Top 10 at 10: Here come the Chinese banks; Gold output falls; Super debate?; The Hobbit stalls; Dilbert

Here are my Top 10 links from around the Internet at 10 to 12pm. I welcome your additions and comments below or please send suggestions for Tuesday’s Monday's Top 10 at 10 via email to bernard.hickey@interest.co.nz

1.  Debate on compulsory super - Treasury Secretary John Whitehead made a bunch of interesting comments in this Q&A interview on Sunday, including that New Zealand needs to have a debate on compulsory superannuation, although he was careful not to say he favoured it personally. Whitehead, who also said he will step down later this year, said he is keener on repaying government debt first, rather than restarting contributions to the New Zealand superannuation fund.

GUYON One of the other areas that I guess would be a bit of a shot in the arm for capital markets in New Zealand, would be increased savings. In Australia they've had compulsory retirement savings for 18 years. Do you advocate that here?

JOHN We haven't advocated compulsory superannuation in the past. I think it's another area where we need a really good debate. I think people that put issues like mining and compulsory superannuation on the agenda, it's really good for New Zealand, because we need to work through what's in our own interests, and that's one of them. So we would certainly be interested in looking at that issue amongst others.

GUYON Do you support it, you're the chief advisor to the government on the economy, do you support the idea of a compulsory retirement saving.

JOHN What I do support is that we need to get much better at savings in this country, and we need to look at a range of options for that. KiwiSaver has been one of those. Take the recent personal income tax and GST changes, I think [they] are helpful in that. I think compulsory superannuation should be part of the debate.

GUYON And when we're talking about superannuation, I mean one of the ways we're trying to smooth the demographic changes that Treasury's very worried about, is by prefunding superannuation by a two billion dollar yearly contribution by previous governments. What is Treasury's advice about whether we should be making contributions to the super fund now?

JOHN Treasury's advice is to get your debt down first, and to get back to surplus, and that was part of the original act that was passed on the superannuation scheme. Once we've done that our advice is yet get back into prefunding.

2. Not a good look - Rob Stock at the Sunday Star Times reports evidence that ANZ's private bankers told wealthy clients to exit the ING funds while ANZ's branch advisors were telling less wealthy customers to stay in the fund. ANZ is funding a big compensation package, but it still looks awful.

Sunday Star-Times has been handed a banking ombudsman judgement concerning a complaint laid by two private bank clients, Robin and Maureen Kelso from Lincoln. In it, the ombudsman acknowledges the bank was giving different advice to its wealthy and ordinary customers.

The ombudsman's letter to the Kelsos reads: "At the time the bank advised its customers not to withdraw from the DYF... some advisers, such as the ANZ's private bankers, advised investors to exit the fund, others considered it best to wait until the fund recovered, rather than withdrawing from the investment and crystallising a loss."

The Kelsos, who became private bank customers after selling a business, recall getting a call from their private banker in September 2007, which began with the words, "I don't want to panic you, but..." They were advised they should consider leaving the fund. But the Kelsos relied on assurances from ING that the downturn in the credit markets was temporary and that selling up would turn a paper loss into a real one.

3. Not so Golden move - Australian gold production fell 2% to 61 tonnes in the March quarter, BusinessDay reports. The Australian mining tax could make that even worse. The last time the sector was taxed gold production was flattened. Peak gold anyone?

GOLD industry consultant Surbiton Associates has put paid to the Rudd government's claim that the resources sector is overstating the impact of its proposed resources rent tax, just as the industry over-stated the impact of the 1991 imposition of corporate taxation on gold production.

The government has said the 1991 end to gold's tax-free status did not damage the industry and it would be the same with the equally controversial RRT. But Surbiton's long-running survey of gold production showed that gold output fell for the first time in a decade when the gold tax was introduced.

Surbiton director Sandra Close said yesterday that gold production stagnated for the next five years and exploration expenditure also fell.

4. How surprising - It turns out Macquarie's Millionaires have made yet more millions for themselves by exploiting the Australian government's wholesale guarantee to go on a lending spree, Michael Evans reports at Sydney Morning Herald.

At a time when the bank faced the collapse of its ''Macquarie model'' of fee-generating listed infrastructure trusts, the Queensland-born Brazil began spearheading a drive to reinvent the bank's profitability using a turbo-charged commercial lending strategy that taxpayers have unwittingly supported. Macquarie's aggressive use of the taxpayer guarantee to bankroll profits has raised questions about whether it fits with the government's original intentions of ensuring financial stability.

5. Here they come - China's big 5 banks are setting up shop in Australia, The Australian reports. It's all about getting access to resources, it seems.

State oversight, in the form of China's "going out" strategy for its major corporations, has also been responsible for the banking industry's increasingly global outlook. The big Chinese lenders now seek recognition as global operators and are building relationships with peer institutions in chosen markets.

PwC financial services leader Hugh Harley said it should be no surprise that Chinese banks were ramping up their activities in Australia. "China is our number one market with $83bn in two-way trade last year, with the focus on Australia as a resources and, to a lesser extent, agricultural hub," Mr Harley said. A local bank analyst was more cynical when asked to explain the arrival of this cavalcade of banks.

"It's about three things: resources, resources and resources," he said.

6. Matt Taibbi strikes again  - Here's Mr Taibbi's latest missive in Rolling Stone on the financial crisis. His 'Vampire Squid' article on Goldman Sachs last year set the tone for the regulatory drive of the last 12 months. This time Taibbi rightly points to the massive lobbying that stopped serious reform in the senate. Democracy is a wonderful thing... This is a must read if you really want to know how America's political system works. Anyone in favour of an FTA with America, for example, should read this. HT EricRies via Twitter

In the end, however, the proposal to break up the nation's riskiest banks gets walloped 61-33, with an astonishing 27 Democrats – including key banking committee heavyweights like Dodd and Chuck Schumer of New York – joining forces to defeat it.

After the debate, Kaufman, a gregarious and aggressive advocate of finance reform, seems oddly unfazed that his fellow Democrats blew the best chance in a generation to corral the great banking monsters of Wall Street. "For some of them, it was just a bridge too far," he says. As with the whittled-down victories over the Fed audit and the Consumer Finance Protection Bureau – and the brutal defeat of Too Big to Fail – the stalling over the Volcker Rule underscores the basic dynamic of the Senate.

With deals cut via backroom consensus, and leaders like Reid and Dodd tightly controlling which amendments go to a vote, the system allows a few powerful members whose doors are permanently open to lobbyists to pilot the entire process from beginning to end.

One Democratic aide grumbles to me that he had no access to the negotiations for months, while a Wall Street lobbyist he knows could arrange an audience with the leadership. The whole show is carefully orchestrated from start to finish; no genuinely tough amendment with a shot at being approved receives an honest up-or-down vote. "It's all kind of a fake debate," the aide says.

7. How the financial crisis affects us - Guillermo Del Toro has just announced he has resigned as director of 'The Hobbit' being produced in New Zealand. There are massive delays to the project, which would have pumped tens of millions of dollars into the Wellington film economy. This is all because Metro-Goldwyn Mayer is now in the hands of its lenders, who are hedge funds, the LA Times reports. They plan to cut MGM down to size running its library. There won't be much money for new projects like The Hobbit.

The hedge funds, which would own the studio by swapping debt for equity, have balked at raising that much money and are seeking to keep MGM afloat at significantly lower cost, according to people close to the matter. The debt holders are now at odds with MGM management over how ambitious a plan is needed to salvage the studio. The internal divide and lingering uncertainty demonstrate how tortured MGM's reorganization process has been and how the balance of power has shifted from management to lenders.

"Now that MGM's debt holders are in control of the company, they have a steep learning curve to get up to speed on a complex business," said Clark Hallren, managing partner of entertainment banking advisory firm Clear Scope Partners, who is not involved in the process.

The debt holders are considering a strategic partnership with such companies as Summit Entertainment, the independent studio behind the "Twilight" movies, and production and financing company Spyglass Entertainment. In exchange for equity in a restructured MGM, the partner would oversee a small production slate and manage the 86-year-old studio's 4,000-title library, which controls the James Bond franchise. But a cohesive plan has yet to materialize and must be accompanied by the none-too-simple task of raising money for operations and new movies.

8. Crazy, crazy prices - A new study has found that average house prices in Darwin and Sydney are more expensive than average prices in New York and London, News.com.au reports. 

Combined figures from Residex and Australian Property Monitors show the median cost of a Darwin house is $549,035 - almost $90,000 ahead of London, where the median price for a two to three-bedroom house is $462,000, reported Northern Territory News.

A two-bedroom, free-standing house in the New York City metropolitan area (not including Manhattan) is about $80,000 less. Sydney fared even worse. Residex head of research John Lindeman said: "It's quite incredible that houses are cheaper in those cities than in Sydney.

"But it's caused by the demand for Sydney houses, which keeps outpacing the supply - and that's not going to change any time soon."

9. Aye Carumba! - Ambrose Evans Pritchard points out at The Telegraph that Spain is in an awful mess. Fitch downgraded Spain's rating from AAA to AA+ on Friday night and the biggest of the PIGS is struggling to contain a meltdown in its 'Caja' building society sector.

The downgrade could not have come at a more dreadful moment. The EU's €750bn "shield" for eurozone debtors has halted an incipient run on Club Med banks, but it has failed to restore full confidence for the obvious reason that such a guarantee cannot plausibly be extended from Greece to Portugal and then to Spain. The sums are too large, the number of solvent creditors too reduced, the intra-EMU politics too poisonous.

The sub-text of Fitch's 32-page report shows Mr Zapatero's self-immolation to be futile in any case. The agency has not downgraded Spain for lack of austerity. Its implicit conclusion is that the policy of 1930s wage cuts - or "internal devaluations" - being imposed on southern Europe's humiliated states as a quid pro quo for the EU shield is itself part of the problem.

Ultra-austerity will bleed the economy, shrivel tax revenues and fail to close deficit anyway. "Fitch believes the risk that economic growth will fall short of the government's projections," it said. El Pais spoke of a "perverse spiral" in its editorial. "The Fitch note drives home the apparently unsolvable contradiction in which the Spanish economy finds itself. To maintain debt solvency Spain must squeeze public spending: yet this policy undermines the chances of recovery which itself causes further loss of confidence." It is no mystery why Spain is trapped in depression.

The country joined the euro without grasping its Faustian implications, as did others. Germany was equally naive in thinking it could have a currency union entirely on its own terms. EMU caused Spanish interest rates to halve overnight, with dire results as the Bank of Spain's governor confessed in April 2007. "The single monetary policy has meant that excessively loose conditions for our economy have been almost continuous," he said.

Real rates were -2pc as the bubble reached its crescendo. Nearly 800,000 homes were built in 2007, more than in Britain, Germany, and Italy combined. There is now an overhang of 1.6m unsold properties, six times the level per capita in the US. Total public/private debt has reached 270pc of GDP.

His conclusion is devastating

This can end only in two ways. Either Germany tolerates massive monetary reflation by the ECB or Spain will be forced out of EMU, setting off a catastrophic chain-reaction through north Europe's banking system.

10. Totally irrelevant video - Sam the Eagle is back. I am a not so secret Muppets fan. Sam sings American Woman.