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Here's my Top 10 links from around the Internet at 11 am 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 #5 on the debt bomb that has gone off inside China and why it's a problem for China's future growth rate (and therefore for us and Australia).
1. The hilarious Beppe Grillo - I have never understood any of Beppe Grillo's jokes because I don't understand Italian.
But I still think he's hilarious.
He's refusing to join any government and has described the centre-left leader Pier Luigi Bersani as a 'dead man talking'.
He is openly talking about the need for a referendum on Italy's membership of the euro.
He's also rightly pointing out that Italy can't repay its debts and needs to restructure (ie default) on its debts.
The problem is that would wipe out Italy's banking system and probably destroy the German and French banking systems to boot.
Very funny guy.
Here he is being interviewed by a German magazine, as reported by The Telegraph:
“If conditions do not change” Italy “will want” to leave the euro and return to its former national currency.
The 64-year-old comic-turned-political activist also said Italy needs to renegotiate its €2 trillion debt.
At 127 per cent of gross domestic product (GDP), it is the highest in the euro zone after Greece.
“Right now we are being crushed, not by the euro, but by our debt. When the interest payments reach €100 billion a year, we’re dead. There’s no alternative,” he told Focus, a weekly news magazine.
2. A quick history lesson - Blogger Lord Keynes points out here that New Zealand successfully printed money and spent money on housing infrastructure from 1936-38 to dig its economy out of the depression.
We've been here before...
Increases in expenditure began in 1934 as the recovery ensued. The government deficits were covered by bond sales but also by direct central bank money creation (or “central bank credit”):
“The extensive use of central bank credit ... [sc. in New Zealand was] extremely unorthodox; and the amount involved was, for such a small country as New Zealand, substantial.” (Plumptre 1940: 289).In fact, the central bank money creation bears obvious similarities to policies advocated by Modern Monetary Theory, and the state credit was used in public works spending and state housing.2
After New Zealand adopted strong fiscal expansion, employment fell very rapidly after the stimulus was introduced in 1936: the number of those on relief programs fell from 38,000 in 1936 to only 8,000 by December 1937 (The New Zealand Official Year-Book, Volume 94, Govt. Printer, 1990). By the estimate of K. Rankin, real GNP soared by about 18% in 1936, 5.4% in 1937, and 7% in 1938 (Rankin 1992: 61), driving real GDP back to its trend growth path by 1937
3. Just what China needs - A massive high yield bond market to keep funding its urbanisation programme.... That's the scoop from Reuters on what the new leadership are planning.
The key detail is the acceleration of the urbanisation programme. If true and achieved without a credit market explosion then it's good news for Australia and New Zealand.
The Party aims to bring 400 million people to cities over the next decade as the new leadership of president-in-waiting Xi Jinping and premier-designate Li Keqiang seek to turn China into a wealthy world power with economic growth generated by an affluent consumer class.
The urban development would be funded by a major expansion of bond markets, sources with leadership ties, and a senior executive at one of China's "Big Four" state banks, who was formerly at the central bank, told Reuters.
The need for bond market reform has grown more urgent since December, when Li accelerated a commitment in China's 12th five-year plan to spend 40 trillion yuan on Urbanization by 2030. That money will now be spent over the next decade.
"(Li) Keqiang changed the target date during the Central Economic Work Conference last December," said a second source with leadership ties.
Currently, China lacks a properly functioning municipal bond market and is only just developing high-yield bonds, both of which would be needed to attract the investment capital sought.
4. Pollution data a 'state secret' - It's instructive to watch how news gets out in China these days and how things are changing.
WSJ's ChinaRealTime blog reports on how state-owned media have been the most aggressive in calling for state environmental authorities to release soil pollution data categorised as a 'state secret'.
At least three state-run newspapers have slammed China’s environmental authorities for arguing that soil pollution data is a “state secret” and thus not fit for public consumption, marking the second time in less than two months that state media have come out swinging against the government over environmental issues.
“State secrets is the magic phrase for rejecting disclosure of information. Is it because it involves secrets that it can’t be revealed, or is it simply because you’re afraid of triggering dissatisfaction?” the Communist Party’s flagship newspaper People’s Daily said in on its official account on the Sina Weibo microblogging platform this week. “Covering this up only makes people think: We’re being lied to.”
5. Chinese regions cut growth targets - Bloomberg reports almost half of China's provinces have cut their economic growth targets after China's new central government emphasised the need to improve the quality, rather than the quantity, of growth.
Fourteen provinces have set lower targets for gross domestic product expansion this year than in 2012 and the other 17 left their goals unchanged, according to Nomura Holdings Inc. The weighted average target has dropped to 9.9 percent from 10.3 percent, Citigroup Inc. calculates.
Scaling back regional politicians’ growth-at-any-cost attitudes may limit China’s rebound from its weakest expansion in 13 years. At the same time, it may mitigate concerns that rising local-government defaults will threaten the financial system and pollution will worsen as leaders complete a once-a- decade power handover next month.
“In the future, the central government may look at more indicators, including pollution and debt, in assessing local officials,” said Zhang Zhiwei, chief China economist at Nomura in Hong Kong and a former researcher for the International Monetary Fund. “You can’t continue the traditional way of accumulating heavy debts to push up GDP in your term and then leave the trouble to your successor.”
6. The rise of the fringe - Just as in the early 1930s, Europe is beginning to see the rise in opinion polls of the radical right and radical left parties as governments across the continents pursue intense programmes of austerity to keep their German creditors happy.
Here's The Guardian with a wrap up of the rise of such radicals.
Separatism, in Antwerp or Barcelona, is one grassroots response to the financial and economic crisis that now appears to be raising much more fundamental questions about political legitimacy across Europe.
But the backlash against tight fiscal one-shape-fits-all orthodoxy, spearheaded by Germany and orchestrated by Brussels, takes various forms across Europe. In Greece it is the hard-left Syriza movement that has prospered, along with the neo-fascistGolden Dawn, which has added violence to the list of instruments deployed in the backlash of the new politics.
To the north in Denmark, the reaction has been the more common one of Ukip-style protest politics, with opinion polls this week showing that the nationalist, anti-immigrant, rightwing Danish People's party has overtaken the governing social democrats in support.
The suddenness with which Grillo has emerged and taken one in four of Italian votes may have shocked the traditional governing elite across the EU, but it shows little sign of knowing how to respond or adjusting to the message being sent by voters who have sent incumbents tumbling one after the other from Greece to Finland over the past three years.
Why have so many prominent companies gone up in flames? In a new book, “Firm Commitment”, Colin Mayer, of Oxford University’s Saïd Business School, takes a familiar argument—that shareholders have too much power—and gives it new life. The idea that the main function of companies is to boost shareholder value rests on a misunderstanding of the nature of the firm, he says. Companies are not owned by shareholders in the way that ordinary goods are owned. They are artificial persons with a distinct legal identity. Companies are not just devices for lowering transaction costs or bundling contracts together. They are devices for getting groups of people—workers and managers as well as investors—to commit themselves to long-term goals.
The doctrine of shareholder primacy is particularly dangerous when combined with dispersed ownership, he believes. Dispersed ownership (which often occurs when founding families sell shares to finance growth) leads to a separation between ownership and control. Managers exploit this separation to feather their own nests. Owners respond by relying on two devices—shareholder activism or the market for corporate control.
8. Break up the 'Too big to fail and jail' banks - Barry Ritholz does an excellent job here of listing all the very serious people who have called for the Too Big To Fail and Jail banks to be broken up.
Yet it hasn't happened and doesn't look like it will. Why?
9. A great man dies - Stephane Hessel was a French resistance fighter who gave an impassioned speech (and later wrote a booklet) called 'Indignez Vous' in 2009 that captured the mood of the moment.
Here's the FT's excellent obituary.
Its genesis was his speech in 2009 at the Glières Plateau in the French Alps where, 55 years earlier, Maquis guerrillas had fought the Germans. Claiming to speak for the wartime resistance, Hessel urged people to shed indifference and fight the “tyranny of the financial markets”. In 2010 the speech became what he called his “little book”. A tiny Montpellier publisher printed 8,000 copies. “I thought it would sell 8,000 and would interest old French resistance fighters,” he marvelled.
It has sold more than 4m copies, about half outside France, fuelling movements such as Occupy Wall Street and Spain’s Indignados. Protesters waved it aloft. In Syria, an academic circulated a bootlegged translation. The book, as Hessel said, “hit a moment”. People hurt by the financial crisis were angry at banks and governments yet felt helpless to effect change. He told them they could. After all, his generation had defeated Adolf Hitler’s might.
10. Totally Jon Stewart on the Pablo Escobar of maple syrup.
I had no idea.
37 Comments
Again this claim that the govt can solve the housing problem by printing and count on unemployment falling to near zero...
Perhaps 'Lord Keynes' might like to explain what would stop NZ pollies from abusing this pathway to utopia....does LK really believe a future govt would not manipulate the bureaucratic machine to ensure it remained in power...doh
Bad enuff we have a govt borrowing to splurge on stuff that promises them electoral support...the cost there is the interest to pay...the cost of a 'print what you want' policy would be what......?
The economic principle of "printing money" to pay for Goverment expenditure is not new or rocket science. The issue is instead about Goverment abuse of the previlage. This is the reason why money printing is taken as a "bad thing". Another reason why Central Banks are supposed to be "independant" of the Goverment.
Of course this is all force. If the goverment do not "abuse" their access to "money Printing" it can and do serve a function to lift an economy from a deep depression or recession. But only so long as it stops as soon as the effect works. Otherwise it gives rise to inflation and hyperinflation as the value of the currency falls.
The current "money Printing" although in another name is exactly for the same reason of lifting economic activities for the countries concerned. The problem with this round of money printing is that it does not work because the money printed is hoarded by the banks instead of flowing into the general population. Which gives rise to the reason that this round of money printing is done in order to save Banks and Invetors and not really to stimulate economic activities.....However giving printed money to the general public to spend is dangerous because the Banks and Investor Class will be the loser in this indebted economy.
In Europe we see the ECB printing enourmous amount of money but the economy is still contracting...Why ?? Because the printed money is going to the Creditor Banks instead of the general economy. !!!
This is the reason why QE and any other form of Money Printing cannot work.
The way i see it. We as a country have to follow the rest world, and start printing money.This would have to be spent on infarstructure projects, at the same time raise the minimum wage.We should make that at least the same as Australia's. Converted to NZ dollars that would be $20.35. Infarstucture projects could only be let to NZ owened,operated and staffed companys that agreed to pay at least,the $20.35 minimum wage. This would stem the exudos of our youth,(heading to aus).Stimulate the local economy(because the money is spent and earned localy).Cause some inflation,which would have the affect of deflating any debt held by a person prior to period of inflation.(supposedly privaite debt in NZ amongst highest in the world)so this needs to be reset by infation! Lower our exchange rate(making our manufacturing sector competitive again).Manafacturing sector could start employing again,(instead of lay off's and clousures we're seeing at the mo.)
your thoughts?
It can work (in a way) but IT WON'T BE ALLOWED to happen because you said the right thing :
"Would have the effect of deflating any debt held by a person prior to inflation"...This simply cannot be allowed by the capitalist class (who happens to hold the political and political power right now )
#6 - BH, it would be useful to frame this in the context of the various ways of human interaction. Pinker's 'Better Angels' deals with this categorisation and lays bare the psychological drivers underlying each setting. I'm no Pinker, but categories he uses are useful: communal sharing, authority ranking, equality matching, and market pricing/rational-legal. The core argument of the book is that we have evolved along that continuum, with deceasing violence as an outcome.
In #6 the 'radical left' tends to be alternately 'Communal Sharing' or 'Authority Ranking' (depending on whether you're in Haight-Ashbury or Moscow) and the Radical Right tends to the Authority Ranking alone. Both eschew the higher states (Equality/Fairness, let alone market pricing/rational-legal).
The wider point, surely, is that the antics of the banksters and other playaz, has discredited the market pricing/rational-legal end of the spectrum. The rot started with cute financial instruments (market/pricing) and despite lotsa fingers pointing to the culprits, the rational/legal eagles won't do a darn thing about it. Hence the disillusionment.
But, following Pinker, the retreat to older (and more violent modes) of interaction does nothing for overall welfare in the widest sense.
Sigh. We get to see lessons being re-learnt, the hard way, the only way it seems.
No mention of energy costs in there Hugh? That is what I would like to see for the 1930's experiment vs the costs of housing you have been involved in or propose. I bet there is a magnitude of multiples in difference, in fact I know there is. Fatal oversight from you my friend.
Sorry Hugh you are way off the mark in confusing the division of labour with energy costs. What does it cost, in Kw/hrs, to build a house in Houston vs Auckland vs Auckland circa 1936. What is the annual cost of running each of those houses?
As for describing that is beautiful, I would suggest you are aesthetically challenged or myopic as it is nothing of the sort.
Have you ever read "How Buildings Learn" by Stewart Brand? Probably right up there with Christopher Alexander in terms of seminal publications on housing that you wilfully ignore.
Yes and clearly you have no expertese in energy matters, dubious in maths as well, little science and close to zero engineering so are believing the hype. Then Ive always noticed that the easiest ppl fraudsters take in are other fraudsters.
Cost to produce and energy efficiency do not go hand in hand, if energy is extremely cheap v say another input you can use double or even treble the energy use to reduce that other input and be left with a NET lower cost overall.
But then fanatics wont listen......
regards
Perhaps before asking that question of Steven you should outline your own ability to comprehend any expertise Steven has :-P
I say this because before starting Architecture School I had no idea that it was harder than Med School. Even worse is I can't actually explain this to people as there is usually a cognitive deficit that can't be overcome.
Hugh,
Surely a $300,000 3 BR house in Auckland is a lot cheaper than current price of $400,000+
for any 3 BR house in Auckland ??? Of course in Theory we should be getting $1000 all up price but is it achieveable at least in the short term ???
You may think Labour is stupid (and extravagant) with their $300,000 house, What about National's silence and even said it's impossible to have this pricing ?? (Meaning pirces should be even higher !!).
Whatever may be the "right" cost of houses, Labour has a big carrot dangling in front of "first Time" buyers.....
The only way $300k houses are possible is 1) To take land off the land bankers at agricultural prices and re-zone and sell off cheap. That's a huge vote loser in some parts...then there is what that does to house prices for existing owners especially those with 95% LVRs, if they go neg and thats probable, big vote loser. 2) then its defer or shift the costs aka what Hugh wants. That shifts the costs onto existing ratepayers, another vote loser. The only way left is to do a first time buyer grant aka OZ which just overheats the market even more.
So how many votes are lost v gained?
Hence we'll hear lots of noise and not much action.....if doing anything earlier was easy and a NET vote winner I think it would have been long done.
regards
Re; China - the over investment in housing/infrastructure there (and its potential to blow up) has been debated at length here but here is mainstream coverage (from an US network) of the Chinese real estate debt bomb (ignore the 2 ads at the beginning, its a 12 minute segment, the most revealing of which is the interview with the Chinese magnate who hopes the people who run the country know how to rescue the situation):
A note re the housing debacle - DIA has a Development Levies etc Review underway (technical papers here, submissions period closes March 15th).
Worth a view, as this is undoubetdly one of the structural drivers of unaffordable housing, and worth a submission (I am certainly doing one) if'n yer feel up to it.
I'm taking a rather different tack than what I suspect will be the main thrust of most submission. I argue for a disclosure regime, including making TLA's calculate and notify the imputed interest at ruling IRD rates, on their fees, levies, contributions etc, from the date of imposition to the project end date. Then, and to make the individual or per-section effect crystal clear, convert the total interest thus imputed, to a per-lot basis.
Might even make the Clueless Ones appreciate the time=money equation - well, we can but hope.
Sunlight - the great disinfectant......
Oh no, user pays as is National's matra, if you want it you pay for it. I fail to see why those on low incomes should pay for it and carry the risk. Intergenerational is absolute bollocks, most plant last 25 years...therefore those wanting and using it today should be paying for it now...and thats less cost.
regards
Oh no, user pays as is National's matra, if you want it you pay for it. I fail to see why those on low incomes should pay for it and carry the risk. Intergenerational is absolute bollocks, most plant last 25 years...therefore those wanting and using it today should be paying for it now...and thats less cost.
regards
As opposed to your libertatian voodoo economics? LOL, yeah right.
Scrambed eggs economics, yes thats quite fair, you see I take what is shown to work, or has good maths, science and engineering to back it up, sadly your economics has none of the above.
Actually the thought of going near Labour makes me want to puke, I left the Green's because they were no longer substantially green...alliance in drag busy buying votes (off labour) as fast as any other party, except maybe Winston, he's a master pork barreller.
regards
Quite simple dont try and shoot the messenger Hugh, shoot the information, data and logic down. If Im so ignorant and my conclusions so based on nothing it should be easy for you to do so.
Even simple maths, Hugh. Prove that infinite demand of a physical resources on an expotential growth curve can work on a finite planet. Or Demonstrate that the Hubbard energy curve never works....hint look up Coal Production in the UK for a classic proof to my argument.
http://www.theoildrum.com/node/8241
or
http://www.transitionedinburghsouth.org.uk/blog/world-peak-coal-product…
or
http://www.independent.co.uk/news/business/analysis-and-features/anothe…
or even any mineral,
http://en.wikipedia.org/wiki/Hubbert_peak_theory
Go for it....shoot it all down.
NB Having had some other threats on here and know a mate who when he walked into work had to a person cleaning a handgun on a workbench when he arrived, after a dis-agreement the previous day, uh no.
regards
Im well aware that my rates have climbed at 6% per year for a decade.
I am also quite aware that most ppl and it seems especially councillors have no concept or thought of just what that means for those on limited / fixed budgets.
and yes everything is now made or "repaired" with an un-accptable life span...the expotential in action, more and more has to be made and sold to keep the game running "properly"
That cannot continue of course.
regards
Throw in we are leaching the good out of the soil and the fertilizers we apply to compensate leaves residues which build up. I fail to understand why ppl cant look forward and see that gradual and irreversable issue will bite us or our children in the future...makes me scratch my head.
regards
Not just Italy but spain and Ireland,
http://theautomaticearth.com/Finance/spain-has-a-long-way-to-go-down.ht…
regards
Some light here on what Hugh pedals:
"Favorable national development trends coupled with the strong local real estate market present Houston with a chance to get the redevelopment of the east side of downtown right and create a memorable and unique destination," writes Desmond, the executive vice president of urban planning for the Downtown Denver Partnership. "Alternatively, piecemeal redevelopment can continue as it has in the past, leaving a disjointed and incomplete urban fabric. This could mean that Houston would miss a once-in-a-generation opportunity to pull all the pieces together in this promising area."
http://www.chron.com/default/article/Let-s-stoke-the-urban-revival-on-downtown-s-east-4282530.php
Might of missed this Bernard. This is why direct democracy is needed!
http://www.cnbc.com/id/100516799
Redirect your money printing campaign efforts to the cause ...
A quick note about two issues in the threads:
'Farming' , like the USA, cannot Ever be talked about as though it's a single activity. It depends exquisitely on a host of factors: altitude, soil type, depth of soil, rainfall, rain shadow, growing degree days, yada yada. Parts of the Canterbury Plains (e.g south bank of the Waimak from Annat to Courtenay) have been cropped intensively for a century and a half, still going strong. Te Pirita was Strugglers Flat for that same century and a half until the Selwyn Plantation Board, tired of the ETS hoo-ha, mulched every single one of their downland planations, sold it for dairy, and with the application of mucho dihydrogen monoxide, the dairy farmers made them stony plains Verdant.
'Infrastructure' has a surprisngly long life. There are Roman drains still running under York Minster, and much of central Christchurch horizontal infrastructure dates back to the efforts of the Christchurch Drainage Board in the early construction period 1875-1889. That's 130 years give or take. So when y'all yabber on aboot 'intergenerational equity' and how it is sooo last-century, let's just recall that 7 generations of Christchurch has benefitted from one concentrated burst of drain-laying.
History, history. A wunnerful teacher.
For Them as wot has Ears for it....
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