The grandkids were great but I have no idea what's going on. I had expected a real brawl over in Blighty but the finance commission punted...or as they say over there kicked it into touch. Nobody knows what the rules relating to capital adequacy are going to be, no one knows as to what the structure of banks will be and it's beginning to look like everyone is getting tired of the entire thing. In the mean time, the three big guys are substantially more capitalized than any bank over here so the argument shaping up is heading in the, "What's the big deal" direction. Of course you all know my view that when the growth enhancer hits the rapidly turning object, the only percentage of capital that counts is 100% makes me yawn as well. But, the thing that shocked me was a Reuters' report that Barclays Bank, which has total footings of some 1.5 TRILLION POUNDS has but 100 billion pounds in demand deposits. And these guys are worried about capital at the end of the day and not liquidity? Waddya nuts?
Better over on this side of the pond? Ha! There is a widespread mindset forming within the Beltway and in the hallowed halls of finance that nobody understands Dodd/Frank and no one knows how to write regulations that conform to its mandates. Coulda told you so...wait, I did. Rah me. What will happen in the end of course is that the legislators will throw up their hands and turn to the banks to ask them what is it they do and how would you like us to regulate that activity. A veritable win/win...except for the taxpayer. Guys, I keep telling you this, don't regulate the institutions, regulate the people who run the institutions. If it goes wrong, somebody has to die--fiscally, of course. It's all about the money.
And speaking fiscally, the boys are standing eyeball to eyeball, and I think The Leader just blinked. The continuing resolution battle was, in my mind, a lot of hot air. The real fight is now in place over the raising of the debt ceiling and this one could be a doozy. No one wanted to shut down the government last week and everybody knew it. But what is also known is that there is no way...NO WAY the Speaker gets the debt ceiling raised through the House without a substantial pound of flesh on the deficit. The Leader knows that as well as anybody and also realizes that without such legislation things can get very tricky very quickly which is why I think tomorrow's speech may be the defining point of his Presidency. He has indicated that there might be compromises to be made. Let'ss hope he gets this right. We should know by publication time tomorrow.
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