Wednesday, March 11, 2015


I keep telling you good folks that I will write the blog whilst chasing about for information of the goings-on of the day/week/month and trying to catch up with 8 year old triplets on a daily basis.  I have constantly lied, although my intentions were good.  It is an impossibility.  I shall never do it again.

I started late today because in my mind the most important breaking event was the results of the stress test, subjective version.  DeutscheBank flunked as did Santander.  Bank of America got a conditional pass and there were issues with J.P. Morgan.  Goldman Sachs passed as did Morgan Stanley and Citigroup hit it out of the park.  Why any of these things happened?  Again, I haven't a clue and as you read over the next few days why all this occurred, just keep in mind that whoever is writing the story doesn't know either because quite frankly, I doubt if the Fed could supply a cogent, intelligent answer either.  but, it does appear that from what has been released the "worst case" scenario was indeed a worst case, and from this we can take away the conclusion that the system is in pretty good shape...or not.  It is always the black swan, and should there be another event...and there will be, we just don't know all goes in the crapper again.  One can only do one's best and move on.

We are going to talk a lot more about this in the days to come, but having reached this point in the Journey from 2008, there is something that I would like to query which has been on my mind for a bit. Why in the hell are Goldman Sachs and Morgan Stanley bunched in with B of A, Citi, Morgan, or even Wells Fargo S.A.?  It would seem tome that if one wishes to reduce the risk of Too Big to Fail to the taxpayer, why not reduce the number of institutions that fir into that risk group?  Goldman, for example, has led a charmed life.  Little does one hear of the sudden creation in 2009 of Goldman's commercial bank in order to make them eligible for the Fed discount window.  Bankhaus Goldman?  Tell you what.  Wander into Goldie some day and tell them you would like to open a checking account.  Sure, would be the response, sign here and give us $5 million.  Why not simply remove Goldie from the discount window chain and tell them they are on their own.  Ditto with Morgan Stanley.  If they want to make FHA mortgages, fine, but otherwise let's get real as the kids say and have them manage their business in the open, for all to see, and stop with this apples and oranges/pick a winner/nonsensical regulatory gamesmanship.   Just one less river to cross...can anybody say Volker Rule?

OK, I got that off my chest.  Tomorrow we get into the barrel of fun of the past week.  Shall we start with currencies?

No comments:

Post a Comment