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Home Publications Blogs Beat the Press Is Politico Giving Out Stock Tips? It Knows What Markets Want

Is Politico Giving Out Stock Tips? It Knows What Markets Want

Tuesday, 01 November 2011 07:18

People who have the ability to anticipate market movements can make enormous amounts of money running hedge funds and other investment vehicles. Apparently Politico is among the small group of analysts who know what will move markets.

It told readers that:

"If the committee were to take up changes to Social Security, it could show that Congress is looking for systemic changes to the nation’s finances — something markets and credit rating agencies want to see."

While the credit agencies, who are known for rating subprime mortgage backed securities Aaa, have been explicit in their instructions to Congress, it is not clear how Politico could determine the market's sentiments. In recent months bonds prices have soared and interest rate on 10-year Treasury bonds fell as low as 1.7 percent. Is Politico telling us that the bond markets are unhappy about the current budget situation and that interest rates will fall even lower if Congress cuts Social Security?

If that is the claim, it would be interesting to see Politico provide the evidence that is the basis for this assertion. Alternatively, if this is just intuition on the part of the reporters/editors at Politico, it would be important to disclose this fact as well.

Comments (8)Add Comment
i know what ows wants
written by frankenduf, November 01, 2011 10:08
If the committee were to bolster social spending through progressive taxation, it could show that congress is looking for systemic changes to the nation's finances- something 99% of its citizens want to see
written by coberly, November 01, 2011 11:41
While Dean is right

i think he misses the point. No one on the other side really cares what "the market" thinks. This is just background music so the people can hum happily to themselves while the Congress destroys the only chance they have for an old age free of anxiety, grinding poverty, and early death.

The fact is that neither Social Security nor Medicare contribute to "the deficit." Social Security in no way whatsoever... if is paid for directly and entirely by the people who will get the benefits themselves.

Medicare has been made a little more complicated by past efforts to turn it into welfare by funding it partially "through progressive taxation." This means it could contribute to the deficit, but in a way very different from the rest of the budget. With Medicare the people are paying for something they themselves need. Without Medicare the people are still going to face rising medical costs and will have to find the money to pay for them or do without. With Medicare they can pay a small insurance premium over an entire working lifetime so that they will have paid for their own needs in advance. Moreover, because of the pay as you go feature... explicit in the case of the payroll tax, implicit in the case of other taxes (not "deficit spending") the premiums one generation pays are paid in terms of present costs. When they reach retirement age, the costs will have gone up, but the following generation will be paying "pay as you go" out of their own higher wages... they will not be being cheated by this because they will get the same good deal in their turn.

But we have a congress, and some "progressives" who can't understand this. The congress only looks at "spending" without bothering to understand where the money comes from, who pays it and why. And the progressives only care if they can make "the rich" pay for it.... which means the rich will take it away from them sooner or later. Even if you want to live on their charity.
Politico Sweeps Sidewalks Too
written by izzatzo, November 01, 2011 11:45
...Politico is among the small group of analysts who know what will move markets.

Exactly. Politico is among the few astute observers of sidewalks who already picked up all the hundred dollar bills that are never there due to efficient markets.

Stupid liberals.
Self-Regulated or Industry-appointed Regulators Don't Work Again
written by James, November 01, 2011 12:19
October 31, Bloomberg – (National) Finra sanctioned by SEC for altering records before inspection. The U.S. Securities and Exchange Commission (SEC) October 27 ordered the Financial Industry Regulatory Authority (Finra) to improve its internal procedures after accusing a Finra employee of altering records before an SEC inspection.

The director of Finra's Kansas City office caused the alteration of three records of staff meeting minutes in 2008 hours before producing them to SEC inspectors, making the documents inaccurate and incomplete, the SEC said in a statement.

Finra, the industry-funded brokerage regulator, was ordered to hire a consultant and undertake steps to improve policies, procedures and training for inspections, the SEC said. Finra consented to the SEC order without admitting or denying wrongdoing, the SEC said. The production of altered documents cited in the order was the third instance in 8 years, the SEC said.

Source: http://www.sfgate.com/cgibin/ article.cgi?f=/g/a/2011/10/31/bloomberg_articlesLTQFQB6S972F.DTL
written by Kat, November 01, 2011 1:01
"If the committee were to take up changes to Social Security, it could show that Congress is looking for systemic changes to the nation’s finances — something markets and credit rating agencies want to see."
So, I read the article and nowhere do they state why this is a worthy goal. Shouldn't they have to explain?
interest rates
written by joe, November 01, 2011 3:21
Of course, interest rates are only controlled by the market insofar as the Fed lets it. Fed has ultimate control and can smash the bond vigilantes face into the ground. Everyone knows this too. The austrian clowns complain about greenspan keeping interest rates too low and in the same sentence warn that the market will force interest rates up. Incredible!

And the deficit puts downward pressure on interest rates, by creating excess reserves. black is white, up is down.
written by dilbert dogbert, November 01, 2011 11:39
The name says all you need to know. It is called Politico not Econico.
written by bmz, November 02, 2011 2:11
. The CBO projected that the surpluses Clinton left for Bush were enough to pay off the entire US debt by the time that the Social Security/Medicare trust funds would have to be amortized for beneficiary payments, all without having to raise taxes to pay for the amortization of those trust funds. These “surpluses” were made up entirely of excess payroll taxes building up the trust funds. Bush took those excess payroll tax receipts and gave them “back” as income tax reductions, heavily weighted to the wealthy–who didn’t create those surpluses in the first place. By doing this, Bush guaranteed that taxes would have to be raised in order to amortize the trust funds. The failure to do so simply permits the Republicons to steal the money contributed by workers for their retirement. Everything about not raising taxes or limiting expenses, is about stealing our money.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.