Well, we moved. Catastrophe. 5400 to 3600 with half the closet space. Trouble and Strife managed to find wedding gifts as yet unused . We haven't gone to the mattresses but to the packing boxes and on top of it all my desk top died, I lost tuns of stuff and trying to write on an iPad for me is impossible. Short and sweet until I get a new big machine and clear out a place to put it. But for all of you that have inquired as to my existence I will be forever grateful. And so...
Speaking of mattresses, Big Danny Tarullo--as predicted I might add-- announced on Friday that he has fled the coop. The greatest eat shake-down racket of all time was about to end with the new Capo di Tutti Cappi, Donaldo, now running for the show. Danny's underboss, Crazy Lizzy, damn near got wacked by the head of the Hill mob the other day and Danny saw the handwriting on the wall. Gone, finito and not a tear shed. So with half of the retired legions of Goldman Sachs running anything financial in Washington here comes Christmas a bit early this year for the Street. And if the stock market is any indicator, for a lot of other people. I've been speaking with a lot of local business guys here in the fly-over zone and there seems to be a common thread: not too many people like the President as a person but a lot voted for him because of a belief that he would reduce regulation. As one guy told me in Illinois last week: "Catapiller does't give a damn, they just spend $50 million on lawyers and they're in compliance. But it kills me." Never thought about the little guy...that's how far down it goes. And as for the community banks...they think Trump is the second coming. Forget about approval ratings; these people would vote for him again in a heartbeat...unless he doesn't come through on his promises. If that happens, he's dead meat in...as he would put it..an unbelievable manner.
What else has gone on? Well, the Euros have managed to make things even worse if one could imagine that and as I try to get back up to speed I think I will start there...from France to Greece with a few stops in between. It's been quite remarkable given the problems facing our friends Over There that there has been very little reportage. Trump simply takes the air out of the room and out popular press (and theirs) are quite prepared to spend countless hours covering one perceived mis-step after another and criticizing the knot on his tie in the hope that something sticks and POOF, he disappears while a couple of very real crises are bubbling up amid the Zone. It falls to us I guess to bring light unto the darkness but a warning! It may not be every day for a while until I get organized. We fly tomorrow.
Showing posts with label Warren. Show all posts
Showing posts with label Warren. Show all posts
Monday, February 13, 2017
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.
Thursday, October 23, 2014
THE DUD PART II
This was to be yesterday's piece, and it was. You see, we have a restaurant around here named Yesterday's and every once in a while I help them out a bit by tasting wines to be added to their wine list. So yesterday, and part of the early evening belonged to Yesterday's. I am happy to say the pallet remains as one belonging to a far younger man; the capacity does not. Yeah, I know, you're supposed to spit it out but I was brought up to think of the starving children in China and waste not, want not. It was not the day for blogging.
Sometimes great minds think alike and our old friend, Carter, was on the same page as this edition.
Billy the Dud you might remember, when he came over from Goldman ran what was called the markets group at the Fed. I suppose there could be differing views as to his tenure as the group's head (there are), but whether it was good, bad or indifferent is of no matter. Importantly, Dud was in a position that allowed him to witness a broad range of historical and market driven events, some of which were prominently highlighted in his speech of the other day. It also put him in a position to witness, albeit late in the game, the seismic shift in what was called banking by the old guys in the business like me, especially in regard to entry of players into out little sand box who, 20 years ago, were no where to be found in either the heavens or firmament. He also seems to have missed, or paid little attention to, one of the primary missions of the market group; the international payments system. More importantly, what Dud and the dreadful twosome of Lizzy and Danny Tarulo simply ignore is the development of the "shadow banking system" which is no longer in the shadows any more. Indeed, it is the banking system, vibrant, powerful, rich and for the most part unregulated.
Let's be honest, or as the late, great funny lady used to say, "Can we talk?" This mob is not the least bit interested in the growth and development of the U.S. banking system; they want a political scalp and to them the "system" consists of J.P. Morgan, Citigroup and Bank of America. Any one will do but the easiest is Citigroup which just happens to be the only real international bank this country has left and therefore the most vulnerable. This is not a defense of Citibank which since I've been around has had a history of going damn near bust every 15 years, but when Dud starts talking about "breaking up banks that are too big to manage," he's talking about Citigroup because how easy is it to say, "they have 4000 subsidiaries, how can you manage that?" Good question Billy, but those subsidiaries are located in 120 different countries and a hell of a lot of them are managed really well locally. In addition, probably half of them are in existence because some dumb regulator somewhere, but often in Washington, decided that you had to have a subsidiary to do whatever the hell you were doing. For example, in my career I had to form a number of off-shore subsidiaries just to be in compliance with the Investment Act of 1940, about which I have told you that little is known and none of it any good. It remains on the books today, a monument to another time.
Citibank also handles over 500 payment systems out of its foreign locations. Now Billy knows this..or should…because that is one of the responsibilities of the markets group through its oversight of central bank payment which is closely intergrated. Who's gonna love ya when they're gone, Billy-boy? Oh sure, there will be a new system but do you have any idea what an absolute bitch that will be to put in place. I'm sure he does as he's not unintelligent; he just doesn't care. It doesn't fit the ideology. Then again, you can bet your boots that whatever replaces it will not come under the full supervision of the U.S. regulators. A goodly portion of it may not even be in dollars, and if we lose that, we probably lose everything. We are the reserve currency; we have the settlements system; we have the payments system. Think about it.
So, what is preferred in the Lizzy/Danny/Billy world is something real simple; the Wells Fargo's of the world. A great, big, Savings and Loan as I said the other day, that does simple things community banking and makes mortgage loans that are hugely liked to things like Fanny and Freddie which are wards of the state and massive users of public capital. More importantly, they are politically controlled and the threesome likes that. So here's where I have a problem of understanding. Remember Goldman Sachs where Dud was making probably about $10 million a year in cash and God knows what else as a partner before he "retired" to the Fed on some basis in which certainly Bob Rubin and Co. were involved? In 2008, Goldman Sachs was toast. Not because they were stupid but because, as regular readers will remember, 2008 was a liquidity crisis and banks die of the liability side of the balance sheet. Goldman Sachs, like everyone else, couldn't fund themselves, but unlike everyone else, Goldman wasn't a "bank" as defined, making the Federal Reserve discount window unavailable. Goodness, gracious, what do you do about that? Well, you change the charter of the institution, changing Goldman from an investment bank to a commercial bank overnight and voila, the discount window opens as though by magic. In the first instance, who at the Fed looks at that. Yep, the markets group. Waddaya think, Billy? Can we talk? Like about deferred comp from Goldman, clawbacks, and conflict of interests. And why isn't Goldman as dead as Marley's ghost? Or Lehman for that matter. There are a lot of good reasons for the latter but explaining them may get awkward. No? Well then my friend do us a favor and shut up.
Sometimes great minds think alike and our old friend, Carter, was on the same page as this edition.
Billy the Dud you might remember, when he came over from Goldman ran what was called the markets group at the Fed. I suppose there could be differing views as to his tenure as the group's head (there are), but whether it was good, bad or indifferent is of no matter. Importantly, Dud was in a position that allowed him to witness a broad range of historical and market driven events, some of which were prominently highlighted in his speech of the other day. It also put him in a position to witness, albeit late in the game, the seismic shift in what was called banking by the old guys in the business like me, especially in regard to entry of players into out little sand box who, 20 years ago, were no where to be found in either the heavens or firmament. He also seems to have missed, or paid little attention to, one of the primary missions of the market group; the international payments system. More importantly, what Dud and the dreadful twosome of Lizzy and Danny Tarulo simply ignore is the development of the "shadow banking system" which is no longer in the shadows any more. Indeed, it is the banking system, vibrant, powerful, rich and for the most part unregulated.
Let's be honest, or as the late, great funny lady used to say, "Can we talk?" This mob is not the least bit interested in the growth and development of the U.S. banking system; they want a political scalp and to them the "system" consists of J.P. Morgan, Citigroup and Bank of America. Any one will do but the easiest is Citigroup which just happens to be the only real international bank this country has left and therefore the most vulnerable. This is not a defense of Citibank which since I've been around has had a history of going damn near bust every 15 years, but when Dud starts talking about "breaking up banks that are too big to manage," he's talking about Citigroup because how easy is it to say, "they have 4000 subsidiaries, how can you manage that?" Good question Billy, but those subsidiaries are located in 120 different countries and a hell of a lot of them are managed really well locally. In addition, probably half of them are in existence because some dumb regulator somewhere, but often in Washington, decided that you had to have a subsidiary to do whatever the hell you were doing. For example, in my career I had to form a number of off-shore subsidiaries just to be in compliance with the Investment Act of 1940, about which I have told you that little is known and none of it any good. It remains on the books today, a monument to another time.
Citibank also handles over 500 payment systems out of its foreign locations. Now Billy knows this..or should…because that is one of the responsibilities of the markets group through its oversight of central bank payment which is closely intergrated. Who's gonna love ya when they're gone, Billy-boy? Oh sure, there will be a new system but do you have any idea what an absolute bitch that will be to put in place. I'm sure he does as he's not unintelligent; he just doesn't care. It doesn't fit the ideology. Then again, you can bet your boots that whatever replaces it will not come under the full supervision of the U.S. regulators. A goodly portion of it may not even be in dollars, and if we lose that, we probably lose everything. We are the reserve currency; we have the settlements system; we have the payments system. Think about it.
So, what is preferred in the Lizzy/Danny/Billy world is something real simple; the Wells Fargo's of the world. A great, big, Savings and Loan as I said the other day, that does simple things community banking and makes mortgage loans that are hugely liked to things like Fanny and Freddie which are wards of the state and massive users of public capital. More importantly, they are politically controlled and the threesome likes that. So here's where I have a problem of understanding. Remember Goldman Sachs where Dud was making probably about $10 million a year in cash and God knows what else as a partner before he "retired" to the Fed on some basis in which certainly Bob Rubin and Co. were involved? In 2008, Goldman Sachs was toast. Not because they were stupid but because, as regular readers will remember, 2008 was a liquidity crisis and banks die of the liability side of the balance sheet. Goldman Sachs, like everyone else, couldn't fund themselves, but unlike everyone else, Goldman wasn't a "bank" as defined, making the Federal Reserve discount window unavailable. Goodness, gracious, what do you do about that? Well, you change the charter of the institution, changing Goldman from an investment bank to a commercial bank overnight and voila, the discount window opens as though by magic. In the first instance, who at the Fed looks at that. Yep, the markets group. Waddaya think, Billy? Can we talk? Like about deferred comp from Goldman, clawbacks, and conflict of interests. And why isn't Goldman as dead as Marley's ghost? Or Lehman for that matter. There are a lot of good reasons for the latter but explaining them may get awkward. No? Well then my friend do us a favor and shut up.
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.
Wednesday, July 16, 2014
THE SILLY SEASON
That's what this time of year is called in the UK, probably because football is done for a full month and there is nothing on which they can concentrate. Strange things happen and are said. It kinda holds true Over Here as well especially if you have congressional testimony from the Chairman of the Fed and Crazy Lizzy Warren is around.
Janet Yellen gave folks a whole lot to chew on not the least of which was her advisory warning that certain segments of the market had perhaps gotten ahead of themselves and some decent discussion of where the Fed was and where it was going, not to mention that in her view the jobs picture was not quite as good as some had made it out to be. Good, solid Central Bank testimony, called for by statute, mostly unexciting but sufficient to satisfy the requirement without putting anybody to sleep. Up rose ol' Crazy Lizzy then, not the least bit interested in all of that monetary stuff but focused solely on whether J.P. Morgan & Co. had presented to the Fed a "living will" as required by the legislative disgrace known as Dodd/Frank and whether Ms. Yellen and her colleagues had accepted it. Further, if they had not accepted it, then she inquired, why hadn't The Fed exercised the remedies granted to it and broken up J.P Morgan? Ms. Yellen hung in there long enough so that time ran out on Warren.
Now, one could simply dismiss all this by saying, "stupid is as stupid does," but let's face it the woman is a U.S. Senator and has a hell of a lot of power and influence not to mention her lap dog on the Fed Board of whom we have spoken in the past. There aren't five people in that august body who believe that a living will could ever work but she is clever enough to recognize that the real lever she has is the possibility to begin reducing the size of financial institutions, as you can be damn sure that a plan, outlined in some 10,000-odd pages covering a financial institution of over $2 trillion in assets under constantly changing markets and conditions will ever be accepted by the Fed. Nobody is that stupid. But what we saw yesterday is the opening salvo it what is going to become a constant bombardment on the regulatory apparatus and the public to "solve" the "too big to fail" problem by reducing the size of the institutions that fit that category according to the Gospel of St. Lizzy. And it's going all the way through to 1916 because Lizzy has her sights set on far higher office having now been convinced by the left wing of her party that Hillary must be stopped.
The result will not be success in either the acceptance of her views or her quest, but she has the ability to sure as hell stop the financial legislative process dead in it's tracks. When recognized, I think we will see the industry itself begin to shrink as a result of this pressure and also as a result of the inability to produce a proper return on the amount of capital required to support a substantial balance sheet. Once again, I shall be bold in my prediction that within the industry we will see its own form of "inversion"--not for tax reasons but simply to get the hell out from under. What we shall also see is the migration of corporate financings from today's institutions to an entirely new breed of financial intermediaries…or principals for that matter…who are far less subject to overall financial regulation or oversight. The growth of the Blackstones of this world will continue even more unabated.
Perhaps that is a good thing. I know I'm not smart enough to figure that one out, but it troubles me. What troubles me even more is that Crazy Lizzy thinks she is. That's not silly. That's downright…well…crazy.
Janet Yellen gave folks a whole lot to chew on not the least of which was her advisory warning that certain segments of the market had perhaps gotten ahead of themselves and some decent discussion of where the Fed was and where it was going, not to mention that in her view the jobs picture was not quite as good as some had made it out to be. Good, solid Central Bank testimony, called for by statute, mostly unexciting but sufficient to satisfy the requirement without putting anybody to sleep. Up rose ol' Crazy Lizzy then, not the least bit interested in all of that monetary stuff but focused solely on whether J.P. Morgan & Co. had presented to the Fed a "living will" as required by the legislative disgrace known as Dodd/Frank and whether Ms. Yellen and her colleagues had accepted it. Further, if they had not accepted it, then she inquired, why hadn't The Fed exercised the remedies granted to it and broken up J.P Morgan? Ms. Yellen hung in there long enough so that time ran out on Warren.
Now, one could simply dismiss all this by saying, "stupid is as stupid does," but let's face it the woman is a U.S. Senator and has a hell of a lot of power and influence not to mention her lap dog on the Fed Board of whom we have spoken in the past. There aren't five people in that august body who believe that a living will could ever work but she is clever enough to recognize that the real lever she has is the possibility to begin reducing the size of financial institutions, as you can be damn sure that a plan, outlined in some 10,000-odd pages covering a financial institution of over $2 trillion in assets under constantly changing markets and conditions will ever be accepted by the Fed. Nobody is that stupid. But what we saw yesterday is the opening salvo it what is going to become a constant bombardment on the regulatory apparatus and the public to "solve" the "too big to fail" problem by reducing the size of the institutions that fit that category according to the Gospel of St. Lizzy. And it's going all the way through to 1916 because Lizzy has her sights set on far higher office having now been convinced by the left wing of her party that Hillary must be stopped.
The result will not be success in either the acceptance of her views or her quest, but she has the ability to sure as hell stop the financial legislative process dead in it's tracks. When recognized, I think we will see the industry itself begin to shrink as a result of this pressure and also as a result of the inability to produce a proper return on the amount of capital required to support a substantial balance sheet. Once again, I shall be bold in my prediction that within the industry we will see its own form of "inversion"--not for tax reasons but simply to get the hell out from under. What we shall also see is the migration of corporate financings from today's institutions to an entirely new breed of financial intermediaries…or principals for that matter…who are far less subject to overall financial regulation or oversight. The growth of the Blackstones of this world will continue even more unabated.
Perhaps that is a good thing. I know I'm not smart enough to figure that one out, but it troubles me. What troubles me even more is that Crazy Lizzy thinks she is. That's not silly. That's downright…well…crazy.
Monday, April 14, 2014
I DID IT AGAIN
I was cruising down I-80 when it came to me that the last time I had seen the lap top was atop the kitchen island not resting comfortably in the back seat. Just like last year it had been left at home. Turning to Trouble and Strife I never even got the first word out when a curt, "Don't even TRY to go there," hit me. I know that tone; it was my fault anyway so I didn't even try to lay off some of the blame. It could have gotten ugly at 75MPH.
Shame is I missed a pretty good week of stories. The big news on the banking front was the agreement among the regulators to establish new primary capital rules for the larger banking institutions at 5%, putting the U.S. banks at a higher level than their European counterparts as well as being somewhat at a disadvantage as to the assignment of risk as to assets. The Euros continue to regard sovereign risk in the Euro zone as having a risk weighting of 0 whereas U.S. banks only enjoy that concept in regard to full faith and credit U.S. debt. Somehow, I seem to think there is a difference in value between Greece and Germany but our Euro brothers and sisters do not.
Now most of the larger institutions can already point to acceptable capital levels or plans that will get them there in a relatively short period of time, but what troubles me, as I continue to point out over and over, is that capital in the sense of which the regulators are speaking, can be important when the Second National Bank of Boot Hill's loan to Farmer Brown goes in the gurgle tube because it didn't rain this year, but doesn't mean a damn thing to J.P. Morgan if all the liquidity in the system dries up: banks get sick on the asset side but die on the liability side…those that count, that is. With all respect to Boot Hill, it doesn't count. So, we have all these fine people in D.C. and Billy the Dud patting themselves on the back when in fact they have done absolutely nothing to improve the system in any way that counts for those among their charges who do count. A round of applause and let us move on.
Citicorp got another piece bad news last week as it was announced that the Federal A.G. in Massachusetts was opening an investigation of money laundering involving their affiliate--once removed--BANAMEX of California. Hummmm. Tarullo deciding that his boys' algorithms work better than all those which had mutually been agreed and now another Massachusetts-based entity jumping up ugly at the Pinata that is/will become Citicorp? Why, you ask? Could it be political cover? Could it be Crazy Lizzy organizing this entire thing? Get good odds from me that it is. I don't believe in coincidences. It is so transparent it is ridiculous, but of course the deaf and dumb media just will not pick it up. As a repost, Citicorp today reported far better than expected operating results and a great improvement in their balance sheet which had the effect of giving a big boost to the stock market at least in the short term. Good on ya, mates.
Finally, Greece announced an immensely sucessful 5 year bond issue of over 3 Billion Euros yielding just under 5%. Coverage was nearly 4X. Remarkable. This morning, the Governor of the Banque de France announced that the Euro Crisis is mostly behind us. Oh good, I was waiting for that. I am also waiting to be told that the Russians have not invaded the Eastern portion of the Ukraine and the Ukrainians will not fight as a proud people will do from time to time. Just a few more events that alter and illuminate our time…and my lap top was in the kitchen. Think I'm getting old?
Shame is I missed a pretty good week of stories. The big news on the banking front was the agreement among the regulators to establish new primary capital rules for the larger banking institutions at 5%, putting the U.S. banks at a higher level than their European counterparts as well as being somewhat at a disadvantage as to the assignment of risk as to assets. The Euros continue to regard sovereign risk in the Euro zone as having a risk weighting of 0 whereas U.S. banks only enjoy that concept in regard to full faith and credit U.S. debt. Somehow, I seem to think there is a difference in value between Greece and Germany but our Euro brothers and sisters do not.
Now most of the larger institutions can already point to acceptable capital levels or plans that will get them there in a relatively short period of time, but what troubles me, as I continue to point out over and over, is that capital in the sense of which the regulators are speaking, can be important when the Second National Bank of Boot Hill's loan to Farmer Brown goes in the gurgle tube because it didn't rain this year, but doesn't mean a damn thing to J.P. Morgan if all the liquidity in the system dries up: banks get sick on the asset side but die on the liability side…those that count, that is. With all respect to Boot Hill, it doesn't count. So, we have all these fine people in D.C. and Billy the Dud patting themselves on the back when in fact they have done absolutely nothing to improve the system in any way that counts for those among their charges who do count. A round of applause and let us move on.
Citicorp got another piece bad news last week as it was announced that the Federal A.G. in Massachusetts was opening an investigation of money laundering involving their affiliate--once removed--BANAMEX of California. Hummmm. Tarullo deciding that his boys' algorithms work better than all those which had mutually been agreed and now another Massachusetts-based entity jumping up ugly at the Pinata that is/will become Citicorp? Why, you ask? Could it be political cover? Could it be Crazy Lizzy organizing this entire thing? Get good odds from me that it is. I don't believe in coincidences. It is so transparent it is ridiculous, but of course the deaf and dumb media just will not pick it up. As a repost, Citicorp today reported far better than expected operating results and a great improvement in their balance sheet which had the effect of giving a big boost to the stock market at least in the short term. Good on ya, mates.
Finally, Greece announced an immensely sucessful 5 year bond issue of over 3 Billion Euros yielding just under 5%. Coverage was nearly 4X. Remarkable. This morning, the Governor of the Banque de France announced that the Euro Crisis is mostly behind us. Oh good, I was waiting for that. I am also waiting to be told that the Russians have not invaded the Eastern portion of the Ukraine and the Ukrainians will not fight as a proud people will do from time to time. Just a few more events that alter and illuminate our time…and my lap top was in the kitchen. Think I'm getting old?
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
Friday, January 25, 2013
HAVE A NICE WEEKEND, YOU JERK
My friend, Gerry, has this great capacity (and propensity) to be a pain in the butt. He doesn't have much to do, doesn't want to do anything, has too much money to worry about much of anything and therefore has huge amounts of time on his hands to make life miserable for everyone else, especially me. So it wasn't a surprise that this E-Mail arrives this morning beginning with, "Nice try, Butt-Head, but you left out a couple of things." Oh, did I mention that Gerry is almost always right? Well, he is and today was no exception.
The Tale of the Whale has a couple of other chapters that I didn't write about which Gerry, of course, picked up and with great glee shared with me. He accurately pointed out that in addition to the situation at JPM described yesterday and to which he agrees, there were at least two major structural deficiencies I neglected to point out. First, it appears that the Investment unit, or CIO in Morgan terms, had its own compliance unit, reporting to the head of the CIO. At the very least this is not what one would call "best practices," but the mere fact that it reported as such need not be a major event-shaper. I knew of the existence of this structure but placed little importance on it which is why it went unmentioned. Perhaps, as Gerry "suggests" more coverage should have been given. He's probably right and for the oversight, I apologize.
What I did miss, however, was far more serious: Within the CIO, the head of risk management reported to the head of CIO. In other words, the Hen Keeper was reporting to the Fox. This is a major failure on the part of Morgan's senior management and should properly fall at the feet of Dimon and his Lieutenants. The house cleaning that has occurred indicates that Jamie and the Board learned the lesson...of course the tuition was $6.5 Billion but hey, it was worth it. And as for me, My week-end shall be spent in embarrassed seclusion, thinking evil thoughts and plotting revenge...along with a firm determination to do better.
If you missed it--and you probably did--there was a very important decision handed down today buy the Court of Appeals for the D.C. Circuit involving the so called "Recess Appointments" made by The Leader to the National Labor Relations Board. There are certain positions that must be approved by the Senate before an individual is confirmed to the post and a member of the NLRB is one. The President, when the Senate is nor in session may make what is known as a "Recess Appointment, good until the sitting of a new Congress. The argument here was whether the Senate was in recess as claimed by The Leader or in continuous session. The fact ruling in the lower court that the appointment were unconstitutional was affirmed by the D.C. Circuit.
So who cares, you ask? Well, not me, BUT there is another case being heard relating to Richard Cordray, the recess appointee to the position of head of the Consumer Protection Bureau, set up under Dode/Frank and organized by crazy Lizzy Warren who, having not a chance of being confirmed, runs for the Senate and wins which means she'll have less opportunity to make a meal out of things than she would in this position which, as designed, reports to no one. Enter Cordray, one step removed from a political hack, placed in office as a recess appointment but under the same set of circumstances as the NLRB 3. That appointment is presently under judicial review and will probably be torn down as well. Bye, bye Cordray who will never be confirmed as well. Both cases will be appealed to the Supremes and if taken up will no doubt be affirmed, IMHO. Delicious. We now have this insane piece of crap legislation rudderless, meaning who knows what happens. However, if The Leader and his mob continues to act in this fashion (see: "Don't Need No Damn Constitution") more of this is going to occur. Guys, we don't need it.
Over There, the leaders are on their way home from Davos having accomplished nothing...or is it not having accomplished anything? Probably the latter. Could have done as much here, in the fly-over zone. Same cold temperatures, same snow, waaaaay cheaper. See you next year? And as for you, Gerry, thanks for making my weekend.
The Tale of the Whale has a couple of other chapters that I didn't write about which Gerry, of course, picked up and with great glee shared with me. He accurately pointed out that in addition to the situation at JPM described yesterday and to which he agrees, there were at least two major structural deficiencies I neglected to point out. First, it appears that the Investment unit, or CIO in Morgan terms, had its own compliance unit, reporting to the head of the CIO. At the very least this is not what one would call "best practices," but the mere fact that it reported as such need not be a major event-shaper. I knew of the existence of this structure but placed little importance on it which is why it went unmentioned. Perhaps, as Gerry "suggests" more coverage should have been given. He's probably right and for the oversight, I apologize.
What I did miss, however, was far more serious: Within the CIO, the head of risk management reported to the head of CIO. In other words, the Hen Keeper was reporting to the Fox. This is a major failure on the part of Morgan's senior management and should properly fall at the feet of Dimon and his Lieutenants. The house cleaning that has occurred indicates that Jamie and the Board learned the lesson...of course the tuition was $6.5 Billion but hey, it was worth it. And as for me, My week-end shall be spent in embarrassed seclusion, thinking evil thoughts and plotting revenge...along with a firm determination to do better.
If you missed it--and you probably did--there was a very important decision handed down today buy the Court of Appeals for the D.C. Circuit involving the so called "Recess Appointments" made by The Leader to the National Labor Relations Board. There are certain positions that must be approved by the Senate before an individual is confirmed to the post and a member of the NLRB is one. The President, when the Senate is nor in session may make what is known as a "Recess Appointment, good until the sitting of a new Congress. The argument here was whether the Senate was in recess as claimed by The Leader or in continuous session. The fact ruling in the lower court that the appointment were unconstitutional was affirmed by the D.C. Circuit.
So who cares, you ask? Well, not me, BUT there is another case being heard relating to Richard Cordray, the recess appointee to the position of head of the Consumer Protection Bureau, set up under Dode/Frank and organized by crazy Lizzy Warren who, having not a chance of being confirmed, runs for the Senate and wins which means she'll have less opportunity to make a meal out of things than she would in this position which, as designed, reports to no one. Enter Cordray, one step removed from a political hack, placed in office as a recess appointment but under the same set of circumstances as the NLRB 3. That appointment is presently under judicial review and will probably be torn down as well. Bye, bye Cordray who will never be confirmed as well. Both cases will be appealed to the Supremes and if taken up will no doubt be affirmed, IMHO. Delicious. We now have this insane piece of crap legislation rudderless, meaning who knows what happens. However, if The Leader and his mob continues to act in this fashion (see: "Don't Need No Damn Constitution") more of this is going to occur. Guys, we don't need it.
Over There, the leaders are on their way home from Davos having accomplished nothing...or is it not having accomplished anything? Probably the latter. Could have done as much here, in the fly-over zone. Same cold temperatures, same snow, waaaaay cheaper. See you next year? And as for you, Gerry, thanks for making my weekend.
Thursday, January 10, 2013
A YEAR OF LIVING DANGEROUSLY
Welcome back. Sorry I am a bit delayed in getting started again, but by this time I'm sure you realize that I'm not the most on-time guy you ever met--especially when the grand kids are in the middle. They win every time which we didn't on January 7. In fact it was worse than being a Republican in Washington which we will get to in a minute, but first, over there.
It's still Christmas but slowly, things are coming back to life with the realization that the three big events which will shape the EU this year will be the elections in Italy and Germany and the referendum in the UK as to its future membership. As I had mentioned, I had overlooked the the UK for much of last year but it is now impossible to do so. We are heading over in a month's time (a shaky date contingent on a number of things at which point I will have a better perspective) but right now, with a certain dependency on the manner in which the question is put, one should expect the UK to leave the EU despite the now somewhat screeching implorings of The Leader and his administration. The effect would be a sea-change and important to the readers of this ongoing plot because of the effect this would have on finance and banking world-wide. Sadly, I am forced to admit at this time that I am clueless, but given that London is, and will probably remain, the center for international finance no longer in coalition with the Euros, any end-game one could dream up might well wind up as the state of play. Near term, I suspect things will remain quite for a bit: now, quiet doesn't mean better--it just means...well...quiet as witnessed by Spain's 10 year auction today which went well by any standard although one should keep in mind that it was revealed about a week ago that Spain has picked the pockets of it's government pension funds to purchase it own debt. My word, the place is looking more and more like Illinois every day. Segue to over here.
The Leader is heady with power and prepared to pick a fight on just about anything following his victory in the first battle of the Great Tax War. Now one battle does not a campaign make and the foreboding specter of the debt ceiling looms before us, but it is clear that the man is in no mood to compromise and therefore it remains to be seen just how much fight is left in the Republicans in the House before a total victory can be declared. In the mean time, the new generals are being put forward, most notably Jacob Lew as the replacement for The Suit, a notorious gutter fighter as opposed to more amiable candidates such as Billy the Dud from the NY Fed and The Bair With Very Little Brain who was dying for the job.
While all of this was going on, insanity began to creep out into the open regarding what the administration might do to avoid a fight altogether.
There are two beauties out there. One is the striking of the One Trillion Dollar Platinum Coin to be deposited with the Fed By Treasury thereby by-passing Congress and providing all the funding The Leader needs...provided we don't run out of Platinum. The other is the tried and true issuance of script in lieu of currency with which we paid our maturing debts just like California did a few years ago. "Hey, no problem! As soon as we get over this little hurdle we'll redeem all that's out there but in the mean time, you can use the stuff or sell it to our banks who we will instruct to purchase the same. After all, the buggers have been hoarding TRILLIONS!"
What seems to have been overlooked by the geniuses behind this idea is the fact that we don't have to merely refinance a trillion or eight this year but it appears that we are in need of almost $1.5 TRILLION OF NEW MONEY! Let's have a contest: how many of you think the amount available, outside of direct purchases by the Fed, will exceed $.50? Love to hear from you.
Finally, after a couple of years, the first set of regs were released by the Consumer Protection Agency, you know, that piece of insanity created by Lizzy Warren, now junior Senator from Mass. Joy at the wisdom of the thing. It seems that if the banks play by the rules which include a repayment formula of no more than a requirement of 46% income to debt, the banks will granted "safe harbor" status whilst having been placed into a position where they can no longer make "sub-prime" mortgage loans unless they are Fanny and Freddie qualified. Absolute genius screamed the Times and those of it's ilk. Funny, I have always been of the view that the only really new idea that has come around in a while was the Sermon on the Mount. Everything else is simply a variation on a theme. This reg is no different, only in my time it was called "Red Lining;" I guess what side of the fence you are on makes a difference. Wonder what Rev. Jackson thinks?
It's still Christmas but slowly, things are coming back to life with the realization that the three big events which will shape the EU this year will be the elections in Italy and Germany and the referendum in the UK as to its future membership. As I had mentioned, I had overlooked the the UK for much of last year but it is now impossible to do so. We are heading over in a month's time (a shaky date contingent on a number of things at which point I will have a better perspective) but right now, with a certain dependency on the manner in which the question is put, one should expect the UK to leave the EU despite the now somewhat screeching implorings of The Leader and his administration. The effect would be a sea-change and important to the readers of this ongoing plot because of the effect this would have on finance and banking world-wide. Sadly, I am forced to admit at this time that I am clueless, but given that London is, and will probably remain, the center for international finance no longer in coalition with the Euros, any end-game one could dream up might well wind up as the state of play. Near term, I suspect things will remain quite for a bit: now, quiet doesn't mean better--it just means...well...quiet as witnessed by Spain's 10 year auction today which went well by any standard although one should keep in mind that it was revealed about a week ago that Spain has picked the pockets of it's government pension funds to purchase it own debt. My word, the place is looking more and more like Illinois every day. Segue to over here.
The Leader is heady with power and prepared to pick a fight on just about anything following his victory in the first battle of the Great Tax War. Now one battle does not a campaign make and the foreboding specter of the debt ceiling looms before us, but it is clear that the man is in no mood to compromise and therefore it remains to be seen just how much fight is left in the Republicans in the House before a total victory can be declared. In the mean time, the new generals are being put forward, most notably Jacob Lew as the replacement for The Suit, a notorious gutter fighter as opposed to more amiable candidates such as Billy the Dud from the NY Fed and The Bair With Very Little Brain who was dying for the job.
While all of this was going on, insanity began to creep out into the open regarding what the administration might do to avoid a fight altogether.
There are two beauties out there. One is the striking of the One Trillion Dollar Platinum Coin to be deposited with the Fed By Treasury thereby by-passing Congress and providing all the funding The Leader needs...provided we don't run out of Platinum. The other is the tried and true issuance of script in lieu of currency with which we paid our maturing debts just like California did a few years ago. "Hey, no problem! As soon as we get over this little hurdle we'll redeem all that's out there but in the mean time, you can use the stuff or sell it to our banks who we will instruct to purchase the same. After all, the buggers have been hoarding TRILLIONS!"
What seems to have been overlooked by the geniuses behind this idea is the fact that we don't have to merely refinance a trillion or eight this year but it appears that we are in need of almost $1.5 TRILLION OF NEW MONEY! Let's have a contest: how many of you think the amount available, outside of direct purchases by the Fed, will exceed $.50? Love to hear from you.
Finally, after a couple of years, the first set of regs were released by the Consumer Protection Agency, you know, that piece of insanity created by Lizzy Warren, now junior Senator from Mass. Joy at the wisdom of the thing. It seems that if the banks play by the rules which include a repayment formula of no more than a requirement of 46% income to debt, the banks will granted "safe harbor" status whilst having been placed into a position where they can no longer make "sub-prime" mortgage loans unless they are Fanny and Freddie qualified. Absolute genius screamed the Times and those of it's ilk. Funny, I have always been of the view that the only really new idea that has come around in a while was the Sermon on the Mount. Everything else is simply a variation on a theme. This reg is no different, only in my time it was called "Red Lining;" I guess what side of the fence you are on makes a difference. Wonder what Rev. Jackson thinks?
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?
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