Gettysburg: Ed’s Daily Notes for July 3rd   Leave a comment

Battle_of_Gettysburg(hat tip to Wikipedia for the photo)

Today is the 150th anniversary of the end of the Battle of Gettysburg (July 1-3, 1863), which is proof that even smart guys like Robert E. Lee can do really stupid things sometimes…

CNBC (via Yahoo): Egypt, Portugal Put Market Risks Back on Table

Strategists say that just as markets showed signs of stabilizing at the start of the week from concerns about an unwinding of U.S. monetary stimulus, political turmoil in Egypt, a political crisis in Portugal and renewed concerns about Greece provide investors with additional reasons to stay away from risky assets.

About the only thing I buy in that list is the political turmoil in Egypt, and I only buy that as far as the oil market is concerned.

Greece and Portugal? Been there, done that. It will be years before we see a European collapse, if at all.

“Unwinding U.S. monetary stimulus”, aka tapering QE? That has already been priced in.

If you want a “risk-off” story, here you go:

Bloomberg: U.S. Gears to Impose Stricter Rules on 8 Largest Banks

JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and Goldman Sachs Group Inc. are among eight U.S. banks facing new domestic rules on capital and debt that would be even stricter than global standards approved yesterday.

Lenders will be forced to maintain a ratio of capital to assets that exceeds the 3 percent floor set by the Basel Committee on Banking Supervision, Federal Reserve Governor Daniel Tarullo said yesterday. Another measure would compel banks to hold a minimum amount of equity and long-term debt to help authorities dismantle failing lenders, Tarullo said.

The remarks show U.S. regulators plan to ratchet up demands for bigger buffers against losses to prevent a repeat of the 2008 credit crisis, ignoring bankers who say lending and profit will suffer. The measures would come on top of toughened global standards known as Basel III that Fed governors approved unanimously, even as Tarullo said parts remain too weak.

“We’re in the first few chapters of a horror story for the big banks, with the worst to come,” said Coryann Stefansson, a managing director at PricewaterhouseCoopers LLP. “It’s clear that the U.S. is willing to push for stronger capital.”

People with knowledge of the matter have said U.S. regulators may want to double Basel’s 3 percent capital threshold, known as the leverage ratio. The Federal Deposit Insurance Corp. said a proposal may be published next week.

…The added measures would affect the eight U.S. institutions already tagged as globally important, according to Tarullo. The Financial Stability Board, which monitors the world’s banking system, has identified those as JPMorgan, Wells Fargo, Goldman Sachs, Bank of America Corp. (BAC), Citigroup Inc. (C), Morgan Stanley (MS), State Street Corp. (STT) and Bank of New York Mellon Corp.

Other changes may include higher capital requirements for banks that rely on short-term market funding, which proved to be unreliable in the financial crisis, and capital surcharges that the Basel panel is preparing to impose on firms whose failure might bring down the entire system, according to Tarullo.

The U.S., along with 26 other members of the Basel Committee, must enact local regulations to carry out a 2010 revision of how minimum capital levels are set for the world’s banks. The FDIC and Office of the Comptroller of the Currency, which check banks for safety and soundness, are scheduled to vote on the Basel standards by July 9.

Don’t underestimate the impact of this on the U.S. economy, or the value of the dollar. Because of the size of these banks, they will be sucking dollars out of the economy to comply with these regulations. If the equity markets crash on July 9th, you will know why.

Having said that, I have to agree with the regulators. If we are going to have “too big to fail” banks, they are going to need higher capital levels than they had in 2008.

Fox News: Administration delays key ObamaCare insurance mandate

Curious timing on this, right before the July 4th holiday:

The Obama administration announced Tuesday that it is delaying a major provision in the health care overhaul, putting off until 2015 a requirement that many employers offer health insurance.

The announcement was made late Tuesday by the Treasury Department, at the beginning of the holiday week while Congress was on recess. It comes amid reports that the administration is running into roadblocks as it prepares to implement ObamaCare.

The change in the employer mandate is arguably the most significant concession the administration has made to date.

…The law requires companies that employ 50 or more workers to offer coverage or face fines. The Treasury Department and the White House said that, based on complaints by employers that the system for reporting the coverage was too onerous, they would simplify that system and give employers an additional year to comply.

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark J. Mazur, the assistant secretary for tax policy at the Treasury Department, said in a statement posted online. “We have listened to your feedback. And we are taking action.”

Bull. If the government was “listening”, they’d have cancelled this monstrosity already.

The Guardian: Google Glass: privacy fears continue

Google’s claim that it will not need to alter its privacy policy to reflect the impact of its new Glass product has been met with scorn by US authorities.

Senator Joe Barton, who co-founded the congressional bi-partisan privacy caucus, sent a detailed letter of concern to Google in May asking the company to clarify how Glass users’ data would be protected, as well as the privacy of non-users who could be identified through technology including facial recognition.

In a lengthy reply, Google’s vice-president of public policy and government relations, Susan Molinari, [emphasized] that Glass is in a trial phase, that there are no plans for facial recognition to be introduced and that existing privacy policies will protect users and non-users.

Barton was not impressed, releasing the following statement on Monday night: “I am disappointed in the responses we received from Google. There were questions that were not adequately answered and some not answered at all.

“Google Glass has the potential to change the way people communicate and interact. When new technology like this is introduced that could change societal norms, I believe it is important that people’s rights be protected and vital that privacy is built into the device. I look forward to continuing a working relationship with Google as Google Glass develops.”

Molinari deftly avoided a specific question about the fallout from the revelation that Google had inadvertently captured personal information from individuals on unencrypted wireless networks while gathering data for its Street View project. Barton had asked how Google planned to prevent Glass unintentionally collecting data without consent.

“Protecting the privacy and security of our users is one of our top priorities,” Molinari wrote, but then deferred on an answer to the next question about protecting privacy more broadly.

One of the bigger privacy questions: How will Google protect users from the U.S. government? But I digress…

Seriously, Google Glass is a work in progress, especially surrounding questions of privacy.

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