Happy Tuesday! There's lots of semi-interesting economic news to get to, so let's git!
- The big news from yesterday is that a conservative judge overturned a key portion of Obamacare, namely the federal mandate that everyone in the country buy health insurance.
Speaking personally, this doesn't really bother me all that much. That's because one of three things will happen:
a.) Jon Walker will be right and people with preexisting conditions will still be able to get health insurance without the whole system collapsing.
b.) The whole private insurance system will collapse due to adverse selection, thus leaving us no alternative but to go to single payer.
c.) The GOP will try to repeal all of Obamacare, including the parts that bar insurance companies from discriminating against people with preexisting conditions. This will result in countless ads full of diabetic children staring into the camera and saying something along the lines of, "Please, Senator Crapbag, don't take my health care away!" Oh and you'd also be telling seniors that they'll have to pay more for prescription drugs. Those two things are typically not what you want to see when you're up for reelection.
So the death of the individual mandate is no sweat off my back, especially since I think the whole provision is just a glorified version of tax farming. The Republican judicial activists kill it and thus speed the demise of the private insurance market, more power to 'em.
- I'm glad the mainstream press is making a stink about the very smelly way Peter Orszag has skipped dutifully from the White House to Wall Street. Joe Klein does a good job of explaining Why This is Important to the Democratic Party and American politics in general:
[T]his move only reinforces my growing sense that the Democratic party has to pry control of its economic policy away from the Wall Street caucus--the Rubin, Summers, Geithner, Rattner and now Orszag etc. gang. I am sure they have had real value as policy-makers, but they've had real blind spots as well.
Their blind spots have to do with the workers who once constituted the Democratic party's base, but who now, with their manufacturing jobs gone, have lost their faith in government and find it easier to vote their anger--against one party, then the next--than to vote for anything or anyone. The Wall Streeters know the bond market intimately; they don't spend much time thinking about how to improve life for the vast swath of Americans who have suffered the mergers-and-acquisitions, the leveraged-buy-outs, the private equity hoggery, the CDO and CDS's and all the other financial gimmicks of the last 40 years.
I guess the difference I have with Klein is that I don't think American workers' interests are "blind spots" to the Wall Street Dems. Rather, I think those interests are a direct impediment to the Wall Street Dems' agenda of using open trade and open borders to undermine labor and environmental laws. These guys know precisely what they're doing and they have ever since they co-opted the Democratic Party in the 1990s and got NAFTA passed, along with odious deregulatory legislation such as the Commodity Futures Modernization Act. The result has been a rapidly shrinking middle class, stagnant real wages and the worst global financial crisis in decades. Everyone deserves a "heckuva job" and a pat on the back.
- As I've said before, the most depressing part about our government's fealty to Wall Street interests is that there's broad bipartisan consensus across the general populace that Wall Street sucks. Check out this Bloomberg poll:
More than 70 percent of Americans say big bonuses should be banned this year at Wall Street firms that took taxpayer bailouts, a Bloomberg National Poll shows.
An additional one in six favors slapping a 50 percent tax on bonuses exceeding $400,000. Just 7 percent of U.S. adults say bonuses are an appropriate incentive reflecting Wall Street’s return to financial health.
A large majority also want to tax Wall Street profits to reduce the federal budget deficit. A levy on financial services firms is the top choice among more than a dozen deficit-cutting options presented to respondents.
With U.S. unemployment at 9.8 percent, resentment of bonuses and banking profits unites Americans across political, gender, age and income groups. Among Republicans, who generally are skeptical of business regulation, 76 percent support a government ban on big bonuses to bailout recipients, that’s higher than backing among Democrats or independents.
I know a few Tea Partiers who truly despise Wall Street because they see how the biggest banks have used the government to secure spots for themselves as permanent economic winners. And really, hating Wall Street shouldn't be a Red or a Blue issue because hating Wall Street is the most obvious and commonsense feeling that a normal human being can harbor, right up there with love of puppies and children. Yet perversely, our political leadership in both parties goes out of its way to show Wall Street who can do a better job of delivering the goods. It's pretty sad.
- Hey, look! Fewer mortgages were underwater last month! But, uh, that's not a good thing:
The number of U.S. homes worth less than the debt owed on them dropped in the third quarter, largely because of mounting foreclosures rather than a rise in property values, according to CoreLogic Inc.
About 10.8 million homes, or 22.5 percent of those with mortgages, were “underwater” as of Sept. 30, the Santa Ana, California-based real estate information company said in a report today. That was down from 11 million, or 23 percent, at the end of June, the third straight quarterly decline.
Falling property values and unemployment near 10 percent have spurred a surge in foreclosures. The number of homes offered in foreclosure auctions averaged 110,000 a month in the third quarter compared with about 98,000 in the same period a year earlier, said Mark Fleming, CoreLogic’s chief economist.
At least Paris Hilton gets to keep her tax cut.
- And sorry to end on a downer, but sometimes there's just nothing happy to report. It looks like the big banks are headed toward another quarter of through-the-roof profits:
The five largest U.S. firms by investment-banking and trading revenue -- Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Morgan Stanley -- will likely have a better fourth quarter than the previous two periods, driven by equity underwriting and higher volume in stock and bond trading, according to data compiled by Bloomberg. Even if this quarter only matches the third, the banks’ revenue will top that of any year except 2009.
The surge has come after the five banks took a combined $135 billion from the Treasury Department’s Troubled Asset Relief Program and borrowed billions more from the Federal Reserve’s emergency-lending facilities in late 2008 and early 2009 following the collapse of Lehman Brothers Holdings Inc. Since then, the firms have benefited from low interest rates and the Fed’s purchases of fixed-income securities.
“This is a once-in-a-lifetime opportunity for most of these banks, and I think they’ve recognized it as that,” said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who has written about Wall Street’s history. “The profits they’re making now will allow them to replenish their capital and take care of the other things they need to do.”
"Other things they need to do" is industry jargon for "having lots of coke-and-hooker parties this Christmas."
OK, try to have a happy day! Here's some cheery footage of a young Itzhak Perlman playing the third movement of Mendelssohn's violin concerto! It's one of the happiest things you'll ever hear, like leprechauns dancing a jig on your crotch (if you're into that sort of thing!):