Made in Texas: the natural selection of manufacturing

Manufactures - Texas

The rise and fall of subprime mortgages

After booming the first half of this decade, U.S. housing activity has retrenched sharply. Single-family building permits have plunged 52 percent and existing-home sales have declined 30 percent since their September 2005 peaks. ; A rise in mortgage interest rates that began in the summer of 2005 contributed to the housing market's initial weakness. By late 2006, though, some signs pointed to renewed stability. They proved short-lived as loan-quality problems sparked a tightening of credit standards on mortgages, particularly for newer and riskier products. As lenders cut back, housing activity began to falter again in spring 2007, accompanied by additional rises in delinquencies and foreclosures. Late-summer financial-market turmoil prompted further toughening of mortgage credit standards. ; The recent boom-to-bust housing cycle raises important questions. Why did it occur, and what role did subprime lending play? How is the retrenchment in lending activity affecting housing markets, and will it end soon? Is the housing slowdown spilling over into the broader economy?Housing - Finance ; Mortgages ; Mortgage loans

The fallacy of a pain-free path to a healthy housing market

In the mid-1990s, the public policy goal of increasing the U.S. homeownership rate collided with a huge leap in financial innovation. Lenders shifted from originating and holding mortgages to originating and packaging them for sale to investors. These new financial products enabled millions of Americans who hadn’t previously qualified to buy a home to become owners. Housing construction boomed, reaching a postwar high—9.1 million homes were built between 2002 and 2006, a period when 5.6 million U.S. households were formed. ; The resulting oversupply of homes presents policymakers with a formidable challenge as they struggle to craft a sustainable economic recovery. Usually a driver of economic recoveries, the housing market is foundering as an engine of growth. ; Generations of policymakers since the 1930s have sought to increase the homeownership rate. By the late 1960s, it had reached 64.3 percent of households, remaining there through the mid-1990s, in apparent equilibrium with household formation during a period of sustained U.S. economic growth. A fresh push to increase ownership drove the rate up 5 percentage points to its peak in the mid-2000s. Home price gains followed the rate upward.Mortgage loans ; Construction industry ; Housing - Prices

Fed policy in the financial crisis: arresting the adverse feedback loop

An adverse feedback loop takes hold when a weakening financial system and a slowing economy feed off each other. A crisis or shock curtails lending, hobbling the real economy; the more production and employment falter, the more lending contracts. ; Arresting the adverse feedback loop could prove to be the seminal challenge of early 21st century monetary policymaking. Since sounding the alarm in January 2008, the Fed has taken a series of actions--many unprecedented--to prevent additional damage to financial markets and restore lending activity. These policies have had some success in loosening the grip of the adverse feedback loop and may have finally positioned the economy for growth. Still, doubts linger. The risk remains that the actions may prove insufficient to put the economy on a clear path to rising employment and stable prices.Financial markets ; Federal Reserve System ; Monetary policy ; Financial crises - United States

From complacency to crisis: financial risk taking in the early 21st century

During the first half of this decade, the belief that new financial products would adequately shield investors from risk encouraged financial flows to less creditworthy households and businesses. By late 2006, U.S. financial markets were flashing warning signals of a potential financial crisis. ; In a sign that investors had become too complacent, risk premiums had all but vanished in junk bond and emerging-market interest rate spreads. Then, conditions changed abruptly. In the important and usually stable market for asset-backed commercial paper, premiums on three-month paper over Treasury bills jumped from 0.17 percentage point in February 2007 to 2.15 points in August. Meanwhile, rising subprime mortgage defaults led investors to abandon their sanguine beliefs about the risk of many mortgage and nonmortgage products. ; The backdrop for these events was a period of macroeconomic stability that fed complacency about risk. This relatively benign economic environment, when combined with the new, structured financial products, increased financial flows to nonprime mortgage and business borrowers. The result was an overeager acceptance of risk taking that began correcting itself only after mounting subprime mortgage defaults reverberated through the broader financial markets.Risk ; Financial markets

Fed intervention: managing moral hazard in financial crises

At the end of September 2008, U.S. policymakers had been working for more than a year to contain the shock waves from plunging home prices and the subsequent financial market turmoil. For the Federal Reserve, the crisis has given new meaning to the adage that extraordinary times call for extraordinary measures. The central bank has dusted off Depression-era powers and rewritten old rules to address serious risks to the global financial system.Monetary policy - United States ; Financial crises ; Financial markets ; Federal Reserve System

Phenotypic spectrum and transcriptomic profile associated with germline variants in TRAF7

PURPOSE: Somatic variants in tumor necrosis factor receptor-associated factor 7 (TRAF7) cause meningioma, while germline variants have recently been identified in seven patients with developmental delay and cardiac, facial, and digital anomalies. We aimed to define the clinical and mutational spectrum associated with TRAF7 germline variants in a large series of patients, and to determine the molecular effects of the variants through transcriptomic analysis of patient fibroblasts. METHODS: We performed exome, targeted capture, and Sanger sequencing of patients with undiagnosed developmental disorders, in multiple independent diagnostic or research centers. Phenotypic and mutational comparisons were facilitated through data exchange platforms. Whole-transcriptome sequencing was performed on RNA from patient- and control-derived fibroblasts. RESULTS: We identified heterozygous missense variants in TRAF7 as the cause of a developmental delay-malformation syndrome in 45 patients. Major features include a recognizable facial gestalt (characterized in particular by blepharophimosis), short neck, pectus carinatum, digital deviations, and patent ductus arteriosus. Almost all variants occur in the WD40 repeats and most are recurrent. Several differentially expressed genes were identified in patient fibroblasts. CONCLUSION: We provide the first large-scale analysis of the clinical and mutational spectrum associated with the TRAF7 developmental syndrome, and we shed light on its molecular etiology through transcriptome studies

Fed intervention: managing moral hazard in financial crises

At the end of September 2008, U.S. policymakers had been working for more than a year to contain the shock waves from plunging home prices and the subsequent financial market turmoil. For the Federal Reserve, the crisis has given new meaning to the adage that extraordinary times call for extraordinary measures. The central bank has dusted off Depression-era powers and rewritten old rules to address serious risks to the global financial system.Monetary policy - United States ; Financial crises ; Financial markets ; Federal Reserve System