Obama Administration Cops to Looming Oil Shortage – In an exclusive interview published March 25 in Le Monde, Glen Sweetnam, the Obama administration’s official expert on the oil market, confirmed nearly every element of the “Peak Oil” scenario that many analysts both in and outside the oil industry have warned of for years: A decline of world oil production could begin soon—perhaps next year, and only extraordinary levels of investment by the oil industry can maintain current rates of production much longer.After decades of ignoring the “Peak Oil” theory that predicts global oil production will peak and then rapidly decline, Sweetnam’s admission marks a profound shift in the U.S. government’s position on energy depletion. "I understand how difficult it must be for officials of the Department of Energy to acknowledge that the lifeblood of the industrial economy–cheap oil–is disappearing faster than they had previously forecast,” “But the American People deserve the truth."
Much of U.S. Was Insulated From Housing Bust (US map)- The U.S. still is feeling the effects of widespread housing bust, but a new report serves as a reminder that large swaths of the nation didn’t experience a boom in home prices and hasn’t suffered from the bust. New York Federal Reserve staffers Jaison R. Abel and Richard Deitz released a report highlighting the stability of upstate New York’s housing markets. The research notes that while the rest of the U.S. saw a real-estate boom and bust, upstate New York was largely insulated from the cycle.“Despite upstate’s long-term weak economic growth and population loss, Buffalo, Rochester, and Syracuse all ranked in the top 10 percent of metro areas in terms of home price appreciation in 2009, with Buffalo ranking sixth overall,” the authors wrote.
Housing Prices May Be Heading for a Double Dip – Anyone thinking housing prices have reached a bottom had better do some recalculating. Despite Tuesday’s Case Schiller report showing smaller declines in January, housing prices may already be in another free fall. Newly revised numbers are pointing to the decline. The Federal Housing Finance Agency’s (FHFA) adjusted figures show a housing price decline of 2 percent in December and 0.6 percent decline in January—reversing some regional price increases in 2009. And more pricing dips are predicted.
Taxes per Person – Some pundits, reflecting on the looming U.S. budget deficits, claim that Americans are vastly undertaxed compared with other major nations. I was wondering, to what extent is that true?The most common metric for answering this question is taxes as a percentage of GDP. However, high tax rates tend to depress GDP. Looking at taxes as a percentage of GDP may mislead us into thinking we can increase tax revenue more than we actually can. For some purposes, a better statistic may be taxes per person, which we can compute using this piece of advanced mathematics: Taxes/GDP x GDP/Person = Taxes/Person
Irish Banks Need $43 Billion in New Capital – Ireland’s banks need $43 billion in new capital after “appalling” lending decisions left the country’s financial system on the brink of collapse. “Our worst fears have been surpassed,” Finance Minister Brian Lenihan said in the parliament in Dublin yesterday. “Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come.” The agency aims to cleanse banks of toxic loans, the legacy of plunging real-estate prices and the country’s deepest ever recession. In all, it will buy loans with a book value of 80 billion euros ($107 billion), about half the size of the economy.
For job seekers, no recovery in sight—Why prospects for job growth and unemployment remain dim – EPI Briefing Paper #259 Print-friendly PDF version The National Bureau of Economic Research (NBER), the nation’s arbiter for dating business cycles, is apt to conclude that the recession officially ended in the middle of 2009. Yet consistent job growth has yet to arrive and the unemployment rate will probably not peak until the second half of this year. In short, this recovery is currently “jobless” and has been for quite some time. Worse, even when it is no longer technically jobless (that is, when we have positive employment growth), the unemployment rate will likely not fall substantially for a year or even longer.
Strategic Defaults: Lessons From the Great Depression – Government policy continues to rigidly classify mortgages by their “affordability,” and pays too little attention to strategic defaults. Policy mistakes like these serve to prolong the foreclosure crisis.The home foreclosure process begins when a homeowner stops making his mortgage payments, so the major policy question is how to get homeowners to pay.As shown by a 1999 study by Martha Olney, a professor at the University of California, Berkeley, the Great Depression of the 1930s offers vivid evidence that borrowers default for strategic reasons, and make full payments even on loans that appear “unaffordable” when given the incentive to do so.
Congress seeks more information on health care charges – AT&T announced last week that it would charge $1 billion against its earnings as a result of the recently passed health care bill. Other companies also announcing charges include Caterpillar ($100 M), John Deere ($150 M), and MMM ($85-90 M). Analyst David Zion of Credit Suisse estimated that S&P 500 companies will rack up a combined $4.5 B charge.In response, Congressman Henry Waxman (D-CA), Chairman of the House of Representatives Committee on Energy and Commerce, and Bart Stupak (D-MI), Chairman of the Subcommittee on Oversight and Investigation, sent letters to the chief executive officers of AT&T, Caterpillar, Deere & Co, and Verizon. Here is an excerpt from the letter for AT&T: My position is that eliminating the tax-deductibility of the subsidy, as the recent legislation did, was perfectly reasonable, and that the companies’ responses to the legislation were perfectly reasonable. But the Congressional "request" for a personal appearance of the CEOs and the right to peruse all the company email on the topic are not reasonable.
From bucolic bliss to ‘gated ghetto’ – Home foreclosures have devastated neighborhoods throughout the country, but the transformation from suburban paradise to blighted community has been especially stark in places like Willowalk — isolated developments on the far fringes of metropolitan areas that found ready buyers when home prices were soaring but then saw an exodus as values crashed. Vacant homes are sprinkled throughout Willowalk, betrayed by foot-high grass. Others are rented, including some to families that use government Section 8 vouchers to live in homes with granite countertops and vaulted ceilings.
No more extensions of tax credit for first-time home buyers – Home buyers hoping to take advantage of a new or extended tax credit should not procrastinate: This third bite at the apple will be the last.Proponents of the $8,000 credit for first-time buyers and the $6,500 credit for move-up buyers made it clear during the debate on Capitol Hill that the benefits would not be renewed when they expire. And a lobbyist for the National Assn. of Realtors confirmed that at the group’s annual convention last month.
Volcker Optimistic Financial Overhaul Will Include His Rule – The former Federal Reserve chairman defended his proposal to give regulators the power to force banks to get rid of divisions that make risky bets with their capital, in order to help prevent another financial crisis.“We have a promising possibility of getting agreement here” for a “reasonably good bill,” Volcker said, adding he was more optimistic than a month ago. Senate Democrats on March 15 proposed a financial overhaul that would hurt big Wall Street banks by reining in their profits and requiring them to hold more capital. The proposal includes a version of what Obama has dubbed the “Volcker rule.”