General Economic News Dec. 6 -10

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News
FRIDAY
Households slow Treasury binge
U.S. households have taken a breather in their two-year-long Treasury-buying binge.
Household wealth grows $1.2 trillion
Americans got richer in the third quarter even as home values hit the skids after more than a year of increases.
Foreigners flock to Treasuries
If foreigners have had their fill of Treasuries, they sure have a funny way of showing it.
Exports push trade deficit to 9-month low in October
The U.S. trade deficit fell to its lowest level in nine months, as growing demand for American goods overseas pushed exports to their highest level in more than two years.
Act II for American Manufacturing?
Say bye-bye to the likes of River Rouge, and hello to smaller, smarter factories surrounded by industrial ecosystems that nourish innovation. But the next wave of manufacturing may require government’s helping hand.
Bank of America to resume foreclosures
Bank of America said Friday it was ending its hiatus on foreclosure sales, and promised to get its act together after a series of sloppy home seizures prompted the bank to back off and re-examine its process.

THURSDAY
U.S. fiscal health worse than Europe's: China adviser
The U.S. dollar will be a safe investment for the next six to 12 months because global markets are focused on the euro zone's troubles but America's fiscal health is worse than Europe's, an adviser to the Chinese central bank said on Wednesday.
Fitch Downgrades Ireland
Fitch Ratings downgraded Ireland to triple-B plus on Thursday, citing the costs of the restructuring of the banking system and the loss of access to affordable funding in the market.

WEDNESDAY
Consumer credit jumps by most in more than 2 years
Consumer borrowing rose in October by the largest amount in more than two years, led by a big rise in the category that includes student loans.
3 Northeast states are home to most fiscally responsible
In what is being billed as an unprecedented look at financial behavior in all 50 states, a study out today rates New York, New Jersey and New Hampshire as having the most fiscally responsible residents.
Fannie Mae: Mortgage delinquencies down in 2010
Serious mortgage delinquencies for single-family homes continue their slide from 2009 highs.

TUESDAY
U.S. Mortgage Delinquency Rate Could Fall to 5% in '11
The percentage of U.S. consumers who are delinquent on their mortgages could fall to about 5% by the end of 2011, from an expected 6.2% at the end of this year, according to a leading credit bureau.
Could Abolishing the Death Penalty Help States Save Money?
State Legislators and Reformers Argue Cost in Push to End Capital Punishment
Fumbling the ball
Did Jean-Claude Juncker, Luxembourg's prime minister who is also head of the euro zone's finance ministers, score an own-goal yesterday? With the markets savaging bonds issued by “peripheral” countries such Greece, Ireland and Portugal, he proposed that euro-zone members should issue collective “E-bonds” for up to 40% of the euro zone's GDP. The idea came out of the blue in an article written with Giulio Tremonti, the Italian finance minister. Common Eurobonds, they claimed, would “send a clear message to global markets and European citizens of our political commitment to economic and monetary union and the irreversibility of the euro.” Their fellow finance ministers, though, do not seem to have received it particularly well.
Gold, silver, oil in rally mode
Commodity prices continued to soar for a second day in a row Tuesday as the euro pushed higher against the U.S. dollar.
The 'tax' you can't avoid: Oil prices rising
The price of crude is perilously close to $90 a barrel and the average cost for a gallon of gas is inching toward $3 nationwide. If they keep climbing, that could put a serious dent in economic recovery hopes for 2011.
IMF chief backs Greek loans extension
The International Monetary Fund is backing plans to extend Greece's repayment of bailout loans but is urging the European Union to seek a "comprehensive solution" to its debt crisis, the head of the agency said Tuesday.

MONDAY
Motorists could see $3 gas at pumps by Christmas
Barring a steep drop in crude prices, U.S. motorists can expect to see gas prices exceeding $3 per gallon, if they are not seeing such prices already, according to a new survey of filling stations.
Proposed 1.4% pay raise for military draws fire
Military servicemembers are fighting what would be their lowest pay raise in decades as the nation wages two wars, including a 10th year of combat in Afghanistan.
U.S., South Korea reach free trade agreement
The United States has reached a tentative free trade agreement with South Korea, the White House said Friday.
Economy is making steady gains despite weak hiring
The economy is starting to fire on almost every cylinder these days but the one that matters most: Job creation.

Economist Comments
FRIDAY
Accounting for Public Pensions
There has been talk of shared sacrifice, in which employees accept lower benefits, taxpayers pay more and bondholders also take hits. You can argue that is what happened in New York City a quarter of a century ago, when some bondholders were forced to extend maturities. But widespread expectations that such a thing was possible could drive up borrowing costs for all localities, making their fiscal problems that much worse.
Ethanol: Let Protectionism Expire
The best thing President Obama and Congress could do for ethanol policy this year is nothing — let the tax credit and tariff expire.

THURSDAY
European debt crisis tests unity -- and global economy
Fears that the debt crisis will spread to a big economy like Spain should compel Europe to come together to meet this challenge.
Make Congress obey the Constitution
Bills should be blocked for exceeding legislative authority
Congress should rein in the regulators
Increasingly, American families find they have a permanent and rather demanding house guest: Uncle Sam.
Consumerism Is Keynesianism
Free-marketeers focus on production.

WEDNESDAY
What a Drag: Mortgage-Refi 'Cash-Ins'
During the boom, homes in the U.S. were functioning like veritable ATMs. Lately, they are acting more like vacuums.

TUESDAY
Does President Obama Understand Economics?
Neither government spending nor tax cuts automatically provide an economic stimulus. But President Obama has continued to make this mistake. Take a look at much of what he insisted be included in his tax cut deal with congressional Republicans.
President Obama's next two years
A choice between free-market principles and more class warfare
Government micromanages your fonts
DOT caves to lobby, mandates costly signage change nationwide

MONDAY
Charitably inclined Americans contribute generously abroad
critics have charged that the U.S. is miserly when it comes to helping people in the developing world. Currently, the U.S. federal government gives approximately $26 billion (0.2 percent) of our gross national income (GNI) to support development efforts around the world. This money often comes with bureaucratic stipulations and measurements that must be met in order to secure this government-to-government funding. But critics argue that all economically developed nations should be giving around 0.7 percent of their GNI to development efforts.
Obama's phony federal freeze
The federal worker pay freeze President Obama announced last week was promoted as a move in the right direction toward deficit reduction. But weighed against the historic fiscal damage his administration has inflicted on the country, it's nothing more than a symbolic gesture.
The Week in the European Crisis
Financial professionals with every perspective weighed in. Here, Minyanville offers a recap of this week's hottest debate

Blogs
FRIDAY
The Stimulus Worked, Kind of
So why my title of this post? Why do I say stimulus worked? Because I don't judge it by Keynesian criteria. I judge it by efficiency criteria.
Consumer Sentiment increases in December
The preliminary Reuters / University of Michigan consumer sentiment index increased to 74.2 in December from 71.6 in November.
Capital markets vs. Wall St.
Until the relationship between large financial institutions and Washington changes, we will have crony capitalism rather than the real thing.

THURSDAY
Reflections on Freddie Mac
No matter how impregnable the regulations seem when you first put them in place, eventually a government guarantee leads to disaster. For me, that is the main lesson of the Freddie Mac story.
Exploding the bubble cycle
Market crashes spur a new round of frenzied securities regulation. Then the market recovers, regulators get lax, and the unscrupulous find a new loophole to exploit.
Ricardian Equivalence and Stimulus Failure
There is a graph which explain stimulus failure.
Economics Experiment: Pick The Cutest Animal
Help us settle a big debate in economics. (And see some painfully cute videos.) Participate in our economics experiment.
What’s Wrong with Keynes
The bottom line for me is that Keynes was very right about one thing–people’s perception of the future plays a big role in their willingness to take risks. What he was wrong about is the ability to use government spending as a way to encourage a positive perception of the future or to produce real economic results that lead to prosperity and increased employment.
Reagan Recovery vs. Obama Recovery in Pictures
No two recessions are the same. And no two recoveries are going to be exactly the same either … especially when the presidents that preside over them have diametrically opposed philosophies about what government can or should do. But as Ronald Reagan once said: “Shouldn’t we expect government to read the score to us once in a while?”

WEDNESDAY
Let's Call a Stamp a Stamp...
...and a debit card a debit card.
Genius
Public Pension Reform Parody
Credit-Card Borrowing Dips, but Student Loans Jump
U.S. consumer borrowing unexpectedly climbed again in October as a jump in student loans offset the 26th consecutive decline in credit-card use.
What Is Happening With Banks, Lending, and Credit?
Things are trending up, but slowly and weakly, which should continue for quite some time.
Food Stamp Rolls Continue to Rise
More people tapped food stamps to pay for groceries in September as the recession and lackluster recovery have prompted more Americans to turn to government safety net programs to make ends meet.
Mortgage Purchase Applications increase slightly last week
Even with the increase in applications (seasonally adjusted), the four-week moving average of the purchase index is about 17% below the levels of April 2010 and suggests weak existing home sales through the end of the year and into January.

TUESDAY
No Recession in Washington
Forbes looks at new data on household income in different metro areas:
Research Highlights Slowest Price Increases Since 1981
Price increases are decelerating at the greatest pace in nearly 30 years, a paper from the Federal Reserve Bank of San Francisco said.
The Cost of Sugar Subsidies
Even in a season characterized by candy canes and cookies waiting for Santa, protectionism, specifically the U.S. sugar program, hurts American consumers and workers. The U.S. sugar program provides a classic example of a special interest group benefiting from political connections, to the detriment of American consumers.

MONDAY
Bank Failures per Week in 2010
There have been 314 bank failures in this cycle (starting in 2007).
Close the Washington Monument
The National Park Serivce wants to add airport level security to the Washington Monument. Critics say we should close it.
Schedule for Week of December 5th
A light week for economic releases. The trade report on Friday is probably the key release ...
Big Banks as Bootleggers
Here is a post on how the actions of the Fed and Treasury in the last few years have benefited the large banks and eroded the advantages of the smaller banks. Wouldn’t surprise me–it’s a perfect bootleggers and baptists scenario.
Unofficial Problem Bank list increases to 920 Institutions
Here is the unofficial problem bank list for Dec 3, 2010.
Democrats, Republicans, and the Upward March of Government Spending
But the bottom line is: If we have two parties for a reason, because they believe in different things, why don’t we some real differences in the growth of federal spending?
Cuts, Slashes, and Savings at the Pentagon
Although the Bowles-Simpson deficit reduction commission has come up short of the 14 votes among its members that it needs to force Congress to vote up-or-down vote on implementing its recommendations, the debate over ways to cut spending will certainly continue. Of particular note is the emerging consensus that military spending cannot be held sacrosanct in the search for savings.
'Chasing Rainbows': New economic solutions for climate change
Both thought-provoking and laugh-out-loud funny, 'Chasing Rainbows' proposes fighting climate change through globalization and freer markets, not government interventions like cap-and-trade.

Reports
FRIDAY
Wholesale Inventories Continued to Rise In October
Wholesale inventories continued to rise in October, increasing 1.9 percent led by inventory building in nondurable goods. The gain in September inventories was revised upward to 2.1 percent from 1.5 percent.

THURSDAY
Annual Economic Outlook 2011
Turning the Corner in 2011

TUESDAY
Online Privacy Regulation
Likely More Complicated (And Costlier) Than Imagined.
The Myth of Isolationism, Part 1: American Leadership and the Cause of Liberty
There are many misconceptions about America’s early foreign policy. Perhaps no misunderstanding is as widespread as the belief that the Founding Fathers of the United States were isolationists who made non-interventionism their guiding principle.
KORUS FTA: A Good Deal Unnecessarily Delayed
After three years of needless delay, the South Korea–U.S. free trade agreement (KORUS FTA) may finally be submitted for legislative approval. On December 3, U.S. and South Korean negotiators produced a supplementary agreement that rewarded narrow U.S. special interests but still maintains the significant benefits of the original accord. While capitulating to U.S. auto demands may help President Obama with his political base, it concurrently makes South Korean ratification more difficult.

MONDAY
Why Is Africa Poor?
Sub-Saharan African countries have not fulfilled their potential since independence. While other developing countries and regions have grown over the past 50 years, much of Africa has stagnated. African leaders have become adept at externalizing blame, holding others responsible for Africa's failings. Yet African leaders — not a lack of capital, access to world markets, or technical expertise — are to blame for the continent's underdevelopment.