Archive

Posts Tagged ‘Wall Street’

Wall Street, Bankers and the White House

December 14, 2009 1 comment

They’re finally getting called to the woodshed. The heads of American Express, Bank of America, Capital One, Goldman Sachs, Citigroup, JPMorgan, Morgan Stanley, and Wells Fargo meet with President Obama today at the White House. It occurs to me that this is not all that dissimilar to something that occurred 47 years ago when John F. Kennedy when toe-to-toe with Big Steel. Sometimes the power of the Presidency can do wonders to reign in greed.

Back then, of course, it was a different world. Steel prices were a very big deal because the nation was still in post-World War II expansion and steel was the key behind the development of the interstate highway system, the auto and airline industries and the growth of the housing industry, then in the process of building America’s great suburbs.

In a nutshell, the Kennedy Administration had spent a great deal of time and effort mediating a major dispute between the steel industry and its labor unions in an effort to hold down the costs of steel. The Labor Secretary of the time, Arthur Goldberg, used his considerable influence with labor to help hammer out a deal in which there were no wage hikes and only modest increases in fringe benefits.

Three days later, the major steel producers announced a 3.5% across-the-board increase in prices. It was a slap in the face to the White House- as if to say “government has no role to play in the private sector, stay out of our business.” And of course, they had just benefited from the government’s intervention in their own labor problems to hold down the cost of union contracts. Do you see an analogy building here?

The U.S. saves the banking sector by offering huge tax-payer bail-outs and how do they respond? Just like Big Steel did in 1962. Only in this case the slap in the face wasn’t a mere price increase. Banks got intensely tight-fisted with their lending. They hiked interest rates on credit cards to loan-shark levels. While the nation’s unemployment rate spiked above 10%, thanks to government bail-outs, they prospered and Wall Street went right back to handing out huge bonuses.

Here’s what Kennedy did when he took on the steel industry:

1) The Justice department swung into action and announced it was investigating possible price-fixing.

2) The Pentagon announced it would enter into contracts only with steel companies that had bucked U.S. Steel and other big companies and kept their prices low.

3) The President held a news conference to explain why the steel companies were not acting in the public interest.

“The pubic interest.” Now that’s an interesting phrase. It implies that hand-in-hand with the raw and necessary capitalistic impulses of making profits, there might also be a sense of responsibility to the nation. Big Steel capitulated in less than a week and rolled back the price increases.

Likewise, the message is beginning to seep through to Big Banking. Even they are beginning to sense how disconnected they are from their customers. On 60 Minutes Sunday night, President Obama did the equivalent of JFK’s Big Steel news conference.

I did not run for office to be helping out a bunch of fat cat bankers on Wall Street. They don’t get it. They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down ten million, twenty million dollar bonuses after America went through the worst economic year that it’s gone through in decades, and you guys caused the problem.

Well, what do you know? Politico.com is reporting this morning that banking leaders will tell the President today that they are ready to “step up.”

Every CEO that’s participating is ready to a) listen and b) step up,” said an industry executive familiar with plans for the meeting. Everybody’s goal is to come out of the meeting with actionable, constructive and measurable things that the industry can do to spur recovery.

The bankers do make a legitimate case that they cannot return to the crazy drunken lending they offered to unqualified subprime mortgage customers that helped screw the economy in the first place. But, surely, even they have to realize the difference between that kind of lending and, say, small business loans. There will always be risk. But some kinds are manageable and some kinds are not.

Let’s hope they’re smart enough to figure out the difference and that the White House and the little people continue to hold their feet to the fire. Our jobs and our way of life are dependent on it.

The Week in Review: Dec. 7- Dec. 11/2009

December 11, 2009 2 comments

Remembering the week’s events so you don’t have to!

Monday 12/7/09

♦ The week starts off with welcome news for millions of parents. Zhu Zhu pets will not kill their children after all. Over the weekend, a California product-rating web site had claimed the hit toy of the Christmas season contained high levels of a fire retardant called antimony that can cause heart and lung problems with chronic exposure. The Consumer Product Safety Commission issues a statement saying- nuh uh (paraphrasing). Turned out GoodGuide had conducted faulty testing that failed to meet government standards-the antimony levels were fine. Officially, parents are cleared to return to not finding the toys at stores. The loveable furry rodents that are supposed to sell for $10 a piece continue selling online for $100.

♥ Tiger Wood’s wife reportedly moves out of their Florida home.

♦ The Gallup polling organization’s daily EKG of the President’s approval ratings drops below 50%. He is now down to 47%, among the lowest approval numbers for a new President in modern history. Pundits with White House connections say Obama advisors liken the situation to the Reagan administration’s first term when the nation was in the deep recession that effectively ended the hyper-inflation of the Carter years but at a high cost to millions of newly unemployed. The economy eventually recovered and so did Reagan’s initially bad poll numbers. Fox News trumpets the Gallup figures with serious fervor. White House spokesman Robert Gibbs responds that the White House pays no attention to poll numbers unless they’re good. Ok, he didn’t really say that last part.

♥ The number of women reported to have had affairs with Tiger Woods reaches seven.

Tuesday 12/8/09

♦ The big Climate Conference is underway in Copenhagen. “Climategate” enters the public lexicon in a big way as tens of thousands begin wondering why all scandals have to be named “gate.” Stolen e-mails and files from a British climate research center suggest temperature data may have been unethically manipulated. Representatives from a country with only a small stake in the debate over limiting carbon emissions officially raise the issue at the conference. Delegates from oil-rich Saudi Arabia declare the scandal raises serious questions about the basic premise behind the theory of global warming. Go ahead; take a moment to connect those last two sentences.

♥ Photos of Tiger Wood’s mother-in-law being wheeled into an ambulance on a stretcher at 2:30 in the morning becomes breaking news on all the cable networks. Quickly scrambled reporters breathlessly note the incredible irony that she has been taken to the same hospital where Tiger had been treated after his single-car accident. She was released the next day. For some reason, she had been experiencing stress.

♦ The Transportation Security Administration messes up big-time. Employees post TSA manuals online as part of the contract solicitation process. Not ordinarily a problem, except that sensitive details about airport security procedures that were supposed to be redacted- weren’t. Turns out the TSA employees thought they had hidden the classified stuff by covering the words in black. They should have actually deleted them. Apparently, clever, tech-savvy whiz kids can see right through the blackened segments in PDF files and soon the sensitive material makes its way onto the internet. Among other things, we now know what a CIA security credential looks like, that TSA workers don’t inspect wheelchairs or prosthetic devices, and that when it gets really busy at airports they only have to look at 20% of checked bags for explosives. This is why I take trains whenever possible.

♦ Monster waves hit Hawaii and surfers go nuts. San Clemente, California’s Greg Long, rides what is described as a massive, jaw-dropping 25-footer to a perfect score of 100 winning $55,000 at the prestigious 25th anniversary Quiksilver in Memory of Eddie Aikau contest on the North Shore of Oahu.

♥ The number of women linked to Tiger Woods reaches 10.

Wednesday 12/9/09

♦ Hump day is a busy news day, indeed. The President delivers a speech at the Brookings Institution in which he outlines tax cuts and other incentives to help small businesses both hire and invest. Since small businesses hire two-thirds of the American work force, some people see this as a good thing. The loyal opposition, which usually supports tax cuts for small businesses, objects loudly because the White House wants to pay for it with bank bail-out money that has been paid back faster than expected. They argue the $200 billion should go toward paying down the huge deficit.  I pull out my handy calculator and put on my old-fashioned green accountant visor-thing.  Let’s see, divide the $200 billion by the national debt which is currently $12,086,118,896,943.  Convert to percentage.  <Insert sound of fingers busily pressing calculator keys> Ah ha!   Instead of tax cuts for small businesses so they can hire more people, we can take that money and reduce the deficit by 1.65%.   Only 98.35% to go!  Good deal!

♥ It is reported that national television ads that featured Tiger Woods have vanished from the airwaves and have not been broadcast since November 29th.

♦ The upper Midwest is hit hard by a massive winter storm that dumps one to three feet of snow and then moves eastward, eventually hitting New England. Buffalo gets buffaloed as it gets both the initial storm and then lake-effect snow later in the week.

♦ Five workers with the Transportation Security Administration are put on leave while an investigation is conducted into how they could be so clueless. See Tuesday, 12/8.

♥ A CNN/Gallup poll is released that finds Tiger Woods’ unfavorability rating has gone up from 9% to 25%. No one seems to notice that a married guy with two kids implicated in ten adulterous relationships still has a higher approval rating than the President of the United States.

♦ Sarah Palin writes an Op-Ed piece in the Washington Post citing climategate, argues there is no consensus on global warming and concludes the President should boycott the Copenhagen conference. Liberal activists and some scientists criticize the Washington Post for publishing the article. They apparently have not heard that nobody actually reads newspapers anymore and that Sarah Palin’s Facebook friends list exceeds the paper’s total circulation. Sarah Palin has 1,097,360 Facebook friends. The Washington Post’s daily circulation is 637,180. On Sundays, it’s 890,163. I checked.

♦ Senate Democrats reach agreement on health care but nobody can quite figure out at first whether a public option is in or out. Turns out the compromise proposal would allow people to start paying for and getting Medicare coverage two years from now; minimum age-55. Since I am 53, I think, “Wow, how cool is that?”

♥ The number of women associated with Tiger Woods reaches 11.

Thursday, 12/10/09

♦ Barack Obama becomes the first sitting American President since Woodrow Wilson to accept the Nobel Peace Prize. It is widely accepted he’d been given the honor as a largely symbolic gesture for the change he represents rather than for anything he’s accomplished in a mere 11 months in the oval office. Awkward. But not really, because Obama starts the speech by openly admitting the accomplishments of previous recipients like Nelson Mandela dwarf anything he’s done thus far in his young Presidency.

He also accepted the PEACE prize one week after committing 30,000 additional U.S. troops to the war in Afghanistan. Awkward. But not really, because the President deals with the issue head-on in his much lauded speech in Oslo, Norway. He reminds his largely European audience that the non-violent movement would not have defeated Nazi Germany and that you can’t sit down at a table and negotiate with Al-Qaeda terrorists. He concludes sometimes you have to make war to find peace. Amazingly enough, the speech receives positive reviews from Karl Rove, Newt Gingrich, Pat Buchanan and Sarah Palin. To underscore his point, the President later reminds attendees of the ceremonies that the founder of the Peace Prize, Alfred Noble, invented dynamite.

♦The Russians finally fess up. An amazing and slightly creepy light display over the skies of pre-dawn Norway on Wednesday were not the harbinger of an alien invasion. Turns out it was a Bulava missile test-fired by the Dmitry Donskoi submarine in the White Sea that failed spectacularly. What startled residents of Norway were seeing was the rocket spiraling down to earth through a haze of leaking fuel, resulting in an awesome and scary viewing experience. For the record, the Bulova missile is one of the most pathetic in the annals of modern rocketry. It has failed in 9 of 13 launch attempts. It occurred to me this would make a great pyrotechnic device for a truly memorable fireworks celebration. Until a friend pointed out that an exploding missile might hurt people. This confirms I would have made a horrible event planner.

♥ Tiger Woods’ attorneys go to court to pre-empt the publishing of nude pictures of the world’s greatest golfer/most questionable decision-maker.

Friday, 12/11/09

The first reviews are in from pre-screenings of the new movie Avatar that is officially released a week  from today.  The epic, whose characters took 15 years to develop and whose total production and marketing costs exceed $350 million- is apparently pretty good.  KTRA movie critic, Sam Rubin predicts at least three Oscars including a Best Picture nomination.  That would be about $116 million per statue.

♦ It’s reported Democrats are poised to vote to increase the national debt ceiling by $1.8 trillion before the end of the year so they can get it out of the way and not have to vote to raise it again before the 2010 elections.  What an outrage!  Why you could produce and market 5,142 Avatar’s for that amount of money.

♥  The Sun newspaper reports exclusively that Tiger Woods tells his wife, Elin that he will do “anything” to keep their marriage together.  She has reportedly agreed to do so for the sake of the children.  Just one condition.  He would be on the shortest leash in the history of leashes.  No more golf tour unless Elin can come along and until the kids are old enough to tag along too.  The first-born, Sam, is 2.  The new kid, Charlie, is 10 months old.  Looks like Tiger is going to be taking a few years off.    Things should die down by then.  Perhaps.

———–
Robert Garcia tweets at garciamedialife.

Finally- Some Common Sense Steps to Help Small Business

December 9, 2009 Leave a comment

Last week, after the jobless summit at the White House, I held back on judging it a mere photo op: “We need to watch closely to see if anything comes of this over the next couple of months.” To give credit where credit is due, it only took about a week. Genuine concern about persistent unemployment and, let’s not kid ourselves, falling poll numbers, have resulted in a common sense blueprint to shift money from banks and Wall Street to the regular folks who actually power the economy. Wish it had been done sooner.

President Obama’s speech at the Brookings Institution Tuesday might have been a little defensive, but it also featured the prospect of some welcome relief and incentives for the nation’s small businesses that, after all, provide about two-thirds of the nation’s employment.

He proposes a tax cut for businesses that hire next year, would eliminate the capital gains tax on profits from small-business investments for a year and would get rid of fees on small-business loans along with federal guarantees of those loans through the end of 2010. Yes, yes and yes. This is precisely the kind of action that needs to be taken by the government to assist the private sector in creating real jobs.

Some of this will be paid for with $200 billion in bank bail-out funds the Treasury Department says are being paid back faster than expected. I like the irony. Greedy banks who continue their tight-fisted lending practices end up providing the cash they won’t loan out to small businesses.

The loyal opposition is, uh, loyally opposed. Republican lawmakers say it’s a violation of the agreement under which the Treasury Department was given the authority to run the bank bail-out fund. But the White House doesn’t need Congressional approval of this and has unilaterally extended the TARP program through October of next year to pay for the small business initiatives. In the end, I don’t see how folks who consistently argue on behalf of small business can oppose these measures with a clear conscience. Come next November, I have a feeling they won’t be bragging to their small business constituents that they opposed tax cuts for them.

At the moment, they’re arguing unused or returned TARP money has to be put specifically toward deficit reduction. May I point out that with the size of the red ink on the books right now, this is but a drop in a great big ocean. What we need now is jobs and I do believe people who get them- also pay taxes.

In his Brookings speech, the president reminded everyone once again that he inherited an economic basket case caused by Republican tax cut and spending policies that created the large deficits in the first place. Yes, true. But you are the President now, Mr. Obama. You wanted this job; you’ve got it- your falling poll numbers (down to 47% approval according to Gallup) indicate people expect you to fix whatever it was you inherited. Nice job coming up with some good ideas to create more hiring- no need to be whiney about it.

The Week in Review

December 4, 2009 Leave a comment

Sometimes it all goes by so fast that by Friday you forget what happened last Monday. Then when you successfully navigate all the clutter in your brain and finally remember what happened Monday…bam…Tuesday’s now been erased. Here’s a helpful guide that won’t tax what’s left of your brain cells and updates some of the week’s noteworthy events:

Monday, November 30: We all returned to reality after the Thanksgiving holidays and after four days off, it was a slow and grudging return to work (or return to looking for work as the case may be). Some of us got through Black Friday, Black Saturday and Black Sunday relatively unscathed. And we thank you for spending. Preliminary sales figures show the retail madness in 2009 was slightly better than it was in 2008. This, of course, was that imaginary Cyber Monday thing and you spent the whole day listening to the media tell you were supposed to follow your brick-and-mortar shopping with excursions to Amazon.com and LL Bean online. You forgot to do it (9 in 10 don’t according to Mastercard research) but that’s ok, because you know you still have about three more shopping weeks left.

Tuesday, December 1: It was a day for the silly and the serious. News coverage was split roughly 50/50 between the President’s impending speech on his new policy in Afghanistan and the saga of Michaele and Tareq Salahi, the couple who had crashed the White House state dinner the previous Tuesday. The day started with the Salahis showing up on the Today show, insisting they had been invited to the function. The week ended with an e-mail trail you’d have to be slightly nuts to take as an invitation to the White House. Plus, a trio of Secret Service agents is on administrative leave and in trouble for letting the Salahis in. The White House admitted it played a role in the security breech but also invoked executive privilege in refusing to allow the social secretary to testify before congress.

After no doubt high-five-ing their way through all the glory and media attention, the Salahis also conclude the week under investigation by the State of Virginia for the way they run a charity polo event that some are claiming is pretty much a Ponzi scheme. This proves there is an important addendum to Andy Worhol’s rule that all Americans will eventually receive 15 minutes of celebrity status. It could be followed by 10 to 15 in the pokey.

Wednesday, December 2: It was a day filled with reaction to the President’s war plans for Afghanistan and as one administration official after another marched up to Capitol Hill, it quickly became evident that everyone hates the plan and further proved the old axiom that if you want a friend in Washington, get a dog. Liberals think nation-building starts at home. Conservatives disliked the timetable that starts a withdrawal process in July, 2011. The week ends with the White House being highly uncertain about the specifics of the withdrawal date, further angering the left, but not enough to appease the right.

Oh, and God help us- it was Tiger Day. The greatest golfer of all time, who we all apparently thought was a candidate for the Papacy- turned out to have been very naughty and participated in a slew of infidelities which are yet to settle at a final number. Perhaps the most notable coverage of all this was the animated recreation of Tiger’s now infamous single-car accident produced by a Japanese media outlet.  There was also the voice-mail Tiger left, begging one his mistresses to take her name off her phone greeting message because the wife was going through his phone contacts and apparently making systematic calls. The week ends with one of Tiger’s ladies abruptly canceling a news conference leading to the biggest flurry of conspiratorial conjecture since smoke was seen rising from the grassy knoll in Dealey Plaza 46 years ago.

Thursday, December 3: The White House holds a “Jobs Summit.” Various wise men and women, media moguls, newspaper columnists and policy experts, truck on over to 1600 Pennsylvania Avenue to share their innovative thinking. The President makes it quite clear Uncle Sam is tapped out and that job-creation is going to be the task of the private sector. Of course, there are things the government can do to help the private sector do this but those specifics will apparently come later.

Friday, December 4: The day is young and unfolding but rest assured Matt Drudge stands ever vigilant to find any innocuous thread of fact to prove there is no global warming, starting the morning with a large headline that screams: “Houston May See Earliest Snowfall Ever.” Well, that seals the case. Especially when you put it together with his various headlines over the summer about it being cooler than usual in some city or another. Apparently, unless the oceans are boiling over there is no threat to the planet from carbon emissions. Tell that to the polar bears and walrus clinging to a shrinking North Pole ice floe as we speak.

And finally, a sliver of unexpected good news today; unemployment dropped from 10.2 to 10% last month. It’s just possible we may have hit bottom. The Dow Jones is very happy about this at the moment (oops- now selling off- forgot how Wall Street loves high unemployement). I think we should all be extremely impressed that the White House “Jobs Summit” produced such lightening fast results!

The Disconnect Between Wall Street, Banks and the People

November 17, 2009 1 comment

There is a rapidly growing chasm between money-people and, well, the rest of us.  Whether it’s bailed-out banks or rescued Wall Street firms, there is palpable resentment about what they did to get us in the mess we’re in, how they were saved with taxpayer money, and how they seem to not really give a hoot about what anybody in America is going through as the Great Recession continues pummeling most of us.

Bloomberg.com’s Susan Antilla makes the point and adds that most Americans don’t consider that Wall Street folks really contribute much that’s meaningful to society.  She says she’s never seen such widespread anger in all her 14 years as a Bloomberg columnist.

I can confirm it anecdotally.  I hear it in taxi cabs, cocktail conversations, heck, I even heard it in the “Wall Street Sucks!” chants at the recent Yankee victory parade where people were supposed to be, like, happy.  And of course, Wall Street couldn’t care less:

Stewart Ewen, a Hunter College professor who writes on contemporary culture, tells me his guess is that Wall Street owns the decision makers and doesn’t care about the rest.

Look, I’m really thrilled the Dow is taking off and that my 401k accounts are staging a comeback.   But, wow, that really is quite the disconnect when 10.2% of Americans are out of work and another 7% have given up looking and aren’t even counted in the official figures anymore. The other 83% live in fear it’ll happen to them.

And what’s with the 25%-30% interest rates on credit cards these days?  Apparently, banks are squeezing what they can before new laws go into effect in February that limit their unilateral price hikes.  Jennifer Waters explains in this Marketwatch piece.

And let’s not forget this screed from Ann Minch, the California woman who launched a one-person boycott of Bank of America when after 14 years as a loyal customer and never having missed a single payment, saw her annual credit-card interest rate suddenly climb to 30%.   Her You Tube declaration is at 479,941 views and counting as of last night.

Something is afoot.  Whether it gets effectively organized is another matter.   A few thousand demonstrators did show up in Chicago at a meeting of the American Banker’s Association in late October.  But whether the protests continue or not, it is undeniable that a vast resentment against the money-people covers the landscape as never before…and seems to be falling on deaf ears.