DOWN THe RABBIT HOLE

A couple of journeys are underway that probably should have a GPS attached before they go any further.

Bernie Sanders, Senator of Vermont, an avowed socialist and therefore a man to be recognized for at least being honest, has proposed a two page bill giving someone--forgive me, I'm not quite sure who--the proposed authority to close down or break up a financial institution deemed too big to fail (TBTF). The great thing about Bernie is he is right up front; no nonsense, no hidden agendas, no subterfuge. Bernie wants financial institutions either nationalized or tightly controlled by the government to the extent of de facto nationalization...the big ones that is. Bernie's argument is that his idea gets rid of the TBTF risk. Sure would. Bernie is the Mad Hatter in our little adventure, understanding little but expressing much. Sort of sets all notions of corporate governance and regulatory affairs back a notch, eh? Some clown wakes up one morning and says, "Think I'll shut down Goldman Sachs today, wonder how that might affect their debtors and creditors?" Counterparty risk? Don't give it a thought. Continuing obligations? Who cares. Shareholders? Win some, lose some. To guys like Bernie, the chance to play God is really appealing.

The other road down the hole is presently being explored by our good buddies, the Euros. Their immediate solution to things they don't like is to tax them--hopefully, out of existence. They are proposing that certainly banking activities they don't like be taxed. Quite remarkably, The Suit has expressed his displeasure. Could it be, unlike the Euros, The Suit hasn't realized that his boss desperately needs every source of revenue under the sun and here's another way to get some more from the bad guys in our little tea party? The Euros figured out this approach a long time ago. Of course if the business is worth doing it will get done; a tax only raises the cost of the doing and that of course is ultimately paid by the client. But perhaps I am too harsh. Perhaps The Suit recognizes that this really isn't such a good idea.

Anyway, as madness goes to the fore, the name and looming presence of Paul Volker has reappeared. The Leader has figured out that if he were to put all the credibility attached to his band of merry men in a basket, it wouldn't amount to a bucket of spit next to that of Volker. Re-enter Paul after being badly used by this mob at the start of the year. I hope the grand old man has learned his lesson but then again, no one is more correct in the approach to TBTF than he and if what comes out of this is a return to the future through a re-examination of the merits of Glass-Stegle considerable good will have been done. However, I am completely distrustful of this administration and I fear that he is back only once more to be used as a frontace to their designs. Then again, I've been wrong before...at least once.

There is a common theme emerging throughout all this and that is one of complete and total control of all things this bunch touches. It is still a bit too soon to see how this works out and much has yet to occur. I think I might wait and see but in the mean time I'm going to wax a bit philosophical over the next few days with some more random thoughts. A friend has asked for a couple of ideas as to what is on the horizon and I think I may just do that here. I'm beginning to like this God-like role. Maybe there's more commonality between Bernie and me than I realize. Scary, eh?