Polls are usually bullshit, but people pay attention to them. The public is the last group of people to know what kind of health-care bill will emerge from Congress and the White House. Fact is that some kind of change will be made, has to be made. Whether it turns out to be "reform" is another matter. Intensive lobbying for the insurance industry and Big Pharma make that an almost impossible task, as this story doesn't note.
G-20 roundup from Pittsburgh. Click on the above video for Russian TV footage of black-clad cops rousting black-clad protesters, as a robotic-sounding voice emanates from a police loudspeaker: "No matter what your purpose is, you must leave." NYT story here.
Thanks to all of you who get paid nothing by Twitter despite your being its only product/asset, the company that hasn't yet generated any significant revenue is about to get $100 million in new funding. In August 2008, Twitter had 4.3 million unique visitors; this August it had 54.7 million. Now hooked, users are, like it or not, about to be bombarded by advertisers and marketers. Too bad most of you are either out of work or otherwise can't afford to buy all the shit you'll be told to buy. (See next item.)
Typically excellent human-interest WSJ story, this one focuses on jobless Americans. Introducing an array of hard-luck yarns: "Nearly 15 million Americans are jobless, and the number is widely expected to remain high even as the economy slowly begins to recover. Part of the problem many of the unemployed face: the very fact that they have been out of work a long time."
CFO at France's biggest telecom warns that, as story says, "the barrage of emails from smartphones and personal computers was stressing out employees."
Pleading for mercy from the Senate's Energy Subcommittee, Texas oil producers claim that the Obama administration's planned tax changes for oil and gas would cost just their big ol' state $20 billion over the next four years.
Up to 70,000 oil patch workers would lose their jobs, and the whole industry would collapse. Supposedly backing up those hyperbolic claims by the Texas Alliance of Energy Producers (TAEP) is a study it commissioned and sent straight to Congress.
The problem? Sweetheart tax breaks the industry's independent producers (not the few giant oil companies) have historically gotten are in danger, and there just ain't no way out no how, the oilmen argue.
"The repeal of the tax provisions would be a quick death, while cap-and-trade would be a slower death," TAEP says.
Looks like the oil and gas industry's been pumping a dry hole on Capitol Hill, considering all the money it's spent on rigging — oil rigging, that is. The oil and gas sector poured a record amount of campaign cash into D.C. pols — $35 million — during the 2008 election cycle. Of course, only 33 percent went to Democrats. Oops.
Book review of Henry Kaufman's The Road to Financial Reformation: Warnings, Consequences, Reforms. One of the Wall Street elder statesman's "biggest beefs is the Fed's tolerance of concentration in the financial system." Ten largest U.S. financial institutions control more than 50 percent of country's financial assets, compared with only about 10 percent in 1990. Glass-Steagall, he says, should have never been repealed.
FDIC's absorbing banks' risk on billions in loans. Shudder. Call it the Bank Buying Bubble. But the NYT looks at the bright side: "As Big Banks Repay Bailout Money, U.S. Sees a Profit," saying that "taxpayers have begun seeing profits" from the bailout of banks.
President Barack Obama may very well be getting in the faces of the lobbyist-orchestrated teabaggers at a New Hampshire "town hall" this very minute. Click above to listen in.
Too bad it would be impolitic for Obama to talk about the so-called teabaggers (and the lobbyists like Dick Armey who are organizing them to rile the Democrats) the way David Shuster discussed teabagging while guest-hosting Keith Olbermann's MSNBC show this past April 13. Here's that video:
A classic oral report, and if the video's not working for you, click on the jump line right below for the next page to see the transcript:
Health-care lobbyists are thicker on Capitol Hill than hookers on a Marseilles dock. The biggest spenders by far of any sector this year, health-care industries have unleashed 3,100 lobbyists, spending more than $263 million so far this year kissing ass and making threats. Just one f'rinstance: NYC teaching hospitals, trying to protect their higher Medicare payment rates, are stalking Chuck Schumer. Rural hospitals and clinics are stalking Senate Finance Chair Max Baucus of Montana, trying to protect what little money they already get — they get Medicare loot at a lower rate than the urban hospitals. Where's Big Pharma? I need more medication.
With the rest of the country still plunging deeper into the recession, those uncooperative consumers are the "missing link" because their "wallets are still being held quite tightly." So tightly that, according to Procter & Gamble, shoppers aren't putting the lotion in the basket, and their clothes are beginning to smell bad, too: "Consumers have slowed purchases of products such as Tide detergent and Olay face cream to save money as unemployment increased." Fact: Household income in the past 12 months has experienced the biggest drop in the past 50 years. Gee, you think this is in way related to "stubbornly high unemployment"?
Ex-Enron speculator John Arnold, now Centaurus hedge-fund major energy speculator, will ask the CFTC to rein in energy speculators. What a guy! Altruism? Of course not. Good way to head off more stringent regulation amid growing criticism of oil-market speculation? Yes. CFTC finally gets it, aiming at "excessive speculation," instead of just "speculation." Not that the CFTC's Gary Gensler is such a hot-shot regulator.
Yeah, the market's doing great, but put on your black armbands: "Unfortunately, I believe that our economy has been forever altered as consumer behaviors will change (i.e., more savings, less consumption) and entire sectors have been curtailed (i.e., lack of leverage means fewer jobs in prime brokerage)."
Goldman Sachs is setting records, but it's a broken record: The Street's big daddy has "reached all-time highs" in revenue "less than a year after the firm took $10 billion in U.S. rescue funds," as Bloomberg puts it.
Goldman Sachs Group Inc. set aside $11.4 billion for compensation and benefits in the first half of 2009, up 33 percent from a year earlier and enough to pay each employee $386,429 for the period. ...
After setting a Wall Street profit and pay record in 2007, Goldman Sachs cut compensation 46 percent last year as the financial crisis slashed revenue and the firm accepted government support. The firm repaid $10 billion to the U.S. Treasury last month, freeing itself from restrictions on year- end bonuses. Even so, a compensation bonanza at a company that received taxpayer support could stoke political anger with the U.S. economy in recession.
Time to go back and read Matt Taibbi's screed on Goldman-as-vampire-squid.
As usual, Eliot Spitzer makes sense about the economy. If he hadn't fucked his own career, he'd be a valuable resource right now. Albany would never have blown up the way it has, if Spitzer were still governor. And unlike David Paterson, Spitzer understands Wall Street and knows how to point out schnooks.
If only Spitzer had kept his finger out of prostitutes and left it on the public pulse. Here he is talking earlier this morning on Bloomberg about public perception of Goldman's expected record haul:
"The question becomes how does this all play politically? This could be a political explosion. 'Suddenly they're back making their bonuses and we're unemployed.' And you know what? The public is right."
No one can deliver bad news like the smooth, articulate Barack Obama. He's so adept and quick that he can kill a fly during an interview, so classy that he even picks up the dead fly afterwards instead of just letting it lie there.
But back to the bad news: It depends on who's listening. The public (or at least some of them) may embrace the president's fairly grand plan to overhaul the financial system as good news — Obama's so charismatic that we'll just have to overlook the bland and often ridiculous spin his team puts on things. The White House's creepily over-friendly blog post about the plan is called "New Foundation, New Stability."
The plan's details are public, everyone's writing about it, it will be hashed and rehashed. Commenters and the public will take seriously every part of Obama's plans for this War on Error, whether each morsel has a chance in hell of becoming law. But most of the work to implement it will take place during arm-twisting sessions on Capitol Hill that no one will see — other than the lobbyists and the pols whose arms they're twisting.
The banking industry is well-armed, with battalions of lobbyists and plenty of money to spend on politicians. The lobbyists are the only people who are sure to read all 89 pages of Obama's plan.
They'll be relieved to find that there's no mention of "Glass-Steagall" in it, which means that Wall Street's bankers won't have to completely undo everything. But the words "Consumer Financial Protection Agency" are sure to excite the industry lobbyists, who will assault the very idea like so many woodpeckers on a telephone pole.
The plan's final draft is here. Note that it's ensconced on financialstability.gov.
For my money, I turn to someone I quote so often that I might as well be on his payroll: Simon Johnson, one of the stars of last night's "Breaking the Bank" on Frontline. In "Regulatory Reform For Finance: Three Views," Johnson breaks down the politco-economic drama. Who's behind the Obama reform package? First possibility: Tim Geithner and Larry Summers (I dub them two of "Obama's Four Worst Hires") have seen "the error of their ways" and are now "radical reformers." Johnson dismisses that theory out of hand as "not widely held." The second possibility: G and S "want a minimal degree of reform with a great deal of window dressing." Johnson calls that the consensus view.
Even worse than the second possibility is the third:
Geithner-Summers have exercised an effective veto over measures that would have constrained large firms directly, but they are not at this time strong enough to prevent sensible consumer protection measures from also going forward.
Johnson calls that third view "more interesting" and, like the second view, also controversial. And he sets up the battle, noting the possible influence of Cass Sunstein, chief of Obama's Office of Information and Regulatory Affairs — even though Sunstein hasn't officially taken the job yet because some senators are upset with his stance in favor of animal-rights regulations:
In this view, someone (Cass Sunstein?) and his/her allies have managed - at least so far - to promote the idea of a consumer protection agency focused on financial products. The details are not yet clear enough to see how what will emerge, and we also don't yet know how vigorously Treasury will defend this idea against the financial sector lobbies. But at least this is something new and potentially powerful in all the right ways.
Sunstein, of course, is known for the idea of a Nudge - pushing consumers ever so gently towards better decisions. It's a fine principle to guide thinking, but lobbies, opponents within the administration, and members of congress with their own agenda will not be moved through gentle means.
Yeah, right. Obama's retreat from his February pledge to cap salaries at $500,000 for bailed-out firms means a return to normalcy on Wall Street a lot sooner than on Main Street. For one thing, Congress is much more susceptible to Wall Street's intensive lobbying, so don't expect the bonus limits to amount to much, no matter how full of bluster various members of Congress will be. The bonuses will amount to a lot. And now the salaries are off-limits to government control.
"Big Ed" Whitacre, the incoming chairman of GM, won't face salary restrictions anyway when the big automaker emerges from bankruptcy, according to the deal already worked out. And his new Detroit neighbors whom Fiat will import to run Chrysler won't have to limit themselves. But now Wall Street's big-shot bankers can rest easier, knowing that they can resume their practice of paying one another at a level very near the recent past, no matter what investors and critics say.
Today's WSJ story is headlined "Salaries Safe, Bonuses Hit," but the real story is a few paragraphs down:
[Obama's] pay provisions were a key motivator for some banks to repay the TARP money. The most restrictive portions of Congress's rules targeted senior executives and top earners at firms receiving more than $500 million in government funds, limiting bonuses to no more than a third of total annual compensation.
The push to revamp compensation practices at all financial firms suggests the administration hasn't dropped its goal of making far-reaching changes to how banks pay employees. But this element of the plan will likely come in the form of recommendations, which may raise questions about how effective they can be.
What a shocker that the banking industry is, as the Wall Street Journal puts it this morning, "aggressively lobbying" Treasury "to make it less costly" for them to get out from under TARP's thumb.
As the WSJ also notes, and way up high too, it's a controversial move by the banks, because they're under fire for charging higher fees to consumers for a slew of products. Including, as I put it Monday, "jacking up fees" for mortgages.
But the banks need that extra moolah from fees because they've spent record amounts on lobbying in the past three years.
On the other hand, the banking industry is displaying quite a bit of gall. The WSJ points out that the American Bankers Association is begging Treasury to let banks withdraw from TARP's Capital Purchase Program without having to pay "an onerous exit fee." (See the ABA's own reference to this on April 17.)
Reiteration: The banks themselves have already furtively hiked fees on the public and initiated new ones. Further gall: These fees on the public are being jacked up amid the drumbeat of propaganda that average Americans need to give banks and other companies more money to help "spend" our way out of the recession.
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