News
WSJ | Fed Softens 'Swipe' Fees
The Federal Reserve ordered the nation's banks to cut the rate they charge merchants for debit-card transactions roughly in half, dealing banks a softer blow than many had feared, but one that will still likely cost them billions in annual revenue.
CNBC | Midwest Business Activity Grew More Than Expected
The Institute for Supply Management Chicago's business barometer rose to 61.1 in June, above the 56.6 in May and economists' expectatiosn for a drop to 54.
Bloomberg | Oil Drops, Extending Quarterly Loss, as U.S. Demand Falters
Futures in New York dropped as much as 0.7 percent, halting the biggest two-day rally in seven weeks. The U.S. Energy Department said yesterday gasoline demand dropped for a second week in the seven days to June 24. U.S. pump prices are up 29 percent from a year earlier.
CNBC | China to Grow Above 9% in 2011: Government Think Tank
China's economy is expected to grow a robust 9.5% in the first half of 2011 and retain much of the momentum the rest of the year with little chance of a hard landing, a government think tank said in a report published on Thursday.
Market Watch | Car sales seen holding steady in June
"The Japanese car makers are getting back to business as usual in the U.S. this month, but they likely lost more market share to still-surging Hyundai and the healing Detroit Three.
Bloomberg | Texas Cotton Farmers Abandon Record Acres on Drought as Gap’s Costs Rise
About 55 percent of the Texas cotton fields were in poor or very poor condition on June 26, matching the record low in 2006, the U.S. Department of Agriculture said. More than 70 percent of the state was experiencing “exceptional” drought as of June 21, and non-irrigated crops in the Panhandle and South Plains regions have all failed, a Texas A&M research unit said.
Econ Comments
Washington Times | GLOZER: Corn-ethanol fiction
A careful review of current federal corn-ethanol policy reveals an array of subsidies, both direct and indirect. These include: 1) corn production subsidies to farmers, 2) a 45-cents-per-gallon ethanol-production tax credit, 3) a mandate requiring gasoline refiners to blend 15 billion gallons of ethanol into gasoline annually by 2015, and 4) a 59.5 cents-per-gallon tariff/tax on imported ethanol. No other energy product enjoys such government favor.
Financial Times | Strikes: Pension tension
Across the developed world, weakened political establishments are meeting fierce resistance in their efforts to curb public spending. The future viability of public sector pensions, as lifespans increase, is a particular headache almost everywhere.
Daily Caller | Not so independent
Jobs are scarce and inflated fuel costs are making everything from food to appliances more expensive. And while the same could have been said about the economy last year, or even the year before, we are struck this year by the weak response coming out of Washington: tapping the Strategic Petroleum Reserve.
Bloomberg | Republicans Seek Spending Cuts to Slow Economy, Schumer Says
Raising the rhetorical stakes while party leaders are far apart over a plan to cut the deficit and increase the U.S. debt limit, Schumer said Republican leaders are seeking deep spending cuts as part of an effort to slow U.S. growth and hurt President Barack Obama’s chances of winning re-election next year.
CNN: Money | Made (again) in the USA: The return of American manufacturing
Lost in a sea of troubling economic data is one bright spot: America is once again competing for -- and winning -- factories and manufacturing operations.
Blogs
WSJ: Real Time Economics | A Look at Case-Shiller, by Metro Area
S&P/Case-Shiller home-price data showed a gain for most cities in April amid a boost from the start of the spring selling season began, but prices still remain below year-earlier levels.
Café Hayek | Obama and manufacturing
President Obama spoke in Iowa the other day about the economy. In a sense, it was the launching of the re-election campaign. I thought it might be interesting to evaluate the economics and see what he thinks is going to be effective politically. The full text is here. I’ll be commenting on most of it. Here we go:
Cato @ Liberty | Economic Freedom
Some smart folks have drawn strongly on the Fraser Institute’s Economic Freedom of the World Annual Report to put together a short video extolling the virtues of economic freedom. Enjoy!
Reports
RCM: Wells Fargo | Housing Data Wrap-Up: June 2011
The Recovery Continues To Have a Tough Time Getting Going.
Thursday, June 30, 2011
Taxes
News
WSJ | Obama Targets Tax Breaks
Republicans responded by repeating their opposition to any tax increases, saying they would hurt the fragile economy.
National Journal | Bill Clinton: Raise Taxes ... but Not Yet
Cut spending and raise taxes. But, he said, lawmakers should delay the implementing such a compromise until after the economy improves.
WSJ | California Online Tax Law Pressures Amazon
Amazon.com Inc. may soon have to collect sales taxes in California after Gov. Jerry Brown signed an online tax-collection bill.
Reports
Tax Foundation | Minnesota Income Tax Increase Modification Could Encourage Tax Avoidance and Promote Poor Investment Decisions
Minnesota is one of 46 states that begin their fiscal year on July 1. However, it is the only state that may endure a government shutdown, due to a tax policy impasse between Governor Mark Dayton (DFL) and the legislature.
WSJ | Obama Targets Tax Breaks
Republicans responded by repeating their opposition to any tax increases, saying they would hurt the fragile economy.
National Journal | Bill Clinton: Raise Taxes ... but Not Yet
Cut spending and raise taxes. But, he said, lawmakers should delay the implementing such a compromise until after the economy improves.
WSJ | California Online Tax Law Pressures Amazon
Amazon.com Inc. may soon have to collect sales taxes in California after Gov. Jerry Brown signed an online tax-collection bill.
Reports
Tax Foundation | Minnesota Income Tax Increase Modification Could Encourage Tax Avoidance and Promote Poor Investment Decisions
Minnesota is one of 46 states that begin their fiscal year on July 1. However, it is the only state that may endure a government shutdown, due to a tax policy impasse between Governor Mark Dayton (DFL) and the legislature.
Health Care
News
National Journal | Bill Clinton: Raise Taxes ... but Not Yet
Former President Clinton, living up to his reputation as a shrewd politician adept at “triangulating,” has some advice for policymakers locked in a stalemate over raising the debt limit: Cut spending and raise taxes. But, he said, lawmakers should delay the implementing such a compromise until after the economy improves.
National Journal | Pain, Smoking, and Cancer: How Far Should the U.S. Go to Save Lives?
Two reports and a controversial vote on a cancer drug Wednesday highlighted pressures that will only worsen as the federal government grapples with reforming the U.S. health care system – whether through the 2010 health care law or Republican approaches stressing personal responsibility.
Econ Comments
AEI | Tampering with Part D Will Not Solve Our Debt Crisis
"Under the proposed legislation, AEI's Joseph Antos, a former Congressional Budget Office official, and Guy King, a former chief actuary for Medicare, find that:
1.Many Medicare Part D plans could change significantly or face failure, disproportionally affecting the most vulnerable seniors.
2.Premiums for all seniors would be likely to increase, with the strongest impact borne by low-income seniors.
3.Government spending on Medicare as a whole is likely to increase, offsetting any savings."
Blogs
Heritage Foundation | White House Silent on Obamacare Transparency Bill
A freshman congressman has offered legislation that would make the extensive federal rulemaking process associated with the new Obamacare law dramatically more transparent. The bill would also give Congress a stepped-up oversight role as federal agencies begin drafting rules to implement the law, which will go fully into effect by 2014.
National Journal | Bill Clinton: Raise Taxes ... but Not Yet
Former President Clinton, living up to his reputation as a shrewd politician adept at “triangulating,” has some advice for policymakers locked in a stalemate over raising the debt limit: Cut spending and raise taxes. But, he said, lawmakers should delay the implementing such a compromise until after the economy improves.
National Journal | Pain, Smoking, and Cancer: How Far Should the U.S. Go to Save Lives?
Two reports and a controversial vote on a cancer drug Wednesday highlighted pressures that will only worsen as the federal government grapples with reforming the U.S. health care system – whether through the 2010 health care law or Republican approaches stressing personal responsibility.
Econ Comments
AEI | Tampering with Part D Will Not Solve Our Debt Crisis
"Under the proposed legislation, AEI's Joseph Antos, a former Congressional Budget Office official, and Guy King, a former chief actuary for Medicare, find that:
1.Many Medicare Part D plans could change significantly or face failure, disproportionally affecting the most vulnerable seniors.
2.Premiums for all seniors would be likely to increase, with the strongest impact borne by low-income seniors.
3.Government spending on Medicare as a whole is likely to increase, offsetting any savings."
Blogs
Heritage Foundation | White House Silent on Obamacare Transparency Bill
A freshman congressman has offered legislation that would make the extensive federal rulemaking process associated with the new Obamacare law dramatically more transparent. The bill would also give Congress a stepped-up oversight role as federal agencies begin drafting rules to implement the law, which will go fully into effect by 2014.
Monetary
News
Market Watch | QE2 worked, St. Louis Fed’s Bullard says
The Federal Reserve’s innovative and controversial plan to pursue monetary policy through a second round of asset purchases, known as QE2, “worked in reality” by helping avoid a bout of mild deflation akin to Japan, a regional Fed president said Thursday.
Market Watch | QE2 worked, St. Louis Fed’s Bullard says
The Federal Reserve’s innovative and controversial plan to pursue monetary policy through a second round of asset purchases, known as QE2, “worked in reality” by helping avoid a bout of mild deflation akin to Japan, a regional Fed president said Thursday.
Budget
News
CNN Money | Is the debt ceiling unconstitutional?
They say default -- and by extension, the debt limit -- violates the 14th Amendment.
Bloomberg | Corporate Jet Benefit Gets Six Obama Mentions, Aids Little in Deficit Cuts
President Barack Obama’s proposal to end a tax break for corporate jet owners, a repeated refrain in his news conference yesterday, would achieve less than one-tenth of 1 percent of his target for reducing the federal deficit.
Econ Comments
Washington Times | MILLER: Ending deficit sprawl
House and Senate leaders need to unify behind the Balanced Budget Amendment.
WSJ | Obama's Real Revenue Problem
Tax receipts are low because of the mediocre economic recovery.
RCM | Greek Bailout, Global Economic Tragedy
As any mildly sentient being knew would happen, the Greek government got its bailout. It was a foregone conclusion, and there's a 99% chance that the IMF would have disbursed more billions to the profligate government even if Greece's Parliament had failed to pass an "austerity" program.
Politico | Real implications of debt debate
Particular August days will be far worse than the monthly totals suggest. For example, on Aug. 3, we project that the government will have about $12 billion in receipts and $32 billion in committed payments, including a $23 billion Social Security payment.
Blogs
Atlantic: McArdle | How to Deal With the Debt Ceiling
This is why schools and other government agencies facing budget cuts tend to immediately slash something high-profile and politically popular.
Daily Capitalist | The New Theater Of The Absurd: The Budget Debates
Government spending can’t make the economy grow. It never has, never will.
Atlantic: McArdle | Is Greece's Austerity Budget a Big Mistake?
At best, Greece has some limited value in illustrating what happens when you let your government finances out of control--but only limited, because they have a whole set of currency issues that America doesn't face.
Cato@Liberty | $2 Trillion in Cuts in Perspective
Even with the cuts, federal spending would still increase by $1.8 trillion.
Heritage Foundation | Morning Bell: Time For Congress to Lead on the Debt Ceiling
The Heritage Foundation has previously laid out exactly what an acceptable package might look like. It must: 1) significantly cut current spending; 2) restrict future spending; and 3) fix the budget process.
CNN Money | Is the debt ceiling unconstitutional?
They say default -- and by extension, the debt limit -- violates the 14th Amendment.
Bloomberg | Corporate Jet Benefit Gets Six Obama Mentions, Aids Little in Deficit Cuts
President Barack Obama’s proposal to end a tax break for corporate jet owners, a repeated refrain in his news conference yesterday, would achieve less than one-tenth of 1 percent of his target for reducing the federal deficit.
Econ Comments
Washington Times | MILLER: Ending deficit sprawl
House and Senate leaders need to unify behind the Balanced Budget Amendment.
WSJ | Obama's Real Revenue Problem
Tax receipts are low because of the mediocre economic recovery.
RCM | Greek Bailout, Global Economic Tragedy
As any mildly sentient being knew would happen, the Greek government got its bailout. It was a foregone conclusion, and there's a 99% chance that the IMF would have disbursed more billions to the profligate government even if Greece's Parliament had failed to pass an "austerity" program.
Politico | Real implications of debt debate
Particular August days will be far worse than the monthly totals suggest. For example, on Aug. 3, we project that the government will have about $12 billion in receipts and $32 billion in committed payments, including a $23 billion Social Security payment.
Blogs
Atlantic: McArdle | How to Deal With the Debt Ceiling
This is why schools and other government agencies facing budget cuts tend to immediately slash something high-profile and politically popular.
Daily Capitalist | The New Theater Of The Absurd: The Budget Debates
Government spending can’t make the economy grow. It never has, never will.
Atlantic: McArdle | Is Greece's Austerity Budget a Big Mistake?
At best, Greece has some limited value in illustrating what happens when you let your government finances out of control--but only limited, because they have a whole set of currency issues that America doesn't face.
Cato@Liberty | $2 Trillion in Cuts in Perspective
Even with the cuts, federal spending would still increase by $1.8 trillion.
Heritage Foundation | Morning Bell: Time For Congress to Lead on the Debt Ceiling
The Heritage Foundation has previously laid out exactly what an acceptable package might look like. It must: 1) significantly cut current spending; 2) restrict future spending; and 3) fix the budget process.
Employment
News
MarketWatch | Requests for jobless benefits little changed
New U.S. claims dipped by 1,000 to 428,000 last week.
Blogs
WSJ: Real Time Economics | Most Cities Post Annual Drop in Unemployment
The job market is hardly healthy. But in most places in the U.S., it’s far better than a year ago.
MarketWatch | Requests for jobless benefits little changed
New U.S. claims dipped by 1,000 to 428,000 last week.
Blogs
WSJ: Real Time Economics | Most Cities Post Annual Drop in Unemployment
The job market is hardly healthy. But in most places in the U.S., it’s far better than a year ago.
Wednesday, June 29, 2011
General Economics
News
Market Watch | Congress near compromise on free trade
Free-trade proposals with South Korea, Panama and Columbia could be one step closer to approval after top senators agreed to extend a program that helps out-of-work Americans.
CNBC | Economy May Grow 4% in Second Half
U.S. eocnomic growht is poised to pick up in the second half of the year after a sluggish start, a top Federal Reserve official knonw for his hawkish views on inflation said Tuesday.
Bloomberg | Crude Oil Advances a Second Day on Speculation OPEC May Reduce Production
Futures advanced as much as 1.5 percent after rallying 2.5 percent yesterday. The IEA’s plan to release strategic reserves sparked speculation that the Organization of Petroleum Exporting Countries may limit output. A U.S. report today may show crude stockpiles fell more than forecast last week, and Greece’s parliament will vote on a plan to cut spending and sell assets.
National Journal | Ethanol Compromise Might Be Close
Sen. Amy Klobuchar, D-Minn. says that she and Sen. John Thune, R-S.D. are nearing a compromise with Sen. Diane Feinstein, D-Calif. on phasing out costly ethanol subsidies by diverting part of the remaining 2.5 billion in subsidies from this year toward the debt and the other part of it to promoting advanced biofuels such as cellulosic ethanol .
CNBC | Bleak View of Economy Spreads to Wealthy Americans
Nearly two thirds of the nation is pessimistic about the current state of the economy and its future, with just 6 percent optimistic about both.
Market Watch | U.S. home prices up for first time in eight months
U.S. home prices in April rose for the first time in eight months, according to data released Tuesday that may reflect more of the beginning of buying season than a new sign in the troubled sector of the economy.
CNN: Money | Talk of natural gas bubble draws industry ire
Big energy company executives and government researchers are firing back at a recent New York Times story suggesting the recent boom in natural gas production from shale rock is unsustainable and perhaps fraudulent.
Politico | Economic uncertainty blame game
Federal Reserve Chairman Ben Bernanke has offered this startling confession about the economy saying, "We don’t have a precise read on why this slower pace of growth is persisting."
Washington Times | Economic stimulus measures unconventional
Last week’s decision to join other oil-consuming nations in releasing 60 million barrels of premium crude onto world markets to lower the price of fuel was widely viewed in economic circles as a first effort of that kind to stimulate the global economy. High fuel prices have been dragging down economic growth as well as the political prospects for incumbents from Washington to Tokyo.
USA Today | Virginia named America's Top State for Business in 2011
Virginia topped our inaugural study in 2007 with Texas at number two. In 2008, they switched positions and Texas took the title. In 2009, it was Virginia/Texas. In 2010, Texas/Virginia.
Econ Comments
Washington Times | DANKER & HOENIG: Don’t leave small business behind
Friday’s gloomy economic forecast from Goldman Sachs solidified a consensus that the economy is just treading water. Goldman’s downgrade from 3 percent to 2 percent gross domestic product (GDP) growth for this quarter would nearly match last quarter’s anemic 1.8 percent growth rate if it bears out.
AEI | The United States and China: Macroeconomic Imbalances and Economic Diplomacy
The United States and China are now the tow largest economies in the world. For the last decade, the United States has been an important net source of demand for the world economy, running persistent large current account deficits.
WSJ | How China's Banks Break the Rules
In October, I sat down in Nanjing with a senior banker for one of China's "Big Four" state banks. I asked him about the new regulations just put in place by Beijing to restrain the growth in lending. "There are ways around these rules," he said.
Washington Times | BAYH & CARD: Regulatory reform restart
As the country emerges from one of the most serious economic downturns in recent history, the last thing we need are more regulations that impose heavy burdens on job creators. One way to get Americans back to work is by removing excessive and costly regulations that make it harder for businesses to grow.
Cato Institute | Shut Down the Strategic Petroleum Reserve
Whenever gasoline prices go through the roof, we're treated to the same, never-ending political spat that we went through last week; liberals want to release crude from the U.S. Strategic Petroleum Reserve (SPR) to help poor, downtrodden motorists while conservatives scream that the SPR is for supply emergencies only and not for domestic political gestures
Washington Times | WOLF: Obamanomics is shovel-ready
The failure of Keynesian economics is no laughing matter, Mr. President.
WSJ | Basel's Capital Gang
Making banks safe is not as easy as it seems.
Bloomberg | Shilling: China Heading for a Hard Landing, Pt. 3
China is hoping to cool its white- hot economy without precipitating a recession. Doing so will be extremely difficult: Inflation fears are growing, the government’s ability to respond is quite limited, and China’s economic model, which leaves bureaucrats guessing about the market effects of their directives, is ultimately untenable.
Financial Post | Peter Foster: The demons in Krugmanomics
Paul Krugman’s affection for markets fell as he became obsessed with inequality, market instability and catastrophic climate change.
Washington Times | Washington Times EDITORIAL: Another ‘recovery summer’
A year ago, Vice President Joseph R. Biden proclaimed the administration’s $830 billion stimulus spending spree would kick off “Recovery Summer.” It never came. For those hoping the dog days of 2011 might bring a change in the economic climate, the latest figures suggest this won’t be a summer of recovery, either.
Blogs
Minyanville | Why the GDP Is Useless and Deceptive
The basis for the so-called "recovery" was a rise in GDP, that measure of what we have spent in the economy. But GDP is a fairly useless bit of data. Here's why.
Café Hayek | Markets or Mandates?
Here’s a superbly done video – rich with facts – on the importance of economic freedom.
Independent Institute | World War II: Still Being Touted as the Quintessential Keynesian Miracle
Someone must have imagined that my hopes for improved economic understanding might be excessively optimistic today and thus needed to be curbed to restore my normal emotional balance, because that person undertook to smash any such hopes to dust by e-mailing me a link to a HuffingtonPost article by Paul Abrams, “Economically, World War II Was Stimulus on Steroids.”
Cato @ Liberty | Dirty Deal Done Not So Dirt Cheap
Interestingly and alarmingly, because implementing the FTAs (which will lower tariff revenue) and paying for the billion-dollar-plus TAA extension “requires” offsets, the draft language specifies in Sec. 601 that revenue should be raised by increasing customs user fees.
Political Calculations | Chinese, U.S. Economies Both Decelerating
Previously on Political Calculations, we discovered that we can use international trade data to diagnose the relative health of national economies.
Econlog | Is Social Security a Ponzi Scheme?
A couple of years ago, I claimed on this blog that Social Security is a Ponzi scheme. Various commenters objected but didn't persuade me. This week, John Seater, an economist whom I respect a great deal, wrote that it is not a Ponzi scheme. He's given the best argument I've seen yet for that view. I'm still not persuaded. Seater wrote:
Reports
RCM: Wells Farge | Job Worries Weigh On Consumer Confidence
Consumer confidence fell 3.2 points in June to 58.5. The recent deluge of weak economic reports has led to more concerns about employment prospects, which more than offsets any relief from falling gasoline prices.
Mercatus Center | Pick Your Poison: Do Politicians Regulate When They Can't Spend?
In this paper, the authors investigate whether laws restricting fiscal policies across U.S. states lead politicians to regulate more instead. The authors first show that partisan policy outcomes do exist across U.S. states, with Republicans cutting taxes and spending and Democrats raising them.
Market Watch | Congress near compromise on free trade
Free-trade proposals with South Korea, Panama and Columbia could be one step closer to approval after top senators agreed to extend a program that helps out-of-work Americans.
CNBC | Economy May Grow 4% in Second Half
U.S. eocnomic growht is poised to pick up in the second half of the year after a sluggish start, a top Federal Reserve official knonw for his hawkish views on inflation said Tuesday.
Bloomberg | Crude Oil Advances a Second Day on Speculation OPEC May Reduce Production
Futures advanced as much as 1.5 percent after rallying 2.5 percent yesterday. The IEA’s plan to release strategic reserves sparked speculation that the Organization of Petroleum Exporting Countries may limit output. A U.S. report today may show crude stockpiles fell more than forecast last week, and Greece’s parliament will vote on a plan to cut spending and sell assets.
National Journal | Ethanol Compromise Might Be Close
Sen. Amy Klobuchar, D-Minn. says that she and Sen. John Thune, R-S.D. are nearing a compromise with Sen. Diane Feinstein, D-Calif. on phasing out costly ethanol subsidies by diverting part of the remaining 2.5 billion in subsidies from this year toward the debt and the other part of it to promoting advanced biofuels such as cellulosic ethanol .
CNBC | Bleak View of Economy Spreads to Wealthy Americans
Nearly two thirds of the nation is pessimistic about the current state of the economy and its future, with just 6 percent optimistic about both.
Market Watch | U.S. home prices up for first time in eight months
U.S. home prices in April rose for the first time in eight months, according to data released Tuesday that may reflect more of the beginning of buying season than a new sign in the troubled sector of the economy.
CNN: Money | Talk of natural gas bubble draws industry ire
Big energy company executives and government researchers are firing back at a recent New York Times story suggesting the recent boom in natural gas production from shale rock is unsustainable and perhaps fraudulent.
Politico | Economic uncertainty blame game
Federal Reserve Chairman Ben Bernanke has offered this startling confession about the economy saying, "We don’t have a precise read on why this slower pace of growth is persisting."
Washington Times | Economic stimulus measures unconventional
Last week’s decision to join other oil-consuming nations in releasing 60 million barrels of premium crude onto world markets to lower the price of fuel was widely viewed in economic circles as a first effort of that kind to stimulate the global economy. High fuel prices have been dragging down economic growth as well as the political prospects for incumbents from Washington to Tokyo.
USA Today | Virginia named America's Top State for Business in 2011
Virginia topped our inaugural study in 2007 with Texas at number two. In 2008, they switched positions and Texas took the title. In 2009, it was Virginia/Texas. In 2010, Texas/Virginia.
Econ Comments
Washington Times | DANKER & HOENIG: Don’t leave small business behind
Friday’s gloomy economic forecast from Goldman Sachs solidified a consensus that the economy is just treading water. Goldman’s downgrade from 3 percent to 2 percent gross domestic product (GDP) growth for this quarter would nearly match last quarter’s anemic 1.8 percent growth rate if it bears out.
AEI | The United States and China: Macroeconomic Imbalances and Economic Diplomacy
The United States and China are now the tow largest economies in the world. For the last decade, the United States has been an important net source of demand for the world economy, running persistent large current account deficits.
WSJ | How China's Banks Break the Rules
In October, I sat down in Nanjing with a senior banker for one of China's "Big Four" state banks. I asked him about the new regulations just put in place by Beijing to restrain the growth in lending. "There are ways around these rules," he said.
Washington Times | BAYH & CARD: Regulatory reform restart
As the country emerges from one of the most serious economic downturns in recent history, the last thing we need are more regulations that impose heavy burdens on job creators. One way to get Americans back to work is by removing excessive and costly regulations that make it harder for businesses to grow.
Cato Institute | Shut Down the Strategic Petroleum Reserve
Whenever gasoline prices go through the roof, we're treated to the same, never-ending political spat that we went through last week; liberals want to release crude from the U.S. Strategic Petroleum Reserve (SPR) to help poor, downtrodden motorists while conservatives scream that the SPR is for supply emergencies only and not for domestic political gestures
Washington Times | WOLF: Obamanomics is shovel-ready
The failure of Keynesian economics is no laughing matter, Mr. President.
WSJ | Basel's Capital Gang
Making banks safe is not as easy as it seems.
Bloomberg | Shilling: China Heading for a Hard Landing, Pt. 3
China is hoping to cool its white- hot economy without precipitating a recession. Doing so will be extremely difficult: Inflation fears are growing, the government’s ability to respond is quite limited, and China’s economic model, which leaves bureaucrats guessing about the market effects of their directives, is ultimately untenable.
Financial Post | Peter Foster: The demons in Krugmanomics
Paul Krugman’s affection for markets fell as he became obsessed with inequality, market instability and catastrophic climate change.
Washington Times | Washington Times EDITORIAL: Another ‘recovery summer’
A year ago, Vice President Joseph R. Biden proclaimed the administration’s $830 billion stimulus spending spree would kick off “Recovery Summer.” It never came. For those hoping the dog days of 2011 might bring a change in the economic climate, the latest figures suggest this won’t be a summer of recovery, either.
Blogs
Minyanville | Why the GDP Is Useless and Deceptive
The basis for the so-called "recovery" was a rise in GDP, that measure of what we have spent in the economy. But GDP is a fairly useless bit of data. Here's why.
Café Hayek | Markets or Mandates?
Here’s a superbly done video – rich with facts – on the importance of economic freedom.
Independent Institute | World War II: Still Being Touted as the Quintessential Keynesian Miracle
Someone must have imagined that my hopes for improved economic understanding might be excessively optimistic today and thus needed to be curbed to restore my normal emotional balance, because that person undertook to smash any such hopes to dust by e-mailing me a link to a HuffingtonPost article by Paul Abrams, “Economically, World War II Was Stimulus on Steroids.”
Cato @ Liberty | Dirty Deal Done Not So Dirt Cheap
Interestingly and alarmingly, because implementing the FTAs (which will lower tariff revenue) and paying for the billion-dollar-plus TAA extension “requires” offsets, the draft language specifies in Sec. 601 that revenue should be raised by increasing customs user fees.
Political Calculations | Chinese, U.S. Economies Both Decelerating
Previously on Political Calculations, we discovered that we can use international trade data to diagnose the relative health of national economies.
Econlog | Is Social Security a Ponzi Scheme?
A couple of years ago, I claimed on this blog that Social Security is a Ponzi scheme. Various commenters objected but didn't persuade me. This week, John Seater, an economist whom I respect a great deal, wrote that it is not a Ponzi scheme. He's given the best argument I've seen yet for that view. I'm still not persuaded. Seater wrote:
Reports
RCM: Wells Farge | Job Worries Weigh On Consumer Confidence
Consumer confidence fell 3.2 points in June to 58.5. The recent deluge of weak economic reports has led to more concerns about employment prospects, which more than offsets any relief from falling gasoline prices.
Mercatus Center | Pick Your Poison: Do Politicians Regulate When They Can't Spend?
In this paper, the authors investigate whether laws restricting fiscal policies across U.S. states lead politicians to regulate more instead. The authors first show that partisan policy outcomes do exist across U.S. states, with Republicans cutting taxes and spending and Democrats raising them.
Taxes
Econ Comments
WSJ | A Stealth Tax Hike
The return of the deduction phase-out gambit.
Fox Business | Do Higher Taxes and More Government Rules Create Jobs?
Do more government rules create private sector, or government jobs? Do more government rules incentivize bureaucrats to keep the rule machine grinding, to justify their jobs?
Minyanville | Federal Withholding Tax Data Says US Already in Recession
The drop in mid-May -- versus the strong gains in March and April -- suggests that the US may have entered recession a month ago.
WSJ | A Stealth Tax Hike
The return of the deduction phase-out gambit.
Fox Business | Do Higher Taxes and More Government Rules Create Jobs?
Do more government rules create private sector, or government jobs? Do more government rules incentivize bureaucrats to keep the rule machine grinding, to justify their jobs?
Minyanville | Federal Withholding Tax Data Says US Already in Recession
The drop in mid-May -- versus the strong gains in March and April -- suggests that the US may have entered recession a month ago.
Health Care
News
National Journal | Lieberman, Coburn Unveil Medicare Proposal
The package is one of the first bipartisan—Lieberman caucuses with the Democrats—proposals to wring significant savings from the federal health program for the elderly. The senators estimate it will save at least $500 billion from the program over 10 years, with nearly half of the savings coming from an increase to seniors’ premiums for doctor visits.
Politico | Medicaid cuts could come from Democrats
Defenders of Medicaid have been fighting hard against Republican proposals to cut the program, but they're just waking up to the threat of one proposed by the Obama administration.
National Journal | Tommy Thompson: Health Exchanges Important
In an opinion piece published in the Huffington Post on Monday, Thompson, who was HHS secretary from 2001 to 2005, wrote that the exchanges have the potential to be a market-based solution. States should see the exchanges as an opportunity for innovation and, more importantly, a way to keep the federal government out of Medicaid, according to Thompson.
Blogs
Cato @ Liberty | Republicans Getting Rich off ObamaCare
Here we have the spectacle of a former Republican Health and Human Services secretary getting rich by helping states implement ObamaCare.
Atlantic: Megan McArdle | Pharma Spending Less on Finding New Drugs
For the first time ever last year, the global drug industry cut its R&D spending. The trend is expected to continue, at least in the near term.
Reason | ObamaCare Continues to Make Consultants Richer
Individual polls obviously vary, but the overall trend since last fall is clear: Fewer and fewer people favor the law, while outright opposition continues to hold steady.
National Journal | Lieberman, Coburn Unveil Medicare Proposal
The package is one of the first bipartisan—Lieberman caucuses with the Democrats—proposals to wring significant savings from the federal health program for the elderly. The senators estimate it will save at least $500 billion from the program over 10 years, with nearly half of the savings coming from an increase to seniors’ premiums for doctor visits.
Politico | Medicaid cuts could come from Democrats
Defenders of Medicaid have been fighting hard against Republican proposals to cut the program, but they're just waking up to the threat of one proposed by the Obama administration.
National Journal | Tommy Thompson: Health Exchanges Important
In an opinion piece published in the Huffington Post on Monday, Thompson, who was HHS secretary from 2001 to 2005, wrote that the exchanges have the potential to be a market-based solution. States should see the exchanges as an opportunity for innovation and, more importantly, a way to keep the federal government out of Medicaid, according to Thompson.
Blogs
Cato @ Liberty | Republicans Getting Rich off ObamaCare
Here we have the spectacle of a former Republican Health and Human Services secretary getting rich by helping states implement ObamaCare.
Atlantic: Megan McArdle | Pharma Spending Less on Finding New Drugs
For the first time ever last year, the global drug industry cut its R&D spending. The trend is expected to continue, at least in the near term.
Reason | ObamaCare Continues to Make Consultants Richer
Individual polls obviously vary, but the overall trend since last fall is clear: Fewer and fewer people favor the law, while outright opposition continues to hold steady.
Monetary
News
Market Watch | Major China bank sees inflation hitting 6.2%
China’s June consumer price index inflation is set to hit 6.2%, as food prices continued to rise, said a report released Monday by China International Capital Corp.
Market Watch | Fed may loosen debit-card swipe-fee rules
The Federal Reserve may provide some moderate relief to banks when it votes Wednesday afternoon to adopt a controversial debit-card rule that is set to shift billions of dollars in revenue from financial institutions to merchants.
Market Watch | Major China bank sees inflation hitting 6.2%
China’s June consumer price index inflation is set to hit 6.2%, as food prices continued to rise, said a report released Monday by China International Capital Corp.
Market Watch | Fed may loosen debit-card swipe-fee rules
The Federal Reserve may provide some moderate relief to banks when it votes Wednesday afternoon to adopt a controversial debit-card rule that is set to shift billions of dollars in revenue from financial institutions to merchants.
Budget
News
Politico | Treasury: Debt ceiling deadline is real
The Treasury Department is swatting down reports that the deadline to raise the debt ceiling could be shifted from early August to the end of that month, saying that at most the drop-dead date to hike the limit might be only a few days later than initially expected.
National Journal | Where Are We With Appropriations?
...as anyone who works in Washington knows, having access to at least the formal documents legislators use in making appropriations decisions can be invaluable.
Market Watch | ‘Significant’ debt deal possible: White House
Top Senate Republican to meet Obama as tax disagreement lingers.
National Journal | Uncle Sam's International IOUs
Chinese investors are betting big on U.S. debt.
Politico | Bill Clinton: Stimulus wasn't big enough
“I think the stimulus did as well as it could have done — there just wasn’t enough of it,” Clinton told reporters on Tuesday.
Econ Comments
Politico | The courage to balance the budget
Yogi Berra once made the statement, “It’s déjà vu all over again.” I look at the current budget and debt limit debate and I can’t help but think he was right. It’s just like 1995 all over again, except this time the stakes are much higher.
Minyanville | Kass: Debt Is Suffocating Recovery
Despite clear signs from the housing market and from a plethora of numerous soft economic releases, consensus S&P estimates have not yet been adjusted lower. Nor have S&P year-end price targets budged.
Blogs
Mercatus Center: Neighborhood Effects | Illinois’ “Goldilocks” budget
This year Illinois’ budget is larger than last year even though the state anticipates a shortfall of over $9 billion.
Reports
Bankrupting America | Budget Briefing Book: Volume Three
Our three part Budget Briefing Book provides a rundown of all the facts you need when it comes to how the government spends your money and the subsequent effects.
Politico | Treasury: Debt ceiling deadline is real
The Treasury Department is swatting down reports that the deadline to raise the debt ceiling could be shifted from early August to the end of that month, saying that at most the drop-dead date to hike the limit might be only a few days later than initially expected.
National Journal | Where Are We With Appropriations?
...as anyone who works in Washington knows, having access to at least the formal documents legislators use in making appropriations decisions can be invaluable.
Market Watch | ‘Significant’ debt deal possible: White House
Top Senate Republican to meet Obama as tax disagreement lingers.
National Journal | Uncle Sam's International IOUs
Chinese investors are betting big on U.S. debt.
Politico | Bill Clinton: Stimulus wasn't big enough
“I think the stimulus did as well as it could have done — there just wasn’t enough of it,” Clinton told reporters on Tuesday.
Econ Comments
Politico | The courage to balance the budget
Yogi Berra once made the statement, “It’s déjà vu all over again.” I look at the current budget and debt limit debate and I can’t help but think he was right. It’s just like 1995 all over again, except this time the stakes are much higher.
Minyanville | Kass: Debt Is Suffocating Recovery
Despite clear signs from the housing market and from a plethora of numerous soft economic releases, consensus S&P estimates have not yet been adjusted lower. Nor have S&P year-end price targets budged.
Blogs
Mercatus Center: Neighborhood Effects | Illinois’ “Goldilocks” budget
This year Illinois’ budget is larger than last year even though the state anticipates a shortfall of over $9 billion.
Reports
Bankrupting America | Budget Briefing Book: Volume Three
Our three part Budget Briefing Book provides a rundown of all the facts you need when it comes to how the government spends your money and the subsequent effects.
Employment
News
Politico | Manufacturing advocates: White House is no jobs factory
[Obama's] latest initiatives, though, focus mostly on trends that predate the recession, such as the years of layoffs caused by factories moving overseas and machines displacing workers.
Blogs
Coordination Problem | Munger on Why Creating Jobs is Not Government's Job
The other day I linked to his numerous podcasts at EconTalk, so today I will give you the video feed.
Marginal Revolution | The wisdom of Scott Sumner
Monetary policy should be expansionary, but structural forces behind unemployment can make traditional fiscal policy either more or less effective (it is more important to target disaffected workers, but also harder to do so) and you can think of that as the frontier policy question of the day.
Politico | Manufacturing advocates: White House is no jobs factory
[Obama's] latest initiatives, though, focus mostly on trends that predate the recession, such as the years of layoffs caused by factories moving overseas and machines displacing workers.
Blogs
Coordination Problem | Munger on Why Creating Jobs is Not Government's Job
The other day I linked to his numerous podcasts at EconTalk, so today I will give you the video feed.
Marginal Revolution | The wisdom of Scott Sumner
Monetary policy should be expansionary, but structural forces behind unemployment can make traditional fiscal policy either more or less effective (it is more important to target disaffected workers, but also harder to do so) and you can think of that as the frontier policy question of the day.
Tuesday, June 28, 2011
General Economics
News
WSJ | Colombia Trade Deal Loses Key Support
The top Democrat on a key House trade panel whipped up a new furor over three stalled trade deals Monday when he said he wouldn't support a pact with Colombia if the White House and Republicans refuse to include references to pro-labor provisions negotiated by the Obama administration.
Washington Times | Spending dips in U.S. for first time in a year
Consumer spending failed to budge from April to May, evidence that high gas prices and unemployment are squeezing household budgets. When adjusted for inflation, spending actually dropped 0.1 percent last month, the Commerce Department reported Monday.
Market Watch | Cut mortgage-interest deduction: Fed official
Congress should reduce the amount of mortgage interest and debt payments that households and corporations can deduct to trim incentives for leverage, a regional Fed bank president said Monday.
Bloomberg | Home Prices in 20 U.S. Cities Fell 4% in April
A backlog of foreclosures and falling sales raise the risk that prices will decline further, discouraging builders from taking on new projects. The drop in property values and a jobless rate hovering around 9 percent are holding back consumer sentiment and spending, which accounts for 70 percent of the economy.
Politico | Breakthrough on trade may come
That deal could lead to a breakthrough on long stalled U.S. trade agreements with South Korea, Colombia and Panama. Those argreements were initially negotiated under Presdient George W. Bush and have been strongly opposed by organzied labor and many House Democrats.
Econ Comments
WSJ | The Deficit Is Worse Than We Think
Normal interest rates would raise debt-service costs by $4.9 trillion over 10 years, dwarfing the savings from any currently contemplated budget deal.
Blogs
Daily Capitalist | Why GDP Is Useless and Deceptive: There Was No Recovery
We have not recovered from the Great Recession and thus our current economic stagnation is less a new event than a continuation of the original collapse. The basis for the so-called “recovery” was a rise in GDP, that measure of what we have spent in the economy. It’s a fairly useless bit of data.
Reason Foundation | Debt Ceiling with GSEs on the Red Carpet
The debt ceiling itself is paralyzed with indecision. Yet there is another option the gossip pages haven't mentioned: a sunset date for Fannie Mae and Freddie Mac.
Reports
RCM: Wells Fargo | Consumer Spending Rose Less than Expected in May
Personal income rose 0.3 percent in May, while consumer spending was flat. Real outlays fell 0.1 percent. The core PCE deflator rose 1.2 percent and is still well within the Fed’s implicit comfort zone.
NBER | Confidence and the Transmission of Government Spending Shocks
There seems to be a widespread belief among economists, policy-makers, and members of the media that the "confidence'" of households and businesses is a critical component in the transmission of fiscal policy shocks into economic activity. We take this proposition to the data using standard structural VARs with government spending and aggregate output augmented to include empirical measures of consumer or business confidence.
WSJ | Colombia Trade Deal Loses Key Support
The top Democrat on a key House trade panel whipped up a new furor over three stalled trade deals Monday when he said he wouldn't support a pact with Colombia if the White House and Republicans refuse to include references to pro-labor provisions negotiated by the Obama administration.
Washington Times | Spending dips in U.S. for first time in a year
Consumer spending failed to budge from April to May, evidence that high gas prices and unemployment are squeezing household budgets. When adjusted for inflation, spending actually dropped 0.1 percent last month, the Commerce Department reported Monday.
Market Watch | Cut mortgage-interest deduction: Fed official
Congress should reduce the amount of mortgage interest and debt payments that households and corporations can deduct to trim incentives for leverage, a regional Fed bank president said Monday.
Bloomberg | Home Prices in 20 U.S. Cities Fell 4% in April
A backlog of foreclosures and falling sales raise the risk that prices will decline further, discouraging builders from taking on new projects. The drop in property values and a jobless rate hovering around 9 percent are holding back consumer sentiment and spending, which accounts for 70 percent of the economy.
Politico | Breakthrough on trade may come
That deal could lead to a breakthrough on long stalled U.S. trade agreements with South Korea, Colombia and Panama. Those argreements were initially negotiated under Presdient George W. Bush and have been strongly opposed by organzied labor and many House Democrats.
Econ Comments
WSJ | The Deficit Is Worse Than We Think
Normal interest rates would raise debt-service costs by $4.9 trillion over 10 years, dwarfing the savings from any currently contemplated budget deal.
Blogs
Daily Capitalist | Why GDP Is Useless and Deceptive: There Was No Recovery
We have not recovered from the Great Recession and thus our current economic stagnation is less a new event than a continuation of the original collapse. The basis for the so-called “recovery” was a rise in GDP, that measure of what we have spent in the economy. It’s a fairly useless bit of data.
Reason Foundation | Debt Ceiling with GSEs on the Red Carpet
The debt ceiling itself is paralyzed with indecision. Yet there is another option the gossip pages haven't mentioned: a sunset date for Fannie Mae and Freddie Mac.
Reports
RCM: Wells Fargo | Consumer Spending Rose Less than Expected in May
Personal income rose 0.3 percent in May, while consumer spending was flat. Real outlays fell 0.1 percent. The core PCE deflator rose 1.2 percent and is still well within the Fed’s implicit comfort zone.
NBER | Confidence and the Transmission of Government Spending Shocks
There seems to be a widespread belief among economists, policy-makers, and members of the media that the "confidence'" of households and businesses is a critical component in the transmission of fiscal policy shocks into economic activity. We take this proposition to the data using standard structural VARs with government spending and aggregate output augmented to include empirical measures of consumer or business confidence.
Health Care
News
CNN: Money | Early retirement a scary health care option
A majority of large employers today offer some form of retiree insurance -- both to early retirees and to retired workers who are Medicare eligible.
National Journal | Report: 5 Percent of People Account for Half of U.S. Health Care Spending
U.S. health care spending has sharply increased over the past few years. Between 2005 and 2009, national health care spending rose by 23 percent from $2 billion to $2.5 billion, according to the NIHCM Foundation, a nonprofit, nonpartisan organization focused on health care.
Politico | Health exchanges: A new gold mine
The secret to its success: the health reform law and the millions of dollars it invests in health exchanges, the new market places that sates must launch by 2014 or risk the federal government coming in and taking over the task.
Econ Comments
WSJ | Overlapping Health Plans Are Double Trouble for Taxpayers
As the U.S. wrestles with rising health expenses, one group of patients stands out for government-paid care that is both ultra-costly and plagued with problems.
Washington Times | HOWARD: Obamacare’s ‘one size fits all’ health care guidelines
People are individuals, not government-defined herds.
Cato @ Liberty | ObamaCare's Admission of Failure: Waivers on Demand
The American health care system is a mess, an inefficient public-private hybrid. Federal spending and tax policy have encouraged development of a third party payment system which generates wasteful over-spending.
CNN: Money | Early retirement a scary health care option
A majority of large employers today offer some form of retiree insurance -- both to early retirees and to retired workers who are Medicare eligible.
National Journal | Report: 5 Percent of People Account for Half of U.S. Health Care Spending
U.S. health care spending has sharply increased over the past few years. Between 2005 and 2009, national health care spending rose by 23 percent from $2 billion to $2.5 billion, according to the NIHCM Foundation, a nonprofit, nonpartisan organization focused on health care.
Politico | Health exchanges: A new gold mine
The secret to its success: the health reform law and the millions of dollars it invests in health exchanges, the new market places that sates must launch by 2014 or risk the federal government coming in and taking over the task.
Econ Comments
WSJ | Overlapping Health Plans Are Double Trouble for Taxpayers
As the U.S. wrestles with rising health expenses, one group of patients stands out for government-paid care that is both ultra-costly and plagued with problems.
Washington Times | HOWARD: Obamacare’s ‘one size fits all’ health care guidelines
People are individuals, not government-defined herds.
Cato @ Liberty | ObamaCare's Admission of Failure: Waivers on Demand
The American health care system is a mess, an inefficient public-private hybrid. Federal spending and tax policy have encouraged development of a third party payment system which generates wasteful over-spending.
Taxes
News
WSJ | Negotiators Wrangle on Taxes
In Private Meeting, White House Pushes for Changes in Deductions, Subsidies.
MarketWatch | Is your child a tax cheat?
Did you know that all Americans have to report their worldwide income on their tax returns? Even children.
Econ Comments
Washington Times | RAHN: Tax increase con men
‘Revenue’ boost plan depends on assuming away growth.
Daily Caller | Why Ohio should lower its investment tax
Not all taxes are alike: some have little impact on the economy while others can be quite disruptive and hamper growth and investment. Capital gains taxes fall in the latter category.
WSJ | Negotiators Wrangle on Taxes
In Private Meeting, White House Pushes for Changes in Deductions, Subsidies.
MarketWatch | Is your child a tax cheat?
Did you know that all Americans have to report their worldwide income on their tax returns? Even children.
Econ Comments
Washington Times | RAHN: Tax increase con men
‘Revenue’ boost plan depends on assuming away growth.
Daily Caller | Why Ohio should lower its investment tax
Not all taxes are alike: some have little impact on the economy while others can be quite disruptive and hamper growth and investment. Capital gains taxes fall in the latter category.
Monetary
News
Financial Times | Dollar seen losing global reserve status
The US dollar will lose its status as the global reserve currency over the next 25 years, according to tha survey of central bank reserve managers who collectively control more than $8,000bn.
Econ Comments
Minyanville | Deflation Is Here: Retailing in a Data Economy
Part retailer, part psychological experiment, big box stores are a statement about size -- and that's exactly what consumers now fear and despise.
Minyanville | The Euro Is Dying
Time is of the essence, and the only ways out are via some combination of devaluation, default, and resolution of problem banks.
Blogs
Heritage Foundation | Chinese Currency Manipulation: Lies and Statistics
There’s a very old political rule getting a new twist in the House of Representatives right now: When your policies fail, blame someone else. The new twist is: When unemployment is above the level you said would be a catastrophe, and you’re on the road to bankrupting the country in the meantime, start talking about Chinese currency.
Financial Times | Dollar seen losing global reserve status
The US dollar will lose its status as the global reserve currency over the next 25 years, according to tha survey of central bank reserve managers who collectively control more than $8,000bn.
Econ Comments
Minyanville | Deflation Is Here: Retailing in a Data Economy
Part retailer, part psychological experiment, big box stores are a statement about size -- and that's exactly what consumers now fear and despise.
Minyanville | The Euro Is Dying
Time is of the essence, and the only ways out are via some combination of devaluation, default, and resolution of problem banks.
Blogs
Heritage Foundation | Chinese Currency Manipulation: Lies and Statistics
There’s a very old political rule getting a new twist in the House of Representatives right now: When your policies fail, blame someone else. The new twist is: When unemployment is above the level you said would be a catastrophe, and you’re on the road to bankrupting the country in the meantime, start talking about Chinese currency.
Budget
News
WSJ | Debt Talks' Impasse Masks Real Progress
First, Washington's long-term attitudes about spending and debt are slowly but surely changing. Second, as a result, a meaningful short-term deficit deal should be within reach.
CNN Money | California budget deal reached
The plan, cobbled together with Democratic legislative leaders, calls for a total of $14.6 billion in cuts. Much of the bloodletting was agreed to in March, but this week's deal would add at least $2.5 billion in additional reductions.
Econ Comments
Washington Times | MILLER: Permanent spending restraint
There has never been a better chance of passage, and securing ratification from at least 38 states next year would inevitably become the central issue of the 2012 election - no presidential signature is required.
Blogs
WSJ: Real Time Economics | Fed Official Warns of Too Much Debt for Consumers, Corporations
Overly leveraged U.S. consumers and financial firms expose the financial system to shocks, a top Federal Reserve official said Monday, urging changes to the tax code that would lower the incentives of piling on debt.
WSJ | Debt Talks' Impasse Masks Real Progress
First, Washington's long-term attitudes about spending and debt are slowly but surely changing. Second, as a result, a meaningful short-term deficit deal should be within reach.
CNN Money | California budget deal reached
The plan, cobbled together with Democratic legislative leaders, calls for a total of $14.6 billion in cuts. Much of the bloodletting was agreed to in March, but this week's deal would add at least $2.5 billion in additional reductions.
Econ Comments
Washington Times | MILLER: Permanent spending restraint
There has never been a better chance of passage, and securing ratification from at least 38 states next year would inevitably become the central issue of the 2012 election - no presidential signature is required.
Blogs
WSJ: Real Time Economics | Fed Official Warns of Too Much Debt for Consumers, Corporations
Overly leveraged U.S. consumers and financial firms expose the financial system to shocks, a top Federal Reserve official said Monday, urging changes to the tax code that would lower the incentives of piling on debt.
Employment
Econ Comments
Washington Times | UPTON: Employment crash demands real change in Washington
Creating an American jobs decade crucial to recovery.
Minyanville | Job Creation: Why There's None; What Should Be Done
Despite record deficits, spending, various stimulus schemes, and money printing programs, jobs are not being created at a pace that results in a falling unemployment rate.
Washington Times | UPTON: Employment crash demands real change in Washington
Creating an American jobs decade crucial to recovery.
Minyanville | Job Creation: Why There's None; What Should Be Done
Despite record deficits, spending, various stimulus schemes, and money printing programs, jobs are not being created at a pace that results in a falling unemployment rate.
Monday, June 27, 2011
General Economics
News
CNN: Money | Patent reform is finally on its way
Patent reform cleared another major hurdle on Thursday, when the House of Representatives voted overwhelmingly to approve a bill that would fundamentally change the way the government treats intellectual property.
WSJ | New Orders Echo Uneven Recovery
Orders for long-lasting goods such as cars and washing machines increased in May after an April decline, as the factory sector—and the U.S. economy more broadly—continued its fitful recovery.
CNN: Money | The 11th hour stimulus push
Recovery Act money has dried up. The Fed's bond buying program will end this month. Economic growth remains anemic, and there are signs of further slowing.
Econ Comments
Washington Times | REAGAN: Reagan’s vision lives on in Texas
More than three decades ago, my father took ownership of the smoking ruins of the American economy armed with nothing more than four very basic principles: Keep taxes low, restrain government spending, minimize the amount of regulation on private enterprise and keep the money supply sound.
Washington Post | Can global economic policy be freed from its paralysis?
To be fair, some Keynesian economists argue that the problem is timidity, not impotence. Governments could do more; they just aren’t. They could spend more or cut taxes more; budget deficits — at least in the United States — don’t matter much at the moment. The Fed could have a QE3, buying more bonds to try to lower long-term interest rates.
WSJ | Money-Market Mayhem
Once again, regulators miss the systemic risk right in front of them.
RCM | Social Security Shutdown? Bring It On!
That's right. Tell Reid, Pelosi, Obama, Biden, and the whole gang of politicians claiming to represent the little guy that you will vote to increase the debt ceiling provided they join in passing a bill subjecting every dollar of federal entitlement spending to means testing.
Bloomberg | Why China’s Heading for a Hard Landing, Part 1: A. Gary Shilling
Few countries are more important to the global economy than China. But its reputation as an unstoppable giant -- as a country with an unending supply of cheap labor and limitless capacity for growth -- masks some serious and worsening economic problems.
Blogs
Café Hayek | Economic Growth Does Not Eliminate Scarcity
Resources will always be scarce. A thing is not scarce if and only if that thing is instantly and fully available without requiring of each and every consumer of that thing any choices or conscious actions directed at acquiring that thing. Some of the non-scarce things that are useful to human beings are breathable air and gravity.
Calculated Risk | Schedule for Week of June 26th
This will be busy week for economic data. The key releases will be the ISM manufacturing index on Friday, Case-Shiller house prices (April) on Tuesday, and auto sales on Friday.
Café Hayek | On the Finiteness of Resources
What is and isn’t a resource is determined by human ingenuity. Likewise, human ingenuity determines how much “utility” – satisfaction; gratification; pleasure; relief-of-felt-uneasiness (call it what you will) – can be gotten at any moment in time from any given unit of physical stuff.
Calculated Risk | Unofficial Problem Bank list at 1,001 Institutions and Transition Matrix
Note: this is an unofficial list of Problem Banks compiled only from public sources. This post includes an update to the transition matrix.
WSJ: Real Time Economics | Survey: Banks Easing Lending Standards, but Not for Consumers
Here’s a glimmer of good news for the economy. An annual survey by a key bank regulator showed some signs that the nation’s banks are easing underwriting standards after three years of broad tightening of lending terms.
Reports
BEA | Personal Income Rises in May
Personal income increased 0.3 percent in May, the same as in April. Wages and salaries, the largest component of personal income, increased 0.2 percent in May, after increasing 0.4 percent in April.
RCM: Wells Fargo | Weekly Economic & Financial Commentary
First-quarter GDP was revised up to 1.9 percent growth versus a previously reported 1.8 percent. On the negative side, both the GDP price deflator and the core PCE deflator were revised up.
CNN: Money | Patent reform is finally on its way
Patent reform cleared another major hurdle on Thursday, when the House of Representatives voted overwhelmingly to approve a bill that would fundamentally change the way the government treats intellectual property.
WSJ | New Orders Echo Uneven Recovery
Orders for long-lasting goods such as cars and washing machines increased in May after an April decline, as the factory sector—and the U.S. economy more broadly—continued its fitful recovery.
CNN: Money | The 11th hour stimulus push
Recovery Act money has dried up. The Fed's bond buying program will end this month. Economic growth remains anemic, and there are signs of further slowing.
Econ Comments
Washington Times | REAGAN: Reagan’s vision lives on in Texas
More than three decades ago, my father took ownership of the smoking ruins of the American economy armed with nothing more than four very basic principles: Keep taxes low, restrain government spending, minimize the amount of regulation on private enterprise and keep the money supply sound.
Washington Post | Can global economic policy be freed from its paralysis?
To be fair, some Keynesian economists argue that the problem is timidity, not impotence. Governments could do more; they just aren’t. They could spend more or cut taxes more; budget deficits — at least in the United States — don’t matter much at the moment. The Fed could have a QE3, buying more bonds to try to lower long-term interest rates.
WSJ | Money-Market Mayhem
Once again, regulators miss the systemic risk right in front of them.
RCM | Social Security Shutdown? Bring It On!
That's right. Tell Reid, Pelosi, Obama, Biden, and the whole gang of politicians claiming to represent the little guy that you will vote to increase the debt ceiling provided they join in passing a bill subjecting every dollar of federal entitlement spending to means testing.
Bloomberg | Why China’s Heading for a Hard Landing, Part 1: A. Gary Shilling
Few countries are more important to the global economy than China. But its reputation as an unstoppable giant -- as a country with an unending supply of cheap labor and limitless capacity for growth -- masks some serious and worsening economic problems.
Blogs
Café Hayek | Economic Growth Does Not Eliminate Scarcity
Resources will always be scarce. A thing is not scarce if and only if that thing is instantly and fully available without requiring of each and every consumer of that thing any choices or conscious actions directed at acquiring that thing. Some of the non-scarce things that are useful to human beings are breathable air and gravity.
Calculated Risk | Schedule for Week of June 26th
This will be busy week for economic data. The key releases will be the ISM manufacturing index on Friday, Case-Shiller house prices (April) on Tuesday, and auto sales on Friday.
Café Hayek | On the Finiteness of Resources
What is and isn’t a resource is determined by human ingenuity. Likewise, human ingenuity determines how much “utility” – satisfaction; gratification; pleasure; relief-of-felt-uneasiness (call it what you will) – can be gotten at any moment in time from any given unit of physical stuff.
Calculated Risk | Unofficial Problem Bank list at 1,001 Institutions and Transition Matrix
Note: this is an unofficial list of Problem Banks compiled only from public sources. This post includes an update to the transition matrix.
WSJ: Real Time Economics | Survey: Banks Easing Lending Standards, but Not for Consumers
Here’s a glimmer of good news for the economy. An annual survey by a key bank regulator showed some signs that the nation’s banks are easing underwriting standards after three years of broad tightening of lending terms.
Reports
BEA | Personal Income Rises in May
Personal income increased 0.3 percent in May, the same as in April. Wages and salaries, the largest component of personal income, increased 0.2 percent in May, after increasing 0.4 percent in April.
RCM: Wells Fargo | Weekly Economic & Financial Commentary
First-quarter GDP was revised up to 1.9 percent growth versus a previously reported 1.8 percent. On the negative side, both the GDP price deflator and the core PCE deflator were revised up.
Taxes
News
Fox News | Republicans Say No to Tax Hikes, Look for Other Revenues, Benefits Reform
The debt ceiling debate has stalled over the issue of raising taxes, and the Senate minority leader and his chief whip said Sunday they aren't going to allow that to happen.
Blogs
Heritage Foundation | CBO Figures Once Again Prove Tax Hikes Unnecessary to Fix Budget
The CBO calculates that if Congress leaves the tax code as it is today—which would include permanently extending the 2001/2003 tax cuts for all taxpayers (even those greedy, job-producing rich folks and small businesses), patching the alternative minimum tax so it does not impact middle-income families, and continuing a host of other tax-reducing provisions that regularly expire—tax revenues would exceed their historical average of 18 percent of GDP in 2021.
Fox News | Republicans Say No to Tax Hikes, Look for Other Revenues, Benefits Reform
The debt ceiling debate has stalled over the issue of raising taxes, and the Senate minority leader and his chief whip said Sunday they aren't going to allow that to happen.
Blogs
Heritage Foundation | CBO Figures Once Again Prove Tax Hikes Unnecessary to Fix Budget
The CBO calculates that if Congress leaves the tax code as it is today—which would include permanently extending the 2001/2003 tax cuts for all taxpayers (even those greedy, job-producing rich folks and small businesses), patching the alternative minimum tax so it does not impact middle-income families, and continuing a host of other tax-reducing provisions that regularly expire—tax revenues would exceed their historical average of 18 percent of GDP in 2021.
Health Care
News
National Journal | Wisconsin Cuts Funds to Planned Parenthood
Wisconsin Gov. Scott Walker signed a budget Sunday that cuts education and health clinics -- including Planned Parenthood clinics -- to plug a $3 billion shortfall without raising taxes, AP reported. The two-year, $66 billion budget passed in the state legislature without a single Democratic vote. The Planned Parenthood Federation of America denounced the budget, which eliminated state and federal funding for the organization’s clinics.
National Journal | Wisconsin Cuts Funds to Planned Parenthood
Wisconsin Gov. Scott Walker signed a budget Sunday that cuts education and health clinics -- including Planned Parenthood clinics -- to plug a $3 billion shortfall without raising taxes, AP reported. The two-year, $66 billion budget passed in the state legislature without a single Democratic vote. The Planned Parenthood Federation of America denounced the budget, which eliminated state and federal funding for the organization’s clinics.
Monetary
News
Bloomberg | Fed May Buy $300 Billion in Treasuries After QE2
The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends this week, as the central bank uses its $2.86 trillion balance sheet to keep interest rates low.
Fiscal Times | Core Inflation Rises--Interest Rates May Follow
The inflation outlook is taking a new twist. So far the story has been dominated by surging prices for gasoline and food. Not to worry, many economists said, core inflation—which excludes the volatile energy and food sectors—was tame. Not anymore. Now core inflation is picking up, adding new pressure on household budgets and complicating the Federal Reserve’s efforts to balance its twin goals of containing inflation and reducing unemployment.
Bloomberg | Ron Paul’s Anti-Fed Message Gains Respect
Although political analysts give the elder Paul little chance of emerging as President Barack Obama’s challenger, his limited-government goals echo through the Tea Party movement, the cadre of activists that helped Republicans gain control of the House in the 2010 election.
Econ Comments
Barron's | Is Bernanke Playing Politics?
The supposedly party-neutral Fed chief once again parrots the Democratic line on the deficit.
Blogs
Free Banking | The Problem is Central Banking not Fractional Reserve Banking
In some free-market circles fractional reserve banking (FRB) is blamed for everything from business cycles to bad breath. Defenders are seen as apologists for inflation and fraud. Thankfully these views remain a minority because they are gravely mistaken. As I, and other Austrian monetary theorists, such as George Selgin and Larry White, have argued, there’s nothing wrong with FRB that getting rid of a central bank can’t cure. Fractional reserve banking works just fine in a free market.
Bloomberg | Fed May Buy $300 Billion in Treasuries After QE2
The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends this week, as the central bank uses its $2.86 trillion balance sheet to keep interest rates low.
Fiscal Times | Core Inflation Rises--Interest Rates May Follow
The inflation outlook is taking a new twist. So far the story has been dominated by surging prices for gasoline and food. Not to worry, many economists said, core inflation—which excludes the volatile energy and food sectors—was tame. Not anymore. Now core inflation is picking up, adding new pressure on household budgets and complicating the Federal Reserve’s efforts to balance its twin goals of containing inflation and reducing unemployment.
Bloomberg | Ron Paul’s Anti-Fed Message Gains Respect
Although political analysts give the elder Paul little chance of emerging as President Barack Obama’s challenger, his limited-government goals echo through the Tea Party movement, the cadre of activists that helped Republicans gain control of the House in the 2010 election.
Econ Comments
Barron's | Is Bernanke Playing Politics?
The supposedly party-neutral Fed chief once again parrots the Democratic line on the deficit.
Blogs
Free Banking | The Problem is Central Banking not Fractional Reserve Banking
In some free-market circles fractional reserve banking (FRB) is blamed for everything from business cycles to bad breath. Defenders are seen as apologists for inflation and fraud. Thankfully these views remain a minority because they are gravely mistaken. As I, and other Austrian monetary theorists, such as George Selgin and Larry White, have argued, there’s nothing wrong with FRB that getting rid of a central bank can’t cure. Fractional reserve banking works just fine in a free market.
Budget
News
WSJ | Obama Joins Tense Debt Talks
Monday Meetings Aim to Break Logjam; Both Sides Remain Far Apart on Taxes as Deadline Looms.
Bloomberg | Pelosi Says U.S. Debt-Ceiling Deal Must Reduce Tax Subsidies for Companies
House Minority Leader Nancy Pelosi said reductions in “tax subsidies” for companies must be part of any deal to cut the U.S. budget deficit and increase the federal debt ceiling.
Econ Comments
WSJ | A Path to a Budget Pact
Treasury Secretary Timothy Geithner on the U.S. deficit, Europe's woes and overhauling the corporate tax system.
FT | A fiscal policy fit for the next crisis
The debt-ceiling talks in Washington have stumbled again. The sticking point, as before, is taxes.
WSJ | The Local Government Pension Squeeze
Annual retiree costs in Providence, R.I., now amount to an astounding 50% of city tax collections.
Blogs
Heritage Foundation | How Much Do We Owe? That’s the $62 Trillion Question
It turns out this number — a staggering debt of $534,000 per household — has caused quite the controversy.
WSJ: Real Time Economics | Guest Contribution: What Happens if U.S. Defaults?
As debt talks broke down today, concerns were raised about a U.S. default. Maury Harris, chief U.S. economist for UBS Investment Bank, and Drew T. Matus, senior U.S. economist, UBS Investment Bank, look at the potential effects.
Forbes: Back on the Margin | Seven Questions To Ask About Any Congressional Debt-Limit Deal
...negotiators already had tentatively identified more than $2 trillion in spending cuts during the next 10 years.
Heritage Foundation | The European Debt Crisis: A Preview of U.S. Woes?
Similar issues are confronting both the U.S. and Europe today. As the Grecian debt tragedy unfolds, the underlying fear is that it may be a prequel to what will happen here.
Cato@Liberty | $1 Trillion in Phony Spending Cuts?
In the Washington Post Friday, Ezra Klein partly confirmed what I fear the Republican strategy is for the debt-limit bill—get to the $2 trillion in cuts promised through accounting gimmicks.
WSJ | Obama Joins Tense Debt Talks
Monday Meetings Aim to Break Logjam; Both Sides Remain Far Apart on Taxes as Deadline Looms.
Bloomberg | Pelosi Says U.S. Debt-Ceiling Deal Must Reduce Tax Subsidies for Companies
House Minority Leader Nancy Pelosi said reductions in “tax subsidies” for companies must be part of any deal to cut the U.S. budget deficit and increase the federal debt ceiling.
Econ Comments
WSJ | A Path to a Budget Pact
Treasury Secretary Timothy Geithner on the U.S. deficit, Europe's woes and overhauling the corporate tax system.
FT | A fiscal policy fit for the next crisis
The debt-ceiling talks in Washington have stumbled again. The sticking point, as before, is taxes.
WSJ | The Local Government Pension Squeeze
Annual retiree costs in Providence, R.I., now amount to an astounding 50% of city tax collections.
Blogs
Heritage Foundation | How Much Do We Owe? That’s the $62 Trillion Question
It turns out this number — a staggering debt of $534,000 per household — has caused quite the controversy.
WSJ: Real Time Economics | Guest Contribution: What Happens if U.S. Defaults?
As debt talks broke down today, concerns were raised about a U.S. default. Maury Harris, chief U.S. economist for UBS Investment Bank, and Drew T. Matus, senior U.S. economist, UBS Investment Bank, look at the potential effects.
Forbes: Back on the Margin | Seven Questions To Ask About Any Congressional Debt-Limit Deal
...negotiators already had tentatively identified more than $2 trillion in spending cuts during the next 10 years.
Heritage Foundation | The European Debt Crisis: A Preview of U.S. Woes?
Similar issues are confronting both the U.S. and Europe today. As the Grecian debt tragedy unfolds, the underlying fear is that it may be a prequel to what will happen here.
Cato@Liberty | $1 Trillion in Phony Spending Cuts?
In the Washington Post Friday, Ezra Klein partly confirmed what I fear the Republican strategy is for the debt-limit bill—get to the $2 trillion in cuts promised through accounting gimmicks.
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