Thursday's Top 10 at 10: 250 years of very low interest rates; Britain's debt-fueled import boom almost as bad as NZ's; Post crash economics; Dilbert

Here's my Top 10 links from around the Internet. 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 #6 for the glory of a chart going back 300 years. 

1. Lower for longer - Central bankers and economists all around the world are scratching their heads over why interest rates are staying so low for so long.

It's not just central banks that are forcing them down there and keeping them there.

Even in markets where central banks are not printing, they remain remarkably low.

The Economist's Free Exchange has a look at this and points to some disturbing ideas.

Maybe they're this low because investors and savers are now building much lower economic growth and inflation forecasts into their expectations. 

Maybe savers know more than the bankers. As populations age and inequality grows, lower economic growth seems to be baked in to the outlook.

Here's Free Exchange:

Before the crisis Mr Bernanke credited a “global saving glut” originating in China and other emerging markets with holding down long-term interest rates. Although China’s current-account surplus has shrunk in the past five years, Goldman Sachs reckons that the proportion of emerging-market populations in their prime saving years (aged 35-69) is climbing, and won’t peak until 2032.

Although governments acted as borrowers of last resort in the years immediately after the crisis, most are now whittling back their structural deficits, a process likely to continue for several years, freeing more savings.

2. Oh dear. Where have we seen this before? - Ambrose Evans Pritchard writes at the Telegraph about how Britain is expected to have the worst trade deficit in 25 years as the Government cranks up a good old debt-fueled consumption boom with its 'Help to Buy' scheme to help households leverage up to buy houses...

Ambrose points out that Britain's current account deficit of 4.4% of GDP is the worst of the major industrialised nations. It's true New Zealand is not major. Ours is forecast to rise over 6% in the next couple of years. No worries then...

Here's Ambrose:

With the exception of the late 1980s, Britain has not run a current account deficit of this magnitude since the Second World War. It raises concerns that the recovery is being fed by a premature return to bad habits of house price inflation and credit-driven spending rather than a revival of manufacturing and productive investment.

3. It'll never happen - The idea of a Robin Hood Tax on financial transactions has finally jumped the Atlantic and is being talked about in Congress, Mother Jones reports.

Jeffrey Sachs is involved. No relation to Goldman.

4. Baby boomers happy - The cohort that has fared best over the last five or six years has been the baby boomer generation. Here's The Telegraph with a report on how comfortable they feel. 

It adds to the controversy surrounding the 'baby boomer' generation and whether they are benefiting 'unfairly' from a range of taxes, benefits and other financial factors which younger generations will not enjoy to the same degree.

Debate around the issue was fuelled earlier this year by the the Bishop of London Richard Chartres' who said baby-boomers - generally regarded as those born between 1945 and 1960 - were a "fortunate generation."

In Britain 80pc of over-50s reported that "they are satisfied with the financial situation of their household," according to the research, making the UK seventh in a ranking of 56 countries.

5. The post-crash economics society - The Guardian reports a group of British economics students are now challenging the usual neo-classical economics they get taught. Hear, Hear.

The organisers criticise university courses for doing little to explain why economists failed to warn about the global financial crisis and for having too heavy a focus on training students for City jobs.

A growing number of top economists, such as Ha-Joon Chang, who teaches economics at Cambridge University, are backing the students.

Next month the society plans to publish a manifesto proposing sweeping reforms to the University of Manchester's curriculum, with the hope that other institutions will follow suit.

Joe Earle, a spokesman for the Post-Crash Economics Society and a final-year undergraduate, said academic departments were "ignoring the crisis" and that, by neglecting global developments and critics of the free market such as Keynes and Marx, the study of economics was "in danger of losing its broader relevance".

6. I love charts - This very, very long term chart of British long bond yields and government debt ratios is a cracker, coutesty of Paul Krugman. I'm not sure what it means for today, but it sure is fascinating. It seems to show long bond yields returning to where they were for 250 years up until 1950 or so, and that UK government debt is nowhere near as high as it's been for most of the last 300 years.

Krugman's suggestion is that high government debt doesn't necessarily cause high interest rates and that maybe today's low interest rates aren't that unusual. 

7. Reinhart weighs in - Carmen Reinhart, she of the Rogoff and Reinhart 'This Time it's different' debt tipping point duo, has weighed in with her own comments on this chart via Bloomberg.

She reckons Krugman is missing the fact that for long periods those apparently low interest rates were actually quite high in real terms because of deflation that was happening at the time -- particularly the 1930s. She argues, remember, that high public debt slows economic growth, particularly in peace time.

This is one interesting passage about how Britian and Holland maintained high public debt during the mid 1800s, she writes:

How were these two countries able to support such high debt loads for decades? Both played a prominent role as international financial centers; and in both cases, high public debt coexisted with high private saving. The two nations, in effect, were creditors to the rest of the world -- unlike the U.S. today.

The U.K. and the Netherlands enjoyed a substantial and well-documented transfer of resources from their colonies that no modern economy can count on. Other structural forces were in play, too: Peacetime reductions in military spending helped to reduce their debts. Today, structural forces -- notably, the fiscal demands of aging populations -- are mostly pushing the other way.

8. RIP Lou Reid - This is my first Top 10 since the death of the great, grumpy a-hole of a man. Such a hero, but such a pain with it.

Here's the best obit I've read yet, courtesy of Grantaland. 

9. An amateur Mayor - Len Brown ain't got nuthin on this guy. Jon Stewart talks about the Canadian crack smokin' Toronto Mayor Rob Ford.

10. Another Mayor - The Daily Show's Jon Stewart talks about the election of the anti-Bloomberg - New York Mayor Bill de Blasio.