Disappointing results from banking interests - reported eithe before the open or during the session - didn't deter investors from sparking a rally in financials, however, pushing the major indices to recoup some of Monday's dramatic decline.
After the close, CapitalOne (COF), once the nation's largest stand-alone credit card issuer, reported a net loss for the first quarter of 2009 of $111.9 million, or $0.45 per common share, which was far better than last quarter - a $1.4 billion loss, or -$3.74 per share - but far worse than the same period last year, in which the company reported a profit of $548.5 million, or $1.47 per share. during the session, shares of CapitalOne were higher by 1.67 (12.50%), but were seen lower in after-hours trading, down more than a point shortly after the earnings release.
On the Dow, 25 of 30 component stocks finished with gains. Leading the way were the three bank stocks - JP Morgan Chase (JPM), Bank of America (BAC) and Citigroup (C) - all of which ended the day at least 9.5% to the good. How the very same banks which are controlling the economy are manipulating the markets is a grand shame and these oligarchies need to be dismantled, as explained below.
Caterpillar (CAT) reported its first quarterly loss since 1992 and drug maker Merck (MRK) reported a profit but missed earnings estimates.
As for the rest of the market, suffice it to say that the market is mostly comprised of day-trading Wall Streeters and hedge fund managers who follow the leaders, which is why stocks were broadly higher today, despite the absence of any positive news.
Dow 7,969.56, +127.83 (1.63%)
Nasdaq 1,643.85, +35.64 (2.22%)
S&P 500 850.08, +17.69 (2.13%)
NYSE Composite 5,339.59, +119.47 (2.29%)
Advancing issues turned the table on decliners, beating them 4846-1627, though new lows continued the spread over new highs, by a count of 69-18. Volume was solid, though unspectacular.
NYSE Volume 1,671,525,000
Nasdaq Volume 2,435,768,000
In the commodity markets, a slight bounce from Monday's drubbing, with crude futures up 63 cents, to $46.51. Gold lost $4.60, to $882.70, with silver off a nickel, to $12.06. Futures for various foodstuffs were mostly higher.
Appearing before the Joint Economic Committee of Congress today were, among others, Federal Reserve Bank of Kansas City President Thomas Hoenig, Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson, each of whom expressed skepticism over whether current government actions were effective in relieving the economic distress in the banking sector.
Will the government listen, and even more to the point, do the congressional member and senators who convened these hearings, actually understand what they're saying? Probably not. Politicians are a breed of people who understand power and politics and little more. What they do know is that their allegiance is to the Wall Street bankers, because that group, by and large, financed the campaigns that put them or keeps them in positions of power.
As usual, it will be politics first, constituents (the actual ones they're supposed to represent), last, and so, the sad saga of our nation being run into the ground by a coalition of Wall Street financiers and political puppets in Washington will continue unabated. Today's hearings are just more window dressing, designed to keep the public from rising up, rioting and throwing the whole bunch into the East and Potomac Rivers, which is precisely what should happen and very well may happen if this fiasco of keeping insolvent banks operating under clouds of secrecy and mountains of non-negotiable debt is allowed to continue much longer.
Below, Yahoo's Tech Ticker talks with former IMF chief economist and current MIT economics professor Simon Johnson about the big banks and how they stand in the way of a meaningful economic recovery.
Here is Johnson's breathtaking article, The Quiet Coup in this month's Atlantic.
Near the end of his reveling writing, Johnson finally comes to speak the unspeakable:
The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances.
There you have it. A respected economist - not me, a generally disrespected populist pundit blogger - says this current condition could devolve into something worse than the Great Depression. I've held that view all along, since early in 2007, and if you check my archives at Downtown Magazine, probably as early as 2002 or 2003, when I reported on the then-emerging pension crisis which now continues beneath the surface.
Like Johnson, I hold out slim hopes that the elite in Washington and the ruling oligarchs on Wall Street will yield power without a fight of monstrous proportions, against the citizenry of the United States, and to a larger extent, the populations and governments of their trading partners globally.
Mr. Johnson and I are not alone. The chorus for concentrated government action to close down the insolvent banks and replace their inept and likely corrupt management, is growing at a very rapid pace. The longer the government dithers, the closer the nation comes to the precipice of economic, political and social destruction.
Finally, below, here's the second part of Henry Blogett's interview with Simon Johnson, in which he extolls the virtue of quick, decisive action in cleaning up and breaking up the major bank's stranglehold on the country's finances:
It's become clear to just about everyone in the world, except the pols in Washington and the banksters themselves, that breaking up the nation's biggest banks and dismantling their management and interlocking boards of directors would provide the quickest, cleanest and least costly resolution to the global financial condition. Instead, President Barack Obama, like Nero in ancient Rome, fiddles while the empire burns to the ground and the congress can only be compared to circus clowns for all the good they've done over the past six months.