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 | 1369.9 | 1.9 | 0.14% |
| Eurostoxx Index | 2316.5 | 4.0 | 0.17% |
| Oil (WTI) | 87.89 | 0.2 | 0.26% |
| LIBOR | 0.46 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 82.66 | 0.877 | 1.07% |
| 10 Year Govt Bond Yield | 1.62% | -0.01% | |
| RPX Composite Real Estate Index | 182.8 | 0.3 |
Markets are up slightly on moves by the ECB and some encouraging economic news on the jobs front. Overnight, the ECB lowered interest rates to 75 basis points and cut the deposit rate to zero. Bonds and MBS are up slighlty.
The ADP employment change report reported 176k new jobs were added in June, which is much higher than the 100k estimate economists were forecasting. The official non-farm payroll data will be released tomorrow. Initial Jobless claims dropped last week, falling from 388k to 374k.
Today is the first Thursday of the month, and that means retailers are reporting same store sales. So far, most retailers are missing estimates.
Finally, Heard on the Street discusses how the housing market is finally a bright spot in the economy, though its size relative to GDP has shrunk tremendously.
Filed under: Morning Report |
All Things in Moderation 
though its size relative to GDP has shrunk tremendously
Maybe I’m mistaken but that sounds like a good thing. Slightly good news on the jobs front it looks like. It would be nice if it was the beginning of a trend.
OT, I thought this was interesting for some reason re Countrywide. Bi-partisanship at long last.
The report said documents and testimony showed that Mozilo and company lobbyists “may have skirted the federal bribery statute by keeping conversations about discounts and other forms of preferential treatment internal. Rather than making quid pro quo arrangements with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence.”
Among those who received loan discounts, the report said, were:
• Former Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.).
• Senate Budget Committee Chairman Kent Conrad (D-N.D.).
• Rep. Howard P. “Buck” McKeon (R-Santa Clarita), chairman of the House Armed Services Committee.
• Rep. Elton Gallegly (R-Simi Valley).
• Former Rep. Tom Campbell (R-San Jose).
• Mary Jane Collipriest, communications director for former Sen. Robert F. Bennett (R-Utah), then a member of the Banking Committee.
• Rep. Edolphus Towns (D-N.Y.), former chairman of the House Oversight Committee. Towns issued the first subpoena to Bank of America for Countrywide documents, and current Chairman Darrell Issa (R-Vista) subpoenaed more documents.
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Give enough goodies away to politicians on both sides of the aisle and you can get away with murder.
It still amazes me that Franklin Raines, who paid himself tens of millions based on fraudulent accounting doesn’t even get indicted. He made Kenny Lay look like a piker.
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Latest from Matt Taibbi on LIBOR:
http://www.rollingstone.com/politics/blogs/taibblog/why-is-nobody-freaking-out-about-the-libor-banking-scandal-20120703
http://www.rollingstone.com/politics/blogs/taibblog/libor-banking-scandal-deepens-barclays-releases-damning-email-implicates-british-government-20120704
Under least surprising revelation of all, apparently Bank of England regulators were in on the plans to fix the LIBOR rate to help with “confidence”. Crony capitalism at it’s worst.
“Most intriguingly, or perhaps disturbingly, there were revelations last week that Bank of England deputy Governor Paul Tucker had a conversation with Diamond at the peak of the crisis in 2008. The conversation reportedly left Diamond, and subsequently his traders, with the impression that the bank had carte blanche to rig LIBOR downward in order to help allay spiraling public fears about the banks’ poor financial health.
British officials, and Tucker individually, deny that Tucker gave Diamond permission to rig rates. But a report by British regulators did conclude that the two were talking about Barclays LIBOR submissions on October 29, 2008, and that as a result of that conversation, Diamond came away with a “misunderstanding.” The Daily Mail quotes the Financial Services Authority report:
However, as the substance of the telephone conversation was relayed down the chain of command at Barclays, a misunderstanding or miscommunication occurred.
This meant that Barclays’ submitters believed mistakenly that they were operating under an instruction from the Bank of England (as conveyed by senior management) to reduce Barclays’ Libor submissions.”
Bullshit. There’s about as much misunderstanding here as there was about the banks over here having to take TARP money and Bank of America being forced by the Federal Reserve and Treasury Department to buy Merrill Lynch even after their due diligence found significant problems on the balance sheet.
The fundamental problem with the bank regulators now is that they have effectively become unindicted co-conspirators with the banks on these violations. Hard to hold an organization legally liable for actions that the regulators put them up to in the first place.
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Health reform quiz from the Kaiser Foundation. Sort of easy but even though I scored a 10 out of 10 the numbers across the country are disturbing.
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I got 10/10, too, but that’s partly because I knew the “right” answers. Several of these questions are misleading imo in that they accept the Obama administration’s position at face value and fail to account for the entirety of the vast, complex law. Several of them are sufficiently misleading to be considered little more than part of a propaganda effort.
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qb:
I got 10/10, too, but that’s partly because I knew the “right” answers.
Same here. I didn’t actually know the answer for a couple, but I knew what the answer had to be, else it wouldn’t have been on the quiz.
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Scott, I didn’t actually agree with several of the answers, but I knew what the politically correct answers were. (There will be rationing, and a government board will in fact decide what benefits are in and what benefits are out. You say review board, I say death panel.) And the one about requiring business to insure I thought was intentionally contrived to be used as propaganda.
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qb:
I thought the one about a “new” government run insurance program was deceptive too. It’s rather Clintonian to draw a distinction between a “new” government run program and expanding the existing government run program.
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10 out of 10 here, also, lms which (as you note) is kind of discouraging.
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ditto.
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It’s fascinating to me how well Republican messaging on this has altered perceptions of the existing law. It includes death panels, cuts to Medicare benefits, small business requirements, government run insurance plan and undocumented workers. In all five cases a majority misunderstands the bill. Democrats are really lousy at this selling stuff aren’t they?
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lms:
In all five cases a majority misunderstands the bill.
Without knowing the breakdown between “I don’t know” and the wrong answer, you can’t say this definitively.
Democrats are really lousy at this selling stuff aren’t they?
If Democrats were no good at messaging, Obama would never have been elected.
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“Democrats are really lousy at this selling stuff aren’t they?”
It’s not a sales problem. Fareed Zakaria has the key point:
“Curbing the cost of health care
By Fareed Zakaria, Published: July 4
Many liberals believe that the Affordable Care Act — Obamacare — is unpopular only because most Americans don’t understand it. There is some truth to this: Studies show that the core provisions of the bill are more popular than the bill itself. But there’s also a reason, rooted in reality, why many Americans worry about Obamacare — its cost.
Most Americans have health care. What they worry about is the cost of insuring 20 million to 30 million more people. Unless the meteoric rise of health-care costs is slowed, a big expansion of coverage might well remain unpopular, no matter how it is explained.”
http://www.washingtonpost.com/opinions/fareed-zakaria-curbing-the-cost-of-health-care/2012/07/04/gJQAxkr7NW_story.html
“85% of the country has healthcare and worries about cost; 15% doesn’t and worries about access. What [President Obama] did was he dealt with the issue of the 15% before he dealt with the issue of the 85%.” – Fareed Zakaria
http://www.hbo.com/real-time-with-bill-maher/episodes/0/196-episode/synopsis/quotes.html
An economic downturn and $1 trillion annual deficits was not a particularly opportune moment to enact yet one more health care entitlement on top of the rest that are already projected to blow up within 20 years.
No one believes President Obama’s promises that you can do all three of these at once:
1. Cover (almost) everyone
2. Reduce costs
3. Everyone who likes what they currently have gets to keep it.
Something has to give.
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Anyone else heard anything about this? Seems fraught with unintended consequences:
“New Mortgage Seizure Plan is the Nuttiest Idea Yet
By Daniel Indiviglio
Posted Thursday, July 5, 2012, at 11:29 AM ET
A California county’s new plan to seize underwater mortgages from investors may be the most dangerous housing market intervention yet. If it catches on, bondholders could face billions in losses – and taxpayers, too, if local authorities start targeting loans backed by the federal government. That would whack up mortgage costs and may leave Washington as the only lender.
The plan is simple enough. San Bernardino county wants to invoke existing eminent domain laws to seize mortgages that are bigger than the current value of the homes they’re lent against. That’s a radical departure from the way eminent domain is usually deployed – to commandeer land for public use, such as to build a road.
The county would then sell the loans to a fund called Mortgage Resolution Partners. The deal is a no-brainer for all concerned: the investment group makes a profit on the safer new mortgages – to qualify, borrowers have to be current on their payments. The homeowners get a loan that’s now worth less than their home, so also end up with some equity. And the local politicians look smart and may win some extra votes.”
http://www.slate.com/blogs/breakingviews/2012/07/05/new_mortgage_seizure_plan_is_the_nuttiest_idea_yet_.html
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That isn’t emininent domain; it is just plain theft. There is no other gloss to put on it.
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I agree in part jnc, I just thought it was interesting that five of the ten misconceptions were ones Republicans hammered away at. You should know by now that while I am happy the bill still exists I wasn’t particularly pleased with either the process or the results. I know it’s not particularly principled of me but I can’t help that really since getting closer to universal care is my priority. And there are solutions to prevent entitlements from blowing up but very little political will.
Something has to give
I’m pretty sure it will.
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“quarterback, on July 5, 2012 at 11:48 am said: Edit Comment
That isn’t emininent domain; it is just plain theft. There is no other gloss to put on it.”
Presumably if they payout what the mortgage is “worth” in terms of the current value, it effectively becomes a unilateral cram down by the county. I can’t see any way they could possibly square this with Federal bankruptcy law and it’s explicit preemption.
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Presumably if they payout what the mortgage is “worth” in terms of the current value, it effectively becomes a unilateral cram down by the county. I can’t see any way they could possibly square this with Federal bankruptcy law and it’s explicit preemption.
I’m not an eminent domain expert, but I questio whether a mortgage in itself is even property that can be taken under eminent domain. It isn’t title to the property, after all. It is a lien. Even assuming that it is subject to eminent domain, the county would only be able to take the money out of the hides of loan holders or taxpayers, either by underpaying or overpaying. I assume from what the article says that they plan to lowball the holders. If so, they will presumbably have to get a federal court to bless it, if the takings are contested, which seems inevitable. The plan may very well raise Bankruptcy Code preemption issues, but I don’t think it is a case of express preemption.
Edit: I should clarify the underpayment/overpayment. It sounds like the plan is to pay loan holders only something based on the current market value of the property and thus less than the loan amount. The alternative is to pay of the loan amounts with a combination of the new (and lesser) loan proceeds and taxpayer money.
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“lmsinca, on July 5, 2012 at 11:44 am said:
I agree in part jnc, I just thought it was interesting that five of the ten misconceptions were ones Republicans hammered away at. You should know by now that while I am happy the bill still exists I wasn’t particularly pleased with either the process or the results. I know it’s not particularly principled of me but I can’t help that really since getting closer to universal care is my priority. And there are solutions to prevent entitlements from blowing up but very little political will. ”
There’s a quote I read once that I can’t find the source for that basically has an (anonymous of course) Obama administration official making the exact same argument that they had to first “get everyone in the raft before they went over the waterfall” of entitlement reform and deficit reduction.
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Doesn’t almost every homeowner who gets a mortgage at some point owe more than the actual loan amount? So most home buyers, regardless of market conditions, will be “underwater” on their homes. Why should we worry about this since it has and will continue to be true for most homebuyers?
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Re eminent domain,
There aren’t a lot of specifics out there yet, but if we are talking current underwater mortgages, the government better offer par. If the government lowballs the lenders and tells them to sue, then good luck getting a 60% LTV or higher mortgage in San Bernardino County anymore.
Of course a mass exodus of lenders won’t have an effect on real estate values, now would it?
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qb:
I got 10/10, too, but that’s partly because I knew the “right” answers.
Same here. I didn’t actually know the answer for a couple, but I knew what the answer had to be, else it wouldn’t have been on the quiz.
Wow, you guys are really smart…………..I totally thought I could put one over on you this time.
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lms:
I totally thought I could put one over on you this time.
Did someone suggest you were trying to put one over on us?
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Well you both dodged my point but it doesn’t really matter. I just thought it was mildly interesting, no biggie.
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ms:
Well you both dodged my point
I thought I addressed your point quite directly.
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Ims, did you think any of the questions and/or answers were, as QB put it, “misleading”?
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McWing
did you think any of the questions and/or answers were, as QB put it, “misleading”?
Aren’t they always? Does that always mean we can’t glean some useful information from them? My point was based upon the percentages the five issues Republicans really hit hard, rightly or wrongly, were the ones that polled substantially different than the rest. The Dems could have possibly improved the percentages by characterizing the law differently than the R’s if they’d tried, IMO. Whether there is causality there I suppose is a partisan issue or something……………………..I’m clueless.
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I thought the questions were oversimplified, but at least they didn’t put in something like “Will the ACA increase or reduce the Federal government deficits?” which is my real bone of contention in these sorts of surveys when those who answer “increase” are cited as “not understanding the provisions of the ACA”.
It will be interesting to see if the ACA significantly exceeds it’s cost estimates, and if in so doing it discredits the CBO scoring process given that the Democrats have consistently used that score to deflect any and all criticism of the incentives in the law.
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jnc
Doesn’t everyone basically know though that CBO only scores based on current information projected out without factoring in any policy or economic changes? Is there a better way to score proposed legislation?
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“lmsinca, on July 5, 2012 at 2:30 pm said:
jnc
Doesn’t everyone basically know though that CBO only scores based on current information projected out without factoring in any policy or economic changes? Is there a better way to score proposed legislation?”
No, but the Democrats were particularly good at gaming the system. What I find annoying is various liberal/progressive pundits who dismiss any criticism of the ACA’s costs with the argument that since the CBO scored it as reducing the deficit, that must be so and any criticism is ignorant and ill informed.
Most likely this means that I’ve been spending too much time over at PL.
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jnc, lol
Most likely this means that I’ve been spending too much time over at PL
I try to stay away from the ignorant and ill informed characterizations here but I suppose I’m not always successful. I guess everyone misunderstood my point when I linked the survey. What was depressing to me was that the Dems completely blew it in the messaging department on ACA, not that Republicans were ignorant or whatever.
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The Economist on LIBOR:
“The LIBOR scandal
The rotten heart of finance
A scandal over key interest rates is about to go global
Jul 7th 2012 | from the print edition
THE most memorable incidents in earth-changing events are sometimes the most banal. In the rapidly spreading scandal of LIBOR (the London inter-bank offered rate) it is the very everydayness with which bank traders set about manipulating the most important figure in finance. They joked, or offered small favours. “Coffees will be coming your way,” promised one trader in exchange for a fiddled number. “Dude. I owe you big time!… I’m opening a bottle of Bollinger,” wrote another. One trader posted diary notes to himself so that he wouldn’t forget to fiddle the numbers the next week. “Ask for High 6M Fix,” he entered in his calendar, as he might have put “Buy milk””
http://www.economist.com/node/21558281
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“lmsinca, on July 5, 2012 at 3:44 pm said:
What was depressing to me was that the Dems completely blew it in the messaging department on ACA, not that Republicans were ignorant or whatever.”
The ACA was unloved by a lot of people. DailyKos and most progressives/liberals thought it was a sell out to for profit health care. There was never a real base for it and after it passed the administration probably thought it was best to let sleeping dogs lie. In addition, it doesn’t really take effect until 2014.
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jnc
most progressives/liberals thought it was a sell out to for profit health care
As one of those progressive/liberals that was the beginning of my fall from grace at the PL, but that was before your time.
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