Monday, May 9, 2011

General Economics

WSJ | Home Market Takes a Tumble
Turnaround More Distant After 3% Drop, Steepest Quarterly Decline Since 2008.
CNBC | Home Values See Biggest Drop Since 2008
The number of homeowners under wter or those who owe more on the mortgage than their house is currently worth - amounted to 28.4 percent of single famly homeowners represneting a peak since Zillow began calculating data in 2009.
WSJ | OECD Points to Varying Growth
The world's largest economies are set to grow at different speeds, with the U.S., Germany and Russia performing strongly, while Italy, Brazil and India will experience slower growth than they are used to, according to the Organization for Economic Cooperation and Development's composite leading indicator.
Fox News | Gas Prices expected to drop 50 cents by summer
After rocketing up 91 cents since January, including 44 straight days of increases, the national average this past week stopped just shy of $4 a gallon and has retreated to under $3.98. A steady decline is expected to follow.
Market Watch | Gas price spike impact to be in week’s data
It’s not a new story, but an unfolding one — just how much the spike in gasoline prices is impacting the U.S. economy.

Econ Comments                                                                                                             
Washington Post | For the young, there’s a silver lining in the housing bust
The National Association of Realtors routinely publishes a housing “affordability” index, which judges the ability of median families to buy the median-price home at prevailing interest rates. By this measure, existing homes are the most affordable since the index started in 1970.
Daily Caller | The audacity of irresponsibility: Confronting the fallout of a failing economy
According to Gallup, Americans' confidence in the economy reached a new low for 2001 last week. A mere 34 percent of Americans said in a recent CBS/Times poll that they approve of the way President Obama is handling the economy; the lowest point since he took office.
National Journal | Markey: Speculators and Manipulators to Blame for High Energy Prices
After the House passed the first of three bills to speed up and expand offshore drilling on Thursday, Massachusetts Democrat Edward Markey says that the only way to combat high energy prices is to crack down on speculators, deploy the Strategic Petroleum Reserve, and put a clean-energy policy in place.
Washington Times | ZYWICKI: Bureau of Consumer Protection must put consumers first
Congress should reform the reform before it is too late.
RCM | Another Nail In the Keynesian Coffin
The coffin of Keynesianism has so many nails in it now that it is practically surfaced in steel. The notion that government deficits "stimulate" demand, has been proved wrong so many times, and in so many ways, that you would have to be Paul Krugman to still believe in it. However, in its April 28 news release on 1Q2011 GDP, the BEA drove yet another factual wooden stake into Keynesianism's vampire heart - a stake that no one seems to have noticed.
AEI: The American | Prosperity, Depression, and Progress
Any historical study that focuses on the Great Depression is bound to ask what parallels there are with the current period of prolonged high unemployment.

Calculated Risk | Schedule for Week of May 8th
The key reports this week are April Retail Sales
on Thursday, the Consumer Price Index (CPI) on Friday and the monthly Trade Balance report on Wednesday.
Econlog | Anecdotes of an Informal Economy
My guess is that those in the informal economy do not get to send their children to elite primary and secondary schools, and they have little in the way of health insurance. But otherwise, they enjoy what I call Diamond Age access to the more basic goods and a few luxuries.
WSJ: Real Time Economics | Consumers Increase Credit-Card Debt
U.S. consumers in March increased their credit-card debt for the second time since the financial crisis flared, giving a sign of hope that consumer spending could boost an economic recovery that has lost some steam.
Calculated Risk | Unofficial Problem Bank list at 983 Institutions
Here is the unofficial problem bank list for May 6, 2011.
WSJ: Real Time Economics | Number of the Week: Class of 2011, Most Indebted Ever
$22,900: Average student debt of newly minted college graduates.

NBER | What Do Consumers Believe About Future Gasoline Prices?
Policy-relevant inference hinges on this specification, yet there is little direct evidence on the nature of consumer beliefs. We provide such evidence by analyzing two decades of data on gasoline price expectations from the Michigan Survey of Consumers. We find that average consumer beliefs are indistinguishable from a no-change forecast.
RCM: Wells Fargo | Nonfarm Employment Surges in April
Nonfarm payrolls rose a solid 244,000 in April, despite continued government layoffs. The household data were not as rosy, showing a drop in employment and a rise in the unemployment rate to 9.0 percent.


CNN Money | Millionaires who owe no federal income tax
...18,000 were households taking in more than $500,000 -- and of those, 4,000 made more than $1 million.

Econ Comments                                                                                                             
WSJ | Tax Revenues Are Rising
The bad news is that the federal deficit still rolled in at a record $871 billion, a $71 billion increase through April, because spending is up $181 billion, or 6.4% after adjusting for some one-time factors. Medicaid alone is up 6.7%.
CNN | When Reagan raised taxes
If Republicans want to seriously tackle deficit reduction, they will have to remember Reagan's full legacy -- not simply his decision to cut income taxes in 1981.
WSJ | Taxpayers and Money Market Funds
If asset values floated, investors would better understand the risks.

Health Care

National Journal | Maine Health Care Bill Set for Senate Vote Next Week
The Maine health care legislation proposed by House Republicans would open the insurance market so that companies in other New England states, except Vermont, could sell plans in Maine. It would repeal state law that prohibits insurers from requiring policyholders to travel to hospitals in other parts of the state; it would also allow companies to charge policyholders based on age, place of residence, occupation, and whether they smoke.
Politico | Big Medicare overhaul? Don’t count on it
Here are four scenarios for how the budget talks could affect the health care entitlement programs, and the odds that they’ll happen, on a scale of 1 to 5:

Econ Comments                                                                                                             
Fiscal Times | How IPAB Will Change Medicare
The Independent Payment Advisory Board was created by the 2010 health care law. Last month, in releasing his deficit-reduction plan, President Barack Obama called for increasing the panel's authority, saying it was critical to controlling the costs of Medicare, estimated at $524 billion in fiscal 2010. Republicans and some Democrats have denounced IPAB, saying it will be made up of unelected bureaucrats who will wind up rationing care to Medicare beneficiaries.

Cato@Liberty | When Fighting ObamaCare, the Pen is Mightier…
Because the challenge to Obamacare is the most important constitutional question in many decades, and because the case will have substantial ramifications for the health of our citizens as well as the health of our system of supposedly limited government, Cato is breaking protocol (we usually just get involved at the Supreme Court level) and filing amicus briefs in nearly every circuit in which a challenge is being made, at nearly every stage of litigation. Next week, we will also be filing in the Eleventh Circuit.

Heritage Foundation | Solving the National Medicaid Crisis
"On April 15, the House of Representatives passed a budget that addresses the Medicaid crisis. In contrast, the White House fails to appreciate the Medicaid crisis and instead relies on Medicaid to cover upwards of 20 million more people beginning in 2014.


Bloomberg | Geithner Will Urge China to Allow Higher Interest Rates, Stronger Currency
Treasury Secretary Timothy F. Geithner will urge China to allow higher interest rates when he meets with Chinese leaders this week, as the U.S. extends its push for a stronger yuan.
Bloomberg | Treasury Volatility Approaching Four-Year Low as Bonds Rally at End of QE2
Price swings in the Treasury market are approaching the smallest levels in four years, a sign that the end of the Federal Reserve’s $600 billion bond-purchase program next month won’t cause a sell-off in government debt.

Econ Comments                                                                                                             
Minyanville |
In 2008, an ethanol craze and speculators were supposedly to blame. It's something different this time, and it's not the inevitable supply shock due to Mother Nature.
CNN: Money | Inflation: Poison for Obama in 2012
We know that inflation distorts economic behavior. But inflation also affects voting behavior -- and could exacerbate already widespread anxiety and uncertainty about a struggling economy and President Obama's reaction to it.
Bloomberg | Trichet Says Global Central Bankers United in Inflation Fight
European Central Bank President Jean- Claude Trichet said the world’s central bankers are united in fighting inflation fueled by surging commodity prices and fast- growing emerging economies.


FT | States improve on S&P’s federal outlook
Less than a month after Standard & Poor’s warned the chances were growing that the US could lose its triple A credit rating, the agency gave...
WSJ | Renewal of Pacts Eases Fear for Munis
The municipal-bond market appears to be surmounting one of its most urgent challenges of the year as banks renew billions of dollars worth of expiring credit agreements with state and local governments, avoiding a costly scramble to refinance.
FT | Muni debt set for $29bn refinancing
US states, cities and other local entities are gearing up to refinance a record $29bn of expiring bank guarantees this quarter...

Econ Comments                                                                                                             
Fiscal Times | Automatic Budget Cuts Have Spotty Record
One problem was that the law's targets were pegged to federal deficits, which lawmakers don't fully control because government spending and revenue are strongly influenced by the economy.
Barron's | The Argument for Budget Brinksmanship
A money manager contends that, by putting debt-reduction pressure on the president, Republicans would ensure meaningful reform.
Fiscal Times | 5 Experts Explain How to Solve the Budget Deficit
If current policies remain in place, the Congressional Budget Office (CBO) estimates the U.S. budget deficit for 2011 will be close to $1.5 trillion, or 9.8 percent of GDP.

Marginal Revolution | Selling Government Assets
The first set of assets proposed to go on the auction block are mostly empty or little used warehouses, office buildings, barracks and other properties, quite a few of which are now scheduled to be demolished.
NRO: The Corner | Not Paying Our Bills is Just a Symptom of How Much Debt We Have Not a Reason to Borrow More Money
Reinhart and Rogoff go on to explain that it is possible that interest rates stay low for a while even in a time of high debt, for a variety of reasons, but at some point they turn, and when they do it generally happens fast.

CBO | Monthly Budget Review
The federal government incurred a budget deficit of $871 billion in the first seven months of fiscal year 2011, CBO estimates.


National Journal | Lawmaker Proposes Federal Hiring Freeze
Rep. Tom Marino, R-Pa., on Thursday introduced legislation that would prohibit agencies from hiring new employees until the deficit is resolved.

Econ Comments                                                                                                             
CNN Money | The rise of the permanently temporary worker
Temp jobs are in and permanent ones are out, for now. And it doesn't look like there's a surefire route to go from one to the other, posing serious risks to worker morale and corporate growth.
Fiscal Times | Multinationals Dump U.S. Workers for Foreign Labor
When it comes to job hunting, big is out. Small is in. Over the past decade, the explosion of global trade and a sharp focus on productivity and cost cutting have accelerated a key trend in U.S. labor markets: Jobs at big companies just aren’t as plentiful as they used to be.
CNN Money | They're Hiring!
These Fortune 100 employers have at least 350 openings each, totaling more than 96,000 jobs.
Minyanville | BLS Jobs Report: Nonfarm Payroll Headline Number Good, but Only on Surface
...during a recovery, the household survey is supposed to lead. Moreover, the household survey is more consistent with three recent reports.

EconLog | Field Review
Eventually, the patterns of specialization and trade will restore some of them to being able to work for a living. But I think that a lot of the older vintages of workers are not going to make it back into the labor market, and most of the recovery will come within newer vintages.

Heritage Foundation | Heritage Employment Report: April Jobs Report Shows Showers, not Flowers
Unemployment will remain persistently high until business investment and expansion improve. Unfortunately the recent GDP report shows just the opposite—business investment fell from a strong 8.6 percent growth rate in Q4 2010 to a much weaker 2.8 percent in Q1 2011.