Tuesday, September 11, 2007

Animated ABCs of International Finance - Part II

It's that time again, the time for a follow-on to Avian FX in Part-II of Cassandra's Animated ABCs of International Finance. In Part-I, Cassandra highlighted the remarkable similarities between Currencies and some of our best-known and loved feathered friends.

In Part-II of Animated ABCs of International Finance, Cassandra exposes the animated likenesses of Supranational and Central Bank financial market participants, before tackling the private market in Part-III.

The IMF -

Danger Mouse & and his short-sighted sidekick, Penfold, bear a strong likeness to the IMF. They are hailed by secret invitation, responding to crises often in a rather bumbling and ineffectual way, but eventually coming out on top, if only as a result of luck and the good fortune only available to animated Superheroes and Stevie Cohen. But the likeness runs even deeper: rumour has it that the IMF are finally moving from their DC headquarters to - yes - a new purpose-built red Post-Box somewhere on Baker Street.

The BIS -

The nearest thing to a global central banking authority isthe Bank for International Settlements, a splitting image of one Vitalstatistix, the middle-aged, obese, moustached, but generally reasonable leader of Asterix's tribe of indomitable Gauls. Even-tempered, but generally unambitious, he loves good food, and has only one fear: "that the sky may fall on his head tomorrow". However, like the BIS he rarely alludes to this in actual words and, even then, only as a rallying cry: "We have nothing to fear but …".

The World Bank -

Undoubtedly the least relevant actor on the global financial stage (excepting perhaps the EBRD) is the World Bank. Irrelevant at least to developed markets, and recently emerged emerging markets. In fact, the substantial investment activities of their large and influential pension fund probably generates more ripples in financial markets, than their lending or funding activities. Given this reality, Bob The Builder is a rather apt image, not least because he is oh-so-benign, well-meaning, never losing his temper, and always intent on doing good (even if it doesn't always work out that way). So tell me again how the fuck did they got saddled Paul [They'll Welcome Us With Rose-Water & Kisses] Wolfowitz?? And Bob certainly fixed HIM!!

The WTO -

There is general disagreement on precisely whose interests the WTO's General Agreement on Tariffs and Trade is out to defend, though many have a sneaking suspicion that it is the developed nations and their transnational corporations. If this is the case, then I reckon that a striking image is borne by Kimba The White Lion, a heroic animated white lion cub drawn in Japan in the late 1960s, but, like the Little Rascals, has now been withdrawn due to the potential offense it might cause, and the generalized political incorrectness of a White Lion defending Africa against the danger of the wild animals and the darker-skinned heathen natives (allegorical suggestions anyone?). I guess one could safely call him the Ian Smith or PW Botha of cartoon characters: a good Protestant work ethic in combination with a less-than-universal sense of morality.

-------The Central Banks-------

The Fed -

I was a child of the 60s and so my brain was imprinted with the relatively benign images that Californian and Japanese animators had to offer. In the new millennium however, I will pccasionally spy my kids dosing upon rather cynical, verging upon the nihilistic, cartoons. "Catdog" is one such example, about conjoined but contrary "brothers" that is a wonderful analogue for the The Fed and its irreconciliable twinned-objectives. "Cat" (inflation control) is the smarter one, and is always hatching some kind of plot to get his brother to do something for him or to calm down, so that Cat doesn't get beat around and hurt. It may not show all the time, but he deeply loves and cares about his brother. "Dog" is the more lovable of the two brothers (maximum economic growth). Dog loves to play and party and play some more. He loves baseball and playing fetch with frisbees, balls, sticks, etc. One of his biggest interests is in chasing the garbage truck (Wall Street? Interest Groups?). He is very friendly and happy, but does have a breaking point. He's also very sensitive, and if he fails at something he feels horrible and worthless. It usually takes his brother Cat to help snap him out of it and relax (presumable the money supply). Rarely has there been a better metaphor for the FRBs inherently schizophrenic objectives. More recently, with Dr Bernanke however, there is an alternative animated likeness: Gumby and Pokey (who admittedly are actually made of clay or rubber). Like the Fed, Gumby have a 35-year record using "stop motion" techniques to do what he does. While occasionally heroic, Gumby is, like BB, quite literally, spineless. The show also featured Pokey, a red-orange clay pony who perhaps is a Donkey allegorically representing Congress, and Gumby's nemesis, the "Block-heads", who represent collectively The Leveraged Speculators, the Momentum Traders, Mortgage Zaitech Charlatans, and all official organizations buying USD paper to both neuter US rates and insure continued mercantile advantage.

The Bank of England -
Assuredly represented by none other than DM's Boss, Colonel 'K', the "Old Lady" reeks of errrr umm Halitosis? And while the BoE is no longe the boss of anything (except regional UK house prices) it does have a distinguished list of emigres to the BIS such Andrew Crocker. Like "The Old Lady", Col. K has a tendency to either forget what mission he was about to give DM, or go off at a random tangent. Some sources claim that he's a walrus, but this is not so, although it's hard to determine exactly what he is – a gopher, perhaps? He has a nubile (and never seen on-screen) secretary named Miss Boathook. Col. K, having been born in Malaysia to the the Hon. Quentin Ascot Shoetree Knight-Knight Sleepwell and the Hon. Lady Amaryllis Hippeastrum Forfar-Fife like many senior UK public servants lives in Chorleywood.

The BuBa -

Perhaps the Bundesbank is relevant no longer. And perhaps its mystique has all been mistaken since we've witnessed no less than three Germanic banks in as many weeeks say "mea culpa" after choking on US asset-backed shite recently. Thank goodness for "Heimlich Manouvre", which if nothing else, sounds like a sound Germanic rescue plan. That said, there IS and remains a 50bp spread between German credit and other Italian credit and according 30bps or so vs. France. Irrespective, the stereotype is one of some Buba or fmr Buba-official be it Issing, Weber et. al. always whinging or moaning, much like Oscar the Grouch whom we see here in classic form ensconced in his humble stainless-steel abode. Perhaps it's a Germanic trait to always see the world half-empty. Wittgenstein was terribly unhappy, but then he was Austrian. Nonetheless, show me a happy German philosopher (or Central Banker) and I'll give you some subprime CDOs valued at par. Really!!

The ECB -

Like the ECB, Mighty Mouse can fly, usually trailing a mysterious orange energy, which is capable of solidifying for use as a moving platform to carry other characters. He’s swift and agile during flight, able to stop suddenly, to change directions quickly, and to perform complex aerobatic maneuvers with ease. Mighty Mouse has formidable super strength and invulnerability. The limits of these powers are unknown, but he’s sufficiently tough enough to withstand being engulfed in the blast of a building full of military-grade bombs and ammunition when it explodes. He has MAGNOKINESIS and can hurl bolts of white lightning from his hands that allow him to mentally control ferrous metal objects. At will, Mighty Mouse can create an invisible deflection field that surrounds his hands, allowing him to deflect attacks or reflect them back at his opponents. He has been seen to use a type of x-ray vision to see through oblique objects and has the ability to stare his opponents and even inanimate objects into his command. Pretty impressive! Sound familiar, huh?

The Reserve Bank of India -

Of all the EM CBs (outside perhaps of Korea), the Reserve Bank of India resembles Underdog, for doing the unpopular thing, at least in comparison to its BRIC-brethren. Underdog's most frequent saying when he appeared was:
There's no need to fear, Underdog is here.
and to be fair, the RBI at least appears cognizant of the issues, and has at least made an attempt to fight-the-fight.

But Underdog usually caused a lot of collateral damage wherever he went. And whenever someone complained about the damage, Underdog replied:
I am a hero who never fails.
I cannot be bothered with such details.

Bank Negara -

I will be honest in admitting that I do not know any Indonesians personally, excepting a restauranteur in my old neighborhood. I've eaten Gado-Gado, Nasi-Goreng and Satay, and they certainly seem nice enough on TV (they were much kinder to Suharto & Son than say the Romanians were to Ceaucescu). But there is just something wrong about Bank Negara...wrong in the Bill the Cat sense, as if the combined stress and pressure repetitively getting it wrong LARGE in the FX market, combined with ECS therapy, has produced something like an animated feline cross between Ozzy Osbourne and Billy Idol...

The Bank of Japan -

Ahhh the BoJ, the one you've surely been waiting for. Yes, where have they been. It's as if they cut rates to ZERO, set their phones to auto-answer and went to play 46,983 holes of golf, which, in Japan, I estimate, would take more than 7 years of playing EVERY calendar day 1/365 yr please). Of course, they found time whilst on the 19th to call in, and place some orders for errrr something like $800bn USDs in 2002 to 2004 (1.5 trillion in current dollars). And so, Caspar the friendly Ghost is very apropos, so long as "friendly" is interpreted in respect to the subsidy provided to the US consumer, and the Keidanren (and its largest members), and not in respect to long-term systemic integrity. "Hello Kitty" was my #2 choice here, but "the invisible bank", the bank that still scaresthe beejesus out of traders who transgress their will, is still best.

The PBoC -

Felix and his memorable bag of tricks. THAT is the PBoC. Yes, a dollar peg, sterilization bills, outright unsterilized intervention, a financial sector still dominated and/or indirectly controlled by SOEs, widening bands at a snails' pace, and export subsidies are but a few the neatest ones. His black body, white eyes, and giant grin, coupled with the surrealism of the situations in which his cartoons place him, combined to make Felix one of the most recognizable cartoon characters in the world, and a splitting image of the PBoC. Moreover "Felix", in latin translates as "Luck", something the Bank will need if they hope to get back a $1 in real terms for every $1 that they've thrown away ...errrr, I mean, invested. Savings Glut indeed! (Sorry Macro-Man ... "He Who Must Not Be Named" is not an animated character)


Macro Man said...

At the risk of being churlish and spoiling another excellent effort, I nevertheless feel compelled to point out that Bank Negara is the central bank of Malaysia, not Indonesia. Otherwise, good show!

Macro Man said...

Also, for PBOC, I'd suggest "The Apache Chief." Per Wikipedia, "Apache Chief could grow to vast sizes." Sound like the reserve portfolio of anyone you know?

"Cassandra" said...

"Apache Chief" is a real blast from the past! I guess he was based upon some shaman and jimson weed (Factoid: Carlos Castaneda was by almost all accounts, a fraud). Re:: Negagra...thanks. I never did business with Negara, or met anyone, but wheres most who firms who get speculatively clusterf*cked do so only once, Negara seemed to repeatedly come back for more punishment.
Hello Kitty would have been fine for the SNB. RBNZ? Bank of Canada? MAS? SAMA? So much fun, so little time....

Roger Dodger said...

What do you think Japan is going to do with its massive FX reserves?

Keep investing in low yield U.S treasuries, or to create its own SWF?