12/17/2012 08:03 am ET Updated Dec 17, 2012

John Boehner Goes To The Mountain: Seven And A Half Things To Know

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Thing One: Boehner Goes To The Mountain: It was inevitable, but after a prolonged show of trying to make President Obama come to him in fiscal-cliff talks, Speaker of the House John Boehner is finally trudging toward Obama.

It's reminiscent of the legend of somebody named Muhammad (probably not the Prophet), who a few hundred years back gathered a bunch of people around him and told them he was going to make a mountain come to him. When the mountain didn't come, he said, according to Francis Bacon, "If the mountain won't come to Muhammad, then Muhammad must go to the mountain." It means, more or less, that we must all bow to the inevitable, or something like that.

Boehner knows exactly how Muhammad feels. For weeks, in the talks with Obama over the fiscal escarpment of tax hikes and spending cuts scheduled to take effect next year, Boehner has acted like he's got all the leverage. He has refused to contemplate raising tax rates for the wealthiest Americans; refused to budge on giving up his right to pick a pointless, self-destructive debt-ceiling fight once a year; refused to budge on draconian cuts to entitlement programs.

But at last, with little more than a week to go before Christmas and a little more than a fortnight until the clock strikes 2013 -- when Americans will immediately start to be affected by tax increases, notes Zachary Goldfarb of the Washington Post -- Boehner is starting to give ground. According to the Washington Post, over the weekend he offered to let tax rates increase on millionaires and give up his debt-ceiling fight for one year. Obama rejected the offer, according to the Wall Street Journal, perhaps because he still has a fuzzy memory of having won an election recently on the issue of raising taxes on people who make more than $250,000, and because he knows debt-ceiling fights are big losers for Republicans.

Boehner's offer was forward motion, all the same, and may raise hope that a deal can be struck before the calendar turns -- though the two sides are still very far apart, according to Reuters. Not that investors seem particularly concerned one way or the other, notes Jonathan Cheng of the WSJ, who points out that markets likely assume a deal is going to happen -- a potentially risky assumption.

Meanwhile, credit-rating agencies, to the extent anybody on earth gives a crap what they think, are also not concerned about the fiscal-cliff talks, according to the WSJ. In fact, they'd prefer it if we did go over the cliff, which might be the more fiscally responsible thing to do, in the short term. In the longer term it could be disastrous, but nobody ever accused credit-rating agencies of having foresight.

Avoiding the cliff could mean America's long-awaited return to relative economic normalcy come next year, writes the WSJ, with GDP growth of 3 percent or more. But a prolonged journey down the fiscal slip-n-slide could trigger another recession, notes the New York Times, which would be even more disastrous for America's fiscal standing.

Thing Two: Private Equity Backs Up The Debt Truck: It's business as usual for at least one corner of the economy: Private equity. According to the Wall Street Journal's Matt Wirz, private-equity firms are using the most debt since before the crisis to get leverage to make acquisitions. Firms are putting up their own cash for, on average, just 33 percent of the value of a buyout and borrowing the rest, the lowest percentage since 30 percent in 2007, just before everything went pear-shaped. Higher debt ratios mean more profits for private-equity firms and more risk for the companies being acquired, notes Wirz. It's also risky for the lenders -- yields on leveraged loans are near record lows, and investors could get scalped if interest rates start to rise.

Thing Three: Google Gets Off: In what way is Google like a too-big-to-fail bank? If you said "terrible customer service" or "monopoly power," you're right. But Politico reports there's another way Google is just like a big bank: After a prolonged federal investigation of its practices, the search giant is going to walk away scot-free. Apparently the Federal Trade Commission is going to let Google walk, in exchange for a promise that it will make some changes to address anti-trust concerns. This could help Google avoid some of the nasty regulatory fights Microsoft endured in the 1990s, writes the Wall Street Journal, although Google is still getting the stinkeye from Europe and individual U.S. states.

Thing Four: Feds To Try New Thing Called 'Criminal Charges:' Having a less-happy morning is Swiss bank UBS, which could as early as tomorrow be hit with fines of $1.5 billion or more over charges that its bankers manipulated the key benchmark lending rate called Libor, Bloomberg writes. That would be three times as much as Barclays Capital paid to settle its Libor charges, notes the Wall Street Journal, and set an ominous precedent for the dozen or so other banks still under investigation in the wide-ranging Libor probe. Most notably, UBS will be the first bank in something like forever to actually plead guilty to a criminal charge -- though the charge will be made against a small unit in Japan, according to the WSJ, limiting the damage. And individuals are starting to be charged with crimes, first in Europe and next in the U.S. Here's hoping it's the start of a trend.

Thing Five: Capital-Raisin' Is Hard: U.S. banks are short the extra $800 billion or so in capital they need to satisfy Basel III capital requirements, due to take effect in 2015, according to Brooke Masters and Shahien Nasiripour of the Financial Times. Rather than simply raising the capital, U.S. banks are doing what they do best: Whine about the capital rules and plead for more time.

Thing Six: Meet Japan's New Boss, Same As The Old Boss: After a brief exile to the political wilderness, Japan's Liberal Democratic party is back in power, having won a decisive election yesterday. Interestingly, the Financial Times notes the LDP won on a platform of pushing Japan's central bank to take more action to boost the economy, which is once again in recession. Welcome to America's Possible Future.

Thing Seven: Even Stevie Cohen's Formaldehyde Shark Is Getting Nervous: The government just keeps on hassling mega-hedge-fund manager Steven A. Cohen and his mega-hedge-fund SAC Capital. Bloomberg reports that emails introduced at the insider-trading trial of a couple of hedge-fund managers show Cohen was consulted on a questionable trade in Dell. Though Cohen has not been accused of any wrongdoing, he has also popped up in the charges filed recently against another former SAC employee over some trades in drug stocks. And last week, Reuters reported that SAC was also under investigation for trades in shares of Weight Watchers.

Thing Seven And One Half: The Onion Is There: As usual, better than the Daily Show or just about anybody else, the Onion pretty much has the right cathartic response to the nightmare of Sandy Hook. Again, if you'd like to do something constructive about it, go here.

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People Who Led Us To The 'Fiscal Cliff'