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Monthly Archives: April 2013

Perhaps, a Revolt?

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“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
– Henry Ford

In case you were wondering what the cost is of “Too Big to Fail” banks, the Federal Reserve has an answer – $440 million (about $4 for every household in the US).  If that seems low, well, it is.  It’s just what it costs to have “enhanced regulation” of those banks that have been declared “systemic” – legalese for protected by you and I.

Where did that number come from?  It comes at the end of a long, watered-down process that has finally defined just what it means to be one of the protected investment banks. It’s all the result of Dodd-Frank regulation that does more harm than good if this is all they can manage.  But perhaps we can make a bit more out of it …

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Gold Down for the Long Run?

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“The long run is a misleading guide to current affairs.  In the long run we are all dead.”
– John Maynard Keynes

A step back can be very illuminating, especially in economics.  History teaches us an awful lot when we are willing to pay attention to what it says to us (which is almost never).  The long run is also a good way to get away from current fashions, trends, and all the ways that everyone can fool themselves.  Of course, as Keynes tells us, you run the risk of making a completely different mistake in the process.  At least no two economists ever agree on anything, so there’s plenty of wiggle room.

It’s the bigger version of your typical financial reporting – “Stocks fell today on news that blah blah blah …”  when in fact it was just a drippy grey April day in New York and everyone felt lousy.

A decade-plus trend, the increasing price of gold, is coming to a spectacular end.  This may mean something very important – if it’s not the last gasp of the last bubble to work its way through our system.

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Cat Talk

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Is there anything cuter than when your cat “talks” to you?  Cat people all love that cheery “Brrrup!” first thing in the morning (ideally after dawn) or the hearty “Ma-row!” when they first get home.  Or when the food dish is empty, depending on your li’l one’s personality.  What does it mean, exactly?  If you are a veterinarian or other expert on cats you’re probably pretty sure it means … nothing.  That’s right, cat people, just about any felinologist will tell you that your furry box dweller is simply meowing and chirping for no real reason at all.

I don’t believe it, either.  In fact, I’m pretty sure that the domestic feline has some limited vocabulary that means something, even if we aren’t smart enough to understand it.  I doubt they are planning to kill us or report back instructions to an invading army back on the cat planet, so perhaps I am a bit naïve after all.  But here’s what I’ve found.

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Banking (and Insurance) Should Be Boring

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Man Behind Desk:  “Mr. Brain, As you know, we here at Fiero & Company are re-re-insurers.    We provide insurance to re-insurers, who insure insurance companies.”
Brain:  “Is that lucrative?”
Man:  “Take a look.” (opens drawer)
Brain:  (big eyed smile) “Ahem!”
– Pinky and the Brain, S1E2, “Of Mice and Man”

One of the basic principles of Barataria is that “Banking should be boring”.  The main argument against financial regulation is that it stifles innovation.  Yet that hallmark of the 2000s has been the source of excessive risk and nearly all the trouble we find ourselves in today.  When banking is boring, the world is quiet and stable and those of us not in financial dealings have a decent chance of actually getting ahead.

The same is true of insurance.  That’s not only true as a matter of policy, it’s apparently true as a matter of making a lot of dough.

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Six Years On

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“The ideas of economists, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”
– John Maynard Keynes

Six years ago on Wednesday this humble blog was started.  It’s been here MWF ever since, without a single break.  Typically, the anniversary post is a chance to talk about where Barataria has been over the past so many years and brag up the stats a bit.  But that’s not all that important.  What is important is that this blog has covered a momentous time in the economy and life and general with a singular perspective – there are some really wild things going on that I don’t understand, but we can talk about them and maybe work out something together.  It turns out that this perspective is far closer to what the “experts” have experienced than we thought.  And it’s been one Hell of a ride to hang onto.

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