Top 10 at 10: Chinese steel over-capacity; 'Show me the gold'; iPad in a blender; Dilbert

Here are my Top 10 links from around the Internet at 10 past 12. I welcome your additions and comments below or please send suggestions for Friday’s Top 10 at 10 to bernard.hickey@interest.co.nz 1. Over-capacity - The Chinese government wants to remove over-capacity in the steel mill sector by forcing all mills with blast furnaces of less than 400 cubic metres to shut, FT Alphaville points out. This may not be good news in the short run for demand for all that Australian iron ore and coal, but it does show again the Chinese authorities know they have to cool the economy down. However, commodity prices rise ever higher....

All of which quite confusingly comes in the context of rapidly ascending copper prices, which have seemingly defied warnings about upcoming Asian demand weakness and related overcapacity issues.

2. The other side - CNN Money makes the case for those arguing all the US government debt issuance is not a problem. HT Steve Koerber.

Demand for Treasuries simply isn't going away. Rumors that foreign buyers will abandon U.S. debt are being greatly exaggerated. It's true that last month's $118 billion two-year note auction was lackluster, but analysts say that's due to spring holidays and overseas bookkeeping. "Buyers in Asia sat on the sidelines, because it was their fiscal year end," said Rich Bryant, head of Treasury trading at MF Global. Now that we're back to routine, American banks and insurance companies are rejoining foreign investors and pension plans in the upcoming Treasury auctions. Thanks to upcoming financial reform, firms are preparing to hold more capital in reserve, so they'll invest in liquid, triple-A rated securities. That's the definition of a Treasury. Since those same firms can borrow money at nearly 0%, a 4% yield on 10-year notes is basically a risk-free moneymaker.

3. 'Let's be nicer' - NAB chief executive Cameron Clyne, who was previously BNZ CEO, has spoken about the need for Australia's big four banks to turn around their reputations if they are to avoid further regulation, The Australian reported. He even used the O word (Oligopoly).

"I said it would be a long journey, and the last year has only suggested to me it will harder and substantially longer than I anticipated," Mr Clyne told an Australia-Israel Chamber of Commerce lunch in Melbourne yesterday. "(But) if an oligopoly blindly charges on, ignorant of its broader obligations to the community and all those stakeholders, it invites far greater intervention than would otherwise be the case."

4. IMF warning to indebted world - The IMF has published a briefing paper describing the scale of the global economic challenge as heavily indebted developed economies are forced to reduce their budget deficits. Well worth a read, particularly for heavy sleepers who want to stay up late at night. HT Gertraud via email.

The crisis and associated increases in fiscal deficits and government debts have resulted in a daunting fiscal challenge, especially for advanced economies. Under current projections, government debt in the advanced economies will rise, on average, by about 35 percentage points of GDP between 2007 and 2014; primary deficits would remain sizable even as the output gap closes. Large scale fiscal adjustment will be required, when the recovery is securely underway. Achieving and maintaining prudent debt levels will require a major and sustained fiscal adjustment. To illustrate, for the advanced economies, attaining a debt ratio of 60 percent by 2030 would require the structural primary balance to improve by 8 percentage points of GDP, on average, during 2011–2020 (i.e., a fiscal effort of ¾ percentage points per year) and to remain constant for the following decade. The bulk of the adjustment will require more difficult reforms to improve the structural primary balance. These would likely include, for example: (i) reforms aimed at stabilizing entitlement-spending-to-GDP (a challenge, in light of the strength of demographic trends); (ii) measures to lower other primary spending in relation to GDP; and (iii) increased revenue, which in many countries will need to be part of the solution, through broadening of tax bases but also tax rate hikes, depending on country circumstances. Strengthened fiscal institutions can play a key role in support of fiscal consolidation. Most countries, in varying degrees, need to strengthen the formulation and implementation of fiscal frameworks, fiscal monitoring and reporting, budgeting practices, and government assets and liabilities management.

That last point is interesting. Our government, under pressure from ACT, is apparently looking at some sort of agreed fiscal spending cap. Good idea, if you can somehow structure it so the politicians can't avoid it. 5. Now it's the BIS whingeing too - The Bank for International Settlements, the bankers' bank, has warned that Britain needs to cut its budget deficit drastically, The Telegraph reports. Gordon Brown or David Cameron or whoever is in charge after the May 6 election will have his work cut out.

Britain will need "drastic" austerity measures to prevent public debt exploding out of control, the Bank for International Settlements (BIS), has declared. Interest payments on the UK's public debt will double from 5pc of GDP to 10pc within a decade under the bank's "baseline scenario" before spiralling upwards to 27pc by 2040 – by far the highest among the OECD club of developed countries. Greece fares better, while Britain's interest burden is far worse than Italy's.

6. Where's the gold? - Tyler Durden at Zerohedge carries a report questioning just how much gold is sitting in bank vaults. There's a growing concern that many banks and central banks are holding gold in electronic rather than physical form. HT Troy Barsten

It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form. Lenny Organ who was the person to enter the vault of ScotiaMocatta, says "What shocked me was how little gold and silver they actually had." Lenny describes exactly how much (or little as the case may be) silver was available - roughly 60,000 ounces. As for gold - 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold. As Orgen concludes: "The game ends when the people who own all these paper obligations say enough and take physical delivery, and that's when the mess will occur."

7. Chart of the day - The OECD came out overnight with an outlook for the developed economies which suggests a 'double dip' slow-down in the first half of this year, driven by rising interest rates and fiscal tightenings. This chart (click for a better version) helps tell the story. New Zealand's budget deficit looks in pretty good shape compared to the rest.

8. Carry on charging - A low-cost US airline has started charging for carry-on luggage as a way to 'unbundle' the cost of flying. They argue putting luggage in the overhead locker adds weight (therefore burns fuel) and slows down turnaround times because of delays in passengers moving down the aisle. The airline is SpiritAirlines in the United States. Here's the press release. It charges 1c for the actual ticket and then adds on the cost of fuel, taxes and baggage. Your thoughts? 9. Home ownership dream persistent - Felix Salmon at Reuters points to a Fannie Mae Housing survey which shows Americans still think home ownership is a great investment despite the crash there. I'm not sure I agree with his anti-ownership views (I think home occupier ownership is a great thing), but it sure makes for interesting reading.

This is horribly misguided, and it’s particularly depressing that even 77% of renters share in the mass delusion. Homeownership is, if anything, a drag on the economy, since it funnels resources into unproductive overconsumption, and helps to impede labor mobility. There is absolutely no reason to believe that countries with high levels of homeownership, like the U.S., have better economies than those with low levels of homeownership, like Germany. The survey just gets more depressing from there. Americans think now is a good time to buy a house, largely because they think it’s always a good time to buy a house. And they reckon — even now — that house prices are going up, or will at least stay stable. I think what we’re seeing here is a mindset utterly conditioned by the massive, decades-long bull market in housing. Never mind that that bull market has come to an end; the syllogism is simple. House prices always go up; housing is a bargain right now because prices have ticked downwards; therefore now must be a great time to buy.

Sound familiar? 10. Totally irrelevant video - iCouldn'tresist this 'Will it blend' video on the iPad. For all those iFanboys out there. HT ChrisKeall at NBR. 11. Another totally irrelevant video - Some Germans juggle hammers and nail a nail at the same time...strangely compelling. HT Eva via email.