Wednesday, March 2, 2011

General Economics

News                                                                                                                             
Fiscal Times | S&P Warns of Downgrades on Portugal and Greece
Leading credit rating agency Standard & Poor's has warned that it could further downgrade both Portugal and Greece's debt in the coming two months, depending on the outcome of a crucial European leaders' summit later this month.
WSJ | Australian Economy Falls Short of Forecasts
The Australian economy grew solidly in the fourth quarter of 2010, bucking the headwinds of rising interest rates, a still fragile global backdrop and devastating floods that inundated the coal-rich state of Queensland in December and January.
NYT | Credit Card Data Tells Mixed Story
American shoppers did not shed their reliance on credit cards over the year-end holidays.
WSJ | Regulators Push 20% Down Payments on Homes
Banking regulators are pushing for mortgage-lending rules that require homeowners to make minimum 20% down payments on loans classified as lower-risk, according to people familiar with the matter.
Time | Court Rules on Corporate Privacy Rights
The Supreme Court ruled Tuesday that corporations have no right of personal privacy to prevent the disclosure of documents under the federal Freedom of Information Act.
Bloomberg | Food Crisis Not as Bad as 2008 Because of Rice Price: OECD
A global food crisis on the scale of what happened three years ago isn’t recurring because an increase in the cost of rice, a staple for half the world, has lagged behind a jump for other grains, according to the OECD.

Econ Comments                                                                                                             
Cato Institute | It's the Egyptian Economy, Stupid
In order for democracy to sprout along the Nile, transitional leaders should focus as much on Egypt's future economics as its future politics.
WSJ | Get Ready for a Growth Supercycle
Emerging markets could propel a global boom comparable to the industrialization of the United States.
Washington Times | COLE: Obama’s helping hand hoodwinks homeowners
Government mortgage assistance can be worse than nothing.
Bloomberg | Food Crisis Not as Bad as 2008 Because of Rice Price: OECD
A global food crisis on the scale of what happened three years ago isn’t recurring because an increase in the cost of rice, a staple for half the world, has lagged behind a jump for other grains, according to the OECD.
Barrons | Beyond Laissez-Faire
A new biography of Adam Smith reveals a man concerned with humanity as well as economies.
Minyanville | Housing Finance Reform: The Three Actions Politicians Could Take
It's possible that real reform could take root. But it will be a tricky minefield to cross to get there

Blogs                                                                                                                             
Calculated Risk | Private Construction Spending decreases in January
Catching up ... the Census Bureau reported this morning that overall construction spending decreased in January compared to December (seasonally adjusted).
AEI: The American | Energy Fact of the Week: U.S. a ‘Pathetic Energy Hog’… Not
It is a common misperception that the United States has made little progress in improving its energy efficiency over the last generation.
AEI: The American | The Boehner Uncertainty Principle
Physics has the Heisenberg uncertainty principle; economics now has the Boehner uncertainty principle.
WSJ: Real Time Economics | World-Wide Factory Activity, by Country
Global manufacturing posted another month of strong gains in February, with expansion accelerating in most regions including the U.S.
Forbes: Ideas In Action | You’re on Your Own
A Solution to the Social Security Crisis Lies in Giving Americans the Incentive and Freedom to Make Smart and Cautious Investments
WSJ: Real Time Economics | Bankruptcy Filings Ticked Up Last Month
Consumer bankruptcy filings ticked up in February, but so far the rise has slowed from 2010.

Reports                                                                                                                          
Mercatus Center | Five Proposals for a New Housing Finance System in The United States
The five papers presented here look beyond the crisis to present various proposals for the long-term reform of the U.S. mortgage market.

Health Care

News                                                                                                                             
House Energy & Commerce | Joint Congressional Committee Report Details New Health Law’s Fiscal Burden on Fragile State Budgets, Sustainability of Medicaid Program
The joint Congressional Committee report, Medicaid Expansion in the New Health Law: Costs to the States, put together by the Senate Finance Committee, Minority and the House Energy and Commerce Committee, Majority is the first to provide a comprehensive overview of state government estimates regarding the cost of the Patient Protection and Affordable Care Act (PPACA) to state Medicaid programs. The report estimates the health law will cost state taxpayers at least $118.04 billion through 2023--more than double the Congressional Budget Office’s (CBO) recent estimate of $60 billion through 2021.
New York Times | Feeling Budget Pinch, States Cut Insurance
Pennsylvania is one of several destitute states seeking to help balance budgets by removing adults from government health insurance programs.
WSJ | EU Closes Insurers' Gender Rate Gap
The European Union's highest court declared illegal the widespread practice of charging men and women different rates for insurance, setting in motion an overhaul of how life, auto and health policies are written across Europe.

Econ Comments                                                                                                             
NationalJournal | Barbour Calls for Medicaid Block Grant as GOP Eyes Reform Alternatives
Mississippi Gov. Haley Barbour, a Republican, said he would push Congress to turn the federal-state Medicaid program into a block grant, where states receive a lump sum and the ability to redesign the program with little government intervention.

Blogs                                                                                                                             
Cato Institute | Congressional Republicans May Be Understating the Cost of ObamaCare
Gokhale projects that ObamaCare will force Florida to spend an additional $23.8 billion between 2014 and 2023. That is almost double the committees' estimate of an additional $12.9 billion in spending by Florida between 2013 to 2023.
NCPA | Two Visions for Health Reform
There are basically two approaches: a bottom-up, market-based approach and a top-down command-and-control approach:
Heritage Foundation | Obamacare Threatens American Medical Innovation
Until now, the United States has been the world leader in medical innovation, but this is by no means a given for the future. Due to burdensome, time-consuming regulations, medical innovation faces an uphill battle in the United States.

Reports                                                                                                                         
Cato Institute | Estimating ObamaCare's Effect on State Medicaid Expenditure Growth
Once ObamaCare becomes fully effective in 2014, the cost of newly eligible Medicaid enrollees will be almost fully covered by the federal government through 2019, with federal financial support expected to be extended thereafter.
AEI | ObamaCare in the Supreme Court
Recent district court decisions have fueled speculation over what the Supreme Court will do about ObamaCare if and when one of the challenges to the law’s “individual mandate” arrives on the justices’doorstep. Largely unnoticed amidst the agitation, though, cases that will have profound effects on ObamaCare’s future are already pending before the Court. They involve enormous amounts of money,and they have powerful implications for the implementation of the criminally misnamed “Affordable Care Act.” The justices will get these cases right, to good effect.

Taxes

News                                                                                                                             
Miami Herald | Report: Texas allows billions in tax exemptions
Exemptions from sales, franchise, and gasoline and motor vehicle sales taxes for the 2011 fiscal year that ends on Aug. 31, 2011, will amount to $32.2 billion, Combs reported.
Fox News | The Tax Man Cometh: How Does Your State Compare?
The average tax burden in Connecticut, New York and New Jersey exceeds 12 percent, which is roughly equal to the national federal income tax average of 12.2 percent.

Econ Comments                                                                                                             
Fiscal Times | Prospects for Tax Reform in 2011 Look Dim
Democrats and Republicans for years have said they want to overhaul the dense and loophole-ridden U.S. tax system, which hasn’t been revised since 1986…
Fortune | The payroll tax cut isn't working
When Congress approved sweeping tax cuts last year in hopes of giving the economy an extra boost, it might not have anticipated how much oil and food prices would weigh on consumers.

Monetary

News                                                                                                                             
WSJ | Inflation Surges in South Korea
South Korea's February consumer prices topped forecasts to rise at their fastest clip in more than two years, prompting the government to convene another price-stability meeting and raising pressure on the Bank of Korea to increase its policy interest rate next week.
WSJ | Fed Chief Discusses Exit From Stimulus
Federal Reserve Chairman Ben Bernanke, after spending much of the past six months formulating and then defending a new central-bank effort to stimulate the economy, is turning his eyes toward an eventual exit from the program.
Bloomberg | Gross Says U.S. Yields Too Low as Fed Approaches End of QE2
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said yields on Treasuries may be too low to sustain demand for U.S. government debt as the Federal Reserve approaches the end of its second round of quantitative easing.
Bloomberg | Bernanke Signals No Rush to Tighten Credit When Fed Stops Bond Purchases
Federal Reserve Chairman Ben S. Bernanke signaled he’s in no rush to tighten credit after the Fed finishes an expansion of record monetary stimulus, seeing little inflation risk and still-slow job growth.

Econ Comments                                                                                                             
Minyanvile | Fed Digging Its Heel: Employment and Inflation
This Friday, good news on employment could be bad news for asset prices.
CNN Money | Gross warns QE2's end could sink markets
 Bill Gross says stocks and bonds could be in for a world of hurt this summer.
WSJ | Why the Dollar's Reign Is Near an End
For decades the dollar has served as the world's main reserve currency, but, argues Barry Eichengreen, it will soon have to share that role. Here's why—and what it will mean for international markets and companies.
Fox Business | Fed's Hoenig: Fed Should Prepare Markets for Higher Rates
"I really want to take away the punch bowl before the room gets drunk because I think this punch bowl is a little bit spiked," Hoenig, who has repeatedly voiced dissent against the Fed's ultra-low monetary policy, said in an event organized by the Council of Foreign Relations
Bloomberg Inflation Above 9% Shows Bankers No Longer Gods: William Pesek
Several asset bubbles and one global crisis later, we know better. The ongoing surges in prices of commodities such as food are fanning Asian inflation and they require bold action. Higher rates will only do so much. It’s time for politicians to do their part to reduce fiscal-stimulus excesses.

Employment

News                                                                                                                             
NYT | More College Graduates Take Public Service Jobs
As job hunts became tough after the crisis, anecdotal evidence suggested that more young people considered public service. Exactly how big that shift was is now becoming clear: In 2009 alone, 16 percent more young college graduates worked for the federal government than in the previous year and 11 percent more for nonprofit groups, according to an analysis by The New York Times of data from the American Community Survey of the United States Census Bureau.
Bloomberg | Announced U.S. Job Cuts Rose 20% From Year Ago, Challenger Says
Employers in the U.S. announced more job cuts in February than in the same month last year, led by a surge at government agencies.
CNN Money | Mixed signals for the job market
Payroll processing firm ADP reported a larger-than-expected increase in private-sector employment Wednesday, but a separate report showed planned layoffs rose sharply in February.
MSNBC | Bernanke: House GOP spending cuts wouldn't cost 700,000 jobs
Testifying before the Senate Banking and Urban Affairs Committee Tuesday, Bernanke said that his analysis “doesn't give a number that high” for job losses resulting from the GOP plan to eliminate $61 billion in government spending this year, adding that the cuts would only reduce growth "on the margin."

Blogs                                                                                                                           
Public Sector Inc. | New Toolkit for Cutting Employee Costs
As of September 2010, state and local governments had 19.4 million employees earning an average of $40.10 per hour in compensation--$26.25 as wages and $13.85 as benefits. Together, wages and benefits combine to make up 43 percent of state and local spending. Since employee compensation accounts for nearly half of state and local spending, compensation reform is a necessity as governments struggle under financial strain.
Cato@Liberty | Unions and Government Worker Pay
Are these government worker pay advantages related to union shares in the states? I performed a simple regression analysis to find out. The answer is “Yes”—states with more unionized government workforces tend to have a higher government compensation advantage.

Budget

News                                                                                                                             
WSJ | Wisconsin Governor Seeks Deep Cuts
Wisconsin Gov. Scott Walker proposed a two-year budget Tuesday cutting more than $1.25 billion in state aid to schools and local governments, part of a broad proposed reduction in state spending of nearly 7%.
ABC News | From Connecticut to Wisconsin to Florida, States Try Creative Ways to Balance Budgets
In Connecticut, Gov. Dan Malloy is even going after coupon clippers. As part of $1.5 billion in new taxes in Connecticut, Malloy proposes a sales tax on the original price of something -- never mind whether you get a big discount when you buy it.
WSJ | States Fumble Revenue Forecasts
The report's authors calculate that during the depth of the latest recession in 2009, income forecasts by all 50 states overshot reality by a total $49 billion.
WSJ | Both Sides Embrace Government-Waste Study
House and Senate leaders of both parties promised to rein in government spending after examining a new report that detailed billions of dollars in duplicative federal programs.
National Journal | Cantor Says GOP Will Have Budget Plan With Entitlement Reform This Month
Cantor said that it’s only a matter of time until the GOP and the Democrats come together for a “grand bargain” that will fund the government for more than just a few weeks at a time.
Minyanville | What Would Happen if the Government Actually Shut Down?
The federal employees that kept working were responsible for what the Office of Management and Budget describes as "excepted activities"…

Econ Comments                                                                                                             
Cato Institute | There Are Worse Things Than Government Shutdowns
No one really wants to shut down the government, of course. But one does have to wonder why it is more important to prevent a government shutdown than it is to stop the tide of red ink threatening to engulf our economy.
AEI | The Public No Longer Sees Government Shutdown As a "Train Wreck"
Pollster Scott Rasmussen reports that 58 percent of likely voters would rather have a government shutdown until both parties can agree on spending cuts, while only 33 percent would prefer spending at the same levels as last year.
Washington Times | DE RUGY & FICHTNER: Don’t raise the debt ceiling
The Treasury Department estimates that at the current rate of government spending, America’s debt will crash through the $14.3 trillion ceiling in April or May.
AEI | There's Little Chance the Budget Will Be Done in 2 Weeks
The debate we should be having, over the larger long-term debt problem and over how to make smart savings that preserve both a safety net and critical investments in the future, is both obscured by the current one and made more difficult to have if we end up with vicious disputes and potential shutdowns draining energy and the tiny amount of trust and goodwill that exists in the larger political process.

Blogs                                                                                                                             
Marginal Revolution | How bad is the state pension funding mess?
I don't see Baker -- not once -- analyzing the public choice considerations of how state governments actually behave and treat their finances.
NRO: The Corner | Long Live Bad Models and Government Spending!
Many of us have said it before, but it’s worth repeating: Both studies are based on the same faulty models that predicted that the stimulus of 2009 would stimulate economic growth.
WSJ: Real Time Economics | Bernanke Warns on Debt-Limit ‘Chaos’
U.S. Federal Reserve Chairman Ben Bernanke warned Congress could create financial and economic “chaos” if lawmakers bind together raising the short-term debt limit to fund the federal government with fundamental fiscal restructuring.
Cato@Liberty | GAO Report on Duplicative Programs
Most of the “services” discussed in the report need to be eliminated, not consolidated. Turning 82 teacher quality programs into, say, 10 doesn’t change the fact that the federal government should not be involved in education in the first place.
WSJ: Real Time Economics | U.S. Getting Closer to $14.29 Trillion Debt Ceiling
As of Monday, the U.S. had $14.14 trillion in debt subject to the $14.294 trillion debt ceiling, according to the government’s Bureau of Public Debt. This is up from $14.0 trillion Jan. 28.

Reports                                                                                                                         
Heritage Foundation | How to Fix the Federal Budget
The public debt is closing in on 70 percent of the economy and within the decade will exceed the tipping point of 90 percent, resulting in significant harm to economic growth and prosperity.
AEI | Getting to Deficit Reduction
Waiting for a fiscal crisis to occur before taking action is unwise. Japan’s failure to address its debt problem has caused an erosion of living standards over the last decade and a half, and the United States could follow suit if it does not learn from Japan’s mistakes.
Heritage Foundation | Chinese Investment in the U.S.: $2 Trillion and Counting
The Department of the Treasury just issued its preliminary annual report of foreign holdings of American securities. It puts total Chinese investment in the U.S. at $1.61 trillion as of June 30, 2010.