Wednesday, August 25, 2010

8/25/10 Post

Morgan Stanley Says Government Defaults Inevitable
Investors will face defaults on government bonds given the burden of aging populations and the difficulty of securing more tax revenue, according to Morgan Stanley.
US New Home Sales Sink to Lowest Pace on Record
New U.S. single-family home sales unexpectedly fell in July to set their slowest pace on record while prices were the lowest in more than 6-1/2 years, government data showed on Wednesday.
Biden: 'We've seen this movie before'
VP criticizes Boehner as 'nostalgic' for Bush policies.
U.S. Durable Goods Orders Show Sign of Cooling Economy
Orders for U.S. durable goods increased less than forecast in July, a sign that one of the few remaining bright spots in the economy is cooling.
Credit Card Debt Drops to Lowest Level in 8 Years
The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002.
Lack of Jobs, Foreclosures May Keep U.S. Housing Depressed
Sales of new homes probably held at a 330,000 annual pace in July, the second lowest on record. Bernanke's helicopter could move to new altitude
In an all-out effort to get the economy moving again, Federal Reserve Chairman Ben Bernanke may be getting ready to take his money-creating helicopter to a new altitude.
10 states with ridiculously low unemployment
Every U.S. state experienced job losses during the recent downturn, but thanks to the right mix of industries, natural resources, and skilled workers, some states have a far lower unemployment rate than the 9.5 percent national average.
Workplace safety violations can't just be speeding tickets
Something is wrong with the citation system if companies with unsafe practices don't get penalized until after a disaster.
Colorado Budget Cut by $60 Million
Over the past three years, the governor and legislature have cut shortfalls totaling $4.3 billion.
More employers make 401(k) enrollment automatic
The percentage of employers that offer automatic 401(k) enrollment has increased dramatically to 38%. That's more than seven times the rate in 2005, when automatic enrollment was at 5%.
I.R.S. Plan to Uncover Companies’ Tax Strategies
Beginning next year, the agency plans to mandate that corporations also provide a brief description of their uncertain tax positions and their rationale, offering essentially a road map for its auditors.
100-plus tax breaks on the line
Leaving big tax decisions to the fourth quarter isn't unusual: Congress often waits for "the two-minute warning" before voting on so-called tax extenders.
Government Says Gulf Seafood Safe
More Gulf waters are reopening to fishermen, and government officials say seafood cleared for sale has been thoroughly vetted. Whether consumers are buying those assurances — and the fish — remains to be seen.
Biden slams GOP's economic plan
Biden slammed Boehner and Republicans, saying they lack a real economic agenda that would move the country forward. Calling for “truth in advertising,” the vice president called GOP claims about Bush-era upper-income tax-cuts “a myth.”
House Could Return to Fight Over Stem Cell Research
A fall battle is shaping up over embryonic stem cell research after a federal judge ruled Monday against President Barrack Obama’s executive order allowing the research under some circumstances.
Egg recall is a golden opportunity to whip food safety into shape
More than 500 million eggs have been recalled in recent weeks because of salmonella poisoning, an outbreak that originated at a pair of Iowa farms and has spread to at least ten states.
Britain, Germany Slash and Burn Spending Programs
Powerhouse Germany and debt-ridden England have slashed and burned through social programs to salvage the euro zone economy.
'Crisis of Confidence' Sparks a Commodities Selloff
Rotation Out of Riskier Bets Leads Investors to Dump Crude, Copper and Even Cocoa; Gasoline at Lowest Since Dec. '09.

A War We Can’t Afford to Lose
Succeeding in Afghanistan will require more patience from the American people. A summer of high casualty rates and reports about corruption of Afghan President Hamid Karzai’s administration are casting doubt among Americans about the effort.
This Just In: White House Disappointed with America…Again!
Disappointed in both America’s history and current situation, the UPR report declares to the world that the Obama Administration looks “to the future with pride and hope.”
Senators Exaggerate Number of Teachers’ Jobs in Jeopardy
In early August, when the U.S. Senate earmarked $10 billion to recover lost jobs in education, supporters of the measure claimed the money would save thousands of teachers’ jobs.
Obama to Gulf: Oil Ban Stays
When President Obama’s oil spill commission first met in July, they said that the President’s decision to ban oil drilling in the Gulf fell outside their mandate. But after a number of highly charged field hearing in the Gulf, the commission did a 180-degree reversal and promised to press the Obama administration about the ban.
The True National Debt
Fannie Mae and Freddie Mac must be included, pushing actual debt to $18.964 trillion.
Housing and Jobs: Underlying Problems Reemerging
The housing market and unemployment numbers will continue to worsen so long as we continue to delay recovery.
A Real Debate on Spending
From Washington’s perspective, extending current tax policy may look like a tax “cut,” but to American families paying the same amount in taxes next year as they do today, it is in no way a cut.
Biden’s Fatal Conceit
The White House’s misbegotten “Summer of Recovery” continued today with the release of another administration “analysis” that purportedly demonstrates the stimulus’s success in “transforming” the economy.
Economists React: Home Sales ‘Eye-Wateringly Weak’
Economists and others weigh in on July’s plunge in home sales.
ObamaCare on Campus
"Colleges and universities say that some rules in the new health law could keep them from offering low-cost, limited-benefit student insurance policies..."
Secondary Sources: Mortgage Funding, Japanese Deflation, Celebrity Forecasting
A roundup of economic news from around the Web.
Although much more mundane than the prospect of altruistic action heroes sweeping in to teach our children, giving parents choice (say, through tuition tax credits) will spark the many ordinary men and women working in K-12 schools to work harder and more creatively to educate their students.
S&P Cuts Ireland's Rating, Outlook Negative
The 10-year Ireland-to-German bond spread has risen to 318 bps, and is now above the peak during the European crisis in May.
Munger on rent-seeking
Mike talks about his recent trip to Chile and looks at how the reform of the Santiago bus system is going.
Sovereign Debt Wonkery
Think of the following as an analogy. A guy is paddling down a river without realizing that he is headed toward a waterfall. When is the last point that you can warn him in time so that he can paddle to safety? It depends on how fast the river is moving, how fast he can change direction, how strongly he can paddle, and so on.
Richmond Fed: Manufacturing Growth Continued to Ease in August
This is similar to the NY Fed and Philly Fed surveys - although the Philly Fed showed contraction in August. Growth in the manufacturing sector is clearly slowing.
Econ. 101
No permanent demand for housing was created by the program. The accelerated purchase of homes had to come at the expense of future sales. Instead of stimulating the demand for housing in the future, the program depressed it.
Home Sales Plunge In July
...we're going to have to work out the aftermath in months of low home sales.

Research, Reports & Studies
Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output From April 2010 Through June 2010
The Congressional Budget analyzes the impact of the American Recovery and Reinvestment Act on the economy over the past couple of months.
How Obamacare Empowers the Medicare Bureaucracy:
The Patient Protection and Affordable Health Care Act makes statutory changes that could challenge the autonomy of physicians to treat patients as they think best, undercut the freedom of physicians to remain in private practice, and threaten the continuation of fee-for-service medicine regardless of the preferences of doctors and patients.
More Than Lip Service: Why Private Sector Engagement Is Essential
Perhaps one of the most significant lessons learned from recent U.S. disasters is that the private sector is a critical actor in the homeland security enterprise.
RCM: Wells Fargo Economics Group: Existing Home Sales Plummeted in July
Existing home sales dropped 27.2 percent in July, which was well below expectations. The monthly decline was the largest on record. Payback from the tax credit is largely responsible for the sizeable decline.

Economists’ Comments & Opinions
The Deficit Is a Symptom, Spending Is the Disease
Sometime in the next week or so, the U.S. national debt will exceed $13.4 trillion. To put that in perspective: If you earned $1 every second, it would take you 425,000 years to earn enough money to pay off that debt. And it's not likely to get much better any time soon.
Central Banks: Heads They Win, Tails We Lose
Deflation is the cleansing of the speculative excesses and a return of general population profits back to their rightful owners -- the central banks and those behind them.
Stop the Madness
Washington is spending the country into economic decline.
Geithner and Summers Must Go
"Recovery Summer" turns out to be a dud, Geithner, Summers, Vice President Joe Biden and others have insisted that prosperity is just around the corner - and that if it's not, George W. Bush is to blame.
The Housing Mirage
Homeowner subsidies have only delayed the day of reckoning.
What’s Going On with Interest Rates?
What will happen to interest rates in the short run is a question that divides economists.
Obama's Housing Policies Are Killing Growth
These policies have stunted the spending of tens of millions of consumers who continue to pay high interest rates on unsecured mortgage balances which, absent those policies, would have been compromised and written off long ago.
Putting the Brakes on ObamaCare
How a Republican Congress could begin the process of repealing this unpopular law.
HELMER: Global warmists abandoned fact for fancy
To understand climate hysteria, we need look no further than the Watergate advice: "Follow the money."

Graph of the Day
Mercatus Center: Update: Stimulus Funds and Unemployment
See: Trading Places
See: Plunge in Home Sales Stokes Economy Fears
See: Global economy going nowhere fast
See also: Where the Stimulus (ARRA) Goes
See also: 29% vs. 16% - Found a Job, but How Good Is It?

Book Excerpts
"A people among whom there is no habit of spontaneous action for a collective interest—who look habitually to their government to command or prompt them in all matters of joint concern—who expect to have everything done for them, except what can be made an affair of mere habit and routine—have their faculties only half developed; their education is defective in one of its most important branches." –John Stuart Mill, Principles of Political Economy with some of their Applications to Social Philosophy (1848)

Did You Know
"Budget cuts are forcing police around the country to stop responding to fraud, burglary and theft calls as officers focus limited resources on violent crime. Cutbacks in such places as Oakland, Tulsa and Norton, Mass. have forced police to tell residents to file their own reports — online or in writing — for break-ins and other lesser crimes."