Morning Report – CT Hoarders Tax. Really?

Vital Statistics:

  Last Change Percent
S&P Futures  1504.0 -9.3 -0.61%
Eurostoxx Index 2590.3 -43.3 -1.64%
Oil (WTI) 90.78 -1.3 -1.38%
LIBOR 0.284 -0.003 -1.04%
US Dollar Index (DXY) 82.3 0.349 0.43%
10 Year Govt Bond Yield 1.84% -0.03%  
RPX Composite Real Estate Index 194.7 0.5  

Stock markets are weaker this morning after disappointing economic data out of Asia and Europe. Consumer spending grew .2% in January, the first post tax-hike reading on consumption. Bonds continue to rally, and MBS are flat.

Today is sequester day. For mortgage originators, that means cuts at HUD could affect you. FWIW, I met with several HUD people last week who told me that the sequester will not affect them at all.  They have increased their headcount by something like 30% over the past couple of years and are slotted to grow that number another 20%.  They aren’t worried.  

That said, Shaun Donovan is warning that the sequestration cuts could lower the availability of FHA loans. Given that the refi boom is probably over, FHA mortgages will probably drop anyway, which means that even if capacity drops a little, demand is probably going to drop more, which will offset the effects of the sequester.

It turns out that JP Morgan’s announcement of 13000 layoffs in the mortgage division is not concentrated in origination, it is in workouts.  As the number of delinquencies decline, less resources are needed to handle mods and defaults. 

Richard Cordray spoke to the Credit Union National Association regarding the Qualified Mortgage Rule and other issues. He urged lenders to extend more credit, saying that they are “leaving money on the table” by not lending to “low risk borrowers who want to refinance.”  He also urged banks not to concentrate solely on lending to QM borrowers.  Of course QM doesn’t really provide all that much protection, and the banks know that the CFPB is also working hard to elongate foreclosure timelines. Such is the cognitive dissonance of the CFPB – they want the banks to lend, while at the same time raising their costs if the loan goes bad. 

One of FDR’s worst ideas was the undistributed profits tax, which taxed retained earnings in an effort to get businesses to hire and pay dividends.  This was controversial even in FDRs administration and certainly played a big role in the 1937 “depression within a depression.”  Well guess what, it is back, at least in the state of Connecticut, which is considering a bill (called a “hoarders tax”) that would try and force CT-based corporations to use their retained earnings to hire people or pay a tax. Of course the details haven’t been filled in and it is one of those bills that is meant to make a point, but still… If I am a new business considering where to locate, I would think hard about scratching CT off my list. 

FY2013 CR & 02/21/2013 Open Thread

New NYT piece with some good info on the next stage of the budget fight, the continuing resolution to fund the government through the rest of FY2013 (i.e. through September 30, 2013).

“Taking steps to avoid a full government shutdown at the end of March, the House Appropriations Committee as soon as next week will introduce legislation to keep the government financed through Sept. 30, the end of the fiscal year, but do nothing to stop the pending cuts.”

“The Senate next week will consider competing Democratic and Republican proposals to stop the automatic cuts. The Democratic plan would institute a 30 percent minimum tax rate on incomes over $1 million, cut farm subsidies, and institute military cuts delayed until most United States troops have returned from Afghanistan. Neither plan is expected to win the 60 votes needed to overcome a filibuster

Instead, attention will shift to the next deadline, March 27, when financing for the government runs out.

The House bill would maintain financing at presequester levels, $1.043 trillion, with detailed spending instructions for defense programs devised to give the Pentagon more flexibility. But a provision in the spending bill will say that all levels are subject to automatic cuts to be meted out by the White House Budget Office.”

http://www.nytimes.com/2013/02/21/us/politics/gop-resisting-obama-on-tax-increase.html?pagewanted=2&_r=1&gwh=E1189D5B5E182F1909E62B46AA43A452&ref=politics

If the House is really going to let the baseline be set at pre-sequester levels for the CR, this could constitute a cave for the Republicans. I.e. the sequester was actually in effect for about 1 month tops and now spending is going to be held flat at the old levels.

Update: Good piece by Karl Rove on the various options. I agree with his proposal:

“My own recommendation is that House Republicans should pass a continuing resolution next week to fund the government for the balance of the fiscal year at the lower level dictated by the sequester—with language granting the executive branch the flexibility to move funds from less vital activities to more important ones.”

http://www.rove.com/articles/450

Wonkbook’s graph of the day…

Wonkbook posted their Graph of the Day today, linking to a Mother Jones piece. Their point is that if you think Obama’s a big spender, you need to see two charts.  Here they are:

 

Drum [author of the Mother Jones piece] says, is that “total government spending didn’t go up much during the Clinton era, and it’s actually declined during under President Obama.”

Total Gov Spending Per Capita

 

[S]ome said Drum’s chart was a trick, as it looked at total government spending rather than just federal spending. So on Wednesday, he posted a second chart. This one only included federal spending and it didn’t adjust for population growth. The only thing is adjusts for is inflation.

Total Fed Spending Per Capita

[T]he sharp rise in federal spending begins in late-2009 and is largely over by 2010. It’s ridiculous to attribute all that spending to Obama, who wasn’t in office when it began, rather than to the recession, which is the clear and obvious cause.

Wonkbook Graph of the Day

Food for thought.

Morning Report – Jobs Day 01/04/13

Vital Statistics: 

  Last Change Percent
S&P Futures  1453.4 -0.2 -0.01%
Eurostoxx Index 2696.4 -4.8 -0.18%
Oil (WTI) 92.08 -0.8 -0.90%
LIBOR 0.305 0.000 0.00%
US Dollar Index (DXY) 80.84 0.460 0.57%
10 Year Govt Bond Yield 1.92% 0.01%  
RPX Composite Real Estate Index 192.1 0.1  

Markets are slightly higher after the economy added 155k jobs in December.  The unemployment rate came in at 7.8%, flat vs the revised upward Nov number.  The labor force participation rate was flat at 63.6%. Bonds and commodities have been getting hit since the release of the FOMC minutes yesterday, which indicated QE’s days are numbered.  The 10-year yield has broken out of its 6 month trading range, and MBS are down about 1/4 of a point. 

The minutes of the FOMC meeting revealed that the Fed will probably end QE some time this year. This has put pressure on Treasuries, as well as commodities like gold.  The Fed is predicting 2.3% – 3% GDP growth this year, which is above most other forecasts.  They debated whether to purchase Treasuries or MBS, noting that they haven’t been getting the “spill-over effect” in MBS that they had hoped for by buying Treasuries.  They also said that they do not want to give the impression that they are setting monetary policy solely on two variables – the unemployment rate and the inflation rate. 

The minutes explain why Treasuries refused to rally on the debt ceiling brinkmanship last year – the market knew the Fed was planning to end QE some time this year.  And the differing reactions of the stock and bond market is explained because stocks were paying attention to the machinations in Washington, while bonds were watching the Fed. So this was not the typical “bonds are right, stocks are wrong” dynamic you usually see.

Tim Geithner plans to leave the Administration by the end of the month, and won’t stick around for the debt ceiling debate.  White House Chief of Staff Lack Lew is the favorite to replace him. Lew worked for Citi from ’06-’08, but other than that has spent his career in government.  This will be the first non Wall Street / Fed Treasury secretary in a while, since the disastrous reigns of industry guys like the Paul (The Tin Man) O’Neill and John Snow in the Bush Administration.

The Fed examines why lending rates have not fallen in lockstep with QE in a new paper which asks why isn’t the 30 year fixed rate mortgage at 2.6%.  It does try and provide some reasonable explanations, for example, it does cite the increase in G-fees.  It also cites (a) increased put-back risk, (b) the declining value of MSR’s, and (c) higher origination costs due to increased regulatory scrutiny. That said, the academics tested the hypothesis that each of these individual items were driving the increased margins for lenders, but nothing was significant by itself. So they reject that hypothesis.  Since the t-stat is below 2, it doesn’t count, I guess, so price-gouging must be the explanation, and not these other reasons, which are 100% controlled by the government.  Sigh.

I Saw NoVA Lobby Santa Claus

Being a good lobbyist means working your connections. And as it is happens, I’ve got a meet and great with Santa Claus at the White House tonight.

One of the fun parts of living in the DC area is the National Christmas tree and other decorations. There’s a Santa’s workshop on the Ellipse. We’re taking the little guy to visit this evening after work. My understanding is there’s a mailbox with a to Santa. There’s other fun things, such as the fact that each state has an ornament.

So, if any ATiMers have any Christmas wishes (or any other type — Festivus and the airing of grievances, perhaps), post them here, I’ll pull them together and make sure that Santa gets the ATiM list.

White House tree

Updated with pic —
Santa

Bites & Pieces: ¡Ceviche!

Raw fish is eaten round the world. Sushi and sashimi from Japan, crudo and carpaccio from Italy, and Gravlax from Scandanavia to name a few. Hawaii has contributed poke, a kind of tuna tartare. I was first introduced to it at the Yardhouse in San Diego. The best I’ve ever had was at the East Coast Grill and Raw Bar. A friend of the owner had caught a tuna off Cape Cod the day before and so they were featuring it that night. Then there are the raw oysters that I happily slurp at Clyde’s for happy hour. Anything from Prince Edward Island is worth a taste.

Latin America’s contribution to the world of raw fish is ceviche. I was introduced to ceviche during my first visit to Costa Rica. My then girlfriend had never had a serious boyfriend before, so much of her family was curious about the gringo coming down for her brother’s wedding. My Spanish was minimal back then and I remember being reduced to saying ¡me encanta Costa Rica! as folks chatted with me at the end of the reception. All in all, a good trip. We were married one year later to the day.

Ceviche is distinct from sashimi, carpaccio or tartare in that the fish or shellfish is “cooked” in lime juice. Citric acid alters the chemical and physical properties of the proteins in the fish. This process of denaturation turns the flesh firm and opaque, as if it had been cooked with heat. One still needs to use high quality fish as the marinade is not the same as cooking. Then again, if I’m having a medium rare steak, it should be high quality meat.

For this post, my starter material is a book on ceviche from Guillermo Pernot. He had a great restaurant in Philadelphia (since closed) and is now with the group behind Cuba Libre. That’s a rum and coke with some lime juice.

Let’s start with basic ceviche. First, create the marinade. Half a cup of fresh lime juice, a quarter cup of orange juice, and 2 teaspoons of kosher salt. Fresh is key here, so juice them yourself. Next, cut up about a pound of fish into roughly quarter inch dice. Mahi mahi and red snapper are great choices. Tilapia is fine, if a bit bland. Let the fish marinate an hour or so and then add diced tomato, some minced onion or shallots, some minced cilanto, and some minced chiles (bell, jalapeño or Serrano peppers, depending upon your heat tolerance). If there’s something you think goes with this, enjoy! Serve with tortilla chips. Costa Ricans like to have a mix of ketchup and mayo on the side. I call it salsa tica and it’s good.

Shellfish is also good for making ceviche. If you’re worried about raw fish, parboil some prawns and cut them into small pieces. Shrimp cocktail from the South! Scallops make fantastic ceviche. Just toss whole bay scallops or sliced sea scallops into the marinade and let them sit for about 15 minutes.

Those are the basics. Now let’s get a bit fancy. I mentioned the Pernot book, which I should note is a gift of Natasha Bonilla, a family friend. The recipes are restaurant complicated, but I’ve tried a few at home and they rock. They’re also doable for the home cook. Here are a few of my favorites:

Hamachi Ceviche with Trio of Peppers Salad

This one looks great. There’s a fair amount of chopping involved, but it’s worth it. It’s terrific with an unoaked Chardonney. Heck, live a little and pick up a bottle of white Burgundy.

Citrus Dressing

½ cup fresh lemon juice

½ cup fresh lime juice

½ cup fresh orange juice

1 tablespoon sugar

2 tablespoons oil, infused with garlic*

2 tablespoons annatto oil*

2 teaspoons kosher salt

Combine all the ingredients in a blender until emulsified and set aside.

*I take whole cloves of garlic, mash them slightly with the edge of a knife, and put on the stove over low heat. Let it go for about 15 minutes and then strain. Annato seeds are used to color oil. Traditionally, it’s made the same way that I make the garlic oil. Put the seeds in oil and heat up until colored. For this recipe, I can simply do everything in one batch. You can also find annatto seed powder, which simplifies the whole process. If all this seems a bit too much bother, use a flavored oil or neutral salad oil.

Assembling the ceviche

¾ pound skinless hamachi, sliced thinly (yellow fin tuna)

1 large, evenly shaped red bell pepper

1 large, evenly shaped yellow bell pepper

1 large poblano chile

1 cup of arugula sprouts or thinly sliced arugula

½ red onion, sliced very thin and rinsed under cold water

Salt and pepper to taste

Combine the sliced fish with half the citrus dressing. Cover and refrigerate for 30 minutes.

Slice the top and bottom from the bell peppers. Cut open along one side and remove the seeds and the white membrane. [Pernot instructs one to remove the top layer of watery flesh from the inside as well, but I’d say that’s optional.] Slice each pepper into very thin strips—a mandoline is very helpful here. Do the same for the poblano chile.

Toss the peppers with the remaining citrus dressing. Lightly toss the fish, pepper mixture, arugula and red onion. Adjust the seasoning with salt and pepper. Arrange onto 6 chilled salad plates. [Oh, did I forget to mention that you were supposed to serve on chilled plates? Sorry about that.]

Bay Scallop Seviche with Blackened Tomatillo Truffle Sauce

This one will bring the house down. The ingredients are widely available and it is great for a crowd. Truffle oil is pricey, but a little goes a long ways. Trader Joe’s used to carry truffle oil, but no longer. I find it at World Market. Wine stores often carry some. For this dish, I think black truffle oil makes the most sense.

Let’s start with the plantain chips. You can buy them and they’re quite acceptable. Fresh is best, though. For this, you need green plantains. Cut off the ends, remove the skin and slice into planks. The best way I’ve found is to use a cheese slicer. It makes even plantain slices. Heat up a half inch or so of vegetable oil in a dutch oven or cast iron pan. Fry the slides and set them on paper towels to drain. Toss with a bit of salt.

Blackened Tomatillo Truffle Sauce

3 tablespoons extra virgin olive oil

½ pound fresh tomatillos, husks removed and rinsed

½ pound ripe plum tomatoes

1 red onion, quartered and unpeeled

4 cachucha* chiles

1 jalapeño chile

1 bunch fresh cilantro leaves

3 tablespoons truffle oil

salt & pepper to taste

There are two ways to cook the tomatillos, tomatoes, onion and chiles. Pernot does it on the stove top. Heat a tablespoon of olive oil over med high and add the tomatillos, tomatoes, onion and chiles. Cook, tossing frequently, until the skins are blackened. I like to toss them all with the olive oil and use our toaster oven. I preheat it to 350, put the veggies on a tray, and then move it to broil until the skins blacken (about 10 minutes).

Once cooked, put them in a food processor and cool to room temperature. Add the cilantro and pulse briefly until the vegetables are chopped but still chunky. You can also put everything through a meat grinder. Finally, add the remaining ingredients, taste to check seasoning, and refrigerate.

*I don’t know where to get these either. It’s a native Cuban pepper that looks like a habañero, but has much less heat. I’m fond of Serrano peppers, so I just use 4 of them and skip the jalapeño. If you prefer to keep heat levels down, just use jalapeños.

Bay Scallop Ceviche

1 cup fresh lime juice

¼ cup fresh orange juice

3 tablespoons finely diced red onion (or a lg. shallot)

1 tablespoon kosher (or sea) sallt

1 pound fresh bay scallops

Combine everything but the scallops in a nonreactive (stainless steel or enameled) bowl. Add the scallops and toss to combine. Cover and refrigerator for 24 hours.

Drain the marinade from the scallops and discard. Combine the scallops with most of the sauce and refrigerate for at least 20 minutes. When ready to serve, drain the excess liquid and add the rest of the sauce. A great way to serve this is to put the ceviche onto spoons and top with some crumbled plantain chips. Serve accompanied with plantain chips.

Tuna Ceviche with Roasted Calabaza

This is a three level ceviche. The base is roasted calabaza, a squash. You can use butternut squash for this and do well. On top of the squash is a layer of tuna. You’ll want high quality stuff for this. When I can get bluefin tuna, this is what I make. Thie dish is topped with a peppercress salad (watercress works just fine).

OK. For the base. Have one pound of calabaza (or butternut squash), peeled and cut into half inch cubes. Seasons with salt and p\epper and toss with olive oil. Roast in an oven at 425 degrees for 15 to 20 minutes, shakng and tossing once or twice, until it’s browned and crusty on the outside. Remove from the oven, cover and chill.

Now the salad. Combine half a pound of peppercress (or watercress) leaves with a quarter cup each of lemon and lime juice, a tablespoon of pumpkin seed oil (you can find it at World Market), and some salt and pepper. I’d use a high quality nut oil as the first alternative and good EVOO as the second.

Last, the good stuff. Make an emulsion of a quarter cup each of olive oil, lemon juice, and lime juice, 2 tablespoons of pumpkin seed oil (or nut oil or more olive oil,. Reserve a quarter cup of this. To the rest, add a pound of diced, sushi grade ahi tuna. Season with salt and pepper to taste. I go light on salt and a bit heavy on pepper. The recipe calls for a quarter cup of pepitas, which can be found in Latin American markets.

Let’s put it all together. It helps to have a ring mold to do this. Make a half inch thick base of roasted squash, Put on top of this another half inch of the marinated tuna. Top with the salald and a bit of reserved emulsion.

It’s a fantastic fall dish.

Morning Report 8/29/12

Vital Statistics:

  Last Change Percent
S&P Futures  1410.4 2.6 0.18%
Eurostoxx Index 2432.9 -9.2 -0.38%
Oil (WTI) 95.95 -0.4 -0.39%
LIBOR 0.422 -0.001 -0.24%
US Dollar Index (DXY) 81.45 0.082 0.10%
10 Year Govt Bond Yield 1.65% 0.02%  
RPX Composite Real Estate Index 192.1 -0.4  

Markets are flattish after 2Q GDP was revised upwards and Mario Draghi defended the ECB’s bond buying program. Pending Home Sales increased 15% YOY in July, another sign of life in the residential real esate market. Bonds and MBS are down slightly.

Second Quarter US GDP was revised upwards to 1.7% from the initial 1.5% estimate as consumer spending was a bit higher than initially thought. The  upward revision was expected so there was no reaction in the index futures. Growth 2% or lower will probably not be enough to lower the unemployment rate 

One of the reasons for the increase in house prices has been the lack of distressed sales. CoreLogic’s latest foreclosure report bears this out, as foreclosures dropped 24% in June from a year ago, which is the lowest level since 2007. That said, the pipeline remains at 1.4 million homes and REO sales have declined while foreclosures have continued.  

Fed-Bashing was one of the themes at the Republican National Convention. Certainly a part of that is driven by the desire to keep Libertarians in the tent in the fear that Gary Johnson could pull a Ralph Nader and peel off enough Republican votes to deliver the election to Obama. Bob Corker wrote an op-ed in the FT criticizing the dual mandate. He does make a good point that bond prices should be important signals to the economy, but that signalling process is broken because of Fed manipulation.  

My gripe with the dual mandate has always been that it encourages bubbles – as long as inflation (as measured by the CPI) is behaving, the Fed must keep the pedal to the metal. Economists have accepted the fact that too much money chasing too few goods is a bad thing, but somehow think too much money chasing too few assets is okay.  Since the dual mandate was enacted in 1978, we have had the following bubbles (or mini-bubbles):

 

  • Gold and oil in the early 80s
  • Junk bonds in the mid / late 80s
  • Emerging Market Debt in the early 90s
  • Stock Market bubble in the late 90s
  • Residential Real Estate bubble mid 00s

 

Given that the consequences of getting it wrong are assymetric, maybe it is time to reconsider the dual mandate.  Of course a change in the dual mandate has zero chance of being enacted, but I would like to see the discussion move from theory (market signalling) to practice (the housing bubble).  Of course we can always show people this awesome video.  While it isn’t necessarily all about monetary policy, it does show the perils of a hyperactive Fed.

Bites and Pieces: FroYo Ho Ho

Hi all,

I’ve been fairly quiet, mainly due to a change in my commute. Replacing a 20 – 25 minute drive with a 65 – 70 minute bike ride has been fun, but pretty much left me with no spare energy but to make dinner, watch a bit of TV or a movie, and go to bed.

WIth the summer heat in full swing, I thought I’d post a summertime recipe. Frozen yogurt places have been popping up like summer dandelions. Nearly all the pleasure of ice cream and half the guilt. A Crave popped up in the shopping center next to my place. It’s fun, but can be expensive. So, we (well, my wife) picked up an ice cream maker at Costco. It ran a bit over $30 and has already paid for itself.

You can find many ice cream and frozen yogurt recipes on line, so there’s no need to go into all that. Last week, I heard a story on NPR’s The Splendid Table about how to make frozen yogurt. Jeni Bauer owns a number of ice cream shops in Ohio and wrote a book on making ice cream and frozen yogurt with home equipment. She bought a few home ice cream makers and experimented until she found a way to produce great ice cream. I’ve liked the FroYo we’ve made at home, but this stuff takes it to another level.

There are a couple of tricks to her method. First, bring the milk and sugar up to a boil and add a cornstarch slurry. Boil for a minute longer until it thickens. Second, add this mixture to two ounces of whisked cream cheese. Add the yogurt and flavorings to this base and chill in an ice water bath before using the ice cream maker.

The recipe published on Splendid Table is a lemon frozen yogurt. I modified Jeni’s recipe slightly. Hers calls for putting a quart of yogurt in a sieve, letting it drain for 6 – 8 hours, and then using 1 1/4 cups of the drained yogurt. We keep Greek yogurt at home and I think that works just fine. The original recipe calls for including the lemon zest in the main mixture and picking it out. Such a pain! I’ve long made lemonade syrup by boiling lemon juice, sugar, and lemon zest. The original recipe called for 3/4 cup of sugar and 1/4 cup of corn sugar. We don’t keep corn syrup around at home, so I omit the corn syrup and used a bit more sugar in the lemon syrup.

Lemon Frozen Yogurt

Excerpted from Jeni’s Splendid Ice Creams at Homeby Jeni Britton Bauer. (Artisan Books, 2011)

Lemon Syrup

  • 2 – 3 lemons (sufficient for 1/2 cup of juice)
  • 1/3 cup sugar
  • Zest from 1 lemon (or all if you like)

Yogurt Base

  • 2 – 3 cups of plain Greek yogurt
  • 1 1/2 cups whole milk
  • 1/2 cup heavy cream (or omit cream and use two cups milk)
  • 2 ounces (4 tablespoons) cream cheese, softened
  • 2 tablespoons cornstarch
  • 5/6 cup sugar

Method

Remove zest from one lemon in strips. Juice lemons to make 1/2 cup of lemon juice. Combine zest, lemon juice, and sugar in small sauce pan and bring to a boil. Set aside.

Whisk cream cheese in medium bowl until smooth.

Add two tablespoons of milk to the corn starch and mix to make a slurry. A fork is fine for this.

Combine remaining milk, cream, and sugar in 4 quart nonstick pot and bring to a boil. Boil for about 4 minutes, stirring, then whisk in the cornstarch slurry. Cook until the mixture thickens, about one minute. Stir the mixture into the cream cheese and whisk until smooth. Add the yogurt and lemon syrup (after straining out the zest) and chill in an ice water bath. [I used nested bowls, but you could also pour the mixture into a freezer bag.] Put in the cannister of the ice cream maker and spin until thick and smooth. Pour into a container, cover the surface with wax or parchment paper, and freeze for at least four hours to set up.

Chocolate Frozen Yogurt

Chocolate Syrup

  • 1/3 cup cocoa powder
  • 1/2 cup sugar
  • 1/4 cup water

Yogurt Base

  • 1 quart of plain Greek yogurt
  • 1 1/2 cups whole milk
  • 1/2 cup heavy cream (or omit cream and use two cups milk)
  • 2 ounces (4 tablespoons) cream cheese, softened
  • 2 tablespoons cornstarch
  • 1/2 cup sugar

Method

Combine cocoa powder, sugar, and waterin small sauce pan and bring to a boil. Whisk smooth and set aside.

Whisk cream cheese in medium bowl until smooth.

Add two tablespoons of milk to the corn starch and mix to make a slurry. A fork is fine for this.

Combine remaining milk, cream, and sugar in 4 quart nonstick pot and bring to a boil. Boil for about 4 minutes, stirring, then whisk in the cornstarch slurry. Cook until the mixture thickens, about one minute. Stir the mixture into the cream cheese and whisk until smooth. Add the yogurt and chocolate syrup and chill in an ice water bath. Put in the cannister of the ice cream maker and spin until thick and smooth. Pour into a container, cover the surface with wax or parchment paper, and freeze for at least four hours to set up.

Elinor Ostrom, RIP

Somewhat related to both the discussions of economics and evolution is the work of Elinor Ostrom, who passed away yesterday. Ostrom was awarded the Nobel Prize in Economics in 2009. She was a political scientist who worked on the “tragedy of the commons” and collective action.

The WSJ announcement.

Ostrom’s Nobel page.

Commentary by Ilya Somin at VC.

A post by the evolutionary biologist David Sloan Wilson, whose work I think I’ve referenced here before.

Morning Report 6/13/12

Vital Statistics:

  Last Change Percent
S&P Futures  1314.8 -5.3 -0.40%
Eurostoxx Index 2142.0 -1.4 -0.07%
Oil (WTI) 82.79 -0.5 -0.64%
LIBOR 0.468 0.000 0.00%
US Dollar Index (DXY) 82.31 -0.115 -0.14%
10 Year Govt Bond Yield 1.68% 0.01%  
RPX Composite Real Estate Index 179.1 0.2  

Markets are lower this morning on disappointing retail sales data. April numbers were also revised downward. The Producer Price Index showed inflation at the wholesale level remains under control. Bonds and MBS are lower in spite of the soggy tape. Jamie Dimon gets his close-up today in front of the Senate Banking Committee.

The Lender Processing Services Home Price Index rose .9% in March.  This was the second consecutive monthly increase in the seasonally-adjusted index since 2006. The increase was broad-based geographically, with increases in almost every MSA. That said, March sales volume was extremely low – like mid-90s low – as inventory dried up.  I mentioned a WSJ article yesterday that attempted to address the question why volumes are so low if shadow inventory is so high. Negative Equity is largely the culprit. Also in the report, distressed sales (short sales / foreclosures) made up 40% of the transactions. CNBC notes that new laws like Nevada’s foreclosure-reform law are having the unintended (maybe not) consequence of delaying foreclosures and delaying the market-clearing process. California is debating a “Homeowner Bill of Rights” as well. The net result is that the supply of foreclosed properties will continue to be artificially held back and helps explain the low volume of transactions.

In a story that is guaranteed to hit a lot of ideological nerves, the Washington Post profiles a loan officer who claims Wells Fargo steered minority borrowers into no-doc subprime loans. Needless to say, Wells disagrees claiming they never did no-docs in the first place and that the borrowers wouldn’t have qualified for prime loans anyway. Ironically, she is now in the mortgage-relief business, which has come under scrutiny by the FTC for charging up-front fees and not delivering anything. Needless to say, this article will produce a lot of heated CRA vs bankster debate.