Top 10 at 10: Massive baby boomer wealth shift?; Latvian bond failure; NZ$ to parity vs US$?; Dilbert

Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments in the comments below or please send your suggestions for Friday's Top 10 to bernard.hickey@interest.co.nz We set our goals high at interest.co.nz 1. No soft landing - Here's another story showing our tradeable sector ( exporters and import substituters) are being hit by the NZ dollar's inexorable rise. Pacific Brands has laid off 25 staff at its Fairydown factory in Christchurch that makes pillows, duvets and mattress protectors, The Press reported.

"The bedding accessories market has been subjected to significant consolidation in recent years and has been impacted by the global economic conditions, with volumes declining and a changing industry dynamic, which is seeing a shift to offshore manufacturing," Company spokesman Adam Heathcote said.

2. Boomers' fire sale - US Baby-boomers will soon start shifting their US$10 trillion of assets from growth type assets such as shares to lower risk bond type investments, Reuters reports. HT Troy Barsten.

Instead of a focus on building wealth and a retirement nest egg, those clients will soon focus on making the money last. Baby boomers are increasingly spooked by the turbulent markets of the past year, and concerned with ensuring their funds last through retirements that could last 20 years or more. The US$10 trillion that will be in the control of the newly-retired will dictate a more conservative investment and spending approach.

3. Latvian crisis nears - MarketWatch points out that a Latvian bond auction failed overnight. We seem to be near the point where the Baltic (Latvia, Estonia, Lithuania) economies go horribly pear-shaped and cause all sorts of grief for Nordic and other Western European banks. HT Greg Elliott via email

It's never good news when a government bond auction fails. It's particularly bad news when an auction fails for a note maturing in just six months. And it's really bad news when there isn't any bid at all.

Yet that's what happened Wednesday when Latvia tried to sell close to $17 million of paper. It's not hard to figure out why. See full story on the Latvian crisis.

The Baltic country is squabbling with Western -- mostly Swedish -- leaders over spending cuts, and it's a very real possibility that the country may be forced to devalue its euro-pegged currency if emergency global funds don't arrive.

Were Latvia to devalue, that would hit economies in neighboring countries like Lithuania, and Swedish banks would rack up additional losses on the loans they have made throughout the region. The real nightmare scenario would be the Swedish banks then pulling down other European banks, and then triggering Credit Crunch: Part 2.

4. 'Defend the dollar' -This interview on CNBC with Jim Rickards from Omnis is interesting for an interview on CNBC. It includes some heretical views, including the idea the US Federal Reserve will have to raise interest rates to defend the US dollar, which is falling too fast. Rickards says the Fed should have started hiking rates 6 months ago. He also reckons the US dollar has to halve slowly over the next 17 years to devalue its US$60 trillion in debt and the Fed wants a managed decline. That would mean the NZ dollar would rise to well over US$1. Are we planning for that? Parity party anyone? HT Steven Jones via email. 5. Golden parachute - The US government is facing calls to stop a 'retirement' payment of US$126 million set to go to exiting Bank of America CEO Ken Lewis, Reuters reports. It beggars belief, but it's happening. When is there going to be a public revolt of some kind?

Bank of America announced last week that Lewis will leave the company by year-end. Lewis' package includes $53.2 million in retirement benefits, mostly from a pension program frozen years ago, and $72.8 million in accumulated stock and other compensation, according to an analysis by New York-based compensation consultant James F. Reda & Associates.

6. 'Get Tim on the phone' - US Treasury Secretary Tim Geithner, who has been accused of being too close to the Wall St banks and Goldman Sachs in particular during the massive bailouts, spoke more to Goldman Sachs CEO Lloyd Blankfein during the crisis than he did to Barack Obama, the AP has reported.

Geithner's calendars, obtained by The Associated Press under the Freedom of Information Act, offer a behind-the-scenes glimpse at the extraordinary influence of three companies. More than any other company or any of their rival banks, Goldman, Citi and JPMorgan can get Geithner on the phone several times a day if necessary, giving them an unmatched opportunity to influence policy. "They're people he has relationships with and who he can trust," said Taylor Griffin, a Treasury Department spokesman during the George W. Bush administration and an adviser to the 2008 presidential campaign of John McCain. Geithner had more contacts with Citigroup than with Rep. Barney Frank, D-Mass., who leads the effort to approve Geithner's overhaul of the financial system. Geithner's contacts with Blankfein alone outnumber his contacts with Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee. Partly this is explained by the extraordinary clout of these companies. Goldman, JPMorgan and Citigroup are among the dominant Wall Street players. Their executives can move not just markets but entire economies. Treasury invested heavily in all of them to keep the industry afloat, and Citi faces tighter scrutiny because Treasury owns a larger stake in the bank.

7. 'Too politically connected to fail' - Simon Johnson at Baseline Scenario has a nice take on the AP story revealing Geithner's phone records.

Over the past 30 years Wall Street captured the thinking of official Washington, persuading policymakers on both sides of the aisle not to regulate (derivatives), to deregulate (Gramm-Leach-Bliley), not enforce existing safety and soundness regulations (VaR), and to stand idly by while millions of consumers were misled into life-ruining financial decisions (Alan Greenspan). This was pervasive cultural capture or, to be blunter, mind control.  But when the crisis broke it was not enough.  Having powerful people generally on your side is not what you need when all hell breaks loose in financial markets.  Official decisions will be made fast, under great pressure, and by a small group of people standing up in the Oval Office. If you run a big troubled bank, you need a man on the inside "“ someone who will take your calls late at night and rely on you for on the ground knowledge. Goldman Sachs, JPMorgan, and Citigroup, we learn today, have such a person: Tim Geithner, Secretary of the Treasury. We already knew, from the NYT, that most of Geithner's contacts during 2007 and 2008 were with a limited subset of the financial sector "“ primarily the big Wall Street players who were close to the New York Fed (including on its board). Geithner's defenders insist that his specific contacts while President of the NY Fed were a function of that position; "he was only doing his job." But today's AP report, based on looking at Geithner's phone records, from the inauguration through July, suggest something else.  How can anyone build an accurate picture of conditions in the entire crisis-ridden financial sector primarily from talking to a few top bankers? The list of phone calls is not the largest banks, because some of the biggest are hardly represented (e.g., Wells Fargo), it's not the most troubled banks (e.g., Bank of America had little contact), and it's not even investment banker-types who were central to the most stressed markets (Morgan Stanley was not in the inner loop).  And small and medium-sized banks (and others) always bristle at the suggestion that their interests are in alignment with those of, say, Goldman Sachs. Geithner's phone calls were primarily to and from people he knew well already - who had cultivated a relationship with him over the years, shared nonprofit board memberships, and participated in the same social activities.  These are close professional colleagues and in some cases, presumably, friends.

8. The Lucky Country - Australia is ranked as having the 2nd 'best' financial system and capital markets in the world, up from 11th a year ago. That's according to the World Economic Forum in its annual rankings of financial systems. Britain is number 1 and America is on number 3. Luckily for America and Britain, financial stability was not crucial in the criteria. They're ranked 37th and 38th for stability, while Australia was 9th.

"The change in scores does demonstrate the implications of the downturn on our assessment of the long-term development of financial systems," said Nouriel Roubini of New York University and Chairman, RGE Monitor who is the lead academic on the report.

Germany and France suffered a heavy fall in overall scores that pulled them out of the top 10. They dropped in the rankings but demonstrated financial stability scores that were significantly higher than the United Kingdom and US. Australia showed particular strength this year, a trend that is echoed in many Asia Pacific economies. The breadth of factors covered in the report means that countries with high financial instability scores like the United Kingdom and US could still achieve a high relative ranking in the Index due to other strengths. "We hope this report will provide some insight as to how the financial crisis has affected the world's major financial systems. It draws attention to the diversity of factors beyond financial stability that must be addressed to support the role of financial systems in driving economic growth. The United Kingdom and US may still show leadership in the rankings, but their significant drops in score show increasing weakness and imply their leadership may be in jeopardy." said Kevin Steinberg, Chief Operating Officer, World Economic Forum USA.

9. Speed printing - ZeroHedge points out that the US Federal Reserve bought Fannie Mae agency bonds 30 minutes after they were issued this week.

A half an hour turnaround time between issuance and buyback? Really Ben? As Jim Bianco comments, some answers are far overdue, when trying to explain this most blatant example of monetization to date. 1. Who bought these securities at auction? The potential for foul play here is high if the news of such a buyback accidentally leaked to a few individuals in the market 2. Who does the Federal Reserve think it is fooling by monetizing in such a roundabout way?

10. Smoot Hawley redux - America is considering new tariffs on Chinese steel tube imports, FT.com reported. Obama and the rest of the US government seem to have learnt nothing from the infamous Smoot Hawley act which restricted trade in the 1930s and deepened the depression. The Europeans are just as bad.

The US investigations, which could lead to a 98.7 per cent duty on Chinese steel pipes imports, came shortly after a European Union decision to impose anti-dumping tariffs on the same category of products. According to the Department of Commerce, imports of Chinese steel pipes jumped 132 per cent from 158,128 tonnes in 2006 to 366,091 tonnes in 2008. In value terms, they had risen by 218 per cent to $382m last year. A full-blown trade row erupted last month after Barack Obama, US president, signed an order to impose a duty of 35 per cent on Chinese tyre imports on top of an existing 4 per cent tariff. That was seen as his first big test on world trade since taking office in January, and the decision suggested Mr Obama sided with America's trade unions, which have complained that a "surge" in imports of Chinese-made tyres had caused 7,000 job losses among US factory workers.