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 suggestions for Friday's Top 10 at 10 to bernard.hickey@interest.co.nz We're always right behind you... 
1. Here it comes - All this talk about 'green shoots' and economic rebounds and the stock market's recovery is about to get a real test. The early signs are not good. The S&P 500 fell 1% in late trade after the US Federal Reserve hardened its talk about ending its money printing and low rates strategy, Bloomberg reported. This 'exit strategy' is the big fear of many of the market bulls and could turn a nascent global economic recovery into a double dip recession.
"What the Fed basically signaled in this one is that their foot, while still on the pedal, is not floored anymore," said Burt White, chief investment officer at LPL Financial in Boston, which oversees $234 billion. "They're not saying we're going to do everything we possibly can to promote this economic recovery." The Fed, following a two-day policy meeting, changed the wording in the final paragraph of its statement to say it will continue to employ a "wide range of tools" to bolster the economy. In its August statement, it said it would use "all available" tools.
2. Crisis over? - Meanwhile in Britain, the Bank of England has called economists to its headquarters on Threadneedle Street in London for a crisis meeting, the Telegraph reports It seems even money printing is not working. The Bank of England may be about to charge banks for holding their reserves with the bank. It would be like having to pay your bank to put your money in their bank.
The Bank will host a seminar of all London's major economists next Tuesday "“ the first time it has invited them in en masse in recent memory "“ in what has been construed as a sign that it fears market participants are starting to lose faith in its efforts to pump cash into the economy. The move has also sparked speculation that it is poised to announce a major change to the monetary policy framework, although insiders dismissed such suggestions. It came after the minutes from the Bank's latest Monetary Policy Committee meeting revealed that the idea of cutting the interest rate banks are paid on the reserves they hold there was not discussed this month. The pound has lurched lower in recent weeks, thanks in part to speculation that the Bank will impose charges on banks for holding excessive amounts of cash in reserve at its vaults. Under QE, it is pumping £175bn into the economy, but much of this cash is sitting in banks' reserve accounts rather than being recycled and flowing around the broader economy.
3. Growing European tension - Ambrose Evans Pritchard at the Telegraph has picked up on an extraordinary attack by Germany's Finance Minister Peer Steinbruck on Britain's financial industry. The pressure is growing in the European Union. I agree to an extent with Pritchard's following defence of the finance sector. He argues it was mostly Greenspan and Bernanke's fault. Fair enough.
If a British Chancellor gave an interview on behalf of the British nation saying the German car industry should be shrunk massively, it would be viewed as a gross and gratuitous attack on Germany. Need I add, yet again, that the banks did not cause this global crisis. Governments around the world caused the crisis by forcing down the price of credit (Greenspan, Bank of Japan, and ECB on short rates: China et al on long rates, by flooding the global bond market) far too low for many years, encouraging debt. Banks were the instruments, not the cause.
4. Tottering monsters - Rolfe Winkler at Reuters points to a nice piece on the problems with Zombie banks. We have a few finance companies who suffer from the same problems.
These so-called "hard-to-price assets" have much more value to "zombie banks" than to anyone else, which is why there is no liquidity in that market. The deeply insolvent institutions want what everyone else calls "toxic assets" because it gives them a chance to climb back if the economy recovers well into solvency. The notion of the zombie is that it would be put in its grave by its creditors if it weren't for the black magic of government credit support guarantees and loans. These institutions have very distorted incentives, just as the zombies do in the horror movies. They're looking for things that even might have negative present value but have a possibility of producing good results. It's a long shot bet to plug a hole in their balance sheet.
5. Not us. We're different. The US Federal Reserve has rejected a US Treasury request for a public review of the central bank's governance and structure, Bloomberg reported. Can anyone imagine our Reserve Bank doing the same here? Just extraordinary arrogance. It's time the audit the Fed in a big way.
Some top central bank officials, after agreeing to the review, saw a potential threat to Fed independence after the Treasury released the proposal, two of the people said. The Obama plan said the Treasury would consider recommendations from the review and "propose any changes to the Fed's governance and structure." "It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study," saidRobert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director. "The Fed was created by Congress and it is not part of the executive branch."
6. Oil aplenty - The oil price fell overnight to US$68/bbl after a report showing US inventories are higher than expected as the economy struggles to get restarted, Zerohedge pointed out.
A presumably growing economy, one that has now emerged from a recession (if one listens to the Chairman) needs fuel. Or, as the case may be, oil. So today's oil inventory report did two things: it flatly refuted the Chairman's ongoing propaganda that all is finally well with the US economy, but also played a nasty trick on oil speculators who got majorly burned after oil tumbled as a result of ongoing lack of demand for the black gold.
7. Rapid fire copies - The growth of rip-off copies of the AK47 mean the company that makes the famous Kalashnikov weapons is on the verge of bankruptcy, the Globe and Mail reports. 8. Housing crisis - A US$30 billion time bomb is set to go off in the Californian housing market in 2010 when a bunch of OptionARM mortgages are due to reset, SFGate.com reports
Next year, many option ARM payments will begin to readjust, slamming borrowers with dramatically higher monthly mortgage bills. Analysts say that could unleash the next big wave of foreclosures - and home-loan data show that the risky loans were heavily used in the Bay Area.
9. Debt Debt Debt - Ed Harrison writes at NakedCapitalism about how 'It's the debt stupid.' Economists worry about income statements, but ignore balance sheets. That is a mistake 10. Crony Capitalism - William K Black is always worth a read and he has a new piece here at NakedCapitalism on why allowing the 'Too Big to Fail' banks to go on is unlawful and dangerous.
The Obama administration is continuing the Bush administration policy of refusing to comply with the Prompt Corrective Action (PCA) law. Both administrations twisted a deeply flawed doctrine "“ "too big to fail" "“ into a policy enshrining crony capitalism. Historically, "too big to fail" was a misnomer "“ large, insolvent banks and S&Ls were placed in receivership and their "risk capital" (shareholders and subordinated debtholders) received nothing. That treatment is fair, minimizes the costs to the taxpayers, and minimizes "moral hazard." "Too big to fail" meant only that they were not placed in liquidating receiverships (akin to a Chapter 7 "liquidating" bankruptcy). In this crisis, however, regulators have twisted the term into immunity. Massive insolvent banks are not placed in receivership, their senior managers are left in place, and the taxpayers secretly subsidize their risk capital. This policy is indefensible. It is also unlawful. It violates the Prompt Corrective Action law. If it is continued it will cause future crises and recurrent scandals.
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