Wednesday, April 6, 2011

General Economics

CNN Money | Gas prices: Up 20% from January
Gas prices have risen for 15 days straight days and are getting closer to the all-time high of $4.114 a gallon, reached in July 2008.
Fiscal Times | Japan’s Economy Will Recover Quickly and Grow Fast
While we continue to grieve for the victims of the Japanese earthquake and its aftermath, it is perhaps time to cast a colder eye on the consequences of the country’s worst disaster since the atomic attacks of 1945. What is this calamity going to mean for the Japanese economy?
Bloomberg | SEC Fannie Mae Probe Said to Examine CEO’s Testimony to Congress
As the housing market deteriorated in April 2007, Fannie Mae Chief Executive Officer Daniel Mudd reported to Congress on his company’s health. The firm’s exposure to subprime loans, he told lawmakers, “remains minimal, less than 2.5 percent of our book.”
Bloomberg | Solar Costs May Already Rival Coal, Spurring Installation
Solar panel installations may surge in the next two years as the cost of generating electricity from the sun rivals coal-fueled plants, industry executives and analysts said.
Market Watch | China to Raise Gasoline, Diesel Prices
China said it will raise prices for gasoline and diesel fuel by around 5%, bowing to pressure from rising global crude-oil prices despite concerns about rising inflation in the world's second biggest economy.
CNN Money | Could oil, housing, and spending cuts derail the economy?
The recovery is slowing, and economists are slashing their forecasts for economic growth.

Econ Comments                                                                                                            
CNN Money | Carmen Reinhart: Recovery is 'right on track'
Why does the nation's current economic malaise seem so prolonged -- and what, if anything, can we do about it? Few people are better equipped to answer that question than Carmen Reinhart.
Fox | Rising oil prices beginning to hurt US economy
Just when companies have finally stepped up hiring, rising oil prices are threatening to halt the U.S. economy's gains.
Washington Times | FEULNER: A better way to reform welfare
Make public assistance conditioned on job search
NRO | Fannie and Freddie’s Profiteers
Democrats used the agencies as a friends-’n’-fat-cats protection plan.

Heritage Foundation: The Foundry | Coburn Moves to Eliminate Ethanol Subsidies
Ethanol. Henry Ford called it the “fuel of the future” in the 1920s. Decades later, policymakers put laws in place to increase the amount of ethanol in our fuel supply.
Café Hayek | Getting the Point of Economics
Now I myself, in my principles-of-economics courses, use graphs and some equations.  These can be useful – indeed, in the case of supply-and-demand graphs, damn near indispensable.  But to make them useful requires that they be always related to real-world phenomena, and related deeply and compellingly with stories, anecdotes, metaphores, examples.
Heritage Foundation: The Foundry | Poverty Immigrating to America’s Welfare State
Welfare spending is projected to skyrocket over the next 10 years, costing taxpayers $10.3 trillion and driving the United States toward bankruptcy. 
Café Hayek | Predatory Pricing
Yesterday in my Masters-level microecon-theory course I discussed with my students the theory and practice of “predatory pricing.”
Calculated Risk | Reis: Apartment Vacancy Rates fell sharply in Q1, Lowest in almost three years
From Reuters: U.S. apartment vacancies fall in Q1, rents edge up
The Economist: Daily Chart | Market troubles
Which countries are most in favour of the free market?
The Economist: Free Exchange | Housing markets
The rent is high, and getting higher

Mercatus Center | Free Trade, Protectionism, and Trade Deficits
Whether it is good for a regional or national economy to be a net borrower from the rest of the world is much like asking whether it is good for a household to be a net borrower. It depends on the reason for the borrowing.
RCM: Wells Fargo | ISM Non-Manufacturing: Slower Growth in Service Sector
The ISM non-manufacturing index dipped to 57.3 in March. While this represents a drop in service sector business sentiment from 59.7 in February, the present level is still consistent with expansion.

Health Care

National Journal | CBO Says Ryan Plan Would Raise Health Costs for Elderly
The fiscal 2012 budget plan unveiled Tuesday by House Budget Chairman Paul Ryan, R-Wis., would force most elderly people to pay more for their health care, the nonpartisan Congressional Budget Office wrote in an analysis released Tuesday evening.
National Journal | Bipartisan Hatred of Law's 1099 Tax Provision Finally Leads to Repeal
There was an unusual display of bipartisanship when it came to the health care law on Tuesday after senators overwhelmingly voted to repeal its universally hated 1099 tax-reporting provision, sending the measure to President Obama's desk.
NY Times | Generational Divide Colors Debate Over Medicare’s Future
The Republican budget released on Tuesday is a daring one in many ways.
Washington Times | Red tape cut in health care law
GOP sees ‘down payment on total repeal’ of Obama initiative
CNS News | GOP Budget Proposal: 'Not a Penny' for Obamacare
The Republican proposal says one of its aims is “making sure that not a penny goes toward implementing the new [health care] law” enacted last year.

Econ Comments                                                                                                             
Politico | Medicare's moment of truth
Hats off to the House budget resolution for including real Medicare reform. It is the only hope.
Cato Institute | How ObamaCare Strokes the Fat Cats
When government says it's set to do something for the little guy, hang on to your wallet.

EconLog | Morality and Medicare
The key word here is promises. There is essentially zero chance that the government will keep its current promises.
Marginal Revolution | Do private vouchers help control health care costs?
Why is the market-based Advantage voucher system not helping to control Medicare costs? The answer is that health care cost control is tough, technically and politically.
The Economist: Democracy in America | You put the load right on me
I agree with Mr Ryan that the government needs to limit taxpayers' exposure to Medicare cost inflation. I think this plan is a fundamentally immoral way to do it.


NationalJournal | GOP Tax Goals Raise Many Questions
One key component of House Budget Committee Chairman Paul Ryan's fiscal 2012 budget plan includes a call for tax reform that raises almost as many questions as it answers.


WSJ | IMF Reverses Position on Capital Controls
The International Monetary Fund, which for decades has been unwavering in its support of the free flow of capital, reversed itself and said developing countries can under some circumstances put up barriers to protect their economies.
CNN: Money | Sharp disagreement among Federal Reserve members
The central bank might need to tighten the reins on the economy before the end of the year to stave off inflation, said some members of the central bank's policy-setting body. But others appeared comfortable holding off on taking any action, according to the minutes of the Fed's March 15 meeting, released Tuesday.
Market Watch | Fed’s post-QE2 debate underway: March minutes
The minutes show that for a “few” Fed members, economic conditions might unfold in a way that would warrant the launch of an exit plan this year.
WSJ | The Inflation Solution?
Austerity and inflation will go together.
Bloomberg | Bernanke Faces Possible Fed Split on Maintaining Stimulus
A “few” among the central bank’s 17 governors and regional bank presidents said tighter credit may be warranted this year, while a “few others noted that exceptional policy accommodation could be appropriate beyond 2011,
WSJ | ADB Warns on Inflation
Asian policymakers need to make tackling inflation through preemptive action a priority, the Asian Development Bank said Wednesday, warning that several central banks may be behind the curve and some economies are still showing signs of overheating.
Fiscal Times | Inflation and Dodd-Frank: What Were They Thinking?
For most of us, successful financial regulation means keeping the economy on track, our savings secure and the dollar sound, which means, most importantly, reining in inflation. The problem is, the people in charge of curtailing inflation are the very ones making its resurgence a near certainty. 
Bloomberg | Fed’s Biggest Foreign-Bank Bailout Saved U.S. Muni Bonds
A European bank that received the most Federal Reserve discount window help during the financial crisis also took $381 billion in aid from its home countries and owned subsidiaries implicated in bid-rigging that prosecutors say defrauded U.S. taxpayers.

Econ Comments                                                                                                             
RCM | Has the Fed Eased Too Much?
The Federal Reserve's latest easing move, a $600 billion purchase of US government bonds, known as QE2, has elicited much criticism from Congress and some members of the Fed's own policy board. It has been labeled by critics as inflationary and contrary to the Fed's mandate to pursue price stability. There are some guides - though they are controversial - for determining when a central bank should stop easing after a financial crisis such as occurred in 2008. In light of those criteria, considered here, it is not clear that the criticism of QE2 is valid.
Bloomberg | Lockhart Not ‘Leaning’ to Fed Policy Tightening By Year-End
“I wouldn’t rule it out entirely, but at this stage I personally am not leaning in the direction of thinking that is absolutely required,” Lockhart told reporters during an Atlanta Fed conference.
Minyanville | Government Intervention Likely as Food, Energy Prices Skyrocket
With no wage inflation and unemployment and underemployment still at unacceptably high levels, history suggests it's unlikely Washington will just stand by and do nothing.

WSJ: Real Time Economics | Fed’s Bullard to Push for Curtailing QE2 at April Meeting
James Bullard, president of the Federal Reserve Bank of St. Louis, said he would push at the Fed’s upcoming two-day policy meeting (April 26 and April 27) to reduce the central bank’s quantitative easing program by $100 billion, but held out little hope of being successful.


CNN: Money | Where GOP budget would bite
Good news: The budget proposal unveiled Tuesday by House Republicans would dramatically reduce the country's long-term debt. But that improvement in the fiscal forecast would come at a cost.
CQ | Ryan's Budget Opens Debate on Major Issues
The budget resolution proposed by the House Budget committee chairman on Tuesday raised fundamental questions about the fate of two landmark health care programs, the size and reach of the federal government, tax policy and the nation's debt burden. It is the most sweeping statement of governing philosophy House Republicans have made since they took control of the chamber in January, and it has dialed up the political rhetoric amid talk of a government shutdown.
CNS | Ryan: Debt on Track to Hit 800 Percent of GDP; 'CBO Can't Conceive of Anyway' Economy Can Continue Past 2037
“It all comes down to this: Either you fix this problem now where we, you can guarantee people who’ve already organized their lives around these programs get what they have coming to them, or you pick the president’s path, which is do nothing, punt, duck, kick the can down the road, and then we have a debt crisis and then its pain for everybody,” said Ryan

Econ Comments                                                                                                             
Politico | People's budget or roadmap to ruin?
After months of symbolic legislation aimed at pleasing its political base, the House Repubilcan majority Tuesday unveiled its plan for America's future. Sadly- but not surprisingly - it looks a lot like the standard right-wing schemes that reward Wall Street while kicking more Americans out of the middle class.
AEI | Eventually, the GOP Must Defend Its Budget
I am CR'ed and budgeted out, but it is hard to imagine writing about anything else in a week when the next showdown that could lead to a a shutdown is coming to a head, the House Budget Chairman Paul Ryan unveiled his long term budget this time with an official imprimatur that his individual road map lacked.
Cato Institute | This is Going to Hurt
If we are serious about avoiding the fiscal train wreck to come, we are going to have to be willing to cut even those programs we like.
Cato Institute | Federal Spending: Ryan vs. Obama
House Budget Committee Chairman, Paul Ryan, introduced his budget resolution for fiscal 2012 and beyond today entitled “The Path to Prosperity.” The plan would cut some spending programs, reduce top income tax rates, and reform Medicare and Medicaid. The following two charts compare spending levels under Chairman Ryan’s plan and President Obama’s recent budget (as scored by the Congressional Budget Office).
Atlantic: Megan McArdle First Thoughts on the Ryan Plan
The broad outlines of the plan would work, from a budgetary perspective. It reduces the deficit to a smaller percentage of GDP than either the current-law baseline or the more likely "alternative fiscal scenario". On the other hand, politically, it seems very unlikely to pass in anything like its current form--the Ryan plan actually cuts spending, as a percentage of GDP, from its historical levels.
Minyanville | The CBO Scores Paul Ryan's Budget Proposal
Minyanville's daily roundup of some of the best commentary from around the Web.
NRO | Entitlement Reform: What Next?
Paul Ryan's budget proposal jump starts the conversation on Medicare, Medicaid and Social Security.
NRO | Dems v. Ryan
The House Budget Committee chairman faces an onslaught from the Left.
NRO | A Conflict of Budget Visions
Ryan proposes to repeal Obamacare, take on the massive health care entitlements, privatize Fannie Mae and Freddie Mace, pare back agriculture subsidies, build on the success of welfare reform, and overhaul the tax code.
AEI | Ryan Steals March on Obama as Fiscal Crisis Looms
In the short term, Ryan's budget resolution will likely be adopted in the Republican-controlled House and not even considered in the Democratic-majority Senate. Most of it will probably not become law this year.

Heritage Foundation | Ryan Budget Critics Incorrectly Attack Heritage Analysis
Except in Jeopardy!, questions usually come first, followed by answers. Likewise, when criticizing public policy studies and their underlying methodologies, it typically helps to see the policy study and methodology used before one embarks on criticism.
The Economist: Free exchange | Best budget ever
Paul Ryan has officially revealed the House Republicans' budget proposal, and we will have a detailed analysis of it up in short order. Reactions to the plan will vary (sharply, it's safe to say). But whatever your take on the policy proposals, it's worth approaching the rosy claims made on its behalf with extreme caution. Claims like:
Heritage Foundation | As the Budget Debate Unfolds, It’s Time for Grown Ups
House Budget Chairman Paul Ryan (R, WI) has proposed a budget for grown ups. Washington’s big spenders have responded with the tired clichés we expect from defenders of big government:
Marginal Revolution | The Paul Ryan budget plan
I’ve now read it and here are a few comments:
Mercatus: Neighborhood Effects | Real Spending Per Person: White House vs. Paul Ryan
Budget Committee Chairman Paul Ryan’s spending plan has been released. Both sides are going to characterize it as a $6.2 trillion dollar cut in federal spending. Of course, in Washington a “cut” is rarely a cut.
NRO: The Corner | Obama’s $73 Billion Myth
When he’s not being disingenuous, he’s being utterly dishonest. President Obama told reporters at a press conference Tuesday that House Republicans and Senate Democrats, in talks over a long-term spending compromise, have been negotiating off of the same number of cuts — “$73 billion” — the figure initially proposed by House Budget Committee chairman Paul Ryan (R., Wis.) in early February.
The Economist: Free exchange | Mr Ryan makes his mark
When Paul Ryan, the Republican fiscal wunderkind, moved from opposition to power in last year’s midterm elections, the biggest question hanging over him was whether he would bring his radical fiscal views with him or quietly stash them in a dark corner as he settled down to the realities of governing.

CBO | Long-Term Analysis of a Budget Proposal by Chairman Ryan
The Congressional Budget Office (CBO) has conducted a long-term analysis of a budget proposal by Chairman Ryan to substantially change federal payments under the Medicare and Medicaid programs, eliminate the subsidies to be provided through new insurance exchanges under last year's major health care legislation, leave Social Security as it would be under current law, and set paths for all other federal spending (excluding interest) and federal tax revenues at specified growth rates or percentages of gross domestic product (GDP). The results of that analysis are summarized in this document.
Heritage Foundation | Economic Analysis of the House Budget Resolution
This report summarizes the results of the CDA’s analysis of the House Budget Resolution using these models. As a general matter, the CDA found that implementing the policy changes behind the Budget Resolution would significantly strengthen economic performance throughout the economy and dramatically improve federal fiscal results. This analysis demonstrates that significant actions can be taken now to reform our tax code and rein in the drivers of fiscal imbalances.


Econ Comments                                                                                                             
Minyanville | 7 Long-Term Factors Directly Affecting US Job Growth
The economy is still in a structural readjustment that will leave the middle class higher and drier. Here, some of the factors that will continue to affect employment.

Econlog | What would Scott Sumner Say?
U.S. wage as measured in the Labor Department's employment report have been largely stagnant over the past few months, despite improvements in the job market. In fact, many industries saw more wage growht during the recession then during the recovery. I imagine that Scott Sumner would suggest looking at causality the other way.
WSJ: Real Time Economics | Forget Unemployment Extensions, Cutbacks More Likely
State attempts to pare back unemployment and an improving economy are likely to lead to a much shorter span of unemployment benefits next year.
WSJ: Real Time Economics | Wages Fared Better in Recession Than Recovery
In most U.S. industries, average hourly wages gained more during the recession than during the recovery.

Gallup | Federal Government Hiring Plunges in March
Gallup's U.S. Job Creation Index remains at 2 ½-year high.