Top 10 at 10 past 2: Fed starts exit strategy; Gen Xer rants; US pension debacle; Dilbert

Others considered the discount rate hike as part of the broader "exit strategy" from exceptional measures, which are likely to precede an eventual tightening in monetary policy after months of near-zero interest rates. "The Fed can talk all day about how the discount rate hike is technical and not a policy move, but the market sees it as a shot across the bow," said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi. The dollar gained ground over other major currencies after the announcement, with the euro down 0.5 per cent below $1.36. "Today they raised the discount rate, and not tomorrow or the next day, but soon, they will be lifting the Fed funds rate target as well as the economy is starting to regain momentum and the fears of a W-shaped recovery are increasingly falling to the wayside," Mr Rupkey added.

3. Pensions debacle coming - A new survey in the United States has found a US$1 trillion shortfall in pension funds operated by the states. Let's face it. America is bankrupt. HT Troy Barsten via email.

States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn't taken. The Pew Center on the States released a survey Thursday of state-administered pension plans, retiree health care and other post-employment benefits in all 50 states that blamed a decade's worth of policy decisions for leaving them shortchanged. The result for some states will be "high annual costs that come with significant unfunded liabilities, lower bond ratings, less money available for services, higher taxes and the specter of worsening problems in the future," the study said. The cost of the trillion-dollar shortfall, which will be paid over the coming decades, is about $8,800 for each American household. The study did not include many city, county and municipal pension plans, which are thought to have similar underfunding.

4. Just how exposed are we? - Zerohedge has an interesting piece on those nations in Europe that have individual banks with large asset bases that are worth much more than the GDPs of their host nations. UBS, for example, has assets worth 376% of Swiss GDP. Our big four banks here have assets worth about 200% of NZ GDP. We're not exposed to the euro crisis and our economy is stronger. But it's worth thinking about. HT Troy Barsten via email.

With the threat of sovereign default and contagion now pervasive within the Eurozone periphery, it is relevant to quantify the relative exposure of various banking centers' assets as a percentage of host countries' total GDP. The reason for this is that in Europe for many countries a sovereign default would not have as great an impact, as a risk-flaring contagion impacting these countries' primary financial entities, whose assets account in some cases for multiples of host GDP. For example in Switzerland, the assets of the top two banks, UBS and Credit Suisse, alone account for nearly 600% of the country's GDP. And while Switzerland is relatively isolated from the budget and deficit crises in the PIIGS and STUPIDs, other countries such as Italy, Belgium and ultimately France, Germany and the UK, are much more exposed. The question which pundits should be focusing on is once the Greek crisis flares up and takes down several peripheral non-hosted banks, just what the interplay of a "falling domino" scenario will be not only on neighboring European countries, but also on the holdings of their domestic banks. Because it is inevitable that the same kind of bank run witness in Greece, will become a pervasive phenomenon and impact Portugal, Spain, Italy, etc, which would be the precursor to a global bank run.

5. It's broken - Jeffrey D Sachs explains in the Scientific American what's wrong with the policy-making process in Washington in this succinct piece. HT Murray Grimwood via email

The breakdown of the Washington policy process has four manifestations. First is a chronic inability to focus beyond the next election. "Shovel-ready" projects squeeze out attention to vital longer-term strategies that may require a decade or more. Second, most key decisions are made in congressional backrooms through negotiations with lobbyists, who simultaneously fund the congressional campaigns. Third, technical expertise is largely ignored or bypassed, while expert communities such as climate scientists are falsely and recklessly derided by the Wall Street Journal as a conspiratorial interest group chasing federal grants. Fourth, there is little way for the public to track and comment on complex policy proposals working their way through Congress or federal agencies.

6. Nice young rant - Here's a blog post from a Generation Xer who likes to swear a lot about babyboomers. It is pure polemic, but captures the mood nicely. He finishes on a poignant note, essentially saying he will nurse his parents as they die, despite their decisions to bankrupt the young by piling up mountains of financial, environmental and social debt onto younger generations to fund their baby boomer lifestyles through the 2000s. He's a tad angry.

In the end, when you look to me and my generation to cast off your own blame and help right your foundering state-of-the-art lifeboat, I promise I will be there. I will never abandon you so long as there is breath in this angry body.

7. Here's another post from the same Gen Xer who calls himself Freedom Guerilla. This one is about how he will donate gold to Haiti rather than cash, because cash can't be trusted any more... HT Craig Gerritsen via email.

I believe not only People but the whole Earth suffers because of the obligation of debt and where that obligation resides in the human brain. Think hard enough and you will realize there are fantastic things that have been accomplished by borrowing resources from others and cooperating as a community "” life has been nurtured and revered, and harmony has been created. But the American dollar is not a resource nor an energy source. When did we stop being humans and start being "consumers?" If you think you may have a role in targeting and destroying the obligation of debt, then I encourage you to join "Operation Reverse Leverage." The idea is simple: I want to see how much of the world's debt an ounce of gold can eliminate. I want to see what a community can do once they have decided to take action and change the source code of the Economic Matrix, and I want to witness how lives do change and what potential humans actually have.

8. Digging deeper into debt - Britain borrowed an extra 4.3 billion pounds in January when economists had expected it to repay 2.8 billion pounds. Will Britain become the next Greece? Some people are whispering this quietly. Luckily for Britain it is not in the Eurozone and can allow a depreciation to help it out...or have a quiet chat to the IMF. However, Gordon Brown is unconcerned a few months ahead of an election... HT Emma via Googlechat

A sharp rise in government spending and a drop in tax receipts from businesses hit by the deepest recession in decades meant that Britain was unable to post the usual surplus enjoyed in a January, a month when income tax and corporation tax revenues typically pick up. In fact, by the government's preferred measure of the public coffers, there was a deficit last month "“ the first January when the government was forced to borrow since records began in 1993. Britain's own relatively high deficit, its slow growth rate and high inflation have prompted some to speculate it could be the next country to alarm global markets. The pound weakened against the dollar and the euro and British government bond prices fell as January's borrowing shock fuelled worries about Britain's fiscal position. But a Treasury spokesman was quick to stress that the government would meet or even beat chancellor Alistair Darling's borrowing forecasts for the full year. "These figures keep us on track to meet our pre-budget report forecast. With only two months remaining, borrowing including financial sector interventions is at £122.4bn against a full year forecast of £170.4bn," he said.

9. Debt-tastrophe - The New York Post has collated some comments together from Fed rebel Thomas Hoenig into this piece. It doesn't take long for him to start talking about the Weimar Republic's penchant for printing. HT Gertraud via email.

Growing demands on the federal government have invited a massive buildup of government debt now and over the next several years. US fiscal policy must focus on reducing this debt buildup and its consequences. History holds many examples of severe fiscal strains leading to major inflation. It seems inevitable that a government turns to its central bank to bridge budget shortfalls -- with the result being too-rapid money creation and eventually, not immediately, high inflation. German hyperinflation is one classic and often-cited example, and with good reason. When I was named president of the Federal Reserve Bank of Kansas City in 1991, my 85-year old neighbor gave me a German 500,000 Mark note.

10. Just a figment of everybody's imagination - The Onion is strangely on the money on the topic of money. Apparently (wink, wink) Ben Bernanke has realised money is just a symbolic, mutually shared illusion.

What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world's largest economy. "Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we"¦if we"¦" said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. "You know what? It doesn't matter. None of this"”this so-called 'money'"”really matters at all." "It's just an illusion," a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. "Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless."

Totally irrelevant video - John Stewart has the low-down on Iran's plans to take over the world with a mouse operated rocket.