Monday, July 14, 2014

Financial Sarcasm Roundup for 07/14/14

Open your mouths for a big, fat, heaping spoonful of financial sarcasm.  It's good for you and you'll get used to the taste in no time flat.

The Trans-Pacific Partnership is getting hung up on the US's domestic election calendar.  That would not be such a big deal if the negotiators stick to their regular meeting calendar.  I remember how NAFTA's negotiations had periodic hangups over domestic political pressures but the parties still got a deal done.  If the TPP dealers can't even agree on their next meeting date then they've got more severe problems than one country's elections.  I say dress up some actors in a Chinese New Year dragon dance costume and have them throw some firecrackers into the TPP's next press conference.  That will wake everyone up about the urgency of creating a trade bloc countering China.

A new Great Wall of China is going up around "wealth management" services.  Here's why it's very important for the rest of the Pacific Rim to ring-fence China's economy.  China has obviously not fully identified the problems in the risky wealth management products (WMPs) that channeled its middle class savings into failed infrastructure and empty residential projects.  The inevitable defaults of these WMPs will destroy any Chinese banks that have not pushed them off their balance sheets.  China's obvious hope that FTZs will attract enough FDI to soak up WMP demand is not realistic.  Western banks with any sense will keep their FTZ branches away from the Chinese wealth management chop shops.

The silver fix is getting a new caretaking team.  There will never be a perfect way to set any daily commodity price.  Moving the silver fix to exchanges that habitually make pricing transparent is better than leaving it in the hands of collusive bankers.  The gold fix is the obvious next candidate, and then currencies and interest rate benchmarks.  Regulators are probably tiring of the vast investigations they must launch every time a bank's misbehaving whale trader nearly causes a systemic lock-up.  Taking a global pricing fix away from bank trading desks is like taking the car keys away from a drunk teenager.  Someone has to be the adult on the scene.

I would like to thank several hot San Francisco women for making my day a bit less sarcastic.  They know who they are.  I'm always up for harmless flirtation and the ladies do swoon from my attention.