WIth Barclays' downsizing, there is no longer any British bank in the bulge bracket

Barclays is cutting 7000 jobs from its investment bank (one quarter of the staff) and moving over half its investment banking-related assets into a bad bank.  Barclays’ focus will be the U.K. and the U.S.  Higher capital requirements and more deferred pay put at a disadvantage, they say, UK banks compared to those in France, Germany, and the U.S.  Wasn't the U.K. supposed to benefit from banking restrictions on the continent?  The banking sector worldwide is in secular decline as debt/GDP shrinks.  According to the FT, Deutsche and the Wall Street players will be the only bulge bracket banks left.  Where does this leave London and Paris?

Informed money launderers prefer dollars to bitcoins.

CNBC just had a discussion of bitcoins and a couple of similar digital currencies that I had never heard of.  Concern was expressed that miscreants and low-lives could use bitcoins to launder money. 

I asked myself the following question:  If 99% of all money laundering is in US dollars, which it is, isn’t it the security of the dollar the issue? The dollar's vulnerability is putting too much of a burden on the intermediaries to police transactions, which is driving up transaction costs. The provenance of each bitcoin is contact within its code so every transaction is recorded automatically.  Why can't this be done with digital dollars?

It's getting easy to find a job in the USA, if you want one.

Dr. Yellen says that the JOLTS (Job Openings and Labor Turnover Report) is an important indicator of the labor market that she watches it carefully.  The March JOLTS came out this morning and the key phrase in the BLS’ commentary is "March was little changed from February."  The labor market was on cruise control.  The press commentary that followed the announcement opined that the report shows no pickup in activity and will not satisfy Mrs. Yellen that conditions are improving.  She can be expected, they think, to remain very dovish.

I find this puzzling. Doesn’t the key chart of JOLTS data above, the “Number of unemployed per job opening,” look great?

Climate change and the art of lawn maintenance

Who are you going to believe?  A bunch of distinguished scientists or your own lying outdoor thermometer?  I saw a headline today that said it has been the coldest winter in the US since 1912, and another that gave another more recent comparison date.  One specified that it has been the coldest winter if one counted only the months since the beginning of this year.  Etc.  Anyway, it's been cold recently.  Here on the Massachusetts coast, the trees are only now budding, which is on the late side.  Today it was 54° when I got up; yesterday it was 39° and the day before 34°. 

Doubts are spreading about the global warming thesis, and the recent UN report confesses that the models they had been using were not working; they suggest that weather is too complex to model.  The climate issue has, unfortunately, become a political football, or fireball, or snowball, as the case may be.  It is confusing.  Anyway, I know that I am not as worried about warming as I was ten years ago when it seemed imminent.  Perhaps we should look to the medieval author of The Cloud of Unkowning and put aside any preconceptions.  I know one this for sure, however, and that is that this cold, wet weather seems to have worked for the new lawn I put in behind the house.  The grass seeds have germinated and are coming in evenly.  In my neighborhood, all politics are local.

Nigeria's war on corruption; We wish them the best of luck.

At the World Economic Forum in Abuja President Goodluck Jonathan announced the “Clean Business Practice Initiative.”  The goal is for corporations in Nigeria to become less corrupt.  Of course, the only way for corporations to be corrupt is to bribe government officials; they certainly don’t bribe each other.  Putting that aside, President Jonathan is to be commended on his fine sense of irony in light of the $20 billion that recently disappeared from the state oil company and his efforts to suppress any inquiry. 

As for reducing corruption I can only say, "Good luck."

For central banks, there are no red lines. Monetary tightening may have become impossible.

Think back: In January 2013 the Fed announced that it would raise its bond buying from $40 billion to $85 and would keep buying bonds and maintaining zero rates until unemployment dropped to 6.5%. Unemployment then was 7.7%.   Today unemployment is 6.3%, but bond buying continues, albeit at a reduced rate, and zero rates persist.  Yesterday Yellen said these policies would continue and bond buying might increase again if housing weakness and unsatisfactory conditions in the labor markets persisted.

 

Meanwhile in the UK Bank of England Governor Carney, who had previously said he would tighten policy when growth reached "escape velocity," which, at more than 3% (.8% q/q, 3.2% y/y in Q1) , it has, now says he's waiting for "sustained momentum".  Chris Giles in FT notes that he does this while at the same time denying he has changed policy.

Maybe it is impossible for any single central bank to tighten policy without dire consequences on the trade and capital flow fronts?  New Zealand, for example, wants to raise rates to curb speculation but cannot do so because its currency is too strong.  It’s a sort of prisoner’s dilemma:  Once a critical mass of countries have bad policies, it is in the interest of each to be the last to implement good policies. The result is paralysis, and perhaps danger.

Blame it on the Bossa Nova: Brazil dances to inefficiency.

A recent study by the Boston Consulting Group rated Brazil as a more expensive manufacturing venue than Europe due to low productivity.  A report in the FT today, however, indicates that what Brazil lacks in efficiency it may be making up in volume.  Government revenues have risen from 33% of GDP in 1999 to 39% today, compared with an OECD average of 36%, while the country ranks 124 out of 148 in government efficiency, according to the World Economic Forum.  Under Lula and Rousseff, the number of ministers has about doubled to 39 and there are other cabinet-level officials, each with his retinue of advisors, consultants, minions, sycophants and hangers-on.  The FT relates the story of the rookie bureaucrat in Brasilia who was warned by her supervisor that she should stop spending eight hours a day at the office and put in four like everybody else. (FT, p2)