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 watch today is Hugh Hendry. Hilarious, reckless and fearless. I'm glad he's not running any government, but he is fun to watch.
1. Milk for 75 NZc a litre - Der Spiegel reports (in German) that Aldi supermarkets is selling milk for 45 Euro cents a litre (75 NZc a litre) after a surge in production saw the price forced lower in renegotiations of contracts between farmers and supermarkets.
The best price per litre you could get in New Zealand at the moment is 4 litres of Dairy Dale for NZ$6.75, which works out at around NZ$1.69 a litre. Nosh is apparently selling milk for NZ$1.25 a litre.
Wouldn't milk at 75 cents a litre be nice for consumers here?
Not so much for farmers though...Time for local prices to reflect global prices?
Here's the clip from Der Spiegel, for purely entertainment reasons, just to say we're a multi-lingual site. I welcome translation in the comments.
Fettarme Milch (1,5 Prozent) kostet damit 45 Cent, Milch mit einem Fettgehalt von 3,5 Prozent kostet 51 Cent. Auch Butter wird erheblich billiger. Für eine Packung müssen Kunden 75 Cent zahlen und damit 14 Cent weniger. Der Preis für Schlagsahne wurde von 43 Cent auf 37 Cent gesenkt.
Grund für den Preisrutsch ist die jüngste Verhandlungsrunde zwischen den einzelnen Molkereien und Handelskonzernen über neue Trinkmilchverträge. Die Kontrakte gelten in der Regel für ein halbes Jahr. Bereits im November 2011 war Trinkmilch um etwa zwei bis drei Cent je Liter billiger geworden.
Die aktuelle Rabattrunde im Einzelhandel fällt stärker aus als von Produzenten befürchtet. In den vergangenen Wochen gab es Berichte, dass erste Abschlüsse in der Preisrunde Abschläge von Molkereien gegenüber Handelsriesen von vier bis 4,5 Cent je Liter Trinkmilch vorsähen.
"Wer Lebensmittel verramscht, ruiniert unsere Bauern"
2. Eurofailure yet again - Reuters reports Europe's leadership failed yet again overnight to hammer out a deal for new capital rules for its struggling banks.
A summit to hammer out a deal broke up in acrimony with the English accusing the French and Germans of trying to water down rules for tougher capital requirements.
Britain's George Osborne accused fellow EU finance ministers of trying to water down Europe's bank capital rules and said this would make him "look like an idiot", as talks about a law to stop another financial crisis unravelled in Brussels.
In remarks at the negotiating table, Osborne, who says he wants much tougher controls to avoid a repeat of the current crisis, fumed that regulation being discussed could dent the credibility of Europe and harm London, its top financial centre.
Michel Barnier, the EU commissioner in charge of financial regulation, accused Osborne of seeking an opt-out with a proposal that would let Britain impose higher capital ratios on its banks than elsewhere in Europe - something France and others fear could disadvantage continental institutions.
"London is a very important centre but... there are other centres alongside London which also merit consideration," said Barnier, a former French government minister.
3. Extractive elites - Buttonwood writes at The Economist about a new book about how 'extractive elites' in economies such as Russia, China and corrupt African dictatorships eventually fail because they stop 'creative destruction' from happening.
Buttonwood reckons the banking sector and governments have become the extractive elites of the developed world.
In their new book, “Why Nations Fail: The Origins of Power, Prosperity and Poverty”, Daron Acemoglu and James Robinson, a pair of economists, suggest that many countries are bedevilled by economic institutions that “are structured to extract resources from the many by the few and that fail to protect property rights or provide incentives for economic activity.” In contrast, “inclusive” economies distribute power more widely, establish law and order, and have secure property rights and free-market systems.
There are two potential candidates for extractive elites in Western economies. The first is the banking sector. The wealth of the financial industry gives it enormous lobbying power, including as contributors to American presidential campaigns or to Britain’s ruling parties. By making themselves “too big to fail”, banks ensured that they had to be rescued in 2008.
Much of current economic policy seems to be driven by the need to prop up banks, whether it is record-low interest rates across the developed world or the recent provision of virtually unlimited liquidity by the once-staid European Central Bank.
A second candidate for the extractive-elite category is the public sector. In some countries, such as Greece, there has been a clear policy of “clientelism” in which political parties have rewarded their supporters with jobs and benefits that have been funded by the general taxpayer. In the Anglo-Saxon world, public-sector employees now have more generous pension rights than the majority of private-sector workers.
4. Hugh Hendry's latest - Eclectica Fund Manager Hugh Hendry is well known for his provocative and often doom-laden views on global financial markets. Here's his latest on Europe in the video below and via Zerohedge, which says Hendry says: "You can't make up how bad it is."
"The political economy in Europe is such that the politicians chose to default on their spending obligations to their citizens in order to honor the pact with their financial creditors and so as time goes on, the politicians are being rejected."
5. Higher inflation - New York Times columnist and Nobel prize winner Paul Krugman argues here for higher inflation to help solve the US economic crisis.
Essentially, Krugman argues that Bernanke changed his mind on the need for the Fed to tolerate higher inflation in the short term over the past several years for two reasons. First, "basically the Fed staff doesn't like adventurous policies. To some extent he's been converted by the Fed's internal culture." Second, Krugman believes Bernanke and the Fed have been subject to political intimidation. Remember Texas Gov. Rick Perry's now-infamous "treasonous" attack of last year?
"The main thing the Fed can do is promise that they will be very slow to step on the brakes, that as the economy recovers that they will let inflation rise, not to high levels, but to 3 or 4 percent from two percent," Krugman suggested. "That would move the markets quite a lot. It would lead people who are making plans to think that sitting on cash is not a good idea. That's the strategy Bernanke urged on the Japanese twenty years ago."
6. Something just snapped in the Australian economy - Houses and Holes writes over at Macrobusiness that yesterday's Australian services sector contraction was dire.
This report is suggesting that we are headed into recession. Add in the R.P.Data Index of a resumption of house price falls in April and I’m getting the distinct impression that we’re going through some kind of freeze in aggregate demand.
If I had to pick a cause, I’d say that the bank’s shift to unilateral interest rate moves has dramatically undermined confidence in the RBA insurance policy. Folks are headed into their shells. We might also speculate that this is why the RBA pushed the panic button, it may have picked this up in its industry liaison or one of its other proprietary data sources.
7. Still falling - CNBC reports Chinese house prices fell in April for the 8th month running.
Price drops failed to stimulate sales, however, as transactions declined in 80 percent of the 40 key cities monitored by CREIS. Transactions fell by 26 percent in Shanghai in April from March and by 4 percent in Beijing. The CREIS data offers the earliest monthly look into China's real estate market performance.
A Reuters weighted home price index, based on official data published by the National Bureau of Statistics, showed China's average new home price fell in March from a year earlier - the first such fall since the government began to curb property speculation two years ago.
Analysts polled by Reuters last month predicted Chinese home prices will likely fall by a further 10-20 percent between April and December this year, after slipping 5 percent in the first quarter.
8. The only way out - Jeremy Warner writes at The Telegraph that the only sustainable way out of the European debt crisis is the abandonment of the euro and a return to free-floating sovereign currencies.
Only then will Europe's seemingly interminable debt crisis be lastingly resolved. All the rest is just so much prancing around the goalposts, or an attempt to make the fundamentally unworkable somehow work. The latest eurozone data are truly shocking, much worse in its implications both for us and them than news last week of a double-dip recession in the UK. Even in Germany, unemployment is now rising, with a lot more to come judging by the sharp deterioration in manufacturing confidence. For Spanish youth, unemployment has become a way of life, with more young people now out of a job (51.1pc) than in one.
There is only one boom business in Spain these days – teaching English and German. No prizes for guessing where these students are heading.
It's an insightful read.
Before I occupied Wall Street, Wall Street occupied me. What started as a summer internship led to a seven-year career. During my time on Wall Street, I changed from a curious college student full of hope for my future, into a cynical, bitter, depressed, and exhausted “knowledge worker” who felt that everyone was out to screw me over.
Poker is extremely popular across Wall Street, and provides an instructive lesson. The book Poker Winners Are Different by industrial psychologist and poker adviser Alan Schoonmaker presents a scenario where a player notices his best friend’s “tell”—that is, the best friend has a habit of showing when he has a good or bad hand. The book then poses the following dilemma: should you (a) tell your friend, (b) win a bit of money from him, and then tell him, or (c) exploit your friend, never telling him. The correct answer: screw your friend. Schoonmaker, who used to do “management development” work at Merrill Lynch, writes that winners will “do whatever the rules and ethics allow to maximize their profits.” This behavior is heralded in poker and it’s heralded on Wall Street. Despite what may be emblazoned on plaques or in mission statements, the ethics of Wall Street are purely about winning at any cost.
10. Totally Clarke and Dawe - Australian Foreign Minister Bob Carr tested his pre-conceived ideas in a recent meeting with Fiji's Frank Bainarama.
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.