Friday, October 8, 2010

10/8/10 Post


News
America's $4.6 trillion retirement hole
Americans are woefully unprepared to pay for retirement, according to research released Thursday. On average, U.S. workers would need to have an additional $48,000 when they retire at 65 to ensure they don't run shy of cash in retirement.
Tax-slashing proposals scare GOP, Democrats
While many states are wrestling with billion-dollar budget deficits, Colorado voters are being asked to adopt ballot initiatives that would ban borrowing for public works, cut the income tax and slash local property taxes.
Waiting For The Ax
This morning's jobs report doesn't appear likely to salvage democrats' election prospects.
Rory Reid Warns That Health Care Law Poses Risk to Nevada
Son of Senate Majority leader Harry Reid (D-Nev.), said “The law that was passed gives time for the new system to go into effect but there is potential for it to put significant pressure on states because Medicaid rates could go up significantly.”
Federal judge upholds health care law
U.S. District Court Judge George Steeh ruled Thursday that the so-called individual mandate falls squarely within Congress’s ability under the Constitution to regulate interstate commerce.
Government spending rises 9%
Basic government spending rose by 9 percent in fiscal 2010, driving the country to a $1.291 trillion deficit down $125 billion from 2009, but still the second-largest hole on record, the Congressional Budget Office said Thursday.
$4.6 million bridge being built by the state for horses
While hundreds of Massachusetts bridges are in need of serious repairs, one bridge is being replaced even though nothing heavier than a horse is expected to go over it.
Dollar Falls Below 82 Yen for First Time Since 1995 After Payrolls Report
The dollar dropped below 82 yen for the first time since 1995 as the U.S. payrolls report showed employers cut more jobs last month than economists forecast.
2010 deficit near $1.3 trillion
The federal government ran a deficit of nearly $1.3 trillion in the fiscal year that ended Sept. 30, according to preliminary estimates released Thursday by the Congressional Budget Office.
N.J. governor kills Hudson River tunnel project
New Jersey Gov. Chris Christie killed plans for a new train tunnel to connect his state with New York's Manhattan island Thursday, saying billions of dollars in possible cost overruns made the project "completely unthinkable."
US Chamber spends more than $10 million on ads
The U.S. Chamber of Commerce this week is airing more than $10 million in advertising in some of the most competitive House and Senate races, a massive infusion by the business lobby against Democratic candidates in about 30 contests.
Will paying with plastic cost you more?
On Monday, the Department of Justice came to a settlement agreement with Visa and MasterCard. The decision was a long time coming (two years), and the details are fairly complex. The upshot for consumers is simple, though: Merchants are now allowed to create pricing tiers based on how you pay, so pulling out the plastic could cost more than paying cash.
Obama vetoes bill to speed foreclosures
President Obama won't sign a bill that could have made it easier for courts to clear foreclosures, the White House said Thursday. The bill would have required federal and state courts to recognize documents that were notarized in other states.
Delays to Tax Tables May Dent Paychecks
Even if Congress plans to extend current tax rates, it needs to do so quickly to avoid disruptions. There are enough differences between 2010 and 2011 numbers, such as inflation adjustments, that payroll executives still need weeks to update and test their systems.
IMF chief says China, others may see currency as a 'weapon'
The head of the International Monetary Fund on Thursday said that China's currency is "substantially undervalued" and that he feared countries had begun viewing exchange rates "as a weapon" in the competition for economic growth.

Blogs
At the Mercy of the Obama Tax Hikes
When will the Obama administration admit their economic stimulus plan, which cost more than the Iraq war, failed?
The Real Scandal of the Foreclosure Mess
...good land titling is important. It is also emergent. When there are changes in the marketplace, we need new legal mechanisms for dealing with any resulting irregularities.
You Can’t Tax the Rich Enough to Close the Deficit
President Obama has driven spending and deficits to historic levels in just two years since taking office. Not content to stop there, his budget for the next 10 years keeps spending at record levels and piles up unprecedented amounts of debt in the process.
What’s Holding Employers Back?
The number of people employed part-time for economic reasons was 9.5 million in September, up 612,000 from the prior month. In the past two months the number of involuntary part-time workers has jumped by 943,000.
Fear – of Greenspan
As Greenspan observes, “Fear Undermines America’s Economy.” Fear of inflation. Fear of deflation. Fear of higher taxes. Fear of generalized governmental foolishness.
Obamacare vs. the Rule of Law
According to Bloomberg News McDonald’s had sought, and eventually won, a waiver from the upcoming Obamacare regulations. This allows them to continue providing health insurance coverage to 115,000 workers. In fact, McDonald’s workers were just some of the over 1 million of Americans who were spared losing their current health care coverage thanks to one-year waivers from the Obama HHS.
Two Years in, Obama Still Has an Unemployment Problem
Unemployment got steadily worse for three years during the Great Depression, and if things aren't quite that bad now, the lengthy decline is a reminder that recessions induced by financial crises are particularly severe.
Is America Exceptional?
In a new publication entitled “Why is America Exceptional?” Matthew Spalding takes a different view of America and her role in the world. Every nation, Spalding explains, “derives its meaning or purpose from some unifying quality—an ethnic character, a common religion, a shared history.” But America is different: it is a nation dedicated to a set of principles, proclaimed to be self-evident in the Declaration of Independence and secured in the United States Constitution.
To Survive This Global Crisis, We Must Remember Teamwork
Rather than working through problems together, as was done two years ago, nations are now individually choosing what they believe to be their own best course of action.
Economists React: Job Market ‘Uncomfortably Weak’
Economists and others weigh in on the September employment report.
ObamaCare Weakens: Jack in the Box, McDonald's, Others Get Health Care Coverage Waivers
ObamaCare has made yet another concession: reneging on the protection of US workers by exempting employers from having to raise minimum annual insurance benefits.
Employment: A New Trough
The employment situation reported today showed a decline in nonfarm payroll employment. That means that my favorite indicator, labor capacity utilization, is at its lowest level since the recession began.
The Ghost of QE2
Seeing both sides of an invisible catalyst.
Budget Woes Hit Local Government Jobs
Local governments have now cut jobs in nine of the past 10 months. But the losses only bring their payrolls back to late-2006 levels, just after housing values peaked, suggesting more pain ahead as budgets reflect lower property tax revenues.
Short Selling: Sexy or Dangerous?
While the profits can be astronomical, the risk is too far up in the stratosphere for ordinary investors planning for retirement.
Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks
The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) was at 9.472 million in September, up sharply from August. This is a new record high, and is obviously bad news.
Broader U-6 Jobless Rate up to 17.1%: Why the Jump?
The U.S. jobless rate was flat at 9.6% in September, but the government’s broader measure of unemployment rose even more to 17.1%, the highest rate since April and down just slightly from the October 2009 high of 17.4%.
Backing 2010Q3 GDP Out of Today's Unemployment Rate Data
We then find the annualized compounded growth rate of GDP from the second quarter of 2010 ($13,194.9 billion) to the third quarter of 2010 (which the unemployment data would place around $13,272.3 billion) to be about 2.4%.
Kansas City Fed’s Hoenig Still Wants to Raise Rates
Countering the increasingly popular view that the Fed may again buy long-term assets to help spur growth, Federal Reserve Bank of Kansas City President Thomas Hoenig said, “I don’t think we should go that way at all.”
Market Failure vs. Government Failure
Public choice economists have varying beliefs about the efficacy of markets. Some think markets work quite well most of the time, others take the idea of market failure seriously. But they don’t assume—as most Keynesians seem to—that government corrections will be flawlessly executed.
Dallas Fed’s Fisher Rebuts Calls for More Action
“While none of us are satisfied with the current pace of economic expansion and job creation, presently it is not clear that conditions warrant further crisis-like deployment of the Fed’s arsenal,” Richard Fisher said, in text prepared for delivery before the Economic Club of Minnesota in Minneapolis.

Research, Reports & Studies
Fearing the Chávez Model
For many in Latin America, the Chávez model is the greatest threat to economic and political liberalism since the armed insurrections of the 1980s.
Why Inflation Matters
Even if inflation is not an immediate threat, the explosion in the deficit and debt over the last few years provides a reason to remind ourselves of the problems it can cause.

Economists’ Comments & Opinions
Financial literacy for all Americans
Youth financial illiteracy is a serious and growing problem. The average high school senior can only answer about half the questions on a basic financial knowledge test.
The quest for growth
It may depend on structural reforms as much as prudent macroeconomic policy.
Four obvious, key things still to be done
The Obama administration’s economic policy team is dominated by people who actually caused the crisis. The vaunted “financial reform bill” is, to mix metaphors, a watered-down fig leaf of a joke.So, what should have been in the new law? Here’s a list.
Is Commercial Real Estate Recovering?
We could still have another two years or so for the CRE market to tighten up. Here's why.
In foreclosure controversy, problems run deeper than flawed paperwork
The court decisions, should they continue to spread, could call into doubt the ownership of mortgages throughout the country, raising urgent challenges for both the real estate market and the wider financial system.
If Schools Were Like 'American Idol' . . .
Unless we measure success by how children perform, we'll have higher standards for pop stars than public schools.
Declining Economic Freedom
We are in the midst of a great debate between the proponents of limited government and open markets on the one hand and those favoring more collectivism and political direction of the economy on the other. The outcome of this debate will determine the future direction of both economic freedom and the prosperity of Americans and others throughout the world.
EPA to drain $1 trillion from economy
Less than two years ago, the EPA set a ground-level ozone standard of 75 parts per billion (ppb), but Obama administration officials are looking to impose an even lower standard of 60 ppb by fiat. That seemingly small change will have sweeping effects throughout the economy.

Graph of the Day
Obama’s Job-Killing Policies: A Picture Says a Thousand Words
See: Cutting Government the Canadian Way
See: Jobs Take a Hit in September
See Also: Challenge of Closing the Job Deficit
See Also: It’s Simple To Balance The Budget Without Higher Taxes

Book Excerpts
"Mass unemployment is not proof of the failure of capitalism, but the proof of the failure of traditional union methods." –Ludwig von Mises, Planning for Freedom, (1952)

Did You Know
"A government investigator says 89,000 stimulus payments of $250 each went to people who were either dead or in prison. The Social Security Administration's inspector general said in a report Thursday that $18 million went to 72,000 people who were dead. The report estimates that a little more than half the payments were returned. The report said $4.3 million went to a little more than 17,000 prison inmates."