9/29/10 Post

BUZZ: Home Prices Edge Up But Outlook Darkens

News
Schaumburg Votes to Lower Property Taxes
The village of Schaumburg bucked the national trend of raising taxes and fees to cover rising expenses when its board unanimously approved a 4.4 percent reduction to the 2010 property tax levy.
French budget makes 'historic' spending cuts
President Nicolas Sarkozy's government launched a "historic" attack on France's soaring overspending on Wednesday, unveiling a budget which closes tax loopholes and imposes unprecedented spending cuts.
Dollar tumbles, gold hits record high
The dollar sank against the euro and hit a record low point against the Swiss franc on Wednesday while gold struck a new all-time peak, as traders mulled possible US moves to boost its ailing economy.
CEOs less willing to hire, sales a worry
U.S. chief executive officers' view of the economy darkened in the third quarter, with top executives saying they were less willing to hire new workers as they fear sales growth will slow.
Haitians suffer as U.S. aid is stuck in red tape
Nearly nine months after the earthquake, more than a million Haitians still live on the streets between piles of rubble. One reason: Not a cent of the $1.15 billion the U.S. promised for rebuilding has arrived.
Senate advances bill aimed at averting shutdown
A stopgap spending bill that's needed to avert a government shutdown on Friday advanced in the Senate as lawmakers prepared to head for the exits for the midterm elections.
House set to approve bill on China’s yuan
The House of Representatives is poised on Wednesday to pass legislation to pressure China to let its yuan currency rise more quickly, fanning the flames of a long-running dispute over trade and jobs.
Inhofe Says EPA's New Boiler Rule Could Kill Nearly 800,000 Manufacturing Jobs
The top Republican on the Senate environmental panel released a scathing report Tuesday that he contends shows that the Environmental Protection Agency's new proposed rule on cleaning up boilers nationwide could devastate America's manufacturing base and imperil hundreds of thousands of jobs without providing any real public health or environmental benefits.
Why Gold is Soaring
Gold has topped $1,300 an ounce for good reason. The Obama administration has flooded the world with greenbacks and Treasuries, global investors have little confidence in the management of the U.S. economy, and investors have taken refuge in gold.
Southwest's AirTran Acquisition May Bring Higher Ticket Prices
Southwest Airlines Co.’s planned purchase of AirTran Holdings Inc. may lead to higher ticket prices as a low-fare competitor is eliminated and the merged carrier works to make up for higher costs.
Recession's Toll in U.S. Ranged From Incomes to Marriage, Census Data Show
The worst U.S. recession since the Great Depression last year hurt almost every part of American life, from household finances to marriage rates and teenage employment, according to Census Bureau figures.
Final Senate jobs bill fails
The jobs agenda put forth by Senate Democrats has begun to lose support within their own caucus, including a Tuesday vote in which a bipartisan filibuster defeated a bill to stop jobs from being shipped overseas.
EU proposes tougher budget rules
The European Commission proposed new penalties for countries that spend themselves into debt in hopes of preventing another crisis like the one that pushed Greece ot the edge of bankruptcy and shook confidence in the euro.
Deficit-cut panel convenes amid skepticism
With just two months left before it has to issue a final report, a U.S. commission looking at ways to cut the federal deficit was to meet again on Wednesday amid questions about its hard-headedness.
Treasury nears plan to exit AIG
The U.S. government and AIG are finalizing a plan for how the Treasury Department would exit its majority stake in the insurance giant, according to several published reports.
Tax cuts: Extend them but beware
The problem is that if those tax cuts are not accompanied by other changes in the government budget, and are simply funded through borrowing, that borrowing crowds out other private investment in productive capital ... the computers, the machinery, the buildings, that are the source of long-term economic growth.
Small business for Congress!
Small business people are frustrated. They don't feel like Congress, specifically, and the government, generally, gets what they need, especially in a difficult economy
25 percent increase in depression cases along Gulf Coast since massive BP spill
A Gallup survey released Tuesday of almost 2,600 coastal residents showed that depression cases are up more than 25 percent. The conclusions were consistent with trends seen in smaller studies and witnessed by mental health workers.
Oil prices rise as corporate deals encourage investors, gas pump prices continue down
Benchmark crude for November delivery rose 13 cents to $76.66 a barrel in midday trading on the New York Mercantile Exchange. At the pump, the national average for a gallon of regular dipped to $2.691 on Tuesday. That's 3 cents lower than a week ago, although it remained 19.2 cents higher than a year ago.
Fate Of Fannie, Freddie Could Test Limits Of GOP Pledge
Beneath the bold promises of the GOP's Pledge to America rests the tough task of implementing policy. And on that front, a battle over housing policy offers a glimpse of how difficult it may be for House Republicans to carry forward their goal of smaller government in the next Congress.
Stimulus, Deficit Drive Debate At Workforce Conference
Experts on both sides of the chasm separating deficit reduction and economic stimulus argued Tuesday over the best solution to the hot-button issue of economic recovery.
Gulf leaders push to revive economy
Now that the oil has stopped flowing in the Gulf of Mexico, renewed economic development efforts have begun along the Gulf Coast.

Blogs
Do You Hold These Truths?
For more than 200 hundred years, America’s first principles—liberty and equality, natural rights the consent of the governed, private property, religious freedom, the rule of law and constitutionalism—have defined us as a nation and united us as a people.
Secondary Sources: Currency Manipulation, Jobs Bill, Asia vs. Latin America
A roundup of economic news from around the Web.
Leaving Children Behind? It’s Time to Embrace Online Education
It’s 2010, but you wouldn’t know it from looking at the American school system. Technological advances that we all take for granted in our homes, offices, and cars have yet to fully make their way into our children’s classrooms.
MBA: Mortgage Applications Purchase Index increases slightly
"The Refinance Index decreased 1.6 percent from the previous week, which is the fourth straight weekly decrease. The seasonally adjusted Purchase Index increased 2.4 percent from one week earlier."
Congress Again Creates Confusion and Again Harms the Economy
The inability of Congress to stop the Obama tax hikes is already having a real, negative impact on the U.S. economy. Businesses are delaying hiring and investment decisions because they do not know what their tax liability will be next year. Even tax experts have noticed the incredible amount of confusion that now exists as Congress flees D.C. without preventing the tax hikes.
CEOs Grow More Pessimistic
A third-quarter survey of chief executives showed they predict the economy will grow 1.9% this year, down from their 2.7% estimate last quarter, the Business Roundtable, an association of U.S. CEOs, said Tuesday.
Side Effects: Doughnut Hole Deal Not so Sweet
Currently 3.4 million Americans seniors covered by Medicare find themselves in a giant “doughnut hole,” but despite the tasty terminology, there’s nothing sweet about it.
Krugman Mangles Smith
In fact, as Smith’s example of the laborer’s woolen coat shows, he thought of the real division of labor as being carried out across the whole globe, across many, many years, and among a multitude of enterprises. Whereas Smith saw the progress of the division of labor as depending on the “extent of the market,” Krugman translates that to “the size of the factory”!
The Protectionist Threat of Another Great Depression
A financial bubble fueled by easy money and loose credit bursts. Unemployment shoots up, and gross domestic product falls sharply. Some in the U.S. Congress blame foreigners for unfair trade practices and pass a trade bill that prompts widespread retaliation, exacerbates the popping of the bubble, and sends the country into further economic trouble. That is what happened with the Wall Street Crash of 1929, the Smoot–Hawley Tariff Act of 1930 and the Great Depression.
Why Don't U.S. Corporations Threaten to Exit?
Within the U.S., there is some evidence that economic activity has shifted away from business-hostile "blue" states to business-friendly "red" states. To the extent that this is true, it does not seem to have caused politicians in blue states to switch colors.
Estimate of Decennial Census impact on September payroll employment: minus 78,000
The Census payroll decreased from 83,955 for the week ending August 14th to 6,038 for the week ending September 18th.
If Not Fannie, then Who?
We devote too much capital to mortgages, at the expense of more productive sectors of our economy.
End Drug War, Save Billions in Wealth
A new Cato Institute report examines the budgetary impact of ending the drug war and concludes that $88 billion could be saved each year (about $41 billion from canceled spending and about $47 billion in new tax revenue).

Graphic of the Day
Fixing Europe's Single Currency
See: Dealing with Debt
See also: U.S. Economic Confidence Remains Steady at 2010 Low

Economists' Comments & Opinions
The Pelosi-Reid Deficits
Blame Congress, not presidents Bush or Obama, for our perilous fiscal situation.
First, Do No Harm--But Please Do Something
If Congress wants to get serious about the jobs challenge ahead, the sooner we pass it, the better.
40 Years of Energy Panic
We seem to get all the oil we want at a price we're willing to pay.
Cut Taxes and Help Government Steal Less
Progressives want to raise taxes on individuals who make more than $200,000 a year because they say it's wrong for the rich to be "given" more money. Sunday's New York Times carries a cartoon showing Uncle Sam handing money to a fat cat. They just don't get it.
Department of Disinformation
Sebelius tells a North Carolina fairy tale.
Why the Statistical "Recovery" Feels Bad
The alleged recovery is nothing more than an illusion caused by unsustainable deficit spending.
The Light Bulb Switchover: In the Dark
So, are you ready to comply with the federal government’s ban on incandescent light bulbs? Starting in January 2012, a little over a year from now, the phase-out begins.

Research, Reports & Studies
Making Budget Rules Work
Congress faces two sets of problems, a commitment problem and an enforcement problem, that prevent well-meaning legislators from effecting change.
Going Cold Turkey
Most of the plans put forward for replacing Fannie Mae and Freddie Mac involve some continuing role for the government in housing finance. The reasons behind these plans are less than persuasive, and recent experience has shown that the moral hazard created by the government's presence in the housing-finance market can produce catastrophic results for taxpayers.
RCM: Wells Fargo Economics Group: Consumer Confidence Falls in September
The Consumer Confidence Index fell 4.7 points in September to 48.5. Both the current conditions and expectations series declined during the month, and the labor market components of the survey weakened.

Book Excerpts
"The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources — if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality." –F.A. Hayek, "The Use of Knowledge in Society" (1948)

"Did You Know"
The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008, a 3% real increase over five years, to about 14% of U.S. national income. This cost is in addition to the federal tax burden of 21%, for a combined cost of 35% of national income. One out of every three dollars earned in the U.S. goes to pay for or comply with federal laws and regulations, and new policies enacted in 2010 for health care and financial services will increase this burden.