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 | 1554.0 | 4.0 | 0.26% |
| Eurostoxx Index | 2739.8 | 35.1 | 1.30% |
| Oil (WTI) | 92.27 | -0.3 | -0.27% |
| LIBOR | 0.28 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 83.05 | 0.158 | 0.19% |
| 10 Year Govt Bond Yield | 2.05% | 0.03% | |
| RPX Composite Real Estate Index | 193.5 | 0.0 |
Stock index futures are up (again) after initial jobless claims came in lower than expected, and inflation readings at the producer level showed inflation well contained. Initial Jobless claims came in at 332k, better than the street estimate of 350k. Bonds and MBS are down.
Since the early Feb, the US dollar has been on a tear, as nascent US economic strength is drawing assets from overseas and the Bank of Japan attempts to devalue the Yen. We have yet to see manufacturers complain, but at some point, they will. It will be interesting to see if Jack Lew expresses support for a strong dollar or damns it with faint praise.
A proposal by the Dallas Fed would cap assets at deposit-insured divisions of the largest US banks at $250M and force them to separate investment banking and traditional lending. It isn’t a full re-institution of Glass-Steagall – it would require separate capitalization and funding for the investment banking and trading units, but would not formally force them to break up. That said, for all practical purposes, it would effectively re-instate Glass Steagall. The reason why we repealed Glass Steagall in the first place was because the US investment banks (Goldman, Merrill, etc) couldn’t compete with the big international banks in the US derivatives business because the overseas giants had such a huge funding advantage. The big international giants like Barclay’s, UBS, and Nomura could borrow at depositor rates (which were often 0%), while the US investment banks were forced to borrow at higher, market-driven LIBOR rates. This meant that Barclay’s etc. could offer much better financing rates on derivatives than Goldman or Merrill. The rest of the world does not separate commercial and investment banking, or even draws a distinction between the two.
This proposal would eliminate the reason why investment banks and commercial banks joined up in the first place – cheap financing. Since the big giants are trading with a holding company discount, they will undoubtedly face shareholder pressure to spin off their investment banking operations to eliminate the discount. The reason why the Fed is doing this is to make it easier for the FDIC to close down a failing unit of a big bank. It isn’t a systemic risk issue. That said, I have always been highly skeptical of the Glass Steagal theory of the financial crisis. Residential real estate bubbles are the Hurricane Katrinas of banking, and it doesn’t matter if you were long real estate through a mortgage loan on your balance sheet, through a holding of mortgage backed securities, or because you sold protection on a basked of CDOs, you were still long real estate and still got crushed when it dropped. People forget the rationale for Glass Steagall, which was to prevent investment banks from using their captive commercial banks or insurance companies as a “back book” for holding soured underwritten bond offerings. The financial crisis did not occur because JP Morgan was stuffing bad paper onto Chase’s balance sheet – it happened because we had a real estate bubble. And because we are in “do something, anything” mode, we are attacking the wrong reason (Glass Steagall) while ignoring the real reason – the Fed.
RealtyTrac reported that foreclosure filings increased 2% MOM in February, but are down 25% YOY. “At a high level, the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years” according to Daren Blomquist, VP at RealtyTrac. Nevada, Maryland, Washington, and New York are the states with more work to do, and they have reported big increases in foreclosure starts.
Filed under: Morning Report |
All Things in Moderation 
A quiz: What kind of conservative are you?
http://www.buzzfeed.com/bennyjohnson/what-kind-of-conservative-are-you
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You got: Whoa, you’re a Libertarian!
Yeah, you knew what you were doing. You’re not technically a “conservative” but let’s be honest, who do you trust most with your civil liberties? Individual liberty, political freedom, and voluntary association for all, down with the state!
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You got: Same as nova.
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“You got: Old-School, Traditionalist Conservative”
Take it with a grain of salt. I am so pop-culturally illiterate that I knew absolutely nothing about the comic book characters, the movie characters, etc and just picked randomly.
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EHRMAHGERD!
You got: LIBERAL!
Damn you! Quit turning America into a marxist paradise. Go back to Canada or France and pay your 75% income tax.
Shocked, shocked I am!!!
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Quick update for Nova and jnc on the health insurance/medigap coverage dilemma we’ve found ourselves in. I talked to Blue Shield again yesterday and found a slightly obsolete option for us, thanks to a very eager rep. We applied for a waiver of coverage that, if approved, will allow me to keep my BS small group coverage while allowing Walter to opt out and then be able to acquire one of the normal range of medicare supplemental plans. Timing will be critical but we’ve at least got a shot, more than I really had yesterday.
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Brent: I picked the Avenger character randomly. What I want to know is if you and NoVA picked the guy in the morning coat with the Rolls Royce or not.
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My staff selected the appropriate responses, including the gentleman in the morning coat. I simply nodded my approval while they were freshening my morning coffee
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Good news LMS .. I’m not familiar with such an option, but fingers crossed it works out.
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I went with the Rolls Royce guy, but I don’t do political rallies. I have been to only 1 political event in my life, and that was the Madison, WI Marijuana Harvest held at the capitol back when I was in college.
You don’t tend to see a lot of rallies for free markets.
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Brent:
…but I don’t do political rallies.
Me neither. That should have been a choice…a guy sitting at a desk actually doing work.
Edit: Or surfing the internet. 🙂
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I am in the same boat as Michigan. Liberal. And like Brent,also just randomly picked some.
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Yea, I felt like at least half the questions didn’t even have an option for me, hence the randomness of selecting… I almost did the close my eyes and point thing 🙂
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Somewhat related: http://leftycartoons.com/the-24-types-of-libertarian/
and its response:http://3.bp.blogspot.com/_TOWe_dR57Kc/THnO9Fkv_0I/AAAAAAAAAKQ/atPsMulQ2vs/s1600/24types+of+authoritarian.jpg
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Nova,
Both of those are hilarious. How many of each can you be at the same time?
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i think there’s a lot of overlap potential. my favorite is the guy up top, outside of the box to the right of the title. missed him the first time I saw it.
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Good to hear that lmsinca. Good luck with the rep.
This is well worth a read:
“How a Soviet spy outmaneuvered John Maynard Keynes to ensure U.S. financial dominance
Posted by Neil Irwin on March 14, 2013 at 8:10 am”
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/14/how-a-soviet-spy-outmaneuvered-john-maynard-keynes-and-ensured-u-s-global-financial-dominance/
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“That said, I have always been highly skeptical of the Glass Steagal theory of the financial crisis.”
My take on this is that Glass Steagal’s repeal had nothing to do with the bubble per say, but had it still been in effect the perceived need for TARP and a bailout may not have been present and therefore the cost to the taxpayers of the clean up may have been less. I.e. more investment banks may have been allowed to go under.
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jnc:
…therefore the cost to the taxpayers of the clean up may have been less.
That seems unlikely. According to Propublica, which tracks all of the bailout funds, total outflows on the bailouts came to $606 billion. So far, a total of $461 billion has been paid back to the Treasury. So the current all-in cost is $145 billion.
But the bailout of Fannie and Freddie alone cost $187 billion. So really the entire current cost of the bailout is due solely to Fannie and Freddie. (If we exclude them, the taxpayer has actually made money on the bailouts.) And there is no reason I can think of to assume that the Fannie and Freddie bailout would have been perceived as unnecessary had G/S still been in place, nor would the existence of G/S prevented Fannie and Freddie from engaging in the activity that lost money.
EDIT: Actually, I didn’t account for dividend payments from Fannie/Freddie, which total $52 billion and should be excluded from receipts if we exclude them from the cost. So, actually the current MTM loss (some investments are still open and may yet pay returns) on everything outside of Fannie/Freddie is about $5 billion. But that includes the bailout of the auto companies, which also had nothing to do with G/S and would certainly have occurred whether or not G/S was still in place. So I think my point stands. It seems unlikely that the cost to taxpayers would have been any less had G/S still been in place.
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Speaking of conservatives, CPAC is this weekend and they have issued a dress code appeal because it seems women at previous conferences have been running around dressed like two-dollar whores (not to be disrespectful towards the low-end of the market for sex workers). Unless I am being Onioned (or Suzi Parkered), most of these ideas seem so common sense as to be patronizing.
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Seriously??? I can’t imagine any woman, particularly of the conservatives, would ever have even imagined wearing any of the inappropriate attire. So this really does come across as simple patronizing. Sad really.
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Maybe. I can imagine a fair amount of people from the blogger world being that clueless.
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How a Soviet spy outmaneuvered John Maynard Keynes to ensure U.S. financial dominance
I read that article this morning and the treasonous behavior on the part of Harry Dexter White seems a little over-blown. I had never heard of the guy before. In addition to being cut out of global finance (another dubious claim since London is still the banking capital of the world), Britain also carries a chip on its shoulder about being left out of the Marshall Plan due to them being ostensibly one of the winners.
Besides, I’ve always thought of George Kennan as being a pinko stooge.
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I’d have to read the full book to decide on the “treasonous” part, but I thought the premise of trying to reorganize the post war world around the goals of ending the British empire, deindustrializing Germany, and a permanent alliance between the United States and the Soviet Union contrasted with the actual results was interesting.
Also the idea that in the realm of economics, it was the US vs Britain, not the two working together.
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Worth a read:
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Conservapedia has a long article on Harry Dexter White. It seems the strongest accusation against him was of transferring engraving plates for post-war German script to the Soviets allowing them to literally mint their own money. He seems at least as guilty as Alger Hiss, if not as famous. If the Soviet Union had all these deeply placed moles how did they still end up on history’s dustbin?
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I don’t consider the recovery of the funds as having validated the policy because of the opportunity costs and moral hazard associated with doing the bailouts in the first place. Prudent businesses and individuals were denied the opportunity to profit from the mistakes of those who miscalculated. Savers are being intentionally forced to finance the banks recovery via the Fed’s manipulation of the interest rates.
Even if the government made 200% ROI it still shouldn’t have been done because the government should not participate in a market that it ostensibly regulates.
If we want to turn the Fed into a hedge fund with unlimited funding that can always buy during market slumps, that’s possible but not advisable.
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jnc:
Even if the government made 200% ROI it still shouldn’t have been done because the government should not participate in a market that it ostensibly regulates.
I agree with this and virtually everything else you said. But we were talking about the “cost” to taxpayers, and the fact of the matter is that the cost to taxpayers for bailing out the banks has amounted to zero. In fact money has been made. And I think it is wrong to perpetuate this populist myth, used to great effect by politicians to distract from their own far more egregious shortcomings (both in action and in philosophy), as an argument either against TARP or for more regulation.
There are most definitely real reasons to object to the bailouts. But the cost to taxpayers is not one of them, nor is it a legitimate reason for the reinstatement of G/S.
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“If the Soviet Union had all these deeply placed moles how did they still end up on history’s dustbin?”
Because communism doesn’t work.
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Because communism doesn’t work.
Of course it doesn’t. But it seems an awful lot of people were determined to keep it around as long as possible. With Hiss, White, and the entire 1933 graduating class of Cambridge helping them, you would have thought the Soviets could have done better than they did.
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Yello, some of those folks were convinced Stalin would be a loyal ally not a mortal enemy. My dad was sure Whittaker Chambers had it right about Hiss and White. And for that matter, Henry Wallace. All three were not Marxists. But they sure believed a bunch of crap about Stalin and the first two fed information to the USSR and were in fact spies. They wanted Germany to stay crushed and they did not want anything like the Marshall Plan. Wallace became profoundly anti-Soviet later in life, realizing he had been a complete dupe.
Chambers himself never understood White because White remained a dedicated capitalist and had no interest in Marxist talk. But there was White, along with Chambers and Hiss, meeting together as spies.
I read all of Whittaker Chambers papers in the Saturday Evening Post before I was ten years old. I was also in the Civil Air Patrol and spent Wednesday afternoons spying for Soviet planes from the summit of the highest hill in rural Howell Township, NJ. I had a hot line to McGuire AFB. I called in a plane once in two years. It turned out to be a B-29. But the Russians had B-29 knockoffs with the same profile.
One of the ironies of secrecy was that Truman was not actually cleared for the Army Intelligence that clearly implicated Hiss. Omar Bradley was, yet even though he and HST were fishing buddies and fellow Missourians, Bradley never breached protocol and never told HST to cool it when HST defended Hiss.
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That’s how bad the ideology is. What’s fascinating is the fact that despite all evidence there still are people outthere who believe in Marxism.
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Mark – You may be able to celebrate:
“Senate group considers large reduction in family visas as part of immigration deal
By David Nakamura, Thursday, March 14, 1:09 PM”
http://www.washingtonpost.com/politics/senate-group-considers-large-reduction-in-family-visas-as-part-of-immigration-deal/2013/03/14/90252aae-8be8-11e2-9f54-f3fdd70acad2_story.html?hpid=z1
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YES THANK YOU FOR GETTING SOMETHING RIGHT!
Hope it makes it to signature.
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I was also in the Civil Air Patrol and spent Wednesday afternoons spying for Soviet planes from the summit of the highest hill in rural Howell Township, NJ.
That’s hardcore. A girl I dated briefly in high school is very big into CAP and posts lots of right wing things on Facebook. She keeps me from falling too into the echosphere. While the CAP seems a Cold War anachronism, I guess somebody has to keep protecting the purity of our essences.
In junior high, my wargaming friends and I had a pact to eventually become guerrillas so we could infiltrate the Soviet Union and lead a grass roots revolution from inside the Iron Curtain. History overtook our efforts.
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“There are most definitely real reasons to object to the bailouts. But the cost to taxpayers is not one of them, nor is it a legitimate reason for the reinstatement of G/S.”
I’ll concede the cost point based on the government’s potential to be paid back in the long run, but I’d still argue that had G/S been in force, the bailouts would have been less likely to occur.
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jnc:
I’d still argue that had G/S been in force, the bailouts would have been less likely to occur.
Perhaps some of them, but not all of them. Fan/Fred were going to get bailed out no matter what. So too GM.
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“In junior high, my wargaming friends and I had a pact to eventually become guerrillas so we could infiltrate the Soviet Union and lead a grass roots revolution from inside the Iron Curtain. History overtook our efforts.”
Wolverines!
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Wolverines!
Yup. They stole our story for that movie.
My dad was stationed in Italy in the early 80s where there were astro-turfed communist protests against that movie. He had never seen Red Dawn so I was describing the plot to him. About the communist take-over of Latin America, he said “At least they got the scenario right.”
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I saw the remake with some friends. but the theater was filled with tween-age girls and mid-30s dudes. so it was the nostalgia set and apparently the lead, Chris Hemsworth, is quite popular with 8th grade girls.
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The remake lost my money when it was reported they digitally redid all the uniforms from Chinese to North Korean. Even for a
wingnutmilitaristic hyper-right wing Hollywood wet dream, you have to have some level of plausibility.LikeLike
yello:
Even for a wingnut…
Could you please cease using that term. I find it offensive and insulting.
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Could you please cease using that term. I find it offensive and insulting.
Not a problem.
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yeah, it was ridiculous. it was more action movie than the original too. the original is a lot darker than i remembered.
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Mark, you doing any SXSW events this week?
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JNC – NADA. The weather is great. the crowds are greater. Maybe Rosanne and I will get to a movie on the film festival list, but no music.
Tax season for her and I am busy.
I did download this:
http://www.npr.org/2013/03/01/173275533/the-mix-the-austin-100
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My favorite line from the original is:
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“So too GM.”
That’s open to debate. They had to reallocate the TARP money because they couldn’t get a stand alone bailout through Congress, and a big part of the argument was you can’t justify bailing out Goldman Sachs, but not General Motors.
That’s how moral hazard works.
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jnc:
They had to reallocate the TARP money because they couldn’t get a stand alone bailout through Congress, and a big part of the argument was you can’t justify bailing out Goldman Sachs, but not General Motors.
That’s a fair point.
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Speaking of Soviet invasions, anyone ever see the movie “The Beast”?
http://en.wikipedia.org/wiki/The_Beast_%281988_film%29
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according to wiki the beast grossed $160k in theaters. i don’t think anyone saw it. i’ll have to see if it’s on netflix
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It’s well worth the time Nova. One of my favorite war movies, and having the mujahedin as the heroes is interesting to watch now in retrospect.
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See also the remake of Battlestar Galactica.
The episodes set on New Caprica were just amazing.
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Several years ago I wrote a blogpost comparing our occupation of Iraq to the movie Red Dawn. The invaders are never the heroes.
http://livebythefoma.blogspot.com/2006/12/wolverines.html
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See also the remake of Battlestar Galactica.
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I’ll add beast to the list for when mrs. nova is traveling.
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If anybody starts slamming the Star Trek reboot again, I will literally throw up on this blog.
That’s a promise.
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