The Ticker Quick Views on Politics, Economics and Finance
There's something missing in the Libor settlements that the Royal Bank of Scotland Plc reached today with authorities in the U.S. and U.K. It's an omission that could impair investors' chances of recovering money lost due to banks' misbehavior.
Like Barclays Plc and UBS AG, RBS admitted that its traders sought to benefit their own positions by manipulating the London Interbank Offered Rate -- a transgression for which the bank will pay $612 million in fines. The misconduct occurred largely in Japanese-yen and Swiss-franc Libor, over a period stretching from October 2006 to November 2010.READ MORE
Last week, the Netherlands nationalized its fourth largest bank, SNS Reaal, and to reduce the cost wrote down the value of the bank's subordinated bonds to zero.
This isn't the first time that subordinated bondholders (investors lower down on the food chain when it comes to getting paid back) have suffered in the euro area’s financial crisis. That precedent was set in Ireland, where senior bondholders were made whole but junior bondholders took a hit on their bank bonds. Since the beginning of the Irish crisis in 2008, about 14 billion euros ($19 billion) of the total 26 billion euros of subordinated debt has gone unpaid.READ MORE
As the world falls in love with Prime Minister Shinzo Abe's plans for Japan, it's forgetting the ultimate arbiters of his success: the bond vigilantes holding sway over borrowing costs.
What Abenomics bulls haven't yet explained away is what happens if Japan's prime minister gets his way. Imagine, for a moment, that the Bank of Japan succeeds in pushing gains on consumer price to 2 percent or 3 percent. The resulting rise in 10-year bond yields would shake Japan Inc. to its core.READ MORE
It's easy to see why Russ Girling, the chief executive of TransCanada Corp., is optimistic that his company's controversial Keystone XL pipeline will soon get a green light from the U.S.
"You have to believe that the world is logical, especially around something as important as this," he told a group of Bloomberg News reporters and editors this morning. For the State Department to reject the pipeline would be "the craziest thing I could think of for the largest consumer of oil on earth," Girling said.READ MORE
House Majority Leader Eric Cantor gave what was billed as a major policy speech today at the American Enterprise Institute. The policy specifics in the approximately 4,600-word speech amounted to pretty thin gruel. Instead, the speech was almost entirely about repositioning Cantor and the Republican Party politically. And that may make it the most important Republican policy speech in quite a while.
First, the tone. Who was this mild-mannered middle-of-the-roader? Cantor's icy partisanship melted away in a sea of warm bromides about the Wright Brothers at Kitty Hawk and the Statue of Liberty. Aside from some requisite signaling to the right -- "There is no greater moral imperative than to reduce the mountain of debt" -- Cantor was a model of conciliation, offering hope that the two parties can find "within us the ability to set differences aside."READ MORE
Margaret Carlson & Jim Kelly
This week Jim Kelly and Margaret Carlson are corresponding about Washington's moment on the small screen. Kelly is the former editor of Time magazine (and of Carlson) and is now a contributing editor at Vanity Fair. Carlson is a Bloomberg View columnist.
Margaret: I'm a pushover for TV shows that dramatize Washington, as day-to-day Washington can be pretty dull. I even like "Scandal," which lacks the elite pedigree of "House of Cards," which is based on the British series of the same name that aired more than 20 years ago.READ MORE
President Barack Obama, sensing another "self-inflicted" wound in the making, asked Congress today to consider passing a small package of spending and tax changes to avert deep and "indiscriminate" budget cuts slated to kick in March 1.
It's no secret that lawmakers will be unable to agree quickly (if ever) on a budget deal as they try to bridge an ideological divide over spending and tax policy. A budget agreement will require the kind of "grand bargain" discussions Congress has all-too-eagerly kicked down the road, and there's no reason to think this time will be different.READ MORE
Albert R. Hunt
Channeling Lenny Skutnik: As he delivered what he billed as a major policy speech in Washington today, House Majority Leader Eric Cantor relied on guests in the audience to illustrate his party's desire to "make life work better" and concern for average folks.
The address at the American Enterprise Institute was short on specific policy prescriptions, other than criticisms of President Barack Obama's health-care law and a broad call for a pathway to citizenship for the children of undocumented workers.READ MORE
Ever wonder if you have what it takes to work at Goldman Sachs Group Inc.? A career quiz on its website, mentioned today in Politico's Morning Money newsletter, might give you a good idea, if you don't mind answering a few goofy questions.
Goldman would first like to know a little bit about your pedigree. What college did you attend? What degree did you earn? And where would you like to work?READ MORE
Philip Klein of the Washington Examiner is outraged that Governor John Kasich has agreed to accept expanded Medicaid in Ohio:
"Whatever justifications Kasich may give, the actual explanation for his embrace of the Medicaid expansion is political cowardice. Chastened by his failed attempt at public sector union reform and Obama’s victory in the state, Kasich is up for reelection next year. And he’s afraid to stand up to the inevitable onslaught of attacks from Democrats who would charge that he was refusing to accept free money to bring health care to poor Ohioans."
Well, that's an odd way to put it. Yes, if Kasich had declined the Medicaid expansion, Democrats would have "charged" that he was declining free money for poor people's health care, because that's exactly what he would have been doing. Medicaid expansion is free to state taxpayers in the first few years and then nearly free in subsequent ones. Kasich was afraid to opt out, because doing so would have been harmful to Ohioans. This is an example of the system working like it's supposed to.READ MORE
Now that the Justice Department has filed its lawsuit accusing McGraw-Hill Cos. and its Standard & Poor's unit of fraud, I have a plea for my fellow scribblers in the press: Please stop calling S&P a "ratings agency."
Call it a ratings company, or a rater, or a publisher, or an opinion merchant. Take your pick. Or come up with your own moniker clearly signaling that S&P is a commercial enterprise that makes its money by selling rating services to bond issuers.READ MORE
The Canadian penny is heading into retirement. As of today, the Canadian Mint will stop distributing the coins to financial institutions.
“Pennies have sat idle for too long in forgotten penny jars and couch crevices,” Shelly Glover, Parliamentary secretary to the Canadian Minister of Finance, said in a statement.READ MORE
(Corrects description of movie in fifth paragraph.)
Edward Koch, who died last week at 88, figures prominently as an antagonist in "How to Survive a Plague," David France's excellent new documentary about the AIDS Coalition to Unleash Power (ACT UP). The film opens with footage from 1987 of a reporter asking Koch, then New York's mayor, why he called ACT UP protesters "fascists" but referred to them in a news release as "concerned citizens." Koch replied, classically, "Fascists can be concerned citizens."READ MORE
Simon Johnson's column today focuses (as usual) on too-big-to-fail banks and asks who decided to make them immune from prosecution in the first place. He mentions a speech by Lanny Breuer, the outgoing head of the U.S. Justice Department's criminal division, who told the New York City Bar Association last September that decisions about whether to indict large corporations are the sorts of considerations that "literally keep me up night."
Breuer's speech received little attention last year. But it has been getting a lot lately -- ever since the PBS program "Frontline" brought it up during a documentary last month called "The Untouchables," about the lack of significant criminal prosecutions related to the financial crisis. Anyway, I've seen the speech cited so many times recently, I figured it's worthwhile to publish the relevant section so readers can see what the fuss is about:READ MORE
There are good sports commissioners and there are bad commissioners, and then there is NFL Commissioner Roger Goodell: the Donald Trump of sports commissioners.
No matter how many errors in judgment he makes, no matter how powerfully the tides seem to be turning against him, his empire remains intact, even growing.READ MORE
This Valentine's Day in Russia, do your patriotic duty and make a baby.
That's the message from President Vladimir Putin, who has invited the trio Boyz II Men to perform in Moscow on Feb. 6 as part of an effort to raise the country's birth rate. The group will sing romantic ballads, "hopefully giving Russian men some inspiration ahead of St. Valentine's Day," according to the Moscow Times. (Update: Putin "may or may not" have invited the band, as Foreign Policy reports. His campaign for more Russian babies, however, is longstanding.)READ MORE
Edward Koch’s upset victory in the 1977 mayoral race in New York was the desperate act of a city whose progressive dreams had been mauled by near bankruptcy, a chaotic blackout and a high murder rate. Despite 35 years of subsequent success, for which Koch deserves some credit, the city should not take for granted the tough, sensible centrism that Koch brought to City Hall.
New York rose at the start of the 19th century as America’s greatest port and for more than a century, the city’s economy was strong enough to withstand mayoral mediocrity and even the kleptocracy of the Tweed Ring. In 1929, the city’s manufacturing workers were 72 percent more productive than the national average.READ MORE
Albert R. Hunt
The stars seem aligned for another attempt at reforming U.S. immigration laws. Here is some data for lawmakers to ponder:
The Department of Homeland Security estimates that in 2011, the last year for which there are numbers, 6.8 million of the 11.5 million undocumented immigrants in the U.S. were from Mexico. The Pew Hispanic Center, which often has the most reliable immigration data, says the number has dropped to 6.1 million, from 7 million five years before.READ MORE
In 1989, New York Mayor Edward Koch was running for a fourth term. He was defeated by a 16-year-old, Yusuf Hawkins, a black New Yorker who was surrounded by a white mob in Bensonhurst, Brooklyn, before being fatally shot in the chest. The mob had formed in part in response to a rumor that a black or Hispanic teen from outside the largely Italian-American neighborhood was dating a local girl.
Three days later, predominantly black civil rights marchers walked through Bensonhurst in protest. In response, local whites spewed racial epithets in a scene reminiscent of Boston during the battle over school busing.READ MORE
Ten years ago, spaceflight had become so regular that the comings and goings of shuttles often went unnoticed outside the NASA community. But on the morning of Feb. 1, 2003, many Americans awoke to the realization that spaceflight will never be routine.
That morning, the return of the shuttle Columbia went horribly awry. The problem had started with its launch, when a piece of foam from the external fuel tank struck the spacecraft's left wing. Some of the heat-resistant tiles cracked, which allowed superheated gasses to destroy the shuttle on re-entry to the Earth's atmosphere. Seven astronauts died.READ MORE