Systemic Risk: In one of his serio-comic sequences, Charlie Chaplin’s little tramp starts pulling a thread from his crumpled suit. Before long, his whole miserable costume dissolves. Is there that kind of loose thread here?
Increasing numbers of economists, market participants and some members of the US policy establishment have come to a greater appreciation of the role of globalization on US economic performance. They view globalization and the US policy response to it as the cause of the US asset price bubbles and hence the balance sheet nature of this “recession”. This perspective also implies that counter-cyclical fiscal and monetary policies do not address the cause of the under-performance of the US economy and hence are not solutions.
Below is a translation of a letter from Professor Schwarz-Schilling to Richard Herzinger of Die Welt c/o my friend Achim Duebel in Berlin. He writes: "Mr. Mladic perhaps is right to be angry, sitting so lonely in the dock in The Hague. A Europe unable to learn from its past sits in the shadow behind him."
In his June 29th press conference, the President again singled out rebates to push U.S. fossil fuel production in his demand for tax increases for an economy already threatened by double-dip recession. The proposal compounds regulatory mischief: blocking oil and gas in the Gulf of Mexico while Chinese and other foreign companies drill off Cuba almost within sight of Florida beaches, forfeiting 250,000 jobs.
The Fed is not backing off of its desire to stimulate the economy, all it is doing is backing off of its policy of steadily adding to that stimulus. The air is not, on net, leaking from the tire, it is still in the balloon. That stimulus is still working and the key question is how effective it has been and will be.
For investors and risk managers, the legal and sovereign risk illustrated by the Tropp v. the Corporation of Lloyd's litigation boggles the mind. If the Tropp petition is denied by the US Supreme Court, can any US individual, fund or fiduciary invest in Lloyd's with confidence?
But by launching his campaign with outrageous demagoguery, Pres. Barack Obama “made it clear” he will avoid fundamentals. He counts on emotional appeals to self interest – private and corporate welfare recipients, elderly who make old age a profession out of human tragedy, all interests vying for favor at the public trough.
Q: Is it fair to say that financial regulators are both a source and perpetuator of financial instability? Yes. Financial regulators have a unique position. They are the only financial market participant who can see the current asset and liability level data at any financial institution.
Given the presidency’s dual role as chief of state as well as chief executor, celebration of a multitude of ceremonies is necessary and fitting – all the more in times of peril when the nation’s spirit needs uplift. But Mr. Obama’s sports addiction, his gliterrati extravaganzas, his causal acknowledgement of our closest allies’ tragedies, and his wife’s Marie-Antoinette progressions are increasingly bizarre. Importing a Chicago Daley mob family member, supposedly as a pragmatic chief of staff, so far has not injected restraint much less austerity.
We put out a research note earlier this week downgrading Wells Fargo & Co ("WFC"/Q3 2010 Bank Stress Rating: "B"). Of course the media focused on the departure of Howard Atkins, the former CFO who retired suddenly and without notice, but ignored the disclosure and governance issues.
When scientists get further along with epigenetics, they may discover the Chinese have two unique DNA: a gambling gene, and another for hospitality. The first, of course, explains why Macau is odds-on favorite for replacing Vegas as No. 1 world gambling champion. The second suggests why few escape the lure of a Chinese campaign to win visitors’ hearts and minds.
"By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union." -- Andrew Jackson, Veto Message to Congress regarding the Second Bank of the United States, 1832
The fact that the unveiling of Facebook was done with so much noise and fanfare by GS, a firm that never does anything rash you understand, suggests that there was a need to divert attention from the issue of valuation.