Proposals to regulate privately negotiated derivatives may reduce “sorely needed liquidity” in the high-yield, high-risk loan market, according to the Loan Syndications and Trade Association.
Maybe, we don't need so much liquidity in the high-yield, high-risk loan market. Maybe, we don't need Total Return Swap dealers making a killing on spreads and threatening systemic risk. Maybe it's time to have a real discussion about the economic and societal benefits from some of these derivatives.
I cannot believe that IL district re-elected her. She is such a corporate troll. So of course she's front and center of a bought and paid for by the financial lobby.
They tried like hell to get a real representative into the Democratic slot as well as ind. and it's the same shit everywhere in Congressional races...the corporate puppet wins.
HuffPo has some details on the outrageous sell out of Congress.
Firstly is this VoxEU post on global industrial output. They are saying it's tracking the Great Depression.
and there is also a big brew ha ha on "income elasticity" as in foreigners getting our jobs is what I think they really mean and that's the "magic cause" on global trade collapse.
So, the claim is that when foreigners don't get our jobs through offshore outsourcing, the global trade equation collapses.
Now over at Econbrowser, he's doing the math and finding no such correlation.
What I find interesting is that since the U.S. is the biggest importer nation, maybe it's because Americans are tapped out....and that is where the correlation arises. I could not find a breakdown by nation-state in these posts...
so ya know, "global income" means ??? in terms of trade imbalances. Obviously this is a to be understood.
Rising unemployment will present a major challenge in many advanced economies. Chapter 4 suggests that unemployment rates tend to rise significantly and for many years after financial shocks, and this time will be no exception. Limiting the extent of job destruction will require slower wage growth or even wage cuts for many workers. The impact of the necessary adjustments on poorer segments of labor forces could be cushioned with earned income tax credits or similar programs that limit the social repercussions of wage adjustment. Subsidizing part-time work to facilitate a broad distribution of reductions in labor input and allow a more gradual reduction in wages may also be appropriate, provided there are reassurances that such programs are cut back as good times return.
Are you reading this? Basically they are saying it is policy to destroy the U.S. middle class in order to wealth transfer our income and jobs to emerging economies.
Seriously. Read it and tell me you don't get the same message.
and will continue as long as Larry Summers and Timothy Geithner are part of it. Having said that, I just listened to the President speak on the Consumer Financial Protection Agency. He did call out the U.S. Chamber of Commerce for its role in trying to kill the CFPA legislation and he called out the financial conglomerates as well.
He did mention the "plain language" provisions that Barney Frank has dropped from the legislation. Was that a message to Barney Frank? We will see if he backs up this strong rhetoric with actions.
Even Blinder appears to be kowtowing the "party line" and backtracking on offshore outsourcing as "protectionism".
For the first time, I heard Roubini mention trade policy, offshore outsourcing as some of the causes of long term unemployment in the U.S.
It's pretty ridiculous. They claim it's all "protectionism" and I am like, right, I'm sorry but to rebuild the U.S. economy is protectionist. hmmm, ok.
But yeah, it seems in terms of committee chairs...lobbyists target them most of all, for they are the "gate keepers" and bury good legislation on a daily basis.
So, at this point it looks like Frank sold out. I don't know how else to call it.
Yup, that is surely one galactic-sized loophole in Frank's derivatives legislation.
No surprise that Securities Industry and Financial Markets Association loves it; Blythe Masters is the chair of that and she was the creator of the credit default swap at JPMorgan.
Heard the intrepid Elizabeth Warren the other night on NPR (only reason I would listen to them, they are as bad as Fox, only a bit more subtle) along with that douche, Robert Reich. While I realize Reich is a fundamentally nice guy, he was wrong about everything last night with but one exception: his correct mention of that colossal loophole in Franks' legistlative proposal.
I truly admire Prof. Warren for going on the same show as Reich -- even I wouldn't lower myself to dialog with that clown. He still is clueless and still believes in the "uncorrelated assets" fantasy, as well as unemployment being disconnected - and uncorrelated - to the other economic deficits. (Madam Warren is such a breath of fresh air: highly intelligent and knowledgeable as well as honest and brimming over with integrity -- the smallest minority in America today!)
Only the absolute regulation, or better yet, demise, of unchecked securitization and credit derivatives, private equity leveraged buyouts, offshoring of jobs and importation of scab workers, and the reinstatement of Regulation Q or those anti-usury laws, will change anything --- and they must be done simultaneously, yet we all realize that will never happen!
enact legislation to stop jobs from going overseas.
This ain't rocket science and they need to call cash on this absurd "protectionism" rant ....as if every other nation on earth isn't providing some protections for their labor.
Not declare "hey that Ponzi scheme employs a lot of New Yorkers".
well, firstly it's not really affecting the trade deficit from this data.
Secondly, it will mean Americans are now so broke there is no reason to import because they can no longer afford those cheap crappy goods from overseas.
(how many plastic bins do you need?)
It would be much better if China was forced to stop manipulating their own currency. That was proved to be the primary cause of the 83% of the total U.S. non-oil trade deficit.
GLBA repealed Glass-Stegall. To say "repeal GLB" is almost it, but Glass-Stegall separated commerce from banking. i.e. it put together categories of banks, investment banks, commercial banks and they could not be the same entities. Then it created the FDIC to protect deposits in commercial banks.
So, I do not think Glass-Steagall will help banks at all, which is why you see people like Simon Johnson, William Black and most of the economic bloggers saying Glass-Steagall needs to be reinstated, it's one and the same...but not quite, while you can repeal GLBA, that doesn't mean one reinstated Glass-Steagall, i.e. put up a "wall" where investment and commercial banking are completely separated.
Also, reforms real people are saying are not just reinstate Glass-Steagall. They are also basically saying to repeal the Commodities Futures Modernization act. Even Geithner's proposal does repeal quite a bit of CFMA.
but there is the derivatives market (especially CDS) that played a big role in the crisis.
There were 2 big DE-regulatory laws signed by Pres. Clinton (and strongly advocated by Larry Summers)
1) Financial Services Modernization Act of 1999 (AKA Gramm Leach Bliley Act); and
2) Commodity Futures Modernization Act of 2000
Besides Clinton, Phil Gramm crafted both of these wonderful pieces of legislation. The same Phil Gramm is vice-chair of tax evasion machine - UBS and who was #2 in Time Magazines 25 People to Blame for the Financial Crisis
In a likely more transparency and clearing would narrow bid/ask spreads. This would have a dramatic impact on the profits of JP Morgan, Goldman Sachs and other swap dealers because they make their money off the spread which are probably pretty sizeable in the opaque world of OTC swap markets.
As President Barack Obama vowed in a Sept. 14 speech in New York’s Federal Hall to correct “reckless behavior and unchecked excess” on Wall Street, Mike McMahon and Barney Frank sat in the audience discussing how to ease proposed rules for the $592 trillion over-the-counter derivatives market.
Side by side at 26 Wall St., across from the New York Stock Exchange, freshman congressman McMahon told House Financial Services Committee Chairman Frank he was worried that Obama’s derivatives plan, released in August, would penalize a wide swath of U.S. corporations and could push jobs in his home district overseas, McMahon said in an interview.
According to the article, Congressman McMahon represents a large number of Wall Street workers.
Let's be clear this is a battle between higher upsides versus protection against systemic risk.
Don't be fooled by the "sky is falling" from non-financial companies.
Didn't the entire credit default swaps start as "risk management"? Sounds like that is a loophole one can drive a truck through.
I did a first pass in thomas.gov looking for any actual bill language. It would be useful to examine that and I didn't see anything by Frank w.r.t. derivatives.
This from the Loan Syndications and Trade Association.
Maybe, we don't need so much liquidity in the high-yield, high-risk loan market. Maybe, we don't need Total Return Swap dealers making a killing on spreads and threatening systemic risk. Maybe it's time to have a real discussion about the economic and societal benefits from some of these derivatives.
RebelCapitalist.com - Financial Information for the Rest of Us.
I cannot believe that IL district re-elected her. She is such a corporate troll. So of course she's front and center of a bought and paid for by the financial lobby.
They tried like hell to get a real representative into the Democratic slot as well as ind. and it's the same shit everywhere in Congressional races...the corporate puppet wins.
HuffPo has some details on the outrageous sell out of Congress.
Firstly is this VoxEU post on global industrial output. They are saying it's tracking the Great Depression.
and there is also a big brew ha ha on "income elasticity" as in foreigners getting our jobs is what I think they really mean and that's the "magic cause" on global trade collapse.
So, the claim is that when foreigners don't get our jobs through offshore outsourcing, the global trade equation collapses.
Now over at Econbrowser, he's doing the math and finding no such correlation.
What I find interesting is that since the U.S. is the biggest importer nation, maybe it's because Americans are tapped out....and that is where the correlation arises. I could not find a breakdown by nation-state in these posts...
so ya know, "global income" means ??? in terms of trade imbalances. Obviously this is a to be understood.
I want to point out something in this IMF document Global Prospects and Policies
Are you reading this? Basically they are saying it is policy to destroy the U.S. middle class in order to wealth transfer our income and jobs to emerging economies.
Seriously. Read it and tell me you don't get the same message.
and will continue as long as Larry Summers and Timothy Geithner are part of it. Having said that, I just listened to the President speak on the Consumer Financial Protection Agency. He did call out the U.S. Chamber of Commerce for its role in trying to kill the CFPA legislation and he called out the financial conglomerates as well.
He did mention the "plain language" provisions that Barney Frank has dropped from the legislation. Was that a message to Barney Frank? We will see if he backs up this strong rhetoric with actions.
RebelCapitalist.com - Financial Information for the Rest of Us.
Gary Gensler, of all people, said that this loophole was huge. The President is speaking right now about financial regulatory reform.
At some point the Administration has to start knocking heads or at least decide if they are with us or against us.
As for "protectionism" - I am sick of this meme that somehow using exactly trade laws and enforcing them is "protectionism".
RebelCapitalist.com - Financial Information for the Rest of Us.
Even Blinder appears to be kowtowing the "party line" and backtracking on offshore outsourcing as "protectionism".
For the first time, I heard Roubini mention trade policy, offshore outsourcing as some of the causes of long term unemployment in the U.S.
It's pretty ridiculous. They claim it's all "protectionism" and I am like, right, I'm sorry but to rebuild the U.S. economy is protectionist. hmmm, ok.
But yeah, it seems in terms of committee chairs...lobbyists target them most of all, for they are the "gate keepers" and bury good legislation on a daily basis.
So, at this point it looks like Frank sold out. I don't know how else to call it.
Yup, that is surely one galactic-sized loophole in Frank's derivatives legislation.
No surprise that Securities Industry and Financial Markets Association loves it; Blythe Masters is the chair of that and she was the creator of the credit default swap at JPMorgan.
Heard the intrepid Elizabeth Warren the other night on NPR (only reason I would listen to them, they are as bad as Fox, only a bit more subtle) along with that douche, Robert Reich. While I realize Reich is a fundamentally nice guy, he was wrong about everything last night with but one exception: his correct mention of that colossal loophole in Franks' legistlative proposal.
I truly admire Prof. Warren for going on the same show as Reich -- even I wouldn't lower myself to dialog with that clown. He still is clueless and still believes in the "uncorrelated assets" fantasy, as well as unemployment being disconnected - and uncorrelated - to the other economic deficits. (Madam Warren is such a breath of fresh air: highly intelligent and knowledgeable as well as honest and brimming over with integrity -- the smallest minority in America today!)
Only the absolute regulation, or better yet, demise, of unchecked securitization and credit derivatives, private equity leveraged buyouts, offshoring of jobs and importation of scab workers, and the reinstatement of Regulation Q or those anti-usury laws, will change anything --- and they must be done simultaneously, yet we all realize that will never happen!
but I don't think just a repeal reinstates the separation of investment from commercial banking.
Steagall will address the TBTF problem. But you are right and I agree there are 2 major issues: TBTF and derivatives market.
Both Clinton era laws need to be repealed.
RebelCapitalist.com - Financial Information for the Rest of Us.
enact legislation to stop jobs from going overseas.
This ain't rocket science and they need to call cash on this absurd "protectionism" rant ....as if every other nation on earth isn't providing some protections for their labor.
Not declare "hey that Ponzi scheme employs a lot of New Yorkers".
well, firstly it's not really affecting the trade deficit from this data.
Secondly, it will mean Americans are now so broke there is no reason to import because they can no longer afford those cheap crappy goods from overseas.
(how many plastic bins do you need?)
It would be much better if China was forced to stop manipulating their own currency. That was proved to be the primary cause of the 83% of the total U.S. non-oil trade deficit.
GLBA repealed Glass-Stegall. To say "repeal GLB" is almost it, but Glass-Stegall separated commerce from banking. i.e. it put together categories of banks, investment banks, commercial banks and they could not be the same entities. Then it created the FDIC to protect deposits in commercial banks.
So, I do not think Glass-Steagall will help banks at all, which is why you see people like Simon Johnson, William Black and most of the economic bloggers saying Glass-Steagall needs to be reinstated, it's one and the same...but not quite, while you can repeal GLBA, that doesn't mean one reinstated Glass-Steagall, i.e. put up a "wall" where investment and commercial banking are completely separated.
Also, reforms real people are saying are not just reinstate Glass-Steagall. They are also basically saying to repeal the Commodities Futures Modernization act. Even Geithner's proposal does repeal quite a bit of CFMA.
Just saying.
RebelCapitalist.com - Financial Information for the Rest of Us.
but there is the derivatives market (especially CDS) that played a big role in the crisis.
There were 2 big DE-regulatory laws signed by Pres. Clinton (and strongly advocated by Larry Summers)
1) Financial Services Modernization Act of 1999 (AKA Gramm Leach Bliley Act); and
2) Commodity Futures Modernization Act of 2000
Besides Clinton, Phil Gramm crafted both of these wonderful pieces of legislation. The same Phil Gramm is vice-chair of tax evasion machine - UBS and who was #2 in Time Magazines 25 People to Blame for the Financial Crisis
RebelCapitalist.com - Financial Information for the Rest of Us.
everyone on this site has said reinstate Glass-Steagall.
Attention Congressman Grayson:
Here are two proposals regarding derivatives:
1) Ban trading of Credit Default Swaps and Collateralized Debt Obligations.
or
2) Repeal the Commodity Futures Modernization Act as Barry Ritholtz proposes.
RebelCapitalist.com - Financial Information for the Rest of Us.
In a likely more transparency and clearing would narrow bid/ask spreads. This would have a dramatic impact on the profits of JP Morgan, Goldman Sachs and other swap dealers because they make their money off the spread which are probably pretty sizeable in the opaque world of OTC swap markets.
RebelCapitalist.com - Financial Information for the Rest of Us.
More from Bloomberg:
Derivatives Lobby Links With New Democrats to Blunt Obama Plan
According to the article, Congressman McMahon represents a large number of Wall Street workers.
Let's be clear this is a battle between higher upsides versus protection against systemic risk.
Don't be fooled by the "sky is falling" from non-financial companies.
RebelCapitalist.com - Financial Information for the Rest of Us.
as in "F" grade. I'm sorry but it's like they aren't fixing a damn thing here.
Didn't the entire credit default swaps start as "risk management"? Sounds like that is a loophole one can drive a truck through.
I did a first pass in thomas.gov looking for any actual bill language. It would be useful to examine that and I didn't see anything by Frank w.r.t. derivatives.
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