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from Counterparties:

MORNING BID – He’s an importer-exporter

The stock market has, over time, gotten somewhat more used to the idea that U.S. federal government activities add to market consternation and volatility, not reduce it. In the 1990s, there used to be a catchphrase that “gridlock was good for equities,” but that came during a long period of economic growth and on the back of policies that Wall Street generally supported – financial services reform, welfare reform, and not much else. That’s no longer the case. We’ve already seen the detrimental effects on the markets of the U.S. debt ceiling fiasco that led to the first-ever downgrade of the U.S. credit rating in 2010 and subsequent fights about the debt ceiling (though that has abated somewhat).

The talk about “uncertainty” coming out of Washington is a somewhat overstated game – be it tax policy and the like, there’s always uncertainty in life – but the latest cause for volatility has been specifically related to the renewal of the Export-Import Bank, currently being batted around in Washington with the idea that Congress will end up renewing its charter for a few months (right now mid-2015 looks like the best bet) before invariably taking up the issue again.

It’s not unprecedented for this to be a political football (votes have been close in the past and it has been used as a poster child for Washington-related excess), but this year’s battle is more heated than most in its past. Ex-Im head Fred Hochberg, who spoke at a Reuters summit Wednesday, said the bank was at par with what others were doing and eliminating it would tilt the balance against U.S. exporters, threatening 205,000 jobs.

About one-fifth of its $37 billion in annual loans are for small businesses, but many in the GOP are unmoved. With the idea of an on-again, off-again situation emerging similar to the now-annual debt ceiling extension back-and-forth, some investors believe companies using the Ex-Im bank may head elsewhere for more secure sources of funding that are sure to be around for more than a few months before having to face another annoying fight about its future.

from Breakingviews:

Review: Paul Ryan changes delivery but not direction

By Stephanie Rogan

The author is a Reuters Breakingviews columnist. The opinions expressed are her own. 

Paul Ryan has written a book, just like Hillary Clinton and Barack Obama before him. Unlike those of his Democratic rivals, though, the U.S. congressman and former vice presidential candidate’s is less memoir than campaign manifesto. Ryan’s fiscal prescriptions are familiar, but it’s also obvious he is trying to find a broader audience for them. Though it’s tempting to dismiss “The Way Forward” as just the musings of another presidential wannabe, the book’s title probably accurately reflects the notion that its contents will guide the Republican strategy in the years to come.

from MacroScope:

Scrambling to flesh out skeleton Fed board

"It's about time" was the general reaction when on Thursday the Senate Banking Committee scheduled a vote on Barack Obama's nominees for the Federal Reserve board. Not that Stanley Fischer, Lael Brainard and Jerome Powell (a sitting governor who needs re-confirmation) have been waiting all that long; it was January that the U.S. president nominated them as central bank governors, and only a month ago that the trio testified to the committee. The urgency and even anxiety had more to do with the fact that only four members currently sit on the Fed's seven-member board and one of those, Jeremy Stein, is retiring in a month. The 100-year old Fed has never had only three governors, and the thought of the policy and administrative headaches that would bring was starting to stress people out. After all, the Fed under freshly-minted chair Janet Yellen is in the midst of its most difficult policy reversal ever.

"Boy it would be more comfortable if there were at least five governors and hopefully more" to help Yellen "think through these very difficult communications challenges," said Donald Kohn, a former Fed vice chair. Former governor Elizabeth Duke, who stepped down in August, said one of the Fed board's strengths is its diversity of members' backgrounds. "With fewer people you don't have as many different points of view on policy," she said in an interview.

from Jack Shafer:

The landslide of news

Of the many ways nature can kill you, the landslide must be the most cruel. Not as cosmically spectacular as the tectonic tantrum of the earthquake or as catastrophic as pure weather-borne calamities (floods, hurricanes, tornados), the mudslide lies in wait like a heart attack, springing its localized force without much, if any, warning. It's filthy, it's bone-crushing, and it's suffocating. Any trust you have in terra firma will promptly be upended.

The press coverage of Saturday's landslide in Oso, Wash., which as of this writing has claimed 24 dead and confirmed missing, has expressed this horror with hours of broadcast and thousands of column inches of newsprint -- and continues. Today's New York Times makes the Oso landslide its top story, complete with slideshow and interactive map of the disaster.

from Breakingviews:

Obama’s new sanctions aim to expose crony Putinism

By Kevin Allison
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

 

Barack Obama is hitting Vladimir Putin where it hurts – his inner circle. New U.S. sanctions against a Russian bank and a host of tycoons are ostensibly just an escalated response to the annexation of Crimea. But they also allege a link between the Kremlin boss and Gunvor, a secretive Swiss oil trader. Washington seems determined to reveal how Putin and his comrades have amassed immense personal wealth at public expense.

from MacroScope:

Cold War chill over Ukraine

Dramatic twist in the Ukraine saga last night with a conversation between a State Department official and the U.S. ambassador to Ukraine posted on YouTube which appeared to show the official, Assistant Secretary of State Victoria Nuland, deliberating on the make-up of the next government in Kiev.

That led to a furious tit-for-tat with Moscow accusing Washington of planning a coup and the United States in turn saying Russia had leaked the video, which carried subtitles in Russian. A Kremlin aide said Moscow might block U.S. "interference" in Kiev.

from Photographers' Blog:

Marching to Sousa’s drum beat

Washington, D.C.

By Jonathan Ernst

One of the great things about Washington is historic Capitol Hill, where there’s a lot of life beyond the headlines and punch lines about the U.S. Congress. I like to describe it as a small town attached to the city. We know our neighbors. We walk our dogs.

Sure, our neighbors include senators and congressmen, and every once in a while at the grocery store you’ll find yourself in line behind a woman who happens to be the Secretary of Health and Human Services holding the bouquet of flowers she’s picked out, or a guy who happens to be the director of the CIA as he’s making a selection at the olive bar. But at that moment, they’re just neighbors. They probably walk their dogs too. While a security detail in a large black SUV watches from a discreet distance.

from MacroScope:

Humdrum summit

A two-day EU summit kicks off in Brussels hamstrung by the lack of a German government.

Officials in Berlin say they want to reach a common position on a mechanism for restructuring or winding up failing banks by the end of the year but with an entire policy slate to be thrashed out and the centre-left SPD saying the aim is to form a new German administration with Angela Merkel’s CDU by Christmas, time is very tight.

from Ian Bremmer:

The selfishness in Congress is far from over

When I write about our new G-Zero world, I am describing an international phenomenon: a global environment in which no power or group of powers can sustainably set an international agenda. The global community, used to orienting itself around a collection of U.S.-led powers, has fallen victim to a widening leadership vacuum, what with the United States disengaging from foreign affairs and Europe too busy with its own crisis. Emerging powers like China have grown large enough to undermine a Western-led global agenda -- but not yet developed enough to prioritize their own international role over their domestic concerns.

Every major power is too busy watching out for its own needs to focus on the bigger picture. As a result, the international community has been unable to make any progress on pressing crises like global warming, a civil war in Syria, or the rise of cyber warfare. A vacuum of leadership has led to a dearth of mutually beneficial planning.

from MacroScope:

Can they kick it? Yes they can

Click here for suggested soundtrack to this blog 

During the recent round of financial crises, policymakers have done a whole lot of “kicking the can down the road”.

The latest is taking place in the United States where a fiscal stalemate between Republicans and Democrats has forced the first partial government shutdown in 17 years.  It has also raised concerns about a U.S. debt default, should the government not meet a deadline this week of raising the debt ceiling. That has kept short-term U.S. interest rates and the cost of insuring U.S. debt against default relatively elevated.

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