Here are my Top 10 links from around the Internet at 10am. I welcome your additions in the comments below or please email me your suggestions to bernard.hickey@interest.co.nz. We try to see problems coming... 1. I love it when someone commits heresy in public. Brian Fallow has raised in his NZHerald column the idea of applying GST to rents and mortgage payments. This is a great idea I haven't heard raised in a while. It should be part of the debate going on at the moment within the Tax Working Group. The full opinion piece is well worth a read.

What is so special about expenditure on housing that warrants exemption from a consumption tax? Other necessities like food, clothing and electricity attract GST.

It would bring in a useful amount of money, enough to fund serious cuts elsewhere in the tax system, like the income tax scale. Applying GST to mortgage payments deals with one of the biggest distortions in the current tax system, the problem of "imputed rentals". Avoiding the need to pay rent is a large part of the return on investing in the roof over your head. An untaxed capital gain is the rest. If you put the same amount of equity into a bank deposit you pay tax on the interest. Invest in a company and your share of its profits is taxed. Rent has to be paid from after-tax income. Little wonder, then, that New Zealanders have such a large portion of their assets in housing or that our last housing bubble (measured by the increase in the ratio of house prices to incomes) was particularly large by international standards. People responded rationally to biases in the tax system. 2. Global Finance Magazine has updated its annual list of the world's safest banks. Our banks are all in the top 20. Rabobank is number 6, National Australia Bank (BNZ) is number 11, Commonwealth Bank of Australia is number 12, ANZ Banking Group (including National) is number 15, Westpac is number 16 and ASB is number 17. HSBC is number 18. We really do need to regularly thank our lucky stars that our banks were not infected with the nuttiness seen in the Northern Hemisphere. 3. Tyler Durden at Zero Hedge points out an intriguing piece of research by contrarian US banking analyst Chris Martenson on how the US Federal Reserve seems to bolstering the US Treasury market with more printed money than it is letting on to. Someone needs to point this out to the Chinese. They are being diddled with dud paper. Martenson reckons the US Federal Reserve is printing cash to buy agency bonds (the not so popular mortgage bonds) from foreign central banks, who are then using the cash to buy US Treasuries.

The Federal Reserve has effectively been monetizing far more US government debt than has openly been revealed, by cleverly enabling foreign central banks to swap their agency debt for Treasury debt.  This is not a sign of strength and reveals a pattern of trading temporary relief for future difficulties. This is very nearly the same path that Zimbabwe took, resulting in the complete abandonment of the Zimbabwe dollar as a unit of currency.  The difference is in the complexity of the game being played, not the substance of the actions themselves. When the full scope of this program is more widely recognized, ever more pressure will fall upon the dollar, as more and more private investors shun the dollar and all dollar-denominated instruments as stores of value and wealth. This will further burden the efforts of the various central banks around the world as they endeavor to meet the vast borrowing desires of the US government. One possible result of the abandonment of these efforts is a wholesale flight out of the dollar and into other assets.  To US residents, this will be experienced as rapidly rising import costs and increasing costs for all internationally-traded basic commodities, especially food items.  For the rest of the world, the results will range from discomforting to disastrous, depending on their degree of dollar linkage.

4. Thetechnicaltake over at ZeroHedge makes an interesting point about the stubbornly low US Treasury yields and the comparison with the stock market's strength of recent months. This analyst says the charts are suggesting the stock market is about to fall 20% or more. Bonds are pricing in slow or no recovery, while stocks are pricing in a big recovery. Someone is wrong.

The Fed's back stopping of the bond market has put an unknown bid behind Treasury bonds. Treasury yields did "pop" to 4.014% in June, but there has not been any follow through. But here is the point: Treasury yields have not moved higher; in other words, the Treasury market is not discounting the economic recovery. On the other hand, the stock market has roared ahead discounting the recovery (and then some). This divergence is noticeable, and it appears someone is going to be wrong.

5. Former Morgan Stanley economist and China guru Andy Xie has a very bearish view on Chinese stocks and the Chinese economy for later this year. These concerns helped dampen the bullishness showing through overnight in US stocks. Xie suggests a US double dip early next year. HT Eugene via email

I am not sure this bubble that began six months ago is truly over. The trigger for the current selling was the tightening of lending policy. Bank lending grew marginally in July. On the ground, loan sharks are again thriving, indicating that the banks are indeed tightening. Like before, government officials will speak to boost market sentiment. They might influence government-related funds to buy. "Experts" will offer opinions to fool the people again. Their actions might revive the market temporarily next month, but the rebound won't reclaim the high of August 4. This bubble will truly burst in the fourth quarter when the economy shows signs of slowing again. Land prices will start to decline, which is of more concern than the collapse of the stock market, as local governments depend on land sales for revenue. The present economic "recovery" began in February as inventories were restocked and was pushed up by the spillover from the asset market revival. These two factors cannot be sustained beyond the third quarter. When the market sees the second dip looming, panic will be more intense and thorough. The US will enter this second dip in the first quarter of next year. Its economic recovery in the second half of this year is being driven by inventory restocking and fiscal stimulus.

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6. This is a fun chart indicating what is happening with truck tonnage in the United States from the American Trucking Association. It's a good indicator of actual shipments to factories and shops. A hard measure. It has rebounded slightly and seems to have bottomed out. HT Calculated Risk.

ATA Chief Economist Bob Costello said that truck tonnage will continue to be choppy in the months ahead, but that is not necessarily a bad thing.  "It is not unusual for an economic indicator to become volatile before changing direction," Costello noted. He is hopeful that truck tonnage has finally hit bottom as it has been bouncing around a seven-year low for the last few months.  "While I am optimistic that the worst is behind us, I just don't see anything on the economic horizon that suggests freight tonnage is about to rise significantly or consistently," Costello said.  "Still, even small gains are better than the February 2008 through April 2009 cumulative tonnage reduction of 15.5 percent."

7. Jesse at Le Cafe Americain points out that a plunge in foreign capital inflows into America preceded its stock market crash. The money has not returned and the US markets are now being pumped up with printed money. Click through to the link to see the chart.

Watch the dollar and the Treasury and Agency Debt auctions for any further signs of capital flight, which is when those net inflows of foreign capital turn negative. And if for some reason the unlikely happens and it gains momentum, the dollar and bonds and stocks can all go lower in unison, and there is no place to hide except perhaps in some foreign currencies and precious metals. The sad truth is that US collateralized debt packages and their derivatives have become toxic in the minds of the rest of the world, and there is little being done to change that, except an orderly winding down of the bubble, with the remaining assets being divided largely by insiders, and not price discovery and capital allocation mechanisms driven by 'the invisible hand' of the markets. f that inflow does not return, if the median wage of Americans does not increase, if the financial system is not reformed, if the economy is not brought back into balance between the service and manufacturing sectors, exports and imports, then there can be no sustained recovery in the real, productive economy. The rally in the US markets is based on an extreme series of New Deal for Wall Street programs from the Fed and the Treasury, monetization, and the devaluation of the dollar.

8. Ambrose Evans-Pritchard from The Telegraph weighs into the debate about Ben Bernanke's renomination for a second term as chairman of the US Federal Reserve. He's not a fan of the decision.

Ben Bernanke has proved himself a heroic fire-fighter, saving world from a calamitous spiral into debt deflation by showering markets with liquidity. A good thing too. He helped cause the raging fire of 2007-2009 in the first place. As a Princeton professor and then a junior Federal Reserve governor, Mr Bernanke was the intellectual architect of his predecessor Alan Greenspan's policies that so distorted global finance and pushed debt to historic extremes.

9. John Kay at the FT says banks are plagued by the 'Peter Principle' where competent people are promoted to a level of incompetence. He says banks kept promoting themselves into areas they didn't understand. Luckily ours didn't, or weren't allowed to by the Australian authorities.

The recent failures of financial institutions suggests an organisational analogue. Financial institutions diversify into their level of incompetence. They extend their scope into activities they understand less until they are tripped up by one they cannot do. It was almost refreshing when the Chelsea Building Society announced large losses because it had been a victim of mortgage fraud. The bank's problems related to its core business. Most financial institutions that have come close to failure have done so as a result of losses in essentially peripheral activities.

10.  This is good news from The Australian. It may give the NZX a leg up into Australia with its long delayed Axe trading platform.

AUSTRALIA'S securities and investment watchdog will gain sweeping powers from late next year, and the stock exchange will be stripped of its regulatory role as it faces the possible loss of its trading monopoly.