Tag Archive for 'Wall Street'

Bernanke’s confirmation in doubt

Published
by
Mark
1 month, 2 weeks ago
in International, Markets, Politics and USA
. 15 Comments

A number of US financial blogs are reporting that Ben Bernanke faces a chance of failure to be confirmed by the American Senate for a second term in office.

James Bianco at The Big Picture has all the details, and there’s also coverage at Naked Capitalism.

What’s the big picture here?

On the short term political front, Scott Brown’s win in Massachussetts exemplifies the frustration felt by many with politics as usual. Whether it’s expressed as concern over deficits (and that’s a much more salient touch point with Indendent voters on health care than the rhetoric of the wingnuts), or just as disgust with the jobless recovery’s disjunction with business as usual on Wall Street, there’s no doubt that an election year is starting to focus minds on the politics of financial decision making.

… and that brings us to the bigger picture. Continue reading ‘Bernanke’s confirmation in doubt’

Ted Kennedy’s Massachusetts Senate seat lost: The politics of anti-politics

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by
Mark
1 month, 3 weeks ago
in Culture, Foreign Elections, Politics and USA
. 88 Comments

News is just coming in that Ted Kennedy’s Senate seat in Massachusetts has been lost by the Democrat, Martha Coakley, to the Republicans’ Scott Brown. FiveThirtyEight.Com has the margin at 52-47 and that blog will be well worth watching for analysis and breakdown of the result.

Writing for Crikey today, David Hirst observes:

Luckily for the Republicans, who doubted they had a chance at taking a seat Ted Kennedy had held for 47 years, they nominated a nobody called Scott Brown who drove a truck — a fact the Democrats somehow allowed to become an issue. Naturally Brown, equipped with political advisers as the Republicans smelled not blood but a bloodbath, drove at their behest to Wall Street, where he somehow managed to park.

It wasn’t a huge issue but it played well — the message presumably was that sophisticated people from places such as Boston were not represented by folks who drove trucks. Kennedy sure didn’t drive a truck.

The shell-shocked mainstream media better get used to it, for there are many shocks to come. That the Republicans had the sense to see “truck” and “Wall Street” and bring the two to one was clever indeed.

His analysis suggests that the result is born of the sentiment of a plague on the US political classes, bailing out banks with abandon, but doing nothing perceptible for ‘Main Street’, and the straightened economic circumstances many Americans face after the GFC. He also suggests the Republicans will be emboldened to escalate their anti-Obama rhetoric, but that they themselves have nothing effective to offer; short of pandering to anti-government sentiments deeply embedded in American political culture.

In truth, the US party system is incapable of doing anything other than slightly tacking in the direction of popular sentiment; something confounded by the hyperbolic checks and balances, whose frustration of a majority in the Senate is precisely what made this special election so important.

Previous discussion on LP: Here.

Update: Nate Silver on the swing.

Quiggin on social democracy and the current crisis; Obama’s epic fail

Published
by
Mark
11 months ago
in Disasters, Economics, International, Markets, Policy, Sociology and USA
. 84 Comments

[Via Rob Corr] John Quiggin, with his customary acuity and clarity of thought, has outlined a social democratic agenda post the Global Financial Crisis in a paper [pdf] for the Whitlam Institute.

A social democratic response to the crisis must begin by reasserting the crucial role of the state in risk management. If individuals are to have security of employment, income and wealth, governments must establish the necessary legal and economic framework and enforce its rules. The fact that government is the ultimate risk manager both justifies and necessitates action to mitigate the grotesque inequalities in both opportunities and outcomes that characterise unrestrained capitalism and were increasingly resurgent in the era of economic liberalism.

I might have some differences at the margins, but I wouldn’t dissent from Quiggin’s broad policy approach. Where I would sound a note of caution, however, is his assumption that a restructured economy will necessarily entail a shrunken financial sector. I’m not sure that’s true. As I observed with respect to the recent G20 summit meeting, a note of complacency has crept into discussions of the GFC. There is an apparent assumption that a bit of government prodding to get credit markets moving again, a little more regulation, and a bit of symbolic Wall Street bashing will do the trick. Then business can resume more or less as normal. That assumption, or assumptions like it, are colouring the recent partial revival in equity markets. It’s being driven also by the Obama administration’s actions (and inaction) – controversies over AIG bonuses aside, there’s a distinct sense that whatever Wall Street wants, it will get – including a revival of trading in credit default swaps and other derivatives.

Continue reading ‘Quiggin on social democracy and the current crisis; Obama’s epic fail’

Guest post by Andrew Crook: In a class of their own – Obama staffers and social change

Published
by
Guest Poster
1 year, 1 month ago
in Activism, Ethics, Policy, Sociology, Technology and USA
. 4 Comments

In the 2005 “dramatic documentary” The American Ruling Class, big oil heir turned Harper’s editor turned armchair socialist Lewis Lapham narrates the career choices confronting a group of shiny young Yale graduates. With their future at the crossroads, Lapham asks, will the nation’s brightest pursue private riches or commit to a pious life of public service?

Lapham, playing himself, leads his empty vessels through the streets of Manhattan, counterposing up-scale parties with wait staff slaving for tips. It’s a savvy piece of emotional manipulation designed to guilt the young rich into acknowledging the class structure that, above all else, got them to where they are. In one party scene, the hubris is intoxicating as a tipsy Ivy League cohort prepares, like their parents, to ascend to the heights of commerce, industry and influence.

Of course, this constructed ‘choice’ transcends the personal, reading as an obvious allegory for the nation as a whole. If the American working class has nothing to lose but their chains, Lapham clearly hopes a new generation will hand them the bolt cutters — a naive appeal to altruism perhaps, but one that continues to resonate as the economy tanks. Lapham’s choice is now more pressing, in that conditions have got much worse, and much easier in that elite opinion is again extolling the virtues of public service, always a potent (if submerged) strain of America’s DNA.

Continue reading ‘Guest post by Andrew Crook: In a class of their own – Obama staffers and social change’

The state of capitalism today III

Published
by
Mark
1 year, 4 months ago
in Economics, International, Markets, Politics, Sociology and USA
. 24 Comments

I can’t recall where I read this, but someone in one of the many interesting things written about the global financial crisis suggested that “Keynes” (of whom we’ve heard more lately than we’ve heard for a long time) might be a useful heuristic to understand what’s been happening rather than a real source of inspiration for policy responses or analyses. With all the calls for a new Bretton Woods, emanating from Gordon Brown (and Kevin Rudd), what appears to have been overlooked is that Keynes’ proposals at Bretton Woods itself were substantially modified to ensure the effective independence of the US currency from the financial architecture it put in place – something that’s explained quite deftly here. So, even at the height of “Keynesianism”, we never really had the rule-bound constraints on capitalist behaviour which the man himself had wanted to see. Similarly, there’s no great novelty in pump priming as a tool of macro-economic management and it’s better understood as a pragmatic mode of state intervention, which has been adopted as a tactic of governance, rather than as a paradigm shift in economic practice. Again, there are significant differences between Keynes’ own ideas and the “neo-Keynesian synthesis”.

However, I think we can now advance a few hypotheses, however tentative, about what’s occurring – in terms of both political economy and the sociology of knowledge.

Continue reading ‘The state of capitalism today III’

The state of capitalism today II

Published
by
Mark
1 year, 5 months ago
in Apocalypse, Disasters, Economics, Europe, Foreign Elections, International, Markets, Media, Nationalism, Politics, Sociology and USA
. 28 Comments

SocProf over at The Global Sociology Blog and I must be reading the same things, and thinking along similar lines, because I had planned to link to precisely the same articles she highlights in an update to my recent post on the state of the global financial crisis.

In The Guardian, Will Hutton explains why measures to halt the cascading crisis have been ineffectual to date. He might have made more explicit the implication that one of the basic structural problems is that action taken at the level of the nation state can be counter-productive given the disseminations and movements of capital, and that there are real domestic political barriers to coordinated action, as well as all the obvious problems of concertation through institutions such as the EU and the G20.

But he does make this point – harmonising with the note I’ve been sounding repeatedly – very clearly indeed:

There was no effective opposition. The left and organised labour collapsed as intellectual, social and political forces; there was no conviction that any alternative to this shareholder value-driven, financial, ’securitised’ capitalism existed, or any political muscle to support it even if there were. Mainstream culture moved away from public purpose and fairness; the new priorities were individual self-fulfilment, personal experience and loyalty to self.

Hutton is perhaps more sanguine than I am, though, about the capacity of state action to turn all this around. Continue reading ‘The state of capitalism today II’

The state of capitalism today

Published
by
Mark
1 year, 5 months ago
in Activism, Consumerism, Culture, Economics, Ethics, International, Markets, Media, Politics, Poverty, Sociology and USA
. 89 Comments

Iceland may be a barometer for what’s changing in the world economy. It was only very recently that the Milton Friedman fan club was hailing Iceland as a “Nordic Tiger”, lauding its flat taxes and praising its “economic freedom”. “Economic miracle” was a common phrase. What’s it looking like after the credit crisis?

Iceland right now is apparently in a state of shock and gives a snapshot of what a depression with the Great in it will look like everywhere – “cafes were half-empty, real estate agents sat idle, and retailers reported few sales” says the AP.

This after the government basically took over its banking sector, with Russian money, which as noted in the linked post, has real geopolitical implications.

Meanwhile, the British government is laying out 500 billion pounds to take equity in its banking sector, but basically proposing business as usual. Co-ordinated interest rate cuts are having very little impact on the stock market, and more worryingly, on the liquidity crisis. Paul Krugman writes:

We’re way past the point at which conventional monetary policy has much traction.

In America, in the eye of the economic storm, the Fed has basically become the financial system, but to little avail:

The time for a recession was 2005. At that time simple macroeconomic policy; simply raising interest rates, would have ended the bubbles in credit and housing at the cost of a standard if somewhat nasty recession. Trillions of dollars of intervention would not have been needed. Just standard macro policy. Even in 2006 it might still have worked. The Fed blew it, and they broke the system, and now with the system broken they may have to either buy it all out (and Paulson may be considering that after all) or just become the system. And even if they do that may not work, because, well, who wants to borrow and invest right now?

Bernanke and Greenspan are certainly in the “worst Fed chairman of all time” stakes in a big, big way.

Continue reading ‘The state of capitalism today’

Essential Research Labor 58-42; Interest rates cut by 100 basis points

Published
by
Kim
1 year, 5 months ago
in Economics, Markets, Media and Polls
. 10 Comments

As a bit of an update to my post last night, the Essential Research poll is now out, basically showing no change from last time. Possum has more on all the other questions asked. So, we can now be more confident about suggesting that Malcolm Turnbull’s leadership has yet to really shift any of the trends that were evident under Nelson – this also highlights the vast over-inflation of the importance of Preferred PM and Opposition Leader approval ratings in most of the punditariat’s commentary. It will be very interesting to see what the delayed Newspoll says – since this is apparently the only poll the punditariat focus on. Where to now for the famous “media narrative”?

Peter Martin has all the wonky stuff worth reading on the Reserve Bank’s 1% rates cut, which a number of banks and lending institutions have indicated will lead to a .8% cut in their variable mortgage rates. Dennis Atkins, writing at Party Games, thinks that the Reserve has given the Rudd government political breathing space.

No early Newspoll; interest rates to be cut

Published
by
Kim
1 year, 5 months ago
in Economics, Markets, Media and Polls
. 17 Comments

I wonder if no Newspoll is bad news for the pollsters and those who own them. This must be the first Monday in living memory (well, since anyone started paying attention to this stuff before last year’s campaign) when there hasn’t been an early release of selected Newspoll numbers. It couldn’t possibly be because the numbers don’t show any leadership bounce for Malcolm Turnbull, could it? [Update: Or could it be because NSW had a public holiday yesterday?] After all, last week’s Morgan face to face poll showed a straight swap of primary vote from the Coalition to Labor – 1.5%, with Labor on 57.5% 2PP. And ACNielsen and Newspoll a fortnight ago showed a very poor bounce by historical standards for the Opposition.

No doubt we’ll find out.

Malcolm Turnbull has been playing a dangerous game on interest rates. Continue reading ‘No early Newspoll; interest rates to be cut’

“The gloves are off”

Published
by
Mark
1 year, 5 months ago
in Economics, Foreign Elections, Markets, Sociology and USA
. 108 Comments

The McCain campaign has gone into full on negative smear mode, with Governor Sarah Palin playing the traditional attack role of the Vice-Presidential candidate.

Apparently Obama has been consorting with terrorists, because he once knew a member of the Weathermen (long afterwards and when Bill Ayers had become an educator and a Distinguished Professor at the University of Chicago). All these allegations were aired during the primaries – and no doubt the Rev. Wright stuff is being readied for an encore. Reading this article on the campaign in Florida really does show how much dissemination the loathsome “Muslim sleeper” stuff is getting as well, and Palin’s attack on Obama as some sort of terrorist sympathiser will reinforce that theme among those disposed to believe it, or to have doubts.

Continue reading ‘“The gloves are off”’

Liveblogging the House debate on the TARP bailout bill

Published
by
Kim
1 year, 5 months ago
in Blogging, Economics, Foreign Elections, Markets and USA
. 8 Comments

Earlier on tonight, the indications were that the US House of Representatives would be voting around 2am AEST on the revised version of the TARP bailout bill (with extra billions of dollars in pork to attract lawmakers’ votes – added in the Senate amendment which John “Against Earmarks and Wasteful Spending” the Maverick McCain duly voted for). It doesn’t look like that’s the case because a lot of Congressthings want to go on record for their constituents by speaking on the House floor (and/or because they have to ask questions now because the bill has never been subjected to legislative hearings, as is normal in the US Congress).

Anyway, I’m off to bed. But you can follow what’s going on via this liveblog from Catherine Rampell at the NYT’s Economix.

NB: Previous discussion and commentary at LP on the bailout, the financial markets crisis and the ramifications can be accessed here.

Update: via danny in comments -

1:25 p.m. | Bill passes: The bill passed 263 to 171. The vast majority of Democrats voted in favor (172 yeas to 63 nays), while a slighter majority of Republicans voted against (91 yeas to 108 nays).

Reaction and commentary over the fold.

Continue reading ‘Liveblogging the House debate on the TARP bailout bill’

House Republicans – quote of the week – it’s Dostoevsky, stupid!

Published
by
Kim
1 year, 5 months ago
in Economics, Levity, Markets, Politics and USA
. 14 Comments

Timothy Garton Ash, writing in The Guardian, has picked it:

Continue reading ‘House Republicans – quote of the week – it’s Dostoevsky, stupid!’

US economic crisis policy links post; and Obama and the economy

Published
by
Mark
1 year, 5 months ago
in Economics, Foreign Elections, Poverty, Sociology and USA
. 10 Comments

One point of view that’s been expressed about the financial markets crisis can be summed up by something I read at Crooks & Liars today:

Have you noticed that every person suddenly knows everything there is to know about how the economy works? Wow, it’s all so simple.

Maybe there’s a point there, but not the one John Amato thinks he’s making. I’ve consistently been of the view that the economy should be a subject for civic and political discussion, and that we shouldn’t hold back because of the “not an economist!” cries that sometimes echo around the place. If one of the continuing problems with the US financial sector is the lack of transparency which is causing the crisis of solvency – because no one still knows where all the securitised bodies are buried – so too a bit of transparency in demystifying the fiscal arcana whose complexity was part of the reason for this mess should be welcomed.

So, with that in mind, I wanted to share some links (from econobloggers and non-economists both) I’ve found particularly insightful and interesting over the last few days.

Continue reading ‘US economic crisis policy links post; and Obama and the economy’

Here’s something a bit interesting

Published
by
Kim
1 year, 5 months ago
in Economics, Markets and USA
. 4 Comments

Some Democratic congressfolks have had the intriguing and unorthodox idea that the role of Congress is to legislate. Ian Welsh has the details on the preparation of alternative bills to the Paulson take it or leave it (with bells and whistles to entice you to vote for it added in the Senate!) TARP measure.

I’m not sure, though, how “market sentiment” of “it’s 700 billion or the apocalypse” will deal with this development.

More at OpenLeft.

Ps: Paul Keating on Lateline last night made some very instructive points about why pumping liquidity into markets isn’t working and why Malcolm Turnbull is playing a populist game on interest rates.

Continue reading ‘Here’s something a bit interesting’

Welcome to the Palindrome!

Published
by
Kim
1 year, 5 months ago
in Foreign Elections and USA
. 83 Comments

[I'm borrowing the pun from Michael Bérubé]

In the absence of any more “game changing” impulsive madness from Walnuts, all eyes will probably be on the Veeps debate on Friday – although our friends in the House Republicans or more spectacular crashes on Wall Street might diminish the focus a tad. Sarah Palin won’t be able to pull a McCain though, and “suspend” her campaign, after that trick spectacularly failed as Walnuts slunk out of Washington calling for bipartisanship on one hand while slagging off Obama on the other, after fairly poor reviews of whatever contribution he may have made to the crisis from his fellow Republicans. Nor will Palin be dropped from the ticket – I think (presuming there’s any rationality to the McCain strategy). As Nate Silver observes, there are at least three good reasons why it would be dumb (but again, I’m thinking dumb is the name of the McCain game). And the last time a Veep candidate was dumped – Thomas Eagleton in 72 – McGovern dropped 7 points in the polls.

Anyway, that’s that for the moment, but in this increasingly bizarre campaign which in true postmodern style seems to have as fictive a relationship to the real world as all that fictitious capital swirling around Wall Street waiting for the government to buy it, who knows what lies ahead, or even what lies lie ahead. My main purpose in posting was to draw attention to two excellent pieces from two of my favourite Stateside online writers on the bizarre phenomenon that is the Palin pick, something I continue to believe deserves more analysis than just political calculation or the desire to diss implies.

Continue reading ‘Welcome to the Palindrome!’