Tuesday, October 18, 2011

EU To Ban Naked CDS on Sovereign Debt

Bloomberg reports:
The European Union reached a deal as part of a short-selling law that will pave the way for an optional ban on naked credit-default swaps on sovereign debt.
This is as near to a no-brainer as it gets. In principal, naked CDS are the financial equivalent of nuclear warheads on ICBM's. It's great if you can buy 'em, but whoever sells to you -- i.e. the big bank with the 20-somethings gunning for bonuses on the trading desks -- has to be bailed out when the SovBonds are inevitably downgraded.

This signals a streak of common sense and resolve that we find a refreshing surprise. It is the single piece of good news we've seen from the EU all summer.

Monday, October 17, 2011

Not This Week

Despite demands by the G20 that Europe's debt problems -- likely the largest and most convoluted insolvency in history -- be "fixed in a week", cooler heads respond that it's not going to happen.

Angela Merkel:
“...dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled...The search for an end to the crisis “surely extends well into next year.”
Nouriel Roubini:
“The problems in the eurozone are chronic” and “won’t go away,” He said EFSF needs to be more than four times its current size to be effective.
The existence of nearly incalculable amounts of unpayable bills collecting in the offices Europe's public and private financial institutions suggest that this dose of reality isn't likely going to be heeded.

Sunday, October 16, 2011

Why Johnny Can't Think

Bloomberg reports:
Children as young as 4 years old may now be treated with medications such as Novartis AG (NOVN)’s Ritalin for attention deficit hyperactivity disorder, under new guidelines from the American Academy of Pediatrics.
Though it is no doubt "for the children," it seems like the perfect solution for overworked parents, teachers, and "professional caregivers." And it might be the antidote to the developing personality; and useful for nipping in the bud those embarassing and politically incorrect tendencies that little ones might display.

It's not a worthy excuse, but might this also be why Johnny kills his parents when he becomes a teenager?

Saturday, October 15, 2011

"Occupy the White House 2012"

Let us call the "Occupy" campaign what it really is: a campaign. It is an organized mobilization of civil disturbance that appears to be proceeding according a script. It has substantial financial backing (the "protesters" are being paid). It has the full attention of the media, which begin every newscast with enthusiastic reminders of its existence. It has the "support" of municipal services unions. Such support includes the refusal by NYC Transit Union members, who normally drive the City's buses, to transport to jail miscreant protesters who have been arrested. The miscreants, in turn, support the unions by creating conditions which provide City employees with copious and well-compensated overtime (one month in, unionized NYPD officers have been paid $3.5 million in overtime on Occupy assignments, according to the Mayor's office).

"Occupy" has made such notorious municipal Nannies as New York City Mayor Michael Bloomberg render himself so completely docile to it that he won't even bother to clean the pollution-filled park where the would-be-world-changers have set up their tent city. You can bet if they were a congregation of homeless they would have been unceremoniously shooed from the park without attracting more than a passing remark from the media.

The timing of this campaign is unfortunate, distracting the media as it does from those other campaigns -- the presidential ones. On that note, have you noticed that Occupy the World has many of the earmarks of the last presidential campaign? Let's run them down (the similarities, that is):

As noted, it's clearly well organized. Its ground soldiers are of the same demographics that were so effective last time -- young, energetic, college students who got paid to be obnoxious and demanding. It is a media darling, as was the last campaign to Change the world (it even has an irresistibly easy-to-repeat slogan). Union support? Check! Left-leaning billionaire support? Check! International support? Check. Headlines today was that Rome was billowing smoke and 40 policemen had been injured in a sympathetic "Occupy" event.

We would go so far as to say that "Occupy the World" is really just Obama 2008 2.0 with an edge -- a potentially dangerous edge. The danger comes from the fact that these protesters-for-hire aren't pretending to be nice idealistic youngsters, like last time. They're on the offense now, "occupying" this place and that place. They aren't quite on the warpath, but they are wearing the warpaint and looking restless.

Occupy's raison d'etre is, of course, specious. Likely none of its paid participants has seen his life savings disappear in a failed corporate experiment. Safe to say that none has been evicted from the family home; or suffered any other devastating loss of equity. Even those for whom this campaign isn't a first job can't possibly have worked long enough or paid enough in taxes to justify a claim to anything besides the right to vote. Or to hold a job. Or, of course, to peaceably assemble. Or to remain silent, which is our suggestion.

Beyond being globally obnoxious, this group is willfully denying civil authority, and that affects the rest of us. They have told the mayor of New York City, Michael Bloomberg, that they will not let him clean the park in which they are exercising all manner of bodily function. But the rest of us pay taxes to have our parks kept clean (and sanitary) so that we can enjoy them with friends and family. At some point, the rest of us are going to demand that the city fulfill its obligations to us. And that might just involve a confrontation with the obnoxious professional layabouts.

Which brings us back to the dangerous edge of the Occupy campaign. Being as it is a boilerplate production of the "student movements" of the 1960's, it doesn't, ah, take a weatherman to know that the wind is blowing toward increasingly destructive civil unrest.

Given the very direct lines of influence that connect the misguided mob known as "Occupy" to the Obama administration and its leftist friends in all manner of high places, if you don't fear for the Republic, you're not paying attention.

Wednesday, October 12, 2011

Capitalism Doesn't Create Bubbles

People do.

Thursday, October 06, 2011

It's Not A Death Panel

End-of-Life Surgery May Be Overused in Medicare, Harvard Researchers Say

“In a lot of places, we’re doing a lot of these surgeries I think unnecessarily,” Jha said in an interview. “We’re not having the kinds of conversations with patients that we need to have, about what they want out of their last few days and how we help them achieve those goals.”
Or, how to help them help the Single Payer achieve its goals: cost reduction.

We recommend searching "the intellectual roots of the Third Reich" to see what the Ivory Tower was saying about who should and should not be allowed to live during the last era in which it was called upon the answer the question.

Interest Rate Pressure Creating "Perfect Storm" of Corporate Pension Deficits

This is a big story that you're not hearing much about. Bloomberg reports:

Company pensions in the U.S. fell behind future payouts to retirees by the most ever in September, as stocks fell and the slowing economy and Federal Reserve policy drove down bond yields, according to actuarial and consulting firm Milliman Inc.

The deficit between the assets of the 100 largest company pensions and projected liabilities widened by a record $124 billion in September to $439 billion, Seattle-based Milliman said today in a statement, based on data going back to 2000. Investment assets fell $31 billion to $1.175 trillion, while obligations to retirees rose $93 billion to $1.614 trillion.

“We’ve been talking about how interest rates are driving pension funded status for several years now,” John Ehrhardt, a principal and consulting actuary in New York with Milliman, wrote Oct. 5 in an e-mail. “The perfect storm has been brewing all summer. In September the storm arrived with a vengeance.”

This is nearly a half-trillion dollars that the Federal government is on the hook for, which might not be showing up in deficit numbers. Another "perfect storm."

EU Readies Coordinated Bank Aid Push

Bloomberg reports:
EU Readies Coordinated Bank Aid Push

The European Commission is pushing for a coordinated capital injection for banks to shield them from the fallout of a potential Greek default as Germany urges each country to prepare its own blueprint.

“We are determined to do everything necessary to ..." [...blah blah blah blah...] the commission’s president, Jose Barroso, told reporters in Brussels today. “Close coordination at European level is essential.”

This is tortuous. The sooner we get it over with, the better. Do your thing, markets bounce, more crap hits the fan, and we get the washout the market is waiting for. Why prolong the inevitable? And why, praytell, should the world (via the IMF) sit around and let you socialize your local debt to it?

Tuesday, October 04, 2011

Bad Cop Merkel: No Eurobonds For You

Bloomberg reports:
Merkel Says Those Advocating Crisis Endgame Have ‘No Clue’

German Chancellor Angela Merkel stiffened her resistance to joint euro-area bond sales, saying that investors yearning for a single gesture that can end Europe’s sovereign debt crisis now will be disappointed.
She's talking a hard line. When she's done, there will be a eurobond issue.

"Fed Stands Ready to Take Further Action"

Well, then. This ought to make everything OK. Bloomberg reports:
The Fed “will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability,” Bernanke said today in testimony to Congress’s Joint Economic Committee in Washington.
We can breathe a sigh of relief. Happy days are here again, because everything else the Fed has done to promote a "stronger economic recovery," in any context, has been so effective.

It will be noted that Bernanke uttered the "D" word with regard housing -- it's "depressed." Is depression contagious?
Housing, which had been a “significant driver of recovery from most recessions” in the U.S. since World War II, is now among industries contributing to the “slower-than-expected rate of expansion,” Bernanke said.
We predict you'll be seeing the word "depression" more in the coming weeks and months.