Naked Capitalism has the post Michael Pettis: Is China Really Turning Away from the Dollar?

Yves Smith introduces the article with the following comment:

Yves here. This important post by Michael Pettis addresses whether the efforts of the Chinese to diversify their foreign investments away from the dollar will be a negative for the US. Pettis is skeptical of that thesis, and some of his reasons are intriguing. Like quite a few experts, he doubts that China’s role in sponsoring an infrastructure bank will be a game changer, and he also points out, as we have regularly, that the Chinese cannot deploy their foreign exchange reserves domestically without driving the renminbi to the moon (via selling foreign currencies to buy RMB), which is the last thing they want to have happen. A more surprising, but well argued thesis is that reduced Chinese purchases of US bonds would be a net plus for the US. Get a cup of coffee. This is a meaty, important article.

By meaty article, she probably means there is more information in here than most of us can understand and digest in one reading or without additional reading on our part.  I handle this problem by recording the link to the article on my blog so I can go back to the article if I am so inclined.  The other way I handle the complexity is to assume that if I read enough of these articles, that the knowledge accumulates to the point where you understand more and more of the content of these articles. (That is how I have come to understand some of Modern Money Theory.)

If you don’t read these articles because you cannot understand all of it, then you will only delay the day when you will start to understand the subject matter or postpone that day of understanding forever.

Andy Borowitz’s Facebook post Warren’s Display of Backbone Threatens Career as Democrat may predate the video below by Jon Keller. Borowitz said:

“She stood up for what she believed in and didn’t try to water it down,” said Democratic strategist Harland Dorrinson. “That is a serious violation of the Democratic playbook.”

Compare this to the thrust of Jon Keller’s report on WBZ-TV in Boston.

Today Naked Capitalism posted the item Did Wall Street Need to Win the Derivatives Budget Fight to Hedge Against Oil Plunge?

Conventional wisdom among banking experts is that Wall Street’s successful fight last week to get a pet provision into the must-pass budget bill (or in political junkies’ shorthand, Cromnibus) as more a demonstration of power and a test for gutting Dodd Frank than a fight that mattered to them. But the provision they got in, which was to undo a portion of Dodd Frank that barred them from having taxpayer-backstopped deposits fund derivative positions, may prove to be more important than it seemed as the collateral damage from the 40% fall in oil prices hits investors and intermediaries.

Three days ago, I posted some comments in the article Shutdown averted following late-night drama.

It would be ironic if within days of the entire government (including President Obama) selling out the country to Wall Street, this whole CLO thing blew up in all our faces.

Every now and then it is nice to see the experts discover the same idea that I already discovered.

Politicus USA has the story Republican Nightmares Come True As Bernie Sanders Gets A Big Promotion In The Senate.

Democrats may have lost their Senate majority, but the promotion of Bernie Sanders is another sign that the left is gearing up for a fight.

Maybe the Congressional Democrats can actually do something from their minority position.  Remember that Newt Gingrich was a back bencher in the Republican delegation before he started his climb to power.  Let us just hope that the climb this time will be rapid, less than two years.

Represent Us has the video 5 Awful Things Congress Snuck Into the Omnibus Budget Deal.

In recent days my blog posts have focused on two ot the five awful things. At a party tonight, I was reminded of some others that i think are included in this list of 5.

I am happy to hear that Lockheed Martin is benefiting from some of these shenanigans. I decided a while ago, that if we are going to get screwed by Congress’s favoritism toward Lockheed Martin, the least I could do is to take the hint and make some money from it. So Lockheed Martin has become one of my 20 stock positions. I’d gladly give up the investment as soon as Congress stops getting bought off by Lockheed Martin.

CBS News has some good news in the article No Senate vote yet on $1.1 trillion spending bill.

It will be Monday at the earliest before the Senate votes on a $1.1 trillion government funding bill passed by the House on Thursday night.
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At least 60 senators must agree to end debate on the larger spending package and move toward a vote of the full Senate — a procedure called cloture. A cloture vote will likely take place very early Sunday morning, setting up a final vote Monday.

Do I have to eat humble pie and say thank goodness I didn’t get what I wished for, the end of the filibuster rule?  So it only takes 41 Senators to put a halt to this obscene piece of legislation.  Wow, how lucky we still have that crazy rule.  It may save our bacon at least until the Republicans take over the Senate in 2015.

Whatever good you can say that President Obama has done during his term, he has only been playing around the periphery of the central problem.  Until we solve the central problem of the takeover of our government by the super wealthy oligarchs, then little progress can be made.  Obama is not even in the fight over the central problem.  I don’t think he even sees it as a problem.

The Nation has the article Can Warren and Pelosi Lead Democrats to High Ground? that I really like.

No one should imagine either Pelosi and Warren or other like-minded Democrats have an army ready to march and restore meaning to the Democratic party. What they do have, however, makes them potentially powerful. They have authenticity and sophisticated knowledge. In different ways, both know how the corrupted political system does great damage to American life. It makes them disgusted too.

I just came back from a holiday party of with the Sturbridge Democratic Town Committee.  Of course there was a lot of talk about who could run for President in 2016.  Those of us who are progressive minded talked about Elizabeth Warren, Bernie Sanders, and Jeff Merkley among others.  Nobody even thought of a possibility of Warren/Pelosi or the other way around.  After hearing Nancy Pelosi’s House speech against the budget bill the other day, I am going to have to give some serious thought to this.  Of course, there is nothing really to do, but to watch it play out, and give support whenever needed and where possible.

MSNBC has the story Shutdown averted following late-night drama.

Note that 67 House Republican broke ranks and opposed the package negotiated and endorsed by their own chamber’s leaders – that’s a little more than a fourth of the caucus – which would have been enough to kill the legislation were it not for the 57 House Democrats who rebuffed their leaders and backed the bill.

Please see my previous post Please Impeach The President Already, I Am Begging You to see Nancy Pelosi’s explanation of all that is wrong with this bill.

I am wondering how a certain friend of mine will react to this news. He believes that the younger generation of voters is thirsting for bipartisan compromise. Is this the kind of compromise that would satisfy him? In return for funding the government with a bill that both sides could compromise on, at the last minute, the Republican leadership added what should have been a poison pill. They are providing government funded protection to huge Wall Street banks to take excessive risks. As Nancy Pelosi points out, if the risks pay off, the bank executives get to walk away with the proceeds. If the risks lead to disaster as they did in 2008, the bank executives just walk away, and we tax payers pick up the losses.

I have been hearing about something called Collateralized Loan Obligations (CLO). See the April 2014 Fortune Magazine article Collateralized loan obligations: Our next financial nightmare.

Greed, stupidity, and slack government oversight fueled the mortgage bubble. The same thing seems to be happening today, but this time with leveraged loans and junk bonds.

Do voters think that the timing of rushing this poison pill part of the bill into law is just a bit of protection that will never be needed? I think Jonathan Gruber’s remarks have been completely vindicated by this action of the Republican Congressional leadership. It would be ironic if within days of the entire government (including President Obama) selling out the country to Wall Street, this whole CLO thing blew up in all our faces.

Perhaps, this time, when the government bails out the banks, they will nationalize them like they should have done the last time. (And put a slew of bank executives in jail.)