I really don't know why the administration doesn't take the "mint the trillion dollar platinum coin" option seriously. It is, as far as I can tell, perfectly legal. - Eschaton
The quote above is in reference to this Firedog Lake post on the Fiscal cliff and the latest Republican Doomsday plan for dealing with the fiscal cliff:
It’s quite simple: House Republicans would allow a vote on extending the Bush middle class tax cuts (the bill passed in August by the Senate) and offer the president nothing more – no extension of the debt ceiling, nothing on unemployment, nothing on closing loopholes. Congress would recess for the holidays and the president would face a big battle early in the year over the debt ceiling.
FireDog Lake responded to this news of the GOP economic bomb with:
if the vote includes just the Senate bill, where does that leave us? On January 1, taxes go up on not just the top marginal rates, but on every income earner, when the Bush tax cuts expire. Two million people immediately lose their unemployment benefits. Medicare reimbursement rates drop 30%. The sequester on defense and discretionary spending goes into place, and while OMB has the ability to lessen the impact there for several weeks, they can’t hold back the tide forever. And the country will hit the debt limit by the end of February or the beginning of March.
Once again the Obama administration refuses to label China a currency manipulator. This is when the U.S.-China trade deficit looks on target to hit $300 billion and China just slapped the United States with a unjustified 22% additional tariff on American SUVs.
The Report highlights the need for greater exchange rate flexibility, most notably by China, but also in other major economies. Based on the ongoing appreciation of the RMB against the dollar since June 2010, the decline in China's current account surplus, and China's official commitments at the G-20, APEC, and the U.S.-China Strategic and Economic Dialogue (S&ED) that it will move more rapidly toward exchange rate flexibility, Treasury has concluded that the standards identified in Section 3004 of the Act during the period covered in this Report have not been met with respect to China. Nonetheless, the movement of the RMB to date is insufficient. Treasury will closely monitor the pace of RMB appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth.
On Friday, the witching hour of government press releases they want no one to read, the Treasury Department announced they will block regulation of large classes of derivatives:
Treasury is today issuing a Notice of Proposed Determination providing that central clearing and exchange trading requirements would not apply to FX swaps and forwards.
This proposed determination is narrowly tailored. FX swaps and forwards will remain subject to Dodd-Frank’s rigorous new trade reporting requirements and business conduct standards. Additionally, the Dodd-Frank Act makes it illegal to use these instruments to evade other derivatives reforms. Importantly, the proposed determination does not extend to other FX derivatives, such as FX options, currency swaps, and non-deliverable forwards. These other FX derivatives will be subject to clearing and exchange requirements.
The entire press release is almost burying the announcement for no regulation of FX swaps and forwards. Multinational corporations use FX swaps to hedge on currency fluctuations. According to Better Markets, this will bring out the financial engineers for some sort of derivative trickery fiction:
Neil M. Barofsky wrote a devastating column for the New York Times on March 29, his last day as Special Inspector General for the Troubled Asset Relief Program (SIGTARP). The roles for his position were:
"to conduct, supervise, and coordinate audits and investigations of the purchase, management, and sale of assets under the Troubled Asset Relief Program ("TARP"). SIGTARP is required to report quarterly to Congress describing SIGTARP’s activities and providing certain information about TARP over that preceding quarter." April 21, 2009 (Image SIGTARP)
This report is as disappointing as it is unsurprising. It's clear it will take an act of Congress to do the obvious and call China out for its currency manipulation.
"Claiming China doesn't manipulate its currency makes about as much sense as saying LeBron James doesn't play basketball.
"It's clear that China's announcement before the G-20 last month was nothing more than a charade, but the Administration seems to have fallen for this rather unbelievable promise.
"Congress must pass strong legislation to address China's currency manipulation so that America's workers and businesses can compete on a level playing field.
"We will never double exports unless we stop China's cheating.
"This is a step backward."
Don't think it's just Democrats blasting the administration for refusing to confront China, Republicans are as well.
The New York Times has a detailed interview & article with Pimco's Bill Gross in Treasury has Bill Gross on Speed Dial. While the article is a nice warm fuzzy on guy pulling himself up with his own bootstraps, outside the box brilliant business acumen etc., some very interesting pieces of information are revealed about Pimco, Bill Gross and the Treasury's PPIP plan.
First is this tidbit:
Last fall, the Federal Reserve Bank of New York, run at the time by Mr. Geithner, hired Pimco — along with BlackRock, Goldman Sachs and Wellington Management — to buy up to $1.25 trillion in mortgage bonds in an effort to keep interest rates from skyrocketing.
The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.
The government at present has the authority to seize only banks.
Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president's Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.
Some executives in the group of 130 recipients will get more than $500,000 to stay through 2009, about 200 percent of their salaries.
The awards may equal 100 percent to 300 percent of an executive’s annual salary, and as much as 100 percent for the next round of payments for lower-paid employees, the person said. The retention payments are several times larger than year- end bonuses, which most of the 130 executives will still get in March, the person said.
In Pennsylvania, PPL Corp. increased shutoffs by 78% in the first three quarters of the year compared with the same period a year earlier
....
In Memphis, Tenn., the city-owned utility that supplies electricity, natural gas and water to residents cut off 38% more people in the first eight months of the year
Bear in mind that when the MNBA bill, oops I mean bankruptcy reform passed in 2005, this stopped many people from being able to get out of their debts.
The U.S. Treasury and the Federal Deposit Insurance Corp. are considering a program that may offer about $500 billion in guarantees for troubled mortgages to stem record foreclosures, people familiar with the matter said
The terms, not official would be:
The plan, which might put as many as 3 million homeowners into affordable loans, would require lenders to restructure mortgages based on a borrower's ability to repay
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