Author Archives: eehines

Bank Capital Requirements

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The Federal Reserve is looking hard at increasing the amount of capital that banks must hold in the Fed’s effort to boost bank liquidity, or their ability to handle sharply increased withdrawal rates.

There is pushback against this proposal, including objections that it might make it harder for banks to lend to folks on the lower economic tiers, even that it might make American banks less competitive than foreign competitors. That last often (not always) is just political Newspeak for “be more like Europe.”

However, the problem can be preempted—or at least pushed a considerable way down the road, allowing for more thought—by doing something different that IMNSHO is a better move, anyway.

Rather than increasing capital requirements, require all banks to mark to market (semiannually? quarterly?) all of the debt instruments the banks hold in satisfaction of existing capital requirements.

Then leave that requirement in place for some period of time (5 years, say) in order to get a serious look at how well, or poorly, that requirement supports bank liquidity during economic downturns.

You’ve Formed Your Opinion on EVs. Now Let Me Change It.

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That’s the headline on Dan Neil’s Wall Street Journal paeon to the battery-powered car. In his piece, he acknowledges the past and current shortcomings of Electric Vehicles, but he lays those off to car company marketing rather than to actual performance.

My mind isn’t as made up as Neil’s headline implies; nevertheless, challenge accepted.

I drove a Ford Fusion Hybrid for a number of years, and it was a fine car. However, the battery price premium was enormous, and the reduction in trunk capacity to make room for the battery was just as enormous.

I replaced it with an ICE Fusion, and that car was just as peppy and responsive as the Hybrid (peppiness and responsiveness was one of Neil’s touts regarding battery-powered cars), and I had decent trunk capacity.

I’d get a Hybrid again, were the battery premium actually to come down decently.

I won’t buy a purely battery-powered car until a number of criteria are met:

  • the battery has to be chargeable to a 400-mile range in the same minimal time that I can fill my ICE gasoline tank to a 400-mile range
  • the battery premium must come down. The 14% reduction Neil claims is from a hugely high price
  • the battery’s lifetime must be at least as many years as I drive my cars, and as many miles
  • the battery must stop suffering so significantly from cold temperatures. The battery in my ICE that powers my car’s starter motor also suffers, but it only needs to crank the engine. If needs be, I can get a jump start. The EV’s battery is its motive source, and that motor can’t be jump-started; its power source must be “refueled”
  • the battery must be disposable/recyclable with far less environmental damage done or risk of damage done than is the case today

EV prices are coming down, as Neil claims? Show that after EV subsidies are stopped, and EV buyers pay actual market prices. No one should have to pay tax money because someone else bought an EV.

Probably Won’t Be Invited Back

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Newly elected Argentina President Javier Milei was invited to the World Economic Forum. He had some things to say while he was there.

Today I’m here to tell you that the Western world is in danger. And it is in danger because those who are supposed to have defended the values of the West are co-opted by a vision of the world that inevitably leads to socialism and thereby to poverty[.]

And

Unfortunately, in recent decades, motivated by some well-meaning individuals willing to help others, and others motivated by the wish to belong to a privileged caste, the main leaders of the Western world have abandoned the model of freedom for different versions of what we call collectivism. We’re here to tell you that collectivist experiments are never the solution to the problems that afflict the citizens of the world, rather they are the root cause.
Do believe me, no one [is] in a better place than us Argentines to testify to these two points[.]

And this:

The case of Argentina is an empirical demonstration that—no matter how rich you may be, or how much you may have in terms of natural resources…or how many bars of gold you may have in the central bank—if measures are adopted that hinder the free function of markets, free competition, free price systems, if you hinder trade, if you attack private property, the only possible fate is poverty.

And this, moving in a slightly different direction:

I would like to leave a message for all businesspeople here…you are social benefactors, you’re heroes[.]
Let no one tell you that your ambition is immoral. If you make money, it’s because you offer a better product at a better price.

The WEF persons probably won’t have him in to any more of their assemblages.

Frank Fleming added this regarding our own administrations’ [sic] failures at successive WEF confabs:

Why can’t we get a guy like this in America? This is supposed to be our thing[.]

Unfortunately, those motivated by the wish to belong to a privileged caste vastly outnumber those well-meaning individuals willing to help others, and so the damage that flows from gatherings like the WEF will continue.

A complete transcript of Milei’s speech can be read here. A video of his speech can be viewed here on Disclose.tv’s X account (@disclosetv).

What Comes After the Hamas War in the Gaza Strip?

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The Wall Street Journal tried to address this question last Thursday. As you might imagine, I have thoughts.

Biden administration officials say the path toward a more stable Middle East goes through the ruins of Gaza.

That’s not far wrong.

The latest blows to the White House plans are the persistent attacks by Houthi forces in Yemen against international shipping in the Red Sea….

No, the blow here is in Biden’s timid response to the Houthis’ attacks on commercial shipping. The paucity of serious response to the terrorists is empirically demonstrated by the Houthis’ continued attacks on that shipping, escalated by their targeting US Navy ships, also.

US goals for the region require forging a consensus on who will secure and rebuild Gaza after the Israeli invasion.

Biden/Blinken’s goal for a PLA/PA governance of the Gaza strip is dangerously stupid. Aside from the fact that that gang has already failed in the Gaza Strip and was run out on a rail years ago, the PLA/PA is just another terrorist organization.

Gaza Strip governance should be built up from the Abraham Accord nations, less Israel, with Egypt and Jordan joining those Accord nations.

A Hit and a Miss

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A few days ago, Iran briefly invaded Pakistan with missiles and drones to hit some facilities the Iranian mullahs claimed were terrorist organizations that were abusing Iran. Iran succeeded in killing two Pakistani children.

In response, Pakistan has

completed a “series of highly coordinated and specifically targeted precision military strikes” against Pakistani terrorists in Iran’s Siestan-o-Baluchistan province….

These are terrorists to whom Iran has given sanctuary rather than dealing with them more constructively.

That’s the hit.

The miss is that Pakistan chose to leave alone the sites from which the Iranian missiles and drones were launched against Pakistan. Those should have been destroyed as part of Pakistan’s response.