Thursday, January 06, 2011

Wall Street Reacts To A Bunch Of Stuff... Awkwardly, But The Masters Of The Universe Continue Counting Their Mounting Piles Of Cash


Yesterday Wall Street reacted "cautiously"-- postively but cautiously-- to the new jobs numbers that showed 297,000 new private-sector jobs created during December, almost three times what was predicted.
Companies in the U.S. boosted payrolls in December by the most since records began in 2001, showing a stronger labor-market recovery at the end of last year, data from a private report showed today.

Employment increased by 297,000, exceeding the highest projection in a Bloomberg News survey, after a revised 92,000 rise in November, according to figures from ADP Employer Services. The median estimate in the Bloomberg survey called for a 100,000 gain last month.

Faster job growth will fuel the income gains necessary to further spur consumer spending, which accounts for about 70 percent of the economy. A Labor Department report in two days will show companies added 150,000 workers last month and the unemployment rate eased to 9.7 percent, according to the Bloomberg survey median.

So why cautious? Yesterday, as you'll no doubt recall, the Republicans officially took over the House of Rep-resentatives, vowing to push the same financial and economic agenda that they pushed under Bush, an agenda that tanked the economy. In fact, yesterday transportation and construction stocks tanked in anticipation of Republican job-killing efforts. Martin Marietta fell 6.5%; Vulcan Materials was down 5.2%; and Astec dropped 2.7%; while both Granite Construction and CRH (Oldcastle) were down by 4.4%, all on worries about Paul Ryan's proposed House rules that take away job-creating infrastructure spending.
House Republicans released a draft revision to the House rules package that would remove the requirement that highway trust fund dollars be used specifically for road building and maintenance. While we know spending choices are difficult, this is not an encouraging signal from the new congressional leadership in terms of its commitment to infrastructure spending. We had been hopeful that President Obama’s commitment to a minimum $50B additional on roads and the generally bipartisan nature of road spending for job creation could encourage at least flat spending commitments. However, a move to allow revenues previously set aside for road spending to be spent elsewhere would not only act to reduce total road spending levels but also limit visibility amid an already constrained outlook by the lack of a multi-year highway bill.

In some ways, of course, Wall Street gamblers and executives-- as opposed to investors, the people pushing the market higher-- are getting exactly what they paid for.
A small network of hedge fund executives pumped at least $10 million into Republican campaign committees and allied groups before November’s elections, helping bankroll GOP victories that this week will change the balance of power in Washington, according to a review of campaign records and interviews with industry insiders by the Center for Public Integrity and NBC News.

Bitterly opposed to President Barack Obama’s economic and regulatory policies-- including proposals to increase taxes on some of their profits-- top Wall Street hedge fund moguls were unusually energized during last year’s election. They held multiple fundraisers and coordinated strategy to direct what appear to be unprecedented sums into the coffers of GOP and allied political committees, according to industry and GOP fundraising sources.

Many substantial donations from the hedge fund executives escaped public notice either because they were made late in the campaign (and therefore weren’t reported until after the election) or were funneled through third-party groups, obscure “joint fundraising committees” and newly created political nonprofits that are not required to disclose donors.

The net effect has been to give the hedge funds important new allies at a time they are fending off regulations mandated by the Dodd-Frank financial reform bill and an aggressive Justice Department investigation into insider trading.

A prime example is Rep. Scott Garrett, a little known Republican from northern New Jersey who this week is slated to become the new chairman of the House Financial Services subcommittee on capital markets, a key panel that has direct oversight of the industry. A staunch foe of the regulation of Wall Street, Garrett has threatened to cut funding for the Securities and Exchange Commission and roll back some provisions of Dodd-Frank.

Today savvy political pundit Andy Borowitz described Michele Bachmann (R-MN), who is threatening to run for the GOP presidential nomination, as "an awesome presidential candidate for people who find Sarah Palin too brainy." Cute, but while Palin is just in the business of fleecing the flock, Bachmann is actually in Congress and is introducing legislation, which will pass the House, to repeal the weak financial-reform legislation that passed last year-- not because it's too weak, but because extreme rightists like herself oppose all legislation aimed at protecting consumers.

Even if you just dismiss Bachmann as a fringe crackpot, other fringe crackpots have mastered the art of presenting themselves as mainstream conservatives, like Wall Street whores Paul Ryan and Spencer Bachus, respectively chairs of the House Budget and House Financial Services Committees, who have every intention of doing as much damage as a kook like Bachmann wishes she could.
Republicans in the new Congress could put the budget squeeze on two powerful regulatory agencies to slow President Barack Obama's crackdown on Wall Street.

A Democratic-controlled Congress pushed through the Dodd-Frank bank reform laws last year and regulators were counting on a big budget boost to police the $600 trillion over-the-counter derivatives market-- blamed for much of the excess behind the 2007-2009 financial crisis.

But the last Congress failed to deliver on the funding, and that will be even harder to obtain with Republicans vowing to cut spending as they take control of the House of Representatives and boost their rolls in the Senate.

Republican say they want to review the expansion plans of regulators. "Once you turn the money loose, it's a little harder to stop that train," said Representative Randy Neugebauer of Texas, who will head the House Financial Services oversight subcommittee.

Before lawmakers agree to dole out funds for the Securities and Exchange Commission and the Commodity Futures Trading Commission, Republicans want more time to study whether the spending is warranted, Neugebauer told Reuters.

The delay could give a reprieve to big Wall Street players ranging from Goldman Sachs to BlackRock who, through their lobby groups, have been pressing regulators to slow their furious pace to impose a new rule book on the financial sector called for by the reform law.

Republican Representatives Spencer Bachus, the incoming chairman of the financial services committee, and Frank Lucas, the incoming chairman of the agriculture committee which oversees the CFTC, also wrote to regulators urging delay in the rules-making process.

Of course, there's no reason to single out Ryan and Bachus, even if Wall Street did, with exceedingly large "donations" ($4,546,924 for Bachus and $2,127,615 for Ryan, who hasn't been around nearly as long). We don't have to single them out, though, because they're replaceable moving parts in the John Boehner corporate traveling circus. This week that circus is explained so perfectly by Matt Taibbi in Rolling Stone that we'll celebrate Boehner's ascension with an opportunity to savor it:
John Boehner is the ultimate Beltway hack, a man whose unmatched and self-serving skill at political survival has made him, after two decades in Washington, the hairy blue mold on the American congressional sandwich. The biographer who somewhere down the line tackles the question of Boehner's legacy will do well to simply throw out any references to party affiliation, because the thing that has made Boehner who he is-- the thing that has finally lifted him to the apex of legislative power in America-- has almost nothing to do with his being a Republican.

The Democrats have plenty of creatures like Boehner. But in the new Speaker of the House, the Republicans own the perfect archetype-- the quintessential example of the kind of glad-handing, double-talking, K Street toady who has dominated the politics of both parties for decades. In sports, we talk about athletes who are the "total package," and that term comes close to describing Boehner's talent for perpetuating our corrupt and debt-addled status quo: He's a five-tool insider who can lie, cheat, steal, play golf, change his mind on command and do anything else his lobbyist buddies and campaign contributors require of him to get the job done.

The reasons aren't hard to figure. Voters are fatigued not only by the seemingly endless kinky-sex and corruption scandals emanating from Capitol Hill, but also by the increasingly infuriating fact that no matter which party is in power, the leadership inevitably borrows like dice addicts on the Vegas strip and uses the money to pay for huge Frankensteinian initiatives that bloat the size and power of the federal government, often without semblance of sense or plan. The underlying dynamic is bought-off congressmen ignoring real social problems and using the legislative process to construct massive perpetual handouts for their campaign-contributor sponsors. Both parties have now made the servicing of the giant handout machine their primary raison d'être-- and it's this perception, that Washington is occupied by an unbreakable bipartisan conspiracy of favor-churning hacks, that has inspired anti-Washington revolts like the Tea Party.

"Medicare Part D, No Child Left Behind, the Patriot Act — practically any significant piece of legislation that came out of the Bush presidency, it was a joke," says Chris Littleton, who heads a coalition of 58 Tea Party groups in Boehner's home state of Ohio.

The anger of Tea Partiers like Littleton erupted when they suddenly realized that their elected leaders in Congress had developed a primary allegiance not to constituents back home or even to ideology, but to themselves and their own dissolute, pay-for-play, you-scratch-mine, I'll-scratch-yours intramural bureaucratic calculus. Voters got mad when leaders covered up sex scandals, partied on corporate junkets when they should have been working on the public dime, wasted mountains of taxpayer money on political witch hunts instead of working to stave off another financial crisis or terrorist attack — and they got mad, especially, when congressional leaders stopped having the common decency to hide the lavish gifts funneled to them by their lobbyist pals in exchange for political favors, parading around in public with their goodies in hand without even caring how it looked.

The irony is, no one — no one — represents all of these bile-inspiring qualities better than John Boehner. His most striking achievement is that there's a check mark next to his name on virtually every entry on the list of common public complaints about Congress. And yet, when the Republicans rolled back into the control of the House this past November on the strength of a nationwide Throw-the-Bums-Out movement, it was Boehner, the prototypical bum, who somehow clambered onto the congressional throne. It's hard to imagine that in all of American political history there has been a more unlikely marriage than John Boehner and the pitchfork-wielding, incumbent-eating Tea Party, whose blood ostensibly boils at the thought of business as usual. Because John Boehner is business as usual, a man devoted almost exclusively to ensuring his own political survival by tending faithfully to the corrupt and clanking Beltway machinery. How? Let us count the ways.

They're worth counting-- so you'll be ready for what's coming at you and your family in the next two years (minimum). Here's the entire Rolling Stone article.

UPDATE: More Good News Rains On Republicans' Parade

This morning's unemployment report showed real improvement as fewer Americans filed claims for unemployment insurance in December.
The average number of applications for jobless benefits over the past four weeks dropped to 410,750, the lowest level since July 2008, Labor Department figures showed today in Washington. Claims for the week ended Jan. 1 rose by 18,000 to 409,000, in line with the median forecast of economists surveyed by Bloomberg News.

Firings have been waning in recent weeks, a necessary step toward gains in hiring that will help boost consumer spending, which accounts for 70 percent of the economy. A report tomorrow is projected to show employers added to payrolls in December for a third month as the U.S. expansion gained speed.

“The recovery in the labor market is continuing to move along at a gradual pace,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut, who forecast claims would rise to 410,000. “Employers are getting to the point where they are becoming a little more confident about the strength of the recovery.”

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