6/24/10 Post

BUZZ: Confidence waning in Obama, US Outlook

New
US 30-yr mortgage rate drops to 39-year low
Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.69 percent for the week ended June 24, the lowest since Freddie Mac started the survey in April 1971.
DJIA, Euro, Treasurys Rise
The Dow Jones Industrial Average eked out a slight gain, as investors across financial markets digested the Federal Reserve's cautious remarks on the state of the global economy. Other stock indexes fell, the dollar dropped and Treasury prices ended higher. The 10-year note's yield fell to 3.119%, the lowest level since mid-May.
World leaders, their standing and their issues heading into summit meetings in Canada
Leaders of the world's major industrial countries, representing 85 percent of the global economy, will meet in Canada starting Friday for economic summits. Take a look at selected countries and their leaders’ stances.
Weekly jobless claims fall but remain elevated
The number of people filing first-time claims for jobless benefits fell last week by 19,000, the largest drop in two months. New claims declined to a seasonally adjusted 457,000.
Drilling ban: The jobs at stake
There are as many as 10,000 people that work on deepwater oil rigs in the Gulf of Mexico. Another 25,000 jobs could be affected by the six-month ban imposed by President Obama.
Durables fall in May after five straight gains
The steady upward trend in the manufacturing sector hit a bump in May as a big drop in orders for new airplanes pushed total durable-goods orders down 1.1%.
House panel drops demand for $150 billion bank fund
House members of a conference committee agreed to drop their demands for a $150 billion fund to be used to dismantle a failing mega-bank so its collapse wouldn't damage the markets.
Car Dealers Close to Winning Exemption From Consumer Law
The nation's car dealers appeared on the verge Wednesday of securing a measure that would largely protect them from Congress's wide-ranging financial-regulation overhaul, after an aggressive, months-long lobbying campaign.
Five States Get U.S. Funds to Aid Homeowners
State housing agencies in Arizona, California, Florida, Michigan and Nevada will receive a total of $1.5 billion from the Obama administration's "Hardest Hit Fund."
Democrats Would Cut Budget Below Obama's Plans
The cut amounts to less than 1 percent of the more than $1.1 trillion proposed for agency budgets funded by lawmakers each year through the spending bills.
States Face New Pinch as Stimulus Ebbs
Tax Receipts Aren't Rebounding Quickly Enough to Offset Declining Federal Aid; Push for Additional Medicaid Help Stalls

Blogs
Telling Congress to Reduce the Deficit by Cutting Spending
June 26, America Speaks will host a national town hall meeting in which any and all Americans will be able to voice their opinions on what Washington’s growing deficits will have on the U.S. economy.
European Weakness Is Fuelling U.S. Profligacy
The European debt crisis has demonstrated the painful costs of fiscal profligacy and short-sighted Keynesian stimulus.
A Closer Look at the Recent Trend in Layoffs
The data indicates that the Cash for Clunkers program did not significantly alter the established trend in layoffs during this period, which was declining in any case.
Home Sales: Distressing Gap
...expect that eventually this ratio will return to the historical range of new home sales being around 15% to 20% of existing home sales.

Research, Reports & Studies
Wells Farge Economics Group: New Home Sales Drop to its Lowest Level on Record
New home sales plummeted 32.7 percent in May likely reflecting the expiration of the homebuyers’ tax credit. April was significantly downwardly revised to 446,000 units. Seasonal adjustments may also be at play.
Appropriations and Fund Transfers in the Patient Protection and Affordable Care Act
...creates a mandate for most U.S. residents to obtain health insurance and provides for the establishment of insurance exchanges through which certain individuals and families will be able to receive federal subsidies to reduce the cost of purchasing that coverage. In addition, the new law expands eligibility for Medicaid; reduces the growth in Medicare spending that had been projected under preexisting law; imposes an excise tax on insurance plans determined to have high premiums; and makes other changes to the federal tax code, Medicare, Medicaid, and numerous other programs.
Do Developed and Developing Countries Compete Head to Head in High-tech?
While measures of across product specialization suggest China and other Asian economies have been moving into high-tech exports, the within-product unit value measures indicate they are doing so in the least sophisticated market segments and the gap in unit values between their exports and those of developed countries has not narrowed over time.

"Did You Know"
In France, firing a printing plant employee is hugely expensive. The gent is paid €50,000 per year, works 32 hours per week and 164 days per year. Firing him costs about €466,000 – that’s a French government estimate...

Graphic of the day
Durable Goods Orders dropped by 1.1% in the month of May
See: Initial Claims for the Week Ended Jun 19
See also: Federal Payments to Individuals (% GDP) 1940-2010

Economists’ Comments & Opinions
The best stimulus? Spend less, borrow less
The best stimulus is a solid, credible plan to radically reduce government spending, starting right now.
The Family Business Revenue Act
A tax on the wealthy becomes a tax on mom and pop.
Whither the Euro: Safe Harbor or Fractured Fate?
Even though some countries have taken steps to curb future meltdowns, comprehensive regulation has been stymied by a lack of agreement on the fundamental question of how much regulation is necessary...
Volcker and Derivatives
Financial reform in the hands of a Democratic Congress is looking eerily similar to health-care reform: Public skepticism is proving to be no brake on the liberal ambitions, and substance is increasingly divorced from the problems Washington claims to be solving.

Financial crisis: Worse bank balance sheets + Worse private balance sheets + worse government balance sheets. -Garrett Jones, Twitter

Book Excerpts
"It is often argued that Governments are in a position to inflate by carrying out ambitious schemes of public works. Undoubtedly during the earlier stages of the crisis such measures might have produced the desired effect. At present, however, they could hardly be adopted on any large scale. Practically every Government has a huge budgetary deficit, which makes it difficult, if not impossible, to raise loans for meeting the extraordinary expenditure of such public works. Any attempt to borrow for such purposes would inevitably lead to a further accentuation of distrust, which must be avoided at all costs." -Paul Einzig, The World Economic Crisis 1929-1932, (1932)