Monday, March 21, 2011

General Economics

News                                                                                                                             
CNN Money | Existing home sales tumble 9.6%
According to the National Association of Realtors, homes sold at an annual rate of 4.88 million in February, down 9.6% from January and 2.8% lower than February 2010 sales.
WSJ | Democrats Split on Social Security
...changes to Social Security are on the table as three Democratic senators, Mark Warner of Virginia, Kent Conrad of North Dakota and Richard Durbin of Illinois, negotiate with three Republicans—together forming the so-called Gang of Six—to craft a deal to cut $4 trillion from the federal budget deficit over 10 years.
Investors | U.S. May Lose AAA Rating In '18
The Congressional Budget Office's Friday analysis of the president's plan showed that by 2018, debt service would equal $725 billion, or 18.2% of the $4.0 trillion in projected federal revenue.
Washington Examiner | GOP attempting to undo Wall Street reforms
...Republicans have introduced five bills aimed at curbing parts of the financial reform law that they say are the most onerous, particularly for small and growing businesses.

Econ Comments                                                                                                             
WSJ | Uncle Sam and the Hostile Takeover
Activist investors are often effective at raising corporate performance, but managements hate them and keep trying to skew the rules in their favor.
CNN Money | What has economists most on edge: Oil prices
More than two-thirds of the 23 economists surveyed by CNNMoney identified high oil prices as the most serious risk facing the economy.
WSJ | Tsunamis of Information
Hayek taught us about the 'pretence of knowledge,' and why disasters are worse than expected.
Forbes | Help Housing? Dump Uncle Sam
...sound reforms are crucial to getting the housing market back on a sustainable growth path. Not so long ago it was the norm in this country to put down 20% on a house.
EconTalk | PODCAST: Coyle on the Economics of Enough
Coyle argues that the financial crisis, the entitlement crisis, and climate change all reflect a failure to deal with the future appropriately.
Reason Foundation | The Truth About Hedge Funds and the Financial Crisis
The market exposure of most hedge funds is less than twice the percentage of assets under management.

Blogs                                                                                                                             
EconLog | Asymmetric Loss Functions
The asymmetry is that a mistake in one direction (say, too much) has a much lower cost than a mistake in the other direction (in this case, too little.)
Calculated Risk | Schedule for Week of March 20th
The key releases this week will be existing home sales on Monday, new home sales and Wednesday, durable goods on Thursday, and the final estimate for Q4 GDP on Friday.
Cato@Liberty | Fannie, Freddie: Late to the Party?
The GSEs and their apologists do claim to have been big contributors to one party: the expansion of homeownership in the United States. Yet the facts suggest otherwise.
Political Calculations | U.S. vs Canada: Comparing Oranges and Apples
...unlike the approach taken by the U.S. Census in grouping people according to their race or ethnicity, Canada groups its minority population according to their ancestors' geographic origin.
The American | Regulatory Agencies Cannot be Controlled by Requirements of Interior Rationality
All too often, regulatory analyses read as if most of the decisions about the regulation were already made before the analysis was done.
Calculated Risk | Unofficial Problem Bank list increases to 982 Institutions
Here is the unofficial problem bank list for Mar 18, 2011.
WSJ: Real Time Economics | Number of the Week: Household Debt May Be Accelerating Again
$822 billion: the amount defaults have lopped off U.S. household debt since mid-2008.
Heritage Foundation | Welfare Reform: Self Reliance, Not Government Handouts
Today, the U.S. government operates over 70 welfare programs that span 13 government departments. And spending on these programs has only soared over the decades.

Reports                                                                                                                         
RCM: Wells Fargo Economics Group | Weekly Economic & Financial Commentary
Despite Headwinds, Expansion Continues.

Health Care

News                                                                                                                             
Fox News | As Health Care Law Marks First Anniversary, Patients Note Hits and Misses
A year after President Barack Obama signed his health care overhaul, the law remains so divisive that Americans can't even agree on what to call it. Even so, it is taking root in the land.
NationalJournal | Sen. Brown: Drug Price Increase from $10 to $1,500 is 'Unconscionable'
In a Monday morning op-ed, Sen. Sherrod Brown, D-Ohio, criticized a pharmaceutical company for raising the price of a pregnancy drug from $10 to $1,500, days after he and Sen. Amy Klobuchar, D-Minn., called on the Federal Trade Commission to investigate the price hike.

Econ Comments                                                                                                             
Fiscal Times | On Health Law's Anniversary: Predictions For Next Year
The health care law has been on a roller coaster ride since its passage one year ago, moving forward with implementation plans even as opponents throw up legal and legislative challenges to stop it in its tracks. At Kaiser Health News, we wondered where these moving parts might be in March 2012, at the measure's two-year mark.
NationalJournal | Gingrich: Health Care Law Gone in early 2013
In Washington appearance, GOP presidential hopeful attacks Obama's domestic and foreign policies.

Taxes

Econ Comments                                                                                                             
WSJ | Tax-Overhaul Advocates Study Reagan-Era Reform
Every tax break is backed by an organized and passionate interest group, while lower rates benefit the not-so-organized general interest.

Blogs                                                                                                                             
Mercatus Center: Neighborhood Effects | Do a majority of Americans prefer tax hikes to state budget cuts?
According to the poll results, 55 percent of Americans favor freezing wages for state employees and 51 percent are for reducing pension benefits for new hires.
NRO: The Corner | The Cost to Taxpayers of Joe Biden Station: $20 Million
...Amtrak turns around and renames the station after him; all the while it’s about $6 million overbudget.
Reason: Out of Control Policy Blog | Supporters of "Amazon Taxes" Ignore Economic Ineffectiveness
This means less income earned in the state and, as a result, less paid in income taxes into state coffers.

Monetary

News                                                                                                                             
Fiscal Times | Gas, Food Prices Double-Whammy for Rural Families
With food prices up nearly 4 percent last month — the biggest leap in 36 years — and the national average for a gallon of gas at a whopping $3.57, this economic double-whammy is stretching family budgets to the breaking point.
CNN: Money | Companies raise prices on food, shoes, diapers
Look out! From Huggies diapers to Nike shoes, Americans are about to get less bang for their buck on some of the biggest brands. The increases are necessary to offset inflationary pressure from higher raw material and energy costs.

Econ Comments                                                                                                             
Minyanville | Worldwide Inflation Is Hitting Home
While we can't get price inflation off the ground here in the US, the world's inflation is creeping into our prices, especially food and oil.
Fiscal Times | Inflation Ahead? The Fed May Raise Interest Rates
Over the past three months, consumer prices excluding energy and food have risen 1.8 percent, measured at an annual rate, suggesting further acceleration in the 12-month pace of core inflation this spring.
Minyanville | Endgame for the US Dollar
In the next few months the currency will get hammered and its viability will be questioned. Now is the time for investors to buy more gold, silver, and mining stocks.
Politico | Better ways to reform the Federal Reserve
The new House Republican majority has focused the crosshairs of reform on the Federal Reserve. The Fed, has been controversial since its creation in 1913. But its actiosn during the financial crisis and its recent $600 billion bond-buying program, have triggered a level of political scrutiny not seen since President Andrew Jackson abolished the Second Bank of the United States in 1832.
Minyanville What the End of QE2 Means for Mr. Market
Strategists debate how the end of QE2 will impact the stock market.

Blogs                                                                                                                             
Econlog | Kling, Krugman, and Krugman on Liquidity Traps
Here are the ways that an economy can be at zero nominal interest rates and have high unemployment.
Marginal Revolution | The subtleties of the liquidity traps
One of the older definitions of the liquidity trap is that excess cash balances get absorbed into hoards.  That clearly isn’t going on today because sales are booming.   The unwillingness of people with liquid assets to invest is another common aspect of the traditional definition; that’s not the case today either, even though we might wish investment were stronger.
Cato@Liberty | End the Fed: More than Just a Bumper Sticker Slogan?
Notwithstanding its poor performance, the Federal Reserve seems to get more power over time. But rather than rewarding the central bank for debasing the currency and causing instability, perhaps it's time to contemplate alternatives.
The American | Repeating Europe’s Charade?
There is every indication that markets will soon force Portugal to follow Greece and Ireland and request a bailout from the International Monetary Fund.
The Economist: Free Exchange | Is the Treasury undermining QE?
Quantitative easing suffers its fair share of controversy, but not over this aspect: whether you like it or not, it’s the central bank’s job and no one else’s. I’ve just read a paper that suggests otherwise: done right, the Treasury could achieve the same thing through debt-management policy
WSJ: Real Time Economics | A Look Inside the Fed’s Balance Sheet
Assets on the Fed’s balance sheet expanded to around $2.566 trillion in the latest week from $2.403 trillion at the end of 2010. Nearly all the additions this year have come from new Treasury purchases — some $164 billion in the past three months.

Budget

News                                                                                                                             
Washington Times | CBO: Obama’s budget doesn’t reach primary balance
Congress‘ chief scorekeeper says President Obama’s budget never achieves primary balance, the key measure the White House said would show the country is living within its means.
WSJ | Senators Push Obama on Deficit
More than 60 senators sent a letter to President Barack Obama Friday urging him to "engage" on long-term deficit reduction, a sign of legislative momentum on the issue and impatience with the White House

Econ Comments                                                                                                             
CNN Money | Deficit pessimist sees hope for a deal
...even in the current hostile partisan environment, that it's becoming increasingly possible.
Washington Times | EDITORIAL: Obama’s red ink grows by $2.7 trillion
Now it looks like the amount of debt President Obama’s budget will generate in the coming decade will be $2.7 trillion more than expected. Oops.
Barron's | The Dangers of Lessons Unheeded
A Nobel Prize-winning economist says the West hasn't learned much from Japan's long slump or the struggles of Hoovernomics.

Blogs                                                                                                                             
NY Times: The Caucus | That Budget ‘Battle’? Only a Skirmish
Think of Washington’s initial 2011 budget fights as spring training — for a season about to open in a hailstorm.
USA Today | Democratic senator to break with Obama on debt limit
When it's time to count votes on raising the nation's debt ceiling, the Obama administration may not be able to put Democratic Sen. Joe Manchin in its column.
Heritage Foundation | CBO Report Confirms: Obama’s Budget Laden with Debt
Again, it is made plain that the President chooses to ignore the recommendations (pdf) of his own bipartisan fiscal commission, which called for prompt and serious reform of entitlement programs.

Reports                                                                                                                         
Mercatus Center | Interest Payments on the Federal Debt
As the national debt rises, the interest on the federal debt merits increased scrutiny and concern, especially given the government’s levels of short-term debt and potential inaccuracies in measuring the true interest costs on the debt.
CBO | Preliminary Analysis of the President's Budget for 2012
The Congressional Budget Office (CBO), with contributions from the staff of the Joint Committee on Taxation, has analyzed the President’s budget submission for fiscal year 2012.
Republican Staff Commentary | Spend Less, Owe Less, Grow the Economy
In the long term, fiscal consolidation programs that reduce government spending as a percentage of GDP accelerate economic growth.

Employment

Econ Comments                                                                                                             
Ludwig van Mises Institute | Why Is Unemployment So High?
Everyone knows that the unemployment situation is very bad, but the official figures (not surprisingly) understate the problem.

Blogs                                                                                                                             
Marginal Revolution | Unemployment, Recessions and Barter: A Test
In sum, the increase in barter and scrip during the Great Depression is supportive of the excess demand for cash explanation of that recession, even if these movements didn’t grow large enough, fast enough to solve the Great Depression. Today there seems to be less interest in barter and alternative currencies than expected, or at least than I expected, given an AD shock and the size of this recession. I don’t draw strong conclusions from this but look forward to further research on unemployment, recessions and barter.