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Wall Street has turned on President Obama seeking a scapegoat for continuing
economic woes and beyond the financial services industry, Washington is also the
target of other business leaders. Having been rescued by the government and the
average Joe in the street, business is seeking lower taxes and less regulation.
Last week Intel chief executive, Paul Otellini, said at a forum in Aspen,
Colorado: “I think this group does not understand what it takes to create
jobs. And I think they’re flummoxed by their experiment in Keynesian economics
not working...every business in America has a list of more variables than I've
ever seen in my career." [If variables like capital gains taxes and the R&D
tax credit are resolved correctly, jobs will stay here, but if politicians make
decisions] "the wrong way, people will not invest in the United States.
They'll invest elsewhere."”
Recently, private equity billionaire Stephen Schwarzman,
compared the
administration’s plan for changing the perk of
just paying 15% tax on some income, which was conveniently viewed as a capital
gain, to “when
Hitler invaded Poland in 1939.”
Now
former Obama supporter Daniel, Loeb, who manages about $3.4bn
at his firm, Third Point Partners, has issued an
investors' letter quoting America's third
president, Thomas Jefferson, Ronald Reagan
and pre-president Obama, and reveals that the
last straw for him was the charge of fraud
against investment bank Goldman Sachs.
The New York Times reports that
Democrats received 70% of the donations from Wall Street in 2008; since June,
when the financial reform bill was nearing passage, Republicans were receiving
68% of the donations, according to an analysis by the Center for Responsive
Politics, a nonpartisan research group.
Absolute Return magazine reported that last week,
that hedge fund managers assembled at SAC Capital Advisors founder Steven Cohen’s home in Greenwich, Connecticut, to discuss how to help Republican Party candidates win the upcoming midterm elections.
The gathering was intended as a strategy session during which several Republican party operatives discussed with large donors how best to deploy campaign contributions and other support so that Republican candidates could win in the upcoming midterm elections, according to the source.
Roosevelt
as traitor to his class
Money has
always had a significant role in US politics and in the nineteenth century, US
Senate seats were for sale by most state legislatures.
However, the
patrician Franklin Delano Roosevelt was not for bullying by his own class.
"The money-changers have fled
from their high seats in the temple of our civilization," Roosevelt proclaimed in his March 4, 1933
inaugural speech. "We
may now restore that temple to ancient truths."
Hours later,
he signed an executive order shutting every bank in the country and earned the
enmity of the bankers he saved by establishing a comprehensive regulatory
structure, including the creation of the Securities and Exchange Commission, the
establishment of serious banking oversight, the guaranteeing of bank deposits
and the passage of the Glass-Steagall Act, which separated commercial and
investment banking.
Raymond Moley, a member of Roosevelt's New Deal brains trust said
"capitalism was saved in eight days,"
and Roosevelt observed in 1936: "Now that these people are
coming out of their storm cellars, they forget there was ever a storm."
The late
American historian and aide to President Kennedy, Arthur M. Schlesinger,
recounts in his book
The Age of Roosevelt: The coming of the New
Deal 1933-1935, how
the president produced a parable of a man in a silk hat who fell off a pier and
was drowning in the ocean. A bystander jumped off the pier and saved him, but
the drowning man's silk hat floated away. The bystander was thanked profusely by
the man for saving his life. But three years later, the same man attacked the
bystander for not saving the silk hat!
Discussing what
President Obama needs to do to bridge the gap with business to gain confidence
for recovery, with Robert Crandall, former AMR chairman/CEO and William George,
former Medtronic chairman/CEO:
Loeb's Lament
Billionaire Daniel Loeb told investors last week that "the turning point
in both investor and consumer confidence came on April 16th,
with the filing of the government's suit against Goldman Sachs over its mortgage
CDO activities. This politically-laced lawsuit was a tipping point for shaky
investor confidence against an increasingly worrisome landscape of new laws and
proposed regulations that are perceived by many market participants to promote
'redistribution' rather than growth, and are contrary to free market ideals."
Loeb said: "As every student of American history knows, this country’s core founding
principles included non-punitive taxation, Constitutionally-guaranteed
protections against persecution of the minority, and an inexorable right of
self-determination. Washington has taken actions over the past months like the
Goldman suit that seem designed to fracture the populace by pulling capital and
power from the hands of some and putting it in the hands of others. For example,
a well-intentioned government program gone awry is the new CARD Act that
restricts banks from repricing interest rates on borrowers who fail to meet
their revolving credit obligations. The effect of this legal prohibition has
been to force the banks to raise the interest rate paid by all
borrowers, to compensate for losses they are now being forced to take on
delinquent borrowers. The effect is a redistribution of wealth from people who
pay their debts on time to those who do not."
The billionaire does
acknowledge that many people see the collapse of the sub-prime markets, along with the failure
and subsequent rescue of many banks, as failures of capitalism rather than a
result of a vile stew of inept management, unaccountable boards of directors,
and overmatched regulators not just asleep, but comatose, at the proverbial
switch. "When we hear the chorus of former executives and regulators exclaim that
the crisis was 'impossible to see coming,' while at the same time walking away
with millions or going on to greater levels of responsibility in government, it
is both puzzling and demoralizing. It is easy to see why so many people have
concluded that the entire system is rigged," he wrote.
He also concedes that many businesses are
badly run: "...many of the boards we have come across are populated by individuals
who rely on the stipends they receive from numerous corporate boards and thus
appear motivated primarily to ensure continuing board fees, first-class air
travel and accommodations, and a steady diet of free corned beef sandwiches
until they reach their mandatory retirement age. We are therefore encouraged by
the recently finalized proxy rules, which will ease the nomination and election
of directors by shareholders."
Discussing whether Americans think President Obama is too tough on business
or not tough enough, with Jeanne Cummings, Politico, and Andrew Parmentier,
Height Analytics:
Looking at the issue of fixing
the economy more from a Main Street view, Michael Hirsh in Newsweek,
writes: "Obama was clearly not pushing very hard to
be FDR (Franklin D. Roosevelt) or even his trust-busting relative Teddy
Roosevelt. Now it looks like grim growth and unemployment numbers could extend
all the way into 2012. Distracting himself with health care and other issues,
Obama may have politically maneuvered himself out of the only major remedy that
could bring unemployment down and growth up enough to assure his re-election:
another giant fiscal stimulus. Today, after engendering Tea Party and centrist
Democratic resistance to more government spending by pushing his health-care
plan, the question is whether he has the political capital he may well need, in
the end, to save his presidency. And after a two-year fight over financial
reform, one other question still lingers: has Wall Street come out the big
winner yet again?"
