Monday's Top 10 with NZ Mint: America's stalling economy; How Silvio ruined Italy; Serepisos' zombie receivers; Fonterra's share trading problem; Revolting middle classes; Dilbert

Here's my Top 10 links from around the Internet at 11 am 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. See all previous Top 10s here.

The Muppets are back at number 10.

1. Just plain woeful - The Economist digests the 'Zero' August Non Farm Payroll report and finds little to celebrate.

It suggests the Fed may now ease more after its September 20-21 meeting and that Obama's big speech due on Friday afternoon our time will be able to do little to change the outlook.

Essentially, America is back in recession and has little ammo left.

Money printing has been ineffective at boosting American growth because most of the money was quickly hoarded in bank accounts by the banks themselves.

The rest squirted out the sides into overseas markets and boosted inflation. Now inflation is a worry in America too, despite very low growth.

And Obama has very little political room to move on the budget deficit.

Rock: meet hard place.

Here's The Economist.

Mr Obama will probably ask for a year’s extension in his address to Congress next Thursday night, along with a variety of other measures such as incentives to hire and retrain the unemployed. But he’s unlikely to request, much less get, the sort of stimulus that materially changes the outlook.

That leaves the Federal Reserve. Today’s data at the margin raises the odds it will implement more easing measures as its meeting on September 20-21. But a lot of other information will emerge between now and then, which will help determine whether activity has picked up from the multiple setbacks of August. At present, the odds are still against action at that meeting, but in favour of it later on.

2, Italian problems returning - Italy failed to enact austerity measures late last week and the grumblings about Berlusconi are growing. The BBC reports the European Central Bank telling the Italians to get back on the wagon. 

The ECB has been buying Italy's bonds in the market to try to hold down yields and stop its borrowing costs spiralling out of control.

There has been some speculation that it may reduce its purchases to put pressure on Rome to act more quickly to pass a much disputed 45.5bn euro package of austerity measures now going through parliament.

However, any sign of the ECB cutting back its bond-buying programme would risk triggering a market sell-off that could tip the eurozone's third economy into a Greek-style emergency, Reuters news agency reports.

3. That dodgy Silvio - The Economist said in 2001 that Silvio Berlusconi was not fit to govern Italy. And so it has proved.

Here is a giant 'I told you so' from The Economist. Fair enough.

Only Zimbabwe and Haiti had lower GDP growth than Italy in the decade to 2010. In fact GDP per head in Italy actually fell. Lack of growth means that, despite Mr Tremonti, the public debt is still 120% of GDP, the rich world’s third-biggest. This is all the more worrying given the rapid ageing of Italy’s population.

Low average unemployment disguises some sharp variations. A quarter of young people—far more in parts of the depressed south—are jobless. The female-participation rate in the workforce is 46%, the lowest in western Europe. A mix of low productivity and high wages is eroding competitiveness: whereas productivity rose by a fifth in America and a tenth in Britain in the decade to 2010, in Italy it fell by 5%. Italy comes 80th in the World Bank’s “Doing Business” index, below Belarus and Mongolia, and 48th in the World Economic Forum’s competitiveness rankings, behind Indonesia and Barbados.

4. NZ's Zombie banks - One of Japan's problems was all the bad property loans that were never cleaned out. They just sat in the banks' books festering.

Is something similar happening here via bombed finance companies?

Phil Kitchen's piece in the DomPost explains why the receivers for finance companies controlling Terry Serepisos' may not dump his properties on the market all that quick. It also details Serepisos' refusal to accept bids for lower than he thinks things are worth.

Sounds very Zombie-like to me.

Questions should also be raised around the valuations for Serepisos' assets.

Here's Kitchen:

The sources spoken to all believed Mr Serepisos and his creditors would take a bath whether there was an orderly sale or not. However, most thought that the creditors would opt for an orderly sale rather than force him into bankruptcy and see a flood of mortgagee sales.

One reason for this was that lenders stood to make significant GST gains by an orderly sale compared to mortgagee sales, by which Inland Revenue, as preferential creditor, gets GST on every sale. Mr Scott said a controlled sale was best for the market as the 150 residential properties represented only about one month's average supply.

The sources said Mr Serepisos was caught in a vicious circle from which he was unlikely to escape. As property prices fell and more creditors demanded their money, his cashflow dried up as his developments failed to sell. Because he lacked the money to spend on maintenance or remedial work, more tenants left, as did staff who were paid late.

The sources said Mr Serepisos repeatedly made the mistake of being reluctant to accept offers from buyers in a depressed market, instead holding out for higher offers that have not materialised.

5.  Not such a done deal after all - Andrea Fox at Stuff reports on how some farmers are now having second thoughts about the Fonterra share trading plan known as TAF (Trading among Farmers), particularly after some tweaks at the Fonterra end and a delay in getting the plan through parliament because of the election.

Chairman Henry van der Heyden seems to be fighting some sort of rear guard action.

Out of what Sir Henry calls "the vacuum" created by the delay have emerged fresh concerns about the security of continued farmer control of the $16 billion revenue company, particularly among South Island farmers.

He is facing the possibility his second attempt to lead a major capital restructure of Fonterra may fail. While he attributed a looming election for a farmer director vacancy on the board, and the general election, for creating unrest, it is understood a proposed recent fundamental change to TAF by his board has fuelled it.

It is understood the board is proposing that the title to farmer-owned shares be given to TAF's proposed independent "custodian" body, rattling farmers who voted for TAF on the condition they retained 100 per cent control and ownership of the world's biggest dairy exporter.

Infighting within shareholder watchdog the Shareholders' Council is also understood to be undermining TAF, with last year's council blamed for agreeing to a TAF deal which allowed the board to make changes. Sir Henry said it was "rubbish" to suggest the board was moving away from 100 per cent farmer control.

6.  Controlling the growth - China has grown spectacularly in the last decade, but the focus of its leaders is now very much on slowing the growth and reducing inflation

Here's the New York Times on a change in the Chinese car industry's approach. The question for us is how will NZ and Australia fare when China's growth slows?

A succession of government officials at a conference this weekend called for China’s automakers to shift their focus away from making ever more cars and toward producing more fuel-efficient and more technologically advanced models, including gasoline-electric hybrids and all-electric cars.

“The government must take the leading role in controlling unrealistic growth” of the auto industry, Jiang Kejun, the influential director of the Energy Research Institute at the National Development and Reform Commission, China’s top economic planning agency, said Sunday during a speech at the conference.

Li Shize, the director of pollution control at the Ministry of Environmental Protection, echoed Mr. Jiang, saying that “for the auto industry to develop, we should not try to sell more, but to improve the units sold.”

Years of double-digit expansion have increased Chinese auto production to almost 17 million cars, minivans, pickup trucks and sport utility vehicles last year, from fewer than two million in 2000, making it almost twice the size of the United States or Japanese industries and far larger than any European country’s auto manufacturing sector.

7. Closer than some think - The move for a 0.25% 'Robin Hood Tax' on financial transactions is building up momentum in Europe.

Interestingly, European Commission President Manuel Barroso was in Australia over the weekend lobbying Prime Minister Julia Gillard for her support at the G20 meeting in November.

Owen Tudor at Touchstone writes about the move. Remember, German and France are in favour.

A new leftist government is expected to win elections in Denmark this coming weekend. It says will bring in a 0.25% Robin Hood tax.

A campaign for such a tax has just been launched in Australia.

If the Australians got one, should we bring one in too?

Here's Barrso:

Ahead of the Cannes summit, we will come forward with a proposal for a European financial transaction tax, and we are committed to explore this further also at G20 level. I will be discussing this and other key issues with our G20 partners, such as Australia, where I will travel next week.

8. The middle classes are rising up - Here's an excellent piece from The Economist on various middle class revolts brewing in both developed and developing economies. The protests in Israel over the weekend were massive.

Rebellion is in the air in China, too. In mid-August one of the largest demonstrations since the Tiananmen Square protests took place on the streets of Dalian, a north-eastern boomtown, which forced the authorities to shut down a chemical factory that had been damaged in a storm. Demonstrations and capitulations on this scale, though not unprecedented, are highly unusual.

This one was reminiscent of the outcry that took place in 2007, in the southern city of Xiamen, over plans for a similar project. That event is usually seen as the first big example of a new willingness by China’s middle class to confront the government over environmental abuses. Moreover, the Dalian protest erupted only weeks after an explosion of popular anger, mostly expressed through micro-blogging services such as Sina Weibo, which blamed official neglect for a rail crash between two new high-speed trains that killed 39 people. The criticism was so widespread that even state-supervised media joined in.

9. Not so free trade - Bloomberg reports a trade war is brewing between the EU and Canada.

The European Union may refuse to open its market to more Canadian beef, pork and sweet corn unless Canada provides better access to its heavily protected dairy sector, a senior European diplomat said.

The EU is “disappointed” Canada hasn’t offered any concessions for products shielded by its supply-management system, under which domestic farmers receive production quotas for dairy products such as milk and cheese, as well as poultry and eggs, said Maurizio Cellini, head of economic and commercial affairs at the EU delegation to Canada in Ottawa. Under the system, foreign products face steep tariff rates above an import quota.

10. Totally a Muppets video of Floyd singing 'While my Guitar gently weeps'