Posturing for Progress

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Page 65 of 67

Final Thoughts "A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified." Report from the St. Louis Federal Reserve on the state of economic recovery. Final Thoughts The purported housing recovery is still hot news across the country. Here, what some in the know have to say about it. "Weakening growth, massive liquidity provision, and rising risk assets cannot continue for very long. Fixed-income asset spreads remain attractive, though in general, less so. Inflation protection looks to be 'on sale,' especially in comparison with equities. Should inflation decline significantly, some more unfavorable economic scenarios will be coming into play— with very negative implications for equities." "How big do the biggest banks have to get before we consider breaking them up? They're 30 percent bigger than they were five years ago. Do they have to double in size, triple in size, quadruple in size before we start to talk about breaking up the biggest institutions?" Sen. Elizabeth Warren (D-Massachusetts) to Treasury Secretary Jack Lew on too-big-to-fail banks and financial institutions. "In particular, the expiration of the payroll tax cut, the enactment of tax increases, the effects of the budget caps on discretionary spending, the onset of sequestration, and the declines in defense spending for overseas military operations are expected, collectively, to exert a substantial drag on the economy this year." Federal Reserve Chairman Ben Bernanke in his prepared remarks to Congress about its role in the progress, or lack thereof, in the economy. Commentary from Smith Breeden on the factors contributing to the economy's instability. "People who were on the fence, they tend to get a sense of urgency as they see interest rates rise." Bob Walters, chief economist at Quicken Loans, to Reuters on homeowner reaction to the rise of interest rates. 64 | The M Report "This demonstrates that the main problem is a broadbased lack of demand for workers—and not, as is often claimed, available workers lacking the skills needed for the sectors with job openings." Elise Gould examining the root cause of unemployment in her latest report from the Economic Policy Institute.

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