FCC approves controversial ‘net neutrality’ rules – (video) The Federal Communications Commission on Tuesday approved "high-level rules of the road" designed to ensure that internet providers grant everyone equal access to the Web. But the 3-2 vote immediately came under attack from both flanks, with internet-freedom advocates saying the new rules don’t go far enough and critics saying the government should stay out of online business altogether. In announcing the proposed rules this month, FCC Chairman Julius Genachowski said they would require high-speed internet providers to treat all types of Web content equally. The rules are designed to, in effect, keep the companies that own the internet’s real-world infrastructure from slowing down some types of websites or apps — say, those belonging to a competitor — or speeding up others for high-paying clients.
Obama-GOP Compromise Tax Plan on TPC’s Tax Calculator
– In a flurry of lame-duck activity, Congress quickly passed the Obama-GOP compromise tax plan
and the president signed it into law. TPC has incorporated the new law into its Tax Calculator
so you can see how the act will affect individual tax bills.
The Tax Calculator
lets you compare tax liabilities under the new tax law against what taxes would have been if Congress had simply extended all of the 2001-03 tax cuts or had allowed them to expire as scheduled
. As in earlier versions of the calculator, you can look at ready-made examples or create your own case. See what taxes will be this year and what they’ll be in 2011. Turn on the AMT
patch or see what would happen without it. There’s no better way to see how the new law will affect taxpayers.
MBA: Mortgage Refinance activity declines sharply
– The MBA reports: Mortgage Applications Decrease in Latest MBA Weekly Survey The Refinance Index decreased 24.6 percent from the previous week. The Refinance Index has declined six straight weeks and is at its lowest level since the week ending April 30, 2010. The seasonally adjusted Purchase Index decreased 2.5 percent from one week earlier. … The average contract interest rate for 30-year fixed-rate mortgages increased to 4.85 percent from 4.84 percent, with points decreasing to 0.96 from 1.33 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
November Existing Home Sales: 4.68 million SAAR, 9.5 months of supply
– The NAR reports: Existing-Home Sales Resume Uptrend with Stable Prices Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 5.6 percent to a seasonally adjusted annual rate of 4.68 million in November from 4.43 million in October, but are 27.9 percent below the cyclical peak of 6.49 million in November 2009, which was the initial deadline for the first-time buyer tax credit. Total housing inventory at the end of November fell 4.0 percent to 3.71 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, down from a 10.5-month supply in October.
This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. The second graph shows nationwide inventory for existing homes. The all time record high was 4.58 million homes for sale in July 2008.
U.S. Manufacturing Productivity Strong in 2009
– The U.S. had the sharpest increase in manufacturing productivity — output per hour of work — in 2009 of the 19 industrialized economies for which the U.S. Bureau of Labor Statistics keeps data
: 7.7%. Japan had the steepest decline, 11.4%. For the first time since the BLS began keeping tabs, both output and hours worked in manufacturing declined in all 19 economies, a reflection of the unusually deep global recession. Manufacturing productivity declined in 12 of the 19 economies. Unit labor costs — a measure of the cost of the worker required to produced one unit of output — increased in all but four of the economies, measured in their local currencies, with the largest increases in Germany and Finland. Due to the strength of the dollar in 2009, unit labor costs measured in the U.S. currency fell in 12 of the foreign economies. Compared to other countries, the labor-cost competitiveness of U.S. manufacturing decline versus 10 economies and rose versus eight.
What’s a Good Teacher Worth to You? Try $400,000 –
In 2009, McKinsey released a report
finding that if we raised our education performance to the level of Korea, we would improve the US economy by a sixth of GDP, or more than $2 trillion. In other words, if our students could read and multiply as well as South Korea, our GDP would add the economic equivalent of Italy. Here’s a new report from NBER
. reaching a similar conclusion, that the benefit of a good teacher over an average teacher can add more than $400,000 to a student’s future earnings. Multiply that out over an economy, and you would see gains in the hundreds of billions. A teacher one standard deviation above the mean effectiveness annually generates marginal gains of over $400,000 in present value of student future earnings with a class size of 20 and proportionately higher with larger class sizes. Alternatively, replacing the bottom 5-8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings with a present value of $100 trillion.
In this stratified, winner-takes-almost-all economy, where the middle class has hollowed out and earnings among the college-educated far outstrip high school graduates, the marginal gains from an above-average education will only increase. Read the full story at
States Sue Bank of America: Bank Employees Dish, and Other Highlights – On Friday, Arizona and Nevada both filed suit against Bank of America, saying it deceived homeowners trying to avoid foreclosures. The suits allege that Bank of America knowingly misled homeowners in the loan modification process, regularly promising quick help when the process instead dragged out  over months if not years, foreclosing on homeowners during the modification process  despite promises that homeowners would be safe and making “false” promises to homeowners that their trial modifications would become permanent, among other complaints . A Bank of America executive told the Arizona Republic that he was “disappointed ” in the suits and said the bank is already working to improve its processes and programs. “We and other major servicers are currently engaged in multistate discussions to address foreclosure-related issues more comprehensively,” he said.
Poverty Programs Embattled in the South
– Now, however, states everywhere are grappling with how to save money, and the problem is particularly potent in the South because those states already had some of the lowest spending on programs such as food stamps and Medicaid. At the same time, states across the former Confederacy routinely rank among the poorest in the nation. Poverty is especially widespread among the black and Latino populations across the South (the poverty rate for black families in Mississippi is 44 percent), and as the economy crawls slowly out of the Great Recession those groups are likely to be hit hardest by any cuts the newly elected legislatures want to make. It’s too soon to tell exactly which programs are most vulnerable, but it’s certain that spending cuts are a budget priority. Every politician this year promised to balance the state budget and cut jobs, but none in the South sounded the clarion call for raising taxes on the campaign trail. "There’s definitely more of an anti-tax sentiment in many of these states, even in ones where Democrats have the upper hand," says
The Next Banking Crisis – Evidence coming to light suggests that as subprime loan — origination mills went into overdrive during the boom, they got very sloppy. As loans were turned into securities, many of the trusts that supposedly hold the documents have neither the actual promissory notes nor the liens that give the lender the right to foreclose. The problem was compounded when lenders created an electronic database called the Mortgage Electronic Registration System, or MERS. Often, physical notes were eliminated in favor of electronic ones; however, the law in most states requires that the original note be endorsed — in "wet ink" — to each new owner at every step of securitization. Katherine Porter, a law professor at the University of Iowa and an expert in mortgage servicing, recently testified to the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP) that according to lawyers for both home-owners and banks, "a very large number (perhaps virtually all) securitized loans made in the boom period in the mid-2000s contain serious paperwork flaws, did not meet underwriting or other requirements of the trust, and have not been serviced properly as to default and foreclosure." So, this legal morass doesn’t just gum up foreclosures; it calls into question whether several trillion dollars worth of mortgage-backed securities are worth anything close to their face value.
Federal Reserve Blocks New Foreclosure Regulations
— Top policymakers at the Federal Reserve are fighting efforts to rein in widely reported bank abuses, sparking an inter-agency feud with the FDIC and the Treasury Department. The Fed, along with the more bank-friendly Office of the Comptroller of the Currency, is resisting moves to craft rules cracking down on banks that charge illegal fees and carry out improper foreclosures. The FDIC supports such rules, according to an FDIC official involved in the dispute. The new regulations would rein in debt collection, loan modification and foreclosure proceedings at bank divisions called "mortgage servicers." Servicers have committed widespread fraud in the foreclosure process. While the recent robo-signing of fraudulent documents has received the most attention, consumer advocates have complained about improper fees and servicer mistakes that lead to foreclosure for years. "Given that we’ve seen a massive failure in servicing practices and a massive failure to address servicing in an honest way, I think this is important,". Last week, the National Consumer Law Center and the National Association of Consumer Advocates published a survey of 96 foreclosure attorneys from around the country, attesting that servicers have pushed 2,500 of their clients into the foreclosure process, even as the borrowers were negotiating loan modifications with the same servicers.
FT Alphaville » Cuomo files suit against Ernst & Young – It’s official — Repo 105 will have its day in court (flash from Reuters): Accounting firm Ernst & Young was sued by New York regulators on Tuesday, accused of helping to hide financial risks at Lehman Brothers Holdings Inc before the Wall Street firm’s 2008 collapse. The civil fraud case was filed by New York Attorney General Andrew Cuomo, a statement from his office said. Ernst & Young was Lehman’s outside auditor from 2001 until the investment bank filed for bankruptcy in September 2008. Unless they settle, of course.
Fiscal squeeze will squash the poor –
In many other countries it would be a recipe for civil unrest, perhaps even revolution. Britain, though, is a placid place and it takes quite a lot to get this country’s dander up. Sure, we’ve had protests from students this autumn but the latest forecasts of expected trends in poverty were greeted with a resigned shrug of the shoulders. Make no mistake, the findings from the Institute for Fiscal Studies (IFS) make depressing reading. Child poverty? Going up over the next three years. Poverty from working-age adults with children? Going up. Poverty for working adults without children? You guessed it. Going up also. And these – lest you get the wrong end of the stick – are not increases in relative poverty. They are increases in absolute poverty: the number of people living on less than 60% of the national income adjusted for inflation. And they are not nugatory increases either: by 2013-14 an additional 900,000 people will have slipped below the breadline.