Thursday, September 24, 2009

I feel better now.

It looks like there is one sane individual left in government. Via Calculated Risk I see that Paul Volcker has NOT lost it:

However well justified in terms of dealing with the extreme threats to the financial system in the midst of crisis, the emergency actions of the Federal Reserve, the Treasury, and ultimately the Congress to protect the viability of particular institutions – their bond holders and to some extent even their stockholders – have inevitably left an indelible mark on attitudes and behavior patterns of market participants.

• Will not the pattern of protection for the largest banks and their holding companies tend to encourage greater risk-taking, including active participation in volatile capital markets, especially when compensation practices so greatly reward short-term success?

• Are community or regional banks to be deemed “too small to save”, raising questions of competitive viability?

• Does not the extension of support to non-banks, and even to affiliates of commercial firms, undercut the banking/commerce divide, ultimately weakening the commercial banking system?

• Will not investors in money market mutual funds find reassurance in the fact that when push came to shove, the Treasury with an extreme interpretation of its authority, took action to preserve those funds ability to meet their declared commitment to pay their investors at par upon demand?

What all this amounts to is an unintended and unanticipated extension of the official “safety net”, an arrangement designed decades ago to protect the stability of the commercial banking system. The obvious danger is that with the passage of time, risk-taking will be encouraged and efforts at prudential restraint will be resisted. Ultimately, the possibility of further crises – even greater crises – will increase.

There is no easy answer, no one-size fits all contingencies. Experience, not only here but in every country with highly developed, inter-connected financial systems and institutions bears out one point. Governments are not willing to withhold financial and other support for failing institutions when there is a clear threat to the intertwined fabric of the financial system. What can be done is to put in place arrangements to minimize the extent of emergency intervention and to damp expectations of government “bailouts”.

Three cheers for St. Paul, the Dragon Slayer! Hip-hip, HOORAY! Hip-hip, HOORAY! Hip-hip, HOORAY!

Not that I think anyone is going to listen to him. For example, I have read that Chris Dodd wants to take the four main banking regulatory agencies and role them into one super agency. He doesn’t offer a rationale, or explain how this new institution would have forestalled the current crisis, but you know: Bigger is always better! The new agency will be TOO BIG TO FAIL. But the presence of one trustworthy individual is far more than I expected.

Thursday, September 10, 2009

Unreality check? Unreality? Check!

Let's look in on America to see what it is creating to get out of its current economic state. Perhaps it will be a new type of industry, where Americans will make actual material goods.

Lawyers, insurance firms cash in on fantasy football

(CNN) -- Henry Olszewski was stoked in 2008 when he, along with millions of Americans, drafted New England Patriots quarterback Tom Brady to his fantasy football team.

About eight minutes into the season, a 220-pound safety was blocked into Brady's knee, tearing two of the quarterback's ligaments. Brady's season ended, as did Olszewski's.

"That Monday, [Olszewski] came in the office, and he was bummed out," said Anthony Giaccone, president of Intermarket Insurance. "He asked, 'Why can't we buy insurance for fantasy team players?' "

Thus spawned the brainchild for Fantasy Sports Insurance, which guarantees that NFL players won't miss a certain number of games. FSI will reimburse a fantasy player's entry fee if they do.
Judas H. Priest. They've invented another financial instrument for people to use when gambling. Out-fucking-standing. It's like they have never heard of mortgage backed securities....

Tuesday, September 08, 2009

Blogging about email about blogging....

I don't need a degree to be unemployed!

Amba put a new post up over the weekend entitled You Get the President You Deserve. It inspired me to write her a few emails. She has requested permission to post some of it, which I have granted, and I'm also going to post the stuff she highlighted below for my own archives. These went back and forth yesterday as part of three emails. The italicized comments at the start of the first two sections are from Amba's post. (You should know that, because you should go read her post.)

I hope that those of us who are still sane can all agree that a violent end to his presidency would be a catastrophe for this country we profess to love.)

The phrase President Biden should scare all right thinking people, even if they hate America.
So do you want the demon socialist president of your political fever dreams — because he’ll be easier to defeat in 2012 — or do you want a president we can live with till then?

Doesn’t matter. Obama is both a hard core statist AND a political animal. And for all animals survival is the first imperative. There’s no way he comes out of the Chicago Machine without be a political survivalist.

So we’re getting two main thrusts from his politics: The first is his push to remake America into a socialist paradise (count me among those that think Obama actually hates traditional American ideas on limited government and all that entails); and the second is his cozying up with the banksters and financial powerhouses of Wall Street and the Washington DC economic establishment. One of these is for ideals, and the other for survival. These sometimes conflict, but not as often as one would hope – both are quite comfortable with centralized control by a self-selected elite.

Given these premises, nothing important Obama can do can possibly please those of us that fear large institutions of any stripe.

For that matter, I have trouble agreeing with minor points. For example, I don’t care WHAT Obama says in his speech tomorrow/text today. (What a world! What a world!We’ll have digested the speech and passed it through our intestines before he even gives the damned thing. By the time he speaks it will be working its way through the political sewer system.) The President should stay the hell out of the classroom. (That goes for prior Presidents as well.) At best it represents another photo-op in the President’s (any Presidents) ongoing efforts to win votes. At worst it is cheap propaganda. And there is a very tiny difference between the two. More importantly, doesn’t he have something better to do? I seem to recall hearing something about an economic crisis. Quit wasting time and get to work, you damned self-aggrandizing shill!

Actually, I’m probably happiest with him doing this kind of crap. What the US really needs is a massive deleveraging and the less money spent by the government the better. But that’s not happening anytime ever. The days of the Republic are long gone – now we’re just another democracy voting ourselves into the poor house.
Also, as I wrote a few days ago, why should the children work hard when the banksters don’t have to?

Plus, the UE numbers are showing that college grads aren’t doing much better than high school grads right now. You can graduate from high school without breaking a sweat, if you can just conform to the norms. (That’s why a dropped out.) So why work hard? If I hadn’t gone to college I’d be much less in debt right now, and I don’t need a degree to be unemployed!

But the Prez will get up and spew the normal party line, telling the child’en to study hard and work hard. And in other speeches he will continue to tell them to become engineers. Although you can bet he will make sure his daughters go to law school. He won’t leave them to suffer through the ongoing boom and bust cycles of engineering employment – they’ll be part of the new ruling class. At the very least he’ll make certain they end up with a hedge fund somewhere, ala Chelsea.
I embedded the link in the third section and changed "bankers" in the first sentence of the last section to "banksters". Other than that is appears as emailed.

Wednesday, September 02, 2009

This is so wrong....

Obama is set to give a speech to school children:

In the Sept. 8 speech, Obama will challenge students to work hard, set goals for their education and take responsibility for their learning, Education Secretary Arne Duncan said in a letter to principals.
Hard work? Take responsibility? That's un-American! Our children ought to hire lobbyists, complain that their education is TOO BIG TO FAIL and demand a Federal bailout.

Why not? It worked for Obama's (and Bush's) bankster friends with Goldman Sacks and Obama's thug supporters in the auto unions....