Top 10 at 10: South Canterbury's Wanaka woes; Depression-like drop in US lending; Somers-Edgar on NZX?; 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 email me your suggestions for Thursday's Top 10 at 10 to bernard.hickey@interest.co.nz An amazing response to yesterday's Top 10 at 10 with over 120 responses and counting. Note to self: I must goad Mark Hubbard more...also Where's Wally? Come back Wally. We miss you. John Minto would like today's Dilbert 1. Wanaka's largest resort development, Oakridge Resort, has gone into receivership, the Southland Times reports. South Canterbury Finance is the financier and this will be one more headache for Allan Hubbard to sort out as he scrambles to raise more equity. HT Ruru in yesterday's Top 10. Meanwhile South Canterbury has delayed issuing a new prospectus as it scrambles to raise new capital

Developer Par Hallberg, the sole director of all six companies, said money owed to South Canterbury Finance was related to unrealised plans for a 48-villa development on 25ha of land beside the resort. After he paid for the land and resource consent, arrangements with an Australian buyer had fallen through, Mr Hallberg said. "I have lost everything I own," he said. He would not comment on how much money he owed South Canterbury Finance or how much he had sunk into the new development. The receivership means the land, the resort's two restaurants, conference centre, reception area, gym, pool, and Mr Hallberg's own house, are owned by South Canterbury Finance. The 173 rooms at the resort are not included in the receivership, having already been sold to small investors.

2. IMF professor Tim Congdon says US bank loans have fallen at an annualised pace of 14% in the three months to August, which is a similar rate of contraction as during the Great Depression, reports Ambrose Evans Pritchard at The Telegraph. HT AndrewJ in yesterday's Top 10 comments, Greg Elliott via email and Gertraud Tschida via email.

"There has been nothing like this in the USA since the 1930s," he said. "The rapid destruction of money balances is madness." Mr Congdon said a key reason for credit contraction is pressure on banks to raise their capital ratios. While this is well-advised in boom times, it makes matters worse in a downturn. "The current drive to make banks less leveraged and safer is having the perverse consequence of destroying money balances," he said. "It strengthens the deflationary forces in the world economy. That increases the risks of a double-dip recession in 2010." Similar concerns have been raised by David Rosenberg, chief strategist at Gluskin Sheff, who said that over the four weeks up to August 24, bank credit shrank at an "epic" 9pc annual pace, the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc. "For the first time in the post-WW2 [Second World War] era, we have deflation in credit, wages and rents and, from our lens, this is a toxic brew," he said.

3. Despite this, however, US producer prices rose 1.7% in August, which was more than double the expected inflation, Bloomberg reported. US retail sales also rose a surprising 2.7%. HT Troy Barsten via email.

Producer prices are one of three monthly inflation gauges reported by the Labor Department. Prices of goods imported into the U.S. fell a more-than-forecast 2 percent in August, led by a surge in fuel costs. The Labor Department tomorrow will probably report consumer prices rose 0.3 percent last month after holding steady the prior month, according to economists surveyed by Bloomberg. Fed policy makers on Aug. 12 committed to keeping the key interest rate between zero and 0.25 percentage point "for an extended period" to promote economic recovery. They said they expected "inflation will remain subdued for some time." The economy will grow at a 2.9 percent annual rate in the July-through-September period, according to the median of 61 estimates in a monthly Bloomberg News survey, and slow to a 2.2 percent pace during the last three months of the year.

4. Does the NZX really want to have a property fund listed on it that has or had close connections with Money Managers (Doug Somers-Edgar)? It seems DNZ is preparing for a NZX float and a capital raising, Anne Gibson reports in the NZHerald. The NZX already has Allan Hawkins. It did reject Rod Petricevic. Does it really want anything to do with Doug?

DNZ, with 61 investment properties, has many shareholders who were or still are Money Managers' clients and they held their annual meeting at the Duxton in Auckland. Money Managers has previously been closely associated with DNZ when the business was Dominion Funds. Under chief executive Paul Duffy, the real estate company has changed its name and its structure, axing syndicates and in the last few months trading on the unlisted market. Duffy told the meeting DNZ planned to list on NZX and had a sunset clause which meant it must be completed before September 15 next year. "I would be confident in saying it would be completed before that date," Duffy told shareholders, adding that last month DNZ retained Goldman Sachs JBWere to advise it.

5. Renowned investor Jim Rogers is reported by American Banking News as saying that bank regulators should be put in jail for not allowing banks to fail.  HT Raf Manji via email

"The real problem over the past 10-15 years has been that regulators have not let people fail. Had they let people fail we would have solved this problem a long time ago. I don't know why they're not in jail." When Rogers says this, understand he's identifying the problem as it is today, not attacking the ultimate root of the problem, which is the Federal Reserve and the need to abolish it. But to wonder why they're not in jail for their actions is a powerful statement by Rogers as to what their practices have brought about, and the consequences of those actions across a wide sphere of our social makeup. Rogers has been accurately hitting hard for some time on the foolishness of propping up any business by the government which has obviously been run poorly. He rightly exposed the stupidity of supporting businesses and banks which aren't able to compete with better run companies, and although dead, are allowed to live, not based on improved practices, but on the infusion of taxpayer money which they think will be offered in endless supply. That's why Rogers always uses the term "zombie" when referring to businesses and banks this type of artificial life support.

6. Dylan Ratigan at HuffingtonPost writes cogently about how bank lobbyists are preventing essential reform in the banking system. This is interesting given HuffPo is supposedly friendly to Obama. HT Ross Palmer via email.

The American people have been taken hostage to a broken system. It is a system that remains in place to this day. A system where bank lobbyists have beenspending in record numbers to make sure it stays that way. A system that corrupts the most basic principles of competition and fair play, principles upon which this country was built. It is a system that so far has forced the taxpayer to provide the banks with the use of $14 trillion from the Federal Reserve, much of the $7 trillion outstanding at the US Treasury and $2.3 trillion at the FDIC. A system partially built by the very people who currently advise our President, run our Treasury Department and are charged with its reform. And most stunningly -- it is a system that no one in our government has yet made any effort to fundamentally change.

7. Even Ariana Huffington has weighed in herself to criticise Obama for being asleep at the wheel. HT Ross Palmer.

Listening to President Obama's heartfelt, well-intentioned, but ultimately naïve speech on financial reform today, my mind kept flashing on a story I heard the last time Washington, in the wake of the Enron scandal, promised to reform Wall Street. The story came from a friend who took a family trip on a cruise ship. Her 10-year-old son kept pestering the crew, begging for a chance to drive the massive ocean liner. The captain finally invited the family up to the bridge, whereupon the boy grabbed hold of the wheel and began vigorously turning it. My friend panicked -- until the captain leaned over and told her not to worry, that the ship was on autopilot, and that her son's maneuvers would have no effect.

8. Now the juicy stuff is coming out about what really happened in those final amazing months of George Bush's presidency and it's not pretty. Essentially, George Bush had no idea what his Treasury Secretary Henry Paulson was doing. Matt Latimer worked as a speechwriter for Bush and has the inside story in GQ magazine. HT Felix Salmon at Reuters.

We wrote speeches nearly every time the stock market flipped. Meanwhile, the White House seemed to have ceded all of its authority on economic matters to the secretive secretary of the treasury. The president was clearly frustrated with this. I was told that at one Oval Office meeting, he got very animated and exclaimed to Paulson, "You've got to tell me what you're doing!" (In the weeks that followed, Paulson changed his spending priorities two or three times. Incredibly, he'd been given the power to do with that money virtually anything he pleased. All thanks to a president who didn't understand his proposal and a Congress that didn't stop to think.)

9. Here's (former IMF chief economist) Simon Johnson's post-mortem at Baseline Scenario on Obama's speech about banking reform. He's not a fan... This is the must-read link of the day because Johnson refers back to the epic attack on investment banks by Louis Brandeis in 1914 and draws parallels.

President Obama's speech yesterday was disappointing.  As a diagnosis of the problems that let us into financial crisis, it was his clearest and best effort so far.  He didn't say it was a rare accident for which no one is to blame; rather he placed the blame squarely on the structure, incentives, and actions of Wall Street. But then he said: our regulatory reforms will fix that.  This is hard to believe.  And even the President seems to have his doubts, because he added a plea that "“ in the meantime "“ the financial sector should behave better. The audience was comprised of our financial elite, but the Wall Street Journal reports "not one CEO from a top U.S. bank was in attendance" (p.A4).  How's that for demonstrating respect, gratitude, and a willingness to behave better?

10. Tyler Durden at Zero Hedge points out that law firm Jones Day filed a suit demanding Barclays give back US$5 billion after it bought Lehman Bros. It seems some funny business went on...

In a stunning development in the case of bankrupt Lehman Brothers, Jones Day today filed a statement in which it is essentially demanding over $5 billion from its "savior" Barclays, which ended up purchasing Lehman's North American brokerage, after the law firm and LBHI have allegedly uncovered massive behind the scenes machinations, whose sole purposes was to lower the cost price for the brokerage (and in the process impair Lehman equity and credit stakeholders) and to increase the amount of money transfered to Barclays.