Top 10 at 10: PGC eyeing PGGW Finance?; Gas to save us from oil shortage; 'Financial Coup d'Etat'; MPs' new property rort; Dilberts

Here are my top 10 links from around the Internet at 10am. I welcome your additions and comments in the comments below or please send me your suggestions for Tuesday's Top 10 at 10 to bernard.hickey@interest.co.nz 1. Cost blowout - The ACC story goes from bad to worse. Minister Nick Smith is likely to unveil massive fee hikes later this week after foreshadowing to Tracy Watkins at the Dominion Post a 10-50% increase in levies and the removal of various extensions to the scheme in the last couple of years of the Labour government. The stock market collapse was a factor in ACC's NZ$4.6 billion loss last year, but there have also been various cost blowouts.

Dr Smith said income compensation soared from $655 million-a-year in 2004-05 to $966 million while the cost of looking after ACC victims in their home or community had risen from $159 million to $285 million. Surgery costs were up 87 per cent from $128 million to $240 million; public hospital costs up 31 per cent; MRI and CT scans and X-ray costs up 127 per cent; and physiotherapy costs were up 97 per cent.

2. Now he speaks - George Kerr, the mastermind behind PGC's capital raising, has given an interview to Marta Steeman at The Press. He denies all sorts of rumours, including the one about him being the one who pushed Craig Norgate out as Chairman of PGGW and about him wanting to take over PGC. However, he leaves open the idea that PGC might buy PGG Wrightson Finance. Brilliant. PGC and Marac would then be connected to all that Crafar debt. I'm still surprised that PGG Wrightson has yet to make a disclosure to the NZX about its Crafar exposure.

The speculation is that Mr Kerr and PGC are interested in the PGG Wrightson finance and lending business. The rights issue prospectus shows PGC is keeping the option open, at a forecast cost of $41m to maintain their 20.7 per cent stake. "I think on that one I can't specifically comment on what we can do, but again I guess agriculture is one of the eight great businesses over the long term," he says. Mr Kerr says about eight businesses globally have survived many world crises "“ banking and asset management or financial services, agriculture, resources (mining), real estate, infrastructure, prostitution, drugs and gaming.

3. D-Day looms - South Canterbury's self-imposed deadline to announce a massive capital restructure is looming, the Timaru Herald reports. Its new prospectus may even be out within the next day or two, although I can't imagine a new prospectus will be much use without the details of the capital raising. The government will also be watching closely.

4. It's a gas, gas, gas - Ambrose Evans Pritchard at The Telegraph is always worth reading. He has found the gas industry talking up the use of new technology to extract gas from methane and shale beds. This may be enough to stave off an energy crisis.

America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all. The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected. Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels per day of oil equivalent, enough for 60 years' supply "“ and rising fast. "There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.

5. Yikes - The US budget deficit over the next 10 years is set to top US$10 trillion, Goldman Sachs is forecasting. Zero Hedge reports on the ugliness that comes from the US government generating nearly 10% of GDP in its own right, which is worse than at any time since World War II. I can't work out how the US$ and US Treasuries are going to get out of this mess with their values intact.

The unsustainability of this situation is evident in our projections for the primary balance, which excludes net interest expense. If this balance is in deficit, then debt service will tend to escalate relative to GDP (unless GDP growth exceeds the level of interest rates, in which case a small primary deficit is sustainable). On this metric, our budget projections continue to show an unsustainable situation, with the primary deficit still converging to 2% of GDP but more slowly than we previously thought. On a moment's reflection, it should be evident that this long-term budget projection is untenable. While the US political system is hardly conducive to the assertion or maintenance of fiscal discipline, it is not impervious to the implications of a large and sustained fiscal imbalance either. In 1990, for example, the prospect of a deficit persistently in the vicinity of 5% of GDP led the elder President Bush to renege on his famous ?read my lips, no new taxes? pledge; at the same time, the Congress installed the pay-as-you go (PAYGO) framework that was widely credited with getting the budget into surplus by the end of that decade. More recently, this year?s surge in the deficit, to twice the 1990 level relative to GDP, has spawned genuine resistance to additional fiscal stimulus despite economic weakness. Under these circumstances, the notion that a 5% deficit is now the best that can be hoped for would likely set corrective measures in motion, at least if lawmakers believe that this is the path on which the budget is headed.

6. Financial Coup D'Etat - This is a great video on PBS which talks about a 'Financial D'Etat' in America. This is going mainstream in America now with Congresswoman Nancy Kaptur and former IMF Economist Simon Johnson talk about how Wall St took over US government policy. Here is the transcript for those who are on 'slimband'. When is there going to be a national riot in the United States?

SIMON JOHNSON: Remember Wall Street convinced us that trading derivatives without any regulation, that all these kind of crazy housing loans, which are very dangerous for consumers. That all of this was sensible. All of this was a good way to sustain growth. That was wrong. That wasn't it. That wasn't that's not the end of the story. In the crisis, when things got bad, they also convinced the key people in Washington that they, the bankers, the big bankers, the Wall Street bankers, who are really responsible for all of these problems, they should be saved. Not just their banks, but they individually and should be saved. Their jobs, their pensions, all their perks. It's an extraordinary moment.

7. 'An over-reaction' - Allan Crafar believes the MAF investigation into animal neglect on his farm was an over-reaction by some 'inexperienced' people, Radio NZ is reporting. Meanwhile, Crafar plans to appeal his recent convictions for 'Dirty Dairying' himself, Andrea Fox reports in the NZHerald. Is there anything this man can't do? He certainly believes he can do everything himself. That may well be one of his problems. Check out CloseUp tonight on TVOne where Crafar will be seen chasing cows, losing his pants and showing off the stuffed cow's head mounted on his wall. Not a PR bone in his body. Bless him. Meanwhile Fonterra seems to think it has done OK during the Crafar debacle.

Crafar's dairy company Fonterra said it had worked with the family for two years on problems. "We have been involved in specific issues around milk quality and the environment in particular," said Tim Deane, general manager shareholder and supply services. "If you go back and look at the prosecutions for non-compliance, he did fix them and spent a heap of money fixing them. In our experience when you do intervene, he does fix it. But in this case we didn't know about it [calf deaths]. We didn't pick it up. It's impossible to know everything that is happening on 11,000 farms." Deane said a lesson had been learned from the Crafar crisis.

8. They just can't help it - It seems MPs have found a way to buy property away from Parliament and get the taxpayer to be the guaranteed payer of rent, The Press reported (Stuff). And somehow we expect Parliamentarians to change the laws to reduce incentives for property investors...

MPs are building up their property portfolios on the taxpayer by dipping into the public purse for rent on electorate offices they own. In a fresh twist on the accommodation allowances issue, an investigation by Fairfax shows seven MPs have bought properties they use as their out-of-Wellington offices, billing the taxpayer for the rent. Some are owned in the MP's own name, while others are held through superannuation funds or companies. The loophole allows them to walk away with substantial capital gains. MPs are given a capped allowance to cover the cost of renting and running offices, and must declare if they have a pecuniary interest. Parliamentary Service general manager Geoff Thorn said an independent valuation was used to determine rents.

9. Long memory - This is a great story from the New York Times about how some rare gold coins minted in 1933 are being confiscated by the US government, just like all gold was back in the Depression. A family discovered 10 rare 'double eagle' coins and took them in to the US Mint for verification. They could be worth US$70 million. HT Gertraud.

But after the Langbord family took the coins to the United States Mint to be authenticated in 2004, they got a rude surprise. The Mint said the coins were genuine and kept them. The government claims that they are government property stolen from the Mint, most likely in the 1930s, by Mr. Langbord's grandfather, Israel Switt, a Philadelphia jewelry dealer. The Langbords went to court and recently won an important ruling. A United States District Court judge has given the government until the end of the month either to give back the coins or go back to court to prove that they were in fact stolen by Mr. Switt, a daunting task after three-quarters of a century. Nearly a half-million 1933 double eagles were minted before President Franklin D. Roosevelt, shifting the nation away from the gold standard, issued an executive order that made owning large amounts of gold bullion and coins illegal. Two of the coins went to the Smithsonian Institution, and almost all the rest were melted down.

10. Here's the Daily Show talking about High Frequency Trading.