Wednesday, August 4, 2010

8/4/10 Post

News
Private sector sees job gains in July
Private sector employment rose slightly more than expected in July adding 42,000 jobs, compared to the mere 19,000 jobs added in June.
Toyota earnings up 27% despite recalls in U.S.
Despite ongoing recalls in the U.S., Toyota posted a 27% increase in net revenue for its fiscal first quarter.
Futures turn higher after jobs report
With the release of the private sector job report yesterday, U.S. stocks futures erased earlier losses and moved higher.
Yen Rises to Eight-Month High Versus Dollar on U.S. Slowdown, Fed Outlook
The yen touched an eight-month high against the dollar on speculation growth in the world’s biggest economy is slowing and the Federal Reserve may signal additional stimulus measures at next week’s policy meeting.
China seeks to widen gold market
China has moved to liberalize its gold market further, increasing the number of banks allowed to trade bullion internationally and announcing measures that will encourage development of gold-linked investment products.
Oil Falls From Three-Month High on Concerns Over U.S. Recovery
The Energy Department is scheduled to release its weekly inventory report today at 10:30 a.m. in Washington but the report is forecasted to show that U.S. supplies fell for the first time in three weeks.
Geithner: Tax cuts for rich a '$700 billion mistake'
Treasury Secretary Tim Geithner is expected Wednesday to back the idea of letting tax cuts for the wealthiest Americans lapse as a step toward getting the nation's fiscal house in order.
Summer of no love
Thanks to the persistently lousy economy, a succession of major crises and middling distractions it’s turned into Obama’s Summer of No Love.
Democrats Punt Defense Bill in Bid for McCain's Backing
Senate Democrats are putting off consideration of the defense authorization bill until after the summer recess in hopes that Sen. John McCain will be a more agreeable negotiator after his August primary.
Senate Dems Get Help From Governors On State Aid Bill
Senate Democrats are going all out in hopes of winning 60 votes today to cut off debate on legislation that would extend Medicaid assistance to states and avert teacher layoffs, teaming up some of the nation's governors to help push the bill over the finish line.
GOP Senators Decry Stimulus Spending
Sens. Tom Coburn, R-Okla., and John McCain, R-Ariz., today unveiled a report that that identifies 100 projects funded by the $862 billion stimulus package that they contend wastes taxpayer money.
Democrats Likely to Lower Fiscal 2011 Spending Cap to GOP’s Proposed Amount
Senate Republicans may be on track to force the Democratic majority to shave roughly $6 billion from its proposed $1.114 trillion cap on fiscal 2011 discretionary spending.
$100M worth of merchandise seized, 11 indicted in West Coast counterfeit goods bust
The merchandise was illegally imported from China and includes bags, sunglasses and other items labeled with more than 70 brand names such as Gucci, Prada and Nike.
Working 12 months for 11 months pay
Some 22 states had furloughs in the past year, and at least 13 of them plan to continue them into 2011.
Calls for Review of 14th Amendment Gain Some Republican Support
Senate Republican leaders are backing calls for a review of the 14th Amendment’s guarantee of citizenship to the U.S.-born children of illegal immigrants in what critics say is a bid to energize their base going into the midterm elections.
U.S. Savings Rate at Highest Level in a Year
The Commerce Department reported Tuesday that the personal savings rate -- the amount of each paycheck that goes unspent -- jumped to 6.4 percent in June, the highest rate since June 2009. That's a far cry from the heady days of the spending boom when Americans set aside less than 1 percent of their paychecks.
125 Days Late, a State Budget With New Taxes
Lawmakers completed one of the latest budgets in New York State history on Tuesday night, passing a last piece of legislation that will raise an additional $1 billion — in part by increasing taxes on the sale of clothing and on a variety of businesses.
Foreclosed On—By the U.S.
With Bear Assets, Fed Balances Preserving Investment and Helping Borrowers.

Blogs
Secondary Sources: Tax Cuts, Inflation Expectations, Working Mothers
A roundup of economic news from around the Web.
Sentences to Ponder
"A report from Harvard's Kennedy Center last year found that the world could cut global CO2 emissions by about 6 percent simply by scrapping price supports for fossil energy."
Second-Quarter Slowdown Likely Worse Than First Thought
The slowdown in economic growth recorded in the second quarter was likely even less robust than initially reported on Friday, according to new inventory data released today.
How Don Boudreaux Got Hooked on Economics
...the supply curve, the demand curve, and the price ceiling--are the most important three lines in economics.
MBA: Mortgage Purchase Applications increase slightly last week
The purchase index has increased slightly for three straight weeks - but is still 40% below the level of the last week of April (and about 33% below the last week of April using the 4-week average).
With Wallets Thin, Consumers Face Zero-Sum Game
Consumers’ reluctance to spend is a headwind for second-half growth, not quite scuttling the recovery but not providing a strong boost either. Only a better job picture will lighten the mood.
Money and Liberty
...there is a good reason for government to not use a free currency – it’s the best way to tax its citizens without them ever knowing about it.
Tax Cuts vs. Deficits
As Real Time Economics recently noted, ending the tax cuts won’t make a huge dent in the deficit. The Tax Policy Center points to Treasury estimates that show a cost of $199 billion in fiscal year 2011 and $3.7 trillion over 10 years for extending all the tax cuts.
Personal Bankruptcy Filings up 9% in July
Excluding 2005, when the so-called "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" was enacted (really a pro-lender act), the record year was in 2003 when 1.62 million personal bankruptcies were filed. This year will be close to that level.
Competition Breeds Success
...road builders do things government workers said “could not” be done. Another story this week provides a similar example from another government-dominated field, K-12 education.
Economists Call for Clarity on Government Policy
A panel of economists Tuesday urged U.S. lawmakers to resolve outstanding uncertainty over tax and other policies to help the sluggish recovery, a difficult assignment for Congress as it heads into a contentious campaign season.
ISM Non-Manufacturing Index shows expansion in July
The July ISM Non-manufacturing index was at 54.3%, up from 53.8% in June - and above expectations of 53.7%. The employment index showed expansion in July at 50.9%.
No Such Thing as a Simple Mortgage
Much of this paperwork is the product of earlier acts designed to help uninformed borrowers deal with the complexity of their loans. If you read and understand all of it, perhaps you do. But there's so much of it that it's relatively easier to overlook something.
Some Links
Robert Barro on "stimulus" and more.
Pending and Existing Home Sales
It is hard to tell from the Pending Home sales index how far existing home sales will fall in July and August.
Obama’s Bogus 8 Million Jobs Saved
By the only objective standard available, President Barack Obama’s $862 billion economic stimulus has been a complete failure.
Tax Cut Myth Busting, Round 2
Bill Gale’s discussion of the five myths about the Bush tax cuts was an unusually slanted piece from a normally straight-shooting liberal economist.
Obamacare Loses Big in Missouri; Voters Reject Individual Mandate
Missouri voters dealt Obamacare a significant setback yesterday, approving a statewide ballot measure with an overwhelming 71 percent of the vote.
Let’s Get the Gulf Back to Work
Lifting President Obama’s job-killing oil ban is only the first step toward economic recovery in the Gulf. The region, and our country, are also in desperate need of oil spill liability reform that sufficiently aligns risk and liability with individual behavior.
Great Moments in Government-Run Healthcare
The bureaucrats in Sweden’s government-run healthcare system obviously were not pleased that he called attention to their failure.
The Failure of Socionomics, Part 1
In the socionomics literature, the tendency to rely on arbitrarily selected anecdotes is proof of the futility of the theory.
The Main Event: Inflation vs. Deflation
Two roads suggest very different courses of action.
Boomer Dynamics, Housing, Jobs Creation, and the Falling Participation Rate
Census firing is about to take back another chunk of census hiring; expect another lousy jobs report this month.

Research, Reports & Studies
Medicare Part D and the Financial Protection of the Elderly
...examines the impact of the expansion of public prescription drug insurance coverage from Medicare Part D on the elderly and evidence of substantial crowd-out is found.
Bureaucratic Tyranny or the Renewal of Self-Government: The Beginning of Centralized Administration in America
Today, we have a government skilled in obfuscation. Elected officials are so intent upon avoiding responsibility that even the “regular Statement and Account of the Receipts and Expenditures of all public Money,” which the Constitution directs to “be published from time to time,” is a multi-volume monster.
RCM: Wells Fargo Economics Group: Personal Income Was Largely Unchanged
Personal income and consumer spending were unchanged in June. Prices declined 0.1 percent, however, which means spending rose slightly after adjusting for falling prices. The saving rate rose to 6.4 percent.

Economists’ Comments & Opinions
Snooki Tanning-Bed Protest Splits Sin From Taxes
The first problem with this is that imposing a tax to improve public health doesn’t always succeed as policy. That’s partly because tax laws can’t keep up with scientific research, says J.D. Foster of the Heritage Foundation.
The Crisis When Our Debt Goes 'Pop'
As the Congressional Budget Office puts it, if the national debt continues to grow out of control, a "growing portion of people's savings would go to purchase government debt rather than toward investments in productive capital goods such as factories and computers; that 'crowding out' of investment would lead to lower output and incomes than would otherwise occur."
Rahn: Evidence and denial
Obama advisers refuse to believe they're failing.
An Age of Diminished Expectations?
In the end, policymakers must remember that whether or not the US and Europe avoid a lost decade depends on their ability to retain productive vitality in their economies, not simply on short-term demand-stimulation measures.
More Fed Power Won't Save the Economy
After failing to catch the last bubble the Fed and Treasury have been selected to stop the next crisis... really?

Graph of the Day
Cato: State debt doubles since 2000
See: Long Way to Go for Recovery
See also: Home Data Slide Again as Tax Credit Expires

Book Excerpts
"In essence, economics is the study of property rights. Without scarce resources property rights are pointless. The allocation of scarce resources in a society is the assignment of rights to uses of resources. So the question of economics, or of how prices should be determined, is the question of how property rights should be defined and exchanged, and on what terms." –Armen Alchian, Pricing and Society (1967)

Did You Know
About a third of people in nine states were obese in 2009, a dramatic increase from 2007, when only three states had obesity rates that high. Obese Americans cost the nation an estimated $147 billion in weight-related medical bills in 2008, double the amount a decade ago, government data released last summer show. Obese people have medical bills $1,429 a year higher than normal-weight people.