The UK Government is apparently about to launch a radical policy to further reduce its welfare bill. The newspapers this weekend stated that the Government is about to announce plans to force people who have been on benefits for some time to do community work of up to 30 hours a week or face losing their benefits for three months.
The details have yet to be revealed and apparently opposition party representatives are holding fire until then, but the Archbishop of Canterbury has criticized them, saying that they could push people into despair.
It has been argued that voluntary work in the community is a good way of regaining confidence and skills if you have been out of work for some time. It is, indeed, proposed by many experts who work with woman returners, those who have taken a few years out of the workplace to bring up children.
However, those who do so do it out of choice. Forcing people to do community work against their will may have the same effect as forcing people to get treatment for mental illness. Interestingly, reports suggest the UK Government is about to announce plans to allow prisoners with mental health problems who are not a risk to the public the option of treatment. They clearly recognize that enforced treatment will not work.
Moreover, the approach seems to be fairly punitive rather than encouraging, which does not suggest that it is aimed exactly at building confidence. What, for instance, is the difference between forced community work to get benefits and community sentences, which are a punishment for having broken the law?
The other problem is that if you force people to do unpaid work for 30 hours a week, what are they supposed to do with their children if they have them? Either they are supposed to pay for childcare [out of what money?] or will they have to resort to calling in favors from friends and family who are not working and who may be in similar situation to them or, in the case of family, not living in the immediate vicinity?
Continued on the next page
The Case-Shiller index of 10 major metropolitan areas fell 0.1% in August compared with July, while the 20-city index declined 0.2%. Adjusted for seasonal factors, the 10-area index fell 0.2%, while the 20-area declined 0.3%.
Prices had been climbing since April, boosted by the expiration of the government's first-time home-buyer tax credit that lured waves of people to purchase homes before it expired. Growth had slowed in recent months as its effects waned. Before prices had started rising, they had fallen sequentially for six straight months.
David M. Blitzer, chairman of S&P's index committee, called the latest figures "disappointing," noting that prices declined broadly. He added, "17 of the 20 cities and both composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows."
Is anyone surprised by this? The west coast still looks good, but the rest of the metro areas weakened. As I've mentioned, my own anecdotal evidence from the west coast bears this out. Even with interest rates at historic lows, folks are still worried about their jobs. And in many of the sinking areas there is still a big surplus of homes. As we know, the unemployment needle is stuck in high. Add to this the Mortgage Bankers Association prediction that home lending in 2011 will be the lowest since 1996, below $1 trillion. They expect interest rates to rise and limit the flood of refis.
The Consumer Confidence report also came out today basically unchanged and weak according to the Conference Board, even though it rose slightly. This is basically in line with the U. of Michigan report that came out last week that was a bit more negative. Even though retail sales have been creeping up, analysts say consumers are driven by sales. A Gallup survey on Christmas spending was "disappointing." Here is what they found:
Before we get back to the Fed, I think it is important that we are seeing a growing trend in regional and local banks to dump nonperforming assets. This is critical to any recovery. Banks have been reluctant to foreclose on commercial real estate (CRE) because of a lot of reasons, but mainly that it would negatively impact their Tier 1 capital. Recent reports shows that they are making money mainly by releasing nonperforming loan reserves, which were set aside to reserve against loan losses. This indicates that they are more aggressively dumping nonperforming loans. In the banks surveyed by American Banker, Fifth Third, BB&T Corp., SunTrust Banks Inc., First Horizon National Corp., Comerica, M&T Bank Corp., and TCF Financial Corp., all were selling off hundreds of millions of dollar of CRE and more aggressively foreclosing on residential loans.
Even the big banks, Citi and JP Morgan Chase are having problems. Citi just announced that they won't see daylight until sometime in 2012. And that bastion of capitalism, Goldman Sachs, had a bad quarter, down 40%. Don't shed a tear: bonuses so far are $13.1 billion.
Then there is inflation: flat (1.1% YoY). You would think this is a good thing, but the Fed wants to see it double.
The Federal Reserve Open Market Committee (FOMC), the policy committee which votes on Fed policy such as setting the Fed Funds rate and its Primary Open Market Operations (POMO) policy (QE), meets on November 2-3, and there has been a lot of speculation about how much they will eventually pump into the economy to stimulate price inflation.
By then they will have a good idea what the preliminary GDP numbers are going to be for Q3 (the preliminary numbers will be released on Friday). I expect GDP to be weaker in Q3 than in Q2. That is based on a lot of data that has been sinking in the charts. Readers will be familiar with the data.
I have said that the Fed will pump at least another $1 trillion to into the economy. That was based mostly on some Goldman Sachs research reported on Zero Hedge ($500 billion to $1 trillion). Now the esteemed Tyler Durden reported on Zero Hedge two days ago that GS's latest research has revised its estimate upward to $2 trillion of QE is needed to achieve the desired inflation goal of 2%+. But here is the kicker: GS says they really need about $4 trillion in QE to hit their target! They say the Fed won't do that of course.
The whole analysis is based on what is called the Taylor Rule. That rule is an econometric formula that determines what kind of stimulus is needed to achieve an inflation target. It is a complex rule based on neoclassical models of aggregate economic behavior, which in my opinion is a bit of witchcraft, but more importantly most economists at the Fed believe it and it will guide their actions. If you wish to know more about the Taylor Rule, here is a Wikipedia explanation, and if you really want to know why it doesn't work, see this analysis at the Mises Institute by Frank Shostak.
But GS believes it too:
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
The UK Government is apparently about to launch a radical policy to further reduce its welfare bill. The newspapers this weekend stated that the Government is about to announce plans to force people who have been on benefits for some time to do community work of up to 30 hours a week or face losing their benefits for three months.
The details have yet to be revealed and apparently opposition party representatives are holding fire until then, but the Archbishop of Canterbury has criticized them, saying that they could push people into despair.
It has been argued that voluntary work in the community is a good way of regaining confidence and skills if you have been out of work for some time. It is, indeed, proposed by many experts who work with woman returners, those who have taken a few years out of the workplace to bring up children.
However, those who do so do it out of choice. Forcing people to do community work against their will may have the same effect as forcing people to get treatment for mental illness. Interestingly, reports suggest the UK Government is about to announce plans to allow prisoners with mental health problems who are not a risk to the public the option of treatment. They clearly recognize that enforced treatment will not work.
Moreover, the approach seems to be fairly punitive rather than encouraging, which does not suggest that it is aimed exactly at building confidence. What, for instance, is the difference between forced community work to get benefits and community sentences, which are a punishment for having broken the law?
The other problem is that if you force people to do unpaid work for 30 hours a week, what are they supposed to do with their children if they have them? Either they are supposed to pay for childcare [out of what money?] or will they have to resort to calling in favors from friends and family who are not working and who may be in similar situation to them or, in the case of family, not living in the immediate vicinity?
Continued on the next page
The Case-Shiller index of 10 major metropolitan areas fell 0.1% in August compared with July, while the 20-city index declined 0.2%. Adjusted for seasonal factors, the 10-area index fell 0.2%, while the 20-area declined 0.3%.
Prices had been climbing since April, boosted by the expiration of the government's first-time home-buyer tax credit that lured waves of people to purchase homes before it expired. Growth had slowed in recent months as its effects waned. Before prices had started rising, they had fallen sequentially for six straight months.
David M. Blitzer, chairman of S&P's index committee, called the latest figures "disappointing," noting that prices declined broadly. He added, "17 of the 20 cities and both composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows."
Is anyone surprised by this? The west coast still looks good, but the rest of the metro areas weakened. As I've mentioned, my own anecdotal evidence from the west coast bears this out. Even with interest rates at historic lows, folks are still worried about their jobs. And in many of the sinking areas there is still a big surplus of homes. As we know, the unemployment needle is stuck in high. Add to this the Mortgage Bankers Association prediction that home lending in 2011 will be the lowest since 1996, below $1 trillion. They expect interest rates to rise and limit the flood of refis.
The Consumer Confidence report also came out today basically unchanged and weak according to the Conference Board, even though it rose slightly. This is basically in line with the U. of Michigan report that came out last week that was a bit more negative. Even though retail sales have been creeping up, analysts say consumers are driven by sales. A Gallup survey on Christmas spending was "disappointing." Here is what they found:
Before we get back to the Fed, I think it is important that we are seeing a growing trend in regional and local banks to dump nonperforming assets. This is critical to any recovery. Banks have been reluctant to foreclose on commercial real estate (CRE) because of a lot of reasons, but mainly that it would negatively impact their Tier 1 capital. Recent reports shows that they are making money mainly by releasing nonperforming loan reserves, which were set aside to reserve against loan losses. This indicates that they are more aggressively dumping nonperforming loans. In the banks surveyed by American Banker, Fifth Third, BB&T Corp., SunTrust Banks Inc., First Horizon National Corp., Comerica, M&T Bank Corp., and TCF Financial Corp., all were selling off hundreds of millions of dollar of CRE and more aggressively foreclosing on residential loans.
Even the big banks, Citi and JP Morgan Chase are having problems. Citi just announced that they won't see daylight until sometime in 2012. And that bastion of capitalism, Goldman Sachs, had a bad quarter, down 40%. Don't shed a tear: bonuses so far are $13.1 billion.
Then there is inflation: flat (1.1% YoY). You would think this is a good thing, but the Fed wants to see it double.
The Federal Reserve Open Market Committee (FOMC), the policy committee which votes on Fed policy such as setting the Fed Funds rate and its Primary Open Market Operations (POMO) policy (QE), meets on November 2-3, and there has been a lot of speculation about how much they will eventually pump into the economy to stimulate price inflation.
By then they will have a good idea what the preliminary GDP numbers are going to be for Q3 (the preliminary numbers will be released on Friday). I expect GDP to be weaker in Q3 than in Q2. That is based on a lot of data that has been sinking in the charts. Readers will be familiar with the data.
I have said that the Fed will pump at least another $1 trillion to into the economy. That was based mostly on some Goldman Sachs research reported on Zero Hedge ($500 billion to $1 trillion). Now the esteemed Tyler Durden reported on Zero Hedge two days ago that GS's latest research has revised its estimate upward to $2 trillion of QE is needed to achieve the desired inflation goal of 2%+. But here is the kicker: GS says they really need about $4 trillion in QE to hit their target! They say the Fed won't do that of course.
The whole analysis is based on what is called the Taylor Rule. That rule is an econometric formula that determines what kind of stimulus is needed to achieve an inflation target. It is a complex rule based on neoclassical models of aggregate economic behavior, which in my opinion is a bit of witchcraft, but more importantly most economists at the Fed believe it and it will guide their actions. If you wish to know more about the Taylor Rule, here is a Wikipedia explanation, and if you really want to know why it doesn't work, see this analysis at the Mises Institute by Frank Shostak.
But GS believes it too:
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
eric seiger
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
The UK Government is apparently about to launch a radical policy to further reduce its welfare bill. The newspapers this weekend stated that the Government is about to announce plans to force people who have been on benefits for some time to do community work of up to 30 hours a week or face losing their benefits for three months.
The details have yet to be revealed and apparently opposition party representatives are holding fire until then, but the Archbishop of Canterbury has criticized them, saying that they could push people into despair.
It has been argued that voluntary work in the community is a good way of regaining confidence and skills if you have been out of work for some time. It is, indeed, proposed by many experts who work with woman returners, those who have taken a few years out of the workplace to bring up children.
However, those who do so do it out of choice. Forcing people to do community work against their will may have the same effect as forcing people to get treatment for mental illness. Interestingly, reports suggest the UK Government is about to announce plans to allow prisoners with mental health problems who are not a risk to the public the option of treatment. They clearly recognize that enforced treatment will not work.
Moreover, the approach seems to be fairly punitive rather than encouraging, which does not suggest that it is aimed exactly at building confidence. What, for instance, is the difference between forced community work to get benefits and community sentences, which are a punishment for having broken the law?
The other problem is that if you force people to do unpaid work for 30 hours a week, what are they supposed to do with their children if they have them? Either they are supposed to pay for childcare [out of what money?] or will they have to resort to calling in favors from friends and family who are not working and who may be in similar situation to them or, in the case of family, not living in the immediate vicinity?
Continued on the next page
The Case-Shiller index of 10 major metropolitan areas fell 0.1% in August compared with July, while the 20-city index declined 0.2%. Adjusted for seasonal factors, the 10-area index fell 0.2%, while the 20-area declined 0.3%.
Prices had been climbing since April, boosted by the expiration of the government's first-time home-buyer tax credit that lured waves of people to purchase homes before it expired. Growth had slowed in recent months as its effects waned. Before prices had started rising, they had fallen sequentially for six straight months.
David M. Blitzer, chairman of S&P's index committee, called the latest figures "disappointing," noting that prices declined broadly. He added, "17 of the 20 cities and both composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows."
Is anyone surprised by this? The west coast still looks good, but the rest of the metro areas weakened. As I've mentioned, my own anecdotal evidence from the west coast bears this out. Even with interest rates at historic lows, folks are still worried about their jobs. And in many of the sinking areas there is still a big surplus of homes. As we know, the unemployment needle is stuck in high. Add to this the Mortgage Bankers Association prediction that home lending in 2011 will be the lowest since 1996, below $1 trillion. They expect interest rates to rise and limit the flood of refis.
The Consumer Confidence report also came out today basically unchanged and weak according to the Conference Board, even though it rose slightly. This is basically in line with the U. of Michigan report that came out last week that was a bit more negative. Even though retail sales have been creeping up, analysts say consumers are driven by sales. A Gallup survey on Christmas spending was "disappointing." Here is what they found:
Before we get back to the Fed, I think it is important that we are seeing a growing trend in regional and local banks to dump nonperforming assets. This is critical to any recovery. Banks have been reluctant to foreclose on commercial real estate (CRE) because of a lot of reasons, but mainly that it would negatively impact their Tier 1 capital. Recent reports shows that they are making money mainly by releasing nonperforming loan reserves, which were set aside to reserve against loan losses. This indicates that they are more aggressively dumping nonperforming loans. In the banks surveyed by American Banker, Fifth Third, BB&T Corp., SunTrust Banks Inc., First Horizon National Corp., Comerica, M&T Bank Corp., and TCF Financial Corp., all were selling off hundreds of millions of dollar of CRE and more aggressively foreclosing on residential loans.
Even the big banks, Citi and JP Morgan Chase are having problems. Citi just announced that they won't see daylight until sometime in 2012. And that bastion of capitalism, Goldman Sachs, had a bad quarter, down 40%. Don't shed a tear: bonuses so far are $13.1 billion.
Then there is inflation: flat (1.1% YoY). You would think this is a good thing, but the Fed wants to see it double.
The Federal Reserve Open Market Committee (FOMC), the policy committee which votes on Fed policy such as setting the Fed Funds rate and its Primary Open Market Operations (POMO) policy (QE), meets on November 2-3, and there has been a lot of speculation about how much they will eventually pump into the economy to stimulate price inflation.
By then they will have a good idea what the preliminary GDP numbers are going to be for Q3 (the preliminary numbers will be released on Friday). I expect GDP to be weaker in Q3 than in Q2. That is based on a lot of data that has been sinking in the charts. Readers will be familiar with the data.
I have said that the Fed will pump at least another $1 trillion to into the economy. That was based mostly on some Goldman Sachs research reported on Zero Hedge ($500 billion to $1 trillion). Now the esteemed Tyler Durden reported on Zero Hedge two days ago that GS's latest research has revised its estimate upward to $2 trillion of QE is needed to achieve the desired inflation goal of 2%+. But here is the kicker: GS says they really need about $4 trillion in QE to hit their target! They say the Fed won't do that of course.
The whole analysis is based on what is called the Taylor Rule. That rule is an econometric formula that determines what kind of stimulus is needed to achieve an inflation target. It is a complex rule based on neoclassical models of aggregate economic behavior, which in my opinion is a bit of witchcraft, but more importantly most economists at the Fed believe it and it will guide their actions. If you wish to know more about the Taylor Rule, here is a Wikipedia explanation, and if you really want to know why it doesn't work, see this analysis at the Mises Institute by Frank Shostak.
But GS believes it too:
eric seiger
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger eric seiger
eric seiger
eric seiger
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
Consumers, the life's blood of the American economy, have shown a growing willingness to spend, but this might play havoc with the Federal Reserve's bold plans to revive the recovery.
He has broken the bones of teammates and foes alike, rent Olympic nets asunder, and piled up goals at a prodigious rate over the last few years.
Pulse News has announced that they're making their application free to download on the Android market following a desire to pull in a bigger userbase. They'll.
eric seiger
