THE FED AND FOOLS

Three days away but the whisper number for the jobs report on Friday is a rise of over 200,000.  Now if this occurs, at some point as happened last month, someone will probably realize that these new "jobs" aren't quite what they are supposed to be consisting primarily of short-hour hiring rather that permanent jobs of a 40 or 30 hour week depending whatever the hell the administration needs to make Obama Care work.  Nevertheless, at the Fed policy meeting which began today, the number will probably be discussed and among the assembled gathering will probably be a good deal of what Sir Alex Fergie referrs to as "squeaky bum time" as the thoughts of "how the hell do we get out of this" resonates through the hallowed halls.  Therefore, everyone is waiting for the report tomorrow which, while reflecting (maybe) the consensus, could also be a pretty good indicator of the winner in the Chairman Sweepstakes: if the view is aggressive it will be taken to mean that Ms. Yellen has carried the day and that is exactly what The Leader will be looking for.  There's little secret in the fact that a Chairman Summers would get out of this thing as fast as the train would leave the station which, whilst the right decision, will spell kaput to a whole lot of things in an election year.

And speaking of The Leader, he was on the campaign trail again and while we all know he is possessed with one of the greatest intellects in history, from time to time he does mouth some curious utterances which, without the prior knowledge of his genius, might be taken for stupidity at work.  Today it was tax policy time in which the corporate tax rate was proposed to be cut to 28% leaving it at still the highest corporate tax rate  among first world nations (that means the competition) which will, we are told, result in the repatriation of some $2 trillion in cash from Over There to Over Here.  It will not.  Thank you for that Dear Leader, it is worse than useless.

Next up was the assertion that the XL Pipeline which makes so much sense not only economically but in a strategic a foreign affairs sense as to not really be worthy of discussion, would create only about 2000 jobs for a short period and no more that 50-100 jobs for the long haul.  It took about 30 seconds for a befuddled Canadian Resource Minister to point out that our Department of State in its official report to assess jobs creation at 40,000 and wonder whence this new found knowledge arrived?  He also managed to suggest that Canada might be a better partner that Venezuela and that we already import a million barrels of tar sand crude from Canada as The Leader was educating the world on this matter.  Gosh, just who can one believe these days?

But the best one of the day was the front runner for the Office of the Comptroller of the City of New York, Eliot Spitzer--you remember him, Client #9--telling Wall Street that if they play by the rules they have nothing to worry about.  That is Code for "You support me in whatever my next political campaign is and I'll leave you alone."  It is exactly the same game plan he used as the state's attorney general that got him into the Governor's mansion and his run-in with the Mann Act for which he was never prosecuted on the understanding--or so I am told--that he would never run for public office again.  This piece of garbage should be in a jail cell, but he just might win.  With the example of Detroit showing them what corrupt politicians can accomplish, the people of NYC will still vote for this guy.  Go figure.

BACK FOR A BIT

Or at least until Thanksgiving.  The pundits were bang-on the jobs number last week which was a stinker.  I shall say one more thing:  The decline in the number of unemployed to 7.8% a month before the election surprised no one: The figure was cooked and anyone with a brain in his head expected it to be.  There wasn't a bid for an over-8% number...not one, which is a sad commentary as to the state of confidence in this administration.  Believe it or not that was the fact.  Onward.

Over there, Angie's going to Greece tomorrow and the last time there were these many troops deployed in Athens, German paratroopers were raining down.  Think Angie will strap one on just for old times sake?  Wouldn't that be a kick?  No one can quite figure out why she is going unless it is to show that there are really no hard feeling while whispering in the ear of every Greek she meets, "Give me my (^&*#%%(& money back!"  I guess it is that thing called diplomacy which I know  needs practiced from time to time, but never really understood why except to demonstrate good breeding.  In the world of the real there seems to be more support for the position that this is the end of the line for Greece; no more money, no more extensions, no more "adjustments" in lending conditions.  I still continue to believe in my new position that they will get through the end of the year (yeah, I was off-base there too) but with no miracle in sight and the fiscal status of the country truly dire, surely the end must come soon.  And perhaps this is why Angie is going--to deliver this precise message.  Let's face it, it's as good a guess as any other.

Over here, the WSJ's leading article today concerned itself with the new extortion racket in which the New York State Attorney General, Eric Schneiderman is currently engaged aided and abetted this time for political reasons by The Leader's Justice Department.  The tour de force surrounds the claim that J.P.Morgan engaged in improper underwriting standards in the marketing of mortgage backed securities resulting in a loss of, well, we're not sure, but a REALLY BIG loss to the public.

The enormous irony of all this is that J.P never got into the business; Jamie was trying to but everything went to hell before he could proving that sometimes it's better to be lucky than good...except when there is a scuzz bucket like Schneiderman around.  You see, Jamie thought he was performing a mitzva when he agreed to purchase Bear Stearns which was causing no little embarrassment to the regulatory community and disquiet among financial institutions.  He was asked to help and having done so he is being asked to take it in the neck for the underwriting Bear did by the afore-mentioned scuzz bucket.

This is a law suit made out of whole cloth.  Bear was a bucket shop and peddled rubbish and should have been allowed to fail instead of Lehman which might have made all the difference in the world.  But they weren't and it didn't and in attempting to work with the regulators they (AND their shareholders) wind up with this.  Go to trial and they probably win hands down but Schneiderman learned from the Mann Act violator for whom he worked and is looking for a big settlement which he will probably get.  It aint fair sez I, remembering that Eliot Spitzer NEVER earned a conviction on any corporate wrongdoing suit either as AG or Governor.  If this is the best we can do for ourselves?  Just thought I would bring it up.

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

..I HOPE YOU GOT YOUR S--- TOGETHER...

This is going to be pretty short. When, between visits to the Mayflower Hotel, Bad Boy Eliot scared the AIG Board into getting rid of Hank Greenberg and installed Messr. Sullivan & Co., there was a Bad Moon Risin'. No one at the time saw it. Whoever was supposed to be watching didn't notice that the new management had "doubled down" on products, the risk of which they clearly did not understand, with the result that we see today. Mr. Bernanke rightly expressed his rage at what had occurred and revealed his feelings on 60 minutes last Sunday. But talk about doubling down!

The Chairman has just placed the biggest bet the world has ever seen. He has monetized the debt of the United States. Now I'm a long way from being the brightest guy in the world and I know that the Fed has a hell of a lot more info than I do, but there is no immediate understanding of this move that comes to mind. Forgive me but I'm going to sit and think about this one for another day before waxing poetic. But I've lived a reasonably long life and the last time I was involved in an environment like this the folks around me were speaking Spanish. More tomorrow.