As expected, the subjective portion of the stress tests posed no problem. Everybody passed and as a result the flood of excess capital being returned to shareholders has begun with Citigroup expected to be allow to distribute 135% of its earnings as a result of being in Big Danny's dog house for the past four years. The entire sector went nuts on the equity side with the expectation of higher returns coupled with the continued expectation for further central bank tightening and the beginning of the unwind of bond portfolios moving bond yields sharply upwards resulting in better lending spreads. Unfortunately, everything else got killed in the rotation which includes the dollar.
Now we all know that central bankers are among the world's smartest people, right? So why can't these guys and girls do a bit better in presenting a common front so that most of the Hoi Polloi can figure out what the heck is going on rather than bouncing off walls for the past four days in an effort to get their positions right. Or maybe, just maybe it's not the central bankers' fault at all. Might it be that the latest crop of Masters of the Universe aren't so masterful. As we keep saying there is about a $10 billion overhang out there that has to get "rationalized" at some point so why not now? The bet has to be on rising interest rates which, if coupled with fiscal structural adjustment just may present a soft landing. There is a shot at it. Better than I thought. Clearly, Trump ain't no Obama but what I really missed was this new guy in Paris, Macron if he continues on the course he has chartered. I though the guy was all hat and no cattle but I may well have been wrong which I will happily accept. In fact, if he is the real deal, he margin of victory at the polls could make him unstoppable. He's so confident that he made nice,nice to The Donald in inviting him to the Bastille Day events. Great fun by the way.
So just a word to the Very Wise. Be careful boys and girls because those affected may not be as bright as you think and from the little fat nut in Korea to...well, pick a spot...there's a lot of knarly weather. What many tend to forget is that there is no difference between a Euro and a Dollar. There's a time for everything. Get it right.
Showing posts with label Quantative Easing. Show all posts
Showing posts with label Quantative Easing. Show all posts
Thursday, June 29, 2017
Wednesday, November 11, 2015
SO CUTE WHEN HE'S MAD
Little Paulie Krugman had a kitten today. Read his blog...no, don't waste your time, I'll tell about what he's mad.
It seems that the Minneapolis Fed needed a new President and they selected Neel T. Kashkari to fill the roll.You remember Kashkari; he was the whiz kid in the Treasury who oversaw the TARP program in both the Bush and Obama administrations before moving on to other adventures at PIMCO and in the governor's race for the State of California...which he lost. By all reports he is one hell of a bright young guy (42) and extremely capable. Unfortunately, he is a heretic from Little Paulie's standpoint; he is a guy who actually spoke out against QE II as being worthless and at one point told the Japanese that QE was like morphine--it makes you feel good but cures nothing. (As an aside, Germany's Group of Economic Advisers--the "Wise Men--absolutely blasted the concept of another round of QE today). On top of all that he's not an economist but an engineer with a masters degree fro the University of Illinois which means he probably has a practical approach to things unlike Paulie who can't spell practical. Engineers build things that tend to fall down if built incorrectly; Paulie postulates and moves on. Paulie perceives a threat. Paulie throws a fit. Paulie is having a really bad day between Midwest engineers and German Economists. It's such fun to watch.
But...and there always seems to be a but in these things these days...in addition to the U of I and PIMCO, Mr. Kashkari carries on his resume a stint at Goldman Sachs as a vice president in the San Francisco office. Now a V.P. at Goldie is generally just another smart guy making a couple of million dollars a year who is really not in a position to do any real harm. So why the "But?'
In the past six months Mr. Kashkari is the third refugee from Goldman Sachs to be appointed the Head of a Regional Federal Reserve Bank; Patrick Harker in Philadelphia and Bob Kaplan at Dallas. We of course have Billy the Dud in New York and a few other alumni on the Big Board as well. We have talked about the reputational difficulties facing the Fed in the eyes of the public and especially in the eyes of Congress. We have talked of the decline in stature among global central banks which the Fed is suffering and we all know that there is probably one financial institution in the world about whom if one expresses distrust, dislike or even hatred, it is Goldman Sachs. Envy plays a roll, but it is more than envy and some of it--or a good deal of it perhaps--is with justification. It is therefore really quite stupid to allow this sort of inbreeding to occur in an institution of such importance and I must question the leadership that allows this to happen. Trust can be lost in many ways and once lost it is difficult for it to be regained. These guys are around for a long time...and so will be the questions. What a shame and what a blow I am afraid to the institution's global leadership.
Went to the Eye Guy today and was told I need a laser tune-up tomorrow in one eye and another next week. I'm out of action probably until Monday. This is getting to be a pain.
It seems that the Minneapolis Fed needed a new President and they selected Neel T. Kashkari to fill the roll.You remember Kashkari; he was the whiz kid in the Treasury who oversaw the TARP program in both the Bush and Obama administrations before moving on to other adventures at PIMCO and in the governor's race for the State of California...which he lost. By all reports he is one hell of a bright young guy (42) and extremely capable. Unfortunately, he is a heretic from Little Paulie's standpoint; he is a guy who actually spoke out against QE II as being worthless and at one point told the Japanese that QE was like morphine--it makes you feel good but cures nothing. (As an aside, Germany's Group of Economic Advisers--the "Wise Men--absolutely blasted the concept of another round of QE today). On top of all that he's not an economist but an engineer with a masters degree fro the University of Illinois which means he probably has a practical approach to things unlike Paulie who can't spell practical. Engineers build things that tend to fall down if built incorrectly; Paulie postulates and moves on. Paulie perceives a threat. Paulie throws a fit. Paulie is having a really bad day between Midwest engineers and German Economists. It's such fun to watch.
But...and there always seems to be a but in these things these days...in addition to the U of I and PIMCO, Mr. Kashkari carries on his resume a stint at Goldman Sachs as a vice president in the San Francisco office. Now a V.P. at Goldie is generally just another smart guy making a couple of million dollars a year who is really not in a position to do any real harm. So why the "But?'
In the past six months Mr. Kashkari is the third refugee from Goldman Sachs to be appointed the Head of a Regional Federal Reserve Bank; Patrick Harker in Philadelphia and Bob Kaplan at Dallas. We of course have Billy the Dud in New York and a few other alumni on the Big Board as well. We have talked about the reputational difficulties facing the Fed in the eyes of the public and especially in the eyes of Congress. We have talked of the decline in stature among global central banks which the Fed is suffering and we all know that there is probably one financial institution in the world about whom if one expresses distrust, dislike or even hatred, it is Goldman Sachs. Envy plays a roll, but it is more than envy and some of it--or a good deal of it perhaps--is with justification. It is therefore really quite stupid to allow this sort of inbreeding to occur in an institution of such importance and I must question the leadership that allows this to happen. Trust can be lost in many ways and once lost it is difficult for it to be regained. These guys are around for a long time...and so will be the questions. What a shame and what a blow I am afraid to the institution's global leadership.
Went to the Eye Guy today and was told I need a laser tune-up tomorrow in one eye and another next week. I'm out of action probably until Monday. This is getting to be a pain.
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