Tuesday's Top 10 with NZ Mint: Billy and the Stop Shopping Choir; Beware the Chengguan; How US banks made US$13 bln profit from the Fed's bailout; 'Euro has 10 days until collapse'; Dilbert

Here's my Top 10 links from around the Internet at 1 pm in association with NZ Mint.

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

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

Wolfgang Munchau's '10 days until collapse' is today's must read at #5.

1. Even the Poles want the Germans to intervene - The FT reports Poland's Foreign Minister has made a desperate plea to the Germans to intervene to save the Euro.

Every banker and foreign minister and finance minister on the planet is now begging the Germans to allow or force (we're not quite sure) the European Central Bank to step in to print money to buy Italian and Spanish bonds, and then to create a fiscal union that issues Euro bonds.

There is a bit of history obviously involving German intervention and Poland. 

The tone of the comments is startling.

Words like 'apocalyptic' are thrown around.

You can smell the fear and desperation.

Here's Radoslaw Sikorski:

In a startling comment for a senior Polish minister, Mr Sikorski declared that the biggest threat to his nation’s security was not terrorism, or German tanks, or even Russian missiles, but “the collapse of the eurozone”.

“I demand of Germany that, for your own sake and for ours, you help it survive and prosper,” he said. “You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity. You have become Europe’s indispensable nation.”

2. Here's what a real lender of last resort does - Felix Salmon at Reuters has pulled out this chart from Bloomberg (all's fair) showing just how dire the situation was in early 2009 when Morgan Stanley was forced to borrow the equivalent of more than 750% of its market capitalisation from the US Federal Reserve.

That's the sort of massive intervention that Europe's banking system is calling for from the European Central Bank.

Here's Felix

The Fed likes to say that it wasn’t taking much if any credit risk here: that all its lending was fully collateralized, etc etc. But it’s really hard to look at that red line and have a huge amount of confidence that the Fed was always certain to get its money back. Still, this is what lenders of last resort do. And this is what the ECB is most emphatically not doing.

I find it very hard to imagine the ECB lending some random European investment bank €100 billion just for the sake of keeping liquidity flowing.

3. Brilliant Bloomberg work - I admire what Bloomberg has done with its dogged pursuit of data from the US Federal Reserve on the extent of the bailouts.

Here's its data visualistion.

4. And here's the full story - Bloomberg reports it turns out the Fed lent US banks US$1.2 trillion on a single day in December 2008 and that the banks eventually made profits of US$13 billion from that.

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

5. '10 days to collapse' - The FT's very respected European columnist Wolfgang Munchau warns European leaders must come up with a grand plan for ECB bond buying, a fiscal union and Eurobonds at a summit on December 9 or the Eurozone could collapse violently.

Last week, the crisis reached a new qualitative stage. With the spectacular flop of the German bond auction and the alarming rise in short-term rates in Spain and Italy, the government bond market across the eurozone has ceased to function.

The banking sector, too, is broken. Important parts of the eurozone economy are cut off from credit. The eurozone is now subject to a run by global investors, and a quiet bank run among its citizens.

If the European summit could reach a deal on December 9, its next scheduled meeting, the eurozone will survive. If not, it risks a violent collapse. Even then, there is still a risk of a long recession, possibly a depression. So even if the European Council was able to agree on such an improbably ambitious agenda, its leaders would have to continue to outdo themselves for months and years to come.

I have yet to be convinced that the European Council is capable of reaching such a substantive agreement given its past record. Of course, it will agree on something and sell it as a comprehensive package. It always does. But the half-life of these fake packages has been getting shorter. After the last summit, the financial markets’ enthusiasm over the ludicrous idea of a leveraged EFSF evaporated after less than 48 hours.

Italy’s disastrous bond auction on Friday tells us time is running out. The eurozone has 10 days at most.

6. Beware the The City Urban Administrative and Law Enforcement Bureau or Chengguan - It's worth watching the tensions building on the ground in China and the competing forces at play.

The Chengguan seem to be a bunch of local council 'police' who have become more powerful than the actual police. They seem to be the ones enforcing evictions from houses being torn down by local government in cahoots with developers.

Here's more at Chinahush on a recent incident where more than 20 Chengguan officers attacked a policeman when he came to defend a home owner who was protesting being evicted from his house.

The resulting video of the policeman being beaten up has gone viral.

Among China’s numerous law enforcement ranks, Chengguan (城管: The City Urban Administrative and Law Enforcement Bureau) is perhaps the most feared and despised for their brutality and total disregard of the laws. Google "Chengguan" and thousands of news concerning this law enforcement branch pop up. Thought no longer surprised by news onChengguan violence, Chinese public are still furious about them.

Lately a viral video of aChengguan squad in Henan province attacking a police officer has caused a stir on the Internet.

Although this shocking incident sparked a heated discussion on the Internet, an article about this incident on Netease alone had received more than 180,000 comments in 3 weeks, there’s no more follow-up reports on this it.

7. Aussie budget cuts loom - The Sydney Morning Herald reports Treasurer Wayne Swan will have to announce A$5 billion of government spending cuts today to return the Australian budget to surplus next financial year because the European crisis has blown a A$20 billion hole in the budget.

Spending cuts of more than $5 billion over four years were ticked off last night by cabinet and, along with upbeat forecasts for growth and investment, should offset the revenue losses.

''We need to strike the right balance between fiscal discipline and continuing to support job creation and growth, between those who say we should take an axe to the budget and those who tell us to forget about the surplus,'' Mr Swan said.

8. Melbourne housing tanking - The Herald Sun reports that a 'Super Saturday' auction of 1,000 properties in Melbourne ended with the lowest clearance rate in 8 years. HT Leith at Macrobusiness.

"The tide hasn't turned," SQM Research director Louis Christopher said. "The worst is still in front of us. There is a huge overhang of stock for the market to work through and it is going to get worse before it gets better."

Mr Christopher said at least two further interest-rate cuts would be needed to jump-start the market, and even that could be scuttled by events in Europe.

"I wouldn't want to see a situation where Europe really blows up and we see a credit freeze among our banks, because that would be a serious stumbling block to recovery, even if we get further interest-rate cuts," he said.

9. Totally relevant video of an Occupy Wall Street song video - I'm not a fan of the song and the painful lyrics, but the video images of the Occupy Wall Street protests are interesting. I love it that the singers in the video are 'Billy and the Stop Shopping' choir. It doesn't seem many were listening on Black Friday.

10. Totally irrelevant Stephen Colbert on Newt Gingrich's all-you-can-research booze cruise to Greece.