Friday, June 11, 2010

6/11/10 Post

U.S. Firms Build Up Record Cash Piles The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records since 1952.
Government Budget Behind Last Year’s Pace Economists surveyed by Thomson Reuters were forecasting that the May deficit would total $140 billion, significantly lower than the $189.7 billion deficit recorded in May 2009.
New Rules Would Require Government To Address Public Pension Bomb Later this month, the Governmental Accounting Standards Board plans to issue tentative accounting reforms that are expected to balloon public pension costs when they take effect, possibly in 2013. OECD: Leading Economies’ Growth Slows The world's leading economies should continue to grow in 2010, although the pace of growth is now easing, with the rate of expansion in April falling for the 19th straight month, data showed Friday.
The Beginning of the End for Wall Street …the most worrisome measures for the financial industry have come from a handful of the more than 300 amendments that were added to secure votes for the bill's passage.
Fears of China overheating are back Forget the worries about China's economy cooling off. Overheating might be the greater concern. China reported that its exports, property prices in large cities, and industrial production all grew by nearly 50%, 12% and 19 % respectively.

Research, Reports & Studies
Wells Fargo Economics Group: Higher Receipts in May Led to Smaller U.S. Budget Deficit The current run rate reflects a year-end deficit of more than $1.3T, just below prior year.
How to Fix California's Public Pension Crisis California’s pension and retiree health care benefits are unaffordable and unsustainable. How did he state get into this pension crisis and how can it be fixed.

Matching Narrative to Policy …for regulation to be better, I think there has to be some correspondence between the narrative of what went wrong and the proposed regulatory change.
Why Are Interest Rates Low? [Kling’s] view of interest rates in the past two years is that markets have been trying to tell the financial sector to shrink.
Economists React: ‘Nothing to Worry About — Yet’ in Trade Data Economists and others weigh in on the wider U.S. trade gap for April that came amid drops in exports and exports.
Wealthy Are the Only Ones Spending Upper-income Americans’ self-reported spending rose 33% to an average of $145 per day in May — up from $109 per day in April. Meanwhile, middle- and lower-income Americans’ self-reported spending averaged $59 per day in May, unchanged from the previous month.

Economists’ Comments & Opinions
Prune and Grow In times like these, deficit spending to pump up the economy doesn’t make consumers feel more confident; it makes them feel more insecure because they see a political system out of control.
Free to Choose Why did America prosper when most of the people of the world are still poor?

Graphic of the Day
Retail sales plummeted 1.2% in May. Excluding the payback period following the cash for clunkers program, this was the worst month for retail sales since a 1.5% decline in March 2009.

"Did You Know?"
If the tax credit improvement that is in effect for 2009 and 2010 expires, a family with two children in which a parent is working at a full-time, minimum wage job will see its child credit fall from $1,725 to $248.

U.S. Vice President Joe Biden told President Barack Obama on Friday he was sorry for leaving him behind to manage the oil spill but was thrilled to be watching the World Cup