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Has the bull market in stocks become 'too big to fail'? - (www.latimes.com) Officially, the Federal Reserve isn't supposed to worry about keeping
stock prices flying high. But when Fed Chairman Ben S. Bernanke was asked about
the market's outlook last week on Capitol Hill, he sounded like a lot of
bullish Wall Street investment strategists. "I don't see much evidence of
an equity bubble," he told the Senate Banking Committee in his semiannual
testimony on Fed policy. Stocks "don't appear overvalued given earnings
and interest rates." More important for the markets, Bernanke pledged to
continue the Fed's policy of pumping colossal sums into the financial system to
support the economic recovery. As stocks flirt with the record highs reached
just before the global financial crash of 2008, memories of that catastrophe
loom large. Many Americans have abandoned equities since the crash, terrified
of living through another one. Yet the Fed's efforts to keep the economy
growing may not work unless the stock market keeps moving in one direction from
here: higher. "Too big to fail," the label derisively given to the
nation's biggest banks, now could also be applied to stocks' 4-year-old bull
market. "The Fed and the other central banks cannot afford to see a
massive decline in equity prices," said Mohamed El-Erian, who oversees $2
trillion as chief executive of money manager Pimco in Newport Beach.
State pension funding gap up 20 percent in 2012 - (www.reuters.com) The shortfall in 109 of the nation's state pension plans, which
guarantee retirement for millions of public workers such as police,
firefighters, and teachers rose to $834.2 billion in 2012, up from $690.3
billion the previous year, according to a new report by Wilshire Consulting, a
unit of independent investment management firm Wilshire Associates. The report
highlights the uphill struggle faced by many of the state pension plans
nationwide and is a reminder that financially strained state governments will
have to make some tough choices in order to make up the shortfall. It also
shows state pension fund managers are continuing to up their exposure to less
conventional assets such as real estate, private equity, hedge funds and
commodities as they try to boost their returns and diversify away from over
exposure to volatile equities.
Tax bills for rich families approach 30-year high - (www.usatoday.com) The poor rich. With Washington gridlocked again over whether to raise
their taxes, it turns out wealthy families already are paying some of their
biggest federal tax bills in decades even as the rest of the population
continues to pay at historically low rates. President Obama and Democratic
leaders in Congress say the wealthy must pay their fair share if the federal
government is ever going to fix its finances and reduce the budget deficit to a
manageable level. A new analysis, however, shows that average tax bills for
high-income families rarely have been higher since the Congressional Budget
Office began tracking the data in 1979. It's middle- and low-income families
who aren't paying as much as they used to.
Michigan Governor’s Move Sets Detroit Takeover in Motion -
(www.bloomberg.com) Michigan Governor Rick Snyder’s formal
declaration that a financial emergency besets Detroit started the clock ticking
for city leaders who may want to try to block a state takeover. It gave them 10
days. Opponents can request a hearing before a Snyder-appointed representative
to appeal his decision. Information presented in the session would be reported
to the governor, who would then decide whether to stick by his declaration or
revoke it, said Terry Stanton, a state
Treasury department spokesman. The governor has no deadline to make his call.
If he keeps to his decision, a three-member state panel called the emergency
loan board -- all appointees of the governor -- would select an emergency
manager. Snyder, 54, would have input. City leaders can appeal to a court if he
doesn’t relent, Stanton said. Critics of a takeover say it would hurt Detroit voters by letting a state manager
strip power from their elected leaders. “I fundamentally disagree with taking
measures that disenfranchise the families I represent in Detroit,” U.S.
Representative Gary Peters, a suburban Detroit Democrat, said in a statement.
“Emergency managers in Michigan have consistently failed to address the
systemic problems plaguing older urban areas like Detroit.”
There
is no housing bubble in Southern California, no, no bubble here... - (www.scpr.org) There is not
housing bubble. But of course you could be excused for thinking that there is,
if you live in Southern California. The real estate market here is distorted,
with supply and demand out of whack. The Great Recession meant that we didn't
build any houses for four years. The supply of "distressed"
properties — foreclosures — is getting tight, because banks are working through
their backlog and because they don't want to flood the market and crush what is
for them a good thing: rising prices. But rising prices are a mixed blessing.
In some parts of Southern California, everyday buyers who need a mortgage are
getting priced out by all-cash buyers and investors looking to snap up
properties at a reduced price, relative to what they hit during the peak. This
has led some market observers to say that we're dealing with a housing bubble
in the region. But that's not really the story. There are some micro-bubbles.
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