No Thanks for the Political Class
12:00 AM, Nov 26, 2011 • By IRWIN M. STELZER
But politicians refusing to grasp the deficit nettle might soon be in for a shock, an event that will make voters very unhappy indeed. Banks are under pressure to shore up their capital. The Federal Reserve Board is calling for new, more stringent stress tests of major banks to determine how well-placed they are to cope with a wave of sovereign-debt defaults and bank failures in Europe. One way to increase capital is to raise funds in the market, but that dilutes the value of the holdings of existing shareholders, included among whom are the executives that would have to order such a move, men not noted for worrying about the national interest. Another way is to curtail lending, in essence hoard capital. Signs are that that is what the banks will do, with a dampening effect on lending, growth and job creation.
Those problems await Americans’ return to work and reality on Monday. Until then it is family visits, and consuming the remains of some 45 million turkeys with all the fixin’s. And, of course, shopping: about half of all Christmas spending was done on Friday. It seems from preliminary figures that consumers, who have responded to stagnant incomes by dipping into their savings, increased spending over last year by an estimated 6.6 percent, with online sales up close to 20 percent. And further proof, if any is needed, that the gap between rich and the middle class and the poor has widened: Best Buy, Walmart, Macy’s, and other stores catered to early arriving middle- and lower-income shoppers with offers of $200 HDTV sets, among other “door-buster” bargains; meanwhile, it reportedly took posh Neiman Marcus less than an hour to sell all ten of its special edition Ferraris with matching luggage, a snip at $395,000.
Just the stuff that fans the flames of Obama’s soak-the-rich politics, and testimonial to the failure of high earners, many in their jobs thanks to taxpayer bailouts, to understand that a bit of restraint on their part just might make it easier to defend market capitalism at a time when many Americans are looking for work, and others are watching their real incomes fall.