In a conference hosted by the Central Bank of Chile of all people, Stanley Fisher revealed that in his opinion it looked as though it was about time for a gradual rise in interest rates. So much for uncertainty. The Fed will raise in December and continue to raise until...well, until it catches up with the market. Oh, the 10 year closed at 2.15% today.. From the standpoint of economic meddling, the Fed is dead and I would bet that the happiest guy in the room is Stanley.
What we are looking at in the near future is exactly what Stan Fisher has been quietly calling for and hoping for: if there is to be stimulus let it be of the fiscal kind and with it let there be a restructuring of economic governance in taxes, regulation and alike that has been so long needed in this and other western economies. I don't know what are Mr. Fisher's politics---frankly, I don't know if anyone does--but I suspect he is appreciative of how the markets are responding to Mr. Trump's election and taking the Fed out of a nasty little corner into which they had put themselves.
They are not out of the woods of course. There is a little matter of $4 Trillion on their balance sheet that they have to work off and there are rather clear signs that inflation is afoot the containment of which is their primary (some think otherwise--some are wrong) mandate through monetary governance. Spilling their balance sheet into the world is not exactly compatible with controlling inflation but this was always going to happen and one can only hope that there have been a few good folks thinking about this. And while we are on the subject of thinking, think about the greatest reversal of sentiment we have ever seen. From stated fears of total destruction of all things in the event of a Trump win we have seen the Masters of the Universe turn on a dime and buy the DOW to an all-time record close in the space of three days. Who the hell in their right mind would give their money to these guys to manage?
From now the tale will become how much of the Obama "legacy" will be dismantled in the next six months. Big Danny Tarullo will probably, in an operational sense wind up sleeping with the fishes if he doesn't decide to slip out the back door into the loving arms of Crazy Lizzy who, believing she is Ms. Clinton's natural sucessor, will want no part of him (she needs money...Wall Street has money...Wall Street hates him). Dodd/Frank will catch a good kicking but not entirely disappear which may not be a bad thing although how they are going to fix it is beyond my poor powers of comprehension. Somebody had better start thinking about the BIS meetings at which risk accountability will be a primary topic and since the meetings start on January 9, all we have is a very lame duck bunch of bankers and regulators to carry the flag. Not good. There had better be quick thought and even quicker action on the part of the Trumpsters in getting a message Over There and finding the right people to do it. Hint: Lael Brainard is not one of those people. I can supply a few names if anyone is interested. This could get ugly...more on that at a later time. There is so much more.
But the really great thing to watch in the coming months will be the interplay between the Trumpsters and Chuck Schumer in the Senate. Chuck replaces that most odious of creatures, Harry Reid, and while he will become the leader of the "loyal opposition," Chuck has always known on which side his bread is buttered and that is the side that reads "Wall Street." He's a nasty piece of political work but he's in a tough spot. Lizzy on his left, the Street (now) on his right, and his buddy The Donald in the White House..oh yes, they are good friends. This could be better than "Hamilton." The happiest guy around? Why me of course! I have material for at least...two years?
Have a great weekend!
Showing posts with label Schumer. Show all posts
Showing posts with label Schumer. Show all posts
Friday, November 11, 2016
Wednesday, December 17, 2014
WE'RE BACK!
"Tom, I'm still seeing double." Tom is my surgeon and neighbor.
"Charlie, the operative word is seeing."
We're back, a good way from perfect but lookin' really good...and feeling even better.
Big doings while sidelined on just about everything so the trick is going to be how to weave the past with the present beginning with the election which, as he challenged it would be, was all about Il Duce's policies of the past six years. Yeah, Il Duce. No point of being clever about it anymore, let's just call it as it is and hope he doesn't end up on a lamppost. He, his policies and his party got killed which is going to shape the next two years but of course that hasn't stopped him in his imperial quest the latest being the "normalization" of relations with Cuba about which other than the Castro boys, the Venezulus, the Nics and other assorted vermin and despots in Latin Land, who benefits? Certainly not the Cuban people and the U.S. But, forward he goes, trailed by an increasingly smaller group of sycophants and hangers-on, wandering from one alternative universe to another. The problem is he has chosen a high stakes game in which he holds less than half of the aces. If he loses one of his challenges--just one--be it a real risk in with the Supremes involving Obama Care and Executive authority, or a disaster in foreign affairs, the economy could be brutalized. It is therefore critical that the Republicans, having been wildly successful, prepare for what they have fought and the fall-out from the same. Not to have in place contingency plans to deal with success would be critical. It all begins in two weeks.
On the bright side, the complete collapse in energy prices has been the second most important event in the past month and a half, providing what amounts to a huge tax break to the American consumer and massive upheavals in the geopolitical landscape especially in regard to Russia. Tsar Vlady's imperial ambitions may have been seriously derailed by a world awash in oil and the prospect of burgeoning new supplies of energy arriving in western Europe in a much shorter time frame. The Saudis bless them, have chosen sides in this one and from our standpoint, all the bad guys are getting squeezed. If Il Duce's mob aided in that, good on em'. But times are not good for the Rodina, Belarus--couldn't happen to a nicer bunch--and Venezuela just to name a few. The Zulus could be real close to asset sales and thoughts of default just past the first of the year assuming Duce doesn't do something even stupider and bail them out. Emerging market funds are the other side of this picture, however, with people like Allianze and...ready for it...PIMCO, up to their eyeballs in dodgy paper with the former holding a big number in Russian private sector. Nobody's going in the tank over this but there might well be a cut back or two in bonuses this year. Cry for them.
A third important and truly encouraging piece of news was the roll-back of a small part of Dodd-Frank which sent crazy Lizzy into an apoplectic state which was certainly fun to watch. Poor Lizzy, the minute her back was turned, WHAMMO, right in the neck from my old bud Chuck Schumer whose motto has always been, "Gather ye campaign contributions while ye may..." and the easiest gathering spot is Wall Street. But this is not going to go away and blood is going to be spilt. More on this in coming episodes and on the Federal Reserve which today said it ain't doing nuttin'. The market, which had been awful for ever it seemed immediately went up 300 points. And a Merry Early Christmas to all! Who says it's not about interest rates?
Finally, it became more and more apparent...as we have been suggesting...that the next year is going to be all about Europe, the Union and the Euro. Baring external political events, this is the game to be played and the one to watch which we shall be doing carefully and with great regularity. So, I am really looking forward to the coming months and trying to tie all this together. I hope you're still with me and thanks for all the good wishes I received. Believe me, they were very heart warming.
"Charlie, the operative word is seeing."
We're back, a good way from perfect but lookin' really good...and feeling even better.
Big doings while sidelined on just about everything so the trick is going to be how to weave the past with the present beginning with the election which, as he challenged it would be, was all about Il Duce's policies of the past six years. Yeah, Il Duce. No point of being clever about it anymore, let's just call it as it is and hope he doesn't end up on a lamppost. He, his policies and his party got killed which is going to shape the next two years but of course that hasn't stopped him in his imperial quest the latest being the "normalization" of relations with Cuba about which other than the Castro boys, the Venezulus, the Nics and other assorted vermin and despots in Latin Land, who benefits? Certainly not the Cuban people and the U.S. But, forward he goes, trailed by an increasingly smaller group of sycophants and hangers-on, wandering from one alternative universe to another. The problem is he has chosen a high stakes game in which he holds less than half of the aces. If he loses one of his challenges--just one--be it a real risk in with the Supremes involving Obama Care and Executive authority, or a disaster in foreign affairs, the economy could be brutalized. It is therefore critical that the Republicans, having been wildly successful, prepare for what they have fought and the fall-out from the same. Not to have in place contingency plans to deal with success would be critical. It all begins in two weeks.
On the bright side, the complete collapse in energy prices has been the second most important event in the past month and a half, providing what amounts to a huge tax break to the American consumer and massive upheavals in the geopolitical landscape especially in regard to Russia. Tsar Vlady's imperial ambitions may have been seriously derailed by a world awash in oil and the prospect of burgeoning new supplies of energy arriving in western Europe in a much shorter time frame. The Saudis bless them, have chosen sides in this one and from our standpoint, all the bad guys are getting squeezed. If Il Duce's mob aided in that, good on em'. But times are not good for the Rodina, Belarus--couldn't happen to a nicer bunch--and Venezuela just to name a few. The Zulus could be real close to asset sales and thoughts of default just past the first of the year assuming Duce doesn't do something even stupider and bail them out. Emerging market funds are the other side of this picture, however, with people like Allianze and...ready for it...PIMCO, up to their eyeballs in dodgy paper with the former holding a big number in Russian private sector. Nobody's going in the tank over this but there might well be a cut back or two in bonuses this year. Cry for them.
A third important and truly encouraging piece of news was the roll-back of a small part of Dodd-Frank which sent crazy Lizzy into an apoplectic state which was certainly fun to watch. Poor Lizzy, the minute her back was turned, WHAMMO, right in the neck from my old bud Chuck Schumer whose motto has always been, "Gather ye campaign contributions while ye may..." and the easiest gathering spot is Wall Street. But this is not going to go away and blood is going to be spilt. More on this in coming episodes and on the Federal Reserve which today said it ain't doing nuttin'. The market, which had been awful for ever it seemed immediately went up 300 points. And a Merry Early Christmas to all! Who says it's not about interest rates?
Finally, it became more and more apparent...as we have been suggesting...that the next year is going to be all about Europe, the Union and the Euro. Baring external political events, this is the game to be played and the one to watch which we shall be doing carefully and with great regularity. So, I am really looking forward to the coming months and trying to tie all this together. I hope you're still with me and thanks for all the good wishes I received. Believe me, they were very heart warming.
Tuesday, October 21, 2014
INDESCRIBABLE
I mean, why? Now we know that Janet Yellen is a Democrat, but one would think that she's been around long enough to realize that two weeks before a major election the Chairperson of the Federal Reserve should stay away from hot button topics, but there she was last week speaking out against the dangers of the wealth gap and income distribution in a manner that placed her firmly on The Leader's election campaign committee. Guaranteed to raise a few eyebrows. But then consider that there is very little disagreement that one of the reason for this terrible state of affairs has been the actions of the Fed which has enormously benefited those who control financial assets. Like, girl, it's one thing to be partisan but do you have to be a dumb partisan at the same time, putting a whacking big hurt on the reputation of the institution you chair and the people within it who serve?
I really couldn't believe that this was a real policy statement on the part of the Fed so I called everybody I know to try to figure out just how much attention this received before Janet went blah-blah. No one to whom I spoke really knew but the consensus was that it was not one of those passed around things that every one has a shot at drafting and every phrase is carefully parsed. Yeah, the board knew but no one had paid it much attention. That of course is indicative of another problem it being you can't take too seriously what these buggers say any more much less believing in their independence. Not good, but I came away feeling mollified to an extent. Then yesterday, came Billy the Dud.
One has to go back in time a bit to try to figure this one out. William Dudley became the President of the New York Federal Reserve as a result of Being There, having joined from his senior economic position at---you guessed it--Goldman Sachs where he was what is known in the trade as a "Fed Watcher," a job not associated with star power. He is a good, academic economist, who as far as I can tell has never had, nor does he have now, the slightest understanding of what the Fed has meant to the world…and I mean WORLD…of finance. He has never really understood that he is the President of a public policy institution…a GLOBAL public policy institution…whose utterances has enormous implications rather than just his bright idea of the day. So, when Billy the Dud makes a speech yesterday right out of the playbook of Occupy Wall Street which you might remember turned entire neighborhoods in New York City into cess pools a few years ago on top of Janet's redistribute the wealth remarks, one might call up the lines from a few years back, "Something happening here, what it is ain't exactly clear…"
In a nut shell, The Dud told the banks that unless they cleaned up their act and demonstrated an ability to manage their vast businesses, they wee going to be broken up. He also got into designing completely unworkable compensation programs but that's small potatoes, so let's stick to the headline-making ideas.
Now there is no real secret that The Dud wants to be the Secretary of the Treasury and may well get that job as the present occupier of the seat, our dear friend Jacob/Jack is completely hopeless and recognized around the world as a mere political tool. Gravitas is not a word with which he is easily associated. But then again The Dud, whose remarks were greeted today in a street blog as being akin to a "Chicago alderman threatening Al Capone" can be said to suffer from the same juxtapositional absence. But suddenly, in conjunction with Janet's pronouncements of last week there is no longer any doubt as to the total politicalization of the Federal Reserve which in any case is a mere shadow of its former self. Once an institution that commanded profound respect it has become just another quasi-public institution run out of pure self interest rather than for the purpose of the public good.
There is really no point in going into exactly what it is he said other than to point out in making his case he used examples of dastardly deeds committed by the world of banking such as the "London Whale," forgetting that it was the shareholders and perps who suffered from the loss of $6.5 billion and their jobs not the public and most importantly, the affair was overlooked entirely by the regulators who reported to HIM! Is ritual seppuku on line? Should be easy to find a second to lop off his head after an appropriate amount of time of his screaming over his severed guts. Or should one merely ask ones self is he simply a Fed Watcher and that is what he will always be or is he a particularly stupid Fed Watcher. The implications of the latter could have grave consequences.
All of this, of course, is made more meaningful by the presence of Crazy Lizzy Warren who will give cover and succor to anyone who she believes can produce the right stuff to allow her to kill a bank in conjunction with her partner in the Fed. Lizzy is desperately trying to schedule hearings on this and other subjects before the end of this Congress in January in case there is a change in control as a result of the elections. If she succeeds it will be terrible for the banks, but what might well be standing in the way is my old buddy, Charles ("call me Chuck") Schumer who, when things get ugly has never forgotten where his cash comes from which is not far removed from Wall Street. That showdown could be delicious, but if there is a change in leadership, what a Republican Congress could and might do in relation to the Fed, is something about which I shudder to think. Then again, the institution has sown the seeds of it's own destruction as one of the finest institutions still standing over the last century with a continued diminishing of the quality of. More than a pity.
I really couldn't believe that this was a real policy statement on the part of the Fed so I called everybody I know to try to figure out just how much attention this received before Janet went blah-blah. No one to whom I spoke really knew but the consensus was that it was not one of those passed around things that every one has a shot at drafting and every phrase is carefully parsed. Yeah, the board knew but no one had paid it much attention. That of course is indicative of another problem it being you can't take too seriously what these buggers say any more much less believing in their independence. Not good, but I came away feeling mollified to an extent. Then yesterday, came Billy the Dud.
One has to go back in time a bit to try to figure this one out. William Dudley became the President of the New York Federal Reserve as a result of Being There, having joined from his senior economic position at---you guessed it--Goldman Sachs where he was what is known in the trade as a "Fed Watcher," a job not associated with star power. He is a good, academic economist, who as far as I can tell has never had, nor does he have now, the slightest understanding of what the Fed has meant to the world…and I mean WORLD…of finance. He has never really understood that he is the President of a public policy institution…a GLOBAL public policy institution…whose utterances has enormous implications rather than just his bright idea of the day. So, when Billy the Dud makes a speech yesterday right out of the playbook of Occupy Wall Street which you might remember turned entire neighborhoods in New York City into cess pools a few years ago on top of Janet's redistribute the wealth remarks, one might call up the lines from a few years back, "Something happening here, what it is ain't exactly clear…"
In a nut shell, The Dud told the banks that unless they cleaned up their act and demonstrated an ability to manage their vast businesses, they wee going to be broken up. He also got into designing completely unworkable compensation programs but that's small potatoes, so let's stick to the headline-making ideas.
Now there is no real secret that The Dud wants to be the Secretary of the Treasury and may well get that job as the present occupier of the seat, our dear friend Jacob/Jack is completely hopeless and recognized around the world as a mere political tool. Gravitas is not a word with which he is easily associated. But then again The Dud, whose remarks were greeted today in a street blog as being akin to a "Chicago alderman threatening Al Capone" can be said to suffer from the same juxtapositional absence. But suddenly, in conjunction with Janet's pronouncements of last week there is no longer any doubt as to the total politicalization of the Federal Reserve which in any case is a mere shadow of its former self. Once an institution that commanded profound respect it has become just another quasi-public institution run out of pure self interest rather than for the purpose of the public good.
There is really no point in going into exactly what it is he said other than to point out in making his case he used examples of dastardly deeds committed by the world of banking such as the "London Whale," forgetting that it was the shareholders and perps who suffered from the loss of $6.5 billion and their jobs not the public and most importantly, the affair was overlooked entirely by the regulators who reported to HIM! Is ritual seppuku on line? Should be easy to find a second to lop off his head after an appropriate amount of time of his screaming over his severed guts. Or should one merely ask ones self is he simply a Fed Watcher and that is what he will always be or is he a particularly stupid Fed Watcher. The implications of the latter could have grave consequences.
All of this, of course, is made more meaningful by the presence of Crazy Lizzy Warren who will give cover and succor to anyone who she believes can produce the right stuff to allow her to kill a bank in conjunction with her partner in the Fed. Lizzy is desperately trying to schedule hearings on this and other subjects before the end of this Congress in January in case there is a change in control as a result of the elections. If she succeeds it will be terrible for the banks, but what might well be standing in the way is my old buddy, Charles ("call me Chuck") Schumer who, when things get ugly has never forgotten where his cash comes from which is not far removed from Wall Street. That showdown could be delicious, but if there is a change in leadership, what a Republican Congress could and might do in relation to the Fed, is something about which I shudder to think. Then again, the institution has sown the seeds of it's own destruction as one of the finest institutions still standing over the last century with a continued diminishing of the quality of. More than a pity.
Thursday, April 3, 2014
CITI…AGAIN
Today was supposed to be Part II on the trip but I've been trying to get as much as I can on the latest goings-on with Citicorp.
As predicted, the Feds have jumped in with all hands turning what is right now a $250 million loss from a fraud into a criminal investigation into money laundering along with the State of Massachusetts, the home of…you guessed it…Crazy Lizzy Warren. Make no mistake, this entire thing is running through Warren's office with our boy Dan doing the heavy lifting on the regulatory side. Lizzy wants to make her bones on this one and to hell with anything or anyone that stands in her way. This will ultimately result in another multi-billion dollar extortion on the part of the Feds for--let's be honest--a lousy $250 million that doesn't even reach the level of "material." Citi will be forced to admit what bad boys they were and promise that they will never do it again. Unless the Administration wishes to identify the origin of the millions of money transfers that go through Banamex's California subsidiary, the money laundering whispers will go away as they will discover millions of illegals. This Administration does not want to do that.
But, and here is Lizzy's big prize, what she would really love to do is down size Citicorp and isn't Mexico a wonderful place to start? Look for her to start bleating about that in the next few weeks. And for those of you who like this sort of thing, wait for the reaction of Chuck Schumer when she does. This could be monumental. It could also shape the face of American banking for quite a while. Watch. Part II tomorrow
As predicted, the Feds have jumped in with all hands turning what is right now a $250 million loss from a fraud into a criminal investigation into money laundering along with the State of Massachusetts, the home of…you guessed it…Crazy Lizzy Warren. Make no mistake, this entire thing is running through Warren's office with our boy Dan doing the heavy lifting on the regulatory side. Lizzy wants to make her bones on this one and to hell with anything or anyone that stands in her way. This will ultimately result in another multi-billion dollar extortion on the part of the Feds for--let's be honest--a lousy $250 million that doesn't even reach the level of "material." Citi will be forced to admit what bad boys they were and promise that they will never do it again. Unless the Administration wishes to identify the origin of the millions of money transfers that go through Banamex's California subsidiary, the money laundering whispers will go away as they will discover millions of illegals. This Administration does not want to do that.
But, and here is Lizzy's big prize, what she would really love to do is down size Citicorp and isn't Mexico a wonderful place to start? Look for her to start bleating about that in the next few weeks. And for those of you who like this sort of thing, wait for the reaction of Chuck Schumer when she does. This could be monumental. It could also shape the face of American banking for quite a while. Watch. Part II tomorrow
Wednesday, February 27, 2013
DITTO
Well, what more is there to say following yesterday's piece. Ben finished his bit up on the Hill in grand style, the markets loved him and indicated that they could care less about the sequester which apparently everyone seems to have figured out is meaningless and Italy has been reduced to the status of Greece; an annoyance but not much else despite the fact that they are a real country but not to worry, the ECB will take care of them. Heck, they even raised 8 Billion Euros across the curve and only paid 4.84% for the 10 year. A rousing success. So, let's take it up 175 on the DOW today and feel good about things.
It's the central banks that are doing it and as the saying goes, "Don't fight the Fed." If you're a bull, that's just fine, but if you were paid to worry as I was for a long time, to me the current situation means I become more concerned with "even risk" which to put it into the current vernacular, the return of the Black Swan. What's that? Well that's the problem, you don't know or even think about it until it arrives and as a result the effects are greatly enhanced, but there seem to be the belief that if there is nothing on the horizon, it's full steam ahead.
Except it isn't. The remarkable rise in equities is occurring as a result of Central Bank action resulting in an absence of alternative investment opportunities, high net corporate profits but with little or no top-line growth, continued cash hoarding but corporates of all shapes and sizes and no volume. It's as though some people need something to do rather than acts of real conviction. Then again, those folks are making a lot of money lately which isn't a bad thing. Does it end? Of course, all things do but the question is when and how. What is absent from this extraordinary world wide creation of money is inflation which has surprised a lot of people including your buddy, Charlie, unless you throw in food, gasoline and some other stuff that everybody knows doesn't count. But fair is fair, we started off with this standard and I guess we are stuck with it. Fact is however, if the Big I ever does show up things will get ugly really quickly and the undoubted rise in interest rates will pose an enormous threat to solvency on a number of fronts. But until then, "Lassez les bon temps roulet," as they say in The Big Easy...in the 9th Ward.
A little while ago I got on the case--and rightfully so--of Prof. Steven Davidoff of THE Ohio State University, on the subject of the Argentine bond dispute and the Foreign Sovereign Immunities Act. Prof. Davidoff is back in the Times today with a cracker of an article on the proposed tax on trades of financial instruments which the Euros, led by France, are about to make happen despite the protests of the Brits and the United States. The article traces the origins and histories of this idea and the implementation, in various formats, of the same. It is a very good article and I commend it to you. Interestingly, it points out that if history is any guide such a tax has to be imposed everywhere as if there are jurisdictions which do not employ it there will be a natural migration to those garden spots. More interestingly, Prof. Steve points out that Canada, today held up as the paragon of financial planning and implementation has already rejected such a tax. Huuuumm, wonder what Sen. Chuckie Schumer thinks of that? One hour and ten minutes to Toronto from LGA, Chuck. Check it out. It's on the right side of the Lake. No snow, and really nice people.
It's the central banks that are doing it and as the saying goes, "Don't fight the Fed." If you're a bull, that's just fine, but if you were paid to worry as I was for a long time, to me the current situation means I become more concerned with "even risk" which to put it into the current vernacular, the return of the Black Swan. What's that? Well that's the problem, you don't know or even think about it until it arrives and as a result the effects are greatly enhanced, but there seem to be the belief that if there is nothing on the horizon, it's full steam ahead.
Except it isn't. The remarkable rise in equities is occurring as a result of Central Bank action resulting in an absence of alternative investment opportunities, high net corporate profits but with little or no top-line growth, continued cash hoarding but corporates of all shapes and sizes and no volume. It's as though some people need something to do rather than acts of real conviction. Then again, those folks are making a lot of money lately which isn't a bad thing. Does it end? Of course, all things do but the question is when and how. What is absent from this extraordinary world wide creation of money is inflation which has surprised a lot of people including your buddy, Charlie, unless you throw in food, gasoline and some other stuff that everybody knows doesn't count. But fair is fair, we started off with this standard and I guess we are stuck with it. Fact is however, if the Big I ever does show up things will get ugly really quickly and the undoubted rise in interest rates will pose an enormous threat to solvency on a number of fronts. But until then, "Lassez les bon temps roulet," as they say in The Big Easy...in the 9th Ward.
A little while ago I got on the case--and rightfully so--of Prof. Steven Davidoff of THE Ohio State University, on the subject of the Argentine bond dispute and the Foreign Sovereign Immunities Act. Prof. Davidoff is back in the Times today with a cracker of an article on the proposed tax on trades of financial instruments which the Euros, led by France, are about to make happen despite the protests of the Brits and the United States. The article traces the origins and histories of this idea and the implementation, in various formats, of the same. It is a very good article and I commend it to you. Interestingly, it points out that if history is any guide such a tax has to be imposed everywhere as if there are jurisdictions which do not employ it there will be a natural migration to those garden spots. More interestingly, Prof. Steve points out that Canada, today held up as the paragon of financial planning and implementation has already rejected such a tax. Huuuumm, wonder what Sen. Chuckie Schumer thinks of that? One hour and ten minutes to Toronto from LGA, Chuck. Check it out. It's on the right side of the Lake. No snow, and really nice people.
Wednesday, November 7, 2012
A REALLY BAD DAY
I you are an investor in world stock markets that is. The Leader was reelected rather easily which was a surprise and as a result the DOW closed down 312 points. There was an attempt to make it appear that the real movement from a flat opening was the bad economic numbers out of Euroland, an argument that certainly lost its creds as the day progressed, but actually in the medium term it is Euroland that may be the more important of the two events as rather than the usual suspects it was Germany's economic performance which fell sharply among all the other bad news that caused the greatest shock.
I think this should be viewed carefully in two respects. Germany was of course the key factor affecting all the other economies in the zone but perhaps even more important is that Angie is now in a box: whatever flexibility in dealing with the debt crisis is I believe is gone. The mood will certainly shift to one of Deutschland uber alles as opposed one of Euro cooperation by way of leadership and sharing of the wealth. German capital in bail-out mechanisms just got a lot harder to obtain. Which brings us to Greece which was supposed to vote on the new austerity package today at 2:00 pm local time. Then the riots broke out involving some reports had it at least 75,000 people in the center of Athens. As I write, it is now 1:00 am in Athens and I have still not heard as to whether a vote has been taken. I assume it has not. Unfamiliar as I am with Greek parliamentary procedures I'm not sure what this means other than in most places it would signal that the leadership doesn't have the votes. If this does not pass I cannot see how this can be put back together in time for the latest tranche of the bail out package to pass which could result in a Greek default in less than two weeks. If that happens...
In the mean time Angie stopped into No. 10 to have a bit of a chin wag with her pal, David. Given the fact that in my book the odds of holding things together suddenly just went from about 90% to about 50/50 the conversation may be about nothing at all as there may be no Euro Union in which the Brits can remain attached. That may indeed be an overstatement but there has been such a sudden shift in sentiment for the future that it may not. Focused as we have all been over here on the election a lot of folks haven't been paying too much attention to the event in Euroland and today's goings on have come as a bit of a shock. No doubt there will be an overreaction but our friend across the pond had better lay this one to rest quickly before the global sell-off broadens.
And as to the election, from a banker's standpoint the victory in the Senate Race in Mass. of Elizabeth Warren is the scariest thing imaginable. The general view is that she's a one trick pony, determined to squash the financial industry in general and banks in particular with thousands of pages of regulation even stupider than Dodd/Frank. Could be but then again she has earned millions in representing financial institutions in regulatory matters. From my stand point I hope her ambitions run up against the Wall Street money raising sensation, Chuck Schumer. Settle it fair square, Lizzie and Chuckie. How 'bout a mud wrestling contest in Battery Square Park? Hell, you could probably sell enough tickets for that to pay off the national debt which incidentally is now in the area of $16,000,300,000,000. Greece? What, us worry?
I think this should be viewed carefully in two respects. Germany was of course the key factor affecting all the other economies in the zone but perhaps even more important is that Angie is now in a box: whatever flexibility in dealing with the debt crisis is I believe is gone. The mood will certainly shift to one of Deutschland uber alles as opposed one of Euro cooperation by way of leadership and sharing of the wealth. German capital in bail-out mechanisms just got a lot harder to obtain. Which brings us to Greece which was supposed to vote on the new austerity package today at 2:00 pm local time. Then the riots broke out involving some reports had it at least 75,000 people in the center of Athens. As I write, it is now 1:00 am in Athens and I have still not heard as to whether a vote has been taken. I assume it has not. Unfamiliar as I am with Greek parliamentary procedures I'm not sure what this means other than in most places it would signal that the leadership doesn't have the votes. If this does not pass I cannot see how this can be put back together in time for the latest tranche of the bail out package to pass which could result in a Greek default in less than two weeks. If that happens...
In the mean time Angie stopped into No. 10 to have a bit of a chin wag with her pal, David. Given the fact that in my book the odds of holding things together suddenly just went from about 90% to about 50/50 the conversation may be about nothing at all as there may be no Euro Union in which the Brits can remain attached. That may indeed be an overstatement but there has been such a sudden shift in sentiment for the future that it may not. Focused as we have all been over here on the election a lot of folks haven't been paying too much attention to the event in Euroland and today's goings on have come as a bit of a shock. No doubt there will be an overreaction but our friend across the pond had better lay this one to rest quickly before the global sell-off broadens.
And as to the election, from a banker's standpoint the victory in the Senate Race in Mass. of Elizabeth Warren is the scariest thing imaginable. The general view is that she's a one trick pony, determined to squash the financial industry in general and banks in particular with thousands of pages of regulation even stupider than Dodd/Frank. Could be but then again she has earned millions in representing financial institutions in regulatory matters. From my stand point I hope her ambitions run up against the Wall Street money raising sensation, Chuck Schumer. Settle it fair square, Lizzie and Chuckie. How 'bout a mud wrestling contest in Battery Square Park? Hell, you could probably sell enough tickets for that to pay off the national debt which incidentally is now in the area of $16,000,300,000,000. Greece? What, us worry?
Monday, October 15, 2012
BAD TIMES
We had a house full last week, terrible weather, Trouble and Strife sick as can be (grandchild pathogens) and a football game to attend. We won. That was about the only thing that went well.
In the meantime, I've been trying to figure out what in the hell is going on out there whilst the tightening polls in the Presidential race dominate everything over here. I am told, however, that in regard to the matter of the fiscal cliff, there are actually substantive discussions underway with members of both parties that could lead to a solution but not until the full results are known. Which is why Chuck Schumer, fresh from the taking of a new stupid pill, demanded a tax rise for "millionaires and billionaires," (those defined as making more than $200,000 a year--I know, neither can I) as a way to shoot in front of the duck. But given the back and forth over the past six months I consider this to be a positive step...if true.
Meanwhile, in the midst of financial crisis and austerity, the IMF and World Bank held their annual meeting in probably the most expensive venue in the world, Tokyo, and agreed on nothing except that things weren't good out there. The headline news (not big type) involved Europe and centered about the IMF now believing that austerity is not the way to go and Sweden believing that Greece should step out of the Euro and the Eurozone altogether. A polite, "Thank You" was given to the Swedes (who are correct) and discussion centered around how to prevent the same from happening and the German view (at least on the part of the finance guys) that the IMF was full of it.
The IMF is correct of course but they have no real alternative as the prolonging of the status quo or the improvement upon the same will take money, a lot of money, and that comes from only one source; Germany. Not on at this stage. And yet, Greece will probably get a bye for a few months or so and Spain, if politically they can come to Brussels to ask for help, will get all the money the ECB can print; not that this is going to solve anything permanently but because it will prolong the appearance of a union for a bit longer until...well, that's the real question, isn't it?
So I asked a fellow I know who was in Tokyo as an observer that very thing.
"The election."
"What? Our election? What does that have to do with it?"
"No you jerk," ...we have a warm friendship..."the German election."
I thought about it and it made sense. No one is really working for a solution; everything is in a holding pattern. Can it work given the election is almost a year out? I don't know but the theory is a good one. These are not dumb people. I think everyone realizes that with austerity there will be no or slow growth and growth is what is desperately needed. But pilling new debt onto already overtaxed economies is no solution either as surely at a point it will lead to inflation and an exacerbation of the problem through increased carrying costs. The real solution is through a massive effort at debt reduction but that will of necessity involve the public sector institutions and THAT at this time is unacceptable and politically a death wish. It is a high wire act worthy of the Flying Wallendas.
The gang gets together yet again at the end of the week in Brussels so we wait to see what comes out of that. While all of this is going on there is Cyprus, which, in case you missed it is a member of the EU, a member of the Euro Zone and broke. Cyprus is a little Greece: a busted economy, busted banks and not entirely corrupt but close enough to dammit. They want a bail-out and they want it now or they walk--or so they threaten. Sounds like The Mouse that Roared, Part II. Then again, it is the squeakie wheel that gets oiled...every pun intended
In the meantime, I've been trying to figure out what in the hell is going on out there whilst the tightening polls in the Presidential race dominate everything over here. I am told, however, that in regard to the matter of the fiscal cliff, there are actually substantive discussions underway with members of both parties that could lead to a solution but not until the full results are known. Which is why Chuck Schumer, fresh from the taking of a new stupid pill, demanded a tax rise for "millionaires and billionaires," (those defined as making more than $200,000 a year--I know, neither can I) as a way to shoot in front of the duck. But given the back and forth over the past six months I consider this to be a positive step...if true.
Meanwhile, in the midst of financial crisis and austerity, the IMF and World Bank held their annual meeting in probably the most expensive venue in the world, Tokyo, and agreed on nothing except that things weren't good out there. The headline news (not big type) involved Europe and centered about the IMF now believing that austerity is not the way to go and Sweden believing that Greece should step out of the Euro and the Eurozone altogether. A polite, "Thank You" was given to the Swedes (who are correct) and discussion centered around how to prevent the same from happening and the German view (at least on the part of the finance guys) that the IMF was full of it.
The IMF is correct of course but they have no real alternative as the prolonging of the status quo or the improvement upon the same will take money, a lot of money, and that comes from only one source; Germany. Not on at this stage. And yet, Greece will probably get a bye for a few months or so and Spain, if politically they can come to Brussels to ask for help, will get all the money the ECB can print; not that this is going to solve anything permanently but because it will prolong the appearance of a union for a bit longer until...well, that's the real question, isn't it?
So I asked a fellow I know who was in Tokyo as an observer that very thing.
"The election."
"What? Our election? What does that have to do with it?"
"No you jerk," ...we have a warm friendship..."the German election."
I thought about it and it made sense. No one is really working for a solution; everything is in a holding pattern. Can it work given the election is almost a year out? I don't know but the theory is a good one. These are not dumb people. I think everyone realizes that with austerity there will be no or slow growth and growth is what is desperately needed. But pilling new debt onto already overtaxed economies is no solution either as surely at a point it will lead to inflation and an exacerbation of the problem through increased carrying costs. The real solution is through a massive effort at debt reduction but that will of necessity involve the public sector institutions and THAT at this time is unacceptable and politically a death wish. It is a high wire act worthy of the Flying Wallendas.
The gang gets together yet again at the end of the week in Brussels so we wait to see what comes out of that. While all of this is going on there is Cyprus, which, in case you missed it is a member of the EU, a member of the Euro Zone and broke. Cyprus is a little Greece: a busted economy, busted banks and not entirely corrupt but close enough to dammit. They want a bail-out and they want it now or they walk--or so they threaten. Sounds like The Mouse that Roared, Part II. Then again, it is the squeakie wheel that gets oiled...every pun intended
Wednesday, August 8, 2012
STAN CHART II
I once got a call from an old friend who was a director at the Bank of England. I was visiting London and he tracked me down. "Come around after five, would you. whenever you're free." In those days that meant, "Be here at five, not five Oh one."
Spectacular set-up. Two malts, (he knew I could afford and drank Malts in those days), bottle of Puss Fuss, and a Bolly on ice (in case I had something going on for dinner that evening...I did, but it didn't stop me) to wash down the salmon, cheeses, and pettit fours. How nice I thought until one of his assistants came in with a pad and sharpened pencils. Uh oh, thought I.
I had recently switched institutions and we had a half hour of pleasantries about my new shop. He got up, poured me another "wee dram" as he called it and said, "Your old employer: tell me Charlie who the hell is running that bloody place?" For the second time that evening, uh oh, thought I.
I had been in the same room when the chairman of my bank and Paul Volker had a go at eaxh other, but this was one way traffic, It went on for the better part of 10 minutes and he had it chapter and verse. Smiling to myself I thought that I could probably sell tickets to the meeting that was to come. I had never seen a regulator so mad in all my life. I felt cooperation was the best course at the time.
The last few days would have probably rivaled that experience. Benjamin Lawsky is the cief New York State banking Regulator. His political Rbbi is none other than Sen. Charles Schumer who, as I have stated, upon leaving the House for the Senate took a stupid pill except when in comes to the finance industry from whom he has gladly taken millions in campaign contributions. Mr. Lawsky also comes out of the Attorney General's off of the state last headed by Mario Cuomo and Eliot Spitzer who was last seen wondering whether he was looking at a Mann Act prosecution for participating in prostitution across state lines...a grab bag of political slugs never before seen outside of Chicago. Mr. Lawsky exists in a cupola of arrogance and self aggrandizement occupied by only the truly stupid. He has been trained well.
From what I can determine, he was brought into the investigation of Stan Chart as a courtesy to his position: the action on his part, completely unknown to, or supported by Federal regulators was done purely to promote his image and his political future. As such, he may be among the most despised not only within the relatively non-political Federal Reserve but withing the very political, same-party Treasury. A London moment to be sure.
The truth will out sayeth the Bard and it will in this case. Nevertheless, I will find it quite remarkable if someone doesn't grab this jerk by the scruff of the neck and point out to him that the fact that whilst Stan Chart is a British financial institution he shouldn't think he can deal with it with impunity. New York is no longer the world's financial capitol--due in no little part to regulators and regulation. London has regulators and they answer to politicians who are undoubtably close to Stan Chart, much like his Rabbi is to American institutions. I would hope that someone might suggest to him that he back off and let the Adults deal with this. Are you listening, Chuck?
_____________________________
I made a number of calls to people still in the game in one manner or another regarding the subject of yesterday's post. The answers I received ranged from, "One would think so" to "I don't want to talk about it, Charlie." If and what damage was done we will never know
Spectacular set-up. Two malts, (he knew I could afford and drank Malts in those days), bottle of Puss Fuss, and a Bolly on ice (in case I had something going on for dinner that evening...I did, but it didn't stop me) to wash down the salmon, cheeses, and pettit fours. How nice I thought until one of his assistants came in with a pad and sharpened pencils. Uh oh, thought I.
I had recently switched institutions and we had a half hour of pleasantries about my new shop. He got up, poured me another "wee dram" as he called it and said, "Your old employer: tell me Charlie who the hell is running that bloody place?" For the second time that evening, uh oh, thought I.
I had been in the same room when the chairman of my bank and Paul Volker had a go at eaxh other, but this was one way traffic, It went on for the better part of 10 minutes and he had it chapter and verse. Smiling to myself I thought that I could probably sell tickets to the meeting that was to come. I had never seen a regulator so mad in all my life. I felt cooperation was the best course at the time.
The last few days would have probably rivaled that experience. Benjamin Lawsky is the cief New York State banking Regulator. His political Rbbi is none other than Sen. Charles Schumer who, as I have stated, upon leaving the House for the Senate took a stupid pill except when in comes to the finance industry from whom he has gladly taken millions in campaign contributions. Mr. Lawsky also comes out of the Attorney General's off of the state last headed by Mario Cuomo and Eliot Spitzer who was last seen wondering whether he was looking at a Mann Act prosecution for participating in prostitution across state lines...a grab bag of political slugs never before seen outside of Chicago. Mr. Lawsky exists in a cupola of arrogance and self aggrandizement occupied by only the truly stupid. He has been trained well.
From what I can determine, he was brought into the investigation of Stan Chart as a courtesy to his position: the action on his part, completely unknown to, or supported by Federal regulators was done purely to promote his image and his political future. As such, he may be among the most despised not only within the relatively non-political Federal Reserve but withing the very political, same-party Treasury. A London moment to be sure.
The truth will out sayeth the Bard and it will in this case. Nevertheless, I will find it quite remarkable if someone doesn't grab this jerk by the scruff of the neck and point out to him that the fact that whilst Stan Chart is a British financial institution he shouldn't think he can deal with it with impunity. New York is no longer the world's financial capitol--due in no little part to regulators and regulation. London has regulators and they answer to politicians who are undoubtably close to Stan Chart, much like his Rabbi is to American institutions. I would hope that someone might suggest to him that he back off and let the Adults deal with this. Are you listening, Chuck?
_____________________________
I made a number of calls to people still in the game in one manner or another regarding the subject of yesterday's post. The answers I received ranged from, "One would think so" to "I don't want to talk about it, Charlie." If and what damage was done we will never know
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.
Thursday, May 27, 2010
TWO DEGREES OF SEPERATION
We're back. Great trip, great fun. Gone fishin' next week but in the mean time...
Way back in the last century, I was testifying before a House sub-committee on sovereign debt which had as one of its brighest members a young congressman from Brooklyn by the name of Charles "call me Chuck"...and I did... Schumer . Some where between then and now Chuck either ran into a pole trying to get in front of a tv camera or took a stupid pill, but that's another story. In those days he was really on top of things and the subject about which I was testifying was the valuation of sovereign debt that American banks held on their balance sheets...to wit, should "mark to market" apply. Two guys from Noo Yawk really mixing it up.
"Why shouldn't we demand to know the real value of this stuff?"
"Because Congressman, the value of a loan is a subjective thing; a very subjective thing."
"Isn't there a market?"
"Yes, but it's not very deep or well-established and as such easily manipulated."
"You're not serious." (I was but I knew that he knew that I knew the real concern was that if we had had to put a mark on that crap AT THAT POINT IN TIME, half the banks in the U.S. would be insolvent).
"Look Congressman, let me put it this way, there are a lot of intangibles regarding the valuation of a particular credit. Take my credit for example..."
"What intangibles..."
"My wife." A Pause.
"You have one of those too, eh?" (General laughter).
"Sure as hell do."
After the hearing was over he approached me and asked if he could call from time to time...no attribution, totally off the record. He did ring a number of times and fully understood the problem as well as the enormous loss of flexibility not just for the banks but for the regulators as well. He never broke the confidence. I'm going to be interested to see where Chuck comes down on this insanity being proposed by the FASB loonies, the earlier version of which damn near tanked the world 18 months ago. Do these people never learn or is everybody these days simply consumed with their own sense of importance and insatiable thirst for authority? Consult the archives of the blog to see what I mean.
All of this comes about without a single nod to the reality that we have this country called Greece which has been in the news as of late. Forget about the fact that the "bailout" is a total charade, that it is stupid, that there should have been a rescheduling on market terms, that as an attempt to save the Euro it might well have been the final nail in the coffin and that the real reason was to save the hides of the French and German banks which will be all for naught if this proposal is adopted on a world-wide basis which is really the only way it can be adopted. Sure as God made Green apples The Suit and his collection of hooples will be all for it on the basis that it provides "transparency," and when the music stops, which I predict will be inside of six months, there are going to be a lot of "Peoples," as my friend Hans would put it, "looking where to for to sit down." Tomorrow, I'll try to spell out the end game if the players allow it to be played. Stay tuned.
Way back in the last century, I was testifying before a House sub-committee on sovereign debt which had as one of its brighest members a young congressman from Brooklyn by the name of Charles "call me Chuck"...and I did... Schumer . Some where between then and now Chuck either ran into a pole trying to get in front of a tv camera or took a stupid pill, but that's another story. In those days he was really on top of things and the subject about which I was testifying was the valuation of sovereign debt that American banks held on their balance sheets...to wit, should "mark to market" apply. Two guys from Noo Yawk really mixing it up.
"Why shouldn't we demand to know the real value of this stuff?"
"Because Congressman, the value of a loan is a subjective thing; a very subjective thing."
"Isn't there a market?"
"Yes, but it's not very deep or well-established and as such easily manipulated."
"You're not serious." (I was but I knew that he knew that I knew the real concern was that if we had had to put a mark on that crap AT THAT POINT IN TIME, half the banks in the U.S. would be insolvent).
"Look Congressman, let me put it this way, there are a lot of intangibles regarding the valuation of a particular credit. Take my credit for example..."
"What intangibles..."
"My wife." A Pause.
"You have one of those too, eh?" (General laughter).
"Sure as hell do."
After the hearing was over he approached me and asked if he could call from time to time...no attribution, totally off the record. He did ring a number of times and fully understood the problem as well as the enormous loss of flexibility not just for the banks but for the regulators as well. He never broke the confidence. I'm going to be interested to see where Chuck comes down on this insanity being proposed by the FASB loonies, the earlier version of which damn near tanked the world 18 months ago. Do these people never learn or is everybody these days simply consumed with their own sense of importance and insatiable thirst for authority? Consult the archives of the blog to see what I mean.
All of this comes about without a single nod to the reality that we have this country called Greece which has been in the news as of late. Forget about the fact that the "bailout" is a total charade, that it is stupid, that there should have been a rescheduling on market terms, that as an attempt to save the Euro it might well have been the final nail in the coffin and that the real reason was to save the hides of the French and German banks which will be all for naught if this proposal is adopted on a world-wide basis which is really the only way it can be adopted. Sure as God made Green apples The Suit and his collection of hooples will be all for it on the basis that it provides "transparency," and when the music stops, which I predict will be inside of six months, there are going to be a lot of "Peoples," as my friend Hans would put it, "looking where to for to sit down." Tomorrow, I'll try to spell out the end game if the players allow it to be played. Stay tuned.
Thursday, May 14, 2009
WHAT WILL CHUCKIE SAY?
I'm a bit surprised at the so far muted reaction to the latest plan being floated by Our Hero and The Leader regarding compensation at financial institutions. Seemingly not content with cutting the pay checks for the good folks who work at TARP aided institutions, the latest idea seems to be to in some way control compensation at ALL financial institutions or at least those which could pose a systemic threat (to be defined) whether in the TARP program or not. The scope of this idea, to use one of the New York Time's favorite words. is breathtaking. Maybe that's why the response has been so muted; no one has the breath to say, "SAY WHAT!!!!" You have to give these guys credit; they don't think little thoughts. Of course it is hardly a stretch to go from systemic (to be defined) financial institutions to systemic (to be defined) energy companies, to systemic (to be defined) software companies, to systemic...the list could be endless...and "to be defined." Apparently, as the theory goes, the compensation plans at financial institutions are set up to encourage individuals to take outrageous risks in long term bets where the true outcome is not known until many years after the compensation is paid out. In as much as neither Geitner or Obama ever worked in the private sector (or had a real job as some lesser admirers might say), they must be getting some really good guidance--perhaps from Rahm Emmanuel who worked for Bruce Wasserstein for about 15 minutes and was paid $18 million--but that was catty I suppose.
Now I have a buddy who is still in the business who couldn't be a bigger Obama fan. I am told he donated beaucoup bucks to see The Leader become The Leader. I called him yesterday to get his take (or spin) on the proposal
Me: So, waddaya think? (he's in New York)
Stu: "Communist bastard!"
Me: Come on, it's just another regulatory approach.
Stu: "Nobody signed on for this crap!"
Me: Yeah you did, he told you about wealth distribution. Elections count
Stu...(I'm not sure what the sputter was supposed to convey)
Me: Why don't you talk to Chuck?
Stu: I'll call you back
He hasn't called back yet so maybe he hasn't reached Chuck, but Stu and the Senator are pretty tight...at least as tight as about 500 LARGE gets you to be over the years. So I wonder what Chuckie will say having used the money of people in the business like my friend Stu to get a lot of Democrats elected over the years. Money, the mother's milk of politics. In Stu's case, momma may just have left town.
Moving right along, there was a most interesting duet of op eds in the Times today. Prof Roubini of NYU, he who saw last year his 25 year prediction come true, and V. Z Gao an exec. dir. of the Beijing Private Equity Asso. chatting about the dollar vs. renminbi and role of a reserve currency. Prof Roubini is precisely correct in asserting that it wouldn't be all that of a good thing if the dollar were to lose that role in the world, but totally fuzzy as to how to stop the slide "We must shift our priorities...investing in our crumbling infrastructure, alternative and renewable resources...rather than unnecessary housing and toxic financial innovation. This is the only way to slow down the decline of the dollar and sustain our influence in global affairs." The fact of projected deficits of 11 trillion dollars over the next few year appears to be of little importance.
Mr. Gao, on the other hand says the following: "The United States may want to consider offering inflation-protection measures for China's existing investments in America, and offer additional security or collateral for it's continued investments."..."We still call the dollar gold, but the United States should not assume that this will never change."
Readers of this space will remember that on two occasions we predicted that this would be--PRECISELY--the Chinese position. Prof Roubini makes a number of good points in his piece--both should be must reading--but the quoted portion is crap. The apparent unchecked--and uncheckable--fiscal policies of this administration will spell disaster and it is on these that he should focus. I continue to fear the worst.
Now I have a buddy who is still in the business who couldn't be a bigger Obama fan. I am told he donated beaucoup bucks to see The Leader become The Leader. I called him yesterday to get his take (or spin) on the proposal
Me: So, waddaya think? (he's in New York)
Stu: "Communist bastard!"
Me: Come on, it's just another regulatory approach.
Stu: "Nobody signed on for this crap!"
Me: Yeah you did, he told you about wealth distribution. Elections count
Stu...(I'm not sure what the sputter was supposed to convey)
Me: Why don't you talk to Chuck?
Stu: I'll call you back
He hasn't called back yet so maybe he hasn't reached Chuck, but Stu and the Senator are pretty tight...at least as tight as about 500 LARGE gets you to be over the years. So I wonder what Chuckie will say having used the money of people in the business like my friend Stu to get a lot of Democrats elected over the years. Money, the mother's milk of politics. In Stu's case, momma may just have left town.
Moving right along, there was a most interesting duet of op eds in the Times today. Prof Roubini of NYU, he who saw last year his 25 year prediction come true, and V. Z Gao an exec. dir. of the Beijing Private Equity Asso. chatting about the dollar vs. renminbi and role of a reserve currency. Prof Roubini is precisely correct in asserting that it wouldn't be all that of a good thing if the dollar were to lose that role in the world, but totally fuzzy as to how to stop the slide "We must shift our priorities...investing in our crumbling infrastructure, alternative and renewable resources...rather than unnecessary housing and toxic financial innovation. This is the only way to slow down the decline of the dollar and sustain our influence in global affairs." The fact of projected deficits of 11 trillion dollars over the next few year appears to be of little importance.
Mr. Gao, on the other hand says the following: "The United States may want to consider offering inflation-protection measures for China's existing investments in America, and offer additional security or collateral for it's continued investments."..."We still call the dollar gold, but the United States should not assume that this will never change."
Readers of this space will remember that on two occasions we predicted that this would be--PRECISELY--the Chinese position. Prof Roubini makes a number of good points in his piece--both should be must reading--but the quoted portion is crap. The apparent unchecked--and uncheckable--fiscal policies of this administration will spell disaster and it is on these that he should focus. I continue to fear the worst.
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