On Soros, Media and Volcker Rule
The good side of Soros—and CDS
He’s obnoxious politically but you have to love a guy who has done so much over the years to expose sovereign financial finagling and make money doing it.
Predictably the governments of the world are taking seriously the idea of regulating CDS, now that these lie-detectors of the financial world are making it harder for near-broke sovereigns to borrow. The most popular idea is to forbid investors to buy protection on bonds they don’t own, making the analogy to naked shorts. For a number of reasons that analogy is far from perfect, but even if even if we were convinced that “naked CDS” shot be prohibited on corporate debt, we would still be huge fans of using naked CDS against sovereign debt. Incumbents hate it when the people get to vote; in CDS markets we get to vote every day.
Surprise, Surprise: First Productivity then Jobs Someday before we die we would like to live through an economic recovery that the press does not describe as jobless—for the first none months. All recoveries are jobless at first. The most well-verified law of economics is that productivity governs employment and wages. The economy contracts; the least useful workers (or those at the least productive companies) are let go; productivity rises; production expands; employers add overtime; then finally they make the commitment and hire. Predictable. Unemployment will be down significantly by labor day.
The bad news: to win the election Republicans will actually have to have some ideas other than sucking up to Wall Street for campaign dollars, because they are not just going to coast in on the economy. Republicans? Ideas? Naaaahhh.
Opposing the Volcker Rule for all the Wrong Reasons
Predictably Republicans make the single worst argument: that any Volcker like rules should be drawn up by regulators not enacted in statute. That’s exactly backwards. Discretionary regulation favors insiders, elites, and the politicians who want to suck up to them, or extort favors.
Meanwhile, though it is hard to keep up with all the twists and turns, it appears that the updated administration proposals referenced here may include some good things, like boosting capital requirements and enhancing disclosure. We’re morally certain that the bad outweighs the good but the good should be noted.
This may seem off topic for us, but we agree with our friend and mentor George Gilder, author of The Israel Test, that anti-Semitism is anti-capitalism and that often enough anti-capitalism is anti-Semitism.Dershowitz is great exposing the outrage of the annual campus condemnation of Israel as an apatheid state.Tags: Andrew Redleaf, banking crisis, banking deregulation, capitalism, employment, media, Paul Volcker, Regulation, Richard Vigilante, Soros, Whitebox, WSJ
