At least according to Reuters.

A U.N. panel will next week recommend
that the world ditch the dollar as its
reserve currency in favor of a shared
basket of currencies, a member of the
panel said on Wednesday, adding to
pressure on the dollar.

Currency specialist Avinash Persaud, a
member of the panel of experts, told a
Reuters Funds Summit in Luxembourg that
the proposal was to create something like
the old Ecu, or European currency unit,
that was a hard-traded, weighted basket.

Persaud, chairman of consultants
Intelligence Capital and a former
currency chief at JPMorgan, said the
recommendation would be one of a number
delivered to the United Nations on March
25 by the U.N. Commission of Experts on
International Financial Reform.

"It is a good moment to move to a shared
reserve currency," he said.

If things weren't bad enough. This should help the economy
a whole lot.

C

Eliot Spitzer has some good questions.

    What was the precise conversation
among Bernanke, Geithner, Paulson, and
Blankfein that preceded the initial
$80 billion grant?

    Was it already known who the
counterparties were and what the
exposure was for each of the
counterparties?

    What did Goldman, and all the
other counterparties, know about AIG's
financial condition at the time they
executed the swaps or other contracts?
Had they done adequate due diligence
to see whether they were buying real
protection? And why shouldn't they
bear a percentage of the risk of
failure of their own counterparty?

    What is the deeper relationship
between Goldman and AIG? Didn't they
almost merge a few years ago but did
not because Goldman couldn't get its
arms around the black box that is AIG?
If that is true, why should Goldman
get bailed out? After all, they should
have known as well as anybody that a
big part of AIG's business model was
not to pay on insurance it had issued.

    Why weren't the counterparties
immediately and fully disclosed?

Failure to answer these questions will
feed the populist rage that is
metastasizing very quickly. And it
will raise basic questions about the
competence of those who are supposedly
guiding this economic policy.

Good questions and I'll bet the answers, if we ever get them,
will be very enlightening to say the least.

C

Memo to Tim Geithner ;

If your plan is other than flushing the whole miserable mess and
kicking the exec's sorry asses out into the street, then you
still don't get it.


C

David Sirota puts it in to focus and it ain't pretty.

So, what we see is A) an administration more
worried about the populist anger's
consequences for its image rather than its
utility in passing an aggressive agenda and
B) Wall Street sycophants like Summers and
Geithner continuing to push a red herring
that says there's nothing that can be done to
stop corporations from using our taxpayer
money to subsidize bonuses for the same
executives who created this economic crisis.
In short, what we see here is an
administration more worried about elite
opinion - and more willing to echo elite
opinionmakers' canards - than about seeing
this populist moment as an opportunity.

The fact is, the populist anger that the
Times examines could be a huge force for good
- if the administration gets serious about
championing it, rather than trying to
suppress it out of deference to a
punditocracy that says it is "dangerous" or
"unserious" or "too emotional." Doing the
latter, in fact, is the best way for the
White House to become a target of the
public's ire. But then, doing the latter is
exactly what the Washington insiders in
Obama's administration have been doing for
the better part of a generation - and so
asking them to do anything different may be
asking them to change too much.

This was the reason why Obama was originally
right when he said "change doesn't come from
Washington, it comes to Washington" - because
Permanent Washington is predisposed to see
public passion and anger as a threat rather
than an opportunity.

So Obama and Congress have two choices. One to take the
bull by the horns and do what ever is necessary to correct
this mess. Even if it risks more Wall Street fall out.

Or two continue on and face a very, very angry electorate in 2010
who will care little which party is to blame. Especially since they
both appear to be in it up to their eye lids.

C

Everybody seems to be extremely concerned about AIG
defaulting on it's obligations. Especially to institutions in
Europe and elsewhere. But according to Paul Krugman,
Europe itself seems less disturbed about them or its
own economic condition.

The clear and present danger to Europe
right now comes from a different
direction - the continent's failure to
respond effectively to the financial
crisis.

Europe has fallen short in terms of both
fiscal and monetary policy: it's facing
at least as severe a slump as the United
States, yet it's doing far less to combat
the downturn.

On the fiscal side, the comparison with
the United States is striking. Many
economists, myself included, have argued
that the Obama administration's stimulus
plan is too small, given the depth of the
crisis. But America's actions dwarf
anything the Europeans are doing.

The difference in monetary policy is
equally striking. The European Central
Bank has been far less proactive than the
Federal Reserve; it has been slow to cut
interest rates (it actually raised rates
last July), and it has shied away from
any strong measures to unfreeze credit
markets.

Or are they simply counting on our largesse towards AIG and
others to help bail them out. Point being, if Germany, Italy, the UK
and the rest are indifferent then why should we be concerned about
these companies financial health or continued existence.


C
 

I see that the TAX on cigarettes is going to be raised. Ostensibly
to pay for Children's Health Insurance.

The increase is part of a five-year plan to
raise $35 billion for the Children's Health
Insurance program to help insure children
not covered by Medicaid.

In Nebraska, the state excise tax on a pack
of cigarettes is 64 cents. In Iowa the
state tax is $1.36. Now add the federal tax
to the price.

Another product specific tax with the desire to "Eliminate Smoking".
Ain't gonna happen. Instead of trying to legislate it out of existence,
the government, who Always has our best interests at heart, wants
to tax it out of existence. All this will do is have the same effect as
out "WAR on Drugs". Drive it underground to the black market and
crime. 

We have tried to rid society of those things that the self righteous
find objectionable before with the predicable disastrous outcome.

And with a trillion plus deficit, do you really think any of that money
will be allocated to children's health.

I propose instead taxing particular products for various moral sounding
reasons we should institute a VAT, Value Added TAX on everything that
should be taxed. The problem with product specific taxes is that they
nearly never have the desired effect. People will still smoke or drink or
have elicit sex or do drugs or what not. In other words there will always
be a segment of society that will engage in risky behavior.

And singling them out will simply drive them to acquire their substance
by illegal means. It only hits those who can least afford it. The others
will simply continue to pay. It cause resentment and may even back
fire, having the opposite effect that the one intended.

A VAT would hit everything and every one the same and would be far
easier and cheaper to enforce. 

So lets not try to TAX and/or legislate behaviors away. It simply does not
work. No matter how well meaning those who want to are. All it does is
to make the self righteous feel better.

C

Daniel Gross in Newsweek says why DC should not put
too much "stock" in the DOW.

On March 3, Strategas analyst Dan Clifton
noted that "with the S&P 500 off close to
8.5 percent since the budget was
introduced, it is clear that equity
investors remain skeptical of the
government's plan to lead us out of this
financial crisis." Even CNBC's James
Cramer, who supported Obama during the
campaign, has turned on the president,
calling him a "wealth ."

Talk about misplaced anger. Wall Street
built a wooden house, stuffed it with
flammable material, set it on fire and then
poured gasoline on the blaze. And now it's
blaming the inferno on the arson inspector,
who wasn't appointed until after the fire
had reached three-alarm status?

Alas, the investor in chief is taking
notice. In early March he made a tentative
stab at bucking up the markets. "What
you're now seeing is profit and earning
ratios starting to get to the point where
buying stocks is a potentially good deal,
if you've got a long-term perspective on
it." (Maybe if this whole Leader of the
Free World thing doesn't work out, he can
get a gig on CNBC.)

Obama's commendable tendency to engage his
critics is misguided in this case. He
should be ignoring the Dow. The index has
fallen about 50 percent from its closing
peak of 14,164 on Oct. 9, 2007. (That was
the week the Fox Business Channel debuted.
Coincidence? I report, you decide.)
Everything about the markets has been
chopped in half-their value, their moral
authority and hence their claim on
Washington's attention. Having deprived
Americans of so much of their wealth, the
market is today like Rush Limbaugh: an
unpopular loudmouth prone to emotional
outbursts.

I'd say so and with CNBC as the biggest whiner and blow hard
of them all.

C