April sales pale, new direction for France under Hollande, Greece in a mess, Spain in trouble, Fed working beyond public policy, but not aware of its impacts beyond US borders, former presidents expenses paid by taxpayers, financial headaches for California.
Consumer credit in the US rose in March by the most in over ten years by $21.4 billion from 2001’s $2.54 trillion total.
The rate on student loans is set to double on January 1st, if Congress refuses to act – that would cause each loan to increase in payout by $1,000 per year.
First quarter GM sales rose 2.7% aided by easy credit terms.
The economist, John Williams, says U3 dropped to 8.1%, but was discouraged only because discouraged workers stopped looking for work and the government’s database reflected that. Unemployment activity went up according to Challenger, Gray and Christmas. It looks like some 40,000 more workers are going to get laid off. Even with mortgage rates below 4% in the last two years alone, one million homeowners bought houses, lost money and are under water.
April retail sales are the worst since 2009 even overall car sales are only up 2%. It won’t be long before the Fed stops propping up the banks. QE 3 is on the way.
The victory and the presidential election by Hollande, the Presidential socialist candidate, was not unexpected. It also looks like the parliamentary elections in June will tilt further to the left.
The political situation in Greece is so convoluted that we see no clear-cut combination of winners and predicted this some time ago. If Samaris cannot put together a government then Alexis Tsipris will then get a three-day opportunity to do so. Mrs. Merkel current leader of the CDU in Germany won 31% of the vote, in Scheleswig-Holstein, the worst showing in 50 years, as we predicted. CDU saw its votes fall by almost 50%. Politically this is a difficult position to be in. Incidentally, that is Mrs. Merkel’s home state. Europe’s banks parked $1.2 trillion at their central banks - that is up 12% or $128 billion.
In Greece there will be no bail out, as we predicted. Spain as you can tell by the headlines is what we’ve said it has been for a long time, a dog’s breakfast.
The U.S. Federal Reserve's new inflation target is an example of the kind of steps policymakers globally should take to bolster cross-border coordination and stabilize the economy, an influential Fed official said on Tuesday.
William Dudley, president of the New York Federal Reserve Bank, did not address U.S. monetary policy beyond saying that the 2 percent inflation target, announced in January, shows the Fed will only take action such as purchasing bonds as long as it is consistent with its policy goals.
Still, macroeconomic policies are often too narrow in their focus and can ignore effects beyond national borders, such as on the trade balances of foreign countries, Dudley said in remarks prepared for delivery to a Swiss National Bank-International Monetary Fund conference in Zurich.
He pointed to the inflation target as a positive step toward transparency that can help policymakers outside the United States anticipate the economic and financial fallout in such an interconnected world.
"In doing so, the Fed is also continuing to underscore that actions such as our purchase of U.S. government securities are driven exclusively by our monetary policy goals, and that these policy actions will not continue beyond the moment they become inconsistent with our dual mandate objectives," Dudley said.
"In general, policymakers should strive to ensure that we have both fiscal and monetary policy frameworks that are transparent and viewed as credible and durable."
Dudley is a close ally of Fed Chairman Ben Bernanke and, as head of the Fed's New York regional bank, has a permanent vote on policy actions. He said better cross-border coordination, in general, is warranted.
"The issue for policymakers is whether the policies we put in place will allow adjustments to occur in a way that is consistent with a stable global economy, high levels of employment, and low inflation," Dudley said.
"In macroeconomic terms, the prospects for achieving a more cooperative solution can be enhanced by policy transparency so that the policy goals and reaction function of each authority can be well understood by others."
As steward of the world's largest economy, the Fed's policy actions typically have larger impacts relative to the actions of other central banks.
The Fed's ultra-low interest rates since late 2008 have kept pressure on the U.S. dollar, the world's reserve currency, often hurting non-U.S. exporters. The Fed expects to keep rates "exceptionally low" through late 2014.
In another effort to battle the recession, the Fed's purchases of some $2.3 trillion in long-term securities in the last few years have helped keep U.S. Treasury yields low.
The Group of 20, for instance, has long discussed better coordination in dealing with global trade imbalances. However, national central banks still largely conduct policy independently.
Taxpayers picked up the tab for Bill Clinton’s $579,000 office rent and George W. Bush’s $80,000 phone bill in 2010, according to a report Tuesday that notes Americans ponied up more than $3 million of expenses for the country’s four surviving former presidents.
George W. Bush may have raked in $15 million from speeches alone in 2010, but he still expensed $1.3 million to taxpayers, including $80,000 in phone bills, ABC News’s Jonathan Karl reported in “Spinners and Winners.” And Bill Clinton also made it big on the speech circuit — bringing in $10 million — and billed more than $1 million in expenses to taxpayers. Jimmy Carter, meanwhile, received over half a million in expenses, including $15,000 for postage, and taxpayers also paid $830,000 for George H.W. Bush.
Rep. Jason Chaffetz (R-Utah) is proposing a bill to end taxpayers’ funding expenses for any ex-president who brings in more than $400,000 per year. Under his proposal, presidents would receive a $200,000 annual pension and $200,000 in annual expenses if they make less than that combined, ABC News reported.
“Look, presidents should get a compensation package. They should get a retirement, and they should get some expenses,” Chaffetz told Karl. “But if they’re going to go out on the trail, and they’re going to give speeches, write books and make money, then there comes a point where you say, OK, the taxpayer shouldn’t be responsible for also footing the bill for the office expenses, and the telephone, and paper, and the personnel to man those offices.”
“Does President Bush really need $80,000 a year for his telephones?” Chaffetz asked. “That’s a lot of phones and a lot of phone bills.”
ABC contacted the offices of all the former presidents and reported that none would comment, but did point out that Congress is responsible for stopping such payments. George W. Bush’s spokesperson confirmed to POLITICO it would not be commenting on the report.
Fears of a slowdown in European spending on American products struck US retailers, with shares in watchmaker Fossil plummeting nearly 40 per cent.
Overall, the S&P 500 consumer discretionary index declined 1.3 per cent and was the worst performing sector group on the benchmark US index.
The S&P 500 lost as much as 1.5 per cent, but made strong gains as the session drew to a close. The benchmark US index finished 0.4 per cent lower to 1,363.73 on Tuesday.
International designer and retailer Fossil warned that its European business had begun to slump as the first quarter came to a close in March.
The company blamed the slowdown for a reduction in its full-year earnings forecasts, which it said at best would be $5.33 a share, down from previous guidance of $5.50.
Shares in Fossil plunged 37.6 per cent to $78.52, even as the company said net income rose 4.1 per cent in its first quarter to $58.1m, or earnings of 93 cents a share.
Oliver Chen, analyst at Citigroup, said: “We believe negative news in Europe is impacting discretionary consumer spending as Fossil reduced organic European growth guidance to positive low to mid-single digits from positive mid-teens previously.”
The sell-off in Fossil also sparked a drop in a range of other companies that may be facing a similar slowdown in their European business.
Freddie Mac is poised to appoint Donald Layton, a former JPMorgan Chase banker, as its next chief executive, people familiar with the matter said.
Mr. Layton, a member of AIG’s board and a former chief executive of E-Trade Financial, served as a banker for more than 20 years at JPMorgan before its merger with Bank One. Prior to his retirement, he led the bank’s capital markets activities.
In 2010, after just a few years at E-Trade, the broker, the US Treasury picked Mr Layton to serve as a director at bailed-out insurer AIG.
In taking over Freddie Mac, Mr. Layton will assume the reins of a government-controlled mortgage agency with $2.1tn in assets that will have had three chief executives since its taxpayer rescue in 2008.
Freddie Mac owes US taxpayers $72.3bn stemming from its bailout and faces required annual dividend payments of $7.2bn. The company has been beset with defections from its middle and upper management ranks, faces limits on remuneration and admits it is unlikely to generate sufficient profits to cover the required dividends.
The Wall Street Journal first reported that Freddie Mac was preparing to pick Mr Layton as its next chief executive.
The role of the state-backed US mortgage originators has come under the microscope.
Freddie Mac officials declined to comment. The Federal Housing Finance Agency, its regulator, also declined to comment. A representative for Mr Layton said he was unavailable to comment.
Mr. Layton’s salary will be capped as a result of changes enacted by the FHFA in response to criticism in Congress of Freddie Mac, and its sister company, Fannie Mae, for paying executives salaries and bonuses running into the millions.
Former Freddie Mac and Fannie Mae officials fear that the lower salaries will drive away top talent and stymie the companies in their search for replacements. Both have warned that turnover among their executives risks harming operations.
Mr. Layton, who learnt to program computers when he was 16, will take over a company facing significant technological challenges. Its regulator plans to force company executives to more closely align its products with Fannie Mae and to update its technology systems, which have come under criticism.
More than half of U.S. states expect to end their budget years with cash surpluses as a recovery in the economy buoys tax collections, a sign of easing pressure in statehouses across the country. Twenty-nine state governments, including New Jersey, Indiana and Arizona, anticipate ending their fiscal years with more money on hand than forecast when they put together their annual budgets, according to a survey…by the … National Conference of State Legislatures.
The legislative analyst’s office has a new number that is adding to California’s financial headache: $3 billion. That’s the total amount that tax revenue has lagged behind goals set by Gov. Jerry Brown’s administration in the current fiscal year… Much of that gap comes from a disappointing April, the most important month for income taxes. Income taxes were $2.07 billion short of the $9.43-billion goal, and corporate taxes fell $143 million short of an expected $1.53 billion
The leaders of California's three higher education systems warned… that more budget cuts will hurt the state’s economic recovery. The heads of the University of California, California State University and California Community Colleges spent the day lobbying state lawmakers and the governor's office to make higher education a priority as they prepare to put together a new spending plan for 2012-13. Frustration over rising tuition and fewer courses have been playing out across California's college campuses. At the same time, administrators have been criticized for handing out handsome compensation packages.