Last Thursday and Friday were the inspiration for my colunm in today's Roll Call.

Like Wall Street, Budget Policymakers Need Certainty

Nov. 3, 2009
By Stan Collender
Roll Call Contributing Writer    

Wall Street, which supposedly hates uncertainty, was clearly unhappy late last week.

On Thursday, in the face of a report showing not just that the economy had stopped declining but that it had actually grown faster than expected in the third quarter, the Dow Jones industrial average rallied by almost 200 points. Then, after a separate report on Friday showed that consumer spending had fallen by an unexpectedly large amount in that same quarter, the market sold off by more than the previous day’s gain as the Dow fell by about 250 points.

Is it really possible that the Wall Street community doesn't understand how much its world has changed in the past six months?

I have to ask this question after reading the weekend accounts about how surprised and angry Wall Street is about the extremely negative public response to the story about the million dollars John Thain spent decorating his office.  It apparently is also shocked at the even more negative reaction to the very large bonues Merrill paid its staff last year at the same time the company needed a taxpayer bailout.

CNBC spent much of last Friday defending the decorating and bonuses.  It's on-air personalities called the decorations an insignificant amount of money and said that the bonuses were just a fact of life on the street.  Former General Electric CEO Jack Welch said on Squawk Box that the bonuses were the way to keep good people and make it more likely that the companies the federal government has invested in will do well.

Are we in denial?  Joe Nocera makes the case persuasively in today's New York Times:

Last week, it was Fannie Mae and Freddie Mac that needed a government bailout. This week, it looks as though American International Group and Washington Mutual will be on the hot seat. We have actually reached the point where there are now only two independent investment banks left: Goldman Sachs and Morgan Stanley. It boggles the mind.

Wall Street constantly complains about how Washington incessantly debates issues instead of acting on them.  That's why its almost comical to watch the current situation as Wall Street continues to debate whether there is or will be a recession while Washington has already enacted legislation to deal with it.

Wall Street should be paying more attention to the 2008 congressional election than the presidential contest. 

The reason is simple, as well as one that eveyone -- networks, investors, commentators, etc. -- always seems to forget: Regardless of who the next president is, nothing will happen on taxes and spending unless Congress agrees to do it.

That makes the House and Senate results at least as important for the issues investors and those that serve them tend to focus on, like taxes and spending.