Friday's Top 10 at 10 with NZ Mint: 'Send lawyers, guns and money'; Japan's inexorable fiscal implosion; America's Zombie economy; Greek and Irish fat ladies; Dilbert

Here are my Top 10 links from around the Internet at 10 to 1pm, brought to you in association with New Zealand Mint for your reading pleasure. 

I welcome your additions and comments below, or please send suggestions for Monday's Top 10 at 10 via email to bernard.hickey@interest.co.nz.

I'll pop any surplus suggestions I get into the comment stream under the Top 10.

1. The problem with Japan - Burning Platform has a good old rant about the problems with Japan's mounting government debt, its ageing population and its falling savings rate.

The charts are alarming.

HT Gertraud via email.

The “nothing bad has happened so far” crowd continues to spout fallacies about the Japanese owing the debt to themselves and their high savings rates as the reason that Japanese debt can continue to grow. About 95% of Japan’s debt is held domestically, which sovereign-debt agencies have said supports the country’s creditworthiness even as borrowings have reached 200% of gross domestic product. In a sign that base is waning, Japan’s public pension fund, holder of 12% of outstanding debt, sold more government bonds than it bought for the first time in nine years.

The National Savings rate has declined from 18% in 1980 to 2% today. The days when the Japanese could issue long term bonds yielding 1% and have it all bought by Japanese citizens is over. In 2010, the Japanese government will issue an additional ¥53 trillion in government debt. At the same time tax revenues will drop from ¥46 trillion to ¥37 trillion.

If the market demands an interest rate of anything more than 3.5% to buy their debt then Japan will not have the revenue to service its debt. As the interest rate approaches 3.5% Japan must use all its tax revenue to pay interest on its debt. It becomes readily apparent that Japan will eventually be forced to default on their debt. There are no good options left. A minor uptick in interest rates will sink the 3rd largest economy on the planet. The near failure of a 3rd world country (Greece) turned the world upside down. The failure of Japan would likely touch off a worldwide crash.

2. How not to do it - Felix Salmon from Reuters rips into JPMorganChase's response to its online banking failure. A lesson for any banking IT and marketing types.

This whole episode underlines the way in which it’s silly to assume that bigger banks have more robust websites. In fact, the opposite is true, especially in the case of banks like Chase which are the result of many mergers and therefore have to cobble together all manner of disparate legacy systems.

And it also says a lot about redundancy within big corporations, or the lack thereof. The damage from this outage is many orders of magnitude less severe than the damage from the BP oil spill, but both of them are cases where any attempt at back-up plans or redundancy failed. Chase tried to update its website, but didn’t have a backup system in case the update failed  

3. Fat lady has not sung yet - Nouriel Roubini explains here why the European Financial Crisis is far from over.

First, a trillion-dollar bailout package in May prevented an immediate default by Greece and a break-up of the eurozone. But now sovereign spreads in the peripheral eurozone countries have returned to the levels seen at the peak of the crisis in May.

Second, a fudged set of financial “stress tests” sought to persuade markets that European banks’ needed only €3.5 billion in fresh capital. But now Anglo-Irish alone may have a capital hole as high as €70 billion, raising serious concerns about the true health of other Irish, Spanish, Greek, and German banks.

Finally, a temporary acceleration of growth in the eurozone in the second quarter boosted financial markets and the euro, but it is now clear that the improvement was transitory. All of the eurozone’s peripheral countries’ GDP is still either contracting (Spain, Ireland, and Greece) or barely growing (Italy and Portugal).

So a eurozone that needs fiscal austerity, structural reforms, and appropriate macroeconomic and financial policies is weakened politically at both the EU and national levels. That is why my best-case scenario is that the eurozone somehow muddles through in the next few years; at worst (and with a probability of more than one-third), the eurozone will break up, owing to a combination of sovereign debt restructurings and exits by some weaker economies.

4. A Zombie economy - When home owners are under water they often hang on to try to get their money back, which stops them from moving to another place to get a better job. Ryan Avent explains at The Economist.

One story I've been telling about a potential structural source of unemployment is that negative equity is preventing households from moving to more promising job markets. To sell, these households would have to write a big cheque at closing, which they obviously can't afford to do. So they stay put.

5. Maybe we're not doing so bad - The OECD has some fresh figures that look at the rankings of income by decile to see whether the inequality of wealth is a factor skewing the averages. New Zealand does poorly on the averages, but it doesn't look so bad when you look at the top and bottom ends, because we are relatively less inequal than others. The chart tells the story. Mark Thoma has the story.  HT Kevin via IM

6. 'Send lawyers, guns and money' - There's an old Warren Zevon song I quite like. Allan Hubbard has moved to hire a top lawyer in Wellington this week, Jenni McManus reports in BusinessDay.

Allan Hubbard and his wife Jean have hired a top partner at Russell McVeagh's Wellington office to act on matters relating to the statutory management of a raft of trusts associated with the couple, and a Serious Fraud Office investigation into their affairs. But the partner, Tim Clarke, will not say whether the Hubbards plan a legal challenge to the statutory management. It is also unclear who might be footing the bill.

7.Basel III's fatal flaw - Simon Johnson identifies it.

8. Milk price war - Tesco has slashed its price of fresh milk in Britain, hitting milk producers hard. Tesco is a tad bigger than Fonterra.

9. Americans are going for gold, MSNBC reports.

Visit msnbc.com for breaking news, world news, and news about the economy

10.Totally relevant video - Jon Stewart looks at the Tea Party movement