The week's off to a good start when hits the cycle Monday morning. In summary:
"Right now it looks like the "slowdown, but no double dip call" was correct (it is still early), and now I'm becoming a little more optimistic and taking the "over" on 2011 GDP growth (still no v-shape recovery though)."
-- Calculated Risk
Job creation is ramping up. Unemployment claims are declining. GDP is still growing. Commercial real estate should even stop contracting in the foreseeable future, so say the data. Maybe it's a post-holiday bout with optimism, but a lot of economic indicators seem really encouraging to me.
, an offshore wind farm currently in development off the Nantucket Sound, raised a minor fracas in the recent past.
Although it's tempting to attribute the opposition to a group of faceless billionaires who object to the view from their beach houses and yachts being inconvenienced by an intense need for energy from the shivering masses, it's instead reportedly the work of a only a few such billionaires, , who, it is of this blog's editorial opinion, is a sad, sad little man.
Anyways, there is an organization that exists solely to make sure Cape Wind never happens, and fortunately, it is currently broke! :
Raising an average of $3.6 million a year in 2003, 2004, and 2005, the organization aired television ads, paid a public relations firm, and staged a $1.5 million lobbying drive to try to persuade Congress to kill the controversial plan, which has become central to a national debate over the future of clean energy.
But last year, after losing the fight in Washington and focusing its attention on a crucial battle before state regulators, the alliance was falling into debt, raising only $1.4 million — a 50 percent drop compared with 2008 and its lowest yearly fund-raising total since 2002, the year the group was founded. By December, according to recently released tax returns, the organization’s balance sheet showed more than $500,000 in red ink.
I suppose this counts as a bit of cautious optimism, although I can't imagine what exactly has kept the money from rolling in from Koch and his ilk.
The renewed push to prosecute institutional investors and their contacts for insider trading raises an enormously difficult question: What, today, is the difference between trading on inside information and performing thorough due diligence on a trades?
The Wall Street Journal :
Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries.
It's patently wrong to disclose material information before it's announced broadly. But the illegality of being an industry expert who can accurately predict what will happen is another matter entirely. I really wonder what sort of information these probes will yield.
"You’ve heard about some of these pet projects they really don’t make a whole lot of sense and sometimes these dollars go to projects that have little or nothing to do with the public good. Things like fruit fly research in Paris, France. I kid you not."
-- Then-candidate Sarah Palin
Now (Nov. 2010):
"Researchers at Children's Hospital Boston have reported the find of a novel pain gene. …
The discovery, uncovered in a genome-wide hunt for pain genes in fruit flies, will lead to the development of [possible treatments and general public good.]"
There can be no stronger signal that U.S. cap-and-trade policy is dead than some news out of Chicago today: the Chicago Climate Exchange said this morning it is calling it quits.
The opt-in, voluntary exchange had more than 400 members and an aggregate supply of 680 million tons of carbon-dioxide equivalent, which is somewhere in the neighborhood of the annual carbon output of every U.S. household for the next six years. (Caveat: This kind of accounting is really, really hard.)
The environmental blog of The New York Times :
Activity on the exchange surged last year as Congressional Democrats [in the House] crafted and then passed comprehensive cap-and-trade legislation, as the exchange was regarded as well positioned to serve as a central vehicle for the emissions trading envisioned by the law. But when a similar bill failed to gain traction in the Senate and was abandoned this year, interest dwindled and the price of its carbon credits crashed.
, there has been no trading activity on the exchange since February. In contrast, trading on the European Climate Exchange, which, like the CCX, is owned by Intercontinental Exchange Group (NYSE: ICE), has steadily grown during the past few years because of the , the cap-and-trade program for members of the EU.
“I'm the man. I'm the man. I'm the man. Greene's the man. I'm the man. I'm the greatest person ever. I was born to be president. I'm the man, I'm the greatest individual ever."
-- South Carolina resident and former Congressional candidate Alvin Greene
Sometimes, I encounter prospective clients that don't really understand the process and approach required to achieve effective public relations. They want press mentions without anything newsworthy to say, or they want to pay fees based on how often their name appears in the press instead of traditional arrangements.
Usually, my response is that I'm quite able to generate a considerable amount of attention by saying profoundly and markedly ridiculous things. I guess Alvin Greene, in , has taken a similar say-anything route to stay in the news cycle.
The central bank is hoping that its plans to buy $105bn of Treasuries each month until well into next year will cause long-term interest rates to fall, encouraging households and businesses to spend.
A sustained rise in yields, therefore, could be a serious cause for concern.
The yield stood at 2.63 percent when the Fed announced its strategy on Nov. 3 -- and throughout October, when the Fed was likely signaling the spending to The Street, it crossed that threshold. It closed yesterday at 2.91 percent -- a 9.6 percent jump in just two weeks.
The consensus, as Mackenzie reports, is that yields will eventually fall as the Fed's buying will take place steadily over the next eight months. Still, for a plan that centers on lowering bond yields in order to stimulate spending, this is an awfully strange way to start.
I've been reading a lot about the financial technology that drives corporate treasury departments because of a new engagement as the U.S. press contact for .
A series of posts from Strategic Treasurer, a consulting firm, explains rather succinctly how, and why, corporate treasuries use derivatives, a topic that is widely misunderstood among folks who talk about financial engineering and high finance.
Sans commentary, here are the five misperceptions; read them :
Hedging Requires Crunching.
Derivatives = Speculation.
It’s Important for My Hedges to Make Money.
Risk Management Equals Hedging.
Risk is Absolute.
Hedging Eliminates Cash-flow Volatility.
The use of derivatives by treasury departments was an underreported part of the dialogue surrounding the financial reform bill, which later became the Dodd-Frank Act, earlier this year. I chased down I left in response to by Annie Lowery, who then covered policy for the Washington Independent, because it's still pretty relevant to the theme of corporate treasuries and derivatives use.
The opaque nature of derivatives is precisely what makes them an alluring financial product when used properly. Consider corporate treasuries, which commonly use over-the-counter derivatives to hedge business risks that are beyond their control. These transactions aren't speculative. They're more like an economic utility for many corporations that aren't in the business of [trading them].
Putting all derivatives on an exchange or something like an exchange, which is the only way I know of to force their pricing to become public to the market, takes this option away from the many market participants that use the instruments in productive ways. While I appreciate the good intentions, is it really good policy?
Though the Dodd-Frank Act requires greater levels of transparency for OTC derivatives, the proverbial elephant in the room is how regulators will interpret it. Generally, I expect treasuries that use derivatives in relatively benign ways will be exempt from a lot of the Act's provisions.
And having the benefit of retrospect, the exchange portion of the Act isn't the most harmful thing imaginable for treasurers. I recall hearing cries for policy that taxed derivative use by volume, which would have been much more harmful, potentially, for corporate treasuries that use the instruments responsibly.
I figure I can get away with posting this video of the Fed's recent $600 billion being talked about by cartoons because Reuters blogger .
Lest anyone think I'm perpetuating the things this video says -- I'm not. It's overly reductive and not even entirely right on its facts. But it is on-point about a few general themes -- the Fed's recent history as an economic fixer is dubious, and enlisting Goldman Sachs to deploy the funds is profoundly ridiculous (update: Matt Taibbi ) -- and that's what makes it funny. Find me some better comedy about monetary policy.
One thing I learned by reading on what consumers can do to change the banking system is that the state of North Dakota operates the nation's only state-owned bank, .
In contrast to most commercial banks, Bank of North Dakota (BND) is not a member of the Federal Deposit Insurance Corporation (FDIC). North Dakota Century Code 6-09-10 provides that all BND deposits are guaranteed by the full faith and credit of the State of North Dakota.
The deposit base of BND is unique. Its primary deposit base is the State of North Dakota. All state funds and funds of state institutions are deposited with Bank of North Dakota, as required by law. Other deposits are accepted from any source, private citizens to the U.S. government.
There is a of that speaks favorably of structuring consumer banks in this way, and as of earlier this year, five states that sought to establish state-owned banks.
