The latest in a recent surge of worrisome analyses of how having our snouts buried in our smartphones all day (or 80 times a day on average) is a Bad Thing.
In early 2007, when I worked for Breakingviews, we worried a lot that the long period of prosperity had allowed massive risks to fester unheeded – a syndrome famously described by economist Hyman Minsky. A “Minsky Moment” is when all those chickens come home to roost at once, which happened soon after.
Now the head of China’s central bank, no less, is raising the same worry. From the FT:
US bond traders have begun a new trading day looking at higher prices for Treasury paper while Wall Street is set to open lower. The mood swing comes as the head of China’s central bank has summoned the spectre of a Minsky Moment.
Hyman Minsky is a economist famed for his theory about the risk of a sudden collapse in asset prices triggered by excessive debt or credit growth. The recent surge in global equity and credit markets has been accompanied by a number of strategists warning of a Minsky scenario and that chorus has elevated in tone by Zhou Xiaochuan, the PBOC governor.
He reportedly expressed concern that corporate and household debt are rising too quickly and said China need to defend itself from excessive optimism that could lead to a “Minsky Moment’’.
Bankers have occasionally been called locusts, but this is the first cockroach meme I’ve encountered.
John Chiang, California’s treasurer, imposed sanctions on Wells Fargo last year, taking away much of the state’s extremely valuable business from the disgraced bank. (Remember, ousted CEO Stumpf and his team were the same clowns that were so arrogant they wouldn’t conduct live earnings calls…) In an October 16 letter, Chiang notes some improvements, but extends the sanctions due to the bank’s growing “infestation of problems”. Per the letter (HT Wolf Street):
An Infestation of Problems
In 2016, when federal and local regulatory agencies flipped the light switch to
expose the millions of unauthorized deposit, credit card, debit card, and online banking
accounts, few would have suspected that this one cockroach portended a much more
aggressive and maleficent infestation. Yet, over the past 12 months the following have
come scurrying out of dark corners within Wells Fargo:
• The number of phony accounts has ballooned from an initial 2 million to now
• This past July, news broke that as many as 800,000 consumers were forced by
the bank to buy “lender-based” car insurance they did not need, tipping a
quarter of a million Wells Fargo customers into delinquency and triggering
25,000 vehicle repossessions.
• In August, a new and different auto insurance fraud scandal broke in which
the bank is being accused of failing to make refunds to consumers who paid
off their loans early.
• Also in August, Wells Fargo agreed to pay $108 million to settle a lawsuit
claiming it overcharged military veterans under a federal mortgage
• Recently, a federal judge in San Francisco refused to throw out a lawsuit
accusing Wells Fargo of systematically denying loans to immigrants who
came to the United States as children and who have been allowed to stay here.
The bad news has come with such regularity, I fear more Americans will become
de-sensitized to the bank’s pervasive exploitation of the public’s trust.
The problem with cockroaches, of course, is the constant vigilance needed to ensure their long-term eradication.
Interesting piece by Reagan OMB Director turned econoclast (bit awkward but I like it) David Stockman, on the failure of the Fed’s effort to boost the real economy beyond where it was before the financial crisis, while embedding risks throughout it.
The mad scramble for yield among money managers induced by nine years of massive financial repression has implanted financial explosive devices (FEDs) throughout the warp and woof of the global financial system. The systematic falsification of financial asset prices has literally touched off a chain reaction of speculation and irrational exuberance that is plenary and embedded in nooks and crannies everywhere.
In a study of 3 million people, it found drivers using their mobile phone during 88 percent of trips. The true number is probably even higher because Zendrive didn’t capture instances when phones were mounted in a fixed position—so-called hands free technology, which is also considered dangerous.
“She hung up and I set out the chess board. I filled a pipe, paraded the chessmen and inspected them for French shaves and loose buttons, and played a championship tournament game between Gortchakoff and Meninkin, seventy-two moves to a draw, a prize specimen of the irresistible force meeting the immovable object, a battle without armor, a war without blood, and as elaborate a waste of human intelligence as you could find anywhere outside an advertising agency.”
– Raymond Chandler, The Long Goodbye