7/14/10 Post

BUZZ: Chinese rating agency strips Western nations of AAA status

News
The financial regulation bill
Highlights of the compromise legislation to overhaul financial rules.
Court Tosses Out FCC Rules to Curb Indecent Speech
A three-judge panel of the Second U.S. Circuit Court of Appeals in New York said the Federal Communications Commission's indecency policies violate the First Amendment and are "unconstitutionally vague, creating a chilling effect that goes far beyond the fleeting expletives at issue here."
Crop insurance companies sign off on plan that will cut subsidies $6 billion over 10 years
All 16 private insurance companies that participate in a federal crop insurance program have signed off on a plan designed to cut their subsidies.
Finance Overhaul Casts Long Shadow on the Plains
...it's the derivatives portion—the part of the bill aimed directly at Wall Street—that might end up touching most lives in rural America.
New WH report says economic stimulus bill responsible for saving or creating 3 million jobs
A new White House report says last year's $862 billion stimulus law has now "saved or created" between 2.5 million and 3.6 million jobs. That's up from 2.2 million to 2.8 million in the last quarterly report from the White House Council of Economic Advisers.
Retail sales slip for 2nd straight month
Following seven consecutive increases retail sales fell for a second straight month, with weakness in the automotive sector a key factor in the downturn.
Higher Taxes Boost State Revenue
While states have seen modest tax growth, local-government revenues have just started to fall.
Dumping the dollar: Why it's time to diversify
As much as 64% of the world's currency reserves are held in greenbacks but given the manic ups and downs of the dollar in recent years, it may finally be time to diversify the world's reserves.
U.S. Business Groups Air Policy Concerns
Washington's major business groups plan a united front Wednesday in their confrontation with the Obama administration over economic policy, calling on the White House to cut taxes and curb its regulatory agenda.
TARP failed Main Street banks
The Troubled Asset Relief Program's help has made little difference for small banks, according to the latest report by the Congressional Oversight Panel.
Net neutrality comes back to haunt Google
This year, “search neutrality” has become the rallying cry of activists who believe that Google has too much power to decide which internet sites are granted the attention that comes with a high search ranking, and which are consigned to outer darkness.
Home-buying loan applications at 13-year low
Application for mortgages to purchase a home sank a seasonally adjusted 3.1% for the week ended July 9 on a week-over-week basis, driving the volume to its lowest level since December 1996. On an annual basis, applications for the week were down 43%.
Portugal Feels Austerity's Bite
After Years of Budget Cuts, Its Economy Isn't Healed; Scenario for Others in Europe.
U.S. June budget deficit $68 billion: Treasury
Income was $251 billion in June, about $36 billion higher than receipts in June 2009, due largely to a 39% increase in corporate tax receipts. Spending was $319 billion in June, versus $309 billion a year ago.
Fed Sees Slower Growth
Officials Debate How to Respond if Recovery Falters; Softer 2nd Half Is Seen.

Blogs
Morning Bell: Cap and Ban
On Monday the Obama administration reissued a ban on offshore oil drilling in the gulf after federal courts twice invalidated the first ban.
Senators Press Kagan about Obama-Care
Given that she appears to take an expansive view of Congress’ power to regulate interstate commerce, the best possible outcome for opponents of Obama-Care would probably be for Kagan to join the Court.
Senate Bill Sows Seeds of Next Financial Crisis
In choosing to ignore the actual causes of the financial crisis and instead further expanding government guarantees behind financial risk-taking, Congress is eliminating whatever market discipline might have been left in the banking industry.
It’s Summer in Washington and the Livin’ Is Good
According to a new Regional Income Earnings Index developed by the Martin Prosperity Institute, Greater Washington, D.C. is the nation’s metropolitan region with the highest income.
Macro Beliefs and Reality
I am leaning toward a view of macroeconomics in which firms, households, and government face a collision between beliefs and reality.
Economists React: ‘Shop til You Drop? Hardly’
Economists and others weigh in on the decline in June retail sales.
Sticky (and very high)
For states that have been irresponsible or unlucky and find themselves short of revenue, why not reduce salaries some, say 10% and save that money? ...One answer is that state and city employees are under union contracts that are not easily adjusted on short notice.
Farms Get Smaller, Less Government Support
More — but smaller — farms across the country generated greater national net income in times of drastically less government support.
Further stimulation
...on nominal vs. real effects of government spending.
Secondary Sources: Student Defaults, Factory Peak, Trichet on Austerity
A roundup of economic news from around the Web.

Research, Reports & Studies
The Secret to Human Happiness Is Earned Success
The free enterprise system is an act of self-expression reflecting that Americans truly value earned success, which gives people a sense of meaning about their lives.
As Obama Kowtows, Unions Eye the Private Sector
Unions gave $400 million to Democrats in the 2008 campaign cycle, and they expect to get something in return.
The Moral Basis for Economic Liberty
Those who defend free markets and capitalism often do so solely on managerial or technical grounds, but economic liberty needs a moral defense as well. Defense of economic liberty without reference to morality will ultimately prove injurious to liberty itself
“Rebalancing” Chinese Investment in the U.S.
The first policy step must be to remove confusion caused by ongoing and haphazard political interference. Because most Chinese investment in the U.S. is made by state-owned entities, it will be reviewed by the Committee on Foreign Investment.
Does Government Spending Stimulate Economies?
...greater government spending does not aid the economy; in fact, it causes decreased consumption and investment.
Macroeconomic Effects from Government Purchases and Taxes
Spending multipliers are identified primarily from variations in defense spending, especially changes associated with buildups and aftermaths of wars.

Economists’ Comments & Opinions
Time to fire America's management
Corporate income tax cripples the economy.
Fed should stay on sideline
The Fed should not overreact to every piece of news, either good or bad, as mixed data are part of every recovery, said president of the Kansas City Federal Reserve Bank Thomas Hoenig.
Politicians Are the Problem for Higher Ed
Higher education is awash in government cash, with tens of billions of taxpayer dollars going to schools and students annually.
The Uncertainty Principle
Dodd-Frank will require at least 243 new federal rule-makings.
Arrogance Surplus Leads to Government Excesses
Good policy is what might be called humble policy. It starts with admitting what we don’t know.
A New Immigration Policy Can Reduce U.S. Debt
Reducing the number of skilled legal immigrants reduces chances for economic growth.

Little-known macro fact: Reverse Phillips Curve. Correlation between annual real GDP growth and inflation, '47-'10 = -0.14 -Garett Jones, Twitter

Graphic of the Day
Federal budget gap tops $1 trillion through June
See: Gross public debt projections
See Also: June Retail Sales
See Also : Obama Job Deficit

Book Excerpts
"Today, when it is an accepted principle that the function of the state is to distribute wealth to everybody, it is natural that the state is held accountable for this commitment. To keep it, it multiplies taxes and produces more poverty than it cures. With new demands on the part of the public and new taxes on the part of the state, we cannot but go from one revolution to another. But if it were well understood that the state can take from the workers only what is strictly indispensable to guarantee them against all fraud and all violence, I cannot perceive from what side disorder would come." - Frédéric Bastiat, 'Justice and Fraternity' (1848)

Did You Know
According to a recent survey, 87 % of small business owners viewed free enterprise as “very positive” or “positive”; 78 % of all voters agreed. Conversely, only 12 % of small business owners and 3 percent of all voters viewed the idea of socialism “very favorably.” Small business owners know what they need for their businesses to flourish—and government isn’t it.