Friday's Top 10 with NZ Mint: Chinese admiral says war with Japan would be quick; How NZ could encourage mass immigration of highly skilled Americans; Huawei and a disturbing death in Singapore; Clarke and Dawe; Dilbert

Here's my Top 10 links from around the Internet at midday in association with NZ Mint.

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 #9. One for all Huawei employees and customers in New Zealand to read. It is deeply disturbing.

1. 'Make it a quick war' - The dispute between China and Japan over the Senkaku/Diaoyu Islands keeps bubbling along with not many people too worried.

Yet when you look at the rhetoric of the Chinese generals in particular you begin to wonder.

Kirk Spitzer from Time reports on what a very senior rear admiral recently said in a prime time television special aired in China.

The respective navies keep accidentally shadowing each other and locking on to each others' radar.

Let's hope this all blows over, but the rhetoric is not encouraging.

Here's the jaw-jaw about any war-war.

“The battle to take over the Diaoyu Islands would not be a conventional operation. For either party involved in the war, it would be very difficult to employ their full military capabilities, because there would be no time for them to fully unfold in the fight. The real fight would be very short. It is very possible the war would end in a couple of days or even in a few hours,” said PLA Navy Rear Admiral Yin Zhou, a former director of the Navy Institute of Strategic Studies, in a recent primetime special on Beijing TV.

2. The other point of view - Yesterday I pointed to an article wondering who would have jobs and incomes if lots of jobs go to robots.

Here's a New York Times piece arguing that the shift to robotics is good for productivity and the fruits of this labour will find its way to people eventually.

A German robotics engineer argued that automation was essential to preserve jobs and also vital to make it possible for national economies to support social programs.

“Countries that have high productivity can afford to have a good social system and a good health system,” said Alexander Verl, head of the Fraunhofer Institute for Manufacturing Engineering in Germany. “You see that to some extent in Germany or in Sweden. These are countries that are highly automated but at the same time they spend money on elderly care and the health system.”

3. Delaware = Dollars and Euros Laundered and Washed at Reasonable Expense - FTAlphaville reports on how some of the best tax havens are actually in America. Delaware is particularly effective.

According to a World Bank database, American shells are the most popular corporate vehicles among perpetrators of large-scale corruption… In a study last year three academics, led by Griffith University’s Mr Sharman, approached shell-company providers around the world posing as corrupt officials and money-launderers. They found that OECD countries were less compliant than tax havens with international standards on corporate transparency, that America was among the least compliant, and that Delaware was one of the worst states (with not a single fully compliant response).

Investigators joke that Delaware stands for “Dollars and Euros Laundered And Washed At Reasonable Expense”.

4. 'Just like a real estate agent' - America's futures exchanges regulator, Gary Gensler, has said LIBOR is still often "completely made up". 

Here's how he described it in this BBC article:

Mr Gensler compared the manipulation of rates to an estate agent trying to sell you a house.

"They are trying to reference the price of the houses in the neighbourhood [when] there have been no transactions in the neighbourhood and furthermore, the agent is not willing to share the data and is often just making it all up," he said.

5. America's broken health care system - If New Zealand ever decided its path to greatness was to import lots of highly skilled engineers and tech people from America, it would be fairly easy to entice them here. All we'd need to do is explain our fairly simply and relatively inexpensive health care system and how much it costs individuals and taxpayers and they would migrate in a jiffy.

Read this piece from Time to understand why. HT Martyn via email.

Every time a nurse drew blood, a “ROUTINE VENIPUNCTURE” charge of $36.00 appeared, accompanied by charges of $23 to $78 for each of a dozen or more lab analyses performed on the blood sample. In all, the charges for blood and other lab tests done on Recchi amounted to more than $15,000. Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests. By law, Medicare’s payments approximate a hospital’s cost of providing a service, including overhead, equipment and salaries.

On the second page of the bill, the markups got bolder. Recchi was charged $13,702 for “1 RITUXIMAB INJ 660 MG.” That’s an injection of 660 mg of a cancer wonder drug called Rituxan. The average price paid by all hospitals for this dose is about $4,000, but MD Anderson probably gets a volume discount that would make its cost $3,000 to $3,500. That means the nonprofit cancer center’s paid-in-advance markup on Recchi’s lifesaving shot would be about 400%.

When I asked MD Anderson to comment on the charges on Recchi’s bill, the cancer center released a written statement that said in part, “The issues related to health care finance are complex for patients, health care providers, payers and government entities alike … MD Anderson’s clinical billing and collection practices are similar to those of other major hospitals and academic medical centers.”

The hospital’s hard-nosed approach pays off. Although it is officially a nonprofit unit of the University of Texas, MD Anderson has revenue that exceeds the cost of the world-class care it provides by so much that its operating profit for the fiscal year 2010, the most recent annual report it filed with the U.S. Department of Health and Human Services, was $531 million. That’s a profit margin of 26% on revenue of $2.05 billion, an astounding result for such a service-intensive enterprise.

6. Why should US taxpayers give America's Too Big to Fail or Jail banks a US$83 billion gift each year? - That's the question being asked by Bloomberg's editorial writers.

Bloomberg has worked out how big the subsidy is and that these banks would be unprofitable without it. 

The top five banks -- JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry -- with almost $9 trillion in assets, more than half the size of the U.S. economy -- would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

Neither bank executives nor shareholders have much incentive to change the situation. On the contrary, the financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy. The result is a bloated financial sector and recurring credit gluts. Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.

7. Hand that mine back - Yesterday I talked about China's concrete diplomacy where it builds highways and ports and mines in Africa to get access to precious physical resources.

BBC reports Zambia has just taken a big mine back after the Chinese failed to keep the mine safe or clean. 

As well as the safety issues, Mr Mukanga also stated that the company had failed to pay royalties or properly declare how much coal was produced. The mine in question has been controversial.

A Zambian miner was charged with the murder of a Chinese supervisor at the Collum mine last year. In 2010, Chinese managers were accused of firing on protesting miners.

8. Currency Wars and Australia - Alan Kohler writes at the ABC about the risks for Australia.

The greatest threat to Australian manufacturing is now the Bank of Japan. That's because if the Bank of Japan (BoJ) succeeds in its drive to bring inflation to Japan, the yen will continue to depreciate and push the Australian dollar to new highs. Of course, if the Japanese economy recovers it may become a bigger buyer of Australian resources, but that won't help manufacturing.

 

In the modern world of monetary policy and macro economics, targets blur. All of the indebted nations of the west are trying to generate inflation because it's the only way out of their debt vice: they can't run surpluses and pay it off and they can't just default on their bonds, so they must stuff the bonds down the throats of their central banks and then surreptitiously write down their value via inflation. It's the only way, and they're well into it.

Inflation is both the cause and effect of currency devaluation. By printing money to buy bonds and targeting higher employment and higher inflation, the central banks of America, Europe and Japan are also targeting a lower exchange rate. The Australian dollar TWI used to closely track a combination of the cash rate and commodity prices, but in 2010 that relationship broke down as the United Stated Federal Reserve and then the European Central Bank began their "quantitative easing" programs (buying bonds).

Since then the cash rate has been cut 1.75 per cent and the RBA index of commodity prices has fallen 20 per cent, yet the Aussie TWI has appreciated 15 per cent, from 67.7 in early 2010 to 77.8 today. Against the US dollar, it's up 20 per cent from 86.8 to 103.6 this morning.

9. A disturbing story - The FT has an amazing story titled "Death in Singapore" about the apparent suicide of a young US engineer working for a Singaporean company making equipment in partnership with Huawei.

Huawei is the giant Chinese telecommunciations equipment company that has a major presence in New Zealand, but is banned from government work in UK, Australia and America because of official concerns it is a front for the Chinese military. The implications are profoundly disturbing and symptomatic of worries about cyber warfare and national interests at play through the vehicles of technology companies. Huawei's technology is at the heart of our new fibre to the curb broadband network, along with the 2 Degrees and Vodafone networks.

On June 24 last year, the body of a young US electronics engineer, Shane Todd, was found hanging in his Singapore apartment. Police said it was suicide, but the Todd family believe he was murdered. Shane had feared that a project he was working on was compromising US national security. His parents want to know if that project sent him to his grave

10. Totally Clarke and Dawe on Kevin Rudd's non-run for the Labor leadership.

No. No Brian. No. Um... No. No Brian not in a fit. No.

(Updated with cartoons)