Top 10 at 10: Allan Hawkins' advice; China's resources grab; Japanese wages fall 7.1%; Dilbert

Here's my Top 10 links from around the Internet at 10am. I welcome your additions in the comments below or please send me your suggestions by email to bernard.hickey@interest.co.nz We don't flail around in futility at interest.co.nz... 1. Oh the irony. Former 1980s high flier and convicted fraudster Allan Hawkins now owns a finance company called Cynotech. He warns here in this half year report that other finance companies are vulnerable once the deposit guarantee expires.

A number of other finance companies have had to provide substantially higher bad debt provisions in the latest reporting periods. It is apparent that there are still massive difficulties to be overcome in the finance sector and in some cases if some of those finance companies were to aggressively provision against their property development and property speculation loans then they could be in serious breach of their covenants. We simply believe that the arithmetic does not work out in some cases and this will likely lead to the non-fulfilment of conditions in some finance companies which are under a debenture holders' moratorium. This will have a continuing negative impact on the public perception of the finance industry and we, as a group, have to deal with this and ensure that we are not caught up in this negativity.

2. Here's another commodity market that is rapidly heating up: aluminium. This is good news for Rio Tinto and the people at Bluff, although it may help keep the pressure up on power prices. The FT has a nice piece here explaining why aluminium prices have risen 30% this year. However, the fundamentals are not brilliant and people are wondering if it's another speculative driven squeeze up. Something tells me a vampire squid is making money out of this. HT Troy via email.

But while there have been sharp falls in demand in the recession-hit aerospace and construction industries, aluminium prices at the London Metal Exchange have surged beyond the $2,000 a tonne mark "“ and last week hit $2,115, the highest level since November. One explanation for the seeming riddle lies in the opaque world of aluminium inventories. In recent months, aluminium stocks have accumulated in the LME's warehouses, with inventory levels almost doubling this year to a record of nearly 4.6m tonnes. That is sufficient for about 48 days of global consumption of the metal. But about 75 per cent of the LME's stock could be tied up in warehouses or financing deals, according to industry estimate. That means it cannot be used, reducing available supply to about 1m tonnes "“ or a mere 10 days of consumption.

3. Our banks have begun getting rid of dishonor fees and late bill payment fees, both here and in Australia. Only ANZ National and ASB have yet to follow the trends set by BNZ, Westpac and CBA. But in America the banks there are making a killing out of their fees. Overdrafts are strictly verboten in the land of the free. Here's the FT report.

US banks stand to collect a record US$38.5bn in fees for customer overdrafts this year, with the bulk of the revenue coming from the most financially stretched consumers amid the deepest recession since the 1930s, according to research. The fees are nearly double those reported in 2000. The finding is likely to increase public hostility towards the financial sector, which has been under political pressure to ease the burden on consumers by increasing credit availability and lending more fairly after being bailed out by taxpayers.

4. The Chinese hunt for commodity producing assets offshore is on in earnest as China strives to avoid putting more of its foreign exchange treasure trove into wobbly US Treasuries. China's state-owned CNPC and Cnooc plan to pay US$17 billion to Repsol for all its stake in Argentina's main oil exploration and supply company YPF, the WSJ reported.

The potential deal, which could be the biggest overseas investment by China, highlights the country's growing thirst for energy resources globally and its willingness to offer big money for access. It also underlines the ambition of CNPC to build up its presence in South America and elsewhere. A deal would be another example of how Chinese companies are now working together to buy foreign energy assets after years of working alone.

5. Ever wondered what a deflationary spiral looks like? Japan sets the agenda again with news that its wages, salaries and bonuses fell (yes fell) a whopping 7.1% in the June quarter from a year ago. That's the biggest fall on record, the FT reported. This is what happens when you have an ageing workforce, an ossified economy with weak politicians and a massive debt overhang from a property bubble. By the way, the property bubble burst 20 years ago so Japan has now lost 2 decades and it's getting worse.

"This kind of drop in bonuses would be unthinkable in normal times," said Naoki Murakami, chief economist at Monex Securities. Overtime hours worked continued to fall by double digits, with overtime in the manufacturing sector declining 40 per cent year-on-year. Overtime pay fell 17.7 percent in June from a year earlier.

6. A new survey of private US economists has found most expect the worst US recession since the depression to end in the current 3rd quarter of 2009, Reuters reported. 7. American corporates are hoarding cash because they fear another financial market freeze, according to Bloomberg.

Cash and short-term investments accounted for about $1.98 trillion, or 8.2 percent, of assets at the end of the second quarter for companies in theStandard & Poor's 500 index, up from about $1.6 trillion, or 6.4 percent, a year earlier, Bloomberg data show. Cash reached a record $2 trillion in the first quarter, 8.3 percent of assets. "Cash is king," said Paul Kasriel, the chief economist at Northern Trust Corp. in Chicago. "Businesses are in survival mode right now." While companies sold a record $837.9 billion of bonds this year and raised $109.8 billion in stock offerings, the increase in cash shows they are following the lead of consumers, who pushed the U.S. savings rate to a 14-year high of 6.2 percent in May. "There's going to be a generational psychology shift as to how you and I and the rest of the world think about finance," said Jonathan Fine, a managing director on the investment-grade syndicate desk at Goldman Sachs Group Inc. in New York. "People will keep cash on hand so long as what happened in the last two years remains so visible in the rearview mirror."

8. The biggest spectator sport in the financial markets at the moment is watching how well US Treasury bond auctions go. They will be the flashpoint for any shocks in September and October. Bond yields have been rising relatively fast in the last week, which is having its own fallout on our markets with longer term mortgage rates nudging higher. The next big thing to watch is the record US$75 billion of bonds for sale this week, Bloomberg reported

Ten-year yields surged 37 basis points last week, the most since March 2003, as better-than-estimated employment, home- sales and manufacturing data boosted confidence that the U.S. economy is recovering from its worst slump since the Great Depression. President Barack Obama has pushed the nation's marketable debt to an unprecedented $6.78 trillion in an effort to spur economic growth and support the financial system. The budget shortfall will reach $1.85 trillion in the year ending Sept. 30, equivalent to 13 percent of the nation's economy, according to the nonpartisan Congressional Budget Office. The difference between two- and 10-year yields was 2.54 percentage points, up from 2.45 percentage points a week ago, suggesting investors are demanding higher yields for longer maturities because of the threat inflation will pick up as the economy starts growing.

9. Here's proof if it's needed that American consumers have changed their ways. Remember, consumption drives 70% of the world's biggest economy. This will fall out on everyone. HT Rolfe Winkler 10. Former Goldman Sachs chief Henry Paulson, who was Treasury Secretary during the darkest days of the crisis in September last year, professes to have severed his ties with the Vampire Squid, yet sought waivers to ethics rules so he could talk closely with Goldman in the depths of the crisis. Paulson pushed for the bailout of AIG, that eventually saw billions washed through AIG to its main counterparties, including Goldman Sachs. The New York Times has the smoking gun on just how deeply Paulson was talking to Goldman's CEO Lloyd Blankfein. HT Rolfe Winkler

While Mr. Paulson spoke to many Wall Street executives during that period, he was in very frequent contact with Lloyd C. Blankfein, Goldman's chief executive, according to a copy of Mr. Paulson's calendars acquired by The New York Times through a Freedom of Information Act request. During the week of the A.I.G. bailout alone, Mr. Paulson and Mr. Blankfein spoke two dozen times, the calendars show, far more frequently than Mr. Paulson did with other Wall Street executives. On Sept. 17, the day Mr. Paulson secured his waivers, he and Mr. Blankfein spoke five times. Two of the calls occurred before Mr. Paulson's waivers were granted.