Stunner: Gold Standard Fully Supported By... Alan Greenspan!?

Submitted by Tyler Durden on 01/21/2011 11:58 -0500

You read that right. After such establishment "luminaries" as World Bank president Robert Zoellick, Warren Buffett's father Howard, Jim Grant, and, most recently, Kansas Fed president Thomas Hoenig, all voiced their support for a return to a gold standard, the most recent addition to the motley group of contrite voodoo shamans is none othe than the man who is singlehandedly responsible for America's addiction to cheap toxic credit, who spawned such destroyers of the middle class as the current Chaircreature, and who currently is the chief advisor in John Paulson's crusade to gobble up every ounce of deliverable physical in the world: former Fed Chairman - Alan Greenspan! In an interview with Fox Business, the man who refuses to go away into that good night: "We have at this particular stage a fiat money which is essentially money printed by a government and it's usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity... There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard." And a further stunner: Greenspan himself wonders if we really need a central bank. Now our only question: why couldn't the maestro speak as clearly and coherently during his tenure which resulted in our current near-terminal financial state. And as a reminder, courtesy of Dylan Grice, if and when we do get a return to a gold standard there would be a need to reindex the monetary base to a real time equivalent price of gold, putting the price of the precious metal at about $6,300: "The US owns nearly 263m troy ounces of gold (the w

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SHIBOR: We Have A BIG Liquidity Problem

Submitted by Tyler Durden on 01/21/2011 12:50 -0500

When two weeks ago we first pointed out the surging Chinese weekly SHIBOR (following up on comparable observations from last summer) it prompted a variety of bemused responses, the bulk of which were of the now traditional "this is irrelevant" variety. Too bad. Today, the 7 day SHIBOR (and repo rate) has just surged to new multi-year highs and has literally exploded from 2.5% to 7.3% in a few short days. Two weeks ago we said: "In a nutshell: there is no marginal liquidity left in the world's fastest growing economy. Eventually this will dawn on the world. Until then, BTFD." Looking at the SHCOMP's performance over the past two weeks, this has in fact dawned on the world. And when the headline scanning algos running our own stock markets realize that the world's biggest marginal economy has absolutely no short-term liquidity left, the aftermath will be very ugly.

orld's biggest holder) while the Fed's monetary base is $1.7 trillion. So the price of gold at which the US dollars would be fully gold-backed is currently around $6,300." And here you have people worried about day trading volatility...

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Taming The Unemployment Rate

Posted: Jan 21 2011     By: Dan Norcini      Post Edited: January 21, 2011 at 11:13 am
Filed under: Trader Dan Norcini

Dear CIGAs,
This is an excellent article that I think will prove very instructional. It is a bit lengthy but well worth the read in my view. The long term implications for our nation are disturbing.
Trader Dan

The Phantom 15 Million
Taming unemployment starts with solving the mystery of the jobs that were supposed to have been created in the past 10 years but weren’t. By Jim Tankersley
Friday, January 21, 2011 | 6:15 a.m.
America’s jobs crisis began a decade ago. Long before the housing bubble burst and Wall Street melted down, something in our national job-creation machine went horribly wrong.
The years between the brief 2001 recession and the 2008 financial collapse gave us solid growth in our gross national product, soaring corporate profits, and a low unemployment rate—but job creation lagged stubbornly behind, more so than in any economic expansion since World War II.
The Great Recession wiped out what amounts to every U.S. job created in the 21st century. But even if the recession had never happened, if the economy had simply treaded water, the United States would have entered 2010 with 15 million fewer jobs than economists say it should have.
Somehow, rapid advancements in technology and the opening of new international markets paid dividends for American companies but not for American workers. An economy that long thrived on its dynamism, shedding jobs in outdated and less competitive industries and adding them in innovative new fields, fell stagnant in the swirls of the most globalized decade of commerce in human history.
Even now, no one really knows why.
This we do know: The U.S. economy created fewer and fewer jobs as the 2000s wore on. Turnover in the job market slowed as workers clung to the positions they held. Job destruction spiked in each of the decade’s two recessions. In contrast to the pattern of past recessions, when many employers recalled laid-off workers after growth picked up again, this time very few of those jobs came back.
These are the first clues—incomplete, disconcerting, and largely overlooked—to a critical mystery bedeviling a nation struggling to crawl out of near-double-digit unemployment. We know what should have transpired over the past 10 years: the completion of a circle of losses and gains from globalization. Emerging technology helped firms send jobs abroad or replace workers with machines; it should have also spawned domestic investment in innovative industries, companies, and jobs. That investment never happened—not nearly enough of it, in any case.
If we can’t figure out why, we may be doomed to a future that feels like a long jobless recovery, no matter how fast our economy grows. “It’s the trillion-dollar question,” says David E. Altig, senior vice president and research director for the Federal Reserve Bank of Atlanta, where economists are beginning to explore the shifts that have clubbed American workers like a blackjack. “Something big has happened. I really don’t think we have a complete story yet.”
THE LOST DECADE
We certainly didn’t see it coming. At the turn of the millennium, the Bureau of Labor Statistics predicted that the U.S. economy would create nearly 22 million net jobs in the 2000s, only slightly fewer than the boom 1990s yielded. The economists predicted “good opportunities for jobs” and “an optimistic vision for the U.S. economy” through 2010.
Businesses would reap the gains of new trading markets, the projection said, and continue to invest in technologies to boost the productivity of their operations. High-tech jobs would abound, both for systems analysts with four years of college and for computer-support analysts with associate’s degrees. The manufacturing sector would stop a decades-long jobs slide, and technology would lead the turnaround. Hundreds of thousands of newly hired factory workers would make cutting-edge electrical and communications products, including semiconductors, satellites, cable-television equipment, and “cellular phones, modems, and facsimile and answering machines.”
More…

Hourly Action In Gold From Trader Dan

Posted: Jan 21 2011     By: Dan Norcini      Post Edited: January 21, 2011 at 2:09 pm
Filed under: Trader Dan Norcini

Dear Friends;
Please note the CCI chart and the US Dollar chart as the CCI has plowed into new all time record highs today once again and looks to be setting a new all time record high weekly close as well. The grains and softs are leading the way with wheat now firmly above $8.00 and pushing towards $8.50 with corn shrugging over a bearish technical sign from Wednesday and going on to set a fresh 30 month high in price. Coffee, sugar and cocoa are all strong and lumber is at limit up. One thing is certain – there is yet no letup in the inexorable rise in food prices.
Platinum and palladium are higher today and copper thus far has held support near $4.20 and moved back up once again.
The strength in the base metals suggests that silver should stabilize soon with gold in a following role to it for the time being.
Crude, while weak today, is holding near $89 and natural gas is higher. Unleaded gasoline is up 4 cents a gallon here near midday.
Also note that it is no coincidence that the Dollar has succumbed to further selling pressure today as fears regarding European sovereign debt woes have taken a back seat to the long term, deeply entrenched structural problems in the US concerning its enormous indebtedness and further QE.
One last thing – note the game being played with the bond market by the Fed as I commented on yesterday. There was ZERO downside price action in the reopen of trading for bonds early in the evening yesterday after they were crushed during the session. Upon the reopen they immediately popped higher, saw NO FOLLOW THROUGH selling of any kind (not normal), and are up more than half a point today even as the commodity sector is showing fresh signs of strength and the equity markets are also strong.  In short, the officially sanctioned rigging of the US bond market continues.
No doubt China is taking notice while the US calls it out for currency manipulation.

Click charts to enlarge in PDF format with commentary from Trader Dan Norcini