Thursday, November 15, 2012


This really happened today.  Down in Atlanta, Bernanke was speaking to some bunch called Operation Hope which is organized to get more folks into home ownership, you know, that old "American Dream" stuff that starts and ends at home ownership leaving out most of that fuzzy affordability stuff in the middle.  Seems as though Ben is upset at the banks claiming that they have raised their standards so high that it difficult for prospective home owners to get a mortgage and hence, no fulfillment of the dream for you today my friend.  Now the sight of a regulator telling those whom he regulates to lower their standards is pretty never seen before.  We've seen Congress do it with predictable results but Congress is composed of politicians who are, by definition, craven and stupid.  Regulators have allowed it to occur being fradie-scared at what the politicians might say about them but have never really publicised the fact. Then here comes Ben, and while Ben is down in Atlanta trying to pry open the hearts and wallets of the bankers, his guys up in D.C. announce that they have told the 30 largest banks to get ready for another stress test with part of this one assuming a 12% unemployment rate.  12%  Say WHAT?  You want me to have capital for a 12% unemployment economy?  Well, hell, I don't need a stress test for that.  I'LL JUST GO ALL CASH AND NOT LEND A DIME TO ANYONE YOU MORON!  HOW DOES 100% CAPITAL SOUND TO YOU?

Things aren't much better Over There.  Europe officially went double-dip today with riots in Athens and Madrid along with a few other little dust-up in other financial garden spots.  The German special finance minister to Greece managed to state in public that it takes 3000 Greeks to do the work of 1000 Germans which nearly got him killed by a mob whilst walking from one building to the next, irrespective of the probable accuracy of his assertion.  Spain was told to hurry up with their bail-out demands before it's too late for the EU to do anything about them and Angie and Chrissie threw hissy-fits at each other as to whether Greek debt held by EU members should be forgiven.   And while all this was going on,  the British Press got ahold of a secret EU report that purportedly would reduce the payments from Brussels to the UK by 25% over the next seven years at a time when the Brits are half out the door already.

Honest to God you can't make this stuff up.

Anyway I called Massimo about his morning shocker of the other day.

"OK, the Greek banks take down the issue, go to the the Central bank who buys it from them and ships them right off to the ECB in Frankfurt.  Right?"

"Bravo, Charlie, ma you leave out one little thing."


"The vigor...viga...vichett.."

"The vigorous?  What the hell are you talking about?"

"Si, the vig...that's it!"


"Oh Charlie, tu es proprio Americano.  In between, everybody takes a little...well...not so little piece.  Wonderful business, no?"

"You mean they discount it every time?"

"Sure Charlie, who knows?"

I'm telling you, you can't make this stuff up.

1 comment:

  1. You ought to look at the Adverse (not the severe) stress test. The Fed economists seem to be going full Krugman in assuming they can magically generate 4% inflation with relatively minor effects.

    That also seem to have forgotten interest rate parity.