Tuesday's Top 10 with NZ Mint: Greece's unemployment bomb; The race to debase; Where is the confidence fairy?; John Key's regulatory tradeoffs; Dilbert

Here's my Top 10 links from around the Internet at 1 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.

#9 is my must read today from Peter Thiel and Francis Fukuyama.

1. On the ground in China - China's new leader-in-waiting Xi Jingping is traveling the world reassuring everyone that China's economy is having a soft landing.

But how do we know?

Many people distrust the official statistics on industrial production and GDP.

Many worry that the more grounded and leading indicators such as power production, car sales and lending, actually show a hard landing is happening.

Here's Gordon Chang at Forbes, who is a China sceptic. Some bitters to go with your lemon and lime...

Worth a read:

Electricity consumption, the best indicator of Chinese economic activity, declined 7.5 percent. China’s aggregate financing, another good signal, collapsed, falling by almost half. New lending is the lowest it has been in five years.

Bellwether car sales? They tumbled 23.8 percent. Property prices were off for the fifth-straight month. Exports and imports were both down. Especially important, it appears that demand from consumers for foreign goods skidded. Foreign direct investment fell 0.3 percent, the third-straight month of decline, due largely to troubles in Europe.

In an apparent response to the January numbers, the People’s Bank of China, the country’s central bank, announced Saturday that it was cutting the bank reserve-requirement ratio by 50 basis points effective the 24th, the second reduction since last November. There were six ratio increases last year. Many had expected the PBOC to drop the ratio before the Lunar New Year, but instead it used open-market operations to supply short-term funds to the banks in advance of the long break.

The central bank’s move is expected to make 400 billion yuan — about $63.5 billion — available for lending, but it’s not entirely clear that the big banks will repeat past behavior by lending all of the additional funds at their disposal. Even China’s exuberant bankers are starting to figure out what “ghost cities” are doing to their balance sheets.

2. Lower target - Reuters reports Xi Jingping saying China has cut its growth target this year to 7.5% from 8%.

"From this year on, we have appropriately cut economic growth targets, and this will help us to relieve pressures in terms of inflation, energy, resources and environment," Xi said, according Xinhua news agency, which published his full remarks in Chinese. China's economic growth target, regarded more as a guideline than a serious goal, is made public by the premier at the annual meeting of the largely rubber stamp parliament in early March.

3. On the ground in Greece - Ambrose Evans Pritchard from the Telegraph writes from Greece about the unemployment bomb about to explode in Greece's economy and social system.

Dimitra Noussi, who runs two homeless shelters and a soup kitchen for the City of Athens, said the crunch comes once people have been unemployed for five or six months and cannot pay the rent. Most fall back on the kinship network but there comes a point when critical mass overwhelms even this cultural backstop.

"I’m afraid we’re going to see an unbelievable increase in numbers. We’re suddenly starting to see people in their fifties coming in, and even families with children. They feel humiliated and desperate. I never thought I would see such a thing in my country."

It is against this backdrop that the EU-IMF Troika is (rightly) imposing a further 150,000 public sector job cuts over three years, without "wrongly" offsetting measures to prevent the collapse of private industry. The EU "Marshall Plan" promised last June never actually happened.

This is an excellent line from Ambrose:

The latest best-seller is the Greek translation of Heinrich Winkler’s "Weimar 1918-1933: History of the First German Democracy", narrating how an indebted Germany pursued the same deflation policies under the Gold Standard as Greece is now pursuing under EMU - with the same results. The book culminates in the Reichstag elections of July 1932 when the Nazis and Communists between them won half the seats, and Weimar died.

4. Regulatory tradeoffs - John Drinnan reports in the NZ Herald about a pattern he sees developing in John Key's government where government trades away regulatory protections for new projects. He's referring in this instance to the idea that Sky City Casino can 'buy' some extra pokies in exchange for a new convention centre and Mediaworks managed to water down its local music content rules at Kiwi FM to keep it going.

Deals involving public assets and tradeoffs in regulatory oversight have become commonplace under this Government. Warner Bros was given $20 million and industrial law changes to avert threats to move The Hobbit offshore.

Economic Development Minister Steven Joyce is currently negotiating a deal to allow more pokie machines at SkyCity casino in return for building a national conference centre, estimated to cost $350 million. And in 2009 the Government loaned $44 million to MediaWorks so it could keep its radio frequencies.

5. The austerity cycle - Here's Paul Krugman talking at the New York Times about the problem with austerity in Europe and how the confidence fairy didn't show up.

In early 2010 austerity economics — the insistence that governments should slash spending even in the face of high unemployment — became all the rage in European capitals. The doctrine asserted that the direct negative effects of spending cuts on employment would be offset by changes in “confidence,” that savage spending cuts would lead to a surge in consumer and business spending, while nations failing to make such cuts would see capital flight and soaring interest rates. If this sounds to you like something Herbert Hoover might have said, you’re right: It does and he did.

Now the results are in — and they’re exactly what three generations’ worth of economic analysis and all the lessons of history should have told you would happen. The confidence fairy has failed to show up: none of the countries slashing spending have seen the predicted private-sector surge. Instead, the depressing effects of fiscal austerity have been reinforced by falling private spending.

6. The race to debase - This Zerohedge chart handily puts together the growth in assets at various central banks in recent years, showing massive money printing across the Northern Hemisphere over the last four years.

And we wonder why our currency continues to rise against just about everyone else's...

7. Is this the end of Market Demcracy? - This piece by Thomas Edsall in the New York Times is heretical, and therefore, interesting.

He points out that in November's election Barack Obama will campaign for higher taxes while the Republicans will denouce a drive to a European style 'entitlement society'.

While Americans are going to be able to choose between two contrasting ideologies, what if both choices are off the mark? What if the legitimacy of free market capitalism in America is facing fundamental challenges that the candidates and their parties are not addressing?

Here are some of the issues that are making some politicians and political thinkers uneasy:

Are large segments of the American workforce — millions of people — at a structural disadvantage in the face of global competition, technological advance and ever more sophisticated forms of automation? Is this situation permanent?

Will the share of profits from improving corporate productivity flowing to capital and to high-earning C.E.O.s continue to grow, while the income of wage earners stagnates and their share of profits declines?

Has the surging wealth and income of the top one percent and of the top 0.1 percent reached a tipping point at which the political leverage of the very affluent decisively outweighs the influence of the electorate at large?

Is it possible that in the United States and Europe, democratic free market capitalism is no longer capable of providing broadly shared benefits to a solid majority of workers?

8. China's anti-social financing - WSJ's excellent ChinaRealTimeReport blog points out that total lending, which includes bank loans, loans from family trusts and off balance sheet loans, fell 45% in January from a year ago.

A hopeful interpretation is that Beijing is getting serious about cracking down on a credit bubble that has swelled to worrying proportions. The ratio of outstanding loans to gross domestic product came in at 123% at the end of 2011, compared to 102% at the end of 2008. Lower loan growth will help bring it back down.

In practice however, it’s the fall in bank deposits rather than any credit crackdown by the government that is to blame. With deposits fleeing the banking system to the tune of 800 billion yuan ($127 billion) in January, banks simply didn’t have any money to lend.

9. Conservative blind spots - Peter Thiel, the billionaire PayPal co-founder and early investor in Facebook, Xero and Pacific Fibre, speaks very broadly in this discussion with Francis 'the end of history' Fukuyama at The American Interest about how conservatives have a blind spot when it comes to equality.

Long, but well worth a read.

The rapid rise in inequality has been an issue that the Right has not been willing to engage. It tends either to say it’s not true or that it doesn’t matter. That’s a very strange blind spot. Obviously if you extrapolate an exponential function it can go a lot further. We’re now at an extreme comparable to 1913 or 1928; on a worldwide basis we’ve probably surpassed the 1913 highs and are closer to 1789 levels.

In the history of the modern world, inequality has only been ended through communist revolution, war or deflationary economic collapse. It’s a disturbing question which of these three is going to happen today, or if there’s a fourth way out.

10. Totally Jon Stewart talking about how members of Congress can be insider traders, but not anyone else...

"It's our system of checks and balances. We deposit cheques, they increase their balances..."