Morning Report: Neel Kashkari wants to get tougher on the banks 2/17/16

Stocks are higher this morning as yesterday’s rally has follow-through on overseas markets. Bonds and MBS are down.

Mortgage Applications rose 8.2% last week as purchases fell 3.7% and refis rose 16%.

Housing starts came in 1.1 million, missing the 1.17 million estimate. Building Permits were flat at 1.2 million.

The Producer Price Index rose 0.1% in January. The core index (ex food and energy) rose 0.4%. The headline number was up 0.6% YOY and the core number was up 0.8%.

Industrial Production jumped in January by 0.9%, however the preior month was revised lower from -0.4% to -0.7%. Manufacturing Production rose 0.5%. Capacity Utilization improved markedly from 76.4% to 77.1%.

At 2:00 pm, we will get the FOMC minutes. Given the uncertainty around the Fed’s future plans, we could see the market more sensitive to these than usual.

Neel Kashkari of the Minneapolis Fed gave a speech to Brookings yesterday, calling for even more regulation for the banks and to turn them into public utilities. Of course any examination over whether the Fed had a hand in creating the real estate bubble in the first place is nowhere to be found.

The new enemy for consumer direct is not the government – it is a new robot designed to waste a telemarketer’s time.

61 Responses

  1. Neel Kashkari is, like it seems everybody else is, an alumnus of The Vampire Squid.

    Pick your metaphor:
    1. It takes a thief to catch a thief.
    2. There is no zealot like a convert.
    3. The foxes are guarding the chicken coop.

    Liked by 1 person

  2. Or, as a Goldman guy, he wants the big commercial banks out of his business…

    Liked by 1 person

  3. I think the most likely answer is that he is ultimately a politician and knows the banks make an easy target to score cheap political points.

    Ultimately we are now on the PhD standard of monetary policy and banking, where a bunch of academics in a room are pulling levers trying to control the economy. QE, negative interest rates, etc are uncharted territory. We may again rediscover Hayek’s fatal conceit.


  4. Good take by Charles Pierce on the confirmation fight:

    “There is nothing in the Constitution that says the Senate must move a president’s nomination. It just says he can’t get his nominee confirmed without the advice and consent of two-thirds of the Senate. And that, folks, is where she stands.

    But, see, the thing is, if the Senate chooses to freeze the process, the individual members of the Senate—and, in particular, the leaders of the Senate majority—have to be willing to stand the political consequences of their actions.”

    Liked by 1 person

    • Are you better off forcing obama to nominate a centrist in hopes of winning the election and replacing RBG with a centrist when she rolls a 7 or should you drag your feet and use the threat of nominating a liberal who will roll back the 1st and 2nd amendments as a way to ensure the base will vote and get active?


      • Oh, if only a liberal would be nominated. . .

        I think Justices Sotomayor and Kagan are as wild and crazy as we’re going to see any time soon.

        Liked by 1 person

        • From the right side of the aisle, I would say they are plenty liberal. They certainly aren’t textualists. But any nominee without a lot of baggage (that would then be used to vote against confirmation) can occasionally surprise you, depending on the case. As John Roberts has proved recently! I expect the nominee will appear, at least, more centrist than either Sotomayor or Kagan, and since I think there’s a good chance a Democrat will sit the Whitehouse after November, the Republicans may want to go ahead and confirm. I’m not sure what sort of irrational exuberance makes them feel that a Cruz or Rubio or Trump is a shoe-in, or that Sanders or Hillary would not nominate someone much worse than Obama . . . and maybe they don’t. Maybe the “we’re not going to confirm anybody” is strategic, goading Obama into nominating a centrist or center-right judge that the Republicans would look bad for refusing to consider.


        • KW:

          From the right side of the aisle, I would say they are plenty liberal.

          This is true from the right side of the aisle, from the middle of the aisle, from above the aisle…basically from any view for someone with eyes to see.

          If RBG, Breyer, Kagan, and the Wise Latina can’t be said to be objectively liberal, then the term “liberal” is devoid of meaning.


        • I find the terms “liberal” and “conservative”, encompassing such broad swathes of opinion and positions under them, tend to mean, to the individual “as liberal” or “as conservative” as the speaker. So to many, an Obama or Hillary are center-right, rather than good liberals, because they aren’t as far to the left as Bernie.

          Interesting chart, would love to see it for just cases considered “political”:

          According to the NYT, both Kagan and Sotomayor are more liberal than Ginsburg. I don’t know how much more liberal you could want them to be!


        • As I wrote to Scott, politically RBG is an unreconstructed liberal, on everything except tax law, thanks to her late husband’s specialty. Politically, Breyer was attacked by liberal D Senators as a conservative when he was nominated. Politically, Sotomajor is a prosecutor at heart. Politically, Kagan is a technocrat. But the NYT has its own measures.


        • In fact, if you are scoring by political leaning, RBG is a liberal. She is far more liberal than the other three.

          And she and Scalia were really, really close friends. When her husband was alive the Scalias and the Ginsburgs ate dinner with each other every Monday night.

          They remained opera buddies b/c Mrs. Scalia was not an opera buff.

          I know that Scalia was in such bad health that he could not have relatively simple shoulder surgery. 79 with very high blood pressure and an unwillingness to forego food – I hope that is not me seven years from now.

          Until about 2007 I found his opinions remarkably readable. I do think he became angrier as he past the age of 70, rather than mellower. And he got careless, too.

          Frankly, that happened with the aging Justice Douglas on the liberal side, decades earlier.


        • Mark:

          In fact, if you are scoring by political leaning, RBG is a liberal. She is far more liberal than the other three.

          I would score by the only metric that really matters…Supreme Court decisions/opinions. Are there many politically contentious cases in which RBG was not joined by the other 3? Are there any?

          It may be the case that RBG is personally more liberal than the others, but in their Supreme Court decisions in politicized cases they strike me as largely indistinguishable from one another.

          Until about 2007 I found his opinions remarkably readable.

          My favorite Scalia opinion of all time was his dissent in the 2001 case PGA v Martin. A fantastic combination of unassailable logic, wit, sarcasm, and great writing.

          Before considering the Court’s answer to the first question, it is worth pointing out that the assumption which underlies that question is false. Nowhere is it writ that PGA TOUR golf must be classic “essential” golf. Why cannot the PGA TOUR, if it wishes, promote a new game, with distinctive rules (much as the American League promotes a game of baseball in which the pitcher’s turn at the plate can be taken by a “designated hitter”)? If members of the public do not like the new rules–if they feel that these rules do not truly test the individual’s skill at “real golf” (or the team’s skill at “real baseball”) they can withdraw their patronage. But the rules are the rules. They are (as in all games) entirely arbitrary, and there is no basis on which anyone–not even the Supreme Court of the United States–can pronounce one or another of them to be “nonessential” if the rulemaker (here the PGA TOUR) deems it to be essential.

          If one assumes, however, that the PGA TOUR has some legal obligation to play classic, Platonic golf–and if one assumes the correctness of all the other wrong turns the Court has made to get to this point–then we Justices must confront what is indeed an awesome responsibility. It has been rendered the solemn duty of the Supreme Court of the United States, laid upon it by Congress in pursuance of the Federal Government’s power “[t]o regulate Commerce with foreign Nations, and among the several States,” U.S. Const., Art. I, §8, cl. 3, to decide What Is Golf. I am sure that the Framers of the Constitution, aware of the 1457 edict of King James II of Scotland prohibiting golf because it interfered with the practice of archery, fully expected that sooner or later the paths of golf and government, the law and the links, would once again cross, and that the judges of this august Court would some day have to wrestle with that age-old jurisprudential question, for which their years of study in the law have so well prepared them: Is someone riding around a golf course from shot to shot really a golfer? The answer, we learn, is yes. The Court ultimately concludes, and it will henceforth be the Law of the Land, that walking is not a “fundamental” aspect of golf.

          Either out of humility or out of self-respect (one or the other) the Court should decline to answer this incredibly difficult and incredibly silly question. To say that something is “essential” is ordinarily to say that it is necessary to the achievement of a certain object. But since it is the very nature of a game to have no object except amusement (that is what distinguishes games from productive activity), it is quite impossible to say that any of a game’s arbitrary rules is “essential.” Eighteen-hole golf courses, 10-foot-high basketball hoops, 90-foot baselines, 100-yard football fields–all are arbitrary and none is essential. The only support for any of them is tradition and (in more modern times) insistence by what has come to be regarded as the ruling body of the sport–both of which factors support the PGA TOUR’s position in the present case. (Many, indeed, consider walking to be the central feature of the game of golf–hence Mark Twain’s classic criticism of the sport: “a good walk spoiled.”) I suppose there is some point at which the rules of a well-known game are changed to such a degree that no reasonable person would call it the same game. If the PGA TOUR competitors were required to dribble a large, inflated ball and put it through a round hoop, the game could no longer reasonably be called golf. But this criterion–destroying recognizability as the same generic game–is surely not the test of “essentialness” or “fundamentalness” that the Court applies, since it apparently thinks that merely changing the diameter of the cup might “fundamentally alter” the game of golf, ante, at 20.

          Having concluded that dispensing with the walking rule would not violate federal-Platonic “golf” (and, implicitly, that it is federal-Platonic golf, and no other, that the PGA TOUR can insist upon) the Court moves on to the second part of its test: the competitive effects of waiving this nonessential rule. In this part of its analysis, the Court first finds that the effects of the change are “mitigated” by the fact that in the game of golf weather, a “lucky bounce,” and “pure chance” provide different conditions for each competitor and individual ability may not “be the sole determinant of the outcome.” Ante, at 25. I guess that is why those who follow professional golfing consider Jack Nicklaus the luckiest golfer of all time, only to be challenged of late by the phenomenal luck of Tiger Woods. The Court’s empiricism is unpersuasive. “Pure chance” is randomly distributed among the players, but allowing respondent to use a cart gives him a “lucky” break every time he plays. Pure chance also only matters at the margin–a stroke here or there; the cart substantially improves this respondent’s competitive prospects beyond a couple of strokes. But even granting that there are significant nonhuman variables affecting competition, that fact does not justify adding another variable that always favors one player.


          Complaints about this case are not “properly directed to Congress,” ante, at 27-28, n. 51. They are properly directed to this Court’s Kafkaesque determination that professional sports organizations, and the fields they rent for their exhibitions, are “places of public accommodation” to the competing athletes, and the athletes themselves “customers” of the organization that pays them; its Alice in Wonderland determination that there are such things as judicially determinable “essential” and “nonessential” rules of a made-up game; and its Animal Farm determination that fairness and the ADA mean that everyone gets to play by individualized rules which will assure that no one’s lack of ability (or at least no one’s lack of ability so pronounced that it amounts to a disability) will be a handicap. The year was 2001, and “everybody was finally equal.” K. Vonnegut, Harrison Bergeron, in Animal Farm and Related Readings 129 (1997).

          Liked by 1 person

        • My respect for Scalia is increased by the fact that he (or more likely, one of his interns) cited Kurt Vonnegut.


        • They’ve tried before with Goodwin Liu.


    • And then this becomes the new normal for every nomination where the opposition party can block it. And it will spread—such as refusing to confirm someone nominated in the first term of President Trump, because Trump is too inexperienced in the office, or some such thing. DC politics has become a matter of Anything Is Okay If You’re a Career Politician . . . depending on how a strategy might impact your re-election or future career prospects. Thus, each side does something that bends the rules or sets a new precedent and says “oh, this is how it’s always done, this is just how it should be done, blah blah blah” and the other side says “this has never been done ever in the history of the world, just more proof that the Republicans/Democrats are hypocrites and don’t care about the will of the people” and so on.

      Civility, decorum, and respect for precedent is a two way street, after all. If one party (or neither) has those things as priorities, then it will be a race to the bottom . . . as it pretty much is.


  5. What happens if I “Like” all of your comments?

    Liked by 1 person

  6. Thomas Friedman today in a parenthetical on Grover Norquist:

    (Am I a bad person if I hope that when Norquist slips in that bathtub and has to call 911, no one answers?)

    Later in the same article, demonstrating the self-awareness we have come to expect from the modern day liberal:

    Unlike Sanders, Ted Cruz does not have a good soul. He brims with hate, and his trashing of Washington, D.C., is despicable.


    • Surprised to see Flathead support entrepreneurialism. I thought he admired the Chinese way of running roughshod over everyone in order to get things done.


      • To be honest, if Chris shows up again, I think we should just let his comments stand without comment. I don’t think he’s winning any friends (and, FWIW, I also have him on IL because he got to be just too much).


        • I’m fine with whatever everyone wants to do about cao, I was just goofing on Scott’s cao-like Freidman quote about deathwishing on Grover Norquist and his bizarre assessment of Cruz’s soul.


        • Mich:

          To be honest, if Chris shows up again, I think we should just let his comments stand without comment.

          Why? ATiM is not under any obligation, self-imposed or otherwise, to provide a forum for literally anyone who wants to comment. And especially if no one planned on engaging those comments, I don’t see any reason to leave them up.


        • I’d usually let them stand on principle, but deleting them pisses him off which is a good enough reason for me.


        • I get that. I wish he would participate civilly, or at least semi-civilly, but . . . eh, it ain’t going to happen. In principle, I agree with Michigoose, but I’m worried that’s one of those cases where my principle ends up being a bad idea in practice.


        • I have no problem with them being obliterated. I just think that it’s one of those cases where his words speak volumes about himself.

          Liked by 1 person

  7. NoVA: What was your term for Cons? “Willfull obtuseness”?

    I really see zero value in engaging with progressives anymore. The bad faith arguments/flat out lying is pointless to debate.


    • At least at Plumline. 😉

      Then there are conceptual breaks where it seems very difficult to communicate. Where both sides are thinking the other is not communicating good faith . . . or something. The discussion regarding the text of the constitution seems to be a place where the opposing view is really not getting the intent of the words. There’s just a conceptual disconnect so big I’m not sure precisely how you overcome it. That’s one of the thing that tends to drive people into these tribal associations. It’s much more appealing than trying to talk to others who seem to be intentionally obtuse or completely unwilling to grasp what you’re saying, and it seems like that’s the impression in both directions. Thus . . . sheesh, I’m going to talk to people who speak my language.


    • yes. that’s the phrase. just consider it missionary work.


      • Unfortunately, much like Heart of Darkness, I tend to get dragged down their level.

        Participating in that forum, especially with certain posters, degrades the quality of my own commentary.


        • There’s a point (I’m sure it happens with them) in which explicating and finding supporting links and referring to the text to correct misapprehensions and then trying to illustrate how they are inserting straw men in-between their facts in order to make their dubious points becomes exhausting. One must decide to throw up their hands and get on with their life, because this is not an area where their minds are open to anything but their a priori understanding of the issue.


  8. Like

  9. I really see zero value in engaging with progressives anymore

    Oh, c’mon. You just don’t want to have to buy (with NoVA, I should add) me dinner.

    Liked by 1 person

    • I don’t concede the argument. I actually think you are wrong historically and that the Constitution itself is silent on the issue, as opposed to what the social norm at the time was.

      And as I noted you make arguments in good faith. Cons just flat out lies. But to paraphrase Obi Wan Kenobi, “Who is the more foolish, the fool, or the fool who debates him on PL?”

      I have no excuse for not recognizing PL for what it is and therefore no reason to expect good faith arguments to be made there.


      • I still think I got you. I wasn’t really paying attention to what Cons or the others said–I’m not a lawyer, so the subtleties of “he” escape me.

        To quote Han Solo (as NoVA did earlier): I know.



    • While I don’t conceded the point at all, I’d be glad to buy you dinner! … Somewhere inexpensive, mind you. 😉


      • What point is no one conceding? I seem to have missed a comment.


        • I don’t know either but I’ll be damned if I give one inch on it.

          Liked by 2 people

        • lol


        • Q: Does the constitution as written preclude women from voting. Ie — was the 19th amendment necessary. and is “he” gender neutral.


        • nova:

          Does the constitution as written preclude women from voting.

          No, it does not.

          was the 19th amendment necessary.

          It was necessary only to compel states to allow women to vote. States were always capable of choosing to allow women to vote.

          is “he” gender neutral.

          I am less certain of that, but probably yes.


        • There’s a more specific reason it was necessary: Minor v. Happersett:

          The court decided women had no guarantee of a right to vote, thus necessitating an amendment to spell it out (the way provided for to adjust the constitution where it seems too ambiguous for the SCOTUS or lower courts).

          A subsequent challenge to the 19th amendment failed in the SCOTUS, because the language of the amendment was clear.


        • KW:

          There’s a more specific reason it was necessary…The court decided women had no guarantee of a right to vote

          That is not a more specific reason, that is the exact same reason. The only reason it was needed was to compel states to allow women to vote.


        • I think it’s a number of things:

          A: Were the words “he” and “him” and “his” considered gender neutrals in the 18th century? I don’t think that’s even debatable. They were.

          A2: Is the usage of “he” and “him” and “his” the same as the constitution explicitly barring women from voting or holding public office? Again, I do not think this is debatable. The constitution lacks explicit language doing so, although it would have been easy to include. Coincidence? I think not, but that’s a longer discussion.

          B: Is being an “originalist” and a “textualist” the same thing? I say no. Originalists attempt to insert things into the constitution based on speculation as to the state of mind of the founding fathers, which is little different from the discovery of emanations and penumbras that just happened to include justification for whatever law the SCOTUS wants to create from the bench. But that is debatable, I suppose.

          C: Are the conclusions of early courts regarding things such as Jim Crow laws, racial discrimination, and women’s suffrage a direct consequence of the textual language of the constitution, thus requiring the text of the constitution largely be ignored by the SCOTUS in favor of an enlightened understanding of justice by the modern court? I say no, again, this is not necessary and the lack of a vote for African-Americans and women is not a result, remotely, of the textual language of the constitution (and, if it were, easily remedied by the amendment process, in place since the ratification of the constitution).

          D: “Textualist” or “originalist” are both code-words for hating women and being racist, and it is obtuse or intentionally deceptive for those who consider themselves to be textualists to deny this obvious truth that makes the “living, breathing document that is simultaneously irrelevant to our modern era, being the product exclusively of white, male slaveowners” the only correct way to view the constitution.

          E: A general impression on the left that terms like “white male landowners” and “women shall not vote” and “women are property” are in the constitution, or might as well be, because white men in periwigs wrote it. There is a general conflation of the mores and traditions and culture affectations of the time with what the constitution actually, explicitly says in the text.

          A few other things. Generally, I saw a lot of talking past each other. It’s one of those conversations that, to actually have it, each sides would have to carefully repeat back what they think the other side is saying and that takes a lot of time on the Internet, and it’s more satisfying just to repeat our own view on the subject, but maybe add some supporting links. 😉


        • KW:

          “Textualist” or “originalist” are both code-words for hating women and being racist…

          This is definitely true. In much the same way that “living constitutionalist” is code for hating the constitution and being an ignoramus.


        • A little bit on the gender neutral “he”:

          he use of he as pronoun for nouns embracing both genders is a simple, practical convention rooted in the beginning of the English language. He has lost all suggestion of maleness in these circumstances. The word was unquestionably biased to begin with (the dominant male), but after hundreds of years it has become seemingly indispensable. It has no pejorative connotation; it is never incorrect.

          Girl detective goes on to dispute this being “never incorrect”, with the complaints about the gender neutral “he” that have been common since the late 20th century. Only necessary because “he” was, in the past, consider a gender neutral word in a language that doesn’t have gender specific verbs, adjectives, and adverbs (or decline them).


          More information than you require:

          Using either of the masculine or feminine alone invites trouble. Though gender-neutral he has been considered traditionally correct, dating to Anne Fisher’s 1745 A New Grammar, it really is not a viable option. She detested the use of a plural as a singular, but she also detested attempts to force English to be like Latin. Thus, she chose he to serve as her neutral pronoun, becoming the first grammarian to suggest such a thing.

          Pertaining to our interests, there is a lot more overlap happening here. Throughout Middle English the masculine and neuter shared a common genitive case, and the outgoing dative neuter was identical to the masculine object him.

          Particularly revenant to our founding fathers, steeped in Latin and Classical Greek as they were:

          And we got on well with singular they in everyday use – John of Hildesheim is our first reliably attested use of it in 1400*, and it’s never been out of use since. Some grammarians, like Anne Fisher, saw singular/plural as a strict dichotomy, probably not being aware of the vestigial dual which existed in Old English. Others, seeking to mold English to follow Latin grammar (Latin was, for a time, considered the only language with true grammar) seized on Latin rules and the rules of Latin-based languages to declare he able to function both as masculine and neuter.

          I win!


        • KW’s summation is pretty much spot on.

          NoVA, I thought you went further and argued that the 19th Amendment was unnecessary to compel the states due to the passage of the 14th and that states that precluded women from voting were already violating the Constitution at that point?


        • I did argue that JNC. at least i tried. i admittedly was writing faster than i was thinking and I couldn’t edit my errors. and then they asserted i was making a living constitution argument, which threw me.


  10. The breathtaking numb-nuttery boggles the rational mind.


  11. OT: I appear on a recent Podcast where goobers talk about The Force Awakens, for anyone interested in hearing me pronounce my irrelevant opinions on the Star Wars universe:

    First couple of sentences, I wanted to evoke a 2000 comment review I did of the two Species movies in very, very old comment sections that ended with AICN cutting off old comments sections from getting new comments, and completely blanked on the name of the movie. So, an inauspicious start, but I thought it turned out pretty well for a D-level podcast. 😉


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