Sunday, October 22, 2017

If you follow the news you would be led to believe that everything that occurs is a self contained individual event. This is of course not true. Upcoming decisions which will seriously affect the economy which are linked are the new tax bill working its way to the surface and the next chair of the Federal Reserve. This needs to viewed as a single event.

Given recent legislative performance it is probably safe to assume that whatever tax bill is passed by Congress will be a mess. Just some of the preliminary ideas that have leaked make no sense  (decreasing retirement saving incentives) and judging by the Health Care debacle it seems like Congress has lost the ability to do any substantive work on legislation. Health care failed because no one put forth a carefully crafted workable attempt to address the issues involved. The whole process deteriorated into big-guy talk and posturing without any serious attempt to get to the underlying problem. This does not bode well for tax "reform" which is much harder. Consequently the next chair of the Federal Reserve should be closely watched because they will need to craft monetary policy to offset what I imagine will be a hodgepodge of bad ideas on tax policy. Twice in my career (which started in 1972) I have seen the damage the Fed can do under poor leadership, once in the 1970's under Arthur Burns and again in the 2000's under Greenspan. Hopefully the new Fed chair will be a serious person, if not be afraid, be very afraid.   

Monday, January 9, 2017

With the constant demand for content to fill the 24 hour news cycle, I wonder if anyone bothers to think about what they have written before they air it. Case in point: on either MSNBC or Bloomberg the other day, amid the wringing of hands about the decline of retail store sales among the big chains during the Christmas season, the crawling headline read "Amazon bucks the trend" I guess they were trying to indicate Amazon had a better season than guys like Macy's. Don't they get it yet, Amazon is the trend!

The headline of the article in the weekend WSJ read "Wells Revamps Pay After Scandal". In my naivete I thought "good" some of the board members and executives are finally going to held accountable for the fraud, misstated public reports, breach of fiduciary duty and probably a few thousand violations of the banking laws. What planet do I live on? The new pay scale was for low level employees at the branches. Why are the directors still in place, doesn't there have to be some accountability at the board level? What about the concept of "known or should have known".  This is reminiscent of the mortgage crisis in 2008, where the only guy personally charged with any wrong doing was a mortgage-backed salesman for Goldman Sachs who worked in Paris. Are you kidding me?

Great article on the CBS web site concerning a study of the housing bubble and subsequent melt down in 2008 here.