Hilary, Liz and Dodd-Frank

Oh, there was a time, when I was a young man, when I would fiddle around, and that was nice enough for a while.

Then life came and went.

Nowadays, I find myself content to merely listen while life slips by.

In ages past, a maestro such as Felix Mendelssohn could imagine something incredible; he could then summon up in his own mind and hands-- an exquisite composition, an intricate stream of vibrations--as sublime as any that could ever be coaxed from a mere box constructed of wood and wire. He could then write the composition. Then, 170 years later Hilary could set bow to instrument and, with help from the orchestra, make it all happen so perfectly.

https://www.youtube.com/watch?v=o1dBg__wsuo

There's a reason why my fiddle has been set aside all these years. Why bother? There's somebody who can do it better. There's somebody out there who can, in fact, do it perfectly.

Just listen. But I get to thinking. . .

Years go by. We pay attention, try to figure things out. There's always somebody out there who can do things better than we can. Leave the complicated stuff to experts. And listen. Listen and learn. Maybe you'll learn a thing or two.

Just daydreaming now; I think of Sally Field in Forrest Gump when she was playing his mother and she said life is like a box of chocolates; you never know what you're gonna get.

Think about 2008. Everybody just lollygaggin' along. . .then whoosh! well, you remember what happened. Everybody's shell-shocked. Uncle Hank stammering on the Tube. They had to twist Congress' arm two or three times before they'd come up with the money to fix the mess, at least temporarily.

Then the experts get trotted out to analyze, to testify, to figure what the hell happened in stock markets that made the thing come crashin' down--something about market manipulations of MBS's, unforeseen incredibilities of CDO's, the incredulous defaulting of credit default swaps blah blah blah

As the thing unwinds, along come the explanations, the excuses, the wagging fingers, the committees, the commissions, the oversight agencies get rolled out, cranked up. Republicans in shock because Obama's in. Democrats trying to figure out what went wrong and how to fix it. Democrats got to fix everything, so what do they do. . .

Let's fix everything up, they say.

Ok. Obamacare and Dodd-Frank.

Years go by. Big shock when Trump comes blasting' into 1600 Pennsylvania Ave after those 8 years of Mr. Smooth.

Now this morning we hear Amy and Juan on the radio, and here's Senator Liz whining about how the new Republican whirlwind wants to wind down Dodd-Frank, which was supposed to be the big fix, the big Democratic fix. I mean, she's a little bit crazy, like all Democrats, but there's one thing about Liz, she can play the rhetoric like Hilary plays the violin. It's no wonder Mitch had to cut her off last week. Anyway, Liz is saying:

"Commercial and consumer lending is robust. Bank profits are at record levels. And our banks are blowing away their global competitors. So, why go after banking regulations? The president and the team of Goldman Sachs bankers that he has put in charge of the economy want to scrap the rules so they can go back to the good old days, when bankers could take huge risks and get huge bonuses if they got lucky, knowing that they could get taxpayer bailouts if their bets didn’t pay off. We did this kind of regulation before, and it resulted in the worst financial crisis since the Great Depression. We cannot afford to go down this road again."

I mean, Liz might have a point there. If things are so ROBUST, why do we still get this feeling about the 20,000+ Dow? Is it deja vu, or deja due, or prescience, maybe too much twitter or not enough facebook, or a rerun of common sense or what? Maybe it's all just a bunch of hot air blowin' around and we keep wonderin' about the whole house of cards but we can't really put our finger on what's wrong cuz you know the answer my friend is blowin' in the wind and life is like a box of chocolates anyway, a mere lala land where we think we got it figured out but really we don't.

Although I do have to remind you, Liz, since I am a registered Republican: we can't fix everything. If we could, and if we did, why, how boring would that be?

So my advice to you is we'd best leave the fiddlin' to the experts. Sooner or later we'll all have to face the music anyway.

Glass half-Full

the Ole Firmer's Almaniac

The ole firmer walked around the backside of the barn. His wearied eyes took a moment to focus on the horizon; dark clouds appeared to dominate that distant line; they'd been hanging there for quite a long while now. The immediate vicinity was clear, however, if BLS numbers are to be believed. Mixed signals here there and yon. The times they are a-changin', thought he, and things ain't

what they used to be.

The rules of the game have changed; the old computations are no longer working, with the ole firmer and his firm being blindsided by all the new manipulations, robo-washed sterile by robo-driven arbitragers as if someone behind the sprays and fluff were cleaning the clocks of commerce, wiping away the profits, constantly leveling the playing field and rendering the firmer high but not dry, now eyeless in nasdaq, then dumb in the dow, spooked by the S&P, then suddenly swept up again in a flood of liquidity, floating on Fed flotsam, pummeled by day trade dealers punting buyback fluff up and down the field. The firmer pondered all this while studying the broad side of his barn. Need to fix that roof-- the thought crossed his mind for the umpteenth time.

Then without warning, his step coincides with a pile of BLS. Oh shit, exclaimed he. Up on the rooftop, the ever-vigilant barnyard blackbirds squawked loudly, as if trumpeting their amusement at his misfortune. Caw! Buyback! Caw! Quoth the raven: Evermore! Now and evermore! So shall your ascending P/E path be: driving under the influence of BLS, monitored by SEC, checked with OMB, hog-tied with Dodd-Frank, frothing high in P/E ratios, fearless Fannie and fawning Freddie sharpening pencils in the background, consuming FOMC reports, leaning on Fed puts, flummoxed at SEC stops, disgusted with IRS farts and bewildered by WTF surprises.

LOL . . . not.

The ole firmer's labor participation rate was, and had been for awhile, after 89 months of zero-bound interest rates on the downward trajectory--headed south, as some folks say, although he wasn't comfortable with the phrase. And out there on what used to be the open prairie of Price discovery--that old crossroads of supply and demand-- well, it has become well-nigh impossible to determine where, when, how and why, it seemed to the ole firmer.

This is what it felt like, he surmised, to be on Main Street in a Kmart world, then at Kmart in a Walmart world, now being disoriented in an Amazon jungle, no way out, with the Fed ham-stringin all the supply lines so's to simulate demand on a rising level. How this gmo steady-state staid new world of post-capital never-everland came about he'd never understand.

The old firmer would never understand. He felt like the onslaught of old-timers' disease was gnawing away at his youthful entrepeneural sensibilities.

The obnoxious ravens on the roof calmed down, their screechy cawing now lapsing into a low zirping. Quoth the raven--Nevermore! There's no real investment any more. No more frontier, no more exceptional expansion, no more manifest destiny, where do we go from here, caught between rocknroll and a hard face.

They say casinos are big now.

Where's the high-flyin' high-multiplyin' authentic productivity? Inventories high, sales low. Slow go. What would Rockefeller do? Where's JP Morgan when you need him? Carnegie's steel has all been laid; Edison's taking a nap and Bell won't answer the phone. No Ford nor Chevy on the horizon that I can see, thought he. Watson's now a programmed response. Fairchild's been implanted in a solid state econ. Gates is creaky; Jobs is gone-- out there somewhere on that musky dark cloud horizon. What's everybody doing?

Tappin' on chinky glass, devolving in devices vices, sippin' Singapore slings, all sound and futility signifying no-growth, thought he, hobbling along on a programmed 2% inflation path. Old-timers like me can no longer hit the broad side of a barn with our antiquarian projections based on old-school free-market dynamics, rallies and hog bellies, bushels, widgets and gadgets, buy and sell orders 'til the bears come home, might as well lay bricks in mortars with all these start-up farters.

Out on the horizon, big dust-storm coming up. Bulls are at it again, trying to stampede their way out of the Everything's OK corral, but Uncle Fed and Aunt Fannie shut 'em down every time.

Glass Chimera

The Invisible Hand of Capitalism, 21st-century version

I'm a regular guy who is trying to learn a thing or two about how things work and what makes the world go around and so forth and so on.

Back in the day, early 1970s, I was a clueless college student trying to figure things out. My draft # was 349, so I didn't have to go to Nam. I know some who did have to go, and I appreciate their service to our nation.

So there I was at LSU in 1970, an English major, clueless about the world and everything in it. (I thank the Lord that my children have made better decisions than I did in their early life choices.) One good thing about being an English major is that you do learn how to read and write well, and that helps a lot as we go through life. To this day, I do not regret learning to read and write copiously.

Well, the years rolled by and I got along all right, with much help from God and my wife, and some dear friends with whom we raised our young'uns. I did sales for awhile, then drifted into construction and stayed on that path for most of the working life. We managed to get the three youn'uns through college and out on their own and that was a great blessing.

Fortunately, I never had to lean heavily on that classic phrase of underemployed English majors, Would you like fries with that?

Long about 2004 or so I decided to ease out of construction work; my wife was doing well in her nursing career. The kids were pretty much on their own. I took a few education classes at the nearby hometown university, and was moving toward some new destiny which we knew not what it would be.

By 'n by, along came the fall of 2008, and the Crash of 2008 on wall street and so forth and so on. You know the story.

And since I had been, back in the good ole carefree college days, an English major, I was still in the habit of reading and writing. Therefore and henceforth I started reading copiously about the financial developments that were so profoundly altering everybody's life, even still yet today, as we speak.

And it seemed to me that the whole economy had kind of gone crazy there for a while, for a few weeks or a few months, as we're seeing in the Big Short. But then things sort of evened out a bit, but they never got back to what they were before and furthermore they still haven't, even though the unemployment rate has dropped down from ~10% in 2009 to the ~5% it is today, according to the BLS or the BS, or some such number-crunchin agency in Washington maybe next to the Brookings or over on K Street or some important think-tank place like that.

Long about that time, early '09 or somewhere in there, all the doomsayers showed up online and everybody and their brother was saying the whole dam world would come apart at the seams again and u better buy gold and it seemed to me like this Crash might do a replay but it never did. Instead, things just kind of got on a long, slightly upward slope to what we have today, whatever it is, somewhere between recession and high cotton, with chronic destagulation and perpetual consternation but no real catastrophe like those fringy preppers (not preppies) had said back in '09 or '10 or whenever that was.

In my clueless English major kind of way, I was keeping an eye on the stock market, just for fun of course because I didn't know much about it, but I must say I was amazed that we never really had another big crash like we had had in '08.

Every time the numbers would take a big turn down, and you'd hear about the market being down a hundred or two hundred, especially in September or October, you' d think this could be the Big one again.

But it never was the big one again. It's been pretty much steady-state destagulation with a few ups and downs here and there-- no inverted hockey-stick graphs.

By 'n by, as the weeks rolled by and as I was wondering about all this, I began to wondering if there wasn't some force or entity that was acting in a big, manipulative and perhaps surreptitious way on behalf of ?whoever ?whatever, the good of mankind, to make the market stay steady instead of taking another dive. It kind of seemed like it. Whoever or whatever it was or is must be pretty daggone powerful or influential. Maybe some Julius Pierpoint Morgan (the original WallStreet bailout artist financier) who was just intervening, out of some sacred duty that had been laid upon him as a knight of the financial garter, on behalf of the whole Western world to keep everything on a relatively even keel so we wouldn't have another Panic of '07 or '29 or 2008.

T'was then I thought about that famous phrase: the Invisible Hand, as applied to economics. There's got to be an Invisible Hand in there somewhere stopping that WallStreet slide every time one starts.

Wikipedia https://en.wikipedia.org/wiki/Invisible_ hand explained to me that Adam Smith had introduced the concept in economics in the year 1759. The Invisible Hand the idea that the multiple economic actions of individuals who are acting independently of each other manage to, by luck or Providence or some unseen beneficent force of the Universe, produce a composite outcome that is beneficial to the whole Market, and maybe the whole world.

So as I became more and more astute in these financial matters, I began to feel, somewhat intuitively or through keen powers of in cumulatively clueless observation that this invisible hand was not some ethereal beneficent presence, but rather, a definite entity in the real world. Something very real. Somebody's doing this! Come on now, who is it?

And now, thanks to Ben Bernanke and his memoir, Courage to Act,

http://www.amazon.com/The-Courage-Act-Memoir-Aftermath-ebook/dp/B00TIZFP0I

I have been duly informed. My days of financial naiveté are over, and I see the world for what it really is.

It was the Fed all along!

If you read the epilogue of Ben's book, you'll see what I mean. Here are just a few favorable developments during that period, the last seven years, that he mentions:

~ Unemployment rate, from Aug 2012 at 8.15 down to 5.7 in Oct 2014, during QE3

~ 3 million jobs added in 2014, the largest annual increase since 1999

~ 10.7 million jobs added from 2010-2014

~ "The Fed's securities purchases and lending programs turned a large profit for the government. . .sent almost $100 billion to the Treasury in 2014"

~ "Households had reduced their debt, their interest payments were low, and the value of their homes was higher, as was the value of most retirement accounts."

~ "Consumer confidence, as measured by surveys, had rebounded."

~ "At the end of 2014, U.S. output was more than 8 percent higher than at the end of 2007, the pre-crisis peak."

So it's plain to see that the Invisible Hand has been absolutely vigilant and effective. But this previously mysterious entity is no longer simply the composite whole enchilada of Capitalism. It is . . .

The Federal Reserve!

Thank you, Uncle Ben and Aunt Janet.

Times have changed, and so. . . has Capitalism. The old days are gone forever. We are now living in a bored new world of managed economy.



Glass Chimera

Dat's a Millennial trap Rap

Oh the Fed treadeth so so lightly

tryin to state the state of things so politely

gotta keep them interest rate so low

but them cant get much lower than half-point from zero;

now it be knockin' hell outa euro,

propellin' Dollar to once and future hero.

To raise them rates would be classically correct

oh but then them traders might eject

their programs from gliding oh so perfect

along HFT tracks that them algorithms select.

Autie Jan cant withdraw the punchbowl;

uncle Ben had schooled her 'bout that donut hole.

As you go through life, investor, whatever be your goal

keep your eye on the Fednut, not on the whole.

Kick the can, baby, kick it down the road;

we don't want them bulls havin' to unload.

Keep 'em buying on the dips

with e-eyes fixed upon them blips,

Watch 'em risin', selling on the peaks

this trend could fly for weeks n weeks.

But hey! them near zero rates punish savers;

it aint like it used to be, with small-bank favors.

How them millenials gon' pay back them college loans

while Zirpy Fed hover in zero zones?

Meanwhile, 'though emerging nations buy them new cell phones

jihad jinx be out slashin' no-go zones,

which aint no climates for no new homes,

juxt red-line zones with bloods n bones.

What kinda world is that

for anything but talkin' skat?

And with no nest-egg savins in the bank,

wha you gon' do, drive a tank?

Maybe risk your small-caps in data high-risk market,

or spend it at all while at walmart parkin?

I say this secular stagnation

it juxt stultify my 'magination.

With nutt'n on balance sheets but diminishin' returnin's,

where I gon' stuff my hard-earned earnin's?

Wit dem central banks winkin'

and HFTs a-blinkin'

and all dem ole free-market opportunities shrinkin',

I think I feel them fabled long-tails slinkin'

which means I need a different way of thinkin'.

Pshaw! nuf, that ole magic growth it refuse to come

even 'though gas price be low as scum

While .gov employment indicators

morph to .gov-on-fumes manipulators,

central banks toss hot potato;

but feel to me like rot tomato

Gotta get them econ0my off QE methamphetamine,

get it back on track, American Dream!

Is that dream now juxt pie in the sky?

Just sayin, wtf, don't ask me why.

But hey! I be tryin' to discern these market dynamics

and hopin' there aint no market titanics.

Someone said it juxt a rigged game

for the 1%, you know dem with wealth and fame.

But I's gon' get in this game;

ask me again n' I'll tell u the same.

It the only game in town that I know of;

I know it still be there when them push come to shove.

And when them market collapses, like them big house of cards,

then I'll jump in the game; I'll scoop up them shards!

As them fluffed-up values deflate in them crashes,

it's then I'll buy in, as them fall on them assets!



Glass Chimera

Time for the fiscal cliff plunge?

Back in the 1930s, the United Kingdom was the declining economic power of that age, as the United States is today. During those turbulent early '30s, the Brits were having some trouble balancing their accounts, and they didn't have enough gold reserves to back up the money demands being made on their financial system. So they forsook the gold standard as a means of backing up their currency, the pound.

About that time, as this 21st-century yeoman internet-reader (me) hath been able to ascertain, the Brit economist John Maynard Keynes figured out that, even though the currency was no longer backed up with gold, folks were still passing money around and doing business as if nothing had changed. This discovery became, by and by, the basis for all monetary activity throughout the world for the last eighty years or so.

Money is money, whether there's a vault full of gold.gov somewhere in England or in Fort Knox or anywhere else in the monetized world. That's the point. We're still passing the stuff around as if it had real value, even though there's no gold backing it up. People love spending it, and the love getting it. Perhaps they always will, even when money becomes mere electrons.

Now we are running out of money again, so the financial markets and the stock markets are obsessing about whether the Fed will bail out our money system yet again, for the third time, since the big thrill roller coaster ride of 2008.

This morning, I encountered an article online by a fellow, Joseph Stuber, who seems to actually know what he's talking about, and can explain the current ramifications of this money dynamic better than I can:

http://seekingalpha.com/article/852831-market-euphoria-continues-as-we-get-ready-to-jump-off-the-fiscal-cliff?

Mr. Stuber mentions, right off the bat, one morsel of truth that John Maynard Keynes left behind; it is this statement:

"The market can stay irrational longer than you can stay solvent."

That's basically what happened in '29.

These days, the whizzbangs who run the markets will work hard milking profits out of the system for as long as they can.

In fact, every stock trader will wheel and deal and play chicken with their suckerish counterparties right up until the time that the whole money machine runs out of fuel (imagined value), in hopes that he will be able to exit the game before the house falls and somebody else is left holding the bag of severely devalued assets.

Some of the perceived value of this market pertains to what Congress and the Fed will do, or not do, to retain the integrity of our currency and, therefore, the value our entire economy.

Mr. Stuber offers two possible scenarios of what may happen when Congress attempts to (or pretends to) deal with the fiscal cliff that awaits us, come January. The so-called fiscal cliff is the deficit debacle that Congress shelved for a year so they wouldn't have to contend with its difficult choices before the election.

My layman's rendering of Mr Stuber's two scenarios (extreme paraphrasing) goes something like this:

If Congress make a deal, like they did last year, to extend the expiring "Bush" tax cuts, then we will muddle through the next year or two just as we have been doing. High unemployment will become the new paradigm, a semi-permanent steady state of dysfunction and financial misery for sizable segments of our population, and nothing much will change, or maybe, who knows? it will all get worse.

If Congress doesn't make a deal, and the tax cuts expire, and the so-called "automatic" austere cuts of last year's sequestration deal are put into effect, then the long-awaited economic correction that we've been forestalling since fall of '08 will, at last, take its toll on our high-on-the-hog standards of living, and it will not be pretty, and recovery will probably not roll into effect until, say, 2017, or so, when our overvalued economy tumbles to a new (lower) foundation for true growth to get a foothold.

Someone should mention this to Mr. Romney before he makes as many vain promises as his predecessor did.

We shall what happens on Nov. 6.

And we shall see what happens when Congress re-convenes after the election.

In Charlotte on Labor Day, I heard Chris Matthews mention that the Dow, which was at around 8000 when President Obama took office, is now hovering around 13,000. Chris' implication was that the President must be doing a good job, or the Wall Street crowd would have pulled their rug out.

Perhaps that is true. I think that Mr. Obama has done as well as can be expected of any Democrat, under the circumstances that were passed to him.

But the question arises: what has the level of bubblish value in our stock markets got to do with anything that is happening in the streets and factories and households of our country?

Meanwhile, back at the ranch, or the apartment, as the case may be, what about you, Mr. America, Ms. America? What will you do this week to pitch it and help solve the problem?

Glass half-Full

The Swan Song of J. Al DasCapital

For some it's a good thing; for others a bad,
to be like the capitalist, or provoke socialist rad.
Back in the day, Rockefeller and Carnegie forged the enterprise deal;
JPMorgan and Ford cranked up capitalist zeal.
But then in '29 the machine broke down; all hell broke loose.
It was a train wreck for sure, from engine to caboose.
Smart as he was, Hoover was thought clueless in '32,
so they brought in Roosevelt to set up a new deal crew.
The gov from New York saved us, so they say,
with a big shot of socialism, making work for payday.

Now these days, since the meltdown of '08,
we've the same situation, but reverse, on our plate:
Big Spender Barack's in the driver's seat; he's catchin' the flack,
while Money-movin' Mitt says its time to get back
to those good ole days when investors and innovators were calling the shots,
before all these Keynesian Krugmanites got the hots
for quantitative easing, and stimulus, and priming the pump;
'cause they give us a ride, but we don't get over the hump.

Now out here on Main Street where the grassroots grow,
in the shops and garages where the mom and pops know,
we whip up the long tails; we push pins in the bubbles;
we wink at the black swans and laugh at the troubles.
Class warfare's just a phrase in some socialist goad,
inequality just a pothole, a mere bump in the road.
No flash-tradin' froth, no credit default fizz,
we just work with what can be, and we deal with what is.
If the day ever comes when the gov regulates us beyond reason,
or corporations have all the wealth tied up for the season,
we'll just stick out our necks and we'll sing our swan song,
cuz life in the free market goes on and goes on.

Glass half-Full