Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.
Mortgage Giants Set to Loosen Lending (Joe Light, The Wall Street Journal) The (largely) government owned mortgage security and mortgage guarantee corporations Fannie Mae and Freddie Mac are in the process of loosening the requirements on banks and other mortgage originators that will qualify them for eliminating responsibility for mortgages that go bad. An announcement is anticipated as early as Monday (20 October). The down payment requirement is to be lowered to 3% for some borrowers, according to this article. However, according to a CNN Money article in early January, mortgage underwriting rules going into effect then had "no minimum down payment or credit score requirement". The significance of the Joe Light statement is uncertain.
The other key change mentioned by Light is that the length of time is being relaxed that the mortgagor must make timely payments to exempt the originator for liability for a later default. In 2013 the qualifying condition was three years of timely payments. In May 2014 that was changed to at least 34 timely payments in the first three years. This is to be relaxed further this month. In qualifying for exemption from put-back to the originator of defaulting mortgages, fraud has been excluded from the exemptions. Fraud has been poorly defined according to Light and it will be addressed more explicitly this week.
Articles about conflicts and disease around the world
Why the Fed Should Stop Talking About Raising Interest Rates (Taylor Tepper, Money) The author says mixed economic data argues against an early interest rate hike by the Fed. We can see that. But then he says the "huge stock market sell-off" does as well and we wonder what he is smoking. The sell-off has been less than 5% in large cap stocks. There is no huge there.
The ECB’s Faulty Weapon (Daniel Gros, Project Syndicate) Daniel Gros has contributed to GEI. Gros says that the credit structure in Europe does not respond to interest rates or to monetary expansion the way things would (have) work(ed) in the U.S.
Measuring the Global Fossil Fuel Divestment Movement (Arabella Advisors) The authors say that the economics of climate change and reaction to climate change cannot be assessed without including an determination of the cost of doing nothing. We agree but unfortunately this article does little to define what those costs are. Only generalities are discussed.
Bank of England chief economist ‘gloomier’ about UK prospects (Katie Allen, The Guardian) Pound falls and Andrew Haldane predicts low interest rates will continue amidst macro-economic "agony and ecstasy". The global slowdown will be a drag on the UK which remains "vulnerable to another explosion in the eurozone crisis".
Advice For A Career In Economics (Adam Ozimek, Forbes) Ozimek explains why the most important things for a career in economics are programming skills, communication skills and conscientiousness. He doesn't say that economic theory is important - and we think he has not misstated the situation. He discusses econometrics and says it is really important to "program estimators from scratch". We agree. If you use someone else's program you may never know what you are working with and the potential value or shortcomings of what you produce. This article was a pleasant surprise. It was free of any BS and that is difficult to find in anything with Economics in the title.
Top 10 States Where Americans Are Broke (Eric McWhinnie, Wall Street Cheat Sheet) Well, when it comes to all three measures of income and productivity (personal income, GDP and taxes paid, all per capita), Mississippi ranks 51 in all categories to grab top spot in poorest state. (DC is included.) Which states came in next to last in each category? Arkansas ranked 50 for personal income (8th poorest overall); Idaho ranked 50 for GDP (7th overall); and West Virginia ranked 50 for taxes paid (2nd overall). The highest ranking in each category for the ten poorest : Income, Maine 38th (10th poorest overall); GDP, New Mexico, 40th (5th overall); and Taxes paid, Arkansas, 13th (8th overall).
Other Economics and Business Items of Note and Miscellanea
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