Blog Posts by Aaron Task

Follow The Daily Ticker on Facebook!

The U.S. economy created a stronger-than-expected 163,000 jobs in July, bringing the average monthly rate for 2012 back above 150,000 after a grim second quarter. Manufacturing was a bright spot last month, adding 25,000 jobs, as the private sector added 172,000 jobs in total.

But the unemployment rate ticked up to 8.3% and the so-called real unemployment rate (U6) rose to 15% even as the labor force shrank by 150,000.

"I'm happy to see this report shows we continue to see steady [payroll] growth, but we still need to do a lot more," says Labor Secretary Hilda Solis. "We need to do everything we can to help create more jobs."

Among the things Secretary Solis is doing is continuing to prod Congress on advancing legislation such as the Transportation Bill and proposals to create jobs for teachers, firefighters and police hit by state and local government cuts.

"Proposals sitting on the Hill now for about 10 months could create about 1 million jobs in

Follow The Daily Ticker on Facebook!

The Federal Reserve downgraded its assessment of the economy and declared it "will provide additional accommodation as needed" but announced no new policy action at its policy meeting this week. (Italics added.)

After last week's stories about the Fed preparing to move sooner vs. later, some were disappointed the Fed wasn't more aggressive. But the reality is the central bank is inching closer to another round of quantitative easing, or some other form of stimulus.

"The FOMC is ready to ease and it won't take very much more weakness to justify additional accommodation," writes Dan Greenhaus, chief global strategist at BTIG.

That pretty much sums up the consensus on Wall Street, which helps explains why the stock market's reaction to Wednesday's FOMC announcement was muted. Many market watchers are also eagerly awaiting the outcome of Thursday's ECB meeting at 7:45 a.m. EDT -- many believe the Fed wanted to wait to see what its European counterparts

Follow The Daily Ticker on Facebook!

You're probably aware the U.S. government spends a lot of money and more than it brings in. But few Americans have a really good understanding of how the budget works, where the money comes from and where it goes.

In Red Ink: Inside the High-Stakes Politics of the Federal Budget, Wall Street Journal economics editor David Wessel shines a light on the federal budget and seeks to clear up some of the "myths and unrealities," including:

Politicians Choose How the Money Is Spent: Over 60% of the federal budget -- $3.6 trillion in fiscal 2011 -- is on "autopilot," Wessel notes, citing Social Security checks, Medicare, Medicaid, farm subsidies and veterans benefits that occur "without a vote of Congress."

All the Money Goes to Foreign Aid and Government Workers: Foreign aid is typically less than 2% of the budget -- "it's a pittance," Wessel says, and firing all federal employees wouldn't even cut the deficit in half.

Uncle Sam Keeps Reaching in Our

Follow The Daily Ticker on Facebook!

As the LIBOR scandal continues to encircle global banks, an All-American version of banks manipulating a key lending rate may be unfolding.

The municipal bond industry's self-regulator the Municipal Securities Rulemaking Board is "concerned about the transparency" of the Municipal Market Data (MMD), a benchmark rate for state and local government debt, The NY Times reports.

The MMD Index is owned and published by Thomson Reuters, which calculates the data based, in part, by surveying banks. As with LIBOR, the potential for manipulation is high.

"For years I have been hearing from bankers, usually underwriters, complaining about how the [MMD] scale is manipulated somehow," says one veteran muni bond market watcher.

According to The NYT, the Securities & Exchange Commission is expected to release a report soon on recommended reforms for the muni bond market.

Given the stress on local government budgets -- and the fact muni bonds are favorite

Reverberations are still being felt from Sandy Weill's comments last week about breaking up the big banks. (See: Sandy Weill, Welcome to 'Team Break Up the Big Banks': Neil Barofsky)

This weekend was chock-full of op-eds and stories about Weill's change of heart and the wisdom of his recommendations -- or lack thereof.

"The fact Sandy Weill is coming forward is significant," says Laurence Kotlikoff, professor of economics at Boston University. "But he's got the wrong view of what's wrong with the banks."

The problem is not the size of the banks but their "opacity and leverage," Koltikoff says. "Secret-keeping small banks that are highly leveraged is not going to be a whole lot different. The way to fix it is to break up the banks by not breaking up the banks."

How's that now?

As detailed in his 2012 book, Jimmy Stewart Is Dead, Koltikoff advocates what he calls limited purpose banking, wherein banks would focus solely on being financial intermediaries, rather than trading or other

Follow The Daily Ticker on Facebook!

Most Americans have a sense TARP was a badly managed program that bailed out "fat cat" bankers at the expense of U.S. taxpayers. Well, it's even worse than you think, according to Neil Barofsky, former special inspector general for TARP (SIGTARP).

Officials in both the Bush and Obama administrations took the attitude "bankers know best," Barofsky recalls. "It was somewhat shocking how much control big banks had over their own bailout [and] the overwhelming deference show by Treasury officials to the banks."

Much has been made about Barofsky's criticism of Treasury Secretary Tim Geithner, who told CBS News he is "deeply offended" by how he's portrayed in Barofsky's book Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.

Barofsky pulled no punches in our earlier segment about the ongoing rate-rigging scandal. (See: "I Hope We See People In Handcuffs": Neil Barofsky Weighs in on LIBOR Scandal)

In the

Follow The Daily Ticker on Facebook!

Financial markets rallied around the world Thursday morning after European Central Bank President Mario Draghi declared "the ECB is ready to do whatever it takes to preserve the euro...and believe me, it will be enough."

By suggesting that rising sovereign bond yields could "hamper the functioning of the monetary policy transmission channel," Draghi seemed to identify a loophole that will allow the ECB to act more aggressively to address the crisis, including a Fed-style round of quantitative easing.

What's important here is not so much Draghi's pledge to preserve the euro, which was understood, but his opening the door to QE -- direct bond purchases by the central bank vs. the "cash for trash" program it offered the banks earlier this year, known as LTRO. To some market watchers, this is the "big bang" out of Europe that could mark the beginning of the end of the crisis.

"There is finally light at the end of the tunnel," writes Chris Rupkey, chief

Follow The Daily Ticker on Facebook!

The Fed is coming! The Fed is coming!

Renewed hope the Fed will take additional action to stimulate the economy helped pare the market's loss Tuesday and contribute to a modest rally Wednesday morning -- which had dissipated by 11:00 a.m. EDT.

"Amid the recent wave of disappointing economic news, conversation inside the Fed has turned more intensely toward the questions of how and when to move," writes Jon Hilsenrath in The WSJ.

Another round of quantitative easing (QE), focused on buying mortgage-backed securities, is the most likely action the Fed would announce. In addition, the central bank could extend its commitment to keep rates at zero beyond 2014 and/or directly extend credit to banks via the discount window to spur lending, The WSJ reports.

The New York Times had a similarly themed article, suggested a concerted effort by the Fed to jawbone the market after three days of triple-digit declines and renewed concerns about Europe's debt