The Basel Committee on Banking Supervision is an exclusive and somewhat mysterious entity that issues banking guidelines for the world’s largest financial institutions. The Committee’s latest ‘framework’, is referred to as “Basel III”. The regulators have stubbornly held to the view that AAA-government securities constitute the bulk of those high quality assets, even as the rest of the financial world increasingly realizes they are anything but that. As banks move forward in their Basel III compliance efforts, they will be forced to buy ever-increasing amounts of AAA-rated government bonds to meet liquidity and capital ratios. Add to this the additional demand for bonds from governments themselves through various Quantitative Easing programs, and we may soon have a situation where government bond yields are so low that they simply make no sense to hold at all. This is where gold comes into play. If the Basel Committee decides to grant gold a favourable liquidity profile under its proposed Basel III framework, it will open the door for gold to compete with cash and government bonds on bank balance sheets – and provide banks with an asset that actually has the chance to appreciate. The world’s non-Western central banks have already embraced this concept with their foreign exchange reserves, which are vulnerable to erosion from ‘Central Planning’ printing programs. After all – if the banks are ultimately interested in restoring stability and confidence, they could do worse than holding an asset that has gone up by an average of 17% per year for the last 12 years and represented ‘sound money’ throughout history.
- OECD slashes 2013 growth forecast (FT)
- Fiscal Cliff Compromise Elusive as Congress Returns (Bloomberg)
- China’s PBOC Chief Search Spurs Focus on Finance Regulators (Bloomberg)
- Elected, but Still Campaigning (WSJ)
- Pentagon Readies Options for Afghanistan Force After 2014 (Bloomberg)
- Greece Wins Easier Debt Terms as EU Hails Rescue Formula (Bloomberg)
- Monti presses Cameron for EU referendum (FT)
- Welcome, Mr Carney – Britain needs you (FT)
- Argentina seeks halt to $1.3bn debt order (FT)
- Asean chief warns on South China Sea disputes (FT)
- South Korea Tightens FX Rules to Temper Won Surge (WSJ)
It is truly amazing to what lengths the mainstream media will go to avoid talking about what really got Goldman's former head of the Canadian Central Bank the role of Goldman's current head of the Bank of England. But it could be worse: a word search for Goldman in the BBC's just released profile of Mark Carney shows one instance of said word, and as a parenthetical at that. Hey, it could have been zero...
You've probably noticed the cookie-cutter format of most financial media "news": a few key "buzz words" (fiscal cliff, Bush tax cuts, etc.) are inserted into conventional contexts, and this is passed off as either "reporting" or "commentary" depending on the number of pundits sourced. Correspondent Frank M. kindly passed along a template that is "officially deny its existence" secret within the mainstream media. With this template, you could launch your own financial media channel, ready to compete with the big boys. Heck, you could hire some cheap overseas labor to make a few Skype calls to "the usual suspects," for-hire academics, hedge fund gurus, etc. and actually attribute the fluff to a real person.
Farce #1: “Market value” and “free markets” have become a joke.
Farce #2: Private, self-assigned, fake value is being traded for public money at 100 cents on the dollar.
Farce #3: Printed money is backed by nothing.
Farce #4: We have a “free” enterprise system dominated by monopolies that force people to buy inferior goods and services at exorbitant rates.
Farce #5: High-level financial crimes, no matter how egregious or widespread, are not being prosecuted.
Farce #6: Risk is gone. Now there is only liability borne by citizens.
Farce #7: Productivity has been supplanted by parasitism.
After an almost uninterrupted period of decline over the last few years, US home prices now have some positive momentum. For one, the S&P/Case-Shiller index of property values in 20 cities has seen its highest increase in more than two years. In addition, JP Morgan CEO Jamie Dimon recently stated that his bank was seeing a surge in mortgage applications. And perhaps most importantly, the National Association of Realtors has reported that the nation’s inventory of homes on the market has dropped to its lowest level since March 2006, while the median home price is 11.3% higher than a year ago. These are definitely good signs for housing. But remember, nothing goes up or down in a straight line. Just like a stock market that suffers a serious crash, housing has been due for an upward correction. But it is a false premise to conflate ‘rebound’ with full blown ‘recovery’. The market could just as easily improve, then decline once again in a few months’ time. Positive data is great, but doesn’t necessarily portend long-term growth.
So now that Vikram Pandit has exited stage right from the CEO position at Citigroup, a number of people have asked me about the Zombie Dance Queen.
Before the campaign contributors lavished billions of dollars on their favorite candidate; and long after they toast their winner or drink to forget their loser, Wall Street was already primed to continue its reign over the economy. For, after three debates (well, four), when it comes to banking, finance, and the ongoing subsidization of Wall Street, both presidential candidates and their parties’ attitudes toward the banking sector is similar – i.e. it must be preserved – as is – at all costs, rhetoric to the contrary, aside. Obama hasn’t brought ‘sweeping reform’ upon the Establishment Banks, nor does Romney need to exude deregulatory babble, because nothing structurally substantive has been done to harness the biggest banks of the financial sector, enabled, as they are, by entities from the SEC to the Fed to the Treasury Department to the White House.
Dimon: "So, we were asked to buy Bear Stearns. Some said the Fed did us a favor...No, no, we did them a favor. Let's get this one exactly right. We were asked to do it."
Reports that the housing sector is recovering has generated more than a little irrational exuberance among investors regarding financials.
We must respond to every miserable attempt to rewrite history, particularly by this sorry piece of reckless TBTF CEO malfeasance and Wall Street parasitism.
The State of New York should be seeking the removal of Bank of New York (BK) as custodian with respect to all RMBS trusts operated pursuant to NY law and immediately file a claim on behalf of all investors against BK for negligence.
- Global easing deluge resumes: Bank of Korea Slashes Policy Rate (WSJ)
- And Brazil: Brazil cuts Selic rate to new record low of 7.25 pct (Reuters)
- With Tapes, Authorities Build Criminal Cases Over JPMorgan Loss (NYT) Just don't hold your breath
- IMF snub reveals China’s political priorities (FT)
- Add a dash of trade wars: Revised Duties Imposed by U.S. on Chinese Solar Equipment (Bloomberg)
- IMF calls for action as euro zone crisis festers (Reuters)
- Dubai Losing Billions as Insecure Expats Send Money Abroad (BBG)
- Softbank in Advanced Talks to Acquire Sprint Nextel (WSJ)
- Lagarde calls for brake on austerity (FT)
- EU lambasts Turkey over freedoms (FT)
- Race Tightens in Two States (WSJ)
So, Jamie, you still think that Bear Stearns is not material to JPM investors?
Nothing has changed, it has only gotten worse...