Tuesday, May 17, 2011

General Economics

CNN: Money | The Great Recession's lost generation
About 60% of recent graduates have not been able to find a full-time job in their chosen profession, according to job placement firm Adecco.
Fox News | Construction of New Homes Plummeted in April
Builders broke ground on 10.6% fewer new homes last month. The seasonally adjusted rate fell to 523,000 homes per year.
Market Watch | U.S. industrial output flat, hurt by Japan quake
U.S. industrial production was flat in April as a shortage of parts due to Japan’s earthquake slowed auto production, the Federal Reserve reported Tuesday.

Econ Comments                                                                                                             
Washington Times | RAHN: Democracy versus economic growth
Is democracy incompatible with long-run economic growth? One’s initial reaction may be that this is a silly question, but in this day of a global debt crisis, it is worth recalling the warnings of America’s Founding Fathers that when the people find they can vote themselves benefits, that will bring along the end of the republic.The Founders understood the problems of democracies and why all of the previous democracies had failed, going back to ancient Athens.
Financial Times | Finding the right time for re-privatization
One key question governments must address having bailed out their banks is when to sell again.
Washington Times | FEULNER: Saving the American dream
Hard times demand clear thinking, smart decisions, tough choices - and action. The future of our nation is at stake.
Investor's | Four Pro-Growth Axioms To Avert Shared Scarcity
A phrase you hear in Washington a lot these days is "shared sacrifice." To an alarming degree, the budget debate has degenerated into a game of green-eyeshade arithmetic, with many in Washington demanding that we trade ephemeral spending restraints for large, permanent tax increases.
CNN: Money | Social Security's real problem is not the trust fund
Social Security's real problem is not the trust fund.

Forbes | Governments Are The Primary Creators Of Systemic Risk
The greatest lesson of the still young 21st century is proving to be that governments are the primary source of systemic risk to the economy, our standard of living, and our liberty.
WSJ: Real Time Economics | Top 10 Thriving Industries
Not every industry was decimated by the recession, in fact some areas of the economy are thriving.
Crazybear | Structural Shift in the Economy
It's becoming a more or less accepted economic theory that a large part component of our current recession is structural. This means that during the housing bubble we had lots of people in housing related jobs (construction worker, realtor ), but once the bubble burst those jobs ceased to exist, and the people formerly employed in them have not found new work.
WSJ: Real Time Economics | Goods Prices Increase, as Services Costs Lag
Goods prices face upward pressure because goods tend to be globally traded and are getting pushed higher in part by demand abroad. Meanwhile, service prices, which are less subject to the whims of demand from abroad, are being held back because there’s so much slack in the domestic economy.
Heritage Foundation | Protecting Ineffective Programs Doesn’t Protect the Poor
The mere intention of a government program to help the poor doesn’t mean it actually achieves that goal. And allowing unsustainable spending on government welfare isn’t the most effective—or moral—way to protect the vulnerable.

NBER | Pensions in the 2000s: the Lost Decade?
One of the most dramatic changes in the retirement income system over the last three decades has been a decline in traditional defined benefit (DB) pension plans and a corresponding rise in defined contribution (DC) pensions. Have workers benefited from this change?

Health Care

Fox News | Critics of Health Care Law Raise Alarm About Medicare Doctor Reimbursements
The latest Medicare report shows tens of trillions of dollars in unfunded promises, but Rick Foster the program's non partisan chief actuary, says it's actually worse than that because the report counted savings from the planned 29 percent cut in doctor's payments.
National Journal | On Medicare, GOP Can't Find the Middle
If Republicans are reluctant to endorse both Ryan’s proposals and the president’s, they may be left with the federalist solution endorsed by Romney, whose successful implementation of a health care package similar to Obama's has become a major campaign challenge.

Econ Comments                                                                                                             
Politico | Rep. Paul Ryan: Health reform hurting economy
House Budget Committee Chairman Paul Ryan framed health care costs and the president's health law as key drivers of the nation's economic and fiscal problems Monday, while warning that the president's plan could lead to waiting lists for today's seniors.

Cato@Liberty | Who’s Right on Medicare Reform, Ryan and Rivlin or Obama and Gingrich?
Medicare reform, by itself, won’t solve the third-party payer problem, but it could be part of the solution – especially if seniors used their vouchers to purchase real insurance rather than the inefficient pre-paid health plans that are so prevalent today.
AEI: The American | Mr. Speaker, Medicare IS Social Engineering
If the cuts in Medicare payments to doctors, hospitals, and other care givers take effect as scheduled under the current law, Medicare payment rates will be no higher than those of Medicaid, dropping to 60 percent of the going market rates by 2020 and falling further in years to come. Good luck to seniors trying to make a doctor’s appointment if Medicare pays 60 cents on the dollar.
Cato@Liberty | Pelosi’s Constituents Found out What’s in ObamaCare, and They Don’t Like It
Of the 204 new Obamacare waivers President Barack Obama’s administration approved in April, 38 are for fancy eateries, hip nightclubs and decadent hotels in House Minority Leader Nancy Pelosi’s Northern California district.


National Journal | Conditions of 2001 Tax Cuts Look Increasingly Quaint
Now 10 years on, the national debate has again, after a long wandering in the wilderness of global terrorism, gay marriage and immigration and birth certificates, alighted on the state of the national purse, and any optimism is hard to find. This time, it’s not a question of what to do with all the extra coin.

Econ Comments                                                                                                             
WSJ | Obama's $250,000 Question
Left and right agree: His agenda requires him to break his tax pledge.

Atlantic | Debt and Taxes
So, today we banged our head against the current debt ceiling for the first time.  Think of the country like a tall person who has just moved into an unusually cheap and small basement apartment.  The first bang is the most surprising, but it's not catastrophic.  


Bloomberg | Yen Tumbles Versus Dollar as Bank of Japan Says Economy in ‘Severe’ State
The Japanese currency weakened against most of its 16 major counterparts. The pound climbed as U.K. inflation accelerated more than economists forecast in April to the highest level since 2008, increasing pressure on the Bank of England to raise interest rates.

Econ Comments                                                                                                             
AEI: The American | The Federal Reserve’s Real Mandates
The Federal Reserve has a 'triple mandate.' Grasping this allows us to understand why the Fed, while not doing so well at stable prices or maximum employment, has nonetheless gone on to ever greater power and status in the course of its first century.
Bloomberg | Treasury 10-Year Yields Touch 2011 Low as Housing Starts Fall, Output Flat
Treasuries rose, pushing 10-year note yields to their lowest level in 2011 as U.S. housing starts unexpectedly fell in April and industrial output stalled.


Market Watch | Treasury takes new steps to avoid debt ceiling
Treasury Secretary Timothy Geithner on Monday took further extraordinary measures to keep the nation from hitting the $14.3 trillion debt ceiling.
Bloomberg | Do-Nothing Congress Shows Budget Paralysis
Since the newly seated, divided 112th Congress began in January, 13 measures have been signed into law by President Barack Obama. Four of those cut spending and keep the government funded through this fiscal year. A couple of bills named federal courthouses, and the remainder were mostly temporary extensions of existing programs.
Market Watch | EU opens door to ‘soft’ Greek debt restructuring
A European Union official left the door open to allowing Greece to discuss extending its debt-repayment plans, as the nation faces ongoing doubts about its solvency despite last year’s bailout.
CNN: Money | California's $10.8 billion budget battle
California Governor Jerry Brown unveiled a revised budget Monday that calls for a $9.3 billion tax extension, coupled with a $2.6 billion cut in spending.
Politico | GOP budget cuts would hit poor hard
After campaigning on the promise to roll back spending to Bush-era levels, House Republicans have overshot their mark and landed in the last years of the Clinton administration - at least in the case of cuts from labor, health and education appropriations important to the poor and working class families.

Econ Comments                                                                                                             
RCM | Default 'Catastrophe' Explains Why Debt Ceiling Shouldn't Be Increased
Indeed, if "catastrophe" is the certain result of a U.S. debt default, it's fair to say that Treasury will not default.
Politico | Of budgets, hostages and deficits
U.S. treasuries are a core part of every important financial portfolio in the world. An unknown, but possibly large share is in portfolios that by charter or by law cannot be defaulted debt. So they will be forced to sell.
NYT | Who's Best at Cutting State Spending?
Which governors are the most successful at managing the budget gap, and which are overrated trimmers?
Minyanville | Will Failing to Raise the Debt Ceiling Have Disastrous Consequences?
With the debt ceiling issue looming overhead, it should be an interesting summer for US treasuries and the dollar.

Big Picture | UPDATED: Debt Ceiling Limits (1939- 2011)
The regular debt ceiling limit dance seems to evoke a fairly standard set of behaviors in the two major US political parties: Whichever party is out of power (White House, or Congress or both) threatens not to support raising the debt ceiling. Which ever party is in power talks about how irresponsible and dangerous such a move would be.
The Economist: Free exchange | Against the ceiling
By early August, Mr Geithner says, the government will have run out of ways to stiff people without defaulting. At that point, very bad things will happen.
WSJ: Real Time Economics | No Guarantee Debt-Ceiling Deal Will Get Done
A split among economists over whether a debt ceiling vote should be tied to spending cuts highlights the risk of overconfidence, despite a consensus opinion in the latest Journal survey that the ceiling will be raised before an August deadline.
Marginal Revolution | Type the Title You Want People to See
This topic is so laden with “us vs. them” thinking that I am loathe to approach it.  Still, here are a few thoughts:


Fiscal Times | Congrats, Class of 2011: You're Hired!
Economists, experts in college recruiting and job placement officers around the country say the employment outlook for new grads is brighter than it has been since the Great Recession began in 2007.
CNN: Money | Federal workers facing more cuts
Already enduring a two-year pay freeze, federal workers are once again in the crosshairs of a plan designed to cut government spending.

Heritage Foundation | Minimum Wage Reality in America
When the minimum wage increased from $5.15 to $7.25 between 2006 and 2009 – a dramatic 40% rise – unemployment noticeably took a turn for the worse and the trend continues today.