The Mortgage Morass

Posted by , 15th October 2010

HomePaul Krugman
10/15/2010

The latest in the mortgage foreclosure crisis is that many servicers, or companies that collect payments on behalf of mortgage owners, who have been foreclosing on many mortgages and seizing homes have been ignoring the law and doing so without required documentation and in some cases seizing homes that were not in default. Significant numbers of borrowers are being defrauded by these trusts. Krugman says this could create another financial morass. The Obama administration’s response has been to oppose any action that would upset the banks, while Republicans have asked Americans to trust the banks. Krugman says this is unacceptable. Where no clear property rights exist, it’s the government’s job to create them because what we are doing now is not working.

Krugman is a New York Times columnist.

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Sumo wrestling with federal deficits

Posted by , 7th October 2010

Jeb HensarlingGeorge F. Will
10/7/2010

Representative Jeb Hensarling is serving on Obama’s Commission on Fiscal Responsibility and Reform, and its 18 members are approaching their fiscal goals rather like Sumo wrestlers: with a lot of mutual staring but no contact as yet. Budget-balancing (excluding debt service) and finding ways to “meaningfully improve the long-run fiscal outlook” are the commission’s main goals. But Hensarling says this creates a harmful distraction from the real problem: long-term debt incurred from Social Security, Medicaid, and Medicare. A record number of American citizens are concerned about deficits. Thus, when the commission gives its report in December, Congress will be populated with members potentially emboldened–but not legitimized–by their lack of political future.

Will is a twice-weekly columnist for The Post, writing about foreign and domestic politics and policy.

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Credit for the Recovery

Posted by , 6th October 2010

Pile of moneyDaniel Gross
10/6/2010

Despite stories about consumer savings on the rise, the nation’s total indebtedness has also continued to rise, as have some measures of consumer debt. Gross points out that any decline in personal debt is “driven less by Americans giving up on credit cards than on credit card issuers giving up on Americans.” Lenders are writing off some debt as uncollectable. Still, the recovery is maturing, powered not merely by government stimulus and business investment, but also by increasing total consumer credit. This will be the root of our short-term salvation from the recession.

Gross, author of  “Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation”, is the economics editor and columnist at Yahoo! Finance.

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The Bill Gates Income Tax

Posted by , 5th October 2010

Bill GatesArthur Laffer
10/5/2010

If voters in Washington state pass Initiative 1098 (creating a new income tax on high-income earners), it will go from being one of the fastest-growing in the country to one of the slowest-growing. Those who want to punish the rich for their success should bear in mind that states with the highest tax rates and those that have introduced state income taxes have seen standards of living substantially underperform compared to their no-tax counterparts. If Washington’s most famous billionaires are really worried about their state’s finances, they’d write personal checks to the government and leave everyone else alone.

Laffer is the chairman of Laffer Associates and co-author of “Return to Prosperity: How America Can Regain Its Economic Superpower Status” (Threshold, 2010).

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The Trade and Tax Doomsday Clocks

Posted by , 4th October 2010

The Great DepressionDonald Luskin
10/4/2010

Thankfully, we’re not repeating all the mistakes of 1937, but Congress and the Obama administration are flirting dangerously with one of them by failing to extend the expiring low tax rates for all Americans. What’s worse, we’re close to repeating the mother of all policy errors, the one made not in 1937 but in 1930, the one that started the Great Depression. We’re on track to resurrect the 1930 Smoot-Hawley Tariff Act. Once the election has passed, Luskin hopes cooler heads will prevail on both sides of the aisle. But sometimes in the heat of politics cooler heads do not prevail. If that happens now with issues as critical as those we face, then the economy and the stock market will be doomed to repeat the tragedies of the 1930s.

Luskin is chief investment officer at Trend Macrolytics LLC.

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The Pelosi-Reid Deficits

Posted by , 29th September 2010

Pelosi-ReidSteve Moore
9/29/2010

Blame Congress, not presidents Bush or Obama, for our perilous fiscal situation, says Moore. A strong case can be made that the people most responsible for the gigantic deficits we face today are the House and Senate Majority Leaders Pelosi and Reid. Congress controls the purse strings. When Pelosi and Reid rose to their present jobs in January 2007, the deficit was $161 billion. It had been on a downward trajectory from $413 billion in 2004. Three years later, the Pelosi-Reid Congress had added $1.2 trillion to the deficit. Of course, Bush sponsored or signed many of these deficit-raising bills, such as the bank bailouts and effective tax rebates of 2008. But the Democratic Congress passed them.

Moore is senior economics writer for The Wall Street Journal editorial page.

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What’s the Matter With Wall Street?

Posted by , 28th September 2010

wall-street-signAndy Kessler
9/28/2010

The financial industry has certainly seen slow periods of stock and bond trading and sparse banking before, especially after the dot-com bust. But banks made up for it by inventing high-margin products like collateralized debt obligations, says Kessler. Now it’s hard to imagine mortgage-backed derivatives will add much to Wall Street’s bottom line for many years. There are too many traders, bankers, and salesmen to support the new level of business. Rising interest rates will be the cure for what ails the US economy by driving the dollar higher, commodities back toward their extraction values, and encouraging commitments of capital based on market mechanisms, not the wishes of the government and the Federal Reserve. But that will not be good news for Wall Street, which doesn’t thrive in a rising interest-rate environment.

Kessler, a former hedge fund manager, is the author most recently of “Grumby” (Vigilante, 2010).

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When all else fails, hate Washington

Posted by , 28th September 2010

Washington DCMichael Gerson
9/28/2010

The liberal establishment claims it is anti-Washington, weary of a city that betrays its idealistic aspirations. Yet this same establishment is expanding the role of the very government it claims to dislike, turning to the supposedly-hated Washington for answers to multiple social issues. Demonizing Washington eliminates the need for the administration to explain itself and make concessions, and the American people are sensing contempt from those in leadership who see government as superior to the people. Both conservatives and liberals engage in ironic inconsistencies, but ultimately, insulting the American people is not a fruitful political strategy.

Gerson writes about politics, global health and development, religion and foreign policy.

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Tom Joad Gave Up

Posted by , 28th September 2010

CaliforniaDavid Brooks
9/28/2010

Brooks looks back on what good government looked like in California, where from 1911 to the 1960s its governors were pro-market and pro-business progressive reformers. In addition to their accomplishments in education, business, and public works, they focused on the middle class to build prosperity. But the model is abandoned, and Brooks says California is now in crisis. He cites declines in infrastructure spending and the interests of the coastal affluent trumping those of the inland middle class, to name a few. The solution is a return to the pro-market progressivism that built modern California with a focus on supporting immigrant entrepreneurs, averting state bankruptcy, and unleashing the state’s industrial and agricultural base.

Brooks is a New York Times columnist.

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