Randomly Noted

There are facts. There is political reality. As those two clash, it won’t come out well for the Securities and Exchange Commission.

The SEC’s chairman, Mary L. Schapiro, marshalled facts in a speech today, hitting hard that the watchdog agency needs more money to modernize to fulfill its role, especially in light of the additional responsibilities handed the SEC by the Dodd-Frank Act.

The reality is the SEC had better review all its operations, set its priorities and stop some things so it can do others well. The top priorities should be enforcement and watching ever-more-sophisticated stock market patterns.  Other functions, such as investor education, will have to fall by the wayside.

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The incongruity wasn’t lost on the Federal Reserve chairman or the crowd.

“But before asking the last question, a couple of very important matters to take care of,” intoned the moderator at Fed Chairman Ben Bernanke’s rare press conference today in Washington at the National Press Club. “Want to remind our members and guests of future speakers. Harry Shearer, the comedian and humorist, a voice of ‘The Simpsons,’ will discuss media myths on March 14.

“And we might even try to get him to do a few voices for us,” the moderator added, according to a transcript.

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A quote from Jeffrey R. Immelt, the chairman and chief executive of General Electric who was just tabbed by President Obama to lead a government council on job creation, sums up quite well a key aspect of the  American economic dilemma.

“The assumption made by many that the United States could transition from a technology based, export-oriented economic powerhouse to a services-led, consumption-based economy without any serious loss of jobs, prosperity or prestige was fundamentally wrong,” Immelt wrote in an “op-ed” piece in today’s Washington Post.

I’ll take issue with one aspect of the quote: the implication that someone planned it that way, that someone thought this was a good idea. The transition, which threatens the long-standard American advantage of a broad and robust midlle class, was the result of market forces. Globalization works all sorts of ways.

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Every great government institution deserves a nickname. The U.S. Senate has been called the “world’s greatest deliberative body.” The House of Representatives is referred to as the “People’s House.”

True, these terms of endearment also have been much used ironically and cynically, depending on what’s been going on in those storied institutions. But, through thick and thin, the nicknames have lasted.

The president of the Federal Reserve Bank of Dallas may have on Wednesday, presumably without planning, come up with a terrific nickname, or at least a nickname idea, for the U.S. Federal Reserve. Richard W. Fisher spoke of the need to protect the integrity of our “delicate franchise.”

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If you are looking to make a contrarian macroeconomic bet in 2011, how about this one: real progress will be made in the U.S. at the federal and state level on reducing large, structural budget deficits.

I know it is a doozy. And I did say contrarian, which means if you believe it most people will say you are crazy. But contrarian sometimes does happen.

It’s pretty easy to build a case against deficit-cutting progress. Sky-high budget deficits at the federal level were just recently met by continued tax cuts, which makes the deficit worse. Messing with Social Security or Medicare still means flirting with the ‘third rail’ of American politics. State and city promises to retired workers are massive and underfunded. A divided government in Washington promises nothing but hostility and inaction.

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The U.S. footbal analogy is this: the Federal Reserve is like a runner who has picked up a lot of yards, but now wants to lateral the ball to another runner. The question is whether that second runner is available and what he will do with the ball.

A tortured analogy. Guilty as charged. Federal Reserve Bank of Dallas President Richard Fisher prefers maritime analogies.

The Fed “has helped raise the tide” he told Dow Jones Newswires reporter Michael Derby today in a video interview broadcast via WSJ.com. But a lot of U.S. employers’ boats’ “are still tied to the dock or they’ve sailed to foreign ports,” where the regulatory climate is presumed to be more favorable.

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We are now living through the reason the leader of Securities and Exchange Commission earlier this year called for the right for the agency to fund itself.

We are now living through the reason the Congress won’t honor that request.

It’s about power and control. It’s about the opportunity to take a second whack at signed legislation through a tight grip on the purse.

Let us summarize. SEC Chairman Mary L. Schapiro has asked for the right, granted other U.S. financial regulators, for the SEC to fund itself through the fees it collects from the companies under its purview. That would allow the agency to better meet enforcement and other duties.

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Federal Reserve Chairman Ben Bernanke made clear he is ready for prime time.

In a presumed effort to counter critics of the U.S. central bank’s $600 billion Treasury bond buying plan to spur the economy, Bernanke took to the airwaves via a Sunday broadcast interview on the popular CBS news program 60 Minutes. Fed chairmen of an earlier generation would be shocked at the straight forwardness of it all, though leaders like to talk on television because they feel they can get their points more directly across.

Bernanke didn’t break any big news on 60 minutes, but that wasn’t the point.

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When people talk about the U.S. Federal Reserve, or when central bankers talk about themselves, it’s instructive how often the word ‘effectively’ comes up. Effectively, as in virtually, but not official nor completely spelled out.

The Fed has no official target for where it wants the U.S. inflation rate, but effectively it’s around 2% or a bit below that.

The Fed officially has a dual mandate for price stability and to promote maximum, sustainable economic growth and employment. But, effectively, its goal – like that of other central banks – is to maintain price stability. Presumably, economic growth will flow from an environment of stable prices and expectations for modest future inflation.

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In the 59 pages of sometimes radical notions proposed by the heads of a budget-cutting commission intended to restore discipline and sacrifice to the economic lives of slothful Americans, there’s at least one  idea that should be a no-brainer.

Gradually increase the age at which Americans retire and collect either early or full retirement benefits via the Social Security system. Make provisions for those 62 or older who can’t continue to work.

This one should be widley adopted by Americans if only to show they are ’mature’ about needed belt-tightening measures, given the size of current and future budget deficits. In France, major protests were launched about the plan to gradually increase the retirement age there to 62 from 60.

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