Fed Opens Books, Revealing European Megabanks Were Biggest Beneficiaries – The Federal Reserve on Wednesday reluctantly opened the books on its monumental campaign to save the financial system in the midst of the recent crisis, revealing how it distributed some $3.3 trillion in relief. The data revealed that the Fed’s aid was scattered much more widely than previously understood. Two European megabanks — Deutsche Bank and Credit Suisse — were the largest beneficiaries of the Fed’s purchase of mortgage-backed securities. The Fed’s dollars also flowed to major American companies that are not financial players, including McDonald’s and Harley-Davidson, through unsecured short-term loans. The measure led the nation’s central bank to purchase more than $1.1 trillion in mortgages packaged into the form of securities. The mortgage bonds are backed by Fannie Mae and Freddie Mac, the twin mortgage giants now owned by taxpayers. Deutsche Bank, a German lender, has sold the Fed more than $290 billion worth of mortgage securities, Fed data through July shows. Credit Suisse, a Swiss bank, sold the Fed more than $287 billion in mortgage bonds.  The data had previously been secret. It was released Wednesday per the recently-enacted law overhauling the federal financial regulation. The Fed, ferociously backed by the Obama administration, fought lawmakers’ desire for full disclosure throughout the financial reform debate.

Signs Point to Extending Bush Tax Cuts Temporarily – Republicans and Democrats Wednesday sat down to negotiate a compromise on extending Bush-era income tax cuts—an effort that could be the first step toward a deal this month that many strategists in both parties believe will temporarily extend current tax rates for all income levels. No decisions were reported from the first meeting of the small group that was appointed by President Barack Obama and leaders of both parties in the House and Senate. Still, White House officials expressed optimism about prospects for a bipartisan compromise. "We’re in the midst of productive discussions and negotiations around what I think everybody agrees is an issue that has to get done in taxes," said White House spokesman Robert Gibbs. "I think we can get some substantive agreements."


Profits, Interest, and Inflation – US corporate profits set a record in the third quarter. As Matthew Yglesias points out, that’s not as impressive as it sounds: profits are measured in nominal dollars, and they normally rise during times of economic expansion, so there’s nothing at all unusual about seeing them make new highs. After taking a closer look at the data, Justin Fox is even less impressed: as a fraction of the national income, domestic nonfinancial corporate profits are nowhere near a new high; the big numbers are coming from financial corporations and from foreign earnings of US corporations. Kevin Drum is not quite so unimpressed, though: he looks at the data and sees domestic nonfinancial corporate profits recovering nicely in any case. Count me with the unimpressed, but for different reasons. It’s really not appropriate, in my view, to look at profits in isolation from the rest of the national income. Profits are a form of capital income. Capital income can be roughly divided into profits and interest, depending on how the capital was financed. If we’re interested in the general profitability of business activities, rather than the narrow question of whether current stockholders are getting rich, we should be looking at total capital income.

House May Block Food Safety Bill Over Senate Error – A food safety bill that has burned up precious days of the Senate’s lame-duck session appears headed back to the chamber because Democrats violated a constitutional provision requiring that tax provisions originate in the House. By pre-empting the House’s tax-writing authority, Senate Democrats appear to have touched off a power struggle with members of their own party in the House. The Senate passed the bill Tuesday, sending it to the House, but House Democrats are expected to use a procedure known as “blue slipping” to block the bill, according to House and Senate GOP aides. The debacle could prove to be a major embarrassment for Senate Democrats, who sought Tuesday to make the relatively unknown bill a major political issue by sending out numerous news releases trumpeting its passage. Section 107 of the bill includes a set of fees that are classified as revenue raisers, which are technically taxes under the Constitution. According to a House GOP leadership aide, that section has ruffled the feathers of Ways and Means Committee Democrats, who are expected to use the blue slip process to block completion of the bill.

 What Happens Next on the Deficit Commission As Joan already blogged, The Catfood Commission, also known as the National Commission on Fiscal Responsibility and Reform, released a list of budget recommendations today. (59-page PDF) In terms of process, here is what happens next: The commission will not issue a final report – While the members of the deficit commission will vote on today’s recommendations on Friday, when they do so they will just be 18 people holding a vote on something, and not the formal deficit commission created by President Obama. This is because the deficit commission ceases to exist at midnight, tonight. As commission co-chair Alan Simpson said: To those who just wish the commission would go away, Simpson had one bit of good news: “That’s exactly what we’re going to do December 2.”  Further, the by-laws of the commission state: The Commission shall vote on the approval of a final report containing a set of recommendations to achieve the objectives set forth in the Charter no later than December 1, 2010. The issuance of a final report of the Commission shall require the approval of not less than 14 of the 18 members of the Commission.

Millennials Tackle 21st Century Challenges With a Blueprint for America’s Future – The largest-ever generation of Americans — the Millennial Generation, born between 1980 and 2000 — has designed the future that they want to inherit. A movement of young people nationwide convened in communities across the country and online to articulate their values, their priorities, and provide concrete answers to the questions about the American economy, as well as American education, energy policy, foreign policy, our democracy, social justice, and health care. Through the Roosevelt’s Campus Network’s Think 2040 program, thousands have contributed to a shared vision for 2040 — A Blueprint for the Millennial America. Released today, The Blueprint paints a vision of an America that invests in jobs and infrastructure, that curbs the federal debt, and that strengthens a flexible social safety "trampoline" to better respond to the 21st century challenges Millennials face.  Read our vision at Roosevelt’s Think 2040: Blueprint for the Millennial America

Here Is What ECB Intervention Looks Like – Behold Jean Claude Trichet’s fat finger. ECB now lifting every bid. Note that the PGB was at 84 before yesterday’s two rumors that drove the market (both sovereign bonds and stocks) higher are now refuted. We have a suggestion: perhaps Trichet and Brian Sack can just take it out back and beat each other. The winner’s currency goes to zero and the respective stock market goes to 36,000.

US_Oil_Production_and_Imports_1920_to_2005 – graphs



Worst case scenario: Can we adapt to a world 2 to 4 deg…Oxford scientists have contributed to a series of research papers about the impacts of global warming to coincide with the opening of the Climate Change Conference in Cancun, Mexico. One study, led by Niel Bowerman of the Oxford University’s Department of Physics, warns that the conference will fail to meet its objectives unless it addresses not just how much the planet warms, but also how fast it warms. Potentially dangerous rates of global warming could outpace the ability of ecosystems and artificial infrastructure to adapt, it argues. Bowerman’s study shows that to achieve their aims, negotiators must limit the maximum global emission rate as well as the total amount of carbon emitted through to 2200. He explains: ‘Many people think that the reason why emissions need to peak soon is to save the climate of the 22nd century, but our research highlights a more immediate reason. We need to start cutting emissions soon to avoid potentially dangerous rates of warming within our lifetimes, and to avoid committing ourselves to potentially unfeasible rates of emission reduction in a couple of decade’s time.’

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