Links: 2013-10-09
“If Janet Yellen is sworn in next February as the 15th leader of the Federal Reserve, she’ll owe Lawrence Summers a thank-you card.
Until a few months ago, Ms. Yellen had been widely seen as President Barack Obama’s no-brainer choice to lead the central bank.”
Twitter / simonhinrichsen: How are US Treasuries used …
This is important because Treasuries use as collateral for repo and futures markets is where the financial dislocation is going to come if the US defaults.
“How are US Treasuries used as collateral, really? This is from JP Morgan. “
Congress’ Job Approval Falls to 11% Amid Gov’t Shutdown
But “Americans’ approval of their own representative averages 44%”. This is the key to why a shutdown happens. Congress knows people are not rational in how they perceive these issues and this vast dichotomy between one’s own representative and the approval for Congress as a whole demonstrates this. I look at this as the endowment effect, where the representative is buoyed by being personally connected to the voter through incumbency. The Endowment effect “is the hypothesis that people ascribe more value to things merely because they own them” https://ow.ly/pDOXy
“As Congress’ inability to agree on compromises that would reopen the partially shut-down government and raise the looming debt ceiling continues, Americans give Congress an 11% job approval rating, down eight percentage points from last month and one point above the worst rating in Gallup history.”
Congress’ Job Approval Falls to 11% Amid Gov’t Shutdown
But “Americans’ approval of their own representative averages 44%”. This is the key to why a shutdown happens. Congress knows people are not rational in how they perceive these issues and this vast dichotomy between one’s own representative and the approval for Congress as a whole demonstrates this. I look at this as the endowment principle, where the representative is buoyed by being personally connected to the voter through incumbency.
“As Congress’ inability to agree on compromises that would reopen the partially shut-down government and raise the looming debt ceiling continues, Americans give Congress an 11% job approval rating, down eight percentage points from last month and one point above the worst rating in Gallup history.”
Greek budget sees end to six-year recession next year | Reuters
Should we believe this prognostication is going to be accurate? It’s hard to say but I think it will be.
“Greece will emerge from six years of recession next year, a draft budget forecast on Monday, signaling the country is past the worst of a crippling debt crisis that nearly broke Europe’s single currency.”
U.S. consumer credit up, but credit card usage down | Reuters
“Revolving credit, which mostly measures credit-card use, fell $883.41 million, declining for a third straight month.
Nonrevolving credit, which includes auto loans as well as student loans made by the government, increased $14.51 billion in August. That followed a $12.23 billion increase in July.”
Fed’s Fisher decries U.S. flirtation with default | Reuters
Could the shutdown turn Fisher from hawk to QE dove? I think so. An October taper is out now. With Fisher railing against the shutdown, it may be out for December as well. Longer shutdown = more QE.
“”I deeply hope and I don’t think we’ll default, but it will come down to the wire,” Dallas Federal Reserve Bank President Richard Fisher said in a forum at Southern Methodist University in Texas. “It’s an embarrassment for my country.””
Gold Befuddles Bernanke as Central Banks’ Losses at $545 Billion – Bloomberg
Central banks seem to always get caught out in the precious metals market, buying at new highs and selling near new lows.
“Ben S. Bernanke, the world’s most-powerful central banker, says he doesn’t understand gold prices. If his peers had paid attention, they might have stopped expanding reserves that lost $545 billion in value since bullion peaked in 2011. “
Tea Party’s Strategy Is a Proven Loser – Bloomberg
This is why some in the Tea Party are saying they want to make good on the debt default threat. A threat is only good if it is credible. The question is whether making the threat credible leads to electoral success for the individual or her party. I believe it can be successful for individual Tea Party members of Congress but will undermine the Party as a whole. Just my view here.
“In any negotiation, it is inadvisable to make threats that aren’t credible. Probably the only thing worse is to threaten actions that will end up helping the other side. Yet the Tea Party-affiliated House Republicans aren’t simply making this very mistake with the government shutdown; they are gearing up to do it again, on a grander and more fatal scale, with the debt ceiling. “
Treasury Bill Rates Surge to Highest Since 2008 at 1-Month Sale – Bloomberg
“Treasury one-month bill rates surged to the highest since 2008 and yields on three-year notes rose as the U.S. sold $30 billion of the debt in the first auction of coupon securities since the start of the government shutdown.
The Treasury sold $30 billion of one-month bills at a rate of 0.35 percent, the highest since November 2008 and more than double the rate on comparable one-month securities yesterday. “
How the NSA might use Hotmail, Yahoo or other cookies to identify Tor users | Ars Technica
“One of the more intriguing revelations in the most recent leak of NSA documents is the prospect that the spy agency is using browser cookies from Yahoo, Hotmail or the Google-owned DoubleClick ad network to decloak users of the Tor anonymity service.”
BND lässt sich Abhören von Verbindungen deutscher Provider genehmigen – SPIEGEL ONLINE
The German-equivalent of the NSA is also tapping telecom links for spying according to this German-language article
German NSA has deal to tap ISPs at major Internet Exchange | Ars Technica
It’s not just the US and Britain that are spying.
“The rough German equivalent of the National Security Agency has secret arrangements with local telecom firms, providing direct access to data flowing over domestic fiber. According to the German magazine Der Spiegel (Google Translate), the Federal Intelligence Service (known by its German acronym, BND) has taps on the major Internet exchange point in Frankfurt known as DE-CIX.”
Schneier on Security: Silk Road Author Arrested Due to Bad Operational Security
Schneier trusts the math(s). He believes most NSA hacks have to do with bad operational security and this is an example of why. Given that Silk Road was a criminal operation, it makes sense for the government to go after it.
Schneier on Security: How the NSA Attacks Tor/Firefox Users With QUANTUM and FOXACID
This is a highly technical explanation of how the NSA is able to crack anonymity tools on the Internet. For those interested, it makes for good reading. This does seem to fall into the realm of legitimate NSA work in my view.
Yellen to Be Named Fed Chairman, First Female Chief – Bloomberg
“President Barack Obama will nominate Janet Yellen as chairman of the Federal Reserve, which would put the world’s most powerful central bank in the hands of a key architect of its unprecedented stimulus program and the first female leader in its 100-year history.
Obama will announce the nomination at 3 p.m. today in Washington, a White House official said in an e-mailed statement. Yellen, 67, would succeed Ben S. Bernanke, whose term expires on Jan. 31.”
This Government Shutdown Will Defeat the GOP in 2014 | The Fiscal Times
Notice how Bartlett invokes the Civil War. I did this as well because I could not think of any precedent of division in the US as stark either. I wouldn’t say Republicans are disdainful of democracy however. I would say they are disdainful of the Democrats’ agenda. But Bartlett makes a good case with a Lincoln analogy.
“The Constitution requires that the government be funded annually through the same process by which all laws are made. And no one is saying that what Republicans are doing is illegal or unconstitutional. But it is undemocratic, sore-loser politics.
Republicans respond that “lapses in appropriations” were not uncommon when Democrats controlled the House, and that’s true, as one can see in a recent Congressional Research Service report. As budget expert Stan Collender points out, until 1980 the government didn’t shut down; that results because the Justice Department changed its interpretation of the Antideficiency Act of 1884.
Moreover, Collender notes that many government shutdowns took place over weekends without impacting many people, and in many cases Congress had passed some appropriations bills so that the shutdown didn’t affect most of the government, as it does now.
In short, what we are seeing today is an exceptionally rare event in the history of government funding. Never before has a party holding only the House been so insistent on getting its way. As military people would say, Republicans are using nuclear weapons in what was previously conventional political warfare.
One really has to go back to the Civil War era to find a time when one party was as disdainful of democracy as Republicans are today. Then it was the Democrats, who represented the slaveholding South and thought any means were justified to defend the principle of slavery.
Abraham Lincoln, the first Republican president, explained in his first inaugural address that if a minority persists on forcing the majority to accept its demands, and is willing to use any means necessary to do so, then the inevitable result will be anarchy or tyranny.”
BBC News – Hard-line conservatives see victory in debt limit standoff
“A faction of the Republican Party believes it cannot lose the battle over raising the US government’s borrowing limit – either they dismantle the Democrats’ healthcare reform, or the country has to live within its means for a while. But will the rest of the party stick with them?”
Help to Buy helps push house price rises to 11-year high – Telegraph
House prices are a BIG part of why the UK is growing again.
IMF upgrades UK growth in embarrassing about-turn – Telegraph
This is not to say austerity ‘works’ – and I don’t believe it does – but it is worth noting:
“The International Monetary Fund has upgraded its growth forecasts for the UK by more than any other advanced economy in an embarrassing u-turn for the global financial institution.
Britain is now expected to grow by 1.4pc this year, double the rate projected in April when IMF chief economist Olivier Blanchard singled the UK out for criticism and accused George Osborne of “playing with fire” with his austerity programme. “
Top Bankers Warn on U.S. Debt Proposal – WSJ.com
“Top Wall Street executives are warning that any effort to pay interest on U.S. debt before other obligations such as Social Security, a strategy some lawmakers think would placate bond investors if the government breaches its borrowing limit, would pose severe risks to financial markets and the economy.”
Run of rising Las Vegas home prices reaches an end – VEGAS INC
“The median price of previously owned single-family homes sold in Southern Nevada last month was $180,000, down 1.1 percent from August but still up 28.6 percent from September 2012, according to a new report from the Greater Las Vegas Association of Realtors.”
Bigwig real estate investors starting to pull out of Las Vegas as home prices rise – VEGAS INC
“When Las Vegas’ housing market crashed, wealthy investors pounced on the downturn and started buying cheap homes in bulk to turn into rentals. They helped revive local housing prices and values, which have been rising for months.
But the very recovery they sparked now is scaring them off.
Prices have climbed so high that some Wall Street heavyweights are looking elsewhere for better real estate deals. For some firms, the days of buying as many houses as possible in Las Vegas are waning.”
Weekly Drop in U.S. Economic Confidence Largest Since ’08
“Americans’ confidence in the economy has deteriorated more in the past week during the partial government shutdown than in any week since Lehman Brothers collapsed on Sept. 15, 2008, which triggered a global economic crisis. Gallup’s Economic Confidence Index tumbled 12 points to -34 last week, the second-largest weekly decline since Gallup began tracking economic confidence daily in January 2008.”
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