The world of corporate America and the America the rest of us live in are very separate. One (the first) is doing very, very well. The other is hurting and will, probably hurt even worse as time goes on.
Can the Fed rescue the economy by making money even cheaper than it already is? A debate is being played out in the Fed about whether it should return to so-called "quantitative easing" - buying more mortgage-backed securities, Treasury bills, and other bonds - in order to lower the cost of capital still further.
The sad reality is cheaper money won't work. Individuals aren't borrowing because they're still under a huge debt load. And as their homes drop in value and their jobs and wages continue to disappear, they're not in a position to borrow. Small businesses aren't borrowing because they have no reason to expand. Retail business is down, construction is down, even manufacturing suppliers are losing ground.
That leaves large corporations. They'll be happy to borrow more at even lower rates than now -- even though they're already sitting on mountains of money.
But this big-business borrowing won't create new jobs. To the contrary, large corporations have been investing their cash to pare back their payrolls. They've been buying new factories and facilities abroad (China, Brazil, India), and new labor-replacing software at home. ...Robert Reich at TPM
Where does the Obama administration fit into this picture? Well, Wall Street, is getting over its little love affair with the un-Bush, according to Andrew Sorkin.
...Some of the president’s biggest supporters have ... publicly derided his policies, even at the risk of hurting their ability to influence the party in the future. Issues like the carry-interest tax on private equity or the Volcker Rule have become personal.
Why so personal? The prevailing view is that bankers, hedge fund mangers and traders supported the Obama candidacy because he appealed to their egos.
Mr. Obama was viewed as a member of the elite, an Ivy League graduate (Columbia, class of ’83, the same as Mr. Loeb), president of The Harvard Law Review — he was supposed to be just like them. President Obama was the “intelligent” choice, the same way they felt about themselves. They say that they knew he would seek higher taxes and tighter regulation; that was O.K. What they say they did not realize was that they were going to be painted as villains. ...New York Times
What they are really saying is that a teensy big of regulation (regulation they can find ways of avoiding) is okay, as long as Washington continues to be a strong ally of unleashed capitalism. When they start feeling the tug of the leash and the message that they can no longer go the limit, they show their teeth. And then they bite.
If business leaders have a such a distrust of government, they won’t invest in the country. And perception is becoming reality.
Just last week, Paul S. Otellini, chief executive of Intel, said at a dinner at the Aspen Forum of the Technology Policy Institute that “the next big thing will not be invented here. Jobs will not be created here.”
Mr. Otellini has overseen two big acquisitions in the last two weeks — the $7.7 billion takeover of the security software maker McAfee and the $1.4 billion deal for the wireless chip unit of Infineon Technologies. If he is true to his word, those deals will most likely lead to job cuts in the United States, not job creation. ...NYT
Heads you lose, tails we win.
