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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:
as at 11:10am |
Today 9:00 am |
Friday |
Four weeks ago |
One year ago |
NZ$1 = US$ | 0.8273 | 0.8215 | 0.8445 | 0.8253 |
NZ$1 = AU$ | 0.7951 | 0.7913 | 0.8210 | 0.7789 |
TWI | 75.85 | 75.58 | 76.89 | 73.51 |
Gold, US$/oz | 1,596 | 1,586 | 1,611 | 1,662 |
Dow | 14,509 | 14,506 | 13,976 | 13,239 |
Copper, US$/tonne | 7,782 | 7,762 | 8,075 | 8,575 |
Volatility Index | 11.30 | 11.30 | 12.31 | 15.04 |
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 ...
Signed the Greens petition to stop SOE partial sales | Pre-registered to buy MRP SOE shares |
# | # |
~308,000 | 335,374 |
7. Going upstairs
We missed our regular links to Clarke & Dawe on Friday, so here it is ...
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:
US$ tln | % | |
Total US Federal debt (at the limit): | 16.434 | 100.0 |
Amount owed to intragovernmental holdings | 4.873 | 29.7 |
Amount owed to "the public" | 11.560 | 70.3 |
- Amount owed to US investors | 5.943 | 36.2 |
- Amounts owed to foreign investors | 5.617 | 34.2 |
- Amount owed to China | 1.265 | 7.7 |
- Amount owed to Japan | 1.115 | 6.8 |
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
NZ milk production
Select chart tabs
31 Comments
We need Smith, Brown and Parker all to work co-operatively for NZ rather than in competition with each other.
Really, Bernard, you expect too much. especially with elections coming up within a year or a little more ?......And with Len Brown facing reelection soon ???
We can't get into a bidding war....
why not ?? I noticed that with a bidding war during elections, the voters seems to be the one who decides who offer the best policies....it's Democracy is it not ?? Anyway, does anyone really believes that politicians work for the voters best interest?? Cyprus should be the latest wakeup call.....The President elect went back on his promise just ONE WEEK after being elected !!!
#1 which brings us to #1 and Grillo. The writer is another traditional writer in a traditional paper. Grillo is doing what he has promised to do, ie destroy the existing system...without bloodletting. Cooperating with the existing system is not going to destroy it is it ?? Traditional newspaper cannot get a grip of what Grillo is really all about...the Cyprus affair is another nail to traditional politics in Europe and Der Spiegel is still asleep.....
#1
"The idea that the votes of the street are somehow more democratic than the votes of representatives sent to parliament in a democratic election is an illusion that has found adherents in Germany as well."
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you can pick faults with both. The problem with party politics is that certain interest groups fight their way into a party and while upfront they sell their best wares they have other agenda at the back.
Personally I think political parties are one of, if not THE biggest problem democracy has.
In some ways Im all for disbanding them and making everyone an independant MP having to get voted in by their local ppl. The problem is then a party like the Greens with 11% wouldnt be represented.
regards
I think we need to cut the crap out of politics (somehow).
http://wiki.lesswrong.com/wiki/Debate_tools#debategraph.org
We need more input from the community and instead of the 120 highly paid MP's researchers who work on particular points. The whole political process needs to follow and argument map and people who are out of their depth need to be excluded (can't pass test).
Wait for the Alpine Fault:
http://www.statschat.org.nz/2012/06/28/alpine-fault-can-we-panic-now/
http://www.orc.govt.nz/Information-and-Services/Natural-Hazards/Great-A…
Does our pro-growth Government have a study on how it will effect the hydro stations (hidden away)?
#2
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
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In Australia they are having a population debate which puts them further ahead than us. Ask yourself why we don't have a population debate (yet) a. vested interests
b. "In a book initially published in 1988 called Ideology and Immigration , she demonstrated how race, immigration policy and the concept of multiculturalism had combined to produce a set of ideas that had caused a new and fundamental division with Australian society. She showed this ideology had created a ‘great divide' between the intellectual class and the majority of the population. Intellectuals, who mostly worked for universities and the public service, had endorsed a set of values that won the ear of the then Labor government and the news media. They established a terminology that soon became the only publicly acceptable discourse on the topic. Although they professed their motives were social justice and political progress, the same intellectuals held an overt contempt for the majority of Australians, who they thought remained mired in materialism and shrouded in xenophobia.
http://www.sydneyline.com/Multiculturalism%20sociology%20of%20shame.htm
c. the above groups tend to be better off with more choices to move away from unpleasant circumstances.
#1
The ‘flack:hack’ ratio, the ratio of PR professionals to journalists, has been steadily increasing over time.
re (early in my career I worked for the ACTU - the CFMEU is a law unto itself)
I'm a guessing that early in your career was 1960's to 1970's David? Times have changed. Lots of immigrant building workers on 457 visas and the like. Still not cheap to build. But not as bad as you make out.
The CFMEU is no longer the monster it once was.
Davis re #1
When a person makes progress in going up a against the system that system, with the help of their friens in the news media (look at David Cameron in the UK, backing down on controling the media) attack them. Spread lies about them and destroy them so they can go back to "business as usual"
Can you be sure this story is true?
#3 So, we pay the RBNZ people to issue bank licenses on our behalf, to keep an eye on the banks to keep them from ever losing depositors money and pull the plug the second this threatens to happen. Because, deposits aren’t supposed to be risk bearing investments, right? Right?
We pay them to be the experts so we all don’t have to be.We can’t be. When a bank has its license and operating we can count on the RBNZ it is solvent and sound, right? Right?!
Wrong, apparently. Why are we paying them again?
I would be very interested in a survey, which asks people if they know what a bank deposit is. I would imagine most, if not all, would say it was their cash savings being held by the bank.
The fact that their deposit was actually "owned" by the bank might be a surprise, or that the technical position of their deposit is an unsecured liability of the bank. A deposit guarantee, actual or implied, has tended to mask this reality.
So, the OBR proposal and The Cyprus haircut will at least allow for people to gain a better understanding of what their savings actually constitute. If bank risk is now to be shifted to depositors, as well as bond and shareholders, then depositors need to be made very aware of what this means.
I'm sure the RBNZ has an appropriate educational campaign in mind :-)
I'm well aware a depositor lends her money to the bank. Ownership has nothing to do with this issue. The deal was the deposits are superior to all other liabilities and a regulator would/should default the bank before deposits could not be paid back. That is why interest is lower than bonds and dividents, there's supposed to be no risk, only competition for reserves and time value. If depositors money is used to bail out risk bearing investments/speculations interest rates should be much higher, higher than the by deposits insured shares and bonds.
Many bonds are now 'Covered'. Rank above everything else.
The RBNZ OBR questions and answers http://www.rbnz.govt.nz/finstab/banking/4368385.html
Sleep tight
#2
David you are probably right about unions but if you are not like them you get screwed.
When everyone is corrupt and you cant change the system then it is outcomes that are important
So
Do the Ausie workers benefit from their corrupt union operating in a corrupt system?
1 and 3 are related. Grillo I believe advocates leaving the Euro, which does make sense to me, albeit with the headache of sorting out what currency any debts are in, and how much of a haircut debtholders will have to take (either by devaluation or straight cut). Grillo's approach to government otherwise, I agree, is a copout.
On Cyprus, although I expect Europe will find some way to kick the can again, or explain why this can is dfifferent (Russian money seems the excuse); there has to be at least a small chance this does lead to a run on the banks of Spain, Italy, Portugal, even France. And if that were to happen, it could gain momentum very quickly to a point where the Euro would be very difficult to sustain.
The best result for all in the end, in my view; but it will be messy getting there if and when it comes to that..
#5 Need to get rid of the "armageddon" threat of banks and other financial institutions. They should not be allowed to be too big to fail or too big to prosecute by threatening to collapse the financial system. Our banks are too big relative to the economy.
One solution is to separate the payment system from the banks. Have it run by the RBNZ. If a bank goes down payments, wages etc still get made from current accounts.
The second related idea is separating current accounts from the banks balance sheets. They would have to be held at the RBNZ. Want a 100% guarantee on your personal or business savings, expect no interest. If a bank goes down your savings are safe and continue to be available along with the payment system.
Want interest, accept the risk. Clearly defined investment products with commensurate risk/reward profiles. eg Lower risk mortgage products with low interest, medium risk business products with higher interest and higher risk consumer finance products with the highest interest. No depositing money and letting the bank decide where it goes. But if bank fails you will have to wait for your money or a percentage of it to be returned like any other creditor.
The OBR continues to mix everything up. It's designed to protect the payment system and contagion but will do neither. It's all hot air. That's why the government had to implement a guarantee.
What fun. What will the Russians do I wonder? Presumably they will not be calm and rational like those silly Brussel Commissars think. Yes, I know its just the same as the Euro going down by 13 cents against the US dollar but do they really think they will see it that way?
It's not January, so they probably won't have an "accidental gas pipeline failure" that unfortunately means no gas for Germany for three weeks.
Poisoned umbrellas seems a bit too obvious, but these are the ex KGB guys.
Maybe they will ask for payment in advance on their gas.
I expect any cash they have left in Euroland will make its way to London pdq but they will want revenge too.
This is sick......"Charter schools would get money for set up costs and property funding that their private-sector backers would be able to keep if a school folded"
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10872032
More to the point can taxpayers be expected to always make their efforts available to fund the profitable concerns of others, who believe they are more deserving.
This form of tribute is both physically and politically unsustainable - I guess the recipients are pillaging with a short term form of survival bias.
Regarding pt3... the Cyprus debacle...
This shows one of the unintended consequences of our own Reserve Banks OBR...
If our Banks ever get "wobbly"... the threat of the OBR could easily amplify the problems by causing Bank Runs...
Rather than financial stability ...the OBR could well lead to instability...
steve Keen puts it really well...
http://www.businessspectator.com.au/article/2013/3/18/politics/eu-has-t…
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