Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments in the comments below or please send your suggestions for Tuesday's Top 10 to bernard.hickey@interest.co.nz We love saying things that make our stockholders happy...

1. Boom or bust? -  China's apparent economic strength may only be apparent. This piece in the China Comment blog points to worries with the China's commodity boom. HT Andrew Walker via Twitter

China is demanding a lot of commodities, and is apparently producing a lot of manufactured goods. But it does not appear to be selling a lot of goods abroad, or at home"“ which implies that China is creating a pseudo-bubble market"“ and that should be a reason for concern.

Including local government debt, according to the Wall Street Journal, China's stimulus debt is not at the officially claimed sub-20% of GDP level. Instead, China's debt is nearly 40% of GDP. (Still, this compares favorably with the US' over 60% of government-held debt as a percentage of GDP"“ but there is one difference between the two places; China is a developing country, whereas the US is a developed country-Economists will argue whether that means China's debt is better or worse than America's). (Wall Street Journal).

2. Money Multiplier - Troy Barsten sent me this useful Money Illusion link on the money multiplier and had this to say.

I always had a problem with the idea of a "Money Multiplier". I feel the current crisis proves that the money multiplier is a myth; I just was never able to explain why. My basic beef with most economists is their general assumptions: perfect actors with perfect information, market equilibrium (which is an oxymoron), continuous and infinite supply and demand, etc. My real problem is the Keynesian argument that increasing the money supply will have any measurable direct effect on GDP.

3. Cause and effect - Australia's contrarian economist Steve Keen is always worth reading at his DebtWatch blog. In this post he tears apart the arguments of the textbook neo-classical economists who said America's debt explosion was China's fault because it fed the Americans lots of easy money. He also has a couple of excellent charts. HT Gertraud by email.

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The real problem with the textbook argument is that its cause and effect relations are, to put it bluntly, "arse about tit".

The textbook argues that savings must occur first before investment can occur"”and since the poor Chinese happen to be good savers, while the rich Americans are lousy savers, the financial flows went from China to the USA. So the US crisis is all China's fault.

In fact, the action in a credit-driven economy begins with the lender: lending creates the money which"”once spent by the borrower"”turns up in other people's bank accounts.

4. Behind the scenes - New York Times columnist Andrew Ross Sorkin has written a book called "Too Big to fail" which details what went on in those few mad weeks in September and October last year. Here are some excerpts reprinted in Vanity Fair.

"˜This is an economic 9/11!" There was chilling silence in Treasury Secretary Hank Paulson's office as he spoke. Nearly two dozen Treasury staffers had assembled there Wednesday morning, sitting on windowsills, on the arms of sofas, or on the edge of Paulson's desk, scribbling on legal pads. Paulson was seated in a chair in the corner, slouching, nervously tapping his stomach. He had a pained look on his face as he explained to his inner circle at Treasury that in just the past four hours the crisis had reached a new height, one he could compare only to the World Trade Center attacks, seven years earlier, almost to the week. While this time no lives may have been at stake, companies with century-long histories and hundreds of thousands of jobs lay in the balance.

The entire economy, he said, was on the verge of collapsing. Paulson was no longer worried about just investment banks; he was worried about General Electric, the world's largest company and an icon of American innovation. Jeffrey Immelt, G.E.'s C.E.O., had told him that the conglomerate's commercial paper, used to fund its day-to-day operations, could stop rolling. Paulson had also heard murmurs that JPMorgan Chase had stopped lending to Citigroup; that Bank of America had stopped making loans to McDonald's franchisees; that Treasury bills were trading for less than 1 percent interest, as if they were no better than cash, as if the full faith of the government had suddenly become meaningless.

5. The short version - Felix Salmon at Reuters has a nice summary of this article and puts its significance into context. It seems Morgan Stanley came remarkably close to failing.

If the excerpt gives any indication of the quality of the book as a whole, Sorkin has succeeded in writing the book of the crisis, with amazing levels of detail and access. Many books end up having much less detail than the day-to-day journalism in the papers, choosing instead to concentrate on the bigger picture. This one, by contrast, has a lot of detail, and it's worth reading the Q&A with Sorkin to get an idea of how much reporting went into it.

6. Catching fast - China's economy is growing fast enough to catch Japan as the world's second biggest economy within the next year or two and could catch America by 2029, the New York Times reports. We'll see. This graphic is useful.

Though recent wild currency swings could delay the reckoning, many economists expect Japan to cede its rank as the world's second-largest economy sometime next year, as much as five years earlier than previously forecast.

At stake are more than regional bragging rights: the reversal of fortune will bring an end to a global economic order that has prevailed for 40 years, with ramifications across arenas from trade and diplomacy to, potentially, military power.

China's rise could accelerate Japan's economic decline as it captures Japanese export markets, and as Japan's crushing national debt increases and its aging population grows less and less productive "” producing a downward spiral.

7. Cheeky buggers - Simon Johnson at BaselineScenario jumps on Goldman Sachs' recent acquisition of a stake in Chinese carmaker Geely and asks some very legitimate questions about its use of cheap Fed funding to go gambling. He also raises the carry trade issue which should scare us here in NZ a little.

At the height of the financial panic last fall Goldman Sachs became a bank holding company, which enabled it to borrow directly from the Federal Reserve.  It also became subject to supervision by the Federal Reserve Board (with the NY Fed on point) "“ hence the brouhaha over Steven Friedman's shareholdings.

Goldman is also currently engaged in private equity investments in nonfinancial firms around the world, as seen for example in its recent deal with Geely Automotive Holdings in China (People's Daily;CNBC).  US banks or bank holding companies would not generally be allowed to undertake such transactions - in fact, it is annoyed bankers who have asked me to take this up.

Would someone from the NY Fed kindly explain the precise nature of the waiver that has been granted to Goldman so that it can operate in this fashion?  If this is temporary, is it envisaged that Goldman will cease being a bank holding company, or that it will divest itself shortly of activities not usually allowed (and with good reason) by banks?  Or will all bank holding companies be allowed to expand on the same basis.

In addition, there is the obvious carry trade (borrow cheaply; lend at higher rates) developing from cheap Fed dollar funding to the growing speculative frenzy in emerging markets, particularly China.  Are we heading for another speculative bubble that will end up damaging US bank balance sheets and all American taxpayers?

8. Irrational Exuberance - This phrase is making a comeback, courtesy of Nobel Prize winner Joseph Stiglitz in this video. HT Zero Hedge

The former chairman of the Council of Economic Advisors, Joseph Stiglitz, simplifies the current market situation quite candidly: "Irrational Exuberance." But just like the markets ignored the first iteration of this phrase so many years ago, so they will not care about this current warning, until it too late.

9. A proper study - This is useful for all those people who called for public inquiries into break fees in New Zealand. This is a study by ASIC of mortgage break fees. The chart on page 7 is a cracker showing the Australian banks in Australia making out like bandits. HT Kevin via IM

Data provided to ASIC by Fujitsu Consulting suggests that Australian mortgage fees have increased over the past 20 years. The graph below6 shows that over the period from 1995 to 2007, the total annual fee take against the aggregate Australian 'mortgage book' has increased from 0.67% to 1.39% annually. The early termination fee take as a proportion of the overall fees has increased from 19.31% to 41.83%.

10. Everything is OK - This video is sort of fun. It's taken outside the Reuters HQ in Canary Wharf. "You are a very, very naughty lot of people."