I was cruising down I-80 when it came to me that the last time I had seen the lap top was atop the kitchen island not resting comfortably in the back seat. Just like last year it had been left at home. Turning to Trouble and Strife I never even got the first word out when a curt, "Don't even TRY to go there," hit me. I know that tone; it was my fault anyway so I didn't even try to lay off some of the blame. It could have gotten ugly at 75MPH.
Shame is I missed a pretty good week of stories. The big news on the banking front was the agreement among the regulators to establish new primary capital rules for the larger banking institutions at 5%, putting the U.S. banks at a higher level than their European counterparts as well as being somewhat at a disadvantage as to the assignment of risk as to assets. The Euros continue to regard sovereign risk in the Euro zone as having a risk weighting of 0 whereas U.S. banks only enjoy that concept in regard to full faith and credit U.S. debt. Somehow, I seem to think there is a difference in value between Greece and Germany but our Euro brothers and sisters do not.
Now most of the larger institutions can already point to acceptable capital levels or plans that will get them there in a relatively short period of time, but what troubles me, as I continue to point out over and over, is that capital in the sense of which the regulators are speaking, can be important when the Second National Bank of Boot Hill's loan to Farmer Brown goes in the gurgle tube because it didn't rain this year, but doesn't mean a damn thing to J.P. Morgan if all the liquidity in the system dries up: banks get sick on the asset side but die on the liability side…those that count, that is. With all respect to Boot Hill, it doesn't count. So, we have all these fine people in D.C. and Billy the Dud patting themselves on the back when in fact they have done absolutely nothing to improve the system in any way that counts for those among their charges who do count. A round of applause and let us move on.
Citicorp got another piece bad news last week as it was announced that the Federal A.G. in Massachusetts was opening an investigation of money laundering involving their affiliate--once removed--BANAMEX of California. Hummmm. Tarullo deciding that his boys' algorithms work better than all those which had mutually been agreed and now another Massachusetts-based entity jumping up ugly at the Pinata that is/will become Citicorp? Why, you ask? Could it be political cover? Could it be Crazy Lizzy organizing this entire thing? Get good odds from me that it is. I don't believe in coincidences. It is so transparent it is ridiculous, but of course the deaf and dumb media just will not pick it up. As a repost, Citicorp today reported far better than expected operating results and a great improvement in their balance sheet which had the effect of giving a big boost to the stock market at least in the short term. Good on ya, mates.
Finally, Greece announced an immensely sucessful 5 year bond issue of over 3 Billion Euros yielding just under 5%. Coverage was nearly 4X. Remarkable. This morning, the Governor of the Banque de France announced that the Euro Crisis is mostly behind us. Oh good, I was waiting for that. I am also waiting to be told that the Russians have not invaded the Eastern portion of the Ukraine and the Ukrainians will not fight as a proud people will do from time to time. Just a few more events that alter and illuminate our time…and my lap top was in the kitchen. Think I'm getting old?
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