Top 10 at 10: China's currency push; US/Euro banks still broke; Nouriel Roubini; Nassim Taleb; Party in Buenos Aires; Dilbert

Here's my top 10 links from around the Internet at 10 am. I welcome your additions in the comments below or send any links to me at bernard.hickey@interest.co.nz for possible inclusion in Monday's Top 10 at 10. Our website does not have any military applications. 1. The Chinese push for new global reserve currency just won't go away. Reuters reported China's Vice Minsiter He Yafei saying the issue could be raised at next week's G8 summit, although he subsequently said it was not on the agenda. However, Bloomberg also reported the same minister saying that he hoped the US dollar would remain stable. This is the problem for China. It can't afford to rush out of the room otherwise it is sure to spark a stampede through the shop. So instead it now has to delicately tip-toe out of the room and leave the porcelain intact. 2. It's boom time again on Wall St. Seriously. Goldman is likely to pay out US$20 billion in bonuses and average salaries of US$700,000 this year as profits surge back to the investment banks, Heidi Moore at The Big Money says. Felix Salmon summarises the strategy nicely below.

All those bonuses can't be coming from banking. But it turns out that the banks have been buying up billions of dollars of subprime mortgages, driving up their price. If they carry on doing that a bit longer, the market price will go higher than the price the banks have on their books, and they can then mark their mortgage book to market and report lots of lovely profits. What could possibly go wrong?

3. Michael Lewis, the author of Liar's Poker, has uncovered the man behind AIG's demise -- Joe Cassano. Lewis wrote an excellent piece on the Icelandic debacle (who can forget the exploding Range Rovers?) and this article in Vanity Fair promises to be a cracker from inside the AIG Financial Products debacle. We only get a taste.

In 2001, Joe Cassano, a scrappy and ambitious longtime A.I.G. F.P. employee who lacked a mathematics background, was promoted to head the division. Under his watch A.I.G. F.P. would become increasingly immersed in credit-default swaps"”insurance it sold on packages of corporate and consumer loans, including subprime mortgages, created by Wall Street. By the time the housing bubble burst, A.I.G. F.P. was on the hook for $450 billion in these credit-default swaps"”enough to bankrupt A.I.G. many times over if even a fraction of this debt went bad.

4. Felix Salmon at Reuters has the amazing story of Hernan Arbizu, an Argentinian private banker for UBS and then JP Morgan who stole money from clients and went on to reveal to Argentinian authorities the extent UBS' enabling of tax avoidance. Machine guns are involved. Here's a gem. UBS comes out of it terribly and now the motivation for various governments attempts to 'get UBS' and private bankers in particular becomes clear. It seems private banks are mostly about avoiding tax. Maybe I'm a bit slow...

Arbizu then started going through all manner of legal proceedings in Argentina. At one point he told an Argentine judge about a very commonplace "” but technically legal "” way in which Argentines managed to avoid paying taxes on the $30 billion of assets which they do declare every year. It worked like this: in the 1970s, during the junta, the Argentine government was buying a lot of arms from the Austrian government. And somewhere along the way, the military government passed a rule saying that Argentine citizens didn't need to pay taxes on Austrian bonds. Amazingly, that was pretty much the only law from the days of the military government which survived the transition to democracy. Every year, in December, Argentines would sell everything they had, and put all their money into Austrian bonds for year-end. They paid no taxes. And then, in January, they went back and bought whatever they were invested in in the first place. JPMorgan, says Arbizu, was even working on something called "the Austrian structure" "” a special bond designed to solve the problems of illiquidity in December when lots of Argentines all wanted to buy Austrian bonds at the same time. It would be issued by the Austrian government at JPMorgan's request, and would have a yield linked to a balanced portfolio, so that the yield on the bond was the yield on the portfolio and the Austrian government itself would pay no interest at all.

5. Nouriel Roubini at RGE Monitor says the poor June jobs report in the United States shows the 'green shoots' are mostly yellowing weeds.

The details of the unemployment report are even worse than the headline. Not only are there large job losses right now, but as a way of sharing the pain, firms are inducing workers to reduce hours and hourly wages. Therefore, when we're looking at the effect of the labor market on labor income, we should consider that the total value of labor income is the product of jobs, hours, and average hourly wages "“ and that all three elements are falling right now. So the effect on labor income is much more significant than job losses alone. The details also suggest that other aspects of the labor markets are worsening. If you include discouraged workers and partially-employed workers, the unemployment rate is already above 16 percent. If you consider also that temporary jobs are falling now quite sharply, labor market conditions are becoming worse. And the average duration of unemployment now is at an all-time high. So people not only are losing jobs, but they're finding it harder to find new jobs. So every element of the labor market is worsening. Essentially, the results today suggested that there are not as many green shoots.  These green shoots, as we've argued, are mostly yellow weeds that may even turn into brown manure if a double dip W-shaped recession occurs in 2010-2011. And it's not just the employment situation. Real consumption and retail sales remain weak. Industrial production remains weak. The housing market, in terms of price adjustment, remains weak, even if the quantities - demand and supply - may be closer to bottoming out. Indeed, the inventory of unsold new homes is so large that you could stop producing new homes for almost a year to get rid of that inventory.  Moreover, about 50% of existing home sales are distressed sales (short sales and foreclosed homes).

6. I never thought I'd do this but here is a link to an article in Playboy. It seems that many of the unemployed bankers in New York are going to Buenos Aires for a big party because the hotels, the food, the drugs and the women are so cheap. The story focuses on one failed investment banker named Jason. It is an extraordinary and depressing story if true. These are the Masters of the Universe who drove the world into its deepest economic debacle since the 1930s. And their pay is going up again...

During his time in Buenos Aires Jason met only one local drug dealer. His name is Marcello. "There are more gringos in my city every day," says Marcello in a brief interview in Palermo Soho. He has a shaved head and a sleeve of tattoos on his left arm. He speaks from the saddle of his motorcycle. "I don't particularly deal with them every day, but I have told my employees to target them in the clubs. As far as bankers go I have been to many parties where American bankers have been. They all buy coke from me and blow it immediately. That's the American way"”consume, consume. They don't respect the drug the way Argentines do. We use it when we are tired and want to keep dancing. These guys do a gram in an hour, and it's not even12 a.m. yet. For me it's good because I always have more to sell to them."

7. Jonathan Weill at Bloomberg still thinks US banks are valuing their assets too highly.

Financial stocks in the Standard & Poor's 500 Index rocketed 35 percent during the second quarter, fueling the index's biggest quarterly advance since 1998. Yet for hundreds of U.S. banks and insurance companies, a vast credibility gap remains when it comes to their accounts. As of June 30, there were 336 U.S.-listed financial companies trading for less than 60 percent of their book value, including Citigroup Inc., SunTrust Banks Inc. and Marshall & Ilsley Corp. Together, they had a stock-market value of $233.1 billion, compared with $463.1 billion of book value, or common shareholder equity, according to data compiled by Bloomberg. Truth is, there's no way to know if the economy has turned the corner, or if last quarter's market rally will prove sustainable. Yet when this many banks still have balance sheets that defy belief, it means the industry probably hasn't re- established trust with the investing public. Trust, you may recall, is the financial system's most precious asset. On that score, we still have a long way to go before we can say this banking crisis is over.

8. Nassim "Black Swan" Taleb tells CNBC he believes we're still in the middle of a crash. There's a video in the story I can't embed that's worth watching.

"You may have green shoots, whatever you want to call them, you may have temporary relief, but you are still in a world that's breaking," Taleb said on "Squawk Box."

Anything that's fragile like the financial system will eventually crash, he said.

"We're in the middle of a crash," Taleb said. "So if I'm going to forecast something, it is that it's going to get worse, not better."

The government needs to deleverage debt and not try stimulus packages that will inflate assets, he said.

"What makes me very pessimistic in not seeing any leadership or awareness on parts of government on what has to be done, which is deleverage $40-to-$70 trillion," Taleb said.

"The monkey on our back is debt," he added.

9. Moody's has cut Ireland's credit rating to Aa1 from AAA, making it the last of the ratings agencies to move, MarketWatch reported. These guys are onto it.

10.  Martin Wolf at FT.com also thinks the US and European banks are far from fixed, particularly on the issue of compensation. See points 2 and 6 also. The chart series at the bottom just scares the almighty out of me.

"Never again" might be too much to ask. But "not for a generation" is essential. Governments cannot afford an early repeat, financially, politically, perhaps morally: the lives of so many cannot soon be sacrificed to the whims of a foolish few. Yet what has emerged after the crisis is, as I argued last week , an even worse financial system than the one with which we began. The survivors are an oligopoly of "too-big-and-interconnected-to-fail" financial behemoths. They are the winners not because they are necessarily the best businesses, but because they are the best supported. It takes no imagination to realise what these institutions might now do, given the incentives for risk-taking. So what is to be done? The characteristic, but futile, response is to move the regulatory deckchairs on the deck of the Titanic. Recent proposals from the US Treasury fall partly into this category. But the financial system had to be rescued from its own mismanagement of risk. This is not going to be changed by external supervision. It is going to be changed only by fixing incentives.