All Things in Moderation

Vital Statistics:

European Central Bank President Mario Draghi has shown the markets his bazooka and they yawned. The ECB cut interest rates by 25 basis points and then further announced they would offer banks 3 year loans and relax collateral requirements. This is an extension from the one year loans currently being offered; the market had expected an extension to 2 years.

Initial Jobless Claims came in lower than expected – 381k vs 295k expected. Continuing Claims were 3.58million vs. 3.7 million expected. This print approaches the post crisis low of 375 set in Feb 2011. Just another sign that the labor market is beginning to thaw.

Jon Corzine will be in front of Congress this morning to address the MF Global fiasco. In his prepared statements, he claims he has no idea where the money was and wasn’t involved in the day-to-day movement of capital at the firm. He doesn’t understand why the accounts haven’t been reconciled yet. The Kenny Lay defense, I guess. I would bet the missing money went to cover margin calls. If so, the money should be recoverable – technically it wasn’t MF Global’s money to give. Find out who made the margin call and you will know who is about to make an earnings pre-announcement.

Bloomberg released some of the findings from its Bloomberg Global Poll this morning. 61% of the respondents (mainly professional investors) believe China will face a banking crisis within the next 5 years. It will be interesting to see how the “world’s best managed economy” behaves once the bubble bursts. I am sure the Thomas Friedmans of the world will not abandon their fixation that the government can fine-tune the economy and manage it intelligently.

Chart: Initial Jobless Claims:

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Michigoose passes this one on (alas, I can’t see it, yet):

Something to do with orthopedic surgeons. Hope it’s funny!

Ah, now I’ve seen it. I don’t get it.

But, perhaps this is more my speed:

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It’s a joke, but it’s making the rounds at the office today:

Supreme Court rules no Nativity scene in DC

This isn’t for any religious reason. 

They simply have not been able to find Three Wise Men in the Nation’s Capitol.

A search for a Virgin continues.

There was no problem, however, finding enough asses to fill the stable.

And with that, I’m off to pass the Occupy DC barricades to find my son at daycare and get home.

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I can’t figure this one out.

FDA says the morning after pill is AOK safe for fecund females under 18.  Sebelius overrules FDA and says that under 18 needs a scrip.

Pandering:
 to parents?
To pro-lifers?
To wanting to birth more unwanted children from single teenage mothers because 18 years later they might vote D?

The distinction between a customer for this product and non-customer is not age related, it depends on whether one thinks oneself pregnant.  That should not be age related, in a pragmatic world.  In a political world there are other considerations.

But what are they, and how do they redound to BHO’s imagined advantage with this decision?

One of you might hit on an answer that will seem obvious to me after the fact.  I have run through his voting blocs in my mind:  youth [no], affluent upper middle class females [no], Jews [no], African Americans [no], Latinos [?], indies who like his FP [no].  I do not think Chicano voters will be moved by this, but maybe other Latinos?

Who will be pissed off?  Women and yutes.

What am I missing?

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This story has it all — protectionism and regulatory capture at the expense of honest-to-goodness free market competition. Big limo companies didn’t like the fact that some upstarts were offering the same service for the price of a cab ride. Can’t compete on price? Pass a law requiring the competition to charge more.

Here’s the key point: “Prior to the new laws, Tennesseans could purchase transportation from downtown Nashville to the airport in a limo or sedan for the same price as an average taxi ride. Nashville residents and visitors will now pay almost double for the same service. Nashville folks in need of an affordable ride, and drivers looking to earn an independent living in a sagging economy, join a long line of people caught on the wrong end of a nationwide effort by big car services to squeeze extra profit by regulating competitors out of business.”

Peruse the comments at the link below if you dare. What really, if you’ll excuse the phrasing, chaps my ass, is that this is viewed as a free market failure.

Example: “This regulation kills free market competitio­n from Limo companies who might be willing to do the job for less now doesn’t it. That is Capitalism at work, if you can’t compete or just control or manage a market, maybe increase profits you buy yourself some legislatio­n to kill competitio­n.”

Sigh.

More from Huffington Post

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National Review has an article on the subject, Sex-Selective Abortions Come Home.

I tend to belief that having more guys than girls is not a great idea. Not sure how to address it, as an issue, and there may not be enough people doing it to radically alter the overall ration of boys-to-girls, but I think sex-selection is not a great idea, generally. Even if it could be done without abortion, but just as a pre-pregnancy medical procedure, I’m not sure it’d be a great idea to have folks picking their preferred sex (or sexual preference), and thus skewing population trends.

Or, maybe I’m an old fuddy-duddy.

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Vital Statistics:

Markets are flat this morning on a slow news day. The Europeans continue to bicker over the structure of rescue funds. Euro sovereign yields are more or less stable. No major economic data is being released this morning. Tomorrow we will get initial jobless claims. The street is at 400k, more or less the typical number. Let’s see if last week’s unexpected drop in unemployment is reflected in the initial claims.

The Fed is disputing the Bloomberg story (widely repeated) that the Fed secretly lent $7.8 trillion to the banks during the financial crisis. They claim that on any one given day, Fed credit for the liquidity programs was never more than $1.5 trillion. “These articles … have contained a variety of egregious errors and mistakes,” Bernanke told the chairmen of the U.S. Senate Banking and House of Representatives Financial Services committees. The funny thing about this whole episode is that what is being called a “bailout” is really just the Fed lending against solid collateral to cash-short banks. It is what Central Banks do, and it is the reason why we have them in the first place – to provide liquidity in a crisis so that we don’t have bank runs.

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How We Ruined the Occupy Wall Street Generation. Wait, why is it always our fault? Can’t these people be responsible for anything in their own lives?

Apparently not. Mostly Peaceful Stabbing at Occupy Baltimore.

Mmm. Anybody else hankering for a six-pack of Pepsi Ice Cucumber?

The US will start considering a country’s treatment of homosexuals when passing out the foreign aid. I imagine that this is going to impact a lot of the countries we send money to. No more cash for you, Pakistan!

Also from HuffPo: Mugger tries to mug Ultimate Fighting Champion, later regrets choice of victim.

The Chicago Sun-Times reports that Anthony Miranda approached a parked vehicle near 55th Street and Kenneth Avenue Friday night and asked the driver for a lighter before pointing a handgun at the man and demanding money. After the driver handed over some cash, Miranda reportedly ordered him out of the car — which was apparently a mistake.


… Miranda was taken to Holy Cross Hospital with a “face full of lacerations,” two black eyes and a gunshot wound.

Apparently, in a struggle for the weapon, he ended up shooting himself in the ankle. Kids, stealing is wrong. For more reasons than one.

Is strip searching senior citizens really adding anything to our security?

According to Fox News, the Muppets are a communist plot. I just saw The Muppets the other day, and it was totally awesome. One of the best Muppet movies since the original.

More from Media Matters. Rush Limbaugh (using common sense) says that Fox isn’t part of “a conservative movement”. All I know is, they don’t like Obama, and they don’t like Ron Paul, so I’m not sure who’s left.

How Ghost Busters should have ended.

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At Real Clear Politics.

“Layoffs too often became permanent, not part of the business cycle. And these changes didn’t just affect blue collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs and the internet,” President Obama said at a campaign event in Kansas.

Which is true, as far as it goes, but I’m not sure what I’m supposed to take from it. At one point, 90% of American jobs involved agriculture. Now almost none of them do. But we aren’t suffering from 80% unemployment. More time allows for more people to do different kinds of jobs, but there’s almost always somebody willing to pay for something.

Ace of Spades rebuts. My personal experience has been that almost all my jobs involved the Internet in some way, post 1995. The jobs I had post-2001 were web-retailing jobs, up until 2009, and simply would not have existed, if not for the Internet. Then I got my current position doing database stuff. Still, I think technological innovation is a net positive, even if it costs some jobs. I imagine many of those jobs will come back in other forms, especially for a younger generation more likely to be schooled in the sorts of things that are in demand. But even those suffering benefit from automation of production, automation in agriculture, etc.

I don’t think holding back the tide of innovation to save brick-and-mortar—or mom-and-pop—shops is something that can succeed. I feel sorry for the folks employed by the maker of buggy whips, but markets change.

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Vital Statistics:

Euro markets are down slightly in reaction to the downgrade warning from S&P late yesterday. They note the tightening credit conditions across Europe as well as the growing risk premiums on sovereign debt. The political situation is mentioned as well. S&P is assigning a 40% chance of a fall in output for the Eurozone as a whole in 2012. FWIW, the Euro markets are treating this as a non-event, with little movement in sovereigns and equities.

Banking regulators are finally addressing the fact that “risk-free” assets like sovereign debt are not risk-free after all. The Basel Committee on Banking Supervision is considering letting banks use equities and corporate debt, in addition to cash and sovereigns to satisfy capital standards.
Money quote from the article citing a lawyer at Allen & Overy: “In a world where Nestle is seen as less risky than Portugal, it makes complete sense, but it is politically and economically very difficult. The state requires someone to Hoover up its own debt. Discouraging banks from investing in some countries’ bonds could have a damaging effect on sovereign borrowing.” I would be shocked if Basel let banks use equities and corporates as Tier I capital, but stranger things have happened.

The real estate metrics have been improving lately, and we have another data point with the latest earnings announcement from Toll Brothers. Toll is at the high end of the housing market, and is concentrated in NYC, Boston, and Washington DC. Think McMansions and lofts. Toll is reporting lower cancellations than last year (7.9% vs 8.8%), a 15% increase in $ backlog, and a 12% increase in unit backlog. They mention the urban New York City market as a bright spot, with new buildings in Hoboken, Manhattan, and Brooklyn. I would caution reading too much into NYC real estate as it is a US dollar play as well, and foreign investors view US real estate as dirt cheap. In 2011, Toll used excess cash to buy back stock stock and debt (3 million shares and $55 million of debt). In 2012, they intend to use cash on expanding the business. Toll is giving limited guidance, but anticipates an uptick in business – they are guiding to deliver between 2,400 and 3,200 homes in 2012, vs. deliveries of 2611 in 2011 and 2,642 in 2012. I wouldn’t read too much into this announcement re pricing, (I still think real estate is going down), but it does bode well for construction, which typically leads the economy out of recession and has been MIA in this recovery.

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