Wednesday, May 4, 2011

General Economics

News                                                                                                                             
National Journal | Senate Oil Subsidy Vote Will Have to Wait
Senate Majority Leader Harry Reid, D-Nev., will likely punt to at least next week a politically charged vote on repealing oil and gas subsidies for the country’s biggest producers. Reid said he planned to make an announcement Wednesday on the status of the bill.
Politico | Free-trade pacts caught in crossfire
After years of wrangling, labor and business groups are gearing up for an epic showdown over free trade this summer as President Obama pushes Congress to approve pacts with Panama, South Korea and Columbia.
CNN: Money | Why refining more gas won't bring prices down
At first glance, it seems like a great time to buy a refinery. The price of gas is hovering around $4 and will likely stay high heading into the summer months. But a closer look shows refiners are actually trapped between two sets of players in the oil industry -- providers who deliver crude oil to them for refining, and customers who buy their finished products.
National Journal | Gas Prices: What Moves the Needle?
So what would these proposals actually do for gas prices? National Journal takes a look at how increased offshore drilling, stricter fuel economy standards, eliminating tax breaks, and clean energy investments would ease pain at the pump, if at all.
Politico | Osama bin Laden news could pivot economy
Economists and money managers see bin Laden's death as a potential psychological pivot point away from the "Lost Decade" of low confidence and recession ushered in by the Sept. 11th terrorist attacks.
Reuters | Commerce Secretary Locke hits China over investment barriers
Commerce Secretary Gary Locke accused Beijing on Wednesday of discouraging foreign investment to protect its own companies and promised to push against those barriers if confirmed as the next ambassador to China.

Econ Comments                                                                                                             
Minyanville | Investors Fear Economic Slowdown, Inflation
Despite a lower unemployment rate, the stock charts show unprecedented confusion -- just one of 18 worries affecting world markets this week.
Cato Institute | Eliminating Oil Subsidies: Two Cheers for President Obama
Although the president hopes to eliminate eight specific tax breaks — which cost the Treasury $43.6 billion over 10 years — only three, accounting for $31.9 billion of that total, are particularly important. Conservatives have no business defending any of them.
WSJ | Canada Makes a Right Turn
The country skipped the housing bust and its budget is headed toward balance. Voters liked it.

Blogs                                                                                                                             
The Economist: Free exchange | Rich and poor, growing apart
THINK income inequality growth is primarily an American phenomenon? Think again.
Reason Foundation | “No Nation Was Ever Ruined By Trade”
A new study, Trade and Unemployment: What Do the Data Say?, by three European economists published in the journal, European Economic Review in March, forthrightly asks the question: Does exposure to international trade create or destroy jobs? Their answer strongly backs the observation made by Franklin more than 230 years ago. “A 10 percent increase in total trade openness reduces aggregate unemployment by about three quarters of one percentage point,” they conclude. To be a bit more precise, they find, “A 10 percentage point increase lowers the equilibrium rate of unemployment by about 0.76 percentage points.” Trade creates jobs.
Neighborhood Effects | State and Local Economic Development Programs
It is true, of course, that California’s business climate is abysmal. According to Sorens and Ruger, California is number 44 in terms of fiscal freedom (with 50 being the least-free), and 46 in terms of regulatory freedom. Other indices come to the same conclusion. Kail Padgitt of the Tax Foundation, for example, evaluated states based on their business tax climate and California came in at #49.
WSJ: Real Time Economics | Personal Bankruptcy Filings Moderate
Personal bankruptcy filings dropped last month, as the surge of bankruptcies spurred by the economic downturn continued to moderate.

Reports                                                                                                                         
CRS | Clean Energy Standard: Potential Qualifying Energy Sources
A clean energy standard (CES) has been identified as one possible legislative option to encourage a more diverse domestic electricity portfolio. A CES could require certain electricity providers to obtain a portion of their electricity from qualifying clean energy sources. A CES is broader than a renewable energy standard (RES), including "clean" energy sources along with renewable energy sources.
NBER | Market-specific and Currency-specific Risk During the Global Financial Crisis:
This paper explores how international money markets reflected credit and liquidity risks during the global financial crisis. After matching the currency denomination, we investigate how the Tokyo Interbank Offered Rate (TIBOR) was synchronized with the London Interbank Offered Rate (LIBOR) denominated in the US dollar and the Japanese yen. Regardless of the currency denomination, TIBOR was highly synchronized with LIBOR in tranquil periods. However, the interbank rates showed substantial deviations in turbulent periods.

Health Care

News                                                                                                                             
National Journal | House Votes to Defund Insurance Exchanges
The legislation from Energy and Commerce Chairman Fred Upton, R-Mich., would stop Health and Human Services Secretary Kathleen Sebelius from giving states unlimited funds until 2015 to establish insurance exchanges. The agency has already given $49 million to 48 states and the District of Columbia.

Econ Comments                                                                                                             
CNN: Money | How rich health care mandates could bust the budget
Medical groups are furiously lobbying HHS Secretary Kathleen Sebelius to get their treatments covered under the reform bill. Her choices could be what makes or breaks the plan.
CNN: Money | Healthcare reform 'sound and fury' represents quite a lot
The health care reform law has yet to go into full effect, but it's already changed the health care industry's internal debate.
AEI | How Safe Are Medicines Sold In the US?
The increasing reliance on active pharmaceutical ingredients (APIs) made in unreliable plants, particularly in China, is part of the problem. APIs are the most important ingredients in any drug, and today, Chinese and Indian products are found in nearly 80% of American pharmaceuticals. In 2002, the U.S. imported $331 million in drug products from China - by 2010, it was $1.74 billion.

Blogs                                                                                                                             
Heritage Foundation | Medicare’s New Performance Measures Are Bad News for Hospitals
Congress has yet to enact health care reform that will successfully reduce costs without threatening the quality of care patients receive. Obamacare attempted to achieve this by moving Medicare from a system that pays for the volume of services to one that pays for value.
Econlog | Starve-the-Beast Health Care Policy
I think that any health care policy going forward will do two things.

Taxes

News                                                                                                                             
CNN Money | No big tax cuts for Florida businesses
On Tuesday, Florida's lawmakers blocked Gov. Rick Scott's aggressive plan to cut corporate income taxes by $459 million in fiscal 2012.
Politico | New W.H. battle: Corporate taxes
The Obama administration is quietly gearing up for a high-profile launch in May or June on what may turn out to be the most heavily lobbied issue of the year: corporate tax reform.
CNN Money | Big Oil to Obama: Hands off our tax breaks
President Obama and Democrats in Congress are pushing to end $4 billion in subsides, saying that oil companies are profitable enough to bear the burden, while the government is in serious need of additional revenue.

Econ Comments                                                                                                             
Washington Times | RAHN: We don’t need a tax increase
President’s plan to hit up the rich would mean slower growth for everyone
Washington Times | RIEDL: Myths of tax cuts for rich, spending cuts for poor
The nonpartisan Congressional Budget Office reports that the richest 20 percent of taxpayers now shoulder a record 86 percent of the federal income tax burden.

Blogs                                                                                                                             
Cato@Liberty | Seven Reasons to Oppose Higher Taxes
...if tax increases are not needed to balance the budget, then the only purpose they serve is to facilitate a bigger burden of government spending…

Monetary

Econ Comments                                                                                                             
Minyanville | Is Inflation High and Rising or Low and Falling?
A four-quadrant model of investing, analyzed.
Market Watch | Rep. Frank targets Fed hawks
Rep. Barney Frank, the top Democrat of the House Financial Services Committee, is taking aim at the hawks on the Federal Reserve.
Minyanville | Why the Dollar Won't Sink Treasuries
The largest belt of positive prospective returns occurs just south of where we are today; it involves a modest flattening of the yield curve and is indifferent to the dollar.
Reuters | Fed's Rosengren: Fed policy stance is right for now
U.S. inflation should recede once energy and food prices stabilize and does not mean the Federal Reserve should tighten monetary policy, a top Fed official said on Wednesday.

Blogs                                                                                                                             
WSJ: Real Time Economics | Fed’s Hoenig: Rates Should Start Rising
Federal Reserve Bank of Kansas City President Thomas Hoenig called Tuesday for the central bank to start raising interest rates, citing mounting fears about inflation and rising values for assets such as farmland.
AEI | Can We Rely on Inflation Expectations?
The point is that while expectations are useful for qualitatively purposes, they do not have a strong record of recording the extremes. Given that most of us expect some positive level of inflation, the real debate is over how much. In this regard, either survey or market-based expectations are likely to be both a lagging indicator and an under-estimate of actual inflation.

Budget

News                                                                                                                             
Bloomberg | U.S. Treasury to Sell $72 Billion in Long-Term Debt
The Treasury said it will auction $32 billion in three-year notes on May 10, $24 billion in 10-year notes May 11 and $16 billion in 30-year bonds May 12.

Econ Comments                                                                                                             
Politico | How to reduce the national debt
The recovery is too fragile and our ability to lead in the world too essential for us to play a costly game of chicken.

Blogs                                                                                                                             
The Economist: Free Exchange | Keeping a big debt down
...historically, it has been extremely difficult to address debts of these magnitudes.

Employment

News                                                                                                                             
MarketWatch | ADP: U.S. firms add 179,000 jobs in April
Lowest increase in five months.

Econ Comments                                                                                                             
Washington Times | EDITORIAL: Big Labor’s attack on democracy
Administration launches strike on Boeing and right-to-work states.