Friday, October 29, 2010

Budget News Oct. 25-29



News
FRIDAY
UPDATE: 11 EU States Say Must Cap 2011 Budget Rise At 2.91%
A group 11 European countries said Thursday that next year's European Union budget shouldn't rise by more than 2.91% and proposals to increase it by around 6% were "unacceptable."
High-speed trains get new U.S. funds
The Department of Transportation awarded $2.4 billion Thursday for high-speed rail projects, though a lot more money is needed to make the project a reality.

THURSDAY
Spain's Deficit Cuts Rewarded With Cheaper Funding: Euro Credit
Spain’s central government trimmed the deficit by 42 percent in the first nine months, compared with 31 percent in Greece and a widening budget gap in Portugal.
Tuition, Pell Grants Rise in Tandem
...the federal government gave out $28.2 billion in Pell grants to students in the 2009-10 school year, almost $10 billion more than the previous year.

WEDNESDAY
Deficit that sparked Greek crisis tops 15 pct
Greece's 2009 budget deficit, whose wildly gyrating figures triggered the country's fiscal crisis, will be set "once and for all" at above 15 percent of GDP, the finance minister said on Wednesday.
Va. governor tells agencies to prepare cuts
Mr. McDonnell's memo tells the directors of state bureaucracies to submit contingencies for reductions of 2 percent, 4 percent and 6 percent.
Ireland Needs to Turn Focus to Economic Recovery, Economists Say
The planned spending cuts and tax increases are twice as much as the government previously said it would put in place to narrow the budget gap to the European Union limit of 3 percent of gross domestic product in four years.
Canada watchdog to issue stimulus spending report
The extra spending is due to stop at the end of March 2011. A report into the program as a whole will be issued in about a year's time, Fraser said in a CBC radio interview on Saturday.
UPDATE: Ireland: EUR15B In Budget Cuts Needed Over 4 Years
The EUR15 billion of savings from 2011-2014 will cut a swathe across all government departments--including social welfare, education and health.

TUESDAY
S&P boosts U.K. outlook, lauding cutbacks
So far, austerity is working for the U.K.
Aggressive Deficit Reduction: Will Congress Buy It?
With a Dec. 1 deadline fast approaching, President Obama’s bipartisan fiscal commission is struggling between recommending aggressive and painful ways to reduce the $1.2 trillion annual deficit and more politically prudent proposals that would skirt cuts in Social Security, Medicare and other costly but highly sensitive entitlements.

MONDAY
Britain's austerity: 4 lessons for Washington
The U.K. coalition government last week spelled out spending reductions that average 19% across all agencies over 4 years. That's 500,000 public-sector jobs. Little is spared. Housing benefits and education funds will be cut. Defense will be pared 8%. The cuts go on.
Gov. Bobby Jindal outlines $107 million in state budget cuts
The governor plans to order an executive order later today outlining the specifics of what will be cut, but he confirmed that $34.7 million will come from public colleges and universities, and $20.8 million will be taken from the Department of Health and Hospitals.
British-Style Spending Cuts Would Shock U.S. Budget -- But Could It Work?
The British government this past week announced the steepest set of spending cuts in decades, vowing to slash department budgets by close to 20 percent and eliminate a half-million public sector jobs -- all in the name of closing the country's stubborn deficit

Economist Comments
WEDNESDAY
Economy is running out of gas
The federal government has taken on a lot of debt, but it’s mostly offset deleveraging in the rest of the economy.
Rattner: Our Leaders Aren’t Truthful about the Deficit
In a freewheeling conversation with The Fiscal Times, former ‘car czar’ Steven Rattner says that our leaders – including President Obama – haven’t been straight enough with the American people about what’s needed to get deficit spending under control.
United States can follow Britain's lead with budget overhaul
Britain’s budget deficit, now 11.4 percent the size of its overall economy, is not that much larger than the United States’ — 8.9 percent — but the debate has been similar in both countries.
Analysis: France may face "Thatcher moment" on EU budget
Nearly three decades after British Prime Minister Margaret Thatcher famously told Europe "I want my money back," President Nicolas Sarkozy faces a similar financial predicament as France crawls, cash-strapped, out of recession.

TUESDAY
U.S. Deficit 2010: Are We Heading Down The Same Path As The French
For those who depend on these programs for survival they will find themselves living no better than someone in a third world nation. For those whose taxes have increased they will see their hard work and effort diminished into a government fund that produces nothing. For those living in between they will gradually join the masses at the bottom.

MONDAY
The Fiscal Disaster Set to Explode in December
States have been borrowing from Washington to fund their unemployment trust funds. Next month, they have to start paying that money back.

Blogs
FRIDAY
How To Cut Federal Spending
Our nation’s deficits are, in reality, a spending problem. Even if the 2001 and 2003 tax cuts are made permanent, revenues are set to return to their post-World War II average of 18% by 2020. Spending, on the other hand, continues to explode. After averaging 20% since World War II, federal spending is set to soar to 26% of the gross domestic product (GDP) by 2020. If Congress is to have any chance of cutting the deficit, spending must be cut. But how?
Consumer, Tax Groups Offers Spending-Cut Ideas
An unusual joint-project by the U.S. Public Interest Research Group and the National Taxpayers Union has come up with 30 different cuts in government spending that it says would save taxpayers $600 billion.
New papers on fiscal policy
I don't think the multiplier is zero for the United States, but very likely it's zero in a bunch of places.

THURSDAY
Report: Greece Falling Short of Rescue Package Deficit Goal
According to Bloomberg, the yield on the Greece 10-year bond jumped to 10.39% from 9.36% on Tuesday, and the yield on the Ireland 10-year bond increased to a new crisis closing high of 6.77%.

WEDNESDAY
City watchdog offers cost cut recommendations in controversial report
Chicago faces future annual budget shortfalls of more than $1 billion, but it has options that could cut $250 million in yearly costs, the city's top internal watchdog concludes today in a report that’s sure to stir controversy at City Hall.

TUESDAY
Michigan’s Pension Reform Experience
This pension reform was not comprehensive. The Michigan Public School Employees’ Retirement System (MPSERS) was left untouched and continues to operate as a defined benefit plan. A study by Richard C. Dreyfuss of the Mackinac Center estimates, based on the state’s assumptions, that the unfunded liabilities for pension and health care benefits for Michigan’s public school teachers range between $28 and $39 billion.
Secondary Sources: Recovery Stalled, Deficit, Mortgage-Interest Deduction
A roundup of economic news from around the Web.

MONDAY
Professor Krugman lambasts Britain’s coalition government in his latest column
The big point missed by those who think elevated public debt doesn’t matter is that these periods of excessive debt utterly crippled the UK economy.
Updated Cost of Fannie and Freddie Bailout
The $148.3 billion Treasury has given from taxpayer coffers to the GSEs has been to cover losses on mortgage deals made from the bubble period. I.e. today's defaults are on yesterdays mortgages.

Reports
FRIDAY
How to Cut $343 Billion from the Federal Budget
Federal spending is on an unsustainable path that risks disaster for America. Runaway spending has increased annual federal budget deficits to unprecedented levels, adding $2.7 trillion to the national debt in the past two years alone. Each year’s huge federal deficit increases the mountain of national debt borrowed from future generations of Americans. Congress needs to cut federal spending sharply and quickly. This paper sets forth $343 billion in available spending cuts.

THURSDAY
The Effects of Fiscal Stimulus: Evidence from the 2009 'Cash for Clunkers' Program
We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.

WEDNESDAY
The U.K. Budget Cuts: Lessons for the United States
The Conservative-led coalition government in London plans to cut a total of £81 billion ($130 billion) from public spending over the next four years, as well as 490,000 public sector jobs.

MONDAY
Preventing a National Debt Explosion
Without changes in tax and spending rules, the national debt will rise from 62 percent of GDP now to more than 100 percent of GDP by the end of the decade and nearly twice that level within 25 years.

Employment News Oct. 25-29



News
FRIDAY
Job losses fell disproportionately
A number of industries in New York state, including financial services, terminated at least five percent of their workers in the current recession, which has fallen harder on men, minorities, and those without college degrees.
How Washington could create jobs
Congress has the means to spur job growth, economists say, if it can find the will.

THURSDAY
Weekly Jobless Claims Drop Sharply to 434,000
"Fewer people applied for unemployment benefits last week, the second drop in a row and a hopeful sign the job market could be improving. Initial claims for jobless benefits dropped by 21,000 to a seasonally adjusted 434,000 in the week that ended Oct. 23.

WEDNESDAY
In US, a job means less than it used to
Rather than making jobs more important, the recession is causing workers to put more emphasis on home and family, a new study finds.
India's IT aims to soften image as Obama visits
U.S. President Barack Obama's visit to India puts the spotlight on its $60 billion IT sector, which argues it is a creator of jobs in the United States and should not be blamed for high unemployment.

TUESDAY
Ford to bring 1,200 jobs to Michigan
Ford Motor company said it will create up to 1,200 jobs in the distressed state of Michigan as it ramps up its engineering and manufacturing operations to produce more fuel-efficient cars.

MONDAY
Hiring picture gets a little brighter
The outlook for hiring is improving as U.S. businesses continue to report growing demand and increased profitability, according to a survey of leading economists.
Target, Toys R Us, other retailers boost jobs for holidays
Holiday retail sales are expected to be up only slightly this year, but the news may be better for those looking to work in retailing around Christmas.
Unemployment rate drops in 23 states in September
Unemployment fell in 23 states and Washington, D.C., rose in 11 states and was unchanged in 16 during September, the Labor Department said Friday. The declines were nearly double the number reported by states in the previous month.

Economists Comments
WEDNESDAY
Shipping Out Jobs
With unemployment still stubbornly high, Americans are rightly worried about the economy. And politicians of both parties — from President Obama on down — have seized on US multinational companies as a convenient scapegoat
The Number One Reason Americans Don't Take Farm Jobs
Why a booming farm economy isn't enough to lure Americans to the fields.
Where the New Jobs Are
In Texas, not California.

TUESDAY
Job seekers may want to do a credit check before an employer does
Reports that employers are increasingly checking job applicants' credit records only add to job seekers' angst. Thirteen percent of companies conduct credit checks on all job applicants, and nearly half consider credit history for certain jobs, such as employees with financial responsibilities and senior executives, according to the Society for Human Resource Management.
The going gets tougher
If President Barack Obama and the Democrats want to know why they are still struggling politically this fall, they need look no further than Friday’s latest dismal jobs report from the Labor Department.

Blogs
FRIDAY
Housing Bust impacting Manager Mobility
It is tough to move when you can't sell your home. Sometimes the new employer will pick up the short fall for key executives and managers, but it is probably too expensive in many cases now.

THURSDAY
Moody’s: Companies Reluctant to Spend on Expansion, Hiring
Nonfinancial companies in the U.S. had about $943 billion of cash on hand as of mid-year, but they aren’t likely to spend it on expansion and hiring due to lingering economic uncertainty, Moody’s Investors Service said Wednesday following a study of corporate cash piles.
Secondary Sources: Jobless Recovery, U.K. Austerity, Negative Rates
A roundup of economic news from around the Web.

TUESDAY
Dear Government Unions: We’re Not Making This Up
We were a little taken aback the other day when Joe Davidson’s “Federal Diary” column in The Washington Post quoted a top White House appointee and two union leaders attacking our research findings that federal workers get paid more than private sector counterparts as “lies,” “misinformation” and — oh my — “scapegoating.”
Unions Do Fire Some People After All
Unions have become famous — or infamous — for fighting against layoffs for any reason. Teachers unions have made it next to impossible to fire bad teachers. The union movement went ballistic when D.C. Public Schools Chancellor Michelle Rhee laid off teachers who performed poorly in the classroom.

MONDAY
Business Conditions Improve, Boosting Hiring Hopes
U.S. business conditions improved in the third quarter compared to the April-June period amid higher profits and increased sales abroad, according to a survey of business economists.

Reports
None

Monetary News Oct. 25-29



News
FRIDAY
Why the Fed's bold move won't work
The Federal Reserve is likely to announce a plan to pump more money into the economy next week. But some economists worry that the move won't work.
Not by monetary policy alone
Another dose of “quantitative easing” is necessary; but it will not, by itself, revive America’s economy.
No double-dip recession
After completing an exhaustive review of key drivers of the business cycle, ranging from credit to inventories and measures of labor market conditions, we can forecast with confidence that the economy will avoid a double dip.
Dollar lower again as investors wait for Fed
Currency investors are bracing for dynamic changes to monetary and fiscal policy that could come next week.

THURSDAY
Dollar Falls on Speculation Fed Quantitative Easing Will Debase Greenback
The dollar fell against all of its most-traded counterparts on renewed demand for higher-returning assets as traders speculated the Federal Reserve will debase the currency by buying government debt.
U.S. Easing to Hurt Developing Nations, China Researcher Writes
Quantitative easing in the U.S. will “seriously damage” the interests of developing nations, spuring inflation and pushing up asset prices in emerging economies, Lu Haiqi, a researcher with China’s National Bureau of Statistics, wrote in an article published in today’s Shanghai Securities News.
Fuel card news: US quantitative easing 'could boost oil prices'
Analysts have predicted that any decision by the US Federal Reserve to embark on a second round of quantitative easing could result in persistently high oil prices next year, it has been revealed.
Report suggests Fed to buy $250 billion under QE
A published report suggesting the Federal Reserve will kick off its latest program of quantitative easing by purchasing $250 billion worth of bonds over three months took some life out of markets Wednesday, hurting stock futures and other assets.

WEDNESDAY
Fed Gears Up for Stimulus
Eyes Gradual Bond Buying of Several Hundred Billion Dollars; Doubts Linger.
Fed looks set for new round of monetary easing
The Federal Reserve looks set to embark on a hotly debated second round of monetary easing next week, but much uncertainty surrounds the scope and pace of bond purchases by the U.S. central bank.
Bonds: Two-year Treasurys at record low
Bonds' rate was just 0.40 percent, the lowest yield ever for a two-year auction of US Treasury bonds.

TUESDAY
Dollar Gains Against Euro on Speculation Fed Easing Will Spark Inflation
The dollar rose against the euro on speculation an increase in debt purchases by the Federal Reserve will cause inflation to accelerate.
Yields on TIPS Go Negative
Big Demand for Bonds Suggests Fed Is Winning Deflation Battle; It 'Is Striking'.
Bernanke Asset Purchases Risk Unleashing 1970s Inflation Genie
For the second time since he became chairman in 2006, Ben S. Bernanke is leading the Federal Reserve into uncharted monetary territory.
Treasury Draws Negative Yield for First Time During TIPS Sale
The Treasury sold $10 billion of five-year Treasury Inflation Protected Securities at a negative yield for the first time at a U.S. debt auction as investors bet the Federal Reserve will be successful in sparking inflation.
Dollar doldrums: No end in sight
The greenback slipped once again Monday morning, falling to a new 15-year low against the yen. The dollar also fell against the euro and pound.

MONDAY
Here's Ben Bernanke's Big Speech On The State of Housing Finance
The Fed is looking into the foreclosure crisis.
Dollar Hit After G20 Statement; Risk Returns
The dollar fell broadly against all major rivals Monday after the Group of 20 nations agreed over the weekend to avoid "competitive devaluation" of their currencies.
Treasury Shields Citigroup as Deletions Undercut Disclosure
From the 2008 Bear Stearns Cos. rescue to the Federal Reserve’s policy of quantitative easing in 2010, the Obama administration has delayed disclosures and defended its right to secrecy in court.
Germany Accuses US of Indirectly Manipulating Dollar
German Economy Minister Rainer Bruederle on Saturday took issue with what he called a U.S. policy of increasing liquidity, saying it indirectly manipulated exchange rates.
IMF power shift opens way for more breakthroughs
A G20 agreement to give emerging market countries more power in the International Monetary Fund opens the door for breakthroughs on easing global tensions over trade imbalances.
What Britain's deep budget cuts mean for its future prosperity
Britain's left warns that the country's social fabric will unravel under the deep budget cuts announced today, while conservatives see a new society emerging.
Dollar at Risk of Becoming 'Toxic Waste'
The dollar's slump could get far worse if the dollar index takes out last year's low.

Economists Comments
FRIDAY
What Bernanke thinks
I'm not sure Mr Bernanke's calculation is off, in this case. He zealously guards the independence of the Fed, and he may well be wary that the insertion of his nose into Congress' business would invite more Congressional meddling in his affairs. Mr Bernanke may also be conscious of the continuing political potency of attacks on Fed-orchestrated bail-outs.
Banks Are Lending More (to the Government)
The Federal Reserve's open-market committee (FOMC) is widely expected to try a second dose of "quantitative easing" when they meet again in early November. Dozens of financial reporters have described this as an effort to "goose" the economy, but how that is supposed to work is even more unclear than usual.

THURSDAY
Gold vs. the Fed: The Record Is Clear
There were no world-wide financial crises of major magnitude during the Bretton Woods era from 1947 to 1971.
Kass: QE 2 Is a Con Game
As Halloween, the midterm elections and quantitative wheezing approach over the next week, some strange and spooky developments have occurred:
QE2 a ‘Ponzi scheme’, says Pimco’s Gross
The Federal Reserve’s highly anticipated plan to engage in quantitative easing to pump money into the economy is a “Ponzi scheme,” said Bill Gross, who manages the world’s biggest bond fund for Pimco.
Mad Fed Should Beware Unquantifiable Outcomes: Mark Gilbert
The worrisome thing about so-called quantitative easing in central banking is that its consequences remain unquantifiable, and and the perceived need for more central-bank purchases of securities should make investors uneasy.
Stocks Rise or Sink on QE2's Expected Size
Hints that the Fed's quantitative easing may be restrained sent stocks lower.
The curious anti-QE crowd
I understand the argument that there are limits to what a new round of quantitative easing can accomplish. That seems like a reasonable claim to me, and while I'm not exactly sure what the ideal mix of monetary and fiscal stimulus is, I'm prepared to accept that the fiscal share is greater than zero. What I have trouble understanding is the view that new monetary easing is likely to be counterproductive.

WEDNESDAY
QE2: More Harm Than Good
Large multinational firms will be able to deal with a weaker dollar, but a second round of quantitative easing will be overwhelming for small businesses, the core of our economy.
QEII, Like QEI, Isn't Monetary Ease
Unfortunately for Bernanke & Co. simply adding liquidity to an economic system does not promote growth. In fact, the relationship is reversed: it is new demand that stimulates the need for new liquidity, not liquidity that sparks demand.
Foreclosure-Gate, Dollar Rally, and the Banking Sector
Todd Harrison on what's in store this week for the market.
Goldman Says Fed May Need To Print $4 Trillion To Start Inflation
The Fed is on the cusp of embarking on money printing QE2 to stimulate the economy. The data is still very weak and I think QE2 will happen. I still see stagflation in our future as capital is continuing to be destroyed and yet the dollar gets weaker. Germany is recovering, the UK is embarked on reining in spending which will lead to recovery, China is tightening, Japan is mixed as is the rest of the EU.

TUESDAY
Bernanke Leaps into a Liquidity Trap
In the Hicksian interpretation of the liquidity trap, monetary policy transmits its effect on the real economy by way of interest rates. In that view, the loss of monetary control occurs because at some point, a further reduction of interest rates fails to stimulate additional demand for capital investment.
Preparing for QE2: Three Possible Scenarios to Follow the Fed's Announcement
Investors have big decisions to make as markets prepare for details of the second round of quantitative easing.
Fed Is Wrong in Thinking Inflation Will Solve Unemployment
Each increase in inflation was followed five quarters later by a decrease in normalized employment growth.
Quantitative easing: The numberless oblivion
The world seems full of smoke ahead of a world currency war. The weapon of choice is quantitative easing, a.k.a. QE. If you print a trillion, I’ll print a trillion. Of course, he and she will too. No change in exchange rates after a trillion? Let’s do it again, QE2.
A fistful of dollars and nowhere to go in Asia
The tasting menu on display outside the Japanese restaurant at the Westin Hotel in Tokyo had all the treats a foodie from San Francisco would expect from a Western business hotel in Japan’s capital: fine rare tuna sashimi, fabulous beef and wine pairings for each of the handful of items. Then I saw the price: more than 53,000 yen, or more than $650.
Fed fights the easy-money fight
The Federal Reserve plan to gin up the printing press in an effort to knock down long-term interest rates is one of the most well-signaled roundhouse punches in the history of finance.

MONDAY
Currency market: Fix the rules. Avoid a trade war.
Currency market adjustments are a major focus of Friday's G-20 meeting of finance ministers and central bankers.
QE2 — The Fed’s Plan for Job Growth Could Backfire
On Wall Street, they call it QE2, short for a second round of quantitative easing by the Federal Reserve. By all signs, the Fed is ready once again to begin buying large quantities of assets such as Treasury notes. But what will it mean for Main Street? After all, the ultimate measure of the policy’s success will be whether or not it boosts economic growth and creates jobs.
Why the Fed Wants a Tad More Inflation
For much of the past generation, Federal Reserve officials have been focused on an overarching long-run goal: Get inflation down and keep it there. Now Fed officials want to get inflation a bit higher.
Monetary Steroids
The Fed prepares to administer a dose of monetary easing that could be harmful to the body economic. Wouldn't DHEAS be better, Mr. Bernanke?

Blogs
FRIDAY
The Week in QE2 Debates
Financial professionals with every perspective weighed in. Here, Minyanville offers a recap of this week's hottest debate.
The FOMC: Help Wanted
Policymakers look to the Street for guidance.
I'll Side with Mises: Would Friedman's Logic Lead Us to QE2?
I remain unpersuaded that any of these arguments for QE have the upper-hand either analytically or political economy wise.

WEDNESDAY
Where are the biggest “imbalances?”
Do any of these “imbalances” actually hurt the US?  Of course not, the Fed determines our NGDP.  But I thought it would be interesting to identify the villains, in case you do think it is a problem.

TUESDAY
Focus on the real
China's inflation rate is well above America's. That's just as important in determining export competitiveness as movements in the nominal exchange rate.
Expectations, Dallas Fed Manufacturing, HAMP and Foreclosure-Gate
The Dallas Fed released the regional manufacturing survey this morning: Texas Manufacturing Activity Expands and Business Conditions Improve
Negative Real Rates of Return
Inflation protected securities sold at negative yields for the first time ever on Monday as traders anticipate that the Federal Reserve will start a new round of asset purchases.
Fed QE and Historical Analysis Both Reveal Gold is Better Than Bonds and Stocks
Right now, the economy looks like more of the same-old, same-old mode: stagflation for the foreseeable future.
Is Chinese Protectionism Good for the US?
A simple cost-benefit analysis proves that the Chinese policy of suppressing the value of its currency produces a very large net loss of income to American citizens.

MONDAY
Fed, Bernanke Detail Response to Foreclosure Crisis
The U.S. Federal Reserve presented a report detailing its efforts to help Americans cope with the foreclosure crisis, and Chairman Ben Bernanke said in a speech that federal banking regulators expect preliminary results of their review of the nation’s latest foreclosure mess to be ready next month.
Big Boost From Dollar Decline
Consider the recent fall in the dollar. Since August 27, when Federal Reserve Chairman Ben Bernanke signaled the central bank was likely to pump more dollars into the economy, the greenback’s value has fallen about 4.8% against the currencies of U.S. trading partners.
Is Quantitative Easing Just Masking the Depression Symptoms?
The Federal Reserve is likely to pull the trigger on a new round of monetary stimulus, but its impact remains in question.
The Depression Within the Depression
Until consumer expenditures are narrowed to a level that leads to a sustainable balanced economy, the current depression will continue indefinitely.

Reports
TUESDAY
The Fed’s QE2 and the Economy: Sailing to Safety or a Ship of Fools?
Quantitative easing is a largely experimental tool employed by the Federal Reserve to address a continuing sluggish economy and the renewed potential of deflation. That the Fed faces this prospect is final proof positive that President Barack Obama’s Keynesian stimulus policies have failed, leaving monetary policy as the sole remaining major stimulus tool.
The Great Recession and Its Aftermath from a Monetary Equilibrium Perspective
Modern macroeconomists in the Austrian tradition can be divided into two groups: Rothbardians and monetary equilibrium (ME) theorists. The name for the latter is somewhat misleading, however, as both groups argue that monetary equilibrium is ultimately achieved where the quantity of money supplied equals the quantity of money demanded.

Tax News Oct. 25-29



News
FRIDAY
Obama to Promote Business Deduction to Spur Investment
President Barack Obama will make the case that his proposal to let companies take immediate tax deductions for the full cost of new equipment will help the economy grow and create jobs by encouraging about $50 billion in new investments through 2011.
NY sales tax collections up 10.5 pct through Sept.
Sales tax collections rose 10.5 percent in New York in the first three quarters of 2010 through September, but the gain was mostly due to higher rates and other factors, the state comptroller said on Thursday.

THURSDAY
Tax Shortfalls Spur New Fear on Europe’s Recovery Bid
With economic conditions weaker than expected, tax revenue is coming up short of projections in parts of Europe.

WEDNESDAY
Employers in U.S. Start Bracing for Higher Tax Withholding
Lawmakers won’t start debating whether to extend the cuts, which expire Dec. 31, until after the Nov. 2 elections. Because it takes weeks to prepare withholding schedules, the Internal Revenue Service will probably have to assume the cuts will expire and direct employers to increase payroll deductions starting Jan. 1, experts say.
Acne Cream? Tax-Sheltered.
Denture wearers will get a tax break on the cost of adhesives to keep their false teeth in place. So will acne sufferers who buy pimple creams.
Alcohol Tax Debated in States Across the Nation
It's not the lagging economy that's caused his small business to lose $250,000 in revenue and its staff to shrink from 14 to nine employees, says James Alexander.

TUESDAY
Puerto Rico unveils tax cuts to reignite economy
Puerto Rico's governor on Monday announced plans to cut business and income taxes by more than a $1 billion annually over the next seven years in an attempt to jumpstart the U.S. territory's economy.
Bye-bye, tax breaks?
Tax experts almost uniformly say the next Congress should rethink the more than 200 tax breaks in the federal code that cost more than $1 trillion a year. And, yes, that includes even the really, really popular ones.
Watchdog: Funny math used on AIG bailout
The Treasury Department changed its accounting style and produced an overly optimistic estimate of taxpayer losses in the AIG bailout, the special investigator for the federal bailouts said in a report released Monday.

MONDAY
Unresolved Tax Questions Worry Taxpayers
Predicting your annual federal tax bill is rarely anyone's idea of a good time. But now the process has been made all the more confounding, thanks to a host of questions over what the tax code will look like in 2011.
Key Tax Breaks at Risk as Panel Looks at Cuts
Sacrosanct tax breaks, including deductions on mortgage interest, remain on the table just weeks before the deficit commission issues recommendations on policies to pare back with the aim of balancing the budget by 2015.

Economist Comments
FRIDAY
And the FAIR Tax Trap
Democrats turn a conservative fad against GOP candidates.
Why We Should Eliminate the Corporate Income Tax
The FT has a piece today on the administration's plans to lower the corporate income tax rate in exchange for simplification--getting rid of a bunch of deductions.  This is a decent plan--and not just because it's the Full Employment for Policy Pundits Act of 2011--but this seems like a good time to once again charge into the fray and argue that we ought to just eliminate the damn thing altogether
The Tax Me More State
Two initiatives that would further punish California.

THURSDAY
Democrats’ Estate Tax Plan Trips Next Secretariat: Amity Shlaes
The estate tax is one topic getting lost in the dust of the midterm races. That’s a pity. This tax, now quiescent, is set to roar back like a stallion in 2011 if lawmakers don’t rein it in with new legislation.
Ready For Pay Cut?
It's one thing when the wonks tell you to get ready for a tax hike that may or may not come. It's another when your employer tells you he's getting ready to cut your take-home pay and give it to the tax man.
Tax Breaks For The Wealthy Do Boost Economy
Congress is biting the hand that feeds long-run economic growth by raising tax rates on the rich.

WEDNESDAY
The lamest of lame ducks
What if Congress held a lame duck session, did virtually nothing and quit for the year?
Who wins if foreclosures halted?
Moratorium would impose huge losses on taxpayers, feds

TUESDAY
Obama's Imaginary Tax Cuts
The 111th Congress has already enacted $352 billion in net tax increases and may, in the upcoming lame-duck session, enact the largest tax increases in history, which will hit every man, woman and child — as well as every business in America.

MONDAY
POWELL: The tempting path of protectionism
Every conceivable interest group wanted higher tariffs to prevent American consumers and businesses from taking advantage of better values available from overseas suppliers. As historian E.E. Schattschneider warned, "No party that undertakes a revision of the tariff can be confident it won't start a prairie fire."

Blogs
FRIDAY
IRS Paid Out $111 Million in Erroneous Stimulus Tax Breaks
The U.S. Internal Revenue Service had difficulty implementing new tax benefits in 2010, paying $111 million in erroneous benefits related to the stimulus law, a Treasury Dept. report said.
A Rolling Stone gathers no taxes
For skeptics in the incentive effects of taxation:
Popularizing Deadweight Loss
Indy requests a popularization of deadweight loss. Let's do the deadweight loss from a tax.
Understanding The Differences Among Tax Credits, Deductions, and Adjustments
Here are the simple facts about the differences among tax deductions, adjustments, and credits and how they’ll affect your next tax return.
Why Tax Day won't Be April 15th in 2011
In 2011, D.C. will celebrate Emancipation Day on April 15, a day earlier than normal since April 16 falls on a Saturday. In observance of the D.C. holiday, Tax day will be moved forward on business day this year landing on April 18.

WEDNESDAY
300 Economists Counter White House Claim on Taxes
Then there is the 362,000-member National Taxpayers Union, which sent a letter to Congress on last month signed by 313 economists, including a Nobel laureate, in support of extending all of the 2001 and 2003 the tax cuts.
Rating State Business Tax Climates
The best climates: South Dakota, Alaska, Wyoming, Nevada, Florida, Montana, New Hampshire, Delaware, Utah and Indiana.
Morning Bell: Red Tape Rising
According to a report released last month by the Small Business Administration, existing total regulatory costs already amount to about $1.75 trillion annually. This “hidden tax” on the economy is nearly twice as large as the sum of all individual income taxes collected last year.

TUESDAY
Trick or Treat Taxes!
After all, if you can't tell that a green, kiwi-flavored Jelly Belly is bad for kids and that a black, licorice-flavored Jelly Belly is a healthy alternative, it's up to the government to use its taxing power to keep children safe.
Ratcheting Taxes
Nobel laureate economist Milton Freidman once quipped, “Nothing is so permanent as a temporary government program.” Indeed, once created, government programs remain long after the precipitating event has passed.

MONDAY
Possible compromise on tax cuts?
Vice President Biden said Democrats may be willing to raise the $250,000 threshold at which higher taxes come into effect under President Obama's proposal.
Settling the Question of a Real Estate Tax in Obamacare
The new law is certain to add to the federal deficit. It increases taxes on all Americans in a number of different ways, encourages employers to dump coverage, and will cause many to lose their current health plan.

Reports
None.

Health Care News Oct. 25-29



News
FRIDAY
Health-care spending to reach $192B in 2010
Spending on health care in Canada is slowing, but is expected to reach nearly $192 billion this year — or $5,614 per person — according to a new report by the Canadian Institute for Health Information.

TUESDAY
The decline of the specialty pharmacy
Specialty drugs, which treat rare diseases such as hemophilia, cancer, and multiple sclerosis, are one of the fastest-growing areas of healthcare. Due to their small patient volume and complex manufacturing requirements, specialty treatments can cost tens of thousands of dollars.
Employers looking at health insurance options
The new health care law wasn't supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations.
Conflict over health benefits brochure
A requirement that insurers summarize their health plans in a short brochure has led to a drawnout clash between industry and consumer advocates over how to best define health insurance benefits.

MONDAY
Health reform's side effect: Scams
Fraud experts say health insurance scams are on the rise as criminals quickly exploit consumers' confusion about how the new health care law changes their insurance coverage.
Employers Look at Health Insurance Options
The new health care law wasn't supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations. But last week a leading manufacturer told workers their costs will jump partly because of the law. Also, a Democratic governor laid out a scheme for employers to get out of health care by shifting workers into taxpayer-subsidized insurance markets that open in 2014.

Economist Comments
TUESDAY
Big Insurance, Big Medicine
ObamaCare is already driving a wave of health-care consolidation—and higher costs.

MONDAY
Health care: Freddy Krueger lives
Caught in a cobweb of false promises, the American people were fed a story about how health care reform would insure everyone, allow people to keep their own insurance policies and reduce health care spending while improving quality. Sadly, these were fantasies masquerading as fact. The scary tale that follows needs no skeletons or vampires; statistics alone can frighten you.

Blogs
FRIDAY
Obamacare Subsidies Are Not a Free Lunch
It is true that the tax credits will reduce the effective premium that many households will face for health insurance coverage. However, the key question from a policy perspective is whether the benefits of the Obamacare tax credits outweigh their costs.
Secondary Sources: Lessons From Chile, Health-Insurance Competition, Housing
A roundup of economic news from around the Web.

WEDNESDAY
Even CBO Is Skeptical of Obamacare
Congressional Budget Office (CBO) Director Douglas Elmendorf recently spoke at the University of Southern California about the economic impact of Obamacare. He predicts that Obamacare will further depress the nation’s employment picture.

TUESDAY
Obamacare Frankenstein Is Scarier Than “Zombie Legislation”
Though proponents of the health care law may still be heard shouting, “It’s alive! It’s alive!,” the truth is that conservatives and liberals alike recognize that, as “successful implementation poses remarkable challenges and will require adequate funding, enormous ingenuity, and goodwill from federal and state officials, as well as cooperation from private insurers, businesses, and private citizens.”
Governor Bredesen Got the Calculations Right
Tennessee Governor Philip Bredesen explained how Obamacare has created a situation where the state government and many of its employees will find it mutually advantageous to the get rid of the employer-sponsored insurance program the state currently offers.

MONDAY
Side Effects: Obamacare Strengthens Compliance-Based Medicine
Value-based purchasing in Medicare will alter reimbursement only under Medicare Part A, but from the legislative language, it appears that the way that hospitals treat all patients will be used to determine performance scores. This means that all Americans, not just seniors, will be affected. The negative consequences of compliance-focused medicine are numerous.

Reports
None

General Economic News Oct. 25-29



News
FRIDAY
Shattered Dreams: Homeowner Protection
So with eighty thousands homes in foreclosure in New York state alone, Judge Lippman developed a new procedure requiring attorneys to sign a form confirming that they have personally reviewed the paperwork, including a loan file where a client, the lender, is claiming a homeowner is behind on their payments and in default.
(Tea) Partying for Halloween?
This Halloween, sales are up across the board but sales of Colonial costumes are beating the spread.
Australians swoop in on U.S. foreclosures
The Australians are riding a commodity-driven export boom. China, workshop to the world, is gobbling up ever more metal and fossil fuel, much of which comes from Australia. Among Australia's top commodity exports are coal, iron ore and gold.
Bringing NAFTA back home
Despite Chinese competition, Mexico’s exports are growing. But the country is still not taking full advantage of its trade agreement with the United States.
The indispensable economy?
China may not matter quite as much as you think.
U.S. Michigan Consumer Sentiment Index Decreased in October
Confidence among U.S. consumers fell in October to the lowest level in almost a year, which may temper the biggest part of the economy.
Mortgage Rate Edges Up Again, to 4.23%
Mortgage rates were mixed the latest week, with long-term fixed-rate loans edging higher for the second consecutive period after a streak of record lows, according to Freddie Mac's weekly survey of mortgage rates.

THURSDAY
Administration to get freer with trade
U.S. Trade Representative Ron Kirk has been a genial caretaker for an Obama administration trade agenda mostly aimed at placating labor unions and their Democratic allies by erecting barriers to imports. With the public more opposed to free trade than ever, and Democrats running hard against it this fall the White House has shown no interest in the issue.
Foreclosure Crisis Worsens in Most U.S. Metros
The foreclosure crisis intensified across a majority of large U.S. metropolitan areas this summer, with Chicago and Seattle -- cities outside of the states that have shouldered the worst of the housing downturn -- seeing a sharp increase in foreclosure warnings.
Corporate profits' big climb
Does President Obama deserve credit for the fact that corporate profits have risen faster under him than during any other 18-month period since the 1920's?
Will Germany now take centre stage?
Its economy is booming, but its strength poses new questions
Europe Economic Confidence Improves More Than Forecast
European confidence in the economic outlook improved more than economists forecast to the highest in almost three years in October, led by manufacturing sentiment.
Settlement Reached In Muni-Bond Probe
The Securities and Exchange Commission says the civil settlement is the first time it has secured financial penalties against city officials in a muni-bond fraud case. It comes as the regulator is stepping up scrutiny of the estimated $2.8 trillion muni-market.

WEDNESDAY
Harvest time: The migrant economy
Global weather disruptions have boosted food prices this fall, but one thing that hasn't changed is the annual migration of workers to farms. Secretary of Agriculture Tom Vilsack says that between 50% and 60% of the food Americans eat has been handled by immigrants (legal or not). Here are some key facts about the migrant economy.
New rule: No more up-front fees for debt fixers
Companies that claim to settle your debts for less than you owe can no longer charge up-front fees for their services. Instead, they have to wait to collect from consumers until they actually deliver on the promise.
Cash-Balance Pensions Stand to Gain Favor
Cash-balance pension plans, where employees stand to get a lump-sum payment at retirement based on a system of "credits," are poised to gain traction in the coming year.
Consumer Confidence Still Weak
Americans' confidence in the economy rose only slightly in October from September, according to a monthly survey, as they continue to grapple with job worries.

TUESDAY
Gas prices rise, breaking pre-election pattern
Gasoline prices haven't gotten much attention amid all the other bad economic news for Democrats heading into a final week of campaigning, but the price per gallon has climbed nearly 15 cents since Labor Day - a surprising jump, given that prices usually plummet before an election.
Global food crisis forecast as prices reach record highs
Cost of meat, sugar, rice, wheat and maize soars as World Bank predicts five years of price volatility.
Consumer Confidence Rises to 50.2
U.S. consumer confidence rose slightly in October but remained near historically low levels as concerns about the labor market persisted, according to a private sector report released on Tuesday.
Ford Earns $1.7 Billion in Q3, Pays Down Debt
Ford Motor Co.'s third-quarter net income rose 68 percent as it grabbed a bigger share of the U.S. auto market and buyers paid more for its highly-rated cars and trucks.
Inspector General: Obama Mortgage Relief Program Failed
The Obama administration's foreclosure-prevention effort has been ineffective in tackling the foreclosure crisis, the watchdog for the federal bank bailouts said Monday.
Want to get away with murder? Become a bank.
The biggest danger to the U.S. capitalist system doesn't come from communists or community activists or left-wing academics. It comes from some of the nation's biggest financial institutions. These companies, which helped create the financial meltdown that touched off the Great Recession, have now found yet another way to undermine the public's faith in capitalism and markets: the foreclosure fiasco.
Business Inventory Gains Continue to Slow
Manufacturers Enjoyed Strong Boost From Restocking, but More Cautious Mood Among Customers, Retailers Prevails
Housing data flip-flop: Don't bank on a recovery yet
Great news on home sales was followed up by dismal data on home prices. The lesson? Don't look to the monthly figures for signs a recovery is near.
UK growth doubles forecast
Britain's economy grew twice as fast as expected in the third quarter of this year, easing fears the recovery is faltering and dimming the chance of more quantitative easing from the Bank of England.

MONDAY
Existing-home sales jump 10 percent
September surge the biggest monthly gain in 28 years.
Poll: Independets Siding with GOP
On the economy: 66% of Independents say the recovery legislation is not working (compared to 57% overall.) The percentage who said the stimulus is not working spiked 12% since Labor Day.
Looking Ahead: Economic Reports This Week
View the economt report schedule.
Bernanke: We take foreclosure problems seriously
Federal Reserve Chairman Ben Bernanke said Monday that a federal agency review of foreclosure procedures at the nation's largest mortgage servicers should be completed next month.
Coping with poor, confused consumers
The growing number of Americans living below the poverty line is troubling on many levels, and it's a problem that consumer companies can no longer ignore.
U.S. newspaper circulation dips further
Average daily circulation fell 5 percent in the April-September period.
Economists more cautious on U.S. growth
Despite a number of positive signs, experts believe rate of economic growth will slow.

Economist Comments
FRIDAY
Tea Party Is Best Way to Get Economy Back on Track
To gain support of the Tea Party, candidates will need to focus on spending cuts, lowering taxes, and private-sector job creation.
How the Great Depression and the Great Recession Are Similar
I've been critical of those who compare the Great Recession to the the Great Depression. Still, one area where today's economy is similar to the Great Depression is the lack of private-sector job creation.
Stimulus worked, but not as well as hoped
The U.S. economy is much stronger than it would have been without it, and millions more Americans have jobs because of it. That’s hard to dispute. However, the fiscal stimulus passed by the Democrats in early 2009 probably didn’t deliver as many jobs per dollar spent as hoped by its planners.

THURSDAY
ROSE: Crowding freedom out of the market
Big government kills consumer choice, then forces compliance.
Not the Time to Hamper Entrepreneurs
Private equity, a sector which has demonstrated its ability to take moribund businesses and improve their performance, is about to have its room to maneuver significantly curtailed. The European Parliament and Council have this week reached agreement on the Alternative Investment Fund Managers (AIFM) Directive, guaranteeing that next month it will be passed by the European Parliament.
China has every right to cheat, but shouldn’t
China, we are told, is cheating. It is cheating by making it harder for western companies to invest there and for stealing their technology when they do. It is cheating by directing cheap credit to favoured industries. It is cheating by allowing companies that operate in China to pay their workers less and pollute more. Above all, it is cheating by manipulating its currency, suppressing the value of the renminbi to make its exports super-competitive.
A Stark Choice between European Model or the American Way
The question is whether to begin the daunting task of turning the United States back toward its founding principles, or whether to descend further into the status of European social democracies like France and Greece.

WEDNESDAY
Private Social Security Accounts: Still a Good Ide
As Democrats and Republicans jockey to set Congress's agenda for after the midterm elections, President Obama has already dismissed one reform that would improve Americans' financial standing: allowing workers to save and invest some of their Social Security taxes in personal accounts.
Three reasons why energy M&A is surging
Deal activity in the U.S. oil and gas sector is going gangbusters. Here's why.
House Afire
The elusive search for villains in the foreclosure crisis.
The Nobel Case for Immigration
Only 1 in 20 people on earth live in America. But Americans won 4 of 11 Nobel prizes this year. Last year, it was 8 of 9. Many of those American laureates are immigrants. Today, about 1 in 8 Americans are foreign-born, but 1 in 4 American Nobel laureates since 1901 are foreign-born. Immigrants, it seems, are chronic overachievers. America would benefit by letting more in.
The Unseen Carbon Agenda
Anyone who cares about the U.S. economy is breathing easier now that cap and tax appears to be on the political garbage barge, but don't be so sure. The White House is still pursuing its carbon agenda through regulation, albeit with almost no public attention, and a new study shows the damage that is already being done.
Was TARP Really That Effective?
Think the Troubled Asset Relief Program has performed poorly? So does a government auditor. He says it has lacked transparency, been mismanaged and failed some of its core objectives.

TUESDAY
Small businesses losing out to red tape
In an economic climate with few jobs and cutbacks on basic city services such as police protection and firefighting, you would think cities and states would be overjoyed when someone was willing to open up a new business, bringing with him jobs, economic vitality and tax revenues. You might think that, but you'd be wrong.
Our Next Stop: Greece -- or Rome
If there's one theme dominating our midterm elections this year, it's outrage over runaway government — government running our lives, and trampling morality in the process.
Green lipstick on the stimulus pig
Recovery won't come from more government spending.
The Free Checking Restoration Act
Middle-class consumers are paying the price for the Dodd-Frank financial reform. The next Congress can undo the damage.
D.C. entrepreneurs wrapped in red tape
Bureaucracy blocks attempts to start new businesses in the District.
China cranks up the innovation machine
The Chinese, indeed, respect America's long record of innovation. No Chinese leader today is ever going to say, "We have no use for your country's manufactures." But there should be no doubt that China will go to extraordinary measures to build its own industrial and technological base. The question is how global corporations -- and their governments -- respond.

MONDAY
Ask Labor Whether Foreign Money Is Pouring In
Foreign money may be having a profound influence on the U.S. elections, more so than many people are aware.
Has the Earth Run Out of Any Natural Resources?
China has cut exports of rare-earth metals to Japan, Europe, and the United States, undermining high-tech manufacturers that rely on the minerals for wind turbines and missile-guidance systems. The People's Republic controls more than 90 percent of rare-earth production and now claims that their reserves may be exhausted in the next 20 years. Extinct plant and animal species notwithstanding, has the Earth ever run out of a natural resource?
To fix the economy, let bad banks die
Bad banks, and their bad business model of willful incompetence, are still alive, and dragging down the recovery.
Economy to grow at slower pace
The U.S. economy should continue to grow this year, though forecasters have lowered their expectations about the pace of recovery, according to a new survey.
Government Employees: Still Overpaid
Several studies from left-leaning research groups claim that state and local government employees are underpaid. All of the studies are seriously flawed.
How to Privatize the Mortgage Market
Europeans manage just fine without Fannie and Freddie-type agencies.
Macroeconomics: Three Years Aboard the Failboat
After years of the same failed policies, we're finally ready to set sail.

Blogs
FRIDAY
The long road back
Through the first five quarters of recovery after the 1982 recession, real GDP grew by 7.8%. The total expansion this time has been just 3.5%. Little wonder that employment has risen so slowly.
House Prices have corrected to what year?
Detroit is back to 1995 prices, and some cities like Dallas, Portland and Seattle are only back to 2005 or 2006 prices.
Barack Delano Obama
Reason TV’s Ted Balaker produced and narrated this truly excellent six-minute-long video on regime uncertainty and the parallels between FDR and Barack Obama.
Here’s Why the UN Is Broken
The 43 lowest-paying UN member governments, each assessed 0.001 percent for the regular budget in 2007, together pay a whopping 0.043 percent of the total UN regular budget. The 128 lowest-paying governments pay a combined 1.064 percent of the budget. By contrast, the 16 countries that each pay annual, regular budget assessments of more than 1 percent contributed, in the aggregate, 85.4 percent of the UN’s budget in 2007.
Economists React: Growth Remains ‘Too Weak’
Economists and others weigh in on the increase in third-quarter gross domestic product.
Understanding Regime Uncertainty
Unleashing this destructive uncertainty requires more than simply changing in major ways government’s role in the economy. Instead, regime uncertainty is increased by changes that portend into the indefinite future a greater degree of arbitrary government economic intervention.
A Regulatory Shock from the FCC
The Federal Communications Commission (FCC) has set its regulatory sights on wireless telephone providers for instigating a supposed epidemic of “bill shock” across the land.
Government Dependence Is Back With A Vengeance
Rasmussen Reports released poll results yesterday showing that 23% of Americans say they receive some form of cash benefits from the government. This is remarkably close to the truth. As The Heritage Foundation’s 2010 Index of Dependence on Government documents, 21% of the total U.S. population (64.3 million people) receive some level of assistance from dependence-creating federal programs.
Robust Economy Needs Affordable Energy
The notion that restricting access to affordable energy will make us world leaders in the production of alternative technology doesn’t jibe with past experience. We are world leaders in the consumption of televisions, cell phones, and virtually all other consumer electronics, yet we import the overwhelming majority of these goods. Mandating consumption is different from stimulating domestic production.

THURSDAY
Tea Partiers: America’s Oldest (and Newest) Free Traders
Some in the media have reported that today’s Tea Party members are simply paranoid populists who oppose free trade. This condescending stereotype is false.
One Reason the Economy Sucks in Graphs
In normal times banks were holding under a trillion in reserve. Now banks are holding onto their money. Banks are holding on to their cash for a number of reasons: uncertainty about taxes and regulation, an aversion to risk, and an increase in consumer savings.
Did "Most" Economists Support the Stimulus?
"Most" is a tricky word, but the idea was to convey the idea that a near consensus or general agreement that federal intervention, specifically spending, was necessary. It helps that professional surveys of economists are rarely conducted on timely policy issues, but new evidence suggests that general agreement simply did not exist at the time.
Are Banks Lending Again?
Based on the data I am seeing, it appears that banks, especially the regional and local banks, are starting to solve their nonperforming loan problems. This is very relevant to the credit crunch we are having. There are two aspects to it. First is that banks have tightened credit because they are unsure of the future with a ton of problem commercial and residential real estate on their books. They would rather hold on to their capital until they see a recovery in the economy. Second is that businesses aren’t borrowing, at least not as much as they would if we were in a recovery.
Home Builders Slash 2010 Construction Forecast
The National Association of Home Builders Wednesday slashed its 2010 forecast for single-family home construction, but said activity will accelerate the following two years as the economy improves. Single-family housing starts are set to grow 8.4% this year to 479,000 before construction hits 655,000 new houses in 2011 and 970,000 in 2012.
Home Sales: Distressing Gap Sept 2010
Initially the gap was caused by the flood of distressed sales. This kept existing home sales elevated, and depressed new home sales since builders couldn't compete with the low prices of all the foreclosed properties.
Freddie Mac: 90+ Day Delinquency Rate Declines Slightly in September
Freddie Mac reports that the serious delinquency rate declined to 3.80% in September, from 3.83% in August.
Primer on Austrian Economics
A society does not choose; a collective has no life or mind of its own. That, according to Butler, is an Austrian methodological principle.

WEDNESDAY
What Gets You Most Upset about the TARP Bailout, the Lying, the Corruption, or the Economic Damage?
As an economist, I should probably be most agitated about the economic consequences of TARP, such as moral hazard and capital malinvestment. But when I read stories about how political insiders (both in government and on Wall Street) manipulate the system for personal advantage, I get even more upset.
Are Seniors Being Cheated? No
So the short story is a) rising spending by seniors doesn’t necessarily mean rising costs for seniors; b) inflation has fallen in recent years but seniors haven’t received negative COLAs, temporarily increasing the purchasing power of their benefits; and c) even if a CPI designed for retirees were used, no COLA would be paid next year.
Trade Deficit = Capital Inflow = BOP = 0
We hear a lot about the U.S. "trade deficit" or the "current account deficit," but we don't hear as much about the offsetting "capital account surplus" or "capital inflow" that has to exist when there's a trade deficit. For example, a Google search reveals three times more results for "current account deficit" (775,000) than for "capital account surplus" (224,000).
Returning the People’s House to the People
We have to pass the bill so that you can find out what is in it,” House Speaker Nancy Pelosi said in March. No single statement better epitomizes everything that is wrong with how Congress works. While Speaker Pelosi was referring to Obamacare at the time, she could have been referring to any of the thousand-plus page bills Congress passed this year. This was not how the Framers intended Congress to be run.
Real House Prices, Price-to-Rent Ratio
Yesterday CoreLogic reported that house prices declined 1.2% in August, and this morning S&P Case-Shiller reported widespread price declines in August.
The Truth Behind Superman
The documentary film Waiting for Superman follows five children and their families as they struggle to find educational opportunities. Fed up with the ineffective public schools in their communities, but unable to freely transfer their tax dollars to a school of their choice, the families enter lotteries for the few available slots in private and charter schools. As an unapologetic denunciation of the American educational system, the film features families openly weeping at the prospect of losing the lottery and returning to the public schools.
Philly Fed September State Coincident Indexes
A number of states are showing declining activity - and this "recovery" looks very similar to the sluggish recovery following the 2001 recession. No wonder consumer confidence remains very low.
The Evidence Is In: Head Start Still Doesn’t Work
We are sure that Orzag and President Obama have nothing but the very best of intentions when they promote Head Start expansion. And we are sure they believe that the very best social science evidence should show that Head Start works. But it doesn’t. As President Ronald Reagan once said: “The trouble with our liberal friends is not that they’re ignorant; it’s just that they know so much that isn’t so.”
Economics' limits
Talking about the economy as if it involves the interplay chiefly of large aggregates such as "consumption" and "investment" blinds Keynesian economists to the real action that takes place at a much more detailed level. It's a very unscientific approach.

TUESDAY
The Colbert Effect
Watch the video!
A Look at Case-Shiller, by Metro Area
The October Update
Unsubsidized Ford Profitable for Six Straight Quarters
Ford Motor Company has recorded its sixth straight quarter of profits and expects to have its net debt down to zero by the end of 2011. Ford was the only domestic auto manufacturer to avoid bankruptcy or take a bailout from the federal government.
Economists React: ‘Major Upside Surprise’ in U.K.
The U.K. economy grew strongly in the third quarter, the Office for National Statistics reported Tuesday, defying expectations of a sharp slowdown in the country’s economic recovery. In its preliminary estimate, which is frequently revised at a later date, the ONS said the economy grew 0.8% between July and September after an unusually strong 1.2% quarterly expansion between April and June.
Down again
Almost immediately after the expiration of the government's tax credit for homebuyers, it became clear that American housing market stability had been remarkably dependent on the generous subsidy. Data released this morning indicated that declines accelerated in August.
Immediate Changes to Reform How Congress Works
Changing the membership of the Congress does not fix its out-of-touch culture.

MONDAY
Chicago Fed: Economic activity slowed further in September
Led by declines in production-related indicators, the Chicago Fed National Activity Index decreased to –0.58 in September from –0.49 in August.
Which economic ideas are hard to popularize?
It is hard to popularize "maybe" claims, agnoticism, uncertainties, confidence intervals, and contingencies. The marketing process encourages excess certainty.
Schedule for Week of Oct 24th
The key economic report for the coming week is the Q3 advance GDP report to be released on Friday. There are also three important housing reports to be released early in the week: Existing home sales on Monday, Case-Shiller house prices on Tuesday, and New Home sales on Wednesday.
Why Say's Law Does Not Preclude Gluts and Shortages
Like so many other important insights in economics, the organizing principle that is Say's Law provides us a framework for understanding how different scenarios will play out depending on the institutional arrangement that frames human action.
Unofficial Problem Bank List at 871 Institutions
Here is the unofficial problem bank list for Oct 22, 2010.
Why Germany is different
One question rich world countries, including Germany, should be asking themselves is how Germany managed to set itself up as among the chief suppliers of capital goods (and some other products, like cars) to emerging markets. Germany has been advantaged relative to Japan thanks in part to currency movements. But other economies should perhaps think about the implications of this particular pattern of trade for long-term economic growth: their own, and Germany's.
Defending the Constitution Against Radical Federal Government Power
Speaking at The Heritage Foundation Thursday, Cucinelli urged the public interest lawyers in attendance to do all that they can to educate the public about how the federal government’s ever expanding power is antithetical to our nation’s First Principles.
Goolsbee Refudiated
It doesn’t matter who asks the question (CNN, Gallup, Pew, Fox, ABC, or CBS) the answer is always the same: the American people believe President Barack Obama’s $814 billion economic stimulus failed. The White House believes that this is a failure of communications not a failure of policy.
Foreclosure Crisis: Home Equity Loan Time Bomb
The biggest cost ahead for large mortgage servicers may not be "robosigning" settlements or buying back bad debt -- it's the follow-on mortgage products like home-equity loans that take longer to go sour.

Reports
FRIDAY
Did France Cause the Great Depression?
The gold standard was a key factor behind the Great Depression, but why did it produce such an intense worldwide deflation and associated economic contraction? While the tightening of U.S. monetary policy in 1928 is often blamed for having initiated the downturn, France increased its share of world gold reserves from 7 percent to 27 percent between 1927 and 1932 and effectively sterilized most of this accumulation. This “gold hoarding” created an artificial shortage of reserves and put other countries under enormous deflationary pressure. Counterfactual simulations indicate that world prices would have increased slightly between 1929 and 1933, instead of declining calamitously, if the historical relationship between world gold reserves and world prices had continued. The results indicate that France was somewhat more to blame than the United States for the worldwide deflation of 1929-33.

THURSDAY
Durable Goods Orders Weak Outside of Aircraft
Durable goods orders for September came in stronger than expected, but the headline number was boosted by a jump in aircraft orders. Ex-aircraft, orders fell 0.6 percent signaling a slower pace of business spending.
The Case for Raising Social Security's Early Retirement Age
Estimated effects of increasing the Social Security Earliest Eligibility Age (EEA) from sixty-two to sixty-five on Social Security's finances, retirement income, and the economy. Increasing the EEA would extend the solvency of the Social Security trust fund by about five years, increase total annual retirement income as of age seventy for affected individuals by around 16 percent, and increase gross domestic product (GDP) by around 5 percent.
The Economic Outlook and Options for Fiscal Policy
There are monetary and fiscal policy options that, if applied at a sufficient scale, would increase output and employment during the next few years. Such options would have costs as well. Expansionary fiscal policy would increase federal debt, which is currently larger relative to the size of the economy than it has been in more than 50 years—and is headed higher.

WEDNESDAY
How the “Scientific Consensus” on Global Warming Affects American Business—and Consumers
The only consensus over the threat of climate change that seems to exist these days is that there is no consensus. The 2007 United Nations report on greenhouse gas emissions has served as a catalyst for lawmakers to burden traditional energy sources with regulations in favor of so-called clean energy. Recent revelations of erroneous and misleading data in the report have led many to question the wisdom of government-mandated emissions caps and costly energy-efficiency regulations. Congress should eliminate subsidies and reduce regulatory red tape—and let all energy technologies succeed or fail on their own merits. Artificially propping up a select few distorts the market and hurts American businesses—which means that the final bearers of the costs are, as usual, the taxpayers.

TUESDAY
Existing Home Sales Up More Than Expected in September
Sales of existing homes rose 10 percent in September, which was much stronger than expected. Single family and condos increased for the second consecutive month, we do not foresee a genuine recovery yet.
Rethinking Homeownership: A Framework for 21st Century Housing Reform
The government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac were significant contributors to the build-up of the housing bubble. Yet, virtually no substantive action has been taken to reform them. This delay, continuing a model that has been proven to be both bad business and problematic for the broader housing sector, is distorting the market and preventing a real recovery in housing.

MONDAY
Weekly Economic & Financial Commentary
U.S. and Global Weekly Economic Review.
Four Immediate Reforms to Change the Culture of Congress
Making Congress more responsive to the American people requires something more than just changing the players. Congress must first agree to change its internal rules of organization.