Yearly Archives: 2011

Ian Fraser: Do the UK’s “Vickers” Banking Reforms Go Far Enough?

By Ian Fraser, a financial journalist who blogs at his web site and at qfinance. His Twitter is @ian_fraser

This morning I was listening to Nicky Campbell’s phone-in programme on BBC Radio 5 Live. The topic was the final proposals of Sir John Vickers’ Independent Banking Commission for reforming the UK’s banking system, which were published this morning.

To many, including Philip Augar (who since leaving the City in 2000 has done much to expose the destructive ways in which British finance works, and was a guest on Campbell’s show), Vickers’ proposed reforms — which include ring-fencing banks’ retail arms, forcing banks to plump up their capital cushions and the introduction of greater competition into the sector — are an elegant solution to an intractible problem.

Their hope is that the proposed reforms, which Vickers told us this morning don’t have to be fully implemented until 2019, will in the long-term make Britain’s banks safer, less likely to have to rely on government bailouts, and more predisposed to serve society and the wider economy.

I agree with a lot of what Augar says, but I fear he may be wrong about Vickers.

Tape Painting or Real Rally?

By Marshall Auerback and Edward Harrison Marshall here. That was an impressive rally into the close in New York. Stocks ended up across the board. Yves Smith, who was off the grid today, asked “was there any news driving” the rally into the close or was it just tape painting. Here’s what I wrote: No, […]

Euro SOS

This is a lively discussion on RT which starts from the contrarian perspective of trying to find a silver lining in the Eurozone crisis. One of the panelists is Michael Hudson, who has been a vocal critic of how austerity programs are being used to strip Greece of sovereignity (on top of the minor complication that these programs are certain to fail). It also discusses the prospects for the survival of the euro and who the winners and losers would be in a breakup.

Links 9/12/11

Jurgen Stark = Credit Anstalt 2.0 (and Euromarkets Reacting Accordingly)

It is remotely possible that the EU officialdom will temporarily reverse the train wreck that started last Friday with the resignation of Jurgen Stark from the ECB. That was seen as a sign that Germany has adopted bailout fatigue as official policy. That in turn would mean that Greece will not get any more money lifelines (which as commentators predicted some time ago, means a likely banking crisis, which was the reason for them not to exit the Eurozone).

Mr. Market is giving a big vote of no confidence in European leadership, although the FTSE has reversed some of its early-session losses.

The Financial Zoo: An Interview with Satyajit Das – Part II

Satyajit Das is an internationally respected expert on finance with over 30 years working experience in the industry. He is also a best-selling author and a regular contributor to leading finance blogs – including our very own Naked Capitalism. His new book ‘Extreme Money: Masters of the Universe and the Cult of Risk’ is out now and available from Amazon in hardcover and Kindle versions.

Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.

Part I of the interview can be read here.

Philip Pilkington: In the book you describe ‘money shows’ which are presentations where financiers try to flog their wares to the general public. It really struck me how sleazy these shows are; like something out a carnival sideshow. Salesmen — you know, proper ‘snake oil’ salesmen — stand in front of a crowd and whip them into a frenzy, convincing them that they can all get rich.

I almost found the whole thing quite funny – that is, until I realised that many of these people were just trying to make ends meet. It’s well-known that real wages have stagnated in the last 30 years. And at the same time the financial markets have greatly expanded. These ‘money shows’ seemed to me to be the meeting point of these two toxic phenomena. Perhaps you could talk a little about this?

Dimon Says US Banks Should Dictate to Regulators

Now that Steve Jobs has retired from Apple, Jamie Dimon seems determined to assume his role as the CEO with the most effective reality distortion sphere. You can infer that from the magnitude of the whoppers he is telling and the size of the audience he is trying to bamboozle.

But while Jobs’ Svengali tendencies have gotten more than occasional mention, they weren’t a major failing. Jobs not only saved Apple, but he spearheaded the development of important new product categories. By contrast, Dimon has long been a bully, a smart and capable bully, but a bully nevertheless (I have reports going back to his first year at Harvard Business School, and it takes some doing to be memorably obnoxious by dint of the competition in that category).

Now on the surface, Dimon’s latest brazen statement isn’t quite as gross as my headline suggests. He is merely saying that US banks should not be subject to the new incoming international bank rules, known as Basel III. That might seem to be a narrower statement, but as we show, when you parse his logic, it amounts to banking uber alles.

Links 9/11/11

Links 9/10/11

Employers Diss Obama Job Plan

Wow, this is just embarrassing. A raspberry from businesses, the object of Obama’s tender ministrations. And the reason? Basically, too little demand, something that tax cuts won’t remedy

Summer Rerun: A Conflict of Interest is Not a Conflict of Interest If It Involves Goldman

This post first appeared on May 4, 2009

The “all animals are created equal, but some are more equal than others” logic appears to operate in full force as far as Goldman is concerned. Violations of normal rules of conduct are not merely tolerated, but are asserted to be acceptable.

Now admittedly, the latest news tidbit, of former Goldman co-chairman Steven Friedman staying on as chairman of the New York Fed after Goldman became a bank holding company, isn’t as troubling as when current Goldman chief Lloyd Blankfein was the only Wall Street denizen to meet with Hank Paulson when the Treasury was deciding what to do about AIG. Readers may recall that Goldman had the biggest exposure to AIG and thus had the most to benefit from a course of action that would be generous to counterparties (who had chosen of their own cognizance to enter into contracts with the big insurer).

What is disturbing about the Wall Street Journal is the moral blindness of too many of the key actors, namely Friedman himself and some Fed officials.

Rob Parenteau: Revisiting the PIIGS Led to Slaughter Perspective – Implications of a Greek Default

By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute

Last year we provided an analysis (on the Naked Capitalism blog and elsewhere, including the Levy Economics Institute Annual Minsky Conference, and CBC interviews), based on the financial balances approach that suggested a number of problems could arise with the eurozone’s pursuit of what are called “expansionary fiscal consolidations”. Without a large and sustained swing into a current account surplus, the financial balance approach revealed that the pursuit of fiscal consolidation would undermine the ability of the private sector to service the debt loads it had built up during the prior decade of currency union. Simply put, higher taxes and lower government spending drain cash flow from households and firms, and that increases the financial fragility of economies.