Daily Archives: Nov 30, 2018

President Donald Trump reportedly wants to end federal relief money for Puerto Rico to aid its recovery from Hurricane Maria, the worst natural disaster on record to affect the island.

EFE reported on Sunday that Trump has told GOP leaders and appropriators he does not want to provide more disaster relief funds to Puerto Rico, claiming without evidence that the money is being misused and mismanaged.

Trump also said he wants to roll back some of the funding Congress has already set aside for Hurricane Maria relief, which he cannot do.

The White House declined to comment for the EFE report and did not immediately respond to The Hill.

The president’s reluctance to provide funding stems in part from a misreading of a Wall Street Journal article, Axios reported. The Journal article from October reportedly led him to believe the Puerto Rican government has been using disaster relief money to pay off its debt, though that is not the conclusion of the piece.

Trump’s remarks leave in doubt whether he will sign a future spending bill that includes money for Puerto Rico.

A new study commissioned by the Puerto Rican government over the summer estimates Hurricane Maria killed 2,975 people on the island, finding the risk of death was 45 percent higher for “populations living in low socioeconomic development municipalities” and men aged 65 years and older.

Trump without evidence cast doubt on the official death toll of nearly 3,000, while the researchers have stood by their conclusion.

The Category 5 hurricane devastated the island’s infrastructure and resources in 2017, causing lasting damage to the livelihoods and homes of thousands of Puerto Ricans.

The federal government has spent around $6 billion on recovery from Hurricane Maria so far, less than it spent on Hurricane Katrina, EFE noted.

The Federal Emergency Management Agency (FEMA) in a report released in July admitted the agency was significantly underprepared to deal with the crisis wrought by Hurricane Maria.

“FEMA leadership acknowledged that the Agency could have better anticipated that the severity of hurricanes Irma and Maria would cause long-term, significant damage to the territories’ infrastructure,” the report reads.

Trump in the days after the storm blamed the Puerto Rican government for the significant damage, pointing to the island’s debt.

SAN FRANCISCO/WASHINGTON (Reuters) – With the Federal Reserve expected next month to raise rates to what some U.S. central bankers believe is at or near a neutral level, Chairman Jerome Powell is retuning his message to signal a more cautious approach on further rate hikes next year.

It is not clear whether the idea of perhaps nudging rates above neutral, as he had earlier suggested, is still on the table, or if it means he expects fewer rate hikes, or even a pause.

But minutes from the Fed’s Nov. 7-8 policy-setting meeting, released on Thursday, as well as remarks over the last two weeks, point to a reassessment of the Fed’s longstanding promise of “further gradual rate increases” that would extend two years of nearly uninterrupted quarterly tightening.

“Many participants indicated that it might be appropriate at some upcoming meetings to begin to transition to statement language that placed greater emphasis on the evaluation of incoming data in assessing the economic and policy outlook,” the minutes said.

The transition comes as the Fed’s target policy rate, left at 2 percent to 2.25 percent in November, grinds closer to the 2.5 percent to 3.5 percent range of Fed officials’ views of where a rate that neither boosts nor cools a healthy economy lies.

Back in August, Powell had rejected a too rigid reliance on an abstract guidepost like the neutral rate to shape policy, saying it could lead to costly mistakes. Yet he has kept talking about it. (Graphic: tmsnrt.rs/2RnpbfB)

His renewed focus on the “neutral” level of interest rates as a potential turning point for policy that until now has been on a steady tightening path is echoed by the minutes.

Ironically, it was a reference to that guidepost that led to what in retrospect looks like a communication stumble, when stocks tumbled in early October after Powell’s remark that interest rates were a “long way” from neutral and might even need to rise above that level.

Market reaction reflected investors’ fears the Fed might end up making the kind of mistake Powell talked about – tightening policy too much because of a false read on where neutral is, at a time when clouds had begun to form on the economic horizon.

There are many reasons why Powell would pick now to begin shifting his footing. Since a September news conference when he painted a rosy picture of where things stood, some economic indicators have softened; others, such as wage growth, have firmed, leaving the Fed for the first time in a long time pulled in different directions.

Then there is President Donald Trump, who has berated him for raising rates. And Powell’s own communications plans to end each meeting with a news conference starting next year mean he needs a clear message for each meeting, starting next month.

At the Dec. 18-19 meeting, expected to bring the Fed’s target rate to between 2.25 percent and 2.5 percent, Fed officials will clarify where things stand when they will update their projections on expected rate increases for 2019. Currently they foresee three quarter point hikes.

FEELING IN THE DARK

In remarks delivered two weeks ago on a late evening in Dallas, Powell refined his summertime message, explaining that just as someone in a room where the lights suddenly go out must “slow down” to avoid running into furniture, the Fed must do the same when nearing neutral to avoid missing signals from economic data.

On Wednesday addressing a conference in New York, Powell amplified that message, saying that rates are “just below” the Fed’s range of estimates for neutral. In a sign of possible coordination or at least agreement among influential policymakers, his phrasing was the same as used by the Fed’s No. 2, Richard Clarida, just a day earlier.

“The markets really got a head fake in October, (but on Wednesday) he strongly walked back those expectations,” said Scott Anderson, chief economist at Bank of the West.

Wednesday’s remarks sent stocks soaring and moved at least one analyst, Gregory Daco at Oxford Economics, to expect two instead of three rate hikes next year, as the Fed steers the economy toward a “soft landing” where it could keep growing at a slower clip without stoking inflation.

After the release of the Fed’s meeting minutes, traders of interest-rate futures stuck to their bets that the Fed would slow rate hikes next year, to just one.

Part of Powell’s caution reflects inherent uncertainty over how the economy responds to interest rate increases. Speaking on Wednesday, Powell said the effects of Fed policy decisions “may take a year or more to be fully realized.”

Tim Duy, an economics professor at the University of Oregon who follows the Fed closely, said it was a sign the Fed was ready to wait to see how past hikes will play out.

“To me, this implies a willingness to be more patient in the lower end of the range of neutral,” he told Reuters.

Karim Basta, chief economist at III Capital Management, said recent market volatility showed toning down the neutral rate debate was the way forward. “It’s ironic that a concept, the neutral rate, in which the Fed has such little confidence, has swung markets so dramatically in the past two months,” Basta said. “The Fed may be well served to steer the focus away from the concept of the neutral rate and toward the underlying economy itself.”

 

    TIJUANA, Mexico (Reuters) – A handful of the thousands of Central American migrants camped out at the U.S.-Mexican border waiting to plead their case for asylum in the United States launched a hunger strike on Thursday to protest the Mexican police blocking their way.

    Members of the 6,000-strong caravan, mostly migrants from Honduras, have been sleeping outdoors, on cold floors or on mats in an overcrowded shelter since they arrived in Tijuana city across the border from San Diego, California, three weeks ago.

    Mexican immigration authorities on Thursday began transporting some of the migrants via buses to a new shelter to help lessen the strain.

    Under the harsh immigration policies introduced by the administration of President Donald Trump, U.S. border officials say they may have to stay put in Mexico for months before they can petition the authorities.

    U.S. customs and border control officers fired tear gas canisters into Mexico at dozens of migrants who tried to rush border fencing on Sunday.

    On Thursday, as a steady rain fell and partially flooded the sports complex serving as the main shelter, it was Mexican police who stopped more than a dozen migrants from the caravan approaching the nearby El Chaparral border crossing.

    “What the police are doing is unfair. The truth is we are fighting for our rights,” said one of the migrants, Gerson Madrid, a 22-year-old Honduran who started the trek to the United States in early October to better provide for a young daughter he left behind.

    Madrid said the group was starting a three-day hunger strike to draw attention to the standoff.

    “Why are (the police) treating us like this if we’re not causing them or the Mexican people any trouble?” he said.

    Officials with Mexico’s human rights commission said the new facility opened on Thursday is bigger than the sports complex, which can handle only about 2,000 people, and will ensure migrants are not forced to sleep out in the open.

    Overcrowding along with cooler temperatures and rain has already helped spread illness among migrants, including flu-like sicknesses, lice and chicken pox, according to city officials who declined to be named because they were not authorized to speak to the media.

    Despite the conditions, many caravan migrants appeared determined to wait as long as it takes, with more than 600 applying for work permits in Mexico earlier this week, according to Mexican officials.

    Trump has threatened to “permanently” close the U.S.-Mexican border if Mexico does not deport those gathered in Tijuana.

    Mexico’s government has pushed back, arguing that the migrants have a right to ask U.S. officials for asylum. U.N. agencies said this week asylum seekers fleeing violence or persecution are entitled to lodge claims to obtain sanctuary.

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