New IMF Report Calls for Replacing U.S. Dollar

by Jerry Robinson

Good morning friends! In the news this morning: the IMF calls for dollar replacement, Egypt protests intensify, mortgage rates hit 10-month high and more…

IMF increases calls for alternative to U.S. Dollar… A new report issued by the IMF on Thursday is calling for Special Drawing Rights (SDR’s) as a potential, yet viable, replacement of the U.S. Dollar’s role as the global reserve currency. The report promotes the use of SDR’s as a way to correct global imbalances and to shore up the global financial system… Read full report (PDF) here…

Egypt On Fire… Yesterday, word on the street was that Mubarak would step down… Instead, Mubarak stood defiant refusing to leave office early… VP Suleiman (the CIA’s man in Cairo) was placed “in charge” as Mubarak retained his title as President? Confusion abounds… President Obama agitated… White House in disarray… Today, Denmark’s prime minister becomes first EU leader to call for Mubarak’s resignation…

“Farewell Friday”… Muslim Brotherhood maintains hard line demanding Mubarak’s immediate resignation… Iran’s Ahmadinejad praises protesters as they herald new Islamic Middle East… Protesters vow biggest demonstrations to date… “Put the regime on trial…” and “Death to Israel…”

LIVE FEED…

Global financial markets on edge as investors had anticipated resignation…

Overnight, Chinese markets were up. European market lower and U.S. futures point to a lower open…

Nokia, Microsoft seek to rival Apple, Google… The world’s biggest maker of mobile phones, Nokia, has announced a partnership with Microsoft to challenge Apple and Google’s dominance in the growing smartphone market… Nokia will use Microsoft’s Windows as its primary software platform… Nokia down big as investors perceive weakness… Microsoft perceived as winner… But can NokiaMicrosoft out-innovate Apple… or Google?

R.I.P. – FNMA, FMCC… The Treasury Department will release a report today outlining three possible solutions for getting the Federal government out of the mortgage business… at least partially…

On the chopping block… the two problematic GSE’s, Fannie Mae and Freddie Mac…

Proposed solutions: 1) No govt. role in housing, except agencies like the FHA

2) Government support for mortgages, but only in times of crisis

3) A continual role for the Federal govt. in housing, except through GSE’s…

The mortgage debacle has entangled the Federal government and now they are seeking a way out… JP Morgan CEO Jamie Dimon has called the two GSE’s “the biggest disasters of all time.” No easy answers and the government is not saying which “solution” is best… yet.

U.S. mortgage rates reach 10-month high… As the U.S. housing market attempts to crawl out of the ditch, here come higher mortgage rates… This week, the average rate for a 30-year fixed loan rose to 5.05 percent… Average 15- year rate at 4.29 percent… Fixed mortgages continue rising along with the increasing 10-year bond yields.

Concerns include demand reduction and reduced home affordability… Interesting, however, as 5% mortgage rates are historically low and in more “normal” times would be considered excellent…Not so in this fragile environment.

Fed Governor Warsh Resigns… QE2 opponent, Federal Reserve Board Governor Kevin Warsh, announced his resignation from the seven-member board yesterday after voicing concerns over the Fed’s big market interventions… His departure, scheduled for March 31, will leave just two Bush appointees on the Board… Obama will appoint Warsh’s replacement…

Warsh has been a forceful internal advocate for ending the Fed’s excessive quantitative easing… With his absence, Bernanke will face much less internal resistance…

Also in the news…

1) The CBO Director tells Congress that Obamacare will reduce employment by 800,000 workers…

2) Feeling the pinch from higher costs for wheat, corn, sugar and other commodities, Kraft warns higher prices on the way…

3) As the losses mount, the U.S. Postal Service warns of default…

4) Is Twitter worth $10 billion?

5) Rep. Ron Paul calls QE2 a “total failure,” except for those folks who work on Wall Street.” Watch video here…

Finally… Think that you can’t afford a home in the tropics… Vacation homes in exotic spots are on sale… Beach and sun for less than $1 million…

Why So Serious?… It’s time to laugh a little.

“Marriage is a relationship in which one person is always right, and the other is a husband.” -Anonymous

“Christina Aguilera is bouncing back from her Super Bowl appearance by singing at the Grammys. She’ll be accompanied by a full orchestra and 135 teleprompters.” –Conan O’Brien

“The problem in Egypt is that so many government officials are rich and the people are poor. I think it’s a pyramid scheme.” –Jay Leno

Until tomorrow,

Jerry Robinson – FTMDaily.com

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Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.

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