Here are my Top 10 links from around the Internet at 10 past 12pm, brought to you in association with New Zealand Mint for your afternoon reading pleasure.

I welcome your additions and comments below, or please send suggestions for Wednesday'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. Rising food prices - Global wheat prices jumped to a 22 month high overnight, partly due to the worst drought in 130 years in Russia, a major exporter.

The Globe and Daily reports there's also talk of dry weather in Australia (who would have thunk it) reducing wheat output.

Commodity prices, particularly soft ones such as wheat, oil and soy, are worth watching closely as we all wonder if the massive money printing of recent years gets turned into hyperinflation or sinks into deflation.

2. Ferguson talks -  Economic historian and academic rock star Niall Ferguson is fascinating to listen to. Niall Ferguson talks to RadioLive's Andrew Patterson on SundayBusiness here. Among many other things in the 36 minute radio interview (starts 2 minutes in), he talks about China's move away from relying on US consumers, on America's incredible deficit spending (as in not credible) and the risk of debt deflation.

Among his interesting views:

* America is on track to be spending half of all government revenues on interest payments within a few decades

* America is set to be spending more on interest payments than on defence by 2014

* Half of US government debt is held by foreigners and 10% by China. This makes it different to Japan, where the debt is held locally.

* The US fiscal problem will not be addressed until the market forces the issue because the politicians won't fix it on their own.

*  Keynesians shouldn't trust US Treasury bond yields at 3% now in the same way they shouldn't have trusted the markets high valuations of sub-prime bonds in early 2007.

*  New Zealand's policy record on fiscal reform is a well kept secret

* The fruits of the age of leverage were reaped by very small proportion of the population (See the FT link below)

* Lowly skilled Americans were overpaid in the post-war period

3. How gangsters are saving the Eurozone - FT Alphaville reports that Citigroup economist William Buiter has made the fascinating point that big drug dealers and gangsters are opting for 500 euro notes rather than US$100 notes. This will save Europe. HT Kevin via IM

The European Central Bank issues these notes for a hefty profit that is welcome at a time when its response to the financial crisis has called its financial strength into question.

The high-value bills are increasingly “making the euro the currency of choice for underground and black economies, and for all those who value anonymity in their financial transactions and investments,” wrote Willem Buiter, chief economist at Citigroup, in a recent research report.

The business of issuing euro notes, produced at almost zero cost, is “wildly profitable” for the ECB, Mr. Buiter wrote.  

4. Nearly US$14 trillion - Meanwhile the US Treasury has announced plans to sell a further US$380 billion or so worth of government debt in the next six months, raising total debt to US$14 trillion, Zerohedge reports.

No worries then.

A US Treasury bond yield under 3% makes complete sense.

5. The global clash for resources - Ambrose Evans Pritchard at The Telegraph has a piece on how China has built up monopolies in the rare earth metals needed for new technologies such as mobile phones and hybrid engines.

China’s commerce ministry has cut export quotas for these metals by 72pc for the second half of this year. It is perhaps the starkest move to date in the Great Power clash over scarce resourses. The Pentagon and the US Energy Department are still scrambling to work out what this means for US security.

An interim report from the Government Accounting Office (GAO) has laid bare just how delicate the situation has become. “The US previously performed all stages of the rare earth material supply chain, but now most rare earth materials processing is performed in China, giving it a dominant position. In 2009, China produced about 97 percent of rare earth oxides.

Rebuilding a U.S. rare earth supply chain may take up to 15 years," it said.

Once again we see how China plays the globalization game, taking full advantage of WTO access to western markets without opening its own to the same degree, and all the while holding down its currency for mercantilist gain.  

6. Must read on America's middle class crisis - This is a long and compelling article from the FT.com on the crisis in America's middle class, full of useful reporting. If you click on one article today, make it this one.

The slow economic strangulation millions of middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation.

Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300. The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start.

Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility. Combine those two deep-seated trends with a third – steeply rising inequality – and you get the slow-burning crisis of American capitalism. It is one thing to suffer grinding income stagnation. It is another to realise that you have a diminishing likelihood of escaping it – particularly when the fortunate few living across the proverbial tracks seem more pampered each time you catch a glimpse.

“Who killed the American Dream?” say the banners at leftwing protest marches. “Take America back,” shout the rightwing Tea Party demonstrators.

Statistics only capture one slice of the problem. But it is the renowned Harvard economist, Larry Katz, who offers the most compelling analogy. “Think of the American economy as a large apartment block,” says the softly spoken professor. “A century ago – even 30 years ago – it was the object of envy. But in the last generation its character has changed. The penthouses at the top keep getting larger and larger. The apartments in the middle are feeling more and more squeezed and the basement has flooded. To round it off, the elevator is no longer working. That broken elevator is what gets people down the most.”

7. If you think I'm a bear - Read this and then go away and have a lie down. This blog post from Michael David White is titled "The Aftermath of the Global Housing Bubble Chokes the World Banking System. Only a Coordinated Worldwide Loan Massacre Could Defeat a Japanese-Style Dead-and-Dying-of-Debt Kamikaze. Hell Approaches Us All, But Only For An Extended Period".

Yikes.

There's a bunch of charts like this one.

White is essentially saying that deleveraging in America is impossible given the massive volume of the debt and the need for massive debt restructuring. He compares America with Japan and notes Japanese house prices are still falling 20 years on.

In Japan's experience deleveraging is a fantasy in the aftermath of an extreme credit bubble. Now we know that and the world pretends Japan doesn’t exist. You simply must ask the right question. You have to determine the likelihood of deleveraging.

Is it logical that bubble debts issued to buy bubble assets will be paid back when bubble assets lose their bubble value? The obvious answer is no. The mania was too extreme. The debt is too extreme.

Which leads to the next logical step.

What we should have done a long time ago is a massive write-off. “It was our job to declare bankruptcy. We should have forced banks and insurance companies to convert debt to equity. We should have destroyed the life savings of millions of people and thousands of companies.

Instead we are still waiting to do what we should have done.

8. Be careful what you wish for - Andrew Gawith has done a useful job in this NZHerald column of challenging John Key's floating of the idea of limiting foreign ownership of land. He makes the point land prices could fall if this happens because land values are currently utterly unsustainable. See more here from David Chaston on that. The numbers say sheep and beef land prices need to fall almost 90%.

It's not just foreigners pushing up the price of land to the point that yields are simply not bankable for budding farmers. An increasing proportion of land is owned by wealthy city folk (either individually or in syndicates) often with a sentimental attachment to the land and the means to own it. It's strange though that people are so keen on buying land, which has a notorious track record for delivering low ongoing returns.

In many cases returns from farming do not cover the cost of capital - that is, they do not return sufficient income to cover the interest costs that would be incurred if the farm was purchased using a 100 per cent mortgage.

It's hard to see the business proposition if that is the case; and it is the case for a significant chunk of the farming sector in New Zealand. So why do so many farmers persevere in the face of what looks like financial lunacy? Is it the lifestyle? No, they expect to collect substantial, tax-free capital gains when they sell their property and thus the total return from their business over 30-40 years can be reasonable - there are quite a few wealthy retired farmers. For this business case to work, though, farm values have to rise, and for that to occur you have to have buyers who can lift productivity substantially via economies of scale, better husbandry, vertical integration, etc.

Or you attract wealthy lifestylers prepared to pay big money for the scenery, isolation, prestige, etc of a trophy farm. Foreigners make up a big proportion of these buyers. Alternatively we restrict the ability of foreigners to buy land, and farm values rise more slowly or even fall.  

9. Totally irrelevant photo - Russell (Russ le Roq) Crowe in suspenders. Here's the documentary evidence of Russell Crowe (far right) in high heels and suspenders circa 1986, thanks to John Nicholson from the Evening Post and the Alexander Turnbull Library. Russell was quite skinny then. Rob (the one in the suit) Muldoon was not. Thea looks thrilled.

10. Totally relevant video - Stephen Colbert talks about the debate in America about the expiry of tax cuts for the rich. Conservatives are now talking about the impending expiry as a bomb for the economy.

"A tax bomb. Quick people. To your tax shelters."

Read 'The Word' that go with his spiel. All very relevant when watched after reading the FT.com article referred to above.