Tuesday, July 25, 2017

Capital and Leverage Ratios


A couple of good articles on these two regulatory ratios from Clarus Financial:

Capital Ratio here:

CAPITAL RATIOS AND RISK WEIGHTED ASSETS FOR TIER 1 US BANKS

Leverage Ratio here:

SUPPLEMENTARY LEVERAGE RATIO: COMPARING US BANKS

If you look at it systemically, via the Fed's H.8 report of the system level asset composition, you can see that currently it is the Leverage Ratio that is the control ratio; due to current Fed monetary and Treasury fiscal policies.

We have about $12.5T total assets so with a LR of 7% that requires about $900B capital, risk assets of about $7.5T so with a CR of  8% that requires only about $600B.

Banks are over-capitalized via the Capital Ratio by 100s of $B and accordingly we see them increasing dividend and share buybacks with their earnings rather than adding to their regulatory capital accounts; they dont need any more or at least much more capital.

This should start to reverse somewhat when Fed starts to reduce the reserves in September...



Monday, July 24, 2017

Chase Madar — The Conservative Case for Universal Healthcare


Democrats may be about to lose a core issue if they don't wake up.

The American Conservative

Zero Hedge — Former CIA Director Calls For A Coup If Trump Fires Mueller

In the most vocal opposition to president Donald Trump yet, former CIA Director John Brennan said that if the White House tries to fire special counsel Robert Mueller, government officials should refuse to follow the president orders, as they would be - in his view - “inconsistent” with the duties of the executive branch.
"I think it's the obligation of some executive branch officials to refuse to carry that out. I would just hope that this is not going to be a partisan issue. That Republicans, Democrats are going to see that the future of this government is at stake and something needs to be done for the good of the future," Brennan told CNN's Wolf Blitzer at the Aspen Security Forum, effectively calling for a coup against the president should Trump give the order to fire Mueller.... 
Zero Hedge
Former CIA Director Calls For A Coup If Trump Fires Mueller
Tyler Durden

See also
Just six months after his inauguration, Americans already are split down the middle, 42%-42%, over whether President Trump should be removed from office, a new USA TODAY/iMediaEthics Poll finds.…
Those findings, designed to measure the intensity of opinion, also show a perfect divide, 34%-34%.
USA Today
Poll: Americans split 42%-42% on impeaching Trump

Yasser Abdih and Stephan Danninger — What Explains the Decline of the U.S. Labor Share of Income? An Analysis of State and Industry Level Data

“The U.S. labor share of income has been on a secular downward trajectory since the beginning of the new millennium. Using data that are disaggregated across both state and industry, we show the decline in the labor share is broad-based but the extent of the fall varies greatly. Exploiting a new data set on the task characteristics of occupations, the U.S. input-output tables, and the Current Population Survey, we find that in addition to changes in labor institutions, technological change and different forms of trade integration lowered the labor share. In particular, the fall was largest, on average, in industries that saw: a high initial intensity of “routinizable” occupations; steep declines in unionization; a high level of competition from imports; and a high intensity of foreign input usage. Quantitatively, we find that the bulk of the effect comes from changes in technology that are linked to the automation of routine tasks, followed by trade globalization.”

Lord Keynes — The 10,000 Year Explosion, Chapter 6: A Summary

Chapter 6 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution(2009) is called “Expansions,” and examines the genetic effects of large-scale migrations of human beings.
History is filled with examples of certain population groups that conquer, migrate into, or spread over large areas and replace other groups, or replace other groups with some mixing.
Cochran and Harpending (2009: 156) accept that cultural and technological advantages have played a large role in the success of such movements, but also contend that sometimes, in important cases, evolutionary genetic traits have also been a factor. In this respect, as in normal evolutionary theory, we must look at group fitness, and not just individual fitness, as factors in human history (Cochran and Harpending 2009: 158).
Social Democracy For The 21St Century: A Post Keynesian Perspective

Pepe Escobar — A coup in the House of Saud?


Gives "MBS" new meaning. It's no longer mortgage backed security but Mohammad bin Salman.

But just as MBS were involved in the global financial crisis that began with the housing bubble in the US; so too, Mohammad in Salman is poised to initiate a global political crisis. Pepe Escobar explains.

Asia Times
A coup in the House of Saud?
Pepe Escobar

James Petras — Imperial Power Centers: Divisions, Indecisions and Civil War

One of the most important outcomes of the Trump Presidency are the revelations describing the complex competing forces and relations engaged in retaining and expanding US global power (‘the empire’). The commonplace reference to ‘the empire’ fails to specify the interface and conflict among institutions engaged in projecting different aspects of US political power.
In this essay, we will outline the current divisions of power, interests and direction of the competing configurations of influence.
James Petras Website
Imperial Power Centers: Divisions, Indecisions and Civil War
James Petras | Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia

David Dayen — Single Payer, Meet All Payer: The Surprising State That Is Quietly Revolutionizing Health Care


Maryland.

Lord Keynes — The 10,000 Year Explosion, Chapter 5: A Summary

Chapter 5 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (2009) is called “Gene flow,” and looks briefly at the evolutionary changes induced by mixing of genetically distinct populations.
Social Democracy For The 21St Century: A Post Keynesian Perspective
The 10,000 Year Explosion, Chapter 5: A Summary
Lord Keynes

VIPS — Intel Vets Challenge ‘Russia Hack’ Evidence


Letter to the President.

Consortium News
Intel Vets Challenge ‘Russia Hack’ Evidence
Veteran Intelligence Professionals for Sanity (VIPS)

Awara — Doing Business in Russia: Russian Financial System


Short summary. Essentially, Russia is internationalizing (in effect Westernizing) its banking and financial system, as is China also.

Awara
Doing Business in Russia: Russian Financial System
Eugene Isaev

David Glasner — Hayek, Deflation and Nihilism


At least Hayek later admitted he was wrong about deflation being useful in breaking rigidities.

Uneasy Money

Martin Armstrong — China – A Different Central Bank Altogether

When I returned to the States, people I knew in the Fed and in Treasury called to ask me my opinion after these meetings with the Chinese government. I responded: It was great. They only hired people with experience!
Armstrong Economics
China – A Different Central Bank Altogether
Martin Armstrong

Steve Cecchetti and Kim Schoenholtz — The Other Trilemma: Governing Global Finance

Courses in international economics usually introduce students to the impossible trinity, also known as the trilemma of open-economy macroeconomics: namely, that a fixed exchange rate, free cross-border capital flows, and discretionary monetary policy are incompatible (see left panel of diagram). Why? Because, in the presence of free capital flows under a fixed exchange rate, private currency preferences (rather than policymakers) determine the size of the central bank balance sheet and hence the domestic interest rate. We’ve highlighted this problem several times in analyzing China’s evolving exchange rate regime (see here and here).
While many students learn that a country can only have two of the three elements of the open-economy trilemma, few learn that there also exists a financial trilemma. That is, financial stability, cross-border financial integration, and national financial policies are incompatible as well (see right panel of diagram). The logic behind this second trilemma is that increases in financial integration reduce the incentives for national policymakers to act in ways that preserve financial stability globally. Put differently, as the benefits from financial stability policies spread beyond borders, the willingness to bear the costs of stabilizing the system at the national level decline. This has the important implication that, if we are to sustain increasing financial integration, then we will need greater international coordination among national financial regulators (see here, or for a much broader case for international economic governance, see Rodrik). While this conclusion applies widely, nowhere is it more true than inside the euro area, where policymakers would like a fully integrated financial market, but still protect national champions (including financial intermediaries as well as exchanges)....
Money & Banking
The Other Trilemma: Governing Global Finance
Steve Cecchetti and Kim Schoenholtz

Deborah Bach — Babies can learn a second language in 1 hour per day

“Science indicates that babies’ brains are the best learning machines ever created, ...” says coauthor Patricia Kuhl, codirector of I-LABS and a professor of speech and hearing sciences.
A primary ask of educational research is how to harness this most effectively and efficiently. Presently, a lot of potential is going to waste. Waste is uneconomical.

World Economic Forum | Agenda
Babies can learn a second language in 1 hour per day
Deborah Bach

House passes budget-busting Defense bill


This same type of thing is going on with the Authorizations in the other departments as well.  FY 2018 shaping up nicely.

Seems like the authorization people and appropriation people are finally getting fed up with the moron budget people.

Always better to watch what people do vs. what they say.


The bill would exceed the president's $603 billion defense budget request. But it also would blow past the $549 billion cap on defense spending set under the 2011 Budget Control Act by about $72 billion.




Sunday, July 23, 2017

Paul Richard Huard — FACT: Viet Cong Commandos Sank an American Aircraft Carrier


Bet you didn't know this.

Here's why.
Not surprisingly, North Vietnam celebrated the sinking of Card, considering it a propaganda victory of the first rank. The U.S. government refused to even acknowledge the vessel’s sinking, telling the public the carrier had only been damaged.
Paul Richard Huard | military historian, free-lance journalist, and contributor to War Is Boring

Bill Mitchell – Germany fails to honour its part of the Greek bailout deal

In this blog – The fiscal role of the KfW – Part 1 – I recounted how the government-owned German development bank, KfW (Kreditanstalt für Wiederaufbau) – interacts with the German Finance Ministry to allow its fiscal balance to move into surplus without the commensurate level of fiscal drag that would normally be associated with that degree of fiscal withdrawal. The intent of the blog was to show how the Germans cleverly use their state-owned development bank to advance ideological positions not available to other states that have either privatised these type of institutions or never created them in the first place. It is ironic given the Germans insistence that countries like Greece privatise everything in sight. Today’s blog returns to the KfW, in part, because new information has emerged where we learn that the Greek crisis has allowed the German Ministry of Finance to run surpluses without melting their economy down. The KfW’s role in that regard is undoubted. It has been a source of bailout funds for Greece, on behalf of the German government, and has been pocketing handy profits ever since. This information shows that the popular claims that German taxpayers are bailing out Greece are clearly false and just political verbiage. Further, despite the understanding that the Member States (bailout partners) would remit any profits made on asset holdings associated with the Greek bailout, the Germans have reneged on that deal, in part, because it has channeled those profits through the KfW, which it claims is at hands length to the government, despite being 100 per cent government-owned.
Double-dealing.

Bill Mitchell – billy blog
Germany fails to honour its part of the Greek bailout deal
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Peter Cooper — Short & Simple 10 – Spending Independently of Income

It was mentioned (in part 2) that a currency-issuing government issues its currency in the act of spending. An implication of this is that a currency-issuing government does not need income in order to spend. We have also noted (in parts 5 and 9) that a household or business can spend independently of current income. They can do this either by drawing down past savings or through borrowing.
heteconomist
Short & Simple 10 – Spending Independently of Income
Peter Cooper

Steve Roth — Two Big Questions About the Job Guarantee: God, Devil, and the Details


More blather about the JG.

Answer to question 1: It's a job guarantee. It's advertised as a job offer for those willing and able to work that don't have a job offer from private sector employers in their area. To get the wage you have to show up and do the job you signed you for. What is so hard to understand about that?

Answer to question 2: These issues need to be articulated clearly and formulated into a legislative bill. The initial bill will likely be debated in the House and Senate and modified based on hearings, debate and lobbying. Just like every other policy proposal that becomes law.

Saudi Arabia turning off US oil tap










Wayne Madsen — The End of the ‘New American Century’ Pronounced by the Pentagon


Is the US military quietly signaling a historical turn of events comparable to Britain's decision to abandon empire? One item doesn't tell the whole story but it is indicative that it is being discussed at high levels.

Strategic Culture Foundation
The End of the ‘New American Century’ Pronounced by the Pentagon
Wayne Madsen

Lord Keynes — The 10,000 Year Explosion, Chapter 4: A Summary

Chapter 4 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (2009) is called the “Consequences of Agriculture.”
The effects of agriculture accelerated human evolution and selective pressures in the following ways:
Interesting tidbit:
Yet another cognitive trait that may have been selected for in farmers is the ability to defer gratification (Cochran and Harpending 2009: 114). This was an extremely important type of behaviour on which farming is based, and needed for sowing of crops or breeding of animals, when those plants or animals can be eaten in the present. Farmers with personality traits such as delayed gratification, patience, a work ethic, self-control, and long-term planning would have survived to produce more offspring (Cochran and Harpending 2009: 114). Curiously, this would also have bred more selfish people in contrast to hunter gatherers (Cochran and Harpending 2009: 115).
The would bear out Rousseau's assumption over Hobbes.

Conversely, this would speak in favor of Hobbes.
Farming allowed the creation of more advanced state-based societies that developed systems of law and order and punishments. Many such societies have imposed the death penalty for socially-harmful behaviour, as in crimes like murder, violence, and so on. In a stable society over time, this would likely kill off more aggressive individuals (usually men) and leave that society with a gene pool favouring less aggressive and less violent individuals (Cochran and Harpending 2009: 111–112). Some have argued that the high levels of social conformity in East Asian societies are not just a cultural phenomenal, but the result of long-run genetic changes influencing personality arising from the thousands of years of how these state-based societies in East Asia have operated. This raises the interesting possibility that highly developed state societies have “tamed” human beings in certain ways, not just culturally but also genetically (Cochran and Harpending 2009: 112–113), and that in modern agricultural societies (which have had agricultural and state systems for thousands of years), the average man today might be less aggressive and less violent than the average man 2,000 years ago, or 10,000 or 20,000 years ago. People from state-based, agricultural societies – with thousands of years of history – probably have different cognitive traits, on average, as compared with people in hunter-gatherer societies not subject to the same kind of long-term evolutionary change.
Social Democracy For The 21St Century: A Post Keynesian Perspective
The 10,000 Year Explosion, Chapter 4: A Summary
Lord Keynes

Saturday, July 22, 2017

Nathan Tankus — No, UBI Criticisms Are Not Implicitly Premised On The Idea the Racial Wealth Gap is Good (Sigh)


Nathan Tankus rips up UBI advocate Matt Bruenig and takes a shot or two at Matt Yglesias.

Go JG!

Tankus Notes
Nathan Tankus

Jason Ditz — CIA Chief Warns of WikiLeaks Plotting to “Take Down America Any Way They Can”


The CIA Director conflates the US Deep State and ruling elite with America.

Message for Mike Pompeo: Americans are fed up with endless war. This is all about "taking our country back."

The US Deep State, including the military and military-industrial complex, realize that the US can only present a credible threat in bullying its "adversaries" (read all that refusal to be the American elites' bitch) if the American people are behind more war. This requires the construction and control of a consensus reality by controlling the narrative. Wikileaks is a threat to that.

AntiMedia
CIA Chief Warns of WikiLeaks Plotting to “Take Down America Any Way They Can”
Jason Ditz

See also

The witch-hunt and smear campaign continue.
"Smears against the Green Party for participating in elections are nothing new, but raising the smears to the level of McCarthyism is a recent wrinkle," said Scott McLarty, media director for the Green Party, in an interview with The Hill.
Sputnik International
Jill Stein Comes Under Trump Jr.-Russia Probe Scrutiny

Fort Russ — Fake news alert!


The Hill this time.

Fort Russ
Fake news alert!
Izvestia - translated by Inessa Sinchougova

Izvestiya means "news" in Russian.
[Izvestia is] a Russian daily newspaper founded in 1917 as the official organ of the Soviet government. It continued to be published independently after the collapse of communist rule and the break-up of the Soviet Union. — Oxford Living Dictionaries — English

Aric Jenkins — You Should Update Your Apple Devices Immediately to Fix a Major Security Flaw


Public service message

Fortune — Cybersecurity
You Should Update Your Apple Devices Immediately to Fix a Major Security Flaw
Aric Jenkins

Lord Keynes — The 10,000 Year Explosion, Chapter 3: A Summary

Chapter 3 of Gregory Cochran and Henry Harpending’s The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (2009) is called the “Agriculture: The Big Change,” and examines the evolutionary impact of the agricultural revolution and urban life.
Social Democracy For The 21St Century: A Post Keynesian Perspective
The 10,000 Year Explosion, Chapter 3: A Summary
Lord Keynes

Ivan Eland — Trump’s Slide into Endless-War Syndrome


I am not sure that "slide" is the correct word. I would call it more a push than a slide.

"Ivan." Isn't that a Russian name? (Just kidding.)

Consortium News
Trump’s Slide into Endless-War Syndrome
Ivan Eland | Senior Fellow and Director of the Center on Peace & Liberty at the Independent Institute

Kerry McDonald — How Schooling Crushes Creativity

In 2006, educator and author Ken Robinson gave a TED Talk called, “Do Schools Kill Creativity?” At over 45 million views, it remains the most viewed talk in TED’s history.
Robinson’s premise is simple: our current education system strips young people of their natural creativity and curiosity by shaping them into a one-dimensional academic mold.
This mold may work for some of us, particularly, as he states, if we want to become university professors; but for many of us, our innate abilities and sprouting passions are at best ignored and at worst destroyed by modern schooling.…
Robinson echoes the concerns of many educators who believe that our current forced schooling model erodes children’s vibrant creativity and forces them to suppress their self-educative instincts....
Compelling research shows that when children are allowed to learn naturally, without top-down instruction and coercion, the learning is deeper and much more creative than when children are passively taught.
Like American philosopher and educator John Dewey said many decades ago. It was called "progressive education" by then as an alternative to education by rote, which is now called "teaching the test."

Progressive education involves emphasizing learning over teaching, discovery over schooling, and group (team) learning over individual instruction.

Then objective is learning for life rather than credentialing.

FEE — Foundation for Economic Education
How Schooling Crushes Creativity
Asif Aziz