Mark Gongloff is off the newsletter this morning, so today's 7.5 Things are brought to you by Jillian Berman.
Science has determined that people need to know 7.5 things per day, on average, about the world of business. You can't argue with science. Lucky for you, the Huffington Post has an email newsletter, delivered first thing every weekday morning, boiling down the day's biggest business news into the 7.5 things you absolutely need to know. And we're giving it away free, because we love you, and also science. Here you go:
Thing One: Looks Like We Need A Plan C: John Boehner just can’t catch a break. The Speaker of the House tried to bring his oddly named “Plan B” fiscal cliff proposal to the floor of the House for a vote last night, but unfortunately it didn’t have “sufficient support from our members to pass,” according to a statement cited by Bloomberg. It appears Boehner’s plan -- which proposed raising taxes on those making $1 million or more -- offered satisfaction to no one. Conservatives weren’t interested because it actually raised somebody’s taxes, and President Obama said he would veto the bill because it didn’t go far enough to raise taxes on the wealthy.
And we really mean didn’t go far enough. If it had passed, “Plan B” would have actually meant a backdoor tax cut for the wealthy, according to an analysis by the Tax Policy Center.
Meanwhile, America’s corporate elite is getting a little bit huffy that their public servants are taking their sweet time and increasing the likelihood that we’ll go over the cliff. They’re using words like “embarrassed” and “worst-case scenario” to describe the standoff to the Wall Street Journal. This panicking runs counter to the feelings of some progressive economists, including Paul Krugman and Dean Baker, who have argued that the hype surrounding going over the cliff is largely overblown.
And if anyone should be worried it's ordinary Americans, because the fiscal cliff negotiations are putting the alternative minimum tax at risk, according to the WSJ. If Congress doesn’t pass an extension, couples making as little as $45,000 per year could face a tax increase of almost $3,700, on average.
Thing Two: NYSE Ain't What It Used To Be: Those traders shouting on the New York Stock Exchange floor are becoming largely more of a symbol than anything else. IntercontinentalExchange, a small and little-known rival, bought the NYSE yesterday for about $8 billion -- a whole $3 billion less than it would have gotten in a deal just a year ago.
The fact that the 220-year-old NYSE was swallowed up by a 12-year-old company is indicative of its obsolescence, according to the Wall Street Journal. Though ICE said it would keep the iconic trading floor and big board, the deal shows how much ground the annoying yelling-and-screaming stock trading has lost to machines. Only 20 percent of transactions on NYSE stocks went through the trading floor, according to the WSJ. The decline of the trading floor into a glorified “television studio” has been going for some time, but it started to move faster in recent years thanks to regulators and new technologies that cost it its monopoly, writes Floyd Norris of The New York Times. Things just aren’t what they used to be.
Thing Three: Another Madoff Heads To Prison: The Bernie Madoff scandal is sending another culprit to prison. Peter Madoff, Bernie’s brother, was sentenced to 10 years in prison yesterday for a variety of crimes including lying to regulators, filing fake tax returns and making fraudulent documents as the chief compliance officer at Bernard L. Madoff Investment Securities, according to The New York Times. Family and friends submitted a slew of letters defending Peter Madoff’s character, in contrast to his brother’s sentencing, which included no character references. Peter Madoff is the only other member of the Madoff family to be criminally charged in connection with the fraud so far, according to Reuters.
Thing Four: JPMorgan To Get Wrist Slap: Another day another major bank escaping with a wrist slap. The Office of the Comptroller of the Currency will likely demand that the bank take steps to close the risk holes that allowed a small group of traders to accumulate a loss of about $6 billion, the Wall Street Journal reports. What exactly the bank will be asked to do isn’t clear, according to the WSJ, but they won’t face a fine, god forbid. Despite that his bank lost billions of shareholder dollars, JPMorgan’s CEO Jamie Dimon is still expected to get a bonus this year.
Thing Five: Critics Slam UBS Punishment: Speaking of wrist slaps, critics are deriding regulators for not going far enough in punishing UBS for its role in the Libor rate-rigging scandal. Though the bank’s Japan unit is the first bank entity to face criminal charges over the Libor scandal, some politicians are saying the Justice Department should have brought criminal charges against UBS as a whole, the Wall Street Journal reports. UBS will pay a $1.5 billion fine, a sum Republican Senator Charles Grassley called “spit in the ocean compared to the money lost by borrowers at every level, including taxpayers.” As The Huffington Post’s Mark Gongloff noted earlier this week, Libor manipulation cost Fannie Mae and Freddie Mac, which are backed by the government and therefore taxpayers, at least $3 billion.
Thing Six: Paying To Stalk: Facebook has now put a price on stalking. The world’s largest social network will test a plan charging users $1 per message to send a note to someone outside of their network and ensure that message ends up in the person’s inbox. In a statement posted online, the company said “imposing a financial cost on the sender may be the most effective way to discourage unwanted messages and facilitate delivery of messages that are relevant and useful,” according to the Wall Street Journal.
But as The Huffington Post’s Bianca Bosker notes, the policy is fundamentally anti-social. It discourages users, who may want to contact another user for say a job or networking opportunity, from doing so and puts a price on reaching out. The WSJ points out that the new feature is another way Facebook is trying to actually monetize its popularity, something the company has struggled to do in the past. After that whole Instagram fiasco, we say good luck with that.
Thing Seven: Bankrupt City Maybe Not So Poor: San Bernardino, the city that notoriously declared bankruptcy earlier this year, may have had a little bit more money than it was letting on. The California city paid employees $2 million to cover unused sick and vacation days in the months leading up to when it declared bankruptcy, Reuters reports. City officials are expected to argue in court Friday that the city doesn’t have enough money to pay off its creditors, despite the cash-out payments to employees.
Thing Seven And A Half: The World Is Still Here: If you’re reading this, the world didn’t end at midnight as the Mayan calendar and many panicked callers and emailers to NASA predicted. Way to go world!
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Calendar Du Jour:
Economic Data:
8:30 a.m. ET: Personal Income and Spending for November
8:30 a.m. ET: Durable Goods Orders for November
9:55 a.m. ET: University of Michigan Consumer Sentiment Index for December
Corporate Earnings:
Walgreen
Heard On The Tweets:
Man, R.E.M. is going to be raking in the radio play royalties tomorrow.
— BIG PLASTIC SANTA (@bigplastichead) December 20, 2012
Calendar and tweets rounded up by Alexis Kleinman.
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