Top 10 at 10: 'Fabulous Fab' spills beans on Frankenstein and his girlfriend; Folden for sale; Dilbert

Here are my Top 10 links from around the Internet at 10 to 12. I welcome your additions and comments below or please send suggestion for Tuesday’s Top 10 at 10. 1. China bubble - Jim Chanos spoke to Charlie Rose a while back about the bubble in China's property market. It's worth checking out because it is unvarnished. HT Philly.

What makes it a bubble? What we define as a bubble is any kind of debt-fueled asset inflation where the cash flow generated by the asset itself—a rental property, office building, condo—does not cover the debt incurred to buy the asset. So you depend on a greater fool, if you will, to come in and buy at a higher price. We're seeing behavior [we saw] in 2005 in Miami or '06 or '07 in Dubai. You have said it's a thousand times worse than Dubai. Well, we said that [with tongue] firmly planted in cheek. But then again, according to a news report this week, there's a developer that's going to put in a new Times Square in suburban Beijing, replete with 32 Broadway theaters. You're beginning to hear about these bizarre developments in China, indoor ski resorts similar to what we saw in Dubai.

2. China tightening - Bloomberg reports that China's authorities are trying to crack down on this property bubble.

The China Securities Regulatory Commission has sent financing requests from 41 companies to the Ministry of Land and Resources for reviews of land use compliance, according to a statement posted on the government Web site on April 24. Central bank governor Zhou Xiaochuan said in a statement at an International Monetary Fund meeting in Washington The latest move adds to curbs on loans for third-home purchases, increased down-payment requirements and higher mortgage rates announced this month. The latest data shows property prices in 70 cities rose a record 11.7 percent in March, while China’s economy expanded 11.9 percent from a year earlier in the first quarter, suggesting tighter policies are needed. Chinese banks lent a record 9.6 trillion yuan ($1.4 trillion) last year as part of a 4 trillion yuan stimulus package aimed at bolstering growth through the global financial crisis.

3. Are we ready? - The Australians are about to announce their plans for tax reform, which may include a cut in the corporate tax rate. This may force a last minute rejig in the New Zealand reforms due in Budget 2010 on May 20. In all the public debate so far there has been little talk about a cut in the corporate tax rate here. At the moment, John Key appears to be spending all his tax-cutting ammo on personal income tax cuts. If he has to cut the corporate rate to match (or at least stay close) to Australia, that may leave less room for personal income tax cuts...assuming it will be revenue neutral... There is a lockup in Canberra on Sunday, with everything released from 4.30pm our time. 4. Just ban them - The Australian reports Australia is also moving to ban commissions for financial advisers. Our various reforms haven't moved that far...yet. Perhaps they should.

FINANCIAL advisers are to be banned from taking commissions on products they sell, as the Rudd government moves to protect consumers in the wake of a series of high-profile corporate collapses. The root-and-branch overhaul of the financial services sector will also include a new law requiring financial advisers to put the interests of their clients ahead of their own pockets, or suffer penalties. The changes, announced last night by Financial Services Minister Chris Bowen, will trigger dramatic change in the sector and exceed the recommendations of last year's parliamentary inquiry into the collapse of Storm Financial. While the superannuation and funds management sectors applauded the reforms as a victory for transparency and a boost for national savings, the Association of Financial Advisers warned they would eliminate choice.

5. Credit rationing - The Australian's Richard Gluyas reports that Australia's big banks may have to increase interest rates and ration credit because global markets are getting indigestion from all the longer term debt that Australian banks are issuing. The relative size was a surprise to me.

The sobering outlook, in a 40-page report by banking analyst Jonathan Mott, predicts that if annual credit growth again hits 8.5 per cent, wholesale term debt issued by the banks will have to jump from $140 billion this year to more than $300bn by 2014 to fill the gap. This is more term debt than the entire US banking system has issued since January last year. Westpac is the world's largest issuer of term debt as a percentage of assets, with Commonwealth Bank in third place and ANZ Bank in fifth position, just ahead of National Australia Bank. Assuming a limit on the supply of debt, UBS calculates that credit availability will be "materially constrained", with credit growth capped at 3.5 per cent to 4 per cent from 2012. "Credit would then become a constraining factor on GDP," UBS says. Other scenarios look even more bleak, leading the investment bank to conclude that the nation has to look at alternatives to fund credit growth and investment. Possible measures include tax breaks for deposits, covered bonds, corporate bond markets and changes to superannuation asset allocations.

6. A gift to financial journalism - Goldman Sachs banker Fabrice Tourre, who has called himself the 'Fabulous Fab', is back in the news as more of his astonishing emails are released. Here's the first one, where he describes a CDO index as 'like Frankenstein'. The cynicism and hubris just drips out of the emails. Christine Harper at Bloomberg reports.

The so-called ABX index is “the type of thing which you invent telling yourself: ‘Well, what if we created a ‘thing,’ which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?’” Tourre said in a Jan. 29, 2007, e-mail released yesterday by Goldman Sachs. Watching the index fall is “a little like Frankenstein turning against his own inventor.” A few months later, a June 13, 2007, e-mail shows Tourre claiming, “I’ve managed to sell a few Abacus bonds to widows and orphans that I ran into at the airport, apparently these Belgians adore synthetic ABS CDO2,” using short-hand for asset- backed collateralized debt obligations squared, or CDOs made up of tranches of CDOs containing asset-backed securities.

7. It gets better - Reuters reports that among the emails released are love letters from 'Fabulous Fab' to his 'super smart French girlfriend' in London. Her name is Marine Serres and it seems Fabulous was feeling a little conflicted and wanted to curl up in her arms. Poor possum. A true master of the universe. By the way, I am just finishing the 'The Big Short' by Michael Lewis, which is a cracking read on all of this.

"Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself !!!" Tourre said in an e-mail to Serres in January 2007. The collection of e-mails also show that Tourre was not the only person at Goldman with confidence the subprime market was doomed. Daniel Sparks, a former head of the mortgages department at Goldman, is also expected to testify on Tuesday before the Senate Permanent Subcommittee on Investigations. "According to Sparks, that business is totally dead, and the poor little subprime borrowers will not last so long!!!" Tourre wrote in a March 7, 2007, email to his girlfriend.

The senate hearings this week where 'Fabulous Fab' will appear will be 'must see TV'. I'm going to stay up with a box of popcorn and some sparkling water to watch C-Span. 8. Keep away from a jury - It seems even informed readers in America believe Goldman Sachs have done something wrong, according to this poll of executives reported by Barry Ritholz.

The electronic poll produced the following results: • 55.2% of business leaders feel Goldman Sachs is guilty • 20.7% of business leaders feel Goldman Sachs is innocent, and • 24.1% of business leaders are currently unsure If corporate execs overwhelmingly think Goldie is guilty, what does that say the man in the street will think?

9. Totally irrelevant picture of 'A Folden' - The Rock are auctioning off a car on TradeMe that is a cross between a Holden and a Ford just to mess with the heads of the fans of both famous marques.

10. Totally irrelevant video - America is releasing a new US$100 bill. Here's Stephen Colbert's take on it. Just don't send him any money.

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
The New $100 Bill
www.colbertnation.com
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