General Economic News Nov. 15-19

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News
FRIDAY
A far from random walk from Wall Street
Now, as in the wake of the Great Depression, a generation of investors may have become alienated from the stock market.
Wind energy, solar power face cloudy future
After years of rapid growth and darling status among many in Washington, the future of the American renewable energy industry is uncertain.
Hunting down the hoarders
To rein in prices, the Chinese government turns to unconventional measures
Mortgage Delinquencies Decline
Number Reflects Stronger Economy, But Stubborn Jobless Rate Likely to Keep Foreclosure Rate High
Flying for the holidays won't be cheap
Air fares are up dramatically this holiday season -- so there's no point in waiting for last-minute deals because they're not going to happen, experts say.

THURSDAY
Leading Indicators Index in U.S. Climbs 0.5% for Second Month
The index of U.S. leading indicators rose in October for a fourth consecutive month on signs the Federal Reserve was preparing to take additional action to spur the world’s biggest economy.
U.K. Had Larger-Than-Expected Budget Deficit in October Amid Modest Growth
Britain had a larger budget deficit in October than economists forecast, underlining the challenge facing Prime Minister David Cameron as he tries to cut record levels of borrowing.
Greece Pledges to Cut 2011 Deficit to 7.4% of GDP With Economy Shrinking 3%
Greece’s government plans to cut the budget gap by 5 billion euros ($6.8 billion) in 2011 by reducing spending, including wages at state companies, and increasing sales taxes to meet targets under a European Union-led rescue.
Home Ownership Gets Tougher as Lenders Restrict FHA Mortgages
Home ownership may be falling out of reach for more Americans as lenders toughen their standards for Federal Housing Administration-insured loans beyond what the agency itself requires.
Massachusetts gets the new economy best
Massachusetts is well-positioned because of its many software, hardware and biotech firms, and highly competitive universities such as Harvard and MIT that churn out talented grads who can support their growth.
Fewer homeowners behind on mortgage payments
Mortgage delinquency rates dropped in the last three months -- but only because more borrowers had their homes repossessed. You can't be late on your mortgage payment if you've already lost your home.
Make Money in 2011: The Economy
Here's the happy news: Despite fears of a dreaded double dip, the economy isn't likely to slip back into recession in 2011. Unfortunately, the more probable scenario is no great shakes, either: lackluster growth and persistently high unemployment.
Goodbye, checks: States benefits move to direct deposit, debit cards
Following the federal government's lead, state governments are migrating more payments -- for everything from unemployment to child support -- away from paper checks.
Millionaire Lawmakers: Members of Congress Get Richer
Even a dismal economy didn’t prevent rich lawmakers on Capitol Hill from becoming richer. Congressional members’ personal wealth collectively increased by more than 16 percent between 2008 and 2009, according to a new study by the Center for Responsive Politics, a DC-based non-partisan think tank.
OECD Sees Uneven Euro-Zone Recovery
Recovery in the euro zone will be modest and uneven in the next two years, as deficit-reduction plans in the area weigh on growth and large imbalances in peripheral countries with high debt levels are wound down.

WEDNESDAY
Wholesale Prices Climb Only Slightly
Wholesale prices were mostly tame in October, suggesting inflation would remain subdued for the time being.
Housing starts hit lowest level in 18 months
New home construction fell to an 18-month low in October, the government said Wednesday.
GM's IPO May Raise Record Amount
General Motors Co. said Wednesday that it will increase the size of its initial public offering by about 30% to 478 million shares, which could make it the largest global IPO in history.
Inflation at lowest level since 1957
The Consumer Price Index, a key measure of inflation, increased 1.2% over the past 12 months ending in October, the Bureau of Labor Statistics said.
Ethanol subsidy under fire
For years, American taxpayers have subsidized ethanol production in a bid to boost the nation's energy independence.

TUESDAY
U.S. Factory Production Rises by Most in Three Months
American industry churned out more automobiles, computers and appliances in October, keeping manufacturing at the head of the economic recovery that began more than year ago.
Federal report: U.S. hunger remains at highest levels in 15 years
The number of Americans fighting off hunger stayed level last year, though food insecurity rates remain the highest they have been since the federal government began keeping track 15 years ago, a Department of Agriculture report released Monday found.
Foreclosure mess could threaten banks, report
Congressional watchdog warns of the consequences to housing market
Deflation at Our Doorstep?
U.S. core producer prices unexpectedly fell in October to post their largest decline in more than four years, according to a government report on Tuesday that underscored the Federal Reserve's concerns about the low inflation environment.
Make Money in 2011: Your Savings
Savers, steel yourselves for another low-yield year. Interest rates on savings accounts, CDs, and money markets have been barely there for a while -- bank savings accounts are paying a paltry 0.2% on average, while money-market funds offer a dismal 0.04%.
Banks face $52 billion mortgage hit
The big banks could fork over $52 billion to make good on souring mortgages sold to investors, a government watchdog said.
The overshoot continues
It’s getting to be a habit, and an embarrassing one at that. For the fourth time this year, Mervyn King has had to write to the chancellor of the exchequer explaining why inflation is uncomfortably high. Making matters worse, the governor of the Bank of England will be busy with his pen for some time to come. According to the bank’s own forecast published in its Inflation Report on November 10th Mr King is likely to be writing yet more letters next year to George Osborne at the Treasury. 
Jail Saves $111K By Cutting Kool-Aid, Coffee
Just by removing Kool-Aid from the menu, the county saved about $26,000 a year.
Don't Underestimate Foreclosure Crisis, Watchdog to Warn
A congressional oversight panel is set to warn on Tuesday that a widespread problem of flawed and fraudulent foreclosure paperwork could upend the housing market and undermine the nation's financial stability, just as the issue is coming under greater scrutiny this week in Washington.
In India, the World's Second Largest School Lunch Program
A global hunger index released this month by the International Food Policy Research Institute ranked India 67th out of 84 countries on indicators like child malnourishment, child mortality and calorie deficiency.
One in Four Americans Is Enrolled in a Government Food Program
More Than 17 million Households Reported Having Difficulty Buying Food in 2009.

MONDAY
Retail sales jump 1.2% in October
Retail sales rose for a fourth straight month in October, the government reported Monday, signaling that consumers are keeping their wallets open as the holiday shopping period approaches.
Secret Walmart Survey Shows Inflation Already Here
There might not have been a second round of quantative easing if Bernanke shopped at Walmart. Here is why…
Budget cuts are putting your pets at greater risk if they are lost in New York City.
Greece admits breach of bailout terms as audit begins
Greece acknowledged Monday it would breach conditions for a new installment of a 110-billion-euro bailout as the IMF and European Union began an audit of the country's austerity measures.
Cotton Prices Surge; Will You Pay?
Cotton Costs Surge on Commodities Exchanges; Consumers Warned to Brace Themselves
Farm Economy Heading for Record Driving Surge in U.S. Cropland
The best second-half for commodities in a generation is pushing U.S. farm incomes and agricultural land prices toward record highs.
Democrats to push for $250 Social Security payment
When House Democrats return to Washington on Monday, a top priority will be putting a $250 dollar check in the mail to 58 million Social Security recipients.
APEC countries agree to launch massive new free-trade zone
The 21 members of the Asia-Pacific Economic Cooperation (APEC) agreed Sunday to 'take concrete steps toward realizing a Free Trade Area of the Asia-Pacific' in coming years.
The Washington Punch List
With the economy front and center, we're keeping a close eye on Congress and Obama. Stay tuned for updates on what they get done – and what gets punted.
Make Money in 2011: Your Home
Location, location, location. In the latter half of 2011 that adage should come back into vogue. But first, more declines.
New York state manufacturing plunges: NY Fed
New York state manufacturing unexpectedly plunged in November, the first contraction since July 2009 when the US economy exited recession, official data showed Monday.
Few Americans Would Use Cash Windfall to Start a Business
Chinese more likely than Americans, Europeans to invest in business
Economic Reports This Week
Data this week will include retail sales for October and business inventories for September (Monday); the Producer Price Index for October and industrial production and capacity utilization for October (Tuesday); the Consumer Price Index for October and housing starts for October (Wednesday); weekly jobless claims, the Philadelphia Fed manufacturing index, and leading economic indicators for October (Thursday).
Downturn Bites This Time for Beer, Tobacco
In past recessions smokers and beer drinkers kept puffing and quaffing. This time it could be different.

Economist Comments
FRIDAY
Obama's Economic Policies Unpopular Abroad, Too
Mr. Obama has chosen to serve the narrow interests of two domestic automakers and their union rather than the overall economic and strategic interests of the American people.
Europe Confronts Stein’s Law
If something cannot go on forever, it will stop. This aphorism appears particularly apt for the current Eurozone.
Washington is making the housing crisis even worse
Bad policy and a bad economy make it a terrible time to buy. Instead of pushing cheap credit, Uncle Sam must let the market lower prices.
GM IPO Continues Trend of Rewarding Those Who Failed
What do the General Motors and the nation's big banks have in common? They've both been bailed out by the federal government and, were it not for government largess, neither would be here today celebrating the automaker's largely successful stock offering.
Oh, Did We Ever Get Stuck-o
Groucho was right. And housing will remain depressed despite what government tries to do.
An IPO for Uncle
The government partnership with GM is a long way from over.
The Central Importance of Statistics
The Chinese government is extremely enthusiastic about managing their economy, and they put a lot of thought into it.  But the lack of good statistics on economic performance makes an already near-impossible challenge even more daunting

THURSDAY
U.S. Taxpayers Recover Billions in Sale of G.M. Stock
American taxpayers’ ownership of General Motors was halved on Wednesday, and billions of dollars in bailout money was returned to the federal government, as a result of the nation’s largest initial stock offering ever.

WEDNESDAY
Stimulus: Still Not Working!
Unbelievably, the administration and its allies keep insisting that a failed policy was a success.
U.S. Sets 50 Bank Probes
FDIC Steps Up Investigations at Failed Lenders; 'These Numbers Will Increase'
Body Scanners: The Naked Truth
The body scanners coming to your local airport provide marginal benefits — if any — in detecting weapons and explosives hidden on travelers. They aren't worth the cost in money — let alone in civil liberties.
You and Your Neighbor's Pork
The unspoken rule on Capitol Hill is, "Don't criticize my pork; I won't criticize yours." But regardless of how one feels about earmarks, lawmakers should pay closer attention to their colleagues' projects — because this pork isn't getting distributed equally. Vast regions of the nation are getting the short end of the stick.

TUESDAY
Why the 2011 outlook is dismal
Many of the tailwinds that helped the economy during the past 18 months will turn into headwinds, leaving us little hope but for 0%-2% GDP growth.
Data Suggest Economy Is Finally Improving
While there are still possible wrenches, recent reports show that the economy is at the very least flattening out.
Washington's Equal Pay Obsession
There's no epidemic of gender discrimination. So why is Congress proposing another law?
What caused the financial crisis
Expert points to government policy, not greedy bankers
The GOP Earmark Victory
The party takes a big first step toward public trust.

MONDAY
Economic Success Reliant On Private Firms
It's hard to remember now that in the 1980s Japan had the world's most-admired economy. It would, people widely believed, achieve the highest living standards and pioneer the niftiest technologies. Nowadays, all we hear are warnings not to repeat Japan's mistakes that resulted in a "lost decade" of economic growth.
Maybe It's Not Different This Time
Seen historically, and not just in the context of the last 20 years, valuation levels of the S&P 500 index may still be very elevated.

Blogs
FRIDAY
Raining on GM’s Parade
It’s General Motors’ big day. With a large and successful initial initial public offering, GM reduces the U.S. government’s ownership share and tempts bailout backers to declare victory. While GM has certainly done far better than we might have feared, questions remain about the company’s future and the verdict on the bailout.
Don’t Blame Ireland’s Mess on Low Corporate Tax Rates
Is there any reason to think Ireland’s competitive corporate tax regime is responsible for the nation’s economic crisis? The answer, not surprisingly, is no.
Our Economy Can’t Afford More GM “Success” Stories
Celebrating the company’s Wednesday initial public offering, President Barack Obama last night called his government takeover of General Motors a “success story.” “American taxpayers are now positioned to recover more than my administration invested in GM,” he said. Left unsaid is the fact that if the Obama Administration keeps selling their GM stock at the IPO price, the U.S. taxpayer will lose $10 billion on the deal, and that does not include the loans GM still owes, cash for clunkers, the Chevy Volt subsidies, or the millions of unseen costs the unprecedented intervention has inflicted on our economy.
NATO Countries Meet in Lisbon
NATO has become an end in itself, rather than a means to an end — security — that could command support on both sides of the Atlantic, and unpopular one, at that.
What to Expect From Holiday Sales
Data show that most consumers will be cutting back this season, but upper-income shoppers will actually be kicking it up a notch.

THURSDAY
The Obama Administration’s Self-Destructive Trade Policy
If U.S. trade negotiators want to maintain their ability to negotiate bilateral agreements, they should quit demanding one-sided concessions from South Korea.
What I Learned From the Crisis
I still think that technocratic economists select better monetary policies than elected politicians would.  But after 2008, that's not saying much.
Does The FDA Really Need More Power?
The reality is that there is little known medical evidence that caffeinated malt beverages are less safe than other alcoholic drinks. But that fact is no defense against current FDA power to ban products it deems unsafe for the American people.

WEDNESDAY
Paycheck Fairness Act Will Fatten Paychecks for Trial Lawyers, Not Women
The most recent economic research suggests that paycheck fairness is already a reality, and therefore women’s pay won’t change much if the “Paycheck Fairness Act” passes. There is, however, one group whose paychecks might get a lot fatter if new legislation goes into effect: trial lawyers, an important point made by June O’Neill in the Wall Street Journal (“this new legislation would simply provide a feast for lawyers”), AEI’s Christina Hoff Sommers recently in the New York Times, and last week by the Chicago Tribune.
Let Markets Civilize Airport Security
Privatization is the solution to such conflicts.
Lame-Duck Menace: The Paycheck Fairness Act
Let’s assume that John and Jane have identical characteristics (education, work experience, etc.) except for gender. ABC Company makes offers of employment to John and Jane on the same day, for the same position, for the same starting salary: $45,000. Jane accepts the offer, but John negotiates the salary, and ends up with $50,000. Under the current equal pay laws, there’s no problem; John is earning more because he negotiated and Jane did not. Makes sense, right? Under the Paycheck Fairness Act, ABC Company would be guilty of gender discrimination.
Free-Market Poverty Solutions: A Better Poverty Measurement Is A Good Step
Missing in news reports on the recent release of the United Nations 2010 Human Development Report is any mention of a significant addition to the report.  For the first time, the HDR includes the Multidimensional Poverty Index, which measures poverty based on components other than income and GDP.  The Index rates countries’ poverty levels based on health, education, and living standards, including elements such as nutrition, child mortality, years of schooling, access to water, electricity, and more
Reid’s Lame Duck Energy Bill: More Money for Special Interests, Higher Costs for the Rest of Us
It’s highly unlikely that we’re going to see any large energy bills like a cap and trade or renewable electricity standard passed during the lame duck session, but that isn’t stopping Senator Harry Reid (D–NV) from moving forward with bad energy policy.

TUESDAY
GDP comparisons: Numbers don't lie
The numbers are clear: some nations have a Gross Domestic Product (GDP) equal to that of nations with 10 or 100 times as many people. Why?
Seeing Like a Central Planner
The main part of my argument is that government workers are not underpaid. I would like to make 2 points to suport this.
New survey reveals soaring rates for some store credit cards
Signing up for a store credit card can seem like a good way to survive the holidays. But these cards often come with significant gotchas, as a study released this week by Representative Anthony Weiner (D-Queens and Brooklyn) again proves. Surveying credit card offers from 35 major retailers in New York City, the inquiry found rates as high as 29 percent, or nearly double that of average credit cards. Radio Shack, Best Buy, Staples, Home Depot, and Sears were the five worst offenders.
Abolish the TSA
Art Carden has an excellent article on Forbes.com in which he advocates abolishing the TSA. I give a segment on this in my econ class when I discuss, at length, Hayek's "The Use of Knowledge in Society." How does Hayek's article apply?
A Subsidized Spokesman
This CNBC interview of a subsidized farmer, along with my friend Sallie James of Cato, is interesting for a number of reasons.  The one I wish to flag here is the farmer’s insinuation that Sallie’s (and Cato’s) opposition to farm subsidies and tariffs is questionable because that opposition allegedly reflects nothing more that Cato’s funding.
The economics of natural disasters
A new report from the World Bank asks how much suffering is due to natural hazards, and how much due to human decisions.
An Iffy Outlook For Holiday Sales
Most consumers are of two minds--they want to see the economy improve and they also want to see rock bottom prices (50% OFF) on the things they will be buying for the holidays. The contradiction is one most of us live with, and it's one reason why retailers can't seem to get traction.

MONDAY
Why Does American Exceptionalism Matter?
The reality of American exceptionalism was a theme on the campaign trail, especially among conservatives. Americans agree that the United States is a great nation, but why is America exceptional and why does it matter?
Productivity Changes May Boost Labor-Market Prospects
U.S. companies are getting better at boosting their productivity in tough economic times. That could mean recessions will be harder on millions of American workers, but also that the jobs outlook in the current recovery is better than it seems, according to a new paper.
White Gold
My and Russ’s colleague Larry White – who knows as much about the history and theory of money and banking as anyone alive – would like to see a debate over the gold standard that features at least one strong proponent of that means of mooring money.
A Failing Agenda Fails
President Barack Obama returned from Asia yesterday, and the headlines greeting him home are not kind. “Obama’s economic view is rejected on world stage,” reads The New York Times; “Obama, weakened after midterms, reveals limited leverage in failed S. Korea deal,” says The Washington Post; and ABC News declares, “President Obama Falls Short on G-20 Goals: Failure to Deliver on Key Trade Goals Reveals Limits of American Influence.” These headlines are only half-right: Yes, President Obama did fail to deliver on his agenda in Asia, but the culprit is not declining American influence. The problem is a losing agenda set by the President himself.
Robert Frank on Inequality
The latest EconTalk is Robert Frank talking about inequality.
Unofficial Problem Bank list increases to 898 Institutions
Here is the unofficial problem bank list for Nov 12, 2010.
Schedule for Week of November 14th
Two key housing reports will be released this week: October housing starts (Wednesday) and November homebuilder confidence (Tuesday). Also October retail sales will be released on Monday, and the Fed will release the October industrial production and capacity utilization report (Tuesday).
Half the world’s population lives in 6 countries
A new series looking at Fun Facts! about US and World economies. I am starting with something simple: In 2009, 50% of the world’s 6.8 billion people lived in just 6 countries: China, India, United States, Indonesia, Brazil and Pakistan.
Crushing Entrepreneurs
Clueless regulators continue to pass new rules, despite the damage done by mindless enforcement of the old ones.

Reports
FRIDAY
A Short United Nations To-Do List for the New Congress
As stewards of U.S. taxpayer dollars, Members of Congress should be vigilant in scrutinizing the U.N. budget to guard against impropriety and waste and insist that U.S. interests are being advanced through U.S. contributions to the U.N. system.

THURSDAY
Effects of the Financial Crisis and Great Recession on American Households
We find that the effects of the recession are widespread: between November 2008 and April 2010 about 39 percent of households had either been unemployed, had negative equity in their house or had been in arrears in their house payments. Reductions in spending were common especially following unemployment. On average expectations about stock market prices and housing prices are pessimistic, particularly long-run expectations.
Unemployment Insurance Benefits and Family Income of the Unemployed
The Congressional Budget Office (CBO) examined the role of UI benefits in supporting the income of families in which at least one person was unemployed at some point in 2009. The analysis addressed how that role varied with the amount of family income and the number of weeks of unemployment for all family members. CBO also examined how the poverty rate and related indicators of financial hardship would have differed in the absence of the UI program.
A New Role for the FDA in Food Safety
If the FDA is to survive and stay effective, it must move to reinvent itself as a modern organization, perhaps a new kind of bureaucracy. It must go back to its original focus on science and integrate itself into new market organizations and food safety challenges in a much more innovative way.

WEDNESDAY
Pell Grant Increase Would Not Solve the College Cost Problem
During the 2010–2011 school year, 8.3 million college students received an average of $3,865 in Pell grant funding at a cost of more than $32 billion, the maximum award being $4,860. The Obama Administration and some Members of Congress argue that another $5.7 billion is needed in order to avoid a funding shortfall and a reduction in the maximum grant award of 15 percent.
Congressional Oversight Panel Examines "Robo-Signed" Foreclosures and Other Mortgage Irregularities
The Congressional Oversight Panel today released its November oversight report, "Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation." The Panel reviewed allegations that companies servicing $6.4 trillion in American mortgages may in some cases have bypassed legally required steps to foreclose on a home. The implications of these irregularities remain unclear, but it is possible that "robo-signing" may have concealed deeper problems in the mortgage market that could potentially threaten financial stability and undermine foreclosure prevention efforts.

TUESDAY
The U.S. Generalized System of Preferences: Helping the Poor, But at What Price?
The preferential market access given by the United States to most developing countries through the Generalized System of Preferences yields real benefits for the covered countries and for U.S. consumers and firms importing the goods. Americans save hundreds of millions of dollars a year from duty-free imports, and many poor people abroad have benefited from preferential access to a rich market. Against these benefits, Congress must consider the significant costs of unilateral preference programs — to the preference recipients themselves, to excluded developing countries, and to the world trading system in general — when the program expires at the end of this year.
October Retail Sales Jumped on Strength in Auto Sales
Retail sales increased 1.2 percent in October, buoyed by a 5.0 percent surge in auto sales. While core spending was more modest, today’s report is another positive sign hinting at a strong holiday shopping season.

MONDAY
Economic Group
Weekly Economic & Financial Commentary