Dow makes up what it lost to reach record high

The Dow Jones Industrial Average reached 14,253.77, a record high, going past the 14,198.1 it reached back in 2007, before the financial collapse.  Does this mean the stock market, at least is fully recovered, and that the financial collapse can be declared officially over?  Well, not necessarily. [Read more...]

Why is Wall Street supporting Obama?

Democrats are attacking Republicans as lackeys for Wall Street.  President Obama has thrown his support behind the Occupy Wall Street protesters.  He wants to pour on more regulations and restrictions to big investors and banks and to take advantage of the public backlash against big corporations.  And yet the denizens of Wall Street are giving Barack Obama much more money than they are giving Republicans.  In fact, Mitt Romney’s old company is contributing more money to Obama  than to their former CEO!

Despite frosty relations with the titans of Wall Street, President Obama has still managed to raise far more money this year from the financial and banking sector than Mitt Romney or any other Republican presidential candidate, according to new fundraising data.

Obama’s key advantage over the GOP field is the ability to collect bigger checks because he raises money for both his own campaign committee and for the Democratic National Committee, which will aid in his reelection effort.

As a result, Obama has brought in more money from employees of banks, hedge funds and other financial service companies than all of the GOP candidates combined, according to a Washington Post analysis of contribution data. The numbers show that Obama retains a persistent reservoir of support among Democratic financiers who have backed him since he was an underdog presidential candidate four years ago.

Obama’s fundraising advantage is clear in the case of Bain Capital, the Boston-based private-equity firm that was co-founded by Romney, and where the Republican made his fortune. Not surprisingly, Romney has strong support at the firm, raking in $34,000 from 18 Bain employees, according to the analysis of data from the Center for Responsive Politics.

But Obama has outdone Romney on his own turf, collecting $76,600 from Bain Capital employees through September — and he needed only three donors to do it.

The battle for Wall Street cash has become a crucial subtext in the 2012 campaign, which is shaping up to focus heavily on federal banking and markets policies and the struggling economy.

Top Republicans have courted major U.S. bank executives and financiers, arguing that Obama’s policies have hurt them, while Democrats are seeking to turn the erosion of support on Wall Street to their populist advantage.

Obama’s ties to Wall Street donors could complicate Democratic plans to paint Republicans as puppets of the financial industry, particularly in light of the Occupy Wall Street protests that have gone global over the past week.

via Obama still flush with cash from financial sector despite frosty relations – The Washington Post.

Can anyone explain why donors would contribute to candidates against their interests?  Or do these donors think that Democrats would be far more likely to bail they out again than Republicans?  What all is going on here?

A different take on our economic woes

The wild fluctuations of the stock market last week seem to be a reaction to the national deficit and the downgrading of American bonds.  But, as financial analyst Liaquat Ahamed, points out, investors were dumping stocks and investing in government bonds, despite the downgrade and despite record low interest rates.

So, if financial markets aren’t worried about the full faith and credit of the United States, why is the stock market falling? An alternative view, most prominently expressed by New York Times columnist Paul Krugman, is that the markets have concluded, given the struggling economy, that budget cuts are precisely the wrong medicine for what ails us. The Obama administration was backed into a corner by the S&P downgrade and must now focus on cutting the budget deficit to the exclusion of all other policy objectives. Such austerity — whether achieved through spending cuts or tax increases — at this moment in the business cycle would only exacerbate a slowdown. In this reading, the stock market is preparing itself for the coming double-dip.

If this is the market’s message, what should we do? Instead of instituting deeper budget cuts and other austerity measures, the government should pursue the opposite: It should take advantage of the fact that it can essentially borrow for free to finance badly needed infrastructure investments. After all, our airports, roads and bridges are in need of urgent repair, and the extra investment would provide job opportunities and inject money into the economy.

via What is the stock market telling us? – The Washington Post.

Expect that to be the Democrats’ position, that we should stop worrying about the deficit and spend even more money to create jobs and get the economy going.  Mr. Ahamed says, however, that this isn’t politically possible.  Mainly because ordinary Americans saw the government bailing out big banks and corporations, but doing nothing to bail them out.  He proposes a different kind of government activism aimed specifically at consumers and homeowners, which, I suspect, may also become Democratic proposals:

A large-scale government program to restructure residential mortgages and help households refinance underwater mortgages would reduce the debt overhang and support consumer demand. Most important, by channeling public money to help individual families, rather than Wall Street, this initiative could alter the political dynamics that currently doom any government efforts to jump-start the economy.

Can you answer this take on the economic problems and what government might do about them?

Dow drops 1000 points due to bad typing?

In another example for us English teachers on the importance of spelling accuracy, the stock market plunged 1000 points, wiping out untold numbers of dollars for investors here and around the world, apparently because a trader entered a “b” for billion instead of an “m” for million.  Seriously.  That mistake then triggered a chain reaction of automatic sales and general panic.

The market later recovered quite a bit of the loss, but it still closed 347.80 points down.   The Stock Market announced that it would cancel some of the transactions, so no one knows exactly how it will fall out.

You investors need to know this before you check how your stocks did today so that you don’t jump out the window.

See this. Also this.


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