Subcommittee finds Wall Street commodities actions add risk to economy, businesses, consumer
Wall Street banks have become heavily involved with physical commodities markets, increasing risks to financial stability, industry, consumers and markets, a two-year investigation by the Senate Permanent Subcommittee on Investigations has found.
The investigation’s findings, contained in a 396-page bipartisan report, add important new details to the public debate about the breakdown of the traditional barrier between commercial activities and banking. Included are previously unknown details about activities by Morgan Stanley, JPMorgan Chase and Goldman Sachs, including Goldman Sachs’ controversial management of warehouses storing most of the warranted aluminum in the United States. The new details raise new questions about whether such activities harm businesses and consumers and allow for possible manipulation of the markets.
U.S. Senate Permanent Subcommittee on Investigations
“The economy expanded even faster in the third quarter than previously reported, offering fresh evidence that the U.S. entered the final months of 2014 on an accelerated track. Gross domestic product rose by a 3.9% annual pace in the period running from the beginning of July to the end of September, the Commerce Department said Tuesday. Initially, the government had said the economy grew by 3.5%. In the past two quarters, GDP has grown by an average of 4.2%, the strongest six-month stretch since the middle of 2003.”
A new poll from Hart Research depicts strong support for President Obama’s immigration actions:
“Voters respond favorably by an overwhelming 39-point margin to executive action by President Obama that would focus immigration enforcement efforts on threats to national security and public safety while allowing some illegal immigrants to stay and work in the United States (67% favorable, 28% unfavorable). Support is broad, incorporating a majority of voters in every region of the country, among both men and women, and in states won by both Barack Obama (67% favorable) and Mitt Romney (65% favorable). Younger voters under age 35 express particularly strong support (72%), but more than 60% feel favorable in every age cohort.
Executive action receives support from 91% of Democrats and 67% of political independents. While a narrow 51% majority of Republicans oppose executive action (41% favor), this is driven mainly by a 34-point margin of opposition among Tea Party Republicans (30% favor, 64% oppose). Among non-Tea Party Republicans opinion is more divided, with 47% in favor and 45% opposed.”
” Wealth concentration has followed a U-shaped evolution over the last 100 years: It was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The rise of wealth inequality is almost entirely due to the rise of the top 0.1% wealth share, from 7% in 1979 to 22% in 2012–a level almost as high as in 1929. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of total labor income in the economy.”
Saez, E., and Zucman, G. (2014). Wealth Inequality in the United States since 1913. National Bureau of Economic Research. NBER Working Paper 20625.
The final report, from Chairman Mike Rogers, R-Michigan, and ranking member Rep. Dutch Ruppersberger, D-Maryland, concludes there was no intelligence failure prior to the attack, no stand-down order to CIA operatives trying to go assist at the besieged consular building and found conflicting intelligence in the wake of the attack about the motive and cause, which were reflected in early public comments by the administration.” And the report found,.. ” no evidence of CIA employees being intimidated from testifying and also no indication the CIA presence in Benghazi was partially to secretly ship arms from Libya to Syria.” In addition, ” …the security at the diplomatic outpost was weak and it described a “flawed” process used to create talking points for House Intelligence Committee members and then-U.N. Ambassador Susan Rice, whose public statements after the attack incensed critics who said the administration was avoiding calling the attack terrorism.”
Get and read the full report.
On the November 19 edition of The Kelly File, Kelly acknowledged that the president is not actually pursuing “amnesty,” because “amnesty is citizenship and that’s not what [Obama] is talking about.” Kelly also explained how conservatives purposely misuse the word “amnesty” for political gain: “That’s a hot-button term that the right uses to sort of get people upset.
Via Crooks and Liars
Obama Administration Announces Final Rules to Protect Students from Poor-Performing Career College Programs
Source: U.S. Department of Education
To protect students at career colleges from becoming burdened by student loan debt they cannot repay, today the U.S. Department of Education is announcing regulations to ensure that these institutions improve their outcomes for students—or risk losing access to federal student aid. These regulations will hold career training programs accountable for putting their students on the path to success, and they complement action across the Administration to protect consumers and prevent and investigate fraud, waste and abuse, particularly at for-profit colleges
Poverty Rate Declines, Number of Poor Unchanged, Based on Supplemental Measure of Poverty
Via: U.S. Census Bureau
The nation’s poverty rate was 15.5 percent in 2013, down from 16.0 percent in 2012, according to the supplemental poverty measure released today by the U.S. Census Bureau. The 2013 rate was higher than the official measure of 14.5 percent, but similarly declined from the corresponding rate in 2012.
Meanwhile, 48.7 million were below the poverty line in 2013 according to the supplemental poverty measure, not statistically different from the number in 2012. In 2013, 45.3 million were poor using the official definition released last month in Income and Poverty in the United States: 2013.
These findings are contained in the Census Bureau report The Supplemental Poverty Measure: 2013, released with support from the Bureau of Labor Statistics and describing research showing different ways of measuring poverty in the United States.
The supplemental poverty measure serves as an additional indicator of economic well-being and provides a deeper understanding of economic conditions and policy effects.
Blinder and Watson (2013) acknowledge ubiquitous research demonstrating the U.S. economy has performed better under Democrat presidents than Republican presidents. They asked why. They attribute the Democrat advantage to more benign oil shocks, superior TFP (Total Factor Performance) performance, and more optimistic consumer expectations about the near-term future. They find these “good luck” factors explain a little more than half the Democrat economic advantage.
The U.S. economy has performed better when the President of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 presidential terms. This paper asks why. We find that the answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, and more optimistic consumer expectations about the near-term future. Many other potential explanations are examined, but they fail to explain the partisan growth gap.
The following related posts as a collective examine more economic outcomes than Blinder and Watson’s concentration on GDP growth.
Which Party Occupying the Oval Office Does a Better Job with the Economy?
Part II – Which Party Occupying the Oval Office Does a Better Job with the Economy?
Do Republicans Do a Better Job with the Economy? What Does the Evidence Say
Manufacturing Jobs Growth Differs Sharply Across Post-World II Presidential Administrations
Blinder, Alan S.. & Watson, Mark W. (2013). Presidents and the Economy: A Forensic Investigation.
Insight into gender differences among top income earners.
We analyze changes in the gender structure at the top of the earnings distribution in the United States over the last 30 years using a 10% sample of individual earnings histories from the Social Security Administration. Despite making large inroads, females still constitute a small proportion of the top percentiles: the glass ceiling, albeit a thinner one, remains. We measure the contribution of changes in labor force participation, changes in the persistence of top earnings, and changes in industry and age composition to the change in the gender composition of top earners. A large proportion of the increased share of females among top earners is accounted for by the mending of, what we refer to as, the paper floor – the phenomenon whereby female top earners were much more likely than male top earners to drop out of the top percentiles. We also provide new evidence at the top of the earnings distribution for both genders: the rising share of top earnings accruing to workers in the Finance and Insurance industry, the relative transitory status of top earners, the emergence of top earnings gender gaps over the life cycle, and gender differences among lifetime top earners.
Guvenen, Faith, et al. (2014). The Glass Ceiling and The Paper Floor: Gender Differences among Top Earners, 1981–2012. National Bureau of Economic Research. NBER Working Paper No. 20560.