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Fed's John Williams: "The Global Financial System Is Experiencing Great Stress"

Tyler Durden's picture




 

Some words of caution from recent Fed addition John Williams of the San Fran Fed:

The global financial system is experiencing great stress as it adapts to the new, post-crisis rules of the game.  Those new rules are both explicit and implicit.  They call for more capital, reduced leverage, lower risk appetites, more thorough supervision, and stronger regulation, at both the systemic and individual institution levels.  In this environment, open dialog is all the more important as we collectively reach a common understanding of how the new rules should work in practice.

Of course when one hears John Williams, this is the only thing that should come to mind:

Full speech from John Williams

Risk Management and Macroprudential Supervisory Policies (link)

Welcome to the San Francisco Fed and our beautiful city by the Bay.  I want to extend a special greeting to those of you who have come all the way from Asia to join us.  I’m sorry that other commitments kept me from joining you yesterday.  I’m sure though that Mohamed El-Erian’s keynote address set a strong tone for this conference, which is convening at a time of heightened financial uncertainty around the world.

This is the San Francisco Fed’s fifth Asian Banking Conference & Symposium.  These events are designed to encourage conversation and dialog.  Our aim is to provide a forum for a wide range of opinions and to promote the cross-fertilization of ideas by taking advantage of the diversity represented here.  Conference participants include financial professionals, financial institution supervisors, consultants, and academics from the United States and Asia.  The varied views represented here are particularly helpful to those of us in the Federal Reserve System as we weigh supervisory and monetary policy decisions.  Taking part in the debates and discussion at these conferences sharpens our own sense of the issues and helps us make better policy decisions.

These events are also valuable because they provide opportunities for regulators and banking industry leaders to talk in a neutral setting outside the supervisory framework.  In that way, the conference can foster the kind of give-and-take on vital financial and policy issues that can’t be duplicated within the supervisory relationship itself.  The global financial system is experiencing great stress as it adapts to the new, post-crisis rules of the game.  Those new rules are both explicit and implicit.  They call for more capital, reduced leverage, lower risk appetites, more thorough supervision, and stronger regulation, at both the systemic and individual institution levels.  In this environment, open dialog is all the more important as we collectively reach a common understanding of how the new rules should work in practice.

This year’s symposium focuses on risk management in a financial and regulatory landscape transformed by crisis.  All of us have been busy digesting the lessons of the crisis of 2007–09.  The challenge we now face is to make sure the global financial system is strong enough to weather periods of extreme stress and volatility.  On both the public and private-sector side, we have much work to do to restore confidence in the financial system and reassure the public that financial crises can be contained.

Let me take a few minutes to outline some key supervisory policy challenges related to today’s more robust enhanced prudential supervision standards.  Yesterday you discussed the evolution of regulation in Asia.  Of course, Asia is one of the world’s most rapidly growing financial markets.  Like the United States, it needs regulatory policies that keep up with rapid changes in bank practices and financial markets.

Globally, one of the more contentious areas of regulation concerns new proposed capital requirements aimed at containing systemic financial risk.  The key rules in this area apply to systemically important financial institutions—SIFIs— whose failure could harm the broader economy.  For these institutions, we must set capital requirements high enough to ensure that failure is extremely unlikely while still allowing enough leverage for banks to provide reasonable returns to shareholders.  Another reason for this “SIFI surcharge” is to eliminate the advantage such institutions enjoy in their funding costs by being perceived as too big to fail.  The surcharge makes the playing field between SIFIs and smaller organizations more even.  And it provides disincentives for firms to become extremely large, increasing their systemic footprint.  Nonetheless, setting an appropriate surcharge is a tough balancing act and these standards are sure to provoke pointed discussion on the part of bankers and supervisors alike.

Let’s look at this issue more deeply.  How will SIFI managements adjust their business models in the face of higher capital requirements?  Either expectations will shift regarding appropriate levels of risk and reward, or business practices will change in ways that accommodate the additional capital charge.  For their part, supervisors will have to judge whether such changes are consistent with microprudential standards of safety and soundness for individual institutions and macroprudential standards for containing systemic risk.

Related to these matters is the question of the economic effects of heightened risk management standards and higher capital and liquidity requirements.  Although we have thousands of banking organizations in the United States, the U.S. banking sector is highly concentrated in a small group of large and complex financial institutions.  As a central banker, I am keenly interested in the potential economic impact of regulatory policy and supervisory actions.  Will lower risk tolerance and higher capital and liquidity requirements for SIFIs slow economic growth?  How do we balance any such lost growth against the economic damage of a financial crisis?  We know economic activity is hurt when credit is hard to get.  To what extent will the new rules of the game make credit less available, especially from SIFIs?  Will any possible declines in SIFI lending be offset by financing from other sources?  The Basel Committee on Banking Supervision has concluded that the expected long-term economic impact of stronger capital and liquidity requirements will be relatively small due to the lengthy phase-in period and the continuation of current return-on-equity expectations.1 Still, many variables could potentially alter this outcome, and further analysis is needed to sort out the economic crosscurrents stemming from the forthcoming stricter risk management standards.

Managing systemic financial risk is a challenge of the first order for regulators.  By their very nature, the decisions we make as macroprudential supervisors will be hard to get right.  I have a great deal of confidence in the experience, judgment, and talent of our supervisors.  Nonetheless, systemic supervision is a new endeavor that requires new ways of thinking, new forms of analysis, and new supervisory practices.  We will have to make judgments and take action to head off systemic events that are very difficult to see in advance.  Bank regulators and economists around the world are working hard on this problem and some promising analytical tools are being developed.  For example, regulators are looking at how to determine at what point excess credit flows and relaxed underwriting standards become dangerous.  Still, decisions resulting from this macroprudential supervisory framework will be based in part on preventing future events that are inherently uncertain.  These decisions will probably be met with criticism not only from the industry, but also from political, business, investor, and consumer quarters.  And this process will have effects that won’t be fenced off in a single country.  With today’s interconnected global markets, macroprudential supervisory action in the United States will have repercussions in financial markets around the world.

I’m convinced that timely communication about these policies and practices is critical if we are to get things right.  We must explain to the financial sector and the public in clear language when we believe an unsafe situation is developing and how it could potentially lead to a crisis.  This implies speaking plainly about the economic costs and benefits of macroprudential supervision.  We now know the extraordinary cost of allowing residential real estate underwriting standards to get too loose during the housing boom years.  But the steps taken to tighten lending standards also have a cost.  Some borrowers can’t qualify for loans, which is one of the factors reducing demand for housing and holding down house prices.  It’s important to talk about both sides of the coin—the threat represented by a buildup of systemic risk and the cost of policies and practices that contain that risk.  The challenge is to design a regime of macroprudential supervision that maintains financial stability and maximizes long-term economic growth.

The Federal Reserve is committed to working with other financial supervisory agencies in the new Financial Stability Oversight Council and with the financial industry to make the macroprudential regime successful.  Discussions and dialog at symposiums such as this are part of the process of building a new supervisory approach.  This is a new endeavor and we need you to be actively engaged in thinking, talking, and writing about the issues raised by our efforts to stabilize the financial system.  So, as you take part in the discussions here, know that you are contributing to the development of a better system of supervision.  I am sure that the expertise and talent in this room will contribute to that effort.  I hope you that you find your time here to be informative and stimulating, and I hope that it helps you advance risk management disciplines at your institutions.  Thank you very much.

 

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Fri, 09/09/2011 - 11:59 | 1651073 TruthInSunshine
TruthInSunshine's picture

San Francisco Fed's John Williams = Captain Obvious, and he's here to save the day, too.

This is why the braniacs at the Federal Reserve get paid the big bucks (and ultimately migrate to corner offices at Goldman & JPM's Headquarters when their 'public service' is done).

Fri, 09/09/2011 - 12:04 | 1651119 CrashisOptimistic
CrashisOptimistic's picture

Odds are pretty high he was paid a speaking fee for this drivel.

 

Fri, 09/09/2011 - 12:54 | 1651393 Herd Redirectio...
Herd Redirection Committee's picture

No doubt.  Gotta love this crap about 'SIFI' systematically important financial institutions, meaning 'the status quo', and 'don't try to change anything or we will be forced to deal with you most unpleasantly".

Come on, what we need is a Great Reset.  For all these banks and billionaires to be wiped out, and we start from scratch, using sound money.  Jubilee 2016, here we come!

BTW, check out the latest from the Capital Research Institute "BiMetallic Standard, FAQ":

http://www.capitalresearchinstitute.org

"Here at the CRI we have been calling for a return to ‘sound money’. What does that mean? What does it entail? What does CRI think this would accomplish, exactly?

First, it is crucial to understand, as more and more people are everyday, that our current money system is dishonest and crooked. We are talking about the fiat fractional reserve system, whereby new money comes into existence when banks extend credit (out of thin air). Fiat can only be exchanged for more fiat (unbacked).
The major differences, then, under a sound money system would be in terms of where NEW money comes from. Currently private banks get to decide when new money should be created, and hence, business conditions for THOSE private banks will determine the money environment FOR EVERYBODY. This is the current situation, where banks are so illiquid and insolvent that they plainly refuse to extend credit on reasonable terms. This results in a feedback loop such as the world experienced in 2008 (when credit dried up) as well as what we are experiencing currently.

Under a gold/silver BiMetallic Standard the price of gold and silver would both be fixed..."

Fri, 09/09/2011 - 13:27 | 1651531 AldousHuxley
AldousHuxley's picture

"Great Stress" = "No Money"

 

When cops go to the Fed to ask Bernanke the superman for more money: http://www.youtube.com/watch?v=JRzifyG7G9E&feature=related

Fri, 09/09/2011 - 17:10 | 1652520 Pituary Retard
Pituary Retard's picture

Read the headline too fast. Thought it was insight from John Williams of Shadow Stats.

 

Fri, 09/09/2011 - 17:11 | 1652522 Pituary Retard
Pituary Retard's picture

double post

 

Fri, 09/09/2011 - 12:07 | 1651127 trav7777
trav7777's picture

yeah, total "NO SHIT RLY?"

Fri, 09/09/2011 - 12:14 | 1651163 TruthInSunshine
TruthInSunshine's picture

 

 

 

***Breaking News Alert***

 

San Francisco Fed's John Williams urges parents not to let toddlers place plastic bags over their heads for extended periods of time.

 

***This Has Been A Breaking News Alert***

Fri, 09/09/2011 - 12:14 | 1651165 Oh regional Indian
Oh regional Indian's picture

Notice all the Fed poodles are making end of world speeches. poole yesterday, Williams today, Brrrrrrrnanke Panky just the udder day.

I think we can all count on a crash filled week coming up. And a rumor filled wek-end.  No weekend for Zh, gotta stay on the ball.

Memes for the Imemine crowd, the end is nigh. Don't cry, baby, the Beard will save us all.

V

YUCK, only in America?

Fri, 09/09/2011 - 12:24 | 1651236 PY-129-20
PY-129-20's picture

That Austrian lady killed the ending - ORF! But the Imperial March was a good selection, Tyler.

Fri, 09/09/2011 - 13:32 | 1651321 TruthInSunshine
TruthInSunshine's picture

In other news, The Bernank is blaming consumers for the shitty economy (from the truly WTF files):

WASHINGTON —Ben S. Bernanke, the Federal Reserve chairman, offered a new twist on a familiar subject Thursday, revisiting the question of why growth continues to fall short of hopes and expectations:

Fed Chief Describes Consumers as Too Bleak

 

You really can't make this shit up. It's just...not.....possible.

I wonder if The Bernank has a working theory of econometric model hazarding a guess as to why consumers are "bleak"? Maybe he could plug 18.7% U6 unemployment, depression level housing values and record number of underwater mortgages, trillions of taxpayer extracted monies literally given to Wall Street/Banks, 20% to 50% household wealth destruction, 11% rate of real inflation, surging tax/permit/license fees and rates that are growing like crazy, prolific government deficits and a growing national debt, crashing currencies, etc. etc. into a model and come up with a theory.

Fri, 09/09/2011 - 14:50 | 1651950 RSloane
RSloane's picture

I cannot understand how someone this moronic is the Fed chair. I just don't get it. Surely he has to leave his ivory tower once in awhile to buy some milk and butter thusly mingling with said bleak population. Did he ever ask once why they were so bleak?

Fri, 09/09/2011 - 13:09 | 1651457 Jeremy Roenick
Jeremy Roenick's picture

If by "great stress" he means with a loaded gun, chambered round pointed at one's head.... Then yes, great stress...

 

 

Fri, 09/09/2011 - 13:32 | 1651557 Idiocracy
Idiocracy's picture

Yes, don't you just love the term "public service" as self-applied by uber bureaucrats and politicians?  No doubt Attila the Hun congratulated himself for his widspread public service as he smoked his pipe in genteel retirement

Fri, 09/09/2011 - 12:02 | 1651074 GeneMarchbanks
GeneMarchbanks's picture

Great stuff. The other John Williams would be proud. This "Bizarro" John Williams is an academic ponce.

Shadowstats rules!

Fri, 09/09/2011 - 11:58 | 1651080 Irish66
Irish66's picture

the decisions we make as macroprudential supervisors will be hard to get right

Fri, 09/09/2011 - 11:58 | 1651083 caerus
caerus's picture

they should play that when the bernank appears before congress

Fri, 09/09/2011 - 11:59 | 1651087 doomandbloom
doomandbloom's picture

"This is the end...
Beautiful friend..
This is the end..
My only friend, the end
Of our elaborate plans, the end
Of everything that stands, the end
No safety or surprise, the end
I'll never look into your eyes...again..."

Fri, 09/09/2011 - 12:00 | 1651089 Clorox Cowboy
Clorox Cowboy's picture

 

"The global financial system is experiencing great stress as it adapts to the new, post-crisis rules of the game.  Those new rules are both explicit and implicit.  They call for more capital, reduced leverage, lower risk appetites, more thorough supervision, and stronger regulation, at both the systemic and individual institution level"

 

I'm sorry, but which game is he talking about...??  I'm not aware of anything financial with rules like that.

 

Fri, 09/09/2011 - 12:56 | 1651401 Poetic injustice
Poetic injustice's picture

He is talking about small and medium businesses. Regulating them 10x more will save economy and revive American miracle.

Fri, 09/09/2011 - 12:00 | 1651092 j0nx
j0nx's picture

Duh. Another ivy leaguer here to tell us what we have known for 4 years now. Where would we be without these geniuses..

Fri, 09/09/2011 - 12:01 | 1651095 Robslob
Robslob's picture

So have we gone from Hopium to Stressium?

Fri, 09/09/2011 - 12:01 | 1651098 dick cheneys ghost
dick cheneys ghost's picture

Regulations????????

 

dont tell that to the whores in washington..........

Fri, 09/09/2011 - 12:02 | 1651101 Cdad
Cdad's picture

News flash...BlowHorn [CNBC]...Why Are We Falling?....

"We were expecting clarity out of the Obama speech [lol], but things are now even more unclear."  Gordon Charlop  Who is anyone, including Gordo, kidding with this crap?  

MORE FUCKING PINK SLIPS IN THE BANKER ZONE!  NOW!  Not next quarter, not next year....NOW!  Capital will not form under the leadership of this sick assed group of group think, HFT scalping, lying, morally challenged people.  If Gordo actually believes what he just said, he should be offered early retirement.

The S&P is not even worth 900...not with this crew at the helm.  In fact its true value is absolutely zero until integrity is restored.  And that means these folks have to go.

 

Fri, 09/09/2011 - 12:59 | 1651427 Cdad
Cdad's picture

J. Najarian throws his cred on the same funeral pyre...talkiing about the same high expectations for the Obama speech, and then announcing he has no long positions...this after he just argued for a higher market and a lower VIX LAST NIGHT...and is now offering his S&P put spread...for sale.

All of them...need to go.  Zero cred actors, zero cred BlowHorn network, zero cred computer manipulated market.  There is nothing left here for capital to invest in.  Turn out the lights at the NYSE...you know, after asking Germany's permission.  

Fri, 09/09/2011 - 12:02 | 1651106 Sancho Ponzi
Sancho Ponzi's picture

The problem with the Central Bankers is that sooner or later you run out of other peoples' liquidity.

Fri, 09/09/2011 - 12:03 | 1651108 MsCreant
MsCreant's picture

The challenge is to design a regime of macroprudential supervision that maintains financial stability and maximizes long-term economic growth.

What would happen if we didn't do this? Hmmm?

What if we dumped the whole thing? Would we be any worse off than we are now?

 

Fri, 09/09/2011 - 12:04 | 1651118 Robslob
Robslob's picture


No "we" wouldn't but "they" would be...

Fri, 09/09/2011 - 12:11 | 1651149 MsCreant
MsCreant's picture

Robslob, "we" let "them" decide for us. It can be no other way.

We were born into it. I was told this is just the way it is. You probably were too. Each of us has decided to question how and why this is happening. But every time we participate in the system without the goal of dismantling it, we comply.

But your point is delicious and stands, "they" would not be okay.

Fri, 09/09/2011 - 12:21 | 1651212 slewie the pi-rat
slewie the pi-rat's picture

ya think we hava choice?  i sure hope so, msC/Z!  as one "insignificant" peon at a time gets tf outa "dodge" and stays out

otherwiZe, the Council on Foreign Relations will just keep "winning" by establishing so much chaos, confusion, poverty, illness, and death, that the hypnotiZed will demand rockefeller et. al,'s NWO to become the legal fascist owners of the whole damned plantation

Fri, 09/09/2011 - 13:39 | 1651584 MsCreant
MsCreant's picture

It sounds so paranoid, but what is an SDR? What are these regulations they speak of? Crash it hard and we beg them to rebuild it better, stronger, faster, more centralized. It will be a lean mean stealing machine, baby.

What needs to happen is for everything to become more localized. It will save resources and make all the decisions about the environment, regulations, etc., personal rather than one size fits all and/or depersonalized. Nature abhors centralized systems, they are too fragile. She likes redundancies and small, intricate, interconnected parts that flow together. Destroy one part and you do not take down the whole system in nature. Destroy one part and apparently you can take out most of the economy.

I am afraid we/they will have to make the mistake to learn the lesson.

Fri, 09/09/2011 - 15:35 | 1652157 Bicycle Repairman
Bicycle Repairman's picture

"What needs to happen is for everything to become more localized."

It will reduce the too powerful.  It will make the opaque more transparent.  It will increase accountability. 

Never mind the "ism", just decentralize.

Fri, 09/09/2011 - 12:04 | 1651116 TruthInSunshine
TruthInSunshine's picture

I'm waiting for The Bernank to step in and start buying NFLX, PCLN & LULU, because it's critically important for the health and welfare of the bulk of the American Population, whether employed or (increasingly likely) unemployed/underemployed, that The Bernank Virtuous Circle™ Econometric Model be given full support.

Fri, 09/09/2011 - 12:09 | 1651123 NuYawkFrankie
NuYawkFrankie's picture

Re: "The global financial system is experiencing great stress as it adapts to the new, post-crisis rules of the game...."

POST CRISIS?  Uuughhh?

Must be the FEDs way of saying that we have gone from the CRITICAL stage - to the TERMINAL stage.

Fri, 09/09/2011 - 12:07 | 1651128 Hephasteus
Hephasteus's picture

No. The rules of the game are not reduced risk.

IBM, Amazon, HP, AMD and everybody else are charging forward with cloud when people are telling them to go get stuffed.

Phones are tracking, spying when people are telling them go get stuffed.

Credit is shut off because nothing the centralized planners do not want is going to get any attention or resources.

This is end of empire risk levels with no path forward.

Fri, 09/09/2011 - 12:08 | 1651135 Bill Lumbergh
Bill Lumbergh's picture

Auf Wiedersehen!

Fri, 09/09/2011 - 13:38 | 1651587 Idiocracy
Idiocracy's picture

Bill, please don't show us your O face, nnnn'kay?

Fri, 09/09/2011 - 14:10 | 1651739 Bill Lumbergh
Bill Lumbergh's picture

You know I save that just for Joanna.

Fri, 09/09/2011 - 12:08 | 1651139 caerus
caerus's picture

jim rogers on cnbs

Fri, 09/09/2011 - 12:16 | 1651173 Irish66
Irish66's picture

He is right.  I wish they would let him keep talking

Fri, 09/09/2011 - 12:09 | 1651143 The Count
The Count's picture

 

 

ON another note.... look at this link.... http://consultingbyrpm.com/wp-content/uploads/2011/09/ron-paul-gets-it-a...

Don't you just LOVE how the mainstream media is using every dirty trick in the book to make sure Ron Paul gets no traction? Look at his bar compared to Romney.....

Fri, 09/09/2011 - 12:16 | 1651175 MsCreant
MsCreant's picture

I am not sold on Ron Paul but that is so blatant it is criminal enterprise. Ron Paul's people need to be suing someone. Holy hell, Count. They are not journalists, they are criminal clowns.

Fri, 09/09/2011 - 12:42 | 1651327 Abiotic Oil
Abiotic Oil's picture

When the same people that own the banks own the media and someone comes along who endangers their counterfeiting operation...

Operation Mockingbird Bitchez!

Fri, 09/09/2011 - 12:32 | 1651253 iDealMeat
iDealMeat's picture

+1

Who is Ron Paul?

http://paul.house.gov/

http://www.ronpaul2012.com/

http://en.wikipedia.org/wiki/Ron_Paul

 

@ MsCreant, I'm not necessarily sold on him either because of his pro-life views. But, MSM and the establishment can stand him..  So I'd vote for him.. If I even bother voting this time. 


Fri, 09/09/2011 - 12:10 | 1651146 PulauHantu29
PulauHantu29's picture

How long do you think it would take the median household to save $231,000?

 

http://www.doctorhousingbubble.com/foreign-buyer-argument-cerritos-calif...

Fri, 09/09/2011 - 12:27 | 1651254 Minimum Clearance
Minimum Clearance's picture

Forever and a day.

Fri, 09/09/2011 - 12:31 | 1651271 TruthInSunshine
Fri, 09/09/2011 - 12:52 | 1651382 PulauHantu29
PulauHantu29's picture

Amazing Stats. Why doesn't the Gubberment encourage people to save more instead of cheering thejm on to spend and take on more debt?

Fri, 09/09/2011 - 12:59 | 1651426 TruthInSunshine
TruthInSunshine's picture

Because the Ponzi that is any economy built upon the foundation of fractional reserve banking practices depends on debt issuance, at an exponentional (truly exponential, and not just figure of speech or rough use of language) increase, for its very survival.

When debt issuance, whether due to reluctance to loan fiat or reluctance to borrow fiat, stops growing at an exponential rate, the system has already begun its process of collapse.

Fri, 09/09/2011 - 12:15 | 1651148 Segestan
Segestan's picture

Step one..... Stop out sourcing American jobs, close the borders. All the rest of the  problems will subside in due time.

 

PS... throw the Fuckin UN out!!!

Fri, 09/09/2011 - 12:55 | 1651395 PulauHantu29
PulauHantu29's picture

You make the same point my brother makes: If you send the 14 million illegals back to their country of origin, we would automatically create 14 million jobs and place less of a social strain on the Nation.

Maybe so. Seems that Barry does not want to discuss this idea.

Fri, 09/09/2011 - 13:52 | 1651667 Segestan
Segestan's picture

Yes, and this is ---Why--- we have a leader named ... Barack Obama.

Fri, 09/09/2011 - 13:57 | 1651693 unununium
unununium's picture

There might be a little strain when my neighbor's new job is picking my weeds.

Fri, 09/09/2011 - 12:58 | 1651151 Nate H
Nate H's picture

to me Williams is saying something akin to:

'we are going to make new rules - no CDS, no HFT, no futures trading unless you are end user or producer, no currency trades unless you take delivery of the currency etc.' - some of those rules are coming, if not in US, in Europe, and soon...  (and speaking from systemic risk perspective, its probably a good thing...)

Fri, 09/09/2011 - 15:06 | 1652018 BungaBunga
BungaBunga's picture

So ya think the geek with the glasses after being beat up by a bully, is going to ask the bully to hand over the baseball bat?

 

This time it is different.

Fri, 09/09/2011 - 12:12 | 1651153 Downtoolong
Downtoolong's picture


"In this environment, open dialog is all the more important as we collectively reach a common understanding of how the new rules should work in practice."

I agree. Of course, it might have been better to do this before the Fed threw a couple of $trillion up against the Wall (Street) just to see what happens. Oh well, better late than never, especially when operating under a policy of QE Forever.

 

Fri, 09/09/2011 - 12:16 | 1651178 Zero Govt
Zero Govt's picture

In short, he's a windbag and thinks bluster, posture and another fat lunch will sort it  ...Good Luck with that mate, it hasn't worked since 2007 has it dipwit?

Fri, 09/09/2011 - 12:11 | 1651154 TruthInSunshine
TruthInSunshine's picture

Paul Krugman gets raging boner thinking about how much economic activity would be created by dropping nukes on U.S.:

Nuclear Bombs, War And The Logical Conclusion Of Keynesianism
Fri, 09/09/2011 - 12:14 | 1651160 Zero Govt
Zero Govt's picture


Fed's John Williams: "The Global Financial System Is Experiencing Great Stress"

Has this retard just awoken from deep freeze?

Fri, 09/09/2011 - 15:08 | 1652031 BungaBunga
BungaBunga's picture

No. "Great stress" is fed speak for FUBAR.

Fri, 09/09/2011 - 12:29 | 1651162 slewie the pi-rat
slewie the pi-rat's picture

fuking moron!

well, the moQ is still somewhere or other, and THE Council which has promised elections w/in 8 months is demanding his surrender as well as those who are still armed and ready, willing, and able to keep fighting 
L0L!!! 
US "intelligence" is now saying he is in some desert oasis, so i guess that place will get "surgically flattened" pretty soon if all the "bad guys" don't come out with their hands up
the press is now reporting a "total" of 6 who were "rendered" to libya on condiefuking rice's watch "under" g.w. "puppet" bush
L0L!!!
here's the recent bodycount: At least 30,000 Killed, 50,000 Wounded in Libyan Conflict
anyone interested in "doing the math" only needs to "estimate" how many were "combatants", subtract, and get the innocent civilians not protected by the ~10,000 NATO bombings
L0L!!!
and, as we remember the "reason" that the USA now has a policy of torture and denial of, NOT "human rights", but denial of LAW & JUSTICE to all, please consider what the best freaking presidential candidate of the century has to say about this 9.11 weekend~~~yeah, the guy who has been on the ballot in all 50 states for the last two elections, ralphie-boy nader:
The Empire is Eating Itself » Counterpunch: Tells the Facts, Names the Names
L0L!!!

p.s.:  risk off, BiCheZ!

p.p.s.:  i may post this shit 40 times, today, (this is, unhhh...#2.  h/t to mr dangerfield) just the try to keep up w/ tyler!  no mo coffee for tyler, dammit!  ever!

(edit) gotta go!  t.d. has got BAC up!

Fri, 09/09/2011 - 12:15 | 1651167 lieutenantjohnchard
lieutenantjohnchard's picture

you've really, really got to get up early to outsmart the fed's john williams. to say the financial system is experiencing great stress is a stroke of genius. probably took weeks, nay months, of careful analysis and thought to arrive at said conclusion.

rolls eyes. adds one more buff to shiny gold coin.

Fri, 09/09/2011 - 12:57 | 1651406 TruthInSunshine
TruthInSunshine's picture

Gotta' hand it to those policy wonk geniuses at the Fed - they are on top of things and in charge.

lmao

Fri, 09/09/2011 - 12:15 | 1651170 Steroid
Steroid's picture

Second stage: Negotiation!

Fri, 09/09/2011 - 12:15 | 1651172 Little John
Little John's picture

macroprudential - now that is a word.

Fri, 09/09/2011 - 12:23 | 1651224 somethingelse
somethingelse's picture

i thought it was a joint venture between McDonald's and Prudential

Fri, 09/09/2011 - 12:30 | 1651270 Little John
Little John's picture

A tip of the hat for that one, sir.

Fri, 09/09/2011 - 12:58 | 1651417 Piranhanoia
Piranhanoia's picture

They are all affiliates of the RAMJAC Corporation.

Fri, 09/09/2011 - 12:17 | 1651187 Rainman
Rainman's picture

Debt repudiation will cancel out all the back stage noise from the central planning crowd.

Like Mike Tyson says, ' everybody gots a plan until they get hit '.

Fri, 09/09/2011 - 13:11 | 1651469 Yen Cross
Yen Cross's picture

Rainman, you are on my page. Nice Quote!

Fri, 09/09/2011 - 12:23 | 1651229 Atomizer
Atomizer's picture

This is a new endeavor and we need you to be actively engaged in thinking, talking, and writing about the issues raised by our efforts to stabilize the financial system.

Sounds like this council is nothing more than a fucking coffee klatsch.

Fri, 09/09/2011 - 12:25 | 1651244 djsmps
djsmps's picture

Whenever I see Risk Management I think of George Costanza and Bania.

Fri, 09/09/2011 - 12:38 | 1651305 Jim in MN
Jim in MN's picture

We need the soundtrack for the part where they kill all the younglings.

Fri, 09/09/2011 - 12:45 | 1651341 JW n FL
JW n FL's picture

 

 

The Federal Reserve is committed to working with other financial supervisory agencies in the new Financial Stability Oversight Council and with the financial industry to make the macroprudential regime successful. Discussions and dialog at symposiums such as this are part of the process of building a new supervisory approach. This is a new endeavor and we need you to be actively engaged in thinking, talking, and writing about the issues raised by our efforts to stabilize the financial system. So, as you take part in the discussions here, know that you are contributing to the development of a better system of supervision. I am sure that the expertise and talent in this room will contribute to that effort. I hope you that you find your time here to be informative and stimulating, and I hope that it helps you advance risk management disciplines at your institutions. Thank you very much.

we all should be pushing for the truth to be at the forefront of our conversations.. as cable news will not be!

 

 

 

 

 

 

Fri, 09/09/2011 - 12:50 | 1651372 tony bonn
tony bonn's picture

it doesn't matter if there is great stress since all of the banks passed the rigorous stress tests...besides the indonesian citizen can pass tarp 2/3 to save any bank in the world.....any potential bank runs are easily solved by the concentration camps planted all over the country and overseas.....

Fri, 09/09/2011 - 12:57 | 1651413 Poetic injustice
Poetic injustice's picture

Eureka!

ernanke told Obama that one more Frank-Dodd regulation will fix everything.
Oh, and 5 more agencies to supervise it.

Fri, 09/09/2011 - 13:08 | 1651450 Yen Cross
Yen Cross's picture

Where in the heck do Ya make 5% these days?

Fri, 09/09/2011 - 13:13 | 1651483 OutLookingIn
OutLookingIn's picture

"Macroprudential risk management supervisory capability." Huh? "Will be very diffacult to accomplish."

Translation; Regulators failed and will fail again!

Just like Benny's and Obama's speechs last night, nothing but the same old, same old. Nothings changed.

Fri, 09/09/2011 - 13:14 | 1651487 jjsilver
jjsilver's picture

Arrest them!

Fri, 09/09/2011 - 13:14 | 1651490 Yen Cross
Yen Cross's picture

+ one ( Cdad and C.D. ) do their home work... i RESPECT THOSE GENTLEMEN!

Fri, 09/09/2011 - 13:29 | 1651533 JR
JR's picture

Real wealth is in the potential for growth.

The real wealth is more than the sum of current assets, it is the fruit which will be produced by free enterprise.

Potential for growth is very limited under Communism or central banking, which is based on Keynesian socialism.  If the world’s Keynesian central bankers remain in charge, they will reap reality’s backlash - the lack of wealth that would have been present under America’s former free enterprise system, but now is not.

It was America’s climate, her fertile ground for individual success, which built the beginnings of these multinational corporations.  Can you imagine Henry Ford starting up in America now and going for broke?  He only had a chance in our Founders’ America. (Read Ruth Wilder Lane’s illustration in The Discovery of Freedom of the waste of human energy in planned economies by the mere purchase of a spool of thread in a French department store in the 1940s.)

That potential for growth is the real wealth, and the Fed’s Keynesian system doesn’t have it. Socialism kills growth; Obama and Bernanke are killing growth, driving it to other countries, bad mouthing it, restricting it, holding it down… They want the “rich” ($150,000 or more for a single taxpayer and $250,000 or more for a couple) to pay more, but they don’t want them to earn any money.  Who will work when they end up with less and less, by working?

It reminds me of Minnie Pearl when she started up her chicken franchise chain around the country.  In the beginning, it was worth a lot of money because of its potential for growth.  But the franchises became losers when investors could see the limits on future growth. Minnie['s plight has gone nationwide.

Fri, 09/09/2011 - 13:28 | 1651534 37FullHedge
37FullHedge's picture

Karl Denniger isnt happy in his latest ticker, Its over!

I have taken advice Out of the market, Got my popcorn and watch. This is no joke and I agree with Karl this weekend cold be it for real.

Fri, 09/09/2011 - 13:54 | 1651681 Rick Blaine
Rick Blaine's picture

Great stress??  I'm glad you're here to tell us these things...

Chewy, take the professor in back and plug him into the hyperdrive!

Fri, 09/09/2011 - 13:56 | 1651690 JohnG
JohnG's picture

Ali-G again (I love that thing, just added about 250 word from oblamamama's speech last night, not approved yet)

 

Massiv up to da san francisco fed an' our dun turf by da bay. me iz gona dig to extend da special hear me now to those hof yous who as spitz all da way from asia to join us. i’m sowwy dat uva commitments kept me from joinin yous yesterday. i’m shizzle though dat mohamed el-erian’s keynote address set da strong tone fe dis conference, which iz convenin hat da bells hof heightened financial uncertainty around da world. this iz da san francisco fed’s fifth asian bankin conference & symposium. dees events iz designed to encourage conversashun an' dialog. our aim iz to provide da forum fe da wide range hof opinions an' to promote da cross-fertilizashun hof ideas by takin advantage hof da diversity represented in da house. conference participants include financial professionals, financial institushun supervisors, consultants, an' academics from da united states an' asia. da varied views represented in da house iz particularly helpful to those hof us in da federal reserve system as we weigh supervisory an' monetary policy decisions. takin part in da debates an' discussion hat dees conferences sharpens our own sense hof da issues an' helps us make betta policy decisions. these events iz also valuable coz dey provide opportunities fe regulators an' bankin industry leaders to natta in da neutral settin outside da supervisory framework. in dat way, da conference can fosta da kind hof give-and-take on vital financial an' policy issues dat can’t be duplicated wivvin da supervisory relationship itself. da global financial system iz experiencin yorkie aggro as hit adapts to da fresh, post-crisis rulz hof da game. those fresh rulz iz both explicit an' implicit. dey call fe more capital, reduced leverage, lowa risk appetites, more thorough supervision, an' stronga regulashun, hat both da systemic an' individual institushun levels. in dis environment, opun dialog iz all da more important as we collectively reach da common understandin hof how da fresh rulz should wurk in practice. this year’s symposium focuses on risk management in da financial an' regulatory landscape transformed by crisis. all hof us as bin busy digestin da lessons hof da crisis hof 2007–09. da challenge we now face iz to make shizzle da global financial system iz strong enuff to weatha periods hof extreme aggro an' volatility. on both da public an' private-sector side, we as much wurk to do to restore confidence in da financial system an' reassure da public dat financial crises can be contained. let me take da few minutes to outline some key supervisory policy challenges related to today’s more robust enhanced prudential supervision standards. yesterday yous discussed da evolushun hof regulashun in asia. hof course, asia iz one hof da world’s most rapidly growin financial markets. dig da united states, hit needs regulatory policies dat keep up wiv rapid changes in bank practices an' financial markets. globally, one hof da more contentious areas hof regulashun concerns fresh proposed capital requirements aimed hat containin systemic financial risk. da key rulz in dis manna apply to systemically important financial institutions—sifis— whose failure could harm da broada economy. fe dees institutions, we must set capital requirements maximum enuff to ensure dat failure iz emence unlikely while still allowin enuff leverage fe banks to provide reasonable returns to shareholders. anotha reason fe dis “sifi surcharge” iz to eliminate da advantage such institutions dig in dare fundin costs by bein perceived as too massiv to fail. da surcharge makes da playin field betweun sifis an' smalla organizations more evun. an' hit provides disincentives fe firms to become emence massiv, increasin dare systemic footprint. nonetheless, settin an appropriate surcharge iz da tough balancin act an' dees standards iz shizzle to provoke pointed discussion on da part hof bankers an' supervisors alike. let’s chek dis issue more deeply. how iz gonna sifi managements adjust dare bizzle models in da face hof higha capital requirements? eitha expectations iz gonna shift regardin appropriate levels hof risk an' reward, or bizzle practices iz gonna change in ways dat accommodate da additional capital charge. fe dare part, supervisors iz gonna af judge whetha such changes iz consistent wiv microprudential standards hof safety an' soundness fe individual institutions an' macroprudential standards fe containin systemic risk. related to dees matters iz da quesshun hof da economic effects hof heightened risk management standards an' higha capital an' liquidity requirements. although we as thousands hof bankin organizations in da united states, da yous.s. bankin sector iz highly concentrated in da small group hof massiv an' complex financial institutions. as da central banka, I iz keenly interested in da potential economic impact hof regulatory policy an' supervisory actions. iz gonna lowa risk tolerance an' higha capital an' liquidity requirements fe sifis slow economic growth? how do we balance any such lost growth against da economic damage hof da financial crisis? we nah economic activity iz hurt whun credit iz ard to get. to wot extent iz gonna da fresh rulz hof da game make credit less available, fe real from sifis? iz gonna any possible declines in sifi lendin be offset by financin from uva sources? da basel committee on bankin supervision has concluded dat da hexpected long-term economic impact hof stronga capital an' liquidity requirements iz gonna be relatively small due to da lengthy phase-in blob an' da continuashun hof current return-on-equity expectations.1 still, many variables could potentially alta dis outcome, an' furtha analysis iz needed to sort hout da economic crosscurrents stemmin from da forthcomin stricta risk management standards. managin systemic financial risk iz da challenge hof da first orda fe regulators. by dare well nature, da decisions we make as macroprudential supervisors iz gonna be ard to get east side. I as da yorkie deal hof confidence in da experience, judgment, an' talent hof our supervisors. nonetheless, systemic supervision iz da fresh endeavor dat requires fresh ways hof thinkin, fresh forms hof analysis, an' fresh supervisory practices. we iz gonna af make judgments an' take acshun to head off systemic events dat iz well difficult to chek in advance. bank regulators an' economists around da world iz workin' ard on dis beef an' some promisin analytical tools iz bein developed. fe example, regulators iz lookin hat how to determine hat wot point excess credit flows an' relaxed underwritin standards become dangerous. still, decisions resultin from dis macroprudential supervisory framework iz gonna be based in part on preventin future events dat iz inherently uncertain. dees decisions iz gonna probably be met wiv criticism not only from da industry, but also from political, bizzle, investor, an' consuma quarters. an' dis process iz gonna as effects dat won’t be fenced off in da single turf. wiv today’s interconnected global markets, macroprudential supervisory acshun in da united states iz gonna as repercussions in financial markets around da world. i’m convinced dat timely communicashun about dees policies an' practices iz critical if we iz to get tings east side. we must explain to da financial sector an' da public in clear lingo whun we reckon an unsafe deal iz developin an' how hit could potentially lead to da crisis. dis implies bangin plainly about da economic costs an' benefits hof macroprudential supervision. we now nah da extraordinary cost hof allowin residential real estate underwritin standards to get too loose durin da housin boom years. but da steps takun to tightun lendin standards also as da cost. some borrowers can’t qualify fe loans, which iz one hof da factors reducin demand fe housin an' holdin down yard prices. it’s important to natta about both sides hof da coin—the threat represented by da buildup hof systemic risk an' da cost hof policies an' practices dat contain dat risk. da challenge iz to design da regime hof macroprudential supervision dat maintains financial stability an' maximizes long-term economic growth. the federal reserve iz committed to workin' wiv uva financial supervisory agencies in da fresh financial stability oversight council an' wiv da financial industry to make da macroprudential regime successful. discussions an' dialog hat symposiums such as dis iz part hof da process hof buildin da fresh supervisory approach. dis iz da fresh endeavor an' we need yous to be actively engaged in thinkin, bangin, an' writin about da issues raised by our efforts to stabilize da financial system. so, as yous take part in da discussions in da house, nah dat yous iz contributin to da development hof da betta system hof supervision. I iz shizzle dat da expertise an' talent in dis room iz gonna contribute to dat effort. I hope yous dat yous chek ya bells in da house to be informative an' stimulatin, an' I hope dat hit helps yous advance risk management disciplines hat ya institutions. fank yous well much.

Fri, 09/09/2011 - 14:26 | 1651833 no2foreclosures
no2foreclosures's picture

Anyone did a double take on the name of this recent Fed addition from SF?  Are they playing with the name of John Williams of the Shadow Government Stats??

http://www.shadowstats.com/

Fri, 09/09/2011 - 14:53 | 1651967 JohnG
JohnG's picture

I thought he wrote the theme from Star Wars:

http://en.wikipedia.org/wiki/John_Williams

 

Fri, 09/09/2011 - 19:53 | 1652960 Tunga
Tunga's picture

Two words: FLOOR IDE! 

 

Get some.

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