Posted by: Tom Keene on November 22, 2011
The Emergency Banking Act was introduced on March 9, 1933, to a joint session of Congress and was passed the same evening amid an atmosphere of chaos and uncertainty as over 100 new Democratic members of Congress swept into power determined to take radical steps to address banking failures and other economic malaise. The EBA was one of Mr. Roosevelt's first projects in the 100 days. The sense of urgency was such that the act was passed with only a single copy available on the floor and most legislators voted on it without reading it.
Why did FDR's Bank Holiday Succeed?, Federal Reserve Bank of New York Economic Policy Review, July 2009
They (the failed 12, et al.) are not scared...enough.
What is needed is a sense of urgency. What we get is a posturing that makes my most junkie-crazed political friends cringe.
David Kennedy absolutely nails this in his MUST READ effort of the 1930s.
Or, see the scene in Seabiscuit, with the actress Annie Corley, that crushes the desperation of the time. (C the Cene in Cbisquit, bonus points!)
Go on. Go with Mr. Blodget.
No.
He's going to take care of you sweetie. Go with him.
Mom, don't do this.
The elites, elites dazzled by SuperDuperCommittees, are clueless of the urgency of the moment. The Roosevelt & (and I do mean &) Hoover officials were scared...stiff. Across a desk at Treasury the night of the inauguration, they worked TOGETHER.
We are not scared, enough, and won't be until we hear our children say, "Mom, don't do this." We need to confront our March 9, 1933. Discuss.
Posted by: Tom Keene on November 21, 2011
Fiscal problems in Europe can be solved. Large adjustments based on the spending side work, they are not recessionary and are not the kiss of death for the governments implementing them. It can be done. If the fiscal crisis in Europe worsens, threatening the world recovery, we will know whom to blame: the current leaders of Europe.
The Electoral Consequences of Large Fiscal Adjustments, Alesina, Carloni and Lecce, VOX.eu, 29 May 2010.
This was one of my favorite essays of last year. It bears re-study as Spain "enjoys" a new government.
We are beginning Davos planning. Last year was The Davos of Our Discontent. This year, maybe, The Davos That Dithers.
When does this stop? This charade of meetings and headlines from meetings that insist on not speaking to...the people.
Pick your date for the advent of modern democracy. Read Kissinger's majesterial Diplomacy, or the Global Political Economy of your choice. Read Jerry Z. Muller's authoritative The Mind and the Market.
1848 anyone? I was honored to stand with Otmar Issing overlooking Frankfurt as he described the importance of the Paulskirche to continental democracy.
The politicians (on both sides of the Atlantic) need to get in touch with a silent and crisis-exhausted majority.
The politicians need to start listening, soon and hard, to the Alesinas and Issings and Charles Wyploszs of the world.
The politicians need to find courage, courage that can only come from feeling and fearing the contagion in the voting booth. They are not dithering in the voting booth. Discuss.
Posted by: Tom Keene on November 17, 2011
We capture a village's reservation status by a dummy variable which equals one if the village belongs to a GP reserved for SC/ST. We use two dummy variables to measure the political influence of a village--the first equals one if the Pradhan resides in that village, and the second equals one if the GP headquarters are in that village.
THE POLITICS OF PUBLIC GOOD PROVISION: EVIDENCE FROM INDIAN LOCAL GOVERNMENTS, Besley, Rahman, Pande and Rao, Journal of the European Economic Association, 2004.
They're just like us. In the blur that is the collective business media and, the insatiable desire to feed the beast, I have learned that little distinction is made about guests.
I'll cut to the chase.
They're just like us. Even worse, they're all the same. An economist is an economist; a CEO a CEO.
Memo: my team religiously grades the abilities of our guests because we have learned that our loyal audience cares deeply about guest quality.
Granted, there are selected rock stars of economics, finance and investment, like Allan, Bill, Charles...Vito, Willem, Xavier, Yuri and Zingales (full disclosure, I made up Yuri and sorry Luigi, couldn't find a Zeno.)
We are fixated on a few names (all deservedly excellent) and choose not to identify and discern among many lesser known and some of them remarkably strong and able candidates for comment.
Pop Quiz! Which name above is the rock star? Which does the math of this way mathy paper? Which is quiet and not media ready? Which is a 1000 volts waiting for you to discover her?
Time's up. Get out of the Pundit Rut. I and my killer team promise to interview the best and brightest. And, we will take chances (and at times fail) and converse with smart, smart people you need to know.
You need to know Lupin Rahman. Read her perspective at PIMCO.
Have courage. Find context, insight and judgement. Look beyond Bill and Mohamed. Discuss.
Posted by: Tom Keene on November 10, 2011
It is growing apparent that the euro area may be too late to deliver a policy response that can avoid nonlinearity in Italy. A succession of earnings results from banks has emphasized how quickly exposure to BTPs has been reduced. With real money investors also aware of the asymmetry of risks in Italy, there are growing concerns as to whether financial institutions are willing to utilize balance sheets to absorb Italy's financing needs. Italy has been confronted with a deleveraging spiral.
Supple, Sondergaard and Mandy, Nomura International plc.
Markets are moving and the focus, for now, is upon the Buoni del Tesoro Polianuali (BTPs). Or rather, the focus is on the various and sundry "sizes" of Italian debt. The amount outstanding (and it is an outstanding full, faith and credit debt), what comes due when, what needs to be issued, often anew, and finally, how to value what people, read France, owns. Forget the "sheets balanced."
(I thought Italian full, faith and on credit was what you relied on when purchasing the Prada Fox Fur Clutch, $1,995, more colors available.)
I think what Team Supple delicately describes above is a tactical run on the bank. Funds are flowing, and the outflowing flowing is strategically based on fear.
Fear.
This November, we harken to and beyond the fears of 1998. October was linear. This November is nonlinear. And, we have nothing to fear but jump-condition fear itself.
Maintain parabolic calm.
The ECB or the CBE or the BCE will ride to the rescue. Or, maybe not.
Where are the Roosevelts? Wir haben nichts zu fürchten außer der Furcht selbst. Or to be more precise, non abbiamo nulla da temere, ma la paura stessa. Discutere.
P.S. all translations courtesy Google Translate. I need to meet an Italian supermodel.
Posted by: Tom Keene on November 7, 2011
The following cable from U.S. ambassador to Germany Philip Murphy ("Ambassador Murphy spent 23 years at Goldman Sachs and held a variety of senior positions, including in Frankfurt, New York and Hong Kong, before becoming a Senior Director of the firm in 2003, a position he held until his retirement in 2006") "CONFIDENTIAL: 10BERLIN181" tells us all we need to know about what has been really happening behind the smooth, calm and collected German facade vis-a-vis not only Greece, but all of Europe, and what the next steps are: "A EUROZONE CHAPTER 11: DB Chief Economist Thomas Mayer told Ambassador Murphy he was pessimistic Greece would take the difficult steps needed to put its house in order.
Wikileaks Exposes German Preparations For "A Eurozone Chapter 11", zerohedge.com, 6 Nov 2011, 16:34
"Such a Europe is always vulnerable to outside influences and prone to political division and centrifugal forces (as recently exhibited in the conflict about the Iraq War.)
Thomas Mayer in Flying on One Engine, 2005.
Then, there was The World War of Leverage, and we were all less smooth and calm.
As few, Thomas Mayer was so far out front, so quietly, so rigorously out front as to defy description of the political economics of others. The "others" having recent and too many misjudgements.
Zerohedge launches some Wikileaks verbiage, a portion above. We drown in opine (read Charles Wyplosz at VOX.edu to clear the mind.) All we need to do is read Thomas Mayer.
I remember sitting at the small bar at Alias Restaurant, Clinton at Rivington, 10002, proofing Dr. Mayer's chapter for my book. I was just thunderstruck at what he was suggesting in 2005!
Then, months later at my London book party, he extended on his chapter, Europe's Political and Economic Future. He spoke softly of the theoretical impossibilities of the post-WW II economic, and indeed, political "union" of these collective, and less-collective nation-states.
I bring this up because the game of chicken is upon us and nearing an end. There is a silence, a quiet, after the chickens choose to crash or evade. I know not what will come. I know for certain, I will listen, and read carefully, Thomas Mayer.