Monday, February 6, 2017

Today's Links

1--Higher Jobless Rate Suggests Economy Has Room to Run-- Unemployment rate ticked up to 4.8% amid an increase in the share of Americans working or actively seeking work

Those with jobs still aren’t seeing the big wage gains that characterized more prosperous economic expansions of the past. The average hourly paycheck grew just 3 cents over the month—and 2.5% over the year—despite millions of workers receiving raises under minimum-wage laws across 19 states at the start of the year. It is better, however, than the 2% rates that prevailed earlier in the expansion...

Some economists have argued that Mr. Trump’s goal of lifting growth to 4% would be too rapid, given the economy’s current capacity, and could ultimately require an intervention by the Fed, which might have to raise interest rates more quickly to prevent excessive inflation.

The more aggressive fiscal policy is, the more aggressive the Fed will be,” said Nomura economist Mark Doms, former chief economist at the Commerce Department.
Quicker action on interest rates would ultimately prevent the economy from achieving Mr. Trump’s economic target. “If you have the Fed hitting the brakes really hard, he’s not going to get as much bang as he had hoped” for his economic plans, said Mr. Doms. The latest jobs data, with a higher unemployment rate and modest growth in wages, “may head off the collision” between the central bank and the president in the near term, he said.

2--Republicans Get Ready to Roll Back Dodd-Frank Law

Republicans in Congress are preparing to release plans to roll back the 2010 Dodd-Frank financial overhaul as early as this week, following an executive order by President Donald Trump seeking a broad review of the Obama-era law.

3--Trump Signs Actions to Begin Scaling Back Dodd-Frank-- The financial-overhaul law was put in place in the wake of the financial crisis

4--The Fed’s Bond Portfolio Is Growing Up, and That Means Less Support for the Economy

5--Don’t Get Fooled on Wages --The Federal Reserve won’t read too much into January’s jobs numbers and neither should investors

6--The Economy’s People Problem-- Productivity data are weak again, showing the challenges faced by President Trump to boost growth, especially if he cuts immigration

7--Trump Reforms Are Stuff of Banker Dreams -- President launches regulatory overhaul that will please many on Wall Street

8--More Cash-Back Rewards Coming for Bank Investors-- Most banks will be able to significantly boost payouts to shareholders following this year’s stress tests

(Trump might not have a government yet, but he's already figured out how to give away the farm)

Banks will suffer less stress and give more cash back to shareholders this year, even without any deregulatory action by the Trump administration.

On Friday, as President Trump was signing executive orders setting in motion a round of financial deregulation, the Federal Reserve also released its hypothetical scenarios for this year’s bank stress tests. Compared with last year, this year’s tests will in some ways be easier and in some ways tougher.

9--US. to World: Banking Deregulation Race Back On

Plan poses a threat to the hard-won health of the world’s banking system

10--Trump Turns Attention To Sweeping Dodd-Frank Revamp

11--Iran Nuclear Deal: Debunking the Myths

The United States can convince the international community to continue its support for sanctions after killing the agreement.

The Facts:

If Congress were to reject the deal, the United States would need to coerce the international community to continue sanctions against their own economic interests. Some opponents of the deal advocate for threatening the international community: You can either do business with Iran or business with the United States. But this threat lacks credibility. As Treasury Secretary Jacob Lew explained in a New York Times Op-ed, 40% of American exports go to the European Union, China, Japan, India, and Korea. By threatening to exclude these countries from our banking system, the U.S. would be placing a significant portion of its own economy at risk. Moreover, the major importers of Iranian oil (China, India, Japan, South Korea, Taiwan, and Turkey) also account for one-fifth of U.S. exported goods and own 47% of foreign-held American treasuries. Even threatening to terminate this economic connectivity could have negative ramifications for both the US economy and the economies of our allies.

Our negotiating partners will not maintain sanctions that hurt their economies simply because the U.S. Congress insists they do so. Threatening our allies with economic warfare is a ludicrous approach, especially when compared to the practical and widely supported alternative of implementing the agreement.

12--The High Price of Rejecting the Iran Deal, Jack Lew

(US joined Iran nukes deal because it had no choice)

the United States does have tremendous economic influence. But it was not this influence alone that persuaded countries across Europe and Asia to join the current sanction policy, one that required them to make costly sacrifices, curtail their purchases of Iran’s oil, and put Iran’s foreign reserves in escrow. They joined us because we made the case that Iran’s nuclear program was an uncontained threat to global stability and, most important, because we offered a concrete path to address it diplomatically — which we did....

If Congress now rejects this deal, the elements that were fundamental in establishing that international consensus will be gone.Continue reading the main story

The simple fact is that, after two years of testing Iran in negotiations, the international community does not believe that ramping up sanctions will persuade Iran to eradicate all traces of its hard-won civil nuclear program or sever its ties to its armed proxies in the region. Foreign governments will not continue to make costly sacrifices at our demand.
Indeed, they would more likely blame us for walking away from a credible solution to one of the world’s greatest security threats, and would continue to re-engage with Iran. Instead of toughening the sanctions, a decision by Congress to unilaterally reject the deal would end a decade of isolation of Iran and put the United States at odds with the rest of the world.

Some critics nevertheless argue that we can force the hands of these countries by imposing powerful secondary sanctions against those that refuse to follow our lead.
But that would be a disaster. The countries whose cooperation we need — including those in the European Union, China, Japan, India and South Korea, as well as the companies and banks that handle their oil purchases and hold foreign reserves — are among the largest economies in the world. If we were to cut them off from the American dollar and our financial system, we would set off extensive financial hemorrhaging, not just in our partner countries but in the United States as well.

Our strong, open economic relations with these countries constitute a foundation of the global economy. Nearly 40 percent of American exports go to the European Union, China, Japan, India and Korea — trade that cannot continue without banking connections.

The major importers of Iranian oil — China, India, Japan, South Korea, Taiwan and Turkey — together account for nearly a fifth of our goods exports and own 47 percent of foreign-held American treasuries. They will not agree to indefinite economic sacrifices in the name of an illusory better deal. We should think very seriously before threatening to cripple the largest banks and companies in these countries.

Consider the Bank of Japan, a key institutional holder of Iran’s foreign reserves. Cutting off Japan from the American banking system through sanctions would mean that we could not honor our sovereign responsibility to service and repay the more than $1 trillion in American treasuries held by Japan’s central bank. And those would be direct consequences of our sanctions, not to mention the economic aftershocks and the inevitable retaliation.

13--EU summit marks escalation of conflict between Europe and US

On Thursday, other leading members of the European Parliament opposed the expected appointment of Ted Malloch as the new American ambassador to the EU. Malloch openly questions the existence of the EU and has indicated that his aim is its destruction. In an interview conducted in January, he told the BBC why he wanted to become the US ambassador in Brussels. “I took a diplomatic post that helped to destroy the Soviet Union,” he said. “Perhaps there is another union that needs taming.”

In an open letter to Tusk and European Commission President Jean-Claude Juncker, the factional heads of the Liberals (ALDE) and the conservatives (EVP) in the European Parliament, Guy Verhofstadt and Manfred Weber, said, “These statements demonstrate outrageous malice toward the values that constitute the EU. If an official representative of the US were to say something like this, it could seriously damage the transatlantic relationship that has been an essential contribution to peace, stability and prosperity on our continent.”

14-- Trump plans rollback of drug industry regulations

15--FBI secret manuals allow for warrantless stalking of journalists

16--US Productivity Growth Has Never Been This Low For This Long

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