News
Bloomberg | Oil Drops on Economic Growth Concern as Bin Laden Death Boosts Volatility
Crude, which touched a 2 1/2-year high yesterday, fell as much as 1.4 percent after the Institute for Supply Management’s manufacturing index declined to the lowest in four months. U.S. crude stockpiles rose last week from the highest since November, according to a Bloomberg News survey before an Energy Department report tomorrow. Oil options volatility increased after news of the al-Qaeda leader’s death.
Econ Comments
AEI | Risk-Retention in the Dodd-Frank Act
The risk-retention requirements of the Dodd-Frank Act (DFA) were enacted in the belief that they would improve the quality and reduce the risk of securitized mortgages by requiring securitizers to have ―skin in the game. The general rule is that unless all mortgages in a securitized pool meet certain minimum quality standards, the securitizer must retain at least a 5 percent interest in the pool—an interest that cannot be hedged or insured. However, now that the bank and securities regulators have filled in some of the details in a recent notice of proposed rule making (NPR), it has become clear that the risk-retention idea will not achieve what was intended.
Bloomberg | Housing’s Good News Is Federal Cash Shortage: Caroline Baum
There are a couple of reasons to think that, without intervention, the housing market would have “cleared” by now, and that buyers would be attracted by falling prices rather than taxpayer dollars.
CNN: Money | Commodities quickly return to normal: Up
Traders who thought bin Laden's death would reverse the months-long rally in oil and gold were sorely disappointed by the end of the day. Commodities markets didn't let emotions run the show for long.
Investors | Just Let The Economy Recover
Like most of the mistakes being made in Washington today, this dogmatic faith in government spending is something that has been tried before — and failed before.
RCM | Joseph Stiglitz's 1% Fallacy, and Why We Can't Trust 99% of Economists
To begin, Stiglitz makes the tired argument that over the last 25 years the rich have grown richer, of course it's what he left out that really informs such a discussion.
AEI | The FDIC and Unintended Consequences of Dodd-Frank
The Dodd-Frank Act required the FDIC to change how it assesses banks for deposit insurance. FDIC’s final rule implementing that mandate went into effect on April 1, 2011. The FDIC now charges a risk-fee based upon an institution’s net assets rather than on domestic deposits. The new fee has triggered market and institutional responses that create incentives for institutions to engage in regulatory avoidance, increase the likely cost of credit to borrowers and affects the efficacy of monetary policy.
Minyanville | State of the Housing Market, May 2011
It's Groundhog Day for real estate and it looks like the market is seeing its shadow again.
Blogs
Cato@Liberty | U.S. Sugar Program Means Higher Prices and Short Supplies
Advocates of the U.S. sugar program like to claim they are protecting our “food security.” It turns out that trade barriers deliver higher prices for consumers while making our food supplies LESS secure.
WSJ: Real Time Economics | Secondary Sources: CFOs Crude Worries, Government Welfare Spending, Fed
A roundup of economic news from around the Web
WSJ: Real Time Economics | Economists React to Bin Laden Killing: ‘John Wayne’ Back in the Saddle?
Economists and others weigh in on the killing of Osama bin Laden by U.S. forces.
Reports
AEI | Why China Overheats
Despite efforts to rein it in, China's inflation rate has reached a point where it is sparking social unrest. Chinese premier Wen Jiabao's recent comment that inflation is a tiger that "once set free is very difficult to put back in its cage" aptly characterizes the current inflation in his country. The world's second-largest economy faces some fundamental choices if it is to restore stability.
