Tuesday, September 7, 2010

9/7/10 Post


News
Economy's looking up for now as double-dip fears ease
A steady flow of not-entirely-terrible economic news has eased worries of renewed recession and shifted the political spotlight from the Federal Reserve to the White House.
EU OKs new financial supervision deal
European Union nations agreed to create new financial oversight institutions Tuesday, hoping to prevent a repeat of the government debt crisis that nearly left Greece bankrupt and brought the European banking system to its knees.
Obama assails GOP, promotes new jobs program
A combative President Barack Obama rolled out a long-term jobs program Monday that would exceed $50 billion to rebuild roads, railways and runways, and coupled it with a blunt campaign-season assault on Republicans for causing Americans' hard economic times.
Nation's economic woes jeopardize Dems' prospects
Frustrated, discouraged and just plain mad, a lot of people who have lost jobs - or know someone who has - now want to see the names of Democrats on pink slips. And that's jeopardizing the party's chances in Ohio and all across the country in November's elections.
Ethanol's mid-life crisis
The sugar industry produces food, fuel and environmental benefits. How fast it grows may depend on an argument about how it should be regulated.
Retiring Fed Official Considers More Bank Action
The former vice chairman of the Federal Reserve, who retired last week after 40 years at the central bank, says that the economy is in “a slow slog out of a very deep hole,” and that the Fed should consider additional stimulus unless the recovery shows signs of “decent progress.”
Economy's modest gains met with irreverence
Polls show many people believe the economy is still in recession or getting worse. Most surveys show that people are as upset about the economy now as they were when it was in deep recession more than a year ago. Voters angry about the economy appear ready to boot out another crop of congressional incumbents for the second election in a row.
Once a Dynamo, the Tech Sector Is Slow to Hire
...as the nation struggles to put people back to work, even high-tech companies have been slow to hire, a sign of just how difficult it will be to address persistently high joblessness.
Indian nuke bill seen as bad for business
A bill approved last week by the Indian Parliament that holds suppliers of nuclear reactors and raw materials liable in the event of an accident is raising concerns that it will scare away foreign businesses from India's lucrative energy market.
Unemployment in U.S. May Rise Toward 10% on `Feeble' Growth
The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow quickly enough to employ people rejoining the labor force, according to economists at BofA Merrill Lynch Global Research and Morgan Stanley.
Small Businesses Feel Squeezed by Obama Policies
Tax increases are keeping small business owners from hiring.
Wall Street Needs `Off-the-Charts' September to Rescue Quarter
After two months bankers would like to forget, Wall Street may need a September to remember to avoid closing the books on the worst quarter for investment banking and trading revenue since the peak of the financial crisis.
Obama to introduce another business tax cut
In another move aimed at stabilizing the still-shaky economy, President Barack Obama on Wednesday will introduce a new $200 billion tax cut giving businesses across the country an incentive to buy new equipment in the short term.
Taxpayer Identity Theft Rises 460 percent
The IRS office that advocates for individual taxpayers is receiving more cases than ever and is processing them more slowly, a report finds.
Four unexpected economic bright spots
Good economic news has been hard to come by lately, but not all is doom and gloom in America these days. The end of summer ushered in a few signs of progress in some of the unlikeliest corners of the economy.
81% rate U.S. economy as 'poor'
A new national poll released Sunday indicates that eight in 10 Americans say that the economy is in poor shape, and the number that say conditions are very poor is on the upswing after steady declines through the spring.
Study says that up to a point, money really can improve happiness
Researchers report: People's emotional well-being - happiness - increases along with their income up to about $75,000.
Homeless Outraged That $1 Menu at San Francisco McDonald's Now 50 Cents More
Such price hikes might be met by a grumble and a shrug elsewhere, but in bohemian Haight-Ashbury, street people are up in arms, saying they rely on the dollar deals to survive.
Future hiring will generate mainly high-skilled or low-paying jobs in service industries
Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into these two categories.
Bush Tax Cuts Showing Some Bipartisan Vigor
The political environment surrounding tax cuts has become almost unthinkable for Democratic leaders and President Obama as Election day approaches.

Blogs
Obama’s New Stimulus Schemes: Same Song, Umpteenth Verse
Like a terrible remake of Groundhog Day, the White House has unveiled yet another so-called stimulus scheme. Actually, they have two new proposals to buy votes with our money.
‘Government Efficiency’
I recently criticized the idea that policymakers should focus their attention on making government more “efficient.” Instead, I argued that policymakers should focus their reform efforts on reducing government’s size.
The Obama Tax and Spend Hikes
26% of voters think the economy is going to be better in the next year, and 61% think the country is on the wrong track.
Not Enough Labor Day
How the government is destroying jobs
Reclaiming Rights
The never-ending struggle to go about your business without fear of government sanction
Labor Day Has Become Government Day
This Labor Day marks a milestone in the history of the U.S. union movement. It is the first Labor Day on which a majority of union members in United States work for the government.
While Unemployment Rises, 15 Minutes to Tee Time
President Obama, who has already tried a massive and massively ineffectual stimulus bill followed by a series of policy gimmicks has announced that, once again, he is focusing intently on the economy.
The Obama Budget: Expanding Welfare, Undermining Marriage
How can the government grow the nation’s welfare roles and undermine efforts to support marriage, in a single effort?
New Study Says Cash for Clunkers Was … a Clunker
Although it’s impossible to know what the economy would have done absent cash-for-clunkers, the authors of the study attempted to do so by analyzing “parts of the U.S. where, for one reason or another, there were almost no clunkers on the road when the program took effect. By comparing sales in those areas to sales in more clunker-rich parts of the country, they were able to estimate the program’s effects.”
Home Equity Lines of Credit: The Next Looming Disaster?
An in-depth look at these second liens and the dangers they pose for the housing market and large banks.
A Small Step in the Right Direction
...businesses would be able to fully and immediately deduct the cost of equipment, rather than having to gradually deduct the cost via depreciation allowances.
Unnecessary ER Visits
People who thought that we could end unnecessary ER visits by expanding access to primary care underestimated the vast reserves of American health paranoia.
How did America pay for World War II?
File under "Reasons why WWII does not provide a good case for massive fiscal stimulus today."
Jobs Surge for the Class of 2010
In fact, young adults between the ages of 20 and 24 enjoyed the greatest increase of all Americans counted as being employed by age group.
War is bad for children, other living things, and the economy
That’s the biggest and most dangerous economic myth of all time, the idea that war stimulates the economy. War stimulates the military sector of the economy.
Duration of Unemployment
In August 2010, the number of unemployed for 27 weeks or more declined significantly to 6.249 million (seasonally adjusted) from 6.752 million in July. It appears the number of long term unemployed has peaked, but it is still very difficult for these people to find a job - and this is a very serious employment issue.
Heterogeneous Labor
Labor, like capital goods, is specialized and specific to certain occupations. When those occupations disappear in recession, the next best alternative immediately available locally may pay considerably lower wages. Workers may “know” they have better alternatives, but their knowledge capital has also depreciated with the crisis and downturn. They must search for employment opportunities.
Broadening Economics Education
Absorbing a broader perspective would encourage tolerance for a variety of methods and a greater appreciation for the complexities of economic policy.
Finding What You're Looking For
One of the things I find most wearying about writing about economics is the extent to which people attempt to hijack economics to "scientifically prove" that their value judgements about things like the proper size and role of government are 100% factually correct--as if there were some way to empirically validate the correct marginal tax rate for people making over $100,000 a year.
Unofficial Problem Bank List increases to 844 institutions
On August 7, 2009, we listed 389 institutions with $276 billion in assets, and now the list has 844 institutions and $412 billion in assets.
Consumption Spending Is 70 Percent of GDP — So What?
...our crying need at present is for a robust revival of private long-term investment. Consumption-oriented government “stimulus” programs, at best, only ensure a protracted period of economic stagnation.
Earthquakes As Economic Phenomena
It will be interesting to see the response of government officials in Christchurch. Official policy response can either slowdown recovery (as it happened in New Orleans in 2005) or it can foster it.
The Medicare Fraud in Our Future
Scam artists get lists of patients, lists of expensive items they can bill to Medicare, and a bank account. Then they go to town and steal tens of millions of dollars.
Schedule for Week of September 5th
This will be a light week for economic data. The trade deficit for July on Thursday is probably the key release.
Temper, Temper…
Tea Partiers aren’t upset because Obamacare hasn’t worked its miracles yet; they’re upset because they believe that Obamacare will create inordinately burdensome costs and other ills in the future. Stimulus opponents aren’t up-in-arms because the economy isn’t “all better” already; they’re up-in-arms because they worry about the high debt burden and inflation that today’s stimulus makes more likely tomorrow.
Unemployment Rate and Level of Education
Note that the unemployment rate increased sharply for all four categories in 2008 and into 2009.
Secondary Sources: Rural Stimulus, Housing, Liability and Risk
A roundup of economic news from around the Web.
Update: Total people receiving unemployment benefits
That is an increase of almost 2 million people receiving aid since the program was reinstated... There are another 4.1 million people receiving regular unemployment benefits (NSA). So the total is close to 10 million (NSA).

Research, Reports & Studies
Cut or be Cut
This collection of eight essays by Reason authors from the Washington Times series “Cut or Be Cut”, illustrates just a small fraction of how “government as usual” is spending your tax dollars.
Heritage Employment Reports: Summer Slowdown of Jobs Continues in August
The unemployment rate increased from 9.5 to 9.6 percent. This was in part because participation in the labor force increased from 64.6 to 64.7 percent as 550,000 workers entered the labor market. The participation rate is unchanged from the start of the year but down 0.5 percent from April.
Obama Tax Hikes Defended by Myths and Straw Man Arguments: Summary
Raising taxes now or in the future is the wrong course. Projected deficits are due to excessive spending, not a dearth of revenues. The arguments for defeating the tax increase are sound. Proponents of raising taxes have offered many straw man arguments and myths to support their case.
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
U.S. Review: Stability at Low Altitude.


Economists’ Comments & Opinions
'Stimulus' Snake Oil
Those who argue that the US unemployment rate, still stuck at 9.6 percent, is reason to try "a second fiscal stimulus" to raise "aggregate demand," are wrong in many ways.
The Biggest Bubble-Makers
Amid signs that another financial bubble might be in the making — this time involving U.S. Treasury bonds priced at about 100 times their yield — it would be helpful to review what one might call bubble dynamics.
Housing Crisis? Look to Canada for Answers
President Barack Obama has tried to prop up the housing market by helping people stay in their homes, even though they're still overwhelmed with mortgage debt. This is the latest in a long series of government interventions intended to promote homeownership.
Your Fat Paycheck Keeps Neighbors Unemployed
Some observations perfectly at home in economics textbooks can be so beastly in practice that nobody is willing to mention them. Ignoring the facts, though, leads to bad policies, and with the U.S. unemployment rate at a stubborn 9.6 percent, we don't need more of those.
A Speech from the Far Side: What Our Enemies Heard
Obama’s speech from the Far Side…what was really said.
ORSZAG: One Nation, Two Deficits
It would be tough, then, to squeeze more than a half percent of G.D.P. from spending by 2015. Additional revenue — in the range of 0.5 to 1.5 percent of the economy — will therefore be necessary to reduce the deficit to sustainable levels.
Bad Medicine Begets Bad Economy
Government policy mistakes bring on crises; the correction of those mistakes will quickly cure them.
The Obama Economy
How trillions in fiscal and monetary stimulus produced a 1.6% recovery.
Factchecking the Democratic Leadership on Jobs
Economists now attribute a chunk of the decline in the jobless rate to 9.6% versus 10.1% in October ’09 to the 1.4 million people who left labor force since May. Add in 1.4 million people, and the jobless rate zooms higher to 10.3%, says Miller Tabak strategist Dan Greenhaus.
Masking the level of job losses
...331,000 people lost full-time jobs and are now working part-time, not because they want to do so, but rather because their employer had to cut back.
Paranoid About Paranoia
But obsessing about the paranoia of the masses is often a way for American elites to gloss over their own, entirely nonsymbolic failures.
More on Small Businesses and the Administration
It’s really fascinating that in the face of all its previous failures, the administration continues in the same direction.
Washington and the 'Recovery Summer' That Wasn't
The nation's capital endures recessions with less discomfort than anywhere else, and that's truer than ever today.
Will Unemployment Continue to Climb?
A look at the factors that will continue to depress employment and indicate weak economic growth.
Now the Bad News: Those August Jobs Were Rented
Despite what some on Wall Street say, the August jobs report shows little hope for recovery.

Graph of the Day
Mercatus Center: Job Creation Update
See: When the GOP Wrote Federal Budgets
See also: Government Spending as a Share of Gross Domestic Product
PODCAST: Kling on Knowledge, Power, and Unchecked and Unbalanced

Book Excerpts
"A major problem of our time is that people have come to expect policies to produce results that they are incapable of producing. …we economists in recent years have done vast harm—to society at large and to our profession in particular—by claiming more than we can deliver. We have thereby encouraged politicians to make extravagant promises, inculcate unrealistic expectations in the public at large, and promote discontent with reasonably
satisfactory results because they fall short of the economists’ promised land." –Milton Friedman, “Have Monetary Policies Failed?” (1972)

Did You Know
Only 47.6% of people ages 16 to 24 had jobs in August, the lowest level since the government began keeping track in 1948, according to the Labor Department. By comparison, 62.8% of that age group was employed in August 2000.