I got a Nobel Laureate in my corner...who you got?

Remember how I keep banging on about the three month T-bill at virtual zero yield being a serious thing? Remember how this humble corner of cyberspace is long GLD because of that miniscule yield and what its consequences imply (two recent examples linked here)? Well check out what Paul Krugman blogged last night:

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November 20, 2008, 7:15 pm

Don’t panic about the stock market

Panic about the credit markets instead. Interest rate on 3-month Treasuries at 0.02%; interest rate on high-yield (junk) bonds over 20%.

This is an economic emergency.

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Unsurprisingly and quite rightly, nobody gives a rat's trasero about Otto's shrill voice, but when a heavyweight speaks, people listen. Here's spot gold this morning:

You go girl.

Bot GLD at the bell

Is that a breakout? Time will tell
(click to enlarge)

Hell, there's something very strange going on when Berkshire Hathaway CDS's are running at +415bps. Also, take a close look at the three month T-Bill at 0.07% yield. The last time that squeeze happened was the day gold shot up $100 (and I mentioned the reasons why in this post).

So, your humble blogger has bot some of that paper that says I own some of that yellow metal. Trading position only. And I don't wanna put the mojo hex on but I'm already 1% on the trade ex-comms....just hoping that JAG decides to join in the fun (BTW, I didn't add to my JAG yesterday...too chicken).

DYODD, dude.

Chart of the Day

From Brad Setser's blog

File this one under "H" for "holy crap!".

Meanwhile, I asked this question earlier today:

When a gov't cuts a cheque for U$85Bn, where do the funds come from? Seriously, I've been thinking about this since last night and I've come to the conclusion that I don't have a clue.

Well happily, Felix Salmon over at 'Market Movers has answered, and here's the link which includes;

"The real answer, however, is that there won't be any $85 billion check. AIG will draw down this liquidity facility only as and when it needs to, and indeed there's a substantial chance that yada yada go see the rest here....."

Moral of the story: If you don't know, ask.