Published by WallStreetWeather.net
Proposed taxes and restrictions on bank bonuses, a bipartisan government committee investigating the cause of the financial crisis, financial regulatory reform legislation in Congress, the Federal Reserve and its Chairman fighting to retain power, and a “financial crisis responsibility fee” to recoup the cost of government bailouts are all dominating the news. They reflect the buildup in planetary influences over the last several weeks converging at today’s Capricorn Solar Eclipse.
A Solar Eclipse is a “supercharged” New Moon. What is in begun at this time will have ramifications particularly over the summer and in the years to come as this eclipse in Capricorn will be repeated on January 14, 2029. Capricorn is an ambitious and action oriented sign focused on professional achievement and the material rewards it brings to create a secure foundation. Capricorn and its planetary ruler Saturn represent economic contraction and consolidation. There are no shortcuts with Saturn; what you put out, you get back. As the ruler of time, Saturn requires that we be accountable and take responsibility for our actions.
The Solar Eclipse conjoining Venus puts the focus on self-worth and financial values. Saturn rules government and Venus rules money and banks. Saturn in Libra (2009-2012) reinforces this theme, representing the relationship between the government and the banks that have rebounded to record profits following the government’s bailout. The mission of Saturn in Libra is to balance out the scales too tilted in favor of Wall St and Washington special interests at the expense of the nation’s overall economic stability.
Pluto rules leverage, Wall Street’s fancy name for debt and all the opaque financial instruments that began turning toxic when Pluto entered Capricorn in 2008. As the planetary ruler of life and death, the government exerted its power by deciding which financial institutions would live and which ones would die before instituting financially friendly policies such as government guaranteed loans and zero percent interest rates which contributed to banks’ outsized gains in bonds, commodities, stocks, and mergers.
Saturn is squaring Pluto at the Solar Eclipse, seeking to put the brakes on Wall St.’s return to its old ways. While the square represents the motivation to restructure and transform the financial system, those in power in government and the plutocrats in the so-called free market system where handouts and special treatment is fine for them but not anyone else, will make every attempt to keep the status quo intact. Saturn square Pluto calls for deleveraging and curtailing wasteful spending; forcing individuals and governments to get their priorities in order and focus on the long term. Pluto rules taxes, and governments will look for various ways to tax and manipulate budgets as a way of indirectly dealing with the issue.
Mercury rules communications. Mercury has been retrograde in Capricorn since December 26, turning stationary direct just hours after the Solar Eclipse. Mercury retrograde brings back matters from the past. Most of the financial news during this retrograde period has focused on government proposals and legislation that seeks to restrict Wall St’s profits, re-examining the factors leading up to and the government’s conduct in handling the crisis.
Mercury squaring Saturn and conjoining Pluto now describes how the government and the media want the public to be focused on bank bonus compensation to conceal the deeper and more fundamental issues that need to be resolved. If banks are forced to return to basic banking and raise capital through deposits rather than wholesale borrowing, they would not be able to engage in the level of risk that generates the outsize profits that allow outsize bonuses. FDIC guaranteed deposits come with restrictions, such as not using the money to trade for the banks’ own account.
Saturn represents foundations and getting to the root cause. Saturn’s energy is particularly potent now as it turned retrograde on Wednesday, the day the Financial Crisis Inquiry Commission (FCIC) held its first hearing to investigate the cause of the financial crisis. Most of Chairman Phil Angelides questions were directed at Goldman Sachs chief executive Lloyd Blankfein. Angelides invoked Saturn and Pluto when he compared Goldman’s practice of selling mortgage-backed securities while shorting the subprime market to selling a car with faulty brakes and purchasing insurance on it. Basically it comes down to Chairman Angelides being “troubled” by Blankfein’s lack of deference to Saturn and Pluto by refusing to admit that the government rescued Goldman from its near death experience.
The Solar Eclipse conjoining Venus puts the focus on the leaders of the nation’s central bank and the Treasury. Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner who was president of the New York Fed when the government bailed out AIG, are both in the hot seat over their lack of transparency for using the insurance giant as a conduit to fully reimburse Goldman and other AIG counterparties at taxpayers’ expense.
Bernanke also refuses to give Saturn and Pluto the respect they deserve by denying the Fed’s policy of ultralow interest rates and lax regulation encouraged Wall St to take on excessive risk in the pursuit of yield. In speeches and in communications to Congress, Bernanke is conducting a vigorous political campaign to be reappointed Fed Chairman and to keep the Fed’s regulatory powers intact. Bernanke’s defense of the Greenspan doctrine of bubble now and fix later is incompatible with the energies of Pluto in Saturn’s sign until 2024. Contrary to the Greenspan/Bernanke doctrine, banks are not innovators. Nor do they produce any physical products. Banks are the backbone providing financial support to the real economy.
The government proposal that touches on all the planetary players involved in the Solar Eclipse has got to be President Obama’s “Financial Crisis Responsibility Fee” that first surfaced when Saturn went retrograde on Wednesday. Mercury retrograde describes how the proposal emanates from a provision in the TARP bill requiring the Administration to come up with a plan to recoup any losses from the $700 billion bailout by 2013. To make up for the currently estimated $120 billion shortfall primarily due to bailouts to the automakers who are exempt from the tax, the Administration has proposed a 0.15% fee on financial firms with $50 billion+ in consolidated assets, including General Electric’s GE Capital division and AIG. This is essentially a leverage tax as it will have a greater affect on banks that rely on wholesale funding as another way to discourage excessive risk taking.
Saturn is a cautious and pessimistic energy that is focused on fundamentals. Venus and the Solar Eclipse conjoin the USA Pluto in the sector of the USA chart representing the banking system and the nation’s wealth. And Mercury turns stationary direct exactly opposite the USA Jupiter in Cancer. Fears that JPMorgan Chase would be required to buy back faulty WaMu mortgage originations is just one of the factors that could contribute to a stock market decline as risks not previously revealed or fully accounted for rise to the surface.
Eclipses are harbingers of major change. The message of the Capricorn Solar Eclipse is that the factors causing the financial crisis have yet to be addressed despite the stock market’s race to return to pre-crisis levels. Wall St. will have to learn to make money the old-fashioned way as the government enacts various financial restrictions. And regardless of their “extended period of time” mantra, the Fed could be forced to raise rates by their June 23 meeting. It appears that the double dip recession that many analysts are concerned about is awaiting Wall St. as innovation returns to Main St.
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