Bank Strength Indication

                  

I mentioned in a previous blog the Dodd-Frank Act of 2010, which was supposed to make banks stronger, among its other panacea provisions, and banking credit-rating downgrades.

                       

There is yet another way to measure the fact that big banks are not deemed as secure by investors as they were before the Dodd-Frank Act. Look at the cost of insuring bank debt.

                                           

The cost of insuring $10 million of debt for five years is an excellent indicator that’s available with regard to the credit standing of major banks. And it’s been high, at least as an investors’ perception of that

risk. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)  

Bank Credit Amidst Politics

                                 

Many smaller banks have relatively few sound loans on their books. They are under constant pressure to clean up their financials and/or add to basic capital.

                       

Unfortunately, politicians in their area usually put pressure on bank examiners to allow these banks with questionable standing to make loans which ordinarily should not be made.

                       

Unfortunately, banks are not making sufficient loans to small business even if they have the ability to do so, The truth is, they make more money these days by borrowing cheaply from the Federal Reserve and investing in government bonds.

                       

This unhealthy environment is perfect for the likes of meddling politicians in Washington.

                       

Solution? Supervise banks gingerly but independently of politics. Permit banks to make riskier small business loans and restrict their tendency to borrow cheaply from the Fed, in order to invest in

government bonds. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Unsure Bank Regulators

                    

The public has no idea how unsure regulators are about the rules they lay down for the banks they regulate. No one has a standard that makes common sense to all concerned.

                       

What securities, for example, should make up a bank’s net assets? Are a government’s bonds really safe if that government is on the verge of bankruptcy? What should measure a bank’s liquidity during a financial emergency?

                       

My argument with bank regulators: Allowing mark-to-market accounting during the 2008-09 financial meltdown, when daily bank net worth was marked down simply because there was no real market to determine those bank asset values. Securities market short-sellers were therefore able to take advantage of the unreal lower values that resulted. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Volcker Rule

                 

Regulators in Washington have little idea of what they do. They are often wrong. And they are not penalized for their errors.

                       

Under the so-called Volcker Rule, banks are not supposed to trade

with their own money. That sounds good to politicians because it appears simplistic enough to sell to voters who haven’t a clue about banking.

                       

But funds are intermingled and the extent of supervision depends on size. There are simply too many “ifs” in the picture. Political influence

thus often rears its ugly head.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Why Foreign Countries Buy U.S. Treasury Bonds

                 

When the U.S. has a trade deficit, that is, it buys more from overseas than it sells, it has to settle accounts. Foreigners don’t eat our dollars, but they can buy U.S. Treasury bonds with them. Fortunately, they have taken them though the bonds are not necessarily an investment bargain.

                       

Foreign central banks now own over one-third of Treasury bonds. Only about one-quarter is held by individuals and investing institutions. Much will be employed in the future as margin backing for trading derivatives and regulatory law.

                       

Unfortunately, those bonds pay very little and keep losing purchasing power. Our problem is, there may be a time with U.S. budget deficits  when foreigners no longer will accept what is referred to as dollar convertibility, or world recognition as our standard of value. (See the Earl J. Weinreb Ne

Retail Medical Offices

The retail medical offices is another ObamaCare casualty that has been stifled.

                       

Mall medical services were designed to accommodate everyday, urgent medical problems that may arise, where patients want to immediately know how serious their illness may be. The idea is to avoid overcrowded conditions in hospital emergency facilities. ERs are there for specific purposes, other than routine health evaluations.

                       

Such medical offices can be made adjuncts to other types of retail facilities. They are supervised on staff by licensed nurses, while overseen by licensed physicians. Doctor referrals are made by nurses. Different states have varying regulations, depending on pressure groups, who would prefer not to have this form of competition.

                                       

Nevertheless, they’re a form of reliable, private choice, low-cost, health care. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

American and European Unemployment

                  

About one third of the unemployed on benefits get jobs once those benefits expire. The longer the benefit term, the longer many unemployed take to start looking.

                       

The difference between the U. S. and Europe has been that the latter has longer-term unemployment benefits. Incentives to find work are minimized. It’s no wonder Europe has chronically higher

unemployment rates. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)