Well, we do, but the protection we need is protection against losing our jobs rather than protection for credit card fees. Senator Chris Dodd, chairman of the Senate banking committee, recipient of sweetheart mortages, and a man who bears great responsibility for Great Depression 2.0, was on the radio this morning pushing a "consumer protection agency". He spoke as if this was the holy grail and we would all get to heaven as soon as it was passed.
I disagree. We truly need regulation of the banking practices that caused Great Depression 2.0 and threw enormous numbers of us out of work. These practices are the buying and selling of mortgages, creation and sale of "securities" backed by nothing, credit default swaps, and calling worthless paper "capital". Plus a horde of accounting industry scams. These practices brought down the economy. Not credit card fees and balloon note mortgages.
Dodd must be hoping we voters will forgive his many sins if he beats up on credit card and home mortgage issuers.
I want someone to beat up on the Wall St gamblers who wrecked the economy.
Tuesday, March 16, 2010
Monday, March 15, 2010
2300 page add on to 2700 page Obamacare
The Hill reports that the fixup bill for Obamacare has grown to 2300 and some pages. Add that to the 2700 page Senate bill and we have 5000 pages of obscure gobbledegook. Permanent employment for zillions of lawyers and bureaucrats who will be able to find paragraphs supporting any damn thing they please. Give me 5000 pages to search thru and I can find anything I need.
A five thousand page bill is so vague that administrators will have a completely free hand, and plenty of tax money to spend as they see fit.
A five thousand page bill is so vague that administrators will have a completely free hand, and plenty of tax money to spend as they see fit.
Sunday, March 14, 2010
Some Questions about Obamacare
1. How can we pay for health care by taxing health care? Surely the health care providers will raise their rates to pay the taxes?
2. What great sin are the insurance companies guilty of? There are all state regulated. The rate increases they are asking for have to be approved by state regulators. If the companies can convince the regulators that they need the money, then it's a good bet they really do need the money.
3. What's wrong with a race to the bottom? Obama's objection to interstate sale of insurance is that people will flock to cheaper insurance from states with fewer mandated coverages. What's wrong with that?
2. What great sin are the insurance companies guilty of? There are all state regulated. The rate increases they are asking for have to be approved by state regulators. If the companies can convince the regulators that they need the money, then it's a good bet they really do need the money.
3. What's wrong with a race to the bottom? Obama's objection to interstate sale of insurance is that people will flock to cheaper insurance from states with fewer mandated coverages. What's wrong with that?
Mud Season starts with confused weather
The sun is out, but it's raining medium hard. Keep it up and that will be the end of the snow. We still have snow on the ground, but the rain is eating into it. Round here, the season after ski season is known as mud season. Lasts about a month. The ground get so soft that heavy trucks are banned from most roads. The truckers call it road ban season.
Saturday, March 13, 2010
Repo man.
Wall St is supposed to be about financing economic growth. Lending money for construction projects, inventory purchase, plant and equipment. All of which are long term investments.
Why then the existence of the "repo" market. According to the Wall St Journal, a repo is a short term loan, from one bank to another. The borrower posts collateral, in the form of securities (stocks and bonds) in return for cash. The borrower promises to repay the loan in a few days, the lender returns the securities when the loan is paid off. The Journal's financial reporters describe the repo market as "the life blood of Wall St."
Oh really.
Why does anyone need money for only a few days? None of the investments in economic growth will pay off in a few days. Surely any deal could be postponed for a few days while the buyer raises the money? Or the seller could be willing to accept a short delay in payment? Certainly in the ordinary business world, we will do damn near anything to make a sale, we certainly would not be stuffy about a few days delay in payment. Hell, most deals are done with purchase orders, not cash, and you have 30 days to make good on a purchase order.
So why are short term loans "the life blood of Wall St"? What economically useful activity can be completed in a few days?
Other tidbits from the article. Apparently Lehman crashed after it ran out of securities to borrow upon. And, Lehman tried to use worthless securities to borrow against. J.P. Morgan demanded Lehman come up with better collateral or repay the loan. This happened just days before Lehman went under for good.
Lehman also did the old "treat a loan as a sale" trick to make their books look better at the end of each quarter. If you call a repo deal a sale, then the money is income and an asset. If you treat it as a loan , then the money is a liability which you owe. Your balance sheet looks better with assents than liabilities. Apparently no US law firm would OK this scam, and Lehman used a letter from a British law firm as justification.
So what was Lehman doing, banking or gambling? I say gambling. In which case flushing Lehman was a good idea.
Why then the existence of the "repo" market. According to the Wall St Journal, a repo is a short term loan, from one bank to another. The borrower posts collateral, in the form of securities (stocks and bonds) in return for cash. The borrower promises to repay the loan in a few days, the lender returns the securities when the loan is paid off. The Journal's financial reporters describe the repo market as "the life blood of Wall St."
Oh really.
Why does anyone need money for only a few days? None of the investments in economic growth will pay off in a few days. Surely any deal could be postponed for a few days while the buyer raises the money? Or the seller could be willing to accept a short delay in payment? Certainly in the ordinary business world, we will do damn near anything to make a sale, we certainly would not be stuffy about a few days delay in payment. Hell, most deals are done with purchase orders, not cash, and you have 30 days to make good on a purchase order.
So why are short term loans "the life blood of Wall St"? What economically useful activity can be completed in a few days?
Other tidbits from the article. Apparently Lehman crashed after it ran out of securities to borrow upon. And, Lehman tried to use worthless securities to borrow against. J.P. Morgan demanded Lehman come up with better collateral or repay the loan. This happened just days before Lehman went under for good.
Lehman also did the old "treat a loan as a sale" trick to make their books look better at the end of each quarter. If you call a repo deal a sale, then the money is income and an asset. If you treat it as a loan , then the money is a liability which you owe. Your balance sheet looks better with assents than liabilities. Apparently no US law firm would OK this scam, and Lehman used a letter from a British law firm as justification.
So what was Lehman doing, banking or gambling? I say gambling. In which case flushing Lehman was a good idea.
Great Depression 2.0 caused by glandular disorder
The PBS Newshour had a guy on last night pushing this idea. Reckless banking is caused by endocrines or dopamine or something medical sounding. Don't blame me, my glands made me do it. Great Depression 2.0, caused by foolish Wall Streeters gambling in sub prime mortgages and credit default swaps, is actually a medical problem. Right.
Is this why Obamacare is claimed to fix the economy?
The Newshour used to be better than this.
Is this why Obamacare is claimed to fix the economy?
The Newshour used to be better than this.
Friday, March 12, 2010
US Dept of Education buying shotguns?
Right here is the request for bids. Are these for use on students? parents? tea partiers? Republicans?
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