More Bad Loans on the Horizon?

US Economics News blog has a great post on the danger of Ginnie Mae and Federal Housing Authority becoming the next Fannie and Freddie -- putting huge taxpayer dollars at risk.

Here is the link: http://useconomicsnews.info/are-ginnie-and-the-fha-the-new-subprime/

It is hard to imagine that the government would repeat the same bad practices that caused a large part of the housing bubble, and resulted in multi-billion-dollar bailouts of Fannie and Freddie...but it appears that history may be repeating.

Are "summer hours" making a yearlong comeback?

In Utah, all state employees were shifted to a 4-day work week last August. They still put in 40 hours a week, but over 4 days instead of 5.

The benefits are pretty substantial -- through May, the state had saved $1.8 million, and that is before the (expensive to cool) summer months...

Additionally, the estimated CO2 reductions are estimated to be equivalent to pulling 2300 cars of the road for a year...

The details are covered in The New Republic, HERE...

Once upon a time, "summer hours" were common in the publishing industry. Now it looks like they may spread to other industries. The nature of international business won't make it possible for everyone to shift to a 4-day week, but it would be interesting to see other areas where it could work.

At the very least, it appears to offer some economic benefits, and possibly some significant environmental ones as well.

HT: Freakonomics

A Bubble in China...

Once you get past the hyperventilating coverage of the US economy, there has been growing concern about a bubble in Chinese stock markets.

However, Vitaliy Katsenelson over at Foreign Policy feels that the potential stock market bubble is unimportant. Instead, he paints a pretty dramatic picture of the entire Chinese economy as a bubble that is on the verge of bursting -- The China Bubble's Coming -- But Not the One You Think

There are lots of folks here in the US who would secretly (or not so secretly) enjoy the idea of the Chinese economy imploding, but they underestimate the effects on the US economy. If the Chinese economy implodes, who will buy the Treasurys that are funding US deficits and deficit spending? What happens if the US government has to come up with the cash it needs on its own, without its lender of choice -- who then foots the bill?

It is not a pretty picture.

Shattering myths about the Subprime crisis...

John Carney at The Business Insider republishes an essay by Fed economist Yuliya Demyanykon on 10 Myths About the Subprime Crisis. This is absolutely worth reading!

Among the myths that Ms. Demyanykon busts are the belief that Subprime loans went only to borrowers with impaired credit, and that subprime borrowers were offered low"teaser rates."

Mr. Carney correctly points out that this is a good "reminder that many of the popular explanations for our mess are way too simple," but he seems to have missed the part that the 108Warren Commission finds so troubling. A significant portion of the new regulatory framework that is being debated on Capital Hill is based on exactly these same myths.

When we legislate and regulate based on an inaccurate understanding of what happened, how can we even hope that this legislation or regulation will do any good?

Knee-jerk legislation and regulation is very dangerous...