Thursday, November 11, 2010 – my comments are in italics

A Gold Standard, which can prompt brutal economic adjustments and exacerbate
inflationary/deflationary forces via accelerated capital flows, is incompatible with the demands of
modern economies, most critically a fractional reserve banking system and open capital accounts. –
Roubini Global Economics – most would agree that the gold standard exacerbated the great depression
by handcuffing monetary policy.
Greenspan oped – says China is continuing to suppress its currency while at the same time the
US is pursuing a policy of currency weakening. The twin weakening of both the yuan and the dollar is
causing a firming of exchange rates in the rest of the world. Greenspan says “we should discourage
reserve accumulation whose sole purpose is to suppress exchange rates”. Greenspan calls on the IMF
to initiate a set of rules that limit the accumulation of reserve assets and sterilize capital inflows. FT
President Barack Obama asked G20 leaders to shift global demand away from U.S. consumption
and borrowing and called for market determination of exchange rates to reverse undervaluation, but
analysts remain skeptical as to what can be achieved at the November 11-12 G20 Summit. – Roubini
Global Economics – the old model of building an efficient manufacturing base, which exports goods to US
consumers is probably unsustainable. Countries that relied on that model for growth will likely be
disappointed and are better off shifting ‘global demand away from US consumption.’
Stephen Roach, Morgan Stanley’s non-executive Asia chairman, said Asian currencies will
strengthen and U.S. jobless benefits should be expanded. – Bloomberg
Deutsche Bank CEO Josef Ackermann said quantitative easing is the right approach for the U.S.,
which has limited tools to stimulate its economy. – Bloomberg
Francesco Garzarelli, chief interest-rate strategist at Goldman Sachs in London, said a bailout of
Ireland and Portugal through the European Financial Stability Facility would resolve current market
tension and not lead to contagion. – Bloomberg – Irish sovereign debt continues to sell off, resulting in a
spike in yields and, thus, borrowing costs.

Ten Year Ireland Sovereign Debt Yields