Here's my Top 10 links from around the Internet at midday 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 video at number 10 sums up a lot today.
1. Maybe Marx was right - Historian Mary Gabriel writes well at Bloomberg (!) about Karl Marx's early years and how his analysis developed.
This renewed interest in Marx's theories is startling.
Here we have Bloomberg, the water carrier for the most ruthless of investment bankers, being genuinely interested in how Marx came up with his ideas.
On a day when many are beginning to question the way capitalism has developed over the last 50 years, this analysis is interesting.
Particularly as the richest group of Americans, Europeans and Chinese pile their cash into the safest assets rather than invest or spend it.
Marx seemed to capture something about the flaws of the most unfettered capitalism, with hoarding and the problems of inequality at the centre of it all.
Economic fashions are a fickle thing.
Marx worked his way through wage, rent, credit, profit, private property vs. communism, and the relations of capital to labor. What he discovered was that acquisition of the glittering prize of the new economic system, money (and by extension the things that such capital could buy), had become the driving force in modern man’s existence, perverting every aspect of his relations with other people, even how he viewed himself. It magically enabled the rich man to become whatever he chose.
‘Stupidity, Cretinism’
Meanwhile the labor that produced the rich man’s wealth robbed the worker of his lifeblood: “It produces palaces -- but for the worker, hovels. It produces beauty -- but for the worker, deformity. It replaces labor by machines, but it throws one section of the workers back to a barbarous type of labor, and it turns the other section into a machine. It produces intelligence -- but for the worker, stupidity, cretinism.”
Marx sought to explain how this corrosive relationship had developed. He began placing man in a system in which the grand bourgeoisie, which controlled all the money as well as the means of production, dehumanized the worker by reducing him to selling his labor for a wage determined by his employer. The worker in the new industrial relationship became alienated from his work, laboring for a class of men who reaped all the benefits and gave him in return only the means to survive.
2. Brace for it - PIMCO, the world's biggest bond fund manager, is worried about the world being on the eve of another financial crisis.
Here's PIMCO CEO Mohamed El Irian via Bloomberg:
“There has been a significant increase in the financial requirements of international intervention,” El-Erian said.
“You need a lot more firepower in order to be a circuit breaker. Look at how much the ECB has put in and ask yourself the question: has it created a circuit breaker? The answer is no, even though the amounts involved have been massive.”
3. Greek strike - BBC reports Athens is gridlocked because of a strike by taxi, bus and train drivers. They're not happy about a fresh round of public service job cuts and wage cuts to win the next tranche of bailout money. Even old people are grumpy.
Retiree Efthymios Gardikiotis told Associated Press: "I'm 73 years old and I will start a war. The same way [the government] wants a war."
Fellow Athenian Ioassif Roussanidis said: "I believe these [new] measures they are taking are probably the worst yet. Other countries have also gone through these crises but they handled them differently."
4. Australian job losses - The Australian reports Australian banks are on the verge of thousands of job cuts as lending growth grinds to a halt.
Major Australian banks may be forced to slash thousands of jobs, freeze wages and cut salaries for workers to offset a dramatic slowdown in business and consumer credit demand.
According to a report by investment bank UBS, the banks' workforces have grown to the highest point in more than 15 years as a result of the strong economic and financial market conditions that existed before the global downturn.
The report says the average salaries of most Australian banking workers are higher than elsewhere in the world, meaning the big four banks have some of the highest costs among their global peers.
5. European firewall - Bloomberg reports European officials are considering leveraging the money in their EFSF bailout fund to erect a 'firewall' around the PIGS to prevent contagion spreading to Italy and Spain...
Bit late now...
And more leverage? Isn't this what got us all into this mess? And following a Geithner idea? The TALF worked wonderfully. Not.
Anyway, here's the financial firefighters talking. Their earth might be about to be scorched.
“To stabilize the euro zone, we need the right firewall to prevent contagion,” French Finance Minister Francois Baroin told reporters today in Washington before meeting his Group of 20 counterparts. The firewall is the European Financial Stability Facility, and “we can discuss how to give it the necessary strength, about using the power of leverage to give it systemic force,” he said.
“It is very important that we look at the possibility of leveraging the EFSF resources and funding to have a stronger impact and make it more effective,” European Union Monetary Affairs Commissioner Olli Rehn said in Washington today. He said the enhanced facility will be “up and running” in the second half of October.
The use of leverage is similar to the Federal Reserve’s Term Asset-Backed-Securities Loan Facility, or TALF, set up in 2008 after the failure of Lehman Brothers Holdings Inc. Under that program, the New York Fed offered loans to firms that held eligible collateral. Under the terms of the program, if borrowers didn’t repay the loan, the Fed would sell the collateral to a special-purpose entity, and the Treasury Department would be first in line to absorb any resulting losses.
6. A lost generation - AP reports on how the US recession is affecting the young most. This is the real story of this recession. How will they feel in a decade or so about paying for the health care costs and pensions of the baby boomers once they do get (often low paid and uninsured) jobs?
In record numbers, they're struggling to find work, shunning long-distance moves to live with mom and dad, delaying marriage and raising kids out of wedlock, if they're becoming parents at all. The unemployment rate for them is the highest since World War II, and they risk living in poverty more than others - nearly 1 in 5.
New 2010 census data released Thursday show the wrenching impact of a recession that officially ended in mid-2009. There are missed opportunities and dim prospects for a generation of mostly 20-somethings and 30-somethings coming of age in a prolonged period of joblessness.
"We have a monster jobs problem, and young people are the biggest losers," said Andrew Sum, an economist and director of the Center for Labor Market Studies at Northeastern University. He noted that for recent college graduates getting by on waitressing, bartending and odd jobs, they will have to compete with new graduates for entry-level career positions when the job market does improve.
"Their really high levels of underemployment and unemployment will haunt young people for at least another decade," Sum said.
7. 'Bail out the banks again' - The Guardian reports IMF boss Christine Lagarde is not pulling any punches on the need for European banks to be recapitalised, which may mean nationalisation for a few.
Addressing journalists in Washington at the opening of the IMF's annual meeting, Lagarde said that Europe must tackle "this twin problem of sovereign debt and the need to strengthen capital buffers". She said: "It is critical that to fuel growth, banks be in a position to finance the economy, to finance enterprises, to finance households, to finance local governments. To do that they need to have the balance sheet that will actually support credit to the economy."
Despite the recent stress tests carried out by the European Banking Authority, which suggested that most of the banks were well-placed to cope with the sovereign debt crisis, the IMF estimates that banks have taken a €300bn (£260bn) hit in the past year as a result of the growing risk of default by Greece and other vulnerable eurozone countries.
Lagarde's call came as Baudouin Prot, BNP's chief executive, emphatically denied reports that it was in talks with Middle Eastern investors about securing a capital injection. "I formally deny this," he said. "We have no particular contact because we don't need a capital increase."
But French bank shares – which have lost 50% of their value in three months – continued to fall as markets endured one of their worst trading days since 2009. BNP was off more than 5% and close rival Société Générale fell almost 10%.
8. The new normal - Leith van Onselen does a great job at Macrobusiness of showing how Australian households are saving more and what it might mean for the housing market.
Some great charts. Well worth a click through.
He points to a speech yesterday by RBA Deputy Governor Phil Lowe.
And van Onselen points to the dis-saving that coincided with the housing boom. What happens if the savings rate returns to 'normal'? Do house prices fall?
As shown by the below chart from Bill Mitchell, the running-down of the savings ratio over the past decade or so was really an aberration and this ratio appears to merely be returning to its long-run trend level. As you can see, if we get historical reversion, savings could go much higher again
9. The Fed's failure - Morgan Stanley economist Stephen Roach points out money printing didn't work in Japan and it won't work in America. A good discussion about the Fed's failure.
10. Totally The End of the World as we know it from one of my favourite banks bands (REM), that announced they were breaking up yesterday.
11. Totally a bonus Clarke and Dawe video because I always put it in on a Friday. There's a lot of buzzing and talk about asuylum seekers, Nauru and Malaysia.
12. Utterly a totally bonus video especially for my wife who often tells me I'm not nearly as attractive as George Clooney.
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