Tuesday, May 31, 2011

General Economics

News                                                                                                                             
WSJ | Canada's GDP Expands 3.9%
Gross domestic product growth was marginally below the consensus call of 4%, and also undershot the Bank of Canada's 4.2% forecast.
USA Today | Economic problems stubbornly linger
Don't look now, but the economic recovery that barely exists in the eyes of many Americans is 2 years old.
Financial Times | US looks at takeover guidelines shake-up
The US justice department is considering a shake-up of the guidelines used in approving takeovers of US companies, pointing to a possible shift in antitrust policy under the Obama administration.
CNN: Money | Home prices: 'Double-dip' confirmed
Home prices hit another new low in the first quarter, down 5.1% from a year ago to levels not reached since 2002.
CNBC | Japan Recovery Takes Hold, But Debt Downgrade Looms
Japan's economy offered more signs of recovery from the deadly March earthquake on Tuesday, but Moody's rating agency warned both growth and government action may fall short of what is necessary to bring Tokyo's ballooning debt back under control.

Econ Comments                                                                                                             
Newsweek | Austerity Works
In bemoaning the pain of fiscal responsibility, the Democrats show they still haven’t learned the lessons of Europe.
WSJ | More Weather Deaths? Wanna Bet?
Contrary to what many environmentalists would have us believe, Americans are increasingly less likely to be killed by severe weather.
NYT | Can I See Your License, Registration and C.P.U.?
Inescapably, computers will be playing an ever larger role in our lives. But exactly what tasks will they be allowed to perform, and how will we use government regulation to evaluate the risks associated with new technologies? These questions will be increasingly pressing as innovations strain the longstanding rules that regulate modern life.
WSJ | In Vino Veritas
P.J. O'Rourke with a modest proposal for a more honest politics.
Source | Check Out What GDP Growth Would Look Like If the Government Were Using The Right Inflation Numbers
The most recent real GDP number for Q1, was weak. If this were an ordinary recovery following a deep recession, the economy would likely be growing 5%-7%. This is why the recovery doesn't feel like a recovery.
Bloomberg | Ryan Says Rich Should Pay More as Sanders Defends Entitlements for Wealthy
Lawmakers who have spent years battling over taxing high- earning Americans are trading places when it comes to cutting their entitlements. Democrats say Social Security and Medicare have endured because they offer benefits to people of all incomes, and accuse Republicans of trying to kill the programs by stripping away their beneficiaries, beginning with the rich. Republicans say the fairest way to curb the deficit is to scale back the programs for those who need them least.

Blogs                                                                                                                             
NRO: The Corner | The Party of Doing Nothing
While Democrats disagree with Republicans about how to reform Medicare — as Bill Clinton says he does — they shouldn’t feel that they can just sit on their hands and do nothing. This is especially true in the face of the Trustees’ Report and its conclusion that, even in the best-case scenario, the ACA has failed to address Medicare funding issues.
Calculated Risk | Schedule for Week of May 29th
There will probably be a series of weak economic reports this week, including Case-Shiller house prices on Tuesday, the ISM manufacturing index on Wednesday, May vehicle sales also on Wednesday, and the May employment report on Friday.
Forbes | 5% Growth: Not Magical Unicorns, The Return of Gazelles
Advocates of robust economic growth are very used to being ridiculed by those who say it cannot be done. Reagan was ridiculed (“voodoo economics”) for his prescription of lower tax rates and a strong dollar. That growth recipe, when adopted despite the ridicule, propelled the Dow Jones Industrial Average from around 900 (no typo) to well over 10,000.
Heritage Foundation | The Unstimulated Obama Economy
The economic news that’s really sticking in the Old Gray Lady’s craw is revised data released last week that shows the economy’s growth stuck at 1.8 percent, slow consumer spending, stagnant wages, higher prices for gas and food, the poor housing market, flagging consumer confidence and a recent Labor Department report showing a higher-than-expected rise in claims for jobless benefits.
Cato@Liberty | How Fannie and Fed Caused the Crash
If you watched the HBO movie Too Big to Fail, you wouldn’t get much sense that government actions — easy money, the homeownership mania, HUD and Fannie’s push to lend to non-creditworthy borrowers — played a major role in the housing bubble and subsequent financial crisis. Sounds like this book would make good supplemental reading for viewers, along with Johan Norberg’s Financial Fiasco.

Reports                                                                                                                         
Cato Institute | Economic Self-Flagellation: How U.S. Antidumping Policy Subverts the National Export Initiative
In January 2010, President Obama announced a goal of doubling U.S. exports in five years. The "National Export Initiative" has since become the centerpiece of the administration's trade policy agenda.

Taxes

Blogs                                                                                                                             
ThinkMarkets | Confusion Masquerading as Science? Taxes and Spending
I am always amazed that when many economists give policy advice the sophistication and logical rigor that the discipline so values gets completely lost.

Reports                                                                                                                         
Tax Foundation | Louisiana Considers Adopting "Amazon" Tax on Out-of-State Online Sellers
While 21 states have considered "Amazon" laws in the past three years, only five have enacted them: Connecticut, Illinois, New York, North Carolina, and Rhode Island...

Health Care

News                                                                                                                             
NYT | Medicare Plan for Payments Irks Hospitals
For the first time in history, Medicare will soon track spending on millions of individual beneficiaries, reward hospitals that hold down costs and penalize those whose patients prove most expensive.
Fiscal Times | Hospital Drug Shortages Rise
A growing shortage of medications for a host of illnesses — from cancer to cystic fibrosis to cardiac arrest — has hospitals scrambling for substitutes to avoid patient harm, and sometimes even delaying treatment.
National Journal | CBO Uncertain on Defunding Health Reform Law
A CBO analysis could not determine if withholding $5 billion to $10 billion needed over the next 10 years to implement the health law's programs such as insurance exchanges or assistance to states to expand Medicaid coverage would add to or subtract from the deficit.

Econ Comments                                                                                                             
CNN: Money | GOP Medicare bet: There's a market for bold
Republican strategists have noticed that courage sells, even in blue states. Maybe the GOP should step up to the plate and acknowledge they want real reform for Medicare.
Washington Post | How the GOP could rescue Medicare reform
Conservatives should understand that much of the opposition to Medicare reform is conservative, at least in form. It is rooted in a fear of change and a resentment of meddling officials. A general distrust of politics extends to a distrust of politicians engaged in confusing reforms. In a choice between the status quo and major change, a center-right country generally will choose the status quo.

Blogs                                                                                                                             
NRO: The Corner | Medicare/MediScare Spending
Leaving the politics of this solution aside, even if we could implement the cuts, it doesn’t seem like a desirable solution. I assume that, under the current system, doctors are charging higher fees for services than they would if their patients were paying with their own money.

Monetary

News                                                                                                                             
Financial Times | New Zealand dollar hits record high
Higher global demand for food, particularly its meat and dairy products to helped exports outpace imports to the tune of NZ$1.11bn(US$908m) in April - a record monthly surplus, which nearly oubled market estimates of NZ$600m.
Bloomberg | Euro Advances to Three-Week High on Greek Aid-Deal Optimism; Yen Declines
The euro rose to a three-week high against the dollar on optimism European officials will approve additional assistance for Greece, reducing the potential losses for bondholders.

Employment

Econ Comments                                                                                                             
Washington Times | EDITORIAL: Unemployment reform
House to vote on easing 99-week benefit requirement.
Washington Times | GRAVES: Government: No. 1 job destroyer
Regulatory morass is choking economic growth and driving jobs overseas.

Blogs                                                                                                                             
WSJ | Less Income, More Layoffs
The GDP report showed nominal profits economywide jumped 8.5% in the year ended in the first quarter, while companies increased their nominal compensation to employees by just 3.7%.

Budget

News                                                                                                                             
Bloomberg | No Love Lost for U.S. Debt as Bond Dealers Share Fewer Treasuries With Fed
Demand for government debt is increasing even as the central bank prepares to conclude its purchases, the size of the market has doubled to $9.1 trillion and Republicans in Congress spar with President Barack Obama over the nation’s debt ceiling.
National Journal | Where Are We With Appropriations?
...as anyone who works in Washington knows, having access to at least the formal documents legislators use in making appropriations decisions can be invaluable.
WSJ | Danger of Greek Contagion Climbs
Investors have long expected Greece to default on its debts, but most were anticipating it would happen sometime next year. Now, skirmishes among European leaders last week have raised the prospect that a default could come as early as mid-July—not enough time for Europe's other debt-ridden economies to right themselves.

Econ Comments                                                                                                             
Cato Institute | Debt Dilemma
By 2035, total federal spending could reach 34 percent of GDP, and climb to 42 percent by mid-century.
Washington Times | EDITORIAL: The Democrats' debt crisis
Despite debt limit, they have no plan for substantive reform.

Blogs                                                                                                                             
John Stossel's Take | What Caused The Debt?
The CBO predicted that the debt would be eliminated within a decade - as the green line shows in the chart below. That didn't happen, partly because economic growth was slower than expected (the yellow line in the chart below shows the impact of that) and partly because of tax cuts that the CBO says reduced government revenue (the blue line)...
Greg Mankiw's Blog | How to Fix the Long-Term Fiscal Problem
A menu of plans, courtesy of the Peterson Foundation.

Reports                                                                                                                         
Mercatus Center | The Debt Limit Debate
While the United States should not default on its debt, neither should Congress raise the debt ceiling without addressing the problem that created the debt: excessive spending.