HEARD AT DINNER

"Good"

" Very good.  I am most surprised.  I would not have expected it.  From where did you bring the chef?"

"From nowhere.  He lives right here."

"Truly?"  That surprises me even more."

"It's a Jewish neighborhood."

"He is Jewish!"

"No, no!  But if you want good like this go to a Jewish neighborhood.  I mean, where do they go on Christmas? "

" I never heard of this in Iowa."

"You never hear about a lot of things in Iowa.  Great state though.  Great people.  They love me.

"You are full of surprises."

"Yep.  Been that way all my life.  Here, try the Moo Goo Gai Pan.   Melts in your mouth...oh by the way sport, we just blew the crap out of an airport in Syria."

"ARRRGGGGGER,"

It's true a swear it.  I know a guy who knows a guy who talked to a guy who was there...well almost there.  He might have tapped the conversation.  Happens a lot these days.  But you might want to keep in mind the "face" thing.  The Donald just dumped all over Mr. Xi very much in public and no one can tell me it wasn't purposeful.  Then again, the guy is lucky.  He had a dream opportunity and used it to his advantage.  But, and it is a big BUT, how will Xi react?

Anyway, The Donald stunned everybody, the jobs number at 98,000 absolutely stank,  the last two month were revised downward and absolutely no one cared.  Nothing moved...nothing.  So, what me worry?  A georgeous weekend in the Fly Over Zone with T & S's peonies racing skyward, happy as hell like everybody else.  She's happy so I'm happy.  I think.

Have a great weekend!

THERE ARE RISKS, AND THEN THERE ARE RISKS

The funny thing is no one seems to pay attention.  I had mentioned some weeks back about all those planes flying around over Syria and what might happen.  Today, the Turks shot a Russian SU-24 out of the sky for apparently "invading" Turkey for 17 seconds, then their buddies on the ground killed the two airmen who managed to eject and then killed a Russian marine in a rescue mission while blowing up a rescue helicopter at the same time.  The world blinked nary an eye.  In fact the equity markets closed up at the end of the day.

Maybe the reaction was, "Ah ha. Russia is a paper bear," and to be sure the operational expertise exhibited by the Bear today was considerably less than formidable.  Mind you, the SU-24 is no match for the souped-up F-16 the Turks were flying but everything else was amateur night in the Russian Circus.  Then again, it's still Russia and it is still Putin, a nut at best, but it is also Turkey and Article 5 which may alone keep things under control and force Putin to lick his wounds and wait to fight another day.  I fear this isn't over.

But I can't get over the singular lack of concern world-wide.  It was as though nothing happened and yet something very big occur ed.  Thanksgiving is a lousy time for crises because nobody wants to deal with one and the tendency is to wait for Monday.  I'm not kidding; it's just that the rest of the world keeps on truckin'.  Thanksgiving is just another Thursday.

Anyway, we're off to be with family and friends tomorrow, and Monday will probably come too quickly.  For those of you that celebrate with us, have a wonderful holiday.  For those of you Over There or over somewhere, peace...or at least take a shot at it.

See you next week.

SURORISE, SURPRISE

If you had any allusions about the politicalization of the Federal Reserve, you probably lost them this week.

In well-coordinated seperate announcements, Big Jim Tarullo and Lael Brainard, the two governors most directly connected to the administration, parroted the White House's favorite economists Larry Summers and Little Paulie Krugman along with the house organ, the New York Times in proclaiming--perhaps demanding--that there be no interest rate rise this year.  I've been around for a bit and while I have witnessed disagreements among board members, we the public generally found out about them in well-schooled leaks to the press...always unattributable of course...but I have never seen an orchestrated campaign to promote such supposed differences in policy matters such as we are witnessing here.

I suspect two things are at work.  Ms. Yellen is clearly Obama's gal but can't say so, and as Chair, she is playing the roll of Caesar's wife but in addition, the two afore-mentioned Governors are probably getting their shots in at Stan Fisher whose views are not quite in line with those of the administration and its sycophants.  As everyone knows, Mr. Fisher is the smartest guy in the room; this is a problem.

Now as you know I don't think it makes a bit of difference whether the Fed raises a 1/4 point or not in the near term.  The problem, Horatio, is not in the rates but as Angel Gurria pointed out, in the structure of things, and while we are no where near as mucked up as Europe, we are moving in the wrong direction (the Democratic "debate" last night was truly spooky). A rate rise is an attitude adjustment and with attitude comes action and with action comes a reassessment as to whether this liquidity gravy train can go on forever.  To that question, you know my answer.  But while this "debate" continues, we face some fairly grim situations which perhaps--just perhaps--are becoming recognized.

The economy, touted as moving ahead, isn't doing much at all.  With more than 1/3 of the capable workforce not working the 5.1% unemployment rate is a nonsense, a fact sustained by the realization that if we were really close to "full employment," wages would not be stagnant and consumer purchases--save for autos which is all the result of borrowed "free money," would not be going no where.  On top of all that, in recent years a growing amount of the business of American corporations has been directed internationally--particularly towards the emerging markets.  That is an ugly place to be doing business right now.  Which the profit numbers as they emerge in the following weeks.

The solution to all of this is of course for the Fed to hold the course.  To do otherwise would of course admit to a monumental policy mistake but more importantly, to a rejection of political theory that has governed our major political parties (yes, Toto, the Repubs are to blame as well) for too many years.  Egos will certainly be bruised.  But it is quite brilliant to focus the conversation on the Fed; reality can be awkward.  And all the while the chance of an "event risk" in the Middle East and other places becomes greater as TOW missiles marked "Made in the U.S.A." are knocking off tanks marked, "Made in Russia."  At some point there are going to be Russians in those tanks and old Yuri in Red Square with a bottle of home brew in his belly, will not wish to understand the niceties in the of the difference between 'Made In" or "Supplied By" as the body bags come home.

I've been getting more political in tone the past couple of weeks which I promised I would never do but unfortunately, politics is becoming such a big part in all our activities that it is difficult to avoid.
The new situation in Syria is just going to make the flow of refugees worse and I really fear for Europe.  This is a economic as well as a societal catastrophe in the making and one with which I suspect, they are not capable of dealing.  We need something to cheer us up...like the Mets beating the Devil's Team, the Dodgers and meeting the Cubbies in the NLCS.  New York against Chicago...the First against the Second City...good against evil...at least for seven games.  That's my kind of war!   Go Mets!

WHENEVER YOU NEED A LAUGH...

...you can always count on the Germans to provide one.  No kidding, they are more fun than a barrel of monkeys.  Last week, Frau Merkel announced that Germany will accept 900,000 refugees from Syria.  Whoa! said a whole bunch of European countries.  Maybe you can handle that but we can't.  On the top of that list was Hungary which finds itself as the primary entry point for these savaged people who, for the most part, simply want a chance at life.  Hungary now finds itself overwhelmed just by the requirement on them by the EU that they register all who enter...forget about giving them a home.  So Hungary has been rounding up the refugees and placing them in detention camps until they get some breathing room.  WELL, said a German politician yesterday filled with self-righteousness, what the Hungarians are doing is like what the Nazis did.............once again, you can't make this stuff up.  So far, it does not appear that the Hungarians have mistaken any Syrians for Jews and are not on their merry way in attempt to kill 6,000,000 of them, but it's early in the game I guess if you are a German political idiot.

Well, having gotten that gut-buster off their chests, guess what the next zinger was?  Today they announced that perhaps they had been a bit too inclusive with the 900,000 figure and if no one would mind, allow us to pull that back a bit to...ah...well...we don't quite know what the figure will be.  Oh, in the meantime, Hungary, would you mind keeping those folks under lock and key until we can sort this out among our European Union members who of course have no clue as to what to do either.  I swear, I had tears rolling down my cheeks for an hour.

This is of course one of the most horrible situations Europe and the world has faced in many a year and will only get worse now with the Russians joining directly into the fray in Syria giving cover to the Iranians to provide more support to their ally Assad with their new-found riches from the nuclear deal.  Many more will die and many more will try to escape to Europe...there is no where else to go.  I hardly pretend to understand that region but all can certainly understand the consequences.  Europe, whose entire economy is on less than solid ground including that of Germany, is about to be faced with probably up to three million refugees who have little education, few skills, no resources and no ability with the languages of the continent save for a few.  The humanitarian cost will be astronomical.  The transfer of capital, devastating.  The political consequences unknown at this time but surely mighty in scope.  And then there sits Perfidious Albion which, with the election of Jeremy Corbyn, a left-wing nutter if there ever was one as the leader of Labor, may well for the near future be a one-party state, totally in the driver's seat vis-a-vis Europe which faced with this set of circumstances certainly cannot allow the UK to leave which would surely sound the death knell for this experiment.

And as for the "Leader of the Free World?"  The best one can say is that it is but a mere 16 months until this narcissistic incompetent is no more.  Anyone will be an improvement.  One hopes that this holds together until new leadership can begin to make a difference, but until then the U.S. must once again be prepared to come to the aid of the democracies of Europe.  In what manner?  As Sr. Draghi put it, "with whatever it takes."  If it comes to it it will not be an easy sell,  but for Europe the crisis is very real and potentially lastingly destructive to European society.  



Meanwhile, Over Here, the question is "will they or wont they?"  The specter of a quarter-point rise on Thursday by the Fed has everyone breathless.  I still say no, but come on?  If you want another laugh, this is the one for you.

A SILVER LINING AND RED LINING?

About the only thing good about the Syrian situation is the fact that The Leader is totally involved in trying to pull his butt out of the crack he stuck it in and therefore has no time (along with the Congress) for anything else leastwise the economy which left to its own devices, even for a brief period, seems to improve.  Every day things look a bit better and markets react favorably while ignoring those little things like the ten year closing above 2.90 today.  Even Europe seems to be getting caught up in the excitement as there are claims that the Euro economy is in full recovery mode.  Of course Portugal, Italy, Greece and a few others continue to wallow in unserviceable debt and industrial lethargy but the word seems to be that if one ignores it, it doesn't exist.  Little Paulie is certain to come out momentarily to debunk the entire thing because if this is reality he need find a bridge quickly off which he can jump because he looks dumber by the day.  I'm afraid, however, that while things have improved, the depth and survivability of this upturn will not be sustainable and Little Paulie will live to bloviate another day.

And speaking of such things, The Leader, in Sweden today, instructed the world in  that it was not he who invented the "Red Line" but the world, to which the world replied, "HUH?"  As an American, this guy is painful to watch, but at least the next few days will be dominated--in the press at least-- by the G-20 get together in St. Petersburg and the interplay between The Leader and Putin as if anything said or done over the next few days has any importance at all.  All in all, it's still pretty bleak for poor ol' Charlie unless I want to cover the Feds suing S & P for fraud for the ratings issued by the firm during the financial crisis.  Now if I remember correctly, we had Moody's and Fitch doing pretty much the same thing so one has to ask one's self, "Self, why aren't they being sued as well?"  What's that you say?  Moody's and Fitch didn't drop the US of A's rating to AA?  NO!  You really don't mean that the administration could retaliate in that manner, do you?   Oh, you do...Huuummmm...I mean...like...huuummmmmm.  Gee, I guess they crossed a Red Line.

SEPTEMBER SONG

It was written by Charlie Chaplin and is really a very good, somewhat mournful composition.  It also has nothing whatsoever to do with banking, finance or global affairs but it was written by a clown and as the month will probably be dominated by another clown who happens to be the President of the United States (I know, this is not supposed to be political, but MY GOD!), if not the  words but their mournful nature seem apropos has we stumble into another little dust-up apparently because stupidity must be rewarded and the President of the United States painting himself into a corner just can't be allowed, ol' boy.

The funny thing is so little is being affected by the national debate over Syria as on a spate of good economic numbers, markets opened higher today only to stagger at midday but rally a bit at the close; in other words, nothing new.  The 10 year briefly touched 2.90 before retreating to 2.85 and change, but even that appeared to be more in reaction to a firming view that in the Summers/Yellen brawl--which is becoming very heated by the way--Larry is ahead on points and that is interpreted as meaning tapering is just around the corner.  I still have my money on the gal;  The Leader has too many people in his own party mad at him already and Pelosi just backed his play in Syria.  Think that came for free?  Now what is really spooky is that The Suit, of unhappy memory, is being pushed once again as the compromise candidate.  There are two minor things wrong with that idea.  First, it would destroy any independence at the Fed as Geithner is a tool and second, he is considered a lightweight in international circles which does us no good at all if things get sticky.

And they will it appears with Christine blabbering today about how the IMF will need more resources to support the emerging markets if needed.  When the head of the IMF says something like that it's almost a lock that they will be needed--whether they are or not if you get my drift.  What also troubles me ( I know, I sound like a broken record) is this entire state of affairs sounds as though it is on cruse control, lacking any form of adult supervision as The Leader twists and turns, watching the guy he defeated, John McCain, outlining and directing his foreign policy in the driveway of the White House on national television.  This is surreal, sez me, whilst Over There, the Euros are calling everyone they know Over Here asking what the hell is going on.  Now, if this is how the issue of War and Peace is being handled, how are we to handle global financial collapse.

OK.  Hyperbole. We are no where near that, but in three weeks we have an election in Germany and how that turns out could really put a cat among the pigeons.  September is one of those 30-day months and two are already behind us.  Only 28 to go;  the days really do dwindle down to a precious few when you're having fun.