Friday's Top 10 with NZ Mint: Wang Lijun's 'vacation style treatment'; Globalisation's profound failure; Ageing Asia means bonds beat stocks; Clarke and Dawe

Here's my Top 10 links from around the Internet at 11am in association with NZ Mint.

I welcome your additions in the comments below or via email

I'll pop the extras into the comment stream. See all previous Top 10s here.

My favourites today are at #2 and #3 on the 'vacation style treatment' in China.

1. The ground is shifting - Academics in America are now questioning more widely the consensus that free trade is always a good thing in the long run.

Chrystia Freeland points at Reuters to an excellent new paper called the China Syndrome from David H. Autor, David Dorn, Gordon H. Hanson that shows free trade with China causes job losses and increases budget deficit spending.

The assumption is that in the long run everyone is better off with free trade as 'stuff' becomes more affordable and workers find new skills and better jobs in the inexorable process of 'creative destruction'.

But what if it doesn't, particularly when the trade and exchange rate systems are manipulated to benefit some countries more than others.

What if it just means wages are just pushed down globally, profits for multi-nationals (along with the pay for execs and dividends for shareholders) are increased and the only way to find a job is to migrate to China?

The truth is we are no longer living in “one nation under God”; we are living in one world under God. Globalization is working — the world overall is getting richer. But a lot of the costs of that transition are being borne by specific groups of workers in the developed West.

We are accustomed to thinking of the left as having an internationalist perspective. Liberals are the sort of people who worry about poverty in Africa or the education of girls in India. The irony today is that the real internationalists are no longer the bleeding-heart liberals, they are the cutthroat titans of capital.

This video with Joseph Stiglitz is worth watching:

2. The strange case of Bo Xilai's police chief  and his 'Vacation style treatment' - We should all become Chinese political analysts now.

China is so much more important to New Zealand's future than America's, yet we are regularly seeing all the burps and farts of the Republican presidential candidate race and virtually none of the intrigues around the handover of power to a new generation of leaders in China later this year.

This story out of China in the last couple of days about one of the most high profile 'princelings' (child of a Mao-era leader) is a cracker.

Bo Xilai is seen as a populist contender for the Chinese leadership. He led a crime crackdown in the huge south western city of Chongqing. Now his right hand man, Deputy Mayor and police boss Wang Lijun, has been demoted and put on 'vacation style treatment' due to 'stress and overwork.' There was even some talk Wang may even have approached the US Embassy in nearbuy Chengdu in an attempt to defect. That would have been politically explosive, although it's not clear he actually did or the Americans entertained the idea.

Where can I get some of this 'vacation style treatment'? Sounds like fun... ;)

The end result is that Bo Xilai seems to have fallen out with the powers-that-be and suggests the leadership transition later this year may not be as smooth as some people think.

I guarantee you this story will not be on the front page of the New Zealand Herald (it made it near the back of the World pages)...yet I bet it's what most of Auckland's Chinese population are talking about and anyone with an eye on China's political transition.

Here's the BusinessWeek version:

Wang, 52, headed Chongqing’s police force from 2009 until last week, overseeing a crackdown on gangs that raised the profile of his patron Bo Xilai, Chongqing’s Communist Party secretary. Wang’s loss of his police portfolio and subsequent leave indicate that China’s leaders have spurned Bo and his development model, which focused on increased state-led social spending, political analyst Li Cheng said in an e-mail.

“The Chongqing model is over,” Li, a senior fellow at the Washington-based Brookings Institution, said in reference to Bo’s strategy, which also included a resurgence of songs and sayings lionizing socialism and Chairman Mao Zedong. “It means a landscape change in Chinese elite politics.”

On Feb. 2, the Chongqing government said Wang had been relieved of his police duties and put in charge of areas including sanitation, athletics and education. Yesterday, after Wang met with U.S. officials, the Chongqing government said in a statement that he was suffering from “immense mental stress and serious physical discomfort,” and had been put on “vacation- style treatment.”

Chinese state media have so far kept quiet about Wang’s meeting at the U.S. consulate. Posts about Wang and discussions of Bo’s political future were widely available on Sina Corp.’s Weibo microblogging service.

3. And who says the Chinese can't do political satire inside China - Here's the WSJ's excellent Chinarealtime blog detailing the fun people are having with the phrase 'vacation style treatment' in blogs and forums in China.

Among the most notable figures to seize on the phrase was Li Zhuang, a lawyersentenced to 18 months in prison in 2010 after defending a Chongqing mob boss nabbed in an organized crime crackdown orchestrated by Mr. Wang. “I’m offering free legal advice for ‘sick people’ seeking vacation-style treatments,” he wrote on his verified Weibo account.

Among those rolling with the vacation theme Wednesday afternoon was the automotive section of the Chengdu Business Daily newspaper, which asked Weibo users which car they would choose if forced to take treatment similar to Mr. Wang’s. “I’d take a Lamborghini,” responded one reader. “That way if you crash and die at least you die with face.”

4. Purely personal - I'm a former Reuters journalist who also used to work at the Financial Times group building a dotcom (but not a Kim Dotcom...).

Here's Murdoch biographer Michael Wolff suggesting in The Guardian Reuters may be in talks to buy the FT from Pearson.

5. 'When prudence trumps desire' - The life stages theory of investing suggest that younger savers buy stocks because they perform better over the long term and savers near retirement invest in bonds because they are less volatile in the short run and generate regular interest payments to pay the bills.

The trouble is over the last 30 years (which is pretty long term in most people's maths) bonds have outperformed stocks globally.

That is partly due to the ageing of the populations of the developed world. As the baby boomers neared retirement in the last 15 years they sold stocks and bought bonds, so the research from the San Francisco Fed says,  which depressed the performance of stocks through the sheer weight of money.

Now Bloomberg reports on how 1.25 billion people in Asia are due to retire by 2050, adding a powerful new driver to the weight of money argument in favour of buying bonds, even though prices are at record highs and yields near record lows.

With Asia’s elderly population poised to double within four decades, more money is being plowed into preserving wealth than enhancing growth, driving up demand for the region’s bonds that are beating returns on stocks.

The number of Asians 60 or older will exceed 1.25 billion, or 24 percent of the population in 2050 from 10 percent in 2011, according to data compiled by the United Nations. That helps explain the surge in pension fund assets and shows why the region’s emerging-market debt returned 63 percent in the five years through 2011, according to a JPMorgan Chase & Co. index. The MSCI Asia-Pacific Index of shares excluding Japan gained 17 percent in that period.

Investors over 50 prefer bonds’ fixed payments, as “prudence trumps desire,” Singapore-based Volatility Research & Trading Ltd. wrote in a Jan. 15 report. In South Korea, there are now 1.2 people aged over 50 for every person between 35 and 49, the part of the population that favors stocks, the company said. The ratio will climb to 3.6 by 2046.

Taiwan will have 413 people aged over 65 for every 100 under 15 by 2050, compared with Japan’s 339, according to the Council for Economic Planning and Development in Taipei. About 38 percent of Singapore’s population will be older than 60 by 2050, up from 12 percent in 2005, UN data show. After expanding 2.5 percent a year for the past three decades, China’s working- age population has stopped growing and will contract 1 percent a year by the mid-2020s, according to the Center for Strategic and International Studies in Washington.

6. This is fun - Business Insider reports Apple is now worth more than Google and Microsoft combined.

7. Print baby print - The European Central Bank overnight loosened its rules for collateral that banks have to provide when borrowing unlimited amounts of three year loans from the ECB at around 1%. And of course, the Bank of England printed another 50 billion pounds (see cartoon above).

Here's FTAlphaville on the loosening.

8. Strip the lot of them - SG's uber-bear Albert Edwards wants to see a lot more financial titans stripped of their knighthoods in the wake of the Fred 'the shred' Goodwin being stripped of his knighthood for blowing up Royal Bank of Scotland so badly it had to be bailed out by British taxpayers.

FTAlphaville cites Edwards saying ex Federal Reserve Governor Alan Greespan (who got an honorary knighthood) and current Bank of England boss Sir Mervyn King should also lose their gongs for being mad money printers and rate cutters.

Many commentators who correctly foresaw the crisis, unlike Mr King, believe that in a balance sheet recession, monetary policy has limited effectiveness and fiscal policy should stay loose.” Wind forward a year and, lo and behold, despite Mervyn King’s promises, QE has not offset fiscal retracement and the UK finds itself back in recession. And as a direct consequence there has been minimal improvement in the fiscal situation…

If Fred Goodwin as CEO is held responsible for what happened to RBS, it goes without saying that Sir Alan Greenspan and Sir Mervyn King should also be held responsible. Alan Greenspan’s responsibility as chairman of the Fed requires little discussion in my view. My views on Mervyn King may be more controversial, but he has been in senior positions at the bank since 1991 as Chief Economist, then Deputy Governor, and Governor since 2003. He has been at the helm and should, in my view, bear primary responsibility for the UKs economic collapse.

9. Totally irrelevant Rube Goldberg thing - There's a hamster, a cup of coffee and a newspaper. A bit of Friday fun.

10. Totally Clarke and Dawe - They're back again. Wes Wally's special subject is recent news.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Speaking of Kim Dotcom BH, have you seen this?
Dotcom described Megabox as Megaupload’s iTunes competitor, which would even eventually offer free premium movies via Megamovie, a site set to launch in 2012. This service would take Megaupload from being just a digital locker site to a full-fledged player in the digital content game.
The kicker was Megabox would cater to unsigned artists and allow anyone to sell their creations while allowing the artist to retain 90% of the earnings. Or, artists could even giveaway their songs and would be paid through a service called Megakey. “Yes that’s right, we will pay artists even for free downloads. The Megakey business model has been tested with over a million users and it works,” Kim Dotcom told TorrentFreak in December. Megabox was planning on bypassing the labels, RIAA, and the entire music establishment.

Why else do you think he is such a great "terrorist" threat to MPEG of USA and the entertainment/ rights owners cartels ??
If those guys can lobby the whole US Senate to pass laws like SOPA, small change is only needed for FBI to launch a new "Terrorist" case against Kim Dotcom and "Persuade" NZ Police to enact another "Hollywood" style raid in Auckland's suburb.

So the NZ Police look as gullible as I thought they were. Still Dotcom was stupid not to invest a greater percentage of his wealth on keeping it secure.

Beware the USA – a nation in big trouble – out for revenue gathering by every means , internationally  – politically, economically and financially.

Yeah     like spending a couple of millions on Senators and Congressman in the US...that should have bought him some protection...Pity.....

NZ police are like fawning puppydogs around the FBI.  Sit.  Roll over.  Good puppy!

PM John Key – Mrs Tolley – Minister of defence Jonathan Colman – the perfect pair !!

I love a good conspiracy theory and I’m no fan of threatening people in foreign countries with jail time for possible copyright infringement…but if you read the indictment the DOJ clearly had Megauploads in their sights for a long time. The “iTunes competitor hypothesis” was just coincidence. In fact, the emails tend to lead me to believe that at least one of the senior corporate officers was a confidential informant. They possibly got them to cooperate with leverage forma previous change or threatening to charge a close family member.
EDIT: However, In true irony:   

I commented on the original thread about the indictment and having read it I do agree. Depends on how long his musice site was planned mind you.
I would expect the emails to be challenged as to admissibility. Also beyond reasonsable doubt means you have to have prove that the defendant was at the keyboard when the email was sent.

Many thanks. I have no sympathy for Kim Dotcom. The guy made an astonishingly large amount of money by knowingly facilitating the theft of copyrighted music and movies.
He operated under the veil of internet freedoms to engorge himself. He's no internet hero.
I also know some things about how he operated personally and the contempt with which he dealt with New Zealand's laws.
Defending Dotcom is a waste of good reasons to defend internet freedom. He's one of the reasons why we have dumb and dangerous laws like ACTA and SOPA. True internet publishers and users shouldn't waste their time defending him.

Not only should they be stripped of their BS "titles". I believe they should be jailed for economic crimes againsts their nation from their useless and totally failed economic policies. Their false policies has causes trillions of losses and misery for another few hundred millions, how's that not suitable for a jail sentence ??

 The ground is shifting - Academics in America are now questioning more widely the consensus that free trade is always a good thing in the long run.
Have we really got free trade?
An artificially low Chineese currency that has caused the closure of manufacturing in the rest of the world.
The totally warped Euro that ties widely varying ecconomies to the same currency, artificially favouring German exports and hobbling Greek, Spainish etc exports?
Banks that are prevented from suffering the consequences of their actions as they would in a totally free and open ecconomy?

Good point.
You could argue it's not really free because of the currency manipulation and all the non-tarriff barriers that abound.
But it's bigger than that.
Capital, technology, goods and services can move relatively freely and without social consequences.
People and labour are much harder to move and change and adapt to these trends.

Is what we have now really globalisation?
from 9 minutes.

I think academics have questioned it for years, but no one in politics listens....really the US is corrupt, its no better than a banana republic....the interesting thing is how brainwashed the peasants are...

re # 1 BH, 
 free trade with China causes job losses and increases budget deficit spending.
The assumption is that in the long run everyone is better off with free trade as 'stuff' becomes more affordable and workers find new skills and better jobs in the inexorable process of 'creative destruction'.
But what if it doesn't, particularly when the trade and exchange rate systems are manipulated to benefit some countries more than others.
Spot on. I've said for some years now that while global free trade is a nice idea, in practice it's being gamed by some and is not working to our benefit.  

I don't know if we can turn the clock back on free/managed trade, nor would we really want to. In my mind there is no doubt that the mixing of people and trade has made our lives richer by a long way. Think food, entertainment, vehicle choice.
Does China try to manage it's exchange rate? Of course, who doesn't? It's a fiat money system after all.
We need free trade. We cannot manufacture all we need, never could, never will.
Our problem is not freer trade but politicians and bankers protecting their fiat money cartels. Imagine free trade on a hard money standard....self correcting trade toll booths on the economy.....utopia.

Free trade and the creation of a global economy, smooths out the global economy.  The wages in the poor countries rise, and the wages in the rich countries fall.  Which is great if you are a low wage country, but not good if you are a high wage country.  The wage differences around the globe are falling through globalisation.  The cost of goods are doing the same.
The spin was all about the price of goods, this is how the idea was sold.  I believe the economic principal is "Free trade CAN make everyone better off".  Which is totally different to "Free trade WILL make everyone better off".
All the crying about currency wars is playing into the hands of the globalists, the obviouos solution is a global currency.
It pays to keep in mind, that the majority of export manufacturing done in China, is being done by, and for western coorporates.  It's not as if Chinese Govt, is creating companies to export goods, they just allow western companies to lease land, build slave housing, enslave the poor, and generaly exploit the labour of it's citizens.  I find it interesting, that the media blames China, yet if it wasn't for the western coorporations shifting manufacturing there, nobody would care about Chinas fx rate.

You argue that China manages its exchange rate and ask: Who doesn't?
The answer is we don't. That's part of the problem.
We're naive if we think the Chinese and others aren't looking after their national interest firsts and way ahead of any idea of market purity.

Why not just subsidise our exporters, that way we get the cheap imports as well.  The RBNZ could carry the fx risk, and sell options to our exporters priced at 70c or whatever, not the black-scholes method.

So shares are down because the Boomers are cashing in and buying bonds (item number 5 above)   It seems to me that if any rise in shareprices that is driven by demand for somewhere to put your money (as versus a rise driven by the value of return of the company itself) then it is a bubble.  And will inevitably correct.
We have seen at times great rises in share prices, when company profitabilitly was not improving, nor did the companies themselves have great prospects.  You can make money at that with brilliant timing. (1985 and 1986) But there is an inevitable correction and somebody gets burned.  You discover you are not so brilliant after all.  (1987)
Share are hugely overpriced on fundamentals.  The correction will take decades.
Now we read that bonds have performed over shares for about 30 years.  How come that is a new discovery.  How many gazillions have been extracted by the financial services for advice that did not note this fact.  ( or maybe it is not a fact ? )
I do like the advice that you buy shares from the view of being an owner (Carmel Fisher) and do not a trader be.

Agree with this.....have made a lot of money timing the fact I think it's the only strategy to make money with shares. Asset allocation just cancels your wins with losses.
You say the market is expensive "based on fundamentals" but all that is out the window. We will see negative interest rates and more QE and the market will rise. There are bright people to make sure of that.
Bonds prices have ridden the falling interest rate structure for 32 years and done very well from some 18% in 1980 to zero today....going forward though I don't know. Interest rates are about zero, money has no price, no risk. 
My feeling is that slowly gold is being remonetized. Fiat money needs some discipline and gold has traditionally played that role. Gold is money and people are waking up to that fact. More people will shun a life of debt and interest payments and hopefully purchase a little gold here and there and we we will be better off for it. That is my hope anyway.

#1 - "What if it just means wages are just pushed down globally, profits for multi-nationals (along with the pay for execs and dividends for shareholders) are increased and .... "
Given many multi-nationals are more wealthy and powerful than a good many nation states, are we to believe it's really all about improving the lot of less powerful and poorer states?
Like many other concepts, it's showed promise and has delivered benefits, but beyond a certain point the original noble intent seems to have been corrupted.

#1 China,free trade etc
I have long wondered where the benefit was in the west being flooded with huge quantities of cheaper goods while all our industry ,manufacturing jobs,and now even services were lost to China.
Oh and migrating to China for a job? Ha ha.they wouldn't allow that but meanwhile we're taking thousands of Chinese migrants.  
Either way it looks like a win win situation...............if you're Chinese.

Bo Xilai was aiming to get on the Standing Committee of the Politburo (the real power in China) when most of the nine people on the committee will retire/step down. But he has obviously fallen out of favour. The Chinese don't usually attack the main man but rather someone closely aligned to him so get there message across. In this case, Wang Lijun, Bo's protege who worked with him in Laioning prior to Chongqing, has been disgraced. Corruption charges may follow and even if Bo Xilai in not charged, he will be tainted by association.
There is obviously some heavy jockeying for positions going on for the available Standing Committee positions prior to the November meeting. Different factions within the communist party will be trying to get their people appointed.

Nice to see you thinking about this. You're doing better than 99% of NZers

Our friends at Demonocracy have once again surpassed themselves, and have followed up the infographic showing the truckloads of cash that are needed to rescue the insolvent PIIGS, with this masterpiece which, while making the naive assumption that debt is represented by physical paper (when it is nothing but a bunch of electronic ones and zeros stored in various computers around the world), presents in gloriously visual terms precisely what the literal debt burden of the world's would look like expressed in piles of one hundred dollar bills. The result is quite stunning...

So you don't like the burps and farts of America, Mr Hickey?

Why don't you run off to China and run your blog from there?

See how long it takes before you start having the comments censored to suit the ruling party.

You are living in a country that exists in it's current democratic format because of the intervention of the USA during WW2 and the Cold War.
And like so many in this country, with yuan signs spinning in thier eyeballs, are willing to dismiss friends of past.

Sorry Moa Man but a deeper read of history would show a different story. The USA forced Japan into the pearl harbour attack so they could enter the war in Europe through the back door, as public opinion was against it. Not that China is a saint either, but at least they don't have the holier than though attitude of the US. The US certainly made on the deal supplying liberty ships to the UK also.
Can I suggest "Mao, the Unknown Story" by Jon Halliday as a good read on China.

As if the US were saints....Japan needed oil...the US blocked it......yet when you look at the empire building white ppl had done by then its somewhat 2 faced to stop japan doing the same thing.

America are not our friends......when their ex-leaders say their way of life is not up for negoitiation what do you think that implies for any other nation? especially if one has oil? Such a statement makes them no better than china......
Censored, there are different ways to censor.....just look at the invasion of Iraq and the effect it had on the US media as an example of how censorship can be achieved without a pistol....print something the President doesnt like and its unpatriotic....and the country is at least 1/2 fundie nationalist...

Yes - globalisation and free trade - wonderful !
I think the world isn’t far away to see the USA+ ,Russia and eventually China to meet in Syria in a few weeks time to make sure we do have enough oil and gas and less nuclear power from Iran – HA !!

The NZagriculture bubble continuous – big for banks – bad for the NZsociety.
But, since I talked to my bank manager, I have to say - I changed my mind about NZeconomy. I'm much more enthusiasiatic.
"China will be our biggest export destination within six or seven years [yet] we're not seeing much advantage being taken by the non-bulk primary producers," Alexander says.
China’s population is: 1,336,718,015 can you imagine the potential for our agriculture sector. Chinese need our stuff.
The economic outlook is great my bank manager said, so I signed a contract to buy another house and a 4WD.
We should turn 100ha farms into 1’000ha farms plus, cut/ burn more native bush/ forest and drill and mine the hell out of New Zealand, before it is too late and other nations are profiting and we are losing out again. The left- wing green melons aren’t interested on lowering the current account deficit. They even don’t have the money to buy shares, for state assets, my bank manager said.

Print baby Print.  This is what the shills were clamouring for, and here it comes.  The US is going to have to a lot more as well.  Sounds like 10T+ is required for both the ECB and the Fed, the ECB is winning for the moment.  "All your base money are belong to us". 
Whats happening is that the banks are deleveraging, not because the debts are being paid off, but because they can sell their assets (debts) to the central banks, and in exchange recieve freshly created base money.  As this happens, the banks deposits grow, and grow.  Sooner or later they will have to lend again, and thats when asset prices will really take off.
"The US government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. Dollars as it wishes at no cost."
Ben Bernanke, November 21, 2002

When you have a gun pointed at your head what do you do? Duck or take the bullet? You can bet they will do just what you would do -- duck and let the public take the bullet just as they have always done. So you can expect that THEY WILL PRINT THE MONEY. This is what the powers-that-be have done since the Federal Reserve was founded in 1913 and Bretton Woods II really unshackled the printing press.

I wonder how much longer the Murdochs will be allowed to control so much New Zealand media access/news

Rupert Murdoch faces fresh crisis as key Sun staff arrested
my gut feeling is that the NZ government would be happy for Rupert to continue to have control of a great deal of our media and  to run it from a prison cell.
Is there a 'fit a proper' test for media control in New Zealand- probably not.
The arguement is will always be that these are issolated incidents and that New Zealand is different. More likely it just hasn't been found out. If an entire empire is built on controlling media acess to politicians and police.
You would think that this would prove again the need for public broadcasting in New Zealand but probably not.

"All your silver are belong to us" - Bullion Buyer
 John Fraser was also told he would not receive the $85,000 of silver bullion he paid for.