Here's my Top 10 links from around the Internet at 11 am 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 the graphic on working in an online warehouse. Oh the joys of globalisation. Have a great weekend.
1. Austerity is not working - John Cochrane from the University of Chicago Booth School of Business writes at Bloomberg about the failure of Europe's austerity plans.
He's right.
Cutting government spending and increasing taxes when the household sector is labouring under massive debt and negative equity is pointless.
It just drives an economy deeper into recession.
What is needed is massive debt restructuring that clears the decks and starts again.
Instead, central banks and governments are trying to tip-toe past the elephant in the room and hope they don't get squashed in process. It's a massive crossing of the fingers and hoping that someone -- anyone -- pulls Europe out of the mire. Everyone is betting that China and emerging markets will be the saviour.
We'll see.
Here's Cochrane, who isn't necessarily in favour of a Keynesian solution. He wants structural reform:
“Structural reform” is vital to restore growth now, not a vague idea for many years in the future when the stimulus has worked its magic. It’s also a lot harder politically than the breezy language suggests. “Reform” isn’t just “policy” handed down by technocrats like rules on the provenance of prosciutto; it involves taking away subsidies and interventions that entrenched interests have grown to love, and have supported politicians to protect. They will fight it tooth and nail.
That is even more reason to address this now, while there is a crisis. The will to do so may evaporate if better times return, and the ability to do so might disappear if the economies plunge.
2. The problem with online retailing - It's great for consumers dodging taxes by leaping into the cloud.
But it's not much fun for workers. All part of the progressive shift in the profit share to the 1% from the 99%.
3. How rich people are buying US democracy - That's a bald thing to say, but it's hard not to after reading this Bloomberg report on how one rich guy in Missouri is successfully using Citizen Initiated Referenda to get rid of taxes and 'starve the beast' of government.
This nuttiness has put California in an awful hole.
In a fractured political universe that spawned the Tea Party, Occupy Wall Street and 10 percent congressional approval ratings, Rex Sinquefield, 67, is up to his eyeballs in frustration. While he maintains he isn’t a billionaire and won’t divulge his net worth, he is using his wealth to go over the heads of the political establishment. He is a new American oligarch, appealing directly to voters for help in reshaping his home state to fit his economic beliefs.
The Sinquefield plan would kill Missouri’s 6 percent personal income tax and raise the sales tax to a maximum of 7 percent from today’s 4 percent. Since 1992, 140 proposals to cut or limit taxes have appeared on state ballots, and 61 percent passed, said Jennie Bowser, who tracks initiatives at the National Conference of State Legislatures in Denver.
The Missouri proposal would burden low- and middle-income wage earners while leaving a $3 billion budget hole, says Moody, the former budget director. It would also benefit rich people, he says. Moody describes Sinquefield and his tax plan this way: “There’s not a nice way to say it. They don’t know what they’re doing.”
4. Beijing on edge amid coup rumours - This headline will not go away. It's the FT reporting via CNBC. The head of China's State Security Apparatus is apparently under house arrest.
The Chinese capital is awash with speculation, innuendo and rumors of a coup following the most important political purge in decades, with even some of the most well-informed officials in the dark about what comes next.
Since Bo Xilai, one of China’s most powerful leaders, was removed from his job last Thursday, the bureaucracy and the public have been on tenterhooks, awaiting the next twist in the gripping political saga.
One person with close ties to China’s security apparatus said Mr Zhou had been ordered not to make any public appearances or take any high-level meetings and was “already under some degree of control”.
The same person said Mr Bo, who was Communist Party chief of Chongqing until last week, was under house arrest while his wife had been taken away for investigation into suspected corruption, a common charge leveled at senior officials who have lost out in power struggles.
5. China eases for some banks - Bloomberg reports the People's Bank of China has cut reserve requirement ratios for 379 branches of the Agricultural Bank of China.
The ruling Communist Party has pledged to fine-tune economic policies as needed as a cooling real-estate market and faltering export demand limit the nation’s expansion. Mining company BHP Billiton Ltd. (BHP) said March 20 that China’s steel output growth has flattened, adding to concern that a slowdown may deepen.
“This is a marginal and targeted easing aiming at encourage more lending in rural areas and to smaller businesses,” said Lu Ting, a Hong Kong-based economist at Bank of America Corp.
6. What's wrong with the world? - Luxury scarf maker Hermes has reported a record profit and plans to pay a special dividend. The victory of the 0.1% seems fairly clear.
Hermes plans to build two leather factories in France this year as demand for its Birkin and other bags outstrips supply, Thomas said in November. The 175-year-old company’s distinctive positioning should mean so-called organic sales rise 13 percent in 2012, one of the fastest growth rates in the luxury industry, HSBC analysts including Antoine Belge estimated this month.
7. Here we go again - European investors are starting to get very nervous about Spain's budget outlook and high debts. Its government bond yields are remaining stubbornly high.
Even Italy's yields are rising again.The dire Eurozone PMI overnight is not helping.
Here's the FT's Richard Milne:
Marc Chandler, currency strategist at Brown Brothers Harriman, noted Italian 10-year yields have fallen 180bp so far this year while Spain’s have risen by 39bp.
“That is after two LTROs,” he said. “That definitely concerns me. When the bonds rally it helps the banks’ balance sheets. But when yields start rising it hurts the banks even more. It is a vicious circle.”
The economic fate of Spain and Italy is both viewed as central to assessing whether the eurozone debt crisis – quiet since Greece’s default earlier this month – could re-erupt. Investors worry that weak growth, not just in Italy and Spain but across the rest of the eurozone, could be the spark to reignite the crisis, despite some European politicians’ claims that it was largely over.
8. Conversion to CNG or LPG? - I wonder how long before America looks at converting its vehicle fleet to start using all the natural gas it has discovered through fracking.
Natural gas prices are collapsing and there's now a serious gap between oil and gas prices. HT Zerohedge.
9. Would the real Mitt Romney please stand up - Some entertaining editing.
10. Totally Clarke and Dawe on the new speaker of Parliament in Australia, who was elected to oppose the Government but is now the speaker of the house...
"That boy. No running near the pool. No running near the pool."
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