The media / press is lazy. In today's world of the 24 hour news cycle there is more filler and idiotic opinion than any semblance of diligent fact based reporting. The current topic in the financial sector is when / whether the Federal Reserve will or won't raise interest rates. What is missing in all this chatter is the fact that anything the Fed does in the next four months is meaningless. If the Fed decides to raise rates...So What? It will have no effect on the economic activity of this country or any other. There will be some speculation in the currency markets but it will be over quickly. Nothing the Fed is contemplating will have any effect in the real world. At best whatever the Fed does is window dressing but if you listen to the talking heads on TV you would think that the fate of the world was being decided on September 17, 2015

The main reason the Fed would raise interest rates is to choke off the economy and kill inflation. Commodity prices are falling because China has finally owned up to being just one big Government spending binge. The world is running out of storage for all the oil sloshing around the globe. Combined with the  stock market performance last week, which was a huge deflationary event, there is no economic reason for the Fed to do anything. With the rest of the world slowing down economically the US economy looks OK. If there were any real journalists in the financial news business they would be out talking to business owners, contractors, bank lending officers, local merchants etc. and actually try to ascertain what the US economy is doing. Don't hold your breath

One hundred years ago in the run up to World War 1 the European powers had been dealing with continual diplomatic crises which were resolved with short regional wars or diplomatic solutions. As each event unfolded each country became a little more reluctant to compromise and the national governments started playing to the fears and prejudices of their respective populations. Eventually the world "sleepwalked" into an enormous war. As I look around the financial world and its recurring crises I can see similarities with 100 years ago. Every event creates a little hardening of the national positions (i.e. French comments in re Greece), countries try to use the crisis to enlarge their sphere of influence (i.e. Russia in Ukraine etc.), every country playing the martyr (i.e. Greek premier posturing for the local voters)  and the rest of the world thinking no matter what the crisis will be avoided at the last minute. In 1914 when the world went over the edge most leaders of Europe were on vacation. Catastrophes can happen by accident and the European and Greek positions seems to be moving in the wrong direction.

On Bloomberg radio this morning there was a news item about China cutting the bank reserve requirement. The radio host said the GDP growth in China is around 7%. These two items taken together make no sense to me. Cutting reserve requirements for banks is a massive stimulus move and a clear indication that the central banking authority is worried about growth. If China's growth was an honest 7% I doubt there would be need for an extreme measure such as this. Beware of any economic statistics coming out of China.

Just in case anyone thinks there is not enough media coverage of the financial world, take a moment to consider all the air time and discussion currently about whether or not the Federal Reserve will or will not include the word "Patience" in their press release today.  The fate of the Republic cannot possibly hang in the balance but you would be hard pressed to guess that from all the huffing and puffing on the business channels. Stop! The reality is that the US economy is doing better than it should since the meltdown of 2008. Clearly the recovery is uneven and it has a ways to go. Commodity prices are falling and that will keep inflation in check. Interest rates are low and will be at historic lows for the foreseeable future. In the age of instant communication the world expects instant results from everything.

One thing that would help the economy is a reasonable fiscal policy from Congress. The constant make believe crises about the debt limit combined with the reluctance to fund necessary agencies and trying to address social issues in defense bills etc. wears thin after a while. The best thing for business is a constant somewhat predictable approach to government regulation and spending. This enables businesses big and small to plan for the future. Most business people I have met do not care which political party is in control, all we want is a consistent approach to fiscal policy based on facts not ideology.  

The reality of American elections is that when power changes in Congress the supporters of the newly elected congressmen or Senators expect their voices will be heard concerning legislation. The greater the support (read money) the faster the new Congress will move legislation near and dear to their supporters hearts. Currently the new Congress is looking to reform / modify / gut the Dodd-Frank act concerning the regulation of Wall Street.This comes at a particularly bad time because bank earnings are under pressure from decreased trading revenues. 

In 2008 the the world banking system almost collapsed. The banks having been trying to sell the narrative than somehow it was lower income people buying a house they couldn't afford that was the problem. The truth was that banks and brokerage houses were trading products they either didn't understand or knew were bad and just didn't care because they made so much money from them. Since 2008 the banks have demonstrated no particular ability manage risk i.e. JP Morgan and the 6 billion dollar loss with the "London Whale".  Wall Street is pushing Congress to change the Dodd Frank Legislation to enable the banks to continue to trade derivatives. Derivatives were the basis of the toxic assets that the banks foisted on investors and necessitated the bail out. 

This confluence of events of banks looking for earnings, a Congress sympathetic to Wall Street, a very compliant Federal Reserve monetary policy and a short memory about just how bad 2008 was seems to me to be a recipe for disaster. 

Yesterday the governor of NJ Chris Christie gave his state of the state address. The mystery for the citizens of New Jersey of every political persuasion is why the nation media thinks our plus sized governor is presidential timber. His record in NJ is abysmal and if the national news media was not inherently lazy and irrelevant they might spend an hour and examine his record. During his tenure he has promised to rectify the public pension mess and then promptly ignored the whole thing. (He is not our first Governor to do this, it is actually something of a proud tradition). He pretended to balance the budget by plugging in a growth rate of 5 to 7%, a rate that is patently false. His vision of the future is demonstrated by the two projects he supports. (I could have gone for the cheap joke here and say the two projects he threw his weight behind but I won't). The first is a bankrupt mall called Xanadu in North Jersey and the second is Atlantic City and casino gambling. I hate to break it to the Governor but malls are dying as consumers change their behavior and on line shopping get smarter and easier. The only thing dying faster than malls is Atlantic City. Casinos are closing, revenue is down and the city is a mess. Maybe if the Governor spent some time in NJ he would know these things.

Christie seems to have made his reputation by yelling at constituents whenever they disagree with him. If the news media would do some work they would find NJ lags the national economic recovery, the governor has no economic program and his vision for the future is mired in the past. He is in the words of the bard "Full of sound and fury,signifying nothing"

I have worked on Wall Street for 42 years and one of the things I have learned is good news is rarely all good and bad news is rarely all bad. The current good news, at least for the US consumer, is the rapid drop in oil prices. We are all looking forward to receiving a 30% discount at the gas pump. In today's age of globalization there will be unexpected consequences of a dramatic price drop of an essential commodity. The easiest and most obvious is that the oil producers will be under pressure because of the lower price, but what about the banks who jumped into the shale oil /fracking business to finance the projects? Oil is a capital intensive business and somebody has lent  a lot of money to projects that may not be viable anymore. Oil producing countries have been living fat dumb and happy for the last 30 or so years because they had all the money they needed. What happens if they get squeezed, will they have to liquidate their investments like London Real Estate or US Treasuries? Do we even know what they own? What is the political impact of the lower revenues vs expectations of OPEC citizens concerning government largess? What about mutual funds who sold indexed stock funds when oil companies are a big part of the composites? For every winner in this scenario like Airlines (because of reduced fuel costs) there will be a loser (citizens of Alaska who receive a state dividend from the trans Alaska pipeline).  The impact of this move will pop up in unexpected places.

At the end of Caddyshack (greatest movie ever?) Bill Murray starts blowing up the gopher holes and nobody know where the next blast will be, the markets appear to be in a position to repeat that performance. Be careful where you step.

Far be it for me to say something nice about AIG, but the lawsuit starting today should shed light into one of the dark corners of the financial bailout of 2008. The Federal Reserve and Treasury decided in the bleak, "world's coming to an end" days of Sept / Oct 2008 to pour money into AIG. The announced reason was to prevent insolvency of the insurance company and avoid another body blow to the markets. AIG did need bailing because that old Wall Street toxic recipe of greed, incompetence and lack of risk controls had bought the once proud company to the brink of bankruptcy. The way the Government poured money into the company did more to save AIG's trading partners than AIG itself. The AIG bailout's major beneficiaries were the parties who traded with the company (read Goldman Sachs, JP Morgan, Deutsche Bank, Merrill Lynch etc.) These trading partners were on the winning side of the trading bet but with AIG unable to pay, so what, they stood to become insolvent themselves. The money dumped through the insurance company help make them whole and kept these firms out of the bucket unlike Lehman Brothers.

I am not criticizing the Government's actions during the crises. Henry Paulson, Ben Bernanke and Tim Geithner were dealing with a major events every hour and they made a lot of decisions on the fly. The fact that we still have capital markets means they were more right than wrong. My objection concerns a year later when Wall Street was well on the road to recovery and the banks who benefited from the subrosa bailout were proudly taking credit for being great businesses. Lloyd Blankfein at Goldman couldn't wait to tell the world how much money the firm had made in 2009/2010 and Jamie Dimon was willing to admit he was the greatest banker ever. I have absolutely no sympathy for the banks as they complain about Dodd Frank act and increased scrutiny of their activities. I think we should go back to Glass Steagall and get commercial banks off Wall Street.