plus 4, Three Cheers for Obama's Banking Reforms - Seekingalpha.com

Three Cheers for Obama's Banking Reforms - Seekingalpha.com
BoE's Tucker-"shadow banking" needs more regulation - Reuters
Book News of the Day - Seattle Post Intelligencer
Stocks Drop on Obama Plan, Bernanke Delay - ABC News
Obama seeks bank limits - Dubuque Telegraph Herald

Three Cheers for Obama's Banking Reforms - Seekingalpha.com

Posted: 21 Jan 2010 11:21 AM PST

Barack Obama is coming out swinging today, and good for him for doing so. Let's go through the press release line by line:

WASHINGTON, DC- President Obama joined Paul Volcker, former chairman of the Federal Reserve; Bill Donaldson, former chairman of the Securities and Exchange Commission; Congressman Barney Frank, House Financial Services Chairman; Senator Chris Dodd, Chairman of the Banking Committee and the President's economic team to call for new restrictions on the size and scope of banks and other financial institutions to rein in excessive risk taking and to protect taxpayers.

Note here how Geithner and Summers just become part of "the President's economic team", while Volcker gets top billing. This is, as Simon Johnson says, an important change of course — and it's one which is being supported by both Dodd and Frank, so there's a good chance it can pass. After all, the Republicans tend to hate Wall Street even more than the Democrats.

The President's proposal would strengthen the comprehensive financial reform package that is already moving through Congress.

This is also a good sign: in the wake of Dodd making noises about softening existing legislative proposals, Obama has come out and said, quite rightly, that we should push hard in the opposite direction, and tighten them up.

"While the financial system is far stronger today than it was a year one year ago, it is still operating under the exact same rules that led to its near collapse," said President Barack Obama. "My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout. It is exactly this kind of irresponsibility that makes clear reform is necessary."

OK, so this is populism. But populism in the service of a good cause is no great sin.

The proposal would:
1. Limit the Scope-The President and his economic team will work with Congress to ensure that no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit.

This is a good idea, but cutting back on prop trading, in particular, is going to be hard. Goldman Sachs (GS) has told me repeatedly that they don't have prop trading: everything they do is ultimately for the benefit of their clients. Absent a corner of the trading floor with a big flashing "prop desk" sign above it, in practice it's very hard to draw the line between the kind of daily trading that any broker dealer has to do, on the one hand, and proprietary trading for a bank's own account, on the other. Both of them involve the bank taking risk and making money, after all.

The restriction on sponsoring hedge funds and private-equity shops makes sense: after all, the in-house hedge funds at Bear Stearns played a large role in its demise. The banks will just spin off those holdings to shareholders, I don't think this is a big deal for them.

2. Limit the Size- The President also announced a new proposal to limit the consolidation of our financial sector. The President's proposal will place broader limits on the excessive growth of the market share of liabilities at the largest financial firms, to supplement existing caps on the market share of deposits.

I love this. It's bank liabilities which cause systemic risk: that's why it's bank liabilities which are subject to the bank tax. And as too-big-to-fail banks increasingly rely on wholesale liabilities rather than a more stable deposit base, it's important to place some kind of restrictions on the degree to which they can do so. In his press conference, Obama said that banks should not be allowed to stray too far from their mission of serving depositors: he's moving, here, towards a vision of narrow (or at least narrower) banking. Good for him.

Banks stocks are down in the wake of the speech, but not dramatically: it's easy to get overexcited about a 6% fall in JP Morgan's (JPM) share price while forgetting that it's still over $40 a share, compared to less than $15 in March. Indeed, its all-time high, back in 2007, was barely over $50. Let's get the Republicans on board with this, and push it through. It's probably our last chance to enact meaningful financial reform this generation.

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BoE's Tucker-"shadow banking" needs more regulation - Reuters

Posted: 21 Jan 2010 10:39 AM PST

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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Book News of the Day - Seattle Post Intelligencer

Posted: 22 Jan 2010 08:21 AM PST

"I plod away, through I don't enjoy this sort of thing. Never liked girls, or knew many, except my sisters, but our queer plays and experiences may prove interesting, though I doubt it... Sent twelve chapters to Mr. N [Thomas Niles, her editor at Roberts Brothers]. He thought it dull; so do I. But I work away and mean to try the experiment; for lively, simple books are very much needed for girls, and perhaps I can supply the need." - Journals of Louisa May Alcott, 1868.

Another day in Plodville, perhaps, for LMA but a great day in Rarebookadoon, the pastoral hamlet just down the road from Brigadoon that I call home, where classic literature grows on antiquarian trees and the ripe fruit falls onto the ground where chipper, eagerly awaiting printers rake, collect, and press the literary leaves into sheets that jolly craftspeople bind up into fine Levant morocco leather that happy goats were pleased to sacrifice:

I recently had a first edition, first issue set, in the original cloth, of Little Women, accompanied by a first of Little Men, pass through my hands. Little Women has become a notoriously rare book to find in its originally published state. And while Little People of America may take me to task for saying so, genuine Little Women and Little Men are not often found in each others' company.

Illustrations to Little Women by May Alcott, one of Louisa's sisters.

That Alcott was not crazy about these books is well-known; she really disliked writing juvenile literature. She preferred writing luridly sensational tales of murder, suicide, adultery, thugs, feminism, transvestitism in short, pulp fiction - and stories such as Perilous Play (1869), published a year after Little Women, about a picnic amongst young adults that begins on a low point and ends on a high.

"'If someone does not propose a new and interesting amusement, I shall die of ennui!' said pretty Belle Daventry, in a tone of despair. 'I have read all my books, used up all my Berlin wools, and it's too warm to go to town for more. No one can go sailing yet, as the tide is out; we are all nearly tired to death of cards, croquet, and gossip, so what shall we do to while away this endless afternoon? Dr. Meredith, I command you to invent and propose a new game in five minutes.'

"'To hear is to obey,' replied the young man, who lay in the grass at her feet, as he submissively slapped his forehead, and fell a-thinking with all his might.

"'Time is up now, Doctor,' cried Belle, pocketing her watch with a flourish.

"'Ready to report,' answered Meredith, sitting up and producing a little box of tortoiseshell and gold.

"'How mysterious! What is it? Let me see, first!' And Belle removed the cover, looking like an inquisitive child. 'Only bonbons; how stupid! That won't do, sir. We don't want to be fed with sugar-plums. We demand to be amused.'

"'Eat six of these despised bonbons, and you will be amused in a new, delicious, and wonderful manner,' said the young doctor, laying half a dozen on a green leaf and offering them to her.

"'Why, what are they?' she asked, looking at him askance.

"'Hashish; did you never hear of it?'"

Bong-bon-bons are consumed by all. A very interesting afternoon ensues. The story first appeared in Frank Leslie's Chimney Corner which , at the time, was billed as the "great family paper of America."

Suffice it to say, LMA did not publish the story under her own name. Whether she had first-hand experience with cannabis remains unclear; she may have simply been inspired by the Gunja Wallah Company's maple sugar hashish candy, a popular confection from the early 1860s through the late 19th century.

She revisited hashish in the anonymously published, A Modern Mephistophes (1877), wherein she provides a much fuller expression of the effects of hashish, which is used by one of the main characters, Jasper Helwyse (an opium addict wise, apparently, in the ways of hell), to seduce Gladys, the young wife of a colleague.

"'Try my sleep-compeller....these will give you one, if not all three desired blessings--quiet slumber, delicious dreams, or utter oblivion for a time....'"

Soon, Gladys displayed "shining eyes, cheeks that glowed with a deeper rose each hour, and an indescribably blest expression in a face which now was both brilliant and dreamy[and] sat by, already tasting the restful peace, the delicious dreams, promised her."

The rediscovery and identification of the large number of Alcott's wild, pseudonymous and anonymously written works was the crowning achievement of Madeline B. Stern (1912-2007), who, with her business partner and close friend, Leona Rostenberg, was amongst the preeminent rare book dealers of her day.

"In the old and rare we have made connections; connections between past and present, between our books and ourselves. When the younger generation tells us we are legendary figures, we sometimes think they really mean has-beens. It is true that they study our catalogues, buy our rare books, consult us from time to time, read and collect our co-authored publications. They search our eyes for a legacy.

"Our lives are our legacy. [and] we look to the future -- to our next find, to our next book, to our next adventure." - Madeleine Stern & Leona Rostenberg, 1997.

The legacy of Louisa May Alcott rests upon her being the first writer in English to depict the modern young girl - and her little women of the 19th century were prototypes for young women of the 20th century - struggling with "how to have successful careers and happy home lives; how to balance housewifery and professional obligations; how to be supportive wives, mothers, and daughters without being subordinate" (Feminist Companion to Literature in English). In short, how to do it all, an impossible burden but at the time Little Women appeared, a radical light shining into the lives of young girls otherwise destined to enter their traditional role as household drudge. That Alcott was able to pull it off is testimony to the light charm and humor she brought to bear on her juvenalia.

In short, Little Women was a How-To novel on becoming the assertive, rebellious spirit that was Louisa May Alcott. Yet the anxieties wrought by these perplexities then, and certainly now, would be, and are, enough to tempt the young toward a little help from psychotropic friends. The struggle continues to be worked out woman by woman, generation to generation.

For an interesting view of Louisa May Alcott from a fundamentalist Christian perspective, please check out The Homemaker's Corner. You'll feel like either you are, or the writer was, on hashish.

Tomorrow: You are cordially invited to a private party where Louisa May Alcott and Elizabeth Barrett Browning get high.
___________

The points on Little Women and Little Men are important to identify true first editions.

ALCOTT, Louisa M[ay]. Little Women or, Meg, Jo, Beth and Amy. Illustrated by May Alcott. Boston: Roberts Brothers, 1868.

First edition, first printing, without note at the foot of p. 341 regarding Little Women, Part Two; without "Part One" in gilt on the spine; and with Little Women priced at $1.25 on the third page of the advertisements (p. 11). Twelvemo signed in eights. iv, [5]-341, [1, blank], [6, ads (numbered 3, 2, 11, 12, 8, 11)] pp. Frontispiece and three wood-engraved plates (facing pages 116, 135, and 320).

Original green sand-grain cloth with covers ruled in blind and spine decoratively stamped and lettered in gilt. Brown coated endpapers.

ALCOTT, Louisa M[ay]. Little Women or, Meg, Jo, Beth and Amy. Part Second. With Illustrations. Boston: Roberts Brothers, 1869.

First edition, BAL State 1 (no notice for Little Women, Part First, at p. iv). Twelvemo signed in eights. [i-iii] iv, 5-356 [360], [8, ads (numbered 16, 12, 11, 3, 2, -, -, 14)] pp. Frontispiece and three wood-engraved plates (facing pages 44, 142 and 193.

Original green sand-grain cloth with covers ruled in blind and spine decoratively stamped and lettered in gilt. "Part Second" stamped in gilt to spine. Brown coated endpapers.

ALCOTT, Louisa M[ay]. Little Men: Life at Plumfield with Jo's Boys. Boston: Roberts Brothers, 1871.

First American edition (published about two weeks after the London edition), first issue, with Pink and White Tyranny listed as "nearly ready" in the ads. Small octavo. [4, ads], [4], 376 pp. Frontispiece and three wood-engraved plates (facing pages 13, 251, and 369).

Original terra-cotta sand-grain cloth with covers ruled in blind and spine decoratively stamped and lettered in gilt. Brown coated endpapers.

BAL 158, 159, and 167. Peter Parley to Penrod 30. Grolier 100. American, 74.

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Stocks Drop on Obama Plan, Bernanke Delay - ABC News

Posted: 22 Jan 2010 07:31 AM PST

NEW YORK (Reuters) - U.S. stocks dropped on Friday as proposed sweeping restrictions on U.S. banks and the delayed confirmation of Fed Chairman Ben Bernanke overshadowed solid earnings from General Electric and McDonald's.

The S&P 500 and Nasdaq both slid about 1 percent, with the S&P turning negative for the first time in the new year.

U.S. President Barack Obama threatened to fight Wall Street banks on Thursday with a new proposal to limit financial risk taking, sending stocks and the dollar tumbling.

"Yesterday's announcement potentially, longer term, changes the entire ballgame," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

The U.S. Senate will not vote this week on whether to confirm Federal Reserve chairman Bernanke for a second four-year term, Democratic aides said, leaving little time before his current term expires.

"He'll get confirmed, but it's just another piece of uncertainty that is overhanging the market here," said Mendelsohn.

The Dow Jones industrial average <.dji> dropped 70.81 points, or 0.68 percent, to 10,319.07. The Standard & Poor's 500 Index <.spx> fell 9.48 points, or 0.85 percent, to 1,107.00. The Nasdaq Composite Index <.ixic> lost 25.14 points, or 1.11 percent, to 2,240.56.</.ixic></.spx></.dji>

General Electric Co shares advanced 3.7 percent to $16.61, while McDonald's Corp rose 1.6 percent to $64.20 as the top Dow gainer after both companies reported earnings that topped expectations.

Materials stocks lost ground after Goldman Sachs downgraded the U.S. metals and steel sectors to "neutral" from "attractive," saying China's credit tightening may further weigh on the group.

U.S. Steel Corp , which Goldman removed from its Conviction Buy list, dropped 4.5 percent to $55.06. The S&P Materials index <.gspm> lost 1 percent.</.gspm>

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