Wednesday's Top 10 with NZ Mint: How Gold crushed Buffett's Coke; China's Feast coming to an end; Greek kids to malnourished to exercise; NZ dairy farmers poor pasture managers; Dilbert

Here's my Top 10 links from around the Internet at 4 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.

My must read today is #8. Satyajit Das has a nice summary of why China's growth of the last four years cannot be repeated.

1. How Gold crushed Coke - Jim Grant from Grant's Interest Rate Observer points out that Gold has outperformed Coke since 1996.

He says the precious metal has 'humuliated' the likes of Warren Buffett in this Bloomberg interview.

Grant also points out how the Fed is manipulating interest rates.

He says bond investors are almost better off in cash than in 10 year Treasury bonds, which is a 'desert in value'

"Many of us understand the meaning of Quantiative Easing. But many of us are wondering the what the meaning of money is."

Grant suggests the Fed set up an 'Office of Unintended Consequences.'

He says the worst case scenario is when the 'Titanic' actions of the world's central banks spin out of control into inflation. He's also bearish about China and China's housing market.

2. How America really works - This video from Bill Moyers, a well respected US journalist, and David Stockman, the former budget director for Ronald Reagan, explain just how America's political system works. Any of New Zealand's negotiators in the Trans Pacific Partnership (if there are any left after the latest round of job cuts) should watch this.

Stockman speaks candidly with Bill Moyers about how money dominates politics, distorting free markets and endangering democracy. “As a result,” Stockman says, “we have neither capitalism nor democracy. We have crony capitalism.”

Stockman shares details on how the courtship of politics and high finance have turned our economy into a private club that rewards the super-rich and corporations, leaving average Americans wondering how it could happen and who’s really in charge.

“We now have an entitled class of Wall Street financiers and of corporate CEOs who believe the government is there to do… whatever it takes in order to keep the game going and their stock price moving upward,” Stockman tells Moyers.

3. Enough red meat already - This may not be good for New Zealand's sheep and beef farmers. MSNBC reports a Harvard study has found people who eat a daily serving of red meat are 13% more likely to die early and 14% more likely to get heart disease or cancer...

The Harvard scientists followed almost 84,000 women and 38,000 men in the Nurse’s Health Study and Health Professional’s Follow-Up Study for 28 years. It found those eating a daily serving of red meat were 13 percent more likely to die in the study period, and approximately 14 percent more likely to develop heart disease or cancer. Those numbers go up to 20 percent more deaths and an estimated 18 percent more heart problems and cancer for those who reported eating a daily serving of processed meats such as hot dogs, salami and bacon.

In the realm of health risks, these are not huge numbers.  Daily cigarette smoking adds risk of some 2,000 to 4000 percent for these hazards. But across the U.S. population, Americans love of meat likely accounts for about 1.5 million excess deaths every decade, according to research from the National Institutes of Health.

4. Kids going without food in Athens - Jon Henley reports via a Guardian blog from a Greek teacher that students are now too weak because of malnourishment to do Physical Education (PE) in schools. 

It has been a common secret among PE teachers for some time now that they don't expect pupils to do PE any more, because many of them are underfed and get dizzy.  They need to be discreet, as these underprivileged children don't wish to be exposed to their peers. In my previous school, the teachers arranged among themselves to give the school canteen some money, so that the canteen could give the child a snack, without embarrassing the child.

However, this was not enough. In many schools today, it is the parents' associations who come together, gather food and discreetly arrange to allocate it to those families of the school who are suffering.

5. 'Casinos don't represent the values of a great city' - Ken Griffin is the CEO of the giant hedge fund Citadel Capital, so he should know a thing or two about gambling. But even he, a conservative Republican, is against Chicago having a casino downtown.

I wonder what John Key thinks.  Well, we have an idea. Key would like to grant Sky City more licenses for pokie machines in exchange for a big convention centre in the centre of Auckland.

Here's Griffin speaking at the Chicago Tribune:

"There is no great city in America that has a casino (downtown)," Griffin said. "And there's a reason for it. Casinos do not represent the values of a great city."

6. Yet more austerity - Just days after the last Greek bailout/austerity deal was announced, Reuters reports Greece will need yet more austerity.

Greece will have to slash a further 5.5 percent of GDP in government spending in 2013 and 2014 to meet agreed fiscal targets underpinning the second international bailout for Athens, a European Commission report said.

he report, obtained by Reuters, said a package of savings adopted by Greece in early 2012 worth 1.5 percent of gross domestic product should allow Athens to meet the target of bringing the primary deficit down to 1 percent this year.

"However, current projections reveal large fiscal gaps in 2013-14," the Commission report said, adding that the shortfall for the two years totalled 5.5 percent. Therefore, substantial additional expenditure cuts will have to be announced and adopted by Greece in the coming months, in particular when Greece updates its medium-term budget in May 2012," the report said.

7. Still great farmers? - As a dairy farmer's son, I have a sense of how important pasture management is.

Here's a useful blog post from Massey University Farm Management expert Tom Phillips on how New Zealand's dairy farmers seem to have lost the knack of being good pasture managers.

The work of the NZ Dairy Consultants working in Ireland & the UK has been critical to those farmers now being global leaders in grazing & pasture management.

What I don’t understand is what has happened in NZ. The past research at No. 2 Dairy Ruakura & the Lincoln University Dairy Farm  & past Consulting Officer efforts have focussed on good pasture management & high utilization.

I’m told that now fewer than 20% of dairy farmers regularly measure & monitor (pasture wedge graph) pastures. Why? Why don’t NZ farmers passionately care for their pastures? Where’s the pride in having spectacular pastures gone?

My suggestion is that capital gains are now more important to farmers than production gains.

8. 'All feasts must come to an end' - Satyajit Das writes at Naked Capitalism about China's debt and investment fueled growth of the last four years. It's a nice, wide summary.

Just like the Japanese after the collapse of the bubble, Chinese householders will be forced to pay for the restitutions of their insolvent banks. Savers will pay a disguised tax – low deposit interest rates and high borrowing rates. In effect, the bailout will entail a large transfer of wealth and income from households to other parts of the economy, amounting to several percentage points of GDP.

This will reduce wealth but also slow consumption growth, at a time when external demand for Chinese products and Chinese trade surpluses is decreasing.

Das also makes this good point about increased Chinese capacity. This is one of the reasons I'm less worried about inflation than some others.

China’s investment boom may also be exacerbating industrial overcapacity. The greater portion of investment has been in infrastructure, rather than manufacturing.

A 2009 report prepared for the European Chamber of Commerce outlines the over-capacity. In its analysis of six major sectors, the report identified the following capacity utilisation rates: steel 72%; aluminium 67%; cement 78%; chemicals 80%; refining 85%; and, wind power 70%.

In 2008, China’s steel capacity was 660 million tons against demand of 470m tons but the difference is similar to the European Union’s total steel output or the combined output of Japan and Korea. China’s excess in cement is larger than the total consumption of the US, Japan & India. Yet China continues to add capacity.

If China be unable to absorb this new capacity domestically, then it might seek to increase exports, in order to maintain production and growth. This would increase a global supply glut. To the extent that Chinese growth is driven by such spending on unproductive investments, it is both wasteful and ultimately economically destructive.

9. A trust deficit - Berkeley Economics professor Barry Eichengreen writes at Project Syndicate about the real problem in Europe.

The deficit that prevents Europe from drawing a line under its crisis is a deficit of trust. First, there is deficient trust between national leaders and their publics. We saw this most visibly in the person of former Italian Prime Minister Silvio Berlusconi, who fortunately has been kicked to the sidelines of the political scene. But even the most stalwart European leaders have lost their followers’ trust by baldly saying one thing today and the opposite tomorrow.

Second, there is a lack of trust among European Union member states. The real reason why the northern Europeans have been unwilling to provide a “big bazooka” – that is, extend more financial assistance to Southern Europe – is that they don’t trust the beneficiaries to use it wisely. They fear, for example, that additional securities purchases by the European Central Bank, aimed at bringing down Spain’s borrowing costs, would only lead the Spanish government to relax its reform effort. As a result, Germany and its allies are prepared to provide just enough assistance to keep the ship from capsizing, but not enough to set it on an even keel.

10. Totally Jon Stewart on the #kony viral video 'sensation' on the Ugandan warlord Joseph Kony. I haven't touched this until now. Not sure what to think.

'Why won't Rihanna retweet my Kony video?"