Let me get this straight: a big bank makes a bad bet and loses a couple of billion dollars. As a result, some people at the bank deemed responsible for the loss lose their jobs and the bank's stock price goes down. Therefore, we MUST have more government regulation of banks. Huh?
I'm not the only one not connecting the dots here as David Harsanyi explains that actually JPMorgan Proves We Don't Need More Regulation:
When banks generate huge profits, they are exploiting the American people, engaging in unadulterated greed and, needless to say, in need of more regulation. And when banks lose too much money? Yep, they're being insatiably greedy -- but stupid, too -- and, naturally, in need of more regulation.
The unscrupulous can't win for losing, apparently.
So when JPMorgan Chase & Co. suffers about $2 billion in losses (probably more) via complex derivative trades that were used by an obscure unit within the bank to hedge against risk, everyone in Washington seems quite excited about the political possibilities. Yet, JPMorgan's problems prove that finance works without any meddling from Washington.
Rather than have someone point out the obvious -- "hey, that's how it's supposed to work"; "that'll teach 'em"; "neat, someone made 2 billion bucks on JPMorgan's stupid bets" -- we have the Justice Department opening an inquiry into the matter, the president calling for tighter regulations, Republican Sen. Bob Corker calling for hearings and a bunch of pundits falsely claiming that if the Wall Street reform bill had been fully implemented, we wouldn't have these kinds of "risky" transactions -- as if we should want to stop them in the first place.
The $2 billion hasn't sunk JPMorgan (and with $127 billion in equity, it hasn't come close), but if this kind of thing constitutes a national emergency, we should have better sense than to allow folks who squander $2 billion on their lunch breaks to concoct the solution.
If you work at JPMorgan or are a shareholder, you have a stake in this. But for the rest of us, the uproar is much adieu about nothing and the worst thing that could happen at this point is to have attention seeking politicians "looking out for the interests of the American people" determine that there's a problem here that needs their special brand of fixing.
Wednesday, May 16, 2012
'Tis a Remorseless Eating Machine
Man pickets over all-you-can-eat fish fry:
THIENSVILLE, Wis., May 15 (UPI) -- A Wisconsin man said he will picket a restaurant every Sunday until its all-you-can-eat fish fry lives up to its name.
Bill Wisth, who stands at 6-foot-6 and weighs 350 pounds, said he went to the all-you-can-eat fish fry Friday at Chuck's Place in Thiensville and was angered when the restaurant cut him off after he downed a dozen pieces of fish, WTMJ-TV, Milwaukee, reported Tuesday.
"It's false advertising," Wisth said. Wisth, who called police while arguing with workers, said he was not satisfied when the restaurant gave him eight more pieces of fish when he left. "I think that people have to stand up for consumers," Wisth said.
Wisth returned to the restaurant two days later with a picket sign and said he will stand outside the eatery every Sunday until it changes its policy during the all-you-can-eat fish fry. Elizabeth Roeming, a waitress at the Chuck's Place, said Wisth was cut off because the kitchen was running out of fish. She said Wisth has caused disturbances at the restaurant before despite making allowances for the customer, including allowing him to run up a tab that he has yet to pay.
Which brings to mind the classic Simpson's (before the show entered a lenghthy period of medicority) episode called "New Kid in Town."
THIENSVILLE, Wis., May 15 (UPI) -- A Wisconsin man said he will picket a restaurant every Sunday until its all-you-can-eat fish fry lives up to its name.
Bill Wisth, who stands at 6-foot-6 and weighs 350 pounds, said he went to the all-you-can-eat fish fry Friday at Chuck's Place in Thiensville and was angered when the restaurant cut him off after he downed a dozen pieces of fish, WTMJ-TV, Milwaukee, reported Tuesday.
"It's false advertising," Wisth said. Wisth, who called police while arguing with workers, said he was not satisfied when the restaurant gave him eight more pieces of fish when he left. "I think that people have to stand up for consumers," Wisth said.
Wisth returned to the restaurant two days later with a picket sign and said he will stand outside the eatery every Sunday until it changes its policy during the all-you-can-eat fish fry. Elizabeth Roeming, a waitress at the Chuck's Place, said Wisth was cut off because the kitchen was running out of fish. She said Wisth has caused disturbances at the restaurant before despite making allowances for the customer, including allowing him to run up a tab that he has yet to pay.
Which brings to mind the classic Simpson's (before the show entered a lenghthy period of medicority) episode called "New Kid in Town."
Tuesday, May 15, 2012
Beer of the Week (Vol. CXLVI)
Another special better late than never edition of Beer of the Week sponsored as always by the calm and cool folks at Glen Lake Wine & Spirits who can help find the wine, whiskey, and beer you need without losing your head.
I spent most of last week on a business trip to Mexico and I am happy to report that I returned with all critical body parts (head, hands, etc.) still firmly attached to my torso. And I had the opportunity to enjoy a few cervesas along the way. In general, Mexican beer does not enjoy a good reputation in the United States. And while that negative impression is in some part deserved, there are some rays of light when it comes to swilling south of the border.
One example is Indio brewed by the Cuauhtémoc Moctezuma Brewery. It’s a dark lager that has more flavor and a bit more of a hop bite than one usually associates with Mexican beers. Victoria from Grupo Modelo is another Mexican beer that isn’t particularly exciting, but fares well when compared to the likes of Corona.
And on this most recent trip, I tried a Bohemia Weizen for the first time and found it quite refreshing. It’s another offering from the Cuauhtémoc Moctezuma Brewery which also produces the decent Bohemia pilsener. The Bohemia Weizen is a wheat beer with a higher alcohol content than you usually find in Mexican beers. It’s somewhat comparable to a Leinie’s Sunset Wheat (with less citrus punch) and it makes for a good alternative in a land of light lagers.
But it seems like the few decent beers that you find in Mexico are hard to come by in the United States. Corona is ubiquitous. Tecate is widely available. And we’re all familiar with the beer from this brilliant ad campaign:
Our beer of the week is Dos Equis Lager. Stay thirsty my friends.
12oz green bottle. Green and gold label with a couple of prominent red Xs as per the name.
STYLE: Lager
ALCOHOL BY VOLUME: 4.3%
COLOR (0-2): Pale yellow and very clear. 1
AROMA (0-2): A bit of bitterness. 1
HEAD (0-2): Bright white color. Decent volume, but it dissipates rapidly. 1
TASTE (0-5): Mostly tepid flavors of sweet malt and corn. Clean and dry finish. Very drinkable. 2
AFTERTASTE (0-2): Fades very fast. 1
OVERALL (0-6): The bearded chap may well be the most interesting man in the world, but the beer he prefers (when he drinks beer) is far from the most interesting. Dos Equis Lager’s bland flavors are remindful of a typical American adjunct lager and there’s not much here to separate it from any macro offering. If you want to enjoy Mexican beer, there are better options out there even if they might be a little harder to locate. 2
TOTAL SCORE (0-19): 8
I spent most of last week on a business trip to Mexico and I am happy to report that I returned with all critical body parts (head, hands, etc.) still firmly attached to my torso. And I had the opportunity to enjoy a few cervesas along the way. In general, Mexican beer does not enjoy a good reputation in the United States. And while that negative impression is in some part deserved, there are some rays of light when it comes to swilling south of the border.
One example is Indio brewed by the Cuauhtémoc Moctezuma Brewery. It’s a dark lager that has more flavor and a bit more of a hop bite than one usually associates with Mexican beers. Victoria from Grupo Modelo is another Mexican beer that isn’t particularly exciting, but fares well when compared to the likes of Corona.
And on this most recent trip, I tried a Bohemia Weizen for the first time and found it quite refreshing. It’s another offering from the Cuauhtémoc Moctezuma Brewery which also produces the decent Bohemia pilsener. The Bohemia Weizen is a wheat beer with a higher alcohol content than you usually find in Mexican beers. It’s somewhat comparable to a Leinie’s Sunset Wheat (with less citrus punch) and it makes for a good alternative in a land of light lagers.
But it seems like the few decent beers that you find in Mexico are hard to come by in the United States. Corona is ubiquitous. Tecate is widely available. And we’re all familiar with the beer from this brilliant ad campaign:
Our beer of the week is Dos Equis Lager. Stay thirsty my friends.
12oz green bottle. Green and gold label with a couple of prominent red Xs as per the name.
ALCOHOL BY VOLUME: 4.3%
COLOR (0-2): Pale yellow and very clear. 1
AROMA (0-2): A bit of bitterness. 1
HEAD (0-2): Bright white color. Decent volume, but it dissipates rapidly. 1
TASTE (0-5): Mostly tepid flavors of sweet malt and corn. Clean and dry finish. Very drinkable. 2
AFTERTASTE (0-2): Fades very fast. 1
OVERALL (0-6): The bearded chap may well be the most interesting man in the world, but the beer he prefers (when he drinks beer) is far from the most interesting. Dos Equis Lager’s bland flavors are remindful of a typical American adjunct lager and there’s not much here to separate it from any macro offering. If you want to enjoy Mexican beer, there are better options out there even if they might be a little harder to locate. 2
TOTAL SCORE (0-19): 8
Monday, May 14, 2012
The Company You Keep?
So now we're considered part of Hugh Hewitt's Rabble on his Pinterest account? I don't even really know what Pinterest is, but I'll take this in the vein of any pub is good pub.
Sand, Sand, Sand
A story in today’s WSJ detailed a surprising off-shoot of the oil and gas boom in the United States. Sand Miners Race to Keep Up With Demand From Fracking (sub req):
The surging demand is making sand the Midwest slice of a national energy boom. Oil and gas producers in recent years have greatly boosted the use of horizontal drilling and hydraulic fracturing to tap reserves once out of reach. Sand, injected deep underground to prop open fractures in shale formations and allow oil and gas to flow out, is important in "fracking."
Wisconsin and Minnesota have abundant supplies of the type of sand that oil and gas producers need. Geological conditions were right hundreds of millions of years ago to form sand hard enough to withstand the pressure thousands of feet underground, while also having round grains that leave space so the oil and gas can escape. Fracking sand can fetch around $50 a ton, depending on quality.
Paul van Eijl, land-acquisition manager for Superior Sand Systems Inc., a Calgary mining company, recently set up a tiny office on Third Street in this Mississippi River port city, a color-coded map of sandstone formations behind his desk. Mr. van Eijl spends his days looking to strike deals with landowners for sand just below the surface, using county land records and Google Earth elevations to target properties.
Sand mines are popping up across the region. Wisconsin officials estimate that the number of mines in the state has doubled to more than 60 since just last fall. Those doing the mining range from Houston-based oil-and-gas producer EOG Resources Inc., which opened a mine in Wisconsin to supply its own production, to tiny operators that don't even process the sand.
As with any natural resource story these days, there is some wailing and gnashing of teeth from NIMBYs and environmental reactionaries about the potential detrimental impacts of a surge in sand mining. But most people in the region seem okay with the idea of getting a small sliver of the oil & gas pie. Let North Dakota crow about their oil. Anybody can exploit black gold. We’ve figured out a way to sell sand.
The surging demand is making sand the Midwest slice of a national energy boom. Oil and gas producers in recent years have greatly boosted the use of horizontal drilling and hydraulic fracturing to tap reserves once out of reach. Sand, injected deep underground to prop open fractures in shale formations and allow oil and gas to flow out, is important in "fracking."
Wisconsin and Minnesota have abundant supplies of the type of sand that oil and gas producers need. Geological conditions were right hundreds of millions of years ago to form sand hard enough to withstand the pressure thousands of feet underground, while also having round grains that leave space so the oil and gas can escape. Fracking sand can fetch around $50 a ton, depending on quality.
Paul van Eijl, land-acquisition manager for Superior Sand Systems Inc., a Calgary mining company, recently set up a tiny office on Third Street in this Mississippi River port city, a color-coded map of sandstone formations behind his desk. Mr. van Eijl spends his days looking to strike deals with landowners for sand just below the surface, using county land records and Google Earth elevations to target properties.
Sand mines are popping up across the region. Wisconsin officials estimate that the number of mines in the state has doubled to more than 60 since just last fall. Those doing the mining range from Houston-based oil-and-gas producer EOG Resources Inc., which opened a mine in Wisconsin to supply its own production, to tiny operators that don't even process the sand.
As with any natural resource story these days, there is some wailing and gnashing of teeth from NIMBYs and environmental reactionaries about the potential detrimental impacts of a surge in sand mining. But most people in the region seem okay with the idea of getting a small sliver of the oil & gas pie. Let North Dakota crow about their oil. Anybody can exploit black gold. We’ve figured out a way to sell sand.
Sunday, May 13, 2012
Regulators! Mount Up!
As the news of JP Morgan Chase's recent multi-billion dollar loss on derivatives transactions breaks, many people are asking the all too common question: where were the regulators?
I can understand the impulse to ask this question. The downfall of Lehman Brothers in 2008 significantly harmed the American economy and marked the beginning of a tough economic period from which we have yet to emerge. Government oversight theoretically could prevent future events of this sort from wreaking havoc with the American economy.
Unfortunately, I think the proposition of government providing appropriate oversight of major financial institutions is far fetched. The main reason why is that the government is simply not competent to provide such oversight.
Finance is an incredibly complex business. Successful executives at major financial firms make tens of millions of dollars in annual income. This attracts elite level talent to the industry, both interms of IQ and drive. I'd note that typical investment bankers out of MBA school work 60-80 hours every week and the top Ivy League MBA graduates tend to flock to investment banks. On the other hand, government workers are frankly not as intelligent or hard working. That's not an insult, it is demonstratable fact.
Even if government regulators were as talented as the management of the finance industry, they simply don't have the resources to develop the complete understanding of the transactions that take place at individual corporate levels. A company like JP Morgan Chase is just one of the thousands of companies that the Securities Exchange Commission is tasked with regulating. Companies like JPM/Chase have thousands of employees dedicated to their various tasks and they can work those employees for ridiculous hours. Regulators simply don't have the manpower to keep up. Because they are outsiders, they don't have the context to understand the activities that these firms undertake.
So what is the answer? Laws like Sarbanes-Oxley and Dodd-Frank have been unable to prevent events like we saw last week at JPM/Chase. I'd suggest that one role for government is to prevent financial institutions from getting too big to fail. That's a fine line to walk and I don't endorse that solution lightly. However, in an environment where Federal Government's the response to the failure of a large financial institutions is to initiate a near-trillion dollar loan program, I submit that we simply cannot afford to allow institutions to be "too big to fail." Other than limiting size and scope of such institutions, any regulation designed to prevent events like we saw last week is folly.
I can understand the impulse to ask this question. The downfall of Lehman Brothers in 2008 significantly harmed the American economy and marked the beginning of a tough economic period from which we have yet to emerge. Government oversight theoretically could prevent future events of this sort from wreaking havoc with the American economy.
Unfortunately, I think the proposition of government providing appropriate oversight of major financial institutions is far fetched. The main reason why is that the government is simply not competent to provide such oversight.
Finance is an incredibly complex business. Successful executives at major financial firms make tens of millions of dollars in annual income. This attracts elite level talent to the industry, both interms of IQ and drive. I'd note that typical investment bankers out of MBA school work 60-80 hours every week and the top Ivy League MBA graduates tend to flock to investment banks. On the other hand, government workers are frankly not as intelligent or hard working. That's not an insult, it is demonstratable fact.
Even if government regulators were as talented as the management of the finance industry, they simply don't have the resources to develop the complete understanding of the transactions that take place at individual corporate levels. A company like JP Morgan Chase is just one of the thousands of companies that the Securities Exchange Commission is tasked with regulating. Companies like JPM/Chase have thousands of employees dedicated to their various tasks and they can work those employees for ridiculous hours. Regulators simply don't have the manpower to keep up. Because they are outsiders, they don't have the context to understand the activities that these firms undertake.
So what is the answer? Laws like Sarbanes-Oxley and Dodd-Frank have been unable to prevent events like we saw last week at JPM/Chase. I'd suggest that one role for government is to prevent financial institutions from getting too big to fail. That's a fine line to walk and I don't endorse that solution lightly. However, in an environment where Federal Government's the response to the failure of a large financial institutions is to initiate a near-trillion dollar loan program, I submit that we simply cannot afford to allow institutions to be "too big to fail." Other than limiting size and scope of such institutions, any regulation designed to prevent events like we saw last week is folly.
Saturday, May 12, 2012
It’s a spirited 60 minutes of podcast excellence with John and Brian Ward. They’re joined this week by Dan Blatt of the website Gay Patriot. From the perspective of a gay conservative, Dan shares his unique insights on the big issues of the week, President Obama’s endorsement of gay marriage and Washington Post tales of Mitt Romney’s alleged bullying while in prep school.
By the way, I believe the only compelling evidence of Romney’s misbehavior is the uncanny resemblance of a 17-year-old Mitt to Alpha House’s Greg Marmalard.
Subscribe to:
Posts (Atom)