There's Another Imminent 'Cliff' You Should Know About, And It's $1.6 Trillion Tall
BofA analysts Priya Misra and Brian Smedley have issued a warning in a recent note to clients about another "cliff" facing markets at the end of the year: the "$1.6 trillion deposit cliff" the U.S. banking system faces when special FDIC insurance provisions expire on December 31, 2012.
When that happens, according to Misra and Smedley, it could "cause dislocations within the banking system" and send short-term interest rates on Treasuries negative while simultaneously increasing the funding costs banks face.
Some background: the FDIC currently offers unlimited insurance on noninterest-bearing deposits at banks it services. The unlimited insurance is a policy measure taken in response to the 2008 financial crisis, when banks were having trouble securing funding. Then, in 2010, Dodd-Frank legislation extended the unlimited insurance provisions through the end of 2012.
It's been a boon for the banking system, which has been able to count on deposit growth as a key source of funding while it deleverages--in lieu of more expensive funding sources like interbank borrowing (indeed, Misra and Smedley point out that all sorts of other funding sources like long-term debt, fed funds, and repo instruments, among others, have decreased by a whopping $1.28 trillion since 2008).
Deposits in these insured accounts have been growing at a decent clip, the dip in the first quarter of this year notwithstanding. Furthermore, the deposit growth has forced interest rates down across the board as banks' holdings of cash and securities have grown.
The depositors contributing to this growth in noninterest-bearing accounts over the past few years are the corporations holding record amounts of cash on their balance sheets and needing a place to park it.
So, what happens when the unlimited insurance provision expires at the end of the year? Misra and Smedley write that, given they expect lawmakers to let it expire, "depositors will be forced to choose between moving their cash elsewhere and accepting that their deposits will be converted from government credit risk to unsecured bank credit risk."
And that probably means depositors plunge that cash into money-market funds that invest in short-term Treasury bills, according to the BofA analysts. This could cause short-term interest rates to head lower--even into negative territory--given the amount of money on the line.
In addition, if depositors take their cash when deposit insurance expires, Misra and Smedley say that "the bank seeing a net outflow of deposits may respond by replacing the lost funding by issuing non-deposit liabilities, by reducing its cash holdings, or by shrinking its securities portfolio."
That's relevant because banks have been a growing source of demand for longer-term fixed-income securities as deposits have surged (BofA says 66 percent of banks' current holdings mature over three years from now). If they become sellers of those securities, interest rates could rise and banks would then be faced with higher costs for long-term funding.
Unfortunately, higher costs for long-term funding usually don't usually translate ceteris paribus into higher economic growth.
Meanwhile, savers in the U.S. will finally get to pay for a safe place to put their cash thanks to negative interest rates.
#1
I guess we should start selling some things. I believe Russia would be interested in purchasing back Alaska. We could have a bidding war between Russia and China. Then we might consider selling California to Mexico. That would pass the immigration problem off to them. We should hurry because so many liberals are leaving now.
The GOP is out with a new web ad this morning, asking the question: Why wont President Barack Obama call the attacks on Libya a terrorist attack?
After all, everyone else knows it was an act of terror.
Modern political campaigns are largely about making mountains out of mole hills, but this seems like a legitimate question primarily because the presidents reluctance to call a terrorist attack a terrorist attack may speak to larger issues.
As far as I can tell, there are a few possible explanations.
First, its possible Obama doesnt believe it was a terrorist attack. This seems highly implausible, though, inasmuch as on Monday, Obama conceded on The View that Libya wasnt just a mob action.
Second, he may be making a political calculation based on the assumption that a terrorist attack on his watch might hurt his electoral chances. If thats the case, it is hardly a profile in courage.
There are other theories. Maybe Obama views these murderers as mere criminals? a dangerous possibility with consequences that transcend mere semantic differences.
Or maybe its a naive hope that burying his head in the sand and refusing to say the T-word will somehow change reality?
If so, he has interesting company. A few years ago, Defense Secretary Don Rumsfeld was mocked for refusing to refer to insurgents as insurgents. Is Obama personally trying to do to the T-word what Rummy attempted to do to the I-word?
If thats the case, we have big problems. The first step toward recovery is to admit you have a problem. How can America be expected to vanquish terrorists if the commander-in-chief wont say the word
[Dawn] OBSERVING the rationality and irrationality of recent events, the mobilisation, violence, and rioting witnessed last Friday offered some insight into the way that public space is coloured in Pakistain.
Based on the footage, and watching some of it first-hand in a local market, one could get the feeling that there were two complementary strands at work.
The first was a sense of organization and purpose with mobilised cadres coming out in a show of strength and defiance, drawing instructions from rightwing-fuelled 'joint action committees'. This is what was presented as the legitimate and rational face of 'protest' -- an idea acceptable to a vast majority, educated or illiterate, rich or poor.
The second strand was visible in the violence, some of which seemed planned, while the rest seemed spontaneous. Young kids, some of them barely over 13, were involved in setting fire to police posts, public buildings, banks, and vehicles.
In parts of Islamabad, far removed from the diplomatic enclave, local traders carefully orchestrated a show of strength that consisted of road blockages, tyre-burning, and tearing down advert hoardings.
The actual vandalism was carried out by labourers employed at shops, and street children who work with scrap dealers. This was the 'irrational' but unavoidable face of affairs -- condemned by most, yet prevented by few.
Combined, these two strands showed us a snapshot of Pakistain's predominant protesting public and its performative repertoire, cultivated over the years by local interests, relied upon by expedient political parties, and sustained by the military through a wide variety of ways.
What's most telling is that the protesting coalition, as announced on large banners in Lahore, Rawalpindi, Islamabad, and Bloody Karachi ...formerly the capital of Pakistain, now merely its most important port and financial center. It may be the largest city in the world, with a population of 18 million, most of whom hate each other and many of whom are armed and dangerous... , consisted of 'traders, Learned Elders of Islam, lawyers, welfare organizations, journalists and students' -- basically our version of civil society.
This is where the actual monopolisation has taken place, i.e. in the space that exists between the formal political process and society in general. Historically, this is the space where debate and contestation take place. Where ideas about freedoms, rights, and social norms are challenged, deliberated upon, and then brought into the mainstream political process.
In many countries, political parties, and voluntary associations hailing from a wide variety of ideological positions carry out the task of organising this space, and consequently, the people who occupy it. In the case of Pakistain, however, this heterogeneity was true only at some point in the past. The tide now flows in only one direction.
Given an entire day to showcase their wares by the government, these 'civil-society' actors and groups have served a timely reminder of just how dangerous, or consequently, how useful they can be.
Due to our proximity to a general election, we'll soon hear whispers of constituency-level agreements between candidates of mainstream parties and representatives of rightwing groups.
Trader associations across the countries, heavily conservative in their politics, have long delivered the support of the bazaaris to various political parties, and will continue to do so. Patronage in return for electoral support. Electoral support in return for a blind eye.
In some areas, the process has already begun. A local religious organization is rumoured to have signed off on an electoral alliance with the PPP in Sahiwal, at the behest of their local leader, who claims he saw Mohtarma in his dreams. Similarly, the PML-N will continue to work with these groups as important allies at the constituency level, relying on their ability to mobilise their own electorate.
Essentially, these self-serving alliances have allowed conservative and beturbanned goon groups to further monopolise social space in a way that leaves little room for other forms of protests to emerge.
The best example of this is that the charred metal of the burnt factory in Bloody Karachi is probably still warm, yet the biggest protests we've seen in the last week have been over a purposefully provocative YouTube video. Subsequently, they've also received the most coverage.
What happened on Friday wasn't specifically because of the capitulation of the government in front of rightwing groups, nor was the subsequent announcement of a $100,000 bounty by a sitting federal minister an attempt at appeasement. These are all ancillary outcomes, or even symptoms of that monopolised public space, which has drawn up a perverse incentive structure for existing politicians and all other mainstream actors.
No government, no political party, no public figure would even dream of denying the right of formal protest over that YouTube video. The most they could say was that protests need to be peaceful and orderly, a minor detail which many decide to overlook in the heat of the moment.
As far as I'm concerned, debates on the 'right' way to protest take us away from more pressing questions on what should be protested, and more broadly, where and how should such questions be raised.
The onus, ultimately, falls on political parties, progressive groups and associations, and people of different ideological dispositions to organise in the same public spaces, to undo this monopolisation of ideas and norms, and to present alternative incentive structures. Otherwise, we'll continue to be marginal actors, commenting on the irrationality of the world around us.
Bottom line: for the foreseeable future you'll become ever more marginal actors, grateful that the limited education of your countrymen allows you the safe relief of commenting in English on the increasing irrationality of the world around you. Perhaps a stiff whisky will help.
Posted by: Fred ||
09/26/2012 00:00 ||
Comments ||
Link ||
[8 views]
Top|| File under: Govt of Pakistan
We've got no one to blame but ourselves. Back in the sixties when that famous fore teller of man made global warming, the Prophet Tiny Tim (PBUH) warned us, did anyone listen? Oh no and now we are paying the price.
Melting Arctic snow isnt as dramatic as melting sea ice, but the snow may be vanishing just as rapidly, with potentially profound consequences for weather in the United States.
Across the Arctic, snow melted earlier and more completely this year than any in recorded history. In the same way ice loss exposes dark water to the suns radiant heat, melting snow causes exposed ground to heat up, adding to the Arctics already super-sized warming.
This extra heat retention appears to alter the polar jet stream, slowing it down and causing mid-latitude weather patterns to linger. Its even possible that the ongoing North American drought, the worst since the Dust Bowl of the 1930s, was fueled in part by climate change in the Arctic, making it a preview of this new weather patterns ripple effects.
In the past, whatever happened in the Arctic stayed in the Arctic. But now it seems to be reaching down from time to time in the mid-latitudes, said climatologist James Overland of the National Oceanographic and Atmospheric Administration. When you combine the new influence of the Arctic with other effects, such as El Niño, were seeing the more extreme weather events.
Over the last several weeks, public attention has been seized by the disappearance of ice in the Arctic Ocean, which in September covered a smaller area than at any other time in the climate record, a fitting exclamation point to its 50 percent decline since the late 1970s.
#2
Wehell, iff local background distortions on GUam are any measure, IIUC what the Artic is trying hard NOT to say is that Solar Activity vee Terra Firma is such that the ice caps are being overwhelmed by latent heat.
* IIRC TOPIX, FREEREPUBLIC, LUCIANNE > seems that Scientists are claiming that up to 100.0Milyuhn people around the world could die by year 2030 as just due to GWCC = GWCC-led happenstance.
Aka the SUN - you know, MAN-MADE AND ONLY MAN-MADE ACTIVITIES.
#3
They still refuse to recognize the consequences to the wobble of the earth's axis created by the millions of issues of National Geographic magazines store in attics and basements in North America. It's like an imbalanced load in an upright washing machine.
#1
Evidence is clear that the spate of Green-on-Blue shootings in Afghanistan is overwhelmingly caused by cultural transgressions.
This is the point where I stopped reading. The notion that somehow, our lack of knowledge about these heathen, is to blame for their betrayal is repulsive. Even more repulsive however, is the fact our own government fully endorses the notion.
#4
The main cultural transgression in Afghanistan is having armed foreigners there who are not jihadis. That is closely linked to why we're there in the first place.
#9
I don't comment often but picked my moniker (sp?) 'Total War' very carefully. We are in the 1930s again. Same path to destruction; appeasement, tolerance of the intolerable and sending messages that are ambiguous at best. Ironicaly, I think we will have the same allies in this up coming conflict. China and Russia will not have the luxury to sit back and smile. Genocide? no, but there wil be a terrible body count and it,sadly,won't be just the followers of the Prophet (PBUH, not). This misguided AF guy is just another in the long list of people who should know better but have an anal ocular interconnect that is surgically unrepairable.
Posted by: Total War ||
09/26/2012 14:02 Comments ||
Top||
#10
Options are options. It's whether you advocate or chose them and why that matters.
#11
The Bell Curve of DOOM. The world has a pattern of major war every 50 plus years give or take a decade (or so). Bosnia, Afgani, Iraq, Libya skirmishes; little small peaks part of a larger long term wave ending in large kill-off events. Vietnam, WW2, WW1, Spanish American War, Boxer Rebellion, Dungan Revolt, Taiping Rebellion, Napoleonic Wars, Civil War. We're talking conflicts with millions of casualties (outside the Boxer Reb with only a few hundred thousand deaths) in 1975, 1939, 1915, 1911, 1899, 1862, 1851, 1804, 1776. The timeline spans 1975 1776, that's two centuries worth of data. Now plot those dates under a bell curve with say a standard deviation of 15years. Youll see the distribution of most mass kill off events occurring 1 or 2 deviations from the mean. With only the period between Taiping (1851) and Napoleonic Wars (1804) being three standard deviations off the mean. Its a classic bell.
The bell predicts 99.7% of distribution events will lie within three standard deviations of the mean. Outliers are predicted at less than a percent, occurring .30%.
What I am getting at: Our current peace period is already three standard deviations from the mean. Vietnam ended in 1975. 2012. 37 years ago. The odds of the current peace period extending past this decade becoming an outlier event are not good.
Don't look now, but Islam is becoming the MSM's official religion of America.
Now, it's not just that no one bats an eye at the amazing truth that the United States is beaming TV ads all over Pakistan apologizing for a derogatory Internet trailer for a nonexistent movie demeaning the being that Muslims call "The Prophet Mohammed." No one in the MSM even slightly hints that doing the kowtow in the same country that sheltered Osama bin Laden to a group that reveled in, delighted in the terrorism against American civilians and still provides the framework for the terrorist Haqqani network, might be humiliating and an insult to the memory of the great Americans who were murdered just last week in Libya.
No, we just take it in stride that our President and our Secretary of State will apologize to the people who hate us and want us dead. That's not what I am referring to.
I am referring to something worse: Have you noticed that in the past few years, and especially in the past few weeks since the murder of the Ambassador and his guards and colleague in Benghazi (a city that Erwin Rommel loved and whose inhabitants he praised), whenever the New York Times refers to Mohammed, they always call him, without quotation marks, The Prophet Mohammed, as if everyone with any sense understands that OF COURSE Mohammed is The One True Prophet and that it's just understood that Mohammed is The Prophet.
I see this in other news outlets and on TV, too. Sober-looking newsmen and newswomen mention Mohammed as The Prophet Mohammed. No ifs, ands or buts. I hear it on the BBC World Service, too.
Now, if Muslims want to believe that Mohammed is The Prophet, God bless them. Fine and dandy. If anyone wants to believe that, good luck to him or her. But why does our mainstream media here in the USA, an overwhelmingly Christian country, refer to Islam's prophet as "The Prophet"?
Have you ever seen any major newspaper here in the USA refer to Jesus Christ as "The Son of God, God Incarnate, The Lord Jesus Christ"? Can you imagine the New York Times running a story about a crucifix resting in urine at an "art gallery" as an offense against "The Lord Jesus, Son of God"? Can you imagine any large newspaper in this country running a story about the Pope and referring to him as "The Holy Father, The Bridge Between Heaven and Earth"? Or about Mary, as "Holy Mary, Mother of God"? It would never happen.
But somehow, probably because the people writing the articles and editing them or the producers on TV news shows fear being beheaded -- and who doesn't? -- we have adopted in our media the Muslim assertion that Mohammed is The Prophet while giving other religious figures the back of our media hand.
This is frightening. We are not supposed to be doing obeisance to a religious group that has many adherents who want us dead. We are not, as journalists, supposed to be labeling anyone as "The" Prophet. But somehow, it's happening. The MSM has become a voice for Islam.
Hitler saw it long ago. Terror and fear of violence can bring about amazing changes in people's behavior. So can a misguided political correctness and self-loathing for the greatest nation on earth.
I overheard a conversation between two women at a dining table just yesterday. One said, "I don't care what anyone says, Obama is a Muslim" (she has said it before) and the other said, "He's not a Muslim. He's just stupid."
I didn't say anything to them. I am just telling you, these do not feel like normal days. They feel like latter days.
There is just a feeling in the air, a look in the sky at dusk, a look on people's faces. Fear is everywhere. Mr. Obama cannot lose this election unless enough people believe it's within their power to stop the ticking of the clock, and I do not feel that groundswell. Not at all. When the American media turns its back on our own religions of tolerance and adores a religion of intolerance, times are upside down. The MSM says it's all fine, trust The Prince of Grant Park, Chicago. But I have always preferred the admonition, "Put not your trust in princes." Something is wrong.
A multi-volume chronology and reference guide set detailing three years of the Mexican Drug War between 2010 and 2012.
Rantburg.com and borderlandbeat.com correspondent and author Chris Covert presents his first non-fiction work detailing
the drug and gang related violence in Mexico.
Chris gives us Mexican press dispatches of drug and gang war violence
over three years, presented in a multi volume set intended to chronicle the death, violence and mayhem which has
dominated Mexico for six years.
Rantburg was assembled from recycled algorithms in the United States of America. No
trees were destroyed in the production of this weblog. We did hurt some, though. Sorry.
Based on the footage, and watching some of it first-hand in a local market, one could get the feeling that there were two complementary strands at work.
Don't look now, but Islam is becoming the MSM's official religion of America.
