8/31/10 Post

BUZZ: India Economy Expands 8.8%

News
Japan Defends Economic Policy Steps as Stocks Slide
Japanese ministers defended measures pledged by the government and the Bank of Japan yesterday after concern deepened that the steps won’t be sufficient to halt the yen’s gain and boost economic growth.
Australia Trade Deficit Smallest Since 2002
The current account deficit narrowed to a seasonally adjusted 5.6 billion Australian dollars ($5 billion) in the second quarter of 2010 from a shortfall of A$16.46 billion in the first quarter, the ABS said Tuesday.
European Inflation Slows to 1.6%, Unemployment Holds at Highest Since 1998
European inflation slowed this month and unemployment held at the highest in almost 12 years in July as companies continued to cut costs to help shore up earnings.
Home Price Rise Better Than Forecast
Prices of U.S. single-family homes gained more than expected in June and rose in the second quarter, reflecting the lingering boost from homebuyer tax credits that ended in April, Standard & Poor's/Case Shiller home price indexes showed on Tuesday.
Russian economy grew official 4.0% in first half
Russia's gross domestic product (GDP) grew by 4.0 percent in the first half of 2010.
Paying Off the House in 15 Years
Homeowners are doing the math and realizing that rates have fallen enough so the increase in payment between a new 15-year mortgage and their current loan is no longer unbearable for their budgets, says Bob Walters, chief economist at online lender Quicken Loans.
German official unemployment rate stable at 7.6%
The German unemployment rate was stable in August at 7.6 percent of the workforce, official figures showed on Tuesday as the number of people seeking work edged slightly lower to 3.188 million people.
U.S. Auto Sales May Hit 28-Year Low as Discounts Flop
U.S. auto sales in August probably were the slowest for the month in 28 years as model-year closeout deals failed to entice consumers concerned the economy is worsening and they may lose their jobs.
Ron Paul questions whether there's gold at Fort Knox, NY Fed
Rep. Ron Paul (R-Texas) said he plans to introduce legislation next year to force an audit of U.S. holdings of gold.
Gold Rallying to $1,500 as Soros's Bubble Inflates
Investors are accumulating enough bullion to fill Switzerland’s vaults twice over as gold’s most- accurate forecasters say the longest rally in at least nine decades has further to go no matter what the economy holds.
Public sours on health care reform as midterms loom
A new poll shows that public support for health care reform dropped sharply in August – a dagger in Democrats’ hopes that their landmark legislation will help them in November’s midterm.
August Torpor Leaves Dow in a Hole
This month's average daily trading of four billion shares in New York Stock Exchange composite volume makes it the slowest August since 2006, and is almost a third lower than the daily volume of 5.8 billion shares in August last year.
Democrats seek separation from Nancy Pelosi
Some of the Democratic Party’s most endangered lawmakers are taking steps to distance themselves from Speaker Nancy Pelosi in an attempt to inoculate themselves from charges that they are beholden to the unpopular House leader and supportive of the ambitious national Democratic agenda.
Obama Kicks Off Jobs Offensive
President Obama will close out the summer with a public relations blitz on jobs and the economy, the issue that is shaping the political landscape for November.
Analysts say US is expected to find that China unfairly helped its aluminum industry
The finding, which could spark higher import duties, was anticipated Tuesday as the White House attempts to strike a delicate balance ahead of November congressional elections that will be dominated by the weak U.S. economy.
U.S. Wants Report Card for Cars
System Would Rate Fuel Economy, Emissions; Industry Says Government Veers Into Issuing Opinions.
Car buyers won't see deals like 'Clunkers' for a long time as leaner automakers guard profits
Deals are getting more scarce because automakers, newly lean and profitable, are holding the line on those profit-eating promotions. And with no one expecting the government to offer a repeat of the Clunkers program, get ready for fewer discounts
Obama rips GOP for blocking small business aid bill
President Barack Obama blasted Senate Republicans on Monday for blocking a small business assistance bill, calling their opposition "pure partisan politics."
Coming Soon: Theaters, Airplanes to Post Calories
Regulators' appetite for calorie counts is about to extend beyond restaurants to thousands of other places that offer food, including airplanes, movie theaters and convenience stores.
Alabama schools turn to bank loans to operate
Alabama schools have been having a rough time of it, and it only looks like it's going to get rougher. Five school districts have already borrowed against lines of credit they have with local banks to fund basic school operations, and 25 additional districts are planning to follow suit in the next few months.
Poll: Americans Disapprove of Obama on Economy, Deficit
In nine of 15 issues examined in an Associated Press-GfK Poll this month, more Americans who expressed intense interest in a problem voiced strong opposition to Obama's work on it, including the economy, unemployment, federal deficits and terrorism.
Credit is finally available, but no one wants it
Finally, nearly two years after they were bailed out by Congress, big banks are beginning to ease lending standards for individuals and small businesses. Just when credit becomes more available, there's little evidence of a surge in demand for it.

Blogs
He Can’t Know
...between 1981 and 2008, taxes paid by this industry totaled nearly $2 trillion, an amount that exceeds oil-industry profits during these same years by almost 40 percent. The production and use of coal is also heavily taxed.
Higher Taxes May Not Push Firms to Cut Dividends
One big reason is that a growing share of U.S. equities are held by retirement funds and foreign investors that aren’t swayed by U.S. individual income-tax rates.
Inflation Regimes: the 5.5 percent barrier
The 5.5 percent barrier was crossed in 1990, with the six-month moving average peaking at 5.96 percent in August of 1990, but inflation turned down from there, falling below 5.5 percent in February of 1991 Until the 1990 recession, we might have been flirting with the high-inflation regime.
Immigrants Make U.S. Workers Richer
The research offers a detailed analysis of how, rather than depressing the wages of native born workers, immigrants help to raise them over time, largely through immigrants’ overall stimulation of economic growth.
Changes in Workers Compensation Taxes Over Time
In 2006, the taxes that support workers compensation insurance in a number of states were skyrocketing out of control. So much so that many businesses were seriously looking at uprooting their operations and moving cross country to where they could operate less expensively.
Economists React: Spending Data Indicate Recovery ‘Slogging Through the Mud’
Economists and others weigh in on the increase in consumer spending and incomes.
I, Fuel Pump
...overwhelming – and fun – evidence that markets work.
How Big a Stimulus Did We Need?
The CBO's numbers imply that even if we'd gotten a much larger stimulus--$1.3 trillion, say--unemployment would at best be something under 9%. The economy would still be underperforming.
The Unemployment Problem
We can argue about how generous the unemployment benefits should be overall, but for any level of benefits it is possible to reduce the disincentive to find work.
New database on the maturity structure of publicly-held debt
...a project with UCSD graduate student Cynthia Wu to try to assess the potential for the Federal Reserve to continue to influence long-term interest rates even when the short-term interest rate is essentially at zero.
Adam Smith on Ford's $5 a Day
Smith goes on to point out, in one of the first public choice insights in written economics, that, of course, the shopkeepers are quite happy for others to be taxed to finance imperialism because their pro rate share of taxes is less than their benefits from having a protected market.
Reversing reform
Over the past several decades, China has slowly reduced its interventions in the economy and it has encouraged state-owned firms to compete aggressively in the market. The effort to remove the heavy shackles on the Chinese economy has generated a period of record growth. Is the process of reform now threatened?
A Federal Right to Obfuscate
H.R. 3421, the “Medical Debt Relief Act of 2009,” has nothing to do with relieving people of medical debts. It adds to the list of information credit reporting agencies may not communicate to their clients.
Economic Problems Won’t Be Solved by Education Stimulus, Either
Mark Calabria does a fine job dismantling Laura Tyson’s argument that we need another stimulus to spur private demand and revive the comatose economy. I would just caution against the one thing he could be construed as implicitly supporting: more federal funding for education.
Trade Deficit Reality Check
Americans should hope for a big surge in imports in the near future. A fast-growing economy would give Americans more money to spend on imports and that—note to headline writers—would obviously be a very good thing.
Wind Energy: It’s Not Cheap or Clean
We’ve explained in detail how subsidized green jobs destroy jobs elsewhere, but it also turns out that increased wind power decreases carbon emissions much less than previously thought, and in some instances, could increase emissions.
The Obama Tax Hikes: It’s Not Their Money!
It doesn’t cost our government anything to allow us to keep the money we have earned. When a tax is not raised, the people get to keep their money, and that’s it.
More (Mis)forecasting Folly from the Keynesians
Advocates for more stimulus dollars such as economist Laura Tyson continue in their failure to recognize the fundamental adjustments needed on the economy's supply side before the economy can get back on a path of sustainable recovery.
What Can the Fed Do?
Less than most hope; more than many fear.
Don't Count the Bulls Out... Yet
In the age of feast or famine, it's alright to nibble.

Research, Reports & Studies
RCM: Wells Fargo Economics Group: Personal Income Rose Modestly in July
Personal income rose an anemic 0.2 percent in July, which was roughly in line with expectations. In real terms, spending rose a modest 0.2 percent. Increases in hours worked helped boost wage and salary growth.
Investing in Institutions
...the robustness of a country's growth path to political uncertainty depends on the degree to which individuals are invested in its current institutions.
After the Fall
Three years have elapsed since the troubles in the United States subprime mortgage market erupted in the summer of 2007. In the interim, a global panic developed and, just as normalcy began to return this year, concerns about a Greek default and widespread contagion in Europe shook the confidence of financial markets anew. As the dust has once again begun to settle, policymakers and financial market participants have begun to ponder the economic effects of these adverse shocks beyond their immediate and evident costs.
The Economic Principles of America’s Founders: Property Rights, Free Markets, and Sound Money
In light of the stark differences between the economies of the present day and the late 18th century in which the Founders lived, we can learn about economics by studying the principles and approach of our Founders.
Charter Schools: A Welcome Choice for Parents
Parents are substantially more satisfied with charter schools and the academic and social development of their children who attend compared to public school parents.

Economists’ Comments & Opinions
TARP and the Continuing Problem of Toxic Assets
It was a bold bet that the Treasury and Fed could engineer an economic recovery without allowing the repricing of U.S. housing stock.
Urban Plight: Vanishing Upward Mobility
Boosters still maintain that big cities remain unique centers for social uplift, but evidence suggests this is increasingly no longer the case.
The Fed Can't Fix An Overtaxed Economy
Big spending is another economy-killer. A recent OECD study noted that for every percentage point increase in spending among the nations studied, per capita GDP fell by 0.3% and investment by as much as 0.4%. So more government "stimulus" cures nothing.
Our Macroeconomic Fetish
Making sure that an economic recovery will never come.
PRICE: Trade is key to future prosperity
Democrats' stalling of pacts hurts American economy.
Bonds May Not Be as Safe as You Think: A Cautionary Tale
Investors seeking shelter from the uncertain economy and falling stock prices are moving into bonds in droves. But they may not be aware of the risks.
Tire-d Old Trade Policies
You can't boost exports by trashing imports.
It's a Good Time to Index Taxes On Capital
...one likely barrier to a higher inflation target is a quirk of tax policy: non-indexation of capital taxation means that higher inflation causes a stealth rise in the real tax rate on capital gains and interest income.
Social Security Bait and Switch
'Harry, am I making this up?' Yes, Mr. President, you are.
Along the Flaming Paper Trail of Crusader Elizabeth Warren
The Consumer Financial Protection Agency is the new kid on the block, a stranger among many agencies regulating financial institutions. The new kid has an agreeable name, but may turn out to be a bothersome nanny or the school bully.
Why World Markets May Continue Downtrend
Additional US stimulus will be proposed which will hold investors in the game, but additional sovereign shocks appear to be likely.
Double Dip Not Possibility but Reality
Will a weak economy bring quantitative easing estimated at $1 trillion?
Exploring Viable Policy Solutions to Fight Economic Headwinds
These actions could restore some business confidence, make a dent in unemployment, and garner a positive reaction from equity investors.

Graph of the Day
American Thinker: USA Today: Record Number in government anti-poverty programs
See: A Look at Case-Shiller, by Metro Area (August Update)
Video: President Obama’s Recovery Summer Vacation

Book Excerpts
"Opportunity cost tends to be defined acceptably, but the logic of the concept is not normally allowed to enter into and inform the subsequent analytical applications... In public finance alone, debates over tax incidence, tax capitalization, public-debt burden, and the role of cost-benefit analysis can be partially resolved when protagonists accept common concepts of cost. The unsatisfactory state of welfare economics can at least be understood and appreciated more adequately when the incorporated cost confusions are exposed. The once heated and long smouldering debate over the possibility of socialist calculation emerges with perhaps a different glow." –James M. Buchanan, Cost and Choice: An Inquiry in Economic Theory (1969)

Did You Know
Republicans led Democrats by 10 percentage points in Gallup’s most recent weekly poll of Congressional voting preferences, the largest lead for the GOP in Gallup’s history of tracking the midterm generic ballot. Gallup began tracking the generic midterm ballot in 1942. The GOP's largest previous lead was 5 percentage points in June 2002, while Democrats have regularly enjoyed far larger leads. The widest was 32 points in July 1974, just before President Richard Nixon resigned.

8/30/10 Post

BUZZ: States See Pickup in Tax Revenue

News
Bank of Japan Boosts Loan Program, Pledges More Steps If Needed
The Bank of Japan expanded a bank- loan program, stepping up its monetary stimulus for the first time since March after the yen surged to a 15-year high and the government pressured the central bank to safeguard the recovery.
Luxury booms while bargain retail suffers
Consumer spending in the US is diverging into two strands as strong growth at high-end stores such as Tiffany contrasts with continuing difficulties for mass-market retailers.
Record number in government anti-poverty programs
Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand.
Investors braced for week of key data
Investors are braced for a week of crucial economic data that could decide the Federal Reserve’s next move after chairman Ben Bernanke said it would ease policy if the outlook deteriorated “significantly”.
Cash-Poor Governments Ditching Public Hospitals
Faced with mounting debt and looming costs from the new federal health-care law, many local governments are leaving the hospital business, shedding public facilities that can be the caregiver of last resort.
Among Democrats, Economic Pressures Are Changing Tax-Cut Dynamics
In light of the recent weakening of the economy, a growing number of Democrats want to extend tax breaks for the wealthy through 2011.
Charter schools finding niches
Specialization seen as the next wave of reform.
Economic Reports This Week
Data will include personal income and spending for July (Monday); S.& P./Case-Shiller home price index for June and second quarter, Chicago purchasing managers’ index for August and consumer confidence for August (Tuesday); North American car sales for August; construction spending for July, ADP employment for August and the ISM manufacturing index for August (Wednesday); retailers’ same-store sales for August, pending home sales for July, factory orders for July and weekly jobless claims (Thursday); and unemployment for August and the ISM service index for August (Friday).
Economists: I dunno, man. What do you think?
The air is quickly coming out of the recovery balloon, and economists have mixed views on how to pump it back up.
Made in USA - For now
Despite the odds, these businesses have managed to stay truly all-American. But for how long?
Consumer spending picks up
Personal spending rose by $44.1 billion last month, or 0.4%, after falling less than 0.1% in June. This came in above the 0.3% increase economists expected.
Obama Looks to Congress to Jump-Start Economy
It is largely up to Congress to take action to speed up the economic recovery at this point, but many lawmakers are more focused on “the silly season” of campaigning instead of passing crucial legislation, President Obama said Sunday.

Blogs
NABE Survey: Most Economists Favor Extending Bush Tax Cuts
At least 60% of economists surveyed by the National Association for Business Economics said lower tax rates on capital gains and dividends should not be allowed to expire as provided under current law.
How panhandlers use free credit cards
Some were unbelieving at first. All were grateful. Some declined the offer. Some who accepted didn’t come back, but those that did had stories to tell.
Trichet: Governments Must Make ‘Ambitious’ Plans To Cut Debt
The head of the European Central Bank said Friday that highly indebted governments will need to act forcefully to lower those burdens, as his central bank continues to work to keep inflation levels low.
Schedule for Week of August 29th
This will be another busy week - the August employment report on Friday is the key economic release this week.
After Crises, Slow Income Growth and High Unemployment
Economists Vincent and Carmen Reinhart offer a grim tour of the economic landscape after financial crises — one plagued by slow economic growth and high unemployment — in the kickoff paper up for discussion at the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole.
Pray, Hear Me Out
...tax-exemption does not involve taking money from Y and giving it to X. That fact is vital.
Unofficial Problem Bank List increases to 840 institutions
"The Unofficial Problem Bank List grew by more than five percent this week as the FDIC released its enforcement actions for July 2010."
What Caused the State Budget Gaps?
The recession was the proximate cause: it sent revenues in a free fall at the same time that it put extra demands on the states’ welfare systems.
U.S. Births decline in 2009
The NCHS reports that U.S. births declined to 4.136 million in 2009, from 4.247 million in 2008. The birth rate declined to 13.5 from 13.9 in 2008 (births per 1000 total population).
How it sounds vs. how it really works
How does [the Recovery Act] sound? Great. Energy efficiency meets job creation. Green jobs helping the environment and saving people money...
The Decline in Civil Liberties
...Americans are no longer free to travel by commercial air without showing a government official a government-issued ID. So the freedom that [a U.S. foreign service officer in Moscow] sought in the United States no longer exists. In an important way, the United States has become Sovietized.
Why Does Louisiana Think This is Obama’s Katrina?
President Obama’s oil drilling ban is set to end on November 30, but hopefully the White House will begin to show some understanding of how the Gulf economy works by ending the ban before that.
Why is Obama Letting Non-Citizens Get Away with Voting?
We can now add one more general amnesty that the administration is apparently extending – no prosecution of illegal voting by noncitizens and a green light to becoming a citizen even if you have violated federal law.
Government Alters Stimulus Sign Policy, Raising More Propaganda Questions
In the 18 months following approval of President Obama’s stimulus package, the Department of Transportation required recipients of government funds to post placards touting the economic recovery. As a result, signs prominently featuring the recovery act logo appeared everywhere.
No Federal Bailouts for State and Local Government Pension Problems
There is bad news and worse news for state governments faced with underfunded pension promises.
Obama’s Economic Slide
What we are seeing is an economy that tried to recover last winter, slowed, and is now sliding steadily to stagnation. Not yet a recession, it is certainly the Obama slide.
Bernanke Pledge on Economy Gives Some Relief to Oil Prices
Ben Bernanke's comments at first sent markets down further, but stock, commodity prices rose once participants accepted the speech's takeaway: The Fed stands ready to act.
Bernanke on Monetary Policy
Ben Bernanke promised the Fed will do whatever it takes to aid the faltering U.S. recovery, and most of all to prevent deflation. The problem for the Fed Chairman is that the central bank is plainly running out of options.
The Laffer Curve Strikes Again
In the private sector, no business owner would be dumb enough to assume that higher prices automatically translate into proportionately higher revenues. In the public sector, however, there is very little understanding of how the real world works.
Is the Trade Gap to Blame for Slowing GDP Growth?
The trade gap should be the least of our worries.

Research, Reports & Studies
RCM: DEBT BE NOT PROUD
Bond investors are lenders. Why should we deliberately choose to lend more to those who are most deeply in debt?
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
U.S. Review: New Day Yesterday.
RCM: Hudson Institute Economic Report
This week saw downward revisions in GDP, a slowing housing markets, and declining durable goods orders. The stock market fell below the psychological 10,000 mark, even though it tends to rise when Congress is out of session.
The Dodd-Frank Act: Creative Destruction, Destroyed
The dominant theme of the Dodd-Frank Wall Street Reform and Consumer Protection Act is fear of instability and change, which the act suppresses by subjecting the largest financial firms to banklike regulation. The competitiveness, innovativeness, and risk taking that have always characterized U.S. financial firms will, under this new structure, inevitably be subordinated to supervisory judgments about what these firms can safely be allowed to do.
Obama’s Iraq Speech Should Stress a Resolute U.S. Security Commitment
President Obama’s televised speech on Iraq will mark the “official” end of U.S. combat operations in Iraq and the transition to an “advise and assist” mission.

Economists’ Comments & Opinions
The Folly of Subsidizing Unemployment
My calculations suggest the jobless rate could be as low as 6.8%, instead of 9.5%, if jobless benefits hadn't been extended to 99 weeks.
Government Pay: Now For The Really Bad News
High federal pay means less capital formation, lower wages and reduced innovation.
Spreading Hayek, Spurning Keynes
Professor Leads an Austrian Revival.
The CBO Promotes a Stimulus Fantasy
The striking thing about the CBO analysis is that it is "reality proof". Rather than presenting evidence that "stimulus" works, the CBO employed economic models that assume that "stimulus" works. As a result, no matter what happened to 2Q2010 GDP and employment, the CBO's calculations would always show that "stimulus" worked exactly as intended.
Time to let home prices fall?
For government to stand in the way of a further price decline is unfair to the next generation of buyers...
Seeking An Honest Social Security Fix
Social Security is not an "insurance" program. Social Security is not a "pension" program. If it were either, everyone running it should go to jail. Quite simply, Social Security is an inter-generational tax and welfare scheme. Facing up to that truth is 90% of the battle as doing so would transform the debate into two separate problems that actually have rational solutions: How do we want to tax ourselves and who should we give welfare to?
Waiting for Mr. Obama
If President Obama has a big economic initiative up his sleeve, as he hinted recently, now would be a good time to let the rest of us in on it.
You Call This a 'Recovery'?
The administration promised from the beginning of last year that recovery would start soon after the stimulus was passed. The only thing that Obama has proved is that Keynesian economics is dead. But the huge debt that our children will inherit will ensure that they remember this experiment.
Disappointing Second Quarter Growth Numbers Bode Well For A..."Lost Decade"
"While growth was still positive, its rate is downright anemic in the wake of such a steep recession. Moreover, estimates of consumer spending were adjusted upward, showing just how weak the Keynesian concept of demand-led growth, boosted by government spending, really is.

Graph of the Day
Mercatus Center: Temporary Staffing Declines in 2010
See: Media Feeds America’s Skepticism about Trade
See: Federal Outlays by Category, Excluding Interest
See also: Surprise! Banks help more homeowners than Obama

Book Excerpts
"The problems involved are not of a praxeological character, and economics is not called upon to provide the best possible solution for them. They concern pathology and psychology. They refer to the biological fact that the fear of penury and of the degrading consequences of being supported by charity are important factors in the preservation of man's physiological equilibrium. They impel a man to keep fit, to avoid sickness and accidents, and to recover as soon as possible from injuries suffered. The experience of the social security system, especially that of the oldest and most complete scheme, the German, has clearly shown the undesirable effects resulting from the elimination of these incentives. No civilized community has callously allowed the incapacitated to perish. But the substitution of a legally enforceable claim to support or sustenance for charitable relief does not seem to agree with human nature as it is. Not metaphysical prepossessions, but considerations of practical expediency make it inadvisable to promulgate an actionable right to sustenance.

It is, moreover, an illusion to believe that the enactment of such laws could free the indigent from the degrading features inherent in receiving alms. The more openhanded these laws are, the more punctilious must their application become. The discretion of bureaucrats is substituted for the discretion of people whom an inner voice drives to acts of charity. Whether this change renders the lot of those incapacitated any easier, is hard to say." –Ludwig von Mises, Human Action (1949)

Did You Know
"As the U.S. draws down in Iraq, it is leaving behind hundreds of abandoned or incomplete projects. More than $5 billion in American taxpayer funds has been wasted — more than 10 percent of the some $50 billion the U.S. has spent on reconstruction in Iraq, according to audits from a U.S. watchdog agency. For example, a $40 million prison sits in the desert north of Baghdad, empty. A $165 million children's hospital goes unused in the south. A $100 million waste water treatment system in Fallujah has cost three times more than projected, yet sewage still runs through the streets"

8/27/10 Post

BUZZ: GDP growth falls sharply in 2Q

News
Obama Administration Seeks to Tighten U.S. Trade Laws
The Obama administration, vowing to crack down on countries such as China that it says help subsidize exports of cheap goods to the U.S., introduced 14 measures to toughen enforcement of trade laws.
Bernanke may nod to weaker outlook, omit details
Federal Reserve Chairman Ben Bernanke will have to address a number of pressing issues in a speech on Friday as investors search for more clarity on how close the U.S. central bank might be to another asset-buying spree to support the flagging recovery.
What Biden didn't mention on stimulus
Vice President Joe Biden said this week that the Obama administration "hit the accelerator" toward spending $5 billion under the economic stimulus law to weatherize people's homes, create thousands of jobs, help consumers save money and put the nation on track for energy independence.
Weak GDP raises stakes for Obama, Fed
Growth figures are expected to show the economy is almost at a standstill, but the government is running out of options to rebuild momentum.
A stickier problem
The economy stopped shrinking a year ago, but America’s unemployment problem is as big as ever. The official jobless rate was 9.5% in July, and would be higher still had many people not given up searching for work. Some 45% of the unemployed have been out of a job for more than six months—the highest proportion since the 1930s.
US mortgage rates reach record low
The average rate for a 30-year fixed mortgage dropped to 4.36 per cent, down from 4.42 per cent the previous week, according to a survey by Freddie Mac, the US government-backed mortgage financier. It is the lowest level since the survey began in 1971.
To help or not to help
The parties wrestle over whether America can afford to create more jobs.
States Press Workers on Health Care
As state and local governments push to get employees to pick up more health care costs, some employees are pushing back.
Bad circulation
There is more to America’s stubbornly high unemployment rate than just weak demand.
Capital Makeover: Stimulus Fuels D.C. Construction
Work on the court building has been going on since 2003. Estimated cost: $122 million.
Killing them softly
International regulators are making progress on tackling too-big-to-fail banks.
Mortgage Picture Brightens, for Now
Fewer Borrowers Were Behind or in Foreclosure in the Second Quarter, but the Number of Newly Distressed Loans Grew.
DJIA Again Loses Its Grip on 10000
Summer Rally for Blue Chips Falters as Weak Data Accumulate; Waiting to Hear From Bernanke.
Pakistan Flood Sets Back Years of Gains on Infrastructure
One estimate, in a joint study from Ball State University and the University of Tennessee, put the total cost of the flood damage at $7.1 billion. That is nearly a fifth of Pakistan’s budget, and it exceeds the total cost of last year’s five-year aid package to Pakistan passed by Congress.
Energy use is way down - but wind surges
Energy use in the United States fell nearly 5% last year, marking the largest annual drop on record.
8 pro-biz Dems facing tough races
Democrats hold 30 "tossup" seats, representing some of the tightest races in the country. Eight of those highly contested seats are held by market-oriented New Democrats.
American job creation 101: stop fretting over Chinese investment
While Chinese firms see the U.S. as an attractive place to do business, executives also think it's an incredibly risky venture.
FCC appeals indecency rule strike-down
The FCC's complaint claimed that the decision keeps it from enforcing indecency violations because it cannot develop a policy that would be specific enough to satisfy the panel.
Gov’t Set to Confirm What Many Feel: Economy at a Standstill
Many analysts say the uncertainty surrounding the economy is holding back consumers from spending and companies from investing and hiring.
AP ENTERPRISE: Tax records show boom for some, bust for others in Gulf of Mexico oil cleanup
The worst offshore oil spill in U.S. history has spurred something of an economic boom in some communities where cleanup operations are based.
GOP plans wave of White House probes
If President Barack Obama needed any more incentive to go all out for Democrats this fall, here it is: Republicans are planning a wave of committee investigations targeting the White House and Democratic allies if they win back the majority.

Blogs
Investing Other People’s Money
If ZBB Energy’s future really is as bright as Mr. Apfelbach says it is, private investors would commit sufficient funds to keep it growing. The fact that private investors aren’t doing so is strong evidence that ZBB Energy’s future is dimmer than Mr. Apfelbach thinks.
Something Else for Government Bondholders To Worry About [Government debt as a percent of GDP] doesn’t compare debt to a government’s ability — or willingness — to pay. When measured against government revenue, the U.S. debt position, for instance, is worse than Greece’s.
Why Won't the Fed Inflate?
Ben Bernanke probably doesn't want to end up having to do the humiliating round of mea culpas that Greenspan had to. That's probably going to give him, and the other members of the open market committee, a slightly deflationary bias.
For Workers Who Find Jobs, Lower Wages
Of the 6.9 million workers who lost jobs during the recession that they’d held for at least three years, only about half were reemployed by January 2010. And 55% of those who did find work were earning less than before.
Would more planned savings be good? How can we lower perceived risk premia?
Both the long-run and short-run conditions require partial resolution, at the same time, and yet the long- and short-run conditions point in some different directions.
Secondary Sources: Lower vs. Higher Rates, Fed Options, China and India
A roundup of economic news from around the Web.
Commercial Real Estate Borrowers Joint the Ranks of Strategic Defaulters
It should be a lot easier for bankers to weed out strategic defaulters in business than in the individual market; the cash flows are much more transparent. One hopes they do. Meanwhile, the problems with securitization become ever more apparent.
Believe Me or Your Own Lying Eyes?
"...because the government has used the cash from the trust fund surpluses to finance other current activities rather than saving the cash by running unified budget surpluses, the government as a whole has not been truly prefunding Medicare benefits."
Secretary Duncan’s Race to Waste Your Education Dollars
“As I have said many times before, this isn’t just about the money — this is about working together and putting the needs of children ahead of everyone else.”
Mexican Massacres, Immigration Control, and the Obama Administration
The cold blooded murder of 72 illegal migrants by members of Mexico’s notorious Zeta cartel in the state of Tamaulipas is another stark and gruesome reminder of the current criminal and drug-related turmoil in Mexico.
Yes, the Founding Fathers Have Foreign Policy First Principles
The Founding Fathers created the United States as a sovereign nation. That in itself is directly and obviously relevant to the conduct of American foreign policy, both because it is what enable us to have a foreign policy in the first place, and because it emphasizes the value the Founders placed on sovereignty.
The Great Deleveraging Lie
The storyline is that consumers, corporations are paying off debts. But consumer spending has been entirely propped up by an ever increasing level of debt.

Research, Reports & Studies
CH7: Postwar British Socialism and the Fabian Society
The shift from the doctrine of free markets and free trade to the doctrine of extensive government control was partly caused by the influences of the Fabian Society in Great Britain.
Automatic Stabilizers and Economic Crisis: US vs. Europe
This paper analyzes the effectiveness of the tax and transfer systems in the European Union and the US to act as an automatic stabilizer in the current economic crisis.
Obama Administration Must Enforce America’s Immigration Laws
Instead of constantly seeking ways to evade, skirt, and ignore the immigration laws that are on the books, the Obama Administration needs to simply execute the laws while looking to solve the immigration problem in a way that discourages more illegal immigration, maintains security, and promotes the economy.
Obama Tax Hikes Defended by Myths and Straw Men
President Obama has called for a huge tax increase to take effect on January 1, 2011. Instead of reducing spending, he proposes to raise taxes on a wide swath of taxpayers—including small businesses—despite the weak economic recovery.
Returning More Power to the States Is the Natural Evolution in Homeland Security
The key to returning power to the states and localities is: Making sure those entities have a better seat at the table when national policy is created, discussed, and finalized; and Decreasing the federalization of disaster response that began in 1993. These two reforms would ensure that the power within the homeland security enterprise gravitates down closer to the people.

Economists’ Comments & Opinions
Public Pensions and Our Fiscal Future
Few Californians in the private sector have $1 million in savings, but that's effectively the retirement account they guarantee to many government employees.
FDR and the Lessons of the Depression
Higher taxes on capital and increased union power led to the 1937 economic slide.
The Most Fiscally Irresponsible Government in U.S. History
Current federal budget trends are capable of destroying this country.
COLE: Obama's next big bank bailout
Fine print says taxpayers are still on the hook.
The Dangers of Big Government Debt
On Thursday, Standard & Poor's said action is needed soon if the U.S. is to keep the much-coveted AAA bond rating that lets the government borrow in global markets at the lowest rates possible.
Ask Not Whether Governments Will Default, but How
The sovereign debt crisis is not European: it is global. And it is not over.
The New American Corporate State
A troika of big government, big business and big labor is attempting to run the country to its own advantage.
Clean Slate Time
How about this for a tax plan: cut most people’s taxes by half, eliminate the need to file returns, and provide the Treasury with a better way to reduce the deficit.
Prices drop, but hopes never do
Not even a 30 percent drop in housing prices can shake the idea that prices always go up.
Meaningless Multipliers Sank the Recovery Act, Part 2
Keynesian multipliers allow economists to ignore reality by making up jobs that can't be found on actual payrolls.
Primal Fears of a Double Dip Could Create Opportunities
People's innate tendency toward dichotomous thinking -- and its associated panic impulse -- could soon provide a chance to purchase stocks at extraordinary long term values.

Graph of the Day
Confronting the Unsustainable Growth of Welfare Entitlements
The Next Generation's Debt Burden
See: New Unemployment Benefits Claims
See: Floods in Pakistan - Maps, Graphs and Key Data
See also: The Cost of the Protected Class

Book Excerpts
"Signs are not wanting that some of those who are largely responsible for the present craze for planning are beginning to be uneasy about the forces they have loosened, and to feel a little like the sorcerer’s apprentice who cannot lay the ghosts he has raised. Once prices or incomes are guaranteed to some producers, there is little ground left for refusing the same to any others… If you argue for a particular purpose that “individuals have no machinery for limiting imports to the level of exports” you must not be surprised if your disciples insist that the Government should individually match each item of imports with a corresponding item of exports. And if you generally denounce the “humbug of finance” you must not expect the people to respect the particular piece of financial machinery of your own design." –F.A. Hayek, “Genius for Compromise,” (1945)

Did You Know
"New York Gov. David Paterson on Thursday promised to finally start collecting taxes on cigarettes sold by Native American stores, despite state police warnings that such enforcement could result in "violence and death." The state plans to collect a $4.35-per-pack sales tax on cigarettes sold by Native American retailers to non-Indian customers beginning next Wednesday.

Tribes have refused to collect the tax, citing their sovereignty and treaties dating to 1794. The last time the state tried to collect the tax, in 1997, protests erupted and tires were burned on the Thruway, shutting down a 30-mile stretch."

8/26/10 Post

BUZZ: Jobless Claims Decline

News
White House claims for stimulus rely on rosy assumptions, best-case scenarios
The Obama administration claimed this week that $100 billion invested in innovative technologies under the economic stimulus law is "transforming the American economy." But an examination of details in the 50-page report unveiled Tuesday by Vice President Joe Biden reveals something a bit different: a collection of rosy projections that ignore many of the challenges, pitfalls and economic realities in all those areas.
Ford to expand presence in Asia
Ford Motor Co. announced on Thursday that it will ramp up its presence in the fast-growing Asian and African markets.
One in 10 mortgage holders faces foreclosure
One in 10 American households with a mortgage was at risk of foreclosure this summer as the government's efforts to help have had little impact stemming the housing crisis.
How the Stimulus Is Changing America
The American Recovery and Reinvestment Act of 2009 — President Obama's $787 billion stimulus — has been marketed as a jobs bill, and that's how it's been judged. The White House says it has saved or created about 3 million jobs, helping avoid a depression and end a recession. Republicans mock it as a Big Government boondoggle that has failed to prevent rampant unemployment despite a massive expansion of the deficit. Liberals complain that it wasn't massive enough.
Slower U.S. Capital Investment May Reach Job Market
A slowdown in U.S. business investment may soon hit the job market, further hindering a recovery in the world’s largest economy.
Housing's a wreck. Builders rally. Huh?
Existing home sales plummeted in July. New home sales sunk as well, hitting a record low. But luxury homebuilder Toll Brothers reported a surprise quarterly profit Wednesday.
Co-chair of Obama debt panel under fire for remarks
Reforming Social Security has always been a political lightning rod, and none more so than this mid-term election year. Simpson's remarks could further inflame an already divisive debate and complicate the task of the bipartisan commission, which is attempting to broker solutions that both sides of the aisle can support.
Pressure mounts for 'Sheriff' Elizabeth Warren
Pressure continues to mount on President Obama to select Elizabeth Warren as the nation's first consumer financial protection regulator.
That sinking feeling: More bad news for the economy has people talking recession again
Businesses are ordering fewer goods. Home sales are the slowest in decades. Jobs are scarce, and unemployment claims are rising. Perhaps most worrisome, manufacturing activity, which had been one of the economy's few bright spots, is faltering.
SEC Gives Big Investors More Say Over Corporate Boards
The Securities and Exchange Commission voted to give shareholders greater power to nominate candidates to the boards of public companies, handing unions and institutional investors a win in their campaign to have more say over corporate policies.
Democrats privately fear House prospects worsening
Top Democrats are growing markedly more pessimistic about holding the House, privately conceding that the summertime economic and political recovery they were banking on will not likely materialize by Election Day.
Taxing Times for U.S. Investors
Another uncertainty facing U.S. investors: impending tax-law changes.
US tax swoop faces banking backlash
The rules could drive smaller financial institutions out of the US market to escape the impact of the withholding tax, say industry groups.
Not Cash to Burn, but Money in the Bank
The nation's money stock, which includes currency plus bank deposits and households' money-market fund holdings, grew to about $8.64 trillion as of Aug. 9, from $8.48 trillion at the start of the year, according to the Federal Reserve.
Senate tax duel centers on small business
Both parties point to jobs.
Orders and Home Sales Underscore Slowdown
Weakness in durable-goods orders and a drop in new-home sales to historic lows offered more signs that the economy is losing momentum.
Stimulus Assessments Overly Optimistic
...an examination of details in the 50-page report unveiled Tuesday by Vice President Joe Biden reveals something a bit different: a collection of rosy projections that ignore many of the challenges, pitfalls and economic realities in all those areas.

Blogs
Or a Program That Was Actually Going to Work
Obama hasn’t been as successful selling his economic program as Reagan was.
Government’s Unwelcome Economic Distortions
Many of the “seeds” for the recession were planted by government. Regardless, the average citizen reflexively looked toward Washington to quickly fix the economy.
The Report on Stimulus CBO Wishes Would Go Away
As part of the stimulus legislation, Congress mandated CBO report regularly on how well the stimulus is doing. Money spent, economy faltering, Congress wants happy news about their stimulus, and in response all CBO can do is continue to run their antiquated models telling us that down is up and slow is fast.
Liberalism is Failing
…there is no such thing as a free lunch.
Slicing the Bagel Reveals VAT Flaws
Under the tax laws extant in the Big Apple, if a bagel is sold whole, then it is, well, a bagel. But if the bagel is sliced before it is sold, then it falls under the category of “processed foods.” And processed foods are subject to a higher tax—a nine cent higher tax, to be specific.
Side Effects: College Students May Lose Health Care Option Under Obamacare
What about kids without parental coverage? The new law’s requirement that insurance cover children up to age 26 won’t make any difference.
There’s No Such Thing as a Free Energy Audit
D.C.’s Department of the Environment (DDOE) teamed up with Patuxent Environmental Group (PEG) and other contractors to provide “free” energy audits, of course it didn’t end well for the consumer. But most residents didn’t realize that PEG would place liens on their houses for not paying for the audit.
Economy Getting Sicker by the Day, But What It Really Needs Is a Fever
The only cure for the global economy is to eliminate all this government intervention and waste, and then eliminate the artificial excesses coming from the Fed.
New Fed Proposal to Bankrupt America: Government Guarantee of Entire ABS Market
In essence, some economists are saying that bureaucrats are capable of managing the insurance of markets that may exceed $20 trillion.
How An Even Slower Recovery Would Feel
After some improvement in the data over the spring and early summer, the recent news is describing an economy growing below 2%. While technically not a double-dip recession, the recovery could be so weak it will feel like another downturn.
Spending vs. PSST
I would like to see less emphasis on measuring economic activity as spending. I would like to see more effort put into understanding economic activity as patterns of sustainable specialization and trade.
Why were the measured productivity gains so high in 2009?
...interpret the "high productivity innovation" as the decision to lay the workers off, and the selection of workers, not the sudden advent and withdrawal of some new high productivity technology.
CBO Report: We're Still Using the Same Stimulus Model, and It Still Says the Same Thing
Every few months, this comes out, and every few months, a bunch of commentators treat this as if this were an empirical analysis, rather than a case of the CBO sticking the numbers back into the same model, re-running them, and conclusively proving that . . . their model still generates the same results.
Gridlock is Great for Stock Market Returns
Unified governments spend far more, and more quickly, and expand regulation much more than split governments do.
Regime Uncertainty: Are Interest-Rate Movements Consistent with the Hypothesis?
If mainstream analysts continue to disregard the role of regime uncertainty in the major depressions of the modern era, especially in accounting for their extraordinary duration, then they will only demonstrate the poverty of their own mode of analysis.
Fannie, Freddie and Mortgage Addiction
The key is to sell the accumulated mortgages slowly, in small increments. This will take years— after all, it took decades for the government to create the mess.
The Role of Regulation
Matt Yglesias has been fighting a good fight against occupational licensing regimes that mostly serve to restrict entry.
Biden’s Fatal Conceit
Biden repeatedly stated that the “government plants the seed and the private sector makes it grow.” Because the government possesses no “seeds” that it didn’t first confiscate from the private sector, what the vice president is advocating is the redistribution of capital according to the dictates of the Beltway.
The stimulus is working … just not for you
Had we wanted to stimulate the entire economy we would have seen tax cuts for all employers and employees, a sure-fire way to put money in the pockets of everybody.
Is That the Most They Can Say in Stimulus Spending’s Defense?
If a job exists only because of the existence of government dollars, then the job will go away when the government dollars go away.
All This Talk About Deficits Is Getting In the Way Of Preserving and Expanding Our Entitlement Spending
Newly minted White House budget director Jacob Lew said essentially the same thing a decade ago when he told Congress that “fiscal discipline is essential to protect Social Security and strengthen Medicare, so that both will be there in the years ahead.” In this view, fiscal responsibility is useful insofar as it allows for the expansion of government.
The Fed Should Exit Its Low-Rate Policy
...this solution is not sustainable in the long term: The cost is exorbitant, and the short-term and long-term distortions would be devastating.

Research, Reports & Studies
RCM: Wells Fargo Economics Group: New Home Sales Drop to a New Record Low
New home sales fell 12.4 percent in July, which was well below the consensus estimate. Prior months’ data were revised downward. The absolute level of sales dropped to a 276,000-unit pace, which is a record low.
Another Presidential Rescue Mission in North Korea
August has become the month when former U.S. Presidents fly to Pyongyang to gain the release of U.S. citizens incarcerated for illegally entering North Korea.
Cyber Security: A Complex "Web" of Problems
Today, as it pertains to cyber security, America still needs clearer lines of authority within the federal government and a more coherent structure of public–private interaction to allow for effective action.

Economists’ Comments & Opinions
Ask Unemployed How the Stimulus is Working
When the stimulus package was enacted in February 2009, the labor force participation rate, the percentage of Americans who say they are working or looking for work, stood at 65.6%. Last month it was 64.6%, a full percentage point lower.
No Need To Over-Regulate Banker Compensation
Dodd-Frank strengthened shareholder power. Now give bank shareholders the right incentives and let compensation reform itself.
Fed to Savers: Drop Dead
Thoughts while pondering the 43 cents of interest I earned on my savings.
Honey, I Shrunk My Approval Ratings
The White House is having a disastrous 'summer of recovery.'
Where Are the New Jobs?
The statisticians at the National Bureau of Economic Research declared the Great Recession over -- but tell that to people who can't find jobs.
The Fed Is Running Low on Ammo
It still has options if more monetary easing is needed. But they're not very effective.
Harsanyi: Gridlock: our greatest hope
There is no greater check on power in Washington than two strong political parties.
The IRS Targets Incompetent Tax Preparers
That's good news. But the agency is going overboard.
VENABLE: Texas fights global-warming power grab
Lone Star state won't participate in Obama's lawless policy.
ObamaCare: It Is Here
While many of Obama Care's major pieces won't kick in until 2014, a few big changes are already under way--and offering an early taste of what's in store for American health care. It ain't pretty.
Why we're not Greece - yet
The U.S. is not Greece. But this does not mean we cannot learn lessons from a nation that is marked by both great beauty and regular bouts of fiscal madness.
Dow plunge is wake-up call to deal with debt
The market could be in for a very bumpy ride in the coming months -- except it won't have technical glitches to blame. U.S. debts, more likely than not, could be an underlying culprit.
Meaningless Multipliers Sank the Recovery Act, Part 1
Keynesian economists never have to "find" the jobs created; they simply make them up with multipliers.
We're All in a Race to the Bottom
There will be no winners in this economy as the government solves debt with more debt and fears of deflation increase.

Graph of the Day
Jobless claims slide more than expected
See: No Visa Required
See: Existing Home Sales
See also: Future of the Bush Tax Cuts
VIDEO: Public Pulse: how the American public views its government

Book Excerpts
"We shall find too that such current notions as that society ‘acts’ or that it ‘treats’, ‘rewards’, or ‘remunerates’ persons, or that it ‘values’ or ‘owns’ or ‘controls’ objects or services, or is ‘responsible for’ or ‘guilty of’ something, or that it has a ‘will’ or ‘purpose’, can be ‘just’ or ‘unjust’, or that the economy ‘distributes’ or ‘allocates’ resources, all suggest a false intentionalist or constructivist interpretation of words which might have been used without such connotation, but which almost invariably lead the user to illegitimate conclusions. We shall see that such confusions are at the root of the basic conceptions of highly influential schools of thought which have wholly succumbed to the belief that all rules or laws must have been invented or explicitly agreed upon by somebody. Only when it is wrongly assumed that all rules of just conduct have deliberately been made by somebody do such sophisms become plausible as that all power of making laws must be arbitrary, or that there must always exist an ultimate ‘sovereign’ source of power from which all law derives." –F.A. Hayek, Law, Legislation, and Liberty (1982)

Did You Know
Any way you slice your bagel, if you slice it in New York, it's going to cost you more. New York State tax officials are enforcing a sales tax for sliced or prepared bagels, the tax on a sliced bagel is roughly 8 cents. In 2009 2,732 restaurants were audited state-wide. That year, 646 restaurants were audited for bagel malfeasance in New York City alone. In 2010 that number jumped to 1,077.

8/25/10 Post

BUZZ: U.S. Economic Confidence Down in Recent Weeks

News
Morgan Stanley Says Government Defaults Inevitable
Investors will face defaults on government bonds given the burden of aging populations and the difficulty of securing more tax revenue, according to Morgan Stanley.
US New Home Sales Sink to Lowest Pace on Record
New U.S. single-family home sales unexpectedly fell in July to set their slowest pace on record while prices were the lowest in more than 6-1/2 years, government data showed on Wednesday.
Biden: 'We've seen this movie before'
VP criticizes Boehner as 'nostalgic' for Bush policies.
U.S. Durable Goods Orders Show Sign of Cooling Economy
Orders for U.S. durable goods increased less than forecast in July, a sign that one of the few remaining bright spots in the economy is cooling.
Credit Card Debt Drops to Lowest Level in 8 Years
The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002.
Lack of Jobs, Foreclosures May Keep U.S. Housing Depressed
Sales of new homes probably held at a 330,000 annual pace in July, the second lowest on record. Bernanke's helicopter could move to new altitude
In an all-out effort to get the economy moving again, Federal Reserve Chairman Ben Bernanke may be getting ready to take his money-creating helicopter to a new altitude.
10 states with ridiculously low unemployment
Every U.S. state experienced job losses during the recent downturn, but thanks to the right mix of industries, natural resources, and skilled workers, some states have a far lower unemployment rate than the 9.5 percent national average.
Workplace safety violations can't just be speeding tickets
Something is wrong with the citation system if companies with unsafe practices don't get penalized until after a disaster.
Colorado Budget Cut by $60 Million
Over the past three years, the governor and legislature have cut shortfalls totaling $4.3 billion.
More employers make 401(k) enrollment automatic
The percentage of employers that offer automatic 401(k) enrollment has increased dramatically to 38%. That's more than seven times the rate in 2005, when automatic enrollment was at 5%.
I.R.S. Plan to Uncover Companies’ Tax Strategies
Beginning next year, the agency plans to mandate that corporations also provide a brief description of their uncertain tax positions and their rationale, offering essentially a road map for its auditors.
100-plus tax breaks on the line
Leaving big tax decisions to the fourth quarter isn't unusual: Congress often waits for "the two-minute warning" before voting on so-called tax extenders.
Government Says Gulf Seafood Safe
More Gulf waters are reopening to fishermen, and government officials say seafood cleared for sale has been thoroughly vetted. Whether consumers are buying those assurances — and the fish — remains to be seen.
Biden slams GOP's economic plan
Biden slammed Boehner and Republicans, saying they lack a real economic agenda that would move the country forward. Calling for “truth in advertising,” the vice president called GOP claims about Bush-era upper-income tax-cuts “a myth.”
House Could Return to Fight Over Stem Cell Research
A fall battle is shaping up over embryonic stem cell research after a federal judge ruled Monday against President Barrack Obama’s executive order allowing the research under some circumstances.
Egg recall is a golden opportunity to whip food safety into shape
More than 500 million eggs have been recalled in recent weeks because of salmonella poisoning, an outbreak that originated at a pair of Iowa farms and has spread to at least ten states.
Britain, Germany Slash and Burn Spending Programs
Powerhouse Germany and debt-ridden England have slashed and burned through social programs to salvage the euro zone economy.
'Crisis of Confidence' Sparks a Commodities Selloff
Rotation Out of Riskier Bets Leads Investors to Dump Crude, Copper and Even Cocoa; Gasoline at Lowest Since Dec. '09.

Blogs
A War We Can’t Afford to Lose
Succeeding in Afghanistan will require more patience from the American people. A summer of high casualty rates and reports about corruption of Afghan President Hamid Karzai’s administration are casting doubt among Americans about the effort.
This Just In: White House Disappointed with America…Again!
Disappointed in both America’s history and current situation, the UPR report declares to the world that the Obama Administration looks “to the future with pride and hope.”
Senators Exaggerate Number of Teachers’ Jobs in Jeopardy
In early August, when the U.S. Senate earmarked $10 billion to recover lost jobs in education, supporters of the measure claimed the money would save thousands of teachers’ jobs.
Obama to Gulf: Oil Ban Stays
When President Obama’s oil spill commission first met in July, they said that the President’s decision to ban oil drilling in the Gulf fell outside their mandate. But after a number of highly charged field hearing in the Gulf, the commission did a 180-degree reversal and promised to press the Obama administration about the ban.
The True National Debt
Fannie Mae and Freddie Mac must be included, pushing actual debt to $18.964 trillion.
Housing and Jobs: Underlying Problems Reemerging
The housing market and unemployment numbers will continue to worsen so long as we continue to delay recovery.
A Real Debate on Spending
From Washington’s perspective, extending current tax policy may look like a tax “cut,” but to American families paying the same amount in taxes next year as they do today, it is in no way a cut.
Biden’s Fatal Conceit
The White House’s misbegotten “Summer of Recovery” continued today with the release of another administration “analysis” that purportedly demonstrates the stimulus’s success in “transforming” the economy.
Economists React: Home Sales ‘Eye-Wateringly Weak’
Economists and others weigh in on July’s plunge in home sales.
ObamaCare on Campus
"Colleges and universities say that some rules in the new health law could keep them from offering low-cost, limited-benefit student insurance policies..."
Secondary Sources: Mortgage Funding, Japanese Deflation, Celebrity Forecasting
A roundup of economic news from around the Web.
Super-naive
Although much more mundane than the prospect of altruistic action heroes sweeping in to teach our children, giving parents choice (say, through tuition tax credits) will spark the many ordinary men and women working in K-12 schools to work harder and more creatively to educate their students.
S&P Cuts Ireland's Rating, Outlook Negative
The 10-year Ireland-to-German bond spread has risen to 318 bps, and is now above the peak during the European crisis in May.
Munger on rent-seeking
Mike talks about his recent trip to Chile and looks at how the reform of the Santiago bus system is going.
Sovereign Debt Wonkery
Think of the following as an analogy. A guy is paddling down a river without realizing that he is headed toward a waterfall. When is the last point that you can warn him in time so that he can paddle to safety? It depends on how fast the river is moving, how fast he can change direction, how strongly he can paddle, and so on.
Richmond Fed: Manufacturing Growth Continued to Ease in August
This is similar to the NY Fed and Philly Fed surveys - although the Philly Fed showed contraction in August. Growth in the manufacturing sector is clearly slowing.
Econ. 101
No permanent demand for housing was created by the program. The accelerated purchase of homes had to come at the expense of future sales. Instead of stimulating the demand for housing in the future, the program depressed it.
Home Sales Plunge In July
...we're going to have to work out the aftermath in months of low home sales.

Research, Reports & Studies
Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output From April 2010 Through June 2010
The Congressional Budget analyzes the impact of the American Recovery and Reinvestment Act on the economy over the past couple of months.
How Obamacare Empowers the Medicare Bureaucracy:
The Patient Protection and Affordable Health Care Act makes statutory changes that could challenge the autonomy of physicians to treat patients as they think best, undercut the freedom of physicians to remain in private practice, and threaten the continuation of fee-for-service medicine regardless of the preferences of doctors and patients.
More Than Lip Service: Why Private Sector Engagement Is Essential
Perhaps one of the most significant lessons learned from recent U.S. disasters is that the private sector is a critical actor in the homeland security enterprise.
RCM: Wells Fargo Economics Group: Existing Home Sales Plummeted in July
Existing home sales dropped 27.2 percent in July, which was well below expectations. The monthly decline was the largest on record. Payback from the tax credit is largely responsible for the sizeable decline.

Economists’ Comments & Opinions
The Deficit Is a Symptom, Spending Is the Disease
Sometime in the next week or so, the U.S. national debt will exceed $13.4 trillion. To put that in perspective: If you earned $1 every second, it would take you 425,000 years to earn enough money to pay off that debt. And it's not likely to get much better any time soon.
Central Banks: Heads They Win, Tails We Lose
Deflation is the cleansing of the speculative excesses and a return of general population profits back to their rightful owners -- the central banks and those behind them.
Stop the Madness
Washington is spending the country into economic decline.
Geithner and Summers Must Go
"Recovery Summer" turns out to be a dud, Geithner, Summers, Vice President Joe Biden and others have insisted that prosperity is just around the corner - and that if it's not, George W. Bush is to blame.
The Housing Mirage
Homeowner subsidies have only delayed the day of reckoning.
What’s Going On with Interest Rates?
What will happen to interest rates in the short run is a question that divides economists.
Obama's Housing Policies Are Killing Growth
These policies have stunted the spending of tens of millions of consumers who continue to pay high interest rates on unsecured mortgage balances which, absent those policies, would have been compromised and written off long ago.
Putting the Brakes on ObamaCare
How a Republican Congress could begin the process of repealing this unpopular law.
HELMER: Global warmists abandoned fact for fancy
To understand climate hysteria, we need look no further than the Watergate advice: "Follow the money."

Graph of the Day
Mercatus Center: Update: Stimulus Funds and Unemployment
See: Trading Places
See: Plunge in Home Sales Stokes Economy Fears
See: Global economy going nowhere fast
See also: Where the Stimulus (ARRA) Goes
See also: 29% vs. 16% - Found a Job, but How Good Is It?

Book Excerpts
"A people among whom there is no habit of spontaneous action for a collective interest—who look habitually to their government to command or prompt them in all matters of joint concern—who expect to have everything done for them, except what can be made an affair of mere habit and routine—have their faculties only half developed; their education is defective in one of its most important branches." –John Stuart Mill, Principles of Political Economy with some of their Applications to Social Philosophy (1848)

Did You Know
"Budget cuts are forcing police around the country to stop responding to fraud, burglary and theft calls as officers focus limited resources on violent crime. Cutbacks in such places as Oakland, Tulsa and Norton, Mass. have forced police to tell residents to file their own reports — online or in writing — for break-ins and other lesser crimes."