Sunday, February 23, 2014

Monday February 24 Housing and Economic stories


The 10 worst states for taxes in 2014 - (www.cnbc.com) California blows away Illinois, NY, NJ, and all other ones listed. California: Top State Income Tax Rate: 13.3 percent. Sales tax: 7.5 percent. Property tax per capita: $1,450. California has one of the highest income taxes in the country and imposes an alternative minimum tax on both individuals and corporations. The Golden State relies heavily on the income tax revenue generated by its richest residents. This year such revenues are expected to comprise two thirds of California’s general-fund reserves. Its 7.5 percent sales tax rate includes a mandatory statewide local tax of 1 percent.

US severely exposed if rates rise: Erskine Bowles - (www.cnbc.com) The United States spends about $230 billion a year in finance payments to creditors—a level that could more than double if interest rates returned to more normal levels, anti-debt crusader Erskine Bowles warned on Monday. To put $230 billion a year in perspective, Bowles said on CNBC's "Squawk Box," it's more than the U.S. spends at the departments of Commerce, Education, Energy, Homeland Security, Interior, Justice, State and the court system combined. "If interest rates were to return to a median level they were in the 1990s, we'd be spending not $230 billion a year but $650 billion a year," the former co-chair of the president's debt commission said. "When you think about it, that's $650 billion that will be spent, principally in those countries we're borrowing money from, to educate their kids, to improve their infrastructure, to do the high value-added research on their college campuses, so the next new thing is created over there," Bowles said. "That's crazy."

An Economic 'Perfect Storm' Is Brewing - (www.businessinsider.com) Last week at the World Economic Forum in Davos, economist Nouriel Roubini told BI's Joe Weisenthal that it seemed markets had sailed into a "mini-perfect storm," resulting in lots of volatility. "...Between Chinese PMI of 50, Argentina letting its currency go, noises coming politically from Ukraine, Turkey, and Thailand … [the] contagion is not just within emerging markets but also affects advanced economies' equity markets." On Sunday, the economists at Société Générale issued a similar warning using the same vivid imagery. In a note to clients titled "Perfect Storm Brewing As Policy Turns," they write: Following a week of extreme volatility in emerging markets, many wonder if we are now heading for a perfect storm, with China increasingly sucked in and Europe's already low inflation falling further towards deflation. The current developments also mark a shift in markets' focus on where the need for policy change is the greatest - away from Europe where bond spreads remain resilient. We remain unconvinced, however, that the reforms to date in Europe are enough to raise growth sufficiently and put public debt trajectories on a sustainable path.

Currency crisis at Chinese banks 'could trigger global meltdown’ - (www.telegraph.co.uk)  The growing problems in the Chinese banking system could spill over into a wider financial crisis, one of the most respected analysts of China’s lenders has warned. Charlene Chu, a former senior analyst at Fitch in Beijing and now the head of Asian research at Autonomous Research, said the rapid expansion of foreign-currency borrowing meant a crisis in China’s financial system was becoming a bigger risk for international banks. “One of the reasons why the situation in China has been so stable up to this point is that, unlike many emerging markets, there is very, very little reliance on foreign funding. As that changes, it obviously increases their vulnerability to swings in foreign investor appetite,” said Ms Chu in an interview with The Telegraph. Ms Chu has been warning since 2009 about the growth of a shadow banking system in China that has helped fuel the credit expansion seen in the country in the wake of the Western financial crisis.

Fed draws criticism from abroad as emerging markets still reeling - (www.reuters.com)  The Federal Reserve's decision to keep trimming its economic stimulus drew fire on Friday as India's central bank chief said Americans should be more attuned to the global impact of their policies, and the IMF called for vigilance given strains in financial markets. The push-back came on Fed Chairman Ben Bernanke's last day on the job and two days after the U.S. central bank reduced the pace of its huge asset purchase program. The Fed made the move on Wednesday despite a bruising selloff in emerging markets that was prompted in part by the prospect of less U.S. monetary support. With the turmoil in currencies and stocks spreading into more emerging markets on Friday, Fed officials, addressing the rout for the first time, offered no hint the sell-off would influence their policy stance unless the U.S. economy were threatened. But in Mumbai, Reserve Bank of India Governor Raghuram Rajan said the United States "should worry about the effects of its policies on the rest of the world."




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