Top 10 at 10: Lloyds' mega loss; Nassim Taleb; 'Capitalism's dirty little secret'; Bernanke's exit strategy; Gold crisis?; Dilbert

Here's my Top 10 links from around the Internet at 10am. I welcome your additions and comments in the comments below. Please send any suggestions for tomorrow's Top 10 at 10 to bernard.hickey@interest.co.nz We don't use dead or live squirrels to help us drink coffee. 1. Lloyds Banking Group, which controls Bank of Scotland International, is set to post 13 billion pounds of losses on commercial property, business loans and housing loans, The Times reported.

First-half results due to be posted in three weeks will show that its losses are accelerating, in spite of recent suggestions that the worst of the recession is over. UBS analysts expect Lloyds to announce a bottom line half-year loss of £6.3 billion as a result of the soaring provisions. The writeoffs for the first six months of the year would match the losses recorded by Lloyds TSB and HBOS in 2008, as they consummated their disastrous merger. The expected bad debt charge is almost twice what Lloyds paid for HBOS when they came together under the government's watch last autumn. Total writeoffs for this year at Lloyds could exceed £20 billion.

2. This video after the jump from the American News Project on the drive to audit the Fed is well worth watching. HT Tyler Durden at Zero Hedge 3 Bloomberg explains here what the collapse of America's biggest small business lender, CIT, would mean for the US economy, including the possible failure of 760 manufacturers and 300,000 retailers.

A collapse would ripple across the "small and medium-sized businesses who rely on CIT to operate -- to pay their vendors, ship goods to their customers and make their payroll," the New York-based lender said in internal documents obtained by Bloomberg News that make the case for its importance to the U.S. economy.

4. The US budget deficit has already passed US$1 trillion with three months left to go in the fiscal 2009 year, which is more than double last year's deficit, the WSJ.com reported, adding that many analysts expected the deficit to top US$2 trillion by the end of the year. 5. I reckon this is a must read on the risks of massive debt globally and the need for a just as massive debt for equity swap. Nassim "Black Swan" Taleb and Mark Spitznagel write in the FT.com about why now the is the time to tackle real evil: too much debt.

The core of the problem, the unavoidable truth, is that our economic system is laden with debt, about triple the amount relative to gross domestic product that we had in the 1980s. This does not sit well with globalisation. Our view is that government policies worldwide are causing more instability rather than curing the trouble in the system. The only solution is the immediate, forcible and systematic conversion of debt to equity. There is no other option.

6. Fund manager Ben Funnell talks about Capitalism's dirty little secret in the FT. Quite refreshingly socialistic comments from a fund manager.

Just why is there so much debt in the Anglo-Saxon world? Bankers and regulators know well that it is in nobody's long-term interests to have allowed borrowing to escalate to a position where the US now owes far more, as a multiple of the economy, than at the start of the Great Depression. The answer is capitalism's dirty little secret: excessive lending was the only way to maintain the living standards of the vast bulk of the population at a time when wealth was being concentrated in the hands of an elite. The amount by which the elite has benefited is startling, and illustrates the problem with lightly regulated free markets: the rich get much richer while the rest do not get richer at all. According to Société Générale economists, the inflation-adjusted income of the highest-paid fifth of US earners has risen by 60 per cent since 1970, while it has fallen by more than 10 per cent for the rest. As was recently pointed out in the New York Review of Books, the Walton family, of Wal-Mart fame, is wealthier than the bottom third of the US population put together "“ about 100m people.

8. Ben Bernanke may explain his 'exit strategy' for winding back massive monetary stimulus at his appearance before Congress next week, Bloomberg reported.

Fed officials will begin to lift the benchmark interest rate in the third quarter of next year and take it to 1 percent in the final three months, the Bloomberg survey showed. The previous month's survey estimated the Fed would hold the rate near zero until the fourth quarter of next year. "The Fed does not want to trigger market concern about the beginning of policy tightening at this time, an objective I share," said William Poole, former president of the St. Louis Fed. "That means that the Fed needs to be more explicit about how it will know, or what it will look for, to determine that the "˜"˜appropriate'' time has arrived. This explanation need not, and probably cannot, be very precise; however, there certainly can be some general guidance."

9. BusinessWeek is for sale by the owners of S&P, mainly because it's old media rather than a conflict of interest, Barry Ritholz points out. 10. Here's gold bug Antal Fekete from the San Francisco School of Economics writing an open letter to Paul Volcker warning of un catastrophe. I have no idea what he's saying, but he's very convinced the world is about to end. Not sure myself, but a heads up to those who think a lot about gold. ht FTAlphaville

The secular vanishing of the gold basis is a most ominous danger signal. It indicates that monetary gold is oncreasingly unavailable, and in case of a crisis it can no longer be relied upon to come to the rescue. Basis started out at 100 percent of the prevailing interest rate, but has been steadily eroding all the way to zero percent today. Permanent gold backwardation (negative gold basis) is staring us in the face. The gold basis is trying to tell you something. It heralds the greatest monetary crisis of all times. It warns about the possible collapse of the international monetary and payments system. The debt crisis of 2008 was a dress rehearsal. It gave the world a foretaste. This crisis is a gold crisis. It is a crisis indicating the threat of a shortage of the ultimate extinguisher of debt, without which our runaway debt tower is doomed. When it topples, it will bury the world economy under the rubble, as the Twin Towers buried the people working inside in 2001.

10. (bonus!) This is a great academic paper from Dirk Bezemer at Groningen University on which economists and which type of economists forecast the financial crisis. It seems the accounting driven academics and Austrian schoolers did better than the central bankers and bank economists. Page 9 is useful.