Libertarian Democrat Point Of View: An Eccentricity

http://whatifitwere.blogspot.com/

2009-07-04T11:54:00.000-07:00

My new blog is here:

http://whatifitwere.blogspot.com/

the Ortega government wants to silence an opposition-leaning media outlet.

2009-06-21T20:05:00.000-07:00

TO BE NOTED: From Bloggings by boz :

"Nicaragua silences radio station

Nicaragua's government has canceled the license for Radio La Ley. While the government claims the license was canceled over some technical violations of the telecommunications law, it's clear to everyone watching the situation that the Ortega government wants to silence an opposition-leaning media outlet.

Sound familiar? This is a story that is becoming increasingly common in some countries in Latin America. Peru canceled the license for Radio La Voz over documentation issues, but it was clearly due to the station's reporting on the violent clashes in Bagua. Ecuador's government is moving to suspend or shut down Teleamazonas TV over various political disputes regarding the station's reporting. Venezuela's government continues to attack Globovision through various administrative rules, with President Chavez publicly stating that they can only remain on the air if they change their editorial line.

Shutting down private media outlets over political disagreements is a clear violation of freedom of the press as it's defined by the UN, OAS and most of these countries' constitutions. Governments do have rights and obligations to regulate the broadcast spectrum, but using legal technicalities to attack the media outlets does not make the violation of democratic rights any less egregious.

Posted by boz "

structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in Sept

2009-06-21T15:07:00.000-07:00

TO BE NOTED: From the FT:

"Fed plans repo markets revamp

By Henny Sender and Michael Mackenzie in New York

Published: June 21 2009 22:31 | Last updated: June 21 2009 22:31

The US Federal Reserve is considering dramatic changes to the giant repurchase – or repo – markets where banks around the world raise overnight dollar loans.

The plans include creating a utility to replace the Wall Street banks that handle transactions, people familiar with the matter say.

The Fed’s deliberations are partly motivated by concerns that the structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in September last year.

Fed officials plan to meet next month with market participants to discuss reforms.

People familiar with the Fed’s thinking say it is looking into the creation of a mechanism to replace the clearing banks – the biggest of which are JPMorgan Chase and Bank of New York Mellon – that serve as intermediaries between borrowers and lenders.

“The Fed is raising questions about whether the system really protects the interests of all participants,” says one person familiar with the Fed’s thinking.

In the repo markets, borrowers, such as banks, pledge collateral in return for overnight loans from lenders, such as money market funds.

The clearing banks stand between the parties, providing services such as valuing the collateral and advancing cash during the hours when trades are being made and unwound.

Fed officials fear this arrangement puts the clearing banks in a difficult position in a crisis. As the value of the securities falls, clearing banks have an obligation to demand more collateral to avoid losses. But in doing so, they could destabilise a rival.

“The clearing banks fear the positions of the investment banks are so large that a default would be difficult for them to manage,” the person familiar with the Fed’s thinking said.

“[Everyone] is thinking about how to remove conflicts of interest of the clearing banks and the investment banks so that the investment banks aren’t vulnerable to a sudden restriction of credit.”

The system’s complications were evident during Lehman’s collapse. JPMorgan, one of Lehman’s biggest trading partners, acted as its clearing bank in the repo market and – along with BoNY Mellon – served as the clearing bank for the New York Federal Reserve’s credit facility for securities companies.

Lawyers for the Lehman estate and for creditors have raised questions about whether JPMorgan acted too aggressively in seizing and marking down Lehman’s collateral.

Hedge funds have bought Lehman debt on the theory that the estate can claw back some of that collateral in court.

Citing confidentiality concerns, JPMorgan declined to comment.

The Fed hopes to have a new repo system in place by October, when its credit facility for securities companies is to close.

They see the financial crisis primarily as a moral crisis of Anglo-Saxon capitalism.

2009-06-21T15:02:00.000-07:00

TO BE NOTED: From the FT:

"Berlin weaves a deficit hair-shirt for us all

By Wolfgang Münchau

Published: June 21 2009 18:49 | Last updated: June 21 2009 18:49

A decision was taken recently in Berlin to introduce a balanced-budget law in the German constitution. It was a hugely important decision. It may not have received due attention outside Germany given the flood of other economic and financial news. From 2016, it will be illegal for the federal government to run a deficit of more than 0.35 per cent of gross domestic product. From 2020, the federal states will not be allowed to run any deficit at all. Unlike Europe’s stability and growth pact, which was first circumvented, later softened and then ignored, this unilateral constitutional law will stick. I would expect that for the next 20 or 30 years, deficit reduction will be the first, second and third priority of German economic policy.

Anchoring the stability law at the level of the national constitution is an extreme measure – like locking the door, and throwing the keys away. It can only ever be undone with a two-thirds majority – and even a future Grand Coalition may not be able to deliver this as both of the large parties are in a process of secular decline. It means that future fiscal policy will be in the hands of the justices of Germany’s Constitutional Court. The new law replaces a much softer constitutional clause – a golden investment rule that said deficits can only be used to finance investments. It was not a satisfactory rule, but at least it allowed structural deficits in principle. The new law not only sets draconian deficit ceilings, it also provides a detailed numerical toolkit to implement the rules over the economic cycle.

I can foresee two outcomes. First, Germany might end up in a procyclical downward spiral of debt reduction and low growth. In that case, the constitutionally prescribed pursuit of a balanced budget would require ever greater budgetary cuts to compensate for a loss of tax revenues.

To meet the interim deficit reduction goals, the new government will have to start cutting the structural deficits by 2011 at the latest. There is clear danger that the budget consolidation timetable might conflict with the need for further economic stimulus, should the economic crisis take another turn for the worse. There is still economic uncertainty. Bankruptcies are rising, and the German banks are just about to tighten their credit standards again. I simply cannot see how Germany can produce robust growth in such an environment, not even in 2011. If that scenario prevails – as I believe it will – the new constitutional law will produce a pro-cyclical fiscal policy with immediate effect.

One could also construct a virtuous cycle – the second outcome. If Germany were to return to a pre-crisis level of growth in 2011, and all is well after that, the consolidation phase would then start in a cyclical upturn.

Either of those scenarios, even the positive one, is going to be hugely damaging to the eurozone. In the first case, the German economy would become a structural basket case, and would drag down the rest of Europe for a generation. In the second case, economic and political tensions inside the eurozone are going to become unbearable. Over the past 25 years, France has more or less followed Germany’s lead at every turn, but I suspect this may be a turn too far. Deficit reduction has not been, nor will it be, a priority for Nicolas Sarkozy, the French president. On the contrary: he has listened to bad advice from French economists who told him that budget deficits are irrelevant, and that he should focus only on structural reforms. Budget deficits and debt levels matter in a monetary union. But a zero level of debt is neither necessary nor desirable.

I am a little surprised not to hear howls of protests from France and other European countries. Germany has not consulted its European partners in a systematic way. While the Maastricht treaty says countries should treat economic policy as a matter of common concern, this was an example of policy unilateralism at its most extreme.

What is the rationale for such a decision? It cannot be economic, for there is no rule in economics to suggest that zero is the correct level of debt, which is what a balanced budget would effectively imply in the very long run. The optimal debt-to-GDP ratio might be lower for Germany than for some other countries, but it surely is not zero.

While the balanced budget law is economically illiterate, it is also universally popular. Average Germans do not primarily regard debt in terms of its economic meaning, but as a moral issue. Der Spiegel, the German news magazine, had an intriguing report last week on the country’s young generation. One of the protagonists in its story was a young woman who had borrowed a little money to set up her own company. The company turned out to be a success, and she had began to repay the loan. And yet she said she had not felt proud of having taken on debt.

This general level of debt-aversion is bizarre. Many ordinary Germans regard debt as morally objectionable, even if it is put to proper use. They see the financial crisis primarily as a moral crisis of Anglo-Saxon capitalism. The balanced budget constitutional law is therefore not about economics. It is a moral crusade, and it is the last thing, Germany, the eurozone and the world need right now.

munchau@eurointelligence.com"

Unlikely as it may seem, the plan suggests a net increase in regulatory agencies. In the US, this requires real ingenuity.

2009-06-21T14:57:00.000-07:00

TO BE NOTED: From the FT:

"A thin outline of regulatory reform

By Clive Crook

Published: June 21 2009 18:43 | Last updated: June 21 2009 18:43

The Obama administration’s proposals for US financial regulation are pretty good, as far as they go. The problem is they do not go far enough.

Great care and intelligence went into the plan announced last week. It makes no stupid suggestions; recall Sarbanes-Oxley, a recent instance of unguided regulatory backlash, and you see this is no small achievement. But the plan’s comprehensiveness is a bit of an illusion. It ignores many issues, and has more loose ends and suggestions for further review than actual innovations.

Also, as in other areas, the White House is unwilling to confront the political barriers to fuller reform. You can call this pragmatism, or you can call it timidity. A crisis of this order demands big new ideas, and the leadership to push them through. In finance, if not now, when?

The administration asks Congress, which will have to write new laws for the plan to work, to fill some of the biggest holes in the existing structure. Systemically important financial institutions, whether or not they are banks in the old-fashioned sense, should be more tightly regulated by the Federal Reserve, says Mr Obama.

In addition, a new intervention regime should cover all such firms, modelled on the scheme run by the Federal Deposit Insurance Corporation for ordinary banks, says the plan. The idea is to wind up a failing bank early and in an orderly way, rather than facing the choice of bailing it out or letting it collapse and maybe drag others down with it.

The administration is right: these are big and necessary changes. But the details are vague. How exactly the tighter regulation of these “tier one financial holding companies” will work – what their capital and liquidity requirements will be, for instance – is for further study. Firms in this category will pay a regulatory surcharge, as they should. And the plan seems to favour counter-cyclical capital requirements too, which would brake lending growth in credit booms. Again this is right; again there are no specific proposals.

The plan calls for tighter regulation of securities markets. It proposes, for instance, that issuers of credit-risk securities should retain a share of the risk. It wants many over-the-counter derivatives to be traded on exchanges, which is safer, and proposes to bring “all OTC derivatives and asset-backed securities into a coherent and co-ordinated regulatory framework”. Quite right.

But what about Fannie Mae and Freddie Mac, the vast “government sponsored enterprises” that were instrumental in stoking the subprime boom? The plan bravely calls for a “wide-ranging initiative to develop recommendations”.

What about the credit-rating agencies, and the measurement of risk for regulatory purposes more generally? There is no point in telling financial institutions to set aside more capital if they are free to pump up their risks at the same time. The plan is thin. It wants better regulation of the rating agencies. Who doesn’t? But what would better regulation of the agencies look like? That needs further study.

“The financial crisis highlighted the problems associated with compensation structures that do not take into consideration risk and firms’ goals over the longer term,” says the plan. Indeed it did. The report says little on what to do about it, and next to nothing about wider bank corporate governance.

Fair-value accounting? Further review.

These are all complicated issues, and wide consultation is doubtless required to design the rules. So in a way it is unfair to complain about loose ends. It would be easier to feel that way if the administration had got things right at the organisational level. Unfortunately it has not. Perhaps the biggest disappointment in the plan is that it fails to address the bewildering complexity of the regulatory apparatus.

Unlikely as it may seem, the plan suggests a net increase in regulatory agencies. In the US, this requires real ingenuity. Recognising the issue of “jurisdictional disputes among regulators” – a problem that is going to get worse under these plans – it calls for a new Financial Services Oversight Council, chaired by the Treasury. This would advise the Fed on which firms should be regarded as systemically significant, and “facilitate information sharing and co-ordination”. Regulation by committee, atop a system of overlapping agencies unsure of their responsibilities, with financial firms still free to shop around for a regulator they like, does not inspire.

Crucially, it also militates against effective international co-ordination. Aside from poor oversight of the shadow banking system and the system-wide failure to account properly for risk, the biggest weakness in the existing regulatory scheme has been lack of cross-border co-operation by national regulators. The more complicated the domestic regulatory structure, the harder it will be for US regulators to work with their counterparts abroad.

Why no effort to streamline the structure? The answer seems to be that Congress would object. A simpler organisation chart would strip its oversight committees of responsibility, and their members of influence. The White House apparently regards this as too much to ask. On health reform, the administration has given control of the entire project to Congress. On financial regulation, it is still trying to direct the policy – but from the outset within limits that respect the legislature’s preferences, however ill advised. That is a pity.

clive.crook@gmail.com"

And if you need hope, if you're coming apart You can surely find it in my dad's heart.

2009-06-21T14:16:00.000-07:00

TO BE NOTED: From Catie Curtis:

The new version of "Dad's Yard" now released FREE here (with artwork) so scroll down and have at it!

"Hello, Stranger", the string band sessions CD I recorded earlier this year with Garry West at Compass Records, will be available as an itunes exclusive on June 16th! The actual CD, with cover art by best-selling illustrator/humorist Suzy Becker, will be released soon after. More details coming soon!

The BIG news today, is that the new version of my song "Dad's Yard," which I recorded with Grammy Award-winning musicians Stuart Duncan (Allison Krauss sideman), Alison Brown, George Marinelli and Darrell Scott, is available here as a free download! I have always thought that "Dad's Yard" would make a good tribute song/gift for Fathers Day (or to celebrate anyone whose motto in life is "Never throw anything away"). So as of today, "Dad's Yard" is here at CatieCurtis.com! There is also artwork that you can download as a card/insert for the CD jewel case (make sure to reuse an old, scratchy jewel case in keeping with the song) which would make it an excellent Father's Day card with CD. Thanks to Compass Records for offering this gift to you.

This year has been pretty amazing so far. I got to dig in to the Sweet Life (Sept 2008), on the road in an extremely fun fall tour, including sold out performances in venues such as the Birchmere in Alexandria VA. I had the chance to share the gift of music through my Aspire to Inspire Guitar Initiative, which provided guitars to young musicians of limited financial means. In January, I performed at the HRC Inaugural Ball for Barack Obama, in February I brought Sweet Life to the UK, and in March and April I continued touring the United States, including a benefit concert in Madison with the Indigo Girls, Dar Williams and Ani Difranco.

I look forward to September, when I will join the the Olivia team on their Alaska Cruise. I can't tell you how excited I am for the trip, and for the pleasure of performing to an Olivia audience. Olivia has included you and me in this cool promotion:

"Join Catie on Olivia and get $100 off! For the next 30 days, Olivia is offering a group program discount to all Catie fans who want to join her on the Alaka Cruise, Sep 20 - 27, 2009. Just call Olivia at 1.800.631.6277, tell us you are part of the Catie Curtis group and you will receive $100 off per person. For more information on the trips, just go to http://www.olivia.com/Travel/Trips_Alaska.aspx. " Maybe this is the time! Honeymoon, anyone?

I am about to enter summer mode, when I hang out with my kids on the shores of Lake Michigan until early August. There are just a couple events during June and July. One is a recently added a house concert in Topsfield MA, on June 14. The 7 pm show is sold out and they are adding another at 9:30 for which tickets are still available. Also, I will be in Provincetown, MA on July 2nd at a show presented by public radio station WOMR.

I hope you all are finding your own summer mode-- whatever that means to you!

See you out there,
Catie
ps: of course I'll still be on FACEBOOK this summer--- friend me sometime.

last updated Friday, June 12th, 2009 @ 1:19 PM

Dad's Yard Zip File (zip)
This is a zip file containting an mp3 of the song and a pdf to print out. Open the zip file once you have downloaded it.

It's got an old chair that's got no seat
Cracked snowshoes and warped wooden skis
Hardcover books, pages all turned brown
Dad has a reason for everything he keeps around
So if you need something when times get hard
You can probably find it in my dad's yard
And if you need hope, if you're coming apart
You can surely find it in my dad's heart.
You never really know just what might be in store
If you go in the barn and open the boxes on the second floor
'Cause underneath the paper crumpled up in balls
You might find a gem or you might find nothing at all
And that's the fun of it, it's that mystery
And all these things burying other people's history
You can look at this stuff and wonder where it's been
Or you can pick it up and you can use it again
So if you need something when times get hard
You can probably find it in my dad's yard
And if you need hope, if you're coming apart
You can surely find it in my dad's heart.
He can see the beauty beneath the dust and the grime
He can see potential where the rest of us are blind
He will polish the grey until it shines clear blue
And if you know my dad, well, he won't give up on you
So if you need something when times get hard
You can probably find it in my dad's yard
And if you need love, if you're coming apart
You can surely find it in my dad's heart.

fee would be paid by large bank holding companies that engage in risky activities beyond traditional banking

2009-06-21T12:48:00.000-07:00

TO BE NOTED: From the NY Times:

‘Too Big to Fail’ Policy Must End, F.D.I.C. Chief Says

Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, is adding to the debate over what may be the largest overhaul of the nation’s financial rules in decades.

In an interview on CNBC Friday morning, Ms. Bair said a main priority was ending the “too-big-to-fail doctrine” — the idea that a financial institution can become so large and interconnected that it must be propped up at all costs — and called the Obama administration’s proposed regulatory changes an “opening in the process” toward that goal.

She said she wanted a seat at the table in redrafting banking rules and reiterated her support for higher insurance fees for large banks that take big risks, an issue that has been a sore spot between her and John C. Dugan, the comptroller of the currency.

NYT_VideoPlayerStart({playerType:"article",videoId:"1194841058885",adxPagename:"dealbook.blogs.nytimes.com/video"});

As the insurer of $6 trillion in bank deposits, the F.D.I.C. should be included in the decision-making process, Ms. Bair said Friday, especially when it comes to dealing with risks to the entire financial system.

“We would obviously like a seat at the table in decision making on systemic risk,” she said. “The F.D.I.C. has tremendous exposure to the system.”

Ms. Bair is seeking to create a separate insurance pool, similar to, but separate from, the deposit insurance premiums the F.D.I.C. currently collects from banks, which would be designed to curb systemic risk. The fee would be paid by large bank holding companies that engage in risky activities beyond traditional banking. Ms. Bair mentioned proprietary trading and over-the-counter derivative trading as two examples of activities that could warrant the payment of the new insurance fee.

Ms. Bair said the fees would create economic disincentives for banks to take on more risk and grow to a size that would make them too big to fail, thereby posing a risk to the whole financial system.

She also said that she is not likely to continue in her role at the F.D.I.C. past her five-year term, which ends in 2011.

“I am very much looking forward to getting back to more sane hours and more time with my family,” Ms. Bair.

– Cyrus Sanati"

Libertarian Democrat Point Of View: An Eccentricity

http://whatifitwere.blogspot.com/

the Ortega government wants to silence an opposition-leaning media outlet.

structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in Sept

They see the financial crisis primarily as a moral crisis of Anglo-Saxon capitalism.

Unlikely as it may seem, the plan suggests a net increase in regulatory agencies. In the US, this requires real ingenuity.

And if you need hope, if you're coming apart You can surely find it in my dad's heart.

The new version of "Dad's Yard" now released FREE here (with artwork) so scroll down and have at it!

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fee would be paid by large bank holding companies that engage in risky activities beyond traditional banking

‘Too Big to Fail’ Policy Must End, F.D.I.C. Chief Says