May 2012 archive

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

May 24 is the 144th day of the year (145th in leap years) in the Gregorian calendar. There are 221 days remaining until the end of the year.

On this day in 1775, John Hancock is elected president of the Second Continental Congress.

ohn Hancock is best known for his large signature on the Declaration of Independence, which he jested the British could read without spectacles. He was serving as president of Congress upon the declaration’s adoption on July 4, 1776, and, as such, was the first member of the Congress to sign the historic document.

John Hancock graduated from Harvard University in 1754 at age 17 and, with the help of a large inherited fortune, established himself as Boston’s leading merchant. The British customs raid on one of Hancock’s ships, the sloop Liberty, in 1768 incited riots so severe that the British army fled the city of Boston to its barracks in Boston Harbor. Boston merchants promptly agreed to a non-importation agreement to protest the British action. Two years later, it was a scuffle between Patriot protestors and British soldiers on Hancock’s wharf that set the stage for the Boston Massacre.

Hancock’s involvement with Samuel Adams and his radical group, the Sons of Liberty, won the wealthy merchant the dubious distinction of being one of only two Patriots-the other being Sam Adams-that the Redcoats marching to Lexington in April 1775 to confiscate Patriot arms were ordered to arrest. When British General Thomas Gage offered amnesty to the colonists holding Boston under siege, he excluded the same two men from his offer.

President of Congress

With the war underway, Hancock made his way to the Continental Congress in Philadelphia with the other Massachusetts delegates. On May 24, 1775, he was unanimously elected President of the Continental Congress, succeeding Peyton Randolph after Henry Middleton declined the nomination. Hancock was a good choice for president for several reasons. He was experienced, having often presided over legislative bodies and town meetings in Massachusetts. His wealth and social standing inspired the confidence of moderate delegates, while his association with Boston radicals made him acceptable to other radicals. His position was somewhat ambiguous, because the role of the president was not fully defined, and it was not clear if Randolph had resigned or was on a leave of absence. Like other presidents of Congress, Hancock’s authority was limited to that of a presiding officer. He also had to handle a great deal of official correspondence, and he found it necessary to hire clerks at his own expense to help with the paperwork.

Signing the Declaration

Hancock was president of Congress when the Declaration of Independence was adopted and signed. He is primarily remembered by Americans for his large, flamboyant signature on the Declaration, so much so that “John Hancock” became, in the United States, an informal synonym for signature. According to legend, Hancock signed his name largely and clearly so that King George could read it without his spectacles, but this fanciful story did not appear until many years later.

Those of you that read this regular series know that I am from Hackett, Arkansas, just a mile or so from the Oklahoma border, and just about 10 miles south of the Arkansas River.  It was a rural sort of place that did not particularly appreciate education, and just zoom onto my previous posts to understand a bit about it.

Dad was a born salesman.  He could sell anything to anyone just about.  It took him some time to find that calling.  Before sales he pumped gasoline, worked odd jobs, trained as a jewellery designer and maker, and even tried farming.  He hated farming.

But it was sales that Dad was the very best.  Different people have different talents for different things.  I did some direct sales at summer jobs at a paint store and at a small engine repair shop and lawnmower store, but in those jobs the customers came to you.  Dad went to the customers.

Cross posted from The Stars Hollow Gazette

That $2 billion failed London Whale has burgeoned up to a hefty $7 billion:

The crisis at JP Morgan escalated yesterday as it emerged its trading losses in London could rise to as much as $7bn (£4.5bn) and the US bank cancelled a share buyback. Fears were growing that the losses could spiral from an initial $2bn, which was declared on 10 May, as JP Morgan struggles to unwind the massive bets made by the so-called “London Whale” trader Bruno Iksil. [..]

The main index on which Mr Iksil’s credit default swaps trades were based has calmed down in recent days, which suggests that JP Morgan has decided to trade out of its positions gradually rather than take one massive hit. Mr Dimon originally said the bank would deal with the positions to “maximise economic value”. But there is a danger in taking the long view. Mr Iksil was betting on the credit-worthiness of corporate America and if that starts to fall JP Morgan’s losses could mount further.

But in the meantime, Dimon decided to suspend the $15 billion stock buy back:

Two months after announcing a $15 billion share buyback program, JPMorgan Chase reversed course on Monday, saying it was halting the repurchases after the bank’s multibillion-dollar trading loss. [..]

Mr. Dimon said the bank intended to keep its dividend of 30 cents a quarter unchanged. Bank officials have repeatedly emphasized that the company has no plans to reduce it despite the trading loss. Initially estimated by the bank at $2 billion, the trading loss on credit derivatives now stands at more than $3 billion, according to traders and regulators. [..]

The decision to halt the repurchases – a move the company said it made on its own, not at the behest of regulators – sent JPMorgan’s shares sliding again Monday, closing at their lowest level since late last year.

As the losses from London Whale increase and Dimon’s reputation as the “saviour” of JP Morgan is tarnished, the calls for better and tighter regulations for banking increase. That’s the problem faced by the Senate Banking Committee as they consider the “Volker Rule”. As David Dayen pointed out today the rule should not so complex that it just creates more loopholes:

The Fail Whale trades showed that massive, as-yet unregulated risk still exists in our financial system, with the potential to bring down the economy once again and trigger massive taxpayer bailouts. Since the Administration already passed a law that was supposed to deal with that, they’re scrambling to restore what little of value existed in those laws. [..]

The article intimates that independent regulators have authority over writing things like the Volcker rule, and that the White House and the Treasury Department have limited ability to ensure that the rule properly follows from the legislative mandate. Given that a senior Administration official told reporters just yesterday that the losses at JPMorgan Chase would “inform… how the ultimate contours of the Volcker ruler come out-make sure that it is strong,” it’s clear that not even the Administration believes that. They appointed the regulators, and Treasury has plenty of control over almost everything related to Dodd-Frank. If they want a stronger Volcker rule, they’ll get it.

But will the Banking Committee come out with strong, simple rules regulating the gambling that banks are doing with depositor funds? There is a lot of doubt considering that not only are the Senators on the banking committee “financed” by the banks and lobbied heavily, a former lobbyist for JP Morgan Chase, Dwight Fettig is the staff director for the Senate Banking Committee. As our friend watertiger at Dependable Renegade observed “Well, isn’t that conVEEEEENient”:

The Senate Banking Committee is responding to outrage over the news that J.P. Morgan lost some $3 billion in customer money because of a risky trading strategy. The committee is preparing for two hearings with regulators, and Senator Tim Johnson (D-SD), chair of the committee, is hoping that Jamie Dimon will testify in the near future. “Our due diligence has made it clear that the Banking Committee should hear directly from JPMorgan Chase’s CEO Jamie Dimon,” Johnson said in a statement last week.

Luckily for Dimon, the professional staff in charge of managing the banking committee will be quite familiar to him and his team of lobbyists. That’s because the staff director for the Senate Banking Committee is none other than a former J.P. Morgan lobbyist, Dwight Fettig.

In 2009, Fettig was a registered lobbyist for J.P. Morgan. His disclosures show that he was hired to work on “financial services regulatory reform” and the “Restoring American Financial Stability Act of 2009″ on behalf of the investment bank. Now, as staff director for the Senate Banking Committee, he will be overseeing the hearings on J.P. Morgan’s risky proprietary trading.

I agree with Yves Smith in her NYT op-ed opinion that “for starters, reinstate Glass – Steagall”:

Preventing blow-ups like the JPMorgan “hedge” that bears no resemblance to any known hedge isn’t difficult. What makes preventing it difficult is that banks that exist only by virtue of state-granted charters – and more recently, huge transfers from the public – have persuaded public officials and regulators that they have a God-granted right not just to high levels of profit but also high levels of employee and executive compensation. [..]

Maybe it’s time to recognize that these firms are too big and in too many complex businesses to be managed. Jamie Dimon was touted as a star who could supervise a sprawling firm running huge risks, and he fell short because no one can do the job adequately. A less disaster-prone financial system requires more simplicity and redundancy. Re-instituting Glass-Steagall or other variants on the narrow banking theme isn’t a full solution, but it would make for a good start.

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

May 23 is the 143rd day of the year (144th in leap years) in the Gregorian calendar. There are 222 days remaining until the end of the year.

Click on images to enlarge

On this day in 1873, the Canadian Parliament establishes the North West Mounted Police, the forerunner of the Royal Canadian Mounted Police.

North-West Mounted Police

The RCMP has its beginnings in the North-West Mounted Police (NWMP). The police was established by an act of legislation from the Temporary North-West Council the first territorial government of the Northwest Territories. The Act was approved by the Government of Canada and established on May 23, 1873, by Queen Victoria, on the advice of her Canadian Prime Minister, John A. Macdonald, with the intent of bringing law and order to, and asserting sovereignty over, the Northwest Territories. The need was particularly urgent given reports of American whiskey traders, in particular those of Fort Whoop-Up, causing trouble in the region, culminating in the Cypress Hills Massacre. The new force was initially to be called the North West Mounted Rifles, but this proposal was rejected as sounding too militaristic in nature, which Macdonald feared would antagonize both aboriginals and Americans; however, the force was organized along the lines of a cavalry regiment in the British Army, and was to wear red uniforms.

The NWMP was modelled directly on the Royal Irish Constabulary, a civilian paramilitary armed police force with both mounted and foot elements under the authority of what was then the United Kingdom of Great Britain and Ireland. First NWMP commissioner, Colonel George Arthur French visited Ireland to learn its methods.

The initial force, commanded by Commissioner French, was assembled at Fort Dufferin, Manitoba. They departed on July 8, 1874, on a march to what is now Alberta.

The group comprised 22 officers, 287 men – called constables and sub-constables – 310 horses, 67 wagons, 114 ox-carts, 18 yoke of oxen, 50 cows and 40 calves. A pictorial account of the journey was recorded in the diary of Henri Julien, an artist from the Canadian Illustrated News, who accompanied the expedition.

Their destination was Fort Whoop-Up, a notorious whiskey trading post located at the junction of the Belly and Oldman Rivers. Upon arrival at Whoop-Up and finding it abandoned the troop continued a few miles west and established headquarters on an island in the Oldman, naming it Fort MacLeod.

Historians have theorized that failure of the 1874 March West would not have completely ended the Canadian federal government’s vision of settling the country’s western plains, but could have delayed it for many years. It could also have encouraged the Canadian Pacific Railway to seek a more northerly route for its transcontinental railway that went through the well-mapped and partially settled valley of the North Saskatchewan River, touching on Prince Albert, Battleford and Edmonton, and through the Yellowhead Pass, as originally proposed by Sandford Fleming. This would have offered no economic justification for the existence of cities like Brandon, Regina, Moose Jaw, Swift Current, Medicine Hat, and Calgary, which could, in turn, have tempted American expansionists to make a play for the flat, empty southern regions of the Canadian prairies.

The NWMP’s early activities included containing the whiskey trade and enforcing agreements with the First Nations peoples; to that end, the commanding officer of the force arranged to be sworn in as a justice of the peace, which allowed for magisterial authority within the Mounties’ jurisdiction. In the early years, the force’s dedication to enforcing the law on behalf of the First Nations peoples impressed the latter enough to encourage good relations between them and the Crown. In the summer of 1876, Sitting Bull and thousands of Sioux fled from the US Army towards what is now southern Saskatchewan, and James Morrow Walsh of the NWMP was charged with maintaining control in the large Sioux settlement at Wood Mountain. Walsh and Sitting Bull became good friends, and the peace at Wood Mountain was maintained. In 1885, the NWMP helped to quell the North-West Rebellion led by Louis Riel. They suffered particularly heavy losses during the Battle of Duck Lake, but saw little other active combat.