Here's my Top 10 links from around the Internet at 12 midnight 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.
Have a great weekend.
It is his account of posing as an Indian call centre worker.
It poses some uncomfortable questions about the outsourcing of services.
It makes you think more than twice about globalisation.
The detail is excruciating and fascinating.
Luckily many of our banks and Telcos have held back from outsourcing so far.
Yellow Pages is in the Philippines, as is Telecom's broadband. Vodafone used to outsource to Egypt but has since decided to move back.
Is this all a good idea? I used to think it was. It gave New Zealanders cheaper services and increased the wages of those in the third world.
But now I'm beggining to wonder. Perhaps all it does is take jobs off the middle classes in the developed world and create sweat shop jobs in the third world. Multinational companies then pocket the difference as profits on the way through and distribute the money as higher dividends or bonuses to the most senior managers.
Is this sustainable? I wonder.
Here's the best anecdote from the article, which is long but well worth a read.
During our second day of culture training, Lekha dissected the Australian psyche. It took about 20 minutes.
"Just stating facts, guys," Lekha began, as we scribbled notes, "Australia is known as the dumbest continent. Literally, college was unknown there until recently. So speak slowly." Next to me, a young man in a turban wrote No college in his notebook.
"Technologically speaking, they're somewhat backward, as well. The average person's mobile would be no better than, say, a Nokia 3110 classic." This drew scoffs from around the room.
"Australians drink constantly," Lekha continued. "If you call on a Friday night, they'll be smashed—every time. Oh, and don't attempt to make small talk with them about their pets, okay? They can be quite touchy about animals."
"What kind of people are there in Australia?" a trainee asked. "What are their traits?"
"Well, for one thing," Lekha said, "let's admit: They are quite racist. They do not like Indians. Their preferred term for us is—please don't mind, ladies—'brown bastards.' So if you hear that kind of language, you can just hang up the call."
2.Hugh Grant on fire - Some might remember that Hugh Grant bugged a former News of the World journalist and then exposed him in the New Statesman. Here's Hugh Grant in a great on-air stoush on BBC with that journalist.
Grant destroys the phone bugger. Delicious television. Well worth a click through. Sorry I can't embed.
3.An ideological crisis in Western Capitalism - Nobel Prize winning economist Joseph Stiglitz writes at Project Syndicate about the comeback of the free marketeers and the inevitable march to doom.
I don't agree with his purely Keynesian solution, but he's right about the problem.
Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980’s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world. Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year.
Moreover, output growth in the United States was not economically sustainable. With so much of US national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.
I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven, as always, by ideology and special interests, once again threatens the global economy – or at least the economies of Europe and America, where these ideas continue to flourish.
4.The hedge funds are betting on implosion - Bloomberg reports on the hedge funds that are betting on a Greek default and the inevitable implosion to follow.
“Nothing you’ve seen so far has dealt with solvency, just liquidity,” said Simon Finch, head of credit trading at CQS UK LLP, a London-based hedge fund that oversees $11 billion.
Finch, who has bought and sold corporate bonds and loans for 18 years, has stepped up trading in mobile-phone, utility and toll-road companies in the three countries. He expects their governments will be forced to slash spending to pay off lenders, slowing growth and reducing discretionary consumer outlays.
CQS is among the hedge funds that say investors are underestimating the odds of distress or even default not only by Portugal, whose credit rating was downgraded this week to junk status by Moody’s, but also by the bigger Italy and Spain. The funds are moving beyond a direct wager that sovereign debt values will tumble, targeting potential fallout in the corporate-debt market and the banking industry.
“We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread,” billionaire investor George Sorossaid during a panel discussion in Vienna on June 26. “The financial system remains extremely vulnerable.”
5. Supply Side economics has failed - Here's Salon with this conclusion.
The theory of supply-side economics tells us that if you cut taxes on rich people and corporations, the newly liberated moguls and businessmen will take their windfall and invest it, creating jobs and accelerating the rate of economic growth. The benefits of a light hand on the upper class, therefore, will "trickle down" to the working man and woman.
Ever since Ronald Reagan first attempted to make supply-side economics a reality and proceeded to inaugurate an era of persistent government deficits and growing income inequality, it has become harder and harder to make the trickle-down argument with a straight face. But we've never seen anything quite like the disaster that's playing out right now.
6. China pumps up the volume - MIT Sloan Management Professor Yasheng Huang reckons here at the NYTimes the Chinese went on a mad stimulus spree in 2009 that created useless infrastructure and buildings that are now turning massive loans to state governments into toxic assets.
Why should China, a country credited for having a vibrant middle class, a huge internal market and a rapid pace of wealth-creating urbanization, undertake a stimulus program larger both in relative and absolute terms than the stimulus program in the United States, which was at the epicenter of the financial crisis?
The answer is that China’s middle class is far less vibrant than commonly assumed; its internal market (relative to its G.D.P.) is actually modest, and its urbanization is rapid but not wealth-creating. In the face of a precipitous collapse of the demand for exports, the country resorted to the only thing it knew how to do -- embark on a government-organized, debt-financed investment binge to raise the G.D.P.
One theory is that all of these investments are made to prepare for the coming wave of urbanization. This is a myth. The Chinese cities do not lack buildings, which they have in surplus. The cities lack people. Beijing and Shanghai have some of the lowest population densities among the world’s big metropolises. The current infrastructure is more than adequate to accommodate China’s urbanization.
It is likely that a sizable portion of this investment binge is sheer waste and will surely end up as non-performing loans on the banks’ balance sheets.
7. This can't last - Michael Pettis says similar things about the false Chinese growth.
China’s problem now is that the authorities can continue getting rapid growth only at the expense of ever riskier increases in debt. Eventually, they will choose to curtail investment sharply, or the excessive debt will force them to do so. When that day arrives, they can expect many years of growth well below even the most pessimistic current forecasts.
But not yet. High investment-driven growth is likely to continue for at least another two years.
8. Ambrose is back - Evans Pritchard from The Telegraph is back from a very long holiday. He's right back into good form.
The EU authorities are attempting to muzzle free opinion, first by threatening Fitch, Moody’s, and S&P with vague retribution, and then by drafting restrictive laws to prevent them from publishing unwelcome messages.
It is financial repression, pure and simple. The same will be done to the press in due course. Then to you, dear reader.
“We must break the oligopoly of the rating agencies,” says German finance minister, Wolfgang Schäuble. By “we”, of course, he means the EU apparatus of coercion.
9. Debt ceiling chicken - The nervousness is growing in America about the debt ceiling debate. Nicholas Kristof writes at the New York Times about the "carried interest" tax break that allows billionaire hedge fund managers to pay a lower tax rate than their personal trainers.
Tycoons have bet for years that the public is too stupid or distracted to note that in many cases they’re paying just a 15 percent tax rate.
What’s at stake is the “carried interest” loophole, and President Obama is pushing to close it. The White House estimates that this would raise $20 billion over a decade. But Congressional Republicans walked out of budget talks rather than discuss raising revenues from measures such as this one.
The biggest threat to the United States this summer probably doesn’t come from Iran or Libya but from the home-grown risk that the nation will default on its debts.
here’s how it works. These fund managers are compensated mostly with a performance bonus of 20 percent or more of the profits they make. Under this carried interest loophole, that 20 percent is eligible to be taxed at the long-term capital gains rate (if the fund’s underlying assets are held long enough) of just 15 percent rather than the regular personal income rate of 35 percent.
This tax loophole is also intellectually vacuous. The performance fee is a return on the manager’s labor, not his or her capital, so there’s no reason to give it preferential capital gains treatment.
10. Totally Clarke and Dawe - John Clarke talks about Carbon Tax - The Musical. This weekend will be the opening night after all sorts of dress rehearsals.
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