Be Afraid – Be Very Afraid

We like to say we are just "a dog watching TV" because it embraces our seeing and hearing but not understanding 99% of what passes for news. Today we got a treat thrown at us by one Senator Merkley (D-Or) , Congressional overlord in the JPM hearings. The right fine gentleman wants to know why JP was buying 100B in IG9 (and hedging it) rather than making 100b in loans. Absent from the right fine gentleman's view was the fact that a simple loan is a capital affecting decision for a bank. Demand being far to an exotic concept for lawmakers.

Even more mind numbing, face-palming, throwing- coffee- at -screening was the complete lack of understanding of excess reserve banking and IOER Fed policy. Are we really surprised that the rules are so bad? Crisis management remains the only moving force in politics. We have written many times that the Shock Doctrine is practiced heavily on both sides of the isle. No one seems to be standing outside the fog and confusion any longer, however. As Veronica Quaife said of Brundle-fly, "Be afraid, be very afraid."

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