2---Obama's role in sequester, naked capitalism
Lew also underplays his role in bringing about the sequester and Reuters plays along:
The spending reductions were designed in 2011 to be so onerous that they would force the White House and Republicans in Congress to find a less drastic way to trim U.S. budget deficits.Notice the lack of agency? In fact, the sequester was Lew’s baby. From a 2012 Washington Post article:
As the saying goes, success has a thousand fathers, while failure is an orphan. And if there ever is an orphan in Washington these days, it is that odd duck known as “sequestration.”…Fortunately, there is a detailed and contemporaneous look at the debt ceiling deal that led to the current budget crunch: Bob Woodward’s “The Price of Politics.” The book clearly had the full cooperation of top White House and congressional officials. With the help of our colleague, we took a tour through the relevant sections in order to determine the accuracy of the president’s statement [that Congress "proposed" the sequester].Woodward’s account indicates Gene Sperling was the brainchild, and that Obama immediately grabbed the idea. Boehner was “nervous” about it.
Two weeks after that conversation:
Page 326 (July 26):3---Much of the gains we see right now in the yearly trends are a reflection of the market lows in 2012, rather than a function of recent short-term momentum, CNBC
At 2:30 p.m., [White House Budget director Jack] Lew and [White House legislative affairs director Rob] Nabors went to the Senate to meet with [Senator Majority Leader Harry] Reid and his chief of staff, David Krone.
“We have an idea for a trigger,” Lew said.
“What’s the idea,” Reid asked skeptically.
Market observers shouldn't be fooled by the large headline numbers," warned Alex Villacorta, director of research and analytics at Clear Capital, a data provider. "Last year was a turning point for the market where the year started with prices at virtually their lowest point and saw a very strong correction through the year. Much of the gains we see right now in the yearly trends are a reflection of the market lows in 2012, rather than a function of recent short-term momentum."
Villacorta expects these big gains to subside as the market stabilizes and more supply comes up for sale. He sees the recovery of housing itself, not some broader economic resurgence, as housing's main driver.
"Moderate improvements in the broader economic landscape likely haven't offered potential homebuyers strong reason to jump back in at the start of the season. We do expect to see more buyers and sellers ready to take action over the next several months as rising prices continue to free up some underwater mortgages," he offered.
With home price gains running at more than twice the pace of income or rental growth, some are raising concerns of a bubble, but that is likely premature, according to researchers at Capital Economics. They noted that the strongest gains are out West in the markets where prices fell the most. Strong gains show how undervalued these markets are currently.
4---Credit-Card Debt Declines for First Time in 2013 , WSJ
Americans cut their credit-card debt in March, a sign some consumers are cautious about the sluggish economic recovery.
While total consumer borrowing increased slightly during the month, revolving credit, a category dominated by credit card debt, fell 2.4% in March at an annual rate, the first decline this year, a Federal Reserve report showed Tuesday.
The step back after two months of increasing credit card debt suggests consumers were less willing to take on higher balances in order to keep spending. January tax increases took a bite out of most workers’ paychecks.
5---Slow Hiring Holding Back Job Market, WSJ
What’s holding back the job market? Not enough hiring.
Since then, most of those measures have shown marked improvement. Layoffs are back to normal. Voluntary quits, though still well below their pre-recession level, have been trending steadily upward as workers regain confidence. Companies are even posting more jobs.
But actual hiring remains virtually stagnant.
The government on Tuesday released its monthly snapshot of job openings and turnover, known as JOLTS. The report echoed what other data, including Friday’s jobs report, already revealed: The job market cooled in March, though only mildly. Hiring and job openings fell modestly, while layoffs edged up
6---NY Fed Warns of Continued Risk to Financial System, WSJ
The Federal Reserve Bank of New York said in a paper released Tuesday that a key short-term funding market remains vulnerable to destabilizing runs that can threaten the broader health of the financial system.
“Limited tools are available to mitigate the risk of pre-default fire sales,” the paper’s authors warned. What’s more, “no established tools currently exist to mitigate the risk of post-default sales.”
The paper was written by Brian Begalle, Antoine Martin, James McAndrews and Susan McLaughlin. Mr. McAndrews is the bank’s director of research.
The report comes as part of the New York Fed’s long-running effort to deal with the risks created by what’s called the tri-party repo market, which allows banks and other firms to finance their trading positions by borrowing and lending securities to one another.
7---Americans Are Borrowing Again but Still Less Than Before Freeze, WSJ
America's credit crunch is easing. For the past six years, consumers and businesses have struggled to borrow money, but slowly, things are getting easier.
Large U.S. companies are taking advantage of low interest rates to borrow record amounts of capital in bond markets. Banks are opening the spigots for commercial and industrial firms, and loans grew at an 11% annualized rate in the first quarter of this year, the sixth double-digit percentage increase in seven quarters, Federal Reserve data show. According to the Fed's survey of senior bank-lending officers released Monday, 28% of banks lowered the cost of credit lines early this year to smaller firms like Mr. Aaron's that have annual sales of less than $50 million. Residential lending began edging up last year, and even people with bad credit can get a loan to buy a car these days.
In all, some $713 billion in credit flowed to U.S. households and nonfinancial businesses last year, double 2011's $336 billion, according to the Fed. That is still a fraction of the $2.2 trillion in credit that lifted American consumers and businesses in 2007.
Indeed, many Americans still struggle to get loans. Banks have tightened standards, especially for young people and those with past financial problems....
Credit usually gets tighter during downturns, but the latest recession was significantly worse, thanks to billions of dollars of souring home loans that shook the nation's banks and gummed up its mortgage-finance system.
Many banks remain reluctant to make home loans to borrowers with tarnished credit histories. Lenders worry loans they unload to Fannie Mae FNMA +0.12% and Freddie Mac, FMCC -0.24% the government-owned mortgage-finance giants, could be returned to them. And Wall Street's mortgage-securitization machine is struggling to rev up amid stricter rules and unfinished regulations
Consumer credit, which has been slower to respond to the Fed's efforts, is showing signs of life too.
Even borrowers with patchy credit can now qualify for "subprime" car loans, which were 43% of auto loans made in the fourth quarter of 2012, according to Experian, a credit-reporting firm.
Home-equity loans, which allow homeowners to tap their homes for cash, are creeping back. It is the same story with jumbo mortgages, usually taken out by affluent people. The bottom line is that banks are dipping their toes back into riskier territory.
8---Housing Market: Where are the 'Missing Households'?, econintersect
What are the prospects for the shift from increased renting toward the historical level of owner occupied units? Not very good in the next year or two, and possibly longer. The reasons:
- The failure of income for middle and lower income groups to grow is reducing the cohort of potential home buyers. See here.
- The increased level of student debt is reducing the ability of younger buyers to afford to buy a house. Student debt has grown four-fold over the past 8 years to total about $1 trillion.
- The wealth of the lower 93% of the population has declined from 2009 to 2011 during the recovery from the Great Recession. See here.
- The percentage of working households that cannot afford housing rents has increased from 22.8% to 26.4% between 2008 and 2012. See here.
- More than 4 million households that have gone through foreclosure in the past several years and millions more that are expected to still go through that process will result in a significant number of households with credit impairment limiting ability to get a new mortgage. See here, here and here.
9---The Housing Boom continues, prag cap
For the first time since March 2006, both the overall index and the index that excludes distressed sales are above 10 percent year over year. The pace of appreciation has been accelerating throughout 2012 and so far in 2013 leading into the home buying season.”
Chart via Orcam Investment Research:
10---Experts See Risk of a Housing Bubble Resulting from Fed Policies, DS News
11---How Obama's Housing Nominee Mel Watt Helped Create The Subprime Mortgage Crisis, business insider
12---Majority of surveyed Americans expect home prices to rise, housingwire
13---Mortgage Credit Eases as Demand Increases in Q2 , DS News
14---NYSE Margin Debt Raises Eyebrows, DS News
15---LPS: Rate of New Problem Loans Approaching Pre-Crisis Levels, DS News
16---FHFA Directs GSEs to Limit Purchases to QM Loans , DS News
17--Join the Army...and get raped, RT
The Pentagon admitted this week upon the completion of a soon-to-be released Defense Department study that sexual assaults within the United States military are on the rise.
The full results of the survey will not be unveiled until later this week, but the Pentagon has already disclosed one particularly startling statistic: within the ranks of the military, the number of service members who say they’ve been sexually assaulted during the last year amounts to roughly 26,000.
By comparison, 19,300 service members answered similarly in a 2010 study, suggesting the number of attacks has increased by one- third in just two years’ time.
"Sexual assault is a persistent problem and there is more work to be done," the Pentagon acknowledged in a statement obtained by USA Today.
Members of both Congress and the President Barack Obama White House responded already this week with outrage over the alarming trend. Lawmakers from the left and right have expressed their disappointment in the findings, and only hours after the results were published Pres. Obama spoke of the issue during a conversation with Defense Secretary Chuck Hagel.
"I've directly spoken to Secretary Hagel already today and indicated to him that we not only have to step up our game but exponentially go after it," Obama said during a Tuesday presser.