General Economic News Oct. 18-22

---

News
FRIDAY
U.S. plan for trade targets hits G20 headwinds
The United States struggled on Friday to win backing for a proposal to set limits on external imbalances as a way of pressing countries with surpluses such as China to let their exchange rates rise.
Fannie Mae and Freddie Mac deep in the hole
Republicans, Democrats agree on reform, but not on solutions.
Chávez, Syria sign economic accords
On the Mideast leg of an international tour, President Hugo Chávez of Venezuela said Wednesday that he and his Syrian counterpart are “on the attack’’ against Western imperialism.
Home truths
Preventing foreclosures won’t fix America’s housing mess. Encouraging banks to write down mortgages might.

THURSDAY
China's economy cools in third quarter
China's economic growth slowed for the second quarter in a row, cooling fears that its economy is growing at an unsustainable pace.
Economy growing slowly, unevenly, Fed finds
Growth slow in two southern regions; improvement seen elsewhere.
Lenders get OK on foreclosures
President Obama's top housing official said Wednesday that lenders are within their rights to resume foreclosures this month despite allegations that they erred in processing documents. But he said the banks could face fines if found to have broken the law.
U.S. Leading Economic Indicators Increase for Third Month
The index of U.S. leading indicators rose in September for the third straight month, signaling the recovery will extend into 2011.
UPS Profit Tops Analysts' Estimates on Global Economic Pickup
United Parcel Service Inc., the world’s largest package-delivery company, raised its annual forecast after posting an 80 percent gain in quarterly profit, topping analysts’ estimates as international shipments rose.
Airline tickets: Airlines boost profits by selling fewer of them
Airline tickets aren't as plentiful as in 2008, allowing airlines to price them higher.
China's lock on market for rare earth elements: Why it matters
China said Wednesday it will 'continue to provide rare earths to the world,' but it also plans to cut exports. Here's a Q&A on what all the fuss is about.
Mortgage rates rise slightly from record low
30-year benchmark rises to 4.21 percent with 15-year at 3.64 percent.

WEDNESDAY
Chicago sheriff says no to enforcing foreclosures
Two of the largest U.S. mortgage servicers have said they will resume home foreclosures, but a big-city sheriff has news for them: he won't enforce their foreclosure evictions.
IMF sees tepid recovery in Europe
In its latest economic outlook for Europe, the International Monetary Fund said Wednesday that activity across the region will expand at an annual rate of 2.3% this year, before easing to 2.2% in 2011.
SEC Stretched Thin by New Rules
Securities and Exchange Chairman Mary Schapiro said today the cost of implementing scores of rules under the Dodd-Frank overhaul of financial regulation has forced her to shift money and people from other pressing tasks.
Your retirement account might get smaller this year
Older Americans whose retirement accounts took a beating from the market's downturn caught a break last year: The government suspended rules that required them to make annual withdrawals, buying them time for their portfolios to recover.
China Said to Widen Its Embargo of Minerals
China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted some shipments of those materials to the United States and Europe, three industry officials said this week.
To Big to Fail Bank Plan Stretches into 2011
Steps to avoid "too big to fail" banks from destabilizing markets and the world economy will take longer to agree and a common global approach is beyond reach, regulators and central bankers said on Wednesday.
FDIC lowers expected cost of bank failures by $8 billion
Federal regulators decided against raising the fees that banks pay to insure deposits after determining that losses from bank failures this year were lower than anticipated.
http://www.msnbc.msn.com/id/39546204/ns/business-world_business/
Widening income disparity tests famously patient people.
Wells Fargo Reports Record Profit as Credit Improves
Wells Fargo & Co., the largest U.S. home lender, reported record third-quarter profit that beat most analysts’ estimates as credit conditions improved, and said it’s not planning to halt foreclosures.
BofA Resists Rebuying Bad Loans
Bank Posts $7.3 Billion Third-Quarter Loss as Fee Revenue Tumbles; Effects of Regulatory Overhaul.

TUESDAY
Bank of America Reports $7.3 Billion Loss, Citing Charges
Bank of America, the nation’s biggest bank, announced Tuesday that operating profit rebounded in the third quarter, helped by improved credit conditions among consumers and businesses.
Housing starts jump to 5-month high
Housing starts, or the number of new homes being built, rose 0.3% to a seasonally adjusted annual rate of 610,000 in September, up from a revised 608,000 in August, the Commerce Department said.
West get ready, here comes China 2.0
After decades of rapid growth, Asian giant faces fresh challenges.
Shattered Dreams: To Rent or Buy, That is the Question
In the midst of a stalled economy it's a wonder anyone feels like making a big financial purchase like buying a home -- long perceived as a large part of the American dream.
China raises key rate for 1st time since crisis
Beijing tries to cool inflation and guide rapid growth.
Strikes slow French life to snail's pace
Airlines warned to expect fuel shortage.
Seniors on Social Security can make the most of savings
Last week, the Social Security Administration announced that 58 million retirees and individuals with disabilities won't get a cost-of-living allowance in 2011. By law, the Social Security Administration can't increase benefits unless consumer prices in the most recent third quarter have increased since the last cost-of-living adjustment. Social Security said there has been no increase from the third quarter of 2008.
America's Poor: Where Poverty Is Rising In America
Thanks to the recession, 2009 was one of the worst years for poverty in America in more than half a century. The total number of Americans living in poverty hit 43.6 million, the highest level in 51 years and the national poverty rate rose to 14.3 percent from 13.2 percent, according to data released last month by the Census Bureau.
Holidays may be a little merrier for retailers
U.S. consumers plan to spend an average of $688.87 on gifts, decorations, food and other holiday-related items, up slightly from last year, a National Retail Federation survey says.
Flight delays cost passengers nearly $17 billion
There is now a dollar amount to put on the collective rage of U.S. airline passengers over flight delays: $16.7 billion.

MONDAY
Luxury sales rebound to pre-crisis levels The luxury sector is rebounding better-than-expected this year thanks in large part to wealthy Americans replenishing their wardrobes after a year of self-denial and nouveau riche Chinese indulging in a worldwide spending spree, according to a new study released Monday.
Donations to major charities dropped by billions
Donations to the country's 400 biggest charities plunged last year by 11 percent, the worst decline since the Chronicle of Philanthropy started ranking the fundraising organizations two decades ago.
Nevada's residents remain most likely to file for bankruptcy
When it comes to filing for bankruptcies, Nevadans have the dubious honor of being way out in front of the residents of any other state, according to bankruptcy per capita figures compiled from court records for the third quarter of 2010.
Broadband Expansion Not a Government Priority
A majority of Americans (53%) do not believe that increasing the availability of affordable high-speed internet connections should be a federal government priority
Mortgage Damage Spreads
Big Bank Stocks Hit Again as Modern Finance Collides With the Legal System.
U.S. Homebuilder Confidence Rose to Four-Month High
Confidence among U.S. homebuilders rose in October to the highest level in four months, a sign residential construction is stabilizing at depressed levels.
Industrial production falls 0.2 percent in Sept.
The Federal Reserve reports that output at the nation's factories, mines and utilities dropped 0.2 percent last month.
A productive Congress gets no respect from voters
The public panned it. Republicans obstructed it. Many Democrats fled from it. Even so, the session of Congress now drawing to a close was the most productive in nearly half a century.
Production in U.S. Unexpectedly Falls for First Time in a Year
Production in the U.S. unexpectedly dropped in September for the first time in more than a year, evidence of the slowdown in growth that is concerning some Federal Reserve policy makers.
So you bought a foreclosed home. Now what?
It seemed too good to be true: You bought a house in foreclosure at a fraction of the former price. Maybe you even knocked out a wall or two and remodeled with all the money you saved. But now thousands of foreclosures around the country may be invalid because of bank paperwork problems. Should you worry?
Housing mess: You can't stay if you don't pay
Just because a lender screwed up your foreclosure paperwork doesn't mean that you get to stay in your house for free.
A $300 million bet on solar
Abound Solar, a scrappy Colorado startup barely three years old, recently won a $400 million stimulus loan guarantee from the federal government to make thin-film solar panels in the United States.Abound plans to put three quarters of that money into the Kokomo plant, hire as many as 900 people by early 2012 and start exporting to Germany.

Economist Comments
FRIDAY
The Inequality Delusion
Americans think the U.S. has far more income equality than it has. They want it to be even fairer. Yet they hate the policies that would make it so.
The Future of Housing Finance
A memorable decade. How can we apply its lessons to the next decade?
Big banks behaving badly, again
Taxpayers are likely to pay for their garbage-to-gold alchemy.
Nine Stories The Press Is Underreporting -- Fraud, Fraud And More Fraud
If it wasn't already blindingly obvious that pervasive fraud was at the heart of the financial crisis and the ensuing foreclosure catastrophe, you would think that the latest news -- that banks have routinely been lying their heads off in the rush to kick homeowners off the properties they fraudulently induced them to buy in the first place -- would pretty much clinch it. And yet the mainstream media still by and large hasn't connected the dots.

THURSDAY
A Lesson and a Warning From Britain
Today, George Osborne, Britain’s Chancellor of the Exchequer – the man responsible for Britain’s budget –announced the results of a high-profile spending review. He promised cuts, and he delivered. The question is whether the cuts will be deep enough, and Osborne’s other policies wise enough, to restore Britain to financial stability.
Will Washington Let the Mortgage Put-Back Fiasco Escalate?
The mortgage put-back mess is getting more serious. Yesterday, we learned that several major investors demanded that Bank of America buyback mortgage bonds due to its shoddy servicing and process failures. If the bank refuses, the next stop is likely a court. And other banks might soon also be targets of investors. Wall Street is beginning to notice as the securitization market is beginning to seize. Again. Will Washington allow another crisis?
Europe Seen Avoiding Keynes’s Cure for Recession
The British economist John Maynard Keynes may live on in popular legend as the world’s most influential economist. But in much of Europe, and most acutely here in the land of his birth, his view that deficit spending by governments is crucial to avoiding a long recession has lately been willfully ignored.
Did the Recession Slow Consumerism, or Change It Forever?
Here are two impressions of the state of the American Consumer, that 300-million-wallet juggernaut that makes up nearly 70 percent of the economy.
Free Checking Is On the Way Out
How will banks cope with all of the new limits on the fees they can collect on credit and debit cards? That's easy -- they'll just charge all customers a little more for the services they had previous enjoyed for cheap. As a result, free checking will soon be something only economic historians talk about.

WEDNESDAY
South Korea Free Trade Agreement Key to Prosperity and Security
Washington should be expanding American investment and trade opportunities throughout East Asia.
How China Is Moving to Slow Economic Growth
Despite pressure from most of its trading partners at a recent meeting in Washington, China didn't budge on the currency issue, and it is likely to dominate a Group of 20 ministerial meeting this weekend in South Korea.
First, Kill All the Pensions
I believe that in an era when the schools clearly need change, the ability to cling to your job like a rabid abalone should not be something that teacher compensation systems select for--yet that's one of the biggest benefits the job offers. This does, indeed, seem crazy.

TUESDAY
Is Retail Recovering or Is It Just Inflation?
As the prices of imports rise, retail sales will cool off, but it will be difficult to distinguish with ongoing price inflation.
In Our Zero Sum Economy, Are You Winning or Losing?
Right now, the winners are US retail, the credit card banks, and the automakers; the losers are the banks and the holders/guarantors of US mortgage debt.
Declaring war on the regulatory state
Pelosi's Congress ignores the red-tape brigade but the GOP won't.
Why Jamie Dimon doesn't expect a double dip
Is there a new era in banking? J.P. Morgan Chase's CEO discusses what's changed -- and what hasn't.

MONDAY
Buying the Senior Vote
Can our retired readers be bought for $250? Apparently President Obama thinks they can, because two weeks before Election Day he has endorsed sending bonus checks for that amount to the nearly 58 million Americans on Social Security.
Can TARP R.I.P.?
The public is right to hope that the bailout law stays dead
California's Cap-and-Trade War What happens when environmental fashion collides with a state's desperate need for jobs and economic growth? That question will be put to the test when Californians vote November 2 on a ballot measure that would suspend the Golden State's cap-and-trade law until its unemployment rate falls below 5.5%. Today the rate is 12.4%.
COBURN: Education pork stalls reform
Congress can't stop throwing away your money
Now Free Chile's Entrepreneurs
The rescue of 33 miners marked how far Chile has distanced itself from Third World socialism. But if President Piñera isn't careful, Chile could end up there again.
Why a Foreclosure Moratorium Is a Bad Idea
A special bankruptcy law could help borrowers while letting housing markets clear.
The Ethanol Bailout
Scenes from a bailout: Last week, the Environmental Protection Agency decided to make the ethanol lobby's guaranteed "market" even larger. Shares in Archer Daniels Midland, the second largest U.S. ethanol maker, rose to a near 28-month high. Midwest Democrats in tight races got a political bump. Maybe for the first time in history, Exxon and the Natural Resources Defense Council shook out on the same side of an issue—in opposition.
Obama's Foreclosure Inaction Risks Katrina Redux
The foreclosure crisis that seems on the brink of spinning out of control may be the decisive nudge that pushes the U.S. into a double-dip recession. Banks that have only just begun to recover from the worst financial crisis since the Great Depression are about to find themselves in straitjackets.
The X Factor of Economics: People
Economists — they certainly are a contentious bunch. The latest evidence came last week, in the form of the minutes of the latest meeting of the Federal Open Market Committee, the brain trust that establishes monetary policy. The committee, we learned, is divided on a seemingly straightforward question: Should the Fed take action to goose the economy now, or wait, watch and perhaps goose later?
Just How Lousy Is the Economic Recovery?
At 18 months long, the recession did last longer than the previous record holders -- by all of two months. But in terms of unemployment, the 1981-82 recession was worse. The jobless rate peaked at 10.8 percent in Nov. 1982, compared with the peak this time around of 10.1 percent.
Free Money, Investment, and Employment
The combination of Treasury yield curve steepness and Baa-rated yields has led to year-over-year declines in employment and investment in every six-month-ahead period since 1953.

Blogs
FRIDAY
British Military Cuts, Conservatives, and Neocons
Yesterday, Prime Minister David Cameron announced Britain’s biggest defense cuts since World War II. The cuts affect the British military across the board.
When Will Our Progressive Corporatism Nightmare End?
$154 billion. That is the amount of taxpayer money that will be needed to bail out Fannie Mae and Freddie Mac according to a new “stress test” performed by the Federal Housing Finance Agency. And that is the good news.
Clicks and mortar
Our interactive overview of global house prices and rents.

THURSDAY
Letting off steam
IS CHINA'S growth slowing or accelerating? In the year to the third quarter, its economy expanded by 9.6%, slower than its growth in previous quarters. So why did China's central bank raise reserve requirements for six banks earlier this month and raise interest rates (by 0.25%) earlier this week for the first time in almost three years?
Building a new home? Yeah, me neither.
Home construction has hit yet another low. America hasn't built this few new homes in decades.
Financial Regulation Overhaul Draws Weak Public Support
Many Democrats hoped this summer’s financial regulation overhaul would help them in elections this fall. A survey by economists at the University of Chicago and Northwestern University indicates they’re not getting much traction from it.
Macroeconomics from a Pre-Keynesian Perspective
The principal component-idea of macroeconomics – aggregate demand and aggregate supply – trades on the analogy with the Marshallian individual market demand and supply analysis. For many students this makes the idea of macro-aggregation seem quite uncontroversial, almost “natural.”
Economists React: A Moderate Slowdown For China
China’s statistics bureau published key economic data for September and the third quarter Thursday, showing slowing but still rapid growth and a pickup in inflation. Analysts give their take.

WEDNESDAY
What the Left Doesn’t Understand About America
If you think that President Obama’s abandonment of the Creator was an accident in his recent speech in Rockville, MD, think again. Monday was the third time in a little over a month that President Obama wrote the Creator out of one of our nation’s founding documents.
What Is the Rational Default Point for Homeowners?
While house prices nationally have fallen 30 percent from their 2006 peak, at what point does it make sense for homeowners to default as a rational economic choice? This is the question John Krainer, a senior economist at the Federal Reserve Bank of San Francisco, and Stephen LeRoy, a professor emeritus at the University of California Santa Barbara visiting San Francisco Fed scholar, have tried to answer in a new paper, Underwater Mortgages.
U.S. Government TARP Returns Outperform 30-Year Treasury Bonds
Here's something you might not easily uncover in the financial blogosteria universe: The U.S. government's returns on the bailout of banks through the Troubled Asset Relief Program beat out Treasuries, cash and CDs. Of the $309 billion invested in financial through TARP, the return over two years has been $25,2 billion, according to Bloomberg, a return of 8.2 percent, outpacing returns over the same period of the 30-year Treasury, money market accounts and certificates of deposit.
Moody's: Commercial Real Prices fall to 2002 Levels
Moody's reported today that the Moody’s/REAL All Property Type Aggregate Index declined 3.3% in August. This is a repeat sales measure of commercial real estate prices.
Should We Just Call a 'Do-Over' on the Mortgage Market?
Over at Unqualified Offerings, Thoreau asks why we shouldn't just cancel all the damn mortgages and start over. I sense that he isn't the only one thinking this sort of thing these days, and while the temptation is to snort and say "that's ridiculous!", the fact is that something similar has been tried before, in land reform schemes that aimed to address an untenable inequality between landholders and the much more numerous unlanded poor.
Take an Aspirin
Thank goodness for “callous” capitalism.
Why China resists currency reform
The chorus of voices criticizing China's stubborn resistance to reforming its controversial currency regime and allowing the yuan to appreciate keeps getting louder.

TUESDAY
A Better Way to Fix the Foreclosure Process
Today, the great mortgage morass has elicited constant calls for a publicly enforced foreclosure moratorium. But shutting down the foreclosure process would only delay the inevitable and take yet another step away from the rule of law. A far better solution would be to experiment with ways of providing more legal resources to borrowers and courts that would make the foreclosure system more efficient and fair.
The ‘Every Economist’ Myth
In fact, of course, hundreds of economists went on record against the stimulus bill.
What are commodities telling us?
Why aren't higher commodity prices showing up in the CPI? In part, this is down to lags; in part, it's down to the relatively small weight of commodities within the index. But it may be down to methodology.
The Not So Great Great Recession
True enough, the Great Recession lasted 18 months. That’s the longest recessionary period since 1929. But this fact reveals far less than the president implies.
The Left Still Doesn’t Get Poverty
It is far past time to reboot our poverty programs to promote work and encourage marriage in order to control costs and promote greater self-reliance.
Where Is the Housing Recovery?
Anyone who tells you the housing problem is "bottoming" either has an agenda or simply isn't paying attention to the data.
Latest Economic Numbers Show Industrial Complex Slowing
Capacity utilization is stagnating and production is weaker than expected.
Who's Who in the Foreclosure Scandal: A Primer on the Players
No one knows how big this show is going to get yet, but here's a guide to the original cast members.

MONDAY
Schedule for Week of Oct 17th
Two key housing reports will be released this week: September housing starts (Tuesday) and October homebuilder confidence (Monday). Also the Fed will release September industrial production and capacity utilization (Tuesday).
Freedom's just another word for getting a state subsidy
IT’S no secret that Europeans and Americans have different feelings toward income redistribution and meritocracy.
Unofficial Problem Bank List at 875 Institutions
The Unofficial Problem Bank List shrank this week in both the number of institutions and assets. There were eight removals and six additions leaving the list at 875 institutions, down from 877 last week.
Private Capital Moves into Public Infrastructure
The risk should be less for new than for existing infrastructure, because if the project doesn’t pay off, investors will take the hit.
Who Suffers From the Foreclosure Mess? Just About Everyone
All this uncertainty is ultimately going to be terrible for both the housing market, and the broader economy. We'd better work hard at crafting legislative and judicial remedies--more about which later.
Foreclosure "scandal" again
In the end, the biggest losers will be the unemployed, because the assault on the foreclosure process is going to keep the housing market in limbo for years. That in turn is going to make economic recovery something that does not begin until well after President Palin takes office.
Morning Bell: Big Government’s Government Union Firewall
Striking back against the electorate’s small government fervor, AFL-CIO Political Director Karen Ackerman penned a strategy memo last week claiming “Union Voters are the firewall for candidates that support working families.”
Pelosi Proposes Seniors Subsidy to ‘Replace’ the 2011 Social Security COLA
Today’s announcement that Social Security recipients will not receive a cost-of-living adjustment (COLA) again in 2011 brought an immediate reaction from House Speaker Nancy Pelosi (D–CA). She proposed that the lame duck Congress vote on giving seniors another $250 one-time payment supposedly to replace the COLA.
Google to Back “Spine” That Could Transmit Wind Power
Google is coming to a (future) offshore wind farm near you. In an announcement Tuesday, the technology giant said it is joining with investment firm Good Energies in a $5 billion investment to secure permitting for and begin constructing an underwater electricity transmission line.
No Loan Guarantee, No Nuclear? Not Quite
The prospects for new nuclear energy in the U.S. were purportedly set back this weekend when Constellation Energy pulled out of the Calvert Cliffs 3 nuclear energy project in Maryland. They argued that the Department of Energy’s loan guarantee program was too expensive and complicated to be workable.

Reports
FRIDAY
Leading Indicators: U.S. Economy is Still on Its Feet
Despite drags from the housing market and signs of slack in the factory sector, the Leading Economic Index managed to gain 0.3 percent in September, signaling the slow recovery will continue.

THURSDAY
Housing Data Wrap-Up: October 2010
Home Sales and New Home Construction Face a Tough Second Half.

WEDNESDAY
Solid Increase in Housing Starts in September
Housing starts rose 0.3 percent in September, which was well above expectations. Starts of single family homes increased 4.4 percent, while multi-family starts fell 9.7 percent. Single family permits rose 0.5 percent.

MONDAY
Weekly Economic & Financial Commentary Data this week fit the mold for how this recovery has been taking shape. Jobless claims picked up again suggesting further struggles for employment. Trade data indicated a modest drag from net exports on third quarter GDP. A bright spot was retail sales, which picked up nicely in September even as August sales numbers were revised higher.
America’s Founders and the Principles of Foreign Policy: Sovereign Independence, National Interests, and the Cause of Liberty in the World The United States would support, defend, and advance the cause of freedom everywhere. It would be a refuge for the sober, industrious, and virtuous of the world, as well as for victims of persecution. By sympathy and appropriate action, Americans would show themselves to be true friends of humanity.