Wednesday's Top 10 with NZ Mint: 'Let them eat iPads'; Fisking a viral nuclear story; Eurogeddon for exposed banks?; How much money is enough?; Dilbert

Here's my Top 10 links from around the Internet at 10 to 12 am in association with NZ Mint.

I welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.

I'll pop the extras into the comment stream.

I'm travelling today and am having real internet speed problems so apologies for the slightly truncated Top 10 today.

1. 'I can't eat an iPad' - This article from Reuters looks to have captured a moment when the American populace confronted their masters with an uncomfortable truth.

William Dudley, the former Goldman Sachs chief economist who is now the Governor of the Federal Reserve Bank of New York, was asked at a recent 'meet the people' event in Queens in New York about the effect of inflation on food prices.

He replied with a 'Let them eat cake' moment that could easily prove a rallying cry for the grumpy, unemployed,  poor and hungry in America.

It cuts to the heart of the problem of globalisation, of inflation, of money printing and a jobless recovery.

One of the reasons there has been no revolt in America yet is that 40 something of the poorest are on food stamps.

America has hollowed out its economy by exporting high paid manufacturing jobs and has coped for now by importing those low wage costs offshore in the form of lower priced manufactured goods sold in Wal-Mart. The problem is when the money printint to fix the problem simply pushes up commodity and food prices.

It all ends when you can't eat iPads....

Here's what happened.

"When was the last time, sir, that you went grocery shopping?" one audience member asked.

Dudley tried to explain how the Fed sees things: Yes, food prices may be rising, but at the same time, other prices are declining. The Fed looks at core inflation, which strips out volatile food and energy costs, to get a better sense of where inflation may actually be heading.

So, Dudley sought an everyday example of a price that is falling.

"Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said referring to Apple Inc's (AAPL.O) latest handheld tablet computer hitting stories on Friday.

"You have to look at the prices of all things," he said.

This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment "tone deaf."

"I can't eat an iPad," another quipped.

2. Viral post being questioned - The blog post I included yesterday by a MIT research scientist Dr Josef Oehmen that suggested there was little danger of a disastrous meltdown in Japan is now being questioned on the blogosphere.

Salon.com digs around a bit here.

Part of the weight of the blog post comes from the fact that Oehmen was identified as an "MIT research scientist."

So does Oehmen actually work at the Massachusetts Institute of Technology? Yes. But not in the nuclear engineering department. He works at an entity called the Lean Advancement Initiative, which focuses on business management issues. Is he a "research scientist"?

Yes. But, again, not in any nuclear field. Oehmen's research focuses on "risk management" with an eye to helping companies "take entrepreneurial risks."

3. Great detail here on Fukushima - Nate Hagens at The Oil Drum gives an excellent description of the Japanese nuclear situation with lots of details about nuclear power in Japan and Fukushima.

A hydrogen release is very much part of a meltdown scenario, and difficult to imagine hydrogen explosion scenarios on the scale of what was seen at Fukushima 1 that would not involve compromising the reactor pressure vessel.

Comparisons are being made with the accident at Chernobyl, but there are a number of very important differences, notably in terms of reactor design, and therefore accident implications. Nuclear safety in the former Soviet Union was once my research field (see Nuclear Safety and International Governance: Russia and Eastern Europe), and the specifics of the accident at Chernobyl could not be replicated in Japan. The risk in Japan is primarily meltdown, not a Chernobyl-style run-away nuclear reaction.

4. Weaker in the long run - Nouriel Roubini thinks the Yen is likely to weaken in the long run. That didn't happen after the Kobe earthquake as Japanese insurers and others repatriated funds back home.

5. Inside Job - The director of Inside Job, Charles Ferguson, made the now famous comment in his Oscar acceptance speech about how no-one on Wall St had actually been imprisoned.

Sound familiar?

Here he elaborates at Fortune about what he meant.

I've finally seen the movie on a plane. It's a clever compilation of everything we've been following over the last 3 years.

I also didn't realise Ferguson was behind the tech company that created FrontPage, one of the first website production software.

if you set up a financial system that has incredibly dangerous incentives and you don't have any regulatory oversight of that system, then you're going to get dangerous behavior, and so it shouldn't come as a surprise if people do things that end up causing a major financial crisis. And I would point most particularly to two practices in which the financial sector engaged, both of which it still engages in. One is the extremity of the leveraging of these financial institutions: they fund themselves using very short-term funding; they make very long-term, very illiquid investment decisions; and they borrow enormous amounts of money.

At the height of the bubble, Lehman Brothers had a leverage ratio of somewhere around 35 to one, meaning that a three percent decline in the value of their investment portfolio would lead them to be insolvent, and that's dangerous. So first of all, that kind of institutional behavior. But I would say even more importantly was the structure of personal incentives. People were given enormous short-term, primarily cash--but whether cash or stock it almost doesn't matter--enormous short-term incentives and rewards for doing things that had enormous long-term consequences. And if those things went bad, they paid no price whatsoever.

You know, if you're going to have a system run like that, and furthermore a system run without regulatory oversight, then you're going to have crises.

6. A minimal impact in the long term - Ilan Noy at Econbrowser looks at the research on the long term economic impacts of natural disasters and finds they are often minimal for richer countries.

Countries with higher per capita incomes, higher literacy rate, and better institutions are not only less vulnerable to the initial impact of the disaster, but their macro-economy is less affected as well. In particular, there is no evidence from recent data that even large natural disasters have any measurable adverse impact on the national economy of rich developed countries like Japan. In contrast, poorer less-developed countries do face significant short-run costs of disasters, and these can translate into significant income losses.

One can conclude that the likely indirect impacts of this horrific earthquake/tsunami event on growth in the Japanese economy will be quite minimal. The Japanese government and the Japanese people have access to large amounts of human and financial resources that can be directed toward a rapid and robust reconstruction and rebuilding of the affected region. Neither do we have any evidence to suggest that the earthquake is likely to have any enduring monetary effects.

7. Time to get out of the US dollar? - One slightly surprising thing about the financial market reaction to the Japanese earthquake and Tsunami is that the US dollar has not risen much in the usual 'safe haven' buying way.

Simon Black at Sovereign Man makes some really good points about how Japan's rebuilding effort and repatriation will remove demand for the mountain of US Treasuries about to be issued by the US government, particularly once the Fed stops buying from June 30.

Come June 30th, though, with the supposed end of the “I’m not printing money” money printing that is quantitative easing, the US government will have lost, in theory, two of its biggest buyers– the Federal Reserve and Japan. And with both China and the OPEC nations slashing their own Treasury purchases, it leaves one simple question.

Who will buy all of this US government debt?

1) US commercial banks. They’re awash with cash and partially owned by the government anyhow. The Treasury department could easily influence banks to increase their net bond purchases. This would have the effect of crowding out (once again) small businesses and individuals’ access to credit.

2) Retirement accounts. There’s $5 trillion of fresh meat available in US retirement accounts. It would be nothing for the Congress to pass a law requiring money managers to allocate a portion of their onshore retirement accounts to the ‘safety and security’ of US Treasuries. Kiss your retirement savings’ purchasing power goodbye.

8. Eurogeddon - Ambrose Evans Pritchard at The Telegraph writes about just how exposed banks are to the sovereign debt crisis in Europe.

The total exposure of foreign banks to the struggling quartet of Greece, Ireland, Portugal and Spain tops $2.5 trillion (£1.6 trillion) once all forms or risk are included, according to the latest data from the BIS.

9. How much is enough? - Morgan Housel writes at Motley Fool about how much money is enough and why some rich people such as Rajat Gupta, the McKinsey boss and Goldman Sachs director accused of leaking information to an insider trader, want more.

He concludes the following, which I agree with:

“Money isn’t the key to happiness. What really gives people meaning and happiness is a combination of four things: Control over what they’re doing, progress in what they’re pursuing, being connected with others, and being part of something they enjoy that’s bigger than themselves.”

10. Totally wide-eyed video - Here a baby reacts to her mother's sneezes with shock and horror. Sort of funny in a simple way. (My apologies. I linked to a Rage against the machine video to start with. My fault. I've fixed now).