If the last week has taught us anything it's that nobody in Washington actually gives a damn about the deficit. That's because a bipartisan consensus has emerged that we need to spend hundreds of billions of dollars per year to extend the Bush tax cuts. If these tax rates are kept in place over the next decade they'll add around $4 trillion to the national debt.
The bond markets have noticed this, for what it's worth. The yield on the 10-year t-bill closed at 3.27% today, although as Krugman notes this is still very low from a historical perspective. All the same, let's remember that when I started this here feature a mere two weeks ago the yield on the 10-year t-bill stood at 2.8%. And you can bet that if such a quick rise in bond yields over a two-week period had occurred because Obama decided to triple unemployment compensation or lower the retirement age or just write a $383 billion check to Mumia, the shrieking from the Washington Post editorial page would have be deafening. But because it involves tax cuts for rich people they give it a big thumbs up.
So we've learned that nobody actually cares about the deficit. Which is just as well since it's daft to enact deficit reduction during such horrible economic conditions. But it would be nice if we could all stop pretending, wouldn't it?
In other news:
- So who's going to benefit the most from the Obama tax deal? Do you even have to ask?
Households with two paychecks each topping $100,000 stand to be the biggest winners from a proposed payroll tax cut under the agreement between the White House and congressional Republicans.
The proposal to reduce the Social Security payroll tax for employees by 2 percentage points for one year means that those households would get as much as $82 more each week in after-tax income. By contrast, a single worker earning $10,000 would pocket less than $4 a week.
Oh boy, oh boy, oh boy!!!! Almost four whole bucks!!!!!! And hey while we're at it let's extrapolate these figures out for a year: Households earning $200,000 will get $4,264 in extra income while lucky duckies earning $10,000 in annual income will get $208. Everybody wins and everybody has a share!
- Bank of America has ponied up $137 million in "Oopsie!" Cash to settle big rigging in the muni bond market. So why is this a big effing deal, you ask? Check out this classic Matt Taibbi piece for a more detailed explanation but it basically boils down to this: Many big banks like BofA and J.P. Morgan rigged bids for municipal bond contracts. Once these banks "won" their bids, they sold municipalities some truly toxic interest rate swaps that blew up on them when the housing market started to deteriorate. The result is that counties around the country have gone completely belly up.
"So someone's gonna go to jail for this horses*** right?!!?!!" you ask.
HA, HA, HA, HA, HA, HA, HA!
Bank of America won’t be prosecuted as long as it continues to cooperate with the government.
And that's largely how Wall Street rolls: They swindle the hell out of everyone, leave a trail of ruin in their wake and then pay a little bit of "Oopsie!" Cash to make up for it. We live in a deeply corrupt and sick system.
- And lastly, we have this wonderful and charming statement from Citigroup's Chairman Richard Parsons:
Citigroup remains too "interwoven" to fail even after the government has plowed billions into rescuing the banking titan and Congress has passed laws taking aim at financial behemoths, Citi Chairman Richard Parsons told CNBC.
"It's not a question of too big to fail," Parsons said in a live interview. "It's a question of too interwoven in the fabric of the global financial life to fail."
Parsons said allowing Citi to fail previously or in the future would be akin to having "the heart, the pump of the economic system fail because then everybody else dies."
"It's probably the most important private financial institution for maintaining our economic strength and presence around the world. You can't let an institution like that go down," he said.
Some 95 percent of the Fortune 500 companies are clients of Citi, he added.
"We can meet the needs, satisfy their needs and provide services to them in any country in the world in which they are operating. You have to have scale to be able to do that," Parsons said. "You don't have to be an enormous colossus to be deemed too big to fail. It's the interrelatedness of your business to the global economy that matters."
This sounds... somewhat scary. Why hasn't anyone come up with a financial reform bill that would break up some of these way-too-powerful megabanks? Oh right, some people did. And it failed. Democracy sucks.
Have a super rest-of-your-day, friends!