Washington To Economy: Drop Dead

HUFFPOST ALERTS PRESENTS

SEVEN AND A HALF THINGS YOU NEED TO KNOW

FEBRUARY 28, 2013

Washington To Economy: Drop Dead

-- Mark Gongloff

Thing One: Brace For Impact:

With just hours to go before the start of a potentially devastating blow to the economy, our political leaders have finally set aside their differences to come together and boldly say eh, whatever.

Both Republicans and Democrats are resigned to let the "sequester" -- a set of harsh budget cuts that could shave more than half a percentage point from economic growth this year and cost a million jobs -- happen, the Wall Street Journal writes. The sequester won't happen all at once, so each side figures they've got time to let Friday's deadline pass, after which the pressure will really be on, and maybe they'll have more leverage, the WSJ writes. Of course, both sides can't equally have more leverage, but who's counting? The point is that each side now seems willing to let the sequester run its course, hoping that if it actually starts to hurt the economy, then they can blame the other side and get what they want. Leadership!

And a significant number on each side of the debate thinks the sequester is no big deal anyway, the New York Times writes. That news is sure to please former Senator Phil Gramm, the menace to society who came up with the idea of sequestration back in the 1980s. He wrote yesterday that the sequester was no big deal back in his day, either, so we should all just shut up about it. Republicans like that the sequester cuts spending and doesn't raise taxes. Democrats like that it cuts spending mainly from defense and doesn't entirely screw the poor (who are already pretty screwed by our budget choices, but again, who's counting?).

The truth of the matter is that the sequester will ultimately be a bummer for everybody, Reuters points out: It will hurt the economy, and it will not much dent the country's budget deficits in part because a slower economy will lead to lower tax revenues. The sequester should have been avoided, period. Now it will happen, and its resolution will very soon be mixed up with still more idiotic budget fights Congress has invented, including the debt ceiling arriving this spring and funding for the federal government, due to expire near end of March. I'll say it again: Anything good that happens to the U.S. economy this year will happen in spite of Congress.

Thing Two: Number Watch!

The stock market certainly doesn't seem to be worried much about the sequester, or anything else. The Dow Jones Industrial Average surged 175 points yesterday to 14,075.37, within shouting distance of its all-time high of 14,164.53, set on October 9, 2007. Of course, this didn't happen on account of runaway growth in the economy or anything -- it was driven mainly by promises from central-bank chiefs in the U.S. and Europe that they would keep perpetually plying the market with easy money, writes Jonathan Cheng of the Wall Street Journal. But again, who's counting?

Thing Three: Bonus Cap:

The European Union has agreed on a plan to put a lid on bankers' bonuses. The curbs, which must still be approved by most members of the EU, would be the strictest in the world and would apply even to employees of American banks working in Europe. The terms could still be changed to suit the objections of some members, such as the United Kingdom, which has been fighting the curbs.

Thing Four: Fracking Forever:

Hope you like natural-gas fracking, because the U.S. natural-gas boom is going to go on for decades more, researchers believe. A new study of Texas shale finds that "U.S. shale-rock formations will provide a growing source of moderately priced natural gas through 2040, and decline only slowly after that," the Wall Street Journal writes.

Thing Five: Rotten Apple:

The one thing holding back the S&P 500-stock index from also hitting a record high is its inclusion of Apple, formerly America's greatest company, now roundly shunned by investors. The shunning continued yesterday, as Apple's annual shareholders' meeting offered little in the way of vision for the future or a plan for giving shareholders any taste of Apple's $137 billion cash pile. About a third of Apple shareholders withheld their votes for CEO Tim Cook's pay package, the Financial Times writes.

Thing Six: Samsung Picks On Somebody Not Its Own Size:

Apple's biggest rival, Samsung, not content with making Apple's life miserable, now has plans to pick on another miserable company, BlackBerry. Samsung plans to beef up its offerings for corporate customers, cutting into the one last area of business keeping BlackBerry from permanent oblivion, The New York Times writes.

Thing Seven: Heinz Probe Expands:

Investigators looking into insider-trading allegations connected to Warren Buffett's purchase of H. J. Heinz are now looking into complex derivatives bets routed through London, The New York Times writes. The probe, inspired by freakishly profitable options bets placed just before the announcement of the Heinz purchase, had already focused on options bought by a Goldman Sachs account in Switzerland.

Thing Seven And One Half: Here Comes The Madness:

The first-ever televised basketball game -- Fordham vs. Pitt at Madison Square Garden -- happened on this day in 1940. Now you can't get through the month of March without televised basketball games, which is a good thing, and an excuse to link to this classic March Madness explainer by comedian Rob Delaney.

Calendar Du Jour:

Economic Data:

8:30 a.m. ET: GDP for the Fourth Quarter of 2012

8:30 a.m. ET: Weekly Jobless Claims for Feb. 23

Corporate Earnings:

Best Buy

Cablevision

Gap

Heard On The Tweets:

My dog barked at a doorbell on a commercial & I said, "Pipe down, Woof Blitzer" then it hit me that I'll never say anything better than that

— Kyle H (@DepecheALAmode) February 27, 2013

Watching Ben Bernanke explain the debt to Michele Bachmann is a good reminder that one of these people is a very smart and patient person

— Derek Thompson (@DKThomp) February 27, 2013

I walk away from auto-flush toilets like movie stars walk away from explosions

— Barry Pupusa (@burntmybagel) February 27, 2013

British Arctic explorer Ranulph Fiennes is the second-most-famous person whose name contains the letters "Ralph Fiennes."

— Adrian Chen (@AdrianChen) February 27, 2013

Stone Temple Pilots announce they have fired the only person in the group I've heard of.

— Jennifer L. (@TheFearBoners) February 27, 2013

I can't find my notebook anywhere! I've looked in the exact same place 39 times! Don't know what else to do.

— Kumail Nanjiani (@kumailn) February 27, 2013

-- Calendar and Tweets rounded up by Alexis Kleinman

And you can follow us on Twitter, too, if you want, no pressure: @AlexisKleinman and @MarkGongloff

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