Here's my Top 10 links from around the Internet at 12.30 pm 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.
Today's number 11 video is a cracker for all those who've sat through boring economics lectures.
1. A few more steps closer - The idea of a financial transaction tax has been bubbling away for a while. The so-called Robin Hood or Tobin Tax would impose a very small (say 0.25%) tax on every foreign exchange or financial transaction, including those on bonds and shares.
In the last week France and Germany have begun pushing very seriously for one, even if it is only in the Eurozone.
Until now everyone assumed such a tax would be a non-starter because all the major players have to be involved or the trade would simply migrate to an untaxed area.
But over the last week Denmark voted in a centre-left government that is keen on the idea. And the French and Germans are now saying they'll do one, even if it is only for the eurozone.
The key players are Britain, which has the largest financial transactions centre in the world, and the United States.
Both Britain and the United States are opposed.
But the tide of public opinion and fiscal reality is turning. Such a tax would help skim some of the revenues away from the banks and reduce activity that most now see as damaging. It would also generate revenues to help pay for all the bank bailouts in the past.
Here's Bloomberg on the latest talk of a euro area financial transactions tax:
“If it's impossible at the worldwide level, we need to organize that in the European Union and at least in the euro zone,” Belgian Finance Minister Didier Reynders said after meeting his EU counterparts today in Wroclaw, Poland. Such a tax would be set at a lower rate than one applied globally, he said.
“A tax on financial transactions should at least apply to the whole euro zone,” said Elena Salgado, Spain's finance minister.
The European Commission, the 27-nation EU's executive arm in Brussels, said in August it will present proposals for an EU financial-transactions tax, reversing an earlier position that such a measure would be unworkable without global support. It said it will unveil its plans in early October.
2. 'Our version of subprime' - Ambrose Evans Pritchard reports for The Telegraph from Dalian in China about the credit bubble blowing up inside China and the real problems with inflation there.
Cheng Siwei, head of Beijing's International Finance Forum and a former deputy speaker of the People's Congress, said interest rate rises and credit curbs to cool overheating were inflicting real pain on thousands of companies used by local party bosses to fund the construction boom.
"The tightening policy is creating a lot of difficulties for local governments trying to repay debt, and is causing defaults," he told a meeting at the World Economic Forum in Dalian. "Our version of subprime in the US is lending to local authorities and the government is taking this very seriously."
Local governments have created more than 6,000 arms-length companies to circumvent restrictions on bond issuance, creating a huge patronage machine for party bosses that has largely escaped central control.
The audit office said the loans have reached $1.7 trillion (£1 trillion). While some of the money has been used to finance much-needed investments in water systems and roads, a large part has fuelled unbridled construction with a dubious rate of return. The local governments depend on land sales for 40pc of their revenue so the process has become incestuous and self-feeding. Such reliance on property sales revenues has greatly aggravated the post-bubble crisis in Ireland.
3. Grumpy Generation X - Bloomberg reports on research by the US Centre for Work Life Policy on how Generation X feel about the world and baby-boomers in particular. They're feeling debt-ridden and blocked by baby boomers who won't stop working.
Many began their careers as companies started cutting back on pensions and health care benefits, and while people in Generation X are more educated and more diverse than boomers, they have had “no welcome in the economy,” says Neil Howe, a demographer and co-author of six books on generations in the U.S., including 2010’s “Millennials in the Workplace.”
Even those who aren’t stalled at work can feel pressured by the lingering effects of the worst economic slump in seven decades on a generation that has had rotten timing.
“You look at our generation and we’re on the cusp of financial disaster, and it’s the first time that the American dream isn’t what we all thought it was,” says Bryce Pickering, who has worked atCitigroup Inc. (C) in New York for 10 years and, at 32, is among its youngest managing directors.
“A lot of my friends have been caught up in a bad cycle of graduating at the wrong time, starting in a field that blew up, deciding to go back to school and getting into debt to do that, buying a house that’s now worth half what they bought it for.”
4. America's drug problem - The LA Times reports there were more deaths from narcotic and prescription drug overdoses than car accidents in America in 2009.
Drugs exceeded motor vehicle accidents as a cause of death in 2009, killing at least 37,485 people nationwide, according to preliminary data from the U.S. Centers for Disease Control and Prevention.
While most major causes of preventable death are declining, drugs are an exception. The death toll has doubled in the last decade, now claiming a life every 14 minutes. By contrast, traffic accidents have been dropping for decades because of huge investments in auto safety.
Public health experts have used the comparison to draw attention to the nation's growing prescription drug problem, which they characterize as an epidemic. This is the first time that drugs have accounted for more fatalities than traffic accidents since the government started tracking drug-induced deaths in 1979. Fueling the surge in deaths are prescription pain and anxiety drugs that are potent, highly addictive and especially dangerous when combined with one another or with other drugs or alcohol. Among the most commonly abused are OxyContin, Vicodin, Xanax and Soma. One relative newcomer to the scene is Fentanyl, a painkiller that comes in the form of patches and lollipops and is 100 times more powerful than morphine.
5. Russian TV looks like fun - The Daily Mail reports on how a debate about the financial crisis between a couple of klepocrat billionaires on Russian television turned violent. If only our Double-shot interviews were this good.
Of course, the puncher was a former KGB agent. Seems to be a requirement to be really rich in Russia...
6. When the agents dump the vendors - Melbourne's Herald Sun reports on how some real estate agents are dumping unrealistic venders who won't cut their prices.
Is this happening here?
Barry Plant managing director James Hatzimoisis said there came a time in the sale process when agents had to make a commercial decision and drop vendors demanding substantially more than the market was willing to pay.
"There are always a percentage of vendors on the market who will only sell if they get their price," he said. "There comes a time when you have to make a commercial decision and tell them, 'I don't think I am going to be able to sell your house at that price, so it's best we go our separate ways'."
7. A 'Killer Wave' chart - I'm no chartist, but this one from Societe Generale's uber-bear Albert Edwards is interesting. It suggests a 40% fall in the S&P 500 is imminent.
9. The problem with Germany - Ryan Avent from The Economist writes about how the Germans seem determined to shoot themselves in foot and then the head by pushing Greece out of the eurozone.
I've already mused that maybe the euro crisis is primarily about negotiation over the distribution of the costs of saving the currency area, or that maybe it's about figuring out which euro zone membership club is consistent with the political will to keep itself together. There's still another possibility, however. Maybe core economies have convinced themselves that Greece's economy has fundamental weaknesses that are dooming rescue efforts and undermining confidence, such that if the euro zone ejects Greece all problems will be fixed. That would be a dangerous mistake to make; A Greek departure would have serious ramifications across the euro zone, and it would not solve the inherent weakness of the currency area. The situation would almost certainly deteriorate, unless a Greek departure were combined with a major initiative to shore up the rest of the euro zone itself, which obviously wouldn't be forthcoming in a Europe convinced that the big problem is Greece.
I've been a little uncomfortable with the idea that a Greek departure would represent a "Lehman moment", but that it might be, in the sense that euro powers could remain blind to their actual predicament until markets rattle them into awareness.
10. Future-proofing the nation - There's a new (to me at least) mockumentary in Australia on politics. A bit like Yes Minister with an Australian accent. The same guys that did Frontline. HT Eric Crampton.
"I like infrastructure, I just don't like specifics..."
"This is too grand a vision to be bogged down in details. Forget the details. Smell the paper..."
11. Totally hilarious video about the 10 principles of economics.
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