Zimbabwe Says Days Of The US Dollar Are Numbered, Pushes For Gold-Backed Local Currency 

Topping off a weekend of surreal news is the announcement from the Central Bank of Zimbabwe that the country is now evaluating introducing a gold-backed Zimbabwean dollar, and, in keeping with the Salvador Dali feel to the past 48 hours, that the "days of the US dollar as the world's reserve currency are numbered." Yes. Zimbabwe, the same place that two years ago sported a brand new crisp Z$100 trillion bill. What is just as odd is that this news comes less than a week after Iran's President Mahmoud Ahmadinejad criticized US economic policies, saying that the paper currency created by the American government is taking a heavy toll on the global economy. While Zimbabwe, which now transacts almost exclusively in foreign currencies such as the USD and the South African Rand, is actively considering ways to return its own currency into circulation, the man who has up to now served as an inspiration and a role model to Ben Bernanke, Gideon Gono, said the country should consider adopting a gold-backed currency. “There is a need for us to begin thinking seriously and urgently about introducing a Gold-backed Zimbabwe currency which will not only stable but internationally acceptable,” he said in an interview with state media... That giant ripping noise you hear is the Chairsatan tearing down each and every 20x10 poster of Gideon Gono, lining the hallways of the Princeton Economics department. 

An Interesting Week Ahead

 

posted by Turd Ferguson at Along The Watchtower - 36 minutes ago

OK. After 48 hours of MacBook freedom, The Turd has returned with a vengeance. Well, not really...but I have returned with a handful of interesting charts. Let's get straight to it. First up, here's the b...



Soon this bubble will burst...

Guest Post: Q2 Economic Contraction Highly Probable 

Submitted by Tyler Durden on 05/15/2011 15:38 -0400

Recently I have been discussing the possibility that the US economy is in fact in a period of contraction. I want to revisit that call as I don't loosely throw out such a statement without backing it up with real data. Q1 2011 GDP was 1.77%, a 43% reduction in Q4 2010 GDP of 3.11%. Although Q1 GDP could be revised higher over the next two revisions it did highlight three sources of contraction. Initial data for April has further supported potential economic contraction with four regional Fed manufacturing surveys showing a sharp reduction in growth, near outright contraction in ISM Services, a very sharp increase in weekly unemployment claims and a deteriorating trade deficit. 

 

 

 

 

A Look At Key Global Events In The Upcoming Week 

Submitted by Tyler Durden on 05/15/2011 15:12 -0400

Last week’s flow of cyclical data was broadly encouraging. However, cyclical currencies traded weak against the USD. In addition, the Greece situation stood at the forefront of market attention. This week will offer us more on that front with the Ecofin/Eurogroup meetings on Monday. Other than that, we have important cyclical data this week with the Philly Fed on Thursday standing out as the key forward-looking indicator. It will also be interesting to watch trends in initial claims, which has been volatile recently. Finally, Fed Chairman Dudley’s speech will be interesting to follow, together with FOMC minutes. 

 

 

 

 

 

Goldman On The EUR Long/USD Short Rout 

Submitted by Tyler Durden on 05/15/2011 15:11 -0400

A week ago, when we looked at the CFTC's Commitment of Trader data (for speculative exposure), we noticed that EUR long spec positions surged to multi-year highs. We said: "As a result of this surge in exposure, we have seen a one way trade as the specs exit the trade en masse." Sure enough, a week later, the EURUSD (and other EUR crosses) continues to tumble and appears poised to take out the 1.40 level. Today, Goldman's FX team led by Thomas Stolper who appears will not disappoint once again and will be closed out on his EURUSD trade at a loss, looks at the COT data and extrapolates the same rout in EUR longs we predicted, as well as a large $ short position. Of course, this is what we said on Friday, with the caveat that the marginal move has already been completed "and from this point on it will be just the retails, the momos and the robots" if the EUR is to continue dropping. 

 

 

 

 

 

Strauss-Kahn Does Not Have Diplomatic Immunity 

Submitted by Tyler Durden on 05/15/2011 14:10 -0400

To all those who thought, himself probably included, that DSK would get away scott free from his most recent rape incident (as opposed to the metaphorical rape that the IMF has exercised over the decades over insolvent creditor nations), the Telegraph has one word: wrong. "Dominique Strauss-Kahn was told he does not have diplomatic immunity from prosecution against charges including alleged rape, said Paul Browne, an NYPD spokesman."

Guest Post: The Global Economy Burns, While its Leaders Fiddle 

Submitted by Tyler Durden on 05/15/2011 14:00 -0400

All around the world, the bodies and countries with the most power keep screwing people (some like IMF head, Dominique Strauss-Kahn, literally) and entire nations, while supporting their banking systems. Last week, S&P announced it would downgrade Portugal if it didn’t play ball with the IMF and EU over its 4-year 78E billion-bailout program in return for hacking public programs. Echoing our own Congressional goons spewing spending cuts in the face of inadequate revenues and for-bank-manufactured mega-debt, the S&P noted, “Two-thirds of the projected savings in [Portugal’s] 2012 budget will likely come from spending cuts.” On a roll, the IMF also declared Italy needs ‘structural reform’, meaning labor market reform, less public ownership and more private investment to “unlock its growth potential.” (aka invite more speculative capital at its earliest convenience.) Meanwhile, thousands of people are again striking in Greece, as the IMF and EU discuss more austerity measures, following the bank bailout that provoked public outrage a year ago, and a rating downgrade by S&P. The EU remains more concerned with investors regaining confidence in Greece than economic stability of its citizens. Then, there’s Ireland, for whom its last bailout didn’t dent its 14.5% unemployment rate, or fill in the gaping holes its banks dug. In short, the global ‘remedy’ for depressed economies and debt-bloated banking sectors remains to do – more of the same - and pretend this will beget a different outcome. Yet, there is no way this strategy will result in more stable economies. What we can expect instead is further widespread deterioration.