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Monday's Top 10 with NZ Mint; Joseph Stiglitz; the Muppets; seizing a navy ship; when junk is gold; think globally, fabricate locally; King Ludd is still dead; balancing Aussie books; Dilbert

Monday's Top 10 with NZ Mint; Joseph Stiglitz; the Muppets; seizing a navy ship; when junk is gold; think globally, fabricate locally; King Ludd is still dead; balancing Aussie books; Dilbert

Here's my Top 10 links from around the Internet at 10:00 am today in association with NZ Mint.

Bernard will be back with his version tomorrow.

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

See all previous Top 10s here.

 

1. Monetary mystification
The markets are wrong when they cheer QE says Joseph Stiglitz.

He says the danger now is that politicians and markets believe that monetary policy can revive the economy.

Unfortunately, its main impact at this point is to distract attention from measures that would truly stimulate growth, including an expansionary fiscal policy and financial-sector reforms that boost lending.

Stiglitz full view is here »

Both the critics’ fears and the optimists’ euphoria are unwarranted [with more QE]. With so much underutilized productive capacity today, and with immediate economic prospects so dismal, the risk of serious inflation is minimal.

Nonetheless, the Fed and ECB actions sent three messages that should have given the markets pause. First, they were saying that previous actions have not worked; indeed, the major central banks deserve much of the blame for the crisis. But their ability to undo their mistakes is limited.

Second, the Fed’s announcement that it will keep interest rates at extraordinarily low levels through mid-2015 implied that it does not expect recovery anytime soon. That should be a warning for Europe, whose economy is now far weaker than America’s.

Finally, the Fed and the ECB were saying that markets will not quickly restore full employment on their own. A stimulus is needed. That should serve as a rejoinder to those in Europe and America who are calling for just the opposite – further austerity

But the stimulus that is needed – on both sides of the Atlantic – is a fiscal stimulus. Monetary policy has proven ineffective, and more of it is unlikely to return the economy to sustainable growth.

2. Crumbly cookie problems
Economists often like to talk about the "deadweight costs of redistributive taxes" - puts most people to sleep however.

But the ever-innovative Eric Crampton at Offsetting Behaviour has made it somewhat more engaging with the help of the Muppets. Actually, it was the Muppets that caught my attention first; its a good hook for me. He's got two Muppet vids, so double value. Makes the point well.

3. Hedge fund managers storm navy ship in Ghana
I'm not making this up - you couldn't. But it does show that there is no free pass when sovereign nations default on overseas debt. In another case relating to the 2001 Argentine default, about 60,000 Italians are going to get to sue in international court for their US$1 bln.

An Argentine naval vessel crewed by more than 200 sailors has been seized in Ghana as part of an attempt by the US hedge fund Elliott Capital Management to collect on bonds on which Buenos Aires defaulted in 2001.

A Ghanaian court ordered an injunction and interim preservation order against the ARA Libertad, a 100-metre long tall ship, following an application by Elliott subsidiary NML Capital on Tuesday.

The hedge fund, run by the US billionaire Paul Singer, has been closely monitoring the course of the Libertad, according to sources familiar with the firm.

Elliott had been waiting for the ship to stop in a port where it would have a chance to enforce legal judgments previously awarded by UK and US courts. The hedge fund declined to comment.

Argentina slammed the interception of the Libertad as a “trick which these unscrupulous financiers” had pulled, adding that it “violates the Vienna Convention on diplomatic immunity”.

4. When junk is gold (or cash is trash)
We are living in a time of 'financial repression' - interest rates are artificially low in an effort to spur growth through higher credit uptake. But families and firms are deleveraging and bank accounts are awash in cash. This is true in New Zealand and around the world.

But artifically low interest rates are exactly that - artificial.

People won't tolerate them for long, and they will take action to chase yield. But higher yield currently only exists at the dodgy end of the market. We have our own junk bond king feasting on low yields (Graeme Hart and Reynolds) and he is playing a very risky game. So do yield chasers. Just to emphasis the frustration with low yields, this chart shows a trend in the US. Do you think it will work out?

5. Greener on this side? II
How will they pay for their promises? Aussie politicians have made big-spending promises an art-form but the bureaucrats who need to administer their budgets can't see how it can work. Haven't checked recently but I don't recall 'austerity' being in any Australian dictionary. More from Jonathan Barrett at the AFR:

Australia’s top Treasury official has warned that expectations for government services are outstripping the capacity of the tax system and he called on state governments to plug budget deficits by increasing payroll taxes.

In a blunt critique of Australia’s public finances, Treasury secretary Martin Parkinson said state and federal government revenue bases had been “dramatically hollowed” and there was too much political opposition to raise the GST, one of the most efficient taxes.

6. Why people are so rude online
It's a real problem. Commenters on interest.co.nz are not immune - but why is that? Face-to-face most of us understand relationship etiquite. Online, social inhibitions seem to fade, rudeness rises. Is it that we just can't write properly anymore? Don't we care? Or is there something more behavioural going on?. More from the WSJ:

Why are we so nasty to each other online? Whether on Facebook, Twitter, message boards or websites, we say things to each other that we would never say face to face. Shouldn't we know better by now?

Anonymity is a powerful force. Hiding behind a fake screen name makes us feel invincible, as well as invisible. Never mind that, on many websites, we're not as anonymous as we think - and we're not anonymous at all on Facebook. Even when we reveal our real identities, we still misbehave.

According to soon-to-be-published research from professors at Columbia University and the University of Pittsburgh, browsing Facebook lowers our self control. The effect is most pronounced with people whose Facebook networks were made up of close friends, the researchers say.

 

7. Think globally, fabricate locally
Build your own iPhone. Throw away your nuts and bolts, grab some bits and atoms. Digital fabrication is coming. It’ll change everything.

This is another reason why we should just forget about trying to 'manage the exchange rate down' to help our local manufacturers. That strategy has never worked in the past, and with these new manufacturing innovations could never work in the future. Making 'things' in New Zealand makes little sense, especially to potential international customers. We need to reinvent ourselves as a center of ideas. (cue Michael Parker.) Neil Gershenfeld is on to it:

A new digital revolution is coming, this time in fabrication. It draws on the same insights that led to the earlier digitizations of communication and computation, but now what is being programmed is the physical world rather than the virtual one. Digital fabrication will allow individuals to design and produce tangible objects on demand, wherever and whenever they need them. Widespread access to these technologies will challenge traditional models of business, aid, and education.

The revolution is not additive versus subtractive manufacturing; it is the ability to turn data into things and things into data.

 

8. Big discovery
Confirmation of huge new oil and natural gas reserves have been announced in the US, likely a reason the oil price is falling these days. The numbers are impressive, and likely to rise substantially as more exploration work is done. We're talking truly big numbers here. But for a country that uses about 19 million barrels of oil per day, and 60 bln cu/ft of gas per day these new reserves alone won't solve their energy issues. But they do come at a time when consumption is falling and energy efficiency programs are taking hold. The switch to natural gas is changing their markets fast.

Drilling companies beginning to explore the Utica Shale got a piece of good news Friday when the U.S. Geological Survey estimated the rock formation in Ohio, Pennsylvania and other states holds enormous reserves of natural gas and oil.

Releasing its first estimate of the Utica, the USGS calculated the shale formation holds about 38 trillion cubic feet of undiscovered, recoverable natural gas, 940 million barrels of oil and 9 million barrels of natural gas liquids like ethane and propane.

9. King Ludd is still dead
Kenneth Rogoff reckons we should not fear change, still not fear it even though its pace is accellerating. He makes his points with some interesting observations about playing chess for money, which you can read in the full article.

Since the dawn of the industrial age, a recurrent fear has been that technological change will spawn mass unemployment. Neoclassical economists predicted that this would not happen, because people would find other jobs, albeit possibly after a long period of painful adjustment. By and large, that prediction has proven to be correct.

Two hundred years of breathtaking innovation since the dawn of the industrial age have produced rising living standards for ordinary people in much of the world, with no sharply rising trend for unemployment. Yes, there have been many problems, notably bouts of staggering inequality and increasingly horrific wars. On balance, however, throughout much of the world, people live longer, work much fewer hours, and lead generally healthier lives.

 

10. Forget the national average; look for the successes
America's overall economic growth rate is essentially a composite of its many different cities and regions. Look in detail about how this vast number of towns and cities are faring through the GFC and maybe we can learn some lessons. Tech and knowledge wins. (cue Michael Parker again.) More from Richard Florida:

Among large metros, those that have performed well over both periods include big diverse metros like New York and the knowledge- and resource-based metros mentioned earlier, as well as San Antonio, Dallas, Nashville, Philadelphia, and Salt Lake City.

More or less the same pattern holds for small- and medium-size metros. College towns and knowledge regions like Ann Arbor, Michigan; Boulder and Fort Collins, Colorado; Champaign-Urbana, Illinois; Logan, Utah; Portland, Maine; and Rochester, Minnesota have posted consistent growth before and after the crisis, as have resource-rich locations, as well as Casper, Wyoming, Fargo, North Dakota, and Charleston, South Carolina.

The lesson for national economic growth is rather simple. It makes sense to focus the future economy less around housing, roads, and physical capital, and more toward the accumulation of human capital and knowledge assets.

 

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.

47 Comments

Clearly Mr Stiglitz isn't Green:

"the danger now is .. politicians .. believe that monetary policy can revive the economy."

"Unfortunately, its main impact .. is to distract attention from measures that would truly stimulate growth."

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No, I don't think he is a member of the NZ Green party.

 

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Re. #8 - The oil found in that field provides the U.S. with 50 days of oil supply, they better use it sparingly!

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and it will probably cost them 10 plus to get it out...

ho ho.

Actually, "940 million barrels"  is I assume the oil in place, and a good conventional field only gets 50~70% or so but this is shale, they may only get 10% of that so Im not sure in that piece implying 50% recoverable, need more info.  If so its more like 8 days....ie

What isnt mentioned is shale plays are mostly gas and gas isnt transport fuel...

ho ho ho.

regards

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#4 "People won't tolerate them for long, and they will take action to chase yield."  hasnt this been the FED's strategy for the last four years?  Isnt this primarilty why the US share market is in a dead cat bounce?  So one huge 4 year long ponzi scheme.

regards

 

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On #6. David C. Why are people so rude online...Yes they are  David, rude, snobbish, dismissive, arogant,self opinionated jerkoffs, and that's just the Prime Minister in public speaking...imagine him on Facebook.

 On the other side of that coin David, online affords you to be less tolerant,and prone to reacting without fully knowing the other persons position or the emphasis they may be placing on any given subject.

The written word is always more open to interpretation or we wouldn't end up with Great Works of Fiction..like...er.. um ah nah,....there you see, I decided not to say it, for fear of causing offence to so many many  millions of Catholics........

 And that's what we need here more consideration and love...except for all those Commie, Greeny, Capitalist, do gooding,know nothing,Boomer,Libertarian,Banker ,Politician whack jobs out there....... oh and Bernard , cause he's got broad shoulders, he's up for it.

And , it makes you money David, ......Controversy begats hostility and confrontation. 

Through confrontation albeit rudeness we can improve our interactive skills if we wish to persue the subject in question ...or just dismiss it .

We have our moments here, but we smack each other around a few times and sort it out most times....so pretty good overall...... except for Bernard , he's a stirrer that one and I've had no luck reporting him so far.

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I am glad you tacked the subject Count. But then you are just a daft bastard, what would you know.

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Even if he's unintelligent and illegitimate, he's politer (you ever built out of it?) than a lot of the r soles around here.

 

(that originated with a school-friend, holiday-working at Santa's Cave. He noted that the announcer always announced the initial for Christian names, followed by the full surname. Called her up, told her that Mrs Rona Soles had left her umbrella...... Thought about following it up with Mrs Rhonda Slicker, but figured he was pushing his luck......)

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Cheers for that Scarfo you miserable S......T

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Bastidos' the pair of you....

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Is that nice Mister Hickey not here today , to moderate us ?

 

....... oh dear , how sad...

 

Prat !

 

:-)

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Jeffers Morning everyone! :-)

For those who haven't seen Visioneers:

http://www.youtube.com/watch?v=V3xhMOXT1Z8

 

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I'm watching you very closely Mr Gummy....

;)

Bernard

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Bernard ..tell David C your not out of the woods yet ,regards a crash...the way the sites working at the mo...I'd say imminent.....

 I would have said it was plug in conflicts, but sometimes it runs like a dream and because that is usually during low traffic periods , I think you server defo needs a serious look ...sooner than later.

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October 8 was International be rude to Bernard Hickey Day ...... that was yesterday , stop living in the past , man ...

 

..... today is Leif Erikson Day & Ugandan Independence Day !

 

Do try to keep up , Bernard !

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#3 a sailing ship?????   cadet training?

If that is classed as a military naval vessel, oh dear.

jaw drops....

Spot the Argie "SAS" in a sub coming to ghana real soon.  Or maybe the argentine navy will just sail up and take it back....ghana isnt exactly well endowed,

http://en.wikipedia.org/wiki/Ghana_Navy

v

http://en.wikipedia.org/wiki/Argentine_Navy

Im going to bet on the argies in a bun fight.....

regards

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"These new estimates are for technically recoverable oil and gas resources, which are those quantities of oil and gas producible using currently available technology and industry practices, regardless of economic or accessibility considerations".

 

That's a Lomborg statement. At least they acknowledge it's 'unconventional oil'.

 

"to return the economy to sustainable growth".

 

There's no such animal. 

 

"It makes sense to focus the future economy less around housing, roads, and physical capital, and more toward the accumulation of human capital and knowledge assets".

 

Tell me what this will buy, again? Nothing physical, obviously. I have no trouble with folk growing virtually, if that satisfies them. At least they wouldn't have to fool themselves abour Climate Change, and about peak conventional oil. Heck, they'd be able to acknowledge that the planet is spherical.....

 

 

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Calling all Gummy Bears:

 

"Anyone who is not a rabid ideologue will see elements of truth in both accounts. I suspect that one reason French supermarket queues are longer than British ones is that the statutory minimum wage applicable to jobs such as checkout assistants is about 30 per cent higher in France than in Britain.

 

But marginal productivity is only part of the story. British supermarkets, noticing that office workers shop during their lunch break, staff the checkout more heavily then: French ones close tills to allow employees to eat at leisure."

 

http://www.johnkay.com/2012/10/03/higher-pay-boosts-economics-and-politics

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British supermarkets are like an evil cancer plauging the United Kingdom. Anti competitive, monopolistic in nature. UK supermarkets are a lesson to us all when supply chain management rules and we all end up eating cardboard out of cardboard boxes. They are just awfull places. Any Englishman will tell you that they eat way far better when in France.

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I don't know France that well. Broke a wrist skiing there once and had weekend in Paris. I know UK better, however, at lunch yesterday a returning K1W1 told me how much cheaper food is there than in NZ, especially milk ..... "Anti-competitive, monopolistic .." you say, hmmm, methinks we'd be kettle calling pot black on this one. See the John Tamihere interview on yesterdays Q&A, he wants to go after ours. Good on him.

 

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Yes, New Zealand with only two Supermarket groups is most definitely worse- NZ is  very expensive place to shop for food. My thought is to break them up, split off distribution, make them break up into smaller bits. NZ supermarkets are no good for us, they have lots of brands but only two organisations calling the shots, they manipulate  the resource management act to their advantage, the crush suppliers. What we need is real competition.

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Please stop talking about French cheeses and pastries or I may start crying...

 

Agree with the utter lack of supermarket competition in NZ. Grocery shopping was more expensive in the UK than it was in France (and don't get me started on the products themselves). Then we moved over here and it was even more expensive again. If the wages were in line with the COL that wouldn't be a problem, but they're not.

 

Still, 10 years on and still here so there must be lots of good stuff about living in NZ :)

 

 

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David Chaston...your server cannot handle the traffic....you may just crash again....way to slow ....way way too slow.

 Where's that I.T. guy...? somebody report him.

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Yeah, there seems to be a problem. I note too that your comment and mine above have not appeared in the highlighted comment stream to the right of the webpage. This happened to me last week when I was contesting an arguement with Alex about "huge reserves", you may have seen that Count. PS - congrats mate. Cheers, Les.

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Apologies for the missed explanation. Yes, server crash after a failed software update. But this was compounded because in the fix, our ip addresses got wiped. Once we figured out what caused the calamity, the fix was pretty straightforward, but without even email or access to our control panels, we had to revert to doing stuff the old fashioned way. Consequences of having everything in the cloud. Not happy with server host, but this particular issue not likely to happen again. Sorry for outage.

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Re 2

Economists often like to talk about the "deadweight costs of redistributive taxes" - puts most people to sleep however.

The purpose of taxation in a modern democracy with its own currency is redistribution. The real deadweight problem is when redistribution does not occur( is is lessened through tax ciuts for the rich etc). The rich become a dead weight on a modern economy if the wealth is too concentrated. Why because rich people do not spend enough money and when they do they spend on assets and bid up asset prices. The modern economy needs most people actively participating, that is the only way it works. Only deadbeats think that  distributive taxes have deadweight costs.What a bunch of muppets.

 

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I do happen to like the muppets.

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Me too ... that's why I hang around here all day ....

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What so you are calling poor old Count a muppet and a prat? 

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There's a fellow in Rhode Island who grew a 2009 lb ( 913 kg ) pumpkin ....... he spent the entire summer dutifully tending this amazingly huge gourd ....... others take the kids to the beach , or follow their baseball team , sun , surf , turf , chill out as best they can ...... but this fine fellow , tends his pumpkin ....

 

...... and after they weigh the thing at the local show  , it gets chucked out ...... even cows won't eat them . Totally devoid of flavour or sweetness ..... you can't house the homeless in the pumpkin because  the seeds are so big that if one falls it could cause a serious injury ...  

 

If I'm gonna call anyone a muppet or a prat  , I reckon this gentleman is a strong contender ...

 www.pumpkinnook.com/giants/giantpumpkins.htm

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My kids have a ball growing Giant Pumpkins, although our best to date is only just over 200kg.

Good fun in the evenings out in the garden, beats being in front of TV or on the Playstation.

Don't know what's up with those Yankee cows, cause NZ cows love to eat them, they recylce right through, as we collect the poop for fertilizer for the patch.

 

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I guess " each to their own " , but if you study up on how obessive these guys get about their pumpkins you gotta wonder , frankly , if they aren't outta their gourds ...

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Cheers GBH, and thank you !!........ I just ran out to the garden and stomped that Marrow I've been tending to pieces......n ....told the wife the holidays are here again..whoohoo!!

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Hey Scarfo ease up on the poor and old, nothing crochety about me, still running two mile sub 20min and I can hear some spare change rattling as I'm doing it.

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Heck I don't know about that Count, I can still drag my 90kg two miles in around 13mins :-P It is the intent that counts mind you.

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To be honest Scarfo, I used to love to run...longer distance in those days all ten k plus, and then I rediscovered kayaking..an  surfing....and fishing...an I just went right off it , after about twenty years of religious pavement pounding...right off it ,so I'm dragging it round sub twenty really,. prolly could go quicker but can't think why I'd want to anymore....do a lot more upper body now for the water.....enjoying fish a lot more too...yuuuumy!!

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20 years? What so you are saying you are a slow learner :-P  I can run well but I hate it, although being fast twitch 100m is far enough:-) I do wonder if I can still get close to the 11sec mark. More of a resistance exercise man myself so I am not long back from a 1.5km run in soft sand with an extra 10kg on my back, although there is some physio tied up in that. More weight is better than more distance in my book. 

  But I fully concur with having a purpose to your exercise. 

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Scarfo ...we are all slow learners,or we would be much further along  the track, evolutionary wise. I used to think it was cause our dicks got in the way.....now I know it's because dicks get in the way and other people too from time to time.

 I understand there is a moment when it all occurs to you at once....and then the lights go out.

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Cheers SoreL but as I corrected it's 40 years and 1 engagement ring....not quite the feat yet but I think I'll be there ,there abouts or dust.....

av a good one , go raaaaaaak someone up.

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Following on from Sore-Loser

 

Memo: David Chaston

While you are investing in an upgrade to your IT infrastructure .. (I have unlimited broadband) it takes too long to, check the already logged in status then down-load pages, and even longer if you click on a comment by a poster from the comments column .. give up .. go away for awhile .. come back later and try and find the comment you wanted to read .. and its been pushed off the bottom of the list and it becomes a chore to find it again ..

 

For the suggestion box.

Please consider expanding the fields in the database to allow key-words for the categorisation of (a) articles (b) comments and allow readers to be able to search/request comments by specific contributors by nic-name, or date, or topic category. The scope of articles is not particularly wide, and often with time as (and if) the topic hots up, it becomes more interesting it becomes essential to be able to go back over the previous month and read the preceding related or assocaiated articles and or topics and or comments. And believe me it's impossible. Which I believe diminishes the value of the site.

 

Can't even find comments I have previously posted myself. If I can remember the context I have to use Google search engine to find it. The local site-search is useless. All comments have a comment number. Can you publish them at the top of each comment beside the commenters name so you can search for just the comment.

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Second that iconoclast.

 

I would give the IT guys at interest.co.nz  the following marks

 

a) C- for capacity planning

b) C- for keeping the site modern

( your comments about the difficulty in finding previous posts and threads is an obvious example. There are *many* other sites that allow me to find previous threads *very* easily.  Interest is by far the *worst* at this....  By more than a country mile)

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good work iconoclast...!....good advice David C,

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Good suggestions, another if it is possible, could the "new" we see next to  new comments be bolded and in blue or red so we can find them more easily. Of course the "new"would still  disappear when the page is refreshed.

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7. Think globally, fabricate locally

Printing plans for hand guns are reportedly soon to be made available online, once the 3D printers are wide spread and the plans available, it will be harder and harder to maintain control over hand guns in NZ and everywhere else.

 

Making 'things' in New Zealand makes little sense

This is a tricky idea but making things is important as well. To do a good job designing things you often have to make them. Once you loose the making part the designing part can soon follow- this is a major fear in Silicon Valley.  This new type of digital building , may help us make more stuff.

An economy simply cannot be just one thing or another and be successful. One measure of success is the diversity of it rather than the idea of competitive advantage- this has been completely discredited - hasn't it?

Economic success comes from a vast number of experiments ( companies doing stuff) letting markets and luck decide winners. Breaking dominant structures and letting innovation happen. 

 

 

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Yeah but the ammo might be a bit tricker :-P

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Scarfie, Do I remember some woodfire patents you were working on? Where can I find reference to those?

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Re # 10; Aren't these knowledge centres 'succeeding' on the back of an horrific student loan bubble? Methinks that balloon will soon pop and expose these centres as being propped up by what many believe to be an unsustainable level of student borrowings against the future.

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