Freddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.
Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages….
Conceived in the heady post-Cold War 1990s, the futuristic fifth-generation [F-35] jet fighter was to be a technological marvel built in a rush and paid for with “peace dividend” dollars.
But now with the economic crash, the fighter is billions over budget and years behind schedule.
Here’s part of the problem: axing the F-35 would eliminate tens of thousands of jobs in 47 states. Few members of Congress are willing to go along.
The Pentagon budget will actually shrink next year, for the first time since 1998, under a proposal released by the Obama administration that will cut the size of the Army and Marine Corps, trim the number of fighter aircraft and ships, and seek congressional approval for another round of military base closures.
The cuts are part of a broader effort by the Pentagon to decrease its projected spending by $487 billion over the next 10 years, in accordance with a deficit-reduction deal President Obama reached with Congress in August.
The budget is also an attempt to realign the Pentagon’s accounts with Obama’s new military strategy, which he unveiled this month and which seeks to “rebalance” the armed forces toward Asia while maintaining their presence in the Middle East, principally to deter Iran.
The Federal Reserve said on Wednesday that it was likely to raise interest rates at the end of 2014, but not until then, adding another 18 months to the expected duration of its most basic and longest-running response to the financial crisis.
The announcement means that the Fed does not expect the economy to complete its recovery from the 2008 crisis over the next three years. By holding short-term rates near zero beyond mid-2013, its previous estimate, the Fed hopes to hasten that process somewhat by reducing the cost of borrowing.
The Fed said in a statement that the economy had expanded “moderately” in recent weeks, but that unemployment remained at a high level, the housing sector remained in a deep depression, and the possibility of a new financial crisis in Europe continued to threaten the domestic economy.
Scarcely two weeks ago, in its Hosanna-Tabor decision upholding the right of churches to make ministerial hiring decisions, the Supreme Court unanimously and enthusiastically reaffirmed these longstanding and foundational principles of religious freedom. The court made clear that they include the right of religious institutions to control their internal affairs.
Yet the Obama administration has veered in the opposite direction. It has refused to exempt religious institutions that serve the common good””including Catholic schools, charities and hospitals””from its sweeping new health-care mandate that requires employers to purchase contraception, including abortion-producing drugs, and sterilization coverage for their employees.
Last August, when the administration first proposed this nationwide mandate for contraception and sterilization coverage, it also proposed a “religious employer” exemption. But this was so narrow that it would apply only to religious organizations engaged primarily in serving people of the same religion. As Catholic Charities USA’s president, the Rev. Larry Snyder, notes, even Jesus and His disciples would not qualify for the exemption in that case, because they were committed to serve those of other faiths.
Drone strikes rely on fallible intelligence from local informants, which leads to errors. The price is innocent people’s lives. It also sets a dangerous international precedent – that the secret extrajudicial execution by one country, to kill people in another country, with minimal oversight and no judicial process, is acceptable. This is the policy being carried out by drones.
At a very basic level, it is difficult to gauge whether the policy actually works. Supporters claim the policy has successfully disrupted terrorist networks. Yet suicide attacks in Pakistan and violence in Afghanistan and Iraq have often intensified following the drone deaths of senior al-Qaeda and Taliban operatives.
Britain has sunk deeper into debt. Three years after bubble burst, the UK has barely begun to tackle the crushing burden left by Gordon Brown. The contrast with the United States is frankly shocking.
The latest report on “Debt and Deleveraging” by the McKinsey Global Institute shows that total public and private debt in the UK is still hovering at an all-time high. It has risen from 487pc to 507pc of GDP since the crisis began….
It is a very different picture in the US where light is emerging at the end of the tunnel. American banks, firms, and households have been chipping away at their debts, more than offsetting Washington’s double-digit deficits.
No wonder the Medicaid system has so many critics in South Carolina. During the year that ended September 2010, about $490 million in public money was paid in error by the state.
The program intended to help the neediest was apparently helping others, too. Meanwhile, some of the people who needed help were not given it.
According to a recently released federal audit, an estimated 10.7 percent of South Carolinians approved for Medicaid should have been ruled ineligible. Then there were overpayments to hospitals and behavioral health providers due to coding errors.
In an election-year decision certain to disappoint religious conservatives, the Obama administration announced Friday that church-affiliated institutions will get only one additional year to meet a new rule to cover birth control free of charge.
Friday’s announcement by Health and Human Services Secretary Kathleen Sebelius doesn’t apply to houses of worship. Churches, synagogues, mosques and other places of worship were already exempt from the birth-control-coverage rule.
But in many cases, other religious-affiliated employers such as hospitals and universities traditionally haven’t provided any birth-control coverage for their employees.
Commander [Layne] McDowell banked and aligned his jet’s nose with the canyon’s northeastern end. Then he followed his wingmen’s lead. He dived, pulled level at 5,000 feet and accelerated down the canyon’s axis at 620 miles per hour, broadcasting his proximity with an extended engine roar.
In the lexicon of close air support, his maneuver was a “show of presence” ”” a mid-altitude, nonlethal display intended to reassure ground troops and signal to the Taliban that the soldiers were not alone. It reflected a sharp shift in the application of American air power, de-emphasizing overpowering violence in favor of sorties that often end without munitions being dropped.
The use of air power has changed markedly during the long Afghan conflict, reflecting the political costs and sensitivities of civilian casualties caused by errant or indiscriminate strikes and the increasing use of aerial drones, which can watch over potential targets for extended periods with no risk to pilots or more expensive aircraft.
We almost hope this was a political call because, on the substance, there should be no question. Without the pipeline, Canada would still export its bitumen ”” with long-term trends in the global market, it’s far too valuable to keep in the ground ”” but it would go to China. And, as a State Department report found, U.S. refineries would still import low-quality crude ”” just from the Middle East. Stopping the pipeline, then, wouldn’t do anything to reduce global warming, but it would almost certainly require more oil to be transported across oceans in tankers.
Environmentalists and Nebraska politicians say that the route TransCanada proposed might threaten the state’s ecologically sensitive Sand Hills region. But TransCanada has been willing to tweak the route, in consultation with Nebraska officials, even though a government analysis last year concluded that the original one would have “limited adverse environmental impacts.” Surely the Obama administration didn’t have to declare the whole project contrary to the national interest ”” that’s the standard State was supposed to apply ”” and force the company to start all over again.
From Philadelphia to Newark, N.J., New York to Boston, Cleveland to Chicago to Detroit and beyond, the church of the immigrants is going the same route as the old industrial America of our forebears. The huge plants — churches, schools and parish halls — markers of another era, like the hulking steel mills and manufacturing plants of old, can no longer be sustained. There aren’t enough Catholics left in those places, not enough priests and nuns and certainly not enough money to maintain the church as it once was.
According to the Center for Applied Research in the Apostolate at Georgetown University in Washington, the church in the United States has lost 1,359 parishes during the past 10 years, or 7.1 percent of the national total, and most of those have been in the Northeast and the Upper Midwest.
“I’m developing a theory that one of our major challenges today is that American Catholic leadership is being strangled by trying to maintain the behemoth of the institutional Catholicism that we inherited from the 1940s and ’50s,” New York Archbishop Timothy Dolan told NCR’s John Allen in the recently released book-length interview A People of Hope.
Against these downward [price] pressures stand three powerful counter-forces: a reviving economy that eases people’s anxieties about elective spending; an aging society that raises the need for health care; and the start of Obamacare’s insurance mandates in 2014 that expand coverage by 30 million people or more. Those with insurance routinely use more health care than do the uncovered.
Health care poses a dilemma. On the one hand, we all want ”” for our families and ourselves ”” the best care available without artificial limits imposed by government regulations or private insurers. On the other, we don’t want soaring health spending to crowd out other government programs or depress take-home pay. The latest spending figures delude if they suggest we’ve overcome that dilemma. The Neanderthal Cure is an ugly stop-gap, nothing more…
Standard & Poor’s downgraded the credit ratings of France, Italy and seven other European countries on Friday, a move that may have more symbolic than fundamental financial impact but served as a reminder that Europe’s economic woes were far from over.
Another memory jog came Friday from Greece, the original source of Europe’s debt troubles. Talks hit a snag between the new Greek government and the banks and other private investors that Athens hopes will agree to take losses on their debt so that Greece can avoid a default.
Together, those developments underscore that even as Europe’s debt turmoil enters its third year, no clear solutions are yet in sight ”” despite recent signs that a new lending program by the European Central Bank might be easing financial market pressures.
In his second meeting as chairman of the Federal Reserve in May 2006, Ben Bernanke heard a Fed governor warn about the nation’s mortgage market. But Mr. Bernanke described the cooling of the housing boom as a “healthy thing.”
“So far we are seeing, at worst, an orderly decline in the housing market,” he said.
Mr. Bernanke’s words were contained in 1,197 pages of transcripts released Thursday of closed-door Fed meetings from that year. The transcripts paint the most detailed picture yet of how top officials at the central bank didn’t anticipate the storm about to hit the U.S. economy and the global financial system.
Pakistan’s civilian government fired its Defense Secretary Wednesday in a rare show of defiance against the country’s powerful Army, which had earlier publicly rebuked Prime Minister Yusuf Raza Gilani and ignited speculation the government may fall.
Retired Lt. Gen. Naeem Khalid Lodhi, a senior bureaucrat seen as close to the Army, was dismissed by the government for “gross misconduct and illegal action.” He was replaced by a bureaucrat close to the prime minister.
It’s not yet clear whether Pakistan’s powerful Army will be sufficiently moved to launch a coup and directly rule the country as it has done for approximately half of Pakistan’s 65 year history. But if Mr. Gilani’s defiance pays off, that could indicate a boost for the country’s democratic institutions.
Just 1% of Americans accounted for 22% of health care costs in 2009, according to a federal report released Wednesday.
That’s about $90,000 per person, according to the Agency for Healthcare Research and Quality. U.S. residents spent $1.26 trillion that year on health care.
Five percent accounted for 50% of health care costs, about $36,000 each, the report said.
Congressional leaders reached an agreement Thursday to temporarily extend a payroll-tax cut by two months and begin negotiations on a yearlong extension, aides said.
he agreement could end a political stalemate over the payroll-tax cut, which lowered Social Security taxes for 160 million Americans in 2011. Under the tentative agreement, the House will vote again on a two-month extension and the Senate will prepare to negotiate for an extension that will run through 2012.
Aides said House Speaker John Boehner (R, Ohio) has agreed to hold a new vote Friday on extending the tax cut, bowing to increasing pressure to end an impasse that threatened to leave workers with a tax increase next year.
…unlike the debt-ceiling drama and the destructive impasse over a grand bargain to rein in the spiraling national debt, a stalemate on the payroll tax could be good for Social Security, good for the deficit, and good for disproving the conviction that “temporary” tax cuts must never be allowed to expire.
Let us explain.
As we’ve pointed out previously, the 2-percentage-point cut in the payroll tax (from 6.2% to 4.2%) might give a short-term boost to the economy, but it contributes to Social Security’s long-term insolvency at a time when the retirement program is already paying out more in benefits than it is collecting in taxes. A one-year extension would drive up next year’s federal deficit by more than $100 billion.
The payroll tax issue also raises the question of whether there’s any such thing as a temporary tax cut. At the end of next year, the unaffordable Bush tax cuts are set to expire. Extending the payroll tax cut would set a precedent and give ammunition to those who want another extension of the Bush cuts, adding as much as $5 trillion to deficits over the coming decade.
I maintain that no matter how much cash you have on your balance sheet, or how compliant your banker might be, or how cheap the cost of money, you will not commit substantial capital to expanding your payroll or investing significant amounts to expand plant and equipment until you know what it will cost you to run your business; until you know how much you will be taxed; until you know how federal spending will impact your customer base; until you know the cost of employee health insurance; until you are reassured that regulations that affect your business will be structured so as to incentivize rather than discourage expansion; until you have concrete assurance that the fiscal “fix” the nation so desperately needs will be crafted to stimulate the economy rather than depress it and incentivize job creation rather than discourage it; or until you are reassured that the sinkhole of unfunded liabilities like Medicare and Social Security that Republican- and Democrat-led congresses and presidents alike have dug will be repaired so that our successor generations of Americans will prosper rather than drown in dark, deep waters of debt.
My colleague Sarah Bloom Raskin””one of the newest Fed governors, and a woman possessed with a disarming ability to speak in non-quadratic-equation English””recently used the example of the common kitchen sink to illustrate a point. I am going to purloin her metaphor for my description of our present predicament. You give a dinner party. The guests leave and you are washing the dishes. When you are done, you notice the remnants of the party are clogging the sink: bits of food, coffee grinds, a hair or two and the like. You have two choices. You can reach down and scoop up the gunk, a distinctly unpleasant task. Or you can turn the water on full blast, washing the gunk down the drain, providing immediate relief from both the eyesore and the distasteful job of handling the mess. You look over your shoulder to make sure your kids aren’t looking, and, voilà , you turn the faucet on full blast, washing your immediate troubles away.
From my standpoint, resorting to further monetary accommodation to clean out the sink, clogged by the flotsam and jetsam of a jolly, drunken fiscal and financial party that has gone on far too long, is the wrong path to follow. It may provide immediate relief but risks destroying the plumbing of the entire house. It is a pyrrhic solution that ultimately comes at a devastating cost. Better that the Congress and the president””the makers of fiscal policy and regulation””roll up their sleeves and get on with the yucky task of cleaning out the clogged drain.
Read it all (emphasis mine).
The Obama administration will give states broad latitude to define the minimum benefits that many health insurance policies will be required to offer under the 2010 health-care law, officials announced Friday.
The plan sparked criticism from interest groups on all sides of the issue. Consumer advocates worried that millions of Americans could end up with insurance substantially less comprehensive than the law’s drafters intended. Representatives of employers and insurers warned of an opposite scenario: A state could make the benefits package so comprehensive that the resulting plans would be prohibitively expensive.
A Republican payroll tax cut bill that sailed through the House despite a White House veto threat is dead on arrival in the Senate, and it will soon be time for talks on a final package, the Senate’s top Democrat says….
Reid says he will schedule a vote shortly on the House-passed bill to underscore its irrelevance ”” a vote that should start the clock ticking on what stands as the year’s final, high-stakes partisan faceoff.
“It was dead before it got to the Senate,” Reid said of the House legislation. “The Senate will not pass it. The sooner we demonstrate that, the sooner we can begin serious discussions on how to keep taxes from going up on middle-class Americans.”
There is a fascinating new study coming out of the Levy Economics Institute of Bard College. Its titled “$29,000,000,000,000: A Detailed Look at the Fed’s Bail-out by Funding Facility and Recipient” by James Felkerson. The study looks at the lending, guarantees, facilities and spending of the Federal Reserve.
The researchers took all of the individual transactions across all facilities created to deal with the crisis, to figure out how much the Fed committed as a response to the crisis. This includes direct lending, asset purchases and all other assistance. (It does not include indirect costs such as rising price of goods due to inflation, weak dollar, etc.)
The net total? As of November 10, 2011, it was $29,616.4 billion dollars ”” (or 29 and a half trillion, if you prefer that nomenclature). Three facilities””CBLS, PDCF, and TAF”” are responsible for the lion’s share ”” 71.1% of all Federal Reserve assistance ($22,826.8 billion).
The Obama White House, in its own version of the New Year’s Eve countdown in Times Square, has added a banner to its website ”“ a clock ticking down the seconds to when taxes on the middle class will rise “if Congress doesn’t act.”
That tax hit is the 2 percent payroll tax cut now set to expire at midnight, Dec. 31. If Congress fails to at least extend that tax cut, the Social Security tax rate for employees jumps back to 6.2 percent, up from 4.2 percent. If that happens, the average American taxpayer stands to lose about $1,000 in 2012.
Leaders on both sides of the political aisle in Congress offer assurances that by year’s end the tax break will be extended. As lawmakers head into an election year, the stakes are simply too high to kick that can down the road. But GOP leaders, especially, are running up against strong opposition from the rank-and-file on anything that looks like caving on pledges to reduce deficits, dramatically cut spending, and reject all tax increases (which are an issue in this case because Democrats propose to pay for extending the payroll tax by a tax hike on millionaires.
Health and Human Services Secretary Kathleen Sebelius on Wednesday overruled the Food and Drug Administration’s decision that emergency contraceptives be sold freely over the counter, including to teenagers 16 years old and younger.
The pill, called Plan B One-Step, has been available without a prescription to women 17 and older, but those 16 and younger have needed a prescription ”” and still will because of Ms. Sebelius’s decision. In some states, pharmacists can write the prescription on the spot for teenagers. But the restrictions have meant the pills were only dispensed from behind the counter ”” making them more difficult for everyone to get. The pill, if taken after unprotected sex, halves the risk of a pregnancy.
We Americans fool ourselves if we ignore the parallels between Europe’s problems and our own. It’s reassuring to think them separate, and the fixation on the euro — Europe’s common currency — buttresses that mindset. But Europe’s turmoil is more than a currency crisis and was inevitable, in some form, even if the euro had never been created. It’s ultimately a crisis of the welfare state, which has grown too large to be easily supported economically. People can’t live with it — and can’t live without it. The American predicament is little different.
Government expansion was one of the 20th century’s great transformations. Wealthy nations adopted programs for education, health care, unemployment insurance, old-age assistance, public housing and income redistribution. “Public spending for these activities had been almost nonexistent at the beginning of the 20th century,” writes economist Vito Tanzi in his book “Government versus Markets.”
The numbers — to those who don’t know them — are astonishing. In 1870, all government spending was 7.3 percent of national income in the United States, 9.4 percent in Britain, 10 percent in Germany and 12.6 percent in France. By 2007, the figures were 36.6 percent for the United States, 44.6 percent for Britain, 43.9 percent for Germany and 52.6 percent for France. Military costs once dominated budgets; now, social spending does.
Wall Street executives, in a private meeting with a top Federal Reserve official in late September, recommended a coordinated effort by central banks to remedy the European financial crisis, according to Fed documents received in an open-records request.
The meeting, led by Louis Bacon, founder of hedge fund Moore Capital Management, preceded a joint action Wednesday by the world’s major central banks, which banded together to provide liquidity to the markets through cheap U.S. dollar loans….
The world’s major central banks launched a joint action to provide cheap, emergency U.S. dollar loans to banks in Europe and elsewhere, a sign of growing alarm among policy makers about stresses in Europe and in the global financial system.
The coordinated action doesn’t directly address Europe’s government-debt and budget woes. Instead, it is aimed at alleviating the impact of those troubles on global markets. Moreover, it raises the prospect of other steps by central bankers to prevent a repeat of the 2008 financial crisis.
“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” said a statement issued by the six central banks””the U.S. Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank.
Ten thousand combat veterans with post-traumatic stress disorder flooded into VA hospitals every three months this year, pushing the number of patients ill with the disorder above 200,000 and straining resources, Department of Veterans Affairs data to be released today show.
he increase is more than 5% per quarter, according to data obtained by USA TODAY, and it occurs as the VA struggles to move veterans quickly into therapy. New mental health patients at about a third of VA hospitals wait longer than the department’s goal of 14 days or less, according to a USA TODAY analysis published this month.
“Demand for mental health care is only going to continue to grow as thousands more troops return home,” said Sen. Patty Murray, D-Wash., chairwoman of the Senate Veterans’ Affairs Committee. “The VA still has work to do to decrease wait times, ”¦ reduce the stigma around seeking care and to provide access to care in rural areas.”
This was largely expected, and they did reaffirm their AAA overall rating. They felt “declining confidence” that Congress will agree on timely measures to bring about fiscal policies aimed at reducing indebtedness–KSH.