Implications of a Switch to a Territorial Tax System in the United States:
A Critical Comparison to the Current System
The 10-year Treasury TPE at the end of 2016 is estimated to be negative 100 basis points. Roughly speaking, this implies the yield on a 10-year Treasury security would be 100 basis points higher absent the Federal Reserve's LSAPs and MEP programs. By the end of 2017, it stands at about negative 85 basis points. This 15 basis point narrowing reflects two changes in the balance sheet: (1) the SOMA portfolio is aging and (2) we are getting closer to a change in the reinvestment policy. When the size of the balance sheet normalizes in the first quarter of 2023, the TPE is still nonzero, standing at negative 24 basis points, reflecting the fact that the portfolio composition is still not what would be deemed a normal composition. At that time, the portfolio is projected to hold $1.2 trillion in MBS and half of the $1.1 trillion in Treasury holdings will have maturities greater than 10 years (see figure 2). In comparison, before the crisis, the portfolio held no MBS and only $90 billion of the $800 billion in Treasury holdings had maturities greater than 10 years.
Government funding ends Friday, allowing only three full days of legislative activity after the House returns late Tuesday night, and the last-minute controversial requests from the administration are threatening to make a deal harder to reach.
Because Congress failed to come together on an appropriations bill for 2017 last year, its passed a short-term measure called a Continuing Resolution, or CR, that funds the government at 2016 levels. But the CR runs out on Friday, giving Congress a hard deadline to pass a comprehensive funding bill to finish the current fiscal year.
Reflecting the more modest pace of CRE sales volume this year than in the previous two, CRE lending growth by banks in the first quarter dropped to its slowest level of growth in two years, which should help federal banking regulators sleep better after warning about overheated commercial real estate lending.Click here to download a pdf of this article, Missile.pdf
Re-vamping the tax code has become the top legislative issue for the Administration. Ryan said, "As soon as possible for us is by the end of summer but we're going to take our time to get it right. We can clearly get this done by the end of summer but if it needs to go a little longer, we'll do that."Click here to download a pdf of this article, Missile.pdf
That other drama is in France. In the first round of its presidential election, to be held on Sunday, some three-quarters of the French electorate are expected to back candidates who stand variously for corruption, a 100 percent top tax rate, Islamophobia, Russophilia, Holocaust denial, the undermining of NATO and the traumatic breakup of Europe’s political and monetary union. France was once the cradle of the Western Enlightenment. Now it threatens to become a spectacle of decadent collapse.Click here to download a pdf of this article, Missile.pdf
"We need a general election and we need one now," May said Tuesday at the announcement held outside 10 Downing Street. The early election is due to be held on June 8 but would a need a two-thirds majority by U.K. lawmakers before being made official.Click here to download a pdf of this article, Missile.pdf
The IEA shows global inventories falling at a rate of 200,000 barrels a day during the first quarter of this year. But its analysis of observed stockpiles -- and there are plenty of places where volumes in storage are not easily counted -- suggests "global stocks might have marginally increased" over the period. Confused? You're not alone.
OPEC, which published its own monthly report a day before the IEA, paints a much less optimistic picture. It shows global oil inventories increasing by 430,000 barrels a day in the quarter just ended. No confusion there. The world is still over-supplied with oil, according to its biggest producer nations.Click here to download a pdf of this article, Missile.pdf
The new REIT, to be called Safety, Income and Growth Inc., is believed to be the publicly-traded company formed primarily to acquire, own, manage, finance and capitalize ground net leases.Click here to download a pdf of this article, Missile.pdf
Absent an agreement soon, a growing number of analysts say Puerto Rico will seek protection from creditors under PROMESA's court-sanctioned restructuring process, akin to U.S. bankruptcy. Forbearance deals could let negotiations continue past May 1, but a source directly involved in the talks said avoiding an eventual bankruptcy is "impossible."
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