Thought Leadership from Mortgage Cadence CEO Michael Detwiler
First, Nixon did not abolish the gold standard as it had existed from the founding of the country until the 1930s; he abolished the gold exchange standard which had existed since the end of the Second World War. This system did not allow ordinary American citizens to own gold coins, bullion, or certificates (a freedom that was not restored until 1974 by President Ford), or to redeem Federal Reserve notes in gold. That privilege was reserved for foreign holders of U.S. dollars only. This elitist “gold standard” was similar to that imposed on the peoples of Europe after World War I.Scaliger points out that what he suggests would “require reforming several centuries’ worth of banking laws.”
That acknowledgement, namely, that growth is so sluggish, the economy so moribond and unemployment so chronically high, sent money flowing into BOTH stocks and bonds at the same time. How's that for a neat trick by the boyz at the Fed? Here is the deal - the FOMC is attempting to drive money out of bonds and INTO equities based on the fact that they have guaranteed practically no return as far as yields go on short term Treasuries for at least two years.
Other options are rate caps — in which the Fed promises to buy as many securities as needed to hit a longer-term target — a price level or nominal gross domestic product target — or interventions in nongovernment securities markets (which would need congressional funding). "Of these, conventional QE is very likely the option with the lowest hurdle and the first to be deployed," Hatzius concluded.After the S&P downgrade and the massive selloff that started this week, Gold has skyrocketed in price as investors seek safe havens. The last time I checked it was at $1,800 per ounce.
The one thing that has helped to keep some of the population from becoming completely depressed has been the fact that they could look at their 401K programs and still see that those were in the plus column for the year. In other words, while the rest of the world was seemingly going to economic hell, at least they were making a bit of money on their retirement accounts.It was clear then that the federal government's actions were serving to prop up the stock market, which resulted in increased demand and higher prices, pushing 401(k) values higher. The fear was that it would end.
S&P 500 futures SPc1 fell 28.2 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures DJc1 lost 248 points and Nasdaq 100 futures NDc1 dropped 48.75 points.
Personal income increased $18.7 billion, or 0.1 percent, and disposable personal income (DPI) increased $16.3 billion, or 0.1 percent, in June, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) decreased $21.9 billion, or 0.2 percent. In May, personal income increased $23.2 billion, or 0.2 percent, DPI increased $17.6 billion, or 0.2 percent, and PCE increased $5.9 billion, or 0.1 percent, based on revised estimates.Real disposable income increased 0.3 percent in June, in contrast to a decrease of less than 0.1 percent in May, according to the Bureau.
Private wage and salary disbursements decreased $2.2 billion in June, in contrast to an increase of $15.0 billion in May. Goods-producing industries' payrolls decreased $1.8 billion, in contrast to an increase of $4.8 billion; manufacturing payrolls decreased $2.1 billion, in contrast to an increase of $4.1 billion. Services-producing industries' payrolls decreased $0.3 billion, in contrast to an increase of $10.1 billion. Government wage and salary disbursements decreased $0.4 billion, compared with a decrease of $0.5 billion.How can Americans have more money if the private companies that employ them are paying out less? There is only one way. Americans are getting their money from the government, in the form of aid, benefits and unemployment.
“The French and German banks account for roughly half of all European banks’ exposure to those euro-zone countries, meaning that the combined exposure of European banks to those four nations is over $1.8 trillion, nearly half of which is with Spain alone. Thus, in the eyes of the elites and the institutions which serve them (such as the EU and IMF), a bailout is necessary because if Greece were to default on its debt, ‘investors may question whether French and German banks could withstand the potential losses, sparking a panic that could reverberate throughout the financial system.’”But just because they’re having a hard time, too, don’t expect the Europeans to feel like we’re all in the same boat. In fact, the vast majority of them already think we’re out of the boat, freezing to death like an ill-fated Titanic passenger. A poll released by Pew Global Attitudes reported earlier this month that the majority of people in 15 of 22 countries surveyed believe that the days of American hegemony are numbered. According to one website that reported on the poll’s results, “The sentiment was most prevalent in Western Europe, where longtime allies took a very dim view of America’s superpower status.”
First, there were only 18,000 jobs created in June, the lowest since September 2010. While private employment rose by 57,000, government workers dropped by 39,000, continuing a trend as governments at all levels work to cut their budgets. Long-time readers know I think it is important to look at the direction of the revisions, and we got no help. May was revised down by 29,000 jobs and April a further down 15,000.More jobs is the key to the recovery. I’ll give you my thoughts on the key to more jobs in a future post.
“The Federal Reserve's massive stimulus program had little impact on the U.S. economy besides weakening the dollar and helping U.S. exports, Federal Reserve Governor Alan Greenspan told CNBC Thursday.”According to Greenspan, the $2 trillion in quantative easing over the past two years had done little to loosen credit and boost the economy.
“Beginning January 1, 2013, ObamaCare imposes a 3.8% Medicare tax on unearned income, including the sale of single family homes, townhouses, co-ops, condominiums, and even rental income.”According to the GOP, the new ObamaCare tax is the first time the government will apply a 3.8 percent tax on unearned income.
The one thing that has helped to keep some of the population from becoming completely depressed has been the fact that they could look at their 401K programs and still see that those were in the plus column for the year. In other words, while the rest of the world was seemingly going to economic hell, at least they were making a bit of money on their retirement accounts.As Norcini points out, it will be very challenging for the government to take this away and without QE, the markets are likely to revolt.
“The brief recovery in prices in 2009, spurred by government aid to first-time buyers, has now been entirely snuffed out, and the average American home now costs 33 per cent less than it did at the peak of the housing bubble in 2007. The peak-to-trough fall in house prices in the 1930s Depression was 31 per cent – and prices took 19 years to recover after that downturn.”According to the Case-Shiller National House Price Index, we’re back to house prices of the 2002 levels. With no relief in sight.
“Bankers say the bureau is empowered to demand any information it wants from any bank at any time and in any form. That means spending more time and money filing reports and huddling with regulators vs. serving customers.Paul was kind enough to address the Mortgage Cadence team and our customers in Vail at our recent Aspire Users Conference. I think he did a great job and the many comments we received from attendees afterward indicate they agree with me. He has some great ideas and I’m happy to support him.
Banks will be subject to some 20 new reporting mandates under the Home Mortgage Disclosure Act, including data fields on loan pricing designed to help regulators police "predatory lending."
Reports are that the $16 billion, 30 year bond auction, generated poor demand. That should not come as much of a surprise after the big rally has dropped yields down to levels that no one in their right mind would want to lock up capital at for 30 years.No one wants US debt….gee, I wonder why.
Bonds dropped nearly a full point on the auction news but are once again finding buying at a critical technical juncture. No surprise there also in this heavily rigged market.
Existing home sales rose 3.7% from February to a seasonally adjusted annual rate of 5.1 million, the National Association of Realtors reported Wednesday. That marked the sixth monthly rise for existing home sales in the past eight months. "We're clearly on a recovery path," says Lawrence Yun, NAR chief economist.If the real estate crash taught us anything, it was to scrutinize the source of the statistic as carefully as the data itself. We all remember the reports NAR was putting out just prior to the crash. Perhaps those that sell homes can be forgiven for attempting to convince buyers that a recovery is imminent, but they should not be trusted.
