Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1267.9 | -4.2 | -0.33% |
| Eurostoxx Index | 2356.76 | -33.150 | -1.39% |
| Oil (WTI) | 102.41 | -0.550 | -0.53% |
| LIBOR | 0.5825 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 80.052 | 0.389 | 0.49% |
| 10 Year Govt Bond Yield | 1.94% | -0.01% |
Markets are giving back some of yesterday’s gains on a slow news day.
The Fed announced yesterday that they will be more transparent in forecasting interest rates in the future. The ironic thing is that when I studied money and banking way back in the day, the view was that if the market perfectly anticipated Fed policy, it would be ineffective. The Fed had to surprise the market for policy to have its full effect. I believe this will probably be temporary – the Fed knows it has to extricate itself from the financial system and that rates eventually have to go up. The Fed is going to ensure that increases are well-telegraphed and that people have ample time to adjust.
Not a lot of economic data this morning. We will have jobless claims tomorrow and payrolls / unemployment on Friday.
Filed under: Uncategorized |
All Things in Moderation 
OT to Mark — I saw your note about the essential health benefits. I'm working on a post for you.
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I excoriated Suzy Khimm yesterday for writing that this would have stimulative effect on the economy. To the extent that consumers would understand this at all, they would realize that they can postpone their car or house purchase because interest rates aren't going anywhere. While the low rate itself is stimulative in general, forecasting that you're going to keep it there for two years clearly is not.
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The fight over Obama's recess appointment should be amusing.AP sources: Obama bucks Senate Republicans, installs new consumer watchdog on the jobWhat's significant is President Obama is intentionally choosing to pick an institutional fight with the Senate. He could have done the exact same thing two days ago and completely avoided the procedural fight, but has apparently decided that he would rather have the issue for his reelection campaign. "More than a standoff over one significant appointment, the fight speaks to the heart of presidential campaign under way. Presiding over a troubled but improving economy, Obama’s must persuade a weary middle class that he is their champion, all while fending off fire from Republicans challengers and lawmakers. To get Cordray into the job, Obama is essentially dictating to Senate what constitutes a legitimate legislative session."I wonder if there is any video of Senator Obama making a statement supporting Harry Reid's "sham" pro forma sessions to block George W. Bush's recess appointments from 2007 and 2008, similar to Senator Obama's speech opposing raising the debt ceiling from 2006.
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Even though as you know I am very optimistic, there's still a lot of work to be done:"European Banks Hoard Record $591 Billion at ECB"http://www.cnbc.com/id/45867490
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jnc:I didn't understand your other reference about the difference in timing of the appt. could you give it to me some other way?
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Can the minority party schedule these pro-forma sessions without the majority leader's consent?Also, unfortunate phrasing from the president, as quoted by the AP: "[W]hen Congress refuses to act in a way that hurts our economy and puts people at risk, I have an obligation as president to do what I can without them.”
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bsimon- Yikes, that is some unfortunate phrasing.
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That phrasing by the President is great.John: From Ezra Klein's blog on the timing issue:"Some quick background: Presidents have long had the power to make appointments to fill administration positions whenever Congress is adjourned for more than three days of recess. Yet in the current Congress, Republicans have been intentionally organizing “pro forma” sessions during their breaks so as to avoid recesses from technically taking place. Congress isn’t in town, but Obama can’t make recess appointments either.Yesterday, a loophole briefly arose. As TPM’s Brian Beutler reported, the 112th Congress was technically switching between sessions, which meant there was a brief flurry of seconds when Congress wasn’t technically in session and Obama could’ve rushed to appoint Cordray — or fill any other vacancies. A Congressional Research Service brief (PDF) notes that Teddy Roosevelt did this way back in 1903, filling 160 recess appointments, mostly military officers, in a few minutes’ time.Obama didn’t take advantage of that loophole. Instead, the Wall Street Journal reports, White House lawyers have simply concluded that this Republican “pro forma” strategy is irrelevant and that they can recess-appoint Cordray anyway. As a side bonus, recess-appointing Cordray now rather than yesterday means his appointment will last through the end of 2013, rather than through the end of 2012."With Cordray appointment, Obama to set precedent
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jnc:TY. Government process is not my strong suit.
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"European Banks Hoard Record $591 Billion at ECB"lol, even I saw that one coming.
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lms:It's not the number per se that worries me. It's that it's increasing.
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Continuing from yesterday about the danger of low interest rates:"What Pimco's 'Paranormal' Means for Pension Funds"http://www.cnbc.com/id/45869903
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test
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Fred a Fed white paper today. this is most of the conclusion:"The challenges faced by the U.S. housing market today reflect, in part, major changes takingplace in housing finance; a persistent excess supply of homes on the market; and losses arisingfrom an often costly and inefficient foreclosure process (and from problems in the currentservicing model more generally). The significant tightening in household access to mortgagecredit likely reflects not only a correction of the unsound underwriting practices that emergedover the past decade, but also a more substantial shift in lenders’ and the GSEs’ willingness tobear risk. Indeed, if the currently prevailing standards had been in place during the past fewdecades, a larger portion of the nation’s housing stock probably would have been designed andbuilt for rental, rather than owner occupancy. Thus, the challenge for policymakers is to findways to help reconcile the existing size and mix of the housing stock and the currentenvironment for housing finance. Fundamentally, such measures involve adapting the existinghousing stock to the prevailing tight mortgage lending conditions–for example, devising policiesthat could help facilitate the conversion of foreclosed properties to rental properties–orsupporting a housing finance regime that is less restrictive than today’s, while steering clear ofthe lax standards that emerged during the last decade. Absent any policies to help bridge thisgap, the adjustment process will take longer and incur more deadweight losses, pushing houseprices lower and thereby prolonging the downward pressure on the wealth of currenthomeowners and the resultant drag on the economy at large.In addition, reducing the deadweight losses from foreclosures, which compound the losses thathouseholds and creditors already bear and result in further downward pressure on house prices,would provide further support to the housing market as well as provide assistance to strugglinghomeowners. Policymakers might consider minimizing unnecessary foreclosures through theuse of a broad menu of types of loan modifications, thereby allowing a better tailoring ofmodifications to the needs of individual borrowers; and servicers should have appropriateincentives to pursue alternatives to foreclosure. Policymakers also may want to considersupporting policies that facilitate deeds-in-lieu of foreclosure or short sales in order to reduce thecosts associated with foreclosures and minimize the negative effects on communities."
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"Absent any policies to help bridge thisgap, the adjustment process will take longer and incur more deadweight losses, pushing houseprices lower and thereby prolonging the downward pressure on the wealth of currenthomeowners and the resultant drag on the economy at large."_______________huh????? Letting the market clear causes deadweight losses? Deadweight losses are caused by government influence in the market. The Bernank is using interesting terminology..
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so you ARE alive!
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He's preparing congress for the QE due in January which will probably consist of buying MBS from what I read
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sorry, been super busy lately…the whispers in the mortgage forward market are that the fed is already buying…
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The Fed sent a white paper to Congress today about housing. "Expanded Fannie, Freddie Role Could Help Heal Housing: Fed" http://www.cnbc.com/id/45874019 How it affects us is this. The consensus is that a new QE program will begin in January by the Fed, probably the buying of MBS. I think the white paper is an attempt at political cover for Congress to act in concert on the housing market. The post I cited below, may be a trial balloon sent out to gage the reaction to replacing DeMarco on a recess. Big changes coming this month. This is about so much more than just Cordray I tihnk.
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sorry forgot to post the Demarco piece:"And even beyond the short and long term implications of Cordray’s new role at the CFPB is the significance of the recess appointment itself on something even more crucial to housing: The Federal Housing Finance Agency, overseer of Fannie Mae and Freddie Mac. The FHFA has been run by an acting director, Edward DeMarco, for several years. DeMarco has stood in the way of various government attempts to use Fannie Mae, Freddie Mac and the FHA to help troubled borrowers and resuscitate the overall housing market. He has consistently argued that his job is to protect the books of these mortgage giants, not to ameliorate the dyspeptic housing market. If the President can use the recess appointment for Cordray, then he could potentially use it to replace the very controversial DeMarco. “A different FHFA director might take a more expansive view of what is needed to help housing,” notes Jaret Seiberg, financial services policy analyst at Guggenheim Securities. “That opens the door to much bigger refinancing programs than what have been adopted so far. For borrowers, that means lower rates which helps the economy, helps housing and helps the President’s re-election effort.” http://www.cnbc.com/id/45874068
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The recovery won't begin until housing bottoms. And he wants to use the GSEs to try and artificially support the housing market, which will drag out the inevitable.He believes house prices are too important to be set by a mere market.
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brent:What price is these days?
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well that explains why banks are refusing to hit bids in short sales. they must have gotten the word. still don't think it matters – the real estate market is too big to influence – it will do what it is going to do.
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I was just having a dicussion elsewhere, that I think the Fed is in control of damn near everything these days. To the extent they are outside of the housing market, the white paper may be an attempt to change that.
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great. lets let the banks repo REO and non-performers.
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As you may recall I think that it's necessary too. However I never fight the Fed as a matter of good investment policy.
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well, that would officially put us on the japan track.
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Also, unfortunate phrasing from the president, as quoted by the AP: "[W]hen Congress refuses to act in a way that hurts our economy and puts people at risk, I have an obligation as president to do what I can without them.” I found this part of the speech (and the whole, but especially this) truly disturbing. If you heard or saw it, it is even more so. I'm a right winger, so I was against the guy from the start, but I thought this loud and somewhat angry declaration was genuinely worthy of someone like Hugo Chavez. I'm totally serious about that. And I think he has now, with these alleged "recess" appointments, thrown caution to the wind. He is insisting on imposing his will on the country, and he doesn't care what constitutional provisions, traditions or precedents stand in the way. This goes to the very integrity and survival of our constitutional order, which he is openly defying and attacking in my opinion. It also comes after a series of actions that to me are patent derelictions of duty and arrogations of unconstitutional power, like his refusal to enforce DOMA, his use of likely ultra vires executive orders to circumvent Congress, and his seemingly unending legal attacks on states for enforcing laws immigration and voting laws that are politically disadvantageous to his party.I see this President as a genuine threat to our constitutional order. My friends on the left will find this extreme and unpleasant. Kevin might say, tsk tsk, the republic is not about to end. But I nevertheless see it this way. He is in fact gradually undermining and subverting our system of government, and yesterday was a large and defiant step in that direction.
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