After climbing in the first three quarters of this year, the Dow dropped in the fourth quarter for the firt time since 2008. Despite ongoing concerns over the fiscal cliff, the Dow climbed 166 points today, its best ever showing on New Years Eve. The broader S&P 500 index had its best New Year's Eve since 1974.

WSJ:

The S&P 500 and [technology heavy] Nasdaq both rose for the eighth year in the past 10, after slipping last year. The S&P stands 111% above its 2009 low, and the Nasdaq is 138% above its.

These astounding gains show that the great recession was a once in a lifetime buying opportunity for those who still had faith in the markets (or money to invest).

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On "dark pools," large block trades between institutions that are conducted outside the market and thus invisible to the public until they are completed:

While I have always been an advocate of electronic trading due to the efficiency the lower costs they bring o the markets, I am nit (sic) a fan of the lack of transparency the DARK POOLS create.

It is important to examine why there has been this growing interest in the use of dark pools. Markets have always focused on the speed with which information becomes available. Of course this information can be composed of various types.

It could be corporate developments like earnings or mergers or it can be information regarding the placements of buy and sell orders and who is placing these orders. It is the latter information that has created the interest in the dark pools.

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The buyer, IntercontinentalExchange, a 12-year-old exchange that deals in investing contracts known as futures, said Thursday that little would change for the trading floor in Manhattan's financial district.

The NYSE dates to 1792, when 24 brokers and merchants traded stocks under a buttonwood tree on Wall Street. But its importance today is mostly symbolic. Most trading is done on computers that match thousands of orders a second.

"The cash equities business in America has effectively been obliterated," said Thomas Caldwell, chairman of Caldwell Securities in Toronto and a shareholder in the New York exchange's parent company, NYSE Euronext.

He said that the jewel of the deal is not the New York exchange but Liffe, a futures exchange founded in London.

"The original New York Stock Exchange, it's got a brand name, it's got recognition, but as a business it's a very small part of this thing," Caldwell said.

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That’s right, HSBC is officially above the law. Too-big-to-fail has become too-big-to-prosecute.

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Apple began selling the iPhone 5 on Sept. 21, the same day the company's stock hit an all-time peak of $705.07 per share. Since then, the stock has plunged nearly 25 percent, trimming the company's market value by more than $150 billion. On Friday, the stock fell almost 3 percent and closed at $533.25.

The sell-off has had broad impact. It has reached beyond Apple's own stockholders because the company is the largest component in the Standard & Poor's 500 and Nasdaq composite index - two benchmarks that are tracked by widely held mutual funds and exchange traded funds, or ETFs.

Apple comprises 4 percent of the S&P 500 and nearly 12 percent of the Nasdaq, according to FactSet. The Nasdaq has shed 6 percent since Apple's stock price peaked while the S&P 500 has declined 3 percent, the same as the Dow Jones industrial average, which doesn't include Apple in its basket of 30 stocks.

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If we had a functional government America would address three “cliffs” posing far larger dangers to us than the fiscal one:

The child poverty cliff.

Between 2007 and 2011, the percentage of American school-age children living in poor households grew from 17 to 21%. Last year, according to the Agriculture Department, nearly 1 in 4 young children lived in a family that had difficulty affording sufficient food at some point in the year.

Yet federal programs to help children and lower-income families – food stamps, aid for poor school districts, Pell grants, child health care, child nutrition, pre- and post-natal care, and Medicaid – are being targeted by the Republican right. Over 60 percent of the cuts in the GOP’s most recent budget came out of these programs.

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The Globe cites two anonymous Senate aides who say that Warren will be named to the committee in the new session of Congress:

The appointment has not been formally announced by Senate leaders and will not be final until an official vote on assignments by the members. The pending appointment was described to the Globe by aides who requested anonymity because Senate Majority Leader Reid has not made a formal announcement.

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And yet the pit exists.  It goes by the name of “austerity.” However, it didn’t just appear in time for the last election season or the lame-duck session of Congress to follow.  It was dug more than a generation ago, and has been getting wider and deeper ever since.  Millions of people have long made it their home.  “Debtpocalypse” is merely the latest installment in a tragic, 40-year-old story of the dispossession of American working people.

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Andy Kroll of Mother Jones reports:

 Aides to two senators on the banking committee tell Mother Jones the industry has already moved to block Warren from joining the committee, which is charged with drafting legislation regulating much of the financial industry. "Downtown"—shorthand for Washington's lobbying corridor—"has been going nuts" to keep her off the committee, another Senate aide says.

Sen. Jack Reed (D-R.I.), a banking committee member, has been angling to get Warren on the committee, "but there are many bank lobbyists pushing to keep her off," a top Democratic Senate aide told Politico's Morning Money tipsheet. But the aide added, "If she really wants banking, it will be very tough politically to keep her off."

This would be the second time banks fought a hard battle against Warren, who was blocked from taking a post as head of the Consumer Financial Protection Bureau in 2011.

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We’ve now dodged the bullet of a Mitt Romney White House, so let’s get back to reality. Despite his campaign-trail populism, the president will continue the politics of accommodation to conservatives. Two of the three priorities he has set out for his next term are at the top of the GOP agenda: a “grand bargain” to cut government spending over the next 10 years and corporate tax reform that would cut rates—don’t hold your breath—and close loopholes. The third priority, rationalizing immigration law, is one of the few progressive ideas that also has the support of the Chamber of Commerce and the Business Roundtable.

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But with President Obama’s victory last week, the core framework of Dodd-Frank, the financial reform bill he signed in 2010, will become the law of the land. The question now is how to best push it forward in the coming months and years.

The most sensible, immediate reform would be to give regulators the adequate resources necessary to do their jobs. The CFTC had its funding cut by both parties last year in a move that will make their crucial work even harder to accomplish. The GOP is aiming to remove the independent funding stream for the CFPB. Without decent resources, it is unlikely that financial reform will be carried out effectively.

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The Securities and Exchange Commission says JP Morgan failed to tell investors that mortgages tied to the bonds were delinquent. And both banks failed to properly disclose practices that allowed them to profit while investors lost millions, the SEC says.

JPMorgan is paying $296.9 million. Credit Suisse will pay $120 million. The banks agreed to settle the charges without admitting or denying wrongdoing. The money will go to the investors, the SEC said.

It is the latest case against major financial firms for their conduct in the years preceding the 2008 crisis. When the real estate bubble burst, home values plunged and millions of people lost their homes. Investors who bought the securities backed by mortgages lost billions.

Robert Khuzami, the agency's enforcement director, said in a statement that inaccurate statements by banks in packaging and selling mortgage bonds "contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed."

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The settlement of lawsuits filed by the New York attorney general, U.S. Labor Department and private plaintiffs also provides for about $9 million in payments by other defendants. Combined with anticipated future payments from Madoff bankruptcy proceedings, New York Attorney General Eric Schneiderman said it is expected to return nearly all of the original investments to those who were defrauded, including union pension funds from upstate New York.

"Ivy Asset Management violated its fundamental responsibility as an investment adviser by putting its own pecuniary interests ahead of the interests of its clients," Schneiderman said. "Ivy deliberately concealed negative facts it uncovered in its due diligence of Madoff in order to keep earning millions of dollars in fees. As a result, its clients suffered massive and avoidable losses."

Labor Secretary Hilda Solis said the agreement "provides a measure of justice for those Americans who worked hard to prepare for their retirement and then saw hoped-for stability disappear."

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But he has his advocates, among them William Cohan, a former investment banker and investigative journalist. Cohan sees the deficit as the chief problem facing the United States, and thinks Bowles is the only candidate for Treasury who can craft a bipartisan deal to get our “fiscal house in order” and bring some accountability to Wall Street.

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It's not incongruent.

The Rolling Jubilee -- borne of Occupy offshoot group Strike Debt -- is best considered one among many Occupy tactics that aim to challenge or disrupt our current socio-political economic conditions. And as far as tactics go, this one is pretty clever. The idea is this: Occupy plans to buy up distressed debt -- debt which is in default -- and then forgive it (or, "abolish" it, as the ever-dramatic Occupy parlance puts it). Banks sell on distressed debts at pennies on the dollar (since the debts are in default, they're not making money off them and prefer to get rid of them). There are a number of websites where anyone can go and then buy this discharged, cheap debt. So, you or I or Occupy could buy $16,000 worth of debt for just $500 and then either make a profit by recovering the difference or just cancel it. Occupy and Strike Debt plan to do the latter on a large scale.

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“We played the old Beatles song ‘The Taxman,’ on our trading floor this morning,” bond fund uber-manager Bill Gross told Bloomberg on Thursday.

Oh lordy, hard times are coming!

Although, you know, those times might not be quite so hard as the days back in the mid-'60s when George Harrison felt himself compelled to complain about a 95 percent "super tax." If, during the negotiations to avoid the "fiscal cliff," President Obama plays a level of hardball that was in short supply for most of his first term, the wealthiest Wall Streeters might see a return to Clinton-era income tax rates on the rich. Anything more meaningful, like a hike in the tax rate on capital gains, or an end to the exemption for carried interest, will require a major breakthrough -- successfully bashing through the obstructionism of House Republicans who seem unlikely to accede to any elements of Obama's agenda, no matter how forcefully the president seeks them.

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Now the real work begins. Millions of us – the majority – must come together to insist that President Obama and the Democrats stand up and fight for the things we sent them there to do. Mr. President, do not listen to the pundits who today call for you to "compromise." No. You already tried that. It didn't work. You can compromise later if you need to, but please, no more beginning by compromising. And if the Republican House doesn't want to play ball, do a massive end run around them with one executive order after another – just like they have done and will do if given the chance again.

We have to have Obama's back. As he is blocked and attacked by the Right, we need to be there with him. We are the majority. Let's act like it.

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Lesson One: Democrats Can Own the Future.

Latinos, African-Americans, young people, and women have become the major Democratic voting blocs. That’s good news for Democrats because the first three constitute a growing percentage of the voting population (young people eventually become the entire voting population), while women continue to gain economic ground.

The challenge for Democrats will be to hold these groups in the future. All have been attracted to the Democratic Party in recent years mainly because Republican policies have turned them off – policies like the GOP’s draconian responses to undocumented workers, its eagerness to slash Medicaid and food stamps, its misogynistic approach to abortion, and its demand to cut federal spending on education and student loans.

But if Democrats want to keep their loyalty over the long term, the Party will need to do more than rely on Republican electoral stupidity. After all, the GOP might learn it has to become (or appear to become) more inclusive.

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In this context, the decision of a group of corporate CEOs to form a new group, the Campaign to Fix the Debt, to push for a budget deal can be seen as a big deal. This group brings back memories of a 1970s TV ad that featured a middle-aged man wearing a bad toupee pushing totally fake-looking toupees. The narrator assured viewers that no one would recognize that these toupees were not your real hair saying, “I wouldn’t lie to you, I’m the president of the company.”

It’s hard not to think of this ad when listening to the agenda being pushed by the Campaign to Fix the Debt. This is yet another project supported by Wall Street investment banker Peter Peterson. For the last two decades Peterson has used his fortune to bankroll a number of organizations that were ostensibly pushing fiscal responsibility, but always had the same punch line: cut Social Security and Medicare.

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