Obama Finally Listens to Paul Volcker

Treasury Secretary Timothy Geithner and White House economics chief Larry Summers have finally dropped their opposition to the changes that former Federal Reserve Chairman Paul Volcker has been advocating for a full year. I have heard stories about Mr. Volcker being marginalized by his younger counterparts and wandering around the White House being ignored like an ancient King Lear. Though I understand that the current administration has been coming around gradually over the last few weeks, the loss of Ted Kennedy’s seat to a Republican had to be the final wake up call. I was gratified to see that Joe Biden and David Axelrod supported Volcker’s contention that the Government has to get tougher on big banks. Look for serious restrictions on the kinds of major speculative bets investment banks are allowed to make in the future. No more “too big to fail.”

Jobless claims surged unexpectedly again last week. The Labor Department announced job losses were up 36,000 to 482,000 instead of down 4,000 as predicted. Regular readers of my blog will recall that I mentioned before Christmas that this would happen. Per CreditSights, employment of people 25-44 years old was down 8% since the recession started. Employment of people over 45 is down 1%. Experience counts. Anheuser in Belgium is cutting 800 workers and riots have ensued.

In a major policy change, the Supreme Court yesterday struck down limits on corporate political expenditures. It also upheld a key element of McCain-Feingold insisting that donors must be identified. Some see this as a major step forward for free speech. The Democratic agenda is reeling from its stunning defeat in Massachusetts. The healthcare plan is now being reworked and even the strident Nancy Pelosi is beginning to make conciliatory comments. Flights from Yemen to the United Kingdom were suspended yesterday. Today Yemen announced visas will no longer be issued upon arrival and said that visitors must apply for visas in their countries of origin. As Yemen is now recognized as a major source of terrorist activity, this is a very encouraging step forward.