Good morning

The headlines:

  1. JPM CEO continues to self-flagellate with no signs of abatement. That may be because the trading strategy could lead to another $1 billion loss in this quarter or the next (I assume that they know that it has already – there are just prayers being offered for a recovery in that time). If the departure of the Yahoo CEO is anything to go by though –  this could be farewell Jamie. And the banking institution no doubt feels the same – while the Volker Rule won’t really have an impact on what JPM is doing in London (as far as I know), there’s a democrat senator out there that will leap on this to promote and push through a new version of the bill. Link: Just stop talking already!
  2. Elizabeth Warren calls for Jamie Dimon to resign from the New York Fed. Obviously. Show me a politician that doesn’t seize an opportunity to call for a resignation of someone famous. Liz is running for the Massachusetts seat on the US senate. Hmmm. About that Senator and the Volker Rule. That Mother-Volker-Warren’s rule? But she wants JD to resign to show the American voters that the bankers “get it”. Go to the bloomberg article for a great pic of Liz doing a dance move to “Tragedy”. Link: The not-yet-a-senator story.
  3. But the Mormon Mitt wants to repeal the Dodd-Frank Law. Oh yes. Farewell to the Mother-Volker-Warren rule. He has a 59 point economic plan that has space for Dodd-Frank principles, but steers clear of over-bearing regulation. He’d also like to repeal Sarbanes-Oxley, which is the piece of regulation that followed the Enron saga. And Obamacare. There’s almost not enough space to comment on how momentous that would be. Each financial crisis has been greeted by America with more regulation, blaming lack of regulation as the problem. But maybe Mitt has a point – we keep adding regulation. Has that stopped the crises from happening? Maybe we need to go back to something more principle-based, rather than rule-based. Rules can be worked around; principles can be argued against. But in general, I think that a rule doesn’t work as well – because the assumption is that if you can find a loophole, then there’s no longer an issue. Whereas a principle involves a consideration of consequence and/or ultimate outcome. Human nature: it’s a cost. Link: The Romneyan Repeals.
  4. California’s deficit swells to $16 billion. Link: Awkward! Particularly when this is communicated to the Californian public via Twitter. Thanks Governor Brown – cresting the social media wave. The shortfall has almost doubled since January. The courts and the Federal Government have blocked spending cuts. The State failed epically on the tax collection front. And there’s no more Terminator to terminate it. If anyone feels like reading Michael Lewis’ “Boomerang” (everyone should) – there is a really interesting section on America’s debt, which largely involves California being the first state to go bankrupt. Mostly because the governance system in California seems set up to prevent any sort of change whatsoever. And there she blows. 
  5. Facebook Co-founder Eduardo Severin gives up US Citizenship before IPO. From watching the movie, I seem to remember Eduardo as being royally screwed by the Zuckerberg. Anyway – he’s now officially from Singapore. And escaping the IRS. Link: Eduardo has updated his Hometown.
  6. Syriza won’t join Greek Unity Government. Link: They “won’t betray the Greek People”. It’s such a farce of flagrant rhetoric. Honestly – when you read a Syriza speech, you’d think that they plan to solve any and all economic problems with inflammatory adjectives. One of their supporters actually sent me a solution in the form of an article on “Rebranding Greece”. As though that is the primary problem. 
  7. ECB’s Honohan says that a Greek Exit from the Euro would be manageable. For countries other than Greece. “Technically”. The argument is that this is all management of perceptions – which is not an easy (or even, achievable) task. After all, a World War started with the assassination of a Duke. And something about butterfly wings in China and a hurricane in the Caribbean. But I suppose that most things can be traced back as a series of mounting reactions to a relatively incidental occurrence. Doing something is probably better than doing nothing at all. Link: What’s reality anyway?
  8. China lowers bank reserve requirements. Link: Again. Reserve ratios have been cut by a further 50 basis points. This should increase the amount of credit available to the public. Many analysts are suggesting that China should be pursuing a more aggressive monetary policy. But that seems to be the starting point of almost any analyst: “make the slow-down slow less – spend!”
  9. Apple Founder Steve Wozniak says he will buy Facebook shares at any price. Link: ?! Okay – I know that’s not true. Common sense will prevail because there are obviously extremes, like $1billion a share, that will just not bear out. This sounds like the financial advice of mad scientist. 

That’s all for now.

Have a good day.