Juggling Dynamite

The party powers that be would not allow Sanders to become Democratic nominee–proving yet again, that personal integrity is an impediment to political appointment:

Sanders is the rare politician who is not a schmoozer or a pleaser or a prevaricator. Throughout this campaign, and indeed throughout his career, he has said what he meant and stuck to it.  See:  Bernie Sander’s Struggles continues

A new report from Election Justice USA: Democracy Lost, a report on the fatally flawed 2016 Democratic Primaries finds that 184 pledged delegates were lost by Sanders due to election fraud and irregularities, and if this had not happened in critical states like Massachusetts and New York, it could have “substantially changed the media narrative surrounding the primaries in ways that would likely have had far reaching consequences for the Senator Sanders Campaign.”

While the selection of Tim Kaine as Clinton’s VP, signals an ‘all clear’ to finance.  Apparently it will take another 2008 style financial meltdown to clean house.  See:  Hillary’s choice: Why Tom Keene isn’t a ‘Safe pick:

When Sanders on Monday threw his might behind Clinton at the Democratic National Convention, he reassured his supporters that the party platform would now include breaking up the big banks and a 21^st-century version of the Glass-Steagall Act. In fact, the wording is much vaguer than that. Here’s the relevant section from the Democrats’ platform:

Democrats will not hesitate to use and expand existing authorities as well as empower regulators to downsize or break apart financial institutions when necessary to protect the public and safeguard financial stability, including new authorities to go after risky shadow-banking activities. Banks should not be able to gamble with taxpayers’ deposits or pose an undue risk to Main Street. Democrats support a variety of ways to stop this from happening, including an updated and modernized version of Glass-Steagall as well as breaking up too-big-to-fail financial institutions that pose a systemic risk to the stability of our economy.

It’s a topsy-turvy world when Donald Trump advocates reinstating the 1933 Glass-Steagall Act to separate people’s deposits from speculative transactions first, while Hillary Clinton and her VP pick did not. And will not if they get to the White House.

Consensus on Kaine is that he’s reliable (read: won’t upstage Hillary), checks all the boxes (read: won’t rock the political boat) and speaks Spanish (read: has foreign policy credentials). Republicans like him. More importantly for Hillary’s mindset, he’s no Sanders or Sen. Elizabeth Warren (D-MA) (read: won’t derail her mega-fundraising drive, so the Wall Street crowd can now freely open their checkbooks into the homestretch).

This story is a cautionary tale of how romantic ideas go bust on the rocks of too much borrowed money, and the high realty prices it enables. See:  How a Tuscan business dream became and Italian bad loan nightmare.  Footnote:  an estimated 17% of the loans held by Italian banks are now in default, and rising. One third of all non-performing loans in the Eurozone are held by Italian banks.  But defaults are mounting in many countries all over the world, thanks to similarly foolish policies and thinking.

Prices can only be sustained so long as banks are willing to lend dumb amounts, governments to underwrite unreasonable risks and individuals to take on dangerous payment obligations. In reality life is full of economic downturns, revenue losses, property mishaps, illness and death. All are regularly recurring and foreseeable risks, and for the unprepared and over-levered, they routinely prove financially fatal.  Lessons must be learned or the pattern just keeps repeating, ending in tears and hardship all around.

In Tuscany Roberta Tonelli faces huge debts after having to sell her hotel due to recession. Her story reflects the crisis in Italy’s banks, buckling under more than €350bn of non-performing loans. The FT’s Rome bureau chief James Politi reports.  Here is a direct video link

I am skeptical in general of both parties and their commitment to make needed reforms to status quo rules. Talk is cheap and lobbyists and big business money runs deep.  More than 40 years in politics, the Clintons have a particularly long history of troubling relationships with investment bankers.  But I am also reminded that Clinton has worn many hats and taken many different and often opposing positions on issues over the years, depending on what role she was serving.  (And yes, Trump has too).  This can be interpreted as unprincipled or self-serving.   But it is also the nature of being a politician.  Bernie Sanders is one of the few who remained remarkably constant in his expressed positions over the decades.   But then, he wasn’t given an opportunity to lead his party.  So perhaps that shows the cost of consistency and personal integrity in politics.  It’s also why I would never run for political office.  That said, someone has to.

Better Markets CEO, Dennis Kelleher says he believes a Clinton President will crack down on Wall Street. Only time will tell the difference between actions and promises. But his Politico article is optimistic and he offers cases in point.  See Hillary Clinton’s war on Wall Street:

Sanders supporters and others are rightfully concerned that Clinton’s many connections to, large speaking fees from and past positions on Wall Street are indicators that a President Hillary Clinton would be less aggressive on the biggest financial firms than candidate Clinton says she’ll be. But, many of those activities are from some time ago and fail to recognize the concrete specifics of her anti-Wall Street plan, which Clinton simply will not be able to walk away from once in office. It also fails to properly acknowledge what she has done much more recently to demonstrate her commitment to regulating Wall Street.

We still have our concerns. The devil will be in the details if Clinton is elected and her success will depend in part on her nominations for key financial regulatory positions.

But, if Goldman Sachs, JPMorgan Chase, Citigroup, Bank of America and Wall Street’s other too-big-to-fail financial firms think a President Hillary Clinton would reward their friendship, contributions and history with favorable light touch regulation, they appear to be in for a big—and well-deserved—surprise.