Monday's Top 10 with NZ Mint: Beppe Grillo; house building; Cyprus; Richard Fisher; the SOE score; China and American debt; Clarke & Dawe; 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 back tomorrow with his version.

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.

1. Green fascism
Beppe Grillo, leader of the populist Five Star Movement in Italy, prides himself on his ridicule of the parliamentary system. Yet while his anti-establishment rhetoric sounds appealing, at heart it's actually anti-democratic.

And strikingly similar to that of an infamous Italian from the past.

Sadly, there are more than a few Kiwis who are drawn to his message but fortunately our Green party seems to have expunged its ridiculers. Jan Fleischhauer in Spiegel Online takes a closer look:

As with all other revolutionaries, Grillo's answer to the malaise of the present age is extremely simple. You just have to do away with the politicians or, better yet, jettison everything that smells of power and privilege. "We are young," it says on his blog. "We have no structure, heirarchy, leaders or secretaries. We take orders from no one." Grillo's comparison of his movement to the French Revolution, which took its ideas of equality with bloody seriousness, is no accident. He relativizes by saying, "without the guillotine," but the stipulation means little. When people are incited into rage, those who fueled their passions never take the blame.

The mockery of the parliamentary system under the guise of true democracy is a trick that all opponents of democracy espouse, regardless of where they come from.

It is easily overlooked nowadays, but fascism at its heart was a leftist movement. Mussolini never made a secret of his orgins: "I am and always will be a socialist. My convictions will never change. They are implanted into my bones," he told his comrades as they expelled him from the party at the outbreak of war in 1914 because of his pro-war stance. Farrell concludes that "Mussolini's fascism was black, Grillo's is green, but they both have a red heart."

2. Trouble on the home front
Just as Auckland Council and the Government seem to agree we need to build many more new homes as a way to deal with our fast-rising affordability problems, Sydney has decided to do almost exactly the same. They are planning a building surge of 170,000 extra homes over the next 20 years. They expect the first ones to be started in 2014.

The competition for construction trades will be fierce and I doubt NZ will win that battle. The Australian building trades unions are aggressive and corrupt (early in my career I worked for the ACTU - the CFMEU is a law unto itself) so I have no doubt at all that new Sydney homes will be expensive! But with government money in there it will become a feeding frenzy.

No matter how many apprentices we train for our needs the risk is that they will quickly migrate to the big money opportunities in Sydney.

Len Brown and Nick Smith now have a new issue to content with for their urgently needed projects. Lets hope they don't lose sight of the need for affordable homes real people can actually buy. Cost will be the major constraint. We need Smith, Brown and Parker all to work co-operatively for NZ rather than in competition with each other. We can't get into a bidding war. Fast, creative and smart is what will win it for us over the Aussies - no dawdling.

"We want to make home ownership, particularly the ownership of a backyard, a reality again."

Much of the development will be around the North West Rail Link project, with eight new train stations, business and industrial parks and tens of thousands of homes to be built between Cherrybrook and Cudgegong Road, northwest of Rouse Hill.

This would bring about 49,500 jobs to the area, Mr O'Farrell said.

The plan also includes major developments around Leppington and Austral in Sydney's southwest.

Mr Hazzard said 20,000 jobs and 13,000 homes would be created in these areas.

Almost half a billion dollars would be spent on road, water and sewerage infrastructure in northwest and southwest Sydney.

Two types of areas would be developed, greenfield sites where homes would be built on paddocks in outer Sydney, and urban activation areas, where the government hoped to work with local councils to increase living density in existing suburbs.

3. Unhappy savers
The latest news in the euro crisis is that the big countries have forced Cyprus to apply up to a 9.9% haircut on bank deposits in return for a bailout. The Cypriots aren't happy and are looking for ways to get their money out.

The Cyprus problem is complicated because the Russians have an enormous volume of money in the Cypriot banking system and the 'Germans' had no stomach to bail out dodgy Russian depositors.

Actually, the Cypriot banking system is far bigger than the Cypriot economy; it has assets equal to 900% of their GDP, embellished by those vast Russian 'investments'.

Just another twist in the euro-saga that doen't really relate to us? Well, actually, No.

The haircut imposed on depositors is just what the RBNZ has put in place here under our Open Bank resolution policy. We don't have a 'Germany' to bail us out of course. And our total bank deposits represent only 122% of GDP (business and households). But still, would you be ready for such a haircut (ie tax) ?

Cyprus had been a blip on the radar screen of Europe’s long-running debt crisis - until now.

Hobbled by a devastating banking crisis linked to a slump in Greece’s economy, where Cypriot banks made piles of loans that are now virtually worthless, Cyprus on Saturday became the fifth country in the euro union to receive a financial lifeline since Europe’s debt crisis broke out. As the euro zone’s smallest economy, Cyprus had hardly been considered the risk for the euro union that Greece, Ireland, Portugal or Spain were.

But the surprise policy by the International Monetary Fund, the European Central Bank and the European Commission is the first to take money directly from ordinary savers. In the bailout of Greece, holders of Greek bonds were forced to take losses, but depositors’ funds were not touched.

Cypriot banks are loaded up on bad loans made to Greek companies and individuals, which have turned sour at an alarming rate as Greece deals with the fourth year of a devastating economic and financial crisis.

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

5. Stinging criticism from a Fed maverick
The largest American banks are "practitioners of crony capitalism," need to be broken up to ensure they are no longer considered too big to fail, and continue to threaten financial stability, a top Federal Reserve official said. Richard Fisher is president of the Dallas Fed and sits as an alternate on the FOMC. But he has a history of voting against the Bernanke consensus.

"They represent not only a threat to financial stability but to fair and open competition … (and) are the practitioners of crony capitalism and not the agents of democratic capitalism that makes our country great," said Fisher, who has also been a vocal opponent of the Fed's unconventional monetary stimulus policies.

Fisher's vision pits him directly against Fed Chairman Ben Bernanke, who recently argued during congressional testimony that regulators had made significant progress in addressing the problem of too big to fail. Bernanke asserted that market expectations that large financial institutions would be rescued is wrong.

But Fisher said mega banks still have a significant funding advantage over its competitors, as well as other advantages. To address this problem, he called for a rolling back of deposit insurance so that it would extend only to deposits of commercial banks, not the investment arms of bank holding companies.

"At the Dallas Fed, we believe that whatever the precise subsidy number is, it exists, it is significant, and it allows the biggest banking organizations, along with their many nonbank subsidiaries - investment firms, securities lenders, finance companies - to grow larger and riskier," he said.

6. Half-time score
You can sign on the dotted line in the debate over the partial asset sales program. And the score to date is ...

7. Going upstairs
We missed our regular links to Clarke & Dawe on Friday, so here it is ...

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8. Single digit
Some people apparently think the Chinese are the major funders of American federal debt. But the numbers show otherwise. It is true the Chinese are the largest foreign holder but only just, and actually their holdings are relatively small. As at January 2013, the data shows:

What is interesting about this data is that it is for January 2013 and after the Americans went over the 'fiscal cliff' and in the middle of the sequestration battles - and foreigners increased their holdings, including the Chinese who boosted their holdings to a new record. No signs of a pull back in confidence there.

Annual 2012 US GDP was US$15.61 trillion.

By comparison, foreign investors hold a very much larger 66.7% of New Zealand public debt, according to the RBNZ. New Zealand data is not so transparent - you can't find how much the Chinese or Japanese hold.

9. Job losses
No reports of jobs lost this week (although the final Geon tally was confirmed). It still very quiet on this front. However it seems most manufacturers are in good heart. While manufacturing employment may not be growing, new orders and production certainly are. They seem to have got the productivity bug.

We are keeping a tally of reported job losses and we are asking readers for help keeping track of them. Let us know when you see some.

10. Today's quotes
"Empty pockets never held anyone back. Only empty heads and empty hearts can do that." - Norman Vincent Peale

"People are living longer than ever before, a phenomenon undoubtedly made necessary by the 30-year mortgage." - Doug Larson