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from Counterparties:

Renters get owned

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In 2012, the federal government spent $240 billion on housing aid, according to a new study by the Center on Budget and Policy Priorities. Despite the fact that 65% of American households are homeowners, 75% of housing aid, or $180 billion, is set aside for homeowners. Not only is federal housing aid disproportionately targeted to homeowners, it’s disproportionately targeted to the wealthiest homeowners. Here’s the CBPP:

The bulk of homeownership expenditures go to the top fifth of households by income, who typically could afford to purchase a home without subsidies... More than half of federal housing spending for which income data are available benefits households with incomes above $100,000.  The 5 million households with incomes of $200,000 or more receive a larger share of such spending than the more than 20 million households with incomes of $20,000 or less.

At the same time as housing aid focuses on relatively well-off, home-owning Americans, more renters need aid. HUD data show that the number of renters with household incomes that are 30% or less of the local median income (that’s about $19,000 nationally) has risen from just over 8 million in 1999 to 11.8 million in 2011. A recent Harvard study pointed out that for these 11.8 million renters, there “just 6.9 million rentals affordable at that income cutoff—a shortfall of 4.9 million units”. Affordable, at 30% or less of the local median income, means $375 a month or less. The Harvard study also pointed out that the problem is getting worse: the number of extremely low-income renters is rising, and 2.6 million of the affordable rentals are being occupied by higher-income households.

from Breakingviews:

Lael Brainard isn’t the only Fed no-brainer

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By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Lael Brainard isn’t the only Federal Reserve no-brainer. As Undersecretary of the Treasury for International Affairs, she has acquitted herself nobly helping the world understand Washington’s profligate and quixotic ways. The Senate would be as daft to block her potential nomination to the Fed board of governors as it would Janet Yellen’s to the chairmanship. Filling other central banking vacancies quickly is the president’s other obvious task.

from Breakingviews:

France won’t meet its deficit target. No problem

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By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The French government will not meet its target of shrinking the budget deficit to 3 percent of GDP by 2015, according to the European Commission’s latest forecasts. Some voices will again call for the Commission to show some nerve, and dare to discipline one of the EU’s big powers for once. This won’t happen, for political reasons. But it shouldn’t - for economic ones. The only sensible response to the projected higher deficit should be: “so what?”

from Breakingviews:

Dear Mr President: Dodges for the U.S. debt ceiling

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By Swaha Pattanaik

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

With almost no official data to analyse, economists who follow the United States have little to discuss nowadays. Many of them are keeping busy thinking about how the U.S. government could delay default if lawmakers refuse to raise the nation’s maximum borrowing limit. Breakingviews imagines a letter from one of them to President Barack Obama.  

from Breakingviews:

An Abenomics lesson on politics for Uncle Sam

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Two years ago, there was no gloomier place than Japan. The country was recovering from the horrific devastation of the Fukushima earthquake and tsunami. Fearful of radiation poisoning, Tokyoites were purchasing Geiger counters and eschewing vegetables. The government was a thicket of finger-pointing, evasion and paralysis.

from Anatole Kaletsky:

Why markets don’t fear a government shutdown

Now that the worldwide panic over U.S. monetary policy has subsided, Washington is brewing another storm in a teacup: the budget and Obamacare battle that reaches a climax next Monday, followed by the debt limit vote required to prevent a mid-October Treasury default. The ultimate outcome of these crises is a foregone conclusion. As Senator John McCain told the press this week: “We will end up not shutting down the government and not de-funding Obamacare.” He could surely have added that a Treasury default is also out of the question.

But how exactly will Washington manage to dodge these bullets? As McCain added, “I don’t know what all the scenes are, [although] I’ve seen how this movie ends.” Markets understandably fear that all the plot twists leading up to a seemingly satisfactory resolution could produce an economic horror film, crushing business and consumer confidence, damaging economic growth and triggering a major sell-off in global stock markets. That, after all, is exactly what happened when the U.S. Treasury almost defaulted in July 2011.

from Breakingviews:

Fed politics may just preserve Fed’s independence

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By Daniel Indiviglio
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

America’s dysfunctional politics might just preserve the central bank’s independence - if inadvertently. President Barack Obama’s pick as the next chairman of the Federal Reserve, Larry Summers, was torpedoed by congressional opposition. That suggests an unwelcome increase of political meddling in the Fed’s affairs. But if the Fed’s internal choice, Janet Yellen, gets the job, isn’t the central bank’s sovereignty maintained? It’s a messy way to the right outcome.

from The Great Debate:

Fed chair fight raises crucial questions for Obama

The media circus over who will be the next chairman of the Federal Reserve is, on the one hand, an unwelcome spectacle at a time when uncertainty over the outlook for U.S. output and jobs growth is high. While previous leadership transitions have brought forth speculation about candidates, the current “contest” is odd. President Obama, after ungraciously commenting on Chairman Bernanke’s reappointment prospects, wisely stepped back for a period of reflection and decision about “what” he wants as well as “who” he wants.

On the other hand, this period also offers an opportunity for the White House to turn questions for the next chairman to consistent questions about the administration’s own economic policies. Four areas provide an immediate point for comparison.

from MacroScope:

Uncertain about the effects of uncertainty on jobs

Job number one at the Federal Reserve these days is to bring down high U.S. unemployment without sparking inflation. Job number two, it sometimes seems, is explaining just how unemployment got so high in the first place.

Two recent papers published by the San Francisco Fed offer what look like opposite takes on the topic.

from Breakingviews:

Does Ben Bernanke fancy himself a Jedi knight?

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By Daniel Indiviglio
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

When the Federal Reserve moves to execute a smooth monetary stimulus exit, there is no try. During a congressional hearing on Wednesday, Chairman Ben Bernanke implied that his most important duty is to ensure markets understand where monetary policy is heading. The past month has shown how hard that can be when investors hear what they want to hear. Unless Yoda he is, tapering and rate hikes are bound to cause painful lurches.

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