Top 10 at 10: Australian confidence strong; US T-bond auction weak; Obama a wimp; Peter Schiff on The Daily Show

Here's my Top 10 links from around the Internet at 10 am. I welcome your additions in the comments below. I'm glad I'm not a blister or a skunk's colon... 1. Adam Bennett at the NZ Herald reports the banks saying mortgage rates are now driven more by competition for retail deposits than what the Reserve Bank is saying. My views on Parliament's criticisms of the banks are over here in my piece on why the Finance and Expenditure Committee was wrong on 8 counts. 2. Brian Fallow at the NZ Herald considers the fiscal conundrum facing both parties and points, sensibly, to the McLeod Tax Review from 2001, which proposed a wealth tax on assets, as a potential solution. 3. The US economy is not out of the woods yet. The Federal Reserve's Beige Book survey on the economy showed conditions remained weak, the WSJ reported overnight.

The report covers the period from mid-April through May and shows the economy is still frail. Despite costly federal efforts to restart credit markets, it is still very difficult for consumers to obtain loans, the report shows. Some of the 12 Fed districts see the recession easing a bit, but they are still not expecting a significant boost in economic activity in 2009.

4. But Australia is doing better than expected. Consumer confidence figures released yesterday showed the biggest monthly rise in 22 years, BusinessSpectator reported. 5. The US 10 year Treasury bond yield jumped to 4% overnight after a poorly received Treasury bond auction, Bloomberg reported. This is the dominant factor in interest rates globally. Just how can the US government sell trillions of dollars in bonds? Long term interest rates will have to rise. That's the answer the market is delivering. 6. Barack Obama appears to have wimped out on significant reform to the (broken) regulatory environment for US banks and financial insitutions. The WSJ.com reports he has backed off a plan for a large single regulator and will stick to the current overlapping alphabet soup of regulators.

The Obama administration is backing away from seeking a major reduction in the number of agencies overseeing financial markets, people familiar with the matter say, suggesting that the current alphabet-soup of regulators will remain mostly intact. Administration officials had suggested they might push for major regulatory consolidation in the wake of the financial crisis. But now they expect to call for most existing agencies to have broader powers to limit risk-taking by financial institutions, say the people familiar with the planning. Separately, at a meeting of Group of Eight economic officials in Italy this week, Treasury Secretary Timothy Geithner is likely to present the U.S. view that Europe should conduct more vigorous and transparent stress tests of their own banks. The Obama administration believes such tests conducted in the U.S. in recent months helped stabilize the financial system.

7. Now even heavy Democrat supporter economist Joseph Stiglitz is hammering Obama over his reluctance to take on the banks and the lobbyists in Washington by fixing the banks permanently. Stiglitz says the banks should be broken for the good of the people. The sooner Obama realises he needs to get rid of Wall St appeasers like Geithner, the better.

The Obama Administration has, however, introduced a new concept: "too big to be financially restructured". The Administration argues that all hell would break loose if we tried to play by the usual rules. Markets would panic. So, not only can't we touch the bondholders, we can't even touch the shareholders "” even if most of the shares' existing value merely reflects a bet on a government bail-out. This judgement is wrong. The Obama Administration has succumbed to political pressure and scare-mongering by the big banks and, as a result, has confused bailing out the bankers and their shareholders with bailing out the banks.

8. US Congressional hearings can be entertaining when a bright and well briefed politician grills a bureaucrat. The first 6 minutes of this C-Span video below on Youtube has a clipped but fascinating exchange between Congresswoman Marcy Kaptur and US Federal Reserve Chairman Ben Bernanke. It gives you a taste of the level of distrust and anger bubbling away under the surface at the mounting costs to taxpayers of bailouts to bankers, many of whom can be directly blamed for the Global Financial Crisis. HT Blair Rogers from Peak Providence. 9. Russia and Brazil plan to buy US$20 billion worth of IMF bonds to diversify away from US Treasuries, Bloomberg reported. 10. The oil price surged to US$72 a barrel overnight, the FT.com reported Here's Jon Stewart talking to Peter Schiff, the renowed doomster who predicted the Credit Crunch.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Peter Schiff
thedailyshow.com
Daily Show Full Episodes Political Humor Newt Gingrich Unedited Interview