Wednesday's Top 10 with NZ Mint: Magical ECB pixie dust; Christchurch's section affordability outrage; US Libor probe; Iran wants gold, not US$; Dilbert; Muppets

Here's my Top 10 links from around the Internet at 2 pm 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 must read today is #2 -- an impassioned plea from Christchurch about section prices.

1. The ECB's magical pixie dust - Felix Salmon at Reuters does a nice job of explaining the delicacies of whether or not Greece will be judged to have officially defaulted.

It's important because a default will trigger Credit Default Swap contracts,. which may (or may not) cause some grief in financial markets.

Salmon looks at the way the European Central Bank has exempted itself from having to take haircuts on its Greek debt.

He says the extension of that 'pixie dust' to the European Investment Bank (EIB) is further complicating the ruling.

A private body, the International Swaps and Derivatives Association (ISDA), is the official arbiter on defaults.

Its members may have very sore arms by the end of this.

Here's Salmon:

If the decision to exempt the ECB from the Greece haircut was ugly, then the decision to exempt the EIB is, at the margin, even uglier. I’m not saying it’s the wrong decision, necessarily. After all, sovereign restructurings necessarily have an ad hoc, make-it-up-as-you-go-along element to them.

Indeed, if the ECB’s magical pixie dust means that there’s substantially more EU support for this deal, then it might well be worth spreading it around a bit. But at the same time, predictability and consistency are important as well. And both of those seem to have gone out the window at this point. I wouldn’t be at all surprised if ISDA’s Determinations Committee just said “enough already” and declared an event of default. Because in recent weeks private-sector bondholders have been treated in an extremely cavalier manner. And those decisions have consequences.

2. 'Stretched to breaking point' - Reverend Mike Coleman writes with passion in The Press about how the red-zoners in Christchurch are feeling about receiving NZ$100,000 for their sections but having to pay NZ$240,000 for sections elsewhere, if they're available.

New sections aren't due on the market for two to three years, but red-zoners have to leave in 3 months.

Does not compute.

HT Hugh via email.

We now know there were very few sections available. (The city council announced last Friday there are only 600 sections in the city ready to go. Their values are up to $180,000 more than the rateable value on red-zone land.)

Prices of sections were always out of range for many red-zoners. Today they sit on the east stressed and upset. Some have taken their own lives. True.

As it stands today: There is no affordable land in Christchurch. There will be thousands of sections in two to three years, Brownlee now says, which "may" drive the price down, but red-zoners have to leave next April. Figure that out?

3. How about a 75% tax? - BBC reports France's socialist Presidential candidate Francois Hollande has proposed a 75% tax rate on those earning more than €1 million a year.

Mr Hollande himself renewed his call on Tuesday, saying the 75% rate on people earning more than one million euros a year was "a patriotic act".

"It's a signal that has been sent, a message of social cohesion, there is an effort to be made," he explained. "It is patriotic to agree to pay a supplementary tax to get the country back on its feet."

4. Greece vs Iceland - In 2008 Iceland's economy crashed with its banks. Yet now it is rebounding quickly. Greece, meanwhile, fell into the abyss in 2008 also and is still falling fast.

CNN has done a 'compare and contrast' excercise to see which apples compare with what olives and whether the Icelandic solution (nationalise its banks, devalue the krona and impose capital controls) is better than the Greek solution (slash public spending, hike taxes and stay in the euro zone).

The key difference I think is that Iceland has its own currency and devalued its way out of trouble.

Here's CNN's Nina Dos Santos:

5. Gold instead of dollars - Reuters reports Iran will now accept gold instead of US dollars as payment for its oil.

This is obviously connected to sanctions on any banks dealing with Iran, but it does again raise the question of how long before gold returns more as a global trading currency rather than just as a store of value, replacing the US dollar.

We'll see.

6. 'Come to New Zealand' - Matt Yglesias writes at Slate that New Zealand universities look mighty attractive for Americans because we have relatively low tuition fees and lots of government subsidies and support (ie interest free student loans).

He compares America and New Zealand Universities in the chart below:

The gap in tuition being charged across those two countries is enormous, particularly when you consider that the possibilities for mobility of both instructors and students across Anglophe countries. It looks like Americans could reap giant savings by enrolling in New Zealand universities

7. More Libor problems - Reuters reports the US Justice Department has launched a criminal probe into the way Libor is set.

Remember, Libor is the interest rate (London Interbank Offer Rate) agreed by a select few banks that sets the base for trillions of dollars of debt securities globally. British authorities have been looking at this for a while.

Now it's all on in America.

8. 'The richer you are the less ethical you are' - Wired's Brandon Keim reports on a UC Berkeley study showing the richer a person is the more likely they are to be unethical.

The study included seven different experiments that spanned real-world and laboratory settings, from rude San Francisco drivers to test subjects given a chance to take candy from children.

“Occupying privileged positions in society has this natural psychological effect of insulating you from others,” said psychologist Paul Piff of the University of California, Berkeley. “You’re less likely to perceive the impact your behavior has on others. As a result, at least in this paper, you’re more likely to break the rules.”

The findings, announced Feb. 27 in the Proceedings of the National Academy of Sciences, come at a moment when historical tensions over wealth and class have reached a fever pitch: Is greed good, and extreme wealth a sign of virtue? Does wealth corrupt, and should a society strive to be egalitarian in income as well as principles?

9. Modern Monetary Theory - Michael Hudson talks at counterpunch about a three day Modern Monetary Theory conference in Italy where more than 2,100 people turned up to listen to a new brand of economics.

It has a roll on.

Just one week earlier the Washington Post published a review of MMT, followed by a long discussion in the Financial Times. But the theory remains grounded primarily at the UMKC’s economics department and the Levy Institute at Bard College, with which most of us are associated.

The basic thrust of our argument is that just as commercial banks create credit electronically on their computer keyboards (creating a bank account credit for borrowers in exchange for their signing an IOU at interest), governments can create money. There is no need to borrow from banks, as computer keyboards provide nearly free credit creation to finance spending.

The difference, of course, is that governments spend money (at least in principle) to promote long-term growth and employment, to invest in public infrastructure, research and development, provide health care and other basic economic functions. Banks have a more short-term time frame. They lend credit against collateral in place. Some 80% of bank loans are mortgages against real estate. Other loans are made to finance leveraged buyouts and corporate takeovers. But most new fixed capital investment by corporations is financed out of retained earnings.

Unfortunately, the flow of earnings is now being diverted increasingly to the financial sector – not only to pay interest and penalties to banks, but for stock buybacks intended to support stock prices and hence the value of stock options that managers of today’s financialized companies give themselves. As for the stock market – which textbook diagrams still depict as raising money for new capital investment – it has been turned into a vehicle to buy out companies on credit (e.g., with high interest junk bonds) and replace equity with debt. Inasmuch as interest payments are tax-deductible, as if they were a necessary cost of doing business, corporate income-tax payments are lowered. And what the tax collector relinquishes is available to be paid out to the bankers and bondholders who get rich by loading the economy down with debt.

For those who've seen this story this morning about the British Police giving a retired horse to News Corp's Rebekah Brook, here's a typically British cartoons:

10. Totally The Muppets do Bohemian Rhapsody. I think I've linked to it before, but I needed a laugh.

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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Gould gets it:
Austerity Proven as Wrong Answer to Recession
"The critics seem increasingly ready to respond to that challenge. A recent example is Bernard Hickey's interesting suggestion that we should consider "quantitative easing" (or, as it used to be called pejoratively, "printing money").
It may not be the first option to come to mind but it is not as way-out as it seems. Many governments (including the current British and US governments) have "printed money" at times and banks do it all the time, lending money that they do not have, and thereby creating most of the money in our economy out of nothing. If it's all right for them to make billions from doing so, why shouldn't governments do it in the public interest, and so get the economy moving?"

Still got that mind set haven't you Les...not for you the recognition that too much debt would rather govt printed and splurged...Trying to get through to you, the simple message that interest rates on credit are a safety valve that curtail stupidity in a normal's just too much of an ask isn't it?
So why don't you tell us all Les...exactly what the govt should spend printed paper on in chch and what they should not spend on...come on Les....don't keep us waiting!

Actually Wolly you have an even worse one...
So in a classical sense NZ's debt is low compared to say Greece, and zero bound or the liquidity trap economics ie Keynes quite clearly says that Govn spending, in the absense of enough private sepnding and spending on one off projects if large enough will stimulate the economy out of this a classical sense its sound reasoning.  Keynes of course couldnt envision what we see the lack of energy problem he didnt have in the 1930s.  So the spending in leading up to WW2 got the world's economies moving its a theory that has a real world result.
Austerity on the other hand is what we are trying wont work....but then nothing will without energy.

Might be the case were it not for the mountain of private debt...that is what the ratings liars are keeping one eye's the total debt outstanding steven!
My point you miss entirely is that credit and rates are ying and yang right up until the time when some fathead decides the economy needs a shot of credit in the arm...and another...and then a stronger dose...
As to your suggestion that we are trying austerity in NZ today...utter rubbish...the state sector trimming is mostly people not being replaced as they leave...many flip from being state servants to being consultants because the dept bosses can hide the splurge.
Ask the Minister to confirm that 300 FA staff will get the won't even find him.! The bodies will be shuffled here and there and when the nats depart ...the 300 will emerge from the mist.
(Edited for language/bh)

Shhhhhh, hehehehehehe, don't tell the sheeple govt spending is actually way way way up, on the good old Labour days.  How ironic that the govt that campaigns on fiscal prudence is raking up the biggest deficits in history, while spending the most in history, nominaly or real, or even as a % of GDP.
What a laugh, not that I think Labour is better, it just depends what colour club you want to beaten over the head with.

The level of private debt and having to deal with that is why Steven Keen's suggestion of a payments direct to people to retire debt (funded the Government effectively printing money) looks like such a good idea.

Sounds like a great campaign promise.

re trying austerity today.... Is this the austerity you have when you are not really having austerity?  The Government's borrowing splurge of the past few years seems to indicate that there is no constraint being imposed on the government to force austerity.
In other words, Greece has come to the end of the road in some ways. And has to make a choice on which road to travel next.
New Zealand's government does not appear to be choosing austerity at the moment.

It's like the fat person that eats 10 Jenny Craig meals "cause they are on a diet".  Or the smoker smoking 20x as many low nicotine smokes "because they are healthier".

Comparing our country to one that has essentially defaulted in terms of numbers is not really a good reply. 
NZ has massive debt per head of population, and our government would not be borrowing a thing IF they weren't essentially bankrupt also. Why would ANYONE pay interest IF you had a  real surplus? That's right, there is no surplus anywhere! Everything starts to sound like Greece does it not?

Wolly - you made similar comment and asked the same question on BH's 'Print baby print, build baby build' article, and I answered once and followed up with  reminder comment and you didn't respond to either. (Maybe you have the notify replies thingy switched off?) Anyway, how about you scoot back over there, respond and we can pick it up from there.
Cmon, chop, chop.

I did link this the other day, but it may be worth repeating, all the benefits of building a deathstar, according to MMT/Keynsian.
A Modest Proposal To Boost US GDP By $852 Quadrillion: Build The Imperial Death Star

Agreed Wolly. More debt does not work out historically, again its kicking the can down the road. Nice idea to print just some, if only it would end at just some or would fix the problem


Wolly - below my response and answers to the same/similar point and question you asked, copied over on the 'heresy' thread:
Les Rudd | 26 Feb 12, 8:07am

Wolly - just considering ChCh infrastructure repair and replacement, it's one of those choices that isn't. So why would a rating agency not see QE style funding as less of a problem because further debt is not created and capability is being recovered and developed to support repayment of existing debt?
"So, that’s a brief outline of what happened in the two [Weimar and Zim] most notorious cases of hyperinflation.  Notice that in each case you had an enormous foreign currency obligation and a massive loss in productive capacity."

[Did you read this link Wolly?]


by Wolly | 26 Feb 12, 10:19am

Les....printing coloured paper to pay suppliers for materials and workers wages and council fees and "experts" fat charges and gst on top of the not a solution because it has no valve to stop the splurging madness that would develop. You have to learn to see that. A cost to credit is a safety valve...if the RBNZ does not shove its big fat nose in the way....
You say chch...please define chch?...are you saying only the urban area?...are you including private and public ....churches and schools....roads and pipes....bridges and tunnels....cliff protection and ground stabilization(remember the Gerry Trench promise) where does it stop Les?
And how do you stop the use of the QE to solve the rotting building rats nest of filth?...why should this not be eligible for your QE splurge?...come on Les.....explain yourself!


by Les Rudd | 27 Feb 12, 8:35am

Morning Wolly.
"cost of credit" as a "control valve" - errr, yeah right, how's that working out for us:
[Did you read this link Wolly?]

So the control of this kind of funding comes from what is and isn't in scope, ie. your last questions. In terms of ChCh repair and redevlopment of public infrastructure; just that, no private stuff. From your list, so eg. churches, cliff protection for private residences, out. Schools, roads, pipes, bridges, tunnels, in.
"rotting builds" - caused by eq = nope, hence out. (What caused it? Maybe a class action then? Oh that's right,... as you pointed out recently. Funny old world eh.)
So by debating the issue a set of rules, protocols would emerge that define in and out for events such as the ChCh eqs. (Other spend types could also be debated and defined, eg. to address the housing shortage BH outlines.) However no debate and we end up renting private funding with the extra inflationary addition of interest to fund activity that isn't really a choice. 
Cheers, Les.

by Les Rudd | 27 Feb 12, 10:18pm

[My reminder to you.] C'mon, sir, wot did I get wrong this time, Wolly?
[Hey, where is GBH these days?]
C'mon Wolly, chop, chop.


I shall ask you to deal with just one of your as not to waste time.."no private stuff. From your list, so eg. churches, cliff protection for private residences, out. Schools, roads, pipes, bridges, tunnels, in."....and the private school for foreign students Les? does that fit your "in" "out" selection process? Plenty of other examples out there.
As to credit having a cost..."errr, yeah right, how's that working out for us"..If the market were not being manipulated by the Fed, and the govts, rates would rise to reduce demand for credit and boost the incentive to save. Chch is fortunate the Fed is in a mood to scam the American public with the support of the ECB, the BoE and BOJ....leading to English being able to borrow at low rates the billions needed to sort the mess. That state of affairs will not last.
It is not that you get it wrong is that you refuse to see something when it does not fit your model which seems to amount to an absolute faith in printing by govt to pay for stuff. Not only would it prove to be utter shambles to figure out your selection process without political manipulation...but the impact on the resources in the chch region would be disruptive to say the least.
You didn't define chch by the way...where would your splurge start and end...?
"we end up renting private funding with the extra inflationary addition of interest to fund activity that isn't really a choice. "  Correct. That's why we have or should have had insurance cover on the infrastructure, with the RBNZ or Treasury tasked to make sure the insurance companies were always able to cover such an event. It points to the potential for economic failure when successive NZ govts perform so poorly leaving the country exposed to massive loss. The EQC fund was so clearly too small...who was in charge of that?

Morning Wolly.
A private school is not public infrastructure. It might well be used by the public, but it's private, so out.
Credit cost as the "control valve" - yep, acknowledge the Fed influence, but we could deal with it in a number of ways, as discussed before and in that article I referred you to on John's blog. If we implemented same there would be more confidence in dealing with inflation, in general, and this kind of funding in particular, albeit I don't see us with the conditions outlined in that Naked Capitalism article, I also referred you to. Did you read these articles? Any questions?
"selection process" and "political manipulation" - what we need Wolly are some good quality retired Civil Service experienced school teachers to show us how to debate such a problem, rather than simply shy away from and stifle debate. Know anyone that could help? See next answer.
"define chch" - public infrastructure that has been damaged by the eqs and is not covered by insurance.
"insurance cover" - what's done is done, what was covered was covered, what wasn't, who knows why. That isn't stopping central govt. and CCC stump up and it's this requirement that could be funded by reserve bank credit, without the inflationary interest component. It's already pretty much scoped and allotted, so manipulation would probably be nil. 
"EQC fund" - there are lessons to be learnt.
Cheers, Les.

I shall leave it to others to explain to Les the many problems that would crop up if the govt used QE to refi the chch build. I know a brick wall when I see it. Is the sports stadium public or private?...
Here, since you think sending me to read blobs...try this one with you cuppa tea Les.
So now you say the QE activity would pay for all the "public" damage caused by the two quakes..right? what about all the "public" damage caused by droughts..and floods...what of the other regions in NZ Les where the rate payers had to stump up over time to repair and rebuild? Why should chch be any different?
What of the fact that much of the damage look to be the consequence of stupid CCC decisions going back many years?
Why are you not able to explain the market price dislocations caused by QE demand excesses?

Thanks for the platform Wolly. First of all Les you need to understand how the Fed is manipulating the money supply. Don't worry its not complicated and you don't need to understand maths of science, here is all the evidence in a form a 10 year old could have suggested (if said 10 year old can draw much better than I can),
Notice that Mr Goodbank guy, he's nothing like Bollard, all the government investment is tainted and will immediately spoil. Also notice that the gold standard never collapsed in the US. It was perfectly stable and Nixon just  went off it so they could start manipulating the money supply. We are much better off with the economy owing all its money supply overseas and with the burden of that increasing due to the economy becoming more "efficient". Also the economy is totally dependent on buying stuff from overseas and fixing them up, and selling them overseas, so if the cost of that rises its not going to start developing its internal resources and exporting them, its just going to flop.
Finally if all that fails to convince you then booga booga booga, Socialism. You have been warned. Socialism means following the tyrany on the majority, thats obviously undemocratic and can only turn out badly. Duh.
And if you can't explain how QE will effect prices through a market you can't prove anything and the market economy is not guilty. Principals of justice require that the market economy is innocent until proven guilty (Obvious proof of government guilt presented above).

That first links a cracka Nic....of course in real life Able would find Baker and Charlie would out vote him and institute socialism, stealing Ables savings and handing them to those who had none! Able would cease to think up any new inventions and the three of them would get nowhere...

Well maybe Wolly, but thats real life. I think in the cartoon Charlie and Baker could have voted away all of Able's fish (and probably also have made him work for them, to get more). But then the moralistic god of the island would have instituted equality by killing off their food supply in a natural disaster. Well thats what I think Irwin would have written anyway. He was a very moral guy you see.

Either that or some thieving foreigners in a giant trawler would have ripped the guts out of the fish stock in the lagoon one day...I assume it's a lagoon...

Wolly Talking about Keynes is a bit like equating soviet russia with Marx's concepts.  There are two types of Keynes theories - the first is the theory that Keynes actually wrote (lots about uncertainty for example), and the second is the neoclassical restatement of Keynes.  The later is way more common and (factually) bears little resemblance to what Keynes actually said.  The person who wrote that spectator article looks like he is speaking of the second type of Keynes theory. 

Wolly - the stadium, the share that is public, yes. Other ND damage to public infrastucture elsewhere in NZ, yes. Stupid CCC decisions, let's learn, I kinda think we all will now, so yes, fix the prublic infrastructure that has been affected. Market price dislocations, the work is scoped and pretty much costed, against pre-damage market rates. However, I take your point, if, such funding was issued willy-nilly without regard for existing market pricing, so contracts get written based on existing market pricing, which is readily available. This, I think, would also apply to BH's build some houses idea. If anything with such a large programme, the programme could work to keep prices in check, a bit like we are seeing with Fletchers operating in the ChCh rebuild. Sure people will accuse them of rorting, being owned by RBNZ and Wolly Rothchild (because we can't do without a good conspiro theory can we, yawn.) etc, etc, however they also seem to be acting as a brake on gougey price escalation, I think. The FED manipulating, that's one reason we agree on LVRs - for whatever reason price hasn't worked has it. Cheers, Les.   

"so get the economy moving?"  Because he lives in the past.....pre-peak oil.....
What he cant see yet is every time the world's economy recovers the demand for energy will out strip the supply sending its price up significantly.....when that happens our world economy which cant stand expensive energy will move back into recession....

Gerry Brownlee and Canterbury Employers Chamber of Commerce, don't get it:
Productive Investment Incentives - no says Chamber of Commerce 
"Below is a link to an article from The Press that highlights the difference between a business group that accepts any membership and one that represents a particular sector.
To quote a response to a call from Coca Cola for accelerated depreciation:
“an incentive like accelerated depreciation was something that could be looked at to encourage investment in manufacturing, but it was more important for there to be an environment that encouraged business in New Zealand generally, rather than artificial incentives." cola article 19 1 12.pdf
This is the key difference; broad membership organisations are held hostage by their diverse membership. They must try to keep everyone, or at least the majority, happy. So policy positions are represented in broad terms.
Here accelerated depreciation, available in most countries that compete with New Zealand, is subordinated to a general call for settings that help all businesses. Sadly there are no such settings; the traded (or real economy) competes with the world, but the domestic (or non-traded) economy only competes locally. So the New Zealand lawyer, for now, competes only with lawyers in New Zealand; but the manufacturing company competes with manufacturers, and their helpful policy frameworks, anywhere in the world.
One set of policies do not, will not and cannot suit all segments of the economy. This clearly manifests in the exchange rate - the domestic economy wants ever higher exchange rates that lower the cost of imports and offshore travel, whereas the real economy wants lower exchange rates that support international trading competitiveness. The former represent the majority in the economy, so naturally policy is biased to favour domestic activity, not real economy competitiveness. Unfortunately our national current account trade deficit has to be balanced by either selling local assets and / or borrowing from offshore. Unless the trade deficit is corrected this process of sell and borrow ends in a Grecian scenario, with not much left to sell and no one lending at any price.
The New Zealand Manufacturers and Exporters Association advocates policy settings and instruments that support the real economy: such as accelerated depreciation for productive plant as outlined in the Press article (here is an article from the NZMEA on tax - have a look at the 'References from Other Jurisdictions' section, and a submission from some years ago). We go further in other policy areas that deal with competitiveness issues related to lower and broader tax base and monetary policy that target our exchange rate’s value and volatility."
Cheers, Les.

Merge with CECC? Membership of Business New Zealand? People wonder why not? 
Here is one reason why not.

2. 'Stretched to breaking point' - Reverend Mike Coleman writes with passion in The Press
A few months after the Lockyer Valley floods in Queensland the authorities had taken possession of a large swath of land free from flood risk, had subdivided it, and were inviting victims to swap there old properties for safe new sections.  This could have been done in Christchurch. 
The Authorites had the power to take possession of rural land on the Christchurch outskirts.  Average value of rural land in NZ is $14,000 per HA or $1,400 per section.  Land devevelopment in Canterbury is pretty easy, so the totall cost should be significantly less than the $100,000.  If they were efficient, the government could have saved money on the deal, and a lot of people's lives  would be a lot better, a lot quicker.  But I guesse we cant do that sort of thing as we have to protect the hudge profits that the developers will make out of the whole tragety.  Sickening!!!!

Chris-M - That's the main reason that I moved away from ChCh.  The GV  for the land part of my property was about half the price of a new section elsewhere in ChCh.  As you say there are huge amounts of existing rural zoned land surrounding ChCh that could be easily and quickly re-zoned residential, but it was obvious that the authorities were not going to take the initiative.  Thanks to Bob Parker's policies on residential zoning there has been a dearth of affordable residential sections in the area for a long time.

It was suggested early on for Christchurch by Di Lucas, a good idea.

Hi Bernard,
On your Iceland vs Greece example devaluation wasn't the only difference, the fact that Iceland chose to not bail out its banks and bankers and did actually default is important as it has enabled them to write off the debt which should have never been the responsibility of its citizens to pay.  Iceland maintained its sovereignty and honoured the decision of its people by upholding the referendum to not pay back bondholders despite enormous pressure from outside.  Greece on the otherhand can no longer be considered a democracy in any sense of the word. 
If we were ever in the same situation lets pray that Key is not in charge as given his track record we can be certain democracy wont be the answer.

well said.

Good point on the default, although it was only the banks that defaulted, not the nation. In Greece it would be the nation.

Surely the red zoners can see they will be better off in Rangiora or Ashburton....and better off doing up an old place..

Or down the road from you Wolly.

No way....too many plum stuffed Fallow deer down my road...

The ISDA have convinced me...I'm not buying any govt bonds within a bulls roar of the piigs or anywhere else.... The default is in....eveyone knows it.

6. But Americans cant get any NZ based loans?
but yes I would think if they can get a US based loan to study here for 2+ years it would seem a lot cheaper.....Over 2? I think they are covered for ACC as well? thats supposed to be a huge cost to meet in the USA?

The fees quoted are also local student fees, so really the article has misinterpreted the research.  Yes it is interesting that you have to pay twice as much in the USA than in NZ, no that doesn't mean an Americans should study in NZ  to save money as the local fees aren't what is relevant.  Obviously there are host of other reasons why Americans should want to study in our beautiful land, lower fees is not one.

Well considering US student loans are non recourse, (negative pledge?) loans.  It would be a rational descision to keep them as low as possible.  The US seems to be going downhill at an incredible pace.

I do enjoy all the different ways experts come up with, in their ultimatly futile attempt to make the unsustainable monetary sytem sustainable.  It's been causing problems for a long time now, and always ends up with a reset, and try again.
Insanity is doing the same thing over and over and expecting a different result---Einstein.

Good to see papers on this subject so close to home.

Thank you Bernard for presenting an alternative view  (MMT) on economic matters and one of the few rays of sunshine in a world whose economic future looks decidedly dodgy. Another interesting perspective ignored by most media can be found here:

"Peak oil, a housing bubble, bad debts and over-reliance on investments with no genuine economic feasibility guarantee China's current boom is not sustainable. China bulls are in for a ride awakening when various bubbles pop".sic
And their rude awakening will be what for Aus and of course NZ!

The basic thrust of our argument is that just as commercial banks create credit electronically on their computer keyboards (creating a bank account credit for borrowers in exchange for their signing an IOU at interest), governments can create money. There is no need to borrow from banks, as computer keyboards provide nearly free credit creation to finance spending.
I get Wolly's argument that shifting the issuing of debt from banks to govt in theory shouldn't be the answer.  BUT, given our economy is debt-based, austerity without the nicotine patch has a bad end.
Shearer just has to connect all the dots to be quids-in next time around but he'd better show us he has a set of balls and get on the front foot (soon) before  National is forced into the same play off the back foot and claims credit. It's a matter of educating the public.  The average Joe HAS NO IDEA that the banks have been printing money for years. Who says all that dosh spent on TV ads has to be done at election time?

While hardly needing a full-on onslaught by an Austrian thinker, when even some fairly simplistic reductio ad abusrdum thought experiments should suffice (boosting global GDP by a few million percent simply by building a death star comes to mind), Diapason's Sean Corrigan has decided to take MMT, also known as "Modern Monetary Theory", to the woodshed in his latest missive in a grammatical, syntaxic (replete with the usual 200+ word multi-clause sentences) and stylistic juggernaut, that only Corrigan is capable of. So sit back in that easy chair, grab your favorite bottle of rehypothecated Ouzo, and let the monetary hate wash through you.
Sean Corrigan Crucifies MMT

OK skudiv
I'm willing to learn, but how about you distill Corrigan's argument into a paragraph or-two.  The guy uses too much lube when he writes.

Sure.  When you increas the amount of money per person you will have inflation ( as convieniently described as rising prices of goods and services).   Keynsians and MMT are both scared of deflation (Austrians believe in a cycle) and believe that by increasing the amount of money, you can re-ignite peoples desire to spend, but MMT fails to see that too much money will easily result in far too much spending leading to inflation.  Also Keynsians believe in a liquidity trap, liquidity could be translated as transactions, where no matter how much money you give people, or how low interest rates are, people will not spend or borrow, they will only save or pay off debt (depression psychology).  To me that barely requires a response, but if you give people 10 times as much money they will spend, so obviously the liquidity trap isn't real.
Economics is a religon, a useful tool for a period of social evolution, with the Catholics, Protestants, Lutherians, Mormons etc.  This is just the Protestants attacking the Catholics and the Mormons.  The more I learn, the more of an Aethiest I become, God (money) isn't real, and faith in god isn't going to lead to heaven (prosperity and growth), in fact it has caused starvation, depravation, wars, oppression, exploitation, corruption and is incapable of raising the standard of living for humanity.  I don't mind sitting in the cheap seats poking holes in everything.  Technology and Science is a process which has benefited everyone on the planet, and has evolved independent of money since time began.  That may be a better place to look, if we actually want prosperity.

I think its right to be scared of deflation. Im not so sure Austrians accept deflation directly, instead booms and busts, yes you have any URLs?  If so, everyone else sane is petrified of it...and I think rightly so.
"re-ignite peoples desire to spend"  I would have said this was the keynesian response to the zero bound problem....not sure mmt allows for this.....its more like MMT types and becoming born again keynesians...
"liquidity trap isn't real."  "obviously" oh...LOL....Well this is where we  disagree most strongly, it is and we are in one, hence we see no inflation despite the inflationistas chanting...I even have evidence on getting out ie spending leading up to WW2 brought the world out of the Great Depression...and today, example no2 QEing has stopped us going in (so far)..
faith in god? religion? oh dear, you have a faith that we will see overall inflation....yet there is no evidence of it and for some years, and in fact significant deflation is probable in the coming few.
Technology and science, well as I said money is a proxy for energy....both the former are by and large techniques to use more energy....

Careful Steven, biflation is here and most likely will continue.  In fact it's a stretch to even say we have biflation anymore.  What we definatley have is rising prices.  
Your definition of money is an opinion, not truth.  Science is the search for truth, not a technique to use more energy.  Technology is simply the the application of scientific knowlege for practicle purposes.  Money doesn't even factor in eithier of these fields.  To attempt to factor money in science, you would first have to define it, in an exact way, which is impossible given that it is not real.  An electron is defined in an exact way, and is recognisable as an electron by its definition across all fields of science and technology. 
Please try and restrain yourself from putting "words in my mouth".  I enjoy debating with you, but I'd prefer to debate things I say, not defend things that I'm not saying.

I dont see what careful has to do with it...I dont agree, inflation is defined on a National level across all sectors of an econmy overall.....and your pocket over the year.
Stretch no, some areas are seeing constant products come out and the RRP is lower and/or the performance better....
Simple I bought a fridge in December,  $600 knocked off, $2000 instead of $2600, previous model $ broadband connection has gone from a 60gb limit to 90gb for the same money ($135), or I could drop back to the 60gb plan which would save me money.
So say the fridge has a 10 year life? per year impact on my pocket book is $200 instead of $260....
It comes down to your wages /income have not increased..this means yes OK somethings have inflated....but with no more money other things will not be bought.....we come around to this point time and time seems you cannot see it?
Defination of money, as in a IOU for work? or energy? what else is it or can it be? so is gold..
If you had no energy, what use would money be?
Money can be defined as an IOU for energy themselves they are worthless they are a promise for a future good that you can use.  this is where many ppl are falling down comes back to energy instead many ppl go for the abstract.
Energy and technology are inter-linked, effectively you cannot apply technology without expanding energy somewhere at some point to do so. 

So technology is responsible for broadband deflation, and possibly the fridge too.  Don't the scientisits and egineers understand how bad this is?  Anyhow, using the "rising prices" definition, govt statistics say prices are rising.  When any broad measure of inflation, shows us a negative number then we will see deflation, and it may well occur in consumer discretionary goods, untill then it is incorrect to argue that we currently have deflation.  Wages increased 2.6% last year.  So in that regard there is more money, M3 is growing at over 6%, so more credit money is also being created.
If you had no energy you would have no mass (E=mc2), and cannot exist, so yes money would be pointless, as would defining it.  A definition of money as an IOU for energy, how much money, how much energy?  Does 1$=1j?  I'm trying to explain that you can't define money in scientific terms.  Money has no relevance in science.
You cannot apply technology without expending energy.  Technology can reduce the amount of energy expended to perform a given task, like a lever or a pully.

Yeah, be careful steven. If your not careful then I'm gona start arguing with you if its biflation or triflation or rehyperboflation or cleptoflation or skeptoflation or macroflation or microflation or derivflation or plutoflation or demoflation or socialflation or welflation or labflation or capflation or magflation or scareflation and eventually you will get a migraflation due to your confuflation.

Bring. it. on. hahaha

Seems to me, that Austrian's and Libertarians make the most long winded arguments.  I have no idea why that is.

Windy arguments - mean there is no substance behind them. In a previous era they would have been debating angels and pinheads.

What about pointed sticks...?