A new moral fable about bricks and pigs is being written. That 2 of the nations demanding a new monetary regime are the Brazil and Russia is astounding. Brazil is operating a highly unstable shadow economy based on electoral handouts and the Olympics and Russia is a natural resource oligarchy. Whatever. The PIIGs are stuck with debt denominated in a currency they cannot devalue. The BRICs want to accelerate the SDR as a balance of payments mechanism and let local fiat circulate for exchange. The IMF has made several large special allocations of late but tweaking the mix would probably be discussed in a greater role. The major contributor has the right to "house" the IMF, so China could up its payment and request the IMF headquarters be moved to Beijing. A symbolic, yet important event.

The excrement nearing the air conditioning in Europe has aided a "stroll to mediocrity" (FTQ being so 1980's) in US Treasury debt. Meanwhile, the money market cash deluge continues. Fed effective yesterday was .08. 1 month and 3 month LIBOR rates at 21 and 27+ are now facades on the high side of a myth. Actual funding rates would put 3 month slightly below 25. Futures reluctantly and slowly inch into the hallucination. Players clearly view this as a temporary side effect and not the path of rates. Several LARGE put spreads (new based on OI reports today) in EDZ and EOK have been taken.

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