Bill Dudley On Breaking Up Too Big To Fail Banks: "Don't"

In a day full of “shocking” announcements, we just got the latest one. Because it must be truly a shock that none other than Goldman’s Bill Dudley, who also moonlights as head of the New York Fed, is stoically against the break up of America’s systemically critical, massive and 100% untenable FDIC-insured hedge funds, pardon megabanks. Such as Goldman.

From a just released speech ironically titled “Too Big To Fail”

I am not yet convinced that breaking up large, complex firms is the right approach.  In particular, these firms presumably exist, in large part, because there are scale or network effects that allow these firms to offer certain types of services that have value to their global clients.  These benefits might be lost or diminished if such firms were broken up.  In addition, the costs incurred in breaking up such firms need to be considered.  Finally, the breakup of such firms would not necessarily result in a significant reduction in overall systemic risk if the resulting component firms were still, collectively, systemic. 

That is so wrong and frankly moronic, as to border on the grotesque.

These megabanks only exist because the regulatory and financial climate in the US (and the entire world) is one which promotes consolidation to such a point where it is in every bank’s best interest to become as big and as systematically critical as possible in the shortest amount of time, and thus to always get bailed out whenever it is threatened with that other part of the Return equation: Risk.

For Dudley to not even remotely admit this is disingenuous, naive and frankly, idiotic.

The remainder of the Bill “just eat hedonic iPads” Dudley’s drivel can be found here.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4HN7zWPG6ic/story01.htm Tyler Durden

Bill Dudley On Breaking Up Too Big To Fail Banks: “Don’t”

In a day full of “shocking” announcements, we just got the latest one. Because it must be truly a shock that none other than Goldman’s Bill Dudley, who also moonlights as head of the New York Fed, is stoically against the break up of America’s systemically critical, massive and 100% untenable FDIC-insured hedge funds, pardon megabanks. Such as Goldman.

From a just released speech ironically titled “Too Big To Fail”

I am not yet convinced that breaking up large, complex firms is the right approach.  In particular, these firms presumably exist, in large part, because there are scale or network effects that allow these firms to offer certain types of services that have value to their global clients.  These benefits might be lost or diminished if such firms were broken up.  In addition, the costs incurred in breaking up such firms need to be considered.  Finally, the breakup of such firms would not necessarily result in a significant reduction in overall systemic risk if the resulting component firms were still, collectively, systemic. 

That is so wrong and frankly moronic, as to border on the grotesque.

These megabanks only exist because the regulatory and financial climate in the US (and the entire world) is one which promotes consolidation to such a point where it is in every bank’s best interest to become as big and as systematically critical as possible in the shortest amount of time, and thus to always get bailed out whenever it is threatened with that other part of the Return equation: Risk.

For Dudley to not even remotely admit this is disingenuous, naive and frankly, idiotic.

The remainder of the Bill “just eat hedonic iPads” Dudley’s drivel can be found here.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4HN7zWPG6ic/story01.htm Tyler Durden

Japanese Stocks Are Crashing As JPY Surges

No one has any good answers but it seems carry is being unwound in a hurry as US momos are hammered. Whether Draghi’s move shocked EURJPY riders enough to spark some major anxiety is unclear but Japanese stocks are now down over 440 points from early highs (to one month lows), US equities at their lows, and USDJPY blown back below 98.00.

 

 

which is odd considering that so many went short last week…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PEPo-gRn770/story01.htm Tyler Durden

IPOs Have Only Had A Better Year Once – 1999

We previously discussed what happened the last time that IPOs were outperforming the broad market by as much as they are now but thanks to the exuberance of the last month, it seems we have broken another 'record'. Year-over-year absolute gains in Bloomberg's IPO index have only been higher once in history – in 1999; and current levels have been notable resistance for the exuberant spurts of the last 6 years

 

 

The Bloomberg IPO Index (US) is a capitalization-weighted index which measures the performance of stocks during their first publicly traded year. It includes all companies with a market value of at least $50 million at the initial public offering.

 

(h/t Brad Wishak at NewEdge)


    



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Does ProPublica Accept Obama's Retroactive Revision of His Health Plan Promise?

Last week I
noted
that President Obama was trying to retroactively revise
his promise that the Patient Protection and Affordable Care Act
would allow people who were happy with their health plans to keep
them. That guarantee, he explained, applies only to policies that
have not changed in any way since the law took effect. The problem,
of course, is that Obama never mentioned that caveat until now. I
wondered whether reporters would nevertheless treat this
explanation as something other than a
bald-faced lie
. Judging from a new
ProPublica story
, the answer appears to be yes. In an article
that otherwise admirably seeks to explain the actual consequences
of Obamacare, including the costs it imposes on some for the
benefit of others, Charles Ornstein says this:

First, President Obama’s now-infamous pledge that those who
liked their health plan could keep it applied only to people
enrolled in those plans as of the day the Affordable Care Act was
signed into law, March 23, 2010. That became known as the
“grandfather” clause.

That phrasing makes it seem like Ornstein accepts Obama’s
revisionism—which is odd, because Ornstein later notes that
“Politifact has labeled the pledge ‘pants
on fire
.'” Actually, the analysis to which Ornstein links deals
not with Obama’s promise itself but with his attempt to amend it
after the fact. Here is PolitiFact’s conclusion:

According to Obama, “What we said was you can keep [your plan]
if it hasn’t changed since the law passed.”

But we found at least 37
times
 since Obama’s inauguration where he or a top
administration official made a variation of the pledge that if you
like your plan, you can keep it, and we never found an instance in
which he offered the caveat that it only applies to plans that
hadn’t changed after the law’s passage. And seven of those 37 cases
came after the release of the HHS regulations that defined the
“grandfathering” process, when the impact would be clear.

So yes, it’s true: Obama is a liar. Reporters should not let a
lingering attachment to “false
balance
” blind them (or their readers) to that fact.

from Hit & Run http://reason.com/blog/2013/11/07/does-propublica-accept-obamas-retroactiv
via IFTTT

Does ProPublica Accept Obama’s Retroactive Revision of His Health Plan Promise?

Last week I
noted
that President Obama was trying to retroactively revise
his promise that the Patient Protection and Affordable Care Act
would allow people who were happy with their health plans to keep
them. That guarantee, he explained, applies only to policies that
have not changed in any way since the law took effect. The problem,
of course, is that Obama never mentioned that caveat until now. I
wondered whether reporters would nevertheless treat this
explanation as something other than a
bald-faced lie
. Judging from a new
ProPublica story
, the answer appears to be yes. In an article
that otherwise admirably seeks to explain the actual consequences
of Obamacare, including the costs it imposes on some for the
benefit of others, Charles Ornstein says this:

First, President Obama’s now-infamous pledge that those who
liked their health plan could keep it applied only to people
enrolled in those plans as of the day the Affordable Care Act was
signed into law, March 23, 2010. That became known as the
“grandfather” clause.

That phrasing makes it seem like Ornstein accepts Obama’s
revisionism—which is odd, because Ornstein later notes that
“Politifact has labeled the pledge ‘pants
on fire
.'” Actually, the analysis to which Ornstein links deals
not with Obama’s promise itself but with his attempt to amend it
after the fact. Here is PolitiFact’s conclusion:

According to Obama, “What we said was you can keep [your plan]
if it hasn’t changed since the law passed.”

But we found at least 37
times
 since Obama’s inauguration where he or a top
administration official made a variation of the pledge that if you
like your plan, you can keep it, and we never found an instance in
which he offered the caveat that it only applies to plans that
hadn’t changed after the law’s passage. And seven of those 37 cases
came after the release of the HHS regulations that defined the
“grandfathering” process, when the impact would be clear.

So yes, it’s true: Obama is a liar. Reporters should not let a
lingering attachment to “false
balance
” blind them (or their readers) to that fact.

from Hit & Run http://reason.com/blog/2013/11/07/does-propublica-accept-obamas-retroactiv
via IFTTT

Common Core May Suck, But It's Unfairly Blamed for Politicized Public School Lessons

Common CoreCommon Core, the controversial
set of new national education standards touted by the by the
National Governors Association and the Chief Council of State
School Officers, with
significant federal encouragement
, is in the news again. This
time, it’s being called out for promoting politicized lessons
spoon-fed to the captive audience of kiddies in the public schools.
But this is an unfair charge. Common Core
has a lot wrong with it
, high-pressure included, but it doesn’t
specify lesson-plans or politicized content. The real problem is
the much older one of schools controlled by government
officials.

The specific complaint this time is about fifth-grade English
worksheets which ask students to edit sentences including:
“Government officials’ commands must be obeyed by all” and “An
individual’s wants are less important than the nation’s
well-being.” The sentences are a small part of a
larger worksheet
(PDF) called “Hold the Flag High” linked to
the Civil War.

Politicized lessons

But what a part. Way to go, oh bait-the-critics educators! You
walked into it with those loaded sentences. Even teachers are
debating
the propriety of this stuff now
.

But Pearson
Education
tells Fox
News
that this worksheet was copyrighted in 2007 and has been
in use ever since—predating Common Core. And Pearson is far from
the only curriculum vendor out there. Besides, controversy over
politicized education started far before Common Core came along to
cause a fuss.

In 1996, New York State mandated the teaching of the Irish
potato famine as an
act of genocide
by the British government against the Irish, no
other interpretations allowed. The Tucson Unified School District
in Arizona has managed a
heated, years-long battle over race-infused “culturally relevant”
classes
without any input from Common Core. Control over
textbooks has long been a political prize in Texas, with
conservatives in recent years sculpting the lessons
delivered
to students there and, given the size of the market and the cost of
printing multiple editions, elsewhere. And the use of liberal
pundit Paul Krugman’s
Keynes-centric economics texts
in high schools has raised a few
hackles, too.

The problem isn’t Common Core, it’s that government officials
control so many schools, even in the age of expanding choice, and
schools are a handy delivery system for pet ideas to (presumably)
receptive young minds.

There’s plenty to object to about Common Core. But dumping the
new standards won’t solve the problem of politicized curriculum so
long as government officials control schools and get to force-feed
their messages to the children of people with very different
ideas.

from Hit & Run http://reason.com/blog/2013/11/07/common-core-may-suck-but-its-unfairly-bl
via IFTTT

Common Core May Suck, But It’s Unfairly Blamed for Politicized Public School Lessons

Common CoreCommon Core, the controversial
set of new national education standards touted by the by the
National Governors Association and the Chief Council of State
School Officers, with
significant federal encouragement
, is in the news again. This
time, it’s being called out for promoting politicized lessons
spoon-fed to the captive audience of kiddies in the public schools.
But this is an unfair charge. Common Core
has a lot wrong with it
, high-pressure included, but it doesn’t
specify lesson-plans or politicized content. The real problem is
the much older one of schools controlled by government
officials.

The specific complaint this time is about fifth-grade English
worksheets which ask students to edit sentences including:
“Government officials’ commands must be obeyed by all” and “An
individual’s wants are less important than the nation’s
well-being.” The sentences are a small part of a
larger worksheet
(PDF) called “Hold the Flag High” linked to
the Civil War.

Politicized lessons

But what a part. Way to go, oh bait-the-critics educators! You
walked into it with those loaded sentences. Even teachers are
debating
the propriety of this stuff now
.

But Pearson
Education
tells Fox
News
that this worksheet was copyrighted in 2007 and has been
in use ever since—predating Common Core. And Pearson is far from
the only curriculum vendor out there. Besides, controversy over
politicized education started far before Common Core came along to
cause a fuss.

In 1996, New York State mandated the teaching of the Irish
potato famine as an
act of genocide
by the British government against the Irish, no
other interpretations allowed. The Tucson Unified School District
in Arizona has managed a
heated, years-long battle over race-infused “culturally relevant”
classes
without any input from Common Core. Control over
textbooks has long been a political prize in Texas, with
conservatives in recent years sculpting the lessons
delivered
to students there and, given the size of the market and the cost of
printing multiple editions, elsewhere. And the use of liberal
pundit Paul Krugman’s
Keynes-centric economics texts
in high schools has raised a few
hackles, too.

The problem isn’t Common Core, it’s that government officials
control so many schools, even in the age of expanding choice, and
schools are a handy delivery system for pet ideas to (presumably)
receptive young minds.

There’s plenty to object to about Common Core. But dumping the
new standards won’t solve the problem of politicized curriculum so
long as government officials control schools and get to force-feed
their messages to the children of people with very different
ideas.

from Hit & Run http://reason.com/blog/2013/11/07/common-core-may-suck-but-its-unfairly-bl
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New, More Hardline Pakistan Taliban Leader Rejects Peace Talks, As Expected

nextPakistan’s
interior minister warned
last week
that the killing of the leader of the Pakistani
Taliban in a US strike would be the “death of all peace talks”, and
it looks like that’s started.


From Reuters:

The Pakistani Taliban rejected the idea of peace talks
with the government on Thursday after electing hardline commander
Mullah Fazlullah, whose men shot schoolgirl Malala Yousafzai last
year, as their new leader on Thursday.

The rise of Fazlullah, known for his fierce Islamist views, by the
Taliban Shura council follows the Killing of Hakimullah Mehsud, the
previous leader or ameer, in a U.S. drone strike on November
1.

Lessons from the failure of the drug war’s “kingpin strategy”
apply here. A criminal organization’s leader removed by authorities
tends to be replaced by a more ruthless one.

Follow these stories and more at Reason 24/7 and don’t forget you
can e-mail stories to us at 24_7@reason.com and tweet us
at @reason247

from Hit & Run http://reason.com/blog/2013/11/07/new-more-hardline-pakistan-taliban-leade
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What’s Wrong With The Following Chart… Or How JPM’s Traders Humiliated Goldman Sachs

As we reported previously, for the third quarter in a row, Obama’s favorite punching bag bank – JPMorgan – reported a statistically impossible zero trading day losses.

Some suggested that since in the New Normal market in which it is virtually impossible to lose money this was to be expected; either that or just because banks work purely to satisfy client flow and have little principal risk, there is little reason for them to actually lose money trading. Both these ideas got blown out earlier today when Goldman reported that in the third quarter, the FDIC-insured hedge fund’s trading loss days soared to a total of 15 days: a whopping 23.4% of the total 64 trading days in the quarter.

While this may not seem as much, it is a veritable Mt. Everest compared to the 6 days losses in Q2, and orders of magnitude greater than the just 2 loss days in the first quarter of the year.

As a reminder, Goldman’s jump in unprofitability took place in a quarter in which JPM had zero trading losses. In fact in happened in a year in which JPM had zero trading losses. This can be seen on the following chart comparing JPM and Goldman win/loss trading days for the past year.

So what happened? Did Goldman suddenly let itself go and let banks like JPM pocket all the profits? Did Goldman let go all of its best traders and allow JPM to humiliate it where it really counts: trading revenues?

Or was this merely the latest exercise in optics by the wiliest of banks: after all, when you have an administration hell bent on punishing any and every bank that for any reason does something out of the ordinary – even if said “punishment” is merely populism-pleasing wristslaps – the last thing you want to do is add insult to injury and indicate you are absolutely flawless, as JPM continues to do and report quarter after quarter of trading perfection… and soaring litigation reserves.

Maybe this is just one of the reasons why Goldman has so far managed to slip completely untarnished through the DOJ’s punitive cracks?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/w0xqyegYr6Y/story01.htm Tyler Durden