Here's my Top 10 links from around the Internet at 11:30 am today in association with NZ Mint. Bernard Hickey is on vacation and won't be back until early May.
I welcome your additions in the comments below or via email to david.chaston@interest.co.nz.
See all previous Top 10s here.
1. A payments revolution is about to arrive
The next big technology revolution will be in how we pay for stuff.
The big global payments networks of Mastercard and Visa are rolling out their versions of 'pay wave' where you only need to place your smartphone near a merchant's check-out or billing device to pay their bill. But the telecoms industry really, really wants to be part of this revolution other than just making the very brief technical connection.
Here in New Zealand, the three big telecoms providers have announced a joint effort to offer a service in conjunction with Paymark, itself owned by the four major banks.
This technology will roll out fast now. Get ready if you are a merchant; understand the risks and benefits if you are a consumer (the risks may be less than you think).
“Over the past decade, our mobile phone has swallowed our newspaper, our map and our camera to become an essential all-in- one device,” Eric Hertz, chief executive officer at Auckland- based 2degrees, said in the statement. “The logical next step is to make it even more convenient by having it swallow our wallet.”
The service, which plans to use near-field communications technology, will allow customers to make payments by holding an enabled phone close to a special terminal in stores and on trains or buses, according to the statement. Software inside the phone will send transactions over the banking network.
2. Reshoring
The growth in US manufacturing jobs in the past year has actually been impressive and surprising. It is surprising in that you don't assume a high-wage country can strengthen is manufacturing employment given the vast alternatives available in China and India. But there appears to be a trend to bring manufacturing jobs back, a movement that is big enough to show up in the data. And one company doing it is GE.
Jeff Immelt, General Electric’s chief executive, says the decision to put US$1 bln into the group’s domestic appliances business is “as risky an investment as we have ever made”.
He may well be right. The decision to bring back to Louisville, Kentucky, hundreds of jobs that had been outsourced to Mexico and China is emblematic of his strategy for GE. If it fails, it will be hung around his neck forever.
“Reshoring” production is a strategy being tried by many American manufacturers, as rapid wage growth in emerging economies and sluggish pay in the US erodes the labour cost advantage of offshore plants.
3. Making stuff
Manufacturers are surveyed regularly for the PMI confidence measures. Over the past few days we have heard of weakness in Europe, and surprising strength in both the US and China. Even New Zealand is recording positive attitudes from its manufacturers. But for a wider perspective, check out this graphic covering many more of the world's economies.
4. Buying houses by the thousands
When your housing market is in the mire, when hundreds of thousands of homeowners are 'under-water', how can you make a buck from property in this new environment? Maybe one answer is to 'buy everything'. It's not a strategy for the feint-hearted, but it is one some Americans have adopted. By taking big risks, they are hoping for big returns.
At least 20 times a day, Alan Hladik walks into a fixer-upper and tries to figure out if it is worth buying.
As an inspector for Waypoint Real Estate Group, Mr. Hladik takes about 20 minutes to walk through each home, noting worn kitchen cabinets or missing roof tiles. The blistering pace is necessary to keep up with Waypoint’s appetite: the company, which has bought about 1,200 homes since 2008 — and is now buying five to seven a day — is an early entrant in a business that some deep-pocketed investors are betting is poised to explode.
With home prices down more than a third from their peak and the market swamped with foreclosures, large investors are salivating at the opportunity to buy perhaps thousands of homes at deep discounts and fill them with tenants.
5. 'Peak oil' vs 'Human ingenuity'
I'm linking to this just as a curiosity. Honest.
6. The $1.3 billion bond deal haunting Goldman
For the second time in less than two years Goldman Sachs is likely to be charged by the SEC with securities fraud related to a mortgage deal.
But what makes FHLT 2006-E potentially fraudulent, and why the SEC is likely to sue Goldman, is that it appears the firm knew that even compared to the incredibly low standards it stated it was using to select loans for the deal, the mortgages Goldman actually sold to investors were a good deal worse.
For instance, the deal's prospectus that Goldman assembled and distributed to investors, and filed with the SEC, said that there was only one home loan out of 5,012 in the Fremont trust, or 0.01%, in which a borrower had taken out more than their house was worth. But an audit conducted for the FHFA suit found that at least 1,179 loans in FHLT 2006-E, or 23.5%, were already underwater at the time Goldman was pitching the deal to investors.
The suit alleges that Goldman also hid the number of loans in the Fremont trust that were made to real estate investors, which are generally considered riskier than a loan to someone who intends to live in a house themselves. Goldman's pitch claimed that just under 14% of the loans in FHLT 2006-E were made to investors. In fact, that number was over 24%.
7. French fantasy
Even by the standards of Europe, France has an unsustainable social safety net, and is facing a crisis simply because the french have refused to gradually adjust to the real world. You can take minor pain gradually, or massive pain by refusing to acknowledge that change is necessary. A cautionary tale for us.
This erosion of French competitiveness raises hard questions about the underlying social compact. Frenchmen cherish the notion that everyone has an equal right to decent services in good times and a generous safety net in bad. But what sort of level of support, in sickness, joblessness, infancy or old age, can France really afford to offer its citizens? How can the country justify its massive public administration—a millefeuille of communes, departments, regions and the central state—which employs 90 civil servants per 1,000 population, compared with 50 in Germany? How can France lighten the tax burden, including payroll social charges, so as to encourage entrepreneurship and job creation?
Put simply, France is about to face the tough choices that Gerhard Schröder, Germany’s former chancellor, confronted in the early 2000s or that Sweden did in the mid-1990s, when its own unsustainable social system collapsed.
8. Unfunded pension schemes a growing US problem
US corporate pension funds recorded their most disastrous deficits ever in 2011, with the gap between assets and liabilities for the 100 biggest portfolios hitting a record US$326.8 bln. Companies are running hard pumping in extra cash but can't seem to keep up with the fast-rising liabilities. Something has to give. Some retirees may not get everything they expected, especially once they are well into their golden years and at the time they can least do anything about it.
The record 9.3% growth in liabilities versus 2010 overwhelmed the 5.9% investment return for the year for the 100 biggest corporate pension funds, which had expected a 7.8% average return for 2011, said Milliman.
“Given the record-low discount rates, we estimate that 2012 pension expense will increase US$16bn, resulting in a record US$54bn charge to corporate earnings.”
The deficit was also in spite of the companies pumping US$55.1bn of corporate cash into the pension funds in efforts to reduce the shortfall. There’s no sign of a let-up, given the Fed’s intention of keeping rates low.
9. 'The economy is complicated. Let us walk you through it'
If you have the time, this interactive is worth working through. You will get a very good rounded perspective of how the world's biggest economy has suffered through the GFC.
10. The last laugh
Help wanted. I am struggling to find the same type of really good video humour that Bernard linked to. Please email me with suggestions ...
34 Comments
Walter, Im right behind you, well not right behind but close enough to shout support, but with all the wind no one would hear me. Good luck on the crusade im sure they have your number, watch for large grey BMW's with a big fat guy in the back seat, before you cross the road, they may have to back up to finish you off but hey, its still going to be an accident.
Kunst, I disagree that you are ready for the revolution. None of us are.
Some sort of revolution is inevitable, so you don't need to start it - but unless we have something superior organised to replace the culture we now have then we are still a very long way from being ready.
Hypertiger
Choosing to take more than you give is the cause...collapse is the effect.
The population will be reduced in order to take another run at trying to escape the logical conclusion of the take more than you give equation.
Lets say that there is a 50% drought every 500 years...and you start up a civilization...that basically expands for 500 years until it demands 20% of average rain fall...and the 50% drought shows up...The civilization survives and expands for another 500 years and requires 90% of the rain fall...and another drought shows up....poof...game over.
The general population think the drought is the cause of the collapse...but it was the choice to take more than you give that was the cause of the collapse which was an effect.
The world is not ready for the lifting of the veil.
Very true, there are a few alternatives out there, as opposed to the binary capitalism/communisim options most people see ie, RBE, steady state, anarchy, permaculture etc. Most people seem to be trapped in normalacy bias, and expect BAU to be a done deal. I like a RBE because the focus is on technology and resources, as opposed to a step backwards, or a variation of capitalism.
Damn it Walter, .........I just sold the camel, the Kalashnikov, the cammo gear....they didn't want the map to the beehive...said they already had one.
I'll have to get back on to that exotic pets dealer.....hmmm then M.A. F.....I've lost some weight maybe I could just cruise in on a LLama.
Viva le Revolution........
Chistov, Im about to start on this book, so far it looks great. Max Hastings, always a good read.
http://www.amazon.com/Finest-Years-Churchill-Warlord-1940-45/dp/0007263…
Im sure Walter could give you a lift, just dumb down and you will not look out of place.
3 & 5 are related, fracking is a high input industry, and the current boom (followed by?) is creating it's own demand. At least the author aknowleges peak oil as a reality, then leaps to absurd conclusion that gas will save us, as if peak gas will not be an issue. It's not all doom and gloom, but maths, physics and thermodynamics don't support the techno-cornucopians world view of flying cars, and power from the ether. There has to be a step down in terms of energy use, feeding ourselves has become increasingly energy intensive since the transition from hunter gatherer to agriculture. In the end, it's likely human stupidity will prevail. As reported here all the 'quants' are in finance and bean counting, thats where the market says the best place to be is, if you want to make money.
Well put Skud.
The guy's a dorkel-brain, walks so far then falls over. He's not alone in jouranism, though. There's a very good journo called Gwynne Dyer, UK based. Rightly, others look to his efforts, and more often than not, he's right.
But, his grasp is as loose as the writer in #5.
http://gwynnedyer.com/2012/global-civilisation-the-options/
although it's better than some of the spinmeistery we have to endure here.
The horse has already bolted. The growth in population has been slowing since 1961, the first occurance of that in human history. Hockey stick growth is over and it looks like we are heading towards a peak within a generation or two. Perhaps war will speed up the process. Less and less new blood to keep the ponzi going.
The bit I haven't figured out is why the peak in growth before the peak in oil. Has oil been diverted away from developing countries and towards western decadence? Or was the peak of the cost of extraction and refinement back in the 60's?
I dont think we have a generation or 2....I think peak oil is within 5 years ie we drop off the plataeu, but I think we are on the cusp of the next Great Depression....lots of ppl hungry leading up to 2008...this time will be way worse...
Second para, Im not sure what you are trying to ask/say, If you mean GDP, best I can say is I put down to the in-efficiency of our economy. In the 60s we had peak discoveries....so if you follow PhilB's line of "technology will do it", I have to ask why in 50 years of advancement we have not continued to find significant oil....at computers and tech have taken huge strides/advances. instaed oil discoveries are negligable, especially in terms of we need a Saudi Arabia every 2 years given the drop is 7mbpd per annum at present, which is 10% btw...ouch....
regards
Geesus Stevo ..when do you find time to cook , clean, n wash your smalls in a basin..?
And you play games online you say..?
Crikey mate some guy in Japan carked it only a coupla weeks back doin less than you do on the pooter...!
Your a bloody machines what you are........tell me what happens over night tomorrow eh..!
LOL, simple, I delegate chores, then I have a better half....I tend to do the cooking though.....I quite enjoy it......until the kids throw a wobbly over a new recipe "invention"....
:/
Try being a convicted meat eater living with crazy vegans...
I dont play that much....my eldest and I play togther, thats cool....
regards
It was one of his pieces that put me onto AGW, peak food and then in turn peak oil.....however as it turns out after Peak oil had occured.........
:/
/Gwynne Dyer:/ Slim chance obesity will last
Friday October 6, 2006
"The world is probably going to get considerably hotter than that and most of the other great breadbaskets of the world will be similarly affected. Obesity is not our long-term problem."
So some journalists are switched on.....and have been for years.....
regards
"Nor will we ever solve it by just using less energy and eating less meat. Not at seven billion plus, we won’t."
yep.....everytime its over-population.....
PhilB will be in organism when he see's ive posted such stuff again........or maybe its a acolytic fit.....
LOL.
NB I think GD is wrong however on population going some billions more up and then dropping back......I even wonder if 8 is probable now we can see Peak oil is so close...and the Next Great Depression/Austerity wont be good for popualtion growth.
regards
David, now Hickeys away perhaps you could make a few changes, not as drastic as Kato though
one for BH,
The Simple Analytics of Soaking the Rich
"the appropriate tax rate for the rich is quite high — 70 percent or more."
http://krugman.blogs.nytimes.com/2012/04/03/the-simple-analytics-of-soa…
I can see the foaming now....
regards
Actually I am starting to think Key is excellent value for money. He slipped a benefit increase through, without tearing up his support base. The increase is reasonable I think, because there has been some inflation and there have not been regular benefit increases. It could have been much worse, hes hardly in danger of getting my vote but I try to give credit where its due and not just be a partisan.
One of the best arguments for having a tax on wealth is that it reduces inflation (which is somewhat driven by treasury deficits), and that its fair for well off people to pay for more of social security. It also reduces inequality, which makes the democratic system work better.
A lack of social welfare tends to throw workers into the hands of business, which reduces wages, which half the time is what these free-market bigots are biggoting on about (a.k.a creating high wage employment).
Problem is for me is that Key is not someone I see as a person of vision and leadership....and today like no other we need a PM who is...
Not sure on the tax on wealth reduces inflation, URL(s)?
Inequality, I wonder if ppl have not got dis-connected from reality, maybe its something that has happened over the last 60 or so years. For me its a case of too many ppl with no skin in the game means there is no incentive to keep it going as is, however greed seems to have no bounds and is making inequality worse every day....they seem to think there is no consequence.
regards
It should be fairly obvious that tax reduces inflation actually, all forms of economics recognise that more money entering the economy drives inflation. This is exactly what a treasury deficit does, though it can depend where the money is borrowed from. If you take in enough to pay for the expenditure then no more money enters the economy. John Kenneth Galbraith goes much further into this when discussing economics,
http://lachlan.bluehaze.com.au/books/galbraith_money.html
He might be right, tax might be used to stop the economy spiraling into financialisation, there was some evidence of stability after the great depression for many years, though this would be an all encompassing thesis to prove, and in practise may be difficult to manage, or to do with prevailing attitudes to money and debt. One should not under-estimate the effect of prevailing attitudes, look at the effect of Weimar inflation, its still obviously there in German attitudes. Of course not all inflation is directly caused this way, its often more indirrect in that if attitudes were different or could be changed then macro outcomes would be as well.
I don't think that the world really works in the way where leaders are important myself. I think once the country figures out how to get itself out of its mess then the right leader will just show up from somewhere to take us there. I really doubt Key could bend the country to his will if he even had whatever the right bearing is. Personally I have a particular dis-like for Rogernomics, but Roger Douglas would not have emerged without a fairly wide support base. Not necessarily a democratic mandate, but pleanty of support in politically influential circles.
Didn't Bush jr. have both visions and leadership?
Interesting new international currency. http://bitcoinme.com/
All very good until the internet goes down.
Released 2009 Scarfie....stable release March 2012. Check this guy out one of the developers http://en.wikipedia.org/wiki/Amir_Taaki
....Bitcoin is in OSS.......security comes with a big Q...maybe .
The main developer is anonymous by way of pseudonym...hmmmmm....
I do see a problem with replacing electronic money with digital :-) My mate that was describing to me seemed to think it was the ticket, he has been involved with the OWS movement. He has his own network that are bartering and states there are 3000 subcribers to that worldwide. I will see him later in the month and get more from him. Intelligent guy but one of those that is so bright he has stability problems, if you know what I mean.
How is the grand scheme of farcical financial fraud going in the EU !
"The ECB has expanded its balance sheet by about 30 percent since Draghi took office in November, pumping more than 1 trillion euros ($1.3 trillion) into the banking system in a bid to stem the debt crisis. Pressure to unwind the emergency measures is rising in Germany, where workers are winning some of the biggest pay increases in two decades, threatening to stoke inflation.
“Premature Bundesbank calls for an ECB exit strategy have now triggered a new round of market wobbles, with a focus on Spain,” said Holger Schmieding, chief economist at Berenberg Bank in London. “The risk of a new irrational market panic remains serious.”
The theme of the fraud is easy to read...debts are repaid with freshly printed money....fabulous stuff.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.