Wednesday's Top 10 with NZ Mint: Fatca; Chinese statistics; Germany to go first?; an evil Daddy; advertising makes you depressed; Dilbert;

Here's my Top 10 links from around the Internet at 10:00 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

I am still keen to get your suggestions for suitable cartoons. If you notice a really good one, please email me. HT Adrian for today's one.

See all previous Top 10s here.

1. "It's a monstrosity"
If you think the new US FATCA law is tough for us, spare a thought for US citizens who live abroad. They are facing killer penalties if they make any mistake in their US tax returns.

Their law is now assuming that every US citizen living overseas is a tax cheat and that must prove otherwise. Extraordinary. It looks like it will take a tax professional a whole day just to complete one of the required forms. Here is a link to the story in the NY Times:

“It’s a monstrosity,” Steven R. Horton, whose tax practice in Paris advises American expatriates, said of the new demand from the U.S. Internal Revenue Service: Form 8938, the Statement of Specified Foreign Financial Assets. “It compels every taxpayer to try to find a way that they’re guilty of some kind of omission.”

The new requirement comes courtesy of the Foreign Account Tax Compliance Act, or Fatca, an effort to crack down on offshore tax evasion by U.S. citizens. The impetus for Fatca was the revelation that the Swiss bank UBS had been helping thousands of Americans - many of them U.S. residents - to cheat the Internal Revenue Service, an offence for which it paid a $780 million penalty and handed over details on thousands of clients to end prosecution.

The new form requires taxpayers to provide detailed information on their overseas financial accounts, including income derived from them. The penalties for failing to file start at $10,000. Significantly, tax experts warn, filers are subject to major penalties for underreporting - and even where innocent errors are made, they say, it will be up to the taxpayer to convince the IRS examiner of their innocence. The statute of limitations does not expire until after a corrected form is filed.

Proponents say Fatca will bring the U.S. Treasury huge sums each year once the IRS is able to compare individual tax data with reports from foreign financial institutions.

“Offshore tax evasion costs the U.S. jobs and billions of dollars each year, and it puts an unfair burden on the average American taxpayer to make up the difference,” Senator Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee and a sponsor of the legislation, wrote in an e-mail. “In an era when budgets are tight, it’s critical for the IRS to have the resources it needs to root out tax cheats.”

2. A grim fairy tale - Chinese stats
People are always suspicious of Chinese statistics - the expectation is that they have been sanitised up. So it was a bit of a surprise that Q1 2012 GDP data came in at +8.1% below most analysts estimates of +8.9%. However, now there has been some time to consider the latest data, suspicions are rising that there has in fact been some sanitisation 'up'. That is because the main components mostly seem to be suggesting only a +5% growth. And that's a huge difference that could reverberate around the world.

Here is Forbes analysis » and here are some key elements:

So how fast did GDP grow in Q1?  By far, the best indicator of Chinese economic activity is the generation of electricity.  In the January-February period electric output grew by 7.1% year-on-year according to official statistics.  In March, output increased 7.2%, the slowest increase for a non-holiday month in a year.  Because the growth in electricity outpaces the growth of the economy, it’s evident that China cannot be growing faster than 6%.

Actually, a 5% pace is more realistic because other signs point toward flattening growth.  Home and commercial property sales dropped 14.6% in Q1 from the same period last year, for example.  Bellwether passenger car sales for the quarter were down 1.8% year-on-year, and sales of commercial vehicles were off a stunning 10.8%.  The latter figure, usually neglected by the China-watching community, is particularly important as it suggests general business activity will slow in coming months.

3. Is materialism a mental disorder?
If the desire for ever-more material goods is not itself a mental disorder, it is associated with higher rates of depression, anxiety and anti-social behaviour - or so suggests a new study. If you frame questions from a 'consumer' point of view, the responders are wary and cynical. The same questions framed from a 'citizen' point of view reveals a much more balanced response. ScienceDaily reports:

The findings have both social and personal implications, says psychologist and author of the study, Galen V. Bodenhausen. "It's become commonplace to use consumer as a generic term for people," in the news or discussions of taxes, politics, or health care. If we use term such as Americans or citizens instead, he says, "that subtle difference activates different psychological concerns."

We can also take personal initiative to reduce the depressive, isolating effects of a materialist mindset by avoiding its stimulants - most obviously, advertising. One method: "Watch less TV."

4. It may be Germany that leaves the euro first, rather than the PIIGS
The impacts of a two-speed Europe - one going flat out, the other going backwards - are now getting quite severe. It's basically an unnatural and unsustainable concoction where no country has sovereignty over its own monetary conditions. There's deflation and there is inflation both going on at the same time in different countries, and it is the inflationary effects in Germany that might be the tipping point. The WSJ explores the growing tensions:

Now the boot’s on the other foot. Loose credit conditions have been put in place to help peripheral Europe, and these are leading to wage and housing price pressures in Germany. If sustained, the inflationary forces will only exacerbate the already deep rift between the miserly instincts of the Bundesbank and the desire for easy policy within the rest of the ECB.

It’s hard to see a way out of this conflict. While peripheral Europe flounders under austerity and giant debt loads, Germany flourishes. Unemployment has fallen to 5.8%, creating a scarcity of workers that has attracted large-scale net migration under the EU’s freedom of movement rules.

The result: surging demand for housing, especially in the urban areas. The rate of price increase as calculated by BulwienGesa AG for 125 towns and cities was 5.5% last year, considerably higher than in 2010, which showed a significant 2.5% gain over the prior year. That’s not much by the standards of the pre-crisis U.S., but blazing for Germany.

Meanwhile, wages and salaries per employee rose more sharply in 2011 than at any time since 1993, according to the Bundesbank report. Add to that a recent deal giving Germany’s two million public sector workers a 6.3% wage increase for the next two years and you get fuel being added to a slow-burning fire.

Professor Joseph Stiglitz’s thesis may hold true: The cost for Germany will be so high that it is Germany that will leave the euro first.

HT Adrian

5. 'Daddy, you are more evil than I thought'
A hedge fund manager who specialises in short selling explains his business to his son.

So, perceptively my son asked whether it was in my interest to dob scammers into regulators – he asked whether the reason we did not do it much was because of the reasons stated above or because we liked the scammers to be free and profitable. Alas – and I had to confess it – at least part of it was that being a successful short-seller required that regulators were inadequate to the task of policing fraud.

6. Interest rate crime
Various LIBOR investigations are throwing more light on the murky way this benchmark rate has been set. The Economist has dug into where these investigations are up to. The results for the offending banks at the center of this scandal could be very expensive indeed.

If the case is upheld, damages could be big. The American cases are being pursued under “class action” litigation. This means that if Baltimore’s case is upheld other cities sold the same products will also be able to claim damages. Across America 40 states allow municipalities to enter into swap agreements. The total estimated amount in 2010 was $250 billion-500 billion, according to an IMF paper.

What’s more, cases are being brought under the Sherman Act, America’s antitrust law, which allows for triple damages. Assume the worst and damages for American cities alone could go as high as $40 billion.

7. Satellite data II
Hard on the heels of our report of a satellite census that showed there were almost twice as many Antarctic emperor penguins than thought, 3D altitude maps captured by satellites show glaciers in part of the greater Himalaya range are bucking the global trend of continued ice loss - in fact they are growing. The UK Guardian has the story »

8. The Camorra never sleeps
This story had me riveted. It has nothing to do with the economy or interest rates, so I hope you don't mind if I link to it. Its a fairly long read, but gripping. We should really value the rule of law and an open society. This is what happens when democratic institutions get weak.

It's a crime story, about Naples. For years before they caught him, the Italian police had no idea that Paolo Di Lauro was one of Naples’s most powerful crime bosses, running a drug and counterfeit-goods empire - and responsible for a peace his turf had rarely known. Now authorities may long for the days when he was in charge. The full essay is in Vanity Fair.

“We have no choice. The Camorra has created an anti-state whose very existence threatens the legitimacy of the Italian state. If the courts did not act, they would not be real. If the courts are not real, Italy will not endure. Our role is not to prevail over the Camorra but to go through the motions of trying.”

9. Links between fracking and earthquakes
Scientists from the United States Geological Survey have cautiously weighed in on a subject that has sparked public concern in some parts of their country: spates of small and not-so-small earthquakes in oil- and gas-producing areas. It's a short and somewhat dense scientific note, but it does conclude ...

The acceleration in activity that began in 2009 appears to involve a combination of source regions of oil and gas production ...

The New York Times has an easier-to-read summary of the issue here » The issue is relevant for New Zealand given our drive to produce more oil and gas locally. And then there's this »

10. The last laugh
Someone made very complimentary comments a couple of days ago about this version of Top10. This one's for you, from the archives.

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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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.


I'm back ! ....... yeah baby , Gummy rocks ......

@GBH - it would seem so and Hickey could be out if this not so subtle affirmation of your preference is proof. Enjoy the 15 mins.

If  Bernard was the  true master of hickeysterical gloomsterising , he'd be reporting in from France on the travails of the Eurozone , lamenting the end of mankind as we know it .....
....... but nary a word !
Meanwhile , here at , while  Captain Calamity is away , all manners of greenshoots are creeping forth ..... good news is breaking out ..... the gloom is lifting ...

Let the man have a holiday Gummy. I'm sure he'll have plenty to say about the eurozone's woes upon his return.

I agree entirely , I love the new positivism of ......... the question is , when Bernard returns , will he round-up the greenshoots which have burst forth here , or allow them to flourish ?
..... imagine  that  , the prince of darkness taking a walk on the bright side of life ....... wow !

Gummy – I recommend you read more “mainstream journalism”, do more garden work, breath fresh NZair and maybe watch some more of this: to keep you positive all day.

...... the Count of Christov says he has a little job for you ....  he was a tadge cryptic ...... someting about buying a ticket to Wellington ......
.... oh yeah , and matches ..... don't forget to bring a box of fire-lighters , that's the key thing to do ......

No, no Gummy we don’t have to be in Wellington - we remotely control the blow up of “That Thing”

No I wasn't GBH..burn the witch .!.burn the witch...!.go Walter you good thing...! I'd be there for you only I couldn't slip the Llama on the train....told the conductor I was taking the wife for a nose job.
Watch out for Key's security detail...they have seen all the episodes of 24 and Another 24, so probably first rate in sussing out a dirty bomb.

oh right prefer to live in prozac land....

Holiday..! holiday....I didn't get where I am taking holiday.
Give it some thought.
 bloody luxury.

But can you shake your booty like that Green Gummy????????

...... sadly , no ....... he is a finely tuned athlete , compared to moi .......

Interesting passage:
Casinos, sports arenas, and convention centers don't generate income for those who've lost their jobs. The casino is a particularly apt metaphor for the intellectual bankruptcy of thinking, because, if done well, you can generate short-term income and tax revenues.
or Nation of Spoiled Brats

9. Links between fracking and earthquakes
However Taranaki Regional Council director of environment quality Gary Bedford says any earthquakes caused by fracking would only be minor.
"In terms of Taranaki, the seismic signals caused by fracturing get lost in the seismic activity caused by surf breaking on our beaches."
Mr Bedford says findings from the British panel back up other reports compiled in New Zealand.

Ad.3. David - obviously you have Consumerism in mind - not materialism, unless you have specific agenda in place....

1. yet US corps can legally leave vast sums abroard.....crazy....

One would think they would be liable as they (Corps ) won the legal right to enjoy the privileges of individuals - i.e.  bankruptcy without real penalty. guys are really out there these days...only true initiates or japanese soldiers in the philipinnes who haven't been told WW 2 is over would know what you're all talking about?

hey Robo The Glen....hows it going in radioland...? have ya made us famous yet...!
 As to the above don't really need to know what your talking about  to post here....hell pick one at random.... as long as it's contraversial.....  anal...repetitive....and you sound plauseable.....outrageous.....or should get a response.
 And isn't that what we come for ...? the love....the interaction...the family atmos....and most of all the return of Darth Vader.

So here we have a disaster brewing for tax payers.
The bank defrauds local government who in due course may get huge payouts.
Sad state of affairs since the tax payer guaranteed the bank.  So the rate paying public is gets a payout from the tax paying public.


The Next Global Crash: Why You Should Fear the Commodities Bubble
As playwright Arthur Miller once observed, "An era can be said to end when its basic illusions are exhausted." Most of the illusions that defined the last decade -- the notion that global growth had moved to a permanently higher plane, the hope that the Fed (or any central bank) could iron out the highs and lows of the business cycle -- are indeed spent.

Hmm seems to suggest its all a speculative boom and not real scarcity?  not sure would be interesting to know what is the fair value price v the % added on for thegamblers....
For instance the talk about copper ore being stored strikes me as un-substantiated.....we are talking about storing a lot of rock with some copper in it......why not just buy the mine and shut its gates? strange...
I do think prices will nose dive, but that will be becaus eof collapsed demand as a depression bites....
but its a different perspective ....thanks

Joe Stiglitz's Presentation On Why The Entire Global Economic System Is Doomed To Fail

Read more:

Careful Andrewj,
Wouldn't want you to interrupt The Gummy Bear'd hero's pollyanafest

Some people are " the glass is half full " types ...... and some are " the glass is half empty " personalities .......
....... I'm reckoning that the Gibber is a  " holy fecking hell  Batman , the glass is radioactive , and she's gonna explode  any second now "  type .......
Am I right , or am I right ? ........ I'm right , right !

Anyone knowing that the glass is half-full, should know that it is half-empty.
Because it was full when they started drinking.
If they were smart enough to have tracked the increased rate of their drinking, they'd have been able to ascertain from time-taken-thus-far, their time-to-drained-dregs.
In rough terms, they'd be 5/6ths of their time-span gone.
But perhaps the drink befuddles them......
Another one who sees the glass as it is....

...... slightly  alcoholic , is he ? ...... poor befuddled soul .....
Beffuddleholics Anonymus ( BA ) is the place for him , they care , they really do ....

There is easily 200 Trillion Dollars out there...desperate for yield.

Until there is significantly more debt deflation...there is just too much demand for yield by the mindless yield locusts in relation to supply to drive prices down for long.

And if you allow the population to think deflation is here to stay...They will cut back and cause acceleration to the Invest a Billion ounces of silver into the silver mining operation and only get 100 Million ounces out...

You are in big trouble...

Unless the FED maybe quantative eases and makes up the difference...Then you can buy a bit of time...Of course once you have exhausted fractional reservation of commodities.

The Grim Reaper came for me last night, and I beat him off with a vacuum cleaner. Talk about Dyson with death.

Obviously your lux in.

When I came here 17+ years ago I bought a cheap "red devil" vacuum cleaner....its now my router table dust extractor so its kind of hammered but still going.....the Dyson I had lasted 18months just from in house use.....but cost $800 v $ much for "quality"...death would be laughing...

So you got sucked in then?

Oil futures is doing a flip....both WTI and brent starting to drop, speculators leaving I wonder?
BDI also maybe topping.....ho hum...

Seems some financial sites might just be geting that the problem is supply...
"Supply, and the recognition of supply, are now the dominant factor in the oil price. A point so obvious, it hardly seems worth making. However, the developed world is still largely operating on the classical economic view that higher prices will make new oil resources available.
That is true. But, it’s just not true in the way most anticipate.
While higher prices have brought on new supply, these resources have been slow to develop, are more difficult to extract, and generally flow at lower rates of production. As the older oil fields of the world decline, the price of oil must reflect the economics of this new tranche of oil resources. There are no vast, new supplies of oil that will come online in 2013, 2014, and 2015 at the scale to negate existing global declines."
So 2012 might be a fairly quiet year....not so sure on 2013

Interesting day for oil, is china moving into South American oil?

For 'their oil', read 'our hydro dams'.
When the mob gets shafted by overseas interests, sooner or later they put leaders in who boot the overseas interests out. If that fails, you get Nigeria. If it wins, you get Argentina.
I suspect we'd win.

Because the financial and economic history of Argentina has been so wonderful? What number hyperflation are they up to now?

Finance Companies alive and well? is accepting adverstising from Liberty Finance (see banner advert). Is endorsing this company. Is it OK?

Doesn't the RBNZ now have to approve finance companies' right to tout for cash?

Another day full of lies and BS ahead of the peasants..... latest comment from the piigs zone...
"Italy slashes its 2012 economic growth outlook, as Spanish stock markets slide on bad bank loans data and comments by ECB policymaker Jens Weidmann that it is not the central bank's job to tackle Spain's problems. "

How the Dutch got those ski slope nose profiles!!!!
"Fitch Ratings has issued the clearest warning to date that Holland faces losing its AAA rating if it fails to deliver austerity cuts or lets political conflict intrude on economic management."
"The Dutch are on the edge of a negative rating action," said Chris Pryce,

The warning comes as Dutch property tips into deeper slump, with the inventory of unsold homes nearing South European levels. Household debt is the eurozone’s highest at 249pc of income, compared with 202pc in Ireland, 149pc in the UK, 124pc in Spain, 90pc in Germany, 78pc in France and 66pc in Italy - according to Eurostat data from 2010.

The Netherlands is caught in a "negative feedback-loop" as recession and house price falls feed on each other. Building permits have dropped 9pc from a year ago, the lowest since 1953. "The housing market is in a coma," said the Volkskrant newspaper"
QUESTIONS 1.What has the fall in building consents in NZ been?
2.What is the NZ household debt % of income.


The full story here..why the EU is a corpse...

"A drastic contraction of European bank balance sheets during the next 18 months could jeopardise financial stability and economic growth in Europe and beyond, according to forecasts from the International Monetary Fund."