U.S. House of Representatives refuses to raise debt ceiling
In a largely ceremonial vote, the Republicans brought a bill to raise the debt ceiling by $2.4 trillion without any spending cuts, and voted it down by a 318 vs 97 margin. The purpose of the vote was to demonstrate to the Obama administration the poor likelihood of an increase in the debt ceiling without serious spending cuts. The Associated Press indicates that Obama does plan on meeting with the Republican representatives today.
May was first month in which markets were down since August 2010
Yet while the overall trend was down, the market was up 128 points on Tuesday, closing at 12,569 as reported by the Associated Press. Global markets are trending upwards on Wednesday.
China's manufacturing activity slows
China's manufacturing activity rose at a slower rate in May, according to the Chinese Purchasing Managers Index (PMI), as reported by Fox Business News.
Chinese population to trend downwards
The Washington Post reports that the working age population in China has plateaued and will start to get smaller within the next five years. At that time there will be an explosion of retirees as China's population begins to reflect the outcomes of the controlled birth rate of many years. (Most homes are allowed only one child). China has one of the lowest birth rates in the world. Additionally, population has moved away from rural areas. The smaller population will be forced to support the aging population. At its peak, the population will reach 1.45 billion. It is currently at 1.3 billion.
EU warns the US to speed up its bank reform initiatives
In a letter to Timothy Geithner earlier this week, the EU expressed frustration with the U.S. in its efforts to speed up bank reform, in particular, the capital requirements for banks and limits on CEO bonuses. The Basel II standards agreed to by the nations are not being met by the U.S. and could lead to unfair competition, reports the Financial Times. While the U.S. was quick to pass Dodd-Frank, implementation has been significantly delayed.
Probe against foreign bank lending
Congressman Ron Paul is leading a governmental probe asking for greater information from the Federal Reserve regarding lending to foreign banks under the discount window exemption. When banks seek money from the discount window the borrowing is highly secretive, as reported by Fox Business News. At the worst point of the financial crisis, October 2008, when $111 billion was borrowed under the discount window, more than half was given to two foreign banks. Congress is trying to determine the appropriateness of this exemption.
Pre-Existing Condition Insurance Plan claims to save premiums
The government claims it is cutting rates in 17 states and making it easier for people with pre-existing conditions to get health insurance. The Pre-Existing Condition Insurance Plan, according to the Associated Press, has 18,000 people already signed up. The government will run the plan in 17 states while the remaining states will be implementing their own version of the Plan. In 2014 the Plan will be swept into the larger Health Care legislation.
ETFs in 401(k) plans
San Francisco based Charles Schwab has proposed offering ETFs as one of the primary offerings within its 401k plans, according to the Wall Street Journal. Offering the ETFs is seen as a way for Schwab to aggressively compete against larger 401k providers such as Vanguard or Fidelity. Critics claim ETFs are much more volatile than mutual funds and not appropriate for 401(k) participants. Schwab indicates it will only be offering "plain vanilla" ETFs within the plans.