Mortgage rates for 30-year home mortgages in the United States leapt to 4.46 percent this week, the highest since July 2011.
Most economists and observers attribute the jump to Federal Reserve chairman Ben Bernanke's speech last week, which caused concern in the markets that the Fed would soon begin pulling back on its major bond-buying program.
"We're probably going to stay pretty low compared to where we've been over the last couple of decades," said Wall Street Journal reporter Sudeep Reddy. "But this is an important turning point in the recovery -- next week the U.S. recovery moves into its fifth year and we're still worrying about Fed stimulus and whether we're going to be able to get by without these extraordinary actions by the central bank. Some people call it 'monetary cocaine,' some say it's really needed stimulus, but it's going to be a very rocky year as we come out of this and try to just adjust to the idea of the Fed not being there, backing us up."
And what will it be like not having the Fed there?
"The markets are going to need rehab," said The Guardian's Heidi Moore. "The markets have really gotten used to being subsidized by the Federal Reserve, and all of those investors who bought all of those bonds because they thought the Fed was behind them are now going to have to put their money somewhere else."
Plus, each week, the Weekly Wrappers offer their #longreads picks for the weekend ahead. With everything from online privacy to Goldman Sachs' scavenger hunt, here's what you should read.
Sudeep Reddy suggests:
- ProPublica’s Michael Grabell takes us into “temp towns,” where it’s nearly impossible for job-seekers to find factory or warehouse work without going through a temp firm first.
- Trouble in your past? Cough up $1,000 or more to erase it online. The AP looks at web sites that built a business model around charging people to remove their arrest records or mug shots. New York magazine also delves into online “reputation management.”
- Foreign Affairs on gangs and vigilantes thriving in Egypt as President Morsi hits his first anniversary in office on June 30. Homicides are up 300 percent and armed robberies have increased 12-fold since the 2011 revolution.
Heidi Moore chose:
- "Austerity has failed. It turned a nascent recovery into stagnation. That imposes huge and unnecessary costs, not just in the short run, but also in the long term: the costs of investments unmade, of businesses not started, of skills atrophied, and of hopes destroyed." Martin Wolf, the FT columnist in possession in one of the clearest and cleanest minds on the foibles of economics today, makes his point in the first paragraph, but the rest of his New York Review of Books piece on the failure of austerity is as clear and as much a pleasure to read. It's a crisp indictment of the past five years of economic stupidity that was peddled at the highest levels of world government.
- The Guardian's coverage of the NSA files has spurred a national conversation about privacy, national security, and the reach of our laws. If you haven't caught up on it already, it's worth the time.
- A wonderful story from Quartz about the epic, all-night scavenger hunt played by some employees of Goldman Sachs, which reads like a capitalist version of the scripts for Indiana Jones movies. Armor, lasers and more.