Here's my Top 10 links from around the Internet at 11 pm in association with NZ Mint.
I welcome your additions in the comments below or via email tobernard.hickey@interest.co.nz.
I'll pop the extras into the comment stream. See all previous Top 10s here.
I quite liked #6. I'm in Wellington tomorrow and Friday for Webstock.
1. A dark and stormy night - Reuters reports European leaders are pushing Greece to the brink.
They really seem to mean it.
Yikes.
Everyone thinks the Europeans will capitulate at the last minute to do a deal and avoid a default....
But the tone of the comments from the Europeans is not encouraging. Mainly because the Greeks have already started backtracking on their committments from Monday...
Here's a sample:
Samaras has criticized the measures, which parliament passed early on Monday as rioters wrecked buildings across central Athens. He says the cuts could plunge the country, already in its fifth year of recession, into an even bigger slump.
When parliament debated the austerity package on Sunday he indicated that he would try to renegotiate the terms of the bailout, increasing doubt in the minds of European leaders.
"So far Samaras has not given a letter of commitment and this is a problem," a source familiar with the bailout negotiations told Reuters on condition of anonymity. Samaras's New Democracy party declined to comment.
2. The problems with LIBOR - Bloomberg reports on the scandal with the way the LIBOR (London Interbank Offer Rate) is set daily. This is important because so many interest rates globally are set off this rate. US$360 trillion is an unimaginably large number.
“The entire story is very embarrassing for the banks,” said Tom Kirchmaier, a fellow in the financial-markets group at the London School of Economics. “I don’t know how they will eradicate this. The regulators have to rethink the way they set Libor.”
The rate, a benchmark for about US$360 trillion of financial products worldwide, is derived from a survey of banks conducted daily on behalf of the British Bankers’ Association in London.
3. The euro = the rouble - Citigroup's Chief Economist Willem Buiter via FTAlphaville reckons the decision by the European Central Bank to allow its constituent central banks to accept any old collateral in its Long Term Refinancing Operation (LTRO) makes the euro zone look more like the rouble zone.
We consider this to be a dangerous and potentially disastrous decision. Not because it means a relaxation of collateral requirements in the Eurozone, but because it introduces this relaxation in only part of the Eurozone – the soft part…
In fact, we think the February 9 decision brings the Eurozone much closer to the position of the Rouble Zone following the collapse of the Soviet Union.
4. Now that's an increase - ChinaDaily reports the Chinese province of Guanxi has increased its minimum wage by 22%.
5. The China story - Here's Patrick Chovanec and Nouriel Roubini on the China slowdown and its leadership transition.
6. Debt's pall over the lucky country - Alan Kohler at BusinessSpectator unleashes on Australia's staggering debt complex underpinning stupid property prices. Good. We have the same problem. HT Leith at Macroblog.
I’ve been wondering for a while whether there is any underlying problem in this country, or just lots of little things with the exchange rate among the biggest of them.
The only thing that makes sense as a single cause of Australia’s misery is excessive debt. Debt is making everyone grumpy and hypersensitive. When ANZ put up its mortgage rate by just 6 basis points last week – 0.06 per cent for heaven’s sake! – there was national outrage and attacks in parliament.
7. What's really going on in Greece - The New York Times has a good article on this.
9. This is funny and naughty - From Cactus Kate on Murray McCully's hacked emails.
10. Totally irrelevant video on the Linsanity - I'm a basketball fan so love this story. An economist makes it in the NBA. Yay!
The Colbert Report
Get More: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive
8 Comments
Greece has hit rock bottom. The pus is about to burst out, like a fat pimple. Once it does the healing can begin. The next few months look to be the bottom, and hopefully they can have a reset, and go about rebuilding their economy. I bet all the financial elites are there right now snapping up all the underpriced stocks and assets. Having crushed democracy, and the economy, Greece is ripe for the looting.
"When there is blood on the streets; Buy property"
Australian household debt is 105% of GDP v NZ and the US of about 87%, or Italy 45%.
Australian Households have the largest share of debt, no surprise interest rates are so political.
I would argue we dont, as a nation have the same problem. Auckland is vastly disconnected from the rest of the country, and I suspect there would be similar problem there. 60% higher house prices then the rest of NZ, If you could look outside of Auckland you would see that houses are not overpriced IMO, they could be cheaper maybe, but nothing to get concerned over. At a guess I'd say the amount of housing subsidies wasted in Auckland is vastly disproportionate to the population. I'd say unemployment and wages do not warrant such a divergence.
Not sure I agree that Auckland is overpriced. The way I see it, Auckland and Christchurch have real supply issues creating high house prices, and the rest of the country does not have supply issues (or at least should not). To me the rest of the country is overpriced.
However if you are considering income to house value then yes Auckland is expensive.
As I understand it, house prices around most of the country are reasonably close to intrinsic value. I'd expect Aucklands debt to income ratios would be far higher then the rest of the country. The main deterrent to supply as I see it, is the same around the country, that is banks require a far higher deposit to build a new house, then to purchase an existing one, around 25% deposit or 500% higher.
US houses have fallen below the intrinsic value, and with confidence I'd say that the bottom is in there, and house prices should rise.
Pictures From A Greek Soup Kitchen
Since the economic crisis has taken hold, poverty has taken hold among Greece's middle class. And suicide rates have nearly doubled." Just like in the US, those in misery are growing exponentially, but the last thing anyone needs is a reminder of their existence. Yet perhaps they should, because when the Bastille moment hits, the spark to overthrow tyranny, especially that masking under the guise of democracy, will come precisely from the slums of the impoverished and disenfranchised, from those who have nothing left to lose. In Greece, with 28% of the population living "at risk of poverty or social exclusion" this moment may arrive any second.
when there is blood on the streets is the time to buy property. I'm buying in Spain. 2 bedroom good size apartments. 500m meters from the beach, in small complex with swimming pool for less than NZ$105,000. Solid construction in tourist town near international airport. We are renting these out as holiday homes and net more than 10% return.
Prices are still dropping and we are still buying.
Bernard, I would be interested to see a piece from you comparing New Zealand and Portugal. Both have run high current account debts for many years, have high private sector debt, and moderate government debt. But somehow, Portugal is seen as a basket case (and has already received a bailout) and NZ is not, despite Portugal's currency being undervalued relative to NZ's.
Interesting to note that Portugal has recently sold a controlling stake in their largest electricity company to the Three Gorges Company of China.
http://www.nytimes.com/roomfordebate/2012/02/14/what-went-wrong-in-port…
Robert
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