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Author Archives: Lenore Hawkins, Chief Macro Strategist

About Lenore Hawkins, Chief Macro Strategist

Lenore Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, strategic planning, risk management, asset valuation and operations optimization, her focus is primarily on macroeconomic influences and identification of those long-term themes that create investing headwinds or tailwinds.

Toyota and GM Recalls

Earlier this week I spoke with Graham Ledger on the recent Toyota and GM recalls.  So far this year, automakers have recalled about 9 million vehicles in the U.S. If that pace continues, the nation would break the record of 30.8 million recalled vehicles set in 2004.

Toyota’s recalls come as rival GM recalls 2.6 million small cars for defective ignition switches the company links to at least 13 deaths. Of those, 2.2 million are in the U.S. As that crisis unfolded, GM announced recalls of another 3.4 million U.S. vehicles.

Toyota’s latest recalls were announced before the company even developed specific repairs. They come two weeks after the Justice Department skewered the Japanese automaker for allegedly covering up problems that caused unintended acceleration in some cars starting in 2009. Toyota agreed to pay $1.2 billion to settle that case, but federal prosecutors can resurrect a wire fraud charge if the company fails to comply with the terms of the settlement.

The bigger picture is that Toyota’s cars are hardly unsafe. For the 2001-04 model years, for example, Toyota and Lexus accounted for five of the 12 models with the lowest death rates per driver year, and zero of the 12 with the highest. But the company is a multinational whose bottom line depends on a return to good publicity and putting legal troubles behind it in the huge U.S. market.

Is all this a triumph for safety? Or in the case of Toyota, have aggressive federal prosecutors seized on relatively minor missteps to stampede an image-conscious company into a big payout?

As for GM, the bankruptcy and government bailout complicate the feasibility of class action lawsuits.

While clearly the deaths linked to the GM defects are horrific and worthy of much furor. We’re also seeing a trend in enormous government crackdowns on the private sector with enormous fines that lead one to question the utility and purpose of such aggressive actions.

An Italian Blond Day and Champagne

An Italian Blond Day and Champagne

Ever had one of those days when you realize that the Universe is having a bit of fun at your expense and taking the opportunity to make sure you don’t get overly confident? That was my Friday. I’d recently returned to Genova, Italy, where I spend a good deal of my time and was working through my usual jetlag, awkwardness getting back into the language and in particular, the Italian driving sensibilities. Italians can be best described as private anarchists and public communists, which manifests itself into a set of driving norms that leave me seriously contemplating the use of a paintball gun while driving to better express my appreciation for those around me.

My Friday morning consisted of a series of, “I cannot believe I just did that,” exercises which I’m positive is the Universe’s way of hinting that maybe, just maybe, there is something to that whole blond thing.  I made myself coffee three times, losing my cup every time. Still not sure where the other two cups ended up as my cleaning lady inevitably finds them all and discretely puts them in the dishwasher. I’ve seen her sideways glances and slight head shakes which I’m fairly certain mean she thinks I’m insane, and probably not too bright given my Italian fluency, or lack thereof.

Later in the day I thought things were finally turning around for me, when I made the unfortunate decision to drive myself and a colleague to a meeting. It was a freezing cold day, with lots of wind and rain, so being a true southern Californian I was fully decked out in heavy coat and mittens… and there’s where the trouble began.

Now that I’ve finally mastered the art of the round-about I get frustrated when others foil my attempts to navigate them smoothly. On Friday I was maneuvering my way around a particularly busy one onto the Sopraelevata, (a Genovese version of a raised highway on which one’s max speed is whopping 60km/hr or 37mph) when this woman damn near pushes me into another car on my right by swinging wildly into my lane from the inner most lane in a hurried attempt to make it onto the on-ramp, forcing me to slam on my breaks so as to avoid any collisions.

I was already gunning for bear at my own idiocy that day, so this became the perfect opportunity to vent my frustrations! I jetted onto the Sopraelevata behind her, my colleague and I yelling loudly, fists shaking with heavy scowling and considerable head shaking. The crazy woman in that awful tiny red car had the audacity to shake her bloody finger at us in her rearview mirror! Oh no she didn’t! Now I’m really raging to give her a serious talking to, when all of a sudden my engine revs up wildly slowing me down to a ridiculous 30km/hr or so. My colleague is still ranting, but getting a weird look on his face as he tries to figure out what the hell it is that I’m trying to accomplish. The car continues to slow, with RPM jumping wildly. I’m flailing about, face turning 18 shades of red, trying to figure out what the in the hell is going on. The crazy woman in that puny Punto smoothly pulls away from us and now the cars behind me are honking angrily as I finally realize that in my eagerness to give her the what for, I nicked the manual gear shift on the steering wheel with my mittens, but couldn’t feel it because those things are so damn thick!

I did the only thing anyone could in my position. I fixed my gears, pulled over into the slow lane, head hung feeling more blond than at any other point in my entire life. My colleague’s shoulder started the telltale shake of a man desperately trying to not laugh. I gave him my best scowl, which he didn’t at all buy into and the two of us laughed until our stomachs hurt.

The point of this story? The best way to end a day like that is with a bottle of 1995 Bollinger Champagne. It is incredibly good all on its own or with some pasta. It presents with the nice little bubbles that tempt your tongue, rather than the big ole ones that make you hiccup relentlessly after the first sip. Slide a few glasses into the freezer, put the champagne on ice, take a long hot shower, and my evening was able to repair one hell of an Italian blond day.

America’s Foreign Foibles – rethinking foreign policy

America’s Foreign Foibles – rethinking foreign policy

The United States suffers from a significant mismatch between expectations and reality, which has up until recently been address by bureaucratic denial and protestations/assurances that if only more money/power are handed over, the dream can yet be realized.

This mismatch is possibly the greatest in the area of foreign policy. Most Americans are aware that they are incredibly fortunate to live in the United States, under the protection of the Constitution, a document which I find breathtakingly beautiful in its simplicity and respect for both the strengths and weaknesses of human nature. That awareness morphs into a desire to share our good fortune with others, to spread the ideals of democracy, liberty and respect for individual rights.

Unfortunately those beautiful and arguably noble sentiments are perverted into foreign wars and “engagements” that evolve into an attempt to spread respect for individual rights and freedoms through the barrel of a gun, a logical inconsistency that only government can tirelessly support.

A good deal of this perversion arises because anytime a politician has sufficient funds to allocate, someone will find a way to “wine and dine” them, thus foreign policy primarily serves special interests and is in practice often a far cry from the original noble intentions.

I am not advocating isolationism, but rather that American needs to appreciate the difference between being engaged in the world and being responsible for it. The former is consistent with our Constitution, respecting the rights and sovereignty of other nations and individuals. The later, while on the surface may sound admirable, is in reality closer to the bossy and invasive neighbor that chops down your favorite tree under the guise of helping you with your gardening.

America and the rest of the world would be better served if instead the nation focused internally, making itself an example of the joys and benefits of a free society. Showing the world the continually rising standards of living, the endless innovation and happiness enjoyed in a free society is our most powerful tool for global influence.

Michael Jordan and the B-Ball Inequality

Michael Jordan and the B-Ball Inequality

MKI know that this may come as a surprise to many of my regular readers, but I have a confession to make.  Michael Jordan is a better basketball player than I.  This basketball skill spread needs to be addressed. He shouldn’t be that much better than I. It isn’t fair.  No matter how much I practice, no matter what coaching I get, no matter how hard I train in the gym and follow a strictly regimented diet, he will always be better than I.  Unfortunately for Mike, the only way to address this issue, (given that there is a clear cap to my potential at 5’8″ with a proportional wingspan and at best, only slightly better than average springs) is to handicap him.  Now wouldn’t the world be a better place if the difference in our abilities were materially reduced?

You probably get where I’m going with this.  Before anyone gets into a tizzy and starts making all kinds of accusations about how mean and uncaring I am.  There is a serious problem today with respect to income, but the problem, thus the cure, isn’t what is preached in the popular media.

The billionaires at Davos, in what can only be described as irony of epic proportions, all agreed that “Severe income inequality” is one of the top 10 global risks of greatest concern for 2014.  You can read the report here.

So let’s break this problem down.  When people talk about income inequality there is a knee-jerk assumption that by definition, income inequality is bad, which in reality is quite destructive to society as a whole.  It intuitively doesn’t make sense that as a society we should strive to have income equality where regardless of what value an individual generates, income ought to be equal.  The guy who chooses to work 3 days a week sweeping floors at the local Walmart clearly should not enjoy the same income as Steve Jobs! So some degree of income inequality is Ok, right?  But not too much?  Hmmm, ok, then how much?  Who gets to decide how much is too much and how do they make that determination?  Then how do they enforce it? How do we trust that the person we give such enormous power to won’t abuse that power?  For argument’s sake let’s say they don’t.  What about their successor?  How likely is it that we continue to have only angelic geniuses that are able to manipulate society into a Utopian income spread without ever falling prey to corruption and graft?  So far the record throughout history doesn’t lead one to believe that is it all likely.

I spend a great deal of my time in Italy, where I sadly witness first-hand the awful consequences of this sort of societal structure.  If I get paid roughly the same amount whether I work my tail off and take risks trying to improve my performance or if I put in essentially the bare minimum level of effort, why try?  I see this everywhere.  Incredibly bright people who could be innovating like crazy, coming up with all kinds of solutions that would benefit their companies and eventually their nation are beaten down by a system that provides no incentive for those who really try to do something great.  Those who are naturally innovators want desperately to try new things, take risks, but for them there is only downside risk.  They can’t improve their income level through hard work and risk taking.  They only risk annoying their colleagues and supervisors by trying to improve things.  Status quo is the rational choice.  Notice the level of innovation coming out of Italy and its rate of growth!?

I sit at dinner and hear the agony in my friend’s voices as they vent their frustrations and their anger at how a colleague who does very little gets paid roughly the same as they do.  This type of structure infects relationships because it forces people to live in a lie, a lie which is painfully obvious to everyone. The guy who barely shows up to the office and only does the bare minimum knows that the guy who’s working his tail off, (he can’t help but try as innovation is in his DNA) is angry that they both get paid roughly the same.  They both are aware of the resentments, but are powerless to do anything about it because society tells them that this is a far better way to live.  It is more fair. What the hell?  More fair that those who are willing to sacrifice and take risks are basically barred from enjoying any benefit from doing so?  My Italian friends all talk wistfully about how great it would be to work in the U.S. where at least there they can hope to get rewarded for accomplishing something great.

As for the U.S., I struggle to see where this horrific trend we keep hearing about is evidenced.  The table below is from an excellent study by Alan Reynolds of the Cato Institute.  You can read the entire report here. The data does not prove out the claims, at least in the U.S..  The bottom two quartiles and the top quartile enjoyed nearly the same increase in income on a percentage basis from 1989 – 2007.  From 2007 – 2010, the bottom quartile experienced a rise in income, while all others experienced a decline.

Now where is inequality a problem?  Barriers and disincentives to improve one’s lot in life ARE problems.  Subsidies such as those in the Affordable Care Act put the poor in a veritable poverty trap in that as they work to improve their situation, the subsidies are taken away at such a pace as to make them far better off overall working less.  That is both demeaning to the individual and immoral in that it forces others to eternally be enslaved to subsidize their fellow citizen, despite the reality that the guy being subsidized may desperately want to get out of his situation, but is faced with overwhelming incentives that keep him dependent, resentful and demoralized.

There is also something horribly wrong with a system in which savers are punished through financial repression.  The Federal Reserve, by keeping interest rates low, forces savers to go into inappropriately risky investments just to try and get a reasonable return.  Those who are already wealthy and are able to invest heavily in the stock market enjoy out-sized returns courtesy of the Fed’s QEInfinity as evidenced by the 90% correlation between the Fed’s balance sheet and the stock market starting in 2008.  Previously the correlation was essentially 0!

The free market system is far from perfect, full of all kinds of flaws, but it is infinitely better than anything else out there.  There are no angelic, omniscient bureaucrats that can manipulate our world into a more Utopian state.  Be wary of any who claim they can.

That there is a Pavlovian dog: Obamacare and mismatched incentives

That there is a Pavlovian dog: Obamacare and mismatched incentives

This one ought to go down in the annals of “You just can’t make this stuff up,” but sadly when it comes to the twisted rewards system innate in government, this is more the rule than the exception.

Recently the Daily Caller reported that the very firm responsible for the disastrous roll out of Obamacare was awarded six more contracts by the administration’s Centers for Medicare and Medicaid Services AFTER the massive flop of a launch!  Yes, you read that right… AFTER!

In the private sector, businesses and individuals are rewarded for doing more with less.  The company that is able to provide a better product that costs them less to make will be able to charge less than the competition and will sell more.  Win!

Individuals that are able to accomplish more in less time or with fewer resources tend to get promoted, get raises, bonuses, more responsibilities.  Win!  Their behavior gets rewarded, so they do more of it.  The incentive system focuses them on being more efficient, accomplishing more with less.

The company that is able to generate greater returns for investors with fewer resources is rewarded with increased investor interest, lower borrowing costs, (as they’ve shown they are less risky) and better talent shows up on their doorstep, wanting to be associated with such a successful organization, (think Google).

These normal human desires, when expressed in the public sector, get seriously wonky.  Bureaucrats publicly state with great pride that some societal ill is a serious problem and they are going to marshal their resources to address it.  Fantastic.  We’d all like to see a lot less of whatever ill is the flavor of the week.  Who could possibly be against that?  So now all these well meaning sorts get together to work on the problem.  They come up with a budget to address the issue over the next few years and off we go.

Except unexpected things happen along the way, as they always do, and we can’t quite get this addressed the way we originally planned.  The easiest solution would to just get more money.  In the private sector, getting additional funds takes a lot of work, is time consuming and in the end may be impossible.  In the public sector, just whip up some stories that pull at the heart-strings and what politician can risk appearing heartless?  More funds are granted and government spending goes up.  If the plan actually starts to work, now we have to worry, as how do we justify our salaries?  The budget we control?  Ah ha, scope creep!  Now we need to expand into yet another area that is in “crisis” and probably need a bigger budget too while we are at it.

In the private sector, more funds are awarded when you prove you are able to accomplish your goals.  In the public sector, more funds are awarded when you can’t accomplish your goal as originally planned.  In the public sector, the greater the problem, the harder it becomes to solve, the larger your budget.

The private sector pressures individuals and organizations to be efficient with the resources, (money and time) that is invested in them.  The public sector rewards ineffectiveness with bigger budgets and greater scope … because clearly now that I look at it, this problem is just so much bigger than I originally thought!

Bottom Line:  In the private sector you always have to answer to someone for what you are doing with their money, which keeps the pressure on.  In the public sector, there is no such pressure, so the reward system is no longer tied to effectiveness and taxpayers in the end pay too much for too little.

 

Obamacare and the Orwellian Oath

Obamacare and the Orwellian Oath

On February 18th, I spoke with Charles Payne and Julie Roginsky on Fox Business’ Cavuto show about the headlines claiming that Obamacare aka the Affordable Care Act (ACA) will harm jobs. We had a lively debate, which was surprising given that the three Sports Illustrated models gracing this year’s cover were waiting in the green room, an understandable distraction for many! Got me thinking that perhaps I ought to entertain the idea of becoming the first “bikini economist.” No sure that my supply curves would stimulate like claims around QE, but I digress…. For all the administration’s protestations that the ACA isn’t going to harm jobs, their own actions show they know it is. In a press briefing last week Treasury officials made it clear that firms will be required to certify to the IRS under penalty of perjury that ACA was not a motivating factor in their staffing decisions. So… to protect your company from the increase in costs from ACA you must swear that you are not trying to avoid the impact of ACA. But I thought this wasn’t a problem for jobs? If it has no impact, why the Orwellian oath? To be fair, the CBO doesn’t exactly say that jobs will be lost, but rather that ACA discourages work, particularly for those at the lower end of the income scale, in that you get bigger subsidies the less you make. Talk about a poverty trap! When did rewarding people for NOT trying to improve their circumstances become the American dream!? What kind of senseless drivel has the national conversation descended into when Jay Carney assures us that rather than “disincentivizing” these subsidies allow people to “pursue their dreams” without having the terrible burden of working. And just who is paying for these people to pursue their dreams? Oh right, those who STILL WORK! What about their dreams? Their desire to pursue other leisure activities? I guess it is OK to put those on hold so that they can involuntarily support the pursuit of dreams for those who choose to not work! Oh, and wait a minute! I thought this was all supposed to be good for the economy. Now how in hell does having fewer people working or having people work less grow the economy? So far the ACA gives us three little gems

  1. The employer mandate discourages hiring. No point in arguing that fact since firms now have to certify that it didn’t alter their staffing decisions!
  2. ACA delivers $1 trillion in tax increases . What does Congress do when it wants less of something, like smoking tobacco or using fossil fuels? Tax it! So again, can’t argue that this is a negative for growth.
  3. Now the CBO acknowledges that the $2 trillion in subsidies discourages work, but hey, how great is it to pursue leisure interests at the expense of your fellow taxpayer?

Well… at least you get to keep your insurance if you like it.

Prison, it’s not the perks, it’s the population: An over-criminalization crisis

Prison, it’s not the perks, it’s the population: An over-criminalization crisis

The headlines this week have been touting how “Prison life has never been so good,” here and here. While I understand why taxpayers would be none too pleased at the idea that prisoners enjoy more daily life perks than those out earning a living every day, it isn’t the perks that are the problem. It is the massive prison population that ought to make you hopping mad.

The US has a wildly unproductive criminal justice system with a self-destructive focus on revenge-oriented judgment and entirely too many laws that permanently damage an individual’s potential for committing acts that ought never to have been considered a crime in the first place.  We have a veritable over-criminalization crisis.

No other country incarcerates a higher percentage of its population than the United States, a dubious gold medal we’ve held since 2002. Over 7 people are incarcerated out of every 1,000. The US has about 5% of the world’s population but 25% of the entire world’s prison population!

U.S. prison population is over 2.4m and has quadrupled since 1980, with the largest driver of this change being longer prison sentences for drug offenders. There is something seriously wrong with a system in which had the current President been caught smoking pot, as he admits he did in his youth, he could have been sent to prison and been unable to ever make much of his life, after being saddled with the stigma of a convict. Instead, he was one of the lucky ones who never got caught and is now arguably the most powerful person on earth. Something is very wrong with a system that would have imprisoned and effectively ruined his life, as it has so many others, even if you disagree with his political views!

Bottom Line: Prisons ought to be reserved exclusively for those who are a physical threat to society, not as a taxpayer funded form of revenge. Those who are not a physical danger to society ought to remain productive members of society and atone for their misdeeds while being an active part of the economy.

American Income Levels Stagnant for over 20 years!

American Income Levels Stagnant for over 20 years!

On February 13th, at I must add the ungodly hour of 6:30am PST, I spoke with Stuart Varney on Fox Business concerning the dismal state of income levels in the United States. According to the US Census bureau, median household income is just over $51k, which is about where it was 20 years ago! We also just learned that real disposable personal income has fallen by 2.7% from a year ago, the biggest collapse since the semi-depression in 1974!  American income levels have been stagnant for over 20 years.

On top of weak income levels, the employment situation continues to be of great concern. US unemployment rate is now at 6.6%, but this measure has become relatively meaningless as it no longer accurately describes what is happening in the work force. A more descriptive measure is the labor force participation rate, meaning the proportion of the population either employed or looking for employment as a percent of the population. That number is down at 63%, a level we have not seen since 1978! If the labor force participation rate were still at pre-crisis levels, the unemployment rate would be closer to 13%. Some argue that the decline in the labor force participation rate is primarily driven by the inevitable retirement waves of the baby boomers. However, the chart below illustrates that baby boomers are in fact participating in the work force at a higher rate than in decades, for women we are at all-time highs.


With income struggling, it should come as no surprise that savings levels are well below what they ought to be for a financially healthy country. The IRS’s most recent Quarterly Statistics of Income Bulletin is for the 2010 and 2011 tax filings, so it is a bit dated, but nonetheless, very insightful as to trends. According to the release 145.6 million taxpayers were eligible to contribute to an individual retirement account (IRA) in 2010, but only 3.5 million actually did so and of those that did, 62% were over 49 years old. Uh oh! Only 2.4% of those eligible to contribute to their IRAs did so. The average account value is only $92,000 and only 27.6% of all tax filers even have an IRA. Lastly, that wee bit of spending spree we experienced in December? With income struggling, that was funded by consumers dipping into their piggy banks to the tune of $46 billion causing the personal savings rate to fall from 4.3% to 3.9%, the lowest since January 2013.

Another unilateral change to Obamacare

Another unilateral change to Obamacare

Obama already pushed back the employer mandate to 2015 from 2014, conveniently after the mid-term elections. Now his administration is pushing back the mandate for businesses with 50-99 employees to 2016. For companies with over 99 employees, they must cover 70% of employees by 2015 vs. 95%.

 

This is now the 18th executive branch unilateral change to the Obamacare. Safe to say that at this point, the LAW now says whatever Obama wants it to say on any given day. So much for our Constitutional Republic form of government! Changing a statutory mandate requires the approval of Congress, yet Congress hasn’t done much to stop these dictatorial edicts.

 

We were told that ACA was going to solve a myriad of problems and that once we got it, those of us who were opposed, would understand the veritable utopia it created. If that’s the case, why keep delaying implementation? If this thing is so great, why wait at all? What is it that is going to happen in a year that will then make this legislation a net positive whereas apparently today even the White House thinks it is a net negative?

 

Let’s take a step back and look at the big picture. The administration claimed that the ACA would lower healthcare costs for the vast majority and would provide “affordable” insurance for significant portions of the population that were previously not covered, with the assumption that those without insurance were in need or desired it.

 

So where are we now? So far costs are going up and we have a net loss of coverage as more people have lost the coverage they had pre-ACA than are gaining coverage without having any previously. This is not at all surprising and some simple economics tells us that it’s likely to get worse. ACA increases the demand/use of healthcare while at the same time doing nothing to increase the supply, and in many instances actually reducing the supply of healthcare. How can the price not go up?

 

Now we’ve gotten an even more troubling dynamic going on with more artificially created warfare between various parts of society. The administration has been doing a bang-up job creating an irrational and self-destructive war between different income and wealth levels, now they are fostering a war between individuals and businesses, creating a lovely trap that the Republicans seem all too eager to fall into.

 

We’ve now got the Republicans ranting and raving about how it is unfair for businesses to get a break when “hard working families” aren’t. I suppose that makes for a compassionate sound bite, but talk about losing the forest for the trees. Healthcare isn’t a war between businesses and families. Hell, the two shouldn’t even be in the same sentence. Why is health care even remotely related to employment? I don’t get my car insurance or my home owner’s insurance through my employer. Why is my health insurance employment related?

 

Employers didn’t start offering health benefits roughly 60 years ago because they were experts in medical decisions. It was a way of circumventing the World War II wage and price controls. Barred from offering higher salaries to attract workers, employers offered health insurance instead. Aided by an IRS ruling that said workers who received health benefits did not have to pay income taxes on them, and by the fact that employers could write off the cost of the health benefits as a business related expense, this accidental arrangement became the primary way most Americans access health care and is now viewed as just the way it works.

 

The system worked at first, but a lot has changed in 60 years. Back then, the average soldier returning from World War II took a job with a local company where he would work for decades until he got a gold watch at a big retirement party. Today, lifetime employment is dead. By 42, the average American will change jobs 11 times.

 

Sixty years ago, most American companies competed only against neighboring companies for lucrative contracts. Today, most businesses are up against foreign companies that don’t foot the bill for their employees’ health-care costs.

Bottom Line: Obamacare cannot reduce the price of healthcare when it increases demand and at best keeps supply flat, at worst decreases it. What the legislation has done masterfully is show how poorly the public sector addresses pricing and availability problems in the private sector. Health insurance and employment should be separate. Individuals should be able to pick whatever type of insurance best suits their preferences and finances. One-size fits all solutions stifle innovation and in the end, satisfy no one.

NSA Surveillance Impact Overseas

On February 10th I spoke with Neil Cavuto on how NSA surveillance affects international communications.

I work internationally, dividing my time between San Diego, California and Italy. I sometimes advise on deals that have involving high-profile, publicly traded companies and the actions my clients take are significant enough to affect the market.  Now whenever you are talking about large amounts of money, someone will always find information valuable.

So… aside from the obvious obscene Constitutional violations by the NSA, their spying has a material effect on how we now communicate, specifically on how non-American entities conduct their business with Americans and with each other. The world has been put on notice that communications, which in anyway interest the US, are subject to interception by an agency that has shown it doesn’t have its house in order and its use of that information is uncomfortably vague.
Some companies in Europe have even taken steps to ensure that their communications do not get routed through any servers that they believe the NSA may observe.  Of course we really have no idea just how pervasive the NSA’s program truly is, so an overabundance of caution is required.
So now, when I am outside the US and I send an email to the US, I have to first think of which account to send it from based on what I’m saying and whom I’m sending it to.  When placing calls from outside the US to firms with whom we work in the US, I am conscious that someone may be listening and cannot trust what they may do with what they hear.  What if I place a call from somewhere like Dubai or have a conference call on with someone from there to a financial institution in the US?  Does that raise any red flags for the NSA?  Would someone then listen to that call?  I have to think about how to protect information that cannot be released before we are ready, which adds more friction to the system. That is not exactly helpful in an economy that is struggling.  Why make it harder for us to work done?