Current Events in May 2015

With rising obesity, America faces an increased number of type 2 diabetes cases. With an aging Baby Boom generation, the country is bracing for an increase in Alzheimer's disease.

Could the two be related?

Previous studies have hinted at such a link. But researchers at Washington University School of Medicine in St. Louis say they have nailed down the connection.

Their study, using mice, found that elevated glucose in the blood – a primary consequence of diabetes -- can rapidly increase levels of amyloid beta, which shows up in brain plaques in Alzheimer’s patients. The buildup of these plaques is believed to be what brings on the memory loss that Alzheimer’s causes in the brain.

Could lead to new treatments

“Our results suggest that diabetes, or other conditions that make it hard to control blood sugar levels, can have harmful effects on brain function and exacerbate neurological conditions such as Alzheimer’s disease,” said lead author Shannon Macauley, a postdoctoral research scholar. “The link we’ve discovered could lead us to future treatment targets that reduce these effects.”

There are two types of diabetes, type 1 mostly hereditary and the other, type 2, usually brought on by lifestyle factors, such as being overweight or obese. In both types the patient is unable to control glucose, or sugar levels in their blood.

Diabetes patients usually take insulin or other medication to keep their blood sugar where it is supposed to be.

So what does blood sugar have to do with Alzheimer's? To explore the linkage the researchers fed glucose to mice with an Alzheimer's-like condition.

The experiment

If the mice did not have the amyloid plaques in the brains, doubling their blood glucose levels increased amyloid beta levels in the brain by 20%. When the scientists repeated the experiment in older mice that already had developed brain plaques, amyloid beta levels rose by 40%.

When blood glucose levels spiked, it increased brain activity that helped produce amyloid beta.

“This observation opens up a new avenue of exploration for how Alzheimer’s disease develops in the brain as well as offers a new therapeutic target for the treatment of this devastating neurologic disorder,” Macauley said.

Speeds up aging

Meanwhile, researchers at the University of Pittsburgh Graduate School of Public Health say they have found another link between diabetes and diminished memory function. They studied the brains of people with type 1 diabetes and found these brains aged faster, correlating with slower information processing.

Among the middle-aged test subjects who underwent an MRI, 33% of those with type 1 diabetes showed signs of damage to the brain's white matter. Only 7% of subjects who were not diabetic showed similar damage.

The researchers suggest middle-aged patients with type 1 diabetes should be screened for cognitive difficulties. If cognitive issues are progressive, they say these changes could influence a patients ability to manage his or her diabetes.  

If you're looking for a single recent anecdote illustrating almost everything dysfunctional about the modern American system of funding higher education, try this one: On Monday, one week after the long-embattled chain of for-profit schools abruptly closed all of its remaining campuses, Corinthian Colleges filed for bankruptcy.

However, Corinthian's former students lack the same opportunity to wipe out their bad debts and start over again at Net Worth Zero (plus an abysmal credit rating), because student-loan debt, for the most part, cannot be discharged in bankruptcy.

What led to Corinthian's downfall? Like most for-profit schools, it was almost entirely dependent on federally backed student aid (especially those bankruptcy-proof loans) to function. The beginning of the end for Corinthian arguably came last June, when the feds temporarily halted all financial aid to Corinthian schools.

Federal agencies ranging from the Department of Education (DoE) to the Consumer Financial Protection Bureau (CFPB), in addition to the attorneys general of several different states, have alleged that Corinthian-owned schools defrauded their students in multiple ways: inflating or lying about post-graduation job-placement rates, teaching courses whose credits were not accepted by reputable universities or state professional-licensing boards, even engaging in what the CFPB called “predatory lending scheme[s]” bad enough that in February, the DoE and CFPB announced $480 million in debt relief for certain Corinthian students.

Affected students could see their debt burdens reduced by up to 40% — which is another way of saying affected students are still on the hook for at least 60% of those “predatory” loans.

Debt strike

Meanwhile, a group of former Corinthian students went on “Debt Strike,” refusing to repay the federally backed loans they took out to pay for their Corinthian school attendance. The “Corinthian 15” (so called because they started out with 15 members) started their strike in February, by posting an open letter to the DoE saying, in part, that:

We wanted an education because we were driven to learn and to achieve a better life for ourselves and for our families.

We trusted that education would lead to a better life. And we trusted you to ensure that the education system in this country would do so. But Corinthian took advantage of our dreams and targeted us to make a profit. You let it happen, and now you cash in. … Corinthian’s predatory empire pushed hundreds of thousands into a debt trap. But even beyond for-profit schools, tens of millions of students are in more debt than they can ever repay. And you are the debt collector, with powers beyond a payday lender’s wildest dreams. …

“More debt than they can ever repay.” That's exactly the sort of person bankruptcy is supposed to help. So, of all possible subgroupings of Americans to be denied that second chance, why single out the indebted students, most of whom took on that debt when they were still teens or young twentysomethings?

$1.2 trillion

As of March, the total outstanding student loan debt in the U.S. surpassed $1.2 trillion. And of the former students who started repaying their federal student loans in 2011, 650,000 had defaulted by 2013. Average default rates were 19.1% for students at for-profit schools, and 7.2% at non-profit colleges.

College tuition rates have risen faster than inflation every year for at least a generation now. And the people – mostly young people – behind these depressing numbers can't even seek the protection of bankruptcy.

It wasn't always like that. Originally, student loan debt was pretty much like any other, where bankruptcy was concerned. But in 1976, Congress changed the bankruptcy code to bar the discharge of student loan debt within five years of graduation. In the 1990s, that limit was raised to seven years. Then, as Inside Higher Ed  said, “the 2005 code revision made it all but impossible to have student loan debt canceled.”

I've heard arguments saying that's only fair, on the grounds “Bankruptcy shouldn't apply to college debt, because a college education can't be repossessed.” Yet that's true of many kinds of debt: you can't repossess medical procedures, vacations, restaurant dinners, gambling debts, property value lost when the housing bubble collapsed – but if you go over your head in debt to acquire such things, you can declare bankruptcy and get a financial second chance. Over-their-head former students cannot.

Reminder to legal adults who are still under 21 years old: the federal government doesn't think you're responsible enough to buy or drink a beer — yet you can sign on for enormous amounts of bankruptcy-proof college debt with that same government's blessing and active encouragement.

American Uber users beware: Customers from all over the country are complaining that their Uber accounts were charged for trips they never took – in many instances, charged for trips they couldn't possibly have taken – which strongly suggests that those Uber accounts were hacked.

On the other hand, representatives for Uber say they investigated and found no signs indicating a security breach – and added, “This is a good opportunity to remind people to use strong and unique usernames and passwords and to avoid reusing the same credentials across multiple sites and services.”

Here's what we know: Back in March, Vice magazine's Motherboard tech blog discovered that stolen Uber accounts – primarily accounts belonging to users in the U.K. – were being sold for as little as $1 apiece on a cybercriminals' “dark web” forum.

At the time, Uber said it had not found any evidence of a security breach — and even Motherboard admitted that “It’s unclear where the data came from or the scale of the breach. These logins may indicate that Uber’s security was hacked or compromised somehow, although the company says it has found no evidence of a breach. It also might mean that these customers were breached individually by other means, and their Uber credentials harvested and put up for sale.”

One of the British victims of the March hacking suggested a third possibility: “Bloody hell …. Either someone at Uber has passed these details on for money, or they have very lax security.”

London calling

Then, late last week, Motherboard reported a fresh spate of recent Uber false-charge complaints, this time from American customers. One of them, a North Carolina resident named Stephanie Crisco, told Motherboard: “I used Uber for the first time Thursday night. On Friday morning I received a notification on my phone that my driver was en route. I didn’t request a driver. I clicked on the notification and it said that the ride was cancelled but the pickup was in London.”

Crisco also tweeted a screenshot of her account activity showing various rides in London.

Other Uber users on Twitter posted similar complaints.

@Uber I have $70 with of charges on my card that I did not authorize!!! I need someone to contact m[e] asap before I sue!

@Uber wish there was a way to contact you guys.... No phone number and no one responds to my email. Very frustrating.

@Uber account has been hacked and charged almost $200. Uber has no sense of urgency when fraud has been committed. Still no email!!

3 possibilities

Clearly something's going on, with at least some Uber accounts, though so far it's too early to know exactly what. But there are three main possibilities (assuming all sides are telling the truth to the best of their knowledge):

• hackers did manage to breach Uber security, though Uber hasn't yet discovered it;
• someone breached Uber security from the inside; and
• hackers managed to steal people's passwords from various other sites, and some of those people used the same passwords for their Uber accounts.

Possibility three is the justification behind the all-purpose online security rule “Never use the same password across multiple accounts.” Last October, for example, after millions of Dropbox users claimed their accounts were hacked, a brief investigation showed that Dropbox itself was never hacked -- though many individual Dropbox user accounts were, after hackers stole people's credentials from other sites and then discovered that some of their victims used the same password for Dropbox.

The same thing happened with the “Stubhub hacking” in July 2014, and the “Gmail hacking” that September -- turned out neither Stubhub nor Gmail were actually hacked, but hackers were able to fraudulently gain access to various individual accounts after using passwords stolen from other sources.

So if you use the same password for more than one account you need to change the “duplicate” passwords at one, whether you use Uber or not. But if you are on Uber, keep an extra-sharp eye on your account activity — and if you see any fake ride charges, contact Uber to dispute them right away.

When the U.S. government reported domestic airlines' financial data this week, two numbers leaped off the page.

The first was the revenue collected from customers in 2014 baggage fees: $3.5 billion. The second was the amount airlines charged customers for making changes to their reservations. That was good for another $3 billion.

As an industry, the airlines in 2014 collected $127.4 billion in ticket sales, so baggage and schedule change fees added another 5% on top of fares, helping the airlines achieve a collective operating profit of $14.6 billion. That's up from about $8 billion in 2010.

Other fees not counted

There were other fees, of course, but they are not tracked by the Transportation Department. Baggage fees and reservation change fees are the only ancillary fees paid by passengers that are reported to the government as separate items.

Other fees, such as revenue from seating assignments and on-board sales of food, beverages, pillows, blankets, and entertainment are combined in different categories and cannot be identified separately.

When you isolate individual airlines, you see how important fees are to some carriers. Spirit, famous for the number of its fees, got only 63% of its profit from fares – the rest, presumably, in fees.

The airlines getting most of their profit from fares, and not from fees, were SkyWest at 96%, Southwest, at 95%, and JetBlue, at 92%.

Airlines began to add baggage fees in 2008, at the time justified by the soaring price of fuel. And it helped. Almost immediately after adding fees, airlines on the verge of bankruptcy began to show profitability again.

Now that fuel prices have declined, there has been no move to remove or modify fees. They are likely here to stay. But not just because fuel prices could go back up.

Hiding the cost of the flight

Charging fees allows an airline to keep its advertised fares low. Fares, after all, is how consumers usually choose a flight. Websites like Kayak.com make it easy for consumers to compare fares on dozens of flights with the click of a mouse. The difference of just $2 in a fare might sway a consumer to choose one airline over another.

When an airline knows that it can count on a certain amount of revenue per flight on fees, it feels more comfortable offering a lower fare than if it were counting solely on ticket revenue.

The problem for consumers, then, is selecting a flight based just on the fare. Without taking fees into account, you could select the more expensive flight, even though it had the lower fare.

A year ago the Transportation Department proposed new rules for the industry that would, among other things, provide more transparency by requiring airlines to post baggage fees, along with fares. The department has collected comments and the rule is awaiting final action.

The economy continued to create jobs in April, but the pace continued to slow.

According to the April ADP National Employment Report, private sector employment increased by 169,000 jobs from March to April. The economy cranked out 189,000 jobs from February to march, making April the second consecutive month that job creation has fallen below 200,000.

"Fallout from the collapse of oil prices and the surging value of the dollar are weighing on job creation. Employment in the energy sector and manufacturing is declining, “said Moody's Analytics Chief Economist of Mark Zandi. “However, this should prove temporary and job growth will re-accelerate this summer."

Small business payroll growth slips

Payrolls for businesses with 49 or fewer employees increased by 94,000 jobs in April, after rising by 105,000 in March. Companies with 50-499 employees added 70,000 jobs, 6,000 more than the previous month.

Employment gains at large companies -- those with 500 or more employees -- fell slightly from March, adding 5,000 jobs in April, versus 6,000, while companies with 500-999 employees added no jobs; they added just 2,000 the month before. Companies with over 1,000 employees added 5,000 jobs, a small improvement from March's 4,000.

Employment in goods-producing firms was down 1,000 in April, after a gain of 3,000 jobs in March. Within that sector, the construction industry added 23,000 jobs, while, manufacturing lost 10,000 jobs.

Service-providing employment rose by 170,000 jobs in April, 2,000 fewer than in March. Professional/business services contributed 34,000 jobs in April, 6,000 more than in March. Expansion in trade/transportation/utilities totaled 44,000, compared with 41,000 in March. The 7,000 new jobs Financial activities added 7,000 workers.

"April job gains came in under 200,000 for the second straight month," said Carlos Rodriguez, president and chief executive officer of ADP. "Companies with 500 or more employees had the slowest growth."

The report, which is derived from ADP's actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.

It's taking its time, but the recovery in the housing sector continues.

The National Association of Home Builders (NAHB)/First American Leading Markets Index (LMI) shows markets in 68 of the approximately 360 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the first quarter of 2015. This represents a year-over-year net gain of 7 markets.

The index’s nationwide score edged up to .91, meaning that based on current permit, price and employment data, the nationwide average is running at 91% of normal economic and housing activity. Meanwhile, 68% of markets have shown an improvement year-over-year.

“The markets are continuing to make gains,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “A strengthening economy and low interest rates should spur the release of pent-up demand and keep housing moving forward this year.”

Employment spurs the gains

Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.43 – or 43% better than its last normal market level. Other major metros leading the pack include Austin, Texas; Honolulu; Houston; and Oklahoma City. Rounding out the top 10 are San Jose, Calif.; Los Angeles; Salt Lake City; Charleston, S.C.; and Nashville, Tenn.

“The strongest gain is employment, where the number of metros that reached or surpassed their norms nearly doubled in a year,” said NAHB Chief Economist David Crowe. “Despite a minor uptick in single-family permits, only 7% of the markets are at or above their normal permit activity.”

Looking at smaller metros, both Midland and Odessa, Texas, have LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession. Also leading the list of smaller metros are Manhattan, Kan.; Grand Forks, N.D; and Casper, Wyo., respectively.

Think about this. If you have a desktop or laptop computer, the machine is most likely equipped with a fan that keeps the electronics inside from overheating.

Now, multiply your PC by millions in the U.S. That's a lot of fans, many running 24-7, keeping those computers cool. Scientists at the University of Alabama in Huntsville (UAH) estimate the electricity cost of running all those computer fans at more than $6.3 billion a year.

The scientists say they have tested a completely different kind of computer cooling system that could eliminate all those fans and that $6.3 billion in electricity costs.

The system uses convection to circulate 3M’s Fluorinert FC-72 liquid through channels in a computer’s processor and then into a heat sink that serves as an external radiator.

There are other fanless machines just starting to make their way into the consumer marketplace. Intel's latest mobile chip, the Core M, is fanless and is available in some of the latest laptop models from Acer, Asus, HP, Lenovo and other major manufacturers.

An Israeli company called CompuLab, has been making small, air-cooled computers for 15 years. They use a ribbed metal case that acts as a heat sink. A CompuLab model called the mintBox has been running continuously in our none-too-cool office for several years with no problems.

Some component manufacturers, including Corsair, combine traditional fans with liquid cooling.  

Computers might cost less

In addition to saving more than $6 billion in energy costs, the Alabama scientists say their system could save computer makers $540 million a year because they wouldn't need to install fans or the wiring they require. They base that projection on a future in which there are 300 million computers with their system in use.

It would be a revolutionary development in the U.S. – but that could be just the tip of the iceberg.

“If you can do this for the world, we can save a whole lot of pollution globally,” said Dr. James Smith, a UAH chemical engineering professor emeritus who is working with graduate students to optimize the system. “Think of what could be done in China alone.”

Flourinert FC-72

The heat removal system is based on Fluorinert FC-72, the 3M brand name for an electronic cooling liquid and electrical insulator. It is colorless, odorless, biologically inert and chemically stable. It's also nonflammable, with a boiling point at 56 degree Celsius, or 133 degrees Fahrenheit.

Here's how it works; heat generated by the computer processor vaporizes liquid FC-72. That vapor then moves to a heat exchanger, where it releases its heat into the environment and condenses into a heavier liquid.

The heavier liquid then moves to a holding tank, where it travels to the processor again to start the cycle all over.

Cuong Nguyen, an engineering graduate student, wrote his master's thesis comparing the passive cooling system with traditional solid-state passive cooling and traditional fan cooling in computers.

For the comparison, the computers were run for up to 12 hours under no load and heavy load conditions. The system was tested using modified Intel Pentium 4 and Core i3 processors.

12 hours in stable condition

“Our system can absolutely work, and it can work for 12 hours in a stable condition,” Nguyen said.

The series of experiments found the passive FC-72 cooling system could maintain a near steady 56-degree Celsius processor operating temperature. Nguyen said an acceptable temperature range is 50-90 degrees Celsius.

Win-win

The bottom line? Replacing a computer's fan with a passive heat removal system could be a plus all the way around.

“When we remove the cooling fan, it saves material costs, but it also eliminates the noise, vibration and dust contamination of fan cooling,” Nguyen said. “When you remove the dust, you remove the chance that it can build up. Build up of dust can destroy the electronic components.”

Smith says the system could have applications beyond computers. He says it could help stabilize temperatures in electronic guidance and propulsion controls in outer space while making things operate more smoothly here on earth.

Corinthian Colleges filed for bankruptcy earlier this week, shortly after the long-embattled chain of for-profit schools abruptly closed all of its remaining campuses.

Like most for-profit colleges, Corinthian was largely dependent on federal student aid – primarily bankruptcy-proof education loans issued to students. Last June, the feds temporarily suspended funding for Corinthian-owned schools, after the Department of Education argued, among other things, that credits from Corinthian schools often proved useless to students, since those credits were not accepted by regionally accredited state schools, nor by various professional licensing boards.

These and similar problems explain why last October, the attorneys general of 14 different states announced their support for a proposed Congressional measure to increase regulations on the for-profit education industry. (Remember, too, that student loan debt is much worse than other forms, because it can't even be discharged in bankruptcy.)

More recently, the Obama administration tried setting new standards on for-profit schools, standards slated to come into effect this July.

Unsurprisingly, for-profit schools are generally opposed to the newer, stricter regulations. But they have a surprising ally. ProPublica's Alec MacGillis yesterday published the results of an in-depth investigation showing that traditional colleges and universities are also working against the new regulations.

For years, the higher education establishment has viewed the for-profit education business as both a rival and an unsavory relation — the cousin with the rap sheet who seeks a cut of the family inheritance. Yet in a striking but little-noticed shift, nearly all of the college establishment’s representatives in Washington are siding with for-profit colleges in opposing the government’s crackdown. … The emerging alliance points to a new calculation by the higher education lobby. By throwing in with the for-profits, traditional schools might be able to capitalize on Republican control of Congress to limit the government’s reach into their own campuses. Among other things, colleges and universities would like to block the proposed new federal ratings system designed to help families choose institutions based on how of their many students graduate and where they get jobs.

Inflated job placement rates

Corinthian and other for-profit schools have long been accused of inflated or outright fraudulent job-placement rates. For example: in mid-April, only a couple weeks before Corinthian's bankruptcy declaration this week, the Department of Education levied a $30 million fine against Corinthian, alleging among other things that Corinthian-owned Heald Colleges paid companies to hire graduates for temporary positions lasting as little as two days, performing such basic tasks as moving computers and organizing cables, then counted those graduates as “placed in field.”

Heald also counted obvious out-of-field jobs as in-field placements, including one graduate of an accounting program whose food-service job at Taco Bell was counted as “in-field” work.

But why would reputable, accredited traditional universities oppose regulations intended to crack down on such fraudulent behaviors? As ProPublica said:

the higher education lobby represents an industry as self-interested as any other—the two largest of the its many trade groups reported spending $500,000 on federal lobbying last year—and it spies an opportunity in the deregulatory instincts of the Republican majority.

The gambit underscores one of the under-appreciated truths about lobbying in Washington in an era of divided government: Special interests are often as interested in preserving a favorable status quo as they are in getting government to take an action to their benefit. To that end, gridlock can be a feature to be encouraged, not a bug.

At stake in this case is the roughly $150 billion that the federal government shovels annually into colleges and universities in the form of Pell grants and subsidized loans for students. Current and former higher education regulators say the federal government is obliged to assure that taxpayers are getting results for that spending.

Tuition rising

Are taxpayers getting their money's worth? Higher education costs – at traditional universities, not even counting the for-profit schools – have risen considerably faster than inflation every year for at least a generation now.

(Personal anecdote: I attended Cheap State U at in-state rates for four consecutive years in the 1990s, and my senior year tuition costs were significantly higher than freshman year's. Adjusted for inflation, I paid $1,760 per semester as a full-time freshman, compared to $2,661 per semester as a senior. For Fall 2015, the in-state tuition cost will be just under $6,270 per semester. Of course, those cited tuition costs do not include the cost of textbooks, housing, food, parking fees, lab fees, student fees, or any other costs related to college.)

So a high school senior today who enrolls at Cheap State U will pay, in inflation-adjusted dollars, at least three times more money than I did for the same degree. Which wouldn't necessarily be a problem if the job market had similarly expanded, so that today's newly minted college grads can reasonably expect salaries two or three times higher than what I made at the same entry-level gigs.

But that hasn't happened. Wages have been stagnating or even falling, even as the cost of educational credentials continues to rise. Students – and, ultimately, federal taxpayers – are spending more money on education than ever. Are they [we] getting results for all that spending?

Perhaps that's a question the “higher education lobby” would prefer nobody ask.

Despite a slowdown in economic growth in the first quarter of 2015, members of the National Association for Business Economics (NABE) and other industry economists have bullish expectations for the year.

In the April NABE Business Conditions Survey, 77 NABE members and selected industry economists were polled on business conditions in their firms or industries. The results reflect first-quarter results and the near-term outlook.

The survey results indicate “a marked deceleration in growth across the board in the first quarter,” said Survey Chairman Jim Diffley. “However, the panel did not pull back on bullish expectations for the upcoming quarter.”

NABE President John Silvia notes that over the past three months, the prices of crude oil and the dollar have not had a material impact on the outlook for the majority of respondents’ firms,” buts adds, “Due to unusually harsh weather and dock strikes on the West Coast, growth in the first quarter appears to be an outlier within the broader economic outlook.”

Survey highlights

• Sales growth declined during the first quarter. The share of survey participants reporting rising sales slipped back to match October’s result of just under 50%, down 4% from January. Still, a solid majority of the survey panel (71%) as well as large majorities of survey panelists from each sector expect that sales will rise during the second quarter.
• Profit margins expanded at fewer firms in the first quarter, with 26% of survey respondents reporting wider margins, compared with 35% in the fourth quarter). The NRI in April declined to 10, its lowest level since 2013.
• The percentage of survey respondents reporting rising prices doubled in April from January, to 32%. Respondents from the goods-producing sector account for the largest share reporting both the highest fraction of rising prices (47%) and falling prices (20%).
• Almost three-fourths (72%) of respondents expect no change in the prices their firms will charge in the second quarter, versus 65% in the January survey. The share of those expecting increases or decreases was smaller as compared to the previous survey results. Thus the overall NRI for prices in the next three months moved slightly downward -- from 21 to 20.
• The share of respondents reporting rising wages and salaries at their firms increased again in the first quarter, to 45% from 31% in the January 2015 survey and 35% a year ago.
• There was a modest increase in the share of survey respondents reporting increased employment at their firms during the first quarter of 2015, with 35% indicating additional hiring compared with 34% in January (for the fourth quarter of 2014) and 28% in April 2014 (for the first quarter of 2014).
• Expectations for hiring in the second quarter of 2015 are unchanged from those reported in January for hiring during the first quarter of 2015.
• The survey asked panelists if their firms had difficulties filling open positions over the last 3 months. Of the 63 responses received, a solid majority (57%) report there was no difficulty in filing open positions. This compares with the 63% in the previous survey reporting no difficulty, and the 67% reporting no difficulty in NABE’s survey six months ago. The trend in survey results over the last six months suggests that perhaps a tighter job market is becoming more evident.

Applications doe mortgages posted their second consecutive decline last week.

Data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey show applications fell 4.6% in the week ending May 1.

The Refinance Index plunged 8% from the previous week to the lowest level since January 2015, taking the refinance share of mortgage activity down 2% -- to 53% of total applications

“Refinance volume dropped last week as rates in the U.S. increased sharply towards the end of the week, with signs of recovery in Europe lifting rates across the globe,” said MBA Chief Economist Mike Fratantoni. “Purchase activity increased slightly over the week, and the average loan amount for a purchase application reached a record high, a sign that the mix of purchase activity is still skewed toward higher priced homes.”

The adjustable-rate mortgage (ARM) share of activity rose to 6.1% of total applications. The average loan size for purchase applications rose to a survey high of $297,400.

The FHA share of total applications increased to 14.0% from 13.7% the week prior. The VA share of total applications was 11.9%, and the USDA share was unchanged at 0.8%.

Contract interest rates

• The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) rose 8 basis points -- to 3.93% from 3.85%, with points unchanged at 0.35 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) jumped from 3.82% to 3.91%, with points decreasing to 0.24 from 0.31 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs backed by the FHA was up 4 basis points to 3.70%, with points rising to 0.21 from 0.16 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 15-year FRMs increased to 3.19% from 3.14%, with points dipping to 0.30 from 0.31 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 5/1 ARMs slipped 1 basis point to 2.87%, with points increasing to 0.33 from 0.27 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The survey covers over 75% of all U.S. retail residential mortgage applications.

Silicon Valley was shocked last weekend at the sudden death of SurveyMonkey.com CEO Dave Goldberg, husband of Facebook COO Sheryl Sandberg. But the circumstances around his death might serve as a cautionary tale for millions of consumers who work out at gyms or at home.

According to various media reports, Goldberg died of massive head trauma when he fell while working out on a treadmill in a hotel fitness center in Mexico. It turns out treadmills are the cause of many more accidents that don't get nearly the publicity of Goldberg's.

According to the Consumer Product Safety Commission (CPSC), there were at least 10 treadmill recalls in the previous decade, mostly due to unexpected speed changes that could cause a fall. In 2008, Cybex International recalled several models of its treadmill after receiving 24 reports of unexpected speed changes.

But even when these machines are operating perfectly they can be dangerous. Treadmills are powered by electric motors that turn conveyor belts. The operator either walks or runs at the speed of the belt.

Emergency stop switch

When an operator slips, stumbles or falls the belt keeps moving, making it even harder to recover. All treadmills are equipped with an emergency stop switch, activated by pulling a cord and removing a magnetic contact.

While the device is effective, casual observations at health clubs where treadmills are in use suggest few operators attach the cord to their bodies as recommended.

A 2011 report by CBS News documented a number of cases of injury, and even death, due to a treadmill mishap. The CPSC reported treadmill accidents in 2009 results in some 19,000 consumers being rushed to emergency rooms with broken bones, amputated fingers and concussions.

Safety tips

In her advice to readers about treadmill use, About Health sports medicine expert Elizabeth Quinn writes that operating the machine safely is just as important, if not more so, than the benefits it can provide.

Before using a treadmill for the first time, she recommends:

• Get familiar with the control panel; while most treadmills have the same functions, controls may vary. Make sure you understand how to control the machine before getting on it/
• Understand the safety features; Don't just locate the emergency off switch, test it.
• Get a handle on the speed; stand on the treadmill with your feet on the side rails before you start the machine. Increase the speed of the belt to about 2 to 3 MPH to start.

Amarillo College produced this short video, offering some treadmill safety tips:

Home use

Using a treadmill at home, when no one else is around, requires some extra caution on a user's part. Make sure the machine is positioned properly, away from walls, windows or mirrors that could cause injuries if you fall.

If there are children in the home, make sure the treadmill can't be used as a toy when no adults are around.

And when using a treadmill when no one else is present, it is doubly important that you attach the emergency stop cord to your body or clothing, so that the machine stops if you happen to fall.

In fact, exercising alone -- at home or anywhere else -- isn't the greatest idea. Almost any kind of exercise equipment can be dangerous. The lowly free weight can cause serious damage if dropped and, besides the treadmill, machines like stairmasters and elliptical trainers can cause injury if you fall while using them.

Sen. Harry Reid, the powerful minority leader of the U.S. Senate, suffered serious head and eye injuries when he fell off a stairmaster. And back in 1998, the governor of Florida, Lawton Chiles, died of an apparent heart attacked while using a stationary bicycle. He was alone at the time and his body was not discovered for several hours.  

The city of Los Angeles has filed suit against Wells Fargo Bank, alleging that the bank's policies and high-pressure sales quotas encouraged employees to engage in “unfair, unlawful and fraudulent conduct” against customers.

L.A. Prosecutor Mike Feuer filed the suit in state court on Monday, alleging that, among other things, employees would misuse customers' confidential information, open accounts in customers' names without authorization, often failed to close those accounts when the customers demanded it, and sometimes even took money out of authorized client accounts to pay for those unauthorized fees.

“The result is that Wells Fargo has generated a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profit,” the lawsuit says.

Furthermore, “On the rare occasions when Wells Fargo did take action against its employees for unethical sales conduct, Wells Fargo further victimized its customers by failing to inform them of the breaches, refund fees they were owed, or otherwise remedy the injuries that Wells Fargo and its bankers have caused.”

Gaming

The lawsuit also claims that Wells Fargo bankers engaged in a practice known as “gaming” -- opening unauthorized accounts in customers' names, making unauthorized withdrawals from customers' authorized accounts to pay the fees on the unauthorized ones, and reporting customers to collections and/or posting “derogatory information” in the customers' credit reports.

Wells Fargo responded with a statement saying it would fight those allegations in court, and that “Wells Fargo's culture is focused on the best interests of its customers and creating a supportive, caring and ethical environment for our team members. This includes training, audits and processes that work together to support our Vision & Values and our commitment to customers receiving only the products and services they need and will benefit from.”

Yet many consumers — from all over the country, not just California — have written reviews that sound remarkably similar to some of the allegations mentioned in Feuer's lawsuit. Consider this sampling of complaints we got about Wells Fargo, just during the month of April 2015. Dan from Bozeman, Montana wrote us on April 1 to say:

Over the past several years, I have become more and more frustrated with Wells Fargo as a whole. I have kept my personal and business bank accounts with Wells Fargo and just about every month they find a way to charge some kind of fee for some random reason. Their accounts are set up with such complex sets of terms and conditions that you cannot possibly keep track of all of them. If you don't watch your accounts daily - you can be assured they will be siphoning money. The bankers will always assure you that your accounts are free.. just know that they are not.

"Misled in the beginning"

Tawnya from Alexandria, Alabama went into more detail about those fees. She visited her local Wells Fargo branch seeking “ANOTHER temporary check card since the company failed to send me the new card, although I did receive an email [assuring me] it was sent out.” While she spoke to one employee about her check-card problems, another one overheard her mention that she had an at-home business, and encouraged her to open a business savings account.

He quickly went over the benefits and had me transfer $150 from my checking on that day, explaining to me $150 must be deposited into the business savings monthly. He did not specify it had to be an automatic transfer set up for a specific date.... [the following month] I made a deposit of $150 in the Lenlock, AL branch and no worries, until I see they took out a $14 service charge from my business checking and $6 from my business savings. As I looked further, there was another $6 charge to my business savings in Feb. … Not only was I charged a $5 service fee for years to have a checking account after the Wachovia/Wells Fargo takeover, but now I am getting service fees for trying to build a business when I was mislead in the beginning by the representative ….

John from Chicago said that “Wells Fargo small business account reps gave me a personal credit card I did not ask for and charged me fees for that.”

But Octavia from New Jersey offered a view from the employees' side of the table:

.... [O]ur finances hit the toilet when my husband switched jobs and began working for Wells. The amount of stress and pressure that he had to endure to sell and open accounts was too much for him. ... My husband has since left but reiterates that it is the worst to its customers and employees alike!

A Senate committee has raised “significant questions” about DISH Network's conduct during a recent auction for licenses to spectrum airwaves.

Senate Commerce, Science and Transportation Committee Chairman John Thune (R-S.D.) has requested documents from the Federal Communications Commission (FCC), DISH Network and 2 affiliate companies regarding the FCC's recent Auction 97 for Advanced Wireless Services, concluded early this year.

The FCC from time to time holds auctions where it sells unused airwaves to the private sector. This spectrum space can be used for all sorts of consumer services, ranging from mobile phones, satellite service, terrestrial radio and television broadcasts. The more licenses a company has the more services it can offer.

Followed rules?

At issue is whether Dish Network strictly followed auction rules when it engaged in the bidding, along with two of its affiliated companies, which ultimately secured the airwaves for $3 billion.

“While the FCC is reportedly already looking at whether DISH broke auction rules, an examination of how these affiliated companies approached the auction is the only way for Congress to determine whether this $3 billion price discount was appropriate or a result of wrongful conduct, flawed agency rules, or laws Congress must update,” Thune wrote in a letter to all parties involved.

To make sure the bidding is fair there are rules in place to guard against the formation of bidding rings and other collusive practices. All bidders can see the number of competitors they face and their competitors’ bid amounts.

However, the identity of the other bidders is not revealed. While the rules allow affiliated companies to share and coordinate some information, the FCC warns that companies are not exempted from anti-trust laws designed to prevent collusive bidding practices.

Bidding pattern

Thune says that when you look at the data from the auction, an interesting pattern appears. He says DISH appeared to bid aggressively in the early rounds of the auction on hundreds of licenses.

But in every case, he says the company stopped bidding when Northstar or SNR were the only other bidders. When all was said and done, DISH didn't win a single license while its affiliates Northstar and SNR collectively won 702 licenses – which they could buy at a 25% discount.

“The Committee has significant questions about whether conduct surrounding the bidding strategies employed by DISH Network and two affiliates adhered to both the letter and intent of the law, since it may ultimately cost $3 billion in public funds,” Thune said.

Thune has asked for responses from all parties by May 15. Meanwhile, PC Magazine  reports some other bidders, notably AT&T and Verizon, were “irked” by what they observed during the bidding and may have complained.

A certain fictional Dr. Frankenstein thought that putting a bunch of spare human parts together and zapping them with an electrical current would create a splendid new human being. We know how that turned out.

But the idea is still around and some scientists and tinkerers have been using a weak electric current to stimulate their brains, hoping to improve their brainpower in the process. 

But a study by researchers at the University of North Carolina School of Medicine finds that the most common form of electric brain stimulation had a statistically significant detrimental effect on IQ scores -- the opposite of the result the do-it-yourselfers were hoping for.

Published in the journal Behavioural Brain Research, the study adds to the increasing amount of literature showing that transcranial direct current stimulation - tDCS - has mixed results when it comes to cognitive enhancement.

"It would be wonderful if we could use tDCS to enhance cognition because then we could potentially use it to treat cognitive impairment in psychiatric illnesses," said Flavio Frohlich, PhD, study senior author. "So, this study is bad news. Yet, the finding makes sense. It means that some of the most sophisticated things the brain can do, in terms of cognition, can't necessarily be altered with just a constant electric current."

Ah, but wait ...

Frohlich, though, said that using less common alternating current stimulation - so-called tACS - could be a better approach, one that he has been investigating. Earlier this year, Frohlich's lab found that tACS significantly boosted creativity, likely because he used it to target the brain's natural electrical alpha oscillations, which have been implicated in creative thought.

With tDCS, scientists don't target these brain waves, which represent neuronal patterns of communication throughout regions of the brain. Instead, they use tDCS to target brain structures, such particular regions of the cortex.

Some researchers have reported good results from tDCS experiments but Frohlich said that some of the studies that have made waves were poorly designed. Some studies were not properly double-blinded or properly placebo controlled. Other studies were very small -- fewer than 10 people.

Jury still out

A recent meta-analysis of a large number of tDCS papers showed that tDCS is far from a magic pill for cognitive enhancement or brain-related health conditions.

"Aside from stimulating the motor cortex, which has very exciting implications for stroke rehabilitation, I think the jury is still out on tDCS," said Frohlich, who is a member of the UNC Neuroscience Center.

Frohlich stressed that the scientific community should be careful not to create simplistic storylines about tDCS being a 'magic pill' for many brain-related conditions. "There could be dangerous consequences, especially if tDCS is used daily," he said. "Ours was an acute study. We don't know what the long-term effects are. There is so much more we need to understand before tDCS is ready for home use without medical supervision."

Many consumers worry that their credit rating isn't high enough, but a new report finds that 26 million Americans have no credit rating at all, making them "credit invisible."

The Consumer Financial Protection Bureau (CFPB) published the report, which finds that one in 10 adults have no credit history, many of them black, Hispanic or living in low-income neighborhoods.

“Today’s report sheds light on the millions of Americans who are credit invisible,” said CFPB Director Richard Cordray. “A limited credit history can create real barriers for consumers looking to access the credit that is often so essential to meaningful opportunity — to get an education, start a business, or buy a house. Further, some of the most economically vulnerable consumers are more likely to be credit invisible.”

The three nationwide consumer reporting agencies, also called credit bureaus, generate credit reports that track a consumer’s credit history. Credit reports and the three-digit credit scores that are based on those reports play an increasingly important role in the lives of American consumers -- and those with a low, or non-existent, credit score face hurdles in getting credit.

In broad terms, consumers with limited credit histories can be placed into two groups, the CFPB said.

The first group is consumers without a credit report, or the “credit invisibles.” The second group, the “unscored,” includes consumers who do not have enough credit history to generate a credit score or who have credit reports that contain “stale” or not recently reported information.

Today’s report found that:

26 million consumers are credit invisible: About one in 10 Americans can be considered credit invisible because they do not have any credit record. About 189 million Americans have credit records that can be scored.

19 million consumers have unscored credit records: About 8 percent of the adult population has credit records that are considered unscorable based on a widely-used credit scoring model. Those records are almost evenly split between the 9.9 million that have an insufficient credit history and the 9.6 million that lack a recent credit history.

Consumers in low-income neighborhoods are more likely to be credit invisible or to have an unscored record: Of the consumers who live in low-income neighborhoods, almost 30 percent are credit invisible and an additional 15 percent have records that are unscored. 

Black and Hispanic consumers are more likely to have limited credit records: Black and Hispanic consumers are considerably more likely to be credit invisible or have unscored credit records than White or Asian consumers. About 15 percent of Black and Hispanic consumers are credit invisibles compared to 9 percent of White consumers. 

This analysis was conducted using information from the CFPB’s Consumer Credit Panel, which is a random sample of de-identified credit records purchased from one of the nationwide credit reporting agencies and is representative of the population with credit records. By comparing information in the credit panel from December 2010 with 2010 Census data, the Bureau was able to estimate the number of consumers who were credit invisible or had unscored credit records.

The full report is available online. 

A company called Sale Slash has Oprah Winfrey and other big-name celebrities endorsing it and it uses "fake news" sites and spam emails to lure customers but the Federal Trade Commission says its weight-loss products are unproven and its claims outrageous.

“Sale Slash is a fraud trifecta,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The company made outlandish weight-loss claims for its diet pills using fake news sites, phony celebrity endorsements, and millions of unwanted spam emails.”

The FTC has obtained a court order temporarily halting the Glendale, California, company's operations.

The court order halts the defendants’ illegal conduct, freezes their assets, and appoints a temporary receiver over the corporate defendants. The Commission ultimately is seeking to recover money from the defendants that would be used to provide refunds to consumers who bought the defendants’ diet pills.

The FTC’s complaint charges that the defendants behind Sale Slash used affiliate marketers to send illegal spam emails and post banner ads online that led consumers to fake news sites designed to appear as if an independent consumer reporter, rather than a paid advertiser, had reviewed and endorsed the products.

The complaint alleges that these fake news sites made false weight-loss claims and used phony celebrity endorsements to promote the defendants’ diet pills.

Since 2012, the defendants allegedly have marketed and sold a variety of products nationwide, including supposed weight-loss supplements such as Premium Green Coffee, Pure Garcinia Cambogia, Premium White Kidney Bean Extract, Pure Forskolin Extract, and Pure Caralluma Fimbriata Extract.

There was improvement April in the non-manufacturing, or services, sector of the economy. According to the Institute for Supply Management, the sector rose 1.3% last month to 57.8% -- the 63rd straight month of expansion.

The Non-Manufacturing Business Activity Index jumped 4.1% -- to 61.6 percent, reflecting growth for the 69th consecutive month at a faster rate. The New Orders Index was up 1.4% to 59.2% and the Employment Index inched up 0.1% to 56.7% -- indicating 14 consecutive months growth. The Prices Index, meanwhile, dropped 2.3% from March to 50.1%.

According to the report, 14 non-manufacturing industries reported growth in April, with most of them crediting the uptick to “the improved economic climate and prevailing stability in business conditions.”

Industry performance

The 14 non-manufacturing industries reporting growth in April -- listed in order -- are:

1. Arts, Entertainment & Recreation
2. Real Estate, Rental & Leasing
3. Management of Companies & Support Services
4. Transportation & Warehousing
5. Wholesale Trade
6. Finance & Insurance
7. Utilities
8. Health Care & Social Assistance
9. Agriculture, Forestry, Fishing & Hunting
10. Public Administration
11. Retail Trade
12. Accommodation & Food Services
13. Construction and
14. Educational Services

The four industries reporting contraction are:

1. Mining
2. Other Services
3. Professional, Scientific & Technical Services and
4. Information

Home prices posted a year-over-year increase in March for a 37^th consecutive month.

According to property information provider CoreLogic, its Home Price Index (HPI), which charts home prices nationwide -- including distressed sales -- was up 5.9% from the same period last year.

On a month-over-month basis, home prices nationwide rose 2% from February to March.

Distressed sales include short sales and real estate-owned (REO) transactions.

Twenty-seven states plus the District of Columbia were at or within 10% of their peak prices. Seven states -- including Colorado, Nebraska, New York, Oklahoma, Tennessee, Texas and Wyoming -- reached new home price highs since January 1976.

Excluding distressed sales, home prices increased by 6.1% in March 2015 compared with March 2014 and rose 2% month over month. Also excluding distressed sales, only New Mexico (-0.4%) showed year-over-year depreciation in March.

“The homes for sale inventory continues to be limited while buyer demand has picked up with low mortgage rates and improving consumer confidence,” said Frank Nothaft, chief economist for CoreLogic. “As a result, there has been continued upward pressure on prices in most markets, with our national monthly index up 2% for March 2015 and up approximately 6% from a year ago.”

Report highlights

• Including distressed sales, the 5 states with the highest home price appreciation were: Colorado (+9.2%), South Carolina (+9.1%), Kansas (+8%), Texas (+8%) and Nevada (+7.6%).
• Excluding distressed sales, the 5 states with the highest home price appreciation were: Kansas (+9.5%), Colorado (+8.5%), South Carolina (+8.2%), Florida (+7.9%) and Texas (+7.6%).
• Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to March 2015) was -11%. Excluding distressed transactions, the peak-to-current change for the same period was -6.7%.
• Including distressed sales, 2 states and the District of Columbia experienced home price depreciation at the following rates: Connecticut (-0.6%), the District of Columbia (-0.2%) and Maryland (-0.1%).
• The 5 states with the largest peak-to-current declines, including distressed transactions, were: Nevada (-34.7%), Florida (-31.5%), Rhode Island (-29%), Arizona (-27.4%) and Connecticut (-25.5%).
• Ninety of the top 100 Core Based Statistical Areas (CBSAs) measured by population showed year-over-year increases in March 2015. The 10 CBSAs that showed year-over-year declines were: Baltimore-Columbia-Towson, MD; Philadelphia, PA; Camden, NJ; Hartford-West Hartford-East Hartford, CT; New Orleans-Metairie, LA; Rochester, NY; Worcester, MA-CT.; Albany-Schenectady-Troy, NY; New Haven-Milford, CT and Wilmington, DE-MD-NJ.

Looking ahead

The CoreLogic HPI Forecast indicates home prices -- including distressed sales -- will increase by 0.8% month-over-month from March 2015 to April 2015 and on a year-over-year basis by 5.1% from March 2015 to March 2016.

Excluding distressed sales, home prices are expected to increase by 0.7% month-over-month from March 2015 to April 2015 and by 4.7% year-over-year from March 2015 to March 2016.

“All signs are pointing toward continued price appreciation throughout 2015. In fact, the strong month-over-month gain in March may be a harbinger of accelerating price appreciation as we enter the spring selling season,” said Anand Nallathambi, president and CEO of CoreLogic. “Tight inventories, job growth and the inexorable impact of demographics and household formation are pushing price levels in many states, and especially large metropolitan areas like Dallas, Denver, Houston, Seattle and San Francisco, toward record levels.”