Update: its an hour later than the above comments about the weather and we now have sun. As they say: if you don't like the weather, wait five minutes.
Here we go again! It hasn't been all that long since the last big recall of drugs and shut down of a compounding pharmacy.
I have been following the mess in Cyprus for some time. It isn't, as the wonderful (sarcasm alert) U.S. media coverage would lead one to believe, a sudden catastrophe. It has been brewing for over a year. Something I read struck a chord yesterday. I never knew that deposits are considered 'liabilities.' I found that out looking at a chart of one of the Cypriot banks balance sheets (simplified, of course.) Top on the liability side: deposits. But then I got an even bigger shock--depositors hold unsecured liabilities. This little quote from one of Yves Smith reinforces that
In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.You can read the whole article here and it has a number of thought provoking nuggets. Now evidently the big banks want to allow renewed bailouts and to deregulate derivative trading. So they can simply mingle deposits (which the government 'insures' to the tune of about $250k) with their risky derivatives trades. Some of you may remember my frequent question from the height of the financial crisis: what happens to the system when those who are supposed to participate in it lose trust in it? We might soon enough see a large number of depositors shifting to the Bank of Sealy, or other favored mattress.
Update 2: In spite of the chill and wind I does feel a bit more like spring. As I look out at my patio I notice the sun just barely kisses the top of the fence. The shadow of the house will now recede and we will get increasing reflection and warmth from the sun on the fence. When this happens again--in the fall--I will know that the Autumnal equinox is nigh and the dark months about to begin. For now I will joyfully anticipate increasing sunlight and the growing season.
Evidently, yesterday was the 10th anniversary (hate to use such a celebratory word here) of our invasion of Iraq. I noticed a number of (s)news stories about opinion polls concerning American attitudes toward the war. Mainly the question was whether we, now 10 years later, think it was 'worth' it. First of all, this is a question that has no we to it. I, for one, never thought what ever we got out of it would be 'worth' the lives, material and money it would cost. And I always believed it would cost far more than the politicians promised and that the greatest costs would be in the immaterial. How much do you trust your government or the news media to tell you the truth? I trust them even less than I did then and my trust was already somewhat thin. One of the biggest drivers of the deficit over the last ten years (right after the Bush tax cuts) has been two costly and essentially futile wars in central asia. We lost about 3000 lives in the World Trade Center and nearly 4500 in Iraq whose leaders were not involved. And we never found the 'weapons of mass destruction' we were told were such a threat to our allies, if not to us. That war failed to even approach my cynical estimates of our potential gains. Those are now somewhere well south of zero. For a more complete list of the cost, including the Iraqi casualties, read this.