Posts Tagged ‘Wall Street’

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One Year Of Nothing Later

Monday, September 14th, 2009

The Administration’s back again trying to pass “financial reguatory reform”.

So far, this has been a non-starter. The banks don’t want any more regulation or a consumer financial services protection agency. The Congress, being more or less a wholly owned subsidiary of Wall Street, doesn’t want to move too fast. The Administration, having eliminated moral hazard as a permanent check on the industry, wants to appear tough.

And it’s all around the anniversary of the Lehman Brothers fiasco. Lehman of course was a well-regulated, well-capitalized bank by the “new standards” the Administration wants to see adopted. Thus the next bubble watch begins.

Gorilla thinks: “Jayne Mansfield would be at least as good at bubbles as Bernanke and Geithner, and a more pleasing form of caveat emptor!”

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Too Big To Tax Smaller

Thursday, August 27th, 2009

The chief British financial regulator, Lord Turner, thinks it would be a good idea to tax bank profits more so as to reduce the size of the financial services sector.

Would that such words were ever uttered in Washington, DC by any or all of our vast army of regulators!

But that’s a song from Goingbackwardville, not a consituency with much clout these days.

In Movingforwardville we must retain, but not rein in, the comparative advantage of banks losing trillions on behalf of the US taxpayer. High paying jobs are at stake!!!

So, any chance of Tobin taxes on Wall Street?

Gorilla answers: “So long as the same regulators and their political overseers remain in charge of what Lord Turner called the efficient market train wreck, um, no”.

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The Dollar Carry Trade

Tuesday, August 25th, 2009

Simon Johnson has beaten Gorilla to the punch via a very informative post at Baseline Scenario.

While we’re all waiting for the toxic shoe to get unstuck from bank balance sheets (they’re raising capital furiously, coz they know the big losses have just begun), the dollar has replaced the yen as the new carry trade currency (borrow cheaply in dollars, lend profitably in other currencies, in this case Asian ones, as emerging markets are growing a bit).

Thus Wall Street speculation begins again, particularly in commodities. How else does one explain a 50% increase in oil prices when the global economy is essentially not growing, unless one believes, as no economist I know does, in super duper growth just around the corner?

The risk of course is the dollar might appreciate, just as the yen did. So the next bubble watch is on.

Gorilla advises: “Time to go long moral hazard again!”

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Another Woolly Blend

Monday, August 3rd, 2009

In the bad old days of 2001-07, the Fed and the taxpayers were fleeced by the combination of a housing bubble and Alan Greenspan’s rigid ideological predisposition to let a “self correcting” market do pretty much whatever it wanted.

Several trillion dollars in bailouts later, everything old is new again.

Gorilla surmises this time it’s agricultural: “When the sheep replace the barn door, the jockeys ride horses for courses”.

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Bought And Paid For

Wednesday, July 29th, 2009

Want to know how Wall Street operates?

Look at the PBGC.

PBGC currently is responsible for insuring $2 trillion in pension assets, and managed to increase its deficit from $11 to $33 billion in just one year. It might take upwards of $100 billion to bail out PBGC in the coming years.

How was this performance achieved? By putting more of its assets into stocks just before the market dropped 40%. Of course it was only coincidental that PBGC’s head was being wined and dined by some very large investment firms.

Gorilla says: “Pissing away the responsibility, just like a drunken sailor at Chelsea Piers!”

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