Wednesday's Top 10: Where Nokia goes, Finland went; Big data and lollies; Shane Jones and the supermarket wars; Android Pineapple lumps; Dilbert

Here's my Top 10 links from around the Internet at 1 pm 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 is #2 on China and its low interest rate subsidy.

1. The Nokia of New Zealand - A long time ago (2005) I wrote a column in The Independent bemoaning the fact New Zealand didn't have its own version of Nokia and wondering if it should be Fonterra. Between 1998 and 2007 Nokia generated a quarter of Finland's GDP growth.

Nokia's market share peaked at almost 50% in 2007 and then Apple launched the iPhone.

The rest is history. Nokia's share of the handset market is now closer to 3.5%.

Overnight Nokia waved the white flag and agreed to sell out to Microsoft, which itself is on the losing side of an epic shift in technology to smart phones from PCs.

It's worth noting how far Nokia has fallen and how much Finland relies on Nokia. Maybe we should steer away from having our own Nokia, particularly given the botulism scare in recent weeks...

Here's Megan McArdle at Bloomberg talking about where Nokia goes, Finland goes (or should that be went):

Even if Microsoft does manage to make things work as an integrated manufacturer of devices and software (something it has done very well with the Xbox), that doesn’t necessarily mean that Finland will prosper. R&D often shifts around inside large, multinational corporations that don’t feel the same kind of loyalty that a homegrown firm does. Over the years, I’d expect to see Nokia’s center of gravity shift toward the U.S. -- which for Finland means fewer high-paying, satisfying jobs in R&D, or global strategy.

Of course, those jobs were always relatively few -- but a global company run out of a small country can offer disproportionately rewarding jobs when times are good. The corollary is that when times aren’t good, the whole local economy gets pretty bumpy. You don’t need to go to Finland to see what this looks like; just take a peek at “company towns” like Detroit and Rochester, New York (Kodak and Xerox).

2. China's biggest subsidy - It has a few. Coal, aluminium, power, solar panels, cars et al are all subsidised in China. But the biggest is the subsidy state owned enterprises get through the regulation of low term deposit rates and the relative absence of choice for China's mad-keen saving consumers. Financial repression is an ugly thing. 

Here's Michael Pettis at FT with an excellent piece explaining the subsidy and what should happen next. 

Years of artificially low interest rates have been key both to China’s rapid growth and to its notorious domestic imbalances. The role of financial repression – manipulating the financial system to divert money from savers to producers – in the Chinese growth model is widely recognised. But the improvement in the country’s interest rate structure is not.

As a rule when nominal lending rates are broadly in line with nominal gross domestic product growth rates, the rewards of expansion are efficiently distributed between savers and users of capital. When they are substantially lower, however, as they have been in China for the past 30 years, net lenders – mainly household depositors – in effect pay a hidden subsidy to net borrowers. In China these include state entities, manufacturers, state-owned enterprises and real estate developers.

4. Here comes the protectionism - The world managed to mostly avoid trade protectionism in the immediate aftermath of the 2008 crisis, but it's now kicking in and it's being led by the emerging economies. Luckily for us, China is not as bad as it once was and 'our' emerging economies are better than some others such as Indonesia, Brazil and South Africa.

Here's Ambrose at the Telegraph on the EU's warnings about protectionism. The EU has some cheek accusing people of protectionism, but still...

5. Capital controls - Even the IMF is coming around to the conclusion that some form of capital controls make sense, The Economist's Ryan Avent reports. 

6. Supermarket wars - Labour leadership contender Shane Jones seems to have suggested some sort of government intervention in the supermarket business. Here's a useful piece from Terry McCrann over in Australia about the price wars happening over there and who are the winners and losers.

7. Bring out your gold - Speaking of capital controls and trade protectionism, Reuters reports India is preparing to 'buy' gold from its citizens to solve its Rupee crisis.

8. Big data and lollies - Google likes to use big data and its algorythmists to solve all sorts of problems, including how to stop its workers from eating too many M&Ms, WaPo reports. Another way might be to stop calling its mobile operating systems after sweets...

9. Android KitKat - Seriously. BBC reports the good folks at Google have decided to 'brand' their new version of Android as 'KitKat'. The people at Nestle are thrilled. I'm campaigning now for the 'P' version of Android in a few years time to be called "Pineapple Lumps."

10. Totally Jon Stewart with a variety of props. Can't wait for him to get back properly.