Month: April 2016

Recently, White House Press Secretary Josh Earnest said the following: “One of the key legacy achievements of this presidency will be the important reforms of Wall Street. Those reforms have led to a financial system that is more stable and ensures that taxpayers are not on the hook for bailing out financial institutions that make risky bets.”

Evidently the Obama administration has a different definition of “risky bets”, and “taxpayers not on the hook” than most people, because as the Washington Post reports:

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

 

… administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

So on one hand the Obama administration is touting the fact that they are sure they’ve cleaned up the financial system to the point where it’s more stable, and taxpayers “definitely” won’t be on the hook for bailing out banks making risky bets. On the other hand, the administration is pushing banks to loan to sub-prime borrows again, less than eight years after completely blowing up the global financial markets for doing precisely that.

For the banks, this is clearly great news – make more loans + more government guarantees = risk free profits…

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

 

The FHA, in coordination with the White House, is working to develop new policies to make clear to banks that they will not lose their guarantees or face other legal action if loans that conform to the program’s standards later default. Officials hope the FHA’s actions will then spur Fannie and Freddie to do the same.

… for those who, however, still pay taxes and will be tasked to bail out banks during the next crisis, not so much.

It appears as though the US isn’t just competing with China for jobs and market share, but also to see who will be the fastest to blow up the global financial markets again.

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The following chart from the Paragon Real Estate Group, showing median house prices in San Francisco, is troubling, for reasons which do not need an explanation.

 

And here is a bonus chart:it shows the minimum amount of qualifying income one needs to purchase a “median priced house” based on prevailing prices and mortgage interest rates, with 20% downpayment, including taxes and insurance.

Source: Paragon

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Submitted by Mike “Mish” Shedlock of MishTalk

In the wake of an expected victory in Wisconsin, Ted Cruz gave the expected victory speech.

“Tonight is a turning point. It is a rallying cry,” said Cruz to an elated crowd of his supporters.

Nonsense. What happens in Wisconsin stays in Wisconsin.

Nomination Analysis

Cruz won 36 of 42 Wisconsin delegates. In the Path to a Trump Victory, Nate Silver estimated Trump needed to win 18 Wisconsin delegates.

Trump won six, leaving him 12 short.

New York has 95 delegates. Silver estimates Trump needs 58 of then.

I expect Trump will pick up 70 putting him back on track. I made that estimate on April 4 in Rumors of Trump’s Demise Overblown; Wisconsin May Not Matter if Trump Sweeps New York.

Recent Polls

 

Silver’s Poll’s Only Projection

If those numbers for Trump come in, and we will find out on April 19, the momentum will clearly have shifted back to Donald Trump.

Still on Course

Financial Times writer Edward Luce sees things pretty much the way I do. In an article today, Luce says Donald Trump Still Just About on Course.

Despite having self-inflicted the worst two weeks of his campaign, and provoking the opposition of almost every senior Republican in Wisconsin, Mr Trump still took more than a third of the vote — and in a state that he was likely to lose.

 

Wisconsin’s demographics, which skew towards educated conservatives, are similar to that of Iowa, which Mr Cruz won at the start of the primary season two months ago. New York’s are closer to that of New Hampshire, which Mr Trump won handily the following week.

 

It is anybody’s guess what Mr Trump will say, or tweet. His capacity for self-destruction can never be underestimated. But it takes a leap of faith to believe he will be defeated on his home turf by a Texan conservative who denigrates “New York values”.

 

Wisconsin does not drastically alter the bigger picture. Republicans are probably heading towards a contested convention in Cleveland in which they will confront a choice between Mr Trump and Mr Cruz.

Contested Convention

It’s a bit premature to come to the conclusion a contested convention is the odds-on-favorite, but it is increasingly likely.

In January, I stated the only likely way Trump could be stopped was a contested convention. That was long before media glommed onto the idea. Today the notion of a contested convention is mainstream.

Hell to Pay

It remains to be seen if we do have a brokered convention but a Talking Points Memo accurately says there will be Hell to Pay, if we do. Emphasis is mine.

I certainly knew that election night was not the end of the delegation selection process in most states – especially in caucus states. But I confess I did not realize how many states do not allow a candidate any direct control over who ‘their’ delegates even are. So Donald Trump could win all the delegates in a particular state but have party functionaries pick the actual people who will serve as ‘Trump’s’ delegates. So they’re bound on the first ballot but actually there to support Cruz or Kasich or some other unicorn candidate.

 

I think many people imagine a raucous and wild scene where the Trump delegates walk out of the hall after the convention gives Mitt Romney or maybe Jeb Bush’s son ‘P.’ the nomination. But in fact there may be no Trump supporters there to walk out. Now, obviously there will be some. But maybe not that many.

 

The ‘Trump delegates’ who agree to vote for someone else on the second ballot may not be former Trump supporters. They may be Cruz supporters or just party regulars.

 

All of this is why this is bounding toward a wildly destructive conflagration in Cleveland. Elections of all sorts rest not fundamentally on rules and bylaws but on legitimacy. An RNC national committeeman recently complained that the press had given people the wrong impression that voters decided who the nominee was rather than the party. By the rules, he may be right. But good luck sailing that ship across any body of water.

 

TPM Readers know, because it’s been one of the site’s core perennial issues for 15 years, that people’s right to their vote gets disregarded all the time. But it is by definition almost always the votes of the marginalized and those lacking power, almost always those most loosely tied to the political system. And usually it either does not or cannot be proven to swing an actual election. It is quite another thing, under the bright lights of intense national press scrutiny to take the win away from the guy who unambiguously won the most votes.

 

Trump’s constituency is the part of the electorate which Republican politicians have been marinating in grievance and betrayal politics for decades. Only it’s not coming from Al Sharpton or Hollywood elites or limousine liberals or Feminazis. It will be coming from their supposed protectors, their party.

 

It won’t go down well. There will be hell to pay.

Hell to pay indeed!

This is precisely why Trump feels marginalized to the point he may not support the Republican candidate if he doesn’t win.

And why should he?

Can Cruz Beat Hillary?

Can Cruz or some alternative “hand-picked” candidate defeat Hillary?

It seems dubious, at best. To win the election, the Republican nominee will have to pick up votes from some independents and some traditional Democrats.

What votes can Cruz pick up? Anything? I challenge anyone to explain what inroads Cruz, Kasich, or any other hand-picked Republican Neanderthal can deliver from either Democrats or Independents.

Appealing to the core is the road to ruin, and Trump proves it.

And if Trump runs on a third party ticket, it will be next to impossible for Cruz or any other Republican candidate win.

Can Trump Beat Hillary?

Despite the talk, Trump will retain nearly all of the traditional Republican vote. Sure, some may vote Hillary or sit the election out. But the strong anti-Hillary sentiment will overcome almost all of that.

On the plus side, Trump will pick up votes from anti-war Democrats, anti-war independents, anti-establishment independents, anti-Fed independents, and most importantly – angry white Democrats who blame China and Mexico for our problems.

On the minus side, Trump has offended a lot of people. However, there will be some time for him to make amends and sound more presidential.

Destructive Republican Party Breakup

Whether Trump wins the nomination or it is stolen from him, a destructive breakup of the holier-than-thou, war-mongering, neocon pseudo-conservative hypocrites running the Republican party is potentially at hand.

For that we can all thank Trump, whether you like the guy or not. It’s time to rebuild the Republican party, and this is a good start.

If the nomination is stolen from Trump, he can finish the job with a third-party candidacy.

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As Bloomberg reports, the Stockholm International Peace Research
Institute is out with their latest military spending report, and it looks as though many countries around the globe are preparing for more conflict in the coming years, if only based on the recent jump in military-related spending.
   
In aggregate, world
military expenditures rose to $1.7 trillion in 2015, an increase of about 1%
from last year. According to SIPRI, this was the first increase in
global military spending since 2011. Unsurprisingly, the United States
earned the top spot by a ridiculous margin, spending a gargantuan $596
billion in 2015 (for which the military industrial complex – the recipient of the funds – is eternally grateful). The US is followed by China, and Saudi Arabia who spent
an estimated $215 billion and $87.2 billion respectively.

Here is how the top fifteen countries rank.

 

Bloomberg summarized two troubling developments in the following charts, first with countries in Southeast Asia, presumably concerned with China’s activity in the South China Sea, and then with countries in Eastern Europe, on fears of Russian aggression (even though it is NATO which most recently announced it would be aggressively shifting its positioning in Eastern Europe).

Here is the pace in which Southeast Asian countries are increasing their military spending.

 

And here is what’s happening in Eastern Europe. Ironically, Russia, where slumping oil receipts have weighed on the economy, fell to fourth position in the global rankings, with Saudi Arabia taking third spot. The Mideast country, also hurt by the lower price of crude, would have cut spending too had it not been for the $5.3 billion cost of its military campaign in Yemen.

 

India, courted this year by contractors including BAE Systems Plc, Boeing Co.,Lockheed Martin Corp. and Saab AB, had the sixth-biggest defense budget in 2015, after the U.K. in fifth. IHS Jane’s analysts forecast it will advance to fourth in 2017, with a 13.1 percent boost to spending for a total $50.7 billion.

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The FOMC minutes from the uberdovish March meeting were just released. Here are the highlights:

• SEVERAL ON FOMC ARGUED AGAINST APRIL HIKE AS SOME FAVORED IT
• PARTICIPANTS HAD ‘RANGE OF VIEWS’ ON APRIL HIKE
• MOST PARTCPNTS AGREED W/RT HOLD; COUPLE WANTED HIKE
• MANY ON FOMC SAW BIGGER GLOBAL RISKS WARRANTING POLICY CAUTION
• SEVERAL NOTED CAUTION WOULD BE PRUDENT IN APRIL DECISN
• FOMC SAW NEXT MOVE BASED ON DATA ASSESSMENT, NOT CALENDAR DATE
• MANY ON FOMC SAID PRUDENT TO WAIT BEFORE NEXT TIGHTENING STEP
• NUMBER PART JUDGED HEADWINDS WOULD SUBSIDE ONLY SLOWLY
• MANY PARTIC SAID GLOBAL ECON STILL POSED RISK TO US
• SEVERAL PARTICPNTS ARGUED FOR PROCEEDING CAUTIOUSLY
• SEVERAL VOTING MEMBERS NOTED CURRENT FFR LOWER THAN DEC

Market reaction is muted, with a modest dip after the headline that some wanted an April rate hike, but the most notable mover is the USDJPY, which just crashed to fresh October 2014 lows of 109.34. Kuroda may want to wake up soon.

But the most notable finding: mention of the word global was approximately 22 times.

Yellen: president of the world’s central bank.

* * *

Here is the discussion of April:

In light of this expectation and their assessment of the risks to the economic outlook, several expressed the view that a cautious approach to raising rates would be prudent or noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate. In contrast, some other participants indicated that an increase in the target range at the Committee’s next meeting might well be warranted if the incoming economic data remained consistent with their expectations for moderate growth in output, further strengthening of the labor market, and inflation rising to 2 percent over the medium term.

The Fed as “global” stock market barometer:

Participants generally agreed that the incoming information indicated that the U.S. economy had been resilient to recent global economic and financial developments, and that the domestic economic indicators that had become available in recent weeks had been mostly consistent with their expectations. Moreover, the sharp asset price movements that occurred earlier in the year had been reversed to a large extent, but longer-term interest rates and market participants’ expectations for the future path of the federal funds rate remained lower. Taking these developments into account, participants generally judged that the medium-term outlook for domestic demand was not appreciably different than it had been when the Committee met in December.

And here is the real reason why there will be no rate hike for a long time: the Fed is now terrified of the world’s (read China’s reaction function):

• Participants discussed the implications of the global economic and financial developments of the past few months for the medium-term outlook, and they offered different characterizations of the risks to the U.S. economy stemming from these developments.
• Many participants expressed a view that the global economic and financial situation still posed appreciable downside risks to the domestic economic outlook.
• Many participants indicated that the heightened global risks and the asymmetric ability of monetary policy to respond to them warranted caution in making adjustments to the stance of U.S. monetary policy.
• Participants generally agreed that the incoming information indicated that the U.S. economy had been resilient to recent global economic and financial developments.
• Most participants judged it appropriate to maintain the target range for the federal funds rate at ¼ to ½ percent at this meeting while noting that global economic and financial developments continued to pose risks.
• Economic activity had been expanding at a moderate pace despite the global economic and financial developments of recent months.
• They saw global economic and financial developments as continuing to pose risks.
• Global economic and financial developments continue to pose risks.

Here are the full minutes (link):

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By Nigel Farage, originally posted in The Telegraph

The Dutch referendum shows how the internet is taking back power from our Europhile elites

Today’s Dutch referendum on the EU’s expansionist agreement with Ukraine really is the people’s referendum.

GeenPeil, a project stemming from the popular Dutch blog GeenStijl, collected some 420,000 signed, verified, signatures triggering this referendum. It is an extraordinary achievement that highlights how western democracy is evolving.

Dutch referendum is example that euroscepticism is rife throughout Europe. Hope the Dutch people give EU elite a kick in the teeth & vote no

— Steven Woolfe MEP (@Steven_Woolfe) April 6, 2016

The internet truly is the gamechanger of our time. A small collection of individuals with an idea can find thousands of other kindred spirits who join them in championing a cause. That develops, becoming tens of thousands and then allowing a message to reach out to millions.

This revolution is sweeping Europe as we speak. Just look at Beppe Grillo’s Five Star movement in Italy, who harness a system of direct democracy amongst their supporters. When Five Star had MEPs elected to the European Parliament, the party asked supporters to vote on which group they should sit with. Supporters had their say and the Five Star Movement now sit alongside Ukip.

Without the internet, the development and growth of Ukip in Britain would have been far tougher. YouTube gave speeches I made in the European Parliament a platform, reaching out to new audiences not just in the United Kingdom but right across the world. Most encouragingly, these are young audiences, a generation who are now able to access virtually unlimited quantities of information. The internet takes western democracy into a new sphere. Unchartered territory with exciting possibilities.

Our own British referendum on EU membership illustrates the point perfectly. It was Ukip’s people’s army that forced the Prime Minister’s hand and ensured that he delivered on his In/Out referendum pledge – a referendum he had previously spoken out against and did not support until the people’s voice grew too loud to ignore.

The era of top-down political operations is ending. Mass membership, open, accessible political movements are the future. Membership structures that are low-cost but allow involvement for those wishing to participate from the comfort of their own homes is where politics is headed, engaging an entirely new section of the population who have been left behind by the distant, remote current political structures. 

We’ve seen the way that Arron Banks’ Leave.EU have harnessed the power of Facebook to create a social media following that is bigger than any British political party in mere months. Grassroots Out have reached out directly to those who have not typically engaged in British politics, holding packed public meetings across the United Kingdom with speakers from all parties and none, creating a mass movement of supporters who want out of the European Union.

The future for Ukip amidst this backdrop of change is one of new opportuity. As a relatively young party, the people’s army is not constrained by traditional structures and foundations of conventional Westminster thinking. We are free to take a fresh approach and blaze a new trail. And we intend to.

Ukip will be doing everything we can to get the UK out of the EU in the forthcoming referendum, a referendum I believe we will win. Once we have returned power from Brussels, we in Ukip can then become a force for change that delivers powers downwards, back to those who should always be in charge: we, the people.

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