Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below or please email your suggestions for Friday's Top 10 at 10 to bernard.hickey@interest.co.nz I'm (shock horror) early today to make sure I can focus on the RBNZ's December quarter Monetary Policy Statement.

1. Pensions in crisis - The World Bank has issued a report pointing to a looming pension crisis in Europe and Central Asia. HT Gertraud via email.

"It is alarming to look at what the Europe and Central Asian (ECA) countries are soon to face as the region continues to age," said IMF Lead Economist Anita Schwarz.

"Future pension system deficits can be threefold than what is currently expected, and are expected to remain at that level for more than 20 years before slightly improving. Policymakers need to use the opportunity of the current crisis to address long-term issues, which could bankrupt pension systems precisely when the numbers of people who need them are growing.

"While the financial crisis has hit pension systems in the ECA region hard, the real crisis is yet to come. Despite the pain countries have endured during the global financial and economic crisis, the impact of this crisis pales in comparison to what the countries are soon to face with the aging demographic transition."

2. Testing, testing - What will happen when the US Federal Reserve starts withdrawing the punchbowl from the party? This week it dip it's little finger in the punchbowl by draining US$180 million from the banking system Reverse Repos, Bloomberg reported. It is essentially testing the system. We'll see what happens when it gets really serious.

The transaction is one of the tools being used for an eventual withdrawal of the central bank's unprecedented monetary stimulus. Fed officials said when the tri-party reverse repo operational readiness program was announced on Nov. 30 that the actions themselves don't represent any change in policy.

3. Cue disgust - Lucian Bebchuk, Alma Cohen, and Holger Spamann from the Harvard Law School's forum on corporate governance and financial regulation have studied bonuses and share sales at Bear Stearns and Lehman Bros from 2000 to 2008. The top executives extracted US$250 million each (not a typo) before they crashed and their focus on short term returns (and the share bonuses and sales that went with those results) was a factor in their crashes.

According to the standard narrative, the meltdown of Bear Stearns and Lehman Brothers largely wiped out the wealth of their top executives. Many "“ in the media, academia and the financial sector "“ have used this account to dismiss the view that pay structures caused excessive risk-taking and that reforming such structures is important. That standard narrative, however, turns out to be incorrect.

It is true that the top executives at both banks suffered significant losses on shares they held when their companies collapsed. But our analysis, using data from Securities and Exchange Commission filings, shows the banks' top five executives had cashed out such large amounts since the beginning of this decade that, even after the losses, their net pay-offs during this period were substantially positive.

In 2000-07, the top five executives at Bear and Lehman pocketed cash bonuses exceeding $300m and $150m respectively (adjusted to 2009 dollars). Although the financial results on which bonus payments were based were sharply reversed in 2008, pay arrangements allowed executives to keep past bonuses.

Furthermore, executives regularly took large amounts of money off the table by unloading shares and options. Overall, in 2000-08 the top-five teams at Bear and Lehman cashed out close to $2bn in this way: about $1.1bn at Bear and $850m at Lehman. Indeed, the teams sold more shares during the years preceding the firms' collapse than they held when the music stopped in 2008.

Altogether, equity sales and bonuses over that period provided the top five at the two banks with cash of about $1.4bn and $1bn respectively (an average of almost $250m each).

4. Turning purple and then black - This video of a map of the United States shows how the unemployment changed county by county from the beginning of 2007. It turns purple (7% to 9.9%) and then black (over 10%), spreading like a disease. We love a good chart, but this one from LaToya Egwuekwe is a humdinger.

5. A complete waste of space - Paul Volcker is a canny old codger who should still be the US Federal Reserve Chairman. He rightly points out that all that 'financial innovation' of the last decade was a complete waste of time and the only useful thing done by banks in recent years was to invent the ATM, The Telegraph reported.

The former US Federal Reserve chairman told an audience that included some of the world's most senior financiers that their industry's "single most important" contribution in the last 25 years has been automatic telling machines, which he said had at least proved "useful".
Echoing FSA chairman Lord Turner's comments that banks are "socially useless", Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products.

When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk."

6. They're grumpy - North Koreans have not taken kindly to their government taking their money off them. Here's the Wall St Journal's latest report of violence and protest north of the border. The graphic below is useful.

"They've tried to wind back the system, but they're potentially teaching the people that markets can't be controlled," says Shaun Cochran, head of Korea research at CLSA Asia-Pacific Markets, who published a report on North Korea's move.

Pyongyang announced Nov. 30 its decision to issue new currency and limit the amount of old currency that could be exchanged to the equivalent of about $40, based on unofficial exchange rates, a step that essentially scrapped all other private money.

7. "Out of bullets" - Meredith Whitney, who was the banking analyst that predicted last year's implosion, now says on CNBC below the US government doesn't have any bullets left in its arsenal to get the economy going again. Ed Harrison at CreditWritedowns has the story.

8. Now the hangover - Britain's Chancellor Alistair Darling announced a 50% tax on bankers' bonuses overnight, an increase in the VAT back to 17.5% from 15% and an increase in the top tax rate over 150,000 pounds to 50% from 40%, Bloomberg reported. Now that Britain's budget deficit is over 10% and it is being threatened with credit rating downgrades it has to pull that deficit back in. It is choosing tax increases. This will be the challenge for 2010. Will the global economy grow through 2010 when governments and central banks are forced to withdraw their stimulus? Or are we in for a double dip?

Trailing in opinion polls before an election that he must hold by June, Prime Minister Gordon Brown is balancing the need to clamp down on a record peacetime budget deficit while extending support for voters struggling to keep their jobs.

"At this stage in the electoral cycle, the chancellor's weapon of choice is a butter knife rather than an axe," said Alan Downey, head of public sector consulting at KPMG. "Those who were expecting a plan for reducing public expenditure will be disappointed."

9. Replace the US dollar with SDRs - Jeffrey Garten, the Juan Trippe professor of international trade and finance at the Yale School of Management, has called in a FT.com opinion piece for a secret meeting (!) between Christmas and New Year to discuss the creation of a new global reserve currency to replace the US dollar. I get accused of being alarmist and off the planet a lot. Here a Yale professor writes in the FT about what's really going on. This is well worth a read.

The two most significant structural consequences of the recent financial debacle are the massive deficits and debts of the US and the shift of economic power from west to east. There is only one effective way for governments to address the combined impact of both: press for a sea change in currency relationships, especially a permanently and greatly weakened dollar.

The roots of this situation are well known. The American budget deficit of this past fiscal year reached 10 per cent of gross domestic product, the largest since the aftermath of the second world war. Meanwhile, the net external debt of the US nearly tripled last year to $3,500bn and it is projected to increase by nearly $1,000bn every year for the next decade. All this underestimates the problems of a country where unfunded liabilities for baby boomer entitlements are in the stratosphere, infrastructure deterioration is scandalous and many large states are out of money. To close the gaps, taxes would have to be raised to sky-high levels and spending brutally slashed. It would take a miracle if America's political system "“ one rife with vicious partisanship and riddled with well-financed special interests "“ could do either, let alone both.

Washington will therefore have little choice but to take the time-honoured course for big-time debtors: print more dollars, devalue the currency and service debt in ever cheaper greenbacks. In other words, the US will have to camouflage a slow-motion default because politically it is the easiest way out.

10. Totally irrelevant video - Jackie Chan's Top 10 stunts. The last one dislocated his pelvis, burnt all the skin off his hands and electrocuted him. I have a new respect for the man. I winced a lot.