Bernard's Top 10 at 10: ECB threatens to start printing too; China's sweeping reforms of its 'socialist market economy'; Joseph Stiglitz and investor protection; Dilbert; Clarke and Dawe

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 #1 on the potential for the ECB to start printing money too.  

1. 'We haven't even started printing yet' - Just in case you think the era of endless money printing and 0% interest rates forever is over, the Chief Economist of the European Central Bank said overnight that the ECB could cut rates further and it had yet to start printing money.

Currently America, Japan and Britain are printing money like there's no tomorrow.

It explains (at least partly) why the New Zealand dollar is so stubbornly strong and over-valued. It also explains why property bubbles are blowing up all over the world, including in New Zealand.

And the ECB, which governs a currency zone almost as large as America's, is now suggesting it may start printing too.

When will this all end? It seems never. 

We shouldn't be surprised to see some of this printed money squirt out the sides and trickle down towards our own long white cloud of inflated property prices. 

We also shouldn't be surprised if the Reserve Bank's high LVR speed limit fails to control this bubble, thanks to capital and people inflows.

Here's Peter Praet's interview with the WSJ.

The European Central Bank could adopt negative interest rates or purchase assets from banks if needed to lift inflation closer to its target, a top ECB official said, rebutting concerns that the central bank is running out of tools or is unwilling to use them.

"If our mandate is at risk we are going to take all the measures that we think we should take to fulfill that mandate. That's a very clear signal," ECB executive board member Peter Praet said in an interview Tuesday with The Wall Street Journal.

Mr. Praet didn't rule out what some analysts see as the strongest, and most controversial, option: purchases of assets from banks to reduce borrowing costs in the private sector. "The balance-sheet capacity of the central bank can also be used," said Mr. Praet, whose views carry added weight as he also heads the ECB's powerful economics division. "This includes outright purchases that any central bank can do."

2. Why house and prices are expensive in China - Luckily for us, most land in and around New Zealand cities is not sold by the local government. That is the case in China and it's frustrating the hell out of the central government there, which is grappling with an asset bubble.

Reuters has the background here:

Homes in cities such as Beijing are more expensive by some measures than Britain or Japan, a dismal outcome for a central government campaign aimed at making homes more affordable to Chinese. House prices in September rose nationwide at their fastest pace in three years.

"The starting point of local governments is to keep land prices relatively high," said Zou Xiaoyun, deputy chief engineer at China Land Surveying and Planning Institute, a research unit affiliated to the land ministry. "Governments are not willing to see home prices fall."

Selling land is a major source of income for local governments but other factors drive up prices as well. These include natural demand from a rising population, and speculation fuelled by ready cash, given relatively few alternatives for investment.

3. 'A socialist market economy' - Here's the Xinhua report from the Third Plenum announcement of major economic reforms. You gotta love the Chinese determination to create a 'socialist market economy', which most would see as an oxymoron. The weekend's reform news was the biggest political and economic news for New Zealand in the last year or so, now that China is our largest trading partner.

Here's the sort of words (or at least the English translation) that were used. It looks big, if Xi Jingping can pull another Deng Xiaopeng-style reform leap. Xi certainly has the authority now and more than any previous leader since Deng.

Build a unified and open market system with orderly competition

Allow the market to play a decisive role in resources allocation

Establish fair, open and transparent market rules

The session also proposes to build a unified and open market system with orderly competition, and allow the market to play a decisive role in resources allocation. China needs to accelerate forming a mordern market system in which enterprises operate independently, and compete fairly. The focus should be given to clearing market barriers and improving the efficiency and fairness of resources allocation.

4. Yikes - Japan's growth is slowing, despite a monstrous amount of money printing. 

5. Time to prick the bubble? - The Telegraph's Jeremy Warner thinks it might be time to prick Britain's property bubble, which is being blown up by 0% interest rates, money printing and Government 'help to buy'.

One local thought on this. Expat Kiwis previously stranded in British homes that were under water may soon be able to sell up and bring their pounds down here to buy even more over-priced property. And remember, the Welcome Home Loans are exempt from the high LVR policy. Just what we need.

 6. China's property bubble - China, through its crawling peg, is connected to the money printing in America and it's own banking systems (conventional and shadow) have pumped US$14 trillion of credit into its economy in the last 5 years. Now it is also trying desperately to control a housing bubble.

Is there a theme developing here?

Here's Reuters' version of all the tweaks and limits imposed (without success) to control its bubble.

7. More (Consumer Price Index) inflation please - The Economist wants to see more inflation. Think about that sentence for a bit. The Economist wants more inflation. It's a stunning thought after decades of inflation fighting.

All the “sound money” fanatics who issued dire warnings about rampant inflation when central bankers began their unconventional measures might usefully reconsider whether Western policymakers did too little, not too much. Be afraid of inflation, by all means; but life can be even scarier when it sinks.

8. Anti-tax avoidance man - Marty Sullivan is on a mission to stop multi-nationals avoiding tax. Here's an excellent WaPo piece on his crusade. 

9. Stiglitz on TPP - Here's a good summary of the investor protection debate around the TPP. Interestingly, South Africa has pulled out of its one with America.

Countries that have signed such investment agreements have paid a high price. Several have been subject to enormous suits – and enormous payouts. There have even been demands that countries honor contracts signed by previous non-democratic and corrupt governments, even when the International Monetary Fund and other multilateral organizations have recommended that the contract be abrogated.

Even when developing-country governments win the suits (which have proliferated greatly in the last 15 years), the litigation costs are huge. The (intended) effect is to chill governments’ legitimate efforts to protect and advance citizens’ interests by imposing regulations, taxation, and other responsibilities on corporations.

10. Totally Clarke and Dawe on contemporary Australian culture.