pulling together an article and a great graphic showing which European banks are most exposed to a Greek default.
The Greek banks are stuffed.
Germany's Commerz bank and Postbank also have exposures of about a quarter of their equity.
Belgium's Dexia has exposures of up to 39% of equity.
France's BNP and SocGen also have exposures of 8% and 6% of equity respectively.
I couldn't find any Australasian banks in the list.
2. Ready for the Greek vote? - Tonight's vote of confidence in the Greek parliament tonight is shaping up to be interesting for markets.
The Economist nicely summarises the Euro-dithering.
After seven gruelling hours in Luxembourg, which included a video conference with colleagues from G7 countries, the finance ministers of the 17 countries of the euro zonedecided to delay until July the disbursement of €12 billion ($17 billion) in loans from the European Union and the IMF.
By then, they said, two issues would have become clearer. Firstly, the finance ministers say they want to know how far Greece’s private creditors are willing to help “voluntarily” by rolling over Greek debt when current bonds mature. This has become vital for German domestic opinion to sweeten the bitterness of having to support a second bail-out for Greece.
Secondly, the euro zone wants to know whether the reshuffled government of George Papandreou, the embattled Greek prime minister, will secure a vote of confidence in the Greek parliament, which is expected to come on Tuesday. Greek MPs are also due to approve, by the end of June, the next round of austerity measures and structural reforms—including a wholesale privatisation of state companies and lands.
3. Beijing by the beach - NZHerald reports Coromandel and Northland beachfront property developer Hopper Developments wants the government grant a special type of visa for Chinese property investors so they can buy boltholes by the beaches at Pauanui and Marsden Cove.
Is this what we have come to?
Selling off the beachfront to support beachfront property prices and our currently unsustainable lifestyle.
We can't just keep borrowing from the Chinese and selling assets to them to keep spending more than we earn. Down that path poverty lies.
The company is targeting China and is working with the Government to introduce new visa arrangements to facilitate investment, which will not only benefit areas like the Coromandel Peninsula and Northland but New Zealand as a whole, he said. China is being targeted because of the interest there in investing in overseas property.
"It's the fastest growing economy in the world and it's highly productive. Millionaires are popping up every day," MD Leigh Hopper said.
And as land can only be leased in China, people with money are keen to invest in Western freehold property. It's a way of spreading their risk and they don't necessarily expect to make a return, he said.
Chinese investors will be invited to buy property and build, with the aim of attracting them to visit regularly and rent out their houses when they're absent. Options for investment in commercial property, tourism activities and infrastructure are also being explored. The company wants the Government to introduce a renewable, two-year, multi-entry visa for investors who would be sponsored by Hoppers.
"We need flexible visa arrangements so they can come and visit, other than through the [existing] short-term visa."
4. Succession planning? - One sign of succes for any CEO and board is a succession plan and low turnover of the most senior staff. Paul McBeth reports at BusinessDesk that NZX's Head of Strategy Fiona MacKenzie is leaving after just a year in her current role to join the NZ Super Fund.
5. The game has changed - PIMCO's Scott Maher makes some good points in his latest missive about how the outlook for sovereign debt has deteriorated in a structural way and that savers are being punished with financial repression by policymakers trying to avoid debt crises.
Over the next three to five years, we argue that market behavior may be vastly different than what typical cyclical models would predict. Sovereign debt, which is at the core of our global financial system, is undergoing a seismic shift. Governments practicing financial repression may be transferring wealth from creditors (citizens) to debtors (governments) to the detriment of creditors, fixed income investors and savers.
6. The problem with America - Reuters' Felix Salmon point out how America's structural unemployment problem has worsened much more than others'.
I find these numbers quite shocking: after all, it’s hardly as though countries like the UK and Portugal have emerged from the recession unscathed. But the US increase in unemployment over the course of the recession was more than double the increase anywhere else.
That said, the US has historically has a much lower rate of structural unemployment than most of these other countries: the level of unemployment which is baked in to economic reality, before cyclical factors move it temporarily up and down. And what I fear is that the Great Recession has moved the US towards European levels of structural employment, without any kind of Euro-style social safety net.
7. IMF warning - Just in case you (Gummy Bear I'm looking at you) think I'm being a bit excitable about what the Greek crisis means, here's what the IMF says via The Guardian:
The International Monetary Fund warned European leaders that their hesitant response to Greece's debt crisis risked triggering the world's second global financial meltdown in three years.
As EU finance ministers scrambled to build a second bailout of Greece in the space of a year, but delayed throwing Athens a €12bn lifeline until next month, the IMF delivered its bluntest public criticism to date of the way EU leaders have handled the crisis.
"Policymakers are yet again facing uncomfortable dilemmas, raising uncertainty about the final outcome," the fund said in its annual assessment of the eurozone. "With deeply intertwined fiscal and financial problems, failure to undertake decisive action could rapidly spread the tensions to the core of the euro area and result in large global spillovers … a disorderly outcome cannot be excluded."
8. It pays to default - The Economist points out that Greece may be better of by defaulting, going from the past history of other defaulters that have actually grown more after defaulting than before.
While countries that default do find themselves locked out of markets for some time, any growth penalty from a default tends to be short-lived. Argentina saw its GDP decline by 10.9% in the year after its December 2001 default.
But its economy bounced back smartly in the years that followed. Uruguay, Russia and Indonesia also did quite well after their respective defaults.
9. China's 5 year plan - Here's the Brookings Institute with its analysis of China's latest 5 year plan, which seems focused on sustainable growth and reducing inflation, rather than going for growth for the sake of it. The analysis has a great collection of charts summarising China's progress and issues, including the one below on inflation.
This plan could herald a turning point in China's economic development as it represents a marked shift in emphasis from high growth to the quality, balance and sustainability of that growth.
Premier Wen Jiabao's report to the National People’s Congress, which should be read in conjunction with the other plan documents, strikes an interesting balance between self-congratulation for China's economic performance over the last five years, including the economy's resilience during the global financial crisis, and a sober evaluation of the immense development challenges that lie ahead.
The plan document is comprehensive and lists a large number of reform priorities. The emphasis on controlling prices through various policies clearly indicates that the major short-term priority for the government is to manage inflationary pressures.
10. Totally Stephen Colbert video - Colbert says "Sesame Street" brainwashes kids by teaching them the importance of saving and self-control.
Muppets feature, which is a good thing. Marshmellows are eaten for a good cause.
He makes some very deep satirical points about America's consumerist culture...I think...
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