The “sequester” is not a crisis. The “sequester” is not the problem. The real problem is the massive growth in federal spending creating unsustainable deficits and debt that will be shouldered by generations to come. The “sequester” is a solution to a real problem facing America. That said, the “sequester” is not a great solution.The sequester cuts are not a smart way to address the spending problem. The sequester cuts are not adequate to solve the spending and unfunded liability disaster that looms in our entitlement programs. But the odds of getting anything smart out of this administration or this congress that makes even as little impact as do the sequester cuts are vanishingly small. Since it’s a bad bet to rely on our leaders for smart significant cuts, let us at least bank the cuts they already passed.
Archive for the 'Bad Decisions' Category
If Boehner can’t get House Repubs to play ball on a bill that Obama didn’t even agree to…what can we expect for something that’s worse in their eyes? Answer: nothing. Hopes of a grand-bargain — to shave trillions of dollars off the deficit by cutting entitlement programs and raising revenue — are shattered. House Republicans [...]
A High Frequency Trading proprietary algorithm crafted by highly compensated brains-on-sticks and nurtured in the bowels of an investment bank escaped into the wild. From its carefully co-located massively parallel high speed trading computer it emerged to wreak havoc on the financial markets. In this case, it was a happy ending. The algo turned on its master and sucked the very life blood out of the firm that deployed it.Once Knight Capital’s algo was identifed as the culprit, the public company’s stock was slashed by 1/3 – a $300 million market cap haircut decapitation. That was Wednesday before we knew how much the algo lost on the trades. On Thursday morning KCG’s stock was slashed in half again when the trading loss was being reported at $440 Million. The incident is yet another lights-flashing, klaxon-blaring warning signal that competing HFT algorithms operating with the speed, size and complexity that are commonplace today cannot be adequately regulated, tested, or managed. Their interactions with each other cannot even be fully understood or predicted.
Looking back at Jon Corzine’s statements to Congressional committees investigating MF Global’s failure, it is clear that he knew that e-mail was out there. He used the committee hearing to lay the groundwork for a “he said / she said” defense vis-a-vis MF Global treasurer Edith O’Brien. Perhaps O’Brien simply misunderstood JC’s intent. “You gotta fix it” could easily be misinterpreted to mean something like “Raid the client accounts if you have to, but get me the time to sell this piece of crap before the street figures out we’re insolvent.” That kind of misunderstanding happens all the time.
With Ranked-choice voting, Oakland voters are facing the question whether they legitimately elected an incompetent, or if they were denied the opportunity to vote for their preferred candidate for mayor.
China to Europe: ‘Your worn out welfare society and outdated labor laws induce sloth, indolence and penalize hard work.’By mw | Related entries in Bad Decisions, Bailouts, Banks, China, europe
Jin Liqun explains with crystal clarity the prerequisite conditions for China’s potential role as a “white knight” riding to the financial rescue of the Eurozone. To whit – if it is not good for China, and it is not a good investment, China is not going to participate in the European Financial Stability Facility (EFSF). Then in explicit terms, with no BS, no mincing of words, and no diplomatic artifice, Jin Liqun lectures Europe on exactly the problem with the Eurozone labor laws and welfare state.
Dipping into MF Global client funds to backstop the firm’s heavily leveraged high risk bets on European debt is about as serious as it gets. We’re talking – Federal Felony / Criminal Fraud / Grand Theft / Go To Jail / Do Not Pass Go / Do Not Collect $200 / Throw Away The Key / – that kind of serious. If tapping segregated client funds at a broker dealer is not criminal fraud, then it is at least criminal negligence for CEO Jon Corzine.
My hometown supervisors again set up The City for national ridicule and general hilarity, this time with the ban on Mcdonald’s Happy Meal toys. I guess it is a good thing that in these trying times we can offer ourselves up to the rest of the nation as civic clowns to help lighten the national mood.
I fully understand that – in the most progressive major city with the most progressive governing body in the country – it is impossible for them to resist the temptation to occasionally succumb to their core belief that no one is capable of making decisions for themselves or their family without their benevolent dictates guiding forcing us in the right direction. But… when even the Daily Show is pointing and laughing – you’d think our Supes might get a clue.
When an economic bubble bursts, normalcy can only return if the price excesses created during the bubble are wrung out of the market. A recession is often a painful but necessary market mechanism that corrects the pricing distortion and consequent misallocation of capital that occurs in a bubble. When government intervention prevents the mispriced asset class from fully deflating, capital continues to be misallocated and economic malaise lingers on. This is the takeaway message from Peter Schiff’s Wall Street Journal editorial.
Joe Scarborough tells the GOP to “man up” and take on Sarah Palin: Republicans have a problem. The most-talked-about figure in the GOP is a reality show star who cannot be elected. And yet the same leaders who fret that Sarah Palin could devastate their party in 2012 are too scared to say in public [...]