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 is #7, which captures the mood in Britain.
1. The Greek fiscal trainwreck - FT.com reports on how the debt debacle is getting even worse in Greece, forcing the Germans to think about stumping up yet more money.
The austerity medicine is clearly not working.
It's like watching a slow moving trainwreck.
The inevitable fudge solution is already in the works, with some debt retirement, lower interest rates and a deal for the European Central Bank to keep the bonds.
The key day for another Greek bailout is November 12, although the Greek parliament is set to vote on new austerity measures on November 11, which could be another make-or-break moment for Greece.
Instead of Greece’s debt peaking at 167 per cent of economic output next year, as predicted in the March bailout agreement, it will hit 189 per cent and climb to 192 per cent in 2014, according to projections presented to the Greek parliament.
The new projections all but dash hopes Greek debt would come down to 120 per cent of GDP by 2020 – once held out as the standard for a manageable debt load – and senior EU officials acknowledged they may have to give Athens more leeway to hit that target under a revised rescue currently being negotiated.
The scale of the faltering has yet again put Germany and other eurozone creditors in a political quandary, forced to come up with as much as €30bn in new funding to meet Greece’s needs for an overhauled bailout though 2016, despite strong resistance at home to any new aid. Germany has ruled out additional aid or taking losses on existing bailout loans to lighten Greece’s debt load.
Instead, EU officials said they were looking at three possible solutions to close the gap: further lowering interest rates on bailout loans; buying back Greek bonds at current depressed prices and retiring them; or striking a deal with the European Central Bank not to take profits on the €55bn in Greek bonds it holds. Officials said the eventual solution was likely to be a combination.
2. Why we can't solve big problems - Jason Pontin writes at MIT Technology Review about why technology innovation seems to have slowed. He's not sympathetic to the Silicon Valley billionaires who wring their hands over a lack of ambition. He says it's complicated.
Since Apollo 17's flight in 1972, no humans have been back to the moon, or gone anywhere beyond low Earth orbit. No one has traveled faster than the crew of Apollo 10. (Since the last flight of the supersonic Concorde in 2003, civilian travel has become slower.) Blithe optimism about technology's powers has evaporated, too, as big problems that people had imagined technology would solve, such as hunger, poverty, malaria, climate change, cancer, and the diseases of old age, have come to seem intractably hard.
That something happened to humanity's capacity to solve big problems is a commonplace. Recently, however, the complaint has developed a new stridency among Silicon Valley's investors and entrepreneurs, although it is usually expressed a little differently: people say there is a paucity of real innovations. Instead, they worry, technologists have diverted us and enriched themselves with trivial toys.
3.' Show us the money' - FT.com reports the British parliament will investigate why Google and Starbucks pay so little tax in Britain. Reuters says Amazon will also be targeted.
The Guardian says Twitter will also be quizzed.
Google’s British corporate tax bill has attracted attention because it is low given the company’s sales, which are largely charged to its European headquarters in Ireland. It pays a royalty for the use of the company’s search and advertising technologies, which has the result of shifting earnings to Bermuda, via the Netherlands, according to a Bloomberg investigation in 2010.
Google UK reported turnover of £396m for 2011, on which it made a £24m loss after incurring a cost of £51.45m relating to shares given to employees. It reported a tax charge of £3.5m.
4. Chart of the day - The Economist has this useful chart on which countries do the most cremations.
Over time, cremations have increased as burial space has run out and costs have come down. By 2010 around three-quarters of the 566,000 Britons who died were cremated. This trend is seen in other rich countries too. The number of cremations in America rose from 47 in 1885 to over 1m in 2010, or 42% of all deaths.
5. Totally another satire of the TED Talks talks from The Onion - There's some ducks, a chicken and some eggs.
6. My own personal deleveraging move - We've decided to sell our house in Epsom in Auckland to move to Wellington and repay all our mortgage.
It's one way to take advantage of these crazy, hot prices in Auckland and spread the joy around the country. ;)
The scary/sad thing is this will be our best investment decision ever. Cue a chorus of 'I told you so' from our regular readers. Fair enough.
I see little prospect of prices falling in Auckland any time soon given the lack of new house building (see #9), no migration policy (to anywhere except Auckland) and interest rates heading ever lower.
But I would say that now wouldn't I... ;)
Shameless plug time: Here's the house at 26 Halifax Ave in Epsom. It's a 4 bedroom/two bathroom house in the double Grammar Zone and is being sold by Frances Li and Ian Thornhill at Barfoots and Thompson. A large sum will be gratefully accepted. The auction is November 21 and the open home is Saturday and Sunday starting at 1.45 pm. Chris J knows where it is. ;)
7. 'Only the little people pay taxes' - Here's The Guardian's Seumas Milne with a good old rant about a lot of things.
I wonder how long before the poor and middle classes start revolting in one of these depressed developed economies. Come election time...
'Only the little people pay taxes," the late American corporate tax evader Leona Helmsley famously declared. That's certainly the spirit of David Cameron and George Osborne's Britain. Five years into the crisis, the British economy hasjust edged out of its third downturn, but construction is still reeling from government cuts and most people's living standards are falling.
Those at the sharp end are being hit hardest: from cuts to disability and housing benefits, tax credits and the educational maintenance allowance and now increases in council tax while NHS waiting lists are lengthening, food banks are mushrooming across the country and charities report sharp increases in the number of children going hungry. All this to pay for the collapse in corporate investment and tax revenues triggered by the greatest crash since the 30s.
At the other end of the spectrum though, things are going swimmingly. Therichest 1,000 people in Britain have seen their wealth increase by £155bn since the crisis began – more than enough to pay off the whole government deficit of £119bn at a stroke. Anyone earning over £1m a year can look forward to a £42,000 tax cut in the spring, while firms have been rewarded with a 2% cut in corporation tax to 24%.
And this is the best line.
Not that many of them pay anything like that, even now. The scale of tax avoidance by high-street brand multinationals has now become clear, in no small part thanks to campaigning groups such as UK Uncut. Asda, Google, Apple, eBay, Ikea, Starbucks, Vodafone: all pay minimal tax on massive UK revenues, mostly by diverting profits earned in Britain to their parent companies, or lower tax jurisdictions via royalty and service payments or transfer pricing.
Four US companies – Amazon, Facebook, Google and Starbucks – have paid just £30m tax on sales of £3.1bn over the last four years, according to a Guardian analysis. Apple is estimated to have avoided over £550m in tax on more than £2bn worth of underlying profits in Britain by channelling business through Ireland, according to a Sunday Times analysis, while Starbucks has paid no corporation tax in Britain for the last three years.
8. Australia's Superannuation System is a national disgrace - So says Alan Kohler at ABC.
Savers and retirees are fully exposed to both market and longevity risk, there is very little regulation around where the money should be invested and virtually no regulation of fees.
In other words, Australians are required by law to save 9 per cent of their salaries in an effectively unregulated privately managed system.
The industry will argue that it is, indeed, tightly regulated, but not where it counts. Other utilities' prices are set according to the returns on capital of the providers; in super, not only are fees essentially unregulated, but few customers even know what they are. So the superannuation industry is in the happy position of providing a service that is mandated by law where the price is both unregulated and effectively unknown.
No wonder there are more than 400 super funds in this country and many more investment managers fighting to manage the $1.4 trillion in super and $9 billion a year in inflows, and little wonder that the fastest growing sector is self-managed super.
9. It just won't work - Brian Fallow has written an excellent piece on the government's housing affordability piece.
A large underclass, an even larger diaspora and a mountain of household debt. It is fair to judge a policy package like the one on housing affordability announced this week by what they do to relieve those problems. In short, precious little.
Any approach to lifting housing affordability has to be broader than boosting the responsiveness of the supply side of the residential construction market - important as that is. It has to include those households - more than one in three - who rent.
Finance Minister Bill English is clearly not happy with the mounting fiscal cost of housing subsidies, including accommodation supplements, now approaching $2 billion a year, though he acknowledged that any changes in this area would have to be mindful of the unenviable financial circumstances of people receiving this kind of assistance. So why not embark on a major programme of state house construction? The Government just doesn't want to borrow the money.
It seems to believe it could never persuade international markets there is an important difference between borrowing to fund an operating deficit and borrowing to fund long-lived physical assets with enduring socio-economic benefits.
10. Totally another Tom Waits video - Innocent when you dream
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.