The Big Picture

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• ‘Tis two days before Christmas
• From Secrecy to Transparency at the Fed
• 10 Monday AM Reads
• Half-Assed

‘Tis two days before Christmas Posted: 23 Dec 2013 11:00 AM PST From Art Cashin of UBS: 'Tis two days before Christmas and at each brokerage house The only thing stirring was the click of a mouse Down on the Exchange the tape inches along Brokers bargained and traded as they hummed an old song The Fed kept on printing yet few jobs did appear But it’s time to move on so they’ll taper next year Boston won the World Series Baltimore took the Bowl But Tiger still struggles to get the ball in the hole From Bitcoins to Binge-viewing brand new things did occur And the Prez took a selfie that caused quite a stir There was a government shutdown most folks called it a sham And to slow down the Senate a guy read “Green Eggs and Ham” In Cleveland three women finally freed of their fears Held captive by a mad man for nearly ten years The Pope said he resigned an occurrence quite rare A new Pope named Francis new sits in that chair Back tried Spitzer and Weiner they brought little to cheer But it's Christmastime, Alice and Santa is near So stop looking backwards have a cup of good cheer And kiss you a loved one raise your hopes for next year And amidst all the trading Christmas themes we will heed And share our good fortune with families in need And tomorrow they'll pause as we wait on the bell To sing a tradition a song for old "Nell" Don't let this year's problems impede Christmas Cheer Resolve to be happy throughout the New Year And resist ye Grinch feelings let joy never stop Put the bad at the bottom keep the good on the top So count up your blessings along with your worth You're still living here in the best place on earth And think ye of wonders that light children’s eyes And hope Santa will bring you that Christmas surprise So play ye a carol by Mario Lanza Unless you are waiting to celebrate Kwanzaa Hanukkah's over And Ramadan's gone Different folks, different holidays yet each spirit lives on Whatever your feast is we hope you all still Find yourself just surrounded by folks of goodwill Tuesday, as the bell rings hark to your heart's call And as Santa would shout Merry Christmas to All!

From Secrecy to Transparency at the Fed Posted: 23 Dec 2013 08:30 AM PST Via Goldman Sachs: Source: Goldman Sachs, “Top of Mind”, December 18th, 2013

10 Monday AM Reads Posted: 23 Dec 2013 06:30 AM PST Sure, I am on vacation. But OCD never takes any time off — hence, what I’m reading this week: • Valuation, Profit Margins and Stock Market Returns: Adventures in Curve Fitting (Philosophical Economics) • Do not get wrongfooted on descent from QE (FT.com) see also The Federal Reserve was created 100 years ago. This is how it happened. (Washington Post) • 99% of Long-Term Investing Is Doing Nothing; the Other 1% Will Change Your Life (Motley Fool) • Lessons from 2013 in pictures (A Dash of Insight) • A Wordnado of Words in 2013 (NY Times) • The China Mobile iPhone is specific to China Mobile (stratēchery) see also Apple Reaches Deal to Sell iPhones Through China Mobile (Bloomberg) • Stop coddling your dog—he's 99.9% wolf (Quartz) • Your "Thoughtful" Gifts Are Suboptimal (Priceonomics) • Biomedical Technology Stories in 2013 (MIT Technology Review) • Why You’re More Likely To Buy Something When Shopping On Your iPad (Fast Company) What are you reading?   Even Skeptics Are Sticking With Stocks Source: WSJ

Half-Assed Posted: 23 Dec 2013 04:00 AM PST I read yesterday morning in the Japan Times that the JP Morgan settlement is thought to be a blueprint of future settlements. Some recompense to the Treasury, some putative damages to act a deterrent for the future, but a decided lack of culpability in the veritable errrr ummm culprits. Why, pray tell, is it believed correct by a majority of lawmakers in America that “Gun’s Don’t Kill People – People Kill People”,  yet, the same lawmakers fail to apply similar conviction (no pun intended) to the thought that “Banks Don’t Commit Financial Crime – People Commit Financial Crime”?  It is quite obvious that in the truest sense, a bank cannot (yet) commit a crime, and until such time as HAL or Holly take over the reins and execution of bank trading and management, there are individuals, and responsible managers, and their Managers (upper-case “M”) who, should be culpable. Yet, in 2013 America, if one pays enough, it seems the perps and perp-enablers and perp-encouragers and perp-incentivizers can walk free. The question as to “why” there exists a paradox of culpability is a rhetorical question. The answer is  rather obvious: the legislature and its lawmakers have been captured, which leads to laws and standards of convenience, rather than consistent logic. In the game of political rock-paper-scissors, money trumps philosophical consistency each and every day. While I am admittedly both curmudgeonly and, at times cantankerous, and I am known to be periodically nostalgic, none of these are behind my belief that partnerships-of-old, as compared to publicly-listed joint-stock companies, throttled behaviour in ways that were palpably superior, precisely because there was a semblance of culpability – at the very least to one’s partners. And if you weren’t a partner, you can be certain that the culpable partner would insure potential tumors under his remit were excised, as such a cancer would impact both his partnership and therefore his children’s patrimony. I am of course, using this as an example, and I am not suggesting banks return to a partnership model. But it is important to question precisely what message is being sent by the decided lack of personal culpability, directly, by line managers, and their senior managers. Yes, their Senior Managers. In most areas of the law (it has been pointed out to me on more than one compliance-related occasion)  ignorance is no excuse. So “Pay Away” your sins, while a palliative to the Treasury, is no cure. Only the bona-fide prospect of sharing a cell with a father-raper, near-total asset seizures vs. to most individuals what now appears to be eventual repayment of an interest-free loan (if caught) and a possibly blot on one’s employment record (which BTW others less pure-minded may see as a virtue). In practice, this must mean more than  selling out a few of your subordinates to take the rap, and make it go away. Like cancer, if you don’t get it all, it will return, metastasize, and kill the host. And to be clear: WE are the host.

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