Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1399.7 | -1.9 | -0.14% |
| Eurostoxx Index | 2425.9 | -6.4 | -0.26% |
| Oil (WTI) | 92.93 | -0.5 | -0.54% |
| LIBOR | 0.435 | -0.002 | -0.46% |
| US Dollar Index (DXY) | 82.68 | 0.199 | 0.24% |
| 10 Year Govt Bond Yield | 1.76% | 0.02% | |
| RPX Composite Real Estate Index | 190.4 | 0.3 |
Another ho-hum market day with a lot of economic data, but not much action. The CPI showed inflation remains in check, and we had a mixed bag of industrial reports – with positive industrial production and capacity utilization numbers offset by a disappointing Empire State Manufacturing Survey. The bond market continues to sell off and the 10-year bond futures appear to have fallen below the 147 – 153 range they have been stuck in since late May. MBS are down 4 or 5 ticks.
Funds are releasing their 13-Fs right now, which is the list of their holdings. One filing that is always popular is Berkshire Hathaway’s because a lot of investors like the idea of piggybacking Warren’s trades, and also changes can give insight into what Warren is thinking. In the latest filing, he reduced his exposure to defensive names, like Proctor and Gamble, Kraft, and Johnny John. He increased his holding in Wells and initiated stakes in a couple names in the energy sector – National Oilwell Varco and Phillips 66. It is hard to read much into the report – net equity exposure dropped, but they seem to be taking a more constructive posture towards the economy.
If you are a property seller, Taxmageddon may have some nasty surprises for you. Theoretically, this should pull some sales from 2013 back into 2012. Which means that Fall could be a little better, while the Spring selling season could be a little weaker.
Finally, the National Association of Homebuilders Confidence Index increased in August as the hot rental market is brightening the spirits of the homebuilders. While absolute levels are still depressed relative to historical standards, the rebound has been swift.
Chart: NAHB Market Index:
Filed under: Morning Report |
All Things in Moderation 
I read somewhere that BH had sold off all of its Intel stock as well. And guess what INTC is doing today?
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BTW, did Deere miss its earning expectations? It’s taking a huge hit today.
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http://www.chicagotribune.com/business/breaking/chi-john-deere-quarterly-profit-jumps-11-percent-20120815,0,1505597.story
Up 11%, but missed expectations.
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Not sure why investors watch Buffett anymore. He’s the greatest investor of all time of course, but his fund is so massive that little in his investments have anything in common with smaller funds and retail investors. He’s down to the S&P 500 over the last 3 years and slightly above it over the last 5, which is about what you’d expect.
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Thanks, Mark.
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george:
So after a few days of attacks, are you any more sanguine about my idea that this VP thing may be presidential career suicide for Ryan?
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The WSJ has become shockingly bad under Murdoch. Almost everything in this piece is wrong:
“The U.S. Natural-Gas Boom Will Transform the World
North America’s massive resources are going to shift market power away from OPEC and Russia and to consuming nations.”
http://online.wsj.com/article/SB10001424052702303343404577514622469426012.html?mod=rss_opinion_main
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“george:
So after a few days of attacks, are you any more sanguine about my idea that this VP thing may be presidential career suicide for Ryan?”
Good God no. Frankly, i think your idea is hyperbolic and wrong. Ryan was/is going to be demonized by the Obama campaign. Ryan will lose his Budget Committee chairmanship at the end of this Congressional term do to Republican Chairmanship rules (which I favor). As a sitting House Chairman during a Presidential election, his job is to follow the nominee’s lead, not tout his own budget or ideas. As a result of this handcuffing, he essentially faced extermination at the hands of the Democrats and the media (BIRM). The only logical thing for him to do was to beg Romney for the nomination. Now, Romney will lose, of that there is no doubt, but Ryan will be a front runner in 2016 and odds are he will in fact be the nominee. Every instinct you have about this is essentially wrong.
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I assume that Ryan is running for reelection to the House concurrent with the vice-presidential nomination and will simply resign his seat if Romney wins or otherwise return to the House?
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I hate to say it but Greg and most of the writers he quotes are complete dumbasses about economics:
http://www.washingtonpost.com/blogs/plum-line
He’s comparing something Romney said when the debt to GDP ratio was at about 66% to today at slightly over 100%. I’m sure nothing has changed though.
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J, correct, it was too late in Wisconsin to remove his name from the ballot.
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george:
I hate it when you waffle like that. Defend your ground man! LOL
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“bannedagain5446, on August 15, 2012 at 9:27 am said:
george:
I hate it when you waffle like that. Defend your ground man! LOL”
I think he is channeling you:
“Troll McWingnut or George, whichever, on August 15, 2012 at 9:20 am said:
…
Every instinct you have about this is essentially wrong.”
vs
“bannedagain5446, on August 15, 2012 at 9:12 am said:
The WSJ has become shockingly bad under Murdoch. Almost everything in this piece is wrong:”
I believe that George actually provided more supporting analysis.
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President Obama actually just went up a peg for me:
http://www.washingtonpost.com/politics/white-house-installs-brewery-for-obama/2012/08/14/19a72546-e67d-11e1-936a-b801f1abab19_story.html
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President Obama actually just went up a peg for me
Gawd, you’re easy…
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jnc:
I actually did provide links in Wonkblog about this but commodities never seem to catch fire here as a topic for whatever reason, so I figured a blanket indictment would do!
george might be offended though about the channeling. he might think it’s the other way around!
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Banned, I will agree that the WSJ went down hill after Murdoch bought it. Their daily two front page long stories were staples for me for years, now, meh. Also, their weekend section, when it first rolled out was excellent, now not so much. Murdoch stated, when he bought it, that he thought the articles were too long. It’s apparent that he is using the WSJ as a vehicle to compete with the NYT. I expect him to win, but it’s not the same paper.
I’d love for Scott to weigh in on this though.
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McWing:
I’d love for Scott to weigh in on this though.
I’ve never thought too much of the WSJ news pages, so i am not a very good judge, but I have long been a fan of the op-ed page (which has always had a separate editorial staff from the news pages, if I am not mistaken) and I don’t think I have noticed a post-Murdoch change there.
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from the WAPO:
“He wants everyone to know that. He had looked forward to testifying at his trial, and because of unforeseen circumstances [allegations of abuse by his adopted son, Matt Sandusky], that didn’t happen,” Amendola said. “Jerry views his sentencing as an opportunity for him to tell his side of this.”
Hopefully and no doubt his last opportunity to speak.
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He had looked forward to testifying at his trial
This is probably true. It amazed me as a young prosecutor and for the three years I did defense work after how eager male child molesters were to tell “their side.” If only the jury could know how much they cared for the boys… .
They would never “do anything to hurt” the boys.
They “loved” the boys.
They “helped” the boys.
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“Now, Romney will lose, of that there is no doubt”
Really, I think we underestimate how unpopular the president is.
his biggest obstacle, i think, reaching people who may be inclined to vote for him, but have tuned him out.
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NoVa, I just think it’s almost impossible to beat an unprimaried incumbent.
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mark
I think he already said just those words in his interview with Costas.
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I think he already said just those words in his interview with Costas.
I missed that. Although I think someone referenced that interview here. Did he have a pregnant pause at one point?
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that’s true, mcwing.
i just think this year’s turnout is going to be vastly different than 2008.
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mark
bingo
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“markinaustin, on August 15, 2012 at 10:12 am said: Edit Comment
He had looked forward to testifying at his trial”
It will be interesting to see if the other shoe drops, i.e. the allegations of Sandusky providing the boys to boosters.
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http://www.wjla.com/articles/2012/08/chinatown-shooting-leaves-two-wounded-78851.html
edit: my wife is about 2 blocks away, and my boy is about 4away
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nova
That used to be a terrible neighborhood as you probably recall, but the Verizon Center and the restaurants made it relatively safe in recent years. This one sounds like it could have been somebody looking for one particular person that works there.
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The Obama administration hands Issa a nice easy target. From the most transparent administration in history:
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weirdness
The WAPO has been giving me headlines from 2-3 days past so I signed out and in again under my old name, and none of my posts for the last 2-3 days are visible in Ezra’s column. and here I thought I was being shunned like the Amish!
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He Whose Name Shall Not Be Spoken opines on AG Holder & Goldman.
Goldman Non-Prosecution: AG Eric Holder Has No Balls
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jnc:
He Whose Name Shall Not Be Spoken opines on AG Holder & Goldman
Actually, in essence all he does is whine over the fact that determining the legality of something is more complex than asking Taibbi if he approves. Your attraction to this smug asshole really does confound me, jnc.
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jnc:
That would be the tail wagging the dog I think. You know I believe he’s been a terrible AG, but I doubt he’s made these decisions.
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“bannedagain5446, on August 15, 2012 at 11:18 am said:
jnc:
That would be the tail wagging the dog I think. You know I believe he’s been a terrible AG, but I doubt he’s made these decisions.”
Correct. As noted in the article, it’s administration policy.
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He Whose Name Shall Not Be Spoken
LOL, jnc!
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Scott, agreed about the op/ed, especially Taranto and Hanniger.
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McWing:
I am a big fan of Taranto. I’m not that high on Noonan, but on the whole I think they have a very good stable of writers/analysts.
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I have just come across the best take down of Dodd Frank that I have yet read, and it comes by way of Harvard of all places:
http://blogs.law.harvard.edu/corpgov/2012/07/29/the-parallel-universe-of-the-volcker-rule/
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McWing (er, I mean banned):
Great link on Volcker. Of the 9 numbered points, I think I have made 8 of them here at various points in time.
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Agreed, Noonan is a flake, but I lost all faith in purported right-wingers who went for Obama. It’s even more than that, it’s become a real visceral loathing.
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Speaking of visceral loathing, isn’t it about time that the “conservative” Sullivan start ruminating about Ryan’s uterus?
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Noonan is a great speaker (she gave a talk at a dinner at a scientific meeting [of all things!] I was at in D.C. several years ago) but her writing has frequently just been bad, and I think it has actually gone downhill in the last few years.
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Speaking of visceral loathing, isn’t it about time that the “conservative” Sullivan start ruminating about Ryan’s uterus?
Bad, George, very very bad! 🙂
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I guess that shooting in D.C. was at the Family Research Council.
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Scott:
You were talking about low-information voters yesterday (I think). I didn’t see the interview itself, but this piece has an exchange from an interview with an “undecided” voter that I think is kind of interesting.
Obviously, it’s unfair to extrapolate any major lessons from one interview with one person, but the interview is a reminder of a common problem: undecided voters tend to be deeply uninformed voters. That creates a related challenge for both sides of the political divide: how do you connect with millions of Americans who deliberately don’t pay attention?
Warning: link takes you to a notoriously left-wing site (but not FDL, I promise!)
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Mich (from the link):
undecided voters tend to be deeply uninformed voters.
I’ve always figured this was the case.
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OT – http://www.economist.com/blogs/easternapproaches/2012/08/russian-politics-0
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Scott, what Volker piece?
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McWing:
Sorry…I addressed my comment to you instead of banned. I was talking about his link to the D/F takedown, which is actually focused on the Volcker rule.
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scott
will you try to do better next time?
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banned:
Yes, I will try to do better.
At least I didn’t erroneously blame you for littering this space with Taibbi’s garbage. That surely would have been worse.
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“The Waverider X-51A test was a failure. The vehicle was launched successfully from a B-52 bomber Tuesday over Point Mugu Naval Air Warfare Center Sea Range at about 11:35 a.m. PT. But 16 seconds after launch, “a fault was identified with one of the cruiser control fins.” Then, about 15 seconds after the craft separated from the rocket booster, the cruiser lost control.
“It is unfortunate that a problem with this subsystem caused a termination before we could light the Scramjet engine,” said X-51A Program Manager Charlie Brink via a news release Wednesday. “All our data showed we had created the right conditions for engine ignition and we were very hopeful to meet our test objectives.”
The test is a blow to the Waverider program, but also a setback for the development of hypersonic flight, since the control subsystem responsible for the failure had proven “reliable” in past flights.
According to the release, “Program officials will now begin the process of working through a rigorous evaluation to determine the exact cause of all factors at play.”
One of the four X-51A vehicles is left, but there is no official word as to whether it will actually fly.”
Can’t stop now. I’d rather spend money on this, than in resurfacing roads (if we have to choose) but maybe that’s just me!
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“Accuweather: Big snows for Washington, D.C., Philadelphia and New York next winter”
Even they’re even close to being right, nat gas is going back to $4.
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banned:
The X-51 failure is a bummer. But the other two tests were partial successes — at least they got the scramjet up and running before.
I’d rather NASA and DARPA spend money on the scramjet too. I have a feeling that they aren’t very good at resurfacing roads.
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““Accuweather: Big snows for Washington, D.C., Philadelphia and New York next winter”
Even they’re even close to being right, nat gas is going back to $4.”
Luckily for us when it’s a heavy winter, weather does not equal climate.
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George, what is this thing called winter?
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Joe Biden goes off message again:
“Biden calls Romney, Ryan ‘decent, honorable’ at Va. event
By Nia-Malika Henderson, Updated: Wednesday, August 15, 2:09 PM”
http://www.washingtonpost.com/politics/biden-calls-romney-ryan-decent-honorable-at-va-event/2012/08/15/1db91530-e700-11e1-936a-b801f1abab19_story.html?hpid=z3
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“ScottC, on August 15, 2012 at 1:01 pm said:
…
Your attraction to this smug asshole really does confound me, jnc.”
As I noted a couple of days ago, I find the actual behavior in question to be more offensive than the rhetoric that Taibbi uses to describe it. I also reject your notion of the innocent bankers having to go along with the corrupt officials ala Jefferson County. The more apt analogy is the drug dealer paying off the corrupt cop. The banks and their regulators are the two sides of a corrupted system of crony capitalism. The banks certainly aren’t “victims” in the Jefferson County case, or in the subsequent scandals.
With regards to the comments from the previous thread about using morality or ethics as a benchmark instead of legality, I believe that under that standard the banks would come out looking even worse. See the testimony about the Abacus deal and the internal E-mails released by Goldman Sachs. I see no evidence of any sort of belief in a fiduciary responsibly to their clients.
The typical defense is that those institutions are professionals who should have done their own due diligence and were expected to be fully cogniscient of the risks involved, regardless of any representations that Goldman Sachs was making to the contrary, false or otherwise. It’s a reasonable defense, but it certainly rules out “morality” or “ethics” as a benchmark.
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jnc:
I find the actual behavior in question to be more offensive than the rhetoric that Taibbi uses to describe it.
It’s not just Taibbi’s rhetoric that I think is trash, although that is certainly bad enough. I suggest that if you are relying on Taibbi’s presentation of information to draw your conclusions regarding the events he writes about, your conclusions are not likely to be well founded at all. If you have other sources of information that inform your judgement, then by all means link to those. But you just keep linking to Taibbi, and based on the one article about which I actually have some degree of expertise, I can tell you he is not trustworthy. He either doesn’t understand what he is talking about or he is trying simply to frame the information to fit his pre-determined story line. And, frankly, his over-the-top rhetoric ought to make it plain even to non-experts that he has an agenda and he is going to frame whatever information he has in the only way that is going to fit that agenda.
The more apt analogy is the drug dealer paying off the corrupt cop.
That is an entirely inapt analogy. In your analogy, the underlying behavior (drug dealing) is illegal, and the police are tasked with preventing it. The bribe gets paid to government officials in order to entice those officials to allow the illegal activity.
In the Jefferson County situation, the underlying activity (arranging debt financing) is not only perfectly legal, it is actually being arranged on behalf of the government itself. The bribe is paid because that is what is demanded by the government officials in order to allow the perfectly legal private business to be included in the perfectly legal underlying activity that is going to occur in any event.
The banks certainly aren’t “victims” in the Jefferson County case
I’m not sure who you are quoting when you say “victims”, but it certainly isn’t me. I never called JPM a victim. All I said was that if Taibbi wanted to present an honest and reasoned analysis, he would have focused at least as much, and I think quite a lot more, on the government corruption involved as he did on the actions of JPM. That he didn’t indicates that he has a clear agenda (if it wasn’t already clear from his ridiculous editorial rhetoric) and he should be read with at least some degree of skepticism.
With regards to the comments from the previous thread about using morality or ethics as a benchmark instead of legality, I believe that under that standard the banks would come out looking even worse.
Maybe, but still that is the discussion we should be having.
It’s a reasonable defense, but it certainly rules out “morality” or “ethics” as a benchmark.
I disagree. The ethics/morality involved certainly change with regard to the type of client one is speaking of. Good ethics, for example, require one to treat a naive little old lady with much more care than the professional investor who does it for a living.
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At least I didn’t erroneously blame you for littering this space with Taibbi’s garbage.
One man’s garbage is another man’s treasure.
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lms:
One man’s garbage is another man’s treasure.
Sure. And one man’s porn is another man’s love story, but I can tell you if Netflix starts posting links to Debbie Does Dallas under the Romantic Comedy category, I’ll start questioning their judgement, too.
Taibbi is to political analysis what Deep Throat is to sex education. There may be some useful information buried somewhere, but its purpose isn’t to inform. Taibbi’s talents satisfy his acolytes in much the same way that Linda Lovelace’s talents satisfy a 16 yr old boy. And a shower is in order after indulging in each of them.
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Why should banks be regulated anyway? Serious question. A repository of savings could be established that would not pay interest but literally store cash up to a certain level, that would be “insured” and then let the banks do whatever they and other consenting adults want to do. Caveat emptor.
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Troll:
If you want to completely deregulate banks, then why should the government insure any amount of cash? Caveat emptor isn’t caveat emptor nisi.
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Well, the attraction of FDIC is that you won’t lose a minimum amount. If you willingly choose to put money at risk ( and get interest paid for your risk) why should that be insured? If we just have a repository, it seems to me that we would no longer have to waste resources regulating these things any more than, say, a car stereo store is regulated.
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Troll:
Perhaps I’m misunderstanding. The repository is separate from the banks? Something like having a checking account with the FDIC, just so you can access your cash? Then let the banks do what they want and don’t bail them out when/if they fail. Is that close to what you mean?
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Yes, sorry for not being clear enough.
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scott:
you know that was a humorous reference to your 8 out of 9 comment to me, right?
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banned:
you know that was a humorous reference to your 8 out of 9 comment to me, right?
Sorry, no. I thought you were joking about me giving credit to McWing for your link. Still, I will try to do better next time, both in trashing Volcker and in understanding what you are talking about.
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BTW banned, that’s why I always bold the quotation I am responding to…so that there is no confusion about what I am referring to.
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mike:
Remember you and 8 or 10 of your handiest friends can neither build a hypersonic jet, nor resurface roads, no matter how much money is put into the budget for either activity.
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George:
I seem to remember a small event back in the 1920’s or 30’s when the banks weren’t regulated or insured and a few people took a bath.
I keep feeling like you were born about 100 years too late, my friend. Imagine what you could have done in Houston (assuming Houston was around) back in the day! Libertarian paradise!!
Me, I prefer the late 20th/early 21st century. Hell, being a good liberal, I’d regulate your ass into the ground, take away your ammunition (but not your guns), forbid you from going to church because it’s clearly not good for you, take 100% of your pay and give you an allowance. . . and make you read Taibbi everyday (and twice on Sunday, since you aren’t wasting that time in church)!
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Michi, to be clear, I would have a garaunteed repository where you could keep up to $250,000. Your money would be held there, not invested in anything, just stored. You wouldn’t earn interest of course, since your money is not at risk. It you wish to put your money at risk, well then deposit it in a bank. With the repository established, why would we have to keep regulating financial institutions?
Why is this so far fetched? Seriously? It’s not like all this great regulation prevented another bank crash. Many banks essentially collapsed (and were bailed out) by the, in my opinion, ridiculous TARP. Again your money would be safe if you wanted it to be.
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Finally Michi, I assume the second part of your message was some sarcasm, if not, why are you really that interested in controlling by force some one else’s behavior?
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(oops! forgot to put in the /sarcasm code. Of course I was being sarcastic!)
As for if it was simply a repository, then your idea isn’t so far fetched. But I’d have a hard time believing that any business would do such a thing–where’s the profit for them? After all, we’ve been told over and over that the business of business is not to create jobs, it’s to generate profits for the owners and pay dividends to shareholders (if any). I don’t have a quibble with that, but if that’s what businesses are for, and banks are businesses. . .
So, do you want the government to create the repository?
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I’m starting to believe that yello and I share the same problem. Nobody can tell when I’m joking on line. Sigh.
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we’ve been a little angry around here lately.
Don’t make me go over and get cao and skipsailing and bring them here!
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I’m not angry and I don’t take any of Scott’s (or anyone else’s) comments as a personal attack. He’s (correctly) challenging me to make sure that my argument has been thought through and pointing out inconsistencies between my argument and the sources I cite in support of it and his view of what the actual facts of the matter are.
I’d submit that’s the entire raison d’être for this site, namely the ability to have a discussion about contentious topics without attacking the person making them but also without pulling punches with regards to perceived shoddy reasoning for fear of giving offense.
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MIchi, in this instance, I’d have no problem with a Federal Repository. My requirement though would be that deposits could not be used for anything else, they’d just have to sit there, literally gathering dust.
Then, let those that wish to put there money at risk do so, there would be no need to regulate anything on a Federal level.
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jnc:
I completely agree about your “raison” argument ( and I love it when you speak French!)
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“Michigoose, on August 15, 2012 at 5:41 pm said: Edit Comment
George:
I seem to remember a small event back in the 1920′s or 30′s when the banks weren’t regulated or insured and a few people took a bath.”
There’s a real argument that the solution that was imposed to the problems of bank panics in the 1800’s and early 1900’s, namely the Federal Reserve, may have made the problems of the Great Depression worse than they would have otherwise been, hence the difference between that depression and the ones that had preceded it. See specifically the Depression of 1921.
http://en.wikipedia.org/wiki/Depression_of_1920%E2%80%9321
I could easily see an argument for radically reducing all regulation of the banks and investment firms after eliminating the FDIC guarantee and access to the Fed’s lending window, i.e. transform the financial services industry into a true free market.
Basic banking services could be provided by a government bank, say the Postal bank that lmsinca mentioned and has been discussed here before, similar to European postal services. You could even have basic plain vanilla mortgages done through the FHA offered there which would cover 90% of what a sub $100k per year household would need in terms of guaranteed (i.e. federally backed) financial services. I don’t include credit cards in this given their nature as unsecured debt.
Edit: To be clear, FDIC backed deposits should earn 0%. I.e. they lose money after adjusting for inflation.
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When a meme takes hold:
“Iowa deli co-owner caters for Obama visit, but his t-shirt tells another story
By Amy Gardner, Wednesday, August 15, 5:57 PM
DAVENPORT, Iowa — Ross Murty likes business, but he doesn’t like President Obama.
And so the co-owner of the Village Corner Deli here agreed to cater Obama’s visit Wednesday — but not before donning a t-shirt blaring the message: “Government didn’t build my business. I did.”
http://www.washingtonpost.com/politics/iowa-deli-co-owner-caters-for-obama-visit-but-his-t-shirt-tells-another-story/2012/08/15/abde5208-e71e-11e1-936a-b801f1abab19_story.html
Of all the things thrown at Obama, this seems to have the most traction.
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“To be clear, FDIC backed deposits should earn 0%. I.e. they lose money after adjusting for inflation.”
When was the last time this wasn’t true?
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fair enough
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scott
The world of porn has moved on (and on and on and on) You need to get more topical, especially around those under 30
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Banned:
Who here is under 30?!?!?
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Scott
jnc is right when he stated this
I’d submit that’s the entire raison d’être for this site, namely the ability to have a discussion about contentious topics without attacking the person making them but also without pulling punches with regards to perceived shoddy reasoning for fear of giving offense.
My problem with our discussion yesterday and what you just stated re Taibbi indicates that you believe we shouldn’t link Taibbi here in the interest of ATiM. That’s what I am objecting to. If you’re not saying that then I wish you would clarify that for me. Your opinion of Taibbi is somewhat interesting to me but more important to me is what you’re really asking for here if anything. It makes me want to ask if there’s anyone else you prefer we don’t link to?
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lms:
My problem with our discussion yesterday and what you just stated re Taibbi indicates that you believe we shouldn’t link Taibbi here in the interest of ATiM.
I think that no one should take Taibbi seriously enough to want to link to him, or frankly waste any time even reading his tripe, in the interests of common sense. But I am used to being disappointed in and mystified by the judgment of others, and as I clarified yesterday more than once, I think you should link to him or anyone else you desire as much as you want. I’m not telling you what to do. But just as you should feel free to link to him, I will feel free to express my contempt for him, his style, and his work every time you do.
That’s fair, isn’t it?
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scott
we need a recruiting drive then. we’ve got lots of stuff here to offer!
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oh serious question about the link i sent you. Do you think the Volcker Rule is the primary issue with DF or not?
I could see an argument that it is, but i also think that failure to craft any realistic solution to the too big too fail issue is another main problem
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banned:
Do you think the Volcker Rule is the primary issue with DF or not?
Yes, I think it is. Most of the rest of D/F is a bunch of onerous and expensive administrative stuff – reporting requirements and the like – so not good but mostly just an additional cost of doing business (like bribes!…only kidding, jnc.) Volcker is the primary thing that threatens doing the business itself.
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I was inspired to put up a Bites & Pieces if any of you are interested. Ah, summer!
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jnc/Troll:
I could easily see an argument for radically reducing all regulation of the banks and investment firms after eliminating the FDIC guarantee and access to the Fed’s lending window, i.e. transform the financial services industry into a true free market.
I think this would be an interesting idea to talk about, if one or both of you two would be willing to develop it into a full post. What are the benefits/downsides?
Clearly, I’m not qualified to put anything rigorous together on this.
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Some people don’t understand good news when they see it:
“Treasury yields moved to their highest level in three-months Wednesday, as selling hit the bonds sought as the safest haven in a scary world just a month ago.
Traders said improving U.S. economic data was behind the selling. But they also pointed to a big seller overnight during the Asian session, who helped drive the 10-year yield back above 1.75 percent.
In the New York session, the 10-year yield moved above 1.80 percent for the first time in three months, well above the record 1.39 percent it fell to in July as fears about Europe’s debt crisis swirled. It has moved 0.155 percent in three days for its largest three-day yield gain since early June.
“It’s a continuation of a trend we’ve seen for some time now. If we look at the 10-year, we’re at 1.80 now. We were at 1.46 at the start of the month so we’re up 34 basis points in two weeks,” said Dan Greenhaus, global market strategist with BTIG. “It’s coincident with the larger story which is that the economic data is not just getting better but that the Fed might do QE (explain this).” The 30-year added 7 basis points to 2.91 percent.”
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banned:
Remember you and 8 or 10 of your handiest friends can neither build a hypersonic jet, nor resurface roads, no matter how much money is put into the budget for either activity.
Having watched “Cool Hand Luke” at least a dozen times, I can say that I’m much more likely to be able to resurface a road than build a hypersonic jet.
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Surprisingly enough, the Ryan nomination and his own mouth are calling attention to what a complete buffoon Joe Biden is:
Former VA Governor Doug Wilder:
“As far as I am concerned, the President would not associate himself with those remarks,” he said. “And I expect as the days go forward there will be more clarity associated with what the president feels about what Joe Biden said.”
He also repeated an assertion he’s made previously that Secretary of State Hillary Clinton should have been swapped in as President Obama’s vice president. Wilder first made the suggestion in a 2010 op-ed published by Politico.
“As a matter of fact, over eight or nine months ago that it would have been in the president’s best interest to pick Hillary because-and I’ll go even further,” Wilder said. “If Hillary were on that ticket today based on the job she’s done as secretary of state, I think that would be a clearer advantage the president would be seeing.”
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I think the banks would be delighted to go back to the way things were pre-deregulation
FDR-style regulation was also about preventing competition. If you asked Merrill Lynch and Morgan Stanley if they could go back to the days of regulated commissions, they would do it in a heartbeat. Before brokerage commissions were deregulated, your broker would charge you $100 to make a trade. They would be absolutely ecstatic to go back to 1/8 spreads, with a specialist on the NYSE and everybody charging the same rate. Back then, stockbrokers were rich. Not so much anymore.
When FDR regulated the banks, he put in deposit caps, where checking accounts were prohibited from paying interest and savings accounts were capped at 5%. Banks weren’t permitted to operate over state lines. Every bank paid the same interest rates. That is why banks would give you a toaster if you set up a passbook account – it was the only way they could compete. Back then, bankers were in the 3:6:3 club: Borrow money at 3%, lend it at 6%, be on the golf course at 3:00 pm.
Of course this arrangement fell apart in the high interest 1970s, and that is why banks were deregulated in the first place – not because of ideology, but because the deposit caps were causing a slow-motion bank run where people would pull their money out of their savings accounts and invest in money market deposit accounts which paid 8% or 9%. This was called disintermediation.
Don’t forget, regulation invariably guarantees you a profit with minimal risk and you don’t have to think about competition. The other side of the coin is that there is no incentive to deliver a better product to consumers, which means lower quality and higher costs.
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brent:
Things are running the opposite direction:
“Fed’s Dudley urges reform for money market funds”
http://www.cnbc.com/id/48678268
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Scott:
But just as you should feel free to link to him, I will feel free to express my contempt for him, his style, and his work every time you do.
So, in other words, we should feel free to be brow-beaten by you because, in your opinion, we deserve it.
Interesting.
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Mich:
So, in other words, we should feel free to be brow-beaten by you
I don’t feel brow-beaten every time someone recommends his “interesting” take on something, so I have no idea why you should feel brow-beaten if I respond by de-recommending his contemptible take on it.
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Lms, here’s an interesting response to a Politico article that says Ryan blew up the Bowles/Simpson commission. Bottom line from Pethokoukis is Obama’s refusal to put Obamacare on the table blew up the commission from the get go. The link is to AEI, a right wing think tank.
http://www.aei-ideas.org/2012/08/who-really-killed-the-bowles-simpson-debt-plan/
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Interesting McWing. All of this insider stuff is fascinating to me and I would love to be a fly on the wall in some of these negotiations and hear some of these private conversations. What’s intriguing is we’ll never really know will we?
Scott, have it your way. I do wish you wouldn’t assume I’m lacking in judgement just because I enjoy reading and linking someone you don’t approve of, but I’ll have to live with that I guess.
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Brent thanks for the history lesson. Wow, $100 per trade.
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From the current piece in the Post about Biden’s “challenges”
“It turns out the president is a hell of a lot smarter than I thought,” Biden told a reporter in 2010.’
Somehow I doubt Obama said the same thing.
“Tasked by Obama to manage the end of the Iraq war, Biden made eight trips there in three years and helped forge the 2010 power-sharing agreement — since frayed nearly to the breaking point — that left Prime Minister Nouri al-Maliki in office.
“I’ve never seen anyone go into a room where there are disparate views and come out with everyone moving in the same direction,” said former senator Ted Kaufman (D-Del.), a longtime Biden adviser. In Iraq, Biden “went over there, and he knew the Kurds and he knew Maliki, and he was able to negotiate the whole thing.”
So he failed in the Iraq agreement, (you’ll recall Maliki issued arrest warrants for his vice-president last year) and he failed to convince the president not to escalate in Afghanistan, and he was against the Persian Gulf War , but voted for the Iraqi War.
It’s easy to see why they brought him aboard for his foreign policy expertise!
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Oh forgot this:
“Biden suggested that Romney couldn’t be trusted to have accomplished either victory. But Biden also acknowledged that he had counseled Obama not to order the bin Laden strike, a disclosure featured in a video the campaign released in March.”
http://www.washingtonpost.com/politics/ryan-pick-presents-new-challenges-for-biden/2012/08/15/a8db838a-e707-11e1-8f62-58260e3940a0_story_2.html
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banned, I really liked Ted Kaufman though.
See y’all later.
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I respond by de-recommending his contemptible take on it.
You’re not “de-recommending”; you’re bullying. If you don’t want to read the link just don’t read the link. Don’t feel “compelled” to tell me that I’m wrong. Don’t feel “compelled” to set me straight. Just be an adult and deal with the fact that people disagree with you.
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Mich:
You’re not “de-recommending”; you’re bullying.
Oh please. I’m not bullying anyone. And I must say, coming from someone who so enjoys Taibbi’s own bullying rhetoric, the charge rings both hollow and ironic.
If you don’t want to read the link just don’t read the link.
I assume people link to things here because they want others at ATiM to read them. So I do and I will. But if you don’t want me to criticize Taibbi, then I guess you should figure out a way to get people to stop presenting his crap here to be read. (Sorry if it offends you to see his work called crap, but if I am not offended to see it called “interesting” and “enjoyable”, I don’t see why you should be offended by my characterization of it.)
Just be an adult and deal with the fact that people disagree with you.
Yes sir!
Well, on second thought, that seems a rather odd command, if you ask me, coming as it does from someone who seems perfectly accepting of others who encourage people to read Taibbi, but gets all in a huff when someone tries to discourage others from reading him. Perhaps you should consider leading by example?
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Closing with a lighter side post.
In the space of a few days Chad Johnson (formerly known as Ochocinco) lost his brand spanking new wife, his NFL job, his endorsement deal, his reality TV show deal, and got arrested all because she found a receipt in his car with condoms on it.
So the moral of the story is sometimes unprotected sex really is MORE safe than using protection!
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So the moral of the story is sometimes unprotected sex really is MORE safe than using protection!
Oh, Don Juan (and possibly the moniker has never been more apropos)–maybe he should have just thrown the receipt away!
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Taibbi’s own bullying rhetoric
Taibbi’s not bullying anyone, he’s engaging in hyperbole, if anything. You’re making personal, bullying attacks.
Just don’t read the link If you think that we all read every link that every one of us posts you’re more of an optimist than I am. Or more self-absorbed. There are links that I read right away. There are links that I bookmark because I think they’ll be worth my time, but I’m busy. There are links that I chuckle at and say “oh. . . right! Maybe if I get time.”
And there are links that I know that I’m just going to disagree with and I move on.
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Mich:
You’re making personal, bullying attacks.
On who? Seriously, I have no idea what you are talking about.
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gets all in a huff when someone tries to discourage others from reading him
I would also ask which one of us is participating in a true democracy here? Or even a free exchange of ideas??
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Mich:
I would also ask which one of us is participating in a true democracy here?
Neither of us. This a blog, not a system of government.
Or even a free exchange of ideas?
Well you certainly do seem to object to me exchanging my ideas about Taibbi, so….
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Scott:
On who?
Those of us who enjoy reading Taibbi’s pieces. I may not agree with everything he says, but I find his writing entertaining.
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Mich:
Those of us who enjoy reading Taibbi’s pieces.
Could you give me an example of these personal, bullying attacks?
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Scott–
I object to your attempts at censorship. You don’t like Taibbi–fine. But don’t try to bully me into not linking to him. Which is what you’re doing.
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Mich:
I object to your attempts at censorship.
I’m not trying to censor anyone. What is it about “link to whoever you want whenever you want” that is not clear to you?
But don’t try to bully me into not linking to him.
I’ll ask again…can you give me an example of these “personal, bullying attacks”?
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When Scott wrote:
based on the one article about which I actually have some degree of expertise, I can tell you he is not trustworthy. He either doesn’t understand what he is talking about or he is trying simply to frame the information to fit his pre-determined story line
and further explained his criticism, I read the Taibbi article. I think I had never read Taibbi before. I understand and generally agree with Scott’s criticism of the article, in part because I trust Scott’s expertise. OTOH, I disagree about the nature of bribery. I and other lawyers had our builder clients record conversations with city officials when Austin had its first brush with big city bribery inducements in the permitting process in the early 80s. We killed that snake, btw.
Scott, a criticism of an op-ed is always fair game. But wondering why anyone would read a particular journalist when he was just linked to is reminiscent of the perfect spouse – the one who says “why don’t you ever…” or “how come you never…” or “if you could only…”. The perfect spouse we remember as the nag.
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mark:
OTOH, I disagree about the nature of bribery.
I don’t think all instances of bribery have the same nature. It appears to me that in the Jefferson County case, government officials had set up a system in which they would not entertain proposals from anyone who was not introduced to the government by a middleman, who would then provide goods and services to the government officials. In such a system, it seems clear to me that the corruption is primarily the fault of the government officials who created the system, not the private businesses who have to operate within it.
But wondering why anyone would read a particular journalist when he was just linked to…
Just to be clear, Taibbi is probably the single most linked to writer here at ATiM. Two days ago was the first time I have ever expressed my puzzlement over the attraction to him. Since then I have largely simply vilified Taibbi in terms not all that different from the one’s he routinely uses to vilify the targets of his bile…and which others here seem to “enjoy”.
The perfect spouse we remember as the nag.
Well then call me a nag. But Mich is accusing me of something else, which I think has no foundation.
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Scott, perhaps you, like yello and I, have the problem that nobody gets your jokes online. But if not, you’ve bullied everybody who’s linked to Taibbi this week (at least) at one time or another.
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Mich:
But if not, you’ve bullied everybody who’s linked to Taibbi this week (at least) at one time or another.
Maybe third time will be a charm…can you give me an example of these “personal, bullying attacks”?
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No.
Scroll back and look at what you said about Taibbi and his writing and why some of us may or may not link to it. Your constant “I can’t see why someone would find this interesting/useful/meaningful” comments are what I’m talking about.
I don’t need a second father telling me who and what is useful to read. Your opinion is noted.
For now, I have to go for a run and then go to work, so I’ll be out for a while. Hope you have as nice a day as it’s looking like on my weather map. We’re due for another yellow air quality day today–ick.
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Mich:
Your constant “I can’t see why someone would find this interesting/useful/meaningful” comments are what I’m talking about.
So you think that to wonder why someone finds value where I see none at all is a “personal, bullying attack”? Weird.
I don’t need a second father telling me who and what is useful to read.
Another bizarre reference to a father figure. I don’t get it. In any event, if you feel free to characterize Taibbi as “interesting” and “enjoyable”, I think I should feel free to characterize him as devoid of value. That seems perfectly fair to me.
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Scott
I think I should feel free to characterize him as devoid of value. That seems perfectly fair to me.
We all agree with that. The question arises, in my opinion, when you indicate you think I (or someone like me who enjoys reading his pieces) am devoid of value. If I told McWing that I questioned his ability to form his own opinions without the help of opinion writers at some of the right leaning sites he reads, I wouldn’t be particularly surprised if someone called me on it. It would not be much different than calling him ignorant, which of course isn’t true. I would be questioning his character rather than the author of the piece I disagree with. The mere fact that someone like jnc, who agrees with you on many issues, many more than Michi and I do certainly, links his pieces should cause you to question your assumptions about people who find some value in Taibbi’s writing.
And now I personally really am moving on.
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lms:
The question arises, in my opinion, when you indicate you think I (or someone like me who enjoys reading his pieces) am devoid of value.
Since I have at no point indicated anything remotely like that, I guess the question doesn’t arise, then.
The mere fact that someone like jnc, who agrees with you on many issues, many more than Michi and I do certainly, links his pieces should cause you to question your assumptions about people who find some value in Taibbi’s writing.
I have made no assumptions about people who find value in his writing. I have expressed puzzlement over the fact. And yes, the fact that jnc of all people finds him valuable I find the most puzzling of all. He has been linking to his pieces for months. Given that jnc is quite rational and clear thinking, I read them under the assumption that there is something worthwhile about them. But experience is better than assumptions, and having now experienced Taibbi’s schtick for quite some time, I’ve concluded that assumption was wrong. He’s a jerk, a rabid and unfair polemicist, and not particularly trustworthy. Therefore, my puzzlement.
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For some reason this morning I woke up thinking about McWing’s idea to change the banking system to a true free market rather than Matt Taibbi, weird I know. I was wondering if there were such a thing as banks holding people’s money in an interest and risk free account, which they would then not be able to use as collateral or literally for loans or investments, wouldn’t they have to physically store all of that as cash in a vault on the premises. Otherwise, there would be nothing to prevent a run on the bank would there?
Also, where would the banks get money to use for loans if they had no access to our accounts unless we willingly gave up the risk protection of the FDIC? Do we think many of us would do that especially considering the low interest rates? Or do we think interest rates would jump or be competitive in that kind of environment?
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Lulu, see
http://en.wikipedia.org/wiki/United_States_Postal_Savings_System
There is no reason why the USPS could not pay a nominal interest rate, as it did in the early days and when one of my uncles was a small town postmaster. An unregulated private commercial bank could pay you more to account for your risk.
USPS thinks that being able to engage in banking again would cure its internal fiscal problem which was created by Congress insisting that it properly prefund its retirement plans, which is good long term business but which appears onerous compared with what others do about their plan solvency out more than 50 years. That means USPS intends to make a profit on Postal Savings deposits. Invested in federal obligations only, they will not earn much and if an interest payment is offered to the depositor it will be very small.
I like credit unions enough that I would not want to see them hurt by changes to the banking system.
Without FDIC backing, unless private insurance were available, payroll accounts and trust funds would have to move from the uninsured banks. Very few fiduciaries would agree to self insure.
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lms:
wouldn’t they have to physically store all of that as cash in a vault on the premises.
Yes, that is exactly what they would do.
Also, where would the banks get money to use for loans if they had no access to our accounts
From people willing to put their money at risk in exchange for a return.
Do we think many of us would do that especially considering the low interest rates?
I think some people would and some people would not.
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Scott, rather than vault store cash, I am sure the banks could buy Treasuries.
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mark:
Scott, rather than vault store cash, I am sure the banks could buy Treasuries.
Or perhaps the debt of any other AA rated entity?
Snark aside, sure, bank’s could cater to any number of degrees of risk aversion.
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Mark, I linked to a piece earlier this week that indicated postal workers were thinking along the banking lines as a way of saving the USPS. I think all of this is interesting and just find it difficult to imagine the consequences of a complete revamp of the banking industry.
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Scott
I’ve said what I wanted to say on the subject and in my mind it’s a closed subject. You’re free to keep scoring points though.
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lms:
You’re free to keep scoring points though
Thanks, although I don’t think pointing out that I haven’t done the things you accuse me of doing is “point scoring”.
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I have another dumb question. If they were to vault store cash, is there actually enough printed money for that?
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“Scott, rather than vault store cash, I am sure the banks could buy Treasuries.”
I would vehemently disagree w/buying treasuries, or anything else. First, I do not want to provide the government with, what a politician would undoubtedly consider another revenue source. It’s hard to argue with what a disaster that would be. Second, storing money has a risk associated with it (and a cost), it could literally rot, for example, or catch fire, so I think a Federal repository would be a best bet.
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McWing:
I would vehemently disagree w/buying treasuries, or anything else.
I interpreted Mark to be talking about a bank service, not a government repository. In such a case, I would imagine that a bank could offer varying levels of depository services with varying degrees of both safety and returns. For example, it could offer total safety for cash, that is essentially a safe deposit box service (with perhaps some check writing service attached) for a fee, ie a negative return, since the bank is unable to use that money to invest and earn more money. Then it could offer relatively safe (albeit not totally guaranteed) savings accounts dedicated only to investing in T-Bills, providing a return of something less than the actual T-Bill yield after the bank skims its spread for providing the service. And finally it could offer savings accounts which pay larger returns, but which take on more risk, and are hence not guaranteed in any way at all.
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