Tuesday's Top 10 with NZ Mint: America's debt time bomb; A love song for Hayek; Big Golden losers; Big Golden winners; Big Golden bubble?; Dilbert

Here are my Top 10 links from around the Internet at 10 to 12 pm, brought to you in association with New Zealand Mint for your reading pleasure.

I welcome your additions and comments below, or please send suggestions for Wednesday's Top 10 at 10 via email to bernard.hickey@interest.co.nz.

I'll pop any surplus suggestions I get into the comment stream.

Cop a load of this ye scurvy dogs.

1. The story behind gold's rise - Businessweek have an excellent story behind the growth of Exchange Trade Fund (ETF) holdings in gold.

The ETF known as Spider now has more gold than the Swiss Central bank.

This story tells the story of how it was set up by the World Gold Council.

A fascinating behind the scenes piece.

But is it now a bubble?

Globally, the 10 biggest such funds now hold a combined 2,113 metric tons of gold, more than the official reserves accumulated by every country in the world save four: the U.S., Germany, Italy and France. Their popularity has helped drive unprecedented gains for the precious metal, and some people, including analysts at Goldman Sachs Group Inc., say gold can go higher.

Soros, who made $1 billion betting against the British pound in 1992, called gold the "ultimate asset bubble" at the World Economic Forum's January meeting in Davos, Switzerland, when the price of gold was at $1,087.10 an ounce.

His fund held $664.8 million in gold-backed exchange-traded funds as of Sept. 30. Gold's rise resembles moves reached before the three big crashes of the last decade: the Nasdaq tech-stock bubble of 2000, the U.S. housing market bubble of 2005-2006, and the crude oil-price spike of 2008, according to data compiled by Bloomberg.  

2. Problems in Britain? - The Telegraph has this exclusive that UK Business Secretary Vince Cable is on the verge of bringing down the Coalition government. Here the The Guardian reports Cable's plans to expose banker salaries. They're not best pleased. And neither are their Tory supporters.

The Business Secretary Vince Cable also claims that David Cameron will seek to scrap or reduce the winter fuel allowance paid to pensioners from next year. He believes that policies are being rushed through by the Conservatives and that ministers should be “putting a brake on” some proposals, which are in “danger of getting out of control”.

Mr Cable says that, behind the scenes, the Tories and Liberal Democrats are fighting a “constant battle”, including over tax proposals. Likening the conflict to a war, he says he can always use the “nuclear option” of resignation.

His departure from the Government would spell the end of the Coalition, he claims. ince Cable has privately threatened to “bring the Government down” if he is “pushed too far” during fractious discussions with his Conservative colleagues, The Daily Telegraph can disclose.

3. The rise and rise of temps - In an increasingly unequal economy post the Global Financial Crisis it seems that young workers are more likely to be temps than permanent employees. This is a particular problem in Japan, where they are called 'freeters', reports Yves Smith at Naked Capitalism.

Are we seeing anything similar here?

Some of them can work for the same company for a very long time, but they are not only paid less, but are also not in the hierarchy of permanent worker. Many become freeters right out of college, and are never able to get back on track with their peers, since companies in Japan, as in the US, prefer to hire new college or professional school graduates into their entry level positions. The bigger implications for Japan are negative.

Many freeters can’t afford to live by themselves, and therefore become “parasite singles” staying with their parents. The delay in or inability to support oneself further suppresses Japan’s birthrate, worsening its demographic crisis.

4. US boomers depressed - Why? They just had a decade long party. Maybe the guilt about the mess they left behind is now kicking in... The WSJ reports a Pew survey that Baby Boomers in America are more depressed than any other age group.

Some 80% of baby boomers say they are dissatisfied with how things are going in the country today, according to Pew’s survey. Meanwhile, 60% of those ages 18 to 29 said they were dissatisfied, compared with 69% of 30- to 45-year-olds and 76% of those 65 and older.

Previous research found that even though boomers had higher incomes than any age group, they still gave their overall quality of life a lower rating than other cohorts. In the spring of 2008, some 19% of boomers said that they thought their standard of living was worse than their parents’, compared with only 12% of younger adults and 10% of older adults saying their standard of living was worse than their parents.  

5. America's ticking debt time bomb - Tyler Durden at Zerohedge points out Amercia's national central government debt is set to hit US$24.5 trillion or about 150% of GDP by 2015 from US$14 trillion now.

Yet America can get away with it because it has the world's reserve currency.

No worries then. Here's Tyler with the details:

Yet a new feature on the "debt clock", namely one which extrapolates future debt at current rates of advancement (instead of one based on the always completely inaccurate CBO estimates), and looks at US debt in the year 2015 will probably make many stop dead in the their tracks.

If anyone thought that $14 trillion in 2010 debt is bad, just wait until we hit $24.5 trillion in total US national debt in 2015. And it gets even more surreal: total US Unfunded Liabilities are estimated at $144 trillion, roughly $1.2 million per taxpayer... Was that a pin dropping?  

6. Core Europe under pressure - Win Thin writes at Credit Writedowns about the stresses inside the European Financial system and has a great table showing which countries' risk has risen since the middle of the year. Win's table shows New Zealand's sovereign debt risks have risen more than anyone else's, although it's still much better than Ireland and the rest.

Even Germany and Netherlands CDS prices have been dragged higher in recent weeks and what’s worrisome is that the core euro zone is coming under pressures as the contagion continues unabated. European officials have yet to find the “game-changer” that turns market sentiment around, and so we see continued spread-widening in euro zone bond markets as well as ongoing EUR weakness.

We believe that the “game-changer” remains debt restructuring coupled with aggressive IMF and World Bank-backed structural reforms, a la Latin America under the Brady Plan. A muddle-through approach is clearly doing nothing to stop the bleeding. Read more: 

7. 'I'm in love with Friederich Hayek' - This is a love song written by Dorian Electra about the renowned Austrian school economist. I think she's taking the proverbial...maybe. Whatever. There's an awful lot of Keynesians out there who might be about to change sides for this woman. HT Eric Crampton via twitter.

Since these low interest rates, like you said, are lies

Malinvestments come as no surprise

Soon these mistakes will all be revealed

and then corrected, unless they're concealed

Sometimes I dream all day 'bout bein' Mrs. Hayek

We'd share milkshakes, watch sunsets, and kayak

We'd work together on that business cycle theory

Oh darlin' you've been workin' hard,

you must be weary Come to my couch, on which you can rest

I'll make tea, we'll talk credit and interest

Then I can talk about my interest in you

Of course we'll talk 'bout the economy, too

8. If only they'd held on - Europe's central banks, which sold gold over the last decade, have made losses of US$40 billion, FT.com estimates, via Credit Writedowns.

London’s announcement on May 7 1999 that it would sell a large share of the Bank’s gold reserves in favour of assets offering a return, such as government bonds, was the high water mark of so-called “anti-gold” sentiment among European central banks.

Many of these banks, such as those in France, Spain, the Netherlands and Portugal, decided later in 1999 to follow Britain and sell off their reserves. At that time, gold was worth around $280 an ounce, less than a third of its current level of more than $900. European banks sold about 3,800 tonnes of gold, reaping about $56bn, according to calculations from official sales data and bullion prices.

Taking into account the likely returns from the investments in bonds, the banks have gained another $12bn. But because today’s gold prices are far higher, they are about $40bn poorer than if they had kept their reserves. The biggest loser is the Swiss National Bank which sold 1,550 tonnes over the decade and at today’s gold prices is $19bn poorer, followed by the Bank of England, which is $5bn poorer.  

9. Totally important story from The Onion - HT Bomber via Twitter

10. Totally Erik the Viking video -  "Panic mongers..." Nothing is wrong. Nothing to see here. Move along now. HT Alex.