Wednesday's Top 10 with NZ Mint: How QE III rebounds to slow US growth; Cartoons galore; 'Press 2 for debt ceiling outrage'; Death to Powerpoint; Paintballing taggers; Dilbert

Here's my Top 10 links from around the Internet at midnight 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. See all previous Top 10s here.

Cartoons galore today.

1. Printing rebound - Reuters points out QE 3 may not work because it pushes up petrol and food prices, which in turn slow down the US economy...

This is sort of obvious in retrospect, but it does highlight the problem for the Americans.

The virulence of the Tea Partyists in the debt ceiling debate is a direct result of the money printing last year and the higher gas prices that followed.

This is the ultimate problem with Quantitative Easing.

It is political as much as economic.

"We have a negative opinion of QE2, and believe QE3 could very well turn out to be ineffective at best, and counter-productive at worst," said Stephen Jen, managing partner of London-based hedge fund SLJ Partners.

"If we are right, QE will be self-defeating in that the more the Fed eases, the more commodity prices rise, which erodes the capacity of consumers to spend on non-energy products and services."

Since Bernanke unveiled the Fed's QE2 bond buying program in a speech in Jackson Hole in August last year, Brent crude oil have risen 58 percent, while the benchmark CRB commodities index has gained nearly 30 percent.

2. The markets are getting nervous - FTAlphaville points to the inversion of the US Credit Default Swap pricing for US Treasuries. This shows markets are getting a big worried, although we have yet to see a decent selloff in the US Treasuries yet... HT Scarfie

That means, as Bloomberg eloquently put it, that it costs more to insure US Treasuries for one year than it does for five years, for the first time ever. And that’s obviously in both the most liquid US CDS contracts, which are euro-denominated as well as the dollar denominated ones.

3. Europe's problems are back - Bloomberg reports the fears about European contagion are back less than a week after the deal was done to stop contagion.

Italian and Spanish government bonds slumped, increasing the yield relative to benchmark German bunds, on speculation Europe’s aid package may not be sufficient to prevent contagion.

“If you look into the details of the EU summit decision, it doesn’t take you long to get to where the weak points are,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “You still have two countries that are too big to save and are not effectively protected from negative market sentiment. The U.S. debt crisis is also a factor that supports German bunds.”

4. Higher Australian rates - This won't be good for the Australian consumer economy and house prices. Stronger than expected inflation data on Wednesday saw markets reprice in the chances of rate hikes in Australia.

Here's Bloomberg:

The currency surged as traders wagered for the first time in six weeks on a chance that Reserve Bank of Australia Governor Glenn Stevens will resume tightening policy, ending his longest rate pause since 2007.

“It’s a firm number,” said Michael Turner, an economist at RBC Capital Markets Ltd. in Sydney who correctly predicted the quarterly figure. “The RBA is always going to be uncomfortable when it comes in above forecast -- even though there are flood effects still seeping through -- and it certainly strengthens the case for a rate increase.”

RBC Capital predicts the central bank will raise borrowing costs in the fourth quarter, Turner said.

5. 'Press 2 to be outraged' - The Telegraph reported the American Congress' phone system and its websites melted down yesterday after Barack Obama said in his televised address that voters should protest to their Congressional representative about the lack of a debt ceiling increase...

6. Kabuki theatre - Ambrose Evans-Pritchard at The Telegraph says we should all relax a bit because America will not default. Obama will use all the tricks in his book, says Ambrose.

Calm down. The US will not miss a coupon payment on its $14.3tn debt next Wednesday.

A genuine default would be “Lehman on Steroids” in the words of Ex-Treasury secretary Larry Summers. Precisely for that reason President Obama will not pull the trigger, EVEN IF the debt ceiling talks break down in acrimony.

Obama still has a clutch of cards to play, in extremis.

If I am wrong, we will all need to take shelter in nuclear bunkers next Wednesday.

7. One way to reduce a supply glut - This is for real. Bank of America is bulldozing houses it has foreclosed on to reduce the supply on the market, Bloomberg reports.

Bank of America Corp. (BAC), faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.

The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co. (WFC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Fannie Mae are either conducting or considering their own programs.

Disposing of repossessed homes is one of the biggest headaches for lenders in the U.S., where 1,679,125 houses, or one in every 77, were in some stage of foreclosure as of June, according to research firm RealtyTrac Inc. of Irvine, California. The prospect of those properties flooding the market has depressed prices and driven off buyers concerned that housing values will keep dropping.

8. Where do you go? - FTAlphaville reports on a Nomura note on where bond investors forced to buy AAA bonds would go if America is downgraded. It seems Canada and Australia are very popular...

Considering this risk, many investors may contemplate investing in Canada, with total government debt outstanding of 1.0trn, as well as other smaller and stable AAA-rated countries like Australia ($0.3trn) and Sweden ($0.1trn). These countries have a proven track record when it comes to fiscal policy and also boast a relatively buoyant economy.

In addition, Canada and Australia benefit from large commodity wealth.We are already seeing some evidence of safe haven flows into the UK, Canadian, Australian and Swedish bond markets. Over the past few weeks, we have seen these bond markets outperform the US bond market, while their respective currencies appreciate against the USD. Note that the appreciation in both CAD and AUD has been larger than that implied by changes in commodity prices

9. Political movement - An Anti-Powerpoint Party has been formed in Europe, Lucy Kellaway muses at FT.com.

The Anti PowerPoint party has attempted to calculate the economic damage of gawping at all these slides and has concluded that Europe wastes €110bn a year from people sitting though dull presentations.

I suspect the true figure is even worse, as this ignores the secondary effects. PowerPoint must be the least enjoyable way of wasting time there is; a heavy slideshow can leave one feeling grumpy and passive and in no frame of mind for proper work.

Worse, it lowers the quality of discussion and leads to bad decisions. PowerPoint performs the miracle of making things simultaneously too simple and too complicated. It reduces subtle ideas to bullet points, while it encourages you to pad out a presentation with irrelevant data because cutting and pasting is far too easy.

10. Totally some people have too much time on their hands - Paintballers do street art.