Volcker has been the only adult advising this administration. He doing what a good adviser should do - tell like it is not tell what the President wants to hear. Everything he said this past week is true, particularly:
1) Best financial innovation is the ATM
2) Serious structural defects in our economy.
That quote Motley Fool referred to (IMO) Volcker was referring to leverage or being over-leveraged. I got a sense of frustration listening to him.
My target is $1034 and then I think it's going to take off. I didn't read all of Dr. Doom, but my impression was he doesn't believe inflation is an issue or the dollar to suddenly tank either, as well as debt. I see it differently. I see other nations attempting to decouple somewhat from the U.S. economy, reserve currency of the dollar. Maybe I'm wrong, hence I'm playing it fairly conservatively.
On contagion, it's quite a nasty study since seemingly no one knows but if you digest Hudson and some others, I hope you write it up.
Ukraine has made an urgent appeal to the International Monetary Fund for about $2bn in emergency loans to ease "an extremely difficult situation" in meeting its external financial obligations and to avoid the danger of a "spill-over effect" on other economically vulnerable states, write Stefan Wagstyl and Roman Olearchyk in Kiev.
"The next three months are crucial," Hryhoriy Nemyria, Ukraine's deputy prime minister, told the Financial Times a day after returning from a mission to IMF headquarters in Washington. "Wait and see is not an option. The cost of inaction is greater than the cost of action and may aggravate the situation in the wider region."
Ukraine turned to the IMF back in 2008, and recieved $11 billion of a $16 billion loan. However, the IMF suspended the rest of the loan because the Ukraine hasn't implemented its austerity programs yet.
What we are seeing is a slow-motion crisis that is gradually approaching the center. I believe it is because the dominant neoliberal economic school of thought in the world is f*cked up.
I'm trying to wrap my mind around it, but I'm not educated enough yet. I've been reading a lot of Michael Hudson recently.
As for gold, its correcting just like I expected. My target price is around $1040, although it might go a little lower.
Stores closing, banks only lending at usurious rates, more foreclosures -- the Fed needs to do something to force banks to disgorge the largesse Helicopter Ben has given (so generously!) What we need is a national cooperative with Fed access to do small business lending.
Just the other night, we were at an Italian restaurant we have patronized for years. They have always done great veal, but they were "out of veal" The new owner was talking to someone at the next table. Let it slip that he was carrying a 30K Visa bill. Not a good sign.
If he had asked me, I would tell him the same thing I told a relative who asked me for a loan so he could pay his Visa bill -- "They can't put you in jail for owing a bank money." I only hope the restaurant owner stays afloat so we can keep eating there. Another restaurant in our community I went by -- only 3 tabl;es occupied out of 15.
There's no doubt this bill took the wind out of my sails and I've asked myself the same thing, since we know the Senate will assuredly gut worse and then there are the conferees.
That said, one of the points of EP is to get ourselves and hopefully others to try to look at what's going on and put more public awareness on how little reforms we're getting.
But yeah, I gotta say, the corporate takeover of America is pretty brazen, so one has to wonder.
What point is there in expending the energy to follow the minutiae of these proceedings when anyone past age 12 knows that anything these weasels pass will be only the worst sort of window dressing. When those assumed to be championing the peoples interests are headed by scum like Frank, probably the most loathsome maggot "public service" has produced in 50 years, you know its a good time to be an investment banker. Like the Paul/Grayson effort to audit the Fed, this bill is likely to be savaged thoroughly by the time it reaches the desk of escalation-is-withdrawal enthusiast, Barak Ohmama. Settle back, kick off your shoes, this one was over before it started. You'll know your day will have arrived when every street and mall in Washington DC is filled with angry faces and the economy has been utterly paralysed by strikes. And with ever uptick in the unemployment numbers that day draws closer.
For this is the theory on sovereign default, first Greece, then Ukraine ( as I recall) plus Dubai is sitting around with a host of unknowns, trying to bury what's going on there to not cause global panic and then.....the domino theory is next, the U.K....at which point we assuredly would have global contagion.
Also, Gold is crashing and burning. Now you know I'm agnostic on the gold bug situation. That said, Roubini just called gold bugs financial spam and said it's just a big hype bubble because underlying conditions to justify gold inflation do not exist.
My thing on Gold is more "can I make a couple of bucks off of this" instead of believing financial Armageddon is around the corner.
But obviously the probability of global contagion changes that entire view! What is the probability here, really, let's get real on it, of a sovereign default domino happening causing global contagion?
What the future holds for the Euro and the European Union could be decided in the coming months.
(Bloomberg) -- Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since the aftermath of World War II.
“It’s five minutes to midnight for Greece,” Buiter, who will join Citigroup Inc. as its chief economist next month, said in a Bloomberg Television interview today. “We could see our first EU 15 sovereign default since Germany had it in 1948.”
The EU’s economic affairs commissioner said late yesterday that officials are ready to help Greece with its budget deficit after concerns about its public finances sparked a rout in Greek government bonds. Fitch Ratings cut its rating on the nation’s debt yesterday to BBB+ and two other major ratings companies are threatening to follow.
“Default is not unavoidable,” Buiter said. “But unless there are radical fiscal actions, lasting cuts in spending and tax increases of at least 7 percent of GDP, the writing is on the wall” for Greece.
I read that too and it does seem they are exempting them from much of this which to me also is a huge legal loophole for "community banks" to be turned into derivatives trades and take on much more risk.
After reading through HR 4173, and the amendments, several times, then sleeping on it and rereading it, I'm going to make the following seemingly farfetched suggestion -- and you may rightfully claim it is nebulous.
After reading Mr. White's intelligent and thoughtful points on those four loopholes (over at seekingalpha) and in conjunction with those four loopholes I believe the fifth loophole is a bit more subtle and more nonobvious or nontrivial: the overall design of this legislation encourages or generates more derivatives market exposure to the S&Ls.
Historically, the S&Ls have had either limited, or the least amount of exposure to the derivatives market. Given the political process trending towards evermore securitization, resecuritization and the creation of further securitized financial products and artificial markets based upon them (e.g., cap-and-trade and those carbon derivatives [Blythe Masters strikes again!], the "public option" and the establishment of insurance exchange(s), concurrent with the explosion in the number of healthcare hedge funds and the push towards mortality derivatives and mortality-linked securities), I would predict this to be yet another effort to further these goals.
Subtle and seemingly nebulous, but I stand by this prediction.
which is why you are seeing hardly anyone, anywhere going through the actual text.
The Frank manager's amendment is loaded with this types of modifications to the original bill language, so there is the one to look at. I fear we have a host of changes and this "permanent bail out" via access to the Fed. window I'm very unsure of. Fine if they want to create a fund only used for dissolution of a firm (well sort of, they should just break them up right now) but if they did create a permanent U.S. taxpayer bail out, I'm not sure. I mean access to U.S. treasury funds of $150 billion is bad enough and that appears to be in there, but do they also have access to Federal Reserve funds? Did Frank give even more power to the Federal Reserve at the last minute, in spite of the committee as well as the House rejecting such an idea of Fed as super regulator?
Of course the real "legislative rat maze" comes in conference, which is beyond the pale. They usually select 6 people, 3 from the House, 3 from the Senate and literally provisions which overwhelmingly passed both houses have been completely changed in conference....
so we've got a long way to go, but from the Senate's track record, odds are it's just going to get much worse.
seriously. Ok, first note that U.S.C. is a different form of the Act, so of course the clause #s are different! (fun, fun!) The U.S.C. version of the Commodity Exchange Act is hosted on the Cornell Web Site (fun, fun, let's make major legislation public only through private law schools!)
So, the repeal states that no trade board is exempt anymore.
Now on U.S.C. 7, which is here, it looks like this bill redefined which board of trades can deal with derivatives, i.e. contracts so they simply "struck" through this repeal the old legislative text they are replacing.
But this is how it works, one has to sit down with the amendment and go through all of those "strike 2.a.II, part b and put "or;" and then substitute all of that crap into whatever they are amending, which often is located in some law school database, plus you need to make sure you are referencing the right form, so you are looking at the correct bill clause indices, then rewrite the sentence with the new modifications....and then figure out how it now works from the new legislative language.
And folks wonder how corporations are writing the legislation.
That's because no volunteer army can parse these bills fast enough due to this crap the corporate lobbyists pay big bucks for their attorneys to do.
By the time we've traversed the legislative rat maze....they already passed the damn crap into law.
Although this has to wind through the Senate, but I fear an even larger legislative rat maze from the initial Dodd proposal which is massive and then of course in the fine print has exemption after exemption after exemption.
and why I put up Kaptur's floor speech. We have legislation and policy being crafted....by lobbyists and if there is any prayer's chance the people might get an amendment in there, they send their puppets to kill bills.
I mean literally we have corporations writing legislation and in the case of the financial institutions, many paid for their "campaign contributions" and lobbyists with TARP funds, i.e. taxpayer money.
I couldn't monitor the floor proceeding so the votes on all of the amendments isn't in the clerk's roll.
Also, Frank last night put a host of amendments together and they passed with voice vote. What's in them is anybody's guess.
My impression is, because this bill is so complex, there is almost no one reading the legislative text to figure out what's really going on.
I do think that Seeking Alpha post is correct and that's just a crime! It was derivatives which caused systemic risk in the first place.
I thought I read some of this in the manager's amendment (1) and the bill itself, in addition to amendment #19, which failed and was explicit.
This is going to have to be one of those ongoing posts because the bill is so complex and they change things...
but it almost doesn't matter because it must go to the Senate and then to conference.
Kind of like health care, you believe you got your public options, but oops, it's gone.
Volcker has been the only adult advising this administration. He doing what a good adviser should do - tell like it is not tell what the President wants to hear. Everything he said this past week is true, particularly:
1) Best financial innovation is the ATM
2) Serious structural defects in our economy.
That quote Motley Fool referred to (IMO) Volcker was referring to leverage or being over-leveraged. I got a sense of frustration listening to him.
RebelCapitalist.com - Financial Information for the Rest of Us.
My target is $1034 and then I think it's going to take off. I didn't read all of Dr. Doom, but my impression was he doesn't believe inflation is an issue or the dollar to suddenly tank either, as well as debt. I see it differently. I see other nations attempting to decouple somewhat from the U.S. economy, reserve currency of the dollar. Maybe I'm wrong, hence I'm playing it fairly conservatively.
On contagion, it's quite a nasty study since seemingly no one knows but if you digest Hudson and some others, I hope you write it up.
This just came in today.
Ukraine turned to the IMF back in 2008, and recieved $11 billion of a $16 billion loan. However, the IMF suspended the rest of the loan because the Ukraine hasn't implemented its austerity programs yet.
What we are seeing is a slow-motion crisis that is gradually approaching the center. I believe it is because the dominant neoliberal economic school of thought in the world is f*cked up.
I'm trying to wrap my mind around it, but I'm not educated enough yet. I've been reading a lot of Michael Hudson recently.
As for gold, its correcting just like I expected. My target price is around $1040, although it might go a little lower.
This would be a very good research topic. Precisely how many small businesses are using credit cards as their loan source?
I've heard this story over and over and then even worse, using personal credit cards.
On the fairly weak/useless reforms, small business credit cards are exempt. So, is small business being charged 17%, 22%, 30%?
If so, this would explain a lot.
Which is another thing, we need some statistics on precisely how many small businesses have failed this year.
I know where I am, they dropped like flies, lots of "for lease, for rent" signs up in restaurants, store fronts...
but that's not the stats.
Beyond a few inferences on a few shows, I cannot recall any article or blog post anywhere on this either, so exposing it would be a good activity.
Stores closing, banks only lending at usurious rates, more foreclosures -- the Fed needs to do something to force banks to disgorge the largesse Helicopter Ben has given (so generously!) What we need is a national cooperative with Fed access to do small business lending.
Just the other night, we were at an Italian restaurant we have patronized for years. They have always done great veal, but they were "out of veal" The new owner was talking to someone at the next table. Let it slip that he was carrying a 30K Visa bill. Not a good sign.
If he had asked me, I would tell him the same thing I told a relative who asked me for a loan so he could pay his Visa bill -- "They can't put you in jail for owing a bank money." I only hope the restaurant owner stays afloat so we can keep eating there. Another restaurant in our community I went by -- only 3 tabl;es occupied out of 15.
Frank T.
There's no doubt this bill took the wind out of my sails and I've asked myself the same thing, since we know the Senate will assuredly gut worse and then there are the conferees.
That said, one of the points of EP is to get ourselves and hopefully others to try to look at what's going on and put more public awareness on how little reforms we're getting.
But yeah, I gotta say, the corporate takeover of America is pretty brazen, so one has to wonder.
What point is there in expending the energy to follow the minutiae of these proceedings when anyone past age 12 knows that anything these weasels pass will be only the worst sort of window dressing. When those assumed to be championing the peoples interests are headed by scum like Frank, probably the most loathsome maggot "public service" has produced in 50 years, you know its a good time to be an investment banker. Like the Paul/Grayson effort to audit the Fed, this bill is likely to be savaged thoroughly by the time it reaches the desk of escalation-is-withdrawal enthusiast, Barak Ohmama. Settle back, kick off your shoes, this one was over before it started. You'll know your day will have arrived when every street and mall in Washington DC is filled with angry faces and the economy has been utterly paralysed by strikes. And with ever uptick in the unemployment numbers that day draws closer.
For this is the theory on sovereign default, first Greece, then Ukraine ( as I recall) plus Dubai is sitting around with a host of unknowns, trying to bury what's going on there to not cause global panic and then.....the domino theory is next, the U.K....at which point we assuredly would have global contagion.
Also, Gold is crashing and burning. Now you know I'm agnostic on the gold bug situation. That said, Roubini just called gold bugs financial spam and said it's just a big hype bubble because underlying conditions to justify gold inflation do not exist.
My thing on Gold is more "can I make a couple of bucks off of this" instead of believing financial Armageddon is around the corner.
But obviously the probability of global contagion changes that entire view! What is the probability here, really, let's get real on it, of a sovereign default domino happening causing global contagion?
What the future holds for the Euro and the European Union could be decided in the coming months.
I read that too and it does seem they are exempting them from much of this which to me also is a huge legal loophole for "community banks" to be turned into derivatives trades and take on much more risk.
And that's why those tax attorneys make such big bucks and put Machiavelli to shame....
Excellent points, Mr. Oak!
After reading through HR 4173, and the amendments, several times, then sleeping on it and rereading it, I'm going to make the following seemingly farfetched suggestion -- and you may rightfully claim it is nebulous.
After reading Mr. White's intelligent and thoughtful points on those four loopholes (over at seekingalpha) and in conjunction with those four loopholes I believe the fifth loophole is a bit more subtle and more nonobvious or nontrivial: the overall design of this legislation encourages or generates more derivatives market exposure to the S&Ls.
Historically, the S&Ls have had either limited, or the least amount of exposure to the derivatives market. Given the political process trending towards evermore securitization, resecuritization and the creation of further securitized financial products and artificial markets based upon them (e.g., cap-and-trade and those carbon derivatives [Blythe Masters strikes again!], the "public option" and the establishment of insurance exchange(s), concurrent with the explosion in the number of healthcare hedge funds and the push towards mortality derivatives and mortality-linked securities), I would predict this to be yet another effort to further these goals.
Subtle and seemingly nebulous, but I stand by this prediction.
following draft and amendment legislation takes a lot of practice.
RebelCapitalist.com - Financial Information for the Rest of Us.
which is why you are seeing hardly anyone, anywhere going through the actual text.
The Frank manager's amendment is loaded with this types of modifications to the original bill language, so there is the one to look at. I fear we have a host of changes and this "permanent bail out" via access to the Fed. window I'm very unsure of. Fine if they want to create a fund only used for dissolution of a firm (well sort of, they should just break them up right now) but if they did create a permanent U.S. taxpayer bail out, I'm not sure. I mean access to U.S. treasury funds of $150 billion is bad enough and that appears to be in there, but do they also have access to Federal Reserve funds? Did Frank give even more power to the Federal Reserve at the last minute, in spite of the committee as well as the House rejecting such an idea of Fed as super regulator?
Of course the real "legislative rat maze" comes in conference, which is beyond the pale. They usually select 6 people, 3 from the House, 3 from the Senate and literally provisions which overwhelmingly passed both houses have been completely changed in conference....
so we've got a long way to go, but from the Senate's track record, odds are it's just going to get much worse.
I was reading 7 U.S.C. 7a, sorry about that.
seriously. Ok, first note that U.S.C. is a different form of the Act, so of course the clause #s are different! (fun, fun!) The U.S.C. version of the Commodity Exchange Act is hosted on the Cornell Web Site (fun, fun, let's make major legislation public only through private law schools!)
and the section 7a-3 is here.
So, the repeal states that no trade board is exempt anymore.
Now on U.S.C. 7, which is here, it looks like this bill redefined which board of trades can deal with derivatives, i.e. contracts so they simply "struck" through this repeal the old legislative text they are replacing.
But this is how it works, one has to sit down with the amendment and go through all of those "strike 2.a.II, part b and put "or;" and then substitute all of that crap into whatever they are amending, which often is located in some law school database, plus you need to make sure you are referencing the right form, so you are looking at the correct bill clause indices, then rewrite the sentence with the new modifications....and then figure out how it now works from the new legislative language.
And folks wonder how corporations are writing the legislation.
That's because no volunteer army can parse these bills fast enough due to this crap the corporate lobbyists pay big bucks for their attorneys to do.
By the time we've traversed the legislative rat maze....they already passed the damn crap into law.
Although this has to wind through the Senate, but I fear an even larger legislative rat maze from the initial Dodd proposal which is massive and then of course in the fine print has exemption after exemption after exemption.
I don't know if this has been covered yet, but Sec. 3111, which covers Derivatives Transaction Execution Facilities...
I had thought that was the section which fundamentally outlawed speculation and manipulation by credit derivatives?????
and why I put up Kaptur's floor speech. We have legislation and policy being crafted....by lobbyists and if there is any prayer's chance the people might get an amendment in there, they send their puppets to kill bills.
I mean literally we have corporations writing legislation and in the case of the financial institutions, many paid for their "campaign contributions" and lobbyists with TARP funds, i.e. taxpayer money.
I couldn't monitor the floor proceeding so the votes on all of the amendments isn't in the clerk's roll.
Also, Frank last night put a host of amendments together and they passed with voice vote. What's in them is anybody's guess.
My impression is, because this bill is so complex, there is almost no one reading the legislative text to figure out what's really going on.
I do think that Seeking Alpha post is correct and that's just a crime! It was derivatives which caused systemic risk in the first place.
It more like crap in crap out.
RebelCapitalist.com - Financial Information for the Rest of Us.
I thought I read some of this in the manager's amendment (1) and the bill itself, in addition to amendment #19, which failed and was explicit.
This is going to have to be one of those ongoing posts because the bill is so complex and they change things...
but it almost doesn't matter because it must go to the Senate and then to conference.
Kind of like health care, you believe you got your public options, but oops, it's gone.
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