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At the New York Fed: Conference on the Effects of Post-Crisis Banking Reforms

Published by Anonymous (not verified) on Tue, 19/06/2018 - 9:00pm in

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banks, Regulation

Richard Crump and João Santos

The financial crisis of 2007-08 and the ensuing recession, the most severe since the 1930s, prompted a wave of regulatory reforms: tighter bank capital and liquidity rules, new failed bank resolution procedures, a stand-alone consumer protection agency, greater transparency in money market funds, central clearing of derivatives, and others as well. As these reforms have gradually taken effect, a healthy debate has emerged in the policy and academic communities over their efficacy in achieving their intended goals and possible unintended consequences.

On Friday, June 22, the New York Fed will host a conference featuring research conducted by its staff intended to contribute to this debate. The twelve studies were designed to carefully identify how key elements of the new regulatory regime and post-crisis reforms have affected bank risk-taking, funding costs and profitability, and market liquidity. The studies consider a wide set of regulatory changes, including the introduction of liquidity regulation, living wills, the supplemental leverage ratio, market value accounting to measure bank capital, the Consumer Financial Protection Bureau, among others. A distinguished panel of experts and academics will discuss the papers. Daniel K. Tarullo, former Federal Reserve Board member overseeing the Fed’s financial regulatory reforms and current visiting professor of law at Harvard Law School, will deliver the keynote speech.

Disclaimer

The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Crump_richardRichard Crump is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Santos_joaoJoão Santos is a senior vice president in the Bank’s Research and Statistics Group.

How to cite this blog post:

Richard Crump and João Santos, “At the New York Fed: Conference on the Effects of Post-Crisis Banking Reforms,” Federal Reserve Bank of New York Liberty Street Economics (blog), June 19, 2018, http://libertystreeteconomics.newyorkfed.org/2018/06/at-the-new-york-fed....

Private Eye Attacks Facebook Group for People Suspended from Labour

Private Eye has published much excellent material, and over the past few days I’ve blogged about some of the material revealed in this fortnight’s issue. But the magazine does have a very pronounced anti-Corbyn bias, and does seem to have swallowed, and regurgitated all the bilge smearing Corbyn and his supporters in the other parts of the lamestream media. It does seem to take as fact that the smears that Momentum is full of abusive misogynists and anti-Semites, and that the Labour leader and his supporters are ‘hard Left’ and Trotskyites. They aren’t. Corbyn and Momentum really are just traditional Labour, standing for the old Social Democratic policy of a mixed economy, and strong and healthy NHS and welfare state. All of which is anathema to the Thatcherite right – the Blairites – who have tried to position themselves as moderates when in fact the truth is, they’re the extremists. They’re extreme right. And outside the Labour party this is also unwelcome to the Tories and the mainstream media and its bosses pushing for more privatisation and further policies to destroy the welfare state and push the working class further into poverty. Because they see it as good for business having a cowed workforce on poverty wages.

In this fortnight’s Eye, for 15th-28th June 2018 on page 10, the pseudonymous ‘Ratbiter’ has published an article attacking a Facebook group for those suspended from the Labour party, and the attempts of its members to make contact with officials close to Corbyn to obtain justice or redress. It accepts absolutely uncritically the charges against them. And the end of the article once again repeats the claim that those suspended for anti-Semitism are automatically guilty, with an example of an anti-Semitic post from one of those in the group.

But many of those suspended from the Labour party for anti-Semitism and other offences are anything but, as shown in the cases of people like Mike, Tony Greenstein, Jackie Walker and very many others. As I’ve blogged about ad nauseam, ad infinitum. The article therefore needs to be carefully critiqued. It runs

Suspended Animation
Facebook has a secret and carefully vetted political group called Labour Party Compliance: Suspensions, Expulsions, Rejections Co-op. As the ungainly title suggests, it is a online hangout where Corbyn supporters facing disciplinary action for abuse, anti-Semitism and other loveable quirks can nurse their grievances in private. Or so they think.

Screenshots of the site obtained by the Eye show that the outcasts are not so far out in the cold they don’t have access to the highest levels of Corbyn’s Labour.

Take 17-year-old Zac Arnold, who has been suspended from the Forest of Dean Labour Party. He revealed he had “been given the email of someone called Thomas Gardiner by James Schneider at JC’s office, who said he would be a useful contact over my suspension”. He asked his fellow pariahs “what your thoughts are and if you know him”.

They certainly knew Schneider. “I have chatted with James,” said Caroline Tipler, the founder of the “Jeremy Corbyn Leads Us to Victory” Facebook group. “I def think it would be useful to make contact”. The best way to get back into the party would be to start by “making a tentative enquiry and gauge from the response whether to progress it from there”.

The “someone called Thomas Gardiner” to whom young Zac referred is a Labour councillor from Camden. When Corbyn assumed total control of the Labour machine in March by installing Jennie Formby, Len McCluskey’s former mistress, as Labour’s general secretary, Formby’s first act was to call in Gardiner.She sent John Stoliday, the head of Labour’s compliance unit, on gardening leave and put Gardiner in charge of overseeing complaints against members. So he is certainly a “useful” man to know for as any Corbyn supporter facing troublesome allegations – as indeed is Schneider, who works in the leader’s office alongside fellow Old Wykehamist Seumas Milne as Corbyn’s director of strategic communications.

Suspended members appear to think that, so long as they discuss their prejudices in private, they will be fine. Their Facebook group is splattered with posts painting Labour activists as victims of a Jewish conspiracy. “They will try to silence you,” reads one. “They will try to discredit you. Because you are not allowed to criticise Jewish politics.” But their own group suggests
that you are, as long as you aren’t caught and have friends in high places.

So what’s going on here? Well, first of all, the fact that Ratbiter claims to have had screenshots passed to him of the Facebook page shows that it’s not based on his research. It’s from an outside organisation. From the way this is about smearing Corbyn supporters as anti-Semites, it looks like it’s the Campaign Against Anti-Semitism or the Jewish Labour Movement up to their vile tricks again. The CAA’s modus operandi is simply to go back over people’s internet conversations in search of something vaguely anti-Semitic they can use, and then grossly distort it so that they can smear them. They did it to Mike, taking his comments out of context and grossly misreporting what he actually said. They did it to Jackie Walker and her conversation with two others on Facebook about the Jewish participation in the slave trade. Again, a serious issue, which reputable historians are discussing. Walker never said that Jews were responsible for the slave trade, or that they were exclusively in charge of it. She said that the ultimate responsibility lay with the Christian monarchs and states which employed them. There are, however, real anti-Semites, who claim that the Jews were responsible for the slave trade, and so the CAA smeared her, a practicing Jew with a Jewish partner, as an anti-Semite. Just like they’ve smeared Ken Livingstone, because he dared to talk about an embarrassing truth: that the Nazis did reach an agreement with the Zionists to send Jews to Israel, before they decided on the Final Solution. And then there was that entirely artificial controversy a month or so ago, where they smeared Corbyn himself as an anti-Semite, because of a post he made admiring a piece of street art showing bankers around a table resting on the bodies of black men. Only two of the bankers were Jewish, but nevertheless, the CAA and the Board of Deputies of British Jews frothed that it was ‘anti-Semitic’, trying to link it to all the vile theories about the Jewish banking conspiracy.

Unable to unseat Corbyn at the leadership elections, the Blairites and the Israel lobby have been trying to oust him gradually by suspending and smearing his supporters. As happened to Mike. The CAA’s vile article smearing him was passed on to the Labour party, who suspended him just as he was about to fight a council election as the Labour candidate in his part of mid-Wales. As Mike has blogged, he has appealed against his suspension, but was tried once again by another kangaroo court, very much like the one that decided that the veteran anti-racist campaigner, Marc Wadsworth, was an anti-Semite. The Labour party’s compliance unit is so determined to refuse justice to expelled or suspended members on trumped up charges of anti-Semitism, that there is now an organisation set up to fight them on this issue: Labour Against the Witch Hunt, one of whose organisers is the redoubtable Tony Greenstein. I think another is Walker herself. As for Wadsworth, he has gone on a triumphant tour defending himself up and down the country. His campaign was launched in London with Alexei Sayle. Sayle’s parents are Romanian Jews, who were card-carrying Communists, and Sayle himself was one of the leaders of the new, politically correct Alternative Comedy in the 1980s. He was very anti-racist, anti-sexist and pro-gay rights, as were the others that emerged at the same time. So he is very definitely not anti-Semitic.

Clearly, the movement to discredit the smear campaign against decent people unfairly libelled as anti-Semites is gaining ground, otherwise Ratbiter wouldn’t bother writing the article, and attacking and revealing the officials close to Corbyn, who may be prepared to give assistance to them.

Now let’s deal with their quotation that ‘you are not allowed to criticise Jewish politics’. Is this anti-Semitic? Or is simply a clumsy way of expressing a truth: that any criticism of Israel, or support for the Palestinians, will result in you being smeared and suspended. I strongly believe it’s the latter. And the issue of Israel has been deliberately confused with Jews by Israel and its satellite, Zionist organisations themselves. Netanyahu a few years ago declared that all Jews, everywhere, were citizens of Israel. Of course, it’s a risible statement. Many Jews don’t want to be citizens of Israel, a land with which they have no connection, and certainly not at the expense of the country’s real, indigenous inhabitants. Netanyahu and the other maniacs in his coalition don’t want all Jews to be citizens of their country either. Liberal or genuinely left-wing Jews, or Jews, who simply ask too many questions about the Palestinians and dare to think for themselves, rather than swallow Likudnik propaganda, aren’t let in. or if they’re there already, they get thrown out. As have dissident Israelis, like one historian now at Exeter University, Ilon Pappe, who was driven out of his homeland because he dared to describe and protest his nation’s long history of ethnically cleansing the Palestinians.

The organisations behind the smear campaign are Jewish organisations, or claim to be pro-Jewish, like the CAA and the Jewish Labour Movement, which was formerly Paole Zion, ‘Workers of Zion’. Now these organisations clearly don’t represent all Jews. They only represent those, who are fanatically and intolerantly pro-Israel. They also have gentile members, so it’s highly questionable just how ‘Jewish’ these Jewish organisations are. Those smeared by them include self-respecting and Torah-observant Jews, and they have subjected them to the kind of abuse, which would automatically be considered anti-Semitic if it came from a non-Jew. Indeed, many of the Jews smeared by them feel that there is a particular hatred of Jewish critics of Israel. Just like the founders of Zionism were absolutely dismissive of diaspora Jews.

Given this, it should be no surprise if a non-Jew, who has been smeared, becomes confused and says that you can’t criticise ‘Jewish politics’, meaning Israel. Because these Jewish organisations, including the Board of Deputies of British Jews, insist that you can’t. And deliberately so, in order to make it easier to claim that all critics of Israel are anti-Semites.

This is a nasty, mischievous and deceitful article. It is designed to further isolate Corbyn by smearing his supporters and attacking the official close to him, who may be able help them. And it repeats the lie that all of those smeared are anti-Semites. It’s publication is a disgrace to Private Eye.

Private Eye: Blair and Cronies Return to Fund Progress Thatcherites

According to this fortnight’s Private Eye, 15th-28th June 2018 Tony Blair and other wealthy donors have returned to fund Progress, the Thatcherite entryist group in the Labour party. The article states that ‘since its foundation, Progress has promoted Blairite candidates and motions inside the party’. The article goes on to state that it has, however, lost most of its internal battles since Jeremy Corbyn came to power, and that Lord Sainsbury’s announcement that he was no longer donating to it was a major blow. It’s now looking for new funders.

The article cites the Electoral Commission to reveal that the liar and unindicted war criminal gave it £10,000 on 26th March. The article states that this is the first time Blair has given it anything from the vast wealth he’s made from his various consultancies since leaving office.

Other donors include the City headhunter, Jeremy Breaks, who gave Progress £8,000 in April. He’s never given to the Labour party, but did give £2,000 to Owen Smith’s campaign for the Labour leadership.

Another financier, private equity investor Stephen Peel gave them £10,000 in January. He also hasn’t donated anything to the Labour party, but tellingly he did give the Tories £50,000 in 2008. He also funds and sits on the board of a business-orientated Remain group, Best For Britain.

Martin Clarke, the chief financial officer of the AA, also gave Progress £10,000 in February. He’s a long-standing Labour supporter, but his only recorded donation to the party was £2,960 to the Morley and Outwood Constituency Party in 2014. He also gave money to one of Corbyn’s rivals. In 2015 he gage £37,500 to Yvette Cooper’s campaign to gain the Labour leadership. (Page 12).

Blair and the other donors to Progress are thus the same City types, for whom Blair decided to sacrifice the manufacturing sector, and betray the party’s working class roots and supporters, privatising industry, including the NHS, cutting welfare and state aid, all to ingratiate himself with big business, Murdoch and the right-wing press, and swing voters, who would otherwise vote Tory. It also shows just a touch a desperation on the part of Progress and Blair himself. Progress were never more than a tiny faction in the Labour party, which succeeded because they held the levers of power. Now their power’s waning, they’re desperate to get more money. And if Blair’s donating to them for the first time ever, it shows that he’s worried that his political legacy is also in jeopardy.

Hey, Economist! Outgoing New York Fed President Bill Dudley on FOMC Preparation and Thinking Like an Economist

Published by Anonymous (not verified) on Fri, 01/06/2018 - 9:00pm in

LSE_2018.06.01-LSE-Dudley_920x576

Bill Dudley will soon turn over the keys to the vault—so to speak. But before his tenure ends after nine years as president of the New York Fed, Liberty Street Economics sought to capture his parting reflections on economic research, FOMC preparation, and leadership. Publications editor Trevor Delaney recently caught up with Dudley. This transcript has been lightly edited.

Q: Lawyers sometimes refer to ‘thinking like a lawyer.’ How would you describe what it means to ‘think like an economist?’

The classic joke is that economists are ‘on the one hand…on the other hand.’ Lawyers are advocates for a given point of view and prosecute under a well-defined set of rules of law. I think of lawyers as advocates and economists as almost like a justice balance—where they’re trying to weigh the evidence very carefully to see where the preponderance of the evidence lies.

So economists may be a little bit more open-minded to the facts—not to say that lawyers aren’t, but a lawyer’s job is to do something, to advocate a position, to protect a positon. So they’re starting with a very strong
a priori view. I think economists start with a priori views, in the form of a hypothesis, but if the evidence is inconsistent then they start to change the theory and hypothesis, as opposed to arguing that the evidence is obviously not applicable.

Q: You were an economist on Wall Street before joining the Fed. What differences have you noticed between Wall Street economists and the research-oriented economists here on Liberty Street?

A big difference is that Wall Street economists cover a broad range of topics. When I was at Goldman Sachs we had four people covering the U.S. economy—they covered pretty much the gamut of all the policy issues that might have some economic content. Wall Street economists try to synthesize an abundance of information into material that’s useful for the person who’s trying to figure out the world that we live in. A research economist is trying to push the frontier of knowledge outward, so that’s a very different goal.

At the New York Fed, research economists play a hybrid role. They’re doing research that’s trying to push out that knowledge frontier. But they’re also taking all of their knowledge and analytical ability and applying it to real-world policy problems. In my mind, a good research department in a Federal Reserve Bank consists of people who are top-notch in terms of their academic qualifications and ability, and who are interested in real-world policy problems—which creates a tremendous value for the Bank.

Q: During your tenure, has the role of research changed a lot at the New York Fed? …the processes?

I don’t think that it’s changed dramatically. The research department was very good when I came here, it’s very good now. I think probably what’s happened—I don’t know if this is accurate, but it’s a perception on my part—it feels like the research that we do is a little bit more closely aligned with the mission of the Bank than it was ten or fifteen years ago. I don’t think it’s something that was deliberately forced. The work of the Bank has become so interesting in the aftermath of the financial crisis and we have such a wealth of information here compared to other places. I think those factors have caused the research department to want to work on issues that are very consistent with the broader goals of the Bank. The research department is probably providing a little more value to the Bank just because that alignment is a bit closer.

Q: ‘Big data’ is much discussed these days. Has it already had a significant impact on economic research or is that story still evolving?

I think big data is already making a big impact in the world—think about artificial intelligence, machine learning. In the Bank, we’re probably in the early days. I think the biggest data set that we use is the anonymized credit files that we get from Equifax [New York Fed Consumer Credit Panel]. That’s a big data set, but that’s ‘big data’ in a more traditional way, it just happens to be a lot of data. As opposed to big data in the sense that you’re synthesizing a whole bunch of different streams of data and trying to extract information out of it.

The credit analysis has been great though. To be able to take all that information from those credit files and figure out what it means for types and classes of individuals—based on their backgrounds, their locations, their incomes, their educations—has been really valuable.

Q: The New York Fed has researchers focused more on financial markets and others focused on the ‘real’ economy, like the labor market. How do you look at factors on the financial side of the economy versus factors on the real side?

It’s the rare person who can look across both spheres because you come out of school with a specialty. My specialization was industrial organization. I only took one macro class. It was the only class I got a B in in graduate school. I got the B from George Akerlof, Janet Yellen’s husband. It didn’t seem to hold me back in the long run, but it is a little ironic.

One of the challenges going into the financial crisis, for example, if you look at the big DSGE model—dynamic stochastic general equilibrium model—it didn’t include a finance sector. So the whole experience of what actually happened during the global financial crisis—the collapse of the financial system and that taking down the real economy—wasn’t an actual possibility within the major macro models that some economists were using to forecast the economy. So that sort of shows you that you’ve got to bring both disciplines to the table. And there has been progress incorporating financial factors into these models. We were nowhere, now we’re probably at the first or second grade.

Q: So how do you synthesize information from both sides?

In terms of how I think about the two sides, I think a lot of the real economic indicators are more of a description of what’s happening today. The financial indicators give you a lot more information about what people expect to happen tomorrow and how the economy is likely to evolve, conditioned by those economic indicators.

For twenty years now, I’ve been a big proponent of thinking about things through a prism of financial conditions. In other words, the Federal Reserve sets monetary policy, and that monetary policy sets financial conditions, and those financial conditions are what actually drive the economy.

Historically macroeconomists imagined that changes in federal funds were transmitted directly from the Fed to the macroeconomy. But in my mind, the linkage between the federal funds rate and financial conditions is quite variable. So if you just focus on the federal funds rate, you’re going to, at times, make pretty bad forecasts about what’s actually going to happen in the real economy. When I was at Goldman, I found that focusing on financial conditions really helped me, in terms of thinking about the economic outlook and how the economy is going to evolve.

Not to say that everybody has accepted that financial conditions framework, but boy we certainly talk about financial market conditions a lot more broadly today than we did ten years ago. It’s part of the vernacular now, even at the Federal Reserve.

Q: The Federal Open Market Committee, which sets monetary policy for the Fed, is the subject of intense scrutiny. What color can you share about your preparation for FOMC meetings?

How the process works depends on who the Bank president is and what their background and interests are. I run things both closely with the research group, in terms of monetary policy, but also pretty independently. We’re talking and having a lot of dialogue and the research department produces a lot of material for me to consider. And I push back and ask the research department to work on x, y, z—so it’s very much a two-way street.

When it actually comes down to writing the monetary policy briefing that I give to the FOMC, I really don’t ask research to tell me what to say. I’m taking all of the stuff that we’ve been talking about over the six weeks between FOMC meetings on board, then I’m producing my version of what I think.

Q: You’ve argued that supervision and regulation aren’t enough to ensure the effectiveness of the financial system and that banking culture plays an essential role in risk management. How do you think financial firms can advance on that front?

There’s a bunch of steps that I’d like to see the industry take that they’re not quite doing yet. Economists always ask if something is incentive compatible. Why do they talk about that? Because incentives really matter in terms of driving behavior. And behavior ultimately determines what conduct is, and conduct establishes the social norms that define culture. So I think that there’s really a link back to our discussion about culture, back to economics, because it’s really through this incentive channel that things can change. So economists think about incentives all the time, they always ask: ‘What are the incentives in place?’ ‘How does that drive behavior?’

If you think about this in the context of economic models, it’s the rational man or woman taking all the information in the world and trying to solve it in a totally rational way—a view that’s come under scrutiny over the last couple decades. Behavioral economics has said, wait a second, it’s not this super-rational person that’s solving all these things. There are a lot of decisions made by shorthand metrics and as Daniel Kahneman noted, a lot of decisions are made with very little thought or conscious attention. It’s a little bit of an exaggeration. At the same time he's absolutely right in that incentives really do matter, and they do drive behavior and I think that’s how economists think about the world.

Q: You’ve led an institution that plays an important role in the U.S. and global economies. What leadership principles have helped guide you as president of the New York Fed?

Well, the important thing is that you have to practice what you preach. People look at actions a lot more than they listen to words or exhortations, so try to see that your actions are consistent. In other words, if I want people to be open to ideas, I need to be open to ideas too. When I started as president of the Bank, the first time I spoke at a Bank town hall, I shared the outlook that, ‘the best idea wins.’ I emphasized best so we at the Bank would focus on the quality of the idea, and not who was advancing it.

I thought that would be a good way of saying what we’re for. We’re for the best ideas. We don’t have a lot of ideological baggage that we’re carrying around that’s causing us to reach inferior conclusions because we have blinders on. But also because basically it says that this is not going to be a top-down kind of process. The best idea could originate anywhere in the organization and if we’re listening and communicating well, that idea will be communicated upward in the organization.

Rather than have the person at the top try to think of a big idea, I wanted a thousand flowers to bloom and for all of these ideas to percolate throughout the organization, and people parsing through those ideas. If you have lots of ideas competing, the winning idea will probably be a lot better.


Related Reading:

Speech: Important Choices for the Federal Reserve in the Years Ahead (April 18, 2018)

Disclaimer

The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

How to cite this blog post:

"Hey, Economist! Outgoing New York Fed President Bill Dudley on FOMC Preparation and Thinking Like an Economist,” Federal Reserve Bank of New York Liberty Street Economics (blog), June 1, 2018, http://libertystreeteconomics.newyorkfed.org/2018/06/hey-economist-outgo....

Afshin Rattansi Asks What Boris Johnson Is Doing in South America

In this short clip from RT’s ‘Going Underground’, host Afshin Rattani raises the question of what Boris Johnson is doing in Chile, Argentina and Peru, and reminds his viewers of the atrocities committed by Chile’s bloody dictator, General Pinochet. Johnson began a tour of these countries yesterday. Rattansi describes all of these countries as allegedly America’s proxies, but particularly Chile. He tells how Pinochet was warmly supported by Johnson’s heroine, Margaret Thatcher. Pinochet overthrew the democratically elected Socialist president, Salvador Allende, in a CIA-backed coup. The dictator was responsible for the murder and disappearance of 40,000 people. There is a sequence, in which Raymond Peredes, the son of the head of the Chilean army under president Allende, describes what happened to his father. He had every bone in his body broken, and was burned with a flame thrower before finally being shot with 20 bullets. His killers, however, did not touch his head, because they wanted him to remain conscious.

Pinochet was arrested by the Labour government after he came to London, following a warrant put out by a Spanish examining magistrate, judge Baltazar Garzon, who charged him with genocide. There is also a clip of Jeremy Corbyn stating that Pinochet does not enjoy diplomatic immunity from the charges, which including hostage-taking, genocide and extraterritorial murder.

But the old brute was defended by Maggie Thatcher, here looking even more aged, decrepit and malignly insane than ever. Thatcher stated that he’d been a good friend and ally of Britain, but now, thanks to his arrest, his health had been broken and the esteem of Britain’s courts around the world damage. So, as you might expect from a Tory premier, who backed Fascists and Fascist death squads throughout Latin America, there’s plenty of sympathy for him and none whatsoever for the tens of thousands he tortured and murdered. After his arrest, he was released by Tony Blair’s government. Rattansi continues that today the country is in the grip of more neoliberal change, which the opposition claims will cause further poverty.

Rattansi goes on to cover Argentina, where he says that Margaret Thatcher arguably helped end one American proxy dictator after she won the Malvinas/Falklands War. However, he states that ‘the bad old days’ could be returning, because the country’s president, Macri, has just taken out a loan with the IMF. Rattansi goes on to report how the president of Peru, Martin Vizcarra, hasn’t been elected yet. He only took power after his predecessor was forced to resign in a corruption scandal. But he was first to welcome US vice-president, when he touched down last week. The clip ends with Pence stating that all Latin America’s problems are due to the president of Venezuela, Maduro.

From this it seems that Boris has gone to these countries, to wee what Britain can pick up once neoliberalism hits these nations once again. In return for loans, the IMF insists that countries approaching it for aid scale down their welfare spending and privatise their state industries, usually by selling them to the Americans. It’s been described as part of the international network of American corporate imperialism. My guess is that Johnson is hoping that we might be able to buy some of the privatised industries in Argentina and also Chile and Peru. And it’s always good to remind people just how nasty Pinochet was, as well as Thatcher’s deep affection for the butcher. This tells you exactly what kind of person Thatcher was, and what kinds of people those who continue to idolise her, like BoJo, are.

As for Blair’s arrest of Pinochet, that was hopelessly bungled. There was a question about it at the time on the Beeb’s News Quiz on Radio 4. Clive Anderson, who is a lawyer as well as comedian and broadcaster, stated that in situations like that, nations are supposed to issue warning notices that particular individuals will not be welcome in their countries and would be subject to arrest before they arrived there. Blair didn’t. Chile did help us during the Falklands War, which is partly why Thatcher defended him. But he was still a brutal dictator, responsible for horrific and indescribable crimes.

Boris Blusters as Thornberry Tells Him to Resign

I’ve already put one piece up, commenting on how Boris ran from the chamber when Emily Thornberry rose to ask for the government’s comment about the Gaza massacre. Just as he also ran away from her in February, when she terrified him with a question about Northern Ireland. And in this short video from RT, she lays into Johnson again, over the case of Nazanin Zaghari-Ratcliffe.

Mike reported last week that the Iranians had added yet another trumped up charge to Mrs Zaghari-Ratcliffe’s list of spurious crimes, and increased her sentence. This time she has been charged with spreading propaganda. It’s sheer nonsense, of course, but it shows the arbitrary, despotic nature of the regime.

However, this woman’s plight has been compounded by the sheer, hamfisted incompetence of the current Foreign Secretary, Boris Johnson. The Iranian government claimed that she was really spying, and had been teaching journalism during her stay in the country. She hadn’t. She’d actually been taking her daughter, Gabrielle, to meet her Iranian family. Boris, however, decided to leap in with both feet, and claimed in a TV interview that she had indeed been teaching journalism, thus apparently confirming the Iranians’ charges.

There was naturally an outcry against Boris for so ignorantly making the situation worse. So Michael Gove decided to exercise his minuscule intellect, and appeared on television to defend BoJo. And he made matters worse, by stating in an interview that ‘we don’t know what she’s doing’. In fact, the government knew perfectly well what she was doing, and BoJo and Gove only had to look at the briefing papers. Neither of them appear to have bothered. This wouldn’t have surprised Ken Livingstone, who said that Boris often didn’t read them.

Mike in his article about the issue raised the obvious question of why Boris Johnson is still Foreign Secretary, considering all he’s done is make matters worse. He concluded that he is only there, because someone wants him there, not because he has any talent.

https://voxpoliticalonline.com/2018/05/21/innocent-brit-faces-more-years-in-iranian-jail-tory-who-failed-to-rescue-her-is-still-foreign-secretary/

In the video, Thornberry turns her attention to Mrs. Zaghari-Ratcliffe’s case, and asks how many times more times must Boris this happen? How many more times must he insult our international partners and damage our international relations, and imperil British nationals abroad, before Tweezer sacks him? And if she doesn’t, because she doesn’t have the strength or authority perhaps Boris himself should show a bit of personal authority that this job, where words have gravity and actions have consequences, is not for him.

BoJo then bounces up and starts blustering, stating that it is unfair to attack the Foreign Office, that have been working day and night so secure Nazanin Zaghari-Ratcliffe’s release. To which Thornberry simply mouthes ‘Just you’, pointing to the fatuous buffoon. He then goes on to claim that her comments are a distraction from the people, who are really responsible for Zaghari-Ratcliffe’s situation.

This then provokes heated remarks from both sides, with the Deputy Speaker crying for order.

Boris is right that the people really responsible for Mrs Zaghari-Ratcliffe’s imprisonment are the Iranians. But they’ve been assisted in this by Boris’ massive incompetence. It’s also very clear to me that they’re holding her as a political bargaining chip. When they first imprisoned her, Boris ended flying out to Tehran, and Britain mysteriously unlocked about £250 million of Iranian funds, that had previously been frozen in banks over here. Both sides claimed that this was unrelated to Mrs. Zaghari-Ratcliffe’s imprisonment, but it looks far too much that it was very much connected for the excuse that it was all coincidence to be at all convincing. The problem is that the Iranians have learned that all they have to do is retain Mrs Zaghari-Ratcliffe and add a few more years to her sentence, and the government will automatically try anything to secure her release. Try and fail, because she’s too big an asset for them to throw away now.

And I think that the fresh charges they’ve drummed up against Mrs Zaghari-Ratcliffe are not unrelated to the current crisis in American-Iranian relations. America has imposed sanctions on Iran, and has blocked them from using the dollar as their currency of international trade. Even third party companies, who are not American, are prevented from trading with Iran in dollars, if they wish to do business in America. This is intended to make it difficult for the Iranians to trade oil, as the Americans have made the dollar the international trade currency for it. This has the benefit, for the Americans, of boosting their economy. If the world stopped using the petrodollar, and switched to another currency, the American economy would be devastated. Hence one possible motive for the Americans’ overthrow of Colonel Gaddafi was because the Libyan dictator was planning to ditch the dollar, and set up the dinar as an alternative trade currency. Venezuela was also planning to ditch the dollar. And the Russians and Chinese have also made similar plans.
And the Iranians have gone through with theirs, and replaced the dollar with the euro. This has resulted in Trump and his colleagues going berserk, and threatening all kinds of reprisals against Iran and Europe.

Also, while many Iranians are probably quietly in favour of better relations with the West, official Iranian ideology demonises both America and Britain. America is ‘the great Satan’, while Britain is ‘the little Satan’. And there is much popular suspicion and hatred of Britain as the country’s former colonial master. The country was never formally incorporated into the British Empire, but we owned their oil industry and interfered many times in their politics from the 19th century onwards. The Qajar shahs were overthrown and replaced with the Pahlavis because they took out loans with us for modernisation, which they could not repay. And we overthrew their last, democratically elected president, Mossadeq, because he nationalised the Iranian oil industry. The Iranians therefore have a saying, ‘If there’s a pebble in your path, it was put there by a Brit.’

The Iranian dissident, Shirin Ebadi, has said that so great is this popular hatred of Britain, America and the West, that it is actually harmful for them to support Iranian dissident movements. When that is done, the Iranian authorities try to undermine them by claiming that these are subversive movements working against Iran with the country’s colonial enemies.

It therefore seems clear to me that the Iranians are keeping Zaghari-Ratcliffe as a possible bargaining chip in case of further confrontations with America over their switch from the petrodollar to euro. As well as Trump withdrawing from the nuclear treaty Obama signed with the Iranians. And the Iranian authorities are probably also keen to exploit the propaganda value of continuing Zaghari-Ratcliffe’s imprisonment, while Britain impotently pleads for her release.

Boris is right that the real villains in this are the Iranians. But they’ve been assisted by his and Gove’s massive incompetence. Thornberry is right. It’s long past time Johnson was sacked. Not just because of Zaghari-Ratcliffe, but because of all the other stupid mistakes he’s made, which have threatened our international relations, business interests and the welfare of our citizens abroad.

But Mike’s right. May won’t sack him, because he’s too dangerous to her outside the cabinet. So he will continue in his post as foreign secretary for as long as she’s in power.

Which means that, if we want to do something to improve diplomatic relations and free Mrs. Zaghari-Ratcliffe, they’ll both have to go.

Have the Biggest U.S. Banks Become Less Complex?

Published by Anonymous (not verified) on Mon, 07/05/2018 - 9:00pm in

Tags 

banks, Regulation

Linda S. Goldberg and April Meehl

LSE_Have the Biggest U.S. Banks Become Less Complex?0

The global financial crisis, and the ensuing Dodd-Frank Act, identified size and complexity as determinants of banks’ systemic importance, increasing the potential risks to financial stability. While it’s known that big banks haven’t shrunk, the question that remains is: have they simplified? In this post, we show that while the largest U.S. bank holding companies (BHCs) have somewhat simplified their organizational structures, they remain very complex. The industries spanned by entities within the BHCs have shifted more than they have declined, and the countries in which some large BHCs have entities still include numerous “secrecy” or tax-haven locations.

Measures of Bank Complexity

While BHC size is essentially unidimensional (measured in terms of assets), complexity is a multidimensional concept, which in the system established to address global systemically important banks is considered as a combination of balance sheet and derivatives exposures and the number of distinct entities in the organization. Following Avraham, Selvaggi, and Vickery (2012) and Cetorelli and Goldberg (2014), we focus here on organizational complexity, as measured by the number of subsidiaries owned by a BHC and the span of a BHC across industries (including nonbank industries) and countries. These factors are important. Diversification in business lines and countries can add value and contribute to financial stability. However, greater complexity along these dimensions, all else equal, can make a failing bank harder to resolve—an issue contributing to systemic risk and the “too complex to fail” problem. Our data, from bank regulatory filings on the Federal Reserve’s form FR-Y6, are discussed in detail in a previous Liberty Street Economics post.

The table below compares some high-level measures of organizational complexity for the largest fifty BHCs in 2007, just before the crisis, and in 2017, a full decade later. The number of subsidiaries at these BHCs has declined substantially—the median number of subsidiaries fell from 84 to 42.5 between 2007 and 2017, and the maximum from over 2,800 to 1,335 in the same period. While over 1,000 subsidiaries certainly is still a complicated organization, the decline suggests large BHCs are simplifying along this dimension. The fraction of these subsidiaries that are commercial banks (second row) fell for some banks and increased for others, implying that, on net, many BHCs are shrinking the numbers of both commercial bank and nonbank subsidiaries. BHCs also reduced their span across industries, though more modestly than the overall number of subsidiaries, suggesting that BHCs may be simplifying their organizational charts more than their industrial footprints. The geographic footprint of the median bank fell from four countries to two, while the maximum span fell from eighty countries to sixty-nine.

Have the Biggest U.S. Banks Become Less Complex?

Changing Operational Scope

Within BHCs, there have been large changes over time in the number of nonfinancial affiliates. For example, many have moved, via subsidiaries, into providing community housing services, in response to changes in bank regulation and in the low-income housing tax credit, as explored in Cetorelli and Wang (2016). We focus instead on the pattern of changes over time in BHCs’ financial subsidiaries.

Have the Biggest U.S. Banks Become Less Complex?

In the past decade, large U.S. BHCs have shifted their composition of financial subsidiaries away from the more traditional bank and nonbank intermediaries, such as nondepository credit intermediaries, mortgage brokers, and insurance companies. Meanwhile, there has been a large increase in subsidiaries related to “funds, portfolio management, and other financial vehicles,” which accounted for over 22 percent of all nonbank subsidiaries in 2017 versus just 12 percent in 2007. Also more prevalent are subsidiaries involved in “other securities activities,” defined as the catch-all for other financial investment activities (and which excludes activity categorized as relating to securities and commodity exchanges, portfolio management, and trust and custody activities).

Locating in Fewer Countries, but Still in Secretive Ones?

U.S. BHCs are operating in fewer countries than in 2007, reducing one dimension of complexity. However, the countries in which these subsidiaries are located also need investigating. The table below reports the fraction of the foreign subsidiaries located in advanced or emerging market nations, and in countries classified as tax havens or financial secrecy jurisdictions in the Financial Secrecy Index compiled by the Tax Justice Network. Over the past decade, large U.S. BHCs on balance have shifted their foreign subsidiaries slightly toward advanced economies over emerging markets. Among the advanced economies, the share of subsidiaries in tax-haven locations has increased, for example, with Ireland’s role increasing from 3 percent to 5 percent of all foreign subsidiaries between 2007 and 2017. While almost all emerging-market tax havens are experiencing slight declines in total foreign subsidiary shares, the percentage located in the Cayman Islands increased from 10 percent to 11 percent, maintaining the territory as the most popular secretive location. The overall share in tax and secrecy locations has not declined.

Have the Biggest U.S. Banks Become Less Complex?

Simplifying Somewhat, but Still Complex

Although the organizational, business, and geographic complexity of the largest U.S. BHCs has declined somewhat since before the crisis, these institutions remain highly complex in terms of industries spanned and still operate a large share of subsidiaries in secretive locations. Some degree of diversification in business lines and geography may add value and enhance financial stability, yet it can complicate resolution and transparency, so the policy discussion about optimal levels and types of complexity is itself complex. Our findings thus underscore the importance of regulatory frameworks that continue to focus first on limiting the risk of failure and improving resolution mechanisms for dealing with these BHCs in the event of failure.


Disclaimer


The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Linda S. Goldberg

Linda S. Goldberg is a senior vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

April Meehl

April Meehl is a senior research analyst in the Bank’s Research and Statistics Group.


How to cite this blog post:


Linda S. Goldberg and April Meehl, “Have the Biggest U.S. Banks Become Less Complex?,” Federal Reserve Bank of New York Liberty Street Economics (blog), May 7, 2018, http://libertystreeteconomics.newyorkfed.org/2018/05/have-the-biggest-us...
-complex.html.

Turnbull Shocked That Royal Commission Investigating Banks Not Banksy

Published by Anonymous (not verified) on Mon, 07/05/2018 - 8:25am in

Tags 

Science, banks, Budget

The Prime Minister has expressed concern and annoyance that the Royal Commission that his Government set up is investigating Banks rather than his planned target the artist Banksy.

“This is a most concerning occurrence,” said the Prime Minister. “I mean why would we want to investigate Banks when there are more pressing and dangerous industries and companies around like this Banksy chap.”

“I mean can you believe the nerve of this fellow, putting art on walls. He should be putting art where it belongs on canvases so that it can be hung in galleries and bought by the likes of me for my private collection.”

When asked how the Royal Commission into Banks rather than Banksy occurred the Prime Minister replied: “Well Scotty and I were sitting back quaffing some sherry and discussing the countries most pressing issues. Namely unsightly graffiti when he said we should hold a Royal Commission into Banksy that’ll appease the peasants. We laughed and well we must have written down Banks rather than Banksy.”

“But don’t worry about the Banks I’ll have Scotty give them some tax cuts and incentives in the Budget. I’ll make it up to them.”

Mark Williamson

www.twitter.com/MWChatShow

You can check out our new show Decennium Horribilius at this year’s Sydney Comedy Festival. Hosted by The (un)Australian, the quiz show features teams of some of Sydney’s best comics trying to answer questions about the decade of the 1990s — with prizes for the audience.

Saturday May 5, 5.30pm. The Factory Theatre. Book tickets here.

RT Video Shows the Awkward Facts about Safid Javid

Published by Anonymous (not verified) on Thu, 03/05/2018 - 4:45am in

This is another short, excellent little video from RT. It states that its about the uncomfortable facts the media is trying to cover up about this son of a bus-driving dad. When he was working for Deutsche Bank, his annual salary was £3 million a year. He voted 16 times against a tax on bankers’ bonuses. He was responsible for a speech vilifying Momentum as the ‘hard-left Fascist group’. ‘Hard left’ and ‘Fascist’ are contradictions in terms, as Fascism is far right, whatever Tories and American Republicans try to argue. Momentum is actually neither. It’s traditional centre left, Labour’s traditional post-war political stance before the destruction of the social democratic mixed economy and the welfare state under Thatcher. Oh yes, and he was responsible for the government’s failed promises to the Grenfell victims, and just this week warned that the government was about to break another one. They weren’t going to be rehoused any time soon. So much for Tweezer’s claim that they’d all be rehoused within twenty weeks, and it would be a top priority.

In short, Safid Javid is another massively overpaid, corporate banker. Like Rees-Mogg he votes consistently for the benefit of the rich, his own class, and cares nothing for those beneath him. Which includes the victims of the Grenfell Tower fire.

He and the rest of the Tories should be sent a message through the council elections tomorrow that people are sick of them, their contempt for ordinary people, their own monstrous, unrestrained greed and their vile treatment of the poor – the victims of Grenfell fire, the members of the Windrush generation they’ve deported, and just about everyone their policies have attacked and reduced to insecurity and misery – the unemployed, the disabled and those on low incomes, who are now having to choose between eating and paying the bills. Vote them out!

Rudd Resigns, Replaced by Safid Javid, and Deportations Continue

Published by Anonymous (not verified) on Wed, 02/05/2018 - 4:17am in

Okay, late Sunday night came the news that Rudd had finally done the decent thing and fallen on her sword. After saying that she wouldn’t resign, and would continue to stay in office to protect her mistress, Theresa May, she finally bowed to public pressure and handed in her notice. She has now been replaced at the Home Office by Safid Javid, who looks like the Hood from the Thunderbirds.

Mike and the twitter users he follows have had fun with the Hood, er, I mean, Javid. He was photographed standing with his legs wide apart, in a posture which I’m sure he thought at the time made him look like a powerful physical presence. Instead it made him look ridiculous, and Mike and the others have posted it next to photoshopped images of Javid as a male gymnast or yoga expert doing the sideways split, and Blackadder and the Prince Regent also standing with their legs apart in a silly posture from Blackadder III. They’ve also commented that it’s obvious the Tories chose him, thinking that the selection of BAME person to take over Rudd’s post would reassure Black and ethnic minorities that the Tories weren’t the nasty, racist party. The deportations of the Windrush children was just all a mistake, which the party now terrible regrets. Javid himself has appeared in the press making noises about how he will change all this. There’s been a clip of him on the news stating that he doesn’t like the term ‘hostile environment’. I also caught a snippet from the news on Sunday that he had appeared in the Sunday Torygraph stating that he also could have been deported, as his parents came here in 1973. This is presumably intended to reassure BAME and other voters likely to be put off by the deportations that, hey, he’s like them – he could have been a victim. Look, he shares their interests in changing this.

Except he doesn’t. And if the Tories expect public rage to subside now, they’re sorely mistaken.

First of all there were a few choice replies on Twitter when Rudd’s brother and cabinet colleagues tweeted their condolences about Rudd’s departure from government. They claimed that she was a nice, compassionate woman. The peeps on Twitter made it very clear that they didn’t think so. Rudd had presided over a system that deported British citizens purely because they were the children of immigrants. Others have lost their livelihoods, welfare benefits and been denied medical help, including for cancer treatment.

As for Javid, there was absolutely no chance of him being deported. Those targeted were the poor and ordinary. In other words, the people the Tories usually bully, in order to give more power and money to the rich, create a compliant workforce, and, in the case of ethnic minorities, satisfy the rabid racists in their own ranks. Javid is the son of a Pakistani bus conductor, but he’s also a front bench politicians, who also used to be a highly placed executive at Deutsche Bank. He is therefore exactly the type of person, who wouldn’t be deported.

As for his claims to be doing something to redress this scandal, he hasn’t done anything so far and I very much doubt he ever will. Javid consistently votes for the government, including the 2014 legislation that prepared for the deportations in the first place. And Mike has pointed out that one of the meanings of the term ‘compliant’ is ‘ready to agree with or obey’, including ‘excessive force’. This reveals the Tories’ authoritarian streak. He’s going to replace the ‘hostile environment’ with a ‘compliant’ one. Which he hopes the public will believe means the other definitions, such as following the rules or meeting standards. But in this case those, who will be forced to be compliant will not be the Home Office or the Border Agency, but their future victims. They want people to shut up and accept their maltreatment without question. After all, they removed the protections for the Windrush generation in secret, just as they started the deportations themselves.

Javid hasn’t removed the legislation and orders for the deportations. They’re still there, and there’s another flight schedule to take off this week carrying more deportees. He also lied to Diane Abbott. Abbott had made the point that the people deported were British citizens, but the law that protected them had been removed. Javid replied by telling her that it hadn’t, which is false.

So it’s simply a change of face at the Home Office, not a change of policy. And the architect of that police, Tweezer, is still in office. It was Tweezer, who created the ‘hostile environment’ policy when she was Dave Cameron’s Home Secretary and removed the legal protections for the Windrush people. The Tories claimed they were ‘redundant’. As the scandal has shown, they very much weren’t. And there’s more. Much more. Mike has reposted a number of tweets from Bob Strain detailing just about everything May did that has contributed to this gross injustice, including sending round the vans telling illegal immigrants to hand themselves in, cutting the Border Agency’s budget and personnel, as well as being ‘besieged’ by Black History Month warning that this would happen. She and the Tories also created the situation where many of the victims had to be defended by community law projects, because they had engineered it so that they were denied legal aid. Oh yes, and in 2016 she gave a speech that was reported to the authorities for racism.

Her decision to put Javid in charge of the Home Office is also something of a desperate reversal on her part. She previously had demoted him, which suggests that she is racist.

More recently today, Mike put up a piece noting that 32 per cent of the British people believe that May is responsible. This is opposed to 4 per cent, who thought that Rudd alone was responsible.

And they’re right. Rudd was partly responsible, as recognised by 25 per cent of voters. But May is the ultimate person responsible. She therefore should resign or be removed. The deportations should be stopped. Immediately. If Javid doesn’t stop them, then he too should be forced to resign.

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