Gingrich and Gold: He Wants to Get Back to ‘Hard Money’

Charles Kadlec, Contributor

The biggest under-reported story of the South Carolina primary is winner Newt Gingrich’s campaign promise to convene a gold commission to “look at the whole concept of how do we get back to hard money.”

The only job of the Fed should be to “maintain the stability of the dollar because we want a dollar to be worth 30 years from now what it is worth now,” said Gingrich, pointing out price stability encourages savings and investment because people know what the dollar will be worth when comes time to spend it.

Monetary reform can be the issue that propels Gingrich above the tawdry attacks on his personal life and questions about his reliability all the way to the Republican nomination, because it puts him ahead of Governor Romney and Senator Santorum on a policy that enjoys a clear plurality of support among Republicans, Democrats, blacks, whites, hispanics and individuals across all income categories.

When the Rasmussen polling firm last October asked 1000 likely voters if they were “favorable or unfavorable about returning to the gold standard,” 44% were favorable versus 28% unfavorable.  However, when the respondents were asked: Would you “favor or oppose returning to a Gold Standard if you knew it would reduce the power of bankers and political leaders to steer the economy?” those in favor increased to 57% versus only 19% opposed.

All the candidates agree on the need to repeal ObamaCare and Dodd-Frank, to reduce the regulatory burden on American business and to cut corporate and personal income tax rates through tax reform.  But, Governor Mitt Romney promises to follow in President Obama’s footsteps as a weak dollar President, especially relative to the Chinese. Senator Rick Santorum’s website is strangely silent on the issue of monetary policy, even though the gyrations in the value of the dollar have demonstrably hurt the middle-class and manufacturing more than any other single policy.

Gingrich has seized this opening to build his appeal as the conservative candidate who can defeat President Barack Obama by making monetary reform integral to his campaign to increase the prosperity, security and liberty of the American people.

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If you’ve come to Davos for answers, panels are not the place to start. An hour into the “TIME Davos Debate on Capitalism” there were, by my count, just two or three concrete proposals for creating jobs.

The panel included Bank of America CEO Brian Moynihan; Carlyle Group co-founder David Rubenstein; Ben Verwaayen, the CEO of Alcatel-Lucent; Raghuram Rajan, a renowned economist; and Sharran Burrows, the general secretary of the International Trade Union Confederation.

The focus of the panel wasn’t quite “Is 20th century capitalism failing 21st century society?” Instead, it was most certainly about non-specific change at the margins. Rajan called for better worker training, Burrows wants corporations to invest a portion of their income into job creation and a VC audience member bemoaned the U.S. immigration policy and a lack of skilled workers. Despite a few exchanges between Burrows and Alcaltel’s Verwaayen, there was almost nothing in the way of real debate.

Take the “too big to fail” banks, for example. When asked about the issue, Bank of America’s Brian Moynihan claimed that his bank simply needed to be massive to serve an increasingly global economy:

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By Matthew G. Miller – Jan 25, 2012 2:18 AM ET

Ukrainian billionaire Victor Pinchuk wants to talk about income inequality. So does Irish billionaire Denis O’Brien and Indian billionaire Vikas Oberoi.

The three are among a contingent of at least 70 billionaires who are joining more than 2,500 business and political leaders at the World Economic Forum’s annual meeting in Davos, Switzerland, this week, according to a list of attendees and promotional materials obtained by Bloomberg News. A half-dozen of the richest participants, interviewed in advance of the conference, say economic disparity needs to be addressed.

“Many who will be in Davos are the people being blamed for economic inequalities,” Oberoi, 42, chairman of Oberoi Realty Ltd. (OBER), India’s second-biggest real estate developer by market value, said in an interview earlier this month by mobile phone from his car in Mumbai. “I hope it’s not just about glamour and people having a big party.”

Oberoi, who’s attending Davos for the first time, and like- minded billionaires may have trouble finding the subject of income inequality on the agenda. While the forum’s Global Risks 2012 report, published this month, describes “severe income disparity” as the world’s top risk over the next 10 years, tied with fiscal imbalances and ahead of greenhouse-gas emissions, the word “inequality” appears only once in the event’s 130- page program, and that’s in the title of a panel about art.

Read the rest here.

Pimco is launching an ETF to track the biggest mutual fund, its Total Return Fund. Will this portend the end for mutual funds? We looked into the future to find out, and this 2022 story tells it all.

By Joshua Morgan Brown, contributor

March 1, 2022

FORTUNE — Ten years ago, in March of 2012, the world’s largest mutual fund cloned itself as an ETF. It occasioned a small amount of business media attention at the time, but in hindsight, it was the event that changed everything.

Read the rest here.

Jan 23, 2012 12:00 AM EST

By John Arlidge

INSIGHT – In MF Global, JPMorgan again at center of a financial failure

REUTERS – In late October, as MF Global Holdings Ltd teetered toward bankruptcy, Jon Corzine phoned his close-knit circle of Wall Street friends for help.

His firm, facing demands from customers and other firms for cash, needed to sell billions of dollars in securities to raise the money. As the week progressed, MF Global executives came to believe that JPMorgan Chase & Co. (JPM.N), one of MF Global’s primary bankers and a middleman moving that cash, was dragging its feet in forwarding the funds.

Corzine phoned Barry Zubrow, then JPMorgan’s chief risk officer, to question the slow payments. Corzine also called William Dudley, president of the Federal Reserve Bank of New York, to update him on MF Global’s status and told him that payments were slow to arrive from JPMorgan and others. Dudley said he’d monitor the situation.

The delays contributed to a serious cash shortage at MF Global, according to people familiar with the matter. These people say the firm started trading one day in late October with $600 million in cash and spent the whole day selling securities, only to end with just $200 million in cash.

By adhering to procedure and not cutting MF Global any slack, these people say, JPMorgan was able to slow the delivery of funds, worsening MF Global’s distress. As a result, they note, hundreds of millions of dollars of MF Global money may be still stuck in accounts at JPMorgan.

Read the rest here.

Tensions in the Gulf could reach a breaking point as a senior Iranian official said Iran would “definitely” close the Strait of Hormuz if an EU oil embargo disrupted the export of crude oil.

Mohammad Kossari, deputy head of parliament’s foreign affairs and national security committee, issued the warning in respone to a decision by the European Union on Monday  to impose an oil embargo on Iran over the country’s alleged nuclear weapons program.

“The pressure of sanctions is designed to try and make sure that Iran takes seriously our request to come to the table,” EU foreign policy chief Catherine Ashton said.

However, with Washington’s decision to deploy a second carrier strike group in the Gulf, the EU’s attempt to pressure Iran economically could greatly increase the likelihood of all-out war in the region.

The Strait of Hormuz is the vital link between the Persian Gulf and the Gulf of Oman.

It is also one of the most strategic chokepoints in the world when it comes to oil transit.

Read the rest here.

By John Matson | Scientific American

Last night the sun unleashed a flash of radiation called a solar flare, along with a generous belch of ionized matter that is now racing toward Earth at thousands of kilometers a second. The solar storm front from the ionized blast, called a coronal mass ejection (CME), should arrive tomorrow morning, according to the National Oceanic and Atmospheric Administration’s Space Weather Prediction Center (SWPC). The forecasters called the event the strongest solar storm since 2005.

When a solar storm hits Earth, the impact can have a number of consequences, especially in Earth orbit and at high latitudes, where the planet’s geomagnetic shielding is thin. Solar storms can knock out satellites, cause blackouts, and force aircraft to avoid polar routes. Storms can also bring the aurora borealis, a.k.a. the northern lights, down to unusually low latitudes. (You can see a slideshow of recent low-latitude auroras here.)

Read the rest here.

By Michael A. Lewis, PhD. and Anthony Watts

Some one or some organization is attempting to influence the upcoming annual meeting of the American Meteorological Society (AMS).

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By Lu Wang – Jan 23, 2012 12:01 AM ET

Trading (MVOLUSE) in U.S. stocks fell to the lowest level since at least 2008 amid mutual fund withdrawals and Wall Street job cuts.

An average of 6.69 billion shares changed hands on U.S. exchanges in the 50 days ended Jan. 18, the fewest on record in Bloomberg data starting three years ago that excludes over-the- counter venues. On the New York Stock Exchange, volume has tumbled to the lowest level since 1999, the data show.

The slowdown in trading shows that investors remain skittish after five years of withdrawals from mutual funds that buy U.S. equities and one of the most volatile years on record for the Standard & Poor’s 500 Index. While the benchmark index is having its best January rally since 1997, securities firms around the world cut more than 200,000 jobs last year.

“Investor confidence is shaky at the very least,” Mark Turner, head of U.S. sales trading at Instinet Inc. in New York, said in a telephone interview on Jan. 20. His firm handles about 4 percent of the total daily U.S. equity volume. “We need to see the U.S. economy improve. We need to see some sort of a plan in place to deal with Europe’s debt crisis before the market gains some confidence. At that point, we’ll start to see an increase in volume.”

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By STEVEN RATTNER

Published: January 20, 2012

WITH little fanfare, a dangerous notion has taken hold in progressive policy circles: that the amount of money borrowed by the federal government from Americans to finance its mammoth deficits doesn’t matter.

Debt doesn’t matter? Really? That’s the most irresponsible fiscal notion since the tax-cutting mania brought on by the advent of supply-side economics. And it’s particularly problematic right now, as Congress resumes debating whether to extend the payroll-tax reduction or enact other stimulative measures.

Here’s the theory, in its most extreme configuration: To the extent that the government sells its debt to Americans (as opposed to foreigners), those obligations will disappear as aging folks who buy those Treasuries die off.

If that doesn’t seem to make much sense, don’t be puzzled — it doesn’t. Government borrowing is still debt that must eventually be paid off, just as we were taught in introductory economics.

Failing to repay the debt would mean not only the ugliness of default but also depriving the next generation of whatever savings their parents parked in government bonds.

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EXECUTIVE SUMMARY OF ECONOMIC POLICY WORK

By James Pethokoukis

January 23, 2012, 3:08 pm

A lengthy piece in The New Yorker looks at policymaking in the Obama White House. A key source for writer Ryan Lizza is a 57-page, “Sensitive & Confidential” memo written by economist Larry Summers—eventually to be head of Obama’s National Economic Council—to Obama in December 2008. Here’s some of what I learned about Team Obama’s thinking as the financial crisis was exploding, followed by quotes from the memo itself:

1. The stimulus was about implementing the Obama agenda.

The short-run economic imperative was to identify as many campaign promises or high priority items that would spend out quickly and be inherently temporary. …  The stimulus package is a key tool for advancing clean energy goals and fulfilling a number of campaign commitments.

Read the rest here. You won’t believe it!

http://www.youtube.com/watch?v=rFxwOLbImcU

PARIS (Reuters) – Europe’s proposal for a tax on financial transactions would not apply to bonds issues by governments because states need to be able to finance themselves, said France’s Finance Minister Francois Baroin on Sunday.

France plans plow ahead with its own transaction tax even as other European nations are taking longer to agree on how to implement the measure.

“The tax would apply to shares and derivatives but would naturally exclude government bonds since we are in a period where we need investors,” said Baroin in a French televised interview.

The details on when such a tax would take effect will be decided when the draft law is written in February, he added.

(Reporting by Jean-Baptiste Vey)

Source

Watch it at The New York Times.

By Ambrose Evans-Pritchard, International business editor

8:33PM GMT 22 Jan 2012

Britain has sunk deeper into debt. Three years after bubble burst, the UK has barely begun to tackle the crushing burden left by Gordon Brown. The contrast with the United States is frankly shocking.

Via Global Macro Monitor

Posted on January 21, 2012

Shanghai’s channel surfing Panda bears are speaking with a little higher pitch this weekend after getting their ‘hood caught in a vicious squeeze and reversal. The stock index has bounced 8.7 percent off its January 6th lows after falling 31 percent from last April’s 12-month high.  The Shanghai was down 39 percent from its August ‘09 post-crash high before reversing earlier this month.  Hugh Hendry nailed it.

We don’t know if the bottom is in but it seems clear to us the government doesn’t want the stock market to fall any further. They have unleashed the Dragon on the bears with a series of policies to prop up the market.

To read the rest and see the pretty graphs, go here.

By Stephen Dinan

Arizona’s state legislature will open its own investigation into the Obama administration’s disgraced gun-running program, known as “Fast and Furious,” the speaker of the state House said Friday.

Speaker Andy Tobin created the committee, and charged it with looking at whether the program broke any state laws — raising the possibility of state penalties against those responsible for the operation.

Read the rest here.