Thursday's Top 10 with NZ Mint: The next great migration; lousy and lovely jobs; ugly stats; grocery prices; 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.

See all previous Top 10s here.

1. The next 'great migration' ?
'Everyone' wants to live near the city centre, or that is how it often feels in our property markets. Why is that? My generation essentially escaped the rundown, decaying central city neighbourhoods for the good life in the suburbs.

How times have changed - but Nathan Morris is suggesting that something more fundamental may be about to happen. If he is right, it will have big implications for public policy makers (and Hugh P.) Is he right? Or is this just the latest gasp of the widely discredited 'Smart Growth' lobby?

After 60 years, many commentators have announced that the American Dream is poised to make its next great shift - this time from the suburbs to the urban core of our cities.

Generation Y wants freedom, not obstacles or anchors. So when it comes to where and how they live, they also exhibit a greater desire to rent rather than own.

Just as cities were not completely abandoned in the 20th century, suburbs will not be abandoned in the 21st century. But the shift in preferences is clearly underway, and this radical change will manifest itself in the nature of real estate development over the next 20 years.

2. You ain't seen nothing yet
Facebook captivates people, both users and investors. This has resulted in sky-high valuations that may become its undoing. To justify these valuations, it needs to increase its revenues by +25% per year for a decade! Who will be be paying? A: It's users.

But there should be great doubt that those users will tolerate such a high level of monetisation of their own data. Here is Frédéric Filloux's take on the situation:

Facebook numbers are both fascinating and frightening. The social network will pass the 1 billion members mark this year and the capillarity of its services is creating an alternate internet before our very eyes. It has already become a credible substitute for email; it soon will be the dominant news channel for millions. At the same time, it is hugely profitable: Facebook’s margin reaches 62% and its $3.5 billion cash pile will allow occasional mistakes or, if you prefer, bold experiments.

Then, what could go wrong for the ultra-dominant digital rhizome? Two things: its contempt of privacy and Wall Street frothy expectations.

3. The rise of 'lousy' and 'lovely' jobs
More bad news for the middle class: as the economy recovers, jobs in the middle won’t. That is the conclusion of an important new study that connects a long-term trend in the labour market with the business cycle of recession and rebound.

Thanks to technology, more and more 'routine' tasks can be done by machines. The most familiar example is the increasing automation of manufacturing. But machines can now do 'routine' white-collar jobs, too - things like the work that used to be performed by travel agents and much of the legal 'discovery' that was done by relatively well-paid associates with expensive law degrees.

Chrystia Freeland at Reuters has a useful review. And here is a chart from the paper itself that goes to the heart of the matter. Today's students need to choose their careers wisely.

4. Today's ugly stat
Construction levels of single family houses is very weak in the US and things aren't improving. You might be a little surprised because some news reports said [accurately] that they are +17% ahead of the same period a year ago. But that hides the real scale of the US new house building depression. Here are the details from the venerable Christian Science Monitor, but it is their chart that says it all:

5. Warren Buffett has prostate cancer
Legendary investor Warren Buffett has prostate cancer but its the kind that is unlikely to slow him down anytime soon. He is almost 82 after all, so something is going to get him at some stage. Berkshire Hathaway shares fell almost 2% on the news. Buffett hasn't been beating his benchmark recently. Lustre is being lost - although by any measure he is a remarkable guy. 

6. 'We'll be back on track by the next election'
From The Economist: By the end of the last quarter of 2011, GDP in the 34 countries of the OECD was 6.8% lower than it would have been had it continued at its 1995-2007 trend growth rate of 2.7% on average. In monetary terms, that's US$2,200 per person.

According to the IMF's latest economic growth forecasts for the years up to 2017, it will take OECD countries another 2.7 years to reach its pre-crisis trend level of economic output. Applying these calculations to individual countries level, it is clear that the PIIGS have become particularly stuck in the mud, as can be seen in the chart below.

7. Stunning data
I am always amazed by the sheer shear volumes that go through the NZD foreign exchange markets. In 2011, all up they totaled NZ$2.9 trillion* - surely the biggest single number associated with the New Zealand economy and nearly 15 times greater than GDP. We track this activity here » based on the monthly RBNZ B4 data releases.

If you check our charts you will see that Spot transactions were in a minor volume decline from 2005 until the end of 2010. But since then they have been on an upward track. Spot transactions accounted for nearly 13% of all fx activity in 2011. Forwards accounted for only 5% although a check of that same chart will show that this activity is growing.

But the really big activity is in the swap markets - more than 80% is here. This activity was rampant 2005 to 2008 and has fallen away a lot since then. In fact March 2012 swap activity is down 18% on the same month a year ago.

(* Perhaps we should halve that number. The data counts both buyer and seller transactions and there will always be one of each in every trade, so the real volumes will be half those counted.)

8. Clever or dangerous?
There are some clever people out there (and you are probably one of them, of course). Some China watchers have worked out how to estimate the volume of hot money flowing into China - they removed the FDI, trade flows, fx revaluations and interest earned from the total official flow data.

Then they noticed something interesting. That hot money flow approximated the Chinese buildup in metals stocks. Is this evidence of Chinese metals speculation? Or metals speculation at the expense of the Chinese?

9. Grocery price update
CPI for Q1 2012 is due out in a few minutes so I thought it might be a good time to show you where our weekly grocery list monitoring is these days. Each week we check the cost of one 'healthy foods' list in New Zealand, and the same list separately in Australia. We have been doing the NZ list using the Countdown online shopping facility now for 44 consecutive weeks and will publish the full details when we reach the one year anniversary.

But here is a chart of the interim results. No evidence of grocery price inflation here - probably thanks to a high exchange rate and to the impact of 'house brands'.

10. The last laugh
Not really comedy, but I reckon it will make you smile.

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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'Housebrands' do it for heaps not buying the fancy names...

Yeah, I find the homebrand salted nachoes as good as the dorkios's but a lot cheaper........however I find pak'n'save is cheaper overall but they dont do housebrands....though their no-names seem OK....

#1  I live in an apartment, in Europe, near a city centre. When I return on frequent trips to NZ I rent a apartment in Auckland.  There is such a huge difference between the 2. In Europe apartments are built for families and quality of life. My experience in NZ is that apartments are built on the cheap and designed for rental, rather than owner occupancy.
Developers obviously want to make a quick buck, investors probably don't appreciate how shoddy the apartment actually is. The council seems to be asleep in allowing the mass proliferation of cheapy constructed inner city dwellings

#1 is just plain wrong. Has to be written by an economist.
CBD are going to become increasingly irrelevant - most of their activity wasn't related to physical stuff, but needed to be underwritten by real stuff. The overshoot is massive, the reals tuff will still happen, therefore parasitic paper-shuffling will suffer.
One of the real-stuff shortages is energy, which in turn has meant we didn't need to work at food (something real, we really need) in living memory. So it's a no-brainer that the migration will be the other way - labour attempting to replace fossil energy in the fields.
Some will always live in the cities, of course - 1/4 acre suburbia can support a good deal of food, and the Cuban experience suggests you can do a bit in the open spaces....

So how many people do you think could be fed of a Rugby pitch PDK? :-P

Well, the first 5/8ths would feed the forward pack, which would be reduced if you outlawed drop-kicks....

#1: EW is corerect. PDK is correct.

Here's a job for you PDK. The job, should you choose to accept it is to station yourself permanently at Auckland International Airport and re-educate and re-program the asian migrants who are pouring into Auckland in a tidal wave knowing nothing about what you speak and probably don't care. They need re-alignment.

I lived in Auckland once, wouldn't do so again if you  :)
Yep, there are many on the planet who don't have a clue, probably 99.9%. They'll be lost, just like everyone else, though. They too, expect to redeem their 'wealth'. They too, expect to drive a SUV to a supermarket, and just 'get' food. Not too far back, though, they'll remember how to plant, tend and care. Maybe that might make them more useful than the ex-office, get the picture...

When did you last spend time there? Have a good look under the hood?

All we need to do is continue to relocate the homeless Cantabrians. In particular we could round up all the skinheads, or otherwise white supremists, and dump them in central Auckland. They would be like a pig in ****. 

Phil Mcdermott puts up a different view -- the trend he sees is more suburban infill and dropping demand for central city apartments as the blip of youngsters age and play at happy families.

It is nothing to do with the council, nor should it be.
I had the mis-fortune to do some design work for such developers at one stage, the one aim was to make in excess of 100% per yes I totally agree, they are cheap and nasty by and large materials are as cheap and shoddy as posible and the cheapest labour is always used etc.....I wouldnt go near one.
Dont blame the council, blame the punter who is willing to buy such rubbish.....egged on by greed BTW, the council just there to make sure its livable, safe and will last a reasonable amount of time.


With escalating fears regarding the stability of the eurozone, today King World News interviewed former LBMA commodities broker and trader and current MEP Nigel Farage to get his take on the situation.  Farage had some very interesting comments regarding the Italians moving large quantities of gold to Switzerland, but when KWN asked about the chaos in Europe, Farage stated, 


“Well, so far, from all of the European officials and from the new IMF branch office in Washington, we’ve had unanimity that there was no prospect, at any stage, of the euro being under threat.”


“Suddenly, a big shot from the IMF says, ‘There is a problem here, and there may be a breakup of the eurozone.  It could come sooner than you think.’  I see that as a bit of a crack in the dam.  They’ve always used the argument that the euro was inevitable and it was here to stay, and an individual from the IMF has just completely blown that out of the water.  


(The breakup could be disorderly) because there have been no contingency plans.  This is what makes me so angry.  I’ve been saying to Barroso and that little Van Rumpuy character, ‘Come on, let’s have a Plan B.’  Let’s actually get ourselves ready in case it goes the other way.’  The point the IMF official made is that there have been no contingency plans whatsoever....


“Therefore, what is likely, is that, at some point, the markets will just overwhelm and engulf the whole thing, and short-term, that will lead to chaos.  The whole central banking, International Monetary Fund banking system, I mean it just begins to look more and more like the biggest Ponzi scheme we’ve ever seen on earth.


There are going to be some serious banking collapses and the impact of that, on some sovereign states, will be serious.  I’m afraid we’ve gotten to a point where we really can’t stop this now.  We’re beginning to reach a stage where however much false money you create, the problem becomes bigger than the people trying to solve it.  We are very close point.


When I talk about the threats and the risk that this thing could finish up in some kind of rebellion, some sort of awful social cataclysm, they (other European politicians) are now very worried indeed.  They will talk to you in private, but in public, nobody dares utter a word.

..not so sure about that PDK.  I have read related not unsimilar US article's where the retiree's are  also now preferring  inner city apartments as oposed to isolated suburban ring fenced rest homes.  The reasons largely the same as the gen Y's.  They can take the lift and be downtown at the press of a button, no need to worry about a car, shop's, movies, cafe's, Doctors etc nearby, family happy to visit due to location and so on.  Far more stimilating place to live than sitting in a unit miles from the cbd and the rest of life...

That's while energy is available to those who can pay, and assuming they're the ones who can still pay.
When the energy-requiring just-in-time food system starts to open at the seams, and the holes in the s/market shelves manifest in hungry angst....... think Wardells, Dunedin, 1932, and multiply it. I know where I'd rather be.

Surely it is more energy efficient for everyone to live in a compact city and have their food trucked to them, compared to everyone living in the country where they have to drive to get the things that they don't grow. 
I don't believe in your peak energy theories - sure we may not have enough oil - but couldn't we just drop a big nuclear reactor somewhere and have all the electricity we ever need? If we had to, couldn't we put overhead cables over roads to power cars and trucks like the Wellington buses use? Peak oil will make things harder and more expensive, but not impossible.

JJ - it can't be a theory and 'sure we may not have enough'.  Yes, we can make electricity by other means, and yes, we can beome more efficient. I do both - miles ahead of most.
But - your fertiliser is oil, your road is oil, your plastics are oil, all your infrastructure iseither oil, or brought to you by it. Yes, we should be saving it for those things, rather than setting fire to it in little cylinders to propel us down the road. No, that won't be enough.
When you think 'more expensive', I suggest you miss the point. Money is an artificial proxy. No amount of it will create a supply of something that no longer exists, as every empire has found out (Rome ran into 'peak wood').

The problem is you are confusing convienience with ability.....hmm not the word im looking for but Im out of time.  bbl.

I am afraid that the masses won't starve in town while you feed yourself silly.  They'll be raging the countryside raping and pillaging at will.  In such a scenario you'll need to be in a fortified commune armed to your teeth.  Good luck with that!!

Happened before, at the time of Wardells - my old man lived in Waimatuku, half-way between Invercargill and Riverton. They certainly got that far........I'm told my paternal great-grandmother was quite a sight; anlke-length black, shotgun in hand...... she didn't lose too many carrots, but she offered carrots-for-work, usually accepted.
I'm just suggesting we circumvent the standoff part..

Do you have unlimited ammo, like in the movies?

"I'm just suggesting we circumvent the standoff part"
Did you miss that sentence?

careful...never know whoose'll trigger another terror raid!!!  All those STG guys are dying to have another playdate!!

Or they will just pay you to bring them food like they do now...

JJ - with what? Are you another who thinks money will always buy something? It's slow going, ........I'll put it up again:
Please read it - many obviously don't - then answer my 'with what?'
We could do with a rebuttal above the level of mantra, how about it?

"Labour leader David Shearer says economic growth needs to work for all New Zealanders, because too many Kiwis are working long hours for low wages.
In his second "scene-setter" speech at the Nelson Chamber of Commerce this afternoon, Mr Shearer said the Government's policy needed to focus more on lifting the incomes of all New Zealanders, not just a privileged few."
Such as himself !

Shearer is a wasted space. So is Labour at this point, which is a pity, because Key is gradually being exposed for what he is, and will self-destruct.
It's not an argument as to who has a slice of the cake, its about how much cake there is to go around.
Physics doesn't care whether a species is altruistic of self-centred, but physics can wipe it out, and physics can tell anyone with an IQ over about 50, that economic growth is based on physical growth, and therefore had to hit the ceiling.

Yeah well it comes as no suprise to discover Shearer believes he can trot out the same old same old and expect to harvest seems as though he simply fails to understand the era of the socialist free meal is over...or he thinks Kiwi are so stupid they will vote back a bunch of economic loons......
Where are the policies that rid us of the WFF and AS pork slicing madness...why should we not expect Labour to open the immigration gates to tens of thousands of his 'Somali mates'...why has he not taken a stand to promise a slimmed down end the work creation does he intend to approach the powerful banking cartel..with cap in hand like Key.
Which brings us back to the property bubble of idiocy blown during the sick Clark years....a way to fake the growth and keep the snouts in the pig trough.

the phrase "shear volumes" in item #7 has niggled away at me.
Not sure whether it should be "sheer volumes" or "shear volumes"
went off to Urban dictionary and had a  look at "shear" and "sheer".  Neither settled it for me. (And Urban Dictionary refs are not really work safe for these words)
Are there any english grammar nazis who can determine which phrase would be better in context of #7?
(As an aside, I also went looking at urban dictionary for "key" and "Shearer"....  Many more refs for "key" than "Shearer"...   "Gummy Bear Hero" was not there. But go figure... "Gummy Bear'd" was...)

Its 'sheer' in that sutiation. Shear is a cutting thing - two blades.
Ta for sharing that.
try Grievous Bodily Harm. He might be under that....

Well that led me to look up GBH and then had me wondering what colour hair GBH has... 

#1 - I have just moved into a 48m2 apartment at the low end of the Auckland market.  After years of living on a lifestyle block with endless chores to be done, I have to admit I am loving it.   But apartments should have some minimum requirements: 1 a balcony, 2, a carpark.  I don’t think I could do it without this.  But for once, it feels like I own my property, rather than my property owning me.  Downsize your debt and go simple, I recommend it…  It has also forced me to rationalise the “stuff” I own, cause there is simply no room to put it all…
"These individuals have riches just as we say that we have a fever, when really the fever has us" - Seneca (~50 A.D.)

Good comments, but perhaps unrelated?
Downsizing your debt is good, eliminating it better. Going simple is also valid, as is going small (see what we did a family-of-four  year's cruising in:
I think the 'chores' thing is a matter of attitude, though. I see it as my 'work', and to a certain extent, rely on it for built-in exercise. Far more satisfying that sitting in an artificial office, doing artificial stuff.
Don't worry about the carpark thing - don't know how old you are, but 10 years will see that era gone.

"Experts" have been talking about this phenomenon stateside for years. The reality has never matched the hype. Lot of retirees want to stay put. Also, to get a reasonable quality inner city apartment can be expensive, in Auckland you are looking at 600K plus for a decent size 2-3 bedroom apartment of reasonably good quality.
It will keep being an option but is never likely to be a major movement

Hmm, David C
Darn it, whole thread's turned into a Mad Max scenario versus the Growth Believers.
FWIW, that ol' hippy Stewart Brand, in 'Whole Earth Discipline', has a much cheerier view, simply explained in four parts:
1 - City Planet - cities are greener, generate most or all innovation, concentrate problems then solve them, and are way more fun to live in than subsistence farms.
2 - GE the heck out of everything.  Just as LanzaTech can generate liquid fuels from stack gas, the ultimate aim is engineered chains of organisms, each thriving on the output of its precedessor, and spinning off useful stuff for us at every link in the chain.  Call it an ecosystem...
3 - Nuclear - the greenest fuel there is.  Bury a reactor outside a city, use it for 50-70 years, pull up the ladder at the end of its life.
4 - Garden the whole show.  The Indians were well on the way to doing this for the US when the germs, guns and steel of the Spaniards boogered the whole process.  A substantial chunk of the Amazon was terraformed in precisely this way (Charles Mann, 1491) is the reference here.
Have a 10,000 year view......
Sounds way more fun than sitting on a sinkable boat, with a crossbow, waiting for the barbarians....

Chuckle - we don't need another hero.
He should study energy.
So should you.
After you've studied exponential math.

you must be old ... old enough ... to know the difference between then and now

Anyone out there still doubt that criminals are calling the shots!
" Lagarde calls on all IMF member states to "finish the job" and pledge more cash to tackle the eurozone crisis, saying that bailout funds be sent directly to banks rather than struggling countries."
Why not cut away the farce and just let the banks tax the people the pollies....get rid of the fake govts...The bank bosses can manage the contacting out of the pork slicing welfare need for govts anywhere. The savings would be massive and the banks would have to manage it all.

Interesting..........but isnt this protecting the savers? I mean otherwise banks will default and OAPs will be the big losers.
Laughable.....lets just pile money into the open cesspits that is the not sure how she sees that working, but maybe she sees no other choice.......I think they should be natioanlised and the CEOs etc put in prison for gross fraud.