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Frontrunning: December 3
- The Wall Street Journal: The country needs a new Fed Chief (WSJ)
- Steve Rattner reminds people he still exists: Bernanke deserves our thanks (WaPo)
- Roubini on lessons from Dubai: Don't assume government backing for state owned businesses (Forbes)
- Must read: Fudging losses is easy when the FDIC does it, too "The surest way for the FDIC to
regain its credibility is by replenishing its fund’s balance
sheet with fresh capital raised from the banking industry, and
by demonstrating that its financial reports can be trusted
again. Until then, its reputation as a captive regulator
incapable of managing its own finances will remain intact." (Bloomberg) - Goldman takes offense on pay (WSJ)
- Goldman's 2011 forecast would be an absolute disaster for Democrats (Reuters)
- Pensions eliminating stocks add $40 billion to corporate bonds (Bloomberg)
- Comcast is the new CNBC owner. Look for Steve Liesman to extol the virtues of government bailouts of cheesesteak makers (Bloomberg)
- Obama seeks new ideas on US jobs as sense of urgency is growing (BBC)
- Pimco says bet on Yuan after Dubai reminds of risks (Bloomberg)
- NY Fed's Brian Sack on the Fed's Expanded Balance Sheet (FRBNY)
- Russia banks ignore government calls to raise lending (Bloomberg)
- Senate Banking Committee views on Bernanke insider update (Cunning Realist)
- Toll Brothers reports more bad results, focuses on hope (AP)
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Love the Troll Bros. story. Does hope come in a 3 bedroom 2 bath colonial? If all publicly traded home builders went out of business we'd be better off.
Is Briefing.com a friend of ZH, I saw some same store sales info from them that was very interesting but it was 2nd hand and we all know 2nd hand anything is bad for your health.
Ferguson joins Tobin, Friedman, calls for full reserve banking. He forgot to mention that a central bank's functions would be greatly diminished under that model.
How to take moral hazard out of banking -FT
Limited purpose banking (LPB) is the only credible cure. It transforms all financial companies with limited liability, including insurance corporations, into pass-through mutual fund companies. Limited purpose banks would process securities and sell them to mutual funds. They would not be permitted to borrow to invest. Hence, they would never face a run and never fail. Risk-taking would be done by us, the people, via our purchase of more or less risky mutual funds.
http://www.ft.com/cms/s/0/34cd41e4-df77-11de-98ca-00144feab49a.html
"Toll Brothers reports more bad results, focuses on hope"
OMG - Belly laugh of the day. Gotta find a towel to clean the coffee off my laptop screen.
"The Wall Street Journal: The country needs a new Fed Chief"
A prime example of the deliberately manipulated illusion that there's a watchful and engaged independent press that's on your side. The WSJ is calling for a change of puppets while the puppet masters remain safely hidden in the back ground.
Regardless of whether Baby Ben is making decisions on a daily basis, the real question is this. Are the decisions meaningful, or are they just somewhat more complex that the simple left/right choices given to rats in a maze?
The question is not are we (or in this case Baby Ben) in control but do we think we are in control. To quote Einstein "Reality is merely an illusion, albeit a very persistent one."
I will bastardize it by saying control is an illusion, albeit it a very persistent one. As much as we, and Baby Ben, think BB is in control, I believe he is just a puppet.
"It seems clear that Rubin started a chain reaction on August 8, 2007— only one day after the Fed’s disappointing, hold-the line policy decision that so disappointed financial markets and intensified the credit turmoil. Essentially, the academic Bernanke became a hands-on market participant through his contacts with Rubin, Paulson, the hedgies, and others. He reached out to savvy financial-market players who put him in touch with the real world."
http://stockwidget.seekingalpha.com/article/49126-the-rubin-bernanke-pho...
meet the new boss, same as the old boss...sound familiar?
Sure does.
We must shake the naive notion that our political leaders are trying to "fix" our problems. I understand the problems are complex but if nothing else, the average American citizen rates a distant tenth on the "save" list, if at all. The only thing they are "fixing" is their silent benefactors and controllers.
i actually think that they think they are saviors & protectors.
this is how they justify the 'skim' in their minds.
they are victims of cultural cognitive dissonance as much as anyone else -- the belief that human society is best managed hierarchally and bureaucratically and that those at the top are ordained to be at the top to make the difficult decisions that those below could never make in their own 'best' interest.
mauvaise foi ---> bad faith
however, what is being challenged now is their #1 tool for remaining at the top...secret, privileged information, e.g. the known unknowns and the unknown knowns -- the things that we know that we don't know and the things that we don't know we know.
if those unknown knowns & known unknowns were known knowns, would people even need someone to lead them at all?
this is why bills like audit the fed will be defended to the death by the all-seeing eyes.
everything else is like taking a trip to the backlot of universal studios.
This is way past bizarro market...
-BAC to raise loads of capital, up 6% more
-MTG woefully short on minimum capital required, gets waiver and stock is up double-digits http://www.marketwatch.com/story/mgic-gets-capital-waiver-shares-rise-2009-12-03?siteid=yhoof2
-Store sales stink (on the easiest comps ever), and retail REITs continue higher into the stratosphere
-NYMEX opens, gold proceeds to sink $13 in short order (ok, that's not surprising)
-USD spikes up, market decides to ignore the negative sign on correlation and spikes up too.
Addendum:
-Market extends gains on good ISM "horrible number"
Actually it's not a "market" at all. It's a large picture being painted by a few in power to try and get the public back into the market and back into foolish spending habits.
I watch in amasement everyday as "news" and "data" are disseminated around the world to try and get the next market that opens to go higher. Look at Japan last night: way up on Fed Speak? Please. The US consumer has said FU to buying and yet it's spun to the next guy that all is well and getting better.
Look at BAC and then Timmay G on CNBC the next morning? Coincidence? No way.
The list goes on and on and will continue to go on and on until a critical mass is reached whereby enough odd lot players return so the large players can lead them around by the nose while picking their pockets. Until then, good news is phenomenal, no news is great and bad news is good and a chance for a breather.
Japan was way up only on a plunging Yen. Then the in-the-bag idiot financial media reports "Markets look to open positive as they follow big market gains overseas."
I cannot invest in anything besides long-term gold or ag plays anymore. Everything else is rigged or a house of cards.
Very good piece by Weil on the FDIC, whose loss estimates for this financial crisis are a fantasy. In May of this year they were saying $65 billion. In October despite all those Green Shoots and the fantastic economy they increased the loss estimate to $100 billion. As Weil points out their estimates lag far behind the increasing number of problem banks. Chris Whalen has estimated the total cost at $300-$400 billion. If that's the case, the 3 years of upfront premiums from banks totaling $45 billion will be gone in a year or less and the FDIC will have to go to Treasury. However much the FDIC piles up in costs over the next few years would theoretically have to be paid back by member banks, which I'd guess could eat into their earnings for a long time.
The Rattner propaganda piece almost caused me to lose my breakfast. Thanks.
FDIC knows it will eventually have to go to Treasury sooner than later. The only game they are committed to playing now is delaying the announcements on insolvency and fudging loss estimates.
Team Obama has everyone on notice that Job #1 is Health Care Reform. Any high profile borrowings ( including that nagging issue of the debt ceiling ) are strictly back burner issues. Unfortunately for TO, the HCR plan has become constipated with a patchwork of contrasting amendments that threaten to delay passage into early Spring at best.
There is a mad Dem dash to approve HCR before the FDIC borrowing, debt ceiling and Stimulus II come crashing into the party.
HCR is on shaky ground. All bad money news must be averted at any cost or that baby goes down in flames.
So Ben deserves our thanks?
Dear Uncle Ben,
Thank you for the bailouts and free money. To bad about the death of the dollar
Loves and Kisses
Random Banker