Wednesday, January 22, 2014

Today's links

1---Recession’s True Cost Is Still Being Tallied, NYT

At a bare minimum the crisis cost nearly $20,000 for each American. Adding in broader impacts on workers’ well-being — an admittedly speculative exercise — could raise the price tag to as much as $120,000 for every man, woman and child in the United States. With this kind of money we could pay back the federal debt or pay for a top-notch college education for everyone.

The portrait of loss, tentative as it is, suggests that even the most far-reaching measures might be justified to ensure it never happens again. But you wouldn’t know that from the current debate.
In December, the American Bankers Association sued to stop a provision of the Volcker Rule, part of the Dodd-Frank financial reform law, and intended to stop banks from engaging in risky trading on their own account....

Over all, almost half the rules required by the Dodd-Frank legislation have yet to be written. But the financial industry would love to slow regulation further. “Our goal is to press the pause button on the multitude of regulations and rules, to give the industry time to digest them,” said James Ballentine, executive vice president for congressional relations for the banking association...

the Dallas Fed modeled how much economic activity would be lost by the time the nation returned to its growth path before the crisis. In their study, they initially assumed that the economy would return to its previous path by 2023, and concluded that the total loss would amount to 40 percent to 90 percent of a year’s worth of economic output. That’s about $6 trillion to $14 trillion in today’s money — or $19,000 to $45,000 per person.
Others have used different methods and come up with similar estimates. Better Markets estimated that the crisis cost $12.8 trillion in lost output...

Under a more pessimistic assumption, the Dallas Fed economists estimated that the cost could be 65 percent to 165 percent of annual output. The upper limit amounts to about $25 trillion, almost $80,000 per American.
But even that might be an underestimate. Using a different method of analysis, the economists also looked at how Americans cut back on purchases of consumer goods. They concluded that the expectations of the lifetime income of working age adults fell by almost $150,000, on average...

Consider joblessness, which damages physical and mental health and breeds poverty, which contributes to crime. It affects the structure of families. Only about 500,000 new households were formed each year from 2007 to 2010, a third of the average pace during the previous decade....

the Dallas economists borrowed an old estimate by the International Monetary Fund that direct support above and beyond the previously existing public safety net totaled 82 percent of the nation’s G.D.P. — about $12.6 trillion. This is about the size of the federal government’s debt to the public.

2---BOJ Approaches Limit Of Its Existing Bond Buys, As Doubts Spread It Will Boost QE, zero hedge

The BOJ’s total assets have climbed to ¥229 trillion, or 48 percent of the nation’s nominal gross domestic product. The central bank aims to increase its balance sheet further to ¥290 trillion by the end of this year."
Richard Koo adds, "It may be too late to prevent long-term rates doing something crazy” should the BOJ hold off on tapering before inflation reaches the target, said Richard Koo, the chief economist in Tokyo at Nomura Research Institute Ltd. The stimulus is leaving Japan at risk of falling into a quantitative-easing “trap” of being unable to taper without a surge in long-term rates and subsequent damage to the recovery, according to Koo, a former Federal Reserve economist."

Good luck Japan. You will need it very soon....

Accelerating inflation is prompting analysts from HSBC Holdings Plc. to Daiwa Securities Co. to push back forecasts for when the Bank of Japan may add to record monetary easing.

3---The Damage From the Housing Bubble: How Much Did the Greenspan-Rubin Gang Cost Us?, Dean Baker

If we just take the dollar losses through 2013 we get $7.6 trillion, in 2013 dollars. This is just economic losses, it does not include any effort to quantify the pain that workers or their families have suffered from being unemployed or losing their homes. This comes to roughly $25,000 for every person in the country. Alternatively, it is 190 times as much as the Republicans hoped to save from their cuts to food stamps over the next decade.

4---There was a war - and Wall Street won it, Huff Post

The crimes committed at JPMorgan Chase include investor fraud, consumer fraud, perjury, forgery, bribery, violations of sanction laws against countries like Iran and Sudan, illegal foreclosures on active duty service members and their families ... The list goes on and on and on.
 Wells Fargo, which White describes as "a buttoned-down San Francisco-based bank," managed to evade criminal indictments over its subsidiary's active participation in laundering money for the Mexican drug cartels.  Serious charges were leveled at Citigroup executives, including some who had been senior government officials. Investigators were stunned by Bank of America's foreclosure fraud abuses - a practice that every major American bank indulged in, over and over. The lists of potentially indictable offenses at institutions like GE Capital and "shell of its former self" Goldman Sachs are, on the face of it, pretty overwhelming.

5--Housing Bubble 2.0 Hits Messy Resistance In California, Testosterone Pit

The salary “you must earn” to be able to buy the median home in San Francisco is $125,071 as of November, according to That home costs $705,000 – up 24% from a year ago (DataQuick figured the median price in December at $813,000). San Francisco tops the list of the most unaffordable cities. Next are San Diego and Los Angeles – the California trifecta – then New York City, where a mere $71,245 in income suffices to buy the median home. Households earning the median income of $51,000, well, forget it.....

Home-equity loans are back with a vengeance – up 30.8% in the first nine months of 2013 from prior year and are expected to reach $60 billion for the year, the highest level since 2009 when the market was in collapse mode. But it’s still a far cry from 2006, when such loans hit an all-time crazy record of $430 billion, in a $15 trillion economy!...

And adjustable-rate mortgages! In the Bay Area, they made up 22% of all purchase loans in December, up from 11% in December 2012, the highest ratio since July 2008, according to DataQuick....

And Interest-only home loans are back! ....

But sales volume has been plunging. In December it was down 17.7% in San Francisco and 12.7% in the Bay Area from a year earlier.

6---Former subprime executive making risky loans again, center for public integrity

7---Majority of US college campuses becoming ‘no-free-speech’ zones - report, RT

8---Church Complicity With the Horrors of Spain's Fascists--The Silences of Pope Francis, counterpunch

9--Chart--delinquency rate of people who don't put "money down" on a house, oc housing

10---Is San Francisco, the most overvalued US housing market, going to crash?, oc housing

11---Purchase Applications Unexpectedly fall 4% from Last Week, HW

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