Colorado's delegates were decided, 10 seconds at a time
Why the American Dream may be withering in some cities
The American Dream promises that any child, regardless of income or background, can climb the socioeconomic ladder with hard work and determination.
But what happens when their parents can't afford that dream because of soaring home prices in some cities and stagnant wages? Social mobility for young people may decline, with unaffordable rents and home prices eating up more than 40 percent of household income, according to research from real estate research firm Zillow.
Ironically, some of today's least affordable U.S. cities have historically served as locations where poor children once found the most opportunities, such as parts of the Northeast and California, Zillow noted, citing research from Harvard University economist Raj Chetty.
But the surge in real estate prices in many of those areas is now raising questions about whether children born in the post-recession years in these cities are being further marginalized. Take Chicago and San Luis Obispo, California, a town known for vineyards and spas. Children growing up in San Luis Obispo were likely to see higher social mobility, earning about $5,300 more annually as an adult than their counterpart in Chicago.
UC Berkeley to eliminate 500 staff jobs
Financially troubled UC Berkeley will eliminate 500 staff jobs over two years to help balance its budget by 2019-20, The Chronicle has learned.
Chancellor Nick Dirks sent a memo to employees on Monday informing them of the job reductions and said they will amount to “a modest reduction of 6 percent of our staff worforce.” Berkeley employs about 8,500 staffers, from custodians to administrators. Faculty members will not be affected. Dirks said the reductions will be done in part through attrition and did not mention layoffs.
Some staff members in at least one area, residential student services, were told by managers two weeks ago that they should prepare to be laid off in the near future, sources said. Other departments are bracing for similar news.
The job elimination message comes as the campus is projecting a deficit of $150 million this fiscal year — about 6 percent of its operating budget of $2.5 billion, which campus officials have blamed largely on state allocations that have not kept pace with campus needs. Berkeley’s deficit was $109 million last year and $12 million in the 2013-14 fiscal year, campus officials told The Chronicle in February.
US Budget Deficit up Sharply to $108 Billion in March
The federal government's budget deficit rose sharply in March, pushing the deficit for the first six months of this budget year above the same period a year ago. The Treasury Department says the deficit for March totaled $108.0 billion. That marks the biggest March deficit in four years and was more than double the imbalance in March 2015.
The large jump from a year ago reflected calendar shifts, which had made the 2015 deficit look smaller because $36 billion in benefit payments were shifted into February. Through the first six months of this budget year that began on Oct. 1, the deficit totals $461.0 billion. That represents an increase of 4.9 percent from the same period a year ago. The Congressional Budget is forecasting a higher deficit for the full year.
The Congressional Budget is forecasting that the deficit for the full 2016 budget year will total $534 billion, an increase of 21.9 percent from the 2015 deficit of $439 billion, which had been the smallest deficit in eight years.
So far this budget year, government receipts total $1.476 trillion, up 4 percent from the same period a year ago. Government spending totals $1.937 trillion, 4.2 percent higher than the first half of 2015.
Trump fed up with RNC "crap"
IMF Sees Slowing 2016 and 2017 Global Growth
The International Monetary Fund (IMF) has issued an update to its World Economic Outlook. Most of the report centers around even slower global growth in gross domestic product (GDP) for 2016. There may be at least some good news here: China’s slowing growth may actually be a tad better than the IMF’s prior views.
The IMF World Economic Outlook for April specifies that the global economy is faltering from what is nothing short of too slow growth that is lasting for far too long.
The global growth forecast is now at 3.2% for 2016, with a view of picking up to 3.5% growth in 2017. These are down 0.2% from the January forecast for 2016, and down 0.1% for 2017. The IMF sees prominent financial risks, geopolitical shocks and political discord all as prevailing themes for 2016. It also is touting a three-pronged approach to address structural, fiscal and monetary measures.
Growth in advanced economies is projected to remain modest at about 2%. The recovery is hampered by weak demand, partly held down by unresolved crisis legacies, as well as unfavorable demographics and low productivity growth. Growth in the United States is expected to be flat in 2016 at 2.4%, with a modest uptick in 2017. The IMF sees domestic demand being supported by improving government finances and a stronger housing market that help offset the drag on net exports coming from a strong dollar and weaker manufacturing.
Kerry defends US trade deals against domestic critics
The United States' top diplomat took a break from negotiations with foreign powers on Tuesday (Apr 12) to mount a full-throated defense of planned trade deals under attack from domestic critics.
Secretary of State John Kerry stopped off in Los Angeles after a round-the-world trip to make an impassioned case for the Trans-Pacific Partnership, or TPP, and the Trans-Atlantic Trade and Investment Partnership, known as TTIP.
The planned deals, which would boost free trade between the United States and its Asian Pacific partners on one side of the world and with the European Union on the other, have come under fire in Washington. Not only is the Republican-led Congress threatening to delay the agreements that would cement President Barack Obama's trade legacy, but the Democratic challengers in the race to replace him have taken a notably protectionist stance.
Kerry said he would head to Europe to defend the trans-Atlantic deal in the coming days and, in a speech to the Pacific Council policy forum, declared the Pacific trade accord "the highest-standard trade deal ever reached. Period." The deal would set high standards of governance for member states - reducing corruption, boosting workers' rights and safeguarding the environment, he argued. And far from destroying the livelihoods of Americans who see their jobs sent offshore to cheaper labour markets, he declared, it would boost the US economy.
US Banks’ Q1 Results Will Be Worst Since 2007-2008
It is only April, but some on Wall Street are already predicting a rotten 2016 for U.S. banks. Analysts say it has been the worst start to the year since the financial crisis in 2007-2008 and expect poor first-quarter results when reporting begins this week.
Concerns about economic growth in China, the impact of persistently low oil prices on the energy sector, and near-zero interest rates are weighing on capital markets activity as well as loan growth.
Analysts forecast a 20 percent decline on average in earnings from the six biggest U.S. banks, according to Thomson Reuters I/B/E/S data. Some banks, including Goldman Sachs Group Inc (GS.N), are expected to report the worst results in over ten years.
This spells trouble for the financial sector more broadly, since banks typically generate at least a third of their annual revenue during the first three months of the year. “What’s concerning people is they’re saying, ‘Is this going to spill over into other quarters?'” Goldman’s lead banking analyst Richard Ramsden said in an interview. “If you do have a significant decline in revenues, there is a limit to how much you can cut costs to keep things in equilibrium.”
IMF’s World Economic Outlook, Daley on Amazon, tech
American Apparel lays off workers, mulls some outsourcing
Teen apparel retailer American Apparel Llc is laying off hundreds of workers as it overhauls its production process, which could include outsourcing part of its production to another U.S. manufacturer, the Los Angeles Times reported on Tuesday.
"If we do decide to produce some pieces out-of-house, they will still be American-made," Chief Executive Paula Schneider wrote in a letter obtained by the Times.
Schneider said a mismatch between workers and manufacturing was an inefficiency that needed to be addressed as part of the company's turnaround efforts, the Times reported, adding the move came after "months of careful and rigorous review."
The retailer will also cut down on the number of garments it makes throughout the year, to clear inventory.
The Global Economy is Rigged
By now you've probably heard about the so-called Panama Papers. A couple decades' worth of offshore transactions were released, showing that political elites from Europe, Russia, and Asia were stashing their wealth in Panama banks.
Something like 215,000 shell companies had been set up to help hide wealth. People named include current and former leaders of Argentina, China, Qatar, Saudi Arabia, Pakistan, and Ukraine. The prime minister of Iceland has already stepped down after he was named.
Of course, the transactions themselves aren't technically illegal (though the United States, France, Germany, Australia, Austria, Sweden, and the Netherlands have opened investigations). Wealthy people will always seek to protect their wealth...
Still, these transactions stink. Because they are a stark reminder that the world isn't a level playing field. It's a rigged game where the rich elites play by a different set of rules, rules that they create to benefit themselves. They avoid paying the taxes that the rest of us pay. And they get first dibs on investments that most of us never see.
Two Fed bank presidents backed rate hike ahead of last meeting
The heads of two regional Federal Reserve banks supported a rate hike ahead of the Fed's March meeting as an improving economy added to sentiment to tighten monetary policy.
The heads of the Richmond and Kansas City Fed branches supported a quarter point hike in the main lending rates for banks "in light of continued improvements in labor market conditions and expectations that inflation would rise," according to minutes of the Fed's March discount rate meeting.
The discussion over discount rates preceded the Fed's policy meeting held last month. The target federal funds rate was held steady at that session.
Kansas City Federal Reserve Bank president Esther George dissented, preferring to raise rates. Richmond Federal Reserve Bank president Jeffrey Lacker does not vote on the Fed's main rate-setting committee this year.
Venezuela: the land of 500% inflation
Venezuela is spiraling down fast while its biggest problems are skyrocketing up. Inflation in Venezuela is projected to increase 481% this year and by a staggering 1,642% next year, according to new estimates released Tuesday by the International Monetary Fund.
"Venezuela is on the precipice of hyper inflation," says Kathryn Rooney Vera, research director at BullTick Capital Markets in Miami. The IMF also forecasts that Venezuela -- which rarely publishes its own economic data -- will have an unemployment rate of 17% this year and nearly 21% next year.
For some context, the last time the unemployment rate hit that high in the United States was during the Great Depression in the 1930s, when it spiked to as much as 25%. "Venezuela is experiencing a very severe economic crisis," says Francisco Rodriguez, chief Andean economist at Bank of America Merrill Lynch. "This is not a recession, this is a depression."
Inflation has already been a huge problem in Venezuela. In January, the Venezuelan government said inflation rose 141% in the year ending in September. That means prices for all types of goods, such as milk, sugar and flour, are soaring. Basic goods such as toilet paper and soap are in such short supply some hotels are asking guests to bring their own.
Richard Branson: ‘America Will Suffer’ If Walls Are Put Up And Free Trade Stopped
BP CEO to get $3.3 million raise after 12,000 layoffs
BP Chief Executive Officer Bob Dudley is due to receive $19.6 million in pay, a 20 percent raise, even after the company lost a record $6.4 billion and laid off 5,000 workers last year.
The London-based energy giant, which operates the BP Whiting Refinery on Lake Michigan, announced another 7,000 layoffs worldwide so far this year in response to a huge drop in the price of crude oil. Dudley is in line to be paid 280 times as much as workers at the Whiting refinery, who earn around $70,000 a year on average, according to the United Steelworkers union.
BP shareholders will vote on whether to approve the compensation plan at BP's Annual General Meeting on Thursday at the ExCeL International Convention Center, in London.
Dudley's compensation package had been $16.3 million in 2014, and is due to increase by about $3.3 million for 2015 because the company's financial performance exceeded expectations. Even so, BP shares dropped 24 percent in value last year. The company recorded its single-largest annual loss in history, due largely to the fall in crude oil prices.
Hate Taxes? You Certainly Are Not Alone…
At this time of the year, millions of Americans are rushing to file their taxes at the last minute, and we are once again reminded just how nightmarish our system of taxation has become. I studied tax law when I was in law school, and it is one of the most mind-numbing areas of study that you could possibly imagine. At this point, the U.S. tax code is somewhere around 4 million words long, which is more than four times longer than all of William Shakespeare’s works put together. And even if you could somehow read the entire tax code, it is constantly changing, and so those that prepare taxes for a living are constantly relearning the rules. It has been said that Americans spend more than 6 billion hours preparing their taxes each year, and Politifact has rated this claim as true. We have a system that is as ridiculous as it is absurd, and the truth is that we don’t even need it. In fact, the greatest period of economic growth in all of U.S. history was when there was no income tax at all. Why anyone would want to perpetuate this tortuous system is beyond me, and yet we keep sending politicians to Washington D.C. that just keep making this system even more complicated and even more burdensome.
If you hate taxes, you are far from alone. According to NBC News, here are some of the things that Americans would rather do than pay taxes… Six percent would rather sell a kidney, eight percent would rather name their first-born “Taxes,” and 11 percent would rather spend three years cleaning the bathrooms at noro-torious Chipotle.
Of course our system was never intended to be like this anyway. Our founders hated taxes, and they fought a very bitter war to escape the yoke of oppressive taxation. During his very first inaugural address, Thomas Jefferson clearly expressed what he thought about taxes… “A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” Why couldn’t we have listened to him? When the federal income tax was originally introduced a little more than a century ago, most Americans were taxed at a rate of only 1 percent.
But of course once they get their feet in the door, the social planners always want more, and today we are being taxed into oblivion.
Why Obama is forgiving the student loans of nearly 400,000 people
Hundreds of thousands of student loan borrowers will now have an easier path to getting their loans discharged, the Obama administration announced Tuesday.
The Department of Education will send letters to 387,000 people they’ve identified as being eligible for a total and permanent disability discharge, a designation that allows federal student loan borrowers who can’t work because of a disability to have their loans forgiven. The borrowers identified by the Department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter.
If every borrower identified by the Department decides to have his or her debt forgiven, the government will end up discharging more than $7.7 billion in debt, according to the Department.
“Americans with disabilities have a right to student loan relief,” Ted Mitchell, the undersecretary of education, said in a statement. “And we need to make it easier, not harder, for them to receive the benefits they are due.” About 179,000 of the borrowers identified by the Department are in default on their student loans, and of that group more than 100,000 are at risk of having their tax refunds or Social Security checks garnished to pay off the debt. Often borrowers losing out on these benefits aren’t even aware that they’re eligible for a disability discharge, said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center.
Uber says it gave U.S. agencies data on more than 12 million users
Uber Technologies Inc on Tuesday released its first ever transparency report detailing the information requested by not only U.S. law enforcement agencies, but also by regulators.
The ride-sharing company said that between July and December 2015, it had provided information on more than 12 million riders and drivers to various U.S. regulators and on 469 users to state and federal law agencies.
The privately held company, valued at more than $60-billion, said the agencies requested information on trips, trip requests, pickup and dropoff areas, fares, vehicles, and drivers.
Uber said it got 415 requests from law enforcement agencies, a majority of which came from state governments, and that it was able to provide data in nearly 85 per cent of the cases. A large number of the law enforcement requests were related to fraud investigations or the use of stolen credit cards, according to the report.
Treading on oily credit
Unsealed government documents may reveal truth about Fannie, Freddie fate
In the years since the federal government modified its conservatorship agreement with Fannie Mae and Freddie Mac to sweep all the profits from the government-sponsored enterprises into the government’s coffers, many observers, including those with a serious financial interest, have questioned whether the so-called “Third Amendment sweep” was even necessary.
At the time, the government claimed that the GSEs were on the brink of collapse, and amended the terms of the GSEs’ conservatorship to ensure that the government had enough money to bail them out again if necessary.
In the aftermath, a series of Fannie and Freddie shareholders sued the government, claiming that the “Third Amendment sweep” was not only unnecessary, but illegal as well. As of right now, the investors’ cause grew from several court cases into a viral movement on Twitter, where “#FannieGate” has become shorthand for the government’s supposed theft of Fannie and Freddie.
Now, it appears that #FannieGate movement may have a point about the government’s sweep. According to an article published Tuesday by the New York Times, a series of now-unsealed depositions given in the shareholders’ lawsuits show that not only were Fannie and Freddie on track to be profitable for at least 10 years, the government allegedly knew that fact, and more, before choosing to sweep away the GSEs’ profits.
What’s America’s Place in the World Economy?
What would “a bastard, orphan, son of a whore and a Scotsman, dropped in the middle of a forgotten spot in the Caribbean by Providence, impoverished, in squalor … the 10-dollar Founding Father without a father” think about Bernie? About Trump? About manufacturing vs. finance, main street vs. Wall Street? About China?
Alexander Hamilton, America’s first treasury secretary and now the protagonist of an insanely popular Broadway musical, remains an embodiment of the tensions characterizing the American political debate some 240 years after the events depicted in Hamilton. He is somehow, simultaneously, patron saint both to American protectionists and Wall Street financiers. His plan to invest in and protect American manufacturing in its infancy arguably helped the U.S. become the industrial giant that gave the eventual global superpower its backbone. At the birth of the nation, Hamilton also helped institute trading in credit and debt, and helped establish capital markets as the lynchpin of America’s eventual dominance of the global economy.
But today and throughout America’s history, there has been a palpable ambivalence about the country’s global engagement, whether military, diplomatic, or economic. As America’s current treasury secretary, Jacob Lew, wrote recently in Foreign Affairs, this ambivalence is evident “from George Washington’s Farewell Address [written, incidentally, with an assist from Hamilton], to the Senate’s rejection of the League of Nations after World War I, to the initial reluctance of the United States to enter World War II, and to the difficult process of winning congressional support for the postwar economic system itself.”
In the economic realm, there is clearly a tension between what many Americans feel they are getting from the international system—or better yet, not getting—and commitments to free trade and institutions like the International Monetary Fund. An awful lot of Americans in both political parties are frustrated that they are getting gut-punched, not helped up, by such commitments. And American candidates across the spectrum reflect this feeling; modern populists like Donald Trump and Bernie Sanders tend to portray trade deals like the Trans-Pacific Partnership (TPP)—a massive, multi-country agreement shepherded by the Obama administration—as gutting the muscle and heart out of America. Hillary Clinton, too, has opposed it.
Goldman Sachs' House of Junk
It’s getting hard to wrap your brain around subprime mortgages, Wall Street’s fancy name for junk home loans. There’s so much subprime stuff floating around—more than $1.5 trillion of loans, maybe $200 billion of losses, thousands of families facing foreclosure, umpteen politicians yapping—that it’s like the federal budget: It’s just too big to be understandable.
So let’s reduce this macro story to human scale. Meet GSAMP Trust 2006-S3, a $494 million drop in the junk-mortgage bucket, part of the more than half-a-trillion dollars of mortgage-backed securities issued last year. We found this issue by asking mortgage mavens to pick the worst deal they knew of that had been floated by a top-tier firm—and this one’s pretty bad.
It was sold by Goldman Sachs GS 1.32% —GSAMP originally stood for Goldman Sachs Alternative Mortgage Products but now has become a name itself, like AT&T T 0.74% and 3M MMM 0.83% . This issue, which is backed by ultra-risky second-mortgage loans, contains all the elements that facilitated the housing bubble and bust. It’s got speculators searching for quick gains in hot housing markets; it’s got loans that seem to have been made with little or no serious analysis by lenders; and finally, it’s got Wall Street, which churned out mortgage “product” because buyers wanted it. As they say on the Street, “When the ducks quack, feed them.”
Alas, almost everyone involved in this duck-feeding deal has had a foul experience. Less than 18 months after the issue was floated, a sixth of the borrowers had already defaulted on their loans. Investors who paid face value for these securities—they were looking for slightly more interest than they’d get on equivalent bonds—have suffered heavy losses. That’s because their securities have either defaulted (for a 100% loss) or been downgraded by credit-rating agencies, which has depressed the securities’ market prices. (Check out one of these jewels on a Bloomberg machine, and the price chart looks like something falling off a cliff.)