Bernie caught 150 years today. The max. But right to the end Bernie was a stand up guy. He didn't roll over on anybody to the point where some people are beginning to suggest that maybe--just maybe--he pulled this off all by himself. Forgive me if I don't believe that it would have been possible. The saga is of course far from over and it will be fascinating to watch what is revealed and argued in the coming months. Way back in the last century I took the New York State Bar exam. On it there was a essay question (there were 12 in those days) on bankruptcy and the jurisdictional issues posed by the facts in the case as between two Federal Districts. No one with whom I spoke after the exam knew what the hell was going on. Amazingly, they through the entire question out grading only the remaining eleven. That's why I passed; that's why most of my friends passed. This mess has more issues than that question. What goes 'round...but if you think there are regulatory issues involving banking how 'bout the SEC in this one? As the kids would say, "Like, DUH!" Back in the Great Depression, FDR hired Joe Kennedy as the first SEC commissioner. He rational was that it was best to send a crook to catch a crook. Wise. The Leader, who seems to be channeling up FDR at every turn should perhaps take heed.
Missed in all of the deaths and sentencing over the last few days was the restatement of the Chinese position that the world needs a new reserve currency to replace the dollar. With more force and conviction this time SDR's were brought to the fore. Now there are a bunch of really smart guys out there that keep saying don't worry, the Chinese will still hold the Dollar because they have no alternative. Then again, the Chinese have never been a bunch for idle chatter. Most statements by that government are for a purpose although, admittedly, opaque at times. I can't seem to get over this great uneasy feeling that they are telling us something and we are not listening. I don't like it, I really don't
In a few days, we will find out how the banks did in the second quarter. We already know about Goldman; gangbusters. As stated here, if you're a trading institution with a big capital markets business with this kind of a yield curve your organs could be in the midst of being harvested and you could still make money. I don't know how they do it, I really don't. Oh, I don't mean how they make money, that's easy. A few years back, some wag asked Bill Gates who was his greatest competition. His answer? Goldman Sachs. Remember, pay peanuts, you get monkeys. Pay over the top? You get really smart people. That's how they make money. No, what I'm talking about is how do they come up smelling like a rose every time they fall in poo-poo. The got the outrageous bail-out in AIG even when they were prancing about claiming that they were fully hedged and in 1997, who had the opportunity to front-run Long Term Capital Management? Why none other than Goldie again whose then-Chairman John Corzine was the overseer of the wind down of LTCN's positions. Chinese wall? Sure. And I have a bridge for sale. Smell a bit of rot, Horatio? I do.
Finally, no sooner does your humble scribe point out that banks' balance sheets tend to look a bit different in the middle of a reporting period than at the end of one, comes Scott Patterson in last Thursday's WSJ in his "Ahead of the Tape" column pointing out the same thing. His solution? Quoting Lou Crandall, chief Economist of Wrightson ICAP, Scottso thinks that all banks should report a daily average balance ; I assume he wishes to add "sheet" to his idea. I've always felt that one of the best definitions for "mixed emotions" was watching a bus load of economists going over a cliff and realizing that there are three empty seats. Daily reporting? Think about it.
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