Here are my Top 10 links from around the Internet at 10am. I welcome your additions and insight in the comments below or please send suggestions to me at bernard.hickey@interest.co.nz Dilbert is back. Whew. We have nothing worth stealing at interest.co.nz 
1. Warren Buffett, the man who seems to buy the most when others are selling the most, has started selling recently, the New York Times points out in this useful piece.
Mr. Buffett seems to be retrenching a bit. Like so many people, he was blindsided by the blowup in the housing market and the recession that followed, which hammered his holdings of financial and consumer-related companies. He readily concedes he made his share of mistakes. Among his blunders: investing in an energy company around the time oil prices peaked, and in two Irish banks even as that country's financial system trembled. Mr. Buffett declined to predict the short-run course of the stock market. But corporate data from Berkshire shows his company was selling more stocks than it was buying by the end of the second quarter, according to Bloomberg News. Its spending on stocks fell to the lowest level in more than five years, although the company is still deftly picking up shares in some companies and buying corporate and government debt. Among the stocks Mr. Buffett has been selling lately is Moody's, the granddaddy of the much-maligned credit ratings industry. Berkshire, Moody's largest shareholder, said last week that it had reduced its stake by 2 percent.
2. Fran O'Sullivan writes in her NZHerald column that John Key approves of Fonterra's moves to restructure its capital base, but he wants Fonterra and its farmers to be more ambitious.
I think Fonterra is stuck in a catch 22. It has growth plans overseas and needs to reduce its debt. It can't list on the NZX and bring in outside capital. So it will have to ask its farmers, some of whom are already heavily indebted, to increase their own debt levels to fund Fonterra's capital needs. The end result is that NZ Inc is more indebted and Fonterra still doesn't have capital to grow.
As Key told an influential business briefing at Simpson Grierson, "Fonterra is 8 per cent of GDP in New Zealand ... there's no way out of it. That's it. You have to look at what's holding them back." While (Chairman Henry) van der Heyden must put his farmer shareholders first he is aware of the Government's viewpoint and Fonterra's wider responsibility to help New Zealand grow what Key calls its "top line" but the board's options are constrained by the co-op's constitution and farmers' appetite for risk.
3. New Zealand's competitiveness has improved from 24th in the world a year ago to 20th in the world this year, according to the World Economic Forum's Global competitiveness rankings, thanks in part to our 'world class financial system'. It seems we have excellent shareholder protection and corporate governance. We are number one in corporate ethics and number 2 for efficiency of corporate boards (?!) That will be why we have such a vibrant stock market and hardly anyone has lost money in finance companies in the last year....(insert Tui Billboard here)
New Zealand (20th) advances four ranks and joins the top 20. It is the only country within the top 20 to improve its score year on year (4.9 to 5.0), an increase attributable to a number of small improvements across the board. The country maintains or improves its ranking in no less than 85 indicators out of the 113 that compose the GCI (Global Competitiveness Index). Public institutions are assessed very well, placing New Zealand in 5th position worldwide, behind only Singapore and three Nordic countries. The incidence of corruption is minimal by all measures. And when it comes to private institutions, New Zealand is second to none. It ranks 1st with respect to corporate ethics, the strength of auditing standards, and protection of shareholders; and 2nd for the efficiency of corporate boards. Overall, the environment is extremely conducive to business, supported by efficient goods (8th, up nine places) and labor (11th) markets, and by one of the soundest financial systems in the world (3rd). Yet, very much like neighboring Australia, New Zealand's infrastructure is in need of upgrading, as reflected in the country's 35th rank in this area"”its lowest for any of the 12 pillars, after market size. In this light, within the government's stimulus plan, investment in infrastructure projects and incentives to boost innovation capacity would be expected to improve the country's competitiveness going into the future.
4. Edward Hugh at a Fistful of Euros writes that the next step in the financial crisis will be collapses in Eastern and Southern Europe, largely because they cannot issue debt in their own currencies and then inflate their problems away. It's a long piece but well worth reading. HT Calculated Risk.
The principal difference between the East and the South is that in the East governments no longer have the capacity to continue to sustain large deficits, while in the South they continue to be able to do so, though even here they cannot hold out indefinitely. Sometime in late 2010 or early 2011 all of this will, with a horrid and almost deterministic inevitability, all come to a head. And this is why, I personally take the view that the global financial and economic crisis is far from over. There is another stage yet to come, and the focus of the problem will be Southern and Eastern Europe.
5. This piece from Bloomberg is worth reading for anyone mystified as to why the US dollar is so weak and why the New Zealand dollar just keeps on rising. This piece shows we need to brace for a US dollar fall and what that means for our export sector. Given we are not printing money, we are not participating in this global race to the bottom. How do we cope?
"We are at a cross-road," Kenneth Rogoff, a Harvard University professor and former chief economist for the International Monetary Fund in Washington, said in an interview last week. "If the Obama Administration fails to rein in the long-term budget deficits, the dollar is set to decline for decades." Rogoff and Maurice Obstfeld, a professor at the University of California Berkeley, predicted in November 2005 that the dollar would need to depreciate as much as 30 percent on a trade-weighted basis to close a current-account deficit totaling 6 percent of GDP. The Dollar Index is down about 15 percent since then. Now, Rogoff says the dollar will decline against emerging market currencies by about 2 percent each year for the next 10 years as the developing world economies account for a larger share of global growth. To keep the dollar from depreciating, the U.S. current-account deficit should be no larger than 2 percent or 2.5 percent of GDP, he said. International investors have reduced purchases of long-term U.S. assets in recent months, according to the Treasury Department. Net inflows intoTreasuries and stocks fell to $82.8 billion in the second quarter from $235 billion a year earlier, a 65 percent decline. The need for foreign investors may only increase in the final four months of 2009. After purchases by the Fed, the net supply of long-term U.S. government and agency debt has been about $50 billion a month this year, Dean Maki, head of U.S. economics research at Barclays Capital in New York, wrote in a Sept. 4 report. As the Fed slows its so-called quantitative easing program, net supply may reach $200 billion by year-end, he wrote. "In the broadest sense, the dollar tends to prosper when a unique U.S. asset attracts foreign buyers," such as high real yields in the early 1980s and the Internet boom in early 2000s, Steven Englander, the chief currency strategist at Barclays, wrote in a research note on Aug. 27. "There is no asset class in which U.S. assets have a clear performance advantage"
6. Matthew Lynn at Bloomberg reckons Britain's housing market is likely to have a double-dip.
There are good reasons to expect a second dip in the market later this year or early in 2010. First, the benchmark interest rate is still at record lows of just 0.5 percent. Most people can still manage to at least pay the interest on their mortgages -- and so long as you can pay the interest, the property usually won't be repossessed. At some point, interest rates will have to rise again. Once they do, many people will be in trouble. We can expect to see a lot more repossessions. And many of those properties will be back on the market at bargain prices, pushing prices down again. Second, banks are repairing their balance sheets at the expense of mortgage holders. The spread between what the banks pay depositors and what lenders charge for loans is widening. According to Moneyfacts Plc, the margin on two-year money is the widest it has ever been. That may be good news for banks and their shareholders. Competition has been reduced, and it is easier for them to charge higher prices. But it is bad news for mortgage borrowers, the people who go out and buy houses.
7. China plans to issue Renminbi bonds to offshore investors as tries to reduce its reliance on the US dollar as a reserve currency, FT.com reported.
The country's finance ministry said it would issue Rmb6bn ($879m) of bonds in Hong Kong on September 28, in a move to "improve the international status" of the currency and to help mainland companies raise funds in the offshore bond market. "While the amount is not large, this is a significant development for the internationalisation of the renminbi and for the development of the Hong Kong bond market," said Wensheng Peng, an economist at Barclays Capital. Beijing has taken a number of steps in the past year to encourage greater use of the renminbi in international transactions, beginning a process to decrease its dependence on the US dollar. Senior government officials, including Premier Wen Jiabao, have expressed concern that the value of the dollar will decline, which would erode China's $2,100bn in foreign exchange reserves, mostly held in US government bonds.
8. Alan Greenspan, very former master of the universe, is onto it. He reckons banks need to put aside more capital and there was a risk of inflation if central banks don't wind back their stimulus plans. Maybe he feels some responsibility for trying to fix the thing (the global economy) that he broke. His credibility is shot either way. HT Mouse
"I think even in non-euphoria, non-crisis times, we need to have a larger buffer than we currently have," he said. Greenspan, who stepped down as Fed chairman in 2006 after 18 years at the helm, said the considerable slack in the world economy suggested the global rate of inflation excluding food and fuel will go down until the early part of next year. But the massive amounts of liquidity infused into the banking systems by the central banks around the world would fuel inflationary pressures, he said. Unless the central banks defused the large increase in their assets, inflation will begin to pick up, he added. "It is critical, but it has got to be done and it is not going to be easy to do," Greenspan said.
9. Mish at Global Economic Analysis and Barry Ritholz at The Big Picture have differing views on whether this great recession is worse than other recessions or even as bad as the The Great Depression. Mish says it's worse than anything else since WWII. Barry says its no Great Depression redux. Here's Barry's chart (click here for bigger version). 
Here's Mish' chart (click here for bigger version) 
10. The FT reports that China is backing moves to break derivatives contracts with investment banks. This could send global financial markets into a big tiz. September and October could get ugly. This week is the first anniversary of Lehman Bros collapse.
China delivered a blow to some of the world's biggest investment banks yesterday as it declared its support for legal efforts by some state-owned companies that want to break loss-making oil derivatives contracts with foreign institutions. The state-owned Assets Supervision and Administration Commission of the State Council (Sasac) said it was investigating a number of derivatives deals and would help companies find ways to "minimise losses". The move is the latest by Beijing to clamp down on the over-the-counter derivatives market after a number of state companies made disastrous bets on commodity prices and foreign exchange movements, losing billions of dollars. But it will be greeted with dismay by foreign financial institutions, already reeling from a July decision by China's banking regulator that sought to prevent state-owned enterprises from accessing the overseas derivatives market through domestic intermediaries. Andy Xie, an independent economist based in Shanghai, said the moves "pretty much kill this business," adding that the lion's share of profits enjoyed by US and European banks in China came from derivatives deals with state-owned companies.
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