Issue #1: D-Bank
And so it goes, as Kilgore Trout may have summed it up. A story, a punishment, a trial balloon is "leaked" to the WSJ about a $14 B fine for Deutsche's now nearly decade old mortgage backed shenanigans and a "panic" quakes up in the bank's credit default swaps. Despite negative interest rates and heavy ECB bond buying the ancient institution continues to hemorrhage billions in losses annually. As said trial balloon melted more capital away from the bank - already nearly halved for the year - a more "palatable" $4 or 5 B number circulated through the water carrying press.
This game of governmental support and flogging has allowed for outrage on both the left and the right. A week ago we were enthralled with the public dressing down of John Stumpf for Wells Fargo's low brow fleecing of its customers. Others will argue that it is government oversight and regulations that are pushing banks into these unsavory activities. The truth is banking is and always has been a boring little business. National support for the industry was followed by massive fines for illegal and unethical behavior of systemic scale, paid for with electronically generated balances. (This international reach out, some believe, is tit-for-tat slapping after Apple. ) It's a self-perpetuating "There ALL Twix" ,circle jerk ,incestuous waste of time. Which leads us to
The Shallows. If you haven't read the WSJ Weekend page A11 opinion by Peggy Noonan, take 5 and do so. You don't have to subscribe to Noonan's world view to appreciate the truth behind "life in the shallows." The term comes from Nicholas Carr's book of same name. The notion comes close to one I've promulgated here, long ago, the internet makes us all dumber. Noonan and Carr see a direct link between the internet and media news cycle reporting. It's not just the election that has us wading in the shallows. The ability to deal with complex structural issues like the one described above is impaired by the thin emotional responses that are passed off as intelligent discourse. Which leads us to
Who is this Paul Volcker Senior Fellow for International Economics at the Council on Foreign Relations Sabastian Mallaby ? Mr. Mallaby has penned a new bird cage liner on Alan Greenspan called, are you sitting down?, The Man Who Knew.! Trotting out the usual genuflections to Ayn Rand and mysterious missing doctoral thesis, Mallaby constructs a revisionist history glowing portrait of the "Maestro." Reading this amazingly distorted view of recent history caused my soul to throw up in its mouth a little more than a few times. The sub-title is the "Life and Times of Alan Greenspan" but could easily be " Because He Made It Happen." From quid pro quo rate cuts for deficit reduction, GSE balance sheet pump ups to supply "AAA" debt , to self regulating financial innovations, Greenspan oversaw the mudslide. An ex-Randian leaving a decades long trail of activist tinkering that germinated the 3T monetary pornography we now call modern central banking. Long live Lincoln Savings #GIK.
And so it goes, indeed.