Friday, September 10, 2010

9/10/10 Post


News
Goolsbee to Lead Council of Economic Advisers
President Barack Obama will name Austan Goolsbee, a longtime adviser and an architect of his campaign's economic message, to be chairman of the White House Council of Economic Advisers at a White House press conference Friday, an administration official said Thursday night.
Corporate debt issuance at 3-year high
Corporations issued $33.7 billion in investment grade debt this week, the highest weekly amount since May 2008, according to an analysis conducted by Thomson Reuters. Thirty-five offerings were made, the most in about three years.
Wall Street Faces a Grim Third Quarter
Less activity in the stock and bond markets may crimp profits.
Obama Says Economic Progress 'Painfully Slow'
Facing the possibility of a GOP blowout in November, Mr. Obama insisted again that Bush-era tax cuts be extended for individuals earning over $200,000 a year and joint filers earning over $250,000. All the tax cuts are due to expire at the end of this year unless Congress acts.
6-figure jobs - no degree required
You don't necessarily need to go to college to make big bucks. PayScale.com ran the numbers and found these 6 jobs where top performers can earn $100,000 or more a year without a bachelor's degree.
Calif. controller says no immediate threat of IOUs
Controller John Chiang issued a statement Thursday saying monthly cash totals for August were high enough to remove the immediate threat of IOUs. His office had earlier indicated it might need to issue them this month... Last year, his office issued IOUs for only the second time since the Great Depression.
Ireland, Hungary Have Success in Debt Sales
Ireland sold just €400 million ($508.6 million) of treasury bills, at the bottom of its targeted amount of €400 million to €600 million, but it paid lower yields than previously. Hungary sold 40% more bonds than planned, although at higher yields than two weeks ago but with reassuring coverage ratios.
AMT: A Bomb that Could Grind the Economy to a Halt
The Alternative Minimum Tax, or AMT, a huge and largely incomprehensible tax, will hit almost 27 million households in the next few months if Congress fails to act.
Growth Currencies Get a Data Lift
An unexpected improvement in Australian unemployment levels sent the Australian dollar to a four-month high against the greenback. The Canadian dollar hit a three-week high as it continued to benefit from Wednesday's increase in Canada's target interest rates.

Blogs
The rule of law, or the rule of men (women)?
Nowhere is it stated that these [insurance premium] rate hikes are against the law (even if you think they should be), nor can this "misinformation" be against the law. Here is further information, including a copy of the [warning] letter [to insurance industry's top lobbyist from Kathleen Sebelius], which is worse than I had been expecting.
Jon Chait Admits Federal Employees Are Overpaid
...federal government employees are overpaid by around 12 percent relative to private-sector workers with the same education, experience, and other characteristics. Including benefits that comes to around $14,000 extra compensation per year, totaling around $40 billion annually.
Wholesales Inventories increase 1.3% in July
"Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $405.0 billion at the end of July, up 1.3 percent..."
Secondary Sources: Mortgage Crisis, U.S. and Japan, Productivity
A roundup of economic news from around the Web.
Pension Fact of the Day
...as the fraction of retirees goes up, so will the fraction of able-bodied retirees. In fact, we could maintain the status quo as long as people retired on the basis of how old they feel instead of how old they are.
On Comparing Tax Cuts to Social Security
To sum up: as I said in my follow-up post, the only reason the two numbers look even remotely similar is that they're using a present value calculation and a very long time frame. The present value calculation weights very near-term revenues and expenditures much more heavily than later ones; as a result, even though the expenditures on Social Security over the next 75 years are much larger than those on the Bush tax cuts for the wealthy in almost every time period, the early small surplus/small deficit of social security, and the fairly steady size of the Bush tax cuts, makes the present value much closer than the cash flows.
Education: First Cut, Then Improve
Strategically, my thinking is that a vast industry of researchers and activists is already trying to improve education. Competing with them isn't my comparative advantage. Instead, I should focus on the big reform that conventional researchers and activists Dare Not Name: Wasting less money on pseudo-investment in the nation's youth.
Political 'Thinking' on Stimulus
To my way of thinking, George Bush didn't do tax cuts because he cared about stimulus; he did tax cuts because he cared about tax cuts. And if Democrats had cared about stimulus, we would have gotten a stimulus bill that looked almost nothing like the one they actually delivered.
Double Digit Unemployment Rate early next year?
With growth slowing in the 2nd half (and into 2011), this means the unemployment rate will probably tick up too (unless the participation rate falls further).
What to Expect From Obama's Business Tax Cuts
Obviously, on the margin, this will make some investments more attractive, but I'd expect that effect to be swamped by the massive uncertainty surrounding the economy.
Prices Report Reality; Government Threatens to Shoot Messenger (Or At Least to Falsify the Message)
“Unreasonable” is too vague and subjective a standard for guiding a government agency that possesses the power to block price increases. While by definition any “unreasonable” action is questionable and likely harmful, there is in fact no objective way for government to distinguish reasonable price hikes from unreasonable ones.
Scary sentences
"It's not a good sign when the government has to intervene to prevent a run on a bank that is already owned by the government..."
Government Employment since 1976
Federal government employment has decreased over the last 35 years (mostly in the 1990s), state government employment has been flat, and local government employment has increased.
Stimulating $19,000,000,000 in New State Taxes
For every $1.00 in federal grants that a state receives today, the state can be expected to increase its own future taxes by somewhere between $0.33 and $0.42 in the future. Let’s assume it is the average of this range and that future state taxes will rise by $0.38 for every $1.00 in federal aid. If this is the case, then an additional $50 billion in “aid” to the states will cause states to raise their own future taxes by about $19 billion.
Austan Goolsbee to Head the CEA
Goolsbee was one of my favorite professors at the University of Chicago, and not merely because he's the most entertaining professor we had*. He's also one of the sharpest people I've ever met--he has a way of asking questions that cut through your fuzzy thinking to the heart of the problem.
Pension Reforms from California Progressive Leaders
California’s pension tsunami is a few years from decimating the cities. In 2015 it is estimated one-third of Los Angeles’ budget could go to pay for employee retirement costs.

Research, Reports & Studies
RCM: Wells Fargo Economics Group: July Trade Deficit Narrows Substantially After June Jump
The trade deficit narrowed substantially in July following the sharp widening in June. Exports rose while imports contracted after surging in June. Petroleum imports held steady while non-petroleum imports fell.
AEI Political Report
Less than two months before Election Day, voters may be ready to reshuffle the deck, but as the data below show, they are deeply dissatisfied with both parties.

Economists’ Comments & Opinions
Treasurys and the Danger of Short-Term Debt
More than 60% of U.S. debt is set to mature within the next three years.
The Genteel Nation
The first lesson from the economic historians is that we should try to understand our situation by looking for shifts in ideas and values, not just material changes. Furthermore, most fundamental economic pivot points are poorly understood by people at the time.
Why We're in for a Long, Hard Economic Slog
Evidence from 14 U.S. recessions shows that the economy doesn't recover until housing recovers.
Restoring America's Growth
A straightforward plan to restore national growth.
Obama Discovers Incentives
The president's proposed tax cuts for business are a welcome departure from Keynesian stimulus.
The naked stimulus: Why savings stimulate more than spending
The Obama administration's stimulus package may have boosted spending in the short-term, but savings have a more lasting impact on the broader economy.
From Zombie Banks to Zombie Mortgages?
Japan misallocated capital during its lost decade. How the U.S. can avoid its mistakes.
Obama Stimulus Money Goes Where Needed Least: Veronique de Rugy
With a few exceptions, the data show little correlation between the level of unemployment and stimulus spending. In fact, the opposite is true. The federal government has given far fewer stimulus dollars to states with high unemployment than it has to states with low unemployment.
The Obama Heyday Is Over
With so many Democrats running against the president's agenda in the midterm, change will come in the next Congress, regardless of which party is in control.

Graph of the Day
American Thinker: Widespread Deceleration
See: Americans' Wellbeing Declines for Third Consecutive Month

Book Excerpts
"One would think that with at least 250 sovereign external default episodes during 1800-2009 and at least 68 cases of default on domestic public debt, it would be relatively straightforward to find a comprehensive long-range time series on public sector debt. Yet this is not the case; far from it. Government debt is among the most elusive of economic time series." –Carmen M. Reinhart & Kenneth S. Rogoff, This Time Is Different (2009)


Did You Know
"Capitol Hill employees owed $9.3 million in overdue taxes at the end of last year, a sliver of the $1 billion owed by federal workers nationwide but one with potential political ramifications for members of Congress."