Here are my Top 10 links from around the Internet at 10 to 3pm brought to you in association with New Zealand Mint for your afternoon reading pleasure.

My apologies for lateness today. Tad busy with the rate hike.

I welcome your additions and comments below, or please send suggestions for Thursday's Top 10 at 10 via email to bernard.hickey@interest.co.nz.

I'll pop any surplus suggestions I get into the comment stream under the Top 10.

1. Defaulting student loans - It seems like the government is on the warpath over interest free student loans. They are New Zealand's own little sub price prime crisis.

No wonder people are defaulting on loans they never expected to repay and weren't having to service. What was Labour thinking when it introduced the policy and when National supported it? Just plain nuts.

There's even talk now from Stephen Joyce of chasing down delinquents overseas. Good luck with that. Here's the report on Stuff.

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"There are some big issues around how much we write off on student loans," Tertiary Education Minister Steven Joyce said last night. "And one of the reasons is this long tail of borrowers who go overseas and don't make their repayments." Figures show overdue repayments from expats grew 111.1 per cent last year. A

nd ex-students living overseas owe 20 per cent of the total amount despite making up only 14.65 per cent of all borrowers.

Overdue repayments from overseas-based people grew 111.1 per cent last year from $54 million in 2008 to $114m. Overseas borrowers represented 14.65 per cent of all. Yet, they owe 20.9 per cent of the nominal debt. There were 82,337 overseas borrowers last year, up by 7.2 per cent from 76,777 in 2008 .

2. Both levers are broken - Keynesian economist Joseph Stiglitz is worth listening to because he seems to have the ear of the US government and isn't captured by the banks. He was interviewed this week by Kerry O'Brien of the ABC in Australia.

Stiglitz pointed out there wasn't much that either the US Federal Reserve or the US Government could do to avoid another recession over there. HT John Walley via email. Stiglitz was also interviewed here at SMH.com.au.

We've reached in some sense the end of the tether. Monetary policy has almost no power to stimulate the economy. The Federal Reserve already has on its books more than a trillion dollars of mortgages. We've become not the lender of last resort, but essentially the lender of first resort for the entire housing market of the United States. So - and we're supposed to be exiting from that. So, monetary policy has reached its limits and unfortunately, fiscal policy has reached its (political) limits.

He is also surprisingly bleak about the financial outlook, given his closeness to Obama, who has trumpeted the recent financial law reforms.

Stiglitz says the 'Too Big To Fail' banks have not been reined in by latest reforms and another disaster is inevitable. 

It can and it almost surely will happen again, because we didn't deal with the problem of too-big-to-fail banks. It is one of the reasons why it will happen again. And we didn't really deal effectively with all the kinds of excessive risk-taking, all the problems of lack of transparency that were at the core of this crisis.

And so, yes, we understand what the issues are, we understand the issues better than we did three years ago, but politics intruded the power of the banks, was too great. They're making US$20 billion off of derivatives. So rather than lending, they're engaged in all of these kinds of gambling and excessive risk-taking and generating large profits, but it's not helping the American economy and it's putting at risk American taxpayers.

3. The massive retracement - US house prices are still falling and are set to fall further, the Big Picture reports. HT John Walley via email.

4. Bubble blowing didn't work - This chart below from Boom-Bust blog shows that any attempt by the US authorities in early 2009 to reflate the housing bubble has failed. Click on the chart for a bigger, more legible version. The US housing market is still in an awful mess and it's becoming clearer that the US banks aren't keeping their books up to date.

This piece from Reggie Middleton at Huffington Post is very interesting, including this comment from a mortgage broker explaining why the banks are reporting lower delinquency rates.

I recently came across a new mortgage client who was referred to me and I thought I’d share it with you for a potential story. These particular clients had a house which they were way upside down on, so last year they went ahead and purchased another house under an FHA loan with 3.5% down and immediately let the old, upside down house go into foreclosure thereafter.

These particular clients called me to see if they could refinance their new home’s FHA loan to a lower rate. I told them that it would be near impossible because of the damage done to their credit by the foreclosure on the previous house. They were adamant that their scores were still in the high 670’s and so I ran both of their credit reports. Sure enough, his middle score was a 674 and her score was a 678. When I looked at the previous mortgage, it showed as “FORECLOSED- NO DELINQUENCIES”!!!

When I asked them they stated that they hadn’t made a payment to the bank for more than a year prior to the foreclosure on their house. Same is true for many loan modification cases that I have come across. While the banks are dragging out the process with the borrowers, who are living in the homes 100% mortgage free, their statements reflect the borrowers as being current every month. Is that not just absolutely ridiculous!?!?

This is blatant fraud! While Bank CEO/CFOs are going on their quarterly calls and lying to investors about how they are reducing their loan loss reserves due to their delinquency rates being substantially lower, they are deliberately falsifying their credit ratings while foreclosing on homeowners.

What happens when these banks end up losing billions of dollars on all of these foreclosures after depleting their loan loss reserves? More of 2008 is what I imagine. Except their won’t be any more bailouts. 

5. 'Worse than the Roman empire' - The former legal counsel for Long Term Capital Management, Jim Rickards (No relation of Clint....) has looked at differences between the Roman empire in its final stages and the US empire now.

He has concluded that the US empire has many of the same characteristics of the Roman empire just before it imploded and in fact has higher debt. Tyler Durden at Zerohedge points to the story.

The similarities are just far too many, starting with the debasement of the currencies, whereby Rome's silver dinarius started out pure and eventually barely had a 5% content, and the ever increasing taxation of the population, and especially the most productive segment - the farmers, by the emperors, to the point where the downfall of empire was actually greeted by the bulk of the people as the barbarians were welcomed at the gate with open arms.

The one key difference highlighted by Rickards: that Rome was not as indebted to the gills as is the US. Accordingly, the US is in fact in a far worse shape than Rome, as the ever increasing cost of funding the debt can only come from further currency debasement, which in turn merely stimulates greater taxation, and more printing of debt, accelerating the downward loop of social disintegration.

Furthermore, Rickards points out that unlike the Romans, we are way beyond the point of diminishing marginal utility, and the amount of money that must be printed, borrowed, taxed and spent for marginal improvements in the way of life, from a sociological standpoint, is exponentially greater than those during Roman times.

6. Hasta la Vista, baby - Reuters reports California Governor Arnold Schwarzenegger has declared a state of fiscal emergency in his state, which means public servants will be forced to take 3 days off each month without pay. Because the state can no longer afford to pay them.

"Without a budget in place that addresses our $19 billion budget deficit, every day of delay brings California closer to a fiscal meltdown," Schwarzenegger said in a statement. "Our cash situation leaves me no choice but to once again furlough state workers until the legislature produces a budget I can sign," he wrote.

Schwarzenegger's declaration noted the state's government is projected to run out of cash no later than October should its budget stalemate persist, as expected. California has a long history of nasty and lengthy budget battles. Last year, the fight over a spending plan dragged on so long the state controller had to issue IOUs instead of payments to vendors to conserve money for priority payments, including payments for education programs and for investors holding the state's bonds.

6. 'Mum, they're throwing rocks at me' - Bloody aliens. HT to Troy for this piece of amusement in The Daily Telegraph. A Bosnian man's house keeps getting hit by meteorites. It is happening so often he has put up a steel girder reinforced roof. He has an explanation though.

After the fifth rock struck his house, he said: 'I am obviously being targeted by extraterrestrials. I don't know what I have done to annoy them but there is no other explanation that makes sense. The chance of being hit by a meteorite is so small that getting hit six times has to be deliberate.'

7. Buy baked beans and a shotgun - Not really. But you get the drift. Chris Martenson is no nutter or mug. A former banking executive, he is now an independent a banking analyst who predicted the crisis. He has written a book about how to survive a economic meltdown. This preview is fascinating. HT Gertraud via email.

Six years ago, I began to address these questions for myself and my family. I'll be honest; my first motivation came from a place of fear and worry. I worried that I could not predict when and where an economic collapse might begin. I fretted that the pace of the change would overwhelm the ability of our key social institutions and support systems to adapt and provide.

I darkly imagined what might happen if a Katrina-sized financial storm swept through the banking system. I was caught up in fear.

But I am no longer in that frame of mind. Here, six years later, I am in a state of acceptance about what the future might bring (although I am concerned), and I have made it my life's work to help others achieve a similar measure of peace. While I am quite uncertain about what might unfold and when, I am positive that anyone can undertake some basic preparations relatively cheaply and will feel better for having done so. I am passionately interested in helping others to gracefully adapt their lifestyles and adjust their expectations to a very different-looking sort of future. I have no interest in scaring you further, or having you approach the future with trepidation, anxiety, or fear.

Quite the opposite. I want to let you know that adjusting and adapting can be one of the most rewarding and fulfilling journeys you could undertake. It has been so for our family.  

8. Real cheap Greek villas - Bloomberg is reporting that villas on Greek Islands are being marked down by 45% because of the crisis there. HT Gertraud. But not cheap enough yet.

A half-built villa on Mykonos, an island in the Aegean Sea known for its all-night beach parties, is being offered by brokers at Athens-based PloumisSotiropoulos OE for 2 million euros ($2.6 million) after the price was reduced by 500,000 euros. The same firm is seeking a buyer for a three-bedroom home on Corfu for 750,000 euros, down from an original asking price of 1.4 million euros.

So far, no bidders have emerged. “It’s a scary place to invest right now,” said Mike Braunholtz, a broker at Prestige Property Group, which markets properties on the Greek islands. “Things aren’t going to improve until the economic picture becomes clearer.”

9. Chinese banking cultural problems - China expert Patrick Chovanec has written at The Business Insider about the problems inside China's banks. Here he talks about a cultural problem that has not been fixed by various joint ventures and MBA style training course for managers. HT Hugh P via email. They're all afraid of the bullet in the back of the head that their family will have to pay for....

The picture that emerges is one in which Chinese banks, despite a decade of reforms, remain more political than business entities.

Chinese banks have invested heavily in risk management systems and training staff in credit analysis, and have engaged in joint ventures with foreign banks intended to boost their technical skills and product offerings.

But Gary Liu, deputy director of Shanghai-based CEIBS Lujiazui International Finance Research Center, reports that “[Chinese bank] executives are not really managers, but government officials.” Strategic investors with a seat on the board have some voice, says Wendy Dobson, an economics professor and director of the Institute for International Business at the University of Toronto’s Rotman School of Management, “but the boards are still stacked with people from the party.”

“The regulatory environment,” she explains, “is one where the government still sets interest rates and all the banks have access to low risk spread income so they have very little incentive to manage risk.” The result is a situation where bankers are trained to act one way, but conditioned to behave in another. Wharton professor Marshall Meyer recalls a recent trip to China where one bank manager lamented that he had to choose between “being a responsible banker and keeping my job.”

10. Totally irrelevant video about goatee beards - I think they're fashionable too... Jon Stewart is growing one now

11. Totally relevant video - Jon Stewart also talks about the US government's decision to increase its debt ceiling. It seems the solution for America's debt probloem is to turn lead into gold, using science...or to ransom pandas.