Recent comments

If GMOs are so great, then why aren't suppliers/producers/etc pasting it in BIG BOLD letters on their products - new and improved, now with GMO! - ? why not? You wanna eat it, be my guest. Like the other poster said - if they can't prove it doesn't contain GMOs, I'm not buying it. Period. That goes for grocers and restaurants.

The calculation behind the implicit subsidy should be viewed with a healthy dose of skepticism. For starters, it's based on credit ratings data, which are known for their slow adaptability to market changes. Moody's Is Catching Up To The Market's View That Dodd-Frank Is Ending TBTF. "'The FDIC is determined to reduce too-big-to-fail risk,' said Edward Marrinan, a macro credit strategist at Stamford, Connecticut-based RBS Securities. While Moody’s is still determining whether to lower its ratings, 'the market is already there, and gets that this is a significant development in how to assess the risk profile of banks,' he said." (Charles Mead, "Too Big to Fail Discounted as Moody’s Evaluates: Credit Markets," Bloomberg, 4/10/13) Researchers have gone beyond ratings, analyzing how the market actually works. What they found is that Dodd-Frank has already changed the way the market determines bank funding. Based On The Secondary Market For Senior Bonds, Dodd-Frank Has Turned An Implicit Subsidy Into A Funding Penalty For Large Banks. "We find the 136 basis points discount on yield spreads because of the too-big-to- fail (TBTF) effects is removed after the DFA. Markets charge a premium of 33 basis points for the TBTF banks after the DFA. The premium increases further after the rating criteria changes by credit rating agencies." (Ken Cyree and Bhanu Balasubramanian, "The End of Too-Big-to-Fail? Evidence from Senior Bank Bond Yield Spreads Around the Dodd-Frank Act," Social Science Research Network, 6/26/12) The change is due to the many factors that work to make banks safer and less likely to fail. Federal Reserve Chairman Ben Bernanke Says The Largest 18 Banks’ Capital Levels Have More Than Doubled Since The Crisis. “Over the past four years, the aggregate tier 1 common equity ratio of the 18 firms that underwent the recent tests has more than doubled, from 5.6 percent of risk-weighted assets at the end of 2008 to 11.3 percent at the end of 2012--in absolute terms, a net gain of nearly $400 billion in tier 1 common equity, to almost $800 billion at the end of 2012. Indeed, even under the severely adverse scenario of the latest stress test, the estimate of these firms' post-stress tier 1 common capital ratio is more than 2 percentage points higher than actual capital levels at the end of 2008.” (Ben Bernanke, Remarks At The Federal Reserve Bank Of Atlanta, 4/8/13) But more importantly, if a large firm does fail, regulators now have new powers to wind-down a failing firm, thus ending bailouts. FDIC's 'Considerable Progress' On Resolution Authority Is Changing Market Expectations Of Future Bailouts. "The FDIC has made 'considerable progress' by identifying obstacles to implement its so-called orderly liquidation authority, which gives the agency power to wind down, split up or sell off companies considered a potential systemic risk to U.S. financial stability, Moody’s said in the report." (Charles Mead, "Too Big to Fail Discounted as Moody’s Evaluates: Credit Markets," Bloomberg, 4/10/13) Don't believe bailouts have ended? Sheila Bair advises that you do. Former FDIC Chairperson Sheila Bair Argues "Strong Language In Dodd-Frank" Should Give Investors Serious Doubt About Future Bailouts. "Not convinced that bailouts are over? Well, if you are swimming with one of the squids as an investor, do you want to take the chance? Perhaps if one of these giants gets into trouble, the government will blink and throw you a life jacket. But given the strong language in Dodd-Frank banning future bailouts, I doubt it. If you own stock or subordinated debt, you will probably be wiped out. If you own bonds, you will take a big loss. So be a prudent investor, and do your homework. If you still don't understand the risks, get out of the water." (Sheila Bair, "Why Taxpayers Might be off the Hook When a Big Bank Fails," Fortune, 4/11/13) This article also cites a number of individuals that are not break-up proponents, but says they are by linking to a list that links to another list that links to articles, but not quotes. For example, it links to a WSJ op-ed by top economists as what to do as an alternative to TARP during the crisis – this is not a break-up proposal in any way, and completely mischaracterizes the authors. Columbia Professor Glenn Hubbard, Harvard Professor Hal Scott, And Chicago Professor Luigi Zingales Advocate For An Alternative to TARP For Trouble Institutions. "We believe these problems can largely be avoided by adopting a simple approach. Rather than taking over and running banks, the FDIC should split each bank into two parts. One part ("the bad bank") will assume all the residential and commercial real-estate loans and securitized mortgages as assets, and all the long-term debt as liabilities. In addition, "the bad bank" will obtain a loan from the "good bank." This loan is necessary because the long-term debt of the old bank is not likely to be sufficient to fund the assets of the bad bank. The good bank will have all the remaining assets, including derivative contracts and its loan to the bad bank. It will have all the insured deposits and the FDIC-guaranteed short-term debt as liabilities. Once the split is accomplished, the good bank can be cut loose from FDIC receivership." (Hubbard, Scott, and Zingales, "Banks Need Fewer Carrots and More Sticks," The Wall Street Journal, 6/6/09)