Thursday's Top 10 with NZ Mint: Loukanikos the Greek freedom dog; Extending and pretending on the never, never; Greek Brady Bonds; Arianna's view; Cartoons galore; Dilbert

Here's my Top 10 links from around the Internet at 2 pm in association with NZ Mint.

I'll pop the extras into the comment stream. See all previous Top 10s here.

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

My favourite is Loukanikos the protest dog.

1. No more living on the never, never - Jeremy Warner writes at the Telegraph that the Bank for International Settlements has told the indebted Western World it can't keep living beyond its means forever.

This is the guts of the problem.

The growth from 2002 to 2007 was built on leverage and debt.

Now there is too much debt relative to incomes.

Incomes are not growing much or at all.

At some stage a de-leveraging is required.

It can only happen either through a restructuring (haircuts taken by banks and their shareholders) or by inflation (driven by money printing), or a combination of both.

Yet everyone (banks, central banks and governments) is engaging in a mass financial delusion exercise of extending and pretending the growth will come back. It won't.

In New Zealand our version of this delusion is to believe China will deliver the growth. Except the growth in China depends on import demand from America and Europe. China is for now deluding itself that it can fill the gap of the missing imports by building ghost cities...

HT Colin via email.

Here's Warner:

Everything up to and including the kitchen sink has been chucked at the problem, but still we are struggling to achieve escape velocity. Both in terms of fiscal and monetary measures, policymakers are all out of ammo.

The point has not been lost on the Bank for International Settlements (BIS) – often referred to as the central bankers’ bank. In its annual report this week, it draws the opposite conclusion to the one you might expect. If this were a 1930s-style slump, you might expect the BIS to support the present policy mix of ultra-loose monetary and fiscal measures. Instead, it sees this more as part of the problem than the solution.

“The sooner advanced economies abandon the leverage-led growth that precipitated the great recession, the sooner they will shed the destabilising debt accumulated during the last decade and return to sustainable growth,” it says. “The time for public and private consolidation is now.”

At last, an authoritative voice on the international stage has had the courage to break with the liberal policy consensus of the past three years and argue that enough is enough – that the present approach of attempting to fight debt with yet more debt simply isn’t working and, moreover, risks significant long-term damage"

2. Californian exposure - Here is the ultimate Generation X revenge. Activists in California have gotten hold of public records on how much each retired civil servant is getting in pensions from their respective public pension funds. Here's the link for the details.

There are 16,012 retired government pensioners getting more than US$100,000 a year.

Could we do the same here? Would we want to? HT Troy via email.

3. US mortgage bond slump - Bloomberg reports on some grief brewing in the bowels of the US debt markets. HT Hugh via email.

Remembering, of course, the Federal Reserve's second quantitative easing programme of bond buying ends tonight.

A rout in the $1.2 trillion market for so-called non-agency home-loan securities has widened in recent weeks after the Federal Reserve’s auctions of bonds once held by American International Group Inc. helped roil debt backed by subprime mortgages. Non-subprime securities may face further challenges, analysts at Barclays Capital wrote in a June 24 report.

“It is more likely that the Fed will continue the sale of the prime/Alt-A part of the portfolio” than the subprime-tied portion, the New York-based analysts led by Ajay Rajadhyaksha wrote. “With continued supply and better price performance (vs. subprime) in the past couple of months, Alt-A/prime might face relatively more price pressure in the coming weeks.”

4. Where has all the economic growth gone - Mother Jones points out in this fun '12 charts to make your blood boil' that America's economy has grown but the benefits have gone to the richest 1%.

The chart below tells the story. The fruits of productivity growth migrated uphill to the richest 1%.

In the past 20 years, the US economy has grown nearly 60 percent. This huge increase in productivity is partly due to automation, the internet, and other improvements in efficiency. But it's also the result of Americans working harder—often without a big boost to their bottom lines.

Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.

5. Tax impasse - Reuters reports talks between Swiss and US authorities to crack down on tax dodgers has bogged down. This is worth watching because crackdowns on tax havens will become increasingly intense in years to come as heavily indebted deficit countries scramble to find cash down the back of all sorts of sofas.

The sticking point centers on a renewed Swiss insistence that any deal leave Swiss bankers and executives employed by the banks and other financial institutions free from prosecution in the United States, the sources said.

Under the civil agreement being negotiated, known as a global resolution, the United States would require the banks to pay a fine, exit their undeclared offshore banking businesses for Americans, and turn over client names to the Internal Revenue Service (IRS) and the Justice Department, according to the sources.

In exchange, the agencies would drop their widening criminal investigation into the banks, which include HSBC, Credit Suisse, Julius Baer and Basler Kantonalbank.

6. Democratic stirrings - Arianna Huffington, who is herself of Greek descent, writes here about the protests in Greece after a visit to Athens. She met PM George Papandreou for dinner...

Can a truly democratic movement break the stranglehold of corrupt elites and powerful anti-democratic institutional forces that have come to characterize not just the politics of Greece, but most Western democracies, including our own? Greece is only an extreme example of an unfolding seismic social shift that is challenging democracies the world over.

What happens in Greece might very well tell us whether democracy will recover from the crisis of legitimacy exacerbated by the financial crisis or whether it will shrink -- undermined by the very forces that brought on the crisis in the first place.

Papandreou is a member of the "politikos kosmos," the "entrenched semi-hereditary political caste that has ruled and misruled Greece for as long as anyone can remember." Not only was his father Andreas prime minister for two terms, his grandfather held the position for three terms.

And the task confronting the son/grandson is one worthy of the great Greek dramatists. As Barber writes, Papandreou must now rescue his country by "dismantling the system of gluttonous patronage and parasitism on the state that his father Andreas constructed."

7. Brazil vs China - Bloomberg reports on a battle royale brewing between Brazil and China over copper in Africa.

“The Chinese and the Brazilians have voracious appetites” for mining, said Andrew Ross, partner and global equity trader at First New YorkSecurities LLC, a New York-based proprietary trading firm that bets on stocks, commodities, currencies and derivatives.

“They view themselves in direct competition for these strategic natural resource assets.”

8. Loukanikos the Freedom Dog - A stray dog in Athens called Loukanikos takes part in every protest. He barks heartily at the police. He's now a national hero. HT Yves Smith.

9. A Greek Brady bond plan - Hedge fund manager Andy Kessler writes at WSJ about the likely solution to the Greek crisis, which is for Germany to take ownership of Greece. He's serious. Here's how it would work.

The way I see it, the endgame will be something like the Brady Bonds devised in 1989 by U.S. Treasury Secretary Nicholas Brady to resolve the Latin American debt crisis, but with an equity twist.

Under the Brady Plan, bad sovereign debt was swapped for new U.S. government-backed bonds with various interest-rate structures, making them tradeable and easy to move off of bank balance sheets. Ecuador defaulted but Mexico retired their Brady Bonds by 2003, as did eventually most of the dozen plus other Latin American countries.

Euro-zone finance ministers plan to meet again this Sunday to address the Greek tragedy. But so far the only plan on the table is a doomed one by the French for the voluntary restructuring of sovereign Greek debt. Private buyers are increasingly skeptical of government guarantees and will demand real collateral. Credit default swap derivatives, which merely spread the risk, will no longer do. Some other sweetener will be needed. The solution? Bonds backed by real Greek assets.

In this case, you would convert Greek debt, denominated in euros, into long-term German bonds backed partially by the good faith of the German government but also backed by Greek assets—you know, utilities, railroads, tollways, airports, cellphone services, tourism, Ouzo factories and maybe even the islands of Santorini and Mykonos.

10.  Totally Jon Stewart vs Fox - Always good for a laugh. A really big laugh.