6/17/10 Post

BUZZ: Fed up Americans want to take scissors to the federal budget

News
The End Is Near For Free Checking
Banks say they stand to lose billions of dollars in revenue from separate new restrictions on credit cards and overdraft transactions announced earlier this year. They could lose even more from legislation winding its way through Congress.
Inflation Tame Amid Continued High Jobless Claims
The elevated level of claims has worried economists. The sluggish pace of their decline may suggest that employers are still reluctant to hire, and are relying on existing workers to help fill demand.
Home Construction Fails to Lift Recovery
Homebuilders are sending a message: They won't be able to contribute much to the economic recovery now that government home-buying incentives have vanished
Start-Ups Get Free Chance to Pitch to Angel Investors
Start-ups hungry for cash are often expected to pay a fee to pitch to angel investors. But some free services are cropping up to counter the so-called pay-to-pitch model.
New Obama-backed stimulus package fails in Senate vote
A dozen Democrats joined Republicans in voting against a stimulus package that would add $80 billion to the deficit.
More Than 90 Banks Miss TARP Payments
More than 90 U.S. banks and thrifts missed making a May 17 payment to the U.S. government under its main bank bailout program, signaling a rising number of lenders are struggling to meet their obligations.
Va. Gov Sees 2010 Budget Surplus after Money Woes
McDonnell's administration said the state will finish the current fiscal year by month's end in the black if it can collect $1.7 billion in June.
Fed taking steps to beef up oversight to prevent replay of recent financial crisis
"Regulatory agencies must thus supervise financial institutions and critical infrastructures with an eye toward overall financial stability as well as the safety and soundness of each individual institution and system," Bernanke said.
Current account deficit rises in first quarter to $109 billion
The 8% increase in the first quarter deficit marked the third straight quarterly increase in the deficit, which now stands at the highest point since the final three months of 2008.
Consumer prices dip for second straight month
CPI dropped 0.2% in May, following a 0.1% dip in April. Less expensive energy bills were the main factor pulling down prices.

Blogs
Interch-ch-ch-changes
If regulatory measures push down interchange fees, …it may also mean that the least affluent credit card holders have to start paying annual fees again (or won't get cards at all) because interchange revenues no longer cover the cost of providing the card.
Do you know your broadband speed? Do you care?
…shame on anyone who tries to use my willful ignorance as an excuse for some new policy initiative.
The final tally isn’t in yet
…the final bill for the TARP bailout might not be the $50 to $100 billion that Alan Blinder mentions.
An initial double-dip indicator
The number to focus on as an indicator for the shape of the US recovery, Wells’ chief investment strategist Jim Paulsen says, is not the monthly payroll figure, but initial unemployment insurance claims, reported every Thursday.
Rajan and Reinhart
Raghu Rajan spoke at Cato about his new book, Fault Lines. One of the discussants was Carmen Reinhart, of Reinhart and Rogoff fame.
Jeffrey Sachs and the Keynesian Conundrum
Either Keynesians must come up with a better theory of when the Keynesian moment is over or they must follow Keynes himself and advocate the permanent state or quasi-state stabilization of investment. Of course, we need not accept the basic Keynesian framework. That would be best.
Philly Fed Index "decreased notably" in June, Employment turned slightly negative
The index has been positive for ten months now, but turned down "notably" in June.
Squam Lake or Swamp?
If you want to prevent bailouts, the issue is not so much the behavior of bankers as it is the behavior of government officials.
Priority-Based Budgeting, or Shoot the Cocker Spaniel
This is just another way of saying that the last increment of any item you spend money on should be the item with the lowest benefit and the highest cost.
Measuring Government Dependency: The Moocher Index
Is there a greater willingness to sign up for income redistribution programs, all other things being equal, from one state to another?
The Austerity Files
…the least likely arguments you will hear addressed.

“Did You Know?”
Arizona is spending $1.25M to save 250 endangered squirrels on rope bridges expected to save five squirrels a year from being road kill. The DOT plans to install 41 of the "canopy tunnel crossings" at a cost of $400,000. Another $160,000 will be spent on cameras to monitor the bridges, and the rest of the money will fund a project to monitor the rodents. That works out to about $5,000 per squirrel.

Graphic of the Day
Weekly Initial Unemployment Claims increase to 472,000
See also: How the World Spends Its Time Online
INTERACTIVE: Map: Where Americans Are Moving

Economists’ Comments & Opinions
The Bad News about ObamaCare Keeps Piling Up
It's obvious many millions will lose the coverage they have.
Deficit Doves v. Budget Hawks—Can America Grow Itself Out of Debt?
…deficit doves focus on the cyclical deficit, which is manageable, and the hawks worry about the structural deficit, which is unsustainable.
The President's Animosities
Since when was the American idea us versus them?
Bailout Nation Will Thrive as Long as AIG Lives
An end to bailouts? We can only dream.
Stop This Horror Before It Starts Again
…many auditors today are salivating at the fees they'll collect from the mammoth, laborious procedures necessary to "evaluate" millions of individual loans.
Vigilantes Out to 'Get' Equity Firms Will String Up Tax Policy
Congress is in a hurry, and when that happens, we should all be nervous about the potential for unintended consequences from rash action.
Monster stimulus brought more debt and fear, not jobs and recovery
…very scary: the increased prospect of massive debt that’s eroding public faith in what’s to come.

Research, Reports & Studies
Are Leading Indicators of Financial Crises Useful for Assessing Country Vulnerability? Evidence from 2008-09 Global Crisis
We find that the level of reserves in 2007 appears as a consistent and statistically significant leading indicator of the current crisis, in line with conclusions of the earlier literature.
When Central Banks Buy Bonds
Central bank independence is not primarily a matter of reputation, but of reality – what matters is what central banks do, not whether they maintain an appearance of public disdain towards the messy realities of economic life.
Freedom and Exchange in Communist Cuba
Fidel Castro’s socialist revolution promised to satisfy the basic needs of the Cuban people, but the price demanded was the surrender of freedoms. Now that the state is out of money and there are no more rights to exchange for benefits, the demand for freedom is on the rise.

Book Excerpts
“Unfortunately, all that rhetoric about deficits and balanced budgets obscures the real danger that confronts us: the gradual disintegration of our free society… The real issue is the government’s share of the Gross National Product—of the earnings of every productive citizen in this land. That is the issue on which we should concentrate. What does it mean for our way of life? What does it mean for our free enterprise system? What is our free enterprise system? Isn’t free enterprise related to human freedom, to political and social freedom? God Almighty, our forefathers understood that. The millions of immigrants who came to participate in the American dream understood it. When we see this monstrous growth of government, we must realize that it is not a matter of narrow economic issues. What is at stake is equity, social stability in the United States of America.” –Former Treasury Secretary William E. Simon, testifying before the Subcommittee on Democratic Research Organization, A Time for Truth