By the irony of timing, the Dow hit an all-time high as markets opened. Exuberance wafted through the air. Hype was flowing thickly. Happy days were back. New highs beget new highs. And everyone knew why: the Fed’s money-printing and asset-purchase operations. By the irony of timing… because 30 minutes later, kitchen-table reality polluted the scene.
Investors are fuming. But traders, the lucky ones who got the timing right, love it. So do Wall Street firms that shuffle companies around. For decades, Hewlett-Packard did what they wanted it to do: swallow other companies, whole or in pieces, spit out some mangled limbs, and dump tens of thousands of employees. But someone ended up holding the bag.
Contributed by Lee Adler, The Wall Street Examiner. The Fed is growing deposits far faster than banks can deploy them, or than the economy can use them. It is growing them far faster than anybody wants or needs. And so, there are “hundreds of billions of dollars of potential fuel unused.” Therein lies the potential for big problems.
“Former employees of the SEC routinely help corporations influence SEC rulemaking, counter the agency’s investigations, soften the blow of SEC enforcement actions, and win exemptions from federal law.” A damning report on how Wall Street insiders rotate in and out of the SEC—until Wall Street culture and personalities dominate the agency. Regulation and enforcement become a joke. A principle called, “Regulatory Capture.”
Friday evening when no one was supposed to pay attention, Google announced that Executive Chairman Eric Schmidt would sell 3.2 million of his shares in 2013, after having already sold 1.8 million in 2012—suddenly dumping 53% of his Google shares, though he’d sold practically nothing from 2008 through 2011. And Google’s reasons don’t make sense.
By now we should have gotten used to the odor emanating from banks—bailouts, money laundering, Libor rate-rigging, the other misdeeds. But in Europe over the last few days, it was particularly dense. “In this uncertain world, I cannot exclude anything,” said Deutsche Bank co-CEO reassuringly.
On January 22, 2012, French presidential candidate François Hollande shook up the banks: “It has no name, no face, no party, it will never be candidate, it will never be elected, yet it governs: that enemy is the world of finance,” he said. Freed “from all rules,” it “took control of the economy, of society, and even our lives.” He’d fight it, and promised tough reforms. But these days, you’d think he is being tutored by JPMorgan Chase CEO Jamie Dimon.
“Repression” is what Richard Fisher, President of the Dallas Fed, called “the injustice of being held hostage to large financial institutions considered ‘too big to fail.’” He sketched out the destructive impact of these TBTF banks that, as “everyone and their sister knows,” were “at the epicenter” of the financial crisis. And he offered a “simple” plan for coming to grips with them. But he did something else: he defined BIG.
The National Federation of Independent Business tried to shock the world with its report that small-business owner optimism had plunged below the level of apocalyptic post-Lehman November 2008. A huge setback; small businesses are job creating machines. “Something bad happened, and it wasn’t Sandy,” said NFIB chief economist Bill Dunkelberg. “It was the election.”
Especially of CEOs who parachute into the executive office. Wall Street’s knee-jerk reaction can be phenomenal. Citigroup’s massacre of 11,000 souls caused its stock to jump. But the same day, we learn that wages adjusted for inflation dropped 1.4% in the third quarter—a continuation of 12 years of declines that has hollowed out the middle class, pushed people into the lower classes, and devastated the poor.