Kansas City Fedhead Hoenig on... Retail Payments, Fedpotence, and Some Other Stuff not Worth Reading to ECB
"The Future of Retail Banking and Payments--Developments in Global Markets: The Role of Central Banks"
Kansas City Fed President Thomas Hoenig to the European Central Bank (3rd in the quantitative easing/currency debasement game after England then us) and De Nederlandsche Bank in Frankfurt on the 25th of May. It starts out like a winner. Sort of.
A speech on retail payments at this point to the ECB appears to be an attempt to show the Fed isn't just for destroying your currency anymore. If you look at the strategy of it, it's actually a smart move on their part to show the world (at least through their central banking brethren across the pond) that they serve other functions beyond printing money.
ECB President Jean-Claude Trichet insists that now is an appropriate time to discuss things like retail payments. Yes, they do.
Governments and central banks around the globe have made unprecedented use of their policy tools to fight further economic and financial decline. The ECB and the Eurosystem have taken rapid and bold actions in response to the crisis. These measures have been providing refinancing to the banks well above the usual levels and under more flexible conditions than usual. Executive branches have decided exceptional measures to support financial institutions and help stabilising the financial markets. You may now ask: does it make sense in current times to focus on the integration of payment markets and infrastructures? Does it make sense to invest in the integration and modernisation of retail payments business? Our answer is: Yes, it does.
Meanwhile, is the PPT propping up the dollar? Who can tell anymore? I read the comments at Michael Panzner's Friday post on blatant market manipulation via Financial Armageddon that asked for "proof" - where was Panzner pointing? What made Friday any different than other days? I have heard things start getting wonky around 10a EST, right around the time the Goldman rats wake up from their late morning naps (yes, I see what you fuckers are doing) and everything from gold to pharma has been brazenly slaughtered in the open. So? How much proof do people need?
So yes, I'm sure retail payments is a very important topic for a room full of central bankers at a time like this. Geniuses.
At some point, Hoenig insists that were the Fed to be excised from the duty of electronic processing (after an unnecessarily long monologue on the payments themselves), "it seems unlikely that a more competitive environment would emerge."
If you speak central banker (which I am sure everyone at this particular conference certainly does), you know that by speaking in vague "seems" and "appears," the Fed absolves itself from the responsibility of having said "it is certain" later on down the road when this plan fails.
It explicitly knows that this statement is untrue. If it believes in influencing but not dictating the flow of the economy, as it claims it does, then it should also encourage its own competition. Why not? If it is best to perform its duties, then it shouldn't fear competition. By stating this obvious statement with such narcissistic certainty, it is basically admitting to that fear. Clock ticking yet? Can you fuckers hear it now?
The rest of this speech may be found here. I found nothing else worth discussing here.