General Economic News Nov 29 - Dec 3

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News
FRIDAY
Mortgage rates rise to 4.5 percent
Mortgage rates are going up as the economic outlook brightens.
Tracking the pulse of the economy
Economic index forecasts stabilized but modest growth.
Gold powers back into record territory
Gold prices jumped back above $1,400 an ounce Friday as the U.S. dollar slid following a surprisingly weak report on the nation's job market.
Services Sector Expands
The U.S. nonmanufacturing sector expanded in November, according to data released Friday by the Institute for Supply Management, but factory orders fell for the first time in four months in October.

THURSDAY
Obama administration gives billions in stimulus money without environmental safeguards
In the name of job creation and clean energy, the Obama administration has doled out about $2 billion in stimulus money to some of the nation's biggest polluters while granting them exemptions from a basic form of environmental oversight, a Center for Public Integrity investigation has found.
Preliminary reports show November retail sales up
U.S. shoppers spent more in November, preliminary sales reports and new data show, as they responded to "Black Friday" deals and promotions that began early in the month.
Foreclosures made up 25 pct of US home sales in 3Q
The worst summer for home sales in decades also put a chill on foreclosure sales, even as the average discounts on the distressed properties got bigger compared with other types of homes.
Accelerating car sales aid economy
Early reports out Wednesday showed a significant strengthening of the economy last month, with another double-digit increase in auto sales and the largest gain in small-business jobs in three years.
Pending Sales of U.S. Existing Homes Rise a Record 10%
More Americans unexpectedly signed contracts to buy previously owned homes in October, easing concern that the absence of government support is destabilizing the housing market.
Bank of America Becoming Bank of Asia as Merrill Helps Boost Revenue 30%
Bank of America is headed for its best year advising on mergers and acquisitions in Asia-Pacific since 2005, and arranging initial public offerings since 2007, data compiled by Bloomberg show. The combined companies have generated 30 percent more revenue from traditional investment-banking businesses in the region than they did as separate entities.
Mixed Reaction to F.C.C. Internet Plan
The plan from the chairman of the Federal Communications Commission to ensure an open and neutral Internet drew mixed reviews on Wednesday from consumer advocates and Internet service providers, presenting the agency with an uncertain way forward as it considers new broadband regulation.

WEDNESDAY
Productivity in U.S. Rises More Than Previously Estimated
The productivity of U.S. workers rebounded more in the third quarter than previously estimated, showing companies were focused on controlling costs.
House May Block Food Safety Bill Over Senate Error
A food safety bill that has burned up precious days of the Senate’s lame-duck session appears headed back to the chamber because Democrats violated a constitutional provision requiring that tax provisions originate in the House.
Obama's pay freeze for federal workers only limits raises
Many federal workers would still get pay raises the next two years despite the limited salary freeze President Obama proposed this week for 2.2 million government employees.
F.C.C. Chairman Outlines Broadband Framework
Thwarted by the courts, by lawmakers on Capitol Hill and by some of his fellow commissioners, the Federal Communications Commission chairman will try again on Wednesday to devise a new strategy for regulating broadband Internet service providers.
Foreclosures weigh on metro home prices
Millions of foreclosures and weak demand from buyers are forcing home prices down in most major U.S. cities.
Senate Passes Sweeping Law on Food Safety
The Senate passed a sweeping overhaul of the nation’s food safety system on Tuesday, after tainted eggs, peanut butter and spinach sickened thousands of people in the last few years and led major food makers to join consumer advocates in demanding stronger government oversight.
Holiday spirit hinges on taxes, jobless benefits
Economists urge lame-duck Congress to tread carefully
Economic Policy? More Listen to Conservatives
The Republican takeover of the House has energized scholars and researchers whose views on taxes, regulation and the proper scope of government fell out of favor after Democrats swept control of Congress in 2006 and took the White House two years later.

TUESDAY
Cyber Monday sales show strength
Online sales on Cyber Monday surged nearly 20% from last year, according to findings from an analytics group released Tuesday.
Time to send the barber home?
The barber can put the scissors away for now. European politicians have given in to the tantrums of the markets: the threat of an ugly haircut for bondholders has been postponed for several years. Such is the conclusion one draws from Sunday's extraordinary meeting of European finance ministers. Whether it is enough to pacify the distressed markets as they re-open today, after dumping the bonds of the most vulnerable countries and sending their interest rates soaring, is a different matter altogether.
Businesses in U.S. Grow at Faster Pace Than Forecast
Businesses in the U.S. expanded at a faster pace than forecast in November, signaling the world’s largest economy was speeding up heading into 2011.
Europe Inflation Holds Steady; Jobless at Highest in 12 Years
European inflation held steady and unemployment rose to the highest in more than 12 years as the economy’s recovery loses some momentum.
Consumer confidence highest in 5 months
Optimism about the U.S. economy grew in November, pushing the latest reading on consumer sentiment to the highest level since June -- ahead of the holiday shopping period.
Gold gains on uncertainties, metals under pressure
Better than expected GDP figures of India announced today helped the domestic equities recover in today’s session. India reported GDP growth of 8.9% in the second quarter, as against 8.8% in the first quarter. However, poor global economic scenario continued to raise concerns in the global equities.
Home prices fall. Federal tax breaks still muddy picture.
The Case-Shiller 10-city index shows home prices down 0.5 percent since August.

MONDAY
Irish bailout helps banks, angers taxpayers
Ireland's international bailout relieved investors Monday but outraged many across the country who find that a requirement to raid state pension funds to protect foreign creditors unjustly burdens average taxpayers for the mistakes of a rich elite.
Taxes, budget and jobless benefits - Congress at the wire
The lame-duck Congress returns on Monday to a daunting agenda of economic issues.
Black Friday: More shoppers, modest sales
Preliminary reports of sales on Black Friday weekend are coming in.
Obama calls for federal wage freeze
President Obama on Monday will call for a two-year freeze in the wages of federal employees.
Foreclosure scandal impact: Sales dry up
Big banks are having trouble restarting the foreclosure process after this fall's "robo-signing" scandal, and the once booming market for foreclosed homes has been hit hard as a result.
Europe Sets Bailout Rules
Investors Face New Risk in Plan for Future Rescues; Ireland Seals $90 Billion Deal

Economist Comments
FRIDAY
Wave goodbye to Internet freedom
FCC crosses the Rubicon into online regulation
Time to Shut Down the FCC
More transistors exist today than ever and there is plenty of capacity inside fiber-optic cables and out in the air. What's missing is competition for consumers.
Currency imbroglio: Estrangement problems of strange bedfellows?
Politicians, public servants, and commentators have been queuing up in recent months to raise their concerns about global imbalances, particularly the China-US imbalance. This column argues that while the two economies may present opposing public stances, they are quietly playing a tango that neither can step out of.

THURSDAY
Hands Off of Our Internet
The Internet is once again under attack, not from hackers intent on spilling secrets or causing mischief, but by an administration intent on controlling the free flow of information that it views as a threat to its expanding power.
Washington is why the economy is not growing
With unemployment still near 10 percent, and experts saying that won't change much, if at all, in 2011, it seems clear the economy is dead in the water. We need look no further than right here in the nation's capital to understand why.
'Food Safety' and the GOP
Republicans enable more Obama regulation

WEDNESDAY
A Financial Party Platter
Nine economic thoughts to nibble on as you recover from Thanksgiving dinner.
Warren Buffett’s Uncle Sam
The billionaire ignores Sam’s role in the housing collapse, not to mention the Fed’s

TUESDAY
The Treatment of Married Women By the Social Security Retirement Program
Social Security's progressive benefit structure and annuity payment combine with women's lower average earnings and longer average life spans to provide women with more favorable treatment on a lifetime basis. This more favorable treatment does not necessarily imply that women are presented with stronger incentives to participate in the labor force and contribute to Social Security than are men. If anything, Social Security does the opposite.
It's A Self-Sustaining Recovery
Consumers are buying more, productivity is strong and government policy has taken a turn for the better.
How the Government Is Creating Another Housing Bubble
The administration has quietly shifted most federal high-risk mortgage credit initiatives to the government's original subprime lender.
To Know the Stimulus Worked, You Just Have to Believe In It With All Your Heart
Andrew Sullivan warns that “it is important to resist the facile narrative that somehow Obama proved he was a radical leftist because he supported a stimulus package (after Bush's) in the face of the worst recession since the 1930s.” Why? Because the stimulus, you see, it worked!
Don't understand the economy? It's not your fault.
Even economists don't fully understand the complicated global economy.
Ireland hangs on to its low corporate tax rate as if it's a life line
And it is. Ireland has resisted European pressure to raise its 12.5 percent corporate tax rate as part of a debt bailout deal. The rate is what fed this now weakened 'Celtic tiger' in the first place. The US could learn from this.

MONDAY
Public Still Feels Inflation's Pinch
By any widely recognized measure, U.S. inflation is extremely low, so low that the Federal Reserve wishes it were a bit higher. But many people don't see it that way.
The Triumphant Return of Hayek
Across the developed world, critics began to argue that government spending had reached the point of diminishing returns, and was producing an anemic recovery that mainly benefited special-interest groups. And the electorate listened. From Europe to the United States, as voters started to reward candidates focused on fiscal discipline and less government intervention, Keynesianism quickly fell out of favor.
The Hangover, Part II
New derivatives rules could punish firms that pose no systemic risk.

Blogs
FRIDAY
Maybe the coolest thing ever
OK, maybe it isn’t THE coolest thing, but it’s in the top 100.
Who Got The Bailout Money?
Who got the bailout money? Here is a list from Pro Publica which keeps track of these things.
Inequality Is Not the Issue
While the goal of protecting the most vulnerable people in our society is a good one, it shouldn’t be done by increasing the burden on those who are already paying the most by far. Actually, now that I think about it, inequality is the issue. It’s time that the cost of government stops falling systematically and more than unequally on top income earners.
Who Got The Stimulus Money?
Here is another list from Pro Publica which keeps track of Recovery Act spending. Read it and weep.

THURSDAY
CRONY
I am increasingly pessimistic about the fake nature of Wall Street as part of the capitalist system. It is part of the crony capitalist system. I am ashamed at how long it has taken me to notice this. But once you start paying just a bit of attention, it’s hard not to notice.
Why Work?
When it comes to insane policies, it's usually things like war, drone attacks on civilians, and serious violations of civil liberties that sends my blood pressure through the roof.  Today, it’s the thought about how mess up and maddening Entitlement America has become. 
How much did TARP cost? $25 billion
Despite critics' estimates that it would cost over $100 billion, TARP only cost $47 billion and recouped almost half of that.
World-Wide Factory Activity, by Country
Manufacturing growth slowed in the U.S. in November but activity picked up in other major economics, including China and the euro zone. Strength in the euro zone was led by France and Germany. Contraction, meanwhile, continued in the factory sectors in Brazil, Greece and Japan.
Costs of regulation 'staggering' for small businesses
The high costs associated with meeting EPA and IRS regulations are many times higher for small businesses than for their larger competitors, per capita.
Seven Years of Bad Policy: Government Maintains Offshore Drilling Ban
As the rest of the world continues to drill off its respective coasts, the United States is heading in the opposite direction.
OECD Sees Drop in Cross-Border Investment
The OECD said it now expects global flows of foreign direct investment to fall 8% this year, having declined 43% in 2009 and 19% in 2008. In 2009, global FDI flows totaled $1.1 trillion.
Why is New Zealand Different (from Greece and Ireland)?
There are two major differences that are worth noting.
How Would the Fiscal Commission’s Social Security Proposals Affect Benefits?
President Obama’s Fiscal Commission has released its final plan, part of which concerns steps to make the Social Security program solvent over the long term. These steps have generated some controversy, as some on the left argue that, since Social Security doesn’t contribute to the budget deficit, it shouldn’t be included in deficit reduction plans. Of course, this ignores the fact that Social Security faces a significant deficit of its own. It seems reasonable that both deficits—in Social Security and the rest of the budget—should be addressed.
Summary of a busy day
The Federal Reserve released details of borrowing by financial firms, and others during the financial crisis. Here are some articles:

WEDNESDAY
Double dip
America's house prices are falling again
Euro Zone Members as U.S. States
Ireland is a small economy. How small? Its total output is roughly that of the state of Connecticut. But its troubles threaten to spread to other European economies, some small (like Portugal) and some sizeable (like Spain.)
A Look at Case-Shiller, by Metro Area
November Update
Cost-effective terrorism
Cargo-shipped explosives cost terrorists less than $5,000 but caused immeasurable anxiety as well as billions in preventative measures.
Secondary Sources: TARP, Commodities, Global Wealth
A roundup of economic news from around the Web.
What Austrian economics is – and what it is not
Austrian economics is a set of analytical propositions, not a set of policy conclusions or settled interpretations of history.
Macroeconomic Resilience
The Great Recession through a Crony Capitalist Lens
South Korea Trade Pact: More Important Than Ever
The economic case for the South Korea–U.S. Free Trade Agreement (KORUS) has been variously described as a “slam dunk,” a “pareto-optimal solution,” and “an easy ‘yes.’” However, aside from the economic arguments for KORUS, recent events in the Korean peninsula make approval of the agreement more important than ever.
Home Prices Decline as Consumer Confidence Remains
Consumer confidence came in at 54.1, up from just below 50.0 in October, but keep in mind that 90 to 120 is the neutral zone so that's actually a weak reading.

TUESDAY
Sloan’s Social Security Claims Are Turkey
Writing in the Washington Post, Allan Sloan singles out Social Security personal accounts as a policy “turkey.” Both reasons Sloan gives, however, turn out to be wrong.
Random Notes on the Phillips Curve
Looking ahead, the next 12 to 18 months should be interesting. The unemployment rate has been so far above 6 percent for so long that if the Fuhrer equation holds up, we should be seeing some pretty strong downward pressure on inflation. Instead, if inflation remains between 0 and 2 percent, this will look to me like another anomaly for the Phillips Curve.
Federal Pay Freeze Is Wrong Amount, Wrong Policy
The point is that a one-size-fits-all pay structure doesn’t work well today and that a one-size-fits-all solution won’t improve things going forward.
Home Sales: Distressing Gap
Here is an update to a graph I've been posting for several years. This graph shows existing home sales (left axis) and new home sales (right axis) through October. This graph starts in 1994, but the relationship has been fairly steady back to the '60s. Then along came the housing bubble and bust, and the "distressing gap" appeared (due mostly to distressed sales).
The Consumer Spending Fallacy behind Keynesian Economics
The main insight of the mini-documentary is that Gross Domestic Product (GDP) only measures how national output is allocated between consumption, investment, and government. That’s useful information in many ways, but if we want more output, we should focus on Gross Domestic Income (GDI), which measures how national income is earned.
Obama Adopts Cato Pay Proposal
The Obama administration is supporting a two-year freeze on federal pay. I haven’t seen the details yet, but this appears to be a good start at getting excessive government pay under control.
Post-Thanksgiving Economic Review
After a nice Thanksgiving spectacle of turkey, pumpkin pie, relatives, cool days of bright California sunshine, and college football, it’s time to turn back to the serious business of the economy.
Post-Thanksgiving Economic Review
The latest data on Black Friday sales, unemployment, GDP growth, and more.

MONDAY
The Simpson-Bowles Social Security Plan
Chuck Blahous identifies the winners and losers.
Are We Entering Another Phase of Financial Crisis?
It's entirely possible that we'll eventually muddle through without a second major event.  But it's worth remembering that these things take a long time to unfold, and that we are often most vulnerable just when we think we have time for a breather.
What Austrian Economics IS and What It Is NOT
Since the start of the financial crisis and recession, there has been a renewed interest in the ideas of Austrian economics by scholars, public intellectuals, and even the media.  For the first time in a long time, the analytical framework of Austrian economics is being taken note of, if not taken seriously, by a variety of opinion makers.  This is, of course, a good development.
How to Improve Dodd-Frank
Oliver Hart and Luigi Zingales have a suggestion about how to improve the financial reform law.  Their goal is to "spare the most vibrant financial institutions from the rigidities and bureaucratization that a strict application of the Dodd-Frank bill would entail."
Schedule for Week of Nov 28th
The key report for the week will be the November employment report to be released on Friday, Dec 3rd. Other key reports include the Case-Shiller home price index on Tuesday, the ISM manufacturing index on Wednesday, and the ISM non-manufacturing (service) index on Friday.
Number of the Week: 492 Days From Default to Foreclosure
Banks can’t foreclose fast enough to keep up with all the people defaulting on their mortgage loans. That’s a problem, because it could make stiffing the bank even more attractive to struggling borrowers.

Reports
FRIDAY
Exploring Alternative Ways to Present Estimated Future Social Security Benefits in the Social Security Statement
Given the declining share of retirement income provided by Social Security
and traditional defined benefit pensions, individuals must take a more active role in their
retirement saving decisions. The potential for confusion regarding the presentation of estimated Social Security benefits could complicate this process, making it important that Social Security clarify or alter the way nominal benefits are expressed to current users of the Statement.

THURSDAY
Report on the Troubled Asset Relief Program -- November 2010
In October 2008, the Emergency Economic Stabilization Act of 2008 established the Troubled Asset Relief Program (TARP) to enable the Department of the Treasury to purchase or insure troubled assets as a way to promote stability in financial markets. Section 202 of that legislation requires the Congressional Budget Office (CBO) to prepare a report on those transactions within 45 days of a report issued by the Office of Management and Budget (OMB) on the TARP's activities. This fourth statutory report from CBO on the TARP's transactions follows the report that OMB submitted to the Congress on October 15, 2010.
ISM: Sustained Growth in Manufacturing, Input Prices Up
November’s ISM came in at 56.6 with continued growth signals from production, orders and employment. Export orders remain strong. Prices paid suggest input cost pressures, especially from metals.

WEDNESDAY
Consumer Confidence Improves to Highest Level Since June
Consumer confidence improved to 54.1 in November from 49.9 in October. Consumer expectations jumped to 74.2 from 67.5, while the current situation improved only modestly. This is a positive sign for holiday sales.

TUESDAY
Artificially Sweetening the COLA
While it might sound reasonable or fair to give seniors a boost during tough economic times, giving in to such demands would be misguided and undermine the very reason for tying cost-of-living adjustments to the Consumer Price Index (CPI) in the first place—to prevent yearly interest-group lobbying for higher benefit increases and, as the name implies, only provide an adjustment when there’s an actual CPI-measured increase in the cost of living. Providing a COLA or one-time payment beyond what is warranted by an increase in the CPI would actually increase “real” benefits, artificially sweetening the COLA.

MONDAY
Economics Group
Personal income picked up 0.5 percent and personal spending grew 0.4 percent in October. Both readings for the month of September were revised higher as the outlook for consumer spending appears to be brightening.