NOW, NOW...

Carter, that is simply unkind. To suggest that all Mr. Bernanke has done is with his QE II is to create a stock market bubble...really! Why, no greater mind than the senior economist at Moody's (and we know how clever they have been) is convinced that this is the greatest idea since the stimulus which everybody knows created 2,000,000 jobs and has been stress tested in Japan 20 years ago (and counting). But thanks again for the comment and for pointing out the downgrade on the German banking sub-debt. While not to dismiss it, I think the reality is that it's still covered unless, and I don't think this is the case, that the sub-debt is outside of German or at least Euro hands. If I'm wrong let me know but crony capitalism in Euroland is going to be alive and well for quite a while.

Anyway, while I was away sunning, there was an interesting development regulatory-wise. Barclays PLC decided that their Deleware based U.S. bank holding company, Barclays Group US Inc. had become a tad expensive and moved their credit card operation in the U.S. back under the U.K. parent company by way of a direct subsidiary. Why you ask? Well, up until Dodd/Frank, there was an exception for bank holding companies owned by foreign banks granted by the Federal Reserve in regard to the amount of capital required to be held within the holding company. Under the new regs, that amount is fixed at 4% of tier 1 capital for everbody. Sod that said Barclays and changed the game despite the fact that the new rules do not take effect until 2015. Whether other foreign institutions will do the same remains to be seen.

I don't really care a great deal about what Barclays does or other institutions do or may not do, but this action is illustrative of what are often the unintended consequences of regulation (and especially over-regulation). I have noted before in this space that in our global marketplace it makes increasingly little difference if a particular business line is conducted in New York or Tinbuktu. The first movement away from Dodd/Frank happens to be on the part of a non-American institution solely because of cost of the regulation itself. As SOX has made clear, cost is not the only factor to seek regulatory safe havens; sheer complexity is also a strong motivator. In another industry, off-shore drilling, Transocean, a quintessently American company is now registered in Switzerland. How does The Leader's EPA (have you noticed the now-almost total us of the possessive?) regulate a Swiss company. By not allowing them to work offshore of our coast line? In the end who is hurt by that?

This is serious stuff and at some point we and our legislators have to realize that the United States is locked in combat with jurisdictions around the world for business which is increasingly global in nature. We can write the finest, toughest and most needed regulations in the world covering various business lines or entire industries but if we cannot enfource them, what is the point or the good. There's more of this to come I fear. Stay alert.