The White House announced today that The Leader will do all that is necessary for American Gun Control through the use of 16 Executive Fiats in a tacit admission that the laws The Leader wants passed cannot be passed so what the hell, we'll have them anyway. This is becoming fascinating to watch; We may have a King before we are done! I jest...do I not.
Anyway, the back and forth on the debt ceiling became more heated today with more advice being thrown about on both sides. I think in the back of a lot of minds is this train of thought: we are hurdling along on a pace that will, in a few short years, produce $20 trillion in debt and one of the things facilitating that fact is the absence of any market discipline as a result of the actions of the Federal Reserve which has inserted itself into the process in a manner so immense that the age-old cry of "Don't fight the Fed" has become almost a joke. At this stage it may appear to some that the only way to protect the future is to cause a catastrophe now; an event to which there will be such adverse repercussions as to deny future market access only at levels that cannot be affected by continued Fed intervention...i.e. a default. As long as The Leader and his followers, encouraged by the Krugmans of the world, believe that their dreams for a future America as a European-like social democratic state can be financed indefinitely, there will be no change in current policy, hence the funding train must be derailed despite the clear costs of such an action. Or so the thinking goes. But the absolute faith in the European model is all consuming on the left. Despite the fact that it's state today can best be described in that wonderful old Oz (I think) phase, "Hopeless but not serious" matters not a whit. These are true believers, you see, and will not be outdone. And so it goes.
Anyway, in this week of Bank earnings, I've been thinking about another thing. We have but two real Investment banks remaining on a surface that once gave home to dozens. Goldman and Morgan Stanley. Problem is, we don't call them that any more; we simply call them banks, which raises a number of new issues and results in a number of points of confusion. Are all "banks" the same, and if not why is the funding protection and oversight of the Fed being applied to these two institutions which are not only different from one another but wildly different from the other "banks" out there? Oh, I understand how it came about and why but in this brave new world created by our regulators does it need be so today? This is something else I would like to look at in the coming days.
My final little amusement of the day came as a courtesy of CNBC which likes to refer to itself as the world's leading news network. The subject was Japan and if we didn't look out Japan was capable of starting a currency war as a result of the announced devaluation of the Yen (which today slowed as a result of Mr. Abe remarking he thought it had gone far enough). Apparently, busy with other things, CNBC has missed that the Fed's balance sheet roar past $3 trillion on it's way to four trillion at the tune of an announced $85 billion a month and the devaluation of the dollar against a global currency mix of 12% in the last few years. CNBC apparently works under the same game plan as The Leader: we won, you lost Japan. If we say the current currency war is your fault.......it damn well is.
Correction. I stated last week that the on the run Italian 3 year traded just short of 4%. It actually traded just short of 3%
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