Top 10 to 10: PGC scrambles to be first; Ratings agency cred?; Coding for food?; Irish disaster; 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 suggestions for Friday's Top 10 at 10 to me at bernard.hickey@interest.co.nz We're always speaking out at meetings at interest.co.nz... 1. PGC seems to be close to doing a deal to raise more than NZ$160 million in fresh capital, Adam Bennett at the NZHerald reports. How much is going to be left to pump into its South Island neighbour South Canterbury Finance and PGG Wrightson? It's interesting to see Silver Fern Farms is bailing out of PGG Wrightson as well and seems keen to be shot of the whole PGG/PGC/South Canterbury/RPI/Uruguay Farming Systems mess. All this is creating plenty of tension down south too, it seems. PGC was forced to deny a Press article about a board split this week, Stuff reported. George Kerr is at the heart of the action.

An announcement would serve to quell some of the speculation that has swirled around the venerable South Island company and others with whom its affairs are entwined including PGG Wrightson and South Canterbury Finance. Both PGG Wrightson and South Canterbury which holds a 3 per cent stake in PGC have indicated they willraise fresh capital. Some of that speculation has been around how much PGC will seek to raise. The source said the figure of $160 million which had been bandied around may be well short of the mark. PGC not only needs to bolster its balance sheet after purchasing $175 million in impaired property loans from finance company subsidiary Marac, it has also recently paid $18 million for 10 per cent shareholder and director George Kerr's Equity Partners Asset Management business.

2. This story is one to watch for those who are dealing with Bank of Scotland International in New Zealand, which has been pulling out of all sorts of property developments and property financiers all over the country. Bank of Scotland is donkey deep with Strategic Finance on its Fijian, Soho Square and Sentinel projects. It is also a player at Kawarau Falls. The EU is threatening to force Lloyds to sell Halifax, which owns Bank of Scotland, the FT reports.

Neelie Kroes, the Competition Commissioner, has yet to make a final decision, but banking sources told the Times it is clear that she is planning to impose draconian penalties on Lloyds. The newspaper said: "Ms Kroes is understood to have rejected Lloyds' attempt to limit the remedial action it must take to selling Cheltenham & Gloucester and making limited disposals in Scotland."

3. Do the ratings agencies have any credibility left? I'm beginning to wonder after Moody's said Britain was now unlikely to lose its AAA credit rating despite the biggest growth in public debt since World War II, The Telegraph reported.

Moody's said that Britain looked highly likely to retain its AAA rating, after politicians from both major parties said they intended to slash spending and bring the public finances back in order after the election. Standard & Poor's, another ratings agency, sparked fears for Britain's ability to finance itself earlier in May when it warned that the UK may face a downgrade unless the Government got its finances under control. In its update on the ratings for major economies around the world, Moody's said that both the UK and Spain were unlikely to lose their AAA ratings, despite being "severely hit" by the economic crisis, while Germany and France remain "resistant".

4. Clancy Yeates over at The Sydney Morning Herald comments wisely on just how corrupt the system for rating complex structured finance vehicles had become. Clancy talks about regulators hitting harder, but I wonder if anything has changed. New Zealand is about to increase its dependence on such agencies by forcing all deposit takers to get a rating.

A 2008 report from the US Securities and Exchange Commission (SEC) exposed how, in some cases, there was immense pressure on ratings analysts to give issuers what they wanted for the sake of closing a deal. In lurid detail, the report exposed how staff did not understand the products they were rating, often cut corners and failed to address conflicts of interest. The executive director of the St James Ethics Centre, Simon Longstaff, says this deal-centric culture led to a serious dereliction of the agencies' duty. ''There was a tacit, if not explicit, agreement between the ratings agencies and the market that these probably weren't AAA assets, but they would be treated as such just to bring liquidity into the market and to make the wheels turn,'' Dr Longstaff says. In hindsight, this contributed to mispricing of the most complex products that subsequently brought the system to its knees.

5. Here is a new way to fund a startup. One Stanford business school graduate is offering food in exchange for coding for an Internet startup, Reuters reported. We have plenty of instant coffee at interest.co.nz...

Olsen said he could not secure any venture capital and had instead turned to his friends -- and their willingness to work for food -- to develop his "real time discovery engine" that scans Twitter, Facebook and many other places in a specialized search called Yourversion. "My friends come over and code all day on Saturday and, at the end, we have a barbeque and beers," he said. "I give food equity."

6. The government of Ireland looks set to become the owner of an enormous swathe of failed 'ghost town' property developments as part of desperate attempts to revive its economy, Bloomberg reported. This is not a model for us to follow, by the way.

Finance Minister Brian Lenihan will detail tomorrow how much Ireland will pay for about 90 billion euros ($131 billion) of real estate loans now crippling what as recently as 2006 was one of Europe's most dynamic economies. In what may be the biggest financial gamble in 87 years as a sovereign state, the government will become the owner of loans for property developments that have plunged in value. "Short of declaring war, this is the most important decision these guys will ever make," said Brian Lucey, associate professor of finance at Trinity College Dublin, who opposes the plan. "Our entire economic credibility and independence is at stake." Ireland is suffering the worst economic slump of any developed nation since the Great Depression, according to the Economic & Social Research Institute in Dublin.

7. Nouriel Roubini reckons the US economy faces a death by a thousand cuts, CNBC reports.

Repeating his prediction that the economy faces a threat of a "double-dip" recession and at best a slow-growth U-shaped recovery, Roubini said in a live interview that more banks will fail and residential real estate prices have more room to decline.

Additionally, non-government bonds will face pressure, the securitization market is all but dead, the credit markets are still frozen and consumers will continue to save more rather than spend and boost growth.

"It's going to be death by a thousand cuts," said Roubini, chairman of RGE Monitor and economics professor at New York University's Stern School of Business. "The financial system is severely damaged, and it's not just the banks."

8. Steve Keen comments at BusinessSpectator about what really needs to be done to cure the world's debt spiral.

Ultimately this process has to lead to a level of debt that is so great that another revival becomes impossible since no-one is willing to take on any more debt. Then a Depression ensues. That is where we were "¦ in 1987. The great tragedy of today is that naïve Neoclassical economists like Alan Greenspan and Ben Bernanke allowed this process to continue for another three or more cycles than would have occurred without their rescues. In 2008, they did it again "“ only with methods they would have disparaged a mere year earlier ("Rational Expectations Macroeconomics", a modern neoclassical fad, preaches that government intervention can't influence the level of economic activity at all "“ yet another belief that reality has recently crucified). This time, while the rescue has worked, the recovery they expect afterwards can't happen "“ because there's almost no-one left who will willingly take on any more debt. This time, there's no re-leveraging way out. The tumour of debt has to be removed.

9. Martin Wolf at the FT.com makes some sobering comments on what we've learnt in the last year. Not much.

Letting Lehman go was not our biggest mistake. That was letting the economy and financial system become so vulnerable. Equally, the past year has restored neither the financial system nor the economy to health. We have avoided the worst. That is good. It is not enough.

10. Huffington Post has an interesting piece on how the Federal Reserve 'bought' the economics profession in the United States, reducing the scale of the outrage now.

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found. This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too. "The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong." One critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past.