Here's my Top 10 links from around the Internet at 10.30 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.
I'm loving the poster of Animal from the Muppets at number 8 and the Niall Ferguson video at Number 10.
1. Way too innovative - William Mace at Stuff reports on how KPMG's Strategic Financial Solutions group designed the 'Optional Convertible Notes' that it called 'Hybrid Into New Zealand' (HINZ) and that are now subject of IRD allegations of tax avoidance in a High Court case.
It seems its benefit was based on the tax deductions on interest-free loans from New Zealand companies...
Sigh...
What is it with financial innovations that reduce tax bills?
Why can't our innovators actually design new products and services that create value for customers and shareholders and the greater human race rather than just shuffle money from one group (often the rest of society) to a smaller group (in this case foreign shareholders)?
Here's what the court heard and it's not pretty:
The IRD argued there was no economic cost to the New Zealand subsidiary in making the loan to its Australian parent, and the claim should be seen as tax avoidance.
Dr Moorad Choudhry, head of business treasury at Royal Bank of Scotland's global banking and markets division and IRD's first expert witness, told the court the "option" part of the note was valueless.
Choudhry said that several types of OCN were common on world financial markets, but likened Alesco's particular brand of OCN to the instruments that caused sub-prime mortgage defaults in the United States because they had no market.
2. 'Don't hold your breath' - The BBC reports even the World Bank's President Robert Zoellick is reluctant to bet on the Chinese rescuing everyone with a 'bag of gold'
In an interview with the BBC, Mr Zoellick said the idea anyone will come along with a "bag of gold" is fanciful.
"I have been cautioning people not to look for the panacea," he said. "A co-operative international response to Europe's crisis is useful and it helps that the International Monetary Fund and World Bank can draw on capital from cash-rich countries.
"But the idea that you are going to have the Chinese come with a bag of gold and bail everybody out of this problem, I wouldn't hold my breath," Mr Zoellick said.
3. Is Global Trade about to fall? - This chart courtesy of Early Warning certainly suggests it is
4. Brace, brace, brace - Bloomberg reports Germany is bracing for a bunch of bad bank bailouts if the Greek, Italian and Portugese situations go nuclear, or at least feral.
Germany’s bad banks, backed by the state to prevent the collapse of Hypo Real Estate Holding AG and WestLB AG during the credit crisis, would be the hardest hit in the event of a Greek default, leaving taxpayers to shoulder the bill a second time.
Hypo’s FMS Wertmanagement, with 8.76 billion euros ($12 billion) in Greek sovereign investments and loans, and WestLB’s Erste Abwicklungsanstalt, with 1.21 billion euros, bear more than half of German banks’ Greek debt, according to data compiled from company reports and statements.
5. Kick Greece out to avoid Depression - Dr Doom Nouriel Roubini reckons in this Reuters Op-Ed that Greece needs to leave the euro and adopt the Drachma as part of a broad collection of interventions to save the world from another Great Depression.
He's not kidding. His piece is a nice (if discomforting even for me) summary:
The risks ahead are not just of a mild double-dip recession, but of a severe contraction that could turn into Great Depression II, especially if the eurozone crisis becomes disorderly and leads to a global financial meltdown. Wrong-headed policies during the first Great Depression led to trade and currency wars, disorderly debt defaults, deflation, rising income and wealth inequality, poverty, desperation, and social and political instability that eventually led to the rise of authoritarian regimes and World War II.
The best way to avoid the risk of repeating such a sequence is bold and aggressive global policy action now.
6. What is wrong with the world? - A former hedge fund manager and professional footballer in New York has opened a Doggie Day Spa called Spot to cater to the doggie lifestyles of the rich and famous (and time poor).
It costs US$600 a month to have your dog there...
This is trickle down economics at work.
The details are here courtesy of BusinessInsider:
Already the place is attracting celebrities: Spot has catered to the pooches of Mariah Carey, Glenn Close, James Gandolfini, Gerard Butler, Will Arnett and Amy Poehler, Kristin Chenoweth, Donna Karan, Howard Stern and Beth Ostrosky, Kelly Ripa and Mark Consuelos, Bernadette Peters, Lorne Michaels, and former New York Giants players Jim Finn and Todd Pollack.
There's a pool and an outdoor dog park with special turf that is good for the dogs' joints, and an antibacterial mesh lining to prevent diseases from spreading.
If your schedule doesn't permit dropping your dog off at Spot, don't worry: a van will pick and drop off your pooch. Grooming services are also available.
7. Why won't the Americans riot - I've often wondered this. The BBC looks at the prospects after New York Mayor Michael Bloomberg warned of such riots if jobs couldn't be found for America's young.
Here's the BBC with a useful backgrounder:
In interviews with the BBC, analysts, writers and historians feared the US was ripe for some sort of social upheaval, but said a lack of social organisation and a sense of despair had prevented social movements from coalescing.
Peter Dreier, professor of politics and director of the urban and environmental policy programme at Occidental College in Los Angeles, said Americans do not have the "psychology of rioting", and said Americans who bear the brunt of the economic downturn are "demoralised" and discouraged from taking collective action.
"People are angry, and right now they're taking their anger out on themselves - the quiet riots of suicide and depression," he said.
"It took about three years into the Depression before people overcame this sense of blaming themselves about their plight, before they got angry at the banks and the business community and local mayors, before they externalised their anger and made it a political issue rather than a personal one."
9. Why is Italy such a problem - Ed Harrison at Credit Writedowns points out that Italy owes German banks 116 billion euros...
Handelsblatt figures show that there are only four countries where German banks have greater commitments:France (€145.6 billion), Spain (125.2 billion), Luxembourg (120.9 billion), and the Netherlands (117.7 billion). By comparison, German banks only have loans and credit of about €17 billion to Greece.
Die Welt, another German newspaper, reported yesterday that Italy has become the main concern for the euro zone as its debt sells off. Contagion has clearly reached the core. The ECB suggests doubling the EFSF and IMF facilities to deal with this. However, I should add that Felix Zulauf warned in May in Handelsblatt that he had turned bearish and expected Italy to be the next crisis country in euro land. He also mentioned a slow motion run on Italian bank deposits as a worrying sign. Ed Hugh also wrote a good piece on Italy’s problems last week.
10. Totally a Niall Ferguson TEDtalk about the 6 killer apps of prosperity. It's brilliant because it has a chart going back to 1500. He sees a redivergence where the east and south catch up with the west.
Over the past few centuries, Western cultures have been very good at creating general prosperity for themselves. Historian Niall Ferguson asks: Why the West, and less so the rest? He suggests half a dozen big ideas from Western culture — call them the 6 killer apps — that promote wealth, stability and innovation. And in this new century, he says, these apps are all shareable.
(Updated with correct day of the week .... HT Chris_J)
41 Comments
You've got me confused isn't it Wednesday?
Caught in a time warp .....
Chris_J Yes you're right. I am officially a plonker on groundhog day. I've corrected now. cheers
Bernard
Hoping for China to bailout the world is like waiting for Godot...they will never come .
By end of this year or early next latest, China will implode with Local Goverment debts bigger than any the Europeans or US has seen and will need every cent in its reserve to bail out their banks .....currency control will be even tighter than now and most probably foreign currency transaction will be banned except with permission of the BOC.
The Baltic dry index technicals don't look flash for world trade either.
Things are heating up in the world of high finance...it's as if the end game will begin soon...only so long that the game of muscial chairs can last..
7. Why aren't American's rioting?
Even though unemployment is high - the military is still hiring and many (if not most) Americans have a loved one, or a friend, or the neighbour's child etc. who is presently serving and if not in the conflict zones now, there is a high liklihood they will be "under fire" soon. Many univeristy grads who cannot find work elsewhere - enter the military.
Therefore, much of the present middle class is highly miltaristic - which in the US translates to: fervently patriotic.
I noticed, for example, McDonald's premises brightly decorated with flags and slogan's supporting the men and women in military service.... it's like the place is permanently celebrating the fourth of July. I think the banners even used the word "celebrating" (our men and women in military service) in them.
This contrasts with the anti-establishment, and hence anti-war, violent protests of the 1960s - and of course much of the momentum/organisation for these protests came out of the privileged, educated classes within university campuses... as was also the case around the globe at the time (e.g. France, Mexico). And in the US at the time, they had the draft as well as civil rights to add to the angst.
Inequality and injustice over wealth concentration has never been an idealised "movement" in the US - and it's unlikely that it's genesis will come from a university base, as while studying students hold on to a hope that their education will get them somewhere.
And for the time being, if/when it doesn't - there's always the military - and (perhaps unfortunately) Mum and Dad would be proud if their progeny decided to "serve".
Hmmm... maybe.
I wonder if its partly suburbanisation. So many people live out in the burbs, and aren't in close enough physical proximity to carry out protests together.
I may well be wrong. I would be interested in the opinion of a couple of sociologists.
Cheers
Hey Bernard , over on the " Hopes for a helping hand " thread , Walter Kunz has a perfect 10 out of 10 score ..
... that has gotta be a record , the first 10 responses , all of them his ...
Give that man the " Yodeller of the Year " award !
Roger – I’m not able to take the award anyway – I’m over in Switzerland on a door to door military style hunting trip in the city of Zuerich with some friends. We get some “Capitalistic Fat Banker Swines” probably some on the golf- course, when the a..h…s bend over, picking the balls up.
Good idea. Hang in there. We have our now regular Interesties awards due out just before Christmas.
cheers
Bernard
Ohhh Bernard – I’m not sure if we are back by then – the Swiss hunting job is massive – they are a real pest over there - guzzling up most everything.
..and when we do a good job, we may have to go to other countries. It can take years.
FYI now the Slovenian government has fallen, which might delay the next Greek bailout.
Slovenia’s government lost a confidence vote, plunging the first former communist euro-region member into turmoil that may delay the approval of the European Union’s rescue fund amid a sovereign-debt crisis.
Lawmakers in Ljubljana voted 51-36 today to topple Prime Minister Borut Pahor’s administration, according to parliament’s press service. General elections are likely to be held as early as December, which may force a postponement of a vote to back the legislation enhancing the EU rescue fund, known as the European Financial Stability Facility.
Would that be considered a black swan event?
Gee it's hard not to like the freshness of thinking Mr Ferguson brings to history.
New Zealand is making a good job throughout the provinces of hosting the RWC. Just learnt the game this weekend in Rotorua is sold out, have never seen that ground sold out before.Awesome!
Me I saw the mighty Bay of Plenty beat the Wallabies by about 40-16 at Rotorua International Stadium in 1982-ish, and it was pretty packed that day too. But yes by all accounts the provinces have been doing a superb job. I'm not sure of the long-term economics of it, but I really like the look of the Duneding Stadium. Yet again the small towns show up Auckland
"The politico-financial « perfect storm » of November 2011
So, in November 2011 the United States will brace itself for a politico-financial "perfect storm" that will make the summer problems look like a slight sea breeze. The six elements of the future crisis have already come together (32):
. the "super committee" (33) responsible for deciding budget cuts on which there was no agreement this summer will prove incapable of resolving the tensions between the two parties (34)
. the automatic budget cuts required to be made in the absence of agreement will result in a major political crisis in Washington and increasing tensions, especially with the military and the recipients of social benefits. At the same time, this "automatic function" (a real abdication of decision-making authority by Congress and the United States Presidency) will generate major disturbances in the functioning of the state system.
. the other major rating agencies will join S&P in downgrading the US credit rating and diversification out of US Treasury Bonds will accelerate, in the knowledge that the United States now depends primarily on short-term financing (35).
. the inability of the Fed to do anything but talk and manipulate stock markets or gasoline prices in the United States (36), now makes any last-minute "rescue" impossible.
. over the next three months the US public deficit will increase dramatically as tax revenues are now already in the process of collapsing under the impact of the relapse into recession (37). In other words the increased debt ceiling voted in a few weeks ago will be reached well before the November 2012 elections (38)... and this is information that will spread like wildfire in the fourth quarter of 2011 ... reinforcing all investors’ fears to see the United States follow Euroland’s example over Greece and force its creditors to take heavy losses.
. Barack Obama’s new plan in the fight against unemployment will have no significant effect. On the one hand, it’s not up to the challenge and, for this reason, can’t rally the country’s energies; and on the other, it will be cut to pieces by the Republicans who will only keep the tax cuts... The only result of which will be to increase the country's debt even more (39)."
Stripping off the layers to see what's really there!..... http://www.marketoracle.co.uk/Article30480.html
serious stuff this..the euro mob and I do mean mob, are heading for a market showdown where little peasant is protected and wealthy fat banker and bank owner is left to rot...a battle of the Atlantic over direction...to print or not to print, that is the question...
Where oh where in this war can we find NZ..will Bollard give Bernake the big finger or kiss the ring and print...!
I wonder whether the move to ensure failed banks in NZ continue to operate as though nothing had happened, marks the turning point...has Alan Bollard already decided Bernanke is a foolish printer..is Alan Bollard making plans to follow the ECB and European pattern out of the crisis...to say "bugger the banks" it's the system that matters and the savings of the peasants?
Or am I reading MO all wrong!
http://www.marketoracle.co.uk/Article30530.html
There are those who still believe in a Keynesian printup...or should I say borrowup...will they bother to read this...I doubt it.
Don Brash and the other idiots at the Reserve Bank privatised the printing of money in New Zealand- left it all to The banks who printed up and created the massive inflation that New Zealand has experienced in the past decade- Houses didn't really just double in value in New Zealand , our money halved in value ( or a combination). So in the end do we let the banks control our money supply or the politicians, who knows?
PB were you being nice when you said Don Brash & other idiots? DB is far from an idiot, we must not fall into the trap of removing discussion on serious topics by saying thigs such as this. Eventually people will understand that it has not all been by accident!
Maybe the banks control the politicians dude...
Don Brash and the other idiots at the Reserve Bank privatised the printing of money in New Zealand- left it all to The banks who printed up and created the massive inflation that New Zealand has experienced in the past decade- Houses didn't really just double in value in New Zealand , our money halved in value ( really a combination of both ). So in the end do we let the banks control our money supply or the politicians, who knows?
Wolly - yep, it's coming to a head. The sooner the music is faced, the better.
Time to get real.
We been round this pole so many times bleep...the hard bit is find a way to get up the bloody thing and escape the wave of shite.
BBs are so greedy...they have it all...and never think of others...yeah sure... http://www.bbc.co.uk/news/world-europe-14995588
Made me smile Wolly. An old-timer I knew (he would be genJones) used to regale us with anecdotes of his youth and how in his day, if you wanted a regular supply of nookie you had to leave home and get married. Not so today. You would have to wonder about that 41 yo, and you wonder even more about the parents.
I knows what I would put in his Porridge.....!
Thanks for #10, well worth a watch. For those who haven't the time, the 6 "killer apps" are: 1. Competition, 2. The Scientific Revolution, 3. Property rights, 4. Modern medicine, 5. The consumer society, 6. The work ethic.
We;; that's silly. None of them happened without the expenditure of energy in great quantity, and that process kicked the Industrial Revolution off. Maybe he includes energy in (2), but I can't do broadband on my landline. No mention of limits to the amount of consumption possible?
It's not silly. You can download it as an MP4 off that link. Even if it takes a long time it's very worth it.
He has a book that's called Civilisation that expands on his theories.
Yes it is worth a watch PDK, and some of it is valid. He certainly doesn't get peak resources though, well not in the context of his presentation. You could probably take his principles back further though.
What he completely missed though is that concious vs unselfconcious culture. The East will never catch up with the West and he does actually question the reason, but without identifying the answer.
concious vs unselfconcious culture
What's that? And which is East vs West in that regard?
You will see me post on that from time to time. The line is around 30° East, or around Istanbul.
I think the terms are fairly self explanatory, and are to do with the way the brain develops in childhood. Eastern cultures are completely different to the West in a number of areas. You will even find Maslows Hierarchy of needs is different for East and West. You will find belonging, or their place within a group, is paramount. It is why they fight the way they do.
I learnt the principle in the context of design, which unselfconcious culturs can not really do. However they will copy and refine very well. It is why Japanese cars are so reliable:)
In short the East don't think in the same sense you do, they are not really self aware.
I am not implying good or bad here, just difference. I have to do it from a concious position though:)
You can take the roots back to what societies worshipped, plants, animals or the stars. The plant based cultures observed that when you cut off a plant, it continues to grow. They then applied the same reasoning to humans, and thus human sacrifice evolved.
Hmm ... where does, for example, Egyptian culture fit into this theory - East or West? Some pretty amazing designers came from there. :-)
I strongly suggest that any differences are cultural not genetic. There was a time when the Muslim world was the source of all scientific knowledge, before that China was technologically far advanced of everyone else.
PDK pointed out that availability of resources is pretty important, so you would think that would give "new" America an advantage. There was a chart there that compared North and South America where he argued that the difference was that about 80% of people owned land in North America but only about 15% did in South America and that limited growth.
Absolutely it is cultural. You can take a child born in one and raise in the other. I noted the comment on South America, and that the expert didn't even know. Lol. Probably a mix I would say, with conciousness only present where it has been colonised by the West.
My question is can a society move from conciouness into unselfconcious. It seems as though it may have happened in the past and I suspect Kate that Egypt is an example of that. The muslim religion in particular seems to demand unselfconciousness.
I think technically advanced can be misleading, as the copy and refine prinicple can be at work. I mean intelligence doesn't seem to be a monopoly either way.
We actually have a very good example of both here in New Zealand. Of course the reality is we will never have true multi culturalism as they are polar opposites. Perhaps at best we can have a complimentary relationship.
PDK go here sign up and you can interact directly......you can also get much more info ..if it so interests you...or not as thecase maybe.http://www.intelligencesquared.com/micro-site/ferguson
I caught the series in the UK before I headed back to NZ. Well worth the effort to watch. Probably not something I'd ever see on the tele here.
It all makes perfect sense if we are looking at the world (in this case a person or an animal) from the collective point of view of a cancer tumor. Cancer cells commandeer the the blood supply (energy supply) of the organism that they are happily "living in". The cancer cells are not living in harmony with the other tissue of the body, but increasingly, and enthusiatiscally, are growing as fast as they possibly can- taking up more and more of the space in "their home", and using more and more of the rescources. At some point (if not restrained), the cancer cells metasticize, spreading to every far corner of "their home".
It amazes me the despair in our leaders voices when they announce that "growth" is "only" 1%. Our future and the future of our childrens children lies with the health of the body (world) as a whole- not the stupid self destructive view of the cancer- which wants unconscious, unregulated growth.
When my actual mother got cancer, I prayed that it would not grow. I prayed that she would stay the same. She died miseraby.
It's a sad, but valid, analogy.
Sorry to hear about your Mum.
Nial's not the only one who has been reflecting on western "success".
"The Birth of Plenty" by William J. Bernstein identified 4 main drivers:
1) property rights,
2) scientific rationalism,
3) capital markets, and
4) improvements in transport and communication.
a pre-publishing summary can be found at
http://www.efficientfrontier.com/ef/104/bop.htm
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