Saturday, December 4, 2010

Good Saturday morning to you all. We woke to a light coating of snow and anticipate more to come. How much more depends on how the lake effect bands set up. So far the lake effect snow warnings are for counties east of us. I don't know how all this will effect any of you east of me is a good question. The system that slammed the east coast gave us hardly anything at all.

Well, the Wikileaks soap opera continues. It is amusing in a way. The leaks haven't been all that revealing for the most part. I think most of us (anybody who remembers Watergate and the Pentagon Papers, that is) suspected that our government was not terribly concerned with honesty or ethics in their dealings with other countries. Why should we expect honest, ethics or even compassion in foreign affairs when we see none in our domestic affairs. The most honest statement on the matter came from Hillary Clinton when she cited the response of the foreign ministers she was meeting with: "you should hear what we say about you." All of our various 'emperors' have suddenly discovered they are naked. I wondered yesterday how much of the 'hacker' attacks on the Wikileaks site were from government or quasi-government sources. Given the official efforts to shut down the servers who still carry Wikileaks I would speculate that a lot of them are.

Over the last couple of days a thought that had crossed my mind frequently since the great implosion of the financial industry has been mentioned in passing by the mainstream media. We have heard a lot about 'too big to fail.' Now, a couple of items have been described as 'too big to fail but too big to save.' One is Spain which has been referred to for the last year or so as one of the PIIGS--European Union countries whose economies are in fragile condition. So far Greece and Ireland have or are about to receive "bailouts." I put that term in quotes because as far as I can tell the banks investors have been bailed out while the taxpayers of each country are footing the bill through higher taxes and excruciating 'austerity.' Those were relatively small economies. Portugal and Spain are much larger. (The second I in PIIGS is for Italy though little has been said about its economic condition on this side of the pond.) Though each have said that they don't need bailouts we heard the same from Greece and Ireland before the punitive packages were shoved down their throats. The second item concerned Jamie Diamon, CEO and Chairman of JP Morgan/Chase. I can't find the article now but I wondered before if we have reached a point where we are damned if we do and damned if we don't. We have to save these institutions but we can't because we simply don't have the resources.

I just found the article on Diamon and his bank. Skimming over it I noticed something I missed on the first go round. The Dodd-Frank bill which provides a framework for resolving a 'too big to fail' bank wouldn't apply to JP Morgan because 30%+ of its business is outside the U.S. And that sum is headed toward 50%. It appears to me that we are already at the point where one or two big institutions that are interconnected globally could take down the global finance system. Which state is going to backstop that kind of threat??