Here's my Top 10 links from around the Internet at 10 am today.
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.
My must read today is #9 on the secret to long life. I'm thinking of migrating to Greece.
1. Stall speeds and hard landings - Martin Wolf has written a cracking column here at FT.com on what's happening with the Chinese economy and why a slowdown in growth is not as simple and clean as it first appears.
This is of course crucial for New Zealand and Australia, and more so for Australia.
We have benefited enormously from China's growth of around 10% per annum for the last decade. The often-repeated argument is that a slowdown to 7-8% is no great drama because that still implies the Chinese economy will still double in size every 10 years.
There'll be plenty of growth to go around, they argue.
But what if the growth falls to much, much less than that? Or even goes into reverse?
And for Australia and New Zealand, what if the structure of China's economy switches from being investment-based (big imports of iron ore and coal) to consumption based (big imports of food and consumer goods)?
There's plenty to chew on here in Wolf's column:
In a recent note, David Levy of the Jerome Levy Forecasting Center has asked the crucial question: what is China’s stall speed? The general view is that it is straightforward for China to move from 10 per cent to, say, 6 per cent growth over the coming decade. The implicit assumption is that “a rapidly expanding economy is like a speeding train; let up on the throttle and it slows down. It continues to roll along the track as before, just not as rapidly.”
He argues, instead, that China is more like a jumbo jet: “In recent years, a couple of engines have not been working well, and the pilot is now loath to keep straining the remaining good engines. He is allowing the plane to slow down, but if it slows too much, it will fall below stall speed and drop out of the sky.”
The new Chinese government is, in effect, now engaged in the task of redesigning the jumbo jet, as it comes into land, with half of the engines working poorly. The market is most unlikely to deliver such a huge change smoothly. The sole reason I find to trust the landing will work as hoped is that the authorities have handled so many arduous tasks in the past. But it is going to be very tricky. In order to sustain demand, the government might find itself compelled to do some things – run very large fiscal deficits, for example, – that its new leaders neither want nor now expect
2. The big trouble in big China - John Plender at FT.com also has a good look at the massive challenge for China in switching its economy from infrastructure investment to consumption. Talk about landing a jumbo jet on a hankie while blindfolded...
If China confronts a more serious slowdown than most forecasters now expect, policy makers still have room to engineer one last big fiscal splurge. That is something China’s new leadership is desperate to avoid. The authorities have long recognised that their response to the financial crisis, which took investment from 42 per cent of gross domestic product to nearly 50 per cent, has resulted in a grotesque misallocation of capital. The priority of Premier Li Keqiang is thus to give impetus to plans to rebalance the economy towards consumption.
At the same time the local governments that have been responsible for the great majority of that investment have exhausted most of their borrowing capacity. The game whereby local officials have forced farmers to sell their land cheaply and put it into local government financing vehicles is coming to an end. Since land sales and property developments provide 30-40 per cent of local government revenues and local government is not allowed to borrow directly, this amounts to a fiscal watershed.
To lose one cabinet minister is bad luck, to lose two in two days… means… time for another eurozone peripheral crisis? The resignation of Portugal’s foreign minister Paulo Portas yesterday has everyone worried, because of his role as leader of the CDS-PP, the junior partner in the governing coalition. If CDS-PP withdrew their support, the government would be left with 108 seats in a 230-seat parliament and uncertain prospects for scraping together a majority.
And all this less than two weeks before a troika delegation is due to start their next review of the economy as the lenders consider whether Portugal will get an easing of terms on its 2011 €78bn bailout, and receive the next €2bn instalment.
4. Don't joke about interest rate cuts - Apparently Reserve Bank of Australia Governor Glenn Stevens made a joke about cutting interest rates in a speech yesterday. The Australian dollar fell a couple of cents. Hilarious.
Here it is. And I thought Alan Bollard had a dry sense of humour. Stevens' is drier than the Nullabor.
An off-the-cuff remark by Reserve Bank governor Glenn Stevens sent the dollar down on Wednesday after he “joked” a rate cut was seriously considered at Tuesday’s board meeting.
Mr Stevens’s remark, which a spokesman confirmed was intended to be a joke, was at odds with the rest of his speech, which indicated the RBA was content to keep official interest rates on hold while the falling dollar spurs economic growth.
Here, in full, is the ‘joke’.
As some of you may know, the Reserve Bank Board meeting was in Brisbane yesterday at which we deliberated for a long time to leave the cash rate unchanged.
The Fonterra plan has to balance two objectives: How to add more value to the NZ milk pool - which is expected to grow by a further 2.5 billion litres by 2020 - and make good on a commitment to sustainable dairying.
"We're going to give the plan to the Government in August, "says Spierings.
"We will go in on an area-by-area approach over the country. But it's a national plan and what we really ask Government is that, if we land this plan, we go hand-and-hand with Government on a national approach rather than a multi-council approach.
"Because the multi-council approach is going to kill us and it's going to kill growth because you have different debates all over the country and you need national ownership here."
Not only has the aluminium market been in surplus for the last seven years — driven by aggressive production expansion in China’s northern and western regions — there’s now reason to suspect output growth in Xinjiang will surprise to the upside, according to Goldman Sach’s Roger Yuan and respective team.
And while China’s aluminium market posted a small deficit in the second quarter of 2013, the analysts reckon that this was mostly because China’s strategic reserve (the SRB) bought 300kt worth of metal between March and May. There were also a number of production cuts by high-cost domestic producers.
10. Totally John Oliver on Edward Snowdon's little holiday.
28 Comments
2. "If China confronts a more serious slowdown than most forecasters now expect",
Some forecasters saw it coming, a long way out. :)
2."is going to kill us and it's going to kill growth".
Someone need to talk to that fellow, and to Fran O. Both issues go back to the inability - which seems to be a majority affliction - to understand exponential numbers, vis-a-vis physical realities.
Growth kills itself. Always. No exceptions. Why is it such a hard concept for so many to grasp? The only perennial question, is 'when?'.
I think its killed itself, eg despite the constant bombardment that the US is recovering the per capita energy use is way down, signalling that main street is in recession even if the media and Govn says not.
http://peakoil.com/consumption/our-energy-slaves-are-in-recession
#7 New Zealand is over-governed with five layers of government from royalty to community boards - all for a population smaller than most global cities.
Regional Councils have never struck me as being logical structures. The one place where they did make sense was Auckland and now its gone unitary anyway. While they did sweep up a myriad of minute local Catchment Boards and Pest Destruction Boards we tend to forget that we also transferred a lot of function and staff out of a national body, the Ministry of Works Soil and Water Division, into the regional councils.
We are used to the enduring humiliation at eCan and now the emerging humiliation at Horizons.mw. It is no surprise that someone with deep pockets is also looking to bypass these councils altogether. Perhaps we should go further and disestablish these councils altogether, get rid of the fragmented approach and regain some national management of important resources.
Ellwood created the equiateral triangle model, at a time when free market idiology reigned supreme. Regional and Local were either side, equal. No structure ever worked like that, presumably the idea was some mangled expression of the 'competition' nonsense.
Yes, we could reduce the activity, but remember that what we do and monitor, is going backwards and getting worse, by most measures. (Happens when you keep growing and rely on retro-mitigation).
Folk shy off National control, and in many cases, local knowledge is useful, but ultimately, you get the Governance which matches your collective intelligence - suggesting we aren't all that smart.
Structurally they kind of exist side-by-side except that TA's have to align their City/District Plans with Regional Policy Statements and NRRP's. Regionals have a kind of over-arching transport role, hold the complete whip hand when it comes to water extraction and water disposal, and basically run emergency management. As Orwell so nicely put it some animals are more equal than others.
To me what Regional Councils look after is far more important than District Councils. For example, here in Palmy North were it not for Horizons issuing PNCC with an abatement notice regards sewage discharges into the Manawatu - PNCC would never have scheduled the necessary maintenance and upgrade of their sewage treatment plant.
Down Welly way the Regional Council gave KCDC consent to build a huge rock revetment along the beach at Marine Parade, Raumati North in 2006 ... WITHOUT requiring that consent to notified - not even limited notification of those adjoining beach frontages. Now those adjoining frontages are suffering from end effect erosion.
The point is - Regional Councils are (in my opinion) our environment's last defence. Forget DoC as central government sees to it that the impact of their advocacy role is well controlled .. witness Nick Smith instructing them to pull out of their opposition to the Whangamata Marina.
NGOs try their hardest but at least they have a friend in most Regional Councils.
Kate - that's Horatio backing up on the bridge. There is only one reason for NGO's defending, or RC's ditto; to buy time until greater society outlaws the obviously unsustainable, via becoming more informed.
One look at all our major parties, tells you we are a long, long way from that kind of societal maturity, so the approach is failing. If we had 51% who understood, it wouldn't matter what structure we had, presumably.
But the 'growth is possible forever' nutters, will eliminate everything they can, rather than face the obvious. RC's will go, as will funding for monitoring, science other than $-producing, and funding for anything that lets the populace know what's going on.
Yes well I believe there is a ground swell of more informed folks emerging - and a number of them work for RCs; a further number in tertiary institutions etc. It really is a huge disappointment that the Greens were ridiculed and hammered by their opponents and the wider, unwashed uninformed when Jeanette and Rod Donald were co-leaders. Rod was a real loss to NZ Environment Inc.
Understandable that the new co-leaders have re-positioned them to try and thwart the vindictive opponents (i.e. give the opponents less fuel for the prejudicial fire). Hence the more moderate/conventional positions on some issues. Oddly enough, NZ First are unafraid to speak truth to the electorate where the Greens are not.
But I live in hope!!!!
From what little ive seen from RC's so far they are clueless and busy empire building.
NZF? have you heard their AGW denials? from everyone on the NZF caucus, "truth" no, deluded IMHO.
In terms of the Green's I think of the attack(s) as a Ghandi moment. They have made decent gains and now run as the third party, ACT have gone to oblivion except for a hanger on seat. The problem with "moderate/conventional positions" for the Green's is thats the concensus in Parliment, when we are now the calm before the storm of difficult times....the Qs will be asked, why didnt you tell us (about AGW/Peak oil etc)...now at the rate they are going not even the Green's can stand up and say we tried to....
regards
NZF? have you heard their AGW denials? from everyone on the NZF caucus, "truth" no, deluded IMHO.
What are you on about?
Here is their manifesto under the heading 'Global Warming' (bold mine)
Global warming
New Zealand is in need of a national understanding of the importance of this issue. Whether a believer or a skeptic what will matter to New Zealand as an export dependent nation is how the world sees us on this issue and, more particularly, what our international customers and markets perceptions are of New Zealand. That means that an irrational response to international concerns could cost New Zealand dearly.
Climate change is happening, and is likely to accelerate as major ice sheets at the poles shrink increasingly quickly.
Reductions in greenhouse gases will be driven in future by large commercial customers overseas, keen to protect their environmental reputations. Market-leading supermarket chains in Europe, Japan and North America, have been demanding environmentally sustainable products from their suppliers for several years now, for this reason. Examples include leading European supermarket chains. Consequently, New Zealand‟s much-vaunted "100% Pure" branding is at risk if we don‟t "walk the Talk" as New Zealand‟s Prime Minister found out on the BBC "HARDtalk" programme recently, where he could not defend New Zealand‟s "100% pure claim.
New Zealand is well-placed because 75% of our electricity generation is already sustainable hydro, geothermal and wood-off cuts with almost zero carbon emissions. Our natural gas-fired thermal generators are low carbon emitters. Contrast this with Australia‟s electricity generation, based on coal. Australia is the "unlucky country", when it comes to fossil carbon emissions, posing major sustainable energy substitutions.
PS steven. Here's the link - do some homework and let me know what you disagree with .. happy to have an informed conversation on NZF policy in this regard.
http://nzfirst.org.nz/content/nz-first-manifesto
"How could councils get away with daily breaching their resource consents if justice was meant to be even-handed," he asked.
http://www.stuff.co.nz/business/farming/dairy/8878098/Dairy-farmers-unf…
Regional councils were next to feel Leferink's wrath. The councils had received the Government's message about applying control on freshwater management but "somehow missed the memo" about doubling export income.
"Doubling our exports would give these roosters heaps of money to work on decent outcomes for freshwater management. Money gives you choices, just as a lack of it robs you of choices."
Policymakers had an "unhealthy obsession with nitrates, lawyers and the Environment Court". This had led to the use of the nitrification inhibitor DCD on farms and it had showed up in low doses in milk.
Regulation like the Resources Management Act had been hijacked by bureaucrats and lawyers, he said.
"Why don't we re-survey the world to ensure we have the best possible planning system?
"I mean, the RMA wasn't one of the commandments handed down to Moses, was it? It is a document designed by lawyers for lawyers when lawyers were still affordable. Those days are long gone."
He's right but fails to also give credti where credit is due. Mind you I can quite understand how a farmer would look at it given the costs they are incurring at the moment. But the reality is - the intensification we have and are seeing, just isn't sustainable - and no amount of he did/she did can negate that fact. There are plenty of example catchments where farming has been the sole polluter - Aorere comes to mind. Good initiave there between farmers and the aquaculture industry who was the affected party in terms of the runoff/leachate.
Horizons here in PNth took out an enforcement order against the PNCC regards treated sewage standards notmeeting consent conditions here in the Manawatu. And alot of the spills referred to relate to overflow inadequacies, normally related to storm conditions. Again, if I recall correctly, Waikato RC took TCDC to court about a leakage in the Whangamata treatment plant. So, sometimes RCs do act, but indeed they have not been tough enough on District Councils. DCs have been building stadiums and aquatic centres and all these other nice-to-haves in favour of upgrade and maintenance of the core service responsibilities. So you have central government similarly sending them mixed messages - yes we want you to focus expenditure on core services, but here's a big fat taxpayer handout to help you along with that new stadium etc.
It is a mess and yes, the RMA needs a complete re-write .. meaning it should be repealed in full and replaced with a much more simple and elegant piece of legislation. This government should have got that underway in their initial term. Instead they opted for the incremental tweek/amend approach .. which only serves to exacerbate the fact that the legal profession are needed in almost every consent application. Given the RMA has been amended so many times - and the case law so enormous - it is the preserve of lawyers.
#7 Whats Fonterra Up To: So Theo wants to get together with John and plan to convert the other half of NZ to dairy. Wow talk about all our milk in one can. Good thinking Theo. Sidetrack our regional councils and go to Govt, demand a "Sky" deal, I am sure John will go for it. After all didnt National dump the elected heads of the Canterbury Regional Council. The precedent has been set. All we need is another 10,000 Philipinos to pull the tits.
http://qz.com/99280/china-has-the-priciest-housing-on-the-planet/
Urban restrictions?
expensive building materials?
Meddling town councils?
The Economist argues that property taxes are among the most efficient, stable, and progressive forms of taxation and should be embraced.
http://www.economist.com/news/finance-and-economics/21580130-governments-should-make-more-use-property-taxes-levying-land
interesting to read the comments.
Agree, they (land based taxes) also seem to be one of the hardest to dodge. The problem is the middle ground / swing voter wont tolerate such a thing...even though that swing voter is taxed to the gunnels as it is while others on higher incomes use fancy accountants to dodge a huge % of tax.
Like duh.
I have to wonder why such dialouge simply gets no where...at least on/from the left side of the spectrum.
regards
Just remember I called this months back in the wake of the Cyprus affair :-) It would be a good one for hypertiger to get his teeth into. The top have exhausted the bottom in terms of stripping their wealth, the unearned income, so now the hunt is on for other sources of wealth. If you have got it (wealth) the with the utmost certainty it will become a target. Illiquid assets such as property are a sitting duck.
I dont think inflation is the big worry, right now. The big worry is them sending us into a depression and the banks close and we lose the lot. Then once most money has been emptied from those who still have it, then we'll see inflation.
Its really cleaver marketing, we have been so brainwashed into thinking we and our childen have the opportunities to become rich / better off that we'll almost fight not to change the system...yet reality is the top 1% have finished us.
Of course that 1% relies on the rule of law and a functional society allowing them to keep their "gains" and even their lives....even while that 1% undermines that very law and society as they think its to their advantage....
Going to be interesting, yes indeed....
regards
Nice one at #9 Bernard. Back in the early 90'sI had the pleasure to sit in on several seminars by a Doctor of Science in the study of longevity. He talked a lot about things I already knew. Ron as part of his PhD got to travel the world, and I would assume Ikaria was one location, to study the pockets of population where longevity was common. He isolated the common factors to nutrition, exercise, meditation and spirituality. A simply lifestyle is usually associated with these things.
So I view with quiet humour the mindless and souless discussion around property investments that dominates these pages. Those that seek riches, particularly at the expense of others, will die early without ever achieving what they seek, probably frustrated and unhappy.
My father has a saying, "outlive your enemies", which he is doing quite successfully so far.
Scarfie
This worries me a tad.
http://www.radionz.co.nz/news/national/213728/warning-children's-lifesp…
New Zealand children may be the first generation in over a century to have a shorter life expectancy than their parents.
One third of New Zealand children are inactive and one third of them are overweight or obese - problems that health academics warn are out of control.
cheers
Bernard
I have a son at the sharp end of that unfortunately Bernard. He does play winter sports but even that isn't sufficient, he is just about as tall as me but is already heavier. His diet is probably not as bad as some thankfully.
But I have known about this effect of lowering age expectation for more than 20 years, places like Japan are seeing the effect as thieir diet becomes westernised. There is a qualititave vs quantity question in there also. Perhaps we do have a longer life expectancy than we did 50 years ago, although I question the stats on that(look to insurance rates for clues), but I don't think we are not really living any extra years well.
Interesting doco on a young families life amongst the sprawl of Toronto. Someone makes a good point on affordability: "what they don't tell you is that these houses require two cars".
I recommend this post by George Monbiot on ghosts in our psyche. Todays hunters are the property syndicates and the prey are other (lesser ) mortals who will be farmed for their wages..
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