Thursday's Top 10 with NZ Mint: Modern wheat a 'chronic poison'; The Pope of indignant billionaires; Finding peace with honour in the currency wars; Brash vs Doyle on the high NZ$; Riots and a bank run in Iran; Dilbert

Here's my Top 10 links from around the Internet at 11 am today in association with NZ Mint.

As always, we welcome your additions in the comments below or via email tobernard.hickey@interest.co.nz.

See all previous Top 10s here.

My must read story is #1. I am continually stunned at the way the emperors still think they have clothes on.

1. The outrage of the super-rich - Chrystia Freeland has written a detailed piece at the New Yorker about a hedge fund billionaire who is angry with Barack Obama for stoking class warfare.

Leon Cooperman, who is described as the Pope of a movement of hedge fund managers sick of being demonised, is demanding more respect.

He wants Obama and the poor to stop complaining all the time about how rich the rich are.

He is not interested in paying more taxes.

This outbreak of grumpiness is despite the super-rich doing the best out of anyone during the Obama years as bank bailouts and central bank money printing inflated stock and bond values. See #4 below.

Here's Freeland. It's well worth a read to understand how power in America works.

The growing antagonism of the super-wealthy toward Obama can seem mystifying, since Obama has served the rich quite well. His Administration supported the seven-hundred-billion-dollar TARP rescue package for Wall Street, and resisted calls from the Nobel Prize winners Joseph Stiglitz and Paul Krugman, and others on the left, to nationalize the big banks in exchange for that largesse. At the end of September, the S. & P. 500, the benchmark U.S. stock index, had rebounded to just 6.9 per cent below its all-time pre-crisis high, on October 9, 2007. The economists Emmanuel Saez and Thomas Piketty have found that ninety-three per cent of the gains during the 2009-10 recovery went to the top one per cent of earners. Those seated around the table at dinner with Al Gore had done even better: the top 0.01 per cent captured thirty-seven per cent of the total recovery pie, with a rebound in their incomes of more than twenty per cent, which amounted to an additional $4.2 million each.

Evident throughout the letter is a sense of victimization prevalent among so many of America’s wealthiest people. In an extreme version of this, the rich feel that they have become the new, vilified underclass. T. J. Rodgers, a libertarian and a Silicon Valley entrepreneur, has taken to comparing Barack Obama’s treatment of the rich to the oppression of ethnic minorities—an approach, he says, that the President, as an African-American, should be particularly sensitive to. Clifford S. Asness, the founding partner of the hedge fund AQR Capital Management, wrote an open letter to the President in 2009, after Obama blamed “a small group of speculators” for Chrysler’s bankruptcy.

Asness suggested that “hedge funds really need a community organizer,” and accused the White House of “bullying” the financial sector. Dan Loeb, a hedge-fund manager who supported Obama in 2008, has compared his Wall Street peers who still support the President to “battered wives.” “He really loves us and when he beats us, he doesn’t mean it; he just gets a little angry,” Loeb wrote in an e-mail in December, 2010, to a group of Wall Street financiers.

2. Economics after the crisis - This is a book written by British civil servant Adair Turner. Looks like one I need to read.

Here's a review by Robert Skidelsky at The Times Literary Supplement.

Adair Turner is the jewel in the crown of British public servants. He is one of a tiny minority in public life today capable of thinking and acting at the highest level. Economics after the Crisis, based on three lectures he delivered at the London School of Economics in 2010, is a thinking person’s delight, not least for the clear and lucid way in which Turner sets out his arguments. His book challenges the three main planks of what he calls the “instrumental conventional wisdom”. The first is that the object of policy should be to maximize Gross Domestic Product per head; the second, that the primary means of doing this is to create freer markets; the third, that increased inequality is acceptable as long as it delivers superior growth. The attack is devastating, leaving little of the policy edifice of the past thirty years standing.

3. Peace with honour in the currency wars - Bloomberg has written an editorial here on how to end the currency wars. By the way, it also says currency controls are defensible.

Let’s be a bit more precise about who is a currency manipulator. The charge is best limited to countries that stop their currencies from appreciating even though they have big current-account surpluses -- that is, countries that block the movement of currencies toward levels that would help balance global trade. That isn’t what the U.S. is doing with QE3. It is precisely what many other countries are doing, however, hurting the U.S. and Brazil alike.

If currency manipulation is defined this way, the leading offender is China. One measure is a country’s growth in foreign- exchange reserves: Manipulators hold their currencies down by using domestic money to buy foreign assets. Recently, and especially over the past year, China has eased this policy, but its foreign-exchange reserves still stand at a colossal $3.2 trillion.

By no means is China alone. Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics, recently posted a list of 20 currency manipulators, ranked by foreign- exchange reserves. China tops the list, followed by Japan, Saudi Arabia, Russia, Taiwan, Korea, Hong Kong and Switzerland.

We favor adding currency oversight (and the sanctions that might go with it) to the duties of the World Trade Organization or the International Monetary Fund. This makes excellent sense because currency manipulation can add to trade-policy friction and vice versa, in a cycle of mutually assured disadvantage. Currency manipulation already violates WTO and IMF rules, but there is no enforcement. This should change.

4. Top 1% got 93% of the income gains - Again, Bloomberg (the news service of the 1%) has written how the top 1% of income earners gained 93% of the income growth in 2010.

This is well reported piece that lays out the problems in the global economy. Wealth is being hoarded by the wealthiest, rather than invested. Middle income earners are not increasing spending. Economic growth is grinding to a halt. There has to be redistribution of income and wealth for the global economy to really get going again.

Here's an excellent graphic to go with it.

The earnings gap between rich and poor Americans was the widest in more than four decades in 2011, Census data show, surpassing income inequality previously reported in Uganda and Kazakhstan. The notion that each generation does better than the last -- one aspect of the American Dream -- has been challenged by evidence that average family incomes fell last decade for the first time since World War II.

In this recovery it’s proved better to own stock than a house. For stockholders like Hemsley, the value of all outstanding shares has soared $6 trillion to $17 trillion since June 2009, the recession’s end. Even after a recent rebound, the value of owner-occupied housing, the chief asset of most middle- income families, has dropped $41 billion in the same period, part of a $5.8 trillion loss in home values since 2006.

“Income inequality of the scale we have today is destroying our democracy,” retired American Airlines CEO Bob Crandall said in an interview. Crandall, 76, says he became so frustrated at what he sees as selfishness among his peers that he started writing a blog on his Lenovo laptop. “Anyone else willing?” he titled his first entry in August 2011, which argued that people should pay higher taxes.

5. A useful debate - JB Were's Bernard Doyle and Don Brash debate the merits of currency intervention and the high New Zealand dollar in this useful NZ Herald debate piece.

Both make good points:

Here's Doyle:

However, these can only do so much, and may make it more difficult for people to borrow and build a home - a perverse outcome if we are concerned about a shortage of affordable housing. Thus there is also an onus on other policymakers. The 2012 Productivity Commission inquiry into Housing Affordability made a broad range of recommendations that encompassed state and local government, industry bodies and the private sector.

This underlines a key message for currency intervention. Yes, there is probably a greater role for the Reserve Bank to play. But ultimately, a mispriced NZD is an issue for all New Zealanders.

Here's Brash:

Our growth is unbalanced, and we're failing to close the gap between our income and that in countries we like to compare ourselves with, such as Australia.

But make no mistake: reducing the value of the New Zealand dollar means making exporters and those who compete with imports better off while making the rest of us poorer. In the short-term, a lower New Zealand dollar would reduce the real wages of New Zealand workers and it's important to remind those calling for a lower dollar that that's what they are advocating.

6. The problem with modern wheat - This is a bit off the Top 10 beaten track, but interesting nonetheless. A US cardiologist has written a book saying modern varieties of wheat are a "chronic poison".

This interests me personally. The rest of my family have gone gluten free and the benefits have been amazing.

Here's CBS news:

Modern wheat is a "perfect, chronic poison," according to Dr. William Davis, a cardiologist who has published a book all about the world's most popular grain.

Davis said that the wheat we eat these days isn't the wheat your grandma had: "It's an 18-inch tall plant created by genetic research in the '60s and '70s," he said on "CBS This Morning." "This thing has many new features nobody told you about, such as there's a new protein in this thing called gliadin. It's not gluten. I'm not addressing people with gluten sensitivities and celiac disease. I'm talking about everybody else because everybody else is susceptible to the gliadin protein that is an opiate. This thing binds into the opiate receptors in your brain and in most people stimulates appetite, such that we consume 440 more calories per day, 365 days per year."

7. This won't end well - The austerity-driven train smash in Southern Europe is at full steam ahead in Portugal.

The Guardian reports it announced big tax increases overnight to try to fill a budget hole created by its imploding economy. This is madness.

Portugal set out sweeping tax rises on Wednesday to meet conditions for it to receive its international bailout cash, to offset falling revenues caused by a continuing recession that is set to push unemployment to further record highs.

The country's worst recession since the 1970s could deepen further if the tax rises further undermine consumer confidence. There is also a danger that raising taxes could spark more opposition to austerity measures that have already included salary cuts and spending cuts.

"We are confronting a critical moment," finance minister Vitor Gaspar said as he detailed the tax rises, which the government came up with after it abandoned a previous tax plan in the face of mass protests.

Gaspar outlined tax rises across the board for 2013, including income and property taxes, plus a new tax on financial transactions. The average income tax rate will rise to 11.8% from 9.8% currently and an additional 4% tax surcharge will be levied on incomes in 2013. The government said the measures, which will also include spending cuts, will amount to 3% of gross domestic product next year, and raised its estimate for unemployment to 16.4% from its current record level of 15%.

8. Keep an eye on these Middle Eastern events - Riots broke out in Tehran overnight after Iran's rial currency fell 40% in a week and Turkey launched military strikes on Syria after mortar attacks killed Turks in a border town.

The rial has hit record lows against the U.S. dollar almost daily as Western economic sanctions imposed over Iran’s disputed nuclear programme have cut Iran’s export earnings from oil, undermining the central bank’s ability to support the currency.

Panicking Iranians have scrambled to buy hard currency, pushing down the rial whose increasing weakness is hurting living standards and threatening jobs.

“Everyone wants to buy dollars and it’s clear there’s a bit of a bank run,” said a Western diplomat based in Tehran.

9. Unbundle the banks - The Bank of England's director of financial stability Andrew Haldane writes at the FT.com that Britain should go much further in unbundling the dangerous investment banks from the 'boring' retail banks.

Once a value-creation machine, banks have become a value-destruction machine; in response, bank investors are seeking shelter and bank balance sheets have begun a crash diet. So what has gone wrong, and what can be done? Lowly bank valuations are in part a legacy of the past and in part a prophecy about the future. The legacy is the overhang of overvalued bank assets. There are several reasons for this. One is forbearance on past loans, which appears to be both large and latent.

Quite how large and latent is unclear. Near-zero global interest rates, actually and prospectively, have encouraged forbearance by lowering the costs of prevarication. Global accounting rules have also contributed to an overvaluation of legacy assets, as they prevent banks adequately provisioning for future loan losses. International efforts to rectify this are at risk of stalling. There is a strong case for regulators stepping in to lessen the uncertainties over valuations. That might mean calculating prudent valuations across banks’ balance sheets, as the Bank of England’s Financial Policy Committee recently suggested with respect to UK banks.

10. Totally Ricky Gervais as a guinea pig having a bad hair day. This is the new face of advertising.