Category: regulation

Obama Looking to Restrict Antibiotic Use in Livestock

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This is good news.

Basically, feeding tightly penned industrially raised animals antibiotics make they gain weight faster, probably because it suppresses minor illnesses.

It also creates things like antibiotic resistant E. coli, leaves residues in the food, etc.

The Dutch banned antibiotics in animal feed over a decade ago, and we know that the net cost of this change would be less than 5¢ a pound.

Additionally, it would make some of the more inhumane animal husbandry techniques less viable, because stressed animals packed in close quarters become more vulnerable to disease.

What Barry Ritholtz Said

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In his post, Dear Lord, Anyone but Lawrence Summers . . . , about the possibility of Larry being Fed chair:

I read articles like these with dread and horror:

…

So help me God, if Obama nominates this incompetent, lacking-in-judgment jackboot to the FOMC chair, then in 2012, I will write in George W. Bush’s name for President . . .

I’m not that angry, but writing in Ron Paul’s name is beginning to look appealing.

BTW, in his description of Mssr. Summers, he left off “corrupt.”

The inestimable Mark Ames wrote about that almost a year ago.

Economics Update

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Thursday is new jobless claims day, and new jobless claims fell by 52K, to 565K,, bringing the number down below 600K for the first time since late January of this year. (Full disclosure here, one of those 565,000 people was me, if anyone knows of mechanical engineering openings in the greater Baltimore, MD area, it would be greatly appreciated.)

The other shoe dropping is that continuing claims hit an all time high, rising by 159 to 6.88 million.

Also note that these numbers are the seasonally adjusted numbers, and actual claims increased by 17K to 577.5K, and the seasonal adjustment includes a correction for auto factory shutdowns for model changes, which occurred early this year for GM and Chrysler, because of the bankruptcies.

Ain’t statistics grand?

A slightly more realistic metric than the massaged jobs claim data is the fact that retail sales missed expectations in June.

The fact that retailers were selling less than expected led to wholesalers drawing their inventories to the lowest levels since August 2007.

The big news in central bank land is that the Bank of England neither cut its rates nor increased its bond purchases, which had the effect of driving treasuries down, and their yields up.

In any case, it appears that the bogus job numbers (see above) have halted the slide in crude oil prices, with prices settling at $60.41/bbl.

The Bank of England’s move not to cut rates or buy bonds (print money) any faster had the effect of weakening both the dollar and the Yen.

A Real Progrom toi Help the Economy

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The minimum wage goes from $6.55/hr to $7.25/hr on July 24.

The linked article wrings it hands about the “stress” on the job market from the increase, but the reality is that no one has ever been able to find a correlation between increases in the minimum wage and unemployment, and getting more money into the hands of poor people, who spend the money more quickly, is the best way to get the economy moving.

Well, This is a Weird 5-Way

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Justices Antonin Scalia, John Paul Stevens, David Souter, Ruth Bader Ginsburg and Stephen Breyer formed the majority on “Cuomo vs. Clearing House Association, (Eliot Spitzer originally brought the case) where they affirmed a states right to enforce laws against unfair lending practices.

If you had told me that a 5-4 decision in the Supreme court would have this makeup, I would have thought that you were pulling my leg.

While the Supreme Court did limit the scope of state Attorneys General, they do not have the right to simply demand documents, as federal regulators do, they have to get a court order, this is a big victory for consumers, and Scalia authored it.

Reality is sometimes odd.

It’s Bank Failure Friday on Thursday!

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Great Googly Moogly! 7 Banks, 6 of them in Illinois, shuttered by the FDIC on one weekend.

July 2 is literally the middle of the year, day 183, and we are now on a pace to break 100 for the year.

And here they are, ordered, and numbered for the year so far.

  1. John Warner Bank, Clinton, IL
  2. First State Bank of Winchester, Winchester, IL
  3. Rock River Bank, Oregon, IL
  4. Elizabeth State Bank, Elizabeth, IL
  5. First National Bank of Danville, Danville, IL
  6. Millennium State Bank of Texas, Dallas, TX
  7. Founders Bank, Worth, IL

Full FDIC list

Talk About Regulatory Capture

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Remember those bank warrants we got for TARP money?

Well Timothy Geithner and His Evil Minions™ want the banks themselves to set the price, at least initially:

The Treasury Department said the banks will make the first offer for the warrants. Treasury will then decide to sell at that price or make a counteroffer. If the government and a bank cannot agree on a fair price for the warrants, the two sides will have the right to use private appraisers.

If you want a fair price, put them out for public bid.

This is just another backdoor payout to the investment banks.

First, we overpay for the warrants, and now, we sell them back at less than their value.

The hole damn system is corrupt, and the bank bailout needs to be pursued as a criminal investigation, not as a crisis.

Financial Products Should be Precertified as Safe and Effective

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That’s what the Bank for International Settlements (BIS) is saying about financial products:

Financial products should be treated like medicines and sold to consumers only when they are certified safe to prevent a repeat of last year’s financial meltdown, the world’s central bankers said on Monday.

The Bank for International Settlements (BIS), which acts as a forum for central banks, said government efforts to revive the global economy might have only a temporary impact because banks are not being pushed hard enough to fix their underlying problems.

…

The BIS was alarmed by how a collapse in the value of opaque and complex securitized products propelled the world’s financial system into crisis. It said in its annual report all financial products should be registered like medicines.

The safest instruments would be available to everyone, a second tier only to people with authorization, like prescription drugs, and a third tier to a limited number of pre-screened individuals and institutions, like experimental drugs are.

It’s a very good idea, but it won’t happen, because it’s what the Masters of the Universe want, so the Masters of the Universe won’t let it happen.

If you require that products be safe and effective, you prevent them from churning money into fees, and reduce their base salaries and bonuses, so they say, and so says Summers and Geithner.

Fundamentally, until financial instruments are completely clear and transparent to regulators, and certified as such, they should be forbidden.

If Only the Czar Knew

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This is an interesting article on how Larry Summers and Tim Geithner have successfully neutralized Paul Volcker’s attempts to create meaningful reform in the financial industry.

The subtext that the article misses is that this is that this is not Summers’ or Geithner’s doing, it is Barack Obama’s doing.

The fact that Paul Volker has been marginalized is obvious to anyone with two brain cells to rub together, and President Obama is not a stupid man.

The increases in regulation and the reform have been held to a minimum because that is what Obama wants.

WTO Says Environmental Tarriffs Legal

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Much in the same way that they allow for the VAT to be charged at the border, a tariff to reflect the cost of carbon regulations would be legal:

Countries implementing cap-and-trade systems for greenhouse gases may be able to use border taxes to protect domestic industries, after the World Trade Organisation gave a cautious nod to such measures.

It’s basic common sense, though they do note that it cannot be, “a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade”.

Zimbabwe Update

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First off, we have a row between Mugabe and Tsvangerai over the Bank of Zimbabwe Governor, Gideon Gono.

This is a non-trivial row, because the spectacularly corrupt Gono was the architect of Zimbabwe’s hyperinflation, and he did so in order to pay off the various ZANU-PF constituencies to support Mugabe.

It’s gotten heated enough that the (ZANU-PF member) military and security chiefs have said that his removal would be unacceptable.

Members of the MDC have approached the Southern African Development Community asking for an intervention, but non seems forthcoming.

The regional association of governments is sticking with precedent, and being generally useless, so the MDC is moving toward changing the law chartering the Zimbabwean central bank so as to reduce Gono’s authority.

Things are improving a bit though at least in economy, with inflation moderating, though the persecution of civil rights activists continues.

In mining, which will necessarily be a source of much needed foreign currency, you have the good and the bad

On the good side, you have Zimbabwe Zimbabwe moving to ban raw chromium ore exports, and insisting that it be smelted first, which will greatly increase the benefit to society, as there is 10x the profit post smelter. (as an aside, the US and EU have filed a case against against China for doing this at the WTO, because under neocolonialist WTO rules, poor countries are not supposed to develop industries based on their resources)

We also have some gold mines reopening.

On the down side, mines minister is still one of Mugabe’s cronies, which means that he is still on the EU’s sanction list, and was denied a visa to enter the UK, and all indications are that this was well justified, as civil rights violations at the mines seem to be pretty horrific.

Specifically it appears that the Zimbabwe army is using slave labor to operate diamond mines in the east of the country, as a way for Mugabe to continue to pay off the military for its support. (See also here)

We are starting to see some aid resuming to Zimbabwe, with Norway being among the first western nations to do so, though most nations are taking steps to ensure that the aid does not pass through government agencies, which are still compromised.

Non Denial Denial from Bernanke

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So, in testimony before the House Oversight Committee, he claims that the Federal Reserve acted with the “highest integrity” with regard to the BoA Merrill deal:

The Fed chairman said neither he nor any member of the Fed “instructed, or advised Bank of America to withhold from public disclosure any information relating to Merrill Lynch, including its losses, compensation packages or bonuses, or any other related matter.”

The disclosures “belong squarely with the company, and the Federal Reserve did not interfere in the company’s disclosure decisions,” he said.

Translation: I didn’t tell him to lie, but I said that if disclosures queer the deal, you are toast.

He testified against legislation allowing for audits of the Federal Reserve:

When asked about legislation that would allow for broad audits of the Fed by the Government Accountability Office, Bernanke said such powers would compromise the central bank’s independence and be “highly destructive to the stability of the financial system, the dollar and our national economic situation.” Maintaining independence on monetary policy is “critical,” he said.

I may not be one of those financial whiz kids, but when someone says, “No audits,” I think, “Serious waste, fraud, and abuse.”