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 | 1511.8 | -0.6 | -0.04% |
| Eurostoxx Index | 2626.5 | -3.8 | -0.14% |
| Oil (WTI) | 95.4 | -0.3 | -0.33% |
| LIBOR | 0.293 | 0.001 | 0.38% |
| US Dollar Index (DXY) | 80.4 | 0.151 | 0.19% |
| 10 Year Govt Bond Yield | 1.95% | 0.00% | |
| RPX Composite Real Estate Index | 193.2 | -0.1 |
Markets are flattish on no real news. Most of Asia was closed overnight for the lunar new year. The G7 is expected to make a statement against competitive devaluation. There is no economic data this morning, but many will be looking at tomorrow’s retail sales report to get a gauge on how much consumers have been affected by the increase in taxes. Bonds and MBS are flat.
The internal debate at the Fed concerns how to start extricating itself from the market. As QE winds down, the Fed wants to prevent the market from getting ahead of it and prematurely slowing down the economy. The fear is that the market will interpret the end of QE as a signal that the end of ZIRP is imminent. Since the Fed has given numerical targets for the end of ZIRP, this fear is probably overblown, but targets can be changed. That said, if you look at the float numbers, the Fed has effectively cornered the market in 10 to 20 year bonds. And they have the buying power to maintain it. The exit may involve simply holding the paper and letting it mature.
HUD just made it easier to prove discrimination cases. Under the disparate impact rule, statistical proof that your lending mix is different that the population as a whole means you are guilty of discrimination, no matter what your policy or intention is. Period. Obviously this is a huge victory for affordable housing advocates. The Mortgage Bankers Association is unhappy. IMO, this whole debate of FICO explaining everything misses the point that collateral valuation volatility in some neighborhoods is higher than in others. Since the borrower is effectively long a put (if the house drops below the loan amount, they can toss the keys to the bank), and the value of a put is a function of volatility, then that has to be priced in the loan. And if house prices are more volatile in Detroit, or Harrisburg, or Newark then loans there should cost more to reflect that. Which means FICO is not the whole story, contrary to what housing advocates insist.
45 Democrats sent a letter calling on President Obama to permanently replace Acting FHFA Director Ed DeMarco with someone more “willing to implement all of Congress’ directives to meet the critical challenges still facing our nation’s housing finance markets.” This statement means willing to forgive principal on Freddie and Fannie loans. The mandate to put taxpayers first is at loggerheads with the desire to ease the financial burden on consumers.
Separately, the White House is considering more mortgage relief for homeowners through executive order. The plan would allow underwater homeowners who are current on their mortgage to refinance at today’s rates, even if their loans are private label.
Filed under: Morning Report |
All Things in Moderation 
Krugman’s latest:
Or perhaps because it’s not viewed as a proper role for the government to try and reengineer society.
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“Because it’s surely a waste of money seeking to understand the society we’re trying to change.”
That would be my default position wrt government funding of social science initiatives.
I could imagine a specialized need – say State Department training for the diplomatic corps – that could require funding a social science initiative. Exceptions would prove the rule:
It is generally and typically a waste of money for the federal government to fund social science initiatives.
I do favor research sci/tech initiatives partly funded by the federal government over a much broader range, broad enough to where I do not dump on either NSF or NIH. Or DARPA. That is another discussion. And you can call me inconsistent.
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Heresy!
Krugman strikes me as a “all that is not forbidden is mandatory” type of “Consceince of a Liberal” kind of guy.
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Sigh. If the real numbers don’t reflect what I want to prove, I’ll make up some of my own using a model that assumes my conclusion:
I will then turn around and attack the Republicans as being against evidence based reasoning.
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Is this the kind of austerity that Teh Krugman rAils against?
http://m.washingtonpost.com/politics/many-2011-federal-budget-cuts-had-little-real-world-effect/2013/02/09/11938e3e-6bc6-11e2-a396-ef12a93b4200_story.html
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Should be worth watching:
“Cliffhanger
Coming February 12, 2013
As the nation faces yet another round of fiscal crises, FRONTLINE investigates the inside history of how Washington has failed to solve the country’s problems of debt and deficit.”
http://www.pbs.org/wgbh/pages/frontline/cliffhanger/
Does the Administration think anyone actually believes them?
“What President Obama didn’t realize, his aides insist, was that Ryan had been invited to the event, and was sitting in the front row listening to the president blast his plan.”
http://www.pbs.org/wgbh/pages/frontline/government-elections-politics/cliffhanger/did-obama-poison-the-well-in-the-deficit-debate/
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Thanks all for the NYC tips. We didn’t actually make it to a steakhouse. but we did graze our way through the city.
Momofuku Noodle Bar: http://momofuku.com/ — get the pork buns. i made the mistake of sharing them. also, the noodles i ate were “spicy” — they weren’t lying.
mission chinese food. http://missionchinesefood.com/ny/
unless you can handle the DJ that goes to 11, get take out. the food was good, but it was so loud in there, I hard a hard time really enjoying it. we had a late dinner (10:30), so i don’t know if that makes a difference. probably not.
the dutch. http://thedutchnyc.com/ SOHO. nice neighborhood spot. oysters, beer, hanger steak. what’s not to like. my wife had ravioli with smoked ricotta that excellent.
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calling for a complete end to federal funding of social science research.
Krugman’s not calling out Cantor on being against initiatives or re-engineering society, he’s calling him out on not funding research. Exactly like the kind of research on gun violence that the NRA has ensured that we haven’t had funding for since. . . whenever (I can’t remember the year, but believe it was cut in the 1990s).
You’re putting words in both Cantor’s AND Teh Krug’s mouths.
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This isn’t putting words in Krugman’s mouth, it’s understanding the full implications of what he’s advocating for:
“Because it’s surely a waste of money seeking to understand the society we’re trying to change.”
Republican opposition to Democratic policies isn’t out of ignorance. They have diametrically opposed views of the purpose of government.
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“research on gun violence that the NRA has ensured that we haven’t had funding”
I don’t think the CDC should be studying this. Not that whatever conclusions they reached would change my opinion on the matter. But i don’t consider gun violence to be a public health problem. I don’t care what NEJM or JAMA have to say on the topic either.
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jnc: I know that you were interpreting his use of “understanding” to “re-engineering”, but if we’re supposed to take words at their actual meaning (which god knows we’re supposed to do on this blog!) then he wasn’t calling for anything more than research, which is what Cantor is advocating cutting.
And absolutely apropos of nothing, since I’ve been doing a lot of bread baking the last couple of weeks, I’ve discovered that the open face of a laptop being used for streaming tv, movies, etc., makes an excellent place for bread to rise. I put it on a plastic restaurant tray and set the tray on the keyboard. . . works like a charm!
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But i don’t consider gun violence to be a public health problem.
Fair enough. . . what kind of problem is it, then?
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I think gun violence is a public safety problem not a public health problem. ‘Goose, we are awash in information about gun use, gun abuse, and gun deaths. Within the protections of the Second Amendment there are many limitations that could be imposed. So the debate that continues has its limits – the Second Amendment – and its various positions, staked out and supported by pieces of information. Why does there need to be a government “study” about this?
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laptops — the easy-bake-oven of the future.
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criminal justice one. and I say that because what are we supposed to do with the CDC’s inevitable conclusion that “guns are dangerous.”
illegal guns/violence are a threat to community order. and I don’t think the CDC has the expertise to weigh in on that.
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I don’t think the CDC has the expertise to weigh in on that.
I don’t, either, but I do think that they have the expertise to weigh it as an epidemiological problem.
“We had decided to take what we knew about public health prevention and apply it to firearm violence,” says Dr. Wintemute. “We equated the loading dock to smokestack pollutants.”
Boarding a train in Baltimore, along with his former public health policy professor Stephen Teret, MPH, Dr. Wintemute set out to visually document where guns are made and transported.
“We wanted to show upstream sources,” says Dr. Wintemute. “We used slide film. We wanted people to understand guns come from somewhere. And people got it.”
[. . . ]
His research findings have helped change laws, regulations and policy. In a 1987 JAMA study, he linked children accidentally killing children to the similarity between toy and real guns. A nationwide media frenzy led to a manufacturing change in the appearance of toy guns.
How can you have a debate without knowing what to debate?
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well, that’s just it. there’s not much to debate from my persepective.
Dr. Wintermute could present reams of data and my response would be the same. “What other civil liberties would you get rid of in the name of public safety?”
“he linked children accidentally killing children to the similarity between toy and real guns. A nationwide media frenzy led to a manufacturing change in the appearance of toy guns.” great. media frenzy dictating policy.
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media frenzy dictating policy
I knew you’d jump on that. 🙂
But at least he had identified one of the causes of the kid-on-kid shootings. There has to be a reason why gun violence is higher here than in other societies that either (1) have gun ownership rates equivalent to the US or (2) rates of children watching violent videos/playing violent video games (among other things) as we do.
Since I’m not a libertarian I think we need to figure out where civil liberties balance.
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“jnc: I know that you were interpreting his use of “understanding” to “re-engineering”
No, I’m interpreting his use of “trying to change” to “re-engineering”. I don’t approve of Krugman’s proposed changes.
No sir, I don’t approve.
http://www.disapprovingrabbits.com/
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oh, there has to be not quite a balance, which i think is a 50/50 split. but some ratio.
but i automatically get my defenses up went it’s the Helen Lovejoy “won’t somebody think of the children” (not that you’re doing that. just in general)
that and the “if it saves one ….”
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OT: I took a tour of the Tenement Museum in the lower east side. it was a look at life in the late 1800s, early 1900s and the living space. pretty fascinating.
the gift shop was selling a copy of http://www.amazon.com/Woman-Behind-New-Deal-Unemployment/dp/1400078563
didn’t pick up a copy, but it looked interesting, so i figured I’d pass it along.
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nova:
I took a tour of the Tenement Museum in the lower east side.
I did that a few years ago. Did you meet with one of “resident” immigrants of the tenements? Very interesting, especially for the kids to get a sense of what life was really like.
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the tour was based on looking at the situation through the eyes of one of the families that actually lived there. in this case, an Irish-catholic family named the moore’s, whose decedents are somewhat involved in the project. it was kind of “here’s the decisions they would have to make”
but the tour itself was conducted by a guide, who honestly could use some practice. he was very enthusiastic and knew what he was talking about, but he didn’t have his talking points down and tended to jump from topic to topic. and back again.
we left the little guy (he’s 3.5) at home this time. parents getaway.
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jnc:
I don’t approve of Krugman’s proposed changes.
You don’t expect me to be surprised by that, do you? And I love that link–almost as useful as Grumpy Cat!
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some ratio
I can go with that, since by balance I meant something that is acceptable to the majority of the public. . . which doesn’t seem to ever be a 50/50 split.
You should post your advice for tomorrow’s SOTU over here. . .
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“Michigoose, on February 11, 2013 at 1:38 pm said:
jnc:
I don’t approve of Krugman’s proposed changes.
You don’t expect me to be surprised by that, do you? And I love that link–almost as useful as Grumpy Cat!”
I figure if I’m going to split hairs over terms, I should include a cute animal Internet link as a chaser.
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any chance to quote the Beastie Boys. someone was making the point that Obama needs to call out the GOP for actively working to undermine the economy etc. during the SOTU:
therefore,
Obama should just walk to the podium tomorrow night,
say “Listen all y’all, it’s a sabotage” and walk off.
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http://dealbook.nytimes.com/2013/02/11/r-b-s-executives-testify-over-rate-manipulation-case/?nl=business&emc=edit_dlbkpm_20130211
Are the assertions credible they did not think that rate manipulation was possible?
From what Scott has written before, it seems to me they could be. But still:
“I was not aware that derivatives traders were making these requests,” Mr. Nielsen told British politicians, in reference to the rate-rigging. “We had very serious issues. Senior management felt that it was a mathematical impossibility to alter the rates.”
This went on, apparently, after the RBS was told of the investigation.
The assertion that RBS had so many troubles that overseeing its LIBOR folks was not on the agenda is also one that I wonder about.
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I am citing everyone back to Ricci on disparate impact. Volokh as always is useful here:
http://www.volokh.com/2009/06/29/ricci-as-a-defeat-for-business-interests-inflicted-by-pro-business-conservative-justices/
The trap for the landlord is that any attempt to guess that one will be a statistic in a disparate impact [unintentional] discrimination case can be the grounds for a disparate treatment [intentional] discrimination case.
I would advise a landlord or a realtor or a seller not to discriminate on the basis of race. That is all I could do as an honest lawyer. If that color blind determination aggregated sums to disparate treatment then we have to fight the consequences downstream by showing that any other course would have been intentionally discriminatory.
It is time for the Supremes to revisit disparate impact and then limit its application severely.
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Mark (from the RBS link):
The senior executives said they had not been aware of the rate-rigging activities that occurred from 2006 to 2010.
Recall from my old posts on this that there were actually two distinct instances of reporting manipulated rates. One was during the height of the ’08 crisis when some banks did not report their true cost of borrowing because of the negative perception they were afraid it would produce in the market. I think it is highly unlikely that senior executives were not aware of this at the time.
The other was the apparently more routine manipulation by traders to suit their own rate set risks. I think it is entirely plausible that senior executives were unaware of this, at least through 2009. The daily setting of Libor was (is) a fairly mundane task, and remember that the whole BBA methodology of setting it, ie throwing out the highs and lows and then averaging, was designed specifically to frustrate any possible attempts to alter it by high- or low-balling one’s submission. So I find it very believable that libor submissions were not high on the radar screen of senior execs thru 2009. After that, with the media increasingly raising it as an issue and indeed investigations going on, it becomes somewhat less believable that they weren’t paying attention to it.
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Mark:
Are the assertions credible they did not think that rate manipulation was possible?
Another thing to remember with regard to the more routine trader manipulation…we are talking here about fractions of a basis point, which to a trader with daily risk of, say, $3 million dollars per basis point move can be significant money, but in the bigger scheme of things just looks like a rounding error. So if a trader was able to provide a Libor submission that would move that days rate from, say, 1.05% to 1.051%, he might save himself a huge chunk of p&l, but the average guy getting a mortgage isn’t likely to even notice the difference.
I wonder, when they say they didn’t think manipulation was possible, whther they have some implicit scale of manipultion in mind. After all, it is of course possible to manipulate any result that is the average of independently submitted numbers simply by submitting different numbers. The real question is on what scale the manipulation can occur. And I think the BBA methodology definitely did limit the degree to which any manipulation could occur, without being able to make any manipulation impossible. To think manipulation was literally impossible would have been stupid.
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Mark, I’m still waiting for them to dig up the E-mails where the government asks them to manipulate it for the “good of the system”.
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jnc:
Mark, I’m still waiting for them to dig up the E-mails where the government asks them to manipulate it for the “good of the system”.
They already have phone calls where the Fed was informed by the banks themselves that submissions weren’t real. They didn’t seem to care.
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And here I thought it was original with you, NoVA! Never was a Beastie Boys fan
That would make for some interesting rebuttals. . .
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http://sports.yahoo.com/blogs/nhl-puck-daddy/watch-bakersfield-condors-condor-wild-ice-game-video-203431283–nhl.html
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That’s what the handler gets for not bringing a California condor!
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I just reread Taibbi’s latest. I can’t believe I missed this the first time:
Words fail.
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jnc:
*facepalm
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Mark:
I am citing everyone back to Ricci on disparate impact.
I would just note that SCOTUS denied cert. on the Ricci follow-up, New Haven v. Briscoe. After Ricci was remanded, New Haven validated the test scores and was then sued by Briscoe in a disparate impact suit after he wasn’t promoted. The District Judge threw it out, citing Ricci, but the 2nd C reversed.
http://www.scotusblog.com/case-files/cases/city-of-new-haven-v-briscoe/
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The trap for the landlord is that any attempt to guess that one will be a statistic in a disparate impact [unintentional] discrimination case can be the grounds for a disparate treatment [intentional] discrimination case.
I would advise a landlord or a realtor or a seller not to discriminate on the basis of race. That is all I could do as an honest lawyer. If that color blind determination aggregated sums to disparate treatment then we have to fight the consequences downstream by showing that any other course would have been intentionally discriminatory.
The whole premise of “redlining” was that banks refused to lend in some neighborhoods, and the point of CRA was to force banks who did business in these neighborhoods to lend there. The zip code was used as a proxy for race, which made sense because race isn’t included on loan applications. Banks would point to added credit risk in these neighborhoods, and that often got them off the hook. So, the CRA advocates would say: same FICO, different lending result = discrimination.
The point I am making is that to make a good lending decision, you must look not only at the credit of the borrower, but also at the underlying value of the collateral. And that is an angle that had not been a focus, because we were used to rising real estate markets, and that sort of analysis wasn’t typically done, aside from making sure the appraisal was done right.
In options terminology, the borrower is long a put (right to sell) which is based on the fact the borrower can throw the keys to the bank and walk away. The bank is therefore short that put. (Which makes sense – if the value of the house goes up, they get the cash flow stream. If it goes down, they get the house). Implicit in loan pricing is the value of that put. And, if the volatility of the asset increases, the value of that put increases, which means the lender has to charge more (or say no to the loan) to compensate for that put.
Just for fun, I looked at the volatility of the FHFA indices for various places, and to take one example, the volatility of the Camden NJ MSA is about 15%, while the volatility of the Appleton WI MSA is about 6%. In other words, loans in Camden SHOULD cost more than loans in Appleton. So, same borrower, same FICO, different address,should have different prices. According to CRA, that would be evidence of discrimination, while in fact it is the proper pricing of risk.
I am thinking about writing a paper on this, but worried that it probably wouldn’t get published anywhere because of the political correctness factor.
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It is worth a paper, Brent, and you should write it.
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Whew, glad that’s done!
http://www.washingtonpost.com/business/economy/obama-job-of-debt-reduction-nearly-done/2013/02/11/3e5b8008-7458-11e2-95e4-6148e45d7adb_print.html
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My favorite Tweet of the day:
“@DrewMTips: RT: @ExJon: The worst part about this North Korea test is that it was a military-style assault nuke.”
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How does Drew know the difference between a nuclear device and a military-style assault nuke?
Size of the blast indicates small device. Small device is one that with modification can be transported in a bomber or on a warhead.
These are common inferences. My question is what else does Drew know?
Further, have we not assumed that one way or another NK could nuke Seoul, which is what both our planned military response and our unease about authorizing a first strike are really all about?
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Mark, he was snarking on the “military assault” trope the left has about rifles. You take a .223 and dress it up with a pistol grip and a flash suppressor and suddenly it’s horrifying.
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Mark, he was snarking on the “military assault” trope the left has about rifles.
Got it.
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Corked by McWing. I was about to say “they’re all military assault nukes.”
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