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From the category archives:
Federal Reserve
Obama ‘Agnostic’ on Deficit Cuts, Won’t Prejudge Tax Increases
Written By: Rich Miller
President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit.
Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.
“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. “So what I want to do is to be completely agnostic, in terms of solutions.”
Obama repeatedly vowed during the 2008 presidential election campaign that he would not raise taxes on individuals making less than $200,000 and households earning less than $250,000 a year. When senior White House economic adviser Lawrence H. Summers and Treasury Secretary Timothy F. Geithner suggested in August that the administration might be open to going back on that pledge, White House press secretary Robert Gibbs quickly reiterated the president’s promise.
Bailout panel cites commercial real estate danger
Over the next several years, failed commercial real estate loans could litter American cities with empty stores and office complexes, cause hundreds of bank failures and weaken the economy, a watchdog report says.
Banks face up to $300 billion in losses on loans made for commercial property and development, according to a report released Thursday by the Congressional Oversight Panel. The panel monitors the government’s efforts to stabilize the financial system.
The report says the defaults could lead to reduced lending and cause the eviction of families from rental properties. Bank failures also could contribute to job losses and hurt the economic recovery.
Fed in Talks With Money Market Funds to Help Drain $1 Trillion
Written By: Craig Torres and Christopher Condon
The Federal Reserve is in talks with money-market mutual funds on agreements to help drain as much as $1 trillion from the financial system as policy makers prepare for the first interest-rate increase since June 2006, according to a person familiar with the discussions.
The central bank is looking to the $3.2 trillion money- market mutual-fund industry because the 18 so-called primary dealers that trade directly with the Fed have a capacity limited to about $100 billion, estimates Joseph Abate, a money-market strategist at Barclays Capital in New York.
Money-market funds may welcome the opportunity to trade with the Fed after the financial crisis reduced the supply of safe assets in which they can invest. In one example of demand for such assets, auctions on four-week Treasury bills have attracted an average of $5.47 in bids for every dollar sold this year, compared with an average of $3.77 last year, according to Bloomberg data. Yields on the four-week bill fell to five basis points from 20 basis points a year ago.
Job growth may not curb unemployment rate: WHouse
A new White House economic forecast showed Thursday the US economy is set to start producing job growth this year at a rate of 95,000 per month, but that the unemployment rate will remain high.
President Barack Obama’s annual economic report to Congress said the economy is on the verge of pulling out of a period of steep job losses stemming from the worst recession in decades.
But the report also said that the unemployment rate may not come down much from the current level of 9.7 percent, and may even rise because of labor market growth and the return of more discouraged workers to the labor force.
Announcing the new U.S. policy to curb illegal immigration: Make the U.S. economy less attractive to potential illegal immigrants.
US: 7 percent fewer illegal immigrants last year
The number of illegal immigrants in the United States fell by seven percent last year to 10.8 million, coinciding with the country’s financial crisis, a Department of Homeland Security report said Tuesday.
Polk school district to give iPods to some parents
The Polk County school district is giving away iPods to some parents.
The school district is using the device to reward parents of children with disabilities who fill out a 10-minute online survey. The district wants to know how well it’s connecting with the parents and how to get parents involved in their children’s education.
The district is spending about $350,000 in federal stimulus money for the iPods.
The district has more than 10,000 students with disabilities.
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Geithner’s Fed Told AIG to Limit Swaps Disclosure
The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.
AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.
The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.
“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.”
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Could Geithner Face Criminal Charges?
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The following is an urgent message from Ron Paul’s website.
Critical Vote on Audit the Fed Today!
A few weeks ago, the Campaign for Liberty sent out an alert that Representative Mel Watt was attempting to water down HR 1207 in the House Financial Services Committee.
The latest reports we have received have informed us that a vote on the Watt amendment could come today!
There’s still time for us to stop this attack on Audit the Fed! Click here to get a full list of Financial Services Committee members, along with their contact information.
Financial Services leadership seems determined to include Audit the Fed as part of a regulatory reform package instead of passing it as a standalone bill.
While C4L will still do everything in its power to fight for a standalone vote on Audit the Fed on the House floor, it is critical we challenge Watt’s amendment in Committee.
It will become much easier for our representatives to claim they still support Audit the Fed on the House floor if the Watt version passes, when, in reality, Representative Watt’s amendment puts restrictions on Government Accountability Office audits of the Fed.
For example, Watt’s amendment prevents the GAO from auditing or reviewing decisions to authorize, modify, extend, or terminate loans or liquidity facilities.
Congressman Paul will offer an amendment in Committee restoring an audit of the Fed’s entire $2 trillion balance sheet, but we have received word that some of the Democrat members may be waffling on their support for his amendment.
Help us turn up the pressure on these members! Below is the list of Democrats on the committee who have cosponsored H.R. 1207. Please call them and urge them to vote “Yes” on Ron Paul’s amendment. Click on their names to get their web contact information.
1. Rep. John Adler, NJ (202) 225-4765
2. Rep. Travis Childers, MS (202) 225-4306
3. Rep. Steve Driehaus, OH (202) 225-2216
4. Rep. Alan Grayson, FL (202) 225-2176
5. Rep. Rubén Hinojosa, TX (202) 225-2531
6. Rep. Suzanne Kosmas, FL Toll Free: 1-877-956-7627
7. Rep. Dan Maffei, NY (202) 225-3701
8. Rep. Brad Miller, NC (202) 225-3032
9. Rep. Walt Minnick, ID (202) 225-6611
10. Rep. Ed Perlmutter, CO (202)-225-2645
11. Rep. David Scott, GA (202) 225-2939
12. Rep. Brad Sherman, CA (202) 225-5911
13. Rep. Jackie Speier, CA (202) 225-3531
When contacting these members, remember that up to this point, they have been allies on this issue. A civil yet firm tone should be kept during these calls. They should be thanked for their cosponsorship, told that Mel Watt’s changes to the bill are unacceptable, and urged to hold the line and honor their promise to support transparency at the Fed by voting “Yes” on Ron Paul’s amendment.
And don’t forget to click here to get a full list of Financial Services Committee members.
For more information on the Watt amendment, check out this article by The Huffington Post’s Ryan Grim.
We are continuing our work to achieve a standalone vote on H.R. 1207 on the House floor, but we must first stop the Watt amendment in the Financial Services Committee.
Make sure the Financial Services Committee members hear from you as soon as their offices open Thursday morning!
A vote could come any time today. Call, email, and fax the Financial Services Committee members to vote “Yes” on Congressman Ron Paul’s amendment.
Contact Your U.S. Representative
“In a time of universal deceit telling the truth is a revolutionary act.” ~ George Orwell
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Bloomberg reports that the dollar reached a 14-month low versus the euro as stocks advanced around the world on confidence that the global economy is recovering, increasing demand for higher-yielding assets.
Brazil’s real and Mexico’s peso were the biggest gainers versus the dollar among the 16 most-traded currencies tracked by Bloomberg. The South Korean won was the best performer among 10 emerging Asian currencies as the nation’s economy grew at the fastest pace in seven years.
“Risk is a little bit positive, and that’s helping the dollar weaken,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “The overall theme of the dollar weakening versus Asia is continuing.”
The dollar traded at $1.5016 per euro at 9:31 a.m. in New York, compared with $1.5008 on Oct. 23. It earlier declined to $1.5063, the weakest level since August 2008. The dollar was at 91.94 yen, compared with 92.06. It earlier reached 92.21, the highest level since Sept. 21. The yen fetched 138.09 per euro, compared with 138.15.
The MSCI World Index of shares climbed 0.2 percent, while the Standard & Poor’s 500 Index increased 0.1 percent.
The dollar declined against 10 of its major counterparts on speculation reports this week will add to evidence that economies are shaking off the worst of the recession.
U.S. Sentiment
The Conference Board’s index of U.S. consumer confidence increased to 53.5 this month from 53.1 in September, a separate Bloomberg survey showed before tomorrow’s report. A gauge of French household sentiment improved to minus 35 in October from minus 36 last month, a Bloomberg economist survey showed before the Paris-based national statistics office reports tomorrow.
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The pound traded near the lowest level in at least a week against the euro and dollar on speculation the Bank of England will boost asset purchases at its policy meeting next month. The currency fell even as a survey of senior executives by Opinion Leader Research for KPMG showed confidence rose to the highest level in 18 months.Sterling lost as much as 0.4 percent to 92.40 pence per euro, the weakest level since Oct. 15, and was later little changed at 91.97. Against the dollar, it traded as low as $1.6252, the least since Oct. 19, and was later at $1.6324.
Chinese Reserves
The yen and euro earlier gained versus the dollar after China’s Financial News said the nation should boost reserves in the currencies. The Beijing- based newspaper, which is affiliated with China’s central bank, said the nation should raise the amount of Japanese and European currencies while keeping the dollar as the main component.
“The Chinese article revived concern over the status of the dollar and triggered knee-jerk selling of the greenback,” said Yuichiro Harada, senior vice president of the foreign- exchange division at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest lender.
China is the biggest international owner of U.S. government debt followed by Japan. The nation’s foreign-exchange reserves, the world’s largest, surged in the third quarter as an economic recovery attracted speculative capital and a weakened dollar boosted valuations of its yen and euro assets. The holdings climbed about $141 billion to a record $2.273 trillion, the central bank said this month.
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Members of the U.S. central bank are contemplating the best way to let the market know that a period of record-low rates will draw to an end, the Journal reported Oct. 24, without saying where it got the information. The issue may be “on the table” when the Federal Open Market Committee meets Nov. 3-4.The Fed will increase the target rate for overnight bank loans to 0.5 percent in the second quarter of 2010, according to the average forecast of economists in a Bloomberg survey. The Bank of Japan is projected to maintain interest rates through the end of next year.
Benchmark interest rates are 0.1 percent in Japan and as low as zero in the U.S., making the yen and dollar favored targets for investors seeking to fund so-called carry trades. The risk in such transactions is that currency-market moves will erase profits.
Please read the entire article here:
Dollar Touches 14-Month Low as Recovery Signs Spur Risk Demand
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The Ludwig von Mises Institute was founded in 1982 as the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics. It serves as the world’s leading provider of educational materials, conferences, media, and literature in support of the tradition of thought represented by Ludwig von Mises and the school of thought he enlivened and carried forward during the 20th century, which has now blossomed into a massive international movement of students, professors, professionals, and people in all walks of life. It seeks a radical shift in the intellectual climate as the foundation for a renewal of the free and prosperous commonwealth.
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