6/22/10 Post

BUZZ: Rust Belt Cities See Decline in Population

News
Existing-home sales dip 2.2% in May
Resales of U.S. homes and condos fell 2.2% to a seasonally adjusted annual rate of 5.66 million.
Price hikes hammer individual health coverage
When health insurance costs rise for individual buyers, they soar: The average premium rose 20% in its most recent increase.
White House budget director is leaving
Peter Orszag has told President Barack Obama that he plans to leave his position as White House budget director in July.
Swipe-fee compromise won't help consumers
In the U.S., debit-card transaction fees alone add up to about $20 billion annually. However, it's unlikely any savings will be passed on to consumers, mainly because the banks will find other ways to drum up the lost revenue.
As Law Takes Effect, Obama Gives Insurers a Warning
Obama plans to sternly warn industry executives against imposing hefty rate increases in anticipation of tightening regulation under the new health care overhaul.
Taking on two economic summits
Much of the president’s focus in Canada this weekend will be on keeping global leaders on the path they set last year.
House defies President Obama on financial regulation reform
House negotiators on a Wall Street reform bill will push to shield auto dealers from new consumer protection lending rules — a move that bucks President Barack Obama, who has called on lawmakers to reject any carve-outs for special interests.
Geithner Says Access to Credit Improving, May Fuel U.S. Economy
“Credit conditions overall, which dragged our economy into a deep recession in 2007, no longer pose an obstacle to growth,”.
Can We Balance The U.S. Budget? Yes, But Only If We Cut Spending
With our nation headed toward a financial cliff, there is an urgent need and a will among the American people to change course and put our fiscal house in order.
FCC Holds Talks on Internet Rules
Regulators Meet With Phone, Cable Firms Over 'Net Neutrality' Compromise
Tighter Scrutiny For Bank Salaries
The Federal Reserve adopted sweeping new rules Monday that will give banking regulators more power over how the nation's thousands of banks compensate employees ranging from senior executives to traders.
Dems won't pass budget in 2010
The House has never failed to pass an annual budget resolution since the current budget rules were put into place in 1974.

Blogs
Some New Data on Income Inequality
The bottom line is that income mobility is alive and well and seems pretty consistent regardless of who is president or who controls Congress.
The Good Old Days Are Now
How much better off the average American is today than in the past?
Moody's: Commercial Real Estate Prices increase 1.7% in April
It is possible that commercial real prices have bottomed - in general - but it is hard to tell because the numbers of transactions are very low and there are a number of distressed sales.
Existing Home Sales: Inventory increases Year-over-Year
The key is the inventory and months-of-supply, and if these two measures increase later this year as I expect, then there will be additional downward pressure on house prices.
Will Yuan Revaluation Trigger Another Financial Crisis?
Watch for US long-term rates to rise, the risk here is US long-term rates start to spiral higher unless (ha ha!) Uncle Sam starts to borrow less.
Economic Reality: Nowhere to Run, Nowhere to Hide, Part 2
The onset of the Global Sovereign Crisis marks a new dangerous phase of the credit crisis.
Economists React: ‘Next Few Months Will Be Tough’ for Housing
Economists and others weigh in on the drop in May existing home sales.
When to Rely on Coercion
On the one hand, it is a great achievement to have worked out the precise conditions under which decentralized, competitive markets are optimal. On the other hand, mainstream economists do not seem to care about working out the conditions under which government will succeed where markets fail.
Like Taking Cyanide for a Headache
Far from being a momentary side-effect of stimulus spending, uncertainty is a systemic problem with interventionist economic policy. The poison is worse than the medicine.

Research, Reports & Studies
The Three Biggest Myths About Tax Cuts and the Budget Deficit
Balancing the budget by 2020 would require either eliminating one-third of all spending, raising taxes by 50 percent, or a combination of the two.
Controlling Federal Spending
Using Past Budgets as Guides for Spending Restraint
The Prospects for Ending Obamacare: Learning from Health Policy History
Washington’s obsession with controlling, defining, regulating, and restricting private-sector health insurance options overlooks the obvious. Congress must recognize that real cost control begins with the nation’s largest entitlements Medicare and Medicaid.
The Value Added Tax
Too Costly for the United States
EU Bailout: Impact on the United States
To watch developments in Europe today is to peer through a clear window into America’s own future. As the nation runs deficits in the Grecian mode and its own public debt soars toward 100 percent of its economy, a future crisis becomes as predictable as the sunrise—and just as widely predicted.
Weekly Economic and Market Review
The economic data continued its mixed performance last week with little in the way of surprises.
School accountability and teacher mobility
...accountability shocks influence the distribution of the measured quality of teachers (in terms of value added measures) who stay and leave their school, though the average differences are not large.
The Economy Hits Home: International Trade
If you look at the evidence, it’s clear that American and foreign workers, our economy, and the environment are all better off to the degree that we enjoy free trade.
Penalty APR Study
The CardHub.com Penalty APR Study evaluates the post-CARD Act Penalty APR policies of the top 10 credit card issuers, based on outstanding balances.

Graphic of the Day
Extra Taxes Required from Each Taxpayer to Erase the Deficit
See also: How Do Americans Save Money?
VIDEO: Bootleggers and Baptists: A Conversation with Bruce Yandle

Economists’ Comments & Opinions
Is U.S. Now On Slippery Slope To Tyranny?
Those who cannot see beyond the immediate events to the issues of arbitrary power — vs. the rule of law and the preservation of freedom — are the "useful idiots" of our time. But useful to whom?
Spain's Emerging Banking Crisis
The Spanish government narrowly passed a $15-billion austerity package in May. Tomorrow it faces the next big legislative challenge in a move towards more fiscal responsibility.
Bam's Climate Rx: All Pain, No Gain
The cap-and-trade bill won't lower global temperatures but merely make life more expensive. It'll force you to use energy sources that all have to be massively subsidized with your tax dollars.
Europe cuts deep, the U.S. spends on
Some experts think the United States should follow the lead of Britain and other nations in Europe and take steps to cut the deficit. Others warn it's too soon to worry about debt
Wells Fargo Economics Group: China Reintroduces Currency Flexibility
Chinese currency move: much ado about nothing?
Is Illinois the New California?
Illinois has overtaken California as the worst credit risk among American states.
Misguided housing subsidies promote unfairness, bailouts
Over the past half-century, the homeownership rate has risen only modestly, from 62% in 1960 to 68% at the height of the housing bubble. In Canada, which has no mortgage deduction or many of the other subsidies present here, the ownership rate is about the same.

The little secret of most New Keynesian models: they explain unemployment as voluntary vacations, just like RBC models. -Garrett Jones, Twitter

Book Excerpts
"The curious task of economics is to demonstrate to men how little they know about what they imagine they can design." F.A. Hayek, The Fatal Conceit (1989)

"Did You Know"
In 2000, the top quintile paid 66.6% of taxes, a share that dipped to 64.8% in 2002 and then rose, peaking at 69.3% in 2006 and settling at 68.9% in 2007. In 2009, 47% of households owed no income tax.