Monday, March 10, 2014

Financial Sarcasm Roundup for 03/10/14

You may not be ready for my sarcasm, but my sarcasm is definitely ready for you.  If you miss the LOLpics of animals, you're welcome to make your own.  LOLcats may reappear when needed.  True sarcasm needs no artificial additives.

One Chinese bank regulator says China should allow more corporate bond defaults.  Good for him.  He's one of the few honest people in the Chinese banking system.  The bad news is that more corporate bond defaults will destroy the wealth management products that rolled them up as part of their portfolios.  Bring on the cascading defaults.  China's non-emerging middle class is going to get hit in the wallet and learn very painful lessons in risk assessment.

The BIS is dropping hints that central bankers' forward guidance on policy isn't worth very much.  I don't expect the world's central bankers to take the hint.  The bankers in the developed world love the media attention they get from making policy promises.  The ones in the developing world need to reassure local policy elites if they want to keep their jobs.  Fed watchers have too much time on their hands anyway.  They would be more productive calculating the Fed's probability of going bankrupt if it loses control of the yield curve's short end.

China blames lunar new year celebrations for its trade deficit.  Wow, that's a new one.  American executives like to blame the weather when they have a bad quarter.  Now Chinese policymakers are picking up on blame-shifting tactics.  Hey China, maybe the rest of the world is catching on to the fact that your exported products are low in quality.  Maybe the world is getting sick of Chinese IP theft and doesn't want to invest in Chinese value-added manufacturing.  Whatever.  China isn't the juggernaut some Western analysts fear.

The Obama Administration is cracking down on high-income earners' Social Security strategies.  It's about time.  The bipartisan Bowles-Simpson commission warned us about entitlement programs that would destroy the federal government's solvency.  Chipping away at excess benefits one option at a time is better than nothing, although this one proposal probably won't make much difference.  I would hardly describe the ability to manipulate an unfunded liability as a preferred financial planning tool.  Financial advisers who consider Social Security to be the equivalent of an annuity or other collateralized income stream need to find a new line of work.  Acclimatization to entitlement checks is hard to unwind, but unwind it must.

I refuse to be sarcastic about current events in Eastern Europe.  That action deserves sober analysis.