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gramps2
106 Comments
The Bank of England Capitulates
I used to think you were a really smart columnist -- but today you seem to be having math problems and in your Treasury Secretary article, you suggest Barney Franks?
Treasury Secretary Speculation Heats Up
Where Have All the Peak Oil Believers Gone?
High dot-com stock prices did not "prove" the dot-com business model, anymore than their collapse "disproved" Amazon.com's business model.
The price of oil, up or down, does not prove or disprove peak oil. This article is not up to the standards we expect from Seeking Alpha.
Exchange-Traded Derivatives: Why Stop at CDS?
The reason many derivatives do not already trade on an exchange is that OTC derivatives have higher profit margins -- wider bid / ask spreads at minimum, and usually the market maker knows the price while the buyer has no idea.
From the buyer's viewpoint, OTC derivatives are often off balance sheet. If you are using derivatives to **hedge** (as opposed to speculate), it doesn't necessarily make sense to inflate the balance sheet (both sides) with the business item being hedged and the hedge on the other side. Doing so makes the balance sheet appear much bigger, and can arguably distort various ratio numbers often watched by investors.
Most of the arguments for putting derivatives on an exchange boil down to this: management isn't paying attention to risk management, so the process needs to be outsourced to an exchange...
So rather than fixing the real problem, persons in management that lack the skill set to do their jobs, the markets are saying the function should be outsourced to an exchange.
What you are really arguing with your exchange idea is that we simply don't need banks to be financial intermediaries. They don't have any information advantage, they aren't better at managing risk.
'Fundamental Overhaul' of Financial Regulations Needed
So now the clueless are saying they need more power to regulate things they don't understand? How does that make any sense at all?
Shouldn't the central bankers demonstrate a minimum level of competence and understanding before we grant them any new powers?
How about they make use of the powers they already have?
And we are all still waiting for that bonehead Alan Greenspan to admit his gross mismanagement was one of the biggest contributing factors to this crisis.
We don't need more central bank regulations -- we need someone to regulate the central bankers
New Regulatory Changes? Now?
Without doing any research into regulatory structure: at the Federal level, we have a Federal Reserve, the Office of the Comptroller of the Currency, the FDIC, the Treasury Department, the Securities and Exchange Commission, Housing and Urban Development (which regulates numerous mortgage programs), the FDIC, and lets not forget about both houses of Congress having a financial services committee that is supposed to watch broad industry trends and supervise the regulatory agencies above. On top of all that, we have the FBI and Department of Justice that are supposed to investigate financial fraud.
All the states have banking commissions, and many have securities regulators. All of them have attorney generals who supposedly investigate financial fraud.
How can you possibly claim this is "insufficient regulation"??? Did you even think about what you were writing before you wrote it???
I think you meant to say we have ***ineffective regulation*** .... because there is no way a halfway intelligent person could argue we don't have enough regulation.
Congress, just for example, actively intervened at every federal regulatory agency and insisted that Fannie Mae and Freddie Mac expand lending programs to poor borrowers -- neglecting to examine if poor borrowers were credit worthy and underserved (which would argue for FNM/FRE involvement) or if poor borrowers were simply unable to afford a home (which would be a perfectly legitimate reason why they wouldnt get a mortgage). Congress didnt ask and didn't care -- they wanted lending whether it made financial sense or not.
They even went so far as to appoint Franklin Raines, a politician with no banking background, as CEO of Fannie Mae... That appointment was done by Bill Clinton-- Bush has made more than enough bad decisions on his own without being blamed for the bad decisions of others.
We have plenty of regulations in this country -- but they are too often subverted by the regulators themselves.
Can the Global Financial System Be Updated? And By Whom?
How about the EU prove -- at least to the satisfaction of their own constituents -- that they can properly run Europe.
After that, we'll think about letting them run the whole world.
'Free Market' Healthcare: Fix It Now, Before It's Too Late
Insurance is a way to protect yourself from RISK. It is not, and never was, a way to pool expenses so that young people can subsidize obese smokers.
Car insurance is not a way for bad drivers to share their expenses with good drivers.
If you have a pre-existing condition, that is not a risk. You know with absolute certainty that you are going to have the expense. And make no mistake -- it is YOUR EXPENSE. I just recently priced new insurance for myself -- if you are paying $500 per month with a $5000 deductible, it tells me you have a pre-existing health problem, and you want someone else to pay.
You have a lot of nerve expecting the rest of us to pay for your health decisions. People like you are the real criminals in the health care crisis.
The problem with our healthcare system is run-a-way costs; not the availabilty of insurance. As you state-- you are able to get insurance, but it costs too much.
People who claim the issue is about how many people are uninsured are ignorant and don't understand the real problem.
Most of the businesses that canceled (or failed to provide) health insurance did so because health care costs were increasing 8-10% per year historically (and closer to 10-11% more recently). While some businesses grow 10% for a few years -- no business grows that fast over long periods of time... GDP growth has been about 4% over the long haul -- and by definition that is what the average business growth rate is.
Healthcare, or anything whose costs grow faster than GDP, is going to become unaffordable.
Health care costs are growing out of control, at least in part, because this country has too many people, sitting on their sofa with a twinkie in one hand and a cigarette in the other, complaining that they can't get something for nothing.
Grow up!!!
'Free Market' Healthcare: Fix It Now, Before It's Too Late
Go back and read my post again. try to find the sentence where I said the current "healthcare system of insurance company / mega healthcare company monopolies is really the greatest in the world. Huh?"
That isn't what I wrote. if you are even halfway literate -- try reading the very first sentence I wrote: ***there is no question that the current health care system is a mess***
Ben Bernanke, Revisionist
Badly run companies must be allowed to fail. "Investors" -- or more truthfully vultures who figured they could stick taxpayers with the costs-- who invested in a poorly run company SHOULD take losses.
There is nothing in this crisis that is "unprecedented&qu... That is a bunch of nonsense from revisionist commentators who think Bear Stearns was the first major Wall Street firm to fail. Get out your history books and get a clue -- they weren't even in the first 10 major firms to fail.
If your argument holds -- that poorly run companies should be bailed out -- then there is no reason to even have Wall Street, and even less reason to have commentators like yourself.
Any idiot can blindly buy a security, knowing that he wins if it goes up, and the taxpayers lose if it goes down.
This isn't about "punishing" the stupid. This is about preserving the system.
If your argument holds, then we don't need banks or Wall Street or financial commentators like yourself.
'Free Market' Healthcare: Fix It Now, Before It's Too Late
The two countries most often cited as study cases for a National Healthcare system-- Canada and the UK-- have special situations that do not transfer to the U.S.
Both countries had (past tense) very high amounts of natural resource taxes and royalties-- Canada from the Alberta and artic regions, and the UK from the North Sea fields.
The North Sea fields have peaked (according to the UK government AND the oil companies, as well as the government of Norway). The British NHS is in serious financial trouble, with rampant cutbacks. While US patients can have almost any surgery they need inside of a week, many Brits have to wait 6-9 months for many surgeries. Brits are pretty much restricted to seeing one doctor only-- unless they are literally going to die on the spot.
The U.S. tried similar measures via HMOs. U.S. citizens were outraged at delays / rationing that was not even half as severe as the norm in the UK.
Lastly, many doctors in the UK have left the NHS and gone into private practice-- so there are TWO healthcare systems in the UK. One for the rich, and the NHS for everyone else.
Canada's healthcare system enjoys more support from oil royalties than the UK (it has more oil exports, and it has a smaller population -- so the subsidy per person is much higher). None the less, Canada's government is also facing financial pressure of how to continue funding its healthcare system.
Like the UK, Canadians regularly accept delays and rationing far more severe than what HMOs in the US tried to do several years ago.
Both the UK and Canadian governments have demonstrated better (even if not perfect) success at creating and maintaining national transportation systems (railways, airlines, roads, etc) than the U.S. government.
The U.S. government is known for paying $100 billion for a single bomber. Medicare has rampant fraud and constant budget overruns. It is laughable to suggest the US government will have more success at controlling cost than the UK/Canada. Based on past experience, the US government is likely to be far LESS successful.
And few US citizens have bothered to think about what national healthcare would mean. For example, right now a decision to have an abortion is between a woman and her doctor. Once the government becomes the sole payer in the system -- Roe v Wade could easily be overturned as a one line rider in a budget bill. Any doctor who performed an abortion would forfeit all payments from the government.... Once healthcare becomes a government function, the power of the purse can (and will) be used to allow politics to enter every healthcare decision.
Recapitalization and the Implicit Treasury Guarantee
A blanket guarantee of all assets is a foolish idea. Hopefully, I don't need to explain to you that all assets are not equal.
If everything becomes (effectively) a Treasury bond, one of two outcomes must happen:
(1) As happened with Iceland, all assets lose value... this seems unlikely in the U.S., but lets remember that we have no domestic savings so it isn't completely impossible
(2) All assets are as credit worthy as Treasuries, but clearly some Treasury assets are much better than others -- and get a higher price. And the reverse, some "Treasury" assets are clearly not as good and their price should go to zero (or to what they might fetch in bankruptcy).
There is almost no difference between scenario two above and the current situation except: cash rich persons like Warren Buffet can snatch up assets that pay 10% and pay for them as though they were Treasuries paying only 4% -- so cash rich people get a windfall.. and two, future taxpayers (better known as OUR CHILDREN) get hit with the cost of making garbage assets pay off as though they were Treasuries.
Please Mr Salmon -- don't screw over our children with a bunch of voodoo accounting. All assets are not the same and we all know it.
Caught in a Liquidity Trap
Wasn't he the father of most of the economic theories that transformed England from a world power a the end of WW II into an IMF bailout candidate by the 1970s?
Golden State Asks Public Pension Plan for Help
Where is my bailout?
Congress Finally Gets Why the Google-Yahoo Search Deal is So Bad
Why does Yahoo have to sell the ads themselves? Why is it a bad thing if Yahoo focuses on generating better content -- better news aggregation, special interest group pages, financial / stock data, etc -- and then sell ad space on those pages to Google or whomever else?
I don't need 6-10 different versions of yellow pages in my house -- despite what the phone companies seem to think. Which one is the "real" Yellow Pages? is a question for the phone companies lawyers to argue about. I just need one, and its usually which ever one happens to arrive first. Often, I find a good local business by asking friends / neighbors, not by any of the "competing" Yellow Pages. The "competition"... between Yellow Pages directories is all in some regulators head.
I don't need a half dozen search engines either. Google works just fine, so I don't need another search just like them. Google will get replaced if/when someone develops a ***better*** search, not just another search.
If Yahoo is unable to compete in doing internet search -- they need to create other content. People still read many special interest magazines even after we throw the surplus Yellow Pages directories in the recycle bin.