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Market pundits scrambled to fill up air time by attributing the market movement to this data or that comment. The market rally catalyst was quite singular however. As rumors spread of a firmed up Greek rescue package, and the S&P suggested it was shifting Greece out of ICU, the Euro soared. It spiked 0.7% which is a significant move in the currency arena. The result was immediately evident and dramatic. Gold spiked $20 and oil shot up over $2. Those moves came long before the FOMC statement. Those moves were not influenced by some piece of economic data. Those moves were not the result of some shift on the outlook for the President’s health plan. Those moves were the direct result of the jump in the Euro and the correspondent weakening of the dollar. We believe that the Euro/Dollar move was also the primary catalyst in the stock market. Given the action in gold and oil, the stock market’s reaction was rather mute. With such a strong tailwind, you might have expected something like a 100/150 point move in the Dow. The real question on stocks was what was holding stocks back given the currency boost.

Forty years ago, it was a small town on the Persian Gulf, merely one of seven sheikdoms joined in federation in 1971 to create the United Arab Emirates. Basically, there was nothing there but sand. Yes, oil had been discovered under that sand, and the city/state was enjoying its first economic boomlet. From about 60,000 in 1968, population tripled by 1975, doubled in the next ten years, and nearly doubled again by 1995. Problem is, especially compared with many of its Gulf neighbors, it didn’t have all that much oil to begin with, and its reserves were falling fast. What it did have was Sheikh Mohammed bin Rashid Al Maktoum, the most influential member of the family that had ruled for more than a century and a half. And the sheikh had a vision. Sheikh Mohammed believed that the Muslim world needed a New Baghdad, a center of commerce and learning and culture that would shine like the hub of the old caliphate, which had dominated the civilized world a thousand years earlier. He was determined to erect a dazzling, ultra-modern new metropolis, starting from scratch.

How do YOU spell deflation (followed by runaway inflation)?

Ultimately, as my colleague Dylan Grice writes, I think we head back to double-digit inflation rates as governments opt to default. I certainly again expect to see CPI inflation above 25% in the UK and indeed in most developed nations in my lifetime ? I have happy memories of the three-day week and doing my homework by candlelight. In the near term, however, the deflationary quicksand will suck us ever lower until we suffocate. A key driver for underlying inflation remains unit labour costs. While unit labour costs decline at an unprecedented rate, they are sucking us inevitably into a Fisherian, debt-deflation spiral. Only then will we see how far policymakers are willing to go to debauch the currency. Last year saw them cross the Rubicon. Monetisation is now the policy lever of first resort.

- Albert Edwards, Soc Gen

One of the more vocal economic skeptics (as pertains to the developed world at least, China not so much), CLSA's Chris Wood, chimes in with his latest weekly observations on the economy, which are not for the faint of heart, in the latest edition of GREED and fear. Digging in.

• Asia stocks rise on speculation Bank of Japan will ease policy.
• Builders in Feb probably broke ground on the fewest U.S. homes since October.
• China plans to keep its foreign trade policies, including the yuan exchange rate, stable.
• China, Japan reduce holdings of US Treasury debt as global demand wanes.
• China plans to keep its foreign trade policies, including the yuan exchange rate, stable.
• Continental Airlines Inc. will start charging for food for economy-class

I have warned my readers about following myths and legends versus reality and facts several times in the past, particularly as it applies to Goldman Sachs and what I have coined "Name Brand Investing". Very recent developments from Senator Kaufman of Delaware will be putting the spit-shined patina of Wall Street's most powerful bank to the test, as it appears he ain't playin'. Here's the speech from the esteemed Senator from Delaware (yes, the most corporate friendly state in this country), complete with an analysis that you will NEVER see in the mainstream media!!!

It's been eighteen months since AIG collapsed, and Congress has yet to seriously focus on the most important questions: What did they know and when did they know it? "What" refers to the fatal flaws in the collateralized debt obligations, or CDOs, that AIG insured. "They" are the bankers that structured and sold the CDOs, plus the AIG executives who took on the credit risk, plus the rating agencies that handed out AAA ratings. "When" harkens back to 2005 and 2006, when those toxic CDOs were first issued.

The euro could be in an over-sold situation, says Goldman Sachs and Dr. Feldstein. However, a potential correction can not disguise the elephant in the champagne room - the political and structural weakness in the single currency union.

Some weeks ago we presented evidence that the sovereign CDS market pales in comparison with cash notionals outstanding, and furthermore, we demonstrated that sovereign spreads have been led by cash selling, which has been followed only subsequently by CDS moves, not the other way around. The fact, however, did not stop the bashers. Today, ISDA, the International Swaps and Derivatives Association, has issued the following statement, which along the lines of our observations, refutes claims that CDS speculators are to blame for widening (but not, shockingly, tightening) in sovereign spread moves.

Those that want to ban CDS don't understand how the world works. They certainly don't get the fact that the US mortgage market is one gigantic CDS mess.

If you’re of a certain age, chances are you remember exactly where you were when JFK was assassinated. Similarly, if you’re from Canada or the United States and have an even remote interest in hockey, it’s highly likely that you remember exactly where you were when ‘Sid the Kid’ scored the winning overtime goal in the Olympic gold medal game. These were both "significant events", albeit for different reasons. We wonder, however, if any of you recall where you were on September 18th, 2008? Do you remember that day? We can’t seem to recall it either, which is strange, because it was one of the most important days of the decade. October 7, 2008 is another day that should stick out in our memories, but we’re sure you don’t remember that day either – and we’re in the same boat. How is it, then, that we can’t recall where we were or what we were doing on the two days the entire financial system almost collapsed?!? It boggles our mind. These dates should have been emphasized in every "review of the decade" written at the end of 2009, but we’ve been hard pressed to find them mentioned in any mainstream publication. This is troubling to us, and makes us wonder if people are even aware of the incredible events that took place on those fateful days only eighteen months ago. - Eric Sprott And David Franklin

Are you having a good crisis?

Unlike economics, Wildland Fire Science is actually a science. Unlike economists, normal people actually know what the future holds. Debt matters, deleveraging is a bitch, and economist religious rituals ensure our destruction will be more severe and complete than any conceivable alternative. Beware the inevitable conflagration resulting from high levels of debt, followed by extended low interest rates.

It doesn't take rocket science to understand 2 basic ways we can reduce our debt ...