J P Morgan Chase's Loss

It means a lot to me that Jamie Dimon thinks this loss is stupid, avoidable and while no Volker rule had been broken, it broke the Jamie Dimon rule. There is a lot of talk that more regulation is needed. If Wall Street had understood their operations and shown the discipline described by Gillian Tett in her book Fools Gold about the J P Morgan group that initially developed many of the financial exotica out there,     then there would not have been a 2008 financial crisis.  What Jamie has to ask is what caused that discipline to falter recently?
Wall Street currently lobbies Washington against regulation making derivatives more transparent as if the obscure system in place is a sure money maker when actually it's a loser. Any bank that thinks its trading desk is adding value for its shareholders is deluding itself and does not deserve consideration as an investment.  The juice has been worked out of the system.  Today's bank proprietary desks are practicing financial masturbation. Making some heat but no issue. I think the Jeremy Irons character in the movie Margin Call had it right when he said, "I don't hear the music."
TEPCO the Japanese utility with the disastrous failure of its nuclear reactors is an example of a private entity currying favors from regulators in the name of  increasing shareholder value. The result is a total wipeout for shareholders and a staggering burden for Japan. The investment community ought to consider  bank's who want to do proprietary trading as entities destined for a total wipe out, just like TEPCO.  Regulation is sure to come, but investors should leave the TBTF banks to benign neglect because they are losers, with a capital L on their foreheads.

The Moral Sense by James Wilson

I have to thank David Brooks for his editorial in the New York TImes for this work that re-assures me that my libertarian  philosophy is not a point of view that can only mean chaos.  When I tell people I am against drug laws the normal reaction is that I am for a drug crazed chaotic society.  I think Wilson's argument shows that there are built in as well as taught self regulating actors within us that hold us back from chaos and in general make us civil.  Laws may codify but not modify accepted behavior so that a law against murder will get almost complete compliance while in many parts doing some weed won't.  His work takes you beyond the economic equation that some assume we make where behavior is always calculation of risk (punishment) versus reward (pleasure).  I don't do dope. It's a matter of self preservation which is the basis of my conservative lifestyle, if not thought.
Wilson's title is also appropriate for this NTBTF blog since what we are against is Wall Street's loss of Moral Sense as described by Greg Smith's "Why I am Leaving Goldman Sachs."  When a sense of fair dealing is broken in society, it sows the seeds of revolution.

France in Denial

The Economist is calling the French election as "the West's most frivolous."  Wait until this fall.

Conversation at a local bar pits me against the town pundit

“Vinny! How can you call yourself a Libertarian and think about voting for Obama? He's a socialist taking our rights and freedoms away. It's a fact, just look it up.” My protestations declaring an incapability of distinguishing between Obama and Romney make no dent at all against such an irreproachable source.

It seems to me that Obama is true to the FDR tradition of his party and Republicans on other hand campaign for small government and then administer a RINO (Republican in Name Only) stampede of too much Government. It took three terms before Democrats recovered the White House with Bill Clinton and after George W. Bush's pooh pooh pile Republicans don't deserve this next election and until they get their heads straight, nor the next few.

How is it that Republican's can only serve up RINOs? If you preach and believe in small government you have to be against a liberty sucking garrison state with an empire to defend. Other than Ron Paul, no other GOP candidate gets it. In last fall's Republican debates we saw most of the candidates decry the fact that Obama missed the opportunity to stay in Iraq longer! We saw Mitt Romney in South Carolina pandering to the defense industry by declaring we need an even bigger Navy with more aircraft carriers and nuclear submarines to fight the likes of Al Qaeda. Just how dumb are we suppose to be? Come on Mitt, a clear analysis of the U. S. Government from the perspective of a Bain Capital would have you taking a meat cleaver to the U. S. Defense budget. Why don't you say it? Otherwise what is your mandate? Build a bigger Navy?

Republicans are the management class and some believe they can tame government excess, show fiscal restraint and pay down the debt. The last time I looked it was Bill Clinton who managed our economy best. It was his tax increase early on his administration that created the fantastic boom of the nineties. George W. Bush, on the other hand, never made a hard decision. He just made easy ones such as tax cuts and spending increases setting the stage for a Japanese style lost decade.

Which brings up the point of what does left – right mean in the political debate? Liberal versus Conservative means nothing when you understand that the word “Liberal” meant a believer in the individual during the 19^th century. Because it was such a new and radical idea it became associated with “new and radical.” By the time of FDR's administration Liberal just took it's “new and radical” modifiers over to the government interventionist camp. Conservatives on the other hand are the general fighting the last war. They were the Tories in our revolutionary war, the America Firsters before World War Two and now the pre-emptive first strikers.

I became a Libertarian years ago because of my dis-satisfaction with the moral interventionist the GOP includes in it's tent along with its half hearted belief in free markets. The counter to libertarian is authoritarian. Let me posit that an authoritarian is a believer in government and a libertarian a believer in the individual. The spectrum from left to right extremes would be Stalin's or Hitler's regime, both equally horrifying and on the same side, versus a hermit on a deserted Isle. The middle of this spectrum is one where reasonable people can acknowledge some legitimacy in the other's argument and find a cordial way to compromise between more government and less government.

One ideological lever between the two sides is raising or lowering the bar of “Federalist,” proponents of central government, versus “Antifederalist, ” supporters of states rights. Obama's Health Care Act may be argued as federal over reach. My problem is that I can't trust Republicans to consistently push back protecting states and ergo individual rights. Rick Santorum, for example, appears to be much more willing to intervene with federal authority in our personal lives than any Democrat I know, when one considers his intrusive grandstanding performance in the Terry Shiavo case. What does the likes of a U. S. Senator from Pennsylvania have to pontificate about when the head of family makes a personal decision on pulling the plug on a body on life support in Florida? Jeb Bush's intervention was bad enough, but at least he was Governor of Florida at the time. 

"The Economist" Nuclear Energy - The Dream that failed

Nuclear energy requires a Libertarian democracy with fair well understood compensation offered to those who will accept a facility and massive legal recourse for damages when it goes awry.  Japan's experience at Fukushima shows that the Industry's pact with the populace depended solely on the trust of government regulator's efficacy.  That trust is now gone. Can Japan's bank regulator's be far behind?

Nuclear Disaster in Japan was Avoidable, Critics Contened

Today's article in the New York Times illustrates how a regulatory agency eventually gets co-opted by the industry it regulates. In this case the Nuclear regulatory agency in Japan is overwhelmed by industry insiders migrating from company to overseer.  The group think this migration engenders cuts through all types of government agencies. The Goldman Sachs executives migrate to high Treasury positions, for example, and quash proposals that allow customers to get real value versus illusory profits.

The decision making in all cases reeks of willful denial of the known, such as the launch of Challenger when there was a very specific warning that rocket seals would not function in sub freezing weather that Florida could never have, yet did on January 28 1986.

Character

Ron Paul doesn't get much credit for being a decent person. He doesn't wear religion on his sleeve.  He is polite and cordial to his opponents and he speaks about the issues directly without dwelling on character assassination. David Brooks editorial today about "The Rediscovery of Character" doesn't mention Ron Paul, but it ought to have.  Its the reason I am such a Ron Paul supporter.  He is a libertarian philosophically,  but his lifestyle and character is conservative. He is not a libertine.