Thursday's Top 10 with NZ Mint: You gullible?; Stansted fizzer; acting like children; Irish progress; Auckland's non-smart housing policy; iron ore prices; Dilbert, and more

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

Bernard is on his summer break and will be back on January 22, 2013, from Wellington.

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

See all previous Top 10s here.

1. If you don't know maths, you're gullible 
Swedish researchers have recently done a revealing experiment. Their study finds that even academic scholars perceived research to be of higher quality if there’s some maths involved - even if the maths makes no sense.

The experiment threw an irrelevant mathematical equation into research paper abstracts, and asked scholars of different fields to evaluate the quality of the research. People without maths training were impressed; people with maths skills thought it was bollocks.

Mathematics is a fundamental tool of research. Although potentially applicable in every discipline, the amount of training in mathematics that students typically receive varies greatly between different disciplines. In those disciplines where most researchers do not master mathematics, the use of mathematics may be held in too much awe. To demonstrate this I conducted an online experiment with 200 participants, all of which had experience of reading research reports and a postgraduate degree (in any subject). Participants were presented with the abstracts from two published papers (one in evolutionary anthropology and one in sociology). Based on these abstracts, participants were asked to judge the quality of the research. Either one or the other of the two abstracts was manipulated through the inclusion of an extra sentence taken from a completely unrelated paper and presenting an equation that made no sense in the context. The abstract that included the meaningless mathematics tended to be judged of higher quality. However, this “nonsense math effect” was not found among participants with degrees in mathematics, science, technology or medicine.

2. Not strong enough
The Morrison/Infratil/NZS bid for English airport Stansted has failed, apparently.

Given Stansted is regulated by the Civil Aviation Authority, bidders have been told that the financial structure of their offers must be investment grade – pointing to a hefty equity cheque of at least £500m and no more than 50pc of the financing coming from debt.

However, banking sources said even that conservative structure was too much for the potential lenders to the Morrison consortium, given the risk that the final price could spiral several hundred million north of £1bn and there was no certainty over Ryanair’s long-term plans at Stansted. Any decision by the Irish airline to shift planes away from its UK hub would have a dramatic impact on Stansted’s value.

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3. A bank run by children
Jamie Dimon (who has just left his gig at the NY Fed after his term expired) was not happy with how his trrops handled the London Whale scandal.

JPMorgan Chase Chief Executive Officer Jamie Dimon said some top executives at the largest U.S. bank "acted like children" in handling an errant derivatives bet that cost the company more than $6.2 billion last year.

"Instead of helping, they were running around with their head chopped off, ‘what does this mean for me personally, how’s my reputation?’" Dimon, 56, said yesterday at a conference in San Francisco hosted by the New York-based bank. Some people "felt they could take advantage of it personally, they were willing to hurt the company by maneuvering."

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4. Today's raw market data ...
A quick holiday update:

5. Market shift
After going through a [very] tough austerity process, Ireland looks like it is coming out the other side rejuvenated, if bond yields are any indication. More from the Irish Times. HT Brendan W.

The National Treasury Management Agency has sold €2.5 billion of 2017 bonds in its first syndicated sovereign deal since 2010, having received orders worth more than €7 billion.

The last time Ireland raised funds through a syndicated deal – which differs from an auction in that the price is pre-agreed – was before the EU-IMF bailout programme was announced in December 2010.

Ireland looks likely to become the first sovereign to successfully exit a euro zone bailout programme and is expected to issue approximately €10 billion of debt this year.

Irish five-year yields initially rose ahead of books opening on the deal but the strong demand saw the bonds recover early losses to trade flat at a yield of 3.36 per cent.

Given that Ireland's average cost of bond funding was circa 4.7 per cent prior to entering the bailout, to fund at such a level is a remarkable turnaround. It also represents a level lower than that which Ireland is borrowing from the troika, about 3.5 per cent.

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6. The Auckland housing crisis
Yesterday's building consent data showed that only 432 consents were issued for new homes in Auckland in November, 4,442 in the year. Just how inadequate that is can be seen by comparing it on a population basis. 4,442 is 26.6% of all consents issued in the past year, but 34% of the population live in Auckland. Admitedly, this is a crude comparison, but that difference of -7.4% sticks out like a weeping wound for first home buyers and anyone else who is looking for affordable housing in Auckland. Auckland Council's 'smart growth' strategies is just code for 'no growth', bolstered by voters who want the wealth effect of sharply rising house values.

It is great to see what can happen when Councils get cracking - its just a pity it took a deadly earthquake to motivate Christchurch into new building. They are starting to make a difference now. Auckland needs at least 1,000 new dwellings built per month - for ten years.

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7. Crazier and crazier
It is truly amazing how much press the "trillion dollar platinum coin" solution is getting. But Felix Salmon thinks it is all hot air. Dangerous hot air, but hot air all the same.

Let’s be clear about this: no one’s going to mint a trillion-dollar platinum coin. Nor is anybody going to mint a million million-dollar platinum coins. 

In this case, the absurdity to be pointed out is the debt ceiling. Everybody who’s ever been in charge of any country’s finances knows that the concept of a debt ceiling is profoundly stupid, self-defeating, and generally idiotic. And we discovered in 2011 that it can do very real harm. Back then, I hated the idea of the platinum coin:

Tools like the 14th Amendment or even crazier loopholes like coin seignorage would be signs of the utter failure of the US political system and civil society. And that alone could mean the loss of America’s status as a safe haven and a reserve currency. The present value of such a loss? Much bigger than $2 trillion.

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8. Counting down quickly
The US debt ceiling crunch is closer than most people realise. They have already hit the legal limit (debt ceiling) and are using "extraordinary measures" (accounting trickery) right now to stave off default. But people just switch off with endless political brinkmanship. You willing to bet real money they will get through this latest issue?

The US government may default on its debt as soon as Feb. 15, half a month earlier than widely expected, according to a new analysis adding urgency to the debate over how to raise the federal debt ceiling.

The analysis, by the Bipartisan Policy Center, says that the government will be unable to pay all its bills starting sometime between Feb. 15 and March 1.

The government hit the $16.4 trillion statutory debt limit on Dec. 31 , but the Treasury Department is able to undertake a number of accounting schemes to delay when the government runs into funding problems.

9. Up, then down
The Aussies think a new dawn is arriving with iron ore prices. But the the expert analysts think it might be a false dawn. More from Bloomberg:

Iron ore, which posted the biggest quarterly gain on record in the final three months of 2012, may extend gains from a 14-month high as Chinese mills restock, then tumble into a bear market, according to Deutsche Bank AG.

Prices may gain to $170 a ton in the first half on demand in the biggest buyer, before falling to less than $120 as supply expands, Deutsche Bank said in a report. Ore with 62 percent content delivered to Tianjin rose to $158.50 a dry ton yesterday, the highest since October 2011, according to data from The Steel Index Ltd.

A drop from $170 to $120 implies a 29 percent fall, more than the 20 percent that typically defines a bear market.

10. Today's quote
"If you lend someone $20, and never see that person again; it was probably worth it." Anon