It is way too hot out here in the fly-over zone to even think so today we just get bullet points to keep the mind turning over.
---Jamie Dimon, the CEO of J.P Morgan yesterday told Ben Bernanke what everybody knows but nobody would say: Has anyone given a thought as to the effect that all of these new regs might have in freezing up the financial system? Amazingly, Ben said "not really," claiming that it was a very hard thing to do but what happened two years ago simply could not be repeated, hence, new regs. A greater example of the lame leading the halt has never been seen. Jaime might have thought about what he was going to get when he dropped a couple of mil of his own money on The Leader in '08. Sorry Jaime. Deal with it.
---Germany jumped on the French bandwagon yesterday in regard to Greece. The effort to give the banks time is now in full voice. Of course no one is asking what in the hell the banks were doing for the last three years, but then again, Jaime can't be in two places at once or can he? He might think so.
---Big vote in the Senate today on the famous Durbin addition to the Dodd/Frank law. The vote was to delay the admendment which would slash fees consumers pay each time their debit card is "swiped" and was fought tooth and nail by the banking industry. The vote to delay failed and the consumers win. Personally, I think anybody stupid enough to use a debit card should be charged !0 bucks a swipe, but the banks take it in the neck again. This is not going to hurt Jaime and his buddies so much but the home town guys that are issuers of cards are going to get murdered. Way to go Sen. Durbin. Why don't you walk into Rock Island National this afternood and see what kind of a reception you get.
---And speaking of Senators...It seems Carl Levin crawled under a rock a few days ago and hasn't been seen since. Remember his hearings regarding Goldman Sachs noted for his liberal use of the four letter substitute for fertilizer? Remember Carl accusing Goldman of the "massive short" that almost ended the world? Well, it seems as though Carl's boys couldn't read and if they could they didn't understand what it was they were reading. Got all the numbers wrong in their final report and managed to convince everybody that not only didn't Goldie have a "massive short," but that Goldie may well have lost money on the trades. Stay under the rock, Senator. The world will be better off, but apologize first.
---And speaking of "massive shorts," THE Ohio State University football program is a massive short if I ever saw one. The joy around the mid-west is palpable and in that state "up north" as Woody used to say it's party time. Who cares if we're in the tank as a nation? Go Blue! We need rain to break the heat. It's driving people nuts.
Showing posts with label Geithner Obama. Show all posts
Showing posts with label Geithner Obama. Show all posts
Wednesday, June 8, 2011
Thursday, May 19, 2011
QUITE A DAY
So much has gone on I don't know where to start. Let's get the political stuff over first.
The Leader, in a highly touted speech, today overturned 45 years of American policy by calling for a Palistinian state and the return of Israel's borders to those which existed prior to the 1967 war. I'm hardly a Middle East expert and I have no dog in this fight but the prior U.S. position of defensible borders (the '67 borders specificly declared as not being defensible) was backed as recently as 8 years ago with a resolution of both houses of Congress and a Presidential promise. Given the domestic fights The Leader is facing, Congress's reaction to being dissed is going to be important. I think this guy really believes he got Bin Laden all by himself.
They sprung DLK. Couple of mil in cash and detention in a New York apartment. He also resigned opening up the question (officially) of who is to be the new MD of the IMF. Fear not dear readers it will be France's Finance Minister Christine Lagard for three reasons:
1. She is a European (read yesterday's blog)
2. She is liked by The Suit and more importantly Frau Merkel and
3. All of France will throw a sissy-fit if it NOT a Frenchman and no one in the world needs a French sissy-fit. It is the one thing they still do better than anybody else.
The fact that at this time the guy who should have the job handed to him, Stan Fisher, will not get it. The fact that he was always the smartest (and nicest) guy in the room, has the best c.v. in the world, taught Bernanke everything he knows (but not everything that Stan knows) and has been through the mess we all face a half-dozen times at least, doesn't count. You see, Stan is the Governor of the Bank of Israel and a real, practicing Jew. Finis. Of course he may become available if The Leader has his way as the Bank is in Jerusalem and Jerusalem was not in Israel in 1967, and move to England (...And was Jerusalem builded here..?)but he'd still be a practicing Jew. Yep, Finis.
The FT weighed in yesterday demanding that the Fund must turn away from DSK's economic mistakes. Now I still have a few good friends at that wonderful, is somewhat self-important newspaper, so if you're reading this guys and gals, where were you when he buggered Greece, Ireland and Spain? Concerned about access, were we. Now you know of course that with Mme. Lagard not a damn thing is going to change but you've put yourself on the record and from you on this subject we shall probably hear no more until everything goes down the gurgle tube and which time a confident, "We told you so," will be proclaimed. Still, it's nice to know that you agree with me...then again, you always did.
Finally, Linkedin went public today at $45 dollars a share on the NYSE. Within an hour it traded above $100 and stayed pretty much around that level all day. Did the owner, Mr. Weiner get taken to the cleaner? Well, yeah but haven't we seen this movie before? 1999 come to mind? Can you say "Dot.Com?" Sell a little sliver, alot nothing after a big hype and watch the suckers line up when the pros know damn well why not to short a company even at a P/E of a gazillion to one (if you don't ask your broker...although these days he/she/it might not know either). And I thought all of this was going to change with the administration of The Leader. Silly me. Guess I'll go out and buy some Linkedin tomorrow. THIS time I'll know when to get out before the crash.
The Leader, in a highly touted speech, today overturned 45 years of American policy by calling for a Palistinian state and the return of Israel's borders to those which existed prior to the 1967 war. I'm hardly a Middle East expert and I have no dog in this fight but the prior U.S. position of defensible borders (the '67 borders specificly declared as not being defensible) was backed as recently as 8 years ago with a resolution of both houses of Congress and a Presidential promise. Given the domestic fights The Leader is facing, Congress's reaction to being dissed is going to be important. I think this guy really believes he got Bin Laden all by himself.
They sprung DLK. Couple of mil in cash and detention in a New York apartment. He also resigned opening up the question (officially) of who is to be the new MD of the IMF. Fear not dear readers it will be France's Finance Minister Christine Lagard for three reasons:
1. She is a European (read yesterday's blog)
2. She is liked by The Suit and more importantly Frau Merkel and
3. All of France will throw a sissy-fit if it NOT a Frenchman and no one in the world needs a French sissy-fit. It is the one thing they still do better than anybody else.
The fact that at this time the guy who should have the job handed to him, Stan Fisher, will not get it. The fact that he was always the smartest (and nicest) guy in the room, has the best c.v. in the world, taught Bernanke everything he knows (but not everything that Stan knows) and has been through the mess we all face a half-dozen times at least, doesn't count. You see, Stan is the Governor of the Bank of Israel and a real, practicing Jew. Finis. Of course he may become available if The Leader has his way as the Bank is in Jerusalem and Jerusalem was not in Israel in 1967, and move to England (...And was Jerusalem builded here..?)but he'd still be a practicing Jew. Yep, Finis.
The FT weighed in yesterday demanding that the Fund must turn away from DSK's economic mistakes. Now I still have a few good friends at that wonderful, is somewhat self-important newspaper, so if you're reading this guys and gals, where were you when he buggered Greece, Ireland and Spain? Concerned about access, were we. Now you know of course that with Mme. Lagard not a damn thing is going to change but you've put yourself on the record and from you on this subject we shall probably hear no more until everything goes down the gurgle tube and which time a confident, "We told you so," will be proclaimed. Still, it's nice to know that you agree with me...then again, you always did.
Finally, Linkedin went public today at $45 dollars a share on the NYSE. Within an hour it traded above $100 and stayed pretty much around that level all day. Did the owner, Mr. Weiner get taken to the cleaner? Well, yeah but haven't we seen this movie before? 1999 come to mind? Can you say "Dot.Com?" Sell a little sliver, alot nothing after a big hype and watch the suckers line up when the pros know damn well why not to short a company even at a P/E of a gazillion to one (if you don't ask your broker...although these days he/she/it might not know either). And I thought all of this was going to change with the administration of The Leader. Silly me. Guess I'll go out and buy some Linkedin tomorrow. THIS time I'll know when to get out before the crash.
Tuesday, May 17, 2011
THE WEARIN' OF THE GREEN AND THINGS LESS PRISTINE
I met with Pat Mc'Carrity an' he took me by the hand.
He seys, "How is ol' Ireland and how does she stand?"
'Tis the most distressful country the world has ever seen.
For they're shootin' people even now for wearing of the Green.
The true meaning of that song we hum every March 17 and its verses are not really understood by all who have done so. It is a true song of "the troubles," finishing with,
"...and if the color I must wear is England's bloody red
I'll wear it for the color of the Irish blood's been shed..."
HM Queen Elizabeth II visited the Republic today, the first British Monarch do do so in hundreds of years. She was dressed entirely in Green. It will not erase the memory of terror and hatred that has lasted so long but it was a welcome start that hopefully marks the true end of a horrible period in history. Good on ya, Mame, and kudos to the two governments that made it happen.
And now of course, DSK. One could say that what occurred in that $3000 a night broom closet in New York was the first original thought that ever came out of the IMF but if one believes the accuations out there our boy has followed this thought process before. In my experience, the NYPD doesn't get many high profile cases wrong (unlike show-trials brought on by politically ambitious prosecutors--read Eliot Spitzer) so I am sure the truth will out. Whatever the result, DSK has created more than one awkward situation for a whole bunch of people who are more that a touch out-of-sorts as we speak.
To begin, we just threw the guy who probably would have been M. Le President in the can thereby turning all of French politics on its head and convincing those Frenchmen who weren't already convinced that the Yanks have it in for France to join the chorus. Bad timing as issues of debt, currencies, trade and overall global leadership are not exactly in sync between the two countries.
Of course, He With the Hottest Wife Around is turning handsprings. Reeeelection time! Come On! And just when rumors abound that Mme. Sarkozy is preggers. It just don't get better than that. What timing. What a coincidence...?
Secondly, despite what kind of a human being DSK might prove to be, the guy had clout and a following which is sorely needed in Europe today in light of the financial condition of some of the members of Euroland about whom we have been speaking for a number of months now.
Thirdly--and I'm not at all sure this is a bad thing--it puts the entire question of the future role (assuming a future) of the IMF in the great scheme of things, and clearly opens the door to broader participation of a number of the emerging member states who for years have been complaining that the IMF operates for the sole members of the founding nations...i.e. the western states...not without some justification I might add. If the fall of DSK does lead to a changing of the guard the result could easily turn into a campaign issue in the U.S. of A as there is a large body of opinion on both the right and left that has constantly questioned the use of taxpayer's dollars for reasons that do not directly benefit this country and the new order would undoubtably result in a clamor to "spread the wealth" globally highlighting what seems to be one of The Leader's core beliefs and not at the best of time for him.
Fourthly, it's going to be important to watch who gets the nod for the new head boy. Of all things, Joe Ackermann of DeutscheBank is being pushed by persons or person unknown. Given the first thing on the agenda has to be the sovereign debt crisis and the exposure of European banks--especially, but not exclusively--Germany banks, we could be looking at a major league taxpayer rip-off that will have consequences far greater than any Hellenic implication imaginable. We shall keep watch.
Finally, do you think anybody is going to ask the question on our behalf Mr. and Mrs. Taxpayer what in the hell this scuzbucket was doing in a $3000 a night room whilst on private business in New York and booked on Premirer Classe on L'Air Chance because you know he wasn't paying for it? Somebody damn well better.
He seys, "How is ol' Ireland and how does she stand?"
'Tis the most distressful country the world has ever seen.
For they're shootin' people even now for wearing of the Green.
The true meaning of that song we hum every March 17 and its verses are not really understood by all who have done so. It is a true song of "the troubles," finishing with,
"...and if the color I must wear is England's bloody red
I'll wear it for the color of the Irish blood's been shed..."
HM Queen Elizabeth II visited the Republic today, the first British Monarch do do so in hundreds of years. She was dressed entirely in Green. It will not erase the memory of terror and hatred that has lasted so long but it was a welcome start that hopefully marks the true end of a horrible period in history. Good on ya, Mame, and kudos to the two governments that made it happen.
And now of course, DSK. One could say that what occurred in that $3000 a night broom closet in New York was the first original thought that ever came out of the IMF but if one believes the accuations out there our boy has followed this thought process before. In my experience, the NYPD doesn't get many high profile cases wrong (unlike show-trials brought on by politically ambitious prosecutors--read Eliot Spitzer) so I am sure the truth will out. Whatever the result, DSK has created more than one awkward situation for a whole bunch of people who are more that a touch out-of-sorts as we speak.
To begin, we just threw the guy who probably would have been M. Le President in the can thereby turning all of French politics on its head and convincing those Frenchmen who weren't already convinced that the Yanks have it in for France to join the chorus. Bad timing as issues of debt, currencies, trade and overall global leadership are not exactly in sync between the two countries.
Of course, He With the Hottest Wife Around is turning handsprings. Reeeelection time! Come On! And just when rumors abound that Mme. Sarkozy is preggers. It just don't get better than that. What timing. What a coincidence...?
Secondly, despite what kind of a human being DSK might prove to be, the guy had clout and a following which is sorely needed in Europe today in light of the financial condition of some of the members of Euroland about whom we have been speaking for a number of months now.
Thirdly--and I'm not at all sure this is a bad thing--it puts the entire question of the future role (assuming a future) of the IMF in the great scheme of things, and clearly opens the door to broader participation of a number of the emerging member states who for years have been complaining that the IMF operates for the sole members of the founding nations...i.e. the western states...not without some justification I might add. If the fall of DSK does lead to a changing of the guard the result could easily turn into a campaign issue in the U.S. of A as there is a large body of opinion on both the right and left that has constantly questioned the use of taxpayer's dollars for reasons that do not directly benefit this country and the new order would undoubtably result in a clamor to "spread the wealth" globally highlighting what seems to be one of The Leader's core beliefs and not at the best of time for him.
Fourthly, it's going to be important to watch who gets the nod for the new head boy. Of all things, Joe Ackermann of DeutscheBank is being pushed by persons or person unknown. Given the first thing on the agenda has to be the sovereign debt crisis and the exposure of European banks--especially, but not exclusively--Germany banks, we could be looking at a major league taxpayer rip-off that will have consequences far greater than any Hellenic implication imaginable. We shall keep watch.
Finally, do you think anybody is going to ask the question on our behalf Mr. and Mrs. Taxpayer what in the hell this scuzbucket was doing in a $3000 a night room whilst on private business in New York and booked on Premirer Classe on L'Air Chance because you know he wasn't paying for it? Somebody damn well better.
Tuesday, April 12, 2011
BACK HOME AND BAFFLED AS USUAL
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.
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.
Monday, March 7, 2011
TOUGH TIMES
I mean when you have to highlight the bold and brave move of Moody's in lowering Greece's rating from B1a to B1 you got a serious blogging problem on your hands. These are tough blogging times my friend, really tough times. Maybe, I should become a political pundit; there always seems to be room for just one more of those. Then again, constant raving is probably not particularly good for my my overall physical and mental state given the quality of our politics and politicians these days. So Greece becoming junkier and junkier is all I have I guess for the foreseeable future.
Oh yeah, Poo Bear did put out another warning last week that she and the FDIC would deal harshly and quickly with any bank that was in danger of failure. Who cares. And along the same lines, the pols and the news guys have finally figured out (well, almost) the Dodd/Frank has probably made the situation a good deal worse by the clear creation of two (at least) tiers of financial institutions as witnessed by the fact that the risk premium assigned to institutions deemed by the market as not big enough not to fail has increased to 78 basis points according to one report. I don't know whether this is correct but clerly what will happen is that the big will get bigger, risk in the system will be more and more centered in the big institutions making them more risky, the small will want to get big and take bigger risks in an attempt to accomplish that goal and the realization will eventually come that we have made things worse not better. Way to go guys.
Oh yeah, another worthy news item. Bill Gross, he of PIMCO, proclaimed today that what we need are more taxes on the "rich" (to be defined) and higher taxes on corporations. I am sure The Leader and his mob will be screaming, "See, see, see, a leader of American finance says we need higher taxes!" The New York Times will be right along with them. Of course, overlooked in all of this is the fact that poor Mr. Gross is right where you don't want to be in an enviornment in which the Fed is going to do it's damndest to inflate the hell out of our problems: Mr. Gross owns the biggest fixed income (bond) portfolio in the world and is about to get murdered. What Mr. Gross is trying to say is we need more revenue at the governmental level but being no brighter than the average politician he thinks the way to get it is to raise taxes rather than by redoing the tax code in the manner that Billy's guy and the Wyoming Wing Nut suggested and which everyone has ignored, especially The Leader who appointed them...Oh damn, I'm becoming a political pundit. See what happens when there's nothing going on. Scary.
Oh yeah, Poo Bear did put out another warning last week that she and the FDIC would deal harshly and quickly with any bank that was in danger of failure. Who cares. And along the same lines, the pols and the news guys have finally figured out (well, almost) the Dodd/Frank has probably made the situation a good deal worse by the clear creation of two (at least) tiers of financial institutions as witnessed by the fact that the risk premium assigned to institutions deemed by the market as not big enough not to fail has increased to 78 basis points according to one report. I don't know whether this is correct but clerly what will happen is that the big will get bigger, risk in the system will be more and more centered in the big institutions making them more risky, the small will want to get big and take bigger risks in an attempt to accomplish that goal and the realization will eventually come that we have made things worse not better. Way to go guys.
Oh yeah, another worthy news item. Bill Gross, he of PIMCO, proclaimed today that what we need are more taxes on the "rich" (to be defined) and higher taxes on corporations. I am sure The Leader and his mob will be screaming, "See, see, see, a leader of American finance says we need higher taxes!" The New York Times will be right along with them. Of course, overlooked in all of this is the fact that poor Mr. Gross is right where you don't want to be in an enviornment in which the Fed is going to do it's damndest to inflate the hell out of our problems: Mr. Gross owns the biggest fixed income (bond) portfolio in the world and is about to get murdered. What Mr. Gross is trying to say is we need more revenue at the governmental level but being no brighter than the average politician he thinks the way to get it is to raise taxes rather than by redoing the tax code in the manner that Billy's guy and the Wyoming Wing Nut suggested and which everyone has ignored, especially The Leader who appointed them...Oh damn, I'm becoming a political pundit. See what happens when there's nothing going on. Scary.
Monday, February 28, 2011
OFF AND RUNNING
Whew, where to begin? I can't belive so much has happened since we left town. Florida was beautiful by the way, as it always is between Oct 15 and April 15. The other six months it's uninhabitable. Watching the grandkids at Disney World is worth the $11,000,000 it takes to get into the damn place. What a concept.
Anyway, The Leader and his party have the knickers in a twist at the goings-on in the various states and the heat their boys in the union movement are taking. Funny, I don't hear any of that, "I won, deal with it" or "elections have consequences" talk coming out of his mouth lately. In fact not much is coming out that makes any sense at all, especially in the matter of the budget or the nation's finances as we careen towards a shut down of the government. It's not going to happen but in a rather perverse way I sort of wish I could witness a missed payment on the national debt. What a kick; it would make Ali Baba square--or whatever its name is--in Cairo look like a gathering of grandma's knitting circle. One can dream, can't one?
One thing that is important that did occur was the "merger" of the New York Stock Exchange with the Deutsche Bourse. Important in the sense of what this tells us rather than the actually effect it will have in the real world of stock trading. There's very little doubt in my mind that the loss of a substantial amount of the new capital raising business that made New York the center of the financial universe to places like Frankfurt, London and Hong Kong was the result not only of the vast world-wide creation of wealth around the globe in the past 20 years but also as a result of the overregulation--IMHO--of the U.S. markets. With laws such as SOX we are simply a pain in the butt to the rest of the world--and we live in a HIGHLY competitive world. The same thing is going to happen to our hold over the capital markets as a result of the moronic Dodd/Frank debacle (more on that tomorrow). But instead of seeing the light, the only thing that wizz-bang of finance, Chuckie Schumer can respond when asked if the deal will be approved is,"New York had better come first in the new name." Last time I heard that was when Morgan Guaranty bought Chase Manhattan (J.P. MorganChase) and the chairman of Chase said, "Well, at least we saved the name." Tom was a hell of a nice guy; too bad he was an idiot. We lost, guys...WE LOST! And we're about to lose again.
This weekend there was another momentous event: Ireland's ruling party of 70 years got murdered at the polls. Oh, everyone knew they were going to lose but they were slaughtered. Why momentous, you say? Well, for those who were paying attention one of the campaign promises made by the in- coming Fine Gael was to lay on a little "burden sharing" in regard to the treatment of the Irish banking system. Regular readers will know that the previous government was extremely generous towards creditors, basically guaranteeing all of the banks' obligations; not this new bunch. They are looking for bondholders and other creditors to take a haircut and whooo-eee, The French and the Germans don't like that one bit because it's their banking systems we're talking about as well as the good burgers of Kensell Rise and High Street Ken. Needless to say, watching all of this unfolding will be the Greeks and the Spanish and the...well, you get the idea. The thought of this playing out over the next few months is simply delicious. I'll be watching along with my fellow dead-beats. Good to be back.
Anyway, The Leader and his party have the knickers in a twist at the goings-on in the various states and the heat their boys in the union movement are taking. Funny, I don't hear any of that, "I won, deal with it" or "elections have consequences" talk coming out of his mouth lately. In fact not much is coming out that makes any sense at all, especially in the matter of the budget or the nation's finances as we careen towards a shut down of the government. It's not going to happen but in a rather perverse way I sort of wish I could witness a missed payment on the national debt. What a kick; it would make Ali Baba square--or whatever its name is--in Cairo look like a gathering of grandma's knitting circle. One can dream, can't one?
One thing that is important that did occur was the "merger" of the New York Stock Exchange with the Deutsche Bourse. Important in the sense of what this tells us rather than the actually effect it will have in the real world of stock trading. There's very little doubt in my mind that the loss of a substantial amount of the new capital raising business that made New York the center of the financial universe to places like Frankfurt, London and Hong Kong was the result not only of the vast world-wide creation of wealth around the globe in the past 20 years but also as a result of the overregulation--IMHO--of the U.S. markets. With laws such as SOX we are simply a pain in the butt to the rest of the world--and we live in a HIGHLY competitive world. The same thing is going to happen to our hold over the capital markets as a result of the moronic Dodd/Frank debacle (more on that tomorrow). But instead of seeing the light, the only thing that wizz-bang of finance, Chuckie Schumer can respond when asked if the deal will be approved is,"New York had better come first in the new name." Last time I heard that was when Morgan Guaranty bought Chase Manhattan (J.P. MorganChase) and the chairman of Chase said, "Well, at least we saved the name." Tom was a hell of a nice guy; too bad he was an idiot. We lost, guys...WE LOST! And we're about to lose again.
This weekend there was another momentous event: Ireland's ruling party of 70 years got murdered at the polls. Oh, everyone knew they were going to lose but they were slaughtered. Why momentous, you say? Well, for those who were paying attention one of the campaign promises made by the in- coming Fine Gael was to lay on a little "burden sharing" in regard to the treatment of the Irish banking system. Regular readers will know that the previous government was extremely generous towards creditors, basically guaranteeing all of the banks' obligations; not this new bunch. They are looking for bondholders and other creditors to take a haircut and whooo-eee, The French and the Germans don't like that one bit because it's their banking systems we're talking about as well as the good burgers of Kensell Rise and High Street Ken. Needless to say, watching all of this unfolding will be the Greeks and the Spanish and the...well, you get the idea. The thought of this playing out over the next few months is simply delicious. I'll be watching along with my fellow dead-beats. Good to be back.
Friday, January 28, 2011
THE RACE TO WASTE (of time)
It's going to be a close one this year. Davos is always an early leader of the pack what with it's expenditures approaching a billion dollars this year on nothing but ego. A long discussion yesterday on financial regulation produced absolutely nothing I am told except a couple of fairly heated, private arguments. Jamie Dimon announcing that he was tired of hearing criticism of banks and a general consensus that if it wan't business as usual, it was damn close. Oh yeah, Jamie also put his imprematur on the Greek bail-out and by implication, Ireland, Portugal and whatever else comes along I guess. By the by, Jamie is of Greek heritage. Beware of Greeks bearing gifts...and especially those who change their names. Wonder what it was?
The other contender for the biggest waste of time is the Financial Crisis Inquiry Commission, chaired by Phil Angelides, whose report was issued the other day. Wait, I take that back. Having but ten members THREE reports were issued: one by Democrats on the committee, one by three Republicans and one by one guy who said the other two reports were crap. Surprisingly, no one has paid any attention other than to state that this 500-odd page, soon to be best-seller, is now on sale at a Borders near you; which may be an indication why Borders is in the toilet. I have no idea what the hell this exercise cost the American people but it has to be in the millions. Now besides being the former head of the California Democratic Party, ol' Phil was in charge of the finances for Los Angeles County. The theory behind his appointment as Chair was, I guess, "it takes one to know one," but I may be wrong. The scary part is I bet at some point The Leader and The Suit will start quoting from some part of the majority's report to prove a point. The lame, leading the halt, leading...God knows what whilst ignoring the Bowles/Wing Nut commission which had some pretty good ideas to chew on.
Nevertheless, next week we shall have our own little discussion as to these meaty issues which seem to have brought all of these great minds world-wide to a grinding standstill. Stay tuned, and if you run into Al Gore, send him this way. We have a few folks around here who would like to ask him some questions about this global warming thingy. See you Monday.
The other contender for the biggest waste of time is the Financial Crisis Inquiry Commission, chaired by Phil Angelides, whose report was issued the other day. Wait, I take that back. Having but ten members THREE reports were issued: one by Democrats on the committee, one by three Republicans and one by one guy who said the other two reports were crap. Surprisingly, no one has paid any attention other than to state that this 500-odd page, soon to be best-seller, is now on sale at a Borders near you; which may be an indication why Borders is in the toilet. I have no idea what the hell this exercise cost the American people but it has to be in the millions. Now besides being the former head of the California Democratic Party, ol' Phil was in charge of the finances for Los Angeles County. The theory behind his appointment as Chair was, I guess, "it takes one to know one," but I may be wrong. The scary part is I bet at some point The Leader and The Suit will start quoting from some part of the majority's report to prove a point. The lame, leading the halt, leading...God knows what whilst ignoring the Bowles/Wing Nut commission which had some pretty good ideas to chew on.
Nevertheless, next week we shall have our own little discussion as to these meaty issues which seem to have brought all of these great minds world-wide to a grinding standstill. Stay tuned, and if you run into Al Gore, send him this way. We have a few folks around here who would like to ask him some questions about this global warming thingy. See you Monday.
Thursday, January 27, 2011
BACK TO WHAT'S GOING TO MATTER
Certainly nothing that was in The Speech Tuesday night. The Leader, for all the hopes of future years, is a committed Socialist/Leftist/Big Govvie Guy, call him whatever you wish, with the understanding that there is nothing wrong with being a proponent of any of those things except that for the most part events have proven they don't work very well--or at least in my opinion. So, what we can expect from here is a knock down, drag-out fight up to the election of 2012 between the right and the left with little being accomplished, the economy lumbering forward, unemployment remaining in the 9% range, housing stinko, and a general funk settling over the business climate which will overwhelm the momentary good feels brought about by the results of last year's election (make no mistake, it was the results that brough about the pop in confidence) with the knowledge that the only the The Leader cares about is getting reelected. He might just do it as no strong opposition has yet emerged. Then again, things could go south in a hurry which could change the game entirely. Might happen, too.
Inflation, despite the administration's claims and the view of the Fed is real. Oh, not in the official numbers but in the tape from the cash register folks get when their weekly shopping is over. Jimmy Rogers was on the horn the other day predicting $150-$200 oil. Rogers is not a dope. To supply ethonol to the level of 15% which will kill my 1993 Acura has already had an effect on food prices: we compete with China and India for most commodities now...hello; interest rates on the rise despite QE II and dare we mention the looming muni situation?
We dare. Today, Moody's announced that they would begin to consider the pension overhang on the states' credit ratings. For the usual suspects, that can't be good but the dummies at Moody's are about to get in wrong again. Rather than making their own assumptions in regard to the reinvestment rates from which shortfalls or surpluses are calculated, they intend to accept the states' evaluations at face value. Remember 2008? There was some question as I recall as to the valuation of certain assets held on the books of various financial institutions around the world. The institutions felt it was 100...others felt it was somewhat below that figure and that's when the problem started. In merely highlighting this issue, Moody's will spotlight it which is not particularly useful but then again, no one ever clainmed these guys were very smart. Right at the time when Illinois is planning to raise a few billion here and there to fund its pensions plans for the year. Ya gotta wonder. My father used to say, "Do it right or don't do it at all." Moody's never met my father.
Paul Ryan seems to be the point guy for the Loyal Opposition which is good because he's nobody's fool. I would, however, like to see him attack our dreadful fiscal shape with an all out assault upon the tax code rather than messing about the edges as he seems to be doing. Is there no support in his own party for this? I frankly don't understand because all of the logical arguments seem to be supportive of this goal. Is it because once one scratches off the red or the blue one winds up with the same politician underneath? Ya gotta wonder.
Finally, did anyone notice that the other night The Leader barely mentioned the views of the Bowles/Wyoming Win Nut Commission that he himself handpicked, and there was barely a mention of that fact in the mainstream media or anywhere else for that matter? They actually came up with a few good ideas and yet the Commission has been cast aside as though it never happened. Ya gotta wonder. I'm going to do just that.
Inflation, despite the administration's claims and the view of the Fed is real. Oh, not in the official numbers but in the tape from the cash register folks get when their weekly shopping is over. Jimmy Rogers was on the horn the other day predicting $150-$200 oil. Rogers is not a dope. To supply ethonol to the level of 15% which will kill my 1993 Acura has already had an effect on food prices: we compete with China and India for most commodities now...hello; interest rates on the rise despite QE II and dare we mention the looming muni situation?
We dare. Today, Moody's announced that they would begin to consider the pension overhang on the states' credit ratings. For the usual suspects, that can't be good but the dummies at Moody's are about to get in wrong again. Rather than making their own assumptions in regard to the reinvestment rates from which shortfalls or surpluses are calculated, they intend to accept the states' evaluations at face value. Remember 2008? There was some question as I recall as to the valuation of certain assets held on the books of various financial institutions around the world. The institutions felt it was 100...others felt it was somewhat below that figure and that's when the problem started. In merely highlighting this issue, Moody's will spotlight it which is not particularly useful but then again, no one ever clainmed these guys were very smart. Right at the time when Illinois is planning to raise a few billion here and there to fund its pensions plans for the year. Ya gotta wonder. My father used to say, "Do it right or don't do it at all." Moody's never met my father.
Paul Ryan seems to be the point guy for the Loyal Opposition which is good because he's nobody's fool. I would, however, like to see him attack our dreadful fiscal shape with an all out assault upon the tax code rather than messing about the edges as he seems to be doing. Is there no support in his own party for this? I frankly don't understand because all of the logical arguments seem to be supportive of this goal. Is it because once one scratches off the red or the blue one winds up with the same politician underneath? Ya gotta wonder.
Finally, did anyone notice that the other night The Leader barely mentioned the views of the Bowles/Wyoming Win Nut Commission that he himself handpicked, and there was barely a mention of that fact in the mainstream media or anywhere else for that matter? They actually came up with a few good ideas and yet the Commission has been cast aside as though it never happened. Ya gotta wonder. I'm going to do just that.
Wednesday, June 23, 2010
ENGLISH SPEAKING NATIONS
Just back to earth after watching England go through with a workmanship performance and the United States take the Group in a heart-stopping match of the highest quality. If ever a side deserved a result, this was the one and the manner in which they played together and achieved success was nothing short of spectacular.
I wouldn't go so far as to say soccer is a window to the world, but this mob in Washington might want to look in a gain a few lessons from this United States squad. Today was not a good day for this administration (except in the eyes of the mainstream media who are desperately looking for something good to say about The Leader. "The new Harry Truman" is the cry going up (Apologies, by the way. It was not HST and a bucket of warm spit but Alvin Barkley---thanks to reader George). L'Affair McCrystal on the eve of the G-20 summit is not helpful. I suppose his handler think this makes Obama look strong: I think it makes him look the fool because the rest of the world will not view this as being about one man but about an administration in complete disarray. Afganinstan is Mr. Obama's war: the man he has now put in charge is the man excoriated by The Leader and his colleagues in the party less than three years ago and is actually taking a demotion to conduct this action. Looks like we may have a few holes on the bench where four-star generals usually sit. World leadership does not come from actions such as this. Just a personal thought...then again what else does one find in a blog? Dummy.
Unfortunate in it's timing was a completely nonsensical puff piece in the Journal op ed page today from the dynamic duo of The Suit the lately quiet Larry Summers. Read it for a laugh because that's what everyone who will be in Canada over the weekend will be doing. It is becoming increasingly clear that the element of "every man for himself" is becoming dominant in these financial discussions and I would be quite surprised if the result of this latest go-round is anything more. Again, we appear not to have a clue and even less influence but we shall see.
Perhaps you have noticed that I have chosen not to comment on the negotiations in Congress as to the financial services legislation. Simple reason: I haven't a clue other than what I read in the papers and from what I read it appears that not too many folks in Congress have a clue either. So I shall choose to wait until the final version arrives which hopefully will not interfere with the Ghana match on Saturday. Us against a continent. Should be a cracker.
I wouldn't go so far as to say soccer is a window to the world, but this mob in Washington might want to look in a gain a few lessons from this United States squad. Today was not a good day for this administration (except in the eyes of the mainstream media who are desperately looking for something good to say about The Leader. "The new Harry Truman" is the cry going up (Apologies, by the way. It was not HST and a bucket of warm spit but Alvin Barkley---thanks to reader George). L'Affair McCrystal on the eve of the G-20 summit is not helpful. I suppose his handler think this makes Obama look strong: I think it makes him look the fool because the rest of the world will not view this as being about one man but about an administration in complete disarray. Afganinstan is Mr. Obama's war: the man he has now put in charge is the man excoriated by The Leader and his colleagues in the party less than three years ago and is actually taking a demotion to conduct this action. Looks like we may have a few holes on the bench where four-star generals usually sit. World leadership does not come from actions such as this. Just a personal thought...then again what else does one find in a blog? Dummy.
Unfortunate in it's timing was a completely nonsensical puff piece in the Journal op ed page today from the dynamic duo of The Suit the lately quiet Larry Summers. Read it for a laugh because that's what everyone who will be in Canada over the weekend will be doing. It is becoming increasingly clear that the element of "every man for himself" is becoming dominant in these financial discussions and I would be quite surprised if the result of this latest go-round is anything more. Again, we appear not to have a clue and even less influence but we shall see.
Perhaps you have noticed that I have chosen not to comment on the negotiations in Congress as to the financial services legislation. Simple reason: I haven't a clue other than what I read in the papers and from what I read it appears that not too many folks in Congress have a clue either. So I shall choose to wait until the final version arrives which hopefully will not interfere with the Ghana match on Saturday. Us against a continent. Should be a cracker.
Monday, October 12, 2009
BEWILDERED
I have no idea what happened. Thursday's edition was written, posted--I thought--and disappeared. I don't even have a copy of it. It's just...GONE. Unfortunately, I didn't notice it's absence until yesterday which is really inexcusable. It was all about the IMF meeting and what didn't happen as well as the total capitulation of The Suit in line with The Leader's view that the whole world is one. We are now to allow the IMF the privilege of explaining to us when we have a bubble at what we are to do about it, so silly us do not repeat the mistakes of the past. I wont try to repeat the post but simply raise the question that if the good folks on Cn Avenue miss the timing a tad bit, who's there to clean up the mess? The Suit hadn't figured that one out yet at the time of (mis) posting, but I guess one is to assume that with the IMF standing guard, that issue will never arise. Oh, our girl Shelia Bair was blabbering all over Europe which we pointed out. More on her today.
I also mentioned that Mr. Bernanke a week or so ago had rolled over and exposed his throat to Barnie Frank and Frank's committee. Seemingly, Mr. Bernanke has agreed to a mismash of central regulation containing all of the present regulatory bodies that would clearly fall under the control of Congress and by definition, become a politically responsive body. Now it is in the area of monetary policy in which the Fed is supposedly independent but from this point on can anyone say with any conviction that that independence has a prayer for survival? I think not. In attempt to save his organization (and himself?) from Congressional wrath, Mr. Bernanke has delivered himself and his organizations into the hands of the Philistines. Ok, say you, what's the big deal? Let's take a look at Citigroup for a clearer understanding of the tragedy of this move.
Now those of you who have been with me for a while no I do not have a lot of time for the afor-mentioned Ms. Bair. Ms Bair sits astride the FDIC which really has one role in life and that is to guard depositors in commercial banks and close down institutions which are deemed to have failed. The FDIC does this quite well and has for years, but quite frankly it has no ability to monitor the well-being of the banking system as a whole due to a lack of funds and personnel. Indeed, the FDIC uses contract help in performing the two primary tasks to which it has been assigned. Nevertheless, deep into the negotiations between Citi and Wachovia in which it was agreed that Wachovia would merge with Citi it was our girl, under the guise of protecting the depositors, who APPROACHED WELLS FARGO AND ADVISED WELLS HOW TO SCUTTLE THE CITI DEAL IN A MANNER THAT PROVED TO BE SUCCESSFUL. Why? Quite frankly no one really knows except that it IS known that Ms. Bair has a...ah, the term cannot be used in a family blog...for Citi's management. Except for the critical circumstances of the time, she should have been fired for her actions. She was not. Now of course the lawyering for Citi in this deal was appalling but when one has the Fed and the Treasury brokering the transaction a small excuse can be made for not believing that the very junior partner in the triumvirate would go off the reservation. Consider this: at the time Citi's major weakness was funding. Despite it's size Citi buys its deposits, it does not have a large domestic deposit base. Wachaovia does (or did) and therefore it was an excellent fit. Ms. Bair's claim that she was protecting the depositors is utter nonsense as if there was ever a situation "too big to fail," this was it. Remember my friend Jimmy? Where it comes to the evaluation of the health of our financial system and the maintenance of the same, you want ONE S.O.B running the show not a grab-bag of individual operatives with individual agendas. It is a catastrophe in the making particularly when they do not all have the capacity to accomplish the mission. Ms. Bair played her political cards well and laid the groundwork for all sorts of meddling in the future. Unfortunately, Mr. Bernanke has thrown in the towel. It's open season for every windbag with a microphone.
By the way, dear reader, keep in mind you have a pretty big stake in Citi as a taxpayer. Guess what also happened last week? Remember Citi's commodity trader who was owed $100 million? Well, that problem got solved. The administration's pay czar obviously couldn't allow that payment to be made from a political standpoint but it became more and more apparent that legally, the government hadn't a leg to stand on. The money was contractually due. So what did The Leader & Co. do? They pressured Citi into selling the entire unit to Phibro, a private trading house. Well, that's not quite correct; they pressured Citi into giving it away. The most profitable unit was reportedly sold for the value of it's assets--a ridiculous price--to solve a political problem. And screw the shareholder and taxpayers in the process. Be happy with your government as your regulator. From the gang that brought you Fanny and Freddy (and are about to bring you the FHA) they now have it all. What a country.
I also mentioned that Mr. Bernanke a week or so ago had rolled over and exposed his throat to Barnie Frank and Frank's committee. Seemingly, Mr. Bernanke has agreed to a mismash of central regulation containing all of the present regulatory bodies that would clearly fall under the control of Congress and by definition, become a politically responsive body. Now it is in the area of monetary policy in which the Fed is supposedly independent but from this point on can anyone say with any conviction that that independence has a prayer for survival? I think not. In attempt to save his organization (and himself?) from Congressional wrath, Mr. Bernanke has delivered himself and his organizations into the hands of the Philistines. Ok, say you, what's the big deal? Let's take a look at Citigroup for a clearer understanding of the tragedy of this move.
Now those of you who have been with me for a while no I do not have a lot of time for the afor-mentioned Ms. Bair. Ms Bair sits astride the FDIC which really has one role in life and that is to guard depositors in commercial banks and close down institutions which are deemed to have failed. The FDIC does this quite well and has for years, but quite frankly it has no ability to monitor the well-being of the banking system as a whole due to a lack of funds and personnel. Indeed, the FDIC uses contract help in performing the two primary tasks to which it has been assigned. Nevertheless, deep into the negotiations between Citi and Wachovia in which it was agreed that Wachovia would merge with Citi it was our girl, under the guise of protecting the depositors, who APPROACHED WELLS FARGO AND ADVISED WELLS HOW TO SCUTTLE THE CITI DEAL IN A MANNER THAT PROVED TO BE SUCCESSFUL. Why? Quite frankly no one really knows except that it IS known that Ms. Bair has a...ah, the term cannot be used in a family blog...for Citi's management. Except for the critical circumstances of the time, she should have been fired for her actions. She was not. Now of course the lawyering for Citi in this deal was appalling but when one has the Fed and the Treasury brokering the transaction a small excuse can be made for not believing that the very junior partner in the triumvirate would go off the reservation. Consider this: at the time Citi's major weakness was funding. Despite it's size Citi buys its deposits, it does not have a large domestic deposit base. Wachaovia does (or did) and therefore it was an excellent fit. Ms. Bair's claim that she was protecting the depositors is utter nonsense as if there was ever a situation "too big to fail," this was it. Remember my friend Jimmy? Where it comes to the evaluation of the health of our financial system and the maintenance of the same, you want ONE S.O.B running the show not a grab-bag of individual operatives with individual agendas. It is a catastrophe in the making particularly when they do not all have the capacity to accomplish the mission. Ms. Bair played her political cards well and laid the groundwork for all sorts of meddling in the future. Unfortunately, Mr. Bernanke has thrown in the towel. It's open season for every windbag with a microphone.
By the way, dear reader, keep in mind you have a pretty big stake in Citi as a taxpayer. Guess what also happened last week? Remember Citi's commodity trader who was owed $100 million? Well, that problem got solved. The administration's pay czar obviously couldn't allow that payment to be made from a political standpoint but it became more and more apparent that legally, the government hadn't a leg to stand on. The money was contractually due. So what did The Leader & Co. do? They pressured Citi into selling the entire unit to Phibro, a private trading house. Well, that's not quite correct; they pressured Citi into giving it away. The most profitable unit was reportedly sold for the value of it's assets--a ridiculous price--to solve a political problem. And screw the shareholder and taxpayers in the process. Be happy with your government as your regulator. From the gang that brought you Fanny and Freddy (and are about to bring you the FHA) they now have it all. What a country.
Tuesday, September 29, 2009
QUE PASSO, CHE?
Now with Argentina watching us like a hawk, The Leader sallied forth today on the first step of implementing the "Framework for Sustainable and Balanced Growth"--I'm not kidding, that's what he calls it--by announcing he and Ma Belle are off to Copenhagen to bring back the Olympics to Chicago. The fact that half the people in Chicago want no part of the Olympics in 2016 for goodness sakes but seem to be focused on jobs for today and an end to children murdering children in the streets has not swayed the Dynamic Couple. 8-5 neither of them have been to Copenhagen. Oh well...
Anyway, this Framework is going to require the U.S. to borrow less and import less. One assumes that The Leader asked the remaining G-19 what they thought about that import less part but I'm sure in his mind there was little need for that. The reciprocal is that the rest of the world (read, China) is going to export less and focus on internal demand. Riiiight. Last time I looked there are about 1,000,000,000 people in China and only about 3-400,000,000 of them have a day job. Now if 600,000,000 people aren't working it's pretty hard to make goods for people who have no money and if they stay among the mass of the unemployed it's a pretty sure bet that one might experience some domestic unrest before long. Hence, the shift in economic emphasis might be a difficult act to pull off. Indeed, if memory serves (and I'm not yet THAT old) this sermon has been repeated over and over for the last 10 years and we still have sinners. As for the U.S. reducing it's trade deficit, that might be a touch easier but not by much as with the fiscal deficit estimated to increase by 10 TRILLION dollars by 2018 and debt-to-GDP to settle around 100% of GDP (up from 60% IN 2007) one wonders who will have any money to spend on anything except for the fact that we would have to increase our exports and in case you haven't been watching closely dear reader WE DON'T MAKE ANYTHING ANYMORE.
Now Larry Summers may be a lot of things but stupid is not one of them. Summers, The Leader's head economic hummer was at one time the chief economist of the World Bank and surely he has seen this sort of thing before, usually in places to which one didn't travel without a bodyguard. But do we hear a peep from Larry about the nonsense that was being spouted in Pittsburgh last week? Of course not. And was there disagreements or mutterings from any other point on the compass on the rubbish being put forth? Nah. Why, you may ask? Simple, is my answer. Unless you are willing to sail a gun boat up the River Platt nobody gives a damn and nations will continue to act in their own best interest just as they always have since the beginning of time. There was a time when I was willing to believe that this mob showed some promise but after this nonsensical display, I doubt it. Platitudes, nothing but platitudes.
Oddly enough, I received a call this morning from an old friend of mine, a Brit who has managed to do rather well for himself in the foreign service and who actually was in Pittsburgh last week, I think in an official capacity. He stayed over for a bit of a holiday and was making the rounds of old friends.
"Quite a gathering," says I.
"They're all the same, Charlie, they never change."
"What did you think of our guy," says I?
"Oh, we absolutely love him," says he. "An absolute breath of fresh air."
"Really. Still?"
"Absolutely! He's a rock star."
"Well, that's good to hear, I guess," says I.
"Indeed. You have a real winner. Of course, he's a total prat as well."
"Why did I see that coming."
"Because, you're not entirely dumb ol' boy. Never have been."
"Thank you, I suppose."
"Don't mention it."
We'll talk about the dollar tomorrow in what will be a short week. We have a Brit arriving on Thursday.
Anyway, this Framework is going to require the U.S. to borrow less and import less. One assumes that The Leader asked the remaining G-19 what they thought about that import less part but I'm sure in his mind there was little need for that. The reciprocal is that the rest of the world (read, China) is going to export less and focus on internal demand. Riiiight. Last time I looked there are about 1,000,000,000 people in China and only about 3-400,000,000 of them have a day job. Now if 600,000,000 people aren't working it's pretty hard to make goods for people who have no money and if they stay among the mass of the unemployed it's a pretty sure bet that one might experience some domestic unrest before long. Hence, the shift in economic emphasis might be a difficult act to pull off. Indeed, if memory serves (and I'm not yet THAT old) this sermon has been repeated over and over for the last 10 years and we still have sinners. As for the U.S. reducing it's trade deficit, that might be a touch easier but not by much as with the fiscal deficit estimated to increase by 10 TRILLION dollars by 2018 and debt-to-GDP to settle around 100% of GDP (up from 60% IN 2007) one wonders who will have any money to spend on anything except for the fact that we would have to increase our exports and in case you haven't been watching closely dear reader WE DON'T MAKE ANYTHING ANYMORE.
Now Larry Summers may be a lot of things but stupid is not one of them. Summers, The Leader's head economic hummer was at one time the chief economist of the World Bank and surely he has seen this sort of thing before, usually in places to which one didn't travel without a bodyguard. But do we hear a peep from Larry about the nonsense that was being spouted in Pittsburgh last week? Of course not. And was there disagreements or mutterings from any other point on the compass on the rubbish being put forth? Nah. Why, you may ask? Simple, is my answer. Unless you are willing to sail a gun boat up the River Platt nobody gives a damn and nations will continue to act in their own best interest just as they always have since the beginning of time. There was a time when I was willing to believe that this mob showed some promise but after this nonsensical display, I doubt it. Platitudes, nothing but platitudes.
Oddly enough, I received a call this morning from an old friend of mine, a Brit who has managed to do rather well for himself in the foreign service and who actually was in Pittsburgh last week, I think in an official capacity. He stayed over for a bit of a holiday and was making the rounds of old friends.
"Quite a gathering," says I.
"They're all the same, Charlie, they never change."
"What did you think of our guy," says I?
"Oh, we absolutely love him," says he. "An absolute breath of fresh air."
"Really. Still?"
"Absolutely! He's a rock star."
"Well, that's good to hear, I guess," says I.
"Indeed. You have a real winner. Of course, he's a total prat as well."
"Why did I see that coming."
"Because, you're not entirely dumb ol' boy. Never have been."
"Thank you, I suppose."
"Don't mention it."
We'll talk about the dollar tomorrow in what will be a short week. We have a Brit arriving on Thursday.
Monday, August 10, 2009
BACK HOME AGAIN...AGAIN
Loyal reader, Anonymous, raised an interesting quest in response to last week's musings about corporate pay concerning the role of the compensation committee of a Board of Directors. The question went to the independence of such a committee, but that is only a portion of the real question regarding the proper disposition and activities of such groupings, or as been too often the case in past years, groupies.
You might remember that in my posting MY FRIEND DICK, I described a man who was not afraid to tell David Rockefeller that he was looking at an early termination of his banking career unless the performance of the Chase Bank improved immediately. Frankly, it is the CHARACTER of the individuals on a Board that is important rather than personal or corporate relationships that they may or may not possess that will determine their performance. If the character of the man (or woman) is such that there is a full understanding that he or she represents the shareholder in all matters, any relationship, no matter how close is irrelevant and all questions become moot. In recent years the character of too many board members must be questioned and I know that this will bring shouts of outrage from some readers who have sat, or now sit on corporate boards but consider this: could or would you walk into the office of one of your closest friends--David Rockefeller or not--and tell him he's about to get canned? If your answer is not an unequivocal YES, resign immediately. And yet, I must admit that the movement especially in regard to financial holding companies to replace retiring directors with ostensibly completely independent ones is a welcome development. IMHO, Citigroup has greatly upgraded its board in recent months. But somewhere along the way, we have lost our way. You are correct, Anon., we have a problem still.
However, in regard to the direct question of compensation, there seems to be a new mind-set that the object is not to have everyone compensated to the greatest extent in regard to their contribution but to level the compensation playing field. This of course fits in with The Leader's idea of the redistribution of wealth within this society. The disagreement arises not where one individual objects to another making a dramatically higher salary but where the solution is to reduce the top tier rather than raising the lower tier and doing so through fiscal measures such as taxes to fund either direct transfer of monetary wealth or services. I can remember being an ex-pat in England a number of years ago and having an English colleague approach me with the Brit version of his W-2 at the end of the years. He was a managing director of our bank and according to the law, he owed us money for working there in the last two months of the year due to his tax bracket and the lack of adequate withholding. Now there's redistribution!! The effect upon the higher earners was as imagined. Either one lost all incentive to earn beyond a certain level or one engaged in every legal--and illegal--method available to reduce one's tax bill--not to mention the "Brain Drain" that was crippling to the UK until the Thatcher revolution. Human nature being what it is, the same can happen here. Unintelligent compensation and tax theorists can and will create a generation of tax cheats and avoiders to an extent not yet seen in this country. Consider a few free-standing facts.
We have a voluntary tax system. Oh, forget about all the penalties one faces for tax cheating. Very few people in this country cheat on their taxes. Very few people hide income by working off the books. That is NOT the case with a great number of countries in the world. NOBODY pays taxes in Italy. NOBODY pays taxes in Argentina. NOBODY pays taxes in Mexico or certainly not the full amount of what is owed. MY FRIEND DICK knew a lot about Latin America and when he spoke of Argentina he used to say, "Twenty feet of top soil," and laugh! The richest country in the world and the most corrupt. Why did Argentina regress? There was no money for the government to supply the services a government is meant to supply and it became every man for himself with class and social warfare a very real environment. Change the attitude of this country"s people, especially the most productive, make them feel oppressed, and you begin to change the very fabric of society. My advice to The Leader and his followers? Be very, very careful of that which you propose. Comprende, Che?
You might remember that in my posting MY FRIEND DICK, I described a man who was not afraid to tell David Rockefeller that he was looking at an early termination of his banking career unless the performance of the Chase Bank improved immediately. Frankly, it is the CHARACTER of the individuals on a Board that is important rather than personal or corporate relationships that they may or may not possess that will determine their performance. If the character of the man (or woman) is such that there is a full understanding that he or she represents the shareholder in all matters, any relationship, no matter how close is irrelevant and all questions become moot. In recent years the character of too many board members must be questioned and I know that this will bring shouts of outrage from some readers who have sat, or now sit on corporate boards but consider this: could or would you walk into the office of one of your closest friends--David Rockefeller or not--and tell him he's about to get canned? If your answer is not an unequivocal YES, resign immediately. And yet, I must admit that the movement especially in regard to financial holding companies to replace retiring directors with ostensibly completely independent ones is a welcome development. IMHO, Citigroup has greatly upgraded its board in recent months. But somewhere along the way, we have lost our way. You are correct, Anon., we have a problem still.
However, in regard to the direct question of compensation, there seems to be a new mind-set that the object is not to have everyone compensated to the greatest extent in regard to their contribution but to level the compensation playing field. This of course fits in with The Leader's idea of the redistribution of wealth within this society. The disagreement arises not where one individual objects to another making a dramatically higher salary but where the solution is to reduce the top tier rather than raising the lower tier and doing so through fiscal measures such as taxes to fund either direct transfer of monetary wealth or services. I can remember being an ex-pat in England a number of years ago and having an English colleague approach me with the Brit version of his W-2 at the end of the years. He was a managing director of our bank and according to the law, he owed us money for working there in the last two months of the year due to his tax bracket and the lack of adequate withholding. Now there's redistribution!! The effect upon the higher earners was as imagined. Either one lost all incentive to earn beyond a certain level or one engaged in every legal--and illegal--method available to reduce one's tax bill--not to mention the "Brain Drain" that was crippling to the UK until the Thatcher revolution. Human nature being what it is, the same can happen here. Unintelligent compensation and tax theorists can and will create a generation of tax cheats and avoiders to an extent not yet seen in this country. Consider a few free-standing facts.
We have a voluntary tax system. Oh, forget about all the penalties one faces for tax cheating. Very few people in this country cheat on their taxes. Very few people hide income by working off the books. That is NOT the case with a great number of countries in the world. NOBODY pays taxes in Italy. NOBODY pays taxes in Argentina. NOBODY pays taxes in Mexico or certainly not the full amount of what is owed. MY FRIEND DICK knew a lot about Latin America and when he spoke of Argentina he used to say, "Twenty feet of top soil," and laugh! The richest country in the world and the most corrupt. Why did Argentina regress? There was no money for the government to supply the services a government is meant to supply and it became every man for himself with class and social warfare a very real environment. Change the attitude of this country"s people, especially the most productive, make them feel oppressed, and you begin to change the very fabric of society. My advice to The Leader and his followers? Be very, very careful of that which you propose. Comprende, Che?
Wednesday, August 5, 2009
BACK HOME AGAIN...
In Indianaaaaaa! The Leader came back for the fifth time in the last year today, and said...well, nothing. Said Elkhart County had to reinvent itself. Like Detroit, like South Bend, like Michigan City, like the great swath of the rust belt here in the mid-west that has been waiting for the return of Studabaker, U.S. Steel, Bendix, Wheelebrator Fry, and the Edsel for all I know. He's still trying to fix all the wrong things, just as Mike said. And The Leader said it all from the floor of a bankrupt RV manufacturer at which location will soon be an electric motor factory. Sometime ago The Leader proclaimed that we needed electric cars and green fuel and a 37 mpg standard for all that moves on American Roads. RV's really can't do that; I wonder what the audience was thinking practically all of whom depended on that industry 'cept for those who have been doing a little Meth on the side. It was a monumental waste of time. Plane is real pretty tho--or so I am told.
On of the next big fights it seems is going to be over executive pay especially pay in the financial area. This is going to be really interesting as many of the packages, especially for the highest paid guys and gals, are spelled out in fairly tight contractual form and now the question of the sanctity of contract may well meat a real test.. I mentioned the head of Phibro, a sub of Citigroup a couple of days ago who is apparently owed something in the nature of 100 VERY LARGE for his success at trading commodities--read oil--last year. It is an outrageous amount of money but apparently only a small percentage of what he made for the corporation. Frankly, I think it is nuts for a public corporation to put itself in the position of having to pay out that much but having done so, can one really justify its non-payment to a guy with whom the corporation entered into an agreement freely and where the guy performed in precisely the manner to earn his pay? Aside from the shock stemming from the big number, this is a tough question. Of course, Citigroup being owed by the taxpayers complicates the issue. One guy getting this amount of taxpayer money? Then again, if he is making a bundle for the taxpayers, why not? Then again, could he do it without the cache of Citigroup and the U.S. Treasury? How much is that worth? Knotty questions all. We shall be watching.
I think this conundrum serves to highlight one of--and in my mind--the most important issues about which we have had a great deal of discussion. Could these numbers have ever existed if the corporations and managers involved been playing with their own money or without the imputed knowledge that at some point at sometime if all went down the gurgle tube, Uncle would be there with a life-line? I think not. It is not adequate to suggest as a leading article in the WSJ did today that the situation is somewhat different when the biggest shareholder is the taxpayer; that is clearly evident. But the de jurie ownership and support provided to a Citigroup or a Bank of America by the taxpayer is NO DIFFERENT that for J.P. Morgan or Goldman Sachs on a risk assessment if we have a reprise of 2008. And we will sports fans, we will unless we change the rules.
Speaking of B of A, our buddy Ken and his boys--new though they be--did it again. Out they went and hired Sally Krawcheck, late loser of a pissing match over at Citi to run global wealth and management...that's Merrill Lynch...and out the door went Dan Sontag who was Merrill down to his toes for the last 30 years. Ms. Krawcheck no doubt still remembers that when you called the dealers at Citi the phone was answered, "Solomon" even 10 years after the merger. She never got that to change. Bye, bye synergy and bye, bye the best of Merrill that B of A bought. When your most important assets can walk out the door at the end of every day, you better be damn sure what you do in attempting to merge cultures. There is dumb and there is DUMB. You pick it.
On of the next big fights it seems is going to be over executive pay especially pay in the financial area. This is going to be really interesting as many of the packages, especially for the highest paid guys and gals, are spelled out in fairly tight contractual form and now the question of the sanctity of contract may well meat a real test.. I mentioned the head of Phibro, a sub of Citigroup a couple of days ago who is apparently owed something in the nature of 100 VERY LARGE for his success at trading commodities--read oil--last year. It is an outrageous amount of money but apparently only a small percentage of what he made for the corporation. Frankly, I think it is nuts for a public corporation to put itself in the position of having to pay out that much but having done so, can one really justify its non-payment to a guy with whom the corporation entered into an agreement freely and where the guy performed in precisely the manner to earn his pay? Aside from the shock stemming from the big number, this is a tough question. Of course, Citigroup being owed by the taxpayers complicates the issue. One guy getting this amount of taxpayer money? Then again, if he is making a bundle for the taxpayers, why not? Then again, could he do it without the cache of Citigroup and the U.S. Treasury? How much is that worth? Knotty questions all. We shall be watching.
I think this conundrum serves to highlight one of--and in my mind--the most important issues about which we have had a great deal of discussion. Could these numbers have ever existed if the corporations and managers involved been playing with their own money or without the imputed knowledge that at some point at sometime if all went down the gurgle tube, Uncle would be there with a life-line? I think not. It is not adequate to suggest as a leading article in the WSJ did today that the situation is somewhat different when the biggest shareholder is the taxpayer; that is clearly evident. But the de jurie ownership and support provided to a Citigroup or a Bank of America by the taxpayer is NO DIFFERENT that for J.P. Morgan or Goldman Sachs on a risk assessment if we have a reprise of 2008. And we will sports fans, we will unless we change the rules.
Speaking of B of A, our buddy Ken and his boys--new though they be--did it again. Out they went and hired Sally Krawcheck, late loser of a pissing match over at Citi to run global wealth and management...that's Merrill Lynch...and out the door went Dan Sontag who was Merrill down to his toes for the last 30 years. Ms. Krawcheck no doubt still remembers that when you called the dealers at Citi the phone was answered, "Solomon" even 10 years after the merger. She never got that to change. Bye, bye synergy and bye, bye the best of Merrill that B of A bought. When your most important assets can walk out the door at the end of every day, you better be damn sure what you do in attempting to merge cultures. There is dumb and there is DUMB. You pick it.
Tuesday, July 21, 2009
BACK TO BEN
The Chairman was up on the Hill again today facing off against Barney Frank and his band of Geniuses. Ron Paul is the latest bete noir in the morality play having proposed legislation that would enable the Congress to audit the Fed. Needless to say, Ben doesn't think this is a really good idea as the probable result would be to remove whatever shred of independence the Fed has left but as we have surmised, neither the left nor the right is really happy about the Chairman at this time or many of the policies carried out by the institution, and absent a ringing endorsement from The Leader by way of the stated intention to reappoint Ben, methinks the Chairman is in trouble. The Leader's pet projects are in a bit of trouble and I don't think for one minute that he wouldn't can Ben for a couple of badly needed votes especially if they carried the whiff of bipartisanship along with them. Half the world thinks we're a bit daft at this stage and without Bernanke, they will certainly believe that we've gone starkers. The image of Larry Summers in the Big Office would be truly scary to most of the world I think. Summers and Our Hero running monetary and fiscal policy? Terrifying.
And speaking of Our Hero, he was traipsing around the flesh pots of Europe and the Middle East dialing for dollars to fund The Leader's agenda. Back in the eighties when the emerging markets and the world's banking system was the going through the Greatest Crisis of All Time, we who nobly served on Bank "Advisory Committees"...they were called "advisory" rather than "steering" because the latter nomenclature might have given some fool the idea that the banks were really making the decisions and said fool might sue our collective asses off...used to do the same thing. We called them "road shows" and they were always (supposedly) the idea of the obligor. Of course we were there to see that said obligor didn't go off the reservation. Like Our Hero, we had a firm grasp as to the concept of who was Numero Uno. The hot trips were always to places like Brazil, Italy and anywhere else in Europe...especially Hamburgh. Had a lady colleague attacked there on trip for standing too long on a corner that was the stake-out of one of the working girls along the Rapperbahn. Great amusement for all...except for said colleague. But, we saved the world as we then knew it. Hopefully, Our Hero was as successful.
Back then, we also had the concept of "systemic risk" and back then, nobody understood any better than today what the hell that meant. Frankly, the best definition I have heard is not the comparison to the old Supreme Court definition of pornography but it being the "moment when everyone has the crap scared out of them at the same time." Why is immaterial; it's just that everybody knows that things aint good. Now that is a real situation but the leap to the identification of individual institutions as embodying systemic risk is, in my mind, a bit of a reach or to put it another way, an effort that will almost certainly result in insuring that perception will become unwanted reality. And yet, we are spending a great deal of time and effort in arguing who will be the next regulator of systemic risk and not in this country alone. The battle is being joined in the U.K and between the U.K. and the E.U. (where have we seen that movie) to what IMHO will be a meaningless and dangerous result.
Indulge me for a moment. Having been a member of a systemic institution, I think I can say without hesitation that the belief that there will always be someone there to pull you out of the mud does effect thinking and decision making. Sub-consciously perhaps, and yet in a very real way risk taking is made easier if there is the belief that the final result may not always be based on the decision one is about to make. There is no doubt that the S & L crisis came about not solely because of the increase in the amount of deposits that could be insured, but was certainly exacerbated by that event. The knowledge that the depositors were protected undoubtably resulted in individuals taking greater risk in the hope of achieving greater rewards, and those that fund these risks were unconcerned as to the use of their funds. So too with the knowledge that one's institution is 'systemic" in nature. It may be buried in the sub conscious, but it's there.
Quite frankly, I would much rather see a situation where the regulatory bodies of the major banking nations come together and announce that no institution is "too big to fail;" that there is no such thing as a "systemic risk-type of institution," and that no institution or individual should expect that they will be bailed out of their dealings with any institution simply because of the institution's size. To do otherwise and especially as is envisioned to announce that this institution or that bank is simply to big to fail and will be monitored by this regulator is to destroy all discipline--even the little that had existed--in the market place. It is often said that the stock market is influenced by two things; greed and fear. In the financial market place and in the capital markets the greatest regulator that exists is fear. We should not destroy it.
And speaking of Our Hero, he was traipsing around the flesh pots of Europe and the Middle East dialing for dollars to fund The Leader's agenda. Back in the eighties when the emerging markets and the world's banking system was the going through the Greatest Crisis of All Time, we who nobly served on Bank "Advisory Committees"...they were called "advisory" rather than "steering" because the latter nomenclature might have given some fool the idea that the banks were really making the decisions and said fool might sue our collective asses off...used to do the same thing. We called them "road shows" and they were always (supposedly) the idea of the obligor. Of course we were there to see that said obligor didn't go off the reservation. Like Our Hero, we had a firm grasp as to the concept of who was Numero Uno. The hot trips were always to places like Brazil, Italy and anywhere else in Europe...especially Hamburgh. Had a lady colleague attacked there on trip for standing too long on a corner that was the stake-out of one of the working girls along the Rapperbahn. Great amusement for all...except for said colleague. But, we saved the world as we then knew it. Hopefully, Our Hero was as successful.
Back then, we also had the concept of "systemic risk" and back then, nobody understood any better than today what the hell that meant. Frankly, the best definition I have heard is not the comparison to the old Supreme Court definition of pornography but it being the "moment when everyone has the crap scared out of them at the same time." Why is immaterial; it's just that everybody knows that things aint good. Now that is a real situation but the leap to the identification of individual institutions as embodying systemic risk is, in my mind, a bit of a reach or to put it another way, an effort that will almost certainly result in insuring that perception will become unwanted reality. And yet, we are spending a great deal of time and effort in arguing who will be the next regulator of systemic risk and not in this country alone. The battle is being joined in the U.K and between the U.K. and the E.U. (where have we seen that movie) to what IMHO will be a meaningless and dangerous result.
Indulge me for a moment. Having been a member of a systemic institution, I think I can say without hesitation that the belief that there will always be someone there to pull you out of the mud does effect thinking and decision making. Sub-consciously perhaps, and yet in a very real way risk taking is made easier if there is the belief that the final result may not always be based on the decision one is about to make. There is no doubt that the S & L crisis came about not solely because of the increase in the amount of deposits that could be insured, but was certainly exacerbated by that event. The knowledge that the depositors were protected undoubtably resulted in individuals taking greater risk in the hope of achieving greater rewards, and those that fund these risks were unconcerned as to the use of their funds. So too with the knowledge that one's institution is 'systemic" in nature. It may be buried in the sub conscious, but it's there.
Quite frankly, I would much rather see a situation where the regulatory bodies of the major banking nations come together and announce that no institution is "too big to fail;" that there is no such thing as a "systemic risk-type of institution," and that no institution or individual should expect that they will be bailed out of their dealings with any institution simply because of the institution's size. To do otherwise and especially as is envisioned to announce that this institution or that bank is simply to big to fail and will be monitored by this regulator is to destroy all discipline--even the little that had existed--in the market place. It is often said that the stock market is influenced by two things; greed and fear. In the financial market place and in the capital markets the greatest regulator that exists is fear. We should not destroy it.
Wednesday, June 17, 2009
I SHOUDA STAYED IN BED
Well, all was revealed today. Somehow, I don't feel very good about it although there were few surprises. The Fed appears to have come out ok, the Office of Thrift Supervision is no more, another new, massive government agency is to be created and we are supposed to believe that capitalism has been saved from itself. The Leader continues to give good speeches although do you get the feeling that in keeping with his Green bent a lot of the language is being recycled? There wasn't much by way of detail (as usual), but it sounded good.
For the life of me, I don't know how you go about regulating individual corporations but these clowns are about to have a go. Much better that one tries to regulate products or activities but I am afraid that is not what the real agenda is all about. Despite all the rhetoric about not wanting to run this or run that that is exactly what this administration seeks to do through its actions and the financial sector appears to be the next part of the economy not to be run by The Leader and his mob.
The thin ray of hope appears to be the positioning of the Fed to look after the systemic part of the financial sector as the Fed has up to this point been a fairly independent body rather than a newly created Clown House such as that envisioned for the consumer part of the business. Now how the hell one goes about defining what is what inasmuch as a systemic player such as J.P. Morgan Chase has one hell of a big consumer business is beyond me unless one is prepared to let the Clown House oversee the consumer bank and the Fed look after the wholesale and capital markets businesses. Now will not that be fun? But scarier yet, The Leader seemed to be saying that it will be Congress who draws up the rules of governance irrespective of the identity of the regulator. Once that camel gets its nose under the tent it's all over but the shouting...or perhaps wailing and gnashing of teeth is a better image. Further, the Fed--or perhaps Mr. Bernanke--has showed less and less interest in jealously guarding the independence of the institution than some would hope. If the tea leaves are correct, in a year's time it may well be Larry Summers in that role and while he has been spending the last few weeks trying to convince every man, woman and child that The Leader's administration does not have a socialist bent, no one really believes that an independent central bank is high on his agenda. Then again, if he becomes its chairman, who knows where his ego will lead him. Either way it's not a happy picture.
Anyway, the future is certainly an industry operating under greater regulatory oversight which, if crafted by the steady hands of Messrs. Dodd and Frank, is certain to be restrictive and useless at the same time. In the mean time the lawyers and lobbyists are going to make a fortune. Throughout all this everyone has seemed to have forgotten that the business of finance is hardly the private playground of American bankers. I used to joke that you never had to be smart to be Swiss; just have the right banking regulations and you could make a lot of money. Never will this be more true than in the future of finance where the Great American Competition is directed by politicians. We stand to lose a lot sportsfans both in the private sector and in the public arena as well, as this new page will surely have an impact on the dollar and its status in the world. But of course the systemic risk will be removed....then again, weren't Fanny and Freddie systemic? And weren't their regulators Barney and Chris? Oh well...
For the life of me, I don't know how you go about regulating individual corporations but these clowns are about to have a go. Much better that one tries to regulate products or activities but I am afraid that is not what the real agenda is all about. Despite all the rhetoric about not wanting to run this or run that that is exactly what this administration seeks to do through its actions and the financial sector appears to be the next part of the economy not to be run by The Leader and his mob.
The thin ray of hope appears to be the positioning of the Fed to look after the systemic part of the financial sector as the Fed has up to this point been a fairly independent body rather than a newly created Clown House such as that envisioned for the consumer part of the business. Now how the hell one goes about defining what is what inasmuch as a systemic player such as J.P. Morgan Chase has one hell of a big consumer business is beyond me unless one is prepared to let the Clown House oversee the consumer bank and the Fed look after the wholesale and capital markets businesses. Now will not that be fun? But scarier yet, The Leader seemed to be saying that it will be Congress who draws up the rules of governance irrespective of the identity of the regulator. Once that camel gets its nose under the tent it's all over but the shouting...or perhaps wailing and gnashing of teeth is a better image. Further, the Fed--or perhaps Mr. Bernanke--has showed less and less interest in jealously guarding the independence of the institution than some would hope. If the tea leaves are correct, in a year's time it may well be Larry Summers in that role and while he has been spending the last few weeks trying to convince every man, woman and child that The Leader's administration does not have a socialist bent, no one really believes that an independent central bank is high on his agenda. Then again, if he becomes its chairman, who knows where his ego will lead him. Either way it's not a happy picture.
Anyway, the future is certainly an industry operating under greater regulatory oversight which, if crafted by the steady hands of Messrs. Dodd and Frank, is certain to be restrictive and useless at the same time. In the mean time the lawyers and lobbyists are going to make a fortune. Throughout all this everyone has seemed to have forgotten that the business of finance is hardly the private playground of American bankers. I used to joke that you never had to be smart to be Swiss; just have the right banking regulations and you could make a lot of money. Never will this be more true than in the future of finance where the Great American Competition is directed by politicians. We stand to lose a lot sportsfans both in the private sector and in the public arena as well, as this new page will surely have an impact on the dollar and its status in the world. But of course the systemic risk will be removed....then again, weren't Fanny and Freddie systemic? And weren't their regulators Barney and Chris? Oh well...
Tuesday, June 9, 2009
BACK HOME AGAIN IN INDIANA...!
Well, the Hoosier State threw a real spanner in the works. As of 5:00 pm the stay against the Chrysler bankruptcy plan still stands with no clear indication as to how Justice Ginsburg or all of he colleagues will come down on what has been somewhat overlooked as one of the critical constitutional and business issues that has arisen in many a year. The United States has always had one immutable thing that has set it apart from all other nations save perhaps England; the absolute dominance of the rule of law and the consistency with which it has been applied. This has been an enormous advantage over the ages; the greatest advantage perhaps that we enjoy. Individuals of any nation and corporations regardless of their origin stand equal before the bar in this country. No other nation in history can claim this equality. The law has always been fairly and equally applied.
Some weeks ago we joked that Fiat may not understand their relationship with the government of the United States as its relationship with the various governments of Italy have been, shall we say, cozy. This suit, brought by the Attorney General of the State of Indiana on behalf of Indiana government investors against the Chrysler bankruptcy plan is IMHO in the finest of traditions of American jurisprudence. One and all should watch the disposition of this case. It may well prove critical not only in the specific incidence but as to what kind of a system under which we shall go forward. Are we to have a free market society in which the sanctity of contract and the rule of law stand unabated, or will we live under a different understanding of the definition of rights? All societies evolve but not always to the general benefit. Is this one of those moments? We shall see.
$35 Billion in new auctions and refundings this week in the 3, 10 and 30 year maturities. No one seems to be too concerned as to their success but the 10 year benchmark continues to creep upward towards the important--at least from an emotional standpoint--to the 4.00% level.
As this is being written, Oil is well-bid at $70.54 a barrel, up over 2 bucks from the open. Commodities continue to move higher and the dollar in getting crushed. One talking head mused whether these actions might impede the recovery. It would be funny if not so sad. There is no recovery: unemployment is up, the lower advance figure is present only because people now realize the temp jobs number is way up, income levels are down across the board; unemployment has pushed through the 9% level with some Federal Reserve Banks hinting at 10-11.5% by next year. The Leader's plan, after five months has been a failure heading towards a catastrophe with spending out of control and a new czar for some segment of the economy being created daily seeming without any Congressional oversight. Results and improvement need to be shown quickly or confidence, which showed a nice up-tick in March will begin to quickly erode. I fear that this may well be a lost year leaving the country even more vulnerable to exogenous shocks. One hopes one is wrong.
Meanwhile, Our Hero s getting some of his money back as a number of TARP institutions are going to be allowed to repay the advances most of them didn't want in the first place. How nice. But here's a goodie: the TARP funds were allocated by Congress for a specific purpose. The monies to be returned seem to be destined for some sort of "rainy day fund" that Our Hero can use for whatever his little heart desires. Where is Barnie and his "oversight" when you really need it?
Finally, The Leader, Our Hero and their entire mob have apparently decided that the regulatory mechanism presently in place needn't be rejiggered; what we have is ok, what we need is better regulation. So much for Shelia Regina...or is it too soon to announce her demise? Methinks somebody better have a wooden stake close by. This is going to be a hell of a summer.
Some weeks ago we joked that Fiat may not understand their relationship with the government of the United States as its relationship with the various governments of Italy have been, shall we say, cozy. This suit, brought by the Attorney General of the State of Indiana on behalf of Indiana government investors against the Chrysler bankruptcy plan is IMHO in the finest of traditions of American jurisprudence. One and all should watch the disposition of this case. It may well prove critical not only in the specific incidence but as to what kind of a system under which we shall go forward. Are we to have a free market society in which the sanctity of contract and the rule of law stand unabated, or will we live under a different understanding of the definition of rights? All societies evolve but not always to the general benefit. Is this one of those moments? We shall see.
$35 Billion in new auctions and refundings this week in the 3, 10 and 30 year maturities. No one seems to be too concerned as to their success but the 10 year benchmark continues to creep upward towards the important--at least from an emotional standpoint--to the 4.00% level.
As this is being written, Oil is well-bid at $70.54 a barrel, up over 2 bucks from the open. Commodities continue to move higher and the dollar in getting crushed. One talking head mused whether these actions might impede the recovery. It would be funny if not so sad. There is no recovery: unemployment is up, the lower advance figure is present only because people now realize the temp jobs number is way up, income levels are down across the board; unemployment has pushed through the 9% level with some Federal Reserve Banks hinting at 10-11.5% by next year. The Leader's plan, after five months has been a failure heading towards a catastrophe with spending out of control and a new czar for some segment of the economy being created daily seeming without any Congressional oversight. Results and improvement need to be shown quickly or confidence, which showed a nice up-tick in March will begin to quickly erode. I fear that this may well be a lost year leaving the country even more vulnerable to exogenous shocks. One hopes one is wrong.
Meanwhile, Our Hero s getting some of his money back as a number of TARP institutions are going to be allowed to repay the advances most of them didn't want in the first place. How nice. But here's a goodie: the TARP funds were allocated by Congress for a specific purpose. The monies to be returned seem to be destined for some sort of "rainy day fund" that Our Hero can use for whatever his little heart desires. Where is Barnie and his "oversight" when you really need it?
Finally, The Leader, Our Hero and their entire mob have apparently decided that the regulatory mechanism presently in place needn't be rejiggered; what we have is ok, what we need is better regulation. So much for Shelia Regina...or is it too soon to announce her demise? Methinks somebody better have a wooden stake close by. This is going to be a hell of a summer.
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