'Fiscal Cliff' deal favors reflation of housing bubble - (www.ochousingnews.com) The housing market is on firmer ground today, as two major tax provisions survived the “fiscal cliff.” Congress did not touch the mortgage interest deduction, and it extended tax relief for one year on mortgage debt forgiveness. It’s worth noting that the debate on the mortgage interest deduction is merely delayed. In all likelihood, the mortgage interest deduction won’t get touched directly, but when Congress takes up tax reform later this year, we may see an overall cap on deductions will will render the home mortgage interest deduction much less valuable to the high-wage earning households that utilize it.
Secret and Lies of the Bailout - (www.rollingstone.com) The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come. t has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you'd think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right? Wrong. It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.
Contractors quietly optimistic following sequestration delay - (www.washingtonpost.com) Last year, some of the largest contractors were vocal about the need to stop sequestration. They appeared on Capitol Hill and warned that they might have to issue layoff notices to employees. Some even hosted rallies attended by workers nervous about their jobs. After postponement of the sequestration, many contractors were hesitant to say much. The Arlington-based U.S. unit of BAE Systems issued a statement that said the company was pleased by the delay. However, “the prolonged uncertainty associated with sequestration, which has already made it virtually impossible to plan near- and long-term business decisions, will persist for yet another two months,” the company added.
Bond Vigilantes Of Yore Cowed by Central Banks - (www.cnbc.com) Have the fearsome bond vigilantes been rendered obsolete by central banks? As Congress and President Barack Obama lurch from one crisis to the next in an era of record budget deficits and a debt load flirting above $16 trillion, this once feared group of investors has gone strangely silent. Bond vigilantes were credited with forcing up Treasury bond yields to just over eight percent, pressing the Clinton administration to confront the U.S. budget deficit in protest of fiscal and monetary policy. These same bond scourges helped bring Europe's debt crisis to a boiling point, by sending yields in Greece, Italy, Portugal and Spain through the roof. Some market observers are perplexed by the reasons why the vigilantes haven't come out of hibernation. Yet others point the finger at the Federal Reserve and their global central banking cohorts, who are trying to keep the global economy afloat though massive quantitative easing.
Drought threatens to halt critical barge traffic on Mississippi - (www.washingtonpost.com) On a stretch of the Mississippi River, the U.S. Coast Guard has been reduced to playing traffic cop. For eight hours a day, shipping is allowed to move one way in the 180 miles of river between St. Louis and Cairo, Ill., depending on the hour. For the other 16 hours, boats go nowhere, because the river is closed to traffic. The mighty Mississippi, parched by the historic summer drought, is on the verge of reaching a new low. That could mean that tugboats hauling barges loaded with billions of dollars’ worth of cargo — enough to fill half a million 18-wheelers — would not be able to make their way up and down the river. Through the night, contractors for the U.S. Army Corps of Engineers remove rocks from a stretch near Thebes, Ill., that threaten to cut boats to shreds. The corps has assured state officials, farmers and coal barons who rely on the shipping that it can maintain the nine-foot level it says makes navigation safe.
White House sees promise in revisiting elements of ‘grand bargain’ on taxes, spending - (www.washingtonpost.com)