Free Markets, Free People
Via Zero Hedge, I’ve acquired this very interesting little chart, that shows the number of margin calls on its credit-extensions to counterparties. Huh. Now, see, I just wrote that, and I have no idea what it means. It’s just lots of economic gobbledy-gook when you write it out in a single sentence like that. But, here, let’s take a gander at the chart, then I’ll explain, in human terms, what it tells us.
So, the European Central Bank (ECB) had this great idea, which was to implement a European version of Quantitative Easing. They called it the Long-Term Refinancing Operation, or LTRO.
It was actually pretty simple. The banks would go to the ECB and get an LTRO loan by providing collateral of some sort—generally A-rated securities. By which, I mean a security that at least one rating agency has rated as "A". Like, you know, Italian bonds. They don’t actually have to give the collateral to the ECB or anything, just let them know that, "Hey, we’ll just keep it safe, and can hand it over if we really have to." On the strength of those assurances, and the sterling quality of the collateral in question, like Spanish bonds, the ECB then gives the banks a huge hunk of cash. The banks then get to keep the money for up to three years, but are only charged the average overnight rate of interest.
Now, as long as the securities you put up for collateral are good, like Irish bonds, it’s a pretty sweet deal. Alas, if the securities turn out not to be so reliable, the ECB will make a "margin call", that is to say, they will demand the banks come up with additional cash or other assets to cover the collateral.
As you can see from the charts, that is exactly what the ECB is is starting to do. That’s troublesome. You see, the ECB has a €3 trillion balance sheet. But it only has a bit under €11 billion in actual assets. So the ECB has a leverage ratio of a little under 300:1. So, it really does have to go after better assets from the banks if the initial collateral turns, you know, sucky.
The problem then is, as Tyler at Zero Hedge puts it:
The rapid deterioration in collateral asset quality is extremely worrisome(GGBs? European financial sub debt? Papandreou’s Kebab Shop unsecured 2nd lien notes?) as it forces the banks who took the collateralized loans to come up with more ‘precious’ cash or assets (unwind existing profitable trades such as sovereign carry, delever further by selling assets, or subordinate more of the capital structure via pledging more assets – to cover these collateral shortfalls) or pay-down the loan in part. This could very quickly become a self-fulfilling vicious circle – especially given the leverage in both the ECB and the already-insolvent banks that took LTRO loans that now back the main Italian, Spanish, and Portuguese sovereign bond markets.
Essentially, the LTRO program is beginning to suck higher quality assets out of the banks to meet the margin calls that are issued when the initial collateral’s value starts to go belly up. Sucking those higher-quality assets into the ECB’s LTRO collateral program, mean that they can no longer be used to finance business and consumer credit, and, thus, spending. The banks essentially become bond storage warehouses, that don’t actually do any business.
That slows the economy, of course. Which means that those original A-Rated securities stand e much better chance of defaulting, in which case, they’re worth nothing. As Seeking Alpha explains:
The real menace comes in the event of a further weakening of the Eurozone economy. If the economy were to contract, the collateral that the banks have pledged to the ECB may cease to be "performing" (seemingly the only hard criterion for collateral for the second round of LTRO). The ECB would be at risk–and ultimately so would the banks that pledged the defaulting securities.
Any defaults, be they of collateral or the banks themselves, would be a serious issue for the ECB. The ECB is supporting its EUR 3 trillion balance sheet with EUR 10.76 billion in capital–leverage of nearly 300 to one. With the fiscal situation of European sovereigns already strained to the breaking point, it’s hard to see where the money to cover the defaults could come from. This issue of a ballooning balance sheet, coupled with shaky collateral and the 3-year tenor of the ECB loans, is precisely why Trichet and Weber would not go the Draghi route. They bristled at the risk.
The odds of a calamity of the sort that would endanger the ECB are not great, but nor are they impossibly long.
Well, that huge jump in margin calls may be an indicator that those not "impossibly long" odds are getting shorter and shorter. And I wonder how much exposure US banks have to an LTRO default through credit/FX swaps. Probably…really a lot.
So, we got that goin’ for us.
If it’s not painfully obvious by now, the Obama campaign is banking on women voters being the key to re-election. Running on “Hope and Change” isn’t going to work this time around, and the specter of George Bush will only get about as many miles as a Chevy Volt on a full charge. The usually reliable grievance groups, identity cohorts and college students are not as enthused this time around, and the Obama campaign is apparently worried about that $1,000,000,000 in cash won’t be enough to get it past the finish line. So, naturally, some voting bloc must be pandered to and manipulated in order to secure a second term.
Enter the Contraception Wars (a major battle of the General War on Women). Relying on the various Democratic identity politics to get your voter base out is tedious, time consuming, and requires a lot more vote-buying to pay off the different interest groups. Seeing as how they may not be a reliable base anyway, then why not go for the largest voting bloc out there: women!
In recent elections, voter turnout rates for women have equaled or exceeded voter turnout rates for men. Women, who constitute more than half the population, have cast between four and seven million more votes than men in recent elections. In every presidential election since 1980, the proportion [of] female adults who voted has exceeded the proportion of made adults who voted.
The one thing that all women have in common is that they alone have the necessary biological equipment for having babies. If they were made to feel that their equipment was under attack (“Republicans are coming to steal your ladyparts!“), and that only Obamamagne can defend their honor, then perhaps they will race to the polls in support of their hero. Of course, there will have to be some “free” stuff thrown in to sweeten the pot and make women feel as if they are losing something unless Obama is re-elected. Accordingly, what follows is the multi-step process for ensuring the women vote goes solidly for Obama in November:
1. Raise awareness: Subtly introduce the subject of contraception from out of left field at a Republican debate. This will get the tongues wagging and foreshadow who the villains are.
2. Free Stuff: Using your arrogated powers, mandate that all employers who provide insurance must include contraception (including abortifacients and sterilization) in their plans, regardless of conscientious objection, the First Amendment or, y’know, any of that freedom nonsense. By giving women “free” contraception, etc., you necessarily pit them against those who would deny them their grant. Executing this step is vitally important to framing the villains and carrying out Step 3.
3. Create the wedge issue: Because certain quarters will predictably howl at the intrusion upon their liberties, this Step is almost self-executing. Once the villainous voices are set to wailing, pretend to show concern for their plaints and then offer an “accommodation” that changes nothing but highlights your Solomonic wisdom (aided, of course, by a compliant media). The results of this Step are two-fold — (a) it politicizes the issue so that people will have to choose sides, and (b) it creates the illusion that you are fair and just, while your opponents are rigid and uncaring.
4. Flip the issue: Up to this point, the issue has been “I want to give you free stuff, but the greedy bastards don’t want to pay for it.” That may raise legitimate concerns among a sizable portion of the voting bloc you are courting. So, instead, change the narrative to “I want to protect your ability to get the free stuff, but they don’t want you to have it at all!” In flipping the issue from “don’t want to pay for” to “want to ban” you have neatly cleaved your intended voting bloc from your political enemies. Under this telling of the story, the villains are out to get women and only you will stand up to protect them.
5. Generate sound bytes: This Step is a bit tricky and must be followed carefully. The basis for any campaign is a good PR strategy. There will be plenty of older sound bytes out there already, but those will be generally stale and unhelpful. What you need to properly execute this Step is a current controversy. In order to do that you will need a public forum (such as Congressional hearing) in which to force the issue. Start by finding someone to represent your voting bloc and push her presence at the forum in a way that is sure to keep her from actually appearing. (As an added bonus, falsely claim that no representative of the voting bloc was allowed to appear.) Be sure that this speaker will be a sympathetic victim such as a lowly “college student” (regardless of whether she is or not). Now, and this part is very important, have your willing victim draw enemy fire by testifying about activities that perfectly fit the definition of “slut”, all but openly daring your opponents to use the word. Don’t worry about someone taking the bait — someone always rises to occasion.
6. Profit: Now that you have created a wedge issue, identified victim and villain, and staked out your claim to your voter bloc, all you have to do is pound the wedge home. Using your newly generated sound byte(s), you are firmly on the path to political nirvana. Your friends and allies will eagerly disseminate, distort and decry the outrageous outrageousness of your political opponents, firmly ensconcing your coveted voter bloc on your side. It will be the talk of the town for quite some time, ready to be refreshed at the right moments. In addition, it will provide a welcome distraction to your pathetic record, a flailing economy, and impending dangers that show you unequal to the task.
Or maybe, just maybe, women aren’t as manipulable as you believe, and they actually care about their families, their jobs, their home budgets, and their liberties. If that’s the case, then you might just be screwed no matter what you do.
Weekly retail sales are the only thing on the calendar today. Redbook reports sales suffered a -0.4% drop to a 3.0% year-on-year same-store sales rate for the week due to bad weather. ICSC-Goldman, on the other hand, is reporting that, while weekly store sales rose 1.3%, the year-on-year sales rate is only 1.7%, as higher gas prices put more pressure on consumers’ pocketbooks.
But suing to make the theaters reduce the price? Really?
Joshua Thompson loves the movies.
But he hates the prices theaters charge for concessions like pop and candy.
This week, the 20-something security technician from Livonia decided to do something about it: He filed a class action in Wayne County Circuit Court against his local AMC theater in hopes of forcing theaters statewide to dial down snack prices.
"He got tired of being taken advantage of," said Thompson’s lawyer, Kerry Morgan of Wyandotte. "It’s hard to justify prices that are three- and four-times higher than anywhere else."
I usually don’t go to movies. Believe it or not, since I’ve gotten older, I’ve begun to get motion sickness in a theater if there is a lot of action on the screen. It’s weird but that happens to me (also happens with first person shooter games).
But, when I did go, I never went to the concession stand. I agree with Thompson, prices are too high and I’m not willing to pay them. However, I’m also not willing to use the force of government to “force” prices down, for heaven sake.
The way consumers make this point is to quit buying the stuff. Yeah, it takes will. It takes perseverance. It takes a collective action over time. But what it should never take is bringing government in to it.
The suit accused AMC theaters of violating the Michigan Consumer Protection Act by charging grossly excessive prices for snacks.
The suit seeks refunds for customers who were overcharged, a civil penalty against the theater chain and any other relief Judge Kathleen Macdonald might grant.
So who gets to decide what is a fair price? A judge? Or the consumer? How does the consumer decide what a “fair price” is? By not paying what he or she considers to be an unfair price. That’s how. Not by going to the state and attempting to use its power to force a lower price.
No one forces anyone to go to a movie, pay what they’re asking or eat their snacks. Everyone of those is an individual decision and choice. Just as we decide not to buy other products we can’t afford or think are priced too high, it is up to us to make the same sort of decision at a theater concession stand. If enough refuse to buy, it will eventually come to the attention of the theater chains. That’s how pricing is set by markets (you know, all that talk about pricing signals and such?). And the state has no business being involved in that system whatsoever, either legislatively or judicially (and the law suit probably won’t go anywhere, I understand that, but I’m addressing the mindset).
The Daily Caller spots another example of leftist hypocrisy in action.
Talking about Andrew Breitbart’s death, a poster at the Daily Kos decides it would be cool to send him off with a nice little protest from the homophobic bigots at Westboro Baptist Church. You see, Breitbart was a friend to gay right-wing groups such as GOProud. Instead of celebrating that, the true bigotry of at least this leftist shows through in his (or her) little scheme:
A post dated March 1 by “dragon82a,” titled “Let’s Help Andrew Breitbart go out In Style..Get Westboro Baptist Church to Protest Him” encourages readers to post on the Westboro Baptist Church’s Facebook page calling for the group to protest Andrew Breitbart’s funeral:
Here is the Facebook of the WestBoro Baptist Church:
Send them a message anything will do, about how much publicity they would get by Protecting [sic] Andrew.
Lets give back to Andrew what he has so generously given to us all these years.
We could call this “Operation Sendaway”
Because you see, using homophobic fundies (who’s leader is a Democrat activist by the way) in their cause is okay, but utter one word that could even sound like it might be anti-gay and they’ll be on you with all the false righteous indignation they can muster in a heartbeat.
Of course, don’t bother pointing this out to them … they simply won’t get it.
This is so loaded with irony I can’t even count the ways:
Days after General Motors announced it was temporarily suspending production of the Chevy Volt, the electric car was named European Car of the Year.
The Geneva Auto Show announced Monday that the Volt, which is sold in Europe as the Opel Ampera, was named its 2012 Car of the Year ahead of its annual car show that opens this week.
Europe, tottering on the brink of financial collapse because of unsustainable welfare state spending names a heavily subsidized car from a company owned in the majority by government that no one will buy as its pick of the litter (why, because it fits an agenda that no one buys as well).
Of course it’s Europe’s “Car of the Year”.
You just can’t make this stuff up.