Monday's Top 10 with NZ Mint: ANZ stops lending on farm valuations; 'The rent is too damn high Party'; Spanish mortgage defiance; Caterpillar's tax dodging; Cartoons galore; Dilberts

Here's my Top 10 links from around the Internet at 12 midday 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.

When are we all going to stop extending and pretending?

1. Extending and pretending - USA Today reports the US government is expected to announce two new ways for the unemployed to keep their homes and not make interest payments.

When is all this extending and pretending going to end?

It's just shifting liabilities forward into the never never.

I'm beginning to wonder if it might be better to let the US default and then deal with the consequences.

At some stage there has to be a day of reckoning.

The Federal Housing Administration began offering four months of mortgage relief to unemployed homeowners nearly a decade ago. Banks and mortgage brokers participating in the program must comply with the new standard. The Home Affordable Modification Program has been offering three months of relief to the unemployed since last year. Those who service mortgages under the program are expected to follow its voluntary guidelines.

2. Tougher line - Ruralnews reports ANZ's rural bankers (which includes the old National Bank operations) are getting tougher on rural lending, including changing to valuations on earnings rather than land value.

Fascinating in the light of the capital gains tax and land tax debate.

ANZ Bank, which holds 40% of rural loans, is no longer lending money to farmers on asset valuation but on earning capacity. Some farmers are interpreting its review as shutting the door on the farming sector but the ANZ Group's chief risk officer Richard Wilks says it's open for "the right kind of business".

Loans for dairy conversions have been cut back and all loans are signed off by two bank officials. Speaking at the SIDE 2011 conference at Lincoln last week, Wilks said too many conversion loans "were done on the back of cigarette packets; there were too many cost overruns."

Concerns about ballooning rural debt prompted the bank to review its dairy loan book in 2009. It found 1100 farmers carrying $6 billion debt. The concern was about 100 farmers in "dire circumstances" struggling to service interest bills of 8% at a milk payout of $5.40/kgMS. Another 370 farmers were found in the "high risk category".

Wilks says based on ANZ's market share, its figures translate into 250 farmers in dire situations throughout the industry. Another 1000 are high risk.

"The farmers in trouble made excessive use of leverage and over-reliance on capital gains."

Ruralnews also includes some interesting comments from Bill English to a conference last week.   

In his address to SIDE delegates, English expressed worry at the level of farm debt. The extra investment in farming was not producing proportionate output.

"The farming sector is over-capitalised and over-indebted," he told delegates. "The world will not lend us money to grow our debt 4-5 times faster than our economy."  

3. 'It's going to take a while' - US Treasury Secretary Tim Geithner explains in this video below that the US recovery is going to take a while...

Some (Zerohedge) have interpreted his comments as admitting Keynesianism has failed.

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

4. Italian nerves - Bloomberg reports Italy's market regulator is looking at banning naked short selling of stocks after heavy selling of bank stocks last week.

This is what Australia had to do in the depths of the Lehman crisis. Things are getting mighty nervy in Europe.

5. God help us all - Bloomberg reports Porsche is increasing its production of its Cayenne barges on strong Chinese demand.

Any growth is being funneled to the richest.

6. Chinese growth slowing - John Key is remarkably confident about unending growth in China keeping our commodity prices up for a decade or two. HT Chris

Yet China's growth is slowing quite quickly, Bloomberg points out.

China’s slowdown was underscored by the weakest import gain since 2009 in June, limiting the chance for the U.S. and Europe to export their way out of their own domestic challenges. A 58 percent jump in bank credit in 2009-2010 and concern that local governments may default on loans leaves Wen with less room to unleash the scale of stimulus that aided the world in 2008.

China’s economy probably grew the least in almost two years last quarter, contributing to a global weakening that Premier Wen Jiabao confronts with more limited scope for policy response than during the 2008 world recession.

“Any significant policy loosening or introduction of another big stimulus right now would run the risk of plunging the Chinese economy into a real hard landing, with inflation running out of control and government debt and bad loans piling up,” said Lu Zhengwei, Shanghai-based chief economist at Industrial Bank Co., who was rated China’s best analyst in 2010 by China Business News newspaper. “Softer growth is more sustainable” and will help contain inflation, he also said.

7. Why do we trust multi-nationals when they do stuff like this? - Bloomberg reports Caterpillar used tax havens in Bermuda and Switzerland to avoid US$2 billion in taxes and then demoted an executive who argued internally that these structures breached US tax law. HT Troy via email.

Peoria-based Caterpillar, which reported year over year earnings growth exceeding 250 percent in each of the last two quarters, is among several U.S. multinationals asking Congress to end U.S. corporate income taxes on profits earned abroad. The company had $3.7 billion of pretax income last year on $42.6 billion in revenue, 68 percent of which came from offshore.

“What we are asking for is a level playing field when we compete with foreign competitors,” said Edward Rapp, the company’s chief financial officer, in testimony to a congressional committee May 12. The company’s shares fell as much as 3.4 percent in New York Stock Exchange trading today.

Caterpillar’s Swiss strategy, as described in depositions and exhibits attached to Schlicksup’s lawsuit, reflects one way U.S. corporations reduce their actual tax rates. Aided by lower taxes overseas, the company had an overall effective tax rate of about 26 percent on about $27 billion of pretax income from 2000 through 2009, based on data compiled by Bloomberg from the company’s disclosures. The top federal corporate income tax rate in the U.S. is 35 percent.

8. 'Doomed without reform' - James K Galbraith writes at Credit Writedowns that the European project is doomed unless it fixes its structural problems.

Well worth a read.

This noble project was built on an end-of-history economics, on frozen-in-time free-market notions and on dogmatic monetarism linked to arbitrary criteria for deficits and public debt.

In the wake of a global financial meltdown, these no longer serve. Unless they are abandoned soon, they will doom Europe as surely as communism doomed the empire of the East.

Europe's structure is also suspended between two stable formations: the federated nation state and the international alliance. This in-between structure is called a confederacy, and it is something that was tried and which failed in North America on two occasions, most recently in 1865.

9. Spanish mortgage revolt - AP reports via HuffPo that Spanish mortgage defaulters are being evicted, sparking angry protests from hordes of supporters every time.

Defaulters are a small minority in Spain – nearly 98 percent of mortgage holders are up to date on payments. But their plight is generating a wave of solidarity as unemployment soars to record highs: When an eviction appears imminent, demonstrators often gather by the hundreds outside the property to try to block it.

In the rallies, protesters form a human cushion and physically prevent court clerks and bank officials with a locksmith in tow from ejecting residents. The association behind the demonstrations has succeeded about 50 times since 2009, although ultimately it just delays the inevitable.

Last week, the government passed a decree that seeks to address the plight of evicted debtors. It protects more of their wages from being claimed by banks, and changes the way such people's post-foreclosure debt is calculated, to try to trim it.

10. Totally 'the rent is too damn high party' - Climb aboard the Jimmy McMillan express.

This is a trailer for a movie based on the campaign of the 'The Rent is too damn high' guy. He ran for governor of New York.