June 2009

Bill To Audit Federal Reserve Gets House Majority

Submitted by on

Want to know what the hell the Federal Reserve is doing? Now, so do the majority of House Congressional Representatives.

H. R. 1207, Short title: The Federal Reserve Transparency Act, just obtained 221 co-sponsors in support of a GAO audit of the Federal Reserve. This is a House majority.

The blog Firedoglake has support of this bill as an action item.

The long title of the bill is:

To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes

Eli Lilly Sold Anti-Psychotic Drug as Demetia Treatment Knowing it did not Work

Submitted by on

Bloomberg:

Eli Lilly & Co. urged doctors to prescribe Zyprexa for elderly patients with dementia, an unapproved use for the antipsychotic, even though the drugmaker had evidence the medicine didn’t work for such patients, according to unsealed internal company documents.

In 1999, four years after Lilly sent study results to the U.S. Food and Drug Administration showing Zyprexa didn’t alleviate dementia symptoms in older patients, it began marketing the drug to those very people, according to documents unsealed in insurer suits against the company for overpaymen

Why are the same people still in charge of banks they destroyed?

Submitted by on

The House Financial Services Committee held a hearing yesterday, Compensation Structure and Systemic Risk.

Contained within the Q&A is this fantastic question by Representative Alan Grayson (D-FL-8th): How do we hold these executives accountable when they have destroyed their own banks?

Is it all just funny money?

Submitted by on

The headline isn't all that impressive - "US government securities seized from Japanese nationals." It's the subtitle that really catches a person's attention:

Bonds worth US$ 134.5 billion are seized. This is the largest financial smuggling case in history. But are they real? Concern over ‘funny money’ or counterfeit securities is spreading in Asia. The international press is silent.

The story goes like this: two Japanese nationals in their 50s were stopped by Italian police in the town of Chiasso while trying to cross into Switzerland.
In a suitcase with a false bottom they were trying to hide 249 U.S. Treasury bonds, each worth $500 million, plus 10 Kennedy bonds each worth $1 Billion.

$1.3 Trillion of Household Wealth Evaporates

U.S. household net worth decreased by $1.3 trillion in the first quarter of 2009. This was due in part to decreases in stock market and real estate values. The gory details are here.

Here is a table for some context:

Year Net Worth

Did Anyone Hear that Warning?

I sometimes think that the stock market, many economists and policy makers forget that a huge problem still exists despite about $12 trillion of Fed/Treasury grease job. The huge problem is the housing sector and more specifically home mortgages. The huge problem is a reality and reality has a way of kicking us right in the face. There was another warning issued today. Is this warning and the warning by midtowng last week being heard?

The warning is about Option ARM. Here is the example from the Bloomberg article:

Shirley Breitmaier’s mortgage payment started out at $98 when she refinanced her three-bedroom home in Galt, California, in 2007. The 73-year-old widow may see it jump to $3,500 a month in two years.

May Leading Economic Indicators (2)

Over a week ago, I promised a follow up post on May's Leading Economic Indicators. Real life intervened, so, tardily, here it is.

April's LEI were the most strongly positive indicators in 2 years, and the first batch of readings for May were similarly positive. By June 1, we already knew that, by weight over 50% of the indicators would be positive. Real money supply was still strong as the Fed continues to re-liquify (or re-solvenc-fy) the banking system. The yield curve was even more strongly positive than before, due to the backup in long term rates while short term rates are still essentially 0%. Stock prices (over the last 90 days) also strongly rallied. Consumer expectations about the future is rising sharply. Average initial claims for unemployment insurance were basically flat for the month. By weight, that's 52% positive, and 3% neutral.

So May's data started out looking very positive. As we shall see, the suckerpunch was saved for the end.

CBO on 2008 Tax Rebates Effectiveness

Submitted by on

The Congressional Budget Office has released a brief, Did the 2008 Tax Rebates Stimulate Short-Term Growth?

What was the economic impact CBO predicted?

40% spent in first 6 months.

Raise Consumer Consumption by:

Q2    2.3%
Q3    1.0%
Q4   -1.0%

CBO says the results were:

Q2    2.3%
Q3    0.2%
Q4    1.0%

So, what's with the brief? Other economists are studying the effects of the 2001 and 2008 rebates and claiming they have negligable effect.

One of the 2008 tax rebates by Christian Broda and Jonathan Parker that used weekly data provided by participating consumers, who, in their homes, scanned the bar codes on their purchases, mainly from grocery stores, mass merchandise outlets, and drugstores. The researchers’ findings imply that about 19 percent of the tax rebates was spent in the second quarter of 2008 and that cumulative spending amounted to about 33 percent through the third quarter

A survey found that half used the rebate to pay off debt, one third saved the money and one third spent it.

CBO:

By itself simple observation of aggregate consumption over time may not detect the effect of rebates

(in other words, if one does not examine the time line with enough granularity you might miss that blip on the screen!)

Gee wiz, even with the graph data does anyone believe that's a really effective tool to increase people's income in a recession? I guess I suffer from some hypothesis that people need permanent income.

50 Days Until California Meltdown - CA Controller

Submitted by on

Awesome. The California Controller says the state has 50 days until complete meltdown.

From his letter to the Governor:

On May 29, 2009, I informed you of the precarious nature of the State’s cash condition and alerted you to impending risks which threaten the State’s ability to meet its payment obligations.

The situation has not improved. Based on actual revenues received during the month of May, and finalized May Revision data provided by the Department of Finance on June 1, I have the following updates to the State’s 2009-10 cash outlook:

  • In the absence of legislative action, the State will not have sufficient cash to meet all of its payment obligations on July 28. By July 31, the cash deficit will increase to a negative $2.78 billion.

Trade Deficit Increases for April 2009

Submitted by on

The Bureau of Economic Analysis released the April 2009 Foreign Trade statistics. Here is the BEA Foreign Trade Press Release and the full report.

Census, BEA US Trade graph June, 2009

The Nation's international deficit in goods and services increased to $29.2 billion in April from $28.5 billion (revised) in March, as exports decreased more than imports.

The Alliance for American Manufacturing:

Our trade problem can be summarized in one word: China. Imbalanced trade with China is responsible for over half (57%) of the overall U.S. trade deficit in April.

Pages

Instapopulist

Related Content

Recent comments

more
Much Ado About Oil - 128925 reads
G.E. Hearts China - 67011 reads
ADP Employment Report for March 2010 - up 32,000 - 9903 reads
Why aren't these people in jail? - 87287 reads
Preventing green vs. blue - 63109 reads
Blame the Real Cause of this Crisis - 46941 reads
Trend in Temp Workers may not be Temporary - 71218 reads
A Wall Street Transaction Tax - 122390 reads
VAT or Value Added Tax is Getting a Look in D.C. - 377926 reads
United States GDP, Q2 2009 in at -1% - 36161 reads
.