Felix Salmon

Bike war datapoint of the day, rack-placement edition

Felix Salmon
Sep 14, 2011 18:10 UTC

Matt Chaban manages to get a quote today which perfectly encapsulates the self-defeating nature of anti-bike activists. He lays out the basics of New York’s bike-share scheme — 600 stations, 10,000 bikes — and then quotes one friend and one foe. The friend is Gene Russianoff of the Straphangers Campaign. Here’s the foe:

“DOT and Janette Sadik-Khan’s problem is they say, ‘Here’s what we’re doing, take it or leave it,’” said Sean Sweeney of the Soho Alliance, a frequent DOT critic. “Instead, it should be, ‘Here’s 20 racks, where would you like them?’” He expressed concern about whether the stations would be located on too-narrow sidewalks or in valuable parking spaces or other inopportune locations.

Still, he said it would be nice if done right. “I walk a lot, I’ll walk from 59th Street downtown,” Mr. Sweeney said. “Let’s say I don’t want to walk or take the subway, then a bike sounds nice. But it’s still a matter of giving over public space to a private company, so we have to be careful.” He added that no stations should be place in Soho.

I love the way that Sweeney starts by implying that he would be happy to place 20 racks around Soho, underscores that by saying that the scheme “sounds nice” — and then, at the end, drops the bomb that he’s already decided that the optimal number of racks in Soho is precisely zero. He can’t even pretend to be open to the idea for more than a couple of sentences.

Soho, for those of you who don’t know it, is a perennial traffic nightmare, for two reasons. One reason is Broome Street, a key approach to the Holland Tunnel — and it’s hard to do much about that. But the other reason is the curse of on-street parking. Soho is Exhibit A for anybody trying to demonstrate the high cost of free or underpriced on-street parking: there’s way too much space devoted to cars, both in terms of parking and in terms of open pavement, and a huge proportion of the cars driving in Soho are going around in circles looking for a parking spot.

The drivers of those cars are unhappy, and they make life miserable for pedestrians and cyclists, too. It’s a horrible state of affairs, especially given the numbers: according to a 2006 study, 54% of people on Prince Street came to the area by subway or bus, and an additional 35% by walking or bicycle. Only 9% drove to the area in a private car, while an additional 9% arrived by taxi or livery. (The numbers add up to a bit more than 100% because some people use two or more modes of transport.)

If Soho can’t have bike racks, there’s really no point in having a bike-sharing scheme at all. Soho is precisely where people want to go: it’s full of shops and restaurants and other destinations. But somehow the Soho Alliance has already decided that a bike rack is never as important as a “valuable parking space”.

Sweeney, then, is the embodiment of precisely the reason why the DOT can’t outsource rack placement decisions to community organizations: those organizations tend to be dominated by people who are going to be aggressively unhelpful on that front. There’s not a parking space in all of Soho which is so valuable that its street space wouldn’t be better off as a bike rack. If Sweeney can’t recognize that, he’s never going to be a useful person to consult on placement decisions.


“In addition, the survey finds that 45% of respondents would visit Soho *less* often if there were more vendors taking up sidewalk space, which is *exactly* what this program contemplates. Only 10% would visit *more* often.”

Who is playing fast and loose with the facts here?

The reason people said they’d visit less often is because closing the streets of Soho to automobiles was not presented as an option in that survey.

If you keep car access the same — both for on-street parking and throughput — but allow vendors to take up more sidewalk space, of course pedestrians will feel squeezed and not want to spend time in the neighborhood. That’s explains the survey results.

But if you reduce car access in SoHo and eliminate it on some streets altogether, you could get the vendors onto the roadway and give back tons of sidewalk space to the overwhelming majority of people who visit the neighborhood on foot.

Ask pedestrians if they’d like to see the sidewalks cleared and the vendors moved into one of the lanes currently available for the storage of private automobiles, and you’d likely see a huge amount of support.

NYPedSafety is an anti-bike organization masquerading as a pro-pedestrian advocacy group. They are notoriously silent on the subject of the pernicious effects of automobiles.

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Charts of the day, CBO testimony edition

Felix Salmon
Sep 14, 2011 14:05 UTC

Two charts jump out at me from Doug Elmendorf’s presentation to the Joint Select Committee on Deficit Reduction. The first is the sheer size of various loopholes in the tax code:


If you want to make a serious dent in long-term deficit reduction, this is a good place to start. Everybody knows that Social Security and Medicare — pensions and healthcare — comprise a massive part of the government’s future spending. What’s less well known is that pensions and healthcare are also the two biggest tax expenditures in the tax code: the deductibility of healthcare premiums will cost the government about $650 billion over five years, with the deductibility of pension contributions running it a close second. That’s over a trillion dollars in lost revenue right there. Add in the mortgage-interest deduction and the lower rates on long-term capital gains, and you get to $2 trillion pretty quickly. Double that to get a ballpark ten-year figure.

This is something that proponents of private health insurance don’t often grok: that it’s heavily subsidized by the federal government already, due to its tax-exempt status. And it stands to reason that if the government is going to spend hundreds of billions of dollars a year subsidizing private health insurance, then it ought at the very least to get some kind of control over the healthcare industry in return. If you want to keep the system fully private, then fine, but don’t ask the government for massive subsidies at the same time.

As for the tax deductibility of pension contributions, Mark Miller wrote a great post on the subject in June, in which Teresa Ghilarducci makes a very strong point.

Ghilarducci argues that retirement saving wouldn’t decline if the deduction disappeared. “There’s no evidence that it increases saving; much of the academic literature shows that higher income people are simply moving investments they would have made anyway [in taxable accounts] to a tax-preferred account. And there are 25 million taxpayers in the bottom two quartiles who don’t take deductions, so they’re getting no subsidy at all from the federal government on their contributions.”

Everybody’s talking about the necessity of making hard choices: there are lot of hard choices here which could have an enormous effect on government revenues while at the same time simplifying the tax code and even maybe allowing a reduction of the headline rate of income tax. I’m in favor of taking a whack at all of the bars on this chart, with the exception of the EITC. Doing so would make the tax system more progressive, simpler, and more lucrative. Which is exactly what we need.

So, that’s one opportunity facing the deficit committee. But here’s something scarier:


This is the official CBO unemployment projection, on which all of its economic forecasts are based. And it shows unemployment plunging to 5% after 2015. That’s considered the long-term unemployment rate, and I guess that 2015 is considered the long term, or something. In any case, it ain’t gonna happen — there’s absolutely no reason to believe that the economy will suddenly add an enormous number of jobs in four years’ time.

As a result, actual tax revenues are going to be lower than the CBO is projecting, since the CBO is anticipating revenues from millions of people who won’t in fact be employed. And government expenditures on unemployment insurance, Medicaid, and the like will be substantially higher than the CBO is projecting.

So when we get to work on the deficit, it’s important to remember that the problem is bigger than the official CBO numbers would have you believe. Partly because the CBO is assuming things like a 30% reduction in Medicare payments for physicians’ services after 2011, which simply isn’t going to happen. And partly because the CBO is being incredibly overoptimistic on the unemployment rate. So let’s get to work on reducing the size of those loopholes. It’s the only way we can credibly free up enough money to provide the stimulus the economy needs right now.


“Offer to pay the college educations for all doctors and nurses that stay in the profession for ten years, to limit expected future shortages of these professionals.”

Are trained doctors leaving the profession? I know that many are reluctant to enter general practice, due to income disparities between the specialties, but I haven’t heard of any leaving for other fields.

And isn’t the supply constrained primarily by medical school acceptances? There are many more hopeful applicants than seats. Those denied admission may be weaker students, perhaps, but are still generally very bright people.

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Felix Salmon
Sep 14, 2011 05:02 UTC

Elizabeth Warren to announce Senate bid — HuffPo

El-Erian Says Europe Is Nearing a ‘Full-Blown’ Banking Crisis — Bloomberg

Number of poor Americans hits an all-time high of 46.2 million — Census Bureau; see also

“Vladimir Putin: Action Man” — The Atlantic

A look at the frightening bank run that could follow a Greek default — Fortune

News Corp. shareholders launch corporate misconduct complaints against Murdoch — Guardian

5,400 ex-Congressional staffers have left to become lobbyists in the last 10 years — WaPo


1. Is Warren cut out for politics?
2. I wonder how PIMCO is positioned?
3. See my post, Welcome to the New Depression http://economicmaverick.blogspot.com/201 1/09/got-couple-of-numbers-for-you-199-a nd.html

4. Putin? Eh
5. Party like it’s 1931?
6. Where a Raider like Carl Icahn when you need him
7. In DC, that’s called the “Dynamic Job Creating Private Sector”

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Adventures with e-books, Kindle single edition

Felix Salmon
Sep 13, 2011 19:53 UTC

Ryan Avent’s 90-page Kindle single, The Gated City, is a bargain at $1.99. It was produced in close consultation with the Kindle Singles editor, David Blum — the gatekeeper who determines what gets chosen to be a Kindle Single, and what gets relegated to the long tail of Kindle Direct Publishing.

We’re running a great excerpt of Ryan’s book here at Reuters — it’s headlined “How home prices helped kill the first tech boom”. Basically, soaring home prices in Silicon Valley discouraged entrepreneurship, encouraged the flight of qualified workers to other locales, and meant that during the dot-com boom, Silicon Valley actually created fewer companies, per capita, than the country as a whole. With any luck, reading it (or other excerpts, here) will encourage you to buy the whole thing.

Meanwhile, last week Gothamist published its own debut 72-page feature story, in the same format — a 72-page e-book. After putting out a call for pitches in July, Gothamist publisher Jake Dobkin decided that the first $5,000 commission would go to Patrick Kirkland — one of the jurors in the infamous New York “rape cop” trial. He’s not a professional writer, and the story is a bit clunky at first, but he becomes very fluent during the crucial central part of the book, where he explains exactly why and how the jury managed to unanimously acquit both police officers of rape. As someone who found the verdict quite shocking, I can say that he convinced me, too, that the jury made the right decision.

Interestingly, Amazon’s Blum rejected Kirkland’s story as a Kindle Single, calling it “an interesting piece”, but not “right for Singles”. What difference does the rejection make? Well, the Amazon business model is that Amazon takes 30% of the proceeds of e-books, while the author/publisher gets 70%. That’s the deal Avent got. But if you just upload your book to the Kindle store, as Gothamist did, then you only get 70% of the proceeds if you’re charging $2.99 or more. If you stick to the $1.99 price point, then Amazon takes 70% 65%, and you’re left with just 30% 35%.

This is a serious incentive to get past David Blum’s velvet rope — not only will he help you with promotion, cover design, and the like, but he can also give you a much greater share of the proceeds for books sold for less than $2.99.

So when Gothamist published the book, it was $1.99 on iBooks, and $1.99 for the direct PDF download — but $2.99 on Kindle. And then things went exactly according to plan. Apple featured the book on the front page of the iBooks store, and Amazon — as it’s allowed to do — unilaterally cut the price of the book by 33%, to match Apple’s pricing. But it’s still governed by the initial pricing plan, so Gothamist gets 70%, rather than 30% of the current $1.99 price. (So, buy it!)

We’re still in the very early days of micropayments for books, but my gut feeling is that people are increasingly willing to pay small sums for shorter pieces in the 5,000 to 30,000 word range — much as they’re increasingly willing to pay small sums for apps. And the pricing models are, of course, still very much in flux. But if Amazon’s willing to give their Kindle Single authors 70% of the proceeds even after helping them with design and marketing, they should also offer the same deal to publishers who do all that work themselves.


Well, yes, those are the Amazon costs. The point of this brave new paperless digital world was supposed to be that the end user wouldn’t have to pay to kill the trees. So I’d like to not pay for the stuff I’m no longer buying, thank you.

You say “If you want Kindle format books…” Well, if they cost more than the paper version, then I really don’t want them and won’t be buying them.

I doubt that it’s going to be just me: digital books have disadvantages, too: formatting infelicities, photos and color charts look terrible (although other readers do better), getting around is more awkward. So I’d think that people for whom the advantages aren’t overwhelming (e.g. travelling light with lots of reading) will be passing as well.

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France’s banks lose their Street cred

Felix Salmon
Sep 13, 2011 16:02 UTC

It’s looking increasingly as though the proximate cause of the next big global crisis is going to be a liquidity crunch at French banks, rather than a European sovereign default. This is not the kind of stock chart that any leveraged institution likes to see:


BNP Paribas started July trading at €55 per share; it’s now at €27, and there’s no bottom in sight. And that’s making lenders very nervous, according to Nicolas Lecaussin.

“We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore,” a bank executive for BNP Paribas, who declines to be named, told me last week. “Since we don’t have access to dollars anymore, we’re creating a market in euros. This is a first. . . . we hope it will work, otherwise the downward spiral will be hell.”

And Andrew Ross Sorkin, today, points out that Christine Lagarde, after being forthright about the need for European bank capitalizations, has recently been, well, less so. Banks live or die on confidence, and it helps no one if the managing director of the IMF does anything to erode that confidence during a liquidity panic. Largarde’s right that European banks in general — and French banks in particular — need to be recapitalized. But now is not the time to be saying such things, just because statements along those lines, in today’s febrile environment, can cause banks to collapse even before new capital is lined up.

It should go without saying that the banks themselves have to be upfront about the current situation. This kind of thing only makes matters much worse, since it causes markets to discount everything they say:

In the opinion of BNP Paribas, the largest French bank, the market for Greek bonds is inactive, never mind the fact that there are trades every day. It pointed to “the lack of liquidity seen during the first half of 2011” as it concluded market prices were “no longer representative of fair value.” It is now using a model to determine value…

Many banks applied a haircut to all of their Greek bonds, including the long-term ones not covered by the proposed exchange. But some banks, including BNP Paribas and Société Générale in France and Intesa Sanpaolo in Italy, decided to carry the long-term bonds at full value, on the theory that it would all work out and that European governments had promised not to force exchanges of longer-dated bonds…

On Thursday, the average trading price for such bonds was about 37 percent of par value.

The market has good reason to be worried about the French banks. They own $57 billion in Greek sovereign and private debt — more than all German and British banks combined. And they have well over half a trillion euros in Spanish and Italian debt, most of which is trading at a substantial discount to par, if it trades at all.

As a result, the only way for the French banks to be able to project a credible degree of solvency is for the Eurozone to inject a huge amount of money somewhere. Either it goes into the countries the French banks have lent to, and will then be used to pay back the French banks what they’re owed, or else it just goes into the French banks directly — the TARP solution. But if the EFSF isn’t beefed up and deployed very soon, we could see some extremely big French banks either collapse or get nationalized in very short order. And nobody wants to see where the chain reaction from that would lead.


The future looks bleak for French banks. The same applies to Spanish and (don’t forget) German banks. Nobody has to be hugely sorry for France and Germany taking a hit from Greece’ default: by sabotaging the Stability Pact they played a very important part in allowing Greece and Italy to take the rest of Europe for a ride.

How come, by the way, that the French banks are so loaded with Greek, Spanish and Italian debt? Could it be that our boys were doing some pretty heavy betting? 560 billion! Now trading at 40%-50%, wouldn’t it mean that French banks already are 250 billion euro down?

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Cutting municipal tax deductibility won’t hurt infrastructure investment

Felix Salmon
Sep 13, 2011 04:03 UTC

I’m normally a big fan of Bond Girl, but today is obviously the official day when bankers talk their book with no particular logic. In this case, the proposal which has attracted her ire is the idea that part of the jobs bill will be paid for by capping itemized deductions for individuals earning more than $200,000 a year and married couples earning more than $250,000. Basically, you can deduct away to your heart’s content — until your tax rate reaches 28%. At that point, you can’t deduct any more.

Amazingly, this simple and pretty modest proposal would raise a whopping $400 billion — pretty much the entire cost of the jobs bill, right there. And it doesn’t go nearly as far as I would: I’d abolish all deductions altogether, in an attempt to radically simplify the tax code.

But Bond Girl finds a lot to hate, all the same.

This would likely reduce demand for municipal bonds substantially – you know, the primary vehicle for infrastructure investment in this country. According to the Bond Buyer, “Internal Revenue Service data from 2009 shows that 58% of all of the tax-exempt interest reported to the IRS was from individuals with incomes of $200,000 or higher.” Prices for outstanding municipal bonds will decline and borrowing costs for state and local governments will increase going forward. This means state and local governments will have to levy more taxes to construct projects as planned, postpone projects, or cut spending elsewhere.

I’m happy to grant, here, that demand for munis might well decline if this proposal goes through. But would that really hurt infrastructure investment, or mean higher local taxes? Unless and until I see some hard numbers, I’m going to be very skeptical, given the existing ultra-low interest-rate environment. Sure, it’s nice for individual muni investors right now that they don’t need to pay income tax on the puny interest payments they’re getting. But the reason those interest payments are so puny is mostly a function of interest rates, rather than tax-deductibility.

In the absolute worst-case scenario here, all individual investors would shun the muni market entirely, and municipals would have to fund themselves in the institutional market, with taxable bonds. What’s the difference in yield between taxable and tax-free bonds? Right now, it’s not very much.

Realistically, then, how much would municipalities’ cost of funds rise if tax-deductibility were curbed in this way? 20 basis points? 30? 40? We’re not talking, here, about the kind of numbers which change the economics of an infrastructure project. And we’re certainly not talking about the kind of numbers which would necessitate local tax hikes to pay for suddenly-higher construction costs.

Whenever you close a tax loophole, you’ll have a series of consequences. Some will be intended, and some will be unintended. Some will be positive, and some will be negative. But closing loopholes in and of itself is a good thing — and when doing so gets you an extra $400 billion, it’s a no-brainer. If necessary, calculate the added interest expense that municipalities will have to pay, take it out of the $400 billion saved, and just give it to those municipalities as an outright grant. I doubt it would amount to very much money.

And it’s certainly no reason not to go along with this very welcome idea to start cracking down on deductions in the tax code.


@Curmudgeon frankly it was shocking that my earnings power less taxes, insurance, school loans, and retirement savings approximated the various support programs that are available to someone ambitious enough to sign up for them.

While I am a vocal supporter of a strong safetynet every effort must be made to structure support and incentives to move to a higher level of self sufficency. Of all the major assistance programs I think the best is the earned income tax credit… but I do think collecting it should be contingent on the annual completion of some kind of personal finance course offered by some approved non-profit. Entry level retail or food service jobs will never pay much more than minimum wage. Every day I see bright people working at jobs clearly below their obvious potential. That’s better by far than not working, but society does need to guide those people towards increasing their value per labor hour rather than trying to moderate income inequality through assistance programs.

@Felix good point that the poverty line for a two person family 7 years ago was much lower than the current amount for 4. I got that $16,000 figure for 2004 off her annual social security statement so I know it’s accuarte. I will counter your very valid point that she was above the poverty line with the idea the safety net in my state is then infact so strong that minimal cost healthcare, dental care, and housing assistance were avalible to someone at 128% of the poverty line.

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Felix Salmon
Sep 13, 2011 03:31 UTC

More or less the entire market now believes Greece will default. — Bloomberg

It now costs a record $5.8 million upfront and $100,000 annually to insure $10 million of Greek debt for five years using credit-default swaps, up from $5.5 million in advance Sept. 9.

One of Buffett’s successors is a guy who paid over $5.2 million to have lunch with him. –Fortune

[Weschler's] three biggest positions were W.R. Grace (GRA) ($412 million), DaVita (DVA) ($368 million), and DirectTV (DTV) ($328 million). DaVita runs kidney dialysis centers. W.R. Grace is in bankruptcy, but its stock trades actively in the market.

The United States has the lowest share of small businesses of any OECD country. — Washington Post

in France, when a company grows to 50 employees, it has to set up a Works Council that coordinates with employees on workplace conditions. And so “many small French companies limit themselves to… 49 employees.”

The US Department of Defense is the world’s largest employer, by far, with 40% more employees than the Chinese People’s Liberation Army . — The Economist

Student loans for for-profit universities are about as safe as sub-prime. — @rortybomb

Groupon Needs to Get Its Growth On — WSJ

The story isn’t all bad. Groupon gained market share in North America in August compared with top rival LivingSocial, Yipit Data reports. Meanwhile Facebook, a potentially worrisome competitor, recently shut down its daily-deals product.

86% of Americans now approve of interracial marriages. — Gallup

More Americans disapproved than approved until 1983, and approval did not exceed the majority level until 1997.


Maybe 14% just disapprove of marriage in general?

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The euro crisis comes to a head

Felix Salmon
Sep 12, 2011 13:29 UTC

Spiegel has an excellent, long, and detailed article about the tension at the heart of the euro crisis — the one between Greece and Germany. Europe has thrown $150 billion at Greece to date and has nothing to show for it except for a temporarily averted sovereign default. If that kind of money continues to rain down on Greece, the outcome will be similar — immediate crisis averted, but no real change in terms of the Greek sovereign finances. Austerity, it turns out, is working exactly the way it always does: it’s slowing down the country and making any recovery pretty much impossible.

Up until now, the EU’s attitude to Greece was a bit like Tim Geithner’s attitude to the debt ceiling: Greece will implement the reforms it has promised, it will recover economically, we will give them the liquidity they need from the EFSF, there is no alternative. But now, starkly, two alternatives have emerged blinking into the harsh light of the market. Either Greece defaults and remains in the euro; or it defaults and leaves the euro. This is not an orderly London Club bail-in default with a modest 21% haircut and an exit yield of 9%: rather, it’s a proper we-can’t-pay-our-debts default with significant losses for all banks holding Greek debt — including the ECB.

Meanwhile, with the exit of Jürgen Stark, the ECB itself has clearly reached the limit with respect to how much it can help the eurozone stay intact. Stark’s replacement — almost certainly another German Bundesbank type — may or may not be as hardline as Stark was. But Friday’s news underlines that the ECB is emphatically not going to behave during this crisis as the Fed did during the last one — by subordinating itself to broader necessities, and making its first priority that it do everything in its power to ensure that a coherent and coordinated crisis-response plan is adhered to. To put it another way: Bernanke, ultimately, did what Paulson wanted him to do. It’s not at all clear that Mario Draghi will be able to behave the same way.

So the latest swoon in European and global markets makes sense: we’re at an inflection point, in Europe, and all the signs are pointing to more chaos and uncertainty. The last crisis brought Europe and the world together, at least briefly. This one is tearing Europe apart. The unity that we saw at the G20 summit in London in 2009 is nowhere to be seen, and there’s no indication that it’s going to emerge again, at least not before it’s too late. Most of the time, market reports of “worries over Europe” are code for “global stock markets fell, and we don’t know why.” This time, I think they’re legit.


great comments by an intelligent group of posters. thanks!

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Dimon vs Vickers

Felix Salmon
Sep 12, 2011 08:11 UTC

It’s beyond ironic — closer to moronic, really — that Jamie Dimon would give an interview to London’s very own Financial Times, complaining that international bank-regulation standards are “anti-American,” on the very day that the Vickers ReportRobert Peston calls it “the most radical reform of British banks in a generation, and possibly ever” — is released.

It’s literally unthinkable that the US Treasury would ever dream of doing to JP Morgan what the UK Treasury, here, seems to want to do to the likes of Barclays and RBS. This is a Volcker Rule on steroids — all retail banking will be ring-fenced and forced to operate with enormous amounts of capital, much more than Dimon is complaining about. It’s essentially a break-up, in all but name, of the big banks with both retail arms and investment-banking operations. And it’s designed, quite explicitly, to strengthen the UK’s banking system by reducing the amount of risk and bolstering financial stability.

But Dimon doesn’t care about what’s going on in the UK. He’s just looking at Basel, which — incredibly — he wants the US to withdraw from.

“I’m very close to thinking the United States shouldn’t be in Basel any more. I would not have agreed to rules that are blatantly anti-American,” he said. “Our regulators should go there and say: ‘If it’s not in the interests of the United States, we’re not doing it’.”

I have no idea what Dimon thinks is anti-American about the Basel standards, which are certainly in the interests of the United States. In fact, by all accounts it was the US which was pushing for stricter rules, and had to compromise with the laxer Europeans, whose banks are much less well capitalized right now.

US banks, including JP Morgan with its “fortress balance sheet”, are very well placed to navigate through the Basel rules and come out strong and dominant on the other side. European banks, by contrast, will have to raise a lot of very expensive equity. And UK banks, if the Vickers proposals are adopted, will be much less formidable in the international arena than they are right now, with most of their assets ring-fenced and unavailable for merchant-banking misadventures.

And in any case, as we learned during the financial crisis, the world is so interconnected that whatever is good for the global banking system is good for the US banking system. Which point seems to be lost on Dimon:

“I think any American president, secretary of Treasury, regulator or other leader would want strong, healthy global financial firms and not think that somehow we should give up that position in the world and that would be good for your country,” said Mr Dimon.

This makes no sense. The more capital America’s banks have, the stronger and healthier they are, surely. Why would enhanced capital-adequacy standards mean giving up a position of having healthy banks? It would mean quite the opposite, it seems to me.

But I suspect that what Dimon is talking about here isn’t healthy banks, but rather healthy bank shareholders. He wants to go back to the casino model, with himself sitting in the role of the house which always wins. (Except when it loses, and is bailed out by the government.) The American president, secretary of Treasury, regulator or other leaders have no particular interest in seeing bank shareholders and employees make lots of money — that’s not what healthy banking is about. The best banks, indeed, are the invisible middlemen who make very little money.

Vickers understands that, as do the regulators at the Federal Reserve who helped to negotiate the Basel agreement. And in his heart of heart, Dimon probably does too. Not that he’d ever admit it.


ARJTurgot2, JPM can’t “withdraw” from the Basel regulations because they are, erm, regulations.

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