Tea Party: The Great Unknown
American commerce has clearly cast its lot with the Republicans in the midterm election. But just one day after voting the mood is already sober. Nobody knows what the right-wing tea party really wants.
One day after the midterm election, America’s business world is preparing for the Washington power shift. The emboldened Republicans have already announced sweeping changes to Obama’s major initiatives: healthcare and financial reform. Companies are already positioning their lobbyists.
Corporate America contributed millions of dollars to Republicans and tea party candidates in this election. Wall Street and industry has sent a message that it doesn’t support Obama’s economic policies — policies that the U.S. Chamber of Commerce has branded “anti-business.”
Yet just one day after the election, gloom has settled on the financial world. The successes enjoyed by Republicans and the right-wing radical tea party, and thereby Washington’s whole blockade mentality, have been shown to have a dark side. That’s why the usually expected relief in the markets after a Republican victory remains elusive. Their successes disturbed Wall Street to some extent. The attendant Washington gridlock is generally good news for the markets. An old Wall Street adage has it that the government won’t be able to interfere in things. But that might not hold true this time around. The first doubters are already asking what will happen if banks need another government bailout and Washington is paralyzed.
The tea party was born out of anger over the bailout of banks that lost the risky bets they made with taxpayer dollars while the man on the street came away empty handed. Fred Irwin, President of the U.S. Chamber of Commerce in Germany, says it would be wrong to believe that Republicans are basically bank-friendly while Democrats are not.
Analysts complain that a political majority capable of reducing the enormous public debt is nowhere to be seen and that’s why insecurity in financial markets is likely to increase in the future. That’s the view of Horacio Valerias, chief investment strategist for Allianz Global Investors Capital.
With their majority in the House, the Republicans will also chair the House Finance Committee. The most likely candidate for that post, Spencer Bachus, already announced on Wednesday his intention to try to change current financial reform legislation. Banks like Goldman Sachs, JP Morgan and Bank of America could profit from that.
Bachus wants to prevent the majority of derivatives from being traded on exchanges, saying in a television interview on Thursday that such a policy would destroy jobs. Previously, these complex financial products were traded outside the exchanges where they were not subject to regulation and were thus essentially non-transparent. These instruments were partially responsible for the financial crisis. Bachus said Obama’s exaggerated and expansive policies would have to be scaled back.
Likewise, Republicans have long considered Obama’s Consumer Protection Agency for financial products a thorn in the side. It is intended to protect consumers from financial damage due to predatory credit card and mortgage practices. But Republicans fear that it might lead to stricter controls on financial institutions. Experts assume the agency will be under-funded by a Republican controlled House and thus find it impossible to carry out its mission.
While insecurity is the watchword on Wall Street, industry vacillates between relief and worry. The election results were, naturally, good news for the oil industry since they all but ensure that Obama’s environmental protection initiatives are dead in the water. Obama wanted to get a comprehensive package approved this year but failed to do so. He now must try to enact his plans for a greener America incrementally, but it’s already questionable how far Republicans will be willing to compromise in the wake of their newly discovered self-confidence.
One man’s trash is another man’s treasure: green energy stocks like Solarworld, Conergy, Roth & Rau and Centrotherm were among the big losers on German markets. Clean technology concerns worldwide had hoped for environmental regulations that would create investor confidence and result in increased profits from a green energy boom. The Siemens conglomerate, along with Danish wind turbine manufacturer Vestas, began building factories in the United States in order to better position themselves for a growing market. But they are relying on subsidies that now seem based on stargazing.
The Massachusetts example illustrates just how influential political majorities are in passing renewable energy legislation. Governor Deval Patrick supported construction of the state’s first offshore wind park. His Republican opponent, Charlie Baker, vehemently opposed it. Now that Patrick has been re-elected as governor, the 420-megawatt wind park will likely be built. That’s a bright spot for the German Siemens concern that was designated “preferred supplier” for the project.
The European air and space conglomerate EADS also followed the elections with great interest. The parent company of Airbus has been engaged in a hot bidding war with Boeing for what was formerly the world’s largest defense contract. The U.S. Defense Department wants a contractor in place by Christmas who will supply the Air Force with 179 tanker aircraft. The first installment of that contract alone will amount to $35 billion.
Airbus is strongly favored by many Republicans because if they win the contract they intend to build manufacturing facilities in the southern United States. Republicans will now control the House and will also chair the important Defense Appropriations Subcommittee, formerly headed by Democrat Norman Dicks, an unabashed supporter of Boeing. The word in the EADS headquarters is that the change is likely to benefit Airbus.
It should be noted, however, that the defense industry in general can’t expect to profit greatly from the right turn made in American politics because the branch is already set to make cutbacks regardless of which political party is in power.
An example of that is the costly “Future Combat System” program that was pruned back a year ago. The result: American armaments companies will attempt to compensate for such losses by increasing weapons-related exports, thereby putting increased pressure on German and other European manufacturers.
One day after the midterm election, America’s business world is preparing for the Washington power shift. The emboldened Republicans have already announced sweeping changes to Obama’s major initiatives: healthcare and financial reform. Companies are already positioning their lobbyists.
Corporate America contributed millions of dollars to Republicans and tea party candidates in this election. Wall Street and industry has sent a message that it doesn’t support Obama’s economic policies — policies that the U.S. Chamber of Commerce has branded “anti-business.”
Yet just one day after the election, gloom has settled on the financial world. The successes enjoyed by Republicans and the right-wing radical tea party, and thereby Washington’s whole blockade mentality, have been shown to have a dark side. That’s why the usually expected relief in the markets after a Republican victory remains elusive. Their successes disturbed Wall Street to some extent. The attendant Washington gridlock is generally good news for the markets. An old Wall Street adage has it that the government won’t be able to interfere in things. But that might not hold true this time around. The first doubters are already asking what will happen if banks need another government bailout and Washington is paralyzed.
The tea party was born out of anger over the bailout of banks that lost the risky bets they made with taxpayer dollars while the man on the street came away empty handed. Fred Irwin, President of the U.S. Chamber of Commerce in Germany, says it would be wrong to believe that Republicans are basically bank-friendly while Democrats are not.
Analysts complain that a political majority capable of reducing the enormous public debt is nowhere to be seen and that’s why insecurity in financial markets is likely to increase in the future. That’s the view of Horacio Valerias, chief investment strategist for Allianz Global Investors Capital.
With their majority in the House, the Republicans will also chair the House Finance Committee. The most likely candidate for that post, Spencer Bachus, already announced on Wednesday his intention to try to change current financial reform legislation. Banks like Goldman Sachs, JP Morgan and Bank of America could profit from that.
Bachus wants to prevent the majority of derivatives from being traded on exchanges, saying in a television interview on Thursday that such a policy would destroy jobs. Previously, these complex financial products were traded outside the exchanges where they were not subject to regulation and were thus essentially non-transparent. These instruments were partially responsible for the financial crisis. Bachus said Obama’s exaggerated and expansive policies would have to be scaled back.
Likewise, Republicans have long considered Obama’s Consumer Protection Agency for financial products a thorn in the side. It is intended to protect consumers from financial damage due to predatory credit card and mortgage practices. But Republicans fear that it might lead to stricter controls on financial institutions. Experts assume the agency will be under-funded by a Republican controlled House and thus find it impossible to carry out its mission.
While insecurity is the watchword on Wall Street, industry vacillates between relief and worry. The election results were, naturally, good news for the oil industry since they all but ensure that Obama’s environmental protection initiatives are dead in the water. Obama wanted to get a comprehensive package approved this year but failed to do so. He now must try to enact his plans for a greener America incrementally, but it’s already questionable how far Republicans will be willing to compromise in the wake of their newly discovered self-confidence.
One man’s trash is another man’s treasure: green energy stocks like Solarworld, Conergy, Roth & Rau and Centrotherm were among the big losers on German markets. Clean technology concerns worldwide had hoped for environmental regulations that would create investor confidence and result in increased profits from a green energy boom. The Siemens conglomerate, along with Danish wind turbine manufacturer Vestas, began building factories in the United States in order to better position themselves for a growing market. But they are relying on subsidies that now seem based on stargazing.
The Massachusetts example illustrates just how influential political majorities are in passing renewable energy legislation. Governor Deval Patrick supported construction of the state’s first offshore wind park. His Republican opponent, Charlie Baker, vehemently opposed it. Now that Patrick has been re-elected as governor, the 420-megawatt wind park will likely be built. That’s a bright spot for the German Siemens concern that was designated “preferred supplier” for the project.
The European air and space conglomerate EADS also followed the elections with great interest. The parent company of Airbus has been engaged in a hot bidding war with Boeing for what was formerly the world’s largest defense contract. The U.S. Defense Department wants a contractor in place by Christmas who will supply the Air Force with 179 tanker aircraft. The first installment of that contract alone will amount to $35 billion.
Airbus is strongly favored by many Republicans because if they win the contract they intend to build manufacturing facilities in the southern United States. Republicans will now control the House and will also chair the important Defense Appropriations Subcommittee, formerly headed by Democrat Norman Dicks, an unabashed supporter of Boeing. The word in the EADS headquarters is that the change is likely to benefit Airbus.
It should be noted, however, that the defense industry in general can’t expect to profit greatly from the right turn made in American politics because the branch is already set to make cutbacks regardless of which political party is in power.
An example of that is the costly “Future Combat System” program that was pruned back a year ago. The result: American armaments companies will attempt to compensate for such losses by increasing weapons-related exports, thereby putting increased pressure on German and other European manufacturers.