General Economic News Nov. 1- 5

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News
FRIDAY
What the election means for foreclosures and robo-signing
The state attorneys general have been pressing the banks hard over the past month, questioning them over foreclosures and falsified legal paperwork. But Tuesday's election could impact that effort.
Ron Paul vows renewed Fed audit push next year
Republican Representative Ron Paul on Thursday said he will push to examine the Federal Reserve's monetary policy decisions if he takes control of the congressional subcommittee that oversees the central bank as expected in January.
40% of Americans cutting Thanksgiving fat
Forget that second helping of pumpkin pie. With the economy still struggling American families are planning to scale back their Thanksgiving celebrations this year.
AIG loses $2.4 billion on asset sales
AIG said Friday that it lost $2.4 billion in the third quarter on sales of insurance units, proceeds of which it plans to use to pay back the U.S. government.
Toyota quadruples net income
Toyota reported Friday that its net income in the latest quarter more than quadrupled over the same period last year, as strong sales and cost-cutting measures balanced the strengthening yen.
The End of Free-Trade Globalization
The world economy is on the brink again, facing a crisis of epic dimensions for reasons largely obscured by the inflamed politics of 2010. Against their wishes, the United States and China have been drawn into an increasingly nasty and dangerous fight over currencies and trade.
Obama drops plan to limit global warming gases
Environmental groups and industry seem headed for another battle over regulation of greenhouse gases, as President Barack Obama said he will look for ways to control global warming pollution other than Congress placing a ceiling on it.

THURSDAY
Obama wants a do-over with business
One day after a "shellacking" in the congressional election, President Obama acknowledged Wednesday that he needs to improve his relations with business.
Stores strong ahead of the holidays
Retailers reported strong sales results for October on Thursday despite the still-struggling economy.
U.S. Auto Sales Rise in October
U.S. auto sales rose in October as buyers grew more confident in the economy and new models drew them into dealerships.
Germany Concerned about US Stimulus Moves
Germany Economy Minister Rainer Bruederle said on Thursday he was concerned at U.S. efforts to stimulate growth by injecting liquidity into its struggling economy.
Dow up 133 a day after Fed reveals stimulus plan
Stocks are rising sharply Thursday, one day after the Federal Reserve announced a $600 billion plan to stimulate the economy.
European Central Bank Keeps Rates at Record Lows
The Bank of England and the European Central Bank left their key interest rates at record lows Thursday after recent data showed that the economic recovery was showing some resilience.

WEDNESDAY
American dream fades for more as homeownership falls
Ongoing economic, financial and housing woes continue to hit Americans where they live -- or used to.
Freddie Mac sees no housing recovery soon
Freddie Mac lost $2.5 billion in the third quarter and said it will be a "considerable time" before the housing market recovers.
Small Automakers See Big Gains in October Sales
October sales are expected to come in slightly below 1 million vehicles, hitting around 12 million on a seasonally adjusted annual sales rate. Sales in October were uneven, coming in strong some days and really weak on others.
Borrowing Costs Rise for Weak In Europe
Borrowing costs of weaker European countries are again on the rise amid a steady stream of bad news.
Business Looks to Republicans to Block Obama on Rules, Taxes
The Republican gains in Congress mean U.S. companies from Goldman Sachs Group Inc. to Wellpoint Inc. may be able to weaken or block what they consider President Barack Obama’s anti-business policies on health care, the environment, taxes and financial reform.

TUESDAY
Making Low Mortgage Rates Work for You
Rates on 30-year fixed-rate mortgages (excluding jumbos) hit an average of 4.3% in September, the lowest level since 1953, according to Freddie Mac, and are still hovering below 4.5%.
Obama administration sings new tune on foreclosures
A year ago, officials focused on stemming the foreclosure tide. Now they are touting the need for foreclosures to rebuild the housing market.
One sector really loves gridlock: Financials
Interestingly, Financials showed demonstrably better performance under divided government than under unified government, posting an average 20% return over a two-year period (9.5% annualized) as compared with 9% (4.3% annualized) when the government is unified.
Should the Government Insure Private Markets?
...demonstrates how poorly designed public insurance programs can lead to resource misallocation, excessive risk-taking, and potentially enormous burdens on current and future taxpayers.
RIP, muni bond insurance
The market no longer believes in the business of insuring municipal bonds.
Pace of Economic Recovery Remains Unclear
A report on manufacturing provided a glimmer of encouragement, but a separate government report suggested that consumer spending was stuck in the doldrums.

MONDAY
Manufacturing in surprise surge
The Institute for Supply Management's manufacturing index hit 56.9 in October from 54.4 in September. The reading was expected to have eased to 54.
U.S. Consumer Spending Rises Less Than Forecast, Prices Cool
Consumer spending rose less than forecast in September as incomes dropped for the first time in more than a year, a sign Americans may keep rebuilding savings and paring debt as the economy is slow to recover.
The savings rate for U.S. households fell to its lowest level in 13 months
With spending rising faster than incomes, the personal savings rate fell to 5.3% of disposable income, down from 5.6% in August. It was the lowest savings rate since August 2009.
Construction Spending in U.S. Unexpectedly Rose in September
Construction spending in the U.S. unexpectedly rose in September, led by increases in homebuilding and public projects.
Schedule for Week of Oct 31st
The highly anticipated second round of Federal Reserve quantitative easing (QE2) will be announced on Wednesday at 2:15 PM.

Economist Comments
FRIDAY
The problem with the economy? Confidence.
How could several trillion dollars of fiscal and monetary stimulus barely move the needle of gross domestic product growth? That's the question President Obama needs to answer in the wake of the midterm elections. Why was his policy so ineffective at multiplying its stimulative effects throughout the economy?
A Must-Read on Social Security
Think of the Social Security Trust Fund as a cookie jar where a couple tries to save for retirement by tucking away a $100 bill every week. But every weekend, they give that $100 to their kids to spend on movies, pizza, new clothes, and video games. Still, the couple doesn't worry about their inability to save, because each time they remove a $100 bill from the cookie jar, they replace it with a piece of paper that says "You kids owe us $100 plus interest to be paid out in an annuity upon our retirement."

THURSDAY
Parsing the Republican economic agenda
The Republicans now have a platform to voice their positions on economic policy, even if their bills never land on President Obama's desk. Here's how they'll likely approach the hotly debated issues.
China: Economic Miracle or Just Another Bubble?
China's surging, rampant capitalism is still only skin deep - but probably for good reason.

WEDNESDAY
If I max out my 401(k), what's next?
My wife and I have a combined annual income of about $250,000. If we max out our 401(k)s, can we each still contribute the full $5,000 this year to a traditional deductible IRA rather than just investing the money through a normal taxable brokerage account?
Put Department of Education in timeout
The U.S. Department of Education was created with the primary stated goal of increasing students' test scores, but test scores for 17-year-old American students have remained essentially flat since 1970. The department's budget has grown to a whopping $107 billion this year. Per pupil, taxpayer-financed education spending (adjusted for inflation) has risen by more than 200 percent since 1970 (and 150-plus percent since 1980). Clearly and unambiguously, the department deserves a grade of F.
How the FCIC can salvage its relevancy
The forthcoming report from the Financial Crisis Inquiry Commission will not likely disclose any great unknowns about the causes of the crisis. But total transparency would help secure its place in the historical record.

TUESDAY
New Basel Rules Could Punish Wrong Banks
...quadrupling the percentage of capital banks have to hold on to in a system that is basically the same as the one governing global finance during the bubble and great recession isn't the way to prevent future excessive risk taking.
Q3 2010: Homeownership Rate at 1999 Levels
The homeownership rate was at 66.9%, the same level as in Q2. This is at about the level of early 1999.
What are the Costs of Political Uncertainty?
...the ill-effects of policy uncertainty are particularly strong in those areas of policy that are least-certain today.

MONDAY
Divided Washington Is What U.S. Economy Needs
Chances are good that the power of the U.S. government, squarely in the hands of Democrats the past two years, is about to become divided between the two parties. Modern American history suggests that this is the best of all worlds.
Sane Conservative Ideas Watch
As life-spans have gone progressively up, the average age of getting early social security benefits has gone in the opposite direction.
In Praise of Irrational Exuberance
Does a flourishing economy depend on delusion?
Populist Rage Over Foreclosures Doesn’t Justify a Breakdown in the Rule of Law
Grinding the foreclosure process to a halt would only hurt the housing market, create more problems for taxpayers, and slow the recovery.
2% Just Won't Do
While real GDP grew by an annual rate of $66 billion, nearly two-thirds of that - $47 billion - came from businesses restocking depleted inventories. And while it's true that consumer spending increased at the fastest rate since late 2006, all that demand was satisfied entirely with imports, adding little to U.S. output.
Unpopular Financial Reform
Most Americans don’t like the Dodd-Frank act.

Blogs
FRIDAY
School Choice in the Supreme Court: Does All Your Money Belong to the Government?
Tuesday’s election results aren’t the only outcomes this week likely to impact the future of school choice across the country. Yesterday, the Supreme Court heard oral arguments in the case of Arizona Christian School Tuition Organization v. Winn to determine whether the Grand Canyon State’s scholarship tax credit program violates the establishment clause.
Seizing control
"The consumers drove the mom and pops out of business. The consumers preferred Wal-Mart (and Target and K-Mart) to the mom-and-pops. To the extent Wal-Mart did the driving, it was by offering better products at better prices. I was thinking of that yesterday when I saw the headline in the Washington Post: "GOP Siezes Control in the House."
Republican Agenda: Privatization
In coming months, new Republican members of Congress will be looking for ways to cut the budget deficit and also to increase economic growth. One way to do both is to privatize government assets, such as the U.S. Postal Service, Amtrak, and the air traffic control system.
In U.S., 14% Rely on Food Stamps
A huge number of American households are still relying on government assistance to buy food as the recession continues to batter families.

THURSDAY
Bankruptcy Filings increase, Freddie Mac reports loss, and more
Information on the latest happenings in economics.
Post-Moratorium: Where Are the Drilling Permits?
The deepwater drilling moratorium ended three weeks ago, but it could be months before the federal government issues its first new permit.
How does Reagonomics compare to Obamanomics?
A blogger compares the state of the GDP five quarters after the end of the 1981-82 recession to the state of the economy now, five quarters after the 2007-09 recession.

WEDNESDAY
ISM non-Manufacturing Index increases in October
The October ISM Non-manufacturing index was at 54.3%, up from 53.2% in September - and above expectations of 54.0%. The employment index showed expansion in October at 50.9%, up from 50.2% in September.
Personal Bankruptcies Continue to Rise
Personal bankruptcy filings continued to climb in October, on pace to reach their highest level in five years.
Mortgage Purchase Applications Increase slightly last week
The MBA reports: Mortgage Purchase Applications Increase, while Refinance Applications Decline in Latest MBA Weekly Survey

TUESDAY
World-Wide Factory Activity, by Country.
Manufacturing activity expanded faster in most major economies in October, with the U.S., euro zone and China all picking up steam.

MONDAY
Rising Tide Of Government Regulation Faces Rising Opposition From American People
Specifically, fiscal year 2010 federal regulators promulgated 43 major rules estimated, by the regulators themselves, to cost the U.S. economy $28 billion. That is the highest level ever on record.
Faster growth needed
The main reason for the slower performance is the change in recession type. The Fed created the 1982 recession by increasing interest rates to record levels, in an attempt to wring inflation out of the economy. This time around, the recession was caused by the collapse of a huge debt bubble, which forced banks and households to rapidly deleverage.
The Wrong Path
In 2010, the median inceom of U.S. households very likely dropped from the $49,777 recorded in 2009 to a level roughly $2,500 lower: $47,211.
Unofficial Problem Bank list increases to 894 Institutions
Here is an unofficial problem bank list for October 29,2010.
Making the world a better place
Greatness is all around us. It doesn’t come out of Washington. It comes out of you and me and how we live our lives.
Rosner on securitization
Rosner recently wrote an analysis of the state of the securitization market. It is superb. He argues that it is crucial to re-establish the securitization market. I disagree. But that doesn’t matter. What does matter is his superb analysis of the Dodd-Frank bill.
Number of the Week: 107 Months to Clear Banks’ Housing Backlog
Over the summer, banks appeared to be making some headway. The government’s mortgage-modification program helped some people get current on their payments, taking their homes out of the foreclosure pipeline. At the same time, homebuyer tax credits helped boost sales. Combined real and shadow inventory fell to 91 months of sales in May.
The Stealth Stimulus of Defaulters Living for Free
The mortgage-foreclosure mess could prove expensive for banks and investors. But in some states, it will also prolong an unintended economic stimulus: free housing for millions of defaulters.

Reports
FRIDAY
Real Economic Ties Should Underpin U.S.–Indonesia Partnership
There is one very useful thing about economic issues: Progress on them is measurable.

THURSDAY
Federal Overreach into American Higher Education
The U.S. Department of Education (ED) has proposed 14 new regulations that call for aggressive new government involvement in American higher education. Three regulations in particular have attracted much attention and stand out as especially troubling. One regulation would require higher education institutions to obtain authorization from their state governments in order to participate in federal financial aid programs.

TUESDAY
RCM: Wells Fargo Economics Group: ISM: Still a Growth Story—Prices Paid Up, Metals on the Move
October’s ISM came in at 56.9 with continued growth signals from production, orders and employment. Firms appear to have adjusted their operations to signal growth with export orders very strong.

MONDAY
The Consumption Response to Seasonal Income: Evidence from the Japanese Public Pension Benefits
Japanese public pension benefits, which were distributed quarterly through February 1990 and every other month since then, induce substantial but predictable income fluctuations. The relative magnitude of the payments combined with the delay between payments yields a stronger test of the Life-Cycle/Permanent Income Hypothesis than in prior studies. Applying two identification strategies to monthly household panel data, we find that consumption significantly responds to quarterly benefit receipt. Additionalanalysis suggests that our findings cannot be explained by either liquidity constraints or precautionary savings motives.
Weekly Economic & Financial Commentary
U.S. Moderate Growth Continues to Move Ahead.