Top Court in Massachusetts Voids Foreclosures by 2 Banks

Top Court in Massachusetts Voids Foreclosures by 2 Banks – The highest court in Massachusetts ruled Friday that U.S. Bancorp and Wells Fargo erred when they seized two troubled borrowers’ properties in 2007, putting the nation’s banks on notice that foreclosures cannot be based on improper or incomplete paperwork.  Concluding that neither institution had proved it had the right to evict the borrowers, the Supreme Judicial Court voided the foreclosures, returning ownership of the properties to the borrowers and opening the door to other foreclosure do-overs in the state. Legal experts said that while this ruling did not set a precedent for other states, the outcome will be closely watched across the country because it is the first such ruling from a state’s highest court..  “The broad implication is you’ve got to dot your I’s and cross your T’s,” “You need a proper chain of title, and in both of these cases there was a gap in the chain.”

 

How Private Is ‘Private Charity’? – Is this private giving properly called charitable? The word charity evokes images of the better-off in society showing generosity toward the poor and helpless.  As the chart below suggests, a good part of private donations in the United States would be more accurately described as voluntary private financing of civic institutions that benefit all members of society. Museums, educational and religious institutions, public parks and monuments and so on come to mind. Is supporting such institutions really providing charity?

Feldstein: U.S., China Trade Gap on Path to Resolution – Domestic imperatives rather than the tinkering of political leaders will likely close the trade gap between the United States and China, a top economist said Friday. Harvard University economic professor Martin Feldstein made the case that a series of forces already in play will help do what political leaders have failed to accomplish, which is put in place a path to help rebalance a relationship that sees a massive outflow of dollars from the U.S. into Chinese hands. This imbalance is a major driver of America’s overall trade deficit, and become a major political problem complicating the two nations’ relationship. Feldstein’s outlook will strike many as overly optimistic, given that the U.S. and others have been working with little apparent success to induce the Chinese to allow the yuan, which is currently pegged to the dollar, to rise relative to the greenback. While Chinese authorities have allowed a very modest appreciation of late, many have said what has happened is insufficient to redress a situation almost all view as unsustainable.

Georgia Facing a Hard Choice on Free Tuition – The Hope scholarship program is about to be cut by a new governor and Legislature facing staggering financial troubles.  The lingering effects of the recession and the end of federal stimulus funds have sunk many states into a fiscal quagmire. The seriousness of the problem, and a growing concern over how much worse it might become, have many states struggling to find ways to trim services or raise revenues.  In Georgia, that means taking a slice out of the Hope scholarship. When it was begun in 1993, the program was covered easily by Georgia’s state lottery. Politicians enjoyed how happy it made middle-class constituents. Educators praised the way it improved SAT scores and lifted Georgia from the backwaters of higher education.

 

Top Economists Question Continued U.S. Dominance – Many economists meeting in Denver for the annual conference of the American Economic Association believe the Federal Reserve hasn’t done a good job in steering the economy, with at least one predicting the Chinese yuan will supplant the U.S. dollar as the world’s dominant currency. “The age of American predominance is over,” said Simon Johnson, a professor at the Massachusetts Institute of Technology and formerly a top economist at the International Monetary Fund. He believes the yuan will become the world’s reserve currency in two decades. The global financial crisis caused by the U.S. never ended, he told a panel on the causes of the crisis, because big and powerful banks can still bring down the U.S. economy by going under. John Cochrane, an economist from the University of Chicago, said he believes the financial crisis is over. But he fears the outcome will be “goodbye financial crisis, hello sovereign debt crisis,” he said, warning that California may become for the U.S. what Greece was for Europe.

Gasoline prices’ rise evokes 2008 – The grumbling you’ve been hearing at gas stations isn’t your imagination: It’s the sound of motorists looking at pump prices that have been rising toward record highs for this time of year. The average retail price of a gallon of gasoline Friday was $3.083 nationally and $3.342 in California, up substantially from $2.709 nationally and $3.032 in California a year earlier, according to AAA‘s daily survey of fuel prices. The Energy Department’s weekly gasoline price survey, released Monday, showed similar results. Analysts attribute the surge largely to higher crude oil costs, which on Monday jumped to $92.66 a barrel, a 26-month high, before settling lower. Oil closed Friday at $88.03 a barrel in New York futures trading.The last time gasoline prices began the year at similar levels, in 2008, they reached all-time highs by June and July. That has motorists concerned that such a run-up might happen again.

Fed’s Evans: Weak Outlook Calls for Continued Strong Fed Action – A key Federal Reserve official argued forcefully Friday for the central bank to continue providing support to the economy, saying the improving economic outlook is unlikely to bring much relief on the unemployment front for some time. Given the outlook, “substantial policy accommodation continues to be warranted,” Federal Reserve Bank of Chicago President Charles Evans said. “We need to keep short-term nominal policy rates low for an extended period,” he said, describing the bond-buying program as “a complementary policy tool in this regard as it solidifies our commitment to keeping short-term rates low for an extended period.” Collectively, “our policies are striving to achieve this appropriate accommodation,”
 
Of Defense Budget Realities and Myths – Secretary Gates deserves credit for coming to closer terms with reality yesterday in his new defense budget presentation. www.defense.gov/transcripts/transcript.aspx Of course, the need for him to do so was not by choice. The White House made it clear that the deal he thought he had for the "out-years" (defense-speak for the future) when he negotiated his FY 2011 budget last year was OBE’d – thanks to debt reductions commissions and a newly determined, budget-minded Congress.  The White House jumped in front of the parade and, some say, asked the Secretary to find as much as $150 billion out of his "out year" plan, starting with more than $20 billion in FY 2012.
 
What is the debt ceiling, and does the United States really need one? – Yet again, economic storm clouds are forming over Washington. Unless Congress acts, and soon, the United States could face "a worse financial economic crisis than anything we saw in 2008," warns Austan Goolsbee, chairman of the president’s Council of Economic Advisers (and former Slate contributor). Treasury Secretary Timothy Geithner sent a stern letter to Congress: Inaction would cause "catastrophic damage to the economy, potentially much more harmful than the effects of the financial crisis of 2008 and 2009." Geithner and Goolsbee aren’t worried about the United States’ ability to pay its debts so much as its willingness to do so. Indeed, they’re having nightmares not about the debt, but about the debt ceiling—a relic of an earlier budget era and a redundant mechanism for managing the nation’s finances. Which raises the question: Why does the United States even have a debt ceiling in the first place?
 

Deficit must fall, Bernanke warns – Federal Reserve Chairman Ben S. Bernanke laid out a dire scenario on Friday of what could happen to the U.S. economy if the government cannot develop a plan to bring down the budget deficit in the years ahead, even as he said that the economic recovery appears to be gaining momentum. Bernanke also offered his strongest warning yet over the nation’s high deficit. If the United States does not set a fiscal course that is more sustainable, "the economic and financial effects would be severe," he said. If federal debt were to rise at the pace assumed in a plausible scenario analyzed by the Congressional Budget Office – such as extending most of the 2001 and 2003 tax cuts as spending rises at a steady rate – "diminishing confidence on the part of investors that deficits will be brought under control would likely lead to sharply rising interest rates on government debt and, potentially, to broader financial turmoil," Bernanke said. He added that the high borrowing rate would limit private investment and push up the nation’s foreign debt, hurting U.S. incomes and standards of living.

Why Does It Cost $230 Billion to Repeal Health Reform? – Last spring, the Congressional Budget Office estimated that the new health legislation would reduce the deficit by $143 billion over ten years. Yesterday, CBO estimated that repealing that legislation would increase the deficit by $230 billion over ten years. What gives? Why would it cost $87 billion more to repeal the law than was saved by enacting it? The main reason is that the 10-year budget window moved. The health debate started in 2009, so CBO used a 10-year window that ran from 2010 to 2019. It’s now 2011, so the repeal law will be judged against a 10-year window that runs from 2012 to 2021. . The second reason is that Congress decided to cut $15 billion from the subsidies created by the health legislation. Because those cuts reduced future subsidies, it is now $15 billion more expensive to repeal the overall health reform. The third reason is that the original health legislation wasn’t just about health policy. It also included fundamental reforms to the way the government subsidizes college loans. The repeal bill wouldn’t undo those changes, which resulted in budget savings of $19 billion over 2010 to 2019. Finally, the original health reform included about $7 billion in net budget costs during 2010 and 2011.

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