Friday, September 3, 2010

9/3/10 Post


News
'Recovery Summer' Ends With Economic Pothole
This was supposed to be the season the economy heated up, thanks to a wave of public works projects, funded by the government's stimulus program. But summer is coming to an end, and the recovery has not taken root.
White House considering emergency economic stimuli
Administration officials have been huddling almost continuously during the past week, brainstorming for ideas that would boost employment without hiking the massive federal deficit – with Treasury Secretary Tim Geithner rushing to the West Wing for further consultations late Thursday.
A slight reprieve?
Extending the cuts for a while may turn out to be prudent policy.
Wheat Rises on Russian Export Ban; Mozambique Riots
Wheat rose in Chicago after Russia, the world’s third-largest grower, extended a ban on grain exports into next year, raising the prospect of higher food prices that already have sparked riots in Mozambique.
Bernanke out of moves, critics say
With interest rates near zero and the Federal Reserve already owning a large share of the mortgage and Treasury securities markets, many investors fear the central bank may be out of ammunition should the economy take a serious turn for the worse.
GAO: State, local governments 'will steadily decline'
"... closing the fiscal gap over the next 50 years would require action to be taken today and maintained for each and every year going forward equivalent to a 12.3 percent reduction in state and local government current expenditures. Closing the fiscal gap through revenue increases would require action of a similar magnitude ...."
Obama loses backing on taxes
Defying President Obama, Congress seems increasingly reluctant to let taxes go up, even on wealthier Americans.
Jobs Suspense Keeps Dollar Down
The dollar declined modestly against the euro and yen Thursday, with investors unwilling to stake out new positions ahead of the August U.S. employment report.
Bernanke: Shut down banks if they threaten system
Federal Reserve Chairman Ben Bernanke told a panel investigating the financial crisis that regulators must be ready to shutter the largest institutions if they threaten to bring down the financial system.
July factory orders edge up as strong demand for aircraft offsets weakness in other sectors
Factory orders edged up 0.1 percent in July, the first increase after two months of declines. But the strength came in the volatile transportation sector. Excluding transportation, orders were down 1.5 percent, the biggest drop in this category in 16 months.
Budget Woes: Lessons for Washington from California
California’s budget mess has lessons for Washington: Move fast to slow the growth of government pensions, and broaden the tax base.
Struggling youth crime prevention groups see salvation
A $1.6 billion congressional bailout of sorts could help financially flailing groups that fight to keep young people out of trouble, yet lawmakers are reluctant to take up the expensive proposal amid a sour economy and other, more pressing issues.
President Obama versus the world on jobs
For a president elected on a promise of showing a kinder American face to the world, Barack Obama doesn’t seem to mind throwing a few elbows at allies and rivals alike when it comes to the economy.
Democrats Retreat from Increasing Taxes on the Rich
Worried about the fragile economy and their own upcoming elections, a growing number of Democrats are joining the rock-solid Republican opposition to President Barack Obama's plans to let some of the Bush administration's tax cuts expire.
Few options for Barack Obama on 9/11
The White House has not yet announced the president’s plans for next week, though a source familiar with the matter was doubtful Obama would travel to New York.
Chamber Urges Extension of Bush Tax Cuts
The U.S Chamber of Commerce called for an extension of the Bush tax cuts at its annual Labor Day briefing.

Blogs
Broader U-6 Jobless Rate up to 16.7%: Why the Jump?
The U.S. jobless rate rose to 9.6% in August, but the government’s broader measure of unemployment rose even more to 16.7%, the highest rate since April.
Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks
The Employment-Population ratio increased to 58.5% in August from 58.4% in July.
Relief in the Temp Sector
The temporary-help services sector added 16,800 jobs in August, the government said Friday.
Take This Job and Love It
"Employed workers are less fearful of losing their jobs than they were last year, but worries about cuts in benefits and work hours loom larger this year."
Greece: Default Probabilities before and after policy response
...now - after further analysis - the default probabilities have increased for longer time frames...
Lessons in Crony Capitalism
The United States is exploiting our economic system around the world!
The Audacity of Failure
By every objective measure, President Barack Obama’s economic stimulus package has been a complete failure. According to the latest jobs report, total U.S. employment stood at 130.3 million in August, which means the cumulative Obama jobs deficit stands at 7.5 million.
The Repeal Windfall
As November approaches, Obamacare’s defenders are quite plainly desperate. They see public opinion solidly against them, and a devastating election fast approaching.
U.N. Throws $290 Million Lifeline to North Korean Regime
North Korea can count on at least one ally. As reported by FoxNews, “the United Nations is laying plans to spend more than $290 million on a welter of programs in the communist state.” The chief U.N. organizations involved in this effort are: United Nations Development Program (UNDP), UNICEF, the World Food Program (WFP) and the World Health Organization (WHO).
Social Security: Waving the Bloody Shirt Will Delay Needed Reform
Now, it’s liberals who are “waving the bloody shirt,” this time through wild exaggerations of conservatives’ plans for Social Security reform.
How Burger King Lost Its Crown
The fast food chain, which has never been able to fully compete with McDonald's, was sold to 3G Capital for $3.26 billion
Second Gulf Explosion Doesn’t Take Away Need for Drilling
What exploded was not a drilling rig but a production platform. AP reports that the shallow-water platform was not producing oil at the time of the explosion, although the well does normally produce approximately 58,800 gallons of oil and 900,000 cubic feet of gas per day.
Important Manufacturing Indicators Look Weak
Recently released data indicate prolonged economic weakness and a continuing decline in factory orders and the build-up of inventories.

Research, Reports & Studies
Most 'Re-employed' Workers Say They're Overqualified for Their New Job
An estimated 26% (or 36 million) of the 139 million currently employed workers in the United States suffered at least one spell of unemployment during the Great Recession that began in December, 2007.
Are Economists Human?
...analyzes the apparent inability of professional economists to give a better than chance response to a very elementary question about consumer surplus.
Indian Planning and Development Economics
The growth of the Indian economy under Nehru‘s socialism, as we will see, was disappointing. More vigorous growth awaited the liberalization of the economy that began in the 1980s.
The New Face of the Union Movement: Government Employees
The American union movement has reached a historic milestone—more union members currently work for the government than for private businesses.

Economists’ Comments & Opinions
The Small Business The 97% Fallacy
The president's plan to raise top marginal rates is holding back the very people who should be leading the economic recovery.
It Isn't Just Lost Jobs—It's the Lost Jobs Machine
The American economy hasn't been a very robust jobs-producer for quite a while. That's the broader question that needs to be discussed, even as we work on the immediate problem.
120 Days to Go Until the Largest Tax Hikes in History
In just 120 days, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011.
Cantor: Beware of the Obama tax increases
Listening to the Democrats this summer, you're unlikely to hear about an impending tax increase.
Should US government debt be rated junk?
The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall.
Global Economy's Second Day of Reckoning
On the second anniversary of the Lehman crisis, the world economy finds itself yet again at a very troubling juncture.

Graph of the Day
August jobs report
See: Employment Rate Cause for Alarm
See: Monetary Illusions
See: 45% - Unemployment Ain't All Bad
See Also: U.S. Underemployment at 18.6% in August

Book Excerpts
"In the 1962 Report of the Council of Economic Advisers, full employment was officially defined to be present when there was a 4-percent measured rate of unemployment. This was, however, taken to be only some interim rate, with the long-run objective rate considerably lower. The much-discussed Humphrey-Hawkins bill in 1976 set out a 3-percent target rate, to be attained within four years. Historically, however, unemployment in the United States has only infrequently, and then only temporarily, fallen below 4 percent. During the sixty-three-year period after the creation of the Federal Reserve System, the period 1913-1975, there were only twenty years in which unemployment averaged 4 percent or less. Ten of these years—1918, 1943-1945, 1951-1953, and 1966-1968—occurred during periods when the United States was at war, although the mobilization was not so intense in the latter two periods as it was in the former two. The normal rate of unemployment, though unmeasurable, would appear to lie somewhat above 4 percent. During the fifteen-year period 1946-1960, a period that included both moderate mobilization and moderate recession, as well as predating the full Keynesian conversion of our politicians, unemployment averaged 4.5 percent. Even if we could make the heroic assumption that the institutional-structural features affecting employment have remained invariant over the long periods noted, it would seem clear that the "normal" rate of unemployment lies considerably above 4 percent. And, of course, it would be illegitimate to make such an assumption of invariance through time. Both demographic shifts within the labor force (toward younger and female workers) and policy changes (unemployment compensation, extended minimum wage coverage, increases in welfare payments and retirement support) have had the effect of increasing the level of unemployment that would be consistent with any specified rate of inflation." –James M. Buchanan and Richard E. Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes (1977)

Did You Know
Americans will take to the roads and skies for the Labor Day holiday in greater numbers than a year ago, thanks to low gas prices and pent-up demand for air travel, experts say. Auto club AAA projects a 10% increase in holiday travelers over last year. About 34.4 million people are likely to take trips of at least 50 miles.