The FRB-Boston has released Public Policy Discussion Paper that will be of interest to the “Occupy” mob – Quantifying the Role of Federal and State Taxes in Mitigating Income Inequality:
Income inequality has risen dramatically in the United States since at least 1980. This paper quantifies the role that the tax policies of the federal and state governments have played in mitigating this income inequality. The analysis, which isolates the contribution of federal taxes and state taxes separately, employs two approaches. First, cross-sectional estimates compare before-tax and after-tax inequality across the 50 states and the District of Columbia. Second, inequality estimates across time are calculated to assess the evolution of the effects of tax policies. The results from the first approach indicate that the tax code reduces income inequality substantially in all states, with most of the compression of the income distribution attributable to federal taxes. Nevertheless, there is substantial cross-state variation in the extent to which state tax policies compress the income distribution attributable to federal taxes. Cross-state differences in gasoline taxes have a surprisingly large impact on income compression, as do sales tax exemptions for food and clothing. The results of the second approach indicate that there has been little change since the early 1980s in the impact of tax policy on income inequality across almost all states.
Here’s a big surprise! Even bigger writedowns on Greek debt are being discussed:
European finance ministers grappled with an assessment that Greece’s economy is deteriorating as they began a six-day battle to stave off a default and shield banks from the fallout.
A review by European and International Monetary Fund experts showed Greek bond writedowns of 60 percent and more official aid would still leave the country with a debt load bigger than its annual economic output by 2020.
…
Europe’s international image is “disastrous,” Luxembourg Prime Minister Jean-Claude Juncker told reporters before the Brussels meeting. “We’re not really giving a great example of a high standing of state governance.”
It will be remembered that Jean-Claude Juncker is a liar with lying staff.
Federal Reserve Vice Chairman Janet Yellen said a third round of large-scale securities purchases might become warranted if necessary to boost a U.S. economy challenged by unemployment and financial turmoil.
The central bank should also give “careful consideration” to Chicago Fed President Charles Evans’s proposal to tie the near-zero interest-rate pledge to specific levels of unemployment and inflation, Yellen said today in a speech in Denver.
The remarks signal Fed officials may be prepared to delve further into unprecedented monetary territory and take criticism inside and outside the central bank for expanding the balance sheet. Fed policy makers are struggling to lower unemployment that’s been stuck near 9 percent or higher for 30 months without boosting inflation that’s already close to the central bank’s long-run goal.
See? The Republicans may be on to something
Interesting competition for retail deposits in Europe:
The rate paid on new bank deposits for up to a year has climbed in Portugal to 4 percent from 2.56 percent in December and in Italy to 2.41 percent from 1.40 percent, according to data from the European Central Bank. Banco Espirito Santo SA (BES), Portugal’s biggest publicly traded bank, is offering a 4.83 percent average annual return on three-year deposits of more than 1,000 euros.
In September, Intesa Sanpaolo SpA (ISP), Italy’s second-largest bank, sold two-year bonds yielding 4.5 percent to customers transferring cash from competitors.
In Spain, the government acted in May to penalize banks that offered what it deemed to be overly aggressive deposit rates by requiring them to make extra contributions to deposit guarantee funds. Average rates for new bank deposits have held steady this year in Spain at about 2.6 percent.
That hasn’t stopped banks from competing to lure savings with products such as the commercial paper that Bankia is selling to retail clients to raise 1 billion euros. Governments, both national and regional, are in on the act after states including Catalonia and Andalusia offered bonds for sale.
…
Banco Espirito said in August that it trimmed lending by 3.1 percent from a year earlier and boosted customer funds by 23 percent to bring its loan-to-deposit ratio down to 155 percent from 198 percent a year earlier. A lower loan-to-deposit ratio is a sign the bank is less reliant on sources of funding such as bond sales to fund its business.Santander expects lending at its Spanish branch network to shrink 3 percent a year through 2013 after it brought down the loan-to-deposit ratio at the unit to 134 percent from 159 percent in 2009.
Capital Power Corporation, proud issuer of CPX.PR.A has been confirmed at Pfd-3 by DBRS:
DBRS has historically assessed CPLP’s financial profile on a stand-alone basis and, as such, deconsolidated the results of its 29.2% ownership interest in Capital Power Income LP (CPILP; rated BBB (high), Under Review with Negative Implications). The strategic review process initiated by CPILP in the fall of 2010 resulted in an agreement (the Agreement) in which Atlantic Power Corporation (ATP) will acquire all the outstanding units of CPILP. Upon closing of the transaction in early November 2011, CPLP is expected to receive total consideration of approximately $320 million for its ownership interest in CPILP, in a mix of cash, ATP shares and assets. As part of the Agreement, CPILP will sell its Roxboro and Southport facilities, located in North Carolina, to CPLP for a purchase price of $121 million (forming a portion of combined consideration received).
The PPAs for CPILP’s North Carolina plants were finalized with Progress Energy Resources Corp. in June 2011 and DBRS expects their contribution to CPLP’s earnings to be modest, although they should also reduce uncertainty. Closing of the transaction is not expected to have any impact on the ratings of CPLP or CPC, given the modest cash contribution of CPILP to CPLP, and the consideration to be received.
It was a fairly uneventful day on the Canadian preferred share market, with PerpetualDiscounts down 3bp, FixedResets up 1bp and DeemedRetractibles gaining 4bp. There was a surprising amount of volatility for such a quiet day overall, with the majority of major changes in bid price being downwards. Volume was good.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -1.1652 % | 1,976.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -1.1652 % | 2,972.2 |
| Floater | 3.64 % | 3.66 % | 158,310 | 18.16 | 2 | -1.1652 % | 2,133.8 |
| OpRet | 4.85 % | 2.63 % | 62,814 | 1.54 | 8 | 0.0730 % | 2,448.3 |
| SplitShare | 5.41 % | 1.89 % | 54,051 | 0.35 | 4 | -0.0661 % | 2,477.5 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0730 % | 2,238.8 |
| Perpetual-Premium | 5.69 % | 3.84 % | 106,472 | 1.88 | 13 | -0.1667 % | 2,124.3 |
| Perpetual-Discount | 5.35 % | 5.40 % | 109,341 | 14.80 | 17 | -0.0270 % | 2,255.5 |
| FixedReset | 5.15 % | 3.17 % | 195,355 | 2.47 | 61 | 0.0144 % | 2,328.4 |
| Deemed-Retractible | 5.08 % | 4.60 % | 219,805 | 5.82 | 46 | 0.0378 % | 2,191.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| ELF.PR.F | Perpetual-Discount | -2.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-21 Maturity Price : 21.95 Evaluated at bid price : 21.95 Bid-YTW : 6.09 % |
| BAM.PR.B | Floater | -1.30 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-21 Maturity Price : 14.43 Evaluated at bid price : 14.43 Bid-YTW : 3.66 % |
| POW.PR.C | Perpetual-Premium | -1.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-21 Maturity Price : 24.58 Evaluated at bid price : 24.82 Bid-YTW : 5.88 % |
| PWF.PR.M | FixedReset | -1.13 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-31 Maturity Price : 25.00 Evaluated at bid price : 26.25 Bid-YTW : 3.64 % |
| SLF.PR.G | FixedReset | -1.09 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.50 Bid-YTW : 3.81 % |
| BAM.PR.K | Floater | -1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-21 Maturity Price : 14.41 Evaluated at bid price : 14.41 Bid-YTW : 3.67 % |
| IFC.PR.A | FixedReset | 1.40 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.36 Bid-YTW : 3.77 % |
| IFC.PR.C | FixedReset | 1.44 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.41 Bid-YTW : 3.91 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| ENB.PR.B | FixedReset | 113,925 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.60 Bid-YTW : 3.59 % |
| CM.PR.D | Perpetual-Premium | 113,588 | Desjardins crossed 50,000 at 25.11. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-10-21 Maturity Price : 24.70 Evaluated at bid price : 24.93 Bid-YTW : 5.78 % |
| CU.PR.C | FixedReset | 100,500 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.61 Bid-YTW : 3.60 % |
| IFC.PR.C | FixedReset | 98,345 | TD crossed 11,000 at 25.21. RBC crossed 30,000 at 25.21 and 10,500 at 25.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.41 Bid-YTW : 3.91 % |
| BNS.PR.N | Deemed-Retractible | 89,842 | RBC crossed 39,900 at 25.77. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-01-27 Maturity Price : 25.00 Evaluated at bid price : 25.75 Bid-YTW : 4.60 % |
| BNS.PR.Z | FixedReset | 71,335 | Recent secondary offering. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.70 Bid-YTW : 3.43 % |
| There were 34 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| SLF.PR.H | FixedReset | Quote: 24.05 – 24.57 Spot Rate : 0.5200 Average : 0.3135 YTW SCENARIO |
| SLF.PR.F | FixedReset | Quote: 25.95 – 26.50 Spot Rate : 0.5500 Average : 0.3747 YTW SCENARIO |
| PWF.PR.O | Perpetual-Premium | Quote: 25.40 – 25.80 Spot Rate : 0.4000 Average : 0.2881 YTW SCENARIO |
| PWF.PR.M | FixedReset | Quote: 26.25 – 26.60 Spot Rate : 0.3500 Average : 0.2454 YTW SCENARIO |
| SLF.PR.G | FixedReset | Quote: 24.50 – 24.75 Spot Rate : 0.2500 Average : 0.1454 YTW SCENARIO |
| BMO.PR.K | Deemed-Retractible | Quote: 26.18 – 26.55 Spot Rate : 0.3700 Average : 0.2682 YTW SCENARIO |