Here are my Top 10 links from around the Internet at 10 am. I welcome your additions and comments in the comments below or please send suggestions for Wednesday's Top 10 at 10 to bernard.hickey@interest.co.nz Apologies for lateness. There's been a bit on... 1. 'Road to Hell's Gate' - This piece from Karl Denninger at The Market Ticker nicely lays out the basic flaw in the US Federal Reserve's strategy of money printing and competitive devaluation for the US dollar. He makes the interesting point from a New Zealand point of view that the US dollar has now become the main vehicle for the carry trades that were so damaging for us when Japan did it. HT Steven Jones via email.

The problem The Fed and America faces is that this latest "blast of the liquidity firehose" is not limited to The United States in its impact.

Indeed, the problems that this sort of "monetary policy" generates have almost nothing to do with the US Economic picture - rather, they have everything to do with the international nature of markets and monetary flows and the impact that such a policy pronouncement has on them.

Specifically, The United States Dollar has become the primary funding currency for carry trades:

"The dollar is the big funding currency," said Jonathan Clark, vice chairman of New York-based FX Concepts Inc., the world's largest currency hedge fund, with $9 billion in assets under management. "The reason why people are borrowing the U.S. dollar for carry trade is A: It's very cheap to fund, and B: The expectation is it's going to go down."

This is a tremendously destructive force for an economy, and is largely-responsible for Japan's inability to return to economic prosperity and growth over the last 20 years - the Yen became a funding currency of choice.

But Denninger says the US comparison with Japan ends there because Japan had an export sector to take advantage of a weak currency.

Japan had an advantage we do not - a weak currency benefited to a tremendous degree their exporters, and they are an export-based economy.  As a consequence the damage done internally to import prices by the continued downward pressure on their currency was counterbalanced by an improving balance-of-payments picture.

America, on the other hand, has a huge trade deficit.  Attempting to reverse this is essentially impossible as we have offshored production to low-labor-cost locales such as Vietnam and China.  We are also absolutely dependent on foreign energy sources and despite 30 years of political promises to resolve that problem we have refused to take the steps necessary to do so

2. Carry trade pain - Here's another piece from Bloomberg talking about how big the US$ carry trade has become.

Those carry trades are the most profitable since before 2000, according to data compiled by Bloomberg. Borrowing dollars and then selling them is adding pressure on a currency that's already weakened 14 percent since March as the budget deficit exceeded $1 trillion, the government sells a record amount of debt and the Federal Reserve floods the financial system with $1.75 trillion to pull the economy out of a recession.

3. It's different this time - The IMF has written a paper showing that recessions after financial crises are much worse than 'normal' recessions. Intuitive, but worth knowing. The language is dry but useful. The chart drives home the point.

Typically, banking crises have a long-lasting impact on the level of output although growth eventually recovers. Lower employment, investment, and productivity all contribute to sustained output losses. However, there is substantial variation across countries. Initial conditions have a strong impact on the size of the ultimate output loss. Also, short-run macroeconomic stimulus and structural reform efforts tend to be associated with lower output losses. The findings suggest that forceful macroeconomic policy response so far may mitigate the losses. Implementing structural reforms could also help to limit output losses.

4. Fight! Fight! Fight! - No this is not the visit to Crafar Farms all over again...  It seems Texan cricket-loving billionaire and fraudster Alan Stanford just can't avoid getting into fights in prison, BusinessInsider points out.

Jailed alleged Ponzi-schemer Allen Stanford has a concussion, two black eyes and a broken nose, the result of a fight with another inmate. His court-appointed attorney, Kent Schaffer, told the AP that Stanford is back in lockup in Texas and called the injuries "superficial." Unfortunately, information is not (yet) available on Stanford's boxing partner or what the fight was about.

I wonder if it was a fight about boxing or something a little more intimate... 5. Yen free to fly? - Now there's a new style and face of government in Japan people are beginning to wonder if Japan might drop its desperate attempt to keep its currency low. FT.com reports that it seems Japan is not intervening this time as the Yen rises against the leaden US dollar.

The yen rose to an eight-month high against the dollar on Monday after Hirohisa Fujii, Japan's finance minister, indicated that Tokyo would not intervene to stem its recent rise. Fears that Japan would move to weaken the yen for the first time since 2004 have intensified in recent weeks as it rose rapidly through the Y90 level against the dollar. Mr Fujii said earlier this month that a strong yen could give Japanese consumers greater buying power and help to encourage a rebalancing of the economy away from its long-standing dependence on exports for growth. However, analysts said that part of Japan's reluctance to intervene in currency markets was due to the fact that dollar weakness has been broad-based given the ultra-loose monetary and fiscal stance of the US authorities.

6. Will the real Tyler Durden please stand up? - One of the most influential financial blogs in the last year has been from the amazingly prolific and hard hitting 'Tyler Durden' at Zerohedge. I often feature links to this blog and have admired its breaking of major stories such as the Goldman Sachs nano-trading or 'flash' trading affair. But it seems there's more to the story of 'Tyler Durden', the character in Fight Club, than meets the eye. This profile by Joe Hagan in NYMag is an eyeopener.

While on a golf outing, an editor at the New York Times learned from a friend who worked on Wall Street that the Zero Hedge allegation was the talk of the industry, and an assignment ensued. On July 24, the Times published a front-page article on so-called high-frequency trading and its potential abuses, which in turn prompted Chuck Schumer, a member of the Senate Finance Committee, to draft a letter to the SEC that same day. Twelve days later, the SEC signaled that it was considering a ban on the very computerized trading that Zero Hedge had attacked. Suddenly, the shadowy figure behind Zero Hedge was a full-blown cult hero"”a blogger with a bullet. His readership of angry traders and anti-government malcontents celebrated his newfound power. "Welcome to the party pal!!!" declared one of his fans in the comments section. In a sign of just how radically the order has shifted in the political and media world, neither the Times nor Schumer had a clue about the identity of the pseudonymous author behind Zero Hedge. As it happens, the founder is a 30-year-old Bulgarian immigrant banned from working in the brokerage business for insider trading. A former hedge-fund analyst, he's also a zealous believer in a sweeping conspiracy that casts the alumni of Goldman Sachs as a powerful cabal at the helm of U.S. policy, with the Treasury and the Federal Reserve colluding to preserve the status quo. His antidote? A purifying market crash that leads to the elimination of the big banks altogether and the reinstatement of genuine free-market capitalism. Never mind Dow 10,000. Dan Ivandjiiski is all about Dow Zero.

7. Hear hear - It seems financial blogs now have influence....good to hear

Such is their power today that the Treasury and Federal Reserve both circulate "blog watch" e-mails, which are sent to the White House every day. Aides on Capitol Hill solicit bloggers for advice and explanations on complex regulatory issues, according to government spokespeople and the bloggers themselves.

8. Hurrah - And that  Dan Ivandjiiski was one of the key sources behind Matt Taibbi's extraordinary 'vampire squid' attack on Goldman Sachs.

Taibbi, who says he still exchanges e-mails regularly with Ivandjiiski, believes the blog was responsible for the New York Stock Exchange's decision to alter the way it releases weekly trading data: "Pretty clearly this guy has so pissed off Goldman Sachs they managed to get that rule change about how the data got released, and that's almost certainly because of Zero Hedge." On September 17, the SEC drew up a proposal to ban flash trading, scoring a bona fide victory for Zero Hedge. "He was on the cutting edge of bringing attention to the problems posed by flash trades," says Brian Fallon, a spokesman for Senator Schumer, "and his writings certainly bring an insider's perspective to anyone wading through this highly technical issue."

9.  Now Tyler sells T-Shirts - Zerohedge has now gone 'pro' with ads, staff and t-shirts for sale.

Four days after the Times story on high-frequency trading, Zero Hedge re-launched with a sleeker design and more advertising space, adding staff and posting phone numbers to "offices" in London and Zurich. Zero Hedge has seen its page views triple since July. It began selling $37 Zero Hedge T-shirts, modeled by a rumpled hipster in a green camouflage cap. The new logo looks vaguely like a Masonic symbol, and Tyler Durden's posts now feature the image of Brad Pitt's pummeled face from Fight Club, a glowering radical.

10. Dickweeds and Morons - But there's a darker side...

For all his flame-throwing, Ivandjiiski is very sensitive to criticism. When a fellow blogger, who declined to be named, privately corrected him on some evidence he used to criticize the Fed, Ivandjiiski responded with a chest-thumping defense, citing his background working for a $10 billion hedge fund as evidence of his undeniable expertise. "I am well aware what I am talking about," he told the blogger, "and the truth is there are many other things happening that I have yet to bring up "¦ Unlike the mainstream media, I don't tip my cards all at once "¦ My style may hyperventilate, but at least it achieves its goal"”which is to wake the people up from the stupor." Zero Hedge's reputation has grown so much that last month, CNBC personalities Charlie Gasparino and Dennis Kneale felt moved to attack the site on-air"”Kneale was particularly aggrieved by Zero Hedge's ridicule of his declaration that the recession was over and delighted in describing anonymous bloggers as "dickweeds." (Gasparino used the more prosaic "morons.")

Ivandjiiski did arrange for me to speak with (fellow Zerohedger Marla Singer). It was a bizarre exchange. "Tyler Durden isn't one person," she said, but up to 40 different people allowed to post under that name. "We are all Tyler Durden," Singer claimed. It was around this time that Ivandjiiski, in his e-mails to me, began referring to himself in the third person.

Oh dear