Free Lunch? Nope - Free Loans? Yep

The Obama administration will offer $1 billion in zero-interest loans to help homeowners who’ve lost income avoid foreclosure as part of $3 billion in additional aid targeting economically distressed areas. Under the new $1 billion program, the Department of Housing and Urban Development will offer loans of up to $50,000 to borrowers “in hard hit local areas” to make mortgage, tax and insurance payments for as long as two years, HUD said today in a statement. The Treasury Department will also offer as much as $2 billion in aid under an existing program for 17 states and the District of Columbia, according to the news release. The initiatives “will ultimately impact a broad group of struggling borrowers across the country and in doing so further contribute to the administration’s efforts to stabilize housing markets and communities,” Bill Apgar, HUD’s senior adviser for mortgage finance, said in the statement.

Unemployment, following the worst housing crash since the Great Depression, is helping accelerate foreclosures. A record 269,962 U.S. homes were seized in the second quarter, according to RealtyTrac Inc. Foreclosures probably will top 1 million this year, the Irvine, California-based data company said in a July 15 report. Read more here:

Free Lunch? Nope - Free Loans? Yep

For Retirees, Savers, Pension Funds - Assault Continues

Frozen Landscape

Treasuries rose, pushing the two- year note yield to a record low, a day after the Federal Reserve reversed plans to exit from aggressive monetary stimulus. Benchmark 10-year notes gained for a second day after the central bank decided to reinvest maturing agency and mortgage- backed securities in Treasuries to support an economic recovery that the Fed said “has slowed.” The government is scheduled to auction $24 billion of 10-year notes today, the second of three sales this week totaling $74 billion. “This is a bullish backdrop for Treasuries,” said Nick Stamenkovic, a fixed-income strategist in Edinburgh at RIA Capital Markets Ltd., a broker for banks. “Growth is going to be sluggish, and inflation is not going to be a concern.” The yield on the two-year note fell 2 basis points, or 0.02 percentage point, to 0.50 percent at 7:15 a.m. in New York, according to BGCantor Market Data. The price of the 0.625 percent security maturing in July 2012 gained 1/32, or 31 cents $1,000 face amount, to 100 1/4. The yield dropped earlier to 0.4892 percent, the lowest on record. Read more here:

For Retirees, Savers, Pension Funds - Assault Continues

Borrow From Beijing - Pay Paul

Beijing

Nearly $190 million is headed to New Mexico. The U.S. House of Representatives on Tuesday passed a $26 billion bill that includes extra health care funding — a projected $126 million — and additional education money — $65 million — for New Mexico at a time when many say the state is in desperate need of a cash infusion. All that’s left is for President Obama to sign the bill to make it law. State Rep. Danice Picraux, D-Albuquerque, cheered the news Tuesday. “We can keep paying our teachers, keep classrooms sizes low,” Picraux said of the extra dollars headed New Mexico’s way. “In health care, we need more money.” State House Minority Whip, Rep. Keith Gardner, R-Roswell, took a dimmer view of the cash infusion. “It’s just another Band-Aid on a gushing wound,” Gardner said. “We need surgery. Instead of making spending to equate what our revenue is, we prolong the inevitable, and that’s cutting. ”The additional federal money comes to New Mexico at a time when the state’s revenues aren’t keeping pace with expenses. State officials already have projected a sizable budget gap for the fiscal year that started July 1. Read more here:

Borrow From Beijing - Pay Paul

The Doom Loop of Quantitative Easing

Ben Bernanke

Fed Reverses Exit Plans, Sets $2 Trillion Floor for Holdings - The Federal Reserve reversed plans to exit from aggressive monetary stimulus and decided to keep its bond holdings level to support an economic recovery it described as weaker than anticipated. Central bankers meeting yesterday adopted a $2.05 trillion floor for their securities portfolio, pivoting toward a quantitative target for monetary policy. Treasuries surged and stocks pared losses as some investors judged the decision opened the door to a resumption of large-scale asset purchases. “The Fed is cognizant the recovery has lost some momentum and it is still willing to intervene,” said Paul Ballew, a former Fed economist and a senior vice president at Nationwide Mutual Insurance Co. in Columbus, Ohio. “We always thought the exit strategy would be challenging. If you’re at the Fed, it’s proven to be more problematic than what you thought.” Read more here:

The Doom Loop of Quantitative Easing

Dollar Surges Versus Euro on Global Slowdown Concern

500 Euro Bill

The dollar surged the most in three weeks against the euro after the Federal Reserve yesterday said economic growth had slowed and the recovery was weaker than it had anticipated, spurring demand for safer assets. The yen strengthened past 85 per dollar for the first time since Nov. 27 after reports showed U.K. consumer confidence dropped and China said industrial output grew at the slowest pace in 11 months. The pound fell for the third day against the dollar before a central-bank report that economists say will reduce 2011 growth forecasts. “The fact that the Fed is now acknowledging slower growth than expected in the near term has hit risk assets,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “That’s bringing back safe haven flows into the dollar.” Read more here:

Dollar Surges Versus Euro on Global Slowdown Concern

Amity Shlaes - Lousy Lawmakers

Amity Shlaes

You can have low taxes, or you can have an economic recovery, but you can’t have both. That’s the message the administration is hammering this summer. Democrats argue in particular that extending the George W. Bush rate cuts on people in the top tax brackets will damage the budget to such an extent that our economy will suffer.

Tim Geithner

Treasury Secretary Timothy Geithner, for example, said that sustaining the Bush tax cuts for the wealthiest Americans would “hurt economic recovery by undermining confidence that we are prepared to make a commitment today to bring down our future deficits.” Some centrists, and even a few conservatives, are talking a similar line. Former Federal Reserve Chairman Alan Greenspan went further recently, saying all the Bush tax cuts, even those for lower earners, should expire as scheduled at year’s end, since it is wrong to live “on borrowed money.”
The argument that we have to choose between keeping the Bush rates on the one hand and achieve an economic recovery on the other is hypocritical. You know that’s true because our leaders aren’t alleging the same trade-off when it comes to federal expenditures.
The tax cuts Geithner would like to see expire, those for top earners, cost taxpayers by his own estimate $700 billion over 10 years. Plenty of other items in the federal budget cost $700 billion over 10 years, or a much shorter period. Yet you don’t hear the administration positing apocalyptically that those outlays will darken the future. Only lower tax rates can hurt us, Democrats want us to believe. Read more here:

Amity Shlaes - Lousy Lawmakers

Walter Williams - Cut Handouts

Walter Williams

Because of failure to heed the limitations of the U.S. Constitution, which has produced runaway federal spending, our nation sits on the precipice of disaster. Former Senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton, co-chairmen of President Obama's debt and deficit commission, in a Washington Post article "Obama's Debt Commission Warns of Fiscal 'Cancer'" (July 12, 2010) said that "(A)t present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries." The commission added the current budget trend is a disaster "that will destroy the country from within" unless checked by tough action in Washington. The tough action required is spending cuts in programs, including the so-called nondiscretionary, eating most of the federal revenues. Read more here:

Walter Williams - Cut Handouts

Obama's Bennet Beats Clinton's Romanoff

DENVER - Score one for the guy in the White House. President Obama's candidate, Sen. Michael Bennet, fended off a challenge from Bill Clinton favorite Andrew Romanoff on Tuesday to win the Colorado Democratic Senate primary and avoid the fate of other endangered incumbents this primary season. Mr. Romanoff, a former state House speaker, who was endorsed by former President Clinton but ran as the anti-establishment candidate, conceded the race about an hour after the polls closed in Colorado. With 73 percent of the vote counted, Mr. Bennet led 54.2 percent to Mr. Romanoff's 45.7 percent. Read more here:

Obama's Bennet Beats Clinton's Romanoff

Progressive Magazine Blasts Robert Gibbs

Robert Gibbs

Boy, are they thin-skinned over at the White House! And rather than aim their ire at the Republicans, who want Obama to fail, they’re going after their progressive critics, who want him to succeed. This perverse defensiveness first surfaced in February when Chief of Staff Rahm Emanuel called some progressives  retarded” for considering running attack ads against conservative Democrats who were dragging their feet on health care reform. Now, White House Press Secretary Robert Gibbs has let loose, too. In an interview with the Hill, Gibbs went after what he called “the professional left.” “They will be satisfied when we have Canadian health care and we’ve eliminated the Pentagon. That’s not reality,” he said, adding: “They wouldn’t be satisfied if Dennis Kucinich was president.” Well, as a member of the “professional left,” I’d be delighted to have Dennis Kucinich president. But it’s not the role of progressives to be “satisfied” with any president. It’s the role of progressives to stand up for principles. Read more here:

Progressive Magazine Blasts Robert Gibbs

Say It Ain't So

Al Gore

It hasn't been the coolest summer on record, but it's been close, forecasters say. The average temperature in July was 79 degrees, five degrees below normal, and the first eight days of this month also have been five to six degrees below normal, weather experts said. That could put Southern California on track for a near-record-low summer, but it's still too early to say, according to weather experts. The Los Angeles area, in fact, has had below-normal temperatures every month since April. Read more here:

Say It Ain't So