6/17/10 Post

BUZZ: U.S. Debt and the Greece Analogy

FCC Split as It Launches Internet Regulation Effort
What promises to be a contentious debate about government's role in controlling Internet traffic and access.
Consumer Price Drop Squeezes Profits
U.S. consumer prices fell 0.2% last month from April, even as commodity prices from metal to fuel to food remain higher than they were a year ago.
What Crisis? The Euro Zone Adds Estonia
According to economists, the preparation to join the euro zone created some disadvantages for Estonia compared with neighboring countries, which have enjoyed a relative degree of flexibility by hanging on longer to their legacy currencies.
State pension plans in crisis: underfunded by $1 trillion?
According to the Manhattan Institute for Policy Research pension plans for public school teachers, which comprise about half of states' total pension liabilities, were underfunded by $933 billion dollars in fiscal year 2008
House passes bill to increase lending by small banks as Senate defeats GOP jobless aid bill
A $30 billion government fund would be available to community banks to increase lending to small businesses under a bill passed by the House.
Foreclosure crisis hits minorities harder
Of the total homeowners, 17% of Latinos, 11% of African-Americans have lost their homes to foreclosure or are at imminent risk of losing their homes.
Estate tax in limbo
Unless Congress acts, the estate tax will be back next year and no more than $1 million of a person's estate would be exempt from it. That's below the $3.5 million exemption of last year.
Philippine Price Controls Hamper Rise of Generics
The recent embrace of drug-price controls to lower the cost of life-saving medications is creating unexpected problems.
Senators voted against scaled-down Republican package of extended jobless benefits and tax breaks
Thune's proposal would have cut funds for state and local governments to invest in infrastructure, dropped a temporary funding increase to help states pay for Medicaid, and eliminated a proposal to raise taxes on hedge-fund managers.
The euro is still trash
The euro may have enjoyed a slight bounce in the past week against the dollar. But it's still a long way from where it was in late 2009.

Blogs
State Unemployment Rates: Slightly lower in May
Sixteen states and D.C. now have double digit unemployment rates. New Jersey is close.
Regulation Grows Faster than Government Spending
"...the growth in dollar terms over the last ten years is more than double that of any previous decade."
Paul Samuelson Misread Hayek
Samuelson was mistaken to say that their socialism is of the sort that Hayek believed paved the road to serfdom. Those countries have reasonably free trade, only light regulation of capital markets and business, and strong private property rights. In short, all Scandinavia retains what for Hayek was the most significant protection against serfdom: competitive economies.
Zingales Joins the Swamp
Even if you think that the IMF truly would do the best job of resolving international bank failures, does anyone believe that there would be no further expansion of world-government power once this precedent has been set?
European Bond Spreads continue to widen
Greece is up to 668 bps, Ireland 290 bps, Portugal 293 bps, and Spain 211 bps. Oh, and Hungary is up sharply to 495 bps.
Drudge and Huffington Post Push the “Internet BS Switch”
Suddenly the Internet is full of chatter about Senator Lieberman (and Collins and Carper) proposing an “Internet kill switch.” It’s the one issue that Huffington Post and Drudge have agreed on in months: there’s a kill switch coming and they don’t like it.
Bruce Bartlett on Debt Default
On the prospect of U.S. government default on its debt...
Hail Interfluidity!
…we should expect a lot more austerity theater than actual austerity, for better and for worse.

Research, Reports & Studies
Oil, Automobiles, and the U.S. Economy: How Much have Things Really Changed?
…the effects of oil shocks on the mix of vehicle sold and on capacity utilization appear to have been proportional in recent decades to the effects observed in the 1970s.
Lugar’s Energy and Climate Plan: More Big Government, Less Consumer Choice
The bill does not contain a cap-and-trade or carbon pricing provision; however, it does include a host of mandates and regulations that would hurt the consumer.

"Did You Know"
Nevada passes Michigan for the level of unemployment; the State’s unemployment rate climbed to 14% in May, the highest in the state since 1976. It is now the highest in the country.

Graphic of the Day
After the recession ends, trillion-dollar deficits will persist
See also: The Post-Housing Tax Credit Slump Begins

Economists’ Comments & Opinions
Another Myth: Gov't Can Cure Economy's Ills
While the market produced a peak unemployment rate of 9% — briefly — after the stock market crash of 1929, unemployment shot up after massive federal interventions in the economy.
Durbin's antitrust fantasies
Instead of engaging in a serious economic analysis of interchange fees... the Durbin amendment is based on the simple-minded epithet of "duopoly" with no understanding of the past 30 years of antitrust economics. In the end, it will be consumers who will pay for this ignorance.
Obama’s actions prevent timely clean-up by U.S. allies
…even the staunchest supporters of the Jones Act are now distancing themselves from refusals to accept foreign help…
$7-a-gallon gas?
That's a Harvard University study's estimate of the per-gallon price of the president's global-warming agenda.
Financial Reforms Threaten Innovative Lending Option
The P2P business grew as the availability of traditional credit tightened during the recession.
Reality of America’s fiscal mess starting to bite
A report from the US Center on Budget and Policy Priorities issued last month estimates that in fiscal 2010 the US states collectively posted a $200bn-odd budget shortfall, equivalent to 30 per cent of all state budgets.

Bank bailouts: Institutionalizing debt overhang. –Garrett Jones, Twitter

Book Excerpts
"A mere enumeration of government activity is evidence -- often the sole evidence offered -- of "inadequate" nongovernment institutions, whose "inability" to cope with problems "obviously" required state intervention. Government is depicted as acting not in response to its own political incentives and constraints but because it is compelled to do so by concern for the public interest: it "cannot keep its hands off" when so "much is at stake," when emergency "compels" it to supersede other decision making processes. Such a tableau simple ignores the possibility that there are political incentives for the production and distribution of "emergencies" to justify expansions of power as well as to use episodic emergencies as a reason for creating enduring government institutions." –Thomas Sowell, Knowledge and Decisions