Tell It To Al

For the first time in a quarter century, central bankers from around the world will meet in Jackson Hole, Wyo., without the head of America’s own central bank, Reuters reports.

Federal Reserve Chairman Ben Bernanke says he got some sort of personal conflict when the annual retreat goes down in August. Click here to read more from Reuters. This meeting has happened every year since 1978 and this will be the first time our own Fed head won’t be there.

In these times of unprecedented monetary accommodation – a.k.a. money printing – what could be more important than  getting together with the world’s most powerful central bankers in a genuine, ride ‘em cowboy town?

Maybe Jackson Hole reminds Uncle Ben way to much about the hole he’s digging, ratcheting up the Fed’s balance sheet to the tune of more than $3 trillion as the Fed continues purchased $85 billion wirth of Treasurys and mortgage-back securities every month.

Or maybe we can already guess what Uncle Ben would announce if he attended:  We haven’t quite corralled our economic problems yet. So we’ll just keep printing money until the cows come home! Yippie-yi-yo-yippie-kai-yea!

Click here to read more from Bloomberg.

Last week’s Senate vote proved there’s not a thing lawmakers can do to regulate guns. Click here to watch me about it with Cynthia Hessin, host of Colorado State of Mind, and the Denver Post’s Alicia Caldwell, on Rocky Mountain PBS.

Then, one day after the show, someone lets lose with a gun at a marijuana rally. Two were shot. The rally was ended.  Click here to read about that in The Denver Post.

Mark these words that U.S. Treasury Department official Mary Miller delivered today:

“No financial institution, regardless of its size, will be bailed out by taxpayers again.”

“Shareholders of failed companies will be wiped out,”  she said in prepared remarks at a conference in New York City. “Creditors will absorb losses; culpable management will not be retained and may have their compensation clawed back; and any remaining costs associated with liquidating the company must be recovered from disposition of the company’s assets and, if necessary, from assessments on the financial sector, not taxpayers.” Click here for the full content of her speech.

This is precisely what did not happen in the great financial collapse of 2008. But Ms. Miller swears the laws, and the times, have changed.

Given the mad scramble to save everything from giant Wall Street investment banks, Chrysler and General Motors, money market funds and even garden variety companies that were dependent on trading commercial paper for their short-term financing needs, the market has every reason to be skeptical of these claims.

It won’t matter what the Dodd-Frank financial overhaul act says if the whole system begins to fail again. Someone will lock our leaders in a room and tell them that if they don’t come up with the bailout money our ATMs won’t work and Martial law will rule the lands – which is what Treasury Secretary Hank Paulson did when it happened on his watch.

We can only hope it doesn’t happen again. And if it does, it will be of little comfort to recall these words and see whether Ms. Miller was right.

Just when you thought there was a target set for when the Federal Reserve would finally end its unprecedented era of easing,  someone comes along with a new idea.

The Fed has long said it wants to keep buying bonds and holding interest rates to zero until the unemployment rate – now at 7.6% – settles below 6.5%. The plan is basically to keep printing money until this happens – as long as inflation stays below 2%.

A new study getting attention at the Fed suggests this may not be enough. The main reason the unemployment rate keeps falling is because millions of Americans are dropping out of the workforce and are no longer counted as unemployed – even though they are.

The study by Christopher Erceg and Andrew Levin, who are both Fed officials doing research at the International Monetary Fund, suggests the Fed’s goal should include bringing many of these folks back into the labor force.

Click here to read more from Reuters.

If a declining labor participation rate has made the economy look a lot stronger than it really is, well, it looks like the Fed still has years of work ahead.  But does printing money really create jobs?

It’s easier to laugh at doomsday predictions than it is to consider them as looming possibilities.

That’s part of the reason why David Stockman, President Reagan’s former budget director, is getting a lot of blowback from his new book, “The Great Deformation: The Corruption of Capitalism in America,” and a recent piece in The New York Times calling America, “state-wrecked.”

Mr. Stockman, who has been on a bit of a doomsday tour with his new book, appeared at the Society of American Business Editors and Writers Conference last week complaining that democracy as we knew it has been hijacked by crony capitalists.

Laugh if you will, but he says, the inevitable consequences will hit the wall in the next few years.

Click here to read my column on MarketWatch.

Click here to watch Mr. Stockman’s SABEW appearance on C-Span.

Click here to read Mr. Stockman’s Easter Sunday piece in The New York Times.

Some members of the Federal Reserve are suggesting it’s time for the central bank to curb its practice of purchasing $85 billion worth of Treasurys and mortgage backed securities every month.

Janet Yellen isn’t one of them.

Ms. Yellen is the Fed’s vice-chairman and often heralded as a possible replacement for chairman Ben Bernanke if he is not reappointed when his term expires in January. She is also very much on board with the Fed’s unprecedented plan to hold interest rates as near as possible to zero for the foreseeable future.

Speaking in Washington at the Society of Business Editors and Writers conference on Thursday, Ms. Yellen said she would support the plan even if it resulted in inflation ticking higher than the Fed’s targeted rate of under 2%.

At this point in the economic cycle, it’s more important to create jobs, than it is to combat inflation, she explained.

Meantime, John Williams, president of the Federal Reserve Bank of San Francisco, and Esther George, president of the Kansas City Fed bank, gave speeches last week suggesting that the Fed should end this practice soon.

Click here to read my column in The Sunday Wall St. Journal. And click here to watch me talk about this and other news bits with Will Ripley of Denver’s NBC affiliate, 9News.

Citigroup says it’s doing more to be sure it is not laundering money – after the Federal Reserve ordered it to do more to be sure it is not laundering money.

Today, the Federal Reserve ordered the too-big-to-fail bank to better improve its measures to police the risk of money laundering. This is after state and federal regulators put out orders last year that found Citigroup did not do enough to detect and report suspicious activity. Citigroup has neither admitted nor denied guilt, but has agreed to improve its compliance programs.

“Citigroup lacked effective systems of governance and internal controls to adequately oversee the activities of the Banks,” the Fed said in its order. Click here to read more from Reuters. And click here to read the order from the Fed.

Citigroup issued a statement saying that it had made “substantial progress.” But if it’s making acceptable progress, why is the Fed piling on with an additional order?

In December, HSBC Holdings agreed to pay a record $1.9 billion after being accused of laundering drug money from Mexico. Click here to read my column on that. Despite allegations of extremely illegal activity that average Joe’s would never overcome in court, not one executive was charged with a crime.

The feds have figured out that if you want to shut down drug lords and terrorists, you have to shut down their bankers. But they’re not shutting them down, they’re just putting out orders, handing out fines and demanding better compliance programs.

Mary Schapiro, who has recently left her post as chairman of the Securities and Exchange Commission, has been nominated to the board of General Electric Co., a company that paid tens of millions in SEC fines during Ms. Schapiro’s tenure.

The SEC accused GE of accounting fraud, securities fraud and even paying bribes to the Iraqi government. It has settled all of these allegations without admitting nor denying guilt. And now Ms. Schapiro is joining its board.

Click here to read my column in The Sunday Wall Street Journal. And click here to watch me talk about this and other business news with Gregg Moss of Denver’s NBC affiliate, 9News.

Federal Reserve Chairman Ben Bernanke offered only hedged assurances to the Senate Banking Committee that the perverse doctrine of too-big-to-fail was going away.

Taking a grilling from Democratic Sen. Elizabeth Warren from Massachusetts this week, Mr. Bernanke said getting rid of too-big-to-fail – the expectation that certain large banks would be bailed out because they are systemically important – would take more time.

“I assure you that … I would very much like to have confidence we can close down a large institution without causing damage to the rest of the economy,” he said.

Click here to read my column on MarketWatch.

Four years of easy money from the Federal Reserve and corporate coffers are just stuffed with cash.

Companies are increasingly using this money, not so much to expand and create jobs, but to pursue mergers and acquisitions.

So far 2013 is off to the quickest start for M&A activity since the heady Internet bubble days of 2000, according to data from Dealogic. These deals are great for the stock market, but do they create jobs?

Some deals, like the merger between Office Depot and OfficeMax, will actually eliminate jobs.

This is more than a tad ironic considering the Fed’s stated goal of continuing its bond buying programs is to get the unemployment rate down to 6.5%.

Click here to read my column in The Sunday Wall Street Journal.