Friday, March 18, 2011

General Economics

The West Australian | Wealthy Japan has means to recover: IMF
The International Monetary Fund said on Thursday that Japan has the financial means to recover from a devastating earthquake and ensuing massive tsunami.
CNBC | US Cost of Living Hits Record, Passing Pre-Crisis High
A special index created by the Labor Department to measure the actual cost of living for Americans hit a record high in February...
Washington Times | Budget-busting station named for Biden
As a thank-you to its most famous customer, Amtrak is renaming the train station in Wilmington, Del., after stimulus “sheriff” Vice President Joseph R. Biden — after the project received $20 million in stimulus money and came in $5.7 million over the initial announced budget.
National Journal | Global Economy Keeps Wary Eye on Japan
After a conference call on Thursday night, G-7 finance ministers said in a written statement that they would join with Japan to act to stabilize the yen.
CNN | House votes to stop NPR funding
The House of Representatives passed legislation Thursday that would bar federal funding for National Public Radio -- a longtime target of conservatives irritated by what they consider the outlet's liberal bias.
Fox | Reid Says He Won't Consider Changes to Social Security Until He's 91
Despite the growing drumbeat in Washington for entitlement reform to tackle the federal deficit, Reid said Wednesday evening that changes to the program are not something he will even consider talking about, much less acting on.
CNN Money | Japan's crisis hangs over U.S.
Problems in Japan have become exhibit A in what economists say is the greatest threat to the recovery in the United States -- uncertainty overseas.

Econ Comments                                                                                                             
Cato | Housing Market Will Be Fine without 30-Year Fixed Loans
As Congress begins debating the future of Fannie Mae and Freddie Mac, proponents of keeping the taxpayer on the hook for the mortgage market argue that without such support the 30-year fixed-rate mortgage would disappear. The advantages of the 30-year mortgage have, however, been grossly exaggerated. Subsidizing it should not serve as an excuse for continuing to put the taxpayer at significant risk.
WSJ | Progressive Government Is Obsolete
The rule-based civil service was a step forward from Tammany Hall. But today's regulations stifle government workers at a time when getting value for tax dollars is more important than ever.
RCM | Seeking Rational Regulatory Reform
This year America's elected leaders rediscovered the idea that federal regulatory agencies should consider the effect of regulations on the economy before they impose new rules.

Café Hayek | DeLong vs Cowen
Buy the bigger house  or spend another trillion and you may find yourself in an unexpected situation that is not pleasant.
EconLog | Crowding Out: A New Subject
My problem with fiscal stimulus is that I believe we need permanent adjustment to new sustainable patterns of trade, not temporary moves. I think that if you want to eliminate unemployment in a meaningful way, you have to know something about where people ought to be employed, and Washington does not have that information.

Cato | Consumer Prices Higher Than Expected in February
The Federal Reserve is supposed to be a monetary servant, but its masters in the general public don’t seem to be able to control it. Its actions keep distorting returns in the economy and creating bubble after bubble.
RCM: Wells Fargo | Consumer Prices Higher Than Expected in February
Consumer prices came in at the high end of expectations in February. While markets were expecting the overall index to be high, the expectation was for the core consumer price index to remain muted.

Health Care

NationalJournal | States to Have Flexibility for Insurance Marketplace, Administration Says
The head of the agency designed to run the new health insurance marketplace that will begin in 2014 told a Senate panel on Thursday that individual states would have a wide berth to construct key parts of the reform law -- even as Republicans said they were skeptical.

NCPA | Are Market-Oriented Economists Wrong About Health Care?
Tyler Cowen posted 10 common mistakes of market-oriented economists the other day, paired with 14 common mistakes of left-wing economists. That prompted Ezra Klein to propose his own list of mistakes and others are chiming in.
Heritage Foundation | House Hearing Reveals the Truth About the Obamacare Waivers
To date, over 1,000 companies, covering nearly 2.4 million employees, have been granted waivers to escape the burdensome requirements of Obamacare. The House Oversight and Government Reform Subcommittee on Health Care, the District of Columbia, Census and the National Archives held a hearing this week to further examine the transparency and fairness of the waiver process.

AEI | ObamaCare and the Dodd-Frank Act
Controls of exactly the kind imposed by ObamaCare were what Hayek thought would eventually lead to more government controls, to collectivism, and finally to totalitarianism.


CNN Money | Tax the rich! Higher rates for millionaires sought
...a group of Democratic lawmakers has introduced legislation that would make you big-earners do just that -- resulting in a tax hike of up to 40% for the wealthiest Americans.
Fiscal Times | Northeast States Buck Trend, Propose Cigarette Tax Cut
Bucking a national trend of raising cigarette taxes, New Hampshire, New Jersey and Rhode Island have considered reducing theirs, hoping to draw smokers from other states and increase revenue.


Associated Press | NY Fed confirms intervention in currency markets
The disclosure came a day after the Goup of Seven majore industrialized natiosn pledged in a statement to join in a coordinated effort to weaken the Janpanese yen. The yen has surged in the last week to post war record levels following the Japanese earthquake and tsunami.
WSJ | Supply Disruptions Pose Threat of Stagflation
A scramble for supplies prompted by Japan's crisis may add to the specter of stagflation stalking the U.S. economy.
MSNBC | Soaring Yen curbed after G-7 pledges to support Japan
Coordinated intervention in currency markets to support Japan’s recovery from disaster.
The Economist | Muddle, fuddle, toil and trouble
European leaders boldly decide to carry on muddling through.
Bloomberg | Japan May Need $500 Billion to Weaken Yen, Deutsche Bank Says
The yen’s weakness may be short- lived as Japan would need as much as $500 billion to intervene in markets just to match its previous efforts to curb the currency’s strength, according to Deutsche Bank AG.

Econ Comments                                                                                                             
CNN: Money | Why the yen needs to be restrained
The dollar is going to keep getting sand kicked in its face till the U.S. economy finally flexes some job-creating muscle.
Washington Times | Why inflation hurts more than it did 30 years ago
Inflation spooked the nation in the early 1980s. It surged and kept rising until it topped 13 percent. These days, inflation is much lower. Yet to many Americans, it feels worse now. And for a good reason: Their income has been even flatter than inflation.
Ludwig von Mises Institute | Is QE3 Ahead?
Austrian School economists have often explained the business cycle using the metaphor of liquor or drugs. The expansion of paper money and credit gives a sense of exuberance, an economic high that leads to excessive risk taking and balloons of production. But it can't be sustained.
Minyanville | What the Fed Ignores When It Denies Inflation
The Fed likes to strip out the prices of things that are rising in price when it measures inflation, focusing on the "core rate" rather than the "headline rate."

The Curious Capitalist | Is G7 yen intervention a good idea?
First of all, will the G7 action work? In the short term, probably. Joint action by major economies in currency markets has historically proven much more effective in achieving results than unilateral aciton by one cerntral bank.
WSJ: Real Time Economics | Higher Food Prices Likely Here to Stay
The world may need to get used to higher food prices,” IMF research department staff Thomas Helbling and Shaun Roache wrote in a new IMF article. “Policymakers — particularly in emerging and developing economies — will likely have to continue confronting the challenges posed by food prices that are both higher and more volatile.”
Econlog | Liquidity Traps and Unicorns
Once you admit that the central bank can cause inflation by expanding money growth, then you have admitted that there is a way out of the liquidity trap, in which case there is no trap.


Econ Comments                                                                                                             
American | The Wrong Budget Fight at the Wrong Time
The best strategy is to quickly end the squabbling over the budget that should have been passed for fiscal 2011 and then have House Republicans introduce a 2012 budget that lays out their vision.

EconLog | Kinsley on Budget Cutting
...from Michael Kinsley, "You Can't Cut That," Los Angeles Times, March 15, 2011.
Cato@Liberty | Bailout Coming for the Postal Service?
Policymakers with responsibility for overseeing the USPS have introduced legislation that would require the Treasury to credit it with the money.
NRO: The Corner | Rand Takes the Reins
Sen. Rand Paul (R., Ky.) unveiled his five-year budget plan on Thursday.
EconLog | What is Mandatory Spending? What is Entitlement Spending?
...most of what is called mandatory spending should be called automatic discretionary spending.
WSJ: Real Time Economics | Government Spending Should Be Last Resort in Crisis
Gregory Mankiw, a former chairman of President George W. Bush‘s Council of Economic Advisors, and Matthew Weinzierl implicitly argue against the sequence of tools used by the U.S. to handle the recent crisis, proposing instead a different hierarchy of policies.