Friday, July 2, 2010

7/2/10 Post

Today's News
House passes unemployment benefits extension
After a failed attempt earlier this week, the House voted to extend the deadline to file for federal jobless benefits Thursday. But the bill will be stuck in limbo as Congress takes a weeklong summer break.
Stimulus: The big bang is over
This summer will be the peak of the $787 billion stimulus program in terms of creating jobs and pumping money into the economy. It will be a downhill slide for stimulus even as the economy is expected to continue sputtering.
Bankruptcy filings on the rise
Bankruptcy filings surged 14% during the first half of 2010. Filings totaled 770,117 through June, compared to 675,351 during the same period last year.
Job recovery hits a wall
The U.S. economy lost jobs in June, for the first time this year, a net loss of 125,000 jobs in the month. That was due primarily to the loss of 225,000 Census jobs that had swelled payrolls by 433,000 net jobs in May.
Euro-zone unemployment unchanged at 10%
The number of unemployed workers across the 16-nation euro zone ticked higher in May, but the unemployment rate remained at a 12-year peak of 10% for a third consecutive month.
Jobs report prompts new political sparring
A fresh round of political sparring broke out Friday morning following the release of a disappointing jobs report, as Republicans attacked the White House, and President Barack Obama said the country's "heading in the right direction," but admitted the economy's not whole yet.
US stocks fall on poor economic data
Disappointing economic data that fuelled concerns about the strength of the economic recovery sent US stocks lower on Thursday, but some ground was recovered in the last second half of the trading day.
New Financial Rules Will Lower Bank Profits
The landmark financial overhaul legislation will raise banking industry regulatory costs, lower their profits and limit their use of their own assets in risky investments.
Global Manufacturing Momentum Fades, Fueling Worries
Manufacturing lost momentum around the world in June, adding to worries that global economies are poised for slower growth in the months ahead.
Fiscal Commission Debates Deficit Cuts
The president’s fiscal commission heard from advocacy groups and a few public citizens Wednesday afternoon as it considered ways to reduce the federal deficit.
Car Sales Slowed in June
Auto makers saw their U.S. sales rise in June from the depressed level of a year earlier, but sales fell from May as jittery consumers slowed the pace of recovery in the car market.
Schwarzenegger Pressures Lawmakers in Budget Battle
Gov. Arnold Schwarzenegger's order to pay 200,000 state workers just the minimum wage sent a signal to California lawmakers: In the impasse over closing California's $19 billion budget deficit, Schwarzenegger is ready to play hardball.
Dollar Tumbles in Broad Retreat on Weak Data
The dollar fell against the euro and yen after worse-than-expected economic data fueled concern the U.S. recovery was slowing, leading investors to sell the greenback.
Health overhaul may mean longer ER waits, crowding
Emergency rooms, the only choice for patients who can't find care elsewhere, may grow even more crowded with longer wait times under the nation's new health law.
Premiums for New 'High Risk' Pool Could Be Steep
President Barack Obama's new health coverage for uninsured Americans with health problems won't be cheap — premiums averaging $300 to $600 a month in the largest states, according to a government website that went live Thursday.

"The Employment Situation" Hearing Report
"Today's report is bad news for American workers and their families. At this slow pace it will take much of the decade to reutrn to normal emplyoment levels. President Obama and Congressional Democrats are pursuing reckless fiscal policies that are clearly unsustainable. Unless their excessive spending, deficits, and debt accumulation are quickly reversed, the United States may experienece a debt crisis similar to Greece."

- Representative Kevin Brady, Senior House Republican for the Joint Economic Committee

Total nonfarm payroll employment declined by 125,000 in June, and the unemployment rate edged down to 9.5 percent. The unemployment rate only decreased because there was another step down in the labor participation rate. As the number of discouraged workers continued to rise and the labor force shrunk by 652,000. The decline in payroll employment reflected a decrease (-225,000) in the number of temporary employees working on Census 2010. Private-sector payroll employment edged up by 83,000.

See: BLS Employment Situation Summary

June Employment Numbers Raise Specter of a "Lost Decade"
The soft employment numbers build the case for those who believe we may be entering a "lost decade" similar to what Japan experienced before the Great Recession.
Time to Go Global with Greater Economic Freedom
The latest study by the McKinsey Global Institute reveals some astonishing facts concerning contributions of U.S. global companies to the American economy.
Democrats Rescind Recovery Act Funding to Finance More Ineffective Spending
Conservatives began talking about rescinding the stimulus after President Obama signed it into law. Liberals are starting to listen.
Economists React: Is Economy Deer in Headlights or Roadkill?
Economists and others weigh in on the June employment report.
Economic “Experiments”If Barro and the others are correct, we can’t afford to keep throwing good money after bad.
Employment Report: Temporary Help and Diffusion Index
The decrease in the diffusion index in June (almost falling to 50%), is disappointing.
Why Did the Unemployment Rate Drop?
The unemployment rate fell in June to 9.5% from 9.7%, reaching its lowest point since last July. But the decline wasn’t due to improvement in the labor market. Instead, jobless Americans dropped out of the labor force in droves.
Shovel-ready, revisited
Maybe [the stimulus] would have done more stimulating if the spending had actually been directed at projects that use shovels.
State/Local Government Still Shedding Jobs
The pace of state and local government job loss has slowed in recent months. State/Local governments shed 10,000 jobs in June, compared with 18,000 a month earlier and more than 25,000 in each of the first two months of the year.
More Problems With MassCare
If you don't have the mandate, guaranteed issue and community rating will result in the kind of cost spiral we've seen in New York, where only the very sick bother to buy insurance.
Take That, Keynes and Lerner
"Once you break the spell--once governments find that they can get away with borrowing instead of taxing to pay the bills--it is almost impossibly tempting for politicians to do it again and again until the debt is out of control."
Good News about Polluted Water
Pollution is bad, but there is another side to the story. The Hudson River is now clean enough that I’ve swum in it. Air pollution has dropped by 41% since 1990. U.S ocean fisheries have improved substantially in the last few years. Forest cover in the US is larger today than it was 100 years ago. Then, of course, there are the oysters…

Research, Reports & Studies
Tax to the Max?
Should we lift the payroll-tax ceiling to fix Social Security? It’s pretty much accepted, even among policy folks well to the left-of-center, that the trust fund isn’t real savings and that marginal tax rates do matter.
Europe's Sovereign Debt Crisis: No Place to Hide?
As the debt-to-GDP ratio approaches 100 percent, the effort to reduce it by cutting government spending, raising taxes, or both actually raises the ratio because it cuts GDP growth faster than it cuts debt.
One More Thing America Must Learn from Europe
The United States could learn a lesson from Europe: how to make flying cheaper. In the European Union, any EU-based airline from any member country can pick up and drop off passengers anywhere within the Union.
The Economic Impact of an Offshore Drilling Ban
In short, petroleum can be a major energy source for many decades. Consequently an offshore drilling ban’s impact on the U.S. would be felt for decades.
Errors, Robustness, and the Fourth Quadrant
The paper proposes a methodology to calibrate decisions to the degree (and computability) of forecast error.
Social Security Policy Options
This CBO study examines a variety of approaches to changing Social Security, updating an earlier work, Menu of Social Security Options, which CBO published in May 2005.
International Business Cycle Synchronization in Historical Perspective
We then examine the role of global shocks and shock transmission in the trend toward synchronization. Our key finding here is that global (common) shocks generally are the dominant influence.
Some Intellectuals and Society
Sowell claims that those of us who favor free markets aremore empirically inclined and have less ego invested in our views than those who advocate central planning and heavy government intervention generally.

Graphic of the Day
the Atlantic: Dismal Jobs Report
See:Today’s Jobs Report in Pictures
See Also: June Nonfarm Payrolls
See Also: Intelligence tested
VIDEO: Pelosi: Unemployment Checks Fastest Way to Create Jobs

Economists’ Comments & Opinions
The Obama Tax Trap
How some Republicans are preparing to walk right into it.
Economy: the musical
Commentary: The song remains the same for the economy

For them this is a financial crisis; to me it is an intellectual crisis, a crisis of civilization. -Nassim Taleb, Twitter

Book Excerpts
"[L]egal plunder can be committed in an infinite number of ways; hence, there are an infinite number of plans for organizing it: tariffs, protection, bonuses, subsidies, incentives, the progressive income tax, free education, the right to employment, the right to profit, the right to wages, the right to relief, the right to the tools of production, interest-free credit, etc., etc. And it is the aggregate of all these plans, in respect to what they have in common, legal plunder, that goes under the name of socialism." -Frédéric Bastiat, The Law (1850)

"Did You Know"
AAA projects that 34.9 million Americans will travel 100 miles or more during the Independence Day weekend, a jump of 17.1% from last year's 29.8 million travelers.