Friday, December 3, 2010

Budget News Nov 29 - Dec 3

California Democrats may ignore Schwarzenegger's special-session budget
...Schwarzenegger will offer a last-ditch budget proposal Monday to close a $6 billion deficit over six months, but don't expect his ideas to go very far.
Painful projection: $6.2 billion deficit
State's short-term and one-time budget fixes didn't address underlying problems.
Congress passes 15-day funding bill
On Thursday, the day before a temporary federal budget was set to expire, the Senate passed another Band-Aid measure that will fund federal operations for another 15 days.

States Lift Spending After Spell of Cuts
State government spending is growing again amid higher taxes and a slowly improving economy, although budgets continue to face severe pressure.
State budget stress to grow, governor group says
In order to help close state budget gaps, 39 states made $18.3 billion in mid-year budget cuts to their fiscal 2010 budgets while 14 states have already made $4.0 billion in cuts to their fiscal 2011 enacted budget.
John Boehner set to slice up spending bills
House Republicans are devising a plan to simplify spending decisions by considering government funding bills on a department-by-department basis in the new Congress, according to Republican insiders.
Commission's final deficit report preserves controversial spending cuts
...fiscal commission released a final report Wednesday that is full of political dynamite, recommending sharp cuts in military spending, a higher retirement age and reforms that could cost the average taxpayer an extra $1,700 a year
Scooping up Uncle Sam's loose change
The report singles out a few potential targets. One of them is job training. Nine separate federal agencies fund a total of 44 such programs, according to the report. How about the 20 programs at 12 agencies devoted to the "study of invasive species"? Or the 105 programs charged with promoting "participation in science, technology, education and math."
Big Hurdles to Jump to Keep Plan from Being DOA
Deficit reduction is about more than accounting. It's about the size, shape and nature of government.
Congress moves on continuing resolution
On Wednesday, the House approved the measure to give the government another 15-day extension of the continuing resolution under which it is currently operating by a vote of 239 to 178.
Deficit Plan Wins Backers
Bipartisan Support Adds Momentum Despite Sharp Criticism From Left and Right.
As Final Debt Plan Is Released, Signs That the Fight Is Just Beginning
...with opposition from four House members on the panel — three Republicans and one Democrat — and with several other commission members indicating that they were leaning in that direction, the panel seems all but certain to fall short of Mr. Obama’s 14-vote threshold for sending a package to Congress for a vote.
Deficit panel leaders upbeat
Critics on right and left assail tax, budget proposals.

States face $41 billion in budget gaps
The start of the 2012 fiscal year is still seven months away for most states, but the gaps are already appearing.
After Meeting, Obama and Republicans Hopeful About a Deal on Bush Tax Cuts
On Tuesday, according to people in the room, both sides engaged in the kind of cross-party dealmaking that seems to have faded away in today's Washington.
Debt panel's plan would cut $4 trillion
Called "The Moment of Truth," the report is an amended version of a plan put out three weeks ago by the panel's co-chairmen, Erskine Bowles and Alan Simpson.
Commission's final deficit report preserves controversial spending cuts; panel to vote Friday on whether to endorse plan
The leaders of President Obama's fiscal commission released a final report Wednesday that is full of political dynamite, recommending sharp cuts in military spending, a higher retirement age and reforms that could cost the average taxpayer an extra $1,700 a year.
Europe Debt Fears Pile Pressure on Spain, Others
The yields on Spain's 10-year bonds jumped as high as 5.7 percent — a euro-era record difference of 3.05 percentage points against the benchmark German 10-year bond — before easing to 5.5 percent on the close.
New CR Ready, But Earmarks Handicap Endgame
The current CR expires Friday, and Congress must pass an extension before then to provide additional time for lawmakers to decide how to wrap up fiscal year 2011 spending; extend the 2001 and 2003 tax cuts, which expire at the end of the year; and extend unemployment insurance benefits, which begin to expire today.
It's spending cuts vs. tax increases
That 14-vote supermajority is crucial, according to commission staff director Bruce Reed, because of a commitment from Senate Majority Harry Reid (D-Nev.) to hold a vote on the recommendations if such a consensus is reached.
Can They Push Their Deficit Plan Across the Goal Line?
The co-chairmen of the presidential fiscal commission are finding it hard to line up a majority of members behind their plan for reducing projected budget deficits by $3.8 trillion over the next decade.
Delaying Vote, Debt Panel Splits on Taxes and Spending
They said the delay was to provide more time to look at the final package, but it also gave them further opportunity to woo some of the 12 members of Congress on the commission, six from each party, whose support will be critical if the plan is to be taken seriously as a blueprint for eventual legislation.
Debt Infection Continues to Spread
Italy's Borrowing Costs Jump; Rise in Interbank-Lending Rates Rattles Investors.
Europe Examines Ways to Quell Its Debt Crisis
No one thinks that the financial problems of Italy and Belgium, much less Germany, are nearly as serious as those of Greece, Ireland and Portugal, which also suffered a blow on Tuesday when Standard & Poor’s warned of an impending downgrade of its credit rating.
U.S. Senate Rejects Proposed Three-Year Ban on Lawmakers' Budget Earmarks
The chamber voted 56-39 to reject a proposal that would have gone beyond a non-binding moratorium Republicans adopted for their party earlier this month. Today’s proposal would have allowed any lawmaker, for three years, to halt legislation determined to include spending or tax earmarks.
Public Favors Spending Cuts to Reduce Deficit, but the Question Is What to Trim
...most Americans believe both spending cuts and tax increases are in store. Seventy-nine percent say some services will have to be cut to get the budget under control while 65 percent predict that some taxes will have to be increased.

Irish bailout terms provoke risk of revolt over next week's budget
Fine Gael denounces 'high' interest rate on loan and threatens to reject €6bn cuts tabled by coalition government.
Obama's debt commission to vote on controversial spending
That report will be an amended version of a plan put out three weeks ago by the panel's co-chairmen, Erskine Bowles and Alan Simpson.
TARP expected to cost U.S. only $25 billion, CBO says
The Troubled Assets Relief Program, which was widely reviled as a $700 billion bailout for Wall Street titans, is now expected to cost the federal government a mere $25 billion - the equivalent of less than six months of emergency jobless benefits.

Alarm over U.S. debt creates 'window' for tough choices
If Americans aren't prepared for the hard choices needed to control the national debt, most voters here must have missed the memo.
Obama debt commission: It's almost a wrap
After working for eight months, the 18 members of President Obama's bipartisan deficit commission will finish their deliberations this week over how to reduce the nation's long-term debt.
Portugal, Spain hit by investor fears over debt
Portuguese and Spanish borrowing costs rose sharply Wednesday as investors worried that the governments' debt loads will prove unsustainable, putting them next in line for a European bailout, and as a major public sector strike hit Portugal.

Economist Comments
Norquist and Barton: Control Spending to Balance the Budget
Memo to the 112th Congress: Want to fix what’s wrong? It’s really simple and really difficult: Spend less, balance the budget, grow more.
How to Shrink the Deficit
President Obama's deficit commission lands with a predictable political thud.
Judd Gregg: Why the fiscal commission's plan is the way forward
It should not be viewed as the ultimate solution. But it is a template for governance, something that has been sorely lacking as the country sinks deeper and deeper into debt.

The Income Gap and Deficit Reduction
The most important inequality is inequality of happiness or well-being, not inequality of income.
Not a Government Policy
Income inequality is the wrong focus for government policy.
Our view on defense spending: Don't spare the Pentagon from the budgetary ax
No one wants to look weak on defense, or unsupportive of the troops.
Simpson-Bowles: $4 Trillion of Beltway Mumbo Jumbo
In the here and now, where it counts, the plan amounts to an earnest pinprick and little more.
The Politics and Economics Of a U.S. Debt Default
At this point U.S. politicians have shown no spending discipline no matter the party in power. In that case, if market discipline proves the only cure for the spending disease, then we should embrace a U.S. debt default without reservation.
A fiscal mess our leaders won't face
The truth is that there is deep denial on all sides on what it will take to put our fiscal house in order.
A Spanish Inquisition
With Ireland's financial woes exposed, Spain's similarities warrant inspection.
More Than Money at Stake in Europe
As Ireland's bailout fails to stop contagion, risks spread and potentially deepen.

Trivial Tweaks to the Growing Deficit Don’t Count
What looks like a budget concession on the surface – freezing Federal civilian pay – is a trivial tweak to the trillion dollar federal deficit.

Europe's Single Debt Zone
The permanent crisis-management fund will only make permanent crisis more likely.
Appropriators Prepare for Low-Pork Diet
Power to un-spend could overshadow power to spend.
Markets Remain Focused on Debt Crisis
Several European countries — in particular Italy, Portugal, Spain and Belguim — saw spreads increase against the benchmark 10-year German bond as investors sold off government bonds.
New Deficit Plan Calls for Stimulus Spending
The Economic Policy Institute, the Century Foundation, and Demos released a debt-reduction plan today, calling for short-term stimulus spending followed by a stabilization of debt levels at about 90 percent of the gross domestic product in 2025.
A route to cutting the deficit
[Simpson and Bowles'] most extreme suggestion is to eliminate all tax expenditures, raising $1 trillion a year in additional tax revenue, and then use all but $80 billion of that to cut tax rates.

For Tottering States, Bankruptcy Could Be the Answer
A state bankruptcy law would not let creditors thrust a state into bankruptcy--that would violate state sovereignty. But it would allow a state government going into bankruptcy to force a "cramdown," imposing a haircut on bondholders, and to rewrite its union contracts.
A look back at past presidential fiscal commissions
As we look forward to the December 1 report from the Administration’s National Commission on Fiscal Responsibility and Reform, we thought it might be useful to take a look back at the successes – and the failures – of past presidential commissions.
EDITORIAL: Pork for perks
In addition to being expensive and corrupting, earmarks distract attention from other abuses of taxpayer dollars.
Will the next fiscal crisis start in Washington?
With more than 70 percent of U.S. Treasury obligations held by private investors scheduled to mature in the next five years, an erosion of investor confidence would lead to sharp increases in government and private borrowing costs.
Was deficit commission doomed from start?
Some, like the Kerner Commission on the urban riots of the 1960s, break through those roadblocks and help address major problems. But many commissions get swamped by the politics that led to their creation and produce very little.

Don't believe the hype: The deficit proposals are plenty progressive
Let's agree on the facts, regardless of the politics: the Bowles-Simpson plan and Rivlin-Domenici plan will raise taxes on the rich. Not marginal tax rates, but average tax rates.
How Europe's Debt Crisis Could Infect America economists and U.S. government officials connect the dots, it's becoming clear that a broader crisis in Europe could quickly destabilize America's banking system and perhaps the whole U.S. economy.
Europe Debt Crisis: Halt the Contagion, Before It’s Too Late
No sooner than Ireland accepted a $112 billion financial rescue on Nov. 28, after Greece’s $102 billion bailout package back in May, the markets zeroed in on the troubles in Portugal.
Re: Debt Commission, Obamacare, and the GOP — a Question
The biggest problem with the commission’s report is that fails to address the explosion in entitlement spending driven by Medicare and Medicaid.
Lobbying on the Estate Tax: Cui Bono?
...there are more economically efficient ways to deal with the problems posed by large estates, like simplifying the income tax, eliminating the capital-gains step-up on inherited assets, and possibly taxing inheritances as income.
Barry Eichengreen on the Irish bailout
Barry Eichengreen has a magnificent, angry piece about what happened last weekend in this morning’s Handelsblatt.

The President’s Fiscal Commission: It’s a Start
...the report recognizes, to its credit, that our corporate income tax structure puts U.S. corporations at a considerable competitive disadvantage against their foreign competitors.
Government spending and the 1990s
The 1990s saw a surplus because of post-Cold War cuts in military spending and cuts in federal programs, not because the marginal tax rate went up.
Bright Spots in Fiscal Commission Report
Three of the report’s main themes are on target: the need to make government leaner, the need to cut business taxes to generate economic growth, and the need to impose tighter budget rules to discipline spending.
Would the Bowles-Simpson proposal raise or lower your taxes?
How will a proposed budget affect your taxes? It depends entirely on how you define now. 'Current law' and 'current policy' turn out to be very different baselines.
Republican Earmarkers Already Enabling Higher Government Spending
The problem is that the votes earmarks secure from the sponsoring legislators then allow for ever higher levels of spending on other federal programs.
What will it take to avoid European defaults?
...if the market is right and a bondholder haircut is inevitable, what happens to fragile, debt-holding European banks?

Are All Farms Created Equal When It Comes to Subsidies?
It's true that government support for large commercial farms is unfair and inefficient, but it's not any fairer to turn around and favor their smaller, less productive, less resilient counterparts.
Was private or public debt at fault in Europe?
Once sovereign default is in play, De Grauwe predicts self-reinforcing downward spirals can destroy [the] eurozone.
Is the Euro Dead? No, But It's Pining for the Fjords . . .
Belgian debt levels are actually pretty eye-popping, and they seem to be embroiled in a slow-motion political crisis that could reasonably raise fears about this debt being repaid; Business Insider had an entertaining little primer a while back.
Should States Be Able to File for Bankruptcy?
Despite signs of skittishness in the municipal bond market and increasing budgetary pressures, states continue to avoid the kind of austerity measures that are going to be necessary to balance their books while meeting pension obligations.
Still a crisis of confidence
Markets are underestimating Europe's determination to resolve the escalating crisis. Exactly. And that, in turn, implies that Europe is not adequately demonstrating its determination.

US Treasuries: China is #2
When it comes to US Treasuries, the big dog is now–wait for it–the Federal Reserve.
White House Federal Pay Freeze Proposal Is a Start
This is a start, but its barely reaching for the belt. With a projected $1.3 trillion deficit for fiscal year 2011, a pay freeze is more a token offering than anything else.
Morning Bell: Don’t Let Obama Pay Plan Freeze Real Reform
President Obama’s partial pay freeze would save only $28 billion over five years. Sherk’s federal pay reforms would save taxpayers $47 billion every year.

Concerns about Spain
"Another concern is that the central government’s cost-cutting zeal might not be matched by regional and local authorities, which accounted for 57 percent of public spending last year."
Deficit Reduction From the Left
Suddenly, it seems, the conversation inside the Beltway has shifted from whether to attack the deficit to how to conquer it.

Fiscal Commission Report: Too Much Taxes, Not Enough Spending Cuts
Federal spending—rising from its historical average of 20 percent of the economy to a projected 26 percent by the end of the decade—is the moving variable.

A Plan to Cut Spending and Balance the Federal Budget
Federal spending is soaring, and government debt is piling up at more than a trillion dollars a year. Official projections show rivers of red ink for years to come unless policymakers enact major budget reforms. Unless spending is cut, the United States is headed down the road to economic ruin.

The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform
Deep down, every American knows we face a moment of truth once again. We cannot play games or put off hard choices any longer. Without regard to party, we have a patriotic duty to keep the promise of America to give our children and grandchildren a better life.

Employment News Nov 29 - Dec 3

High jobless rate streak could break '80s record
Not since the early 1980s has the nation's unemployment rate been so grim for so long, a government report due Friday is likely to show.
How jobs growth forecast was done
Economic consulting firm Moody's has forecasted U.S. job growth by geographic region and by industry. This interactive was updated Dec. 1, 2010.
November jobs report: Unemployment rate up
The government's monthly labor report threw a curve ball Friday morning as November's job growth came in far lower than expected and the unemployment rate rose to 9.8%.
Republicans Blame Democrats for Rise in Jobless Rate
Democrats and Republicans continued sparring over economic policies Friday as new numbers showed unemployment rising from 9.6 percent to 9.8 percent in November, the highest rate since April.

Pay will go up for many, despite Obama's proposed freeze
The federal pay freezre proposed by President Obama on Monday will not be absolute.
Fewer Americans Filed Jobless Insurance Claims in Past Month
Fewer Americans filed claims for unemployment insurance payments over the past month, showing the job market is beginning to improve.
White House to Issue Report Showing Harm From Jobless Benefits Expiration
The White House plans to release a detailed report showing how the cut-off in jobless benefits will hurt families and the economy, as the administration tries to pressure Republicans to extend long-term aid which started to dry up Wednesday.
Initial unemployment claims tick back up
The number of initial claims rose to 436,000 last week, up 26,000 from a revised 410,000 claims filed the week before, the Labor Department said Thursday.
Congress lets unemployment benefits expire: 'What now' and six other questions
Congress on Tuesday failed to renew an extension of unemployment benefits that it passed at the end of July. Democrats have argued that with unemployment at 9.6 percent, many people still need help. Republicans say they would like to help the jobless, but want the $5 billion per month cost to be funded by a spending cut somewhere in the federal budget.
Smaller Firms Still Hesitant to Hire
Job Growth Remains Modest as Businesses Hold Out for Clearer Economic Picture

Millions may lose jobless benefits as holidays loom
Extended unemployment benefits for nearly 2 million Americans begin to run out Wednesday, cutting off a steady stream of income and guaranteeing a dismal holiday season for people already struggling with bills they cannot pay.
Delta Air Lines is Hiring 1,000 New Flight Attendants; More Than 100,000 Applied
Delta Air Lines is having what might possibly be the most-popular job search in a long time: More than 100,000 people have applied for just 1,000 openings as flight attendants.
Private-sector job growth biggest in 3 years
Payrolls among private employers rose by 93,000 in November, the 10th consecutive month of increases, payroll processor ADP said in its report.

Last unemployment check is in the mail
Although the deadline to file for extended unemployment insurance is officially Nov. 30, many jobless have already filed their last claim for benefits.
Jobless aid loss could choke economic growth
Unemployment benefits boost growth because jobless spend every penny

Economists Comments
Government By Executive Order
A new Labor Department plan shows the president still has wide power to implement an anti-business agenda.

Can business leaders create clean jobs?
Everyone is talking about creating more green jobs, but few people seem to know how to actually do it. That got Chad Holliday, the former CEO of DuPont and current chairman of Bank of America (BAC, Fortune 500), thinking about solutions.
Don't Freeze Federal Pay. Cut It.
Improving Obama's wishy-washy plan to hurt some workers without helping others.

Jobless claims near 9 million, including 5 million on 'extended' benefits
Jobless claims are at 8.77 million, including 26,000 new claimants and 4.9 million receiving federal 'extended' unemployment benefits.
Where are the jobs?
Employment in America turned in a surprisingly poor performance in November, indicating that recovery still hasn't gotten the job creation machine turning steadily.
How’s that Stimulus Working, Mr. President?
The Bureau of Labor Statistics announced this morning that the unemployment rate jumped to 9.8 percent last month. As you can see from the chart, the White House claimed that if we enacted the so-called stimulus, the unemployment rate today would be about 7 percent today.
Employment Summary and Part Time Workers, Unemployed over 26 Weeks
Here are a few more graphs based on the weak employment report ...
Who Knew the Economy Was So Dependent on Unemployment?
It is important to keep in mind that while we wish to help people in need, unemployment benefits may not be the best way to do it. That’s because there are unintended consequences to subsidizing unemployment. For instance, numerous studies, including some by Larry Summers, have found that increasing the length of duration of potential unemployment benefits increases the average length of unemployment.
Why Didn’t Retailers Hire?
There was widespread weakness in the November jobs report with state and local government, factories and construction firms cutting positions, but the biggest surprise came from a decline in retail jobs.

Public Sector Wages: Freezing, Hiking, Measuring
The Obama Administration is receiving a range of reviews for its decision to freeze federal employee pay for the next two years. Is it a mark of good fiscal management, or a symbolic gesture. As expected, public unions don’t like it. Though few are praising Iowa’s departing Governor’s decision to do the exact opposite and approve a six percent wage increase for state workers.
Private sector jobs grow, but recovery still anemic
ADP report says private employers added 93,000 jobs in November.
Is There Room for Compromise on Unemployment Insurance?
Last night the Senate allowed unemployment insurance benefits to lapse for those Americans who have been receiving such benefits for 99 weeks or more. What will happen to the unemployment rate? Let’s look at it in the short-run and in the long-run.

A Breaking Trend in U.S. Layoffs?
To confirm that a clear break from the trend established since 21 November 2009 has occurred, we will to see the number of seasonally-adjusted initial unemployment insurance claim filings drop below 401,000 for the week of 27 November 2010 and to sustain that lower level in the weeks ahead.
With Unemployment Benefits, It’s the Invisible That Truly Matters
With a vote on unemployment-benefit renewal set to come before Congress yet again, a great deal of discussion about its impact is to be expected. If so, it should be hoped that this time around the less visible effects of jobless benefits can be considered.


Monetary News Nov 29 - Dec 3

Republicans to Fed: Forget about jobs
For more than 30 years, the Fed has been tasked with a so-called dual mandate, which outlines two important goals: keep prices stable and maximize U.S. employment. But some critics are sick and tired of the Fed prioritizing job creation at the risk of rising prices.
The future of the euro
The euro is proving horribly costly for some. A break-up would be even worse.
Fed Created Conflicts in Improvising Financial System Rescue
This week’s disclosures of data from the Fed’s rescue efforts during the 2007-2008 financial crisis show how the central bank employed companies to help design or run programs they could use to their benefit.
China's risky inflation offensive
One central bank is sticking to its exit strategy, but hang on tight: Even optimists don't expect the ride to be silky smooth.
Cross Section of Rich Invested With the Fed
The investors, whose identities were disclosed as part of a trove of 21,000 records released on Wednesday at the direction of Congress, are a cross-section of America’s wealthy — investors who, in the midst of the worst financial crisis since the Great Depression, heard about an opportunity and weighed the risk.
Monetary Policy: Fed Critic Ron Paul's Power Play
The Fed critic and gold bug could chair the House panel on monetary policy.

Euro to struggle vs dollar and pound: Reuters poll
The battered euro will fail in the coming year to recoup its recent sharp losses as the debt crisis in the bloc rumbles on and fears over the economic stability of periphery members weighs on minds, a Reuters poll found.
Fed aid in financial crisis went beyond U.S. banks to industry, foreign firms
The financial crisis stretched even farther across the economy than many had realized, as new disclosures show the Federal Reserve rushed trillions of dollars in emergency aid not just to Wall Street but also to motorcycle makers, telecom firms and foreign-owned banks in 2008 and 2009.
Fed ID's companies that used crisis aid programs
The Federal Reserve revealed details Wednesday of trillions of dollars in emergency aid it provided to U.S. and foreign banks during the financial crisis.
Suddenly, Bernanke's Fed is a favorite punching bag. Why the pounding?
Ben Bernanke and the Fed are being lambasted, especially by GOP lawmakers, over policies to stimulate the economy. Some worry the criticism will sap the Fed's effectiveness.
Fed May Be `Central Bank of the World' After UBS, Barclays Aid
Federal Reserve data showing UBS AG and Barclays Plc ranked among the top users of $3.3 trillion from emergency programs is stoking debate on whether U.S. regulators bear responsibility for aiding other nations’ banks.
Fed Officials Push Fiscal Stimulus
Top Federal Reserve officials are pressing lawmakers to pair a long-term plan for deficit reduction with new short-term fiscal stimulus to boost an economy that the central bank admits needs more help than it can provide.

Volcker Says Dollar's Role in Danger as U.S. Influence Declines
Former Federal Reserve Chairman Paul Volcker, who is chairman of President Barack Obama’s Economic Recovery Advisory Board, said the U.S. dollar is in danger of losing its role as a global benchmark currency.
Fed's Bernanke worries slow economy limiting job growth
The economy isn't growing fast enough to significantly reduce unemployment and low consumer confidence remains a barrier to a faster recovery, Federal Reserve Chairman Ben Bernanke said.

Economists Comments
Why Do We Have a Central Bank?
Why do nations have central banks? Countries have developed without one, and sophisticated financial systems have evolved in their absence. Some countries with a central bank have suffered for having one. Zimbabwe comes to mind.
Sunlight shows cracks in crisis rescue story
It took two years, a hard-fought lawsuit, and an act of Congress, but finally on Wednesday, the Federal Reserve disclosed the details of its financial crisis lending programs.

Too Big to Succeed
The Treasury and the Federal Reserve took actions that saved businesses and jobs and may very well have saved the economy itself from ruin. Still, the public seems ungrateful, expressing anger at these institutions that saved the day.
There Is Nothing in QE2 Worth Conserving
David Beckworth has offered a thoughtful, but I believe ultimately flawed, "conservative case" for the Federal Reserve's latest round of quantitative easing.
Why Quantitative Easing and Fiscal Stimulus Are Unnecessary
The Fed and the government should immediately stop what they're doing and get out of the way of a recovery.
Fed Was Buying Debt Issued by McDonald's and the Republic of Korea -- Why?
The long-awaited Fed bailout data was released today and details from the Commercial Paper Funding Facility are particularly interesting.
Fearing The Reaper: QE2, The 1970s And Rerunning The 1930s
Slaying the dangerous myth that money creation is economically stimulative.

Is This the End of the Money-Printing Era?
If monetary stimulus ends and we start recognizing losses rather than trying to roll them forward, we can lay the foundation for a new era of prosperity.
What Ben Bernanke May Be Thinking
The Fed's easy money could help banks reset underwater mortgages and start lending again.

QE2: It's About Debt, Not The Economy
Chairman Bernanke also downplays evidence that 12 months of a 1% Federal funds rate in 2003-2004 contributed to the housing bubble and subsequent collapse. Now, after maintaining a 0% Federal funds rate for nearly two years, he shows no inclination to raise short-term interest rates.
Beg, Borrow, Zeal: Gorging on America’s Liquid Diet
While you were eating turkey and trying to find a parking place at the mall late last week, those supposedly feckless Europeans were actually pretty hard at work. Of course, they had to be — the alternative was to see their financial system collapse. Here’s what they were up to:
What is Ben Bernanke thinking?
One counterintuitive theory is that the Fed chairman realizes that the policy has little chance of dramatic success. The U.S. economy suffers from excess capacity, Bernanke argues, a situation that is unlikely to correct itself any time soon given consistently high levels of unemployment.
The Phillips Curve Does Not Work
At this point, inflation won't solve the problems of low output and high unemployment.

QE2: Can It Be Anything But Disaster for Europe?
And the bigger problem: It won't be possible to contain contagion to Europe alone.

Can Europe's economic system survive its debt crisis?
As contagion spreads in Europe, political and economic leaders continue to struggle to find a real solution.
Default, departures or denial?
Mr Lachman argues that the euro zone has a solvency problem not a liquidity problem.
Why Quantitative Easing And Fiscal Stimulus Are Unnecessary
The government’s response to this crisis has been almost entirely wrong and has served to only delay the recovery by thwarting the liquidation process and reallocation of capital from bad deals to profitable ones.

The market is falling! The market is falling! And it has a long way down to go.
Real prosperity doesn't come from printing new money, and as long as the Fed thinks it does, it just delays the inevitable crash.
A Mono Mandate for the Fed?
If the Fed's mandate were different, monetary policy today might well be the same. That is, with inflation now below its target, the Fed could be pursuing QE2 even if it were operating under the proposed mono mandate.
QE2: Beware the Perils of Its Success
The Fed's plan is like a prescription that comes with a list of side effects that are often worse than the disease it was supposed to cure. Unintended consequnces could include stagflation and higher interest rates.

David Wessel’s Curious Defense of the Fed’s Ambiguous Mandate
Instead of looking ahead, Wessel looks back.   He writes, “prices rose at only a 1% annual rate in the third quarter, the Commerce Department said Tuesday.” The implicit price deflator for GDP rose by less than 1% in 2009, then at a 1.1% rate in the first quarter, 1.9% in the second and 2.3% in the third.  That is insufficient evidence of a worrisome trend.
Why I don’t believe in liquidity traps
There may be some cases where central banks are limited by laws regulating the sorts of assets they are allowed to purchase, but I know of no real world cases where that was a determining factor.  Indeed I know of no case where a central bank that wished to boost inflation and/or NGDP was unable to do so.  Nor do I think we need ever worry about that scenario actually occurring.
Secondary Sources: QE2 Criticism, China, Deficit Reduction
A roundup of economic news from around the Web.

Can the Euro Survive?
The Euro confronts an existential challenge as a sovereign debt crisis rages across
Greece, Ireland, Portugal, and Spain. In May 2010, this crisis forced the European
Commission to abandon its earlier “no bail out” policy and to establish, together with the IMF, a massive safety net for the European periphery. Despite this safety net, by end-November 2010 markets demanded record high interest rates on the European periphery’s sovereign debt

What’s Missing from the QE2 Debate
Unprecedented policy risks—both monetary and fiscal—abound as we move toward 2011. Deficit-reduction measures in the new Congress and pressure to scale back the second round of quantitative easing (QE2) could stunt U.S. economic growth and further dampen the global recovery.

Tax News Nov 29 - Dec 3

Senate Showdown Saturday: Tax Cut Votes on the Way
The two Saturday votes will be on the House-passed bill to extend tax cuts for Americans earning under $250,000 a year and another from Sen. Chuck Schumer, D-N.Y., to raise the threshold to $1 million a year.
Tax-Cut Vote Shows Democratic Divide
House Passes Extension Excluding Higher Incomes, a Largely Symbolic Effort Reflecting Unhappiness With White House.
DREAM Act Would Cost Taxpayers $6.2 Billion Per Year, Group Says
The CIS says its $6.2 billion estimate is conservative and does not include the "modest" number of illegal immigrants expected to attend private institutions.

Panel pitches $3.9 trillion in federal deficit cuts
...with a vote slated for Friday, more than half its members — including both Democrats and Republicans serving in Congress — appear ready to sign a plan that would slash spending, raise taxes and make Medicare and Social Security less generous.
IRS Chief Warns Against Delayed Action on Expired Tax Breaks
The Internal Revenue Service warned lawmakers of filing-season delays and operational challenges in 2011 if Congress doesn’t act this month on tax breaks that expired at the end of 2009.
RETIRING: The Ins-And-Outs Of Roth IRAs
Under current law, contributions to Roth IRAs are made on an after-tax basis and distributions are tax-free. But given the federal deficit, is it possible the government will revise laws to make distributions from a Roth IRA taxable?
Senate Republicans Vow to Block Dem Legislation Until Tax Cuts, Budget Pass
Throwing down the gauntlet, all 42 members of the GOP caucus are sending the letter to Senate Majority Leader Harry Reid warning him that they will bring matters to a standstill unless he swiftly brings those tax-and-spending issues to the floor.
House to Vote on Middle Class-Only Tax Cuts
House Democrats scheduled a vote for Thursday to extend Bush-era tax cuts for the middle-class while letting breaks for high earners expire, a plan House Republican Leader John Boehner of Ohio called, "a Washington stalling tactic with job-killing implications."
Signs Point to Extending All Tax Cuts Temporarily
Republicans and Democrats Wednesday sat down to negotiate a compromise on extending Bush-era income tax cuts—an effort that could be the first step toward a deal this month that many strategists in both parties believe will temporarily extend current tax rates for all income levels.
Inmates Cash In By Claiming Tax Refunds
Nearly 50,000 prison inmates claimed more than $130 million in tax refunds this year without providing any wage information to the IRS, a government investigator says in a report to be released Thursday.

Who will get Bush tax cuts? Congress can't decide.
Unable to agree on who should be eligible to continue to receive the Bush tax cuts, which expire Jan. 1, President Obama and congressional leaders decided to convene a panel Tuesday.
Mortgage Tax Break in Crosshairs
The chairmen, who head the National Commission on Fiscal Responsibility and Reform, told reporters Tuesday they would delay a final vote on their package until Friday, because they wanted to give the group's 16 other members more time to study their recommendations.
State Tax Revenue Continues Rebound, Grows 3.9% In 3Q
Tax collections increased 3.9% in the third quarter compared to a year earlier, based on data from 48 states, the report said; 42 of them showed gains in overall tax revenue.

Value-added tax, or VAT, back as proposal to solve revenue ills
Seven months after the Senate knocked down the idea of a value-added tax, the VAT is back on the table -- one of a host of familiar proposals that has been recycled as a proposed answer to the nation's financial problems.
Republicans Send Mixed Signals Ahead of Meeting With Obama
The looming expiration of the Bush tax cuts was expected to take centerstage as the president sat down with Republican and Democratic congressional chiefs Tuesday morning.
Pence embraces flat tax
Indiana Republican Rep. Mike Pence would scrap the current tax system and replace it with a flat tax for all citizens.

How Congress' tax-cut decision may affect economy
It isn't just a debate over how much money high-income Americans should get to keep. It's about how much their tax cuts might aid the economy.

Economist Comments
Tax squabbling earns Congress failing grade
If members of Congress were taking a tax policy course, chances are good they'd get an "F."
The White House's Tax Blink
Is the president getting serious about striking a deal with Republicans?

Taxpayers, who has your back?
Washington continues to spend U.S. taxpayers' dollars with reckless abandon, with the IMF's bailout of Ireland being just the latest example.
Slash the deficit! (But cut the payroll tax)
Tucked in among the controversial spending cuts proposed by President Obama's debt commission Wednesday, was a little piece of stimulus -- a tax break that could benefit workers.
Cut Tax Expenditures, and Taxes
Unless tax expenditures are balanced out with lower rates so that there is no net revenue gain to Uncle Sam, higher taxes and higher marginal tax rates mean that individuals will work less, hire fewer employees, invest less in their businesses, and look to invest more resources overseas.
Nancy Pelosi's Unwelcome Christmas Gift
A couple earning $80,000 could lose hundreds per month if the Bush tax rates aren't extended.

The Dead Enders
Even after their defeat, Democrats keep insisting on a tax increase.
Ugly Tax Bill Is Washington As Usual
Americans may have voted for change in November, but for now it is business as usual in Washington. Just take a look at the messy tax legislation that is working its way through Congress under the euphemism of a ‘tax-extenders' bill.
Why the Spending Stimulus Failed
New economic research shows why lower tax rates do far more to spur growth.
Keep the Cuts, Cut the Breaks
A better approach would be to keep all the cuts, but only on the condition that we pay for them by junking the tax breaks that corrode our economy.

Will Congress 'Lame Walk' the '03 Tax Cuts?
It is vitally important to get tax policy right because, while its primary function is to raise revenue for the government, tax policy also figures prominently in the business plans of businesses in operation as well as those still on the drawing board.

Zero in on 2011's Tax Time Bomb and Leave 10-Year Plans for Later
The president can't possibly make any tax change permanent, since his term of office ends in two years.
FACT CHECK: Small business caught in tax battle
Both can't be right. And both are playing number games as the lame-duck Congress prepares to take up one of the most contentious issues of the postelection season: what to do about an array of about-to-expire Bush-era tax cuts?
Lame Ducks Will Take the Plunge on Bush Tax Cuts
A lame-duck Congress returns this week to decide the fate of the Bush tax cuts, the debt ceiling, and whether to extend unemployment insurance to millions.
Why Tax Filing Will Be Worse Than Usual
Millions of Americans will get their tax refunds late because of Congressional foot-dragging on the AMT.

Taxes and Uncertainty
...investors and businesses will face continuing uncertainty and the real prospect of a tax increase in one to three years.
Framing the Tax Debate for This Weekend
Increasing the top marginal tax rates to generate $650 billion to $900 billion in federal revenues over the next 10 years means that the same amount of money won’t be invested in the economy as consumption or savings.
Who Pays for Big Government?
Because the individual income tax is one of the few truly progressive taxes, and other taxes are regressive, the overall tax systems in Western Europe may not be as progressive as you might think.
American Taxpayers Should Not Bail Out the European Union
This I-told-you-so attitude is not very mature on my part, but one hopes that American politicians will learn the right lessons and something good will come from this mess.

Taxes and Uncertainty
No details yet, but reports are that they will extend the current tax rates for one to three years. That means investors and businesses will face continuing uncertainty and the real prospect of a tax increase in one to three years.
Fareed Zakaria's Right to Pay Higher Taxes Stops at My Right Not To.
We are in debt because we spend too much, not because we make too little as a country.
Robert H. Frank’s Non-argument for Higher Tax Rates
...several major studies showing that pushing the highest marginal tax rates even higher is extremely dangerous to economic growth; Stanford economist Michael Boskin lists half a dozen of them in his latest Wall Street Journal op-ed.
Secondary Sources: Hoenig on Banks, Tax Plan, German Imbalance
Howard Gleckman notes differences on taxes between the draft and final plans of the fiscal commission.
Estate Tax Bootleggers
The bootleggers and baptists model of regulatory influence strikes again.

Robert Gibbs Signals Temporary Extension of All Tax Cuts
President Obama’s only “line in the sand”, according to Gibbs, is opposition to a “permanent” extension of the tax cuts for the wealthy.
Death Tax and Democracy
The toll the death tax takes on family-owned businesses has been clearly documented as has its infeasibility as a federal budgetary tool.
The Booming Business of Bootlegging
With that kind of savings on the consumer end and that kind of money to be made on the bootlegger's side, we can say with confidence that New York's cigarette smuggling problem is only going to get bigger.
The Futility of Tax Hikes in Pictures
Our federal deficit problem can not be solved by raising taxes. The expected revenues will never materialize. Cutting spending, shrinking government, and allowing for more economic growth is the only way we can climb out of the hole we are in.
Tax Exemption for Health Benefits On Its Last Legs?
That policymakers have started tacitly acknowledging the exemption's problems is encouraging - let's hope the prognosis stays good.

Three Cheers for Switzerland as Voters Reject Class-Warfare Tax Hike in National Referendum
...Swiss voters, like voters in Washington state earlier this month, understood that giving politicians more money is never a solution for any problem.
Hauser’s Law: This Reality Isn’t Negotiable
...the federal government has never been able to get much more than 19 percent of GDP in tax revenues, no matter how high the top marginal tax rate goes.

The Economic Impact of a 25 Percent Corporate Income Tax Rate
The Heritage Foundation’s Center for Data Analysis (CDA) conducted a dynamic simulation of a reduction of the corporate income tax rate to 25 percent, comparing it to a baseline forecast of the economy with the current policy of a 35 percent corporate rate. The results of this simulation show the U.S. economy growing faster than the baseline in the 2011–2020 forecast horizon.

Health Care News Nov 29 - Dec 3

Hospitals, Labor Unions Blast Health Care Cost Cuts in Deficit Commission Plan
The health care cuts proposed by President Barack Obama's deficit commission would reach virtually every corner of society, making cost curbs in the new overhaul law look tame by comparison.

Senate blocks repeal of health care provision
The Senate has rejected efforts to repeal a tax provision that helps pay for President Barack Obama's new health care law. The provision requires nearly 40 million U.S. businesses to start filing tax forms in 2012 for every vendor that sells them more than $600 in goods.
HHS cost rules put states in middle
With pressure mounting from lobbyists for insurance agents, state regulators are scrambling to decide whether they want to apply for exemptions from the new federal rules stating how much insurers must spend on medical costs.
House Approves One-Month Medicare 'Doc Fix'
The legislation postpones a 23 percent cut in doctors' pay scheduled to take effect Wednesday. The short-term package extends the 2.2 percent increase in Medicare reimbursement Congress approved in June through December and buys time for lawmakers to work out a longer-term fix.

Tax break for employer health plans a target again
The goal is to finally to turn Americans into frugal health care consumers.
House to vote on Medicare rate cuts
The House on Monday is scheduled to take up a $1 billion measure delaying by one month a 23% cut in federal Medicare reimbursements to doctors.
'Extraordinarily proud' of health care reform
President Barack Obama, in a wide-ranging, reflective interview with Barbara Walters, staunchly defended his controversial policies — including sweeping health care reforms and the massive economic stimulus package — as bold but necessary steps to help transform an economy that was at the brink of collapse into one that is "growing."

Economist Comments
Repeal Health Care, Make GOP Cut Costs
Spurred by incentives in the federal health-overhaul law, hospitals and doctors around the country are beginning to create new entities that aim to provide more efficient health care.
Embracing Incentives for Efficient Health Care
President Obama should let Republicans repeal health care reform and come up with their own proposals, many of which he believes would likely resemble current law.

How to Tell When ObamaCare Supporters Are Nervous
Supporters have gone to great lengths to make ObamaCare appear popular or to make repeal seem impossible.

Navigating Next Steps on Health Care Reform
For many, finding reasons to repeal Obamacare is like shooting fish in a barrel. Yet while ditching the new law may look like an easy target, settling on a popular alternative is more elusive than people think.
U.S. Health Care Costs
The cost of having a baby in this country has skrocketed over the years. We just presume that you need lots of doctor visits and ultrasounds, that you will sue your ob-gyn for a zillion dollars if the baby is not perfect, etc.
Virginia Obamacare Lawsuit Dismissed
No, not the lawsuit brought by Virginia Attorney General Ken Cuccinelli, but rather one brought by Jerry Falwell’s Liberty University.  Most notably, the district judge found the individual mandate to be a lawful exercise of Congress’s powers under the Commerce Clause because:

Deficit reduction plan would tax health insurance
No more tax breaks for employee health insurance plans, according to Bowles-Simpson deficit plan.
What happened in 1980?
Something, for sure; this is expenditures on health as a percentage of gdp:

Obamacare: where are we?
Overall, the policy is shaping up to be a mess more quickly than I had thought, though not through the mechanisms I had been expecting.  It still seems to have too many jerry-rigged pressure points.

The Future of Health Care Reform: Paul Ryan’s “Roadmap” and Its Critics
The future of health care in America looks grim—but it does not have to be. Representative Paul Ryan (R–WI) has proposed “A Roadmap for America’s Future”—the only comprehensive plan in Washington that deals with the looming fiscal and economic crisis, driven by ever-increasing government spending on health care.

Not Enough Doctors? Too Many? Why States, Not Washington, Must Solve the Problem
The states are far better equipped than the federal government to address increasingly complex and serious health care workforce issues. But by enacting the Patient Protection and Affordable Care Act of 2010, Congress swells the costs and role of the federal government, while ignoring the critical role that states can—and should—play as a consequence of their existing oversight of key workforce areas.

General Economic News Nov 29 - Dec 3

Mortgage rates rise to 4.5 percent
Mortgage rates are going up as the economic outlook brightens.
Tracking the pulse of the economy
Economic index forecasts stabilized but modest growth.
Gold powers back into record territory
Gold prices jumped back above $1,400 an ounce Friday as the U.S. dollar slid following a surprisingly weak report on the nation's job market.
Services Sector Expands
The U.S. nonmanufacturing sector expanded in November, according to data released Friday by the Institute for Supply Management, but factory orders fell for the first time in four months in October.

Obama administration gives billions in stimulus money without environmental safeguards
In the name of job creation and clean energy, the Obama administration has doled out about $2 billion in stimulus money to some of the nation's biggest polluters while granting them exemptions from a basic form of environmental oversight, a Center for Public Integrity investigation has found.
Preliminary reports show November retail sales up
U.S. shoppers spent more in November, preliminary sales reports and new data show, as they responded to "Black Friday" deals and promotions that began early in the month.
Foreclosures made up 25 pct of US home sales in 3Q
The worst summer for home sales in decades also put a chill on foreclosure sales, even as the average discounts on the distressed properties got bigger compared with other types of homes.
Accelerating car sales aid economy
Early reports out Wednesday showed a significant strengthening of the economy last month, with another double-digit increase in auto sales and the largest gain in small-business jobs in three years.
Pending Sales of U.S. Existing Homes Rise a Record 10%
More Americans unexpectedly signed contracts to buy previously owned homes in October, easing concern that the absence of government support is destabilizing the housing market.
Bank of America Becoming Bank of Asia as Merrill Helps Boost Revenue 30%
Bank of America is headed for its best year advising on mergers and acquisitions in Asia-Pacific since 2005, and arranging initial public offerings since 2007, data compiled by Bloomberg show. The combined companies have generated 30 percent more revenue from traditional investment-banking businesses in the region than they did as separate entities.
Mixed Reaction to F.C.C. Internet Plan
The plan from the chairman of the Federal Communications Commission to ensure an open and neutral Internet drew mixed reviews on Wednesday from consumer advocates and Internet service providers, presenting the agency with an uncertain way forward as it considers new broadband regulation.

Productivity in U.S. Rises More Than Previously Estimated
The productivity of U.S. workers rebounded more in the third quarter than previously estimated, showing companies were focused on controlling costs.
House May Block Food Safety Bill Over Senate Error
A food safety bill that has burned up precious days of the Senate’s lame-duck session appears headed back to the chamber because Democrats violated a constitutional provision requiring that tax provisions originate in the House.
Obama's pay freeze for federal workers only limits raises
Many federal workers would still get pay raises the next two years despite the limited salary freeze President Obama proposed this week for 2.2 million government employees.
F.C.C. Chairman Outlines Broadband Framework
Thwarted by the courts, by lawmakers on Capitol Hill and by some of his fellow commissioners, the Federal Communications Commission chairman will try again on Wednesday to devise a new strategy for regulating broadband Internet service providers.
Foreclosures weigh on metro home prices
Millions of foreclosures and weak demand from buyers are forcing home prices down in most major U.S. cities.
Senate Passes Sweeping Law on Food Safety
The Senate passed a sweeping overhaul of the nation’s food safety system on Tuesday, after tainted eggs, peanut butter and spinach sickened thousands of people in the last few years and led major food makers to join consumer advocates in demanding stronger government oversight.
Holiday spirit hinges on taxes, jobless benefits
Economists urge lame-duck Congress to tread carefully
Economic Policy? More Listen to Conservatives
The Republican takeover of the House has energized scholars and researchers whose views on taxes, regulation and the proper scope of government fell out of favor after Democrats swept control of Congress in 2006 and took the White House two years later.

Cyber Monday sales show strength
Online sales on Cyber Monday surged nearly 20% from last year, according to findings from an analytics group released Tuesday.
Time to send the barber home?
The barber can put the scissors away for now. European politicians have given in to the tantrums of the markets: the threat of an ugly haircut for bondholders has been postponed for several years. Such is the conclusion one draws from Sunday's extraordinary meeting of European finance ministers. Whether it is enough to pacify the distressed markets as they re-open today, after dumping the bonds of the most vulnerable countries and sending their interest rates soaring, is a different matter altogether.
Businesses in U.S. Grow at Faster Pace Than Forecast
Businesses in the U.S. expanded at a faster pace than forecast in November, signaling the world’s largest economy was speeding up heading into 2011.
Europe Inflation Holds Steady; Jobless at Highest in 12 Years
European inflation held steady and unemployment rose to the highest in more than 12 years as the economy’s recovery loses some momentum.
Consumer confidence highest in 5 months
Optimism about the U.S. economy grew in November, pushing the latest reading on consumer sentiment to the highest level since June -- ahead of the holiday shopping period.
Gold gains on uncertainties, metals under pressure
Better than expected GDP figures of India announced today helped the domestic equities recover in today’s session. India reported GDP growth of 8.9% in the second quarter, as against 8.8% in the first quarter. However, poor global economic scenario continued to raise concerns in the global equities.
Home prices fall. Federal tax breaks still muddy picture.
The Case-Shiller 10-city index shows home prices down 0.5 percent since August.

Irish bailout helps banks, angers taxpayers
Ireland's international bailout relieved investors Monday but outraged many across the country who find that a requirement to raid state pension funds to protect foreign creditors unjustly burdens average taxpayers for the mistakes of a rich elite.
Taxes, budget and jobless benefits - Congress at the wire
The lame-duck Congress returns on Monday to a daunting agenda of economic issues.
Black Friday: More shoppers, modest sales
Preliminary reports of sales on Black Friday weekend are coming in.
Obama calls for federal wage freeze
President Obama on Monday will call for a two-year freeze in the wages of federal employees.
Foreclosure scandal impact: Sales dry up
Big banks are having trouble restarting the foreclosure process after this fall's "robo-signing" scandal, and the once booming market for foreclosed homes has been hit hard as a result.
Europe Sets Bailout Rules
Investors Face New Risk in Plan for Future Rescues; Ireland Seals $90 Billion Deal

Economist Comments
Wave goodbye to Internet freedom
FCC crosses the Rubicon into online regulation
Time to Shut Down the FCC
More transistors exist today than ever and there is plenty of capacity inside fiber-optic cables and out in the air. What's missing is competition for consumers.
Currency imbroglio: Estrangement problems of strange bedfellows?
Politicians, public servants, and commentators have been queuing up in recent months to raise their concerns about global imbalances, particularly the China-US imbalance. This column argues that while the two economies may present opposing public stances, they are quietly playing a tango that neither can step out of.

Hands Off of Our Internet
The Internet is once again under attack, not from hackers intent on spilling secrets or causing mischief, but by an administration intent on controlling the free flow of information that it views as a threat to its expanding power.
Washington is why the economy is not growing
With unemployment still near 10 percent, and experts saying that won't change much, if at all, in 2011, it seems clear the economy is dead in the water. We need look no further than right here in the nation's capital to understand why.
'Food Safety' and the GOP
Republicans enable more Obama regulation

A Financial Party Platter
Nine economic thoughts to nibble on as you recover from Thanksgiving dinner.
Warren Buffett’s Uncle Sam
The billionaire ignores Sam’s role in the housing collapse, not to mention the Fed’s

The Treatment of Married Women By the Social Security Retirement Program
Social Security's progressive benefit structure and annuity payment combine with women's lower average earnings and longer average life spans to provide women with more favorable treatment on a lifetime basis. This more favorable treatment does not necessarily imply that women are presented with stronger incentives to participate in the labor force and contribute to Social Security than are men. If anything, Social Security does the opposite.
It's A Self-Sustaining Recovery
Consumers are buying more, productivity is strong and government policy has taken a turn for the better.
How the Government Is Creating Another Housing Bubble
The administration has quietly shifted most federal high-risk mortgage credit initiatives to the government's original subprime lender.
To Know the Stimulus Worked, You Just Have to Believe In It With All Your Heart
Andrew Sullivan warns that “it is important to resist the facile narrative that somehow Obama proved he was a radical leftist because he supported a stimulus package (after Bush's) in the face of the worst recession since the 1930s.” Why? Because the stimulus, you see, it worked!
Don't understand the economy? It's not your fault.
Even economists don't fully understand the complicated global economy.
Ireland hangs on to its low corporate tax rate as if it's a life line
And it is. Ireland has resisted European pressure to raise its 12.5 percent corporate tax rate as part of a debt bailout deal. The rate is what fed this now weakened 'Celtic tiger' in the first place. The US could learn from this.

Public Still Feels Inflation's Pinch
By any widely recognized measure, U.S. inflation is extremely low, so low that the Federal Reserve wishes it were a bit higher. But many people don't see it that way.
The Triumphant Return of Hayek
Across the developed world, critics began to argue that government spending had reached the point of diminishing returns, and was producing an anemic recovery that mainly benefited special-interest groups. And the electorate listened. From Europe to the United States, as voters started to reward candidates focused on fiscal discipline and less government intervention, Keynesianism quickly fell out of favor.
The Hangover, Part II
New derivatives rules could punish firms that pose no systemic risk.

Maybe the coolest thing ever
OK, maybe it isn’t THE coolest thing, but it’s in the top 100.
Who Got The Bailout Money?
Who got the bailout money? Here is a list from Pro Publica which keeps track of these things.
Inequality Is Not the Issue
While the goal of protecting the most vulnerable people in our society is a good one, it shouldn’t be done by increasing the burden on those who are already paying the most by far. Actually, now that I think about it, inequality is the issue. It’s time that the cost of government stops falling systematically and more than unequally on top income earners.
Who Got The Stimulus Money?
Here is another list from Pro Publica which keeps track of Recovery Act spending. Read it and weep.

I am increasingly pessimistic about the fake nature of Wall Street as part of the capitalist system. It is part of the crony capitalist system. I am ashamed at how long it has taken me to notice this. But once you start paying just a bit of attention, it’s hard not to notice.
Why Work?
When it comes to insane policies, it's usually things like war, drone attacks on civilians, and serious violations of civil liberties that sends my blood pressure through the roof.  Today, it’s the thought about how mess up and maddening Entitlement America has become. 
How much did TARP cost? $25 billion
Despite critics' estimates that it would cost over $100 billion, TARP only cost $47 billion and recouped almost half of that.
World-Wide Factory Activity, by Country
Manufacturing growth slowed in the U.S. in November but activity picked up in other major economics, including China and the euro zone. Strength in the euro zone was led by France and Germany. Contraction, meanwhile, continued in the factory sectors in Brazil, Greece and Japan.
Costs of regulation 'staggering' for small businesses
The high costs associated with meeting EPA and IRS regulations are many times higher for small businesses than for their larger competitors, per capita.
Seven Years of Bad Policy: Government Maintains Offshore Drilling Ban
As the rest of the world continues to drill off its respective coasts, the United States is heading in the opposite direction.
OECD Sees Drop in Cross-Border Investment
The OECD said it now expects global flows of foreign direct investment to fall 8% this year, having declined 43% in 2009 and 19% in 2008. In 2009, global FDI flows totaled $1.1 trillion.
Why is New Zealand Different (from Greece and Ireland)?
There are two major differences that are worth noting.
How Would the Fiscal Commission’s Social Security Proposals Affect Benefits?
President Obama’s Fiscal Commission has released its final plan, part of which concerns steps to make the Social Security program solvent over the long term. These steps have generated some controversy, as some on the left argue that, since Social Security doesn’t contribute to the budget deficit, it shouldn’t be included in deficit reduction plans. Of course, this ignores the fact that Social Security faces a significant deficit of its own. It seems reasonable that both deficits—in Social Security and the rest of the budget—should be addressed.
Summary of a busy day
The Federal Reserve released details of borrowing by financial firms, and others during the financial crisis. Here are some articles:

Double dip
America's house prices are falling again
Euro Zone Members as U.S. States
Ireland is a small economy. How small? Its total output is roughly that of the state of Connecticut. But its troubles threaten to spread to other European economies, some small (like Portugal) and some sizeable (like Spain.)
A Look at Case-Shiller, by Metro Area
November Update
Cost-effective terrorism
Cargo-shipped explosives cost terrorists less than $5,000 but caused immeasurable anxiety as well as billions in preventative measures.
Secondary Sources: TARP, Commodities, Global Wealth
A roundup of economic news from around the Web.
What Austrian economics is – and what it is not
Austrian economics is a set of analytical propositions, not a set of policy conclusions or settled interpretations of history.
Macroeconomic Resilience
The Great Recession through a Crony Capitalist Lens
South Korea Trade Pact: More Important Than Ever
The economic case for the South Korea–U.S. Free Trade Agreement (KORUS) has been variously described as a “slam dunk,” a “pareto-optimal solution,” and “an easy ‘yes.’” However, aside from the economic arguments for KORUS, recent events in the Korean peninsula make approval of the agreement more important than ever.
Home Prices Decline as Consumer Confidence Remains
Consumer confidence came in at 54.1, up from just below 50.0 in October, but keep in mind that 90 to 120 is the neutral zone so that's actually a weak reading.

Sloan’s Social Security Claims Are Turkey
Writing in the Washington Post, Allan Sloan singles out Social Security personal accounts as a policy “turkey.” Both reasons Sloan gives, however, turn out to be wrong.
Random Notes on the Phillips Curve
Looking ahead, the next 12 to 18 months should be interesting. The unemployment rate has been so far above 6 percent for so long that if the Fuhrer equation holds up, we should be seeing some pretty strong downward pressure on inflation. Instead, if inflation remains between 0 and 2 percent, this will look to me like another anomaly for the Phillips Curve.
Federal Pay Freeze Is Wrong Amount, Wrong Policy
The point is that a one-size-fits-all pay structure doesn’t work well today and that a one-size-fits-all solution won’t improve things going forward.
Home Sales: Distressing Gap
Here is an update to a graph I've been posting for several years. This graph shows existing home sales (left axis) and new home sales (right axis) through October. This graph starts in 1994, but the relationship has been fairly steady back to the '60s. Then along came the housing bubble and bust, and the "distressing gap" appeared (due mostly to distressed sales).
The Consumer Spending Fallacy behind Keynesian Economics
The main insight of the mini-documentary is that Gross Domestic Product (GDP) only measures how national output is allocated between consumption, investment, and government. That’s useful information in many ways, but if we want more output, we should focus on Gross Domestic Income (GDI), which measures how national income is earned.
Obama Adopts Cato Pay Proposal
The Obama administration is supporting a two-year freeze on federal pay. I haven’t seen the details yet, but this appears to be a good start at getting excessive government pay under control.
Post-Thanksgiving Economic Review
After a nice Thanksgiving spectacle of turkey, pumpkin pie, relatives, cool days of bright California sunshine, and college football, it’s time to turn back to the serious business of the economy.
Post-Thanksgiving Economic Review
The latest data on Black Friday sales, unemployment, GDP growth, and more.

The Simpson-Bowles Social Security Plan
Chuck Blahous identifies the winners and losers.
Are We Entering Another Phase of Financial Crisis?
It's entirely possible that we'll eventually muddle through without a second major event.  But it's worth remembering that these things take a long time to unfold, and that we are often most vulnerable just when we think we have time for a breather.
What Austrian Economics IS and What It Is NOT
Since the start of the financial crisis and recession, there has been a renewed interest in the ideas of Austrian economics by scholars, public intellectuals, and even the media.  For the first time in a long time, the analytical framework of Austrian economics is being taken note of, if not taken seriously, by a variety of opinion makers.  This is, of course, a good development.
How to Improve Dodd-Frank
Oliver Hart and Luigi Zingales have a suggestion about how to improve the financial reform law.  Their goal is to "spare the most vibrant financial institutions from the rigidities and bureaucratization that a strict application of the Dodd-Frank bill would entail."
Schedule for Week of Nov 28th
The key report for the week will be the November employment report to be released on Friday, Dec 3rd. Other key reports include the Case-Shiller home price index on Tuesday, the ISM manufacturing index on Wednesday, and the ISM non-manufacturing (service) index on Friday.
Number of the Week: 492 Days From Default to Foreclosure
Banks can’t foreclose fast enough to keep up with all the people defaulting on their mortgage loans. That’s a problem, because it could make stiffing the bank even more attractive to struggling borrowers.

Exploring Alternative Ways to Present Estimated Future Social Security Benefits in the Social Security Statement
Given the declining share of retirement income provided by Social Security
and traditional defined benefit pensions, individuals must take a more active role in their
retirement saving decisions. The potential for confusion regarding the presentation of estimated Social Security benefits could complicate this process, making it important that Social Security clarify or alter the way nominal benefits are expressed to current users of the Statement.

Report on the Troubled Asset Relief Program -- November 2010
In October 2008, the Emergency Economic Stabilization Act of 2008 established the Troubled Asset Relief Program (TARP) to enable the Department of the Treasury to purchase or insure troubled assets as a way to promote stability in financial markets. Section 202 of that legislation requires the Congressional Budget Office (CBO) to prepare a report on those transactions within 45 days of a report issued by the Office of Management and Budget (OMB) on the TARP's activities. This fourth statutory report from CBO on the TARP's transactions follows the report that OMB submitted to the Congress on October 15, 2010.
ISM: Sustained Growth in Manufacturing, Input Prices Up
November’s ISM came in at 56.6 with continued growth signals from production, orders and employment. Export orders remain strong. Prices paid suggest input cost pressures, especially from metals.

Consumer Confidence Improves to Highest Level Since June
Consumer confidence improved to 54.1 in November from 49.9 in October. Consumer expectations jumped to 74.2 from 67.5, while the current situation improved only modestly. This is a positive sign for holiday sales.

Artificially Sweetening the COLA
While it might sound reasonable or fair to give seniors a boost during tough economic times, giving in to such demands would be misguided and undermine the very reason for tying cost-of-living adjustments to the Consumer Price Index (CPI) in the first place—to prevent yearly interest-group lobbying for higher benefit increases and, as the name implies, only provide an adjustment when there’s an actual CPI-measured increase in the cost of living. Providing a COLA or one-time payment beyond what is warranted by an increase in the CPI would actually increase “real” benefits, artificially sweetening the COLA.

Economics Group
Personal income picked up 0.5 percent and personal spending grew 0.4 percent in October. Both readings for the month of September were revised higher as the outlook for consumer spending appears to be brightening.