8/17/10 Post

BUZZ: Obama hits new polling low

News
Oil Spill Could Take a Toll on Louisiana as Shrimp Season Opens
Shrimpers returned to Louisiana waters Monday for the first commercial season since the Gulf of Mexico oil disaster, uncertain what crude may still be in the water and what price they'll get for the catch if consumers worry about possible lingering effects from the massive BP spill.
Say Yes To The Yen
The Japanese yen recently rallied to 15-year highs against the U.S. dollar along with hitting highs against other major currencies.
Producer-Price Increase Eases Deflation Concerns
U.S. producer prices rose for the first time in four months in July as the cost of raw materials increased, easing concerns that the economy could become so weak that it leads to deflation.
Second in line
China has, at long last, surpassed Japan in terms of nominal GDP, making the Chinese economy the world's second largest.
Stimulus Fight Hits the Trail
President Barack Obama is traveling across the country this week to tout the benefits of his massive stimulus plan, which has become a major flash point of the 2010 campaign a year and a half after its passage.
Credit Card Defaults, Late Payments Drop in July
Consumers keep improving how they manage their credit card payments, with fewer customers in July defaulting or making late payments compared with the previous month.
A Two-Year Budget? GOP Sen. Thune Joins the Chorus
Sen. John Thune is the latest to propose that Congress move from an annual to a biannual budget process to end political gridlock and better control spending.
Stimulus Package: Lots More to Spend at Local Levels
State and local governments have yet to spend much of their economic stimulus funding, and some Americans and officials are questioning the wisdom of this.
Feds rethink policies that encourage home ownership
Just how much should Uncle Sam do to help Americans buy their own homes? For 70 years — and for the last 15 in particular — the answer has been: Whatever it takes. Now, policymakers are pausing to reconsider. In the next few months, they'll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream.
Mexico slaps tariffs on US goods over trucking ban
Mexico said Monday it will increase tariffs on a total of 99 U.S. products to pressure Washington to lift a ban on Mexican cargo trucks entering the United States.
Economy Led to Cuts in Use of Health Care
The economic crisis in the United States has reduced the use of routine medical care.
Fed to protect consumers from abusive mortgages
The new regulations, which take effect April 1, will ban lenders from paying mortgage originators more for putting borrowers in more expensive loans.
Banks finally lending more to small biz
While most banks said demand for business and consumer loans was unchanged, large banks -- those with assets greater than $20 billion -- eased their lending conditions.
Can't find a job, college grad?
Housing starts rose 1.7% from June to a seasonally adjusted annual rate of 546,000 last month.
Cancer is world's top 'economic killer' as well as its leading cause of death
Cancer costs more in productivity and lost life than AIDS, malaria, the flu and other diseases that spread person-to-person.
Housing conference likely to focus on continued government role in mortgage market
Talk of shrinking the government's involvement in the mortgage market is growing. Just don't expect action any time soon.
Obama: GOP Is ‘on the Sidelines’ in the Fight for Jobs
Obama said it is “clear” that Democratic economic policies are lifting the country out of the recession and warned that Republicans are pushing for a return to failed policies.
New home construction rises, but outlook weakens
Housing starts rose 1.7% from June to a seasonally adjusted annual rate of 546,000 last month.

Blogs
The Fake Jobs of Obama’s Government Union Bailout
The latest bailout for states and government unions $10 billion was earmarked for education spending which would save 160,000 jobs. But as we pointed out before the bill was signed, this number was completely made up.
No More ‘Ethics’ in the White House?
It looks like ethics and transparency are yet again taking a back seat at the Obama White House, this time with the little-noticed news that the president’s ‘ethics’ czar, Norm Eisen, is leaving to become a foreign ambassador and will not be replaced.
Another Green Jobs Debacle from Obama’s Failed Stimulus
The New York Times reports today that only 8.4% of the $3.2 billion Congress included in President Barack Obama’s failed stimulus to create green jobs by improving energy efficiency has been spent through July.
China Passes Japan, Not As Important As It Seems
After months of speculation, it’s finally official: the Chinese economy, as measured by GDP, is larger than the Japanese economy.
Why Theoclassical Economists Fail as Regulators
The inability of neoclassical economists to learn from the recurrent financial disasters and epidemics of accounting control fraud demonstrate that we're dealing with a faith-based economics.
Our Fixed Income Fascination Continues
A whopping $203 billion has now been invested in bond funds, year to date. In comparison, domestic equity funds have raked in just $16 billion so far in 2010.
Does the Cost of Capital Matter?
The cost of capital has plunged, and the only people who seem to be benefiting are the large banks and Uncle Sam himself.
Can Government Put Idle Resources to Good Use?
At the end of July, nearly 18 months after the stimulus passed, more than half of the $275 billion in investments had yet to be spent.
Don't Expect a Cure for Cancer Any Time Soon
Drug discovery is hard enough even before you add these sorts of challenges. We've been spoiled by the last fifty years; the targets we have now are harder, and even the targets we thought we'd beaten are making a comeback.
Use Spoons Rather than Shovels
During recessions government should not only prevent American consumers from buying foreign-made products, but also prohibit American producers from using labor-saving technologies.
Left, Right, and Wrong
Brink Lindsey is interviewed by Jonathan Rauch for the "five books" series. Lindsey's book choices are not as interesting as his comments on the role of the progressive left and the traditionalist-conservative right.
Predatory Educating
Schools must earn and maintain proper accreditation to remain eligible for Title IV programs. In many instances, the for-profit institutions sit on the boards of the accrediting body.
Most Monolithic
Of course the Communist movement wasn't perfectly monolithic. But wasn't it extremely monolithic nonetheless?
Paul Krugman on Carter and Reagan: Wrong Again
The errors of Paul Krugman's logic are revealed.
Interest Rates and House Prices: A Murky World
Did the proliferation of low-down-payment, low-documentation loans cause the housing bubble? Actually, we don’t really know what happened to approval rates or loan-to-value levels over time.
Boston Fed: Economics Couldn’t Reveal Housing Bubble
Should economists and policy makers have identified the housing market bubble before it burst? The answer is most likely no, says the Federal Reserve Bank of Boston, because economic theory was not up to the challenge.

Research, Reports & Studies
Introduction and Highlights
The federal government has grown exponentially, not just in spending but in its reach.
Meeting America’s Energy and Environmental Needs
America needs an energy policy that promotes environmental sustainability and economic growth. Yet many Members of Congress and the Administration are promoting policies and promulgating regulations that centralize power in Washington.
Changing America’s Course
The United States is the world’s strongest, most prosperous, most just, and freest nation. Yet the path we have been following is turning America into a very different place: a country stifled by a highly regulated economy, nationalized industries, and government-run health care, ruled more by bureaucrats and judges than by the consent of the governed.
State and Local vs Private Sector Spending
Real state and local spending growth has consistently out-paced growth in both real GDP and real private GDP. Because state and local governments depend on the private sector for their tax revenue, this path is not sustainable; state and local government spending cannot continually outpace the wealth-creating sector of the economy.
A Fragile Economic Outlook Continues
Last week, the markets responded to further evidence of a slowing in economic activity, including a further deterioration in new claims for unemployment. Clearly, we are in the window where the market would be expected to be very sensitive to changes in the economic outlook, which is largely what we observed last week in both stocks and bonds.
Empire State Manufacturing Remains Weak
The August Empire State Manufacturing index came in weaker than expected. The index continues to show expansion, but a July and August soft patch is evident.
U.S. Workers Still on Elevated Alert for Potential Job, Pay Cuts
U.S. workers' worries about job and pay cutbacks have eased slightly since 2009, but they continue to be high compared with prior years. In particular, roughly one in four Americans employed full or part time is currently worried about being laid off in the near future.

Economists’ Comments & Opinions
Uncle Sam, Venture Capitalist
President Obama kicked off a five-state campaign swing yesterday with a stop at a "clean energy" plant in Menomonee Falls, Wisconsin. As it happens, Mr. Obama couldn't have chosen a better company to demonstrate the risks that taxpayers are taking with their billions in green stimulus investment.
Worried Americans Look Inward
Economic stress has a way of bringing underlying tensions and suppressed emotions to the surface, for people and nations alike. The real question isn't why these feelings are in the air—that's obvious enough—but which leaders in both political parties will push back against them, in this fall's campaign and beyond.
Railroading The Taxpayer
Washington likes to think that government-funded infrastructure projects boost economic activity. But there is at least one form of Washington-generated infrastructure spending we could manifestly do without: high-speed rail projects.
Juveniles in charge
During the past several months, we have seen much of the political class in Washington increasingly act like juveniles, making the rest of us suffer.
2 Zombies to Tolerate for a While
What is the future of Fannie Mae and Freddie Mac? That is still yet to be decided.
Bureaucracy Gets a Bailout
In voting to spend $10 billion to save school teachers' jobs last week, Congress bailed out government employees who have fatter paychecks and pensions than those doing the same kind of work in the private sector.
Regulating Executive Pay
For those of us striving towards a free society, a basic tenet is a respect for mutual agreements between consenting adults. In the absence of fraud or actual physical harm to either persons or property, adults should have their contracts respected by the state and not rewritten upon political whim. So the question is: is the current system of executive compensation fraudulent or does it impose physical harm on others?
Food Stamps Cut?
Prior to last week’s passage of another $26 billion in bailout money for state and local governments, I noted that the legislation wasn’t really offset:
The Dodd-Frank Wall Street Reform and Consumer Protection Act: The Triumph of Crony Capitalism, Part 4
Regulators will never keep up with the next asset class boom and bust because they'll always be looking backward.
Trendspotting: Investing in Federal Stimulus Projects
Much of the money is being routed back into companies such as engineering giant Siemens and its competitors.
Afternoon at the Treasury
A few good lines from a senior treasury official as I recall the gist:
• “Markets believe we can borrow. The public doesn’t. We need both to move forward on the fiscal front."
• “Businesses are investing in a way that shows more confidence than they are talking.”
David Kennedy on the Great Depression
The latest EconTalk is David Kennedy discussing his book, Freedom from Fear, the Great Depression, and the parallels, if any between then and now.

Graph of the day
Voters Back Tough Steps to Reduce Budget Deficit
See: Food Stamps Cut?
See: Reining in Runaway Spending and Deficits
See also: A Need for Tax Reform

Book Excerpts
“ The greatest misfortune in America today is that most people do not understand that …when men are left free by the state to engage in productive action guided by self interest above all they do create the most efficient and powerful production system that is possible in their society” –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
The tax cuts that expire at the end of 2010 include marriage penalty relief that has been in place for a decade. The Joint Tax Committee estimates that 35 million couples will pay an average of $595 more in taxes in 2011 alone if marriage penalty relief is not extended.