Top 10 at 10: NZ's irrational housing market; Open plan offices?; Safe nuclear power?; Dilbert

Here's my Top 10 links from around the Internet at 10 am. I welcome your additions in the comments below. I bet Dogbert wish he knew about LAQCs. 1. US house prices continue to fall. Data out overnight showed the median US existing house price was US$173,000 in May, down 16.8% from a year ago, the WSJ.com reported. At the current exchange rate that means the US median house prices is NZ$270,000, which compares with New Zealand's median price in May of NZ$337,500. The OECD reckons New Zealand's average earnings are around NZ$43,000, while US average earnings are around US$39,400. This means the house price to earnings multiple in the United States is now around 4.4 times, while the New Zealand multiple is around 7.8. Our market remains horribly over valued and horribly irrational. 2. Fran O'Sullivan has another go at the hot topic of dairy conversion debt in her Wednesday column in the NZ Herald. She again calls on the government to take the impending collapse of some of these farms seriously. Meanwhile the comment storm goes on on our post about problems with big dairy herds It's now up to over 115 comments.

All this points to the need for ministers to instruct Treasury to do some real due diligence on the dairy sector's exposures and do some scenario building.

3. The OECD released a report overnight into pensions which highlighted the need for sweeping reforms. The OECD's pensions at a glance section is an excellent resource and its section on New Zealand makes for interesting reading. We receive less as a percentage of GDP than the OECD average, but we have a 'younger' population now and have a longer life expectancy. 4. Moody's said overnight the United States' AAA rating was safe for now, but could be at risk if the US dollar lost its reserve status or America's government was unable to get its debt tracking lower over time, Reuters reported. 5. The Baltimore Examiner's Steve Christ writes a detailed and scary piece on the coming collapse in the US commercial property market that will add to the pain from the residential property collapse. It's a must read for anyone thinking the next couple of years are going to be better in the United States. HT Alastair Helm.

Taken together, that makes a commercial real estate collapse the next shoe to drop in this long decline "” especially given the massive loss of household wealth. The government's last-ditch efforts to prevent a US$1 trillion collapse in commercial real estate are just like all of rest"” doomed to fail. The math on this one simply can't be overcome.

6. Former BNZ CEO Cameron Clyne, who is now CEO of NAB, is a huge fan of open plan offices, The Australian reported. I agree with him and it's great to see him implement it with gusto in Australia. Your view on open plan?

7. Jon Taplin at TPMCafe makes some excellent points about how the US consumer has changed their spots in a way Obama, Geithner and Bernanke don't understand. He also points out a fundamental capacity utilisation problem that cannot be solved with pump priming. HT Saniac.

It seems to me that the American public has already made a shift to a culture in which spending at the mall will be a lot less important and yet the politicians are acting like their job is to restore the status quo ante--a world the public no longer cares about. Larry Summers talks about getting the big banks lending again, but what business wants to borrow when there is so much excess capacity? There are too many damn malls. Too many car dealerships. What person in their right mind would start a new retail clothing business today? The Big Lie of the current economic debate is that we just went through a "hundred year flood"--that this was all caused by the Sub Prime mortgage crisis. But the problems of stagnation and capacity utilization have been increasing since 1975 when overall capacity utilization was at 86%. It hasn't been above 82% since 1995 and today it is below 77%. But the larger problem has been that we have misallocated our capital since the problems of economic stagnation first raised their head in the mid 1970's. Now there really is only one solution. We have to wean ourselves from the mall economy and begin to make things that other countries want to buy. I believe the citizens are way ahead of the politicians in this project. If Vince Farrell is right and we are in the process of moving $4 trillion in a $13 trillion GDP away from consumption, that is a 40% drop in annual consumption expenditure. Of the three buckets of the economy (consumption, investment and exports) we can already see that investment will increase by at least $1 trillion (the increased savings rate). The missing piece is exports. There are two problems with exports. First, the stuff we make that the rest of the world wants (movies, music, video games, software, drug patents) are all subject to the crushing disdain for our intellectual property on the part of most of the world's citizens (as well as our own public). We have built a knowledge economy, but China doesn't give a fig for our IP regime. If the people want cheap Viagra, China will tell Pfizer to pound sand. If the Brazilians want pirate copies of Shrek, Lula could care less. Second, we are lagging behind in making the technology of the future. Why isn't General Electric the world's largest exporter of wind turbines? Why isn't Babcock and Wilcox's new preassembled nuclear reactorbeing exported to France and Japan? These kinds of technologies are not easily assembled by cheap labor in third world countries. Germany is the largest exporter of Solar power equipment.

8. Will Barack Obama reappoint Ben Bernanke as the Chairman of the US Federal Reserve? The New York Times' Dealbook speculates that maybe he won't, going from some recent comments. 9. Should the world be building more nuclear reactors? Felix Salmon from Reuters points out a new breed of reactors can run off the waste from old reactors and can't melt down. Brilliant. Can we have a couple? 10.  Long term US interest rates and the mortgage rates they spawn are still rising, despite a good dose of money printing this week, Tyler Durden at Zerohedge points out.