Here's my Top 10 links from around the Internet at 7 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.
All a bit frantic today with the Fed's Twist (check out the music videos below), dud GDP, Roost Home Loan Affordability and Fonterra result. Hopefully tomorrow 'tis a little quieter...
1. Peak oil rebuttal rebutted - IHS Cambridge Energy Research Chairman Daniel Yergin wrote a very grumpy piece in the Wall St Journal this week questioning the thinking and evidence behind the Peak Oil idea.
Here's Yergin:
This is actually the fifth time in modern history that we've seen widespread fear that the world was running out of oil. The first was in the 1880s, when production was concentrated in Pennsylvania and it was said that no oil would be found west of the Mississippi. Then oil was found in Texas and Oklahoma. Similar fears emerged after the two world wars. And in the 1970s, it was said that the world was going to fall off the "oil mountain." But since 1978, world oil output has increased by 30%.
Just in the years 2007 to 2009, for every barrel of oil produced in the world, 1.6 barrels of new reserves were added. And other developments—from more efficient cars and advances in batteries, to shale gas and wind power—have provided reasons for greater confidence in our energy resiliency. Yet the fear of peak oil maintains its powerful grip.
So James Hamilton at Econbrowser responded with pretty reasoned argument, I think.
Although it is true that global production did not fall between 2005 and 2010, it is also accurate to observe that it did not grow very much, rising only 2.2 million barrels/day (which represents 2.6% of 2005 levels) over these 5 years. Over these same 5 years, China increased its consumption by 2.5 mb/d. Thus, although the world did produce more, everybody in the world outside of China had to make do with less.
I submit that meeting the growing global demand for crude oil over the last five years has posed significant challenges for the world economy. And those who worry that the next 5-10 years might be like the last should not be dismissed as crackpots.
Hear hear. I'm with Hamilton on this one.
2. Chinese debt - US hedge fund manager Jim Chanos talks at Bloomberg about Chinese debt rising to "European type numbers" of 200% of GDP.
"The property market is hitting the wall right now."
He's short the Chinese banks and property developers. He's long the Macau casinos. "It's our long corruption, short property play."
3. China and America play chicken - As the stress grows, the trade wars will come, if they're not here already. BBC reports on US moves to take China to the WTO over chicken meat imports.
Other recent US filings to the WTO include complaints about steel product duties and wind power subsidies. "China must play by the rules," said US Trade Representative Ron Kirk.
He said import duties imposed by Beijing last September have ruined a market that had been worth $1bn (£636m) to the US, putting 300,000 agricultural jobs at risk.
"We will not stand still if we believe that China has violated its commitments as a WTO member and is therefore threatening American jobs," said Mr Kirk.
China was one of the top two markets for US chicken exports before the tariffs were imposed. The other was Russia.
4. No wonder the Australians are grumpy - The Age reports a quarter of Australian home owners are now suffering mortgage stress.
The number of homeowners facing mortgage stress has jumped to 25 per cent from 21 per cent in June, mortgage insurance provider Genworth Financial said in its September Homebuyer Confidence Index, based on surveys conducted from July 30 to August 5, and released today.
‘‘Current economic uncertainty and increases in living costs have seen stress rise to unprecedented levels in the six months to September 2011,’’ the report said. ‘‘No previous survey has seen mortgage stress levels hit 25 per cent, not even during the depths of the GFC (global financial crisis).’’
In its report, the I.M.F. said that some European banks would need fresh capital as insurance against losses stemming from the debt crisis, and some weaker banks might need to be “resolved” or shut down. Taxpayers may again be called on to bolster the banking system, the I.M.F. said.
“Any capital needs should be covered from private sources wherever possible, but in some cases public injections may be necessary and appropriate for viable banks,” the fund said.
One of the most damaging side effects of the crisis has been a reluctance by banks to lend to each other because of doubts about each other’s solvency. The E.C.B. took further steps to address that problem Wednesday, saying it would ease the terms on which it lends to banks at low interest. Most banks must continually refinance their long-term obligations, and some would collapse without access to short-term credit.
The central bank said it would expand its definition of the collateral that banks can provide to receive central bank loans at the benchmark interest rate, which is 1.5 percent. The E.C.B. dropped a requirement that securities placed as collateral should also be traded on an official exchange.
6. Now the Slovakians are revolting - Yesterday it was Slovenia that was balking at the idea of expanding its bailout for Greece. Now Der Spiegel reports Slovakia is reconsidering the Greek bailout too and provides this excellent chart below. Click on the chart for a legible version.
Slovakia is obligated to contribute some €7.7 billion ($10.9 billion) to the euro-rescue fund. It's a hefty sum for the formerly communist country with a mere 5.4 million inhabitants. At the moment it is highly unlikely that Radicova can rally a parliamentary majority to support the plan.
In Brussels the Slovaks are already notorious for their lack of solidarity. A year ago the prime minister and subsequently the parliament rejected calls to provide any financial help for Greece . Slovakia has put up with painful reforms "without being given a cent," the prime minister argued back then.
7. Debunking the Cul-de-Sac - The Atlantic does a nice job of documenting the growing disillusion with the modern American penchant for sprawling suburbs riddled with Cul-de-Sac. Your thoughts Hugh?
In particular, traffic engineers found Cul-de-Sacs were not as safe for motorists as traditional grid pattern cities.
In their California study, Garrick and Marshall eventually realized the safest cities had an element in common: They were all incorporated before 1930. Something about the way they were designed made them safer. The key wasn’t necessarily that large numbers of bikers produced safer cities, but that the design elements of cities that encouraged people to bike in places like Davis were the same ones that were yielding fewer traffic fatalities.
These cities were built the old way: along those monotonous grids. In general, they didn’t have fewer accidents overall, but they had far fewer deadly ones. Marshall and Garrick figured that cars (and cars with bikes) must be colliding at lower speeds on these types of street networks. At first glance such tightly interconnected communities might appear more dangerous, with cars traveling from all directions and constantly intersecting with each other. But what if such patterns actually force people to drive slower and pay more attention?
“A lot of people feel that they want to live in a cul-de-sac, they feel like it’s a safer place to be,” Marshall says. “The reality is yes, you’re safer – if you never leave your cul-de-sac. But if you actually move around town like a normal person, your town as a whole is much more dangerous.”
8. An alternative to Barack Obama - Washington Monthly says the left in America is beginning to wonder if Elizabeth Warren would be a better Democratic candidate in next year's elections than the current President, who seems captured by Wall St and a pushover for the mad Republicans in Congress. Here's a sense of what Warren would say.
She comes across as passionate and sensible. She is one of the few in America's political system who has fought Wall St consistently and coherently.
Here's a taste:
“I hear all this, you know, ‘Well, this is class warfare, this is whatever,’” she said. “No. There is nobody in this country who got rich on his own. Nobody.
“You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.
“Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”
9. Watch out for a China slowdown - Bloomberg reports The HSBC-Markit flash measure of China's Purchasing Managers Index, a key measure of factory output, showed the third month of contraction running.
The Hang Seng fell 4% this afternoon, the most it has fallen since 2008. Most of the experts still think China can manage a soft landing. Here's hoping. Copper prices are down 20% since February, by the way.
Today’s data adds to evidence the world’s second-biggest economy is slowing after the central bank raised borrowing costs and curbed lending to cool inflation. China has joined policy makers in other Asian economies including South Korea and Malaysia in pausing monetary tightening as a deepening debt crisis in Europe and the risk of renewed recession in the U.S. threaten to stall a global recovery.
10. Totally a video of Chubby Checker's version of the Twist. Great sax.
11. Totally The Beatles' version of Twist and shout. Great rasp in Lennon's voice.
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