Here's my Top 10 links from around the Internet at 6 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.
Nassim Taleb at number 4 on the problems of incentives for America's Too Big To Fail banks is brilliant. And Jon Stewart is good at number 10.
1. What the Beijing bubble looks like - Self-styled standup economist Yoram Bauman has produced this curious little video for America's PBS which looks at apartment prices and who owns them in Beijing.
He finds an office worker at a real estate agency who owns a US$400,000 dollar apartment that rents for US$600 a month, but would sell for US$150,000 in America.
I would guess a similar sized and quality apartment would sell for about US$300,000 in Auckland and rent for around NZ$1,600 (US$1,200) a month.
The video also has great shots of huge swathes of empty apartment buildings in Beijing.
There's a problem brewing here.
Well worth a watch.
2. American inflation higher than expected - One of the reasons the Fed is reluctant to do a third round of money printing is inflation is creeping up.
Producer price inflation overnight was higher than expected, Bloomberg reported.
Here's a great chart showing American prices since 2000. No wonder the Republicans are banging on about Bernanke's money printing.
3. US military knows the score - America's military is actively planning for peak oil and its F 16s will be able to run on biofuels by 2013, Bloomberg reports.
“Reliance on fossil fuels is simply too much of a vulnerability for a military organization to have,” U.S. Navy Secretary Raymond Mabus said in an interview. “We’ve been certifying aircraft on biofuels. We’re doing solar and wind, geothermal, hydrothermal, wave, things like that on our bases.”
The armed forces say they’ve been successful testing fuels produced from sources as diverse as animal fat, frying oils and camelina, an oil-bearing plant that’s relatively drought- and freeze-resistant.
4. 'I fear class warfare' - Nassim Taleb, the author of the crisis-predicting book The Black Swan, reckons in this Bloomberg interview (that I won't embed because it auto-starts) that Occupy Wall Street will slide into some form of class warfare.
He does not like the uber-banks.
"Last year they were paid record bonuses. This is not rational."
It's compelling viewing. He talks about Hammurabi's Code as a way to change the incentives for bankers.
5. The problem in Europe's core - Ed Harrison points out at Naked Capitalism that bond yields in Belgium, France and Austria, have surged.
Belgium is clearly suffering some serious credit revulsion. France and Austria are being carried in tow. That’s where we stand now. The word is that the EFSF will get levered up and banks will be recapped. This may provide some relief but ultimately the euro crisis is more fundamental. Martin Wolf is right when he writes:
The fundamental challenge is not financing, but adjustment. Eurozone policymakers have long insisted that the balance of payments cannot matter inside a currency union. Indeed, it is a quasi-religious belief that only fiscal deficits matter: all other balances within the economy will equilibrate automatically. This is nonsense. By far the best predictor of subsequent difficulties were the pre-crisis external deficits, not the fiscal deficits
Deciding between breakup and deep fiscal integration is the only long-term crisis remedy
6. Is this how private equity works - PrivateEquity hub blogger Luisa Beltran talks to an executive from a chemicals firm who told her why he won't deal with private equity funds again.
He explains how they were interested in funding a private equity buyout, but then saw an opportunity to rip off the partners who owned the business by turning them against each other. The partners stood tough and told the private equity guys to go away...
“They’re a–holes.”
“I could never get the shareholders to turn over to private equity because of the experience we had,” says the exec, who is now 63. “I could never do it. We unfortunately saw the worst behavior. They didn’t even respect the agreement they signed. Making a buck was much more important than being honorable business people.”
7. Spain downgraded - The clock is ticking on Europe's timebomb. They had better their act together pronto.
Moody's downgraded Spain's sovereign credit rating by two notches this afternoon, Bloomberg reported.
A double-notch downgrade to Spain's credit ratings has piled more pressure on European leaders to make rapid progress on solving the region's debt crisis or face unbearable borrowing costs.
The fresh blow from Moody's Investors Service came just a day after the agency warned France its triple-A rating could be at risk and overshadowed a report that Germany and France were nearer a deal on leveraging the euro zone's rescue fund.
8. Melbourne's expensive housing - Leith van Onselen at Macrobusiness does a nice job of showing how over-valued Melbourne housing has become and why prices there are now falling.
I'll be sending this to my brother who bought a house for an obscene price in Melbourne's suburbs last year.
With home prices already elevated and illustrating an elevated valuation gap, the lowest rental yields in the nation, and an ongoing boom in supply likely to make the existing glut of unsold homes worse, Melbourne’s housing market arguably offers the worst investment fundamentals out of Australia’s capital cities.
9. Totally irrelevant pictures of the World's most expensive (and ugliest) camper van - Only because I have a thing for camper vans... HT My wife and thanks to The Daily Mail.
It has a pop up roof terrace and has a double tube sport exhaust. And costs 1.3 million pounds.
And even better inside...
10. Totally irrelevant video - Jon Stewart does his thing on Occupy Wall St
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