Economic Outlook: A fraction of a panacea

Pimco Raises Economic Outlook Based on Tax Cut Compromise Deal
If the tax deal reached between congressional Republicans and President Barack Obama is ratified, it most certainly will add to the ballooning Budget Deficit, but according to Pimco, the stimulative measure will contribute much to Economic Growth. On Monday, President Obama unveiled a Compromise deal that would extend all Bush-era Tax Cuts for two years, as well as extend Unemployment compensation for the long-term jobless, and reduce social security Payroll taxes for 2011 by 2 percentage poin...

Treasury Fall Poses Long-Term Dilemma for Fed Balance Sheet
By Michael S. Derby This week’s jump in Treasury yields hints at a day in the distant future when the Federal Reserve could confront real difficulties managing an enlarged Balance Sheet. At issue is the eventual cost of the Fed’s vast holdings of Treasury securities, which are growing rapidly as it carries out a “Quantitative Easing” program to add $600 billion in Treasurys to its books and reinvest up to $300 billion of maturing Mortgages. While the institution faces no...

How the bond rout shows Bernanke is right
How the bond rout shows Bernanke is right Posted by Colin Barr December 10, 2010 10:39 am Falling bond prices aren't mocking Ben Bernanke. They are embracing him. Bonds have sold off steadily over the past two months, taking the yield on the 10-year Treasury note to its highest levels since the spring. The yield was up 5 basis points Friday at 3.27%, which is nearly a full percentage point above its October low. Turning point? At the same time, Inflation expectations as measured by the yi

The Benefits of a Flat Tax
There is currently a debate on Capital Hill about whether or not to extend the Bush Tax Cuts. It is a measure that the Republicans to support in full by extending it to all income levels, where as most Democrats want to extend it only for the first $250,000 of income. President Obama recently agreed to a Compromise with the Republicans, which includes extending Unemployment Benefits. Although the president cited Economists who believed the tax cuts would benefit The Economy, the tax cuts are not...

Restructuring European debt
Are we going to see Debt defaults in Europe? Yes—and Barry Eichengreen has a positively crystalline explanation why. It’s a first-rate example of economic concepts being explained in plain, easy-to-understand English: The more that countries reduce wages and costs, the heavier their inherited Debt loads become. And, as Debt burdens become heavier, public spending must be cut further and taxes increased to service the government’s Debt and that of its wards, like the banks. This, in tu...

Bank complaints soar even after law changes
FILE - In this file photo taken July 21, 2010, a "bank owned" sign is seen on a home that is listed as a Foreclosure on a HUD website, in Hawthorne, Calif. Complaints against banks are soaring, suggesting that new laws and regulations put in place since the Financial Crisis two years ago aren't dampening Americans' anger over overdraft fees and Foreclosure practices they view as unfair. Complaints against banks are soaring, suggesting that new laws and regulations put in place since the financia...

As expected, Utah poverty rates rose from 2007 to 2009
Well, if Congress won’t act, what about the Federal Reserve? The Fed, after all, is supposed to pursue two goals: Full Employment and price stability, usually defined in practice as an Inflation rate of about 2 percent. Since Unemployment is very high and Inflation well below target, you might expect the Fed to be taking aggressive action to boost The Economy. But it isn’t. It’s true that the Fed has already pushed one pedal to the metal: Short-term Interest Rates, its usual po...

A snapshot of Americans' wealth
Americans' wealth, or net worth, is the value of assets such as homes, checking accounts and investments, minus Debt such as Mortgages and Credit Cards. The Federal Reserve provides a snapshot each quarter. Net worth grew to nearly $55 Trillion in the Third Quarter, a 2.2 percent rise from the prior three months. Here are some of the parts on the asset side of the ledger. _Real estate holdings account for 30 percent of net worth. _Individual stocks make up 14 percent of net worth. _Mutual fun...

Economic sign
The national Unemployment Rate rose last month from 9.6 percent to 9.8 percent at a time when The Economy was, analysts thought, steadily improving. Among the unemployed were people with college degrees — 5.1 percent Unemployment for Americans with at least a bachelor's degree. That was up from 4.7 percent in October and 4.4 percent in September, USA Today reported. Actually, people with advanced education make up 30 percent of the work force, according to Moody's Analytics. Last...

A look at Americans' journey to rebuild wealth
Americans had a net worth of $66 Trillion before the Recession hit. They have slowly rebuilt their wealth after seeing it fall to nearly $49 Trillion in the January-March quarter of 2009. Here's a quarter-by-quarter look at that journey from the bottom. Net worth is the value of assets such as homes, checking accounts and investments, minus debts like Mortgages and Credit Cards. Information is compiled by the Federal Reserve. —Third Quarter 2010: $54.9 trillion, a 2.2 percent increase from...

Federal Reserve Loses $2.4 Billion In Taxpayer Money In Most Recent QE2 POMO Interval
was recently estimated at about $1 billion. This number refers to a Fed Balance Sheet as of April 2010: extending the calculation for the Fed's current ballooning holdings, means that the DV01, or the P&L impact from every basis point move up or down, is now about $1.5 billion. In simple terms, a 1% move in rates will result in a $150 billion loss to Taxpayers ! And so on: 2% - $300 billion, 3% - $450, although technically not in a linear Fashion, as by then the convexity impact will make lo...

On the Ability of Trees to Grow to the Sky
Most of the headlines you’ll see related to the Federal Reserve’s Z.1 Flow of Funds report are focused on the change in household net worth. In the 3rd quarter 2010 report, released yesterday, the change was a positive one: household net worth rose $1.2 Trillion, driven primarily by $1.3 trillion gains in equities and Mutual Fund shares which offset a drop of $649 billion in owner occupied housing value (the first decline since the First Quarter of 2009). This reversed most of the $1...

Many seniors downing in bills, fear things will just get worse
Forced to rely more heavily on Credit Cards and other forms of Debt to make ends meet, many older Americans are drowning in a sea of bills they can’t handle and living in fear that things will get worse. “The problem is 50 percent of Baby Boomers are ill-prepared financially to retire,” said Thomas J. Mackell, former chairman of the Richmond Federal Reserve Bank. “They just don’t have enough money, and many of them are in debt.” From 1991 to 2007, Bankruptcy f...

Klein: Time for tax reform?
That's the word out of the White House. It's also what the Deficit commission recommended, and the incoming chairman of the Ways and Means Committee is talking it up, too. But if you really want to see why we might have a Tax Reform fight next year, look at what we're doing to the tax code. The $858 billion deal Republicans and Democrats are kicking around extends the Bush Tax Rates -- which are already far beneath what's needed to fund the government we've chosen to have -- and adds a furthe...

Economic data
The 1st UoM confidence reading of the month was 74.2, 1.7 pts above expectations, up from 71.6 in Nov and is the best since June when it was at 76. Both Current Conditions and the Economic Outlook moved higher and the Current component in particular rose to the best since Jan ’08. Because the state of the labor market is such a large component of one’s Consumer Confidence, maybe the jobs picture, while not great, is not as soft as Friday’s Nov figure implied. One year inflati...

Sentiment, trade data signal firmer U.S. recovery
Holiday shoppers browse Macy's Department Store in New York City, December 6, 2010. NEW YORK/WASHINGTON (Reuters) - A rise in U.S. Consumer Confidence to its highest in six months and a much bigger-than-expected contraction in the country's Trade Deficit pointed to a firmer Economic Recovery on Friday. The boost in Consumer Confidence on the back of an improving jobs outlook was another indication consumers are willing to spend over the holidays while a rise in exports looks set to lift economi...

Employment-Population Ratio, Young People: A Potential Lost Generation Of Young Americans.
Ed Burmila walks through the horror of trend stories about happy, young, unpaid interns on-the-go in Interns Built the Pyramids. Anyone who works with Young People is aware of the lack of jobs and opportunities, from the most disadvantaged through those who leave college with fresh skills.  The lucky end up in non-paying internships, a nice little inequality generating machine for the 21st century. A 10% drop in the amount of Young People working as a result of this Recession. That’s ...

What The Rout In MBS Means For Pimco And Broader MBS Investor Alternatives, As The Market Wakes Up To Risk
, has left the world's biggest bond fund, second only the Federal Reserve, hoping for a last minute Hail Mary (Pimco can't print money unlike the former). As a reminder, while Pimco's TRF is positioned well to benefit from the steepening in the 2s10s courtesy of its 4.86 effective duration, we are unsure how the massive flattening of the 10s30s is impacting the firm. What we are absolutely sure of, is that the plunge in MBS prices in the recent week has left the fund gasping for air. Recall that...

Stocks open higher after jobless claims dip
NEW YORK (CNNMoney.com) -- Stocks edged higher Thursday following slightly better-than-expected data on the the number of Americans filing for first-time Unemployment Benefits. The Dow Jones industrial average (INDU) was up 14 points, or 0.1%, shortly after the opening bell. The S&P 500 (SPX) gained 4 points, or 0.3%. The tech-heavy NASDAQ (COMP) 10 points, or 0.4%. Email Print Comment Trading has quieted down as investors have started looking toward next year. On Wednesday, stocks managed ...

Euro Trashed
Dec 20, 2010, Vol. 16, No. 14 • By CHRISTOPHER CALDWELL Get alerts when there is a new article that might interest you. It has been easy to snicker in recent weeks at the politicians who designed the euro, which appears on the verge of collapse after a decade as the common currency of a dozen countries in the European Union. Last May, the continent’s Finance Ministers put together a $145-billion package to bail out the corrupt Greek state. When that failed to calm markets, a new trill...

Progressive Bernie Sanders' Quixotic filibuster challenges Obama's pragmatism
 Senator Bernie Sanders of Vermont is an American hero, regardless of your politics. Friday Sanders schooled the country in the lost art of the Filibuster. It was magnificent.  For over eight hours Sanders spoke from the floor of the US Senate, making a passionate and forceful argument against the Obama Tax Cut Compromise. Sanders spoke for Liberals and Progressives angry with President Barack Obama, angry with tax cuts for the rich, angry with a GOP that cares nothing for the welfare ...

Bill Clinton's rebuke to Democrats: tax deal is 'best' Obama can get
In an impromptu news conference Friday at the White House, former President Clinton strongly endorsed President Obama’s Controversial tax-cut deal. House Democrats say Obama caved on tax-cut deal. Are they wrong? House Democrats block GOP-Obama tax deal. Is it dead? Bush Tax Cuts 101: Would extension boost the Economic Recovery? Mr. Clinton told reporters that, after reviewing the agreement the president reached with Republicans earlier this week, he felt it was “the best bipartis...

Consumer sentiment up more than expected
NEW YORK/WASHINGTON (Reuters) - U.S. economic data painted a picture of a firming recovery on Friday as Consumer Confidence rose to its highest level in six months and the country's Trade Deficit narrowed much more than expected. Consumer sentiment in December rose to its highest level since June and was at its third-highest since the start of 2008, according to the Thomson Reuters/University of Michigan survey. Government data showed U.S. exports in October rose a robust 3.2 percent while impo...

UH economists see Oahu-centric recovery in 2011
HONOLULU (AP) - Economists at the University of Hawaii are forecasting a recovery for the state next year that will result mainly from increased Tourism, but Oahu is likely to benefit the most among all the islands. In a report released Friday, the UH Economic Research Organization concluded that tourism demonstrated a rebound in recent months that rivals the boom times that preceded the current Recession. Visitor arrivals topped 590,000 in each of the last four months, a level much like the p...

Number Of Adult Americans Living With Their Parents Has Exploded (CHART)
Empty nest parents, be warned: the number of adults aged 25 to 34 who are living with their parents has exploded, according to this rather shocking chart put together by Economist Tom Lawler and posted on Calculated Risk. Earlier this year, a study published in the journal Transitions to Adulthood titled "What's Going on with Young People Today? The Long and Twisting Path to Adulthood" concluded that the economic downturn has caused an entire generation to delay adulthood.As ScienceDaily summa...