Why Some States are “Donors” and others are “Donees”

Fix and PL commenters are quick to allege that R states are “donees” and D states are “donors”.  The reality eludes them.  But what is the reality?

In the map above, the deepest green states are the biggest donors and the deepest red states are the biggest donees.

The average state should be light green, that is, a small donor, to cover spending outside the USA.  We should look at the average states, the light green ones, like Texas, last.

We can quickly deal with some of the red states.  MD and VA house much of the federal bureaucracy.  They are understandably donees.  NM and AK have huge native American and national park and national forest burdens.  They are understandably donees.  Notice, btw, that of those first four, only one is reliably Republican.  That always falls on deaf ears at PL.

NJ, an industrialized state with plenty of manufacturing and commerce and limited support from AG subsidies or military bases or national parks or Indian reservations, is an understandable big donor.

I have more trouble understanding IL’s situation.  Like TX, it is big in industry and agriculture. IL should be light green, as far as I can see.   Why is it such a big donor?

Why is WVa such a big donee?  If I had to guess, I would think it was purely the legacy of Robert Byrd, but that is cynical, no?  Why is FL a net donee?  Indians and parks?  Could be the Everglades and Key West and the military are enough to explain it, coupled with AG subsidies.  Or are they counting where the social security checks are going?

I am curious as to y’all’s deep thoughts, this not being either The Fix or PL.

NCAA Men’s Final Four: A Word from Madame Commish

A number of the pundits I’ve read this week seem to think the championship is Kentucky’s to lose.  Ahhh, but tournaments are won one game at a time and today it’s Louisville vs. Kentucky, followed by Ohio State-Kansas.

The two Bluegrass State teams met earlier this season.  In that matchup, Kentucky committed a lot of turnovers and shot badly from the floor, yet still managed to win.  And the Wildcats have played very well during the tournament, averaging 88 points per game and shooting over 50%.  ‘Course, they haven’t met anything like the Cardinals’ defense in the last two weeks, either.  And it’s the Louisville defense that holds the potential for an upset.

The evening’s second game features two solid defenses with rugged playing styles.  Kansas beat Ohio State back in December, but OSU’s key player, Jared Sullinger, didn’t play that day.  Kansas has to stay out of foul trouble and have better accuracy with three-pointers, while OSU needs a balanced offensive attack.  Most of the pundits I’ve read are giving this one to the Buckeyes of OSU.

5 Reasons You Don’t Really Want to Win all that Lottery Money

For the last couple days, I had been planning retirement and trying to figure out just how I was going to spend my share of the winnings from the MegaMillions lottery (I do it with my company pool and my share would be a paltry 11 mil).  Then I see this article on why I don’t want to win it.  So naturally I read it. Here are the 5 reasons why they say I don’t want to win it (go to the article for more details about each):

1) Your friends will take advantage
2) Your relationship could fail
3) You’ll have an increased risk of bankruptcy
4) You’ll have to fight off a host of long-lost family members
5) You’ll be a target for a litany of lawsuits and scams

My thoughts on this are:

1) People I know will take advantage – my friends won’t. If ‘friends’ do, then really, how good a friend are they?
2) According to the example they gave (emotionally unprepared for the enormous responsibility and pressure of winning the lottery, took to gambling and womanizing to deal with the troubles adjusting to his new lifestyle), I have a hard time thinking that either my wife or I would not be able to handle it. It could happen I guess but given the chronic savers we are and the money sense we have, I’m willing to risk this one.
3) The theory is that winners have more credit available to them, use it, and overextend themselves. We are not credit people. Other than mortgage, we have lived debt free, paying off credit cards each month, not spending money we don’t have. I don’t think this is really in our DNA.
4) And? If they were long lost, it’s not like I am going to miss them when they come, are denied and leave.
5) Target of scams? Having been fortunate enough to have my Barrister and Libyian email friends already contact me to send over the fortunes that they have gotten for safe keeping, I feel safe in saying that while I am sure people will try and try more often, I think I am ok with the scam part. The lawsuit part I could see as problematic. Will need to up my liability insurance and probably install security cameras around my house. I should be able to afford those measures however.

To sum it up, I am still ready to win my 11 million this evening and begin retirement.  One may have problems when you are rich but they are a better set of problems than if one is poor.  I will be sure to let you all know if, er, when I win.  The first (and only) round is on me.  Cheers!

Handicapping 2012

How are the markets currently handicapping the 2012 election?
Intrade currently has obama trading at about 60
Sporting Index (A UK spread betting index) has him at 62.
No, you can’t arbitrage the two.

Sporting Index Markets:
Intrade Obama Chart:

Morning Report

Vital Statistics:

Last Change Percent
S&P Futures 1403.9 5.7 0.41%
Eurostoxx Index 2471.7 19.0 0.77%
Oil (WTI) 103.52 0.7 0.72%
LIBOR 0.4682 0.000 0.00%
US Dollar Index (DXY) 78.81 -0.376 -0.47%
10 Year Govt Bond Yield 2.15% -0.01%
RPX Composite Real Estate Index 170.13 0.4

Markets are higher this morning on no major news except for the increase in the European firewall. There is probably an element of end-of-the-quarter window dressing to it as well.

Personal Income came in +.2%, lower than expectations, while Personal Spending increased .8% higher than expectations. Inflation data came in as expected. Overall, no reaction in the futures. Chicago Purchasing Manager, Michigan confidence, NAPM, and some revisions are coming out later this morning.

The NYT notes that Moody’s may lower the credit ratings for B of A, Citigroup, and Morgan Stanley in mid-May. The side effect of this downgrade would be to kill their derivatives businesses, as the lower rating will force them to put up much more collateral against their derivatives books, and force many large buy-side clients to trade elsewhere. This could be the impetus to turn Citi and B of A back into plain old commercial  banks.

Goldman is raising money for a new fund to buy distressed home loan bonds without government backing. The documents state this is a bet on improving fundamentals in U.S. housing. The story also goes on to say that Goldman bid on mortgage bonds from AIG in a Feb 8 auction, and decided to hold the merchandise instead of selling it. Most of these bonds are trading in the 50s. Non-agency MBS have done well this year as credit conditions have eased – enough that some funds are paring their bets.

 

 

 

Morning Report

Vital Statistics:

Last Change Percent
S&P Futures 1394.3 -5.9 -0.42%
Eurostoxx Index 2468.1 -28.6 -1.15%
Oil (WTI) 105.23 -0.2 -0.17%
LIBOR 0.4682 -0.002 -0.32%
US Dollar Index (DXY) 79.244 0.118 0.15%
10 Year Govt Bond Yield 2.16% -0.04%
RPX Composite Real Estate Index 169.77 0.0

Markets are weaker as S&P warns that Greece may have to restructure its debt again and a disappointing report from H&M. Best Buy reported better-than-expected earnings this morning and will close 50 stores.

The third revision to 4Q GDP was released this morning, unchanged from the 2nd revision at 3%.  Initial Jobless claims were slightly higher than expected at 359,000. Bloomberg Consumer Comfort and Kansas City Fed come out later this morning.

Bill Gross of PIMCO told Bloomberg that the Fed will probably concentrate on supporting MBS once Operation Twist ends in June. He referred to a “sterilized twist” where the Fed would buy current coupon MBS and simultaneously repo out the Treasuries. This would cause MBS spreads to tighten. So even if the sell off in Treasuries continues, mortgage rate may not rise as rapidly.

Bloomberg had a good interview with FHFA Acting Director Ed DeMarco regarding principal forgiveness on underwater homeowners. It certainly does not appear that a mass taxpayer-funded principal forgiveness, (or cramdown for investors) is in the cards. FHFA prefers to mod interest and term first in order to make an affordable payment. If they cut the principal and the house increases in value, the borrower gets all of the benefit. If they don’t cut the principal, then taxpayers share in that upside. Ed has been a pinata to the Left who want mass cramdowns.

American borrowers fear the Repo Man over everyone else, at least according to a TransUnion survey cited in the Washington Post. It used to be that the mortgage payment was the first priority, but with foreclosure pipelines so elongated, the car loan now takes priority.

Dealbook has been the go-to place for all things MF Global. Yesterday, regulators held a hearing with several top executives of MF, who took the Fifth. The CFO has apparently offered a proffer statement, which means he is negotiating to talk.

Morning Report

Vital Statistics:

Last Change Percent
S&P Futures 1407.2 0.8 0.06%
Eurostoxx Index 2522.2 -3.0 -0.12%
Oil (WTI) 106.12 -1.2 -1.13%
LIBOR 0.4697 -0.001 -0.21%
US Dollar Index (DXY) 79.086 0.039 0.05%
10 Year Govt Bond Yield 2.21% 0.02%
RPX Composite 169.78 0.2

Markets are flattish after Durable Goods orders, which came in below expectations. February Durable Goods came in at 2.2% vs 3% expectations. Bonds and mortgages are off slightly. June 10-year bond futures are trading at 138 after bouncing off a low of 135-05 last week. Mortgage applications also fell 2.7% for the week ending Mar 23 as the backup in mortgage rates hurt refinancings.

The American Bankers Association released its Real Estate Lending Survey yesterday. The survey of 185 respondents, of which the vast majority are small community banks, said that lending conditions at the end of 2011 are about the same as they were at the end of 2010, with regulatory uncertainty as the main concern. The average delinquency rate fell slightly over 2011.

Is Mark Zandi becoming the Abby Joseph Cohen of real estate and the economy? Seems so. The Washington Post locates a pocket of optimism in real estate, citing Zandi and some Northern Virginia Realtor. Washington DC real estate inhabits a world of its own, so I don’t think it necessarily applies nationwide.

Redwood Trust did another jumbo securitization yesterday, more evidence that the private label market is returning.

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