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Noted for December 22, 2012

Worth Reading:

  • Susan E. Woodward and Robert E. Hall: Mortgage Brokers and the Three Axes: "Untrained, inexperienced borrowers interact with specialist mortgage brokers in the mortgage origination market. Brokers earn two kinds of compensation, explicit charges the borrower pays in cash and a commission the lender pays based on the spread between the coupon rate the borrower agrees to and the par mortgage interest rate. Both types of broker compensation seem to confuse borrowers. The wholesale lender’s commission is determined by financial dynamics understood by a tiny group of professionals, and the rate sheet that summarizes the possible payments is never shown to borrowers.… With respect to policy changes that might help achieve a more efficient equilibrium, we believe in evidence-based design. Disclosure law has historically been in the hands of lawyers, who designed dense forms that may help absolve their clients of blame for consumer error, but which did little to help consumers find better deals. A new movement to design disclosures that are proven to be helpful, through field experiments, may result in some progress. Whether these forms can overwhelm the persuasion of skilled expert salesmen remains to be seen. We are inclined to believe that simple admonitions, such as “mortgage brokers are salesmen and the only way to get a good deal is to shop and bargain” and “you are more likely to get a good deal if you shop for no-cost loans” are more likely to yield improvements than, for example, trying to teach borrowers enough financial economics to understand the tradeoff between cash and the interest rate."

  • Nicholas Oulton: In defence of GDP as a measure of wellbeing

  • The “Snake Fight” Portion Of Your Thesis Defense.* Bill Black: Let’s Celebrate the Failure of the July 2011 Great Betrayal

  • Bruce Bartlett: How Democrats Became Liberal Republicans

  • Miles Kimball: The Neomonetarist Perspective

  • Ethan Pollack: The middle class does NOT extend up to $400K

  • Democratic House Candidates Now Have A Nearly 1.2 Million Vote Lead Over The Republicans

  • Chris Giles and Claire Jones: Blow for Osborne as borrowing rises: "George Osborne suffered a double blow on Friday after it emerged that a severe shortfall in income tax revenue pushed the public finances deeper into the red last month and growth was marginally weaker in the third quarter. The poor data on the public finances complicate the chancellor’s ambition to show government borrowing falling this financial year. In official figures that will depress the Treasury just before the Christmas break, the Office for National Statistics reported on Friday that public sector net borrowing in November was £17.5bn, an increase on the level of borrowing from last year. More worrying for the chancellor is that the main cause of higher borrowing is disappointing income tax receipts – the government’s most important revenue source – and so cannot be put down to odd timing of government expenditure, which is variable across the financial year."

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