Wednesday, June 1, 2011

General Economics

News                                                                                                                             
Market Watch | U.S. consumer confidence declines in May
Consumer confidence fell in May as Americans grew slightly more pessimistic about future job prospects and business conditions, according to a closely followed survey.
Financial Times | EU warns US to speed up bank reform
The European Union's top financial regulater has warned the Obama administration that it must speed up and toughen its new banking rules in order to prevent American banks from having unfair advantages over their European counterparts.
Market Watch | China’s manufacturing growth slows further
China’s manufacturing activity expanded in May at its weakest pace in three quarters, as the economy faced headwinds of high inflation and government efforts to rein in prices, according to rival surveys of companies released Wednesday.
Bloomberg | Crude Oil Falls From Near Three-Week High After U.S. Employment Report
Oil declined from near the highest in three weeks on concern demand in the U.S. may falter following a report showing that U.S. companies added fewer jobs than forecast last month.
Politico | Economy shadows President Obama's 2012 campaign
A series of troubling signs for the U.S. economy threatens to dash hopes that 2011 would be a year of robust recover and that could prove troublesome for President Barack Obama's reelection chances.
Washington Times | Today’s airline fuel bills aren’t peanuts
Soaring oil prices now 35 percent of U.S. companies’ operating costs.

Econ Comments                                                                                                             
National Journal | Geithner Defends Auto Bailout in Op-Ed
Two years after bankruptcy filing, Detroit's unemployment has fallen by one-third.
Washington Times | SHAPIRO: Pro-union policies stifle innovation, recovery
Obama labor agenda risks chasing employers away from the U.S.
Financial Times | Emerging economies are ready to lead
Emerging markets have vast experience in policy making that can benefit the global economy.
Source | The Keystone pipeline: A bridge to economics growth
The Keystone pipeline would secure vital resources form a trusted ally. It would also stimulate the economy, increase government revenue and create 13,000 high wage construction jobs over the next two years and 340,000 jobs over the next five years in manufacturing and service industries that would benefit form the pipeline's construction.
Source | Rein in rising gas prices
Skyrocketing gas prices are stretching the budgets of American families like never before. A new study shows that middle-class families are spending as much on gas as they are for health care and nearly as much as they are on groceries. In my home state of Michigan, gas prices hit a record high of $4.22 earlier this month — one of the highest in the nation
Washington Times | RAHN: Free markets flower as war memories fade
New nations of former Yugoslavia discover keys to economic stability.

Blogs                                                                                                                             
WSJ: Real Time Economics | Share of Population on Food Stamps Grows in Most States
The share of residents turning to food stamps has risen in nearly every state nationwide in the past year even as unemployment has moderated.
AEI: American | The Missing Link: Growth
As the budget fight unfolds, keep in mind this chart from Bret Swanson about the various levels of tax revenues from differing growth rates:
WSJ: MarketBeat | ISM’s Svengali-Like Hold on the Stock Market
The manufacturing sector is a small and shrinking gear in the US economic engine, and yet the ISM manufacturing index seems to have an outsized influence on the US stock market.
Daily Capitalist | Poor People Control 61% of World’s Wealth
In capitalistic countries wealth is created,not stolen. Entrepreneurs have an idea, have a relatively free political infrastructure, have access to capital,are willing to take risks,and create a business. They either crash and burn or succeed. If they succeed they create jobs and wealth. They also create wealth for the entrepreneur. Congratulations. Where else do jobs come from?
ThinkMarkets | Why Dodd-Frank is Dud-Blarney
It is a shame that Christopher Dodd  did not become a lobbyist earlier, before he teamed up with Barney Frank to sponsor the Dodd-Frank Act. Mr. Dodd first helped set into motion a fast-expanding web of obscure bureaucratic dicta for almost all financial activity, then took a lucrative job as Hollywood lobbyist.
Econlog | Why do Depressions Occur?
I am well aware that the current economic slump includes more than just housing. Let us focus on just one example of an industry that is undergoing a severe contractionary adjustment: the legal industry. Many large firms have undertaken massive layoffs, and new law school graduates are having a horrible time finding jobs. How can we explain this?

Reports                                                                                                                         
NBER | This Time Is the Same: Using Bank Performance in 1998 to Explain Bank Performance During the Recent Financial Crisis
We investigate whether a bank’s performance during the 1998 crisis, which was viewed at the time as the most dramatic crisis since the Great Depression, predicts its performance during the recent financial crisis. One hypothesis is that a bank that has an especially poor experience in a crisis learns and adapts, so that it performs better in the next crisis.
Heritage Foundation | American Energy Freedom: The Basis for Economic Recovery
When studying American history, in particular times of rapid economic growth, one often finds that poets, such as Ralph Waldo Emerson, speak of fuels that drive industrial revolutions. Such was the case in the mid-to-late 1800s in America. Then, as now, prosperity was directly linked to the efficient use of energy. The more energy-efficient a society became as a whole, the greater the wealth that each individual member of that society enjoyed.

Taxes

Econ Comments                                                                                                             
RCM | Corporate Tax Reform: Will the Obama Administration Do the Right Thing?
At 39.2 percent, the United States has the second highest combined federal and state statutory corporate tax rate in the industrialized world. These high corporate tax rates, however, have not translated into high revenues for the U.S.

Blogs                                                                                                                             
EconLog | State Formation and Tax Collection
Even though tax collection has become relatively easier, I believe that the U.S. has become vastly over-centralized.

Reports                                                                                                                         
Mercatus Center | The Case Against Taxing Cell Phone Subscribers
Federal, state, and many local governments tax cell phone subscribers at a variety of rates that almost always exceed tax rates on other goods and services.

Health Care

News                                                                                                                             
National Journal | Hospitals Annoyed by Medicare Performance Payment Plan
Starting in July, Medicare will begin computing performance scores for hospitals, giving rewards to facilities that hold down costs and penalties to those that spend more. But hospitals say the evaluation system includes factors that they have no control over.
CNN: Money | Prescription drugs worth millions to dealers
Prescription drug abuse, now the fastest-growing drug problem in the country, has created a ballooning street market for highly-addictive pain relief, anxiety and depression drugs.
National Journal | Republican States Hardest Hit Under Medicaid Block Grants
While the GOP's proposed changes to the Medicare program are currently the political weapon of choice for Democrats, Medicaid changes under the budget plan passed by House Republicans could mean 20 to 30 percent drops in estimated federal Medicaid funding for conservative states over the next 10 years.

Econ Comments                                                                                                             
WSJ | Our Current Time for Choosing
Anyone who disagrees with Paul Ryan's Medicare reforms has a moral obligation to propose an alternative.

Blogs                                                                                                                             
Political Calculations | Subsidies and Shortages
In addition to being the most likely to be covered by health insurance, elderly Americans are also the most likely to be spending extended periods of time in U.S. hospitals, which means that as a group, they are more likely to be the ones consuming more of the medications that are increasingly in short supply at U.S. medical facilities.
Econlog | Administrative costs in Health Care
It seems to me that managed care sets up a game between insurance companies and physicians, with the former trying to hold spending down and the latter trying to get as much as they can under the insurance companies' rules. I suspect this helps to explain the high number of administrators working in doctors' offices and hospitals.
NRO: The Corner | ‘The Doctor Might See You Now’
In order to estimate how PPACA will affect physician behavior, Garthwaite looked at the State Children’s Health Insurance Program (SCHIP), which, like PPACA, represented a large increase in the number of Americans receiving public health insurance coverage. His findings confirm the prediction that the expansion of public health insurance programs will likely lead to a decrease in the quantity of medical services provided by physicians even though it increases physicians’ participation.

Monetary

News                                                                                                                             
Fox Business | Rep. Paul to Fed: Tell Us Everything or Else
The chairman of the House subcommittee that oversees the Federal Reserve demanded Tuesday that the Fed fully disclose details of billions perhaps trillions in secret emergency loans it made to almost every major bank in the U.S. and overseas during the financial crises or face a congressional subpoena for the information.
Market Watch | Dollar falls after ADP report disappoints
The dollar lost ground Wednesday after payroll-processing company ADP said the U.S. economy added 38,000 jobs in May, far fewer than the 175,000 economists expected.
Bloomberg | Treasury 10-Year Yields Fall Below 3% for First Time in 2011 on Jobs Data
Treasuries rose, pushing 10-year note yields below 3 percent for the first time in 2011 after ADP Employer Services reported that U.S. companies added fewer jobs in May than economists forecast.

Econ Comments                                                                                                             
Minyanville | Reflections on the Yuan as a Global Reserve Currency
There's likely more local trading in the yuan, but that doesn't imply the death of the dollar or its loss of reserve currency status. And it certainly doesn't portend hyperinflation.
WSJ | The Fed Has Trapped Itself on Rates
Thanks to borrowing short and lending long, the central bank could end up losing big money.

Blogs                                                                                                                             
Forbes | Christy Romer Wants an Adult Conversation on the Dollar
Romer is criticizing the notion, widely held across the globe, that the dollar should be strong – that the U.S. currency should consistently be able to buy a good deal of foreign currency, the euro, peso, renminbi, whatever. In Romer’s view, these who adopt this position don’t respect the law of supply and demand. “The exchange rate is a price much like any other price, and is determined by market forces.”

Employment

News                                                                                                                             
MarketWatch | U.S. private sector adds 38,000 jobs in May: ADP
Economists had predicted monthly growth of roughly 175,000.

Blogs                                                                                                                             
WSJ: Real Time Economics | Adjusting Wage Disparities for Cost of Living
Putting aside the giant metros, there were a few cities where the pay differences and cost of living differences didn’t line up.
WSJ: Real Time Economics | Drop in Jobless Rate Partly Tied to End of Benefits
New research from the Federal Reserve Bank of Chicago, released Tuesday, argued the end of these benefits “contributed modestly” to the drop in unemployment seen between October 2009, when it peaked at 10.1%, and January 2011. They note the former date lines up with when many jobless started losing their extended benefits.

Budget

News                                                                                                                             
CNN Money | Democrats: No pay for lawmakers if U.S. defaults
Sens. Barbara Boxer and Bob Casey sent a letter to Treasury Secretary Tim Geithner on Tuesday, urging him to include lawmaker compensation in the list of things he will have to stop paying if Congress fails to raise the debt ceiling by Aug. 2.
Fox News | House panel votes to cut farm subsidies
A House committee voted Tuesday to cut farm subsidies to pay for deficit reduction and other budget priorities, chipping away at the billions of dollars a year that are directed to farmers.
NY Times | Pressing Obama, House Bars Rise for Debt Ceiling
Republicans brought up the measure, which was defeated 318 to 97, to show the lack of support in the House for raising the $14.3 trillion debt ceiling without concrete steps to rein in chronic budget deficits.
Roll Call | Economists Support Boehner on Spending Cuts and Debt Limit
The Ohio Republican released a letter signed by more than 150 economists who support his stance that any debt limit increase be attached to spending cuts that exceed it in size.

Econ Comments                                                                                                             
Washington Times | BLANKLEY: Democratic response to deficit spending
Anger over profligacy spurs new political parties across Europe.
WSJ | A Smarter Debt Limit Strategy
Republicans are headed for another deal over phony spending cuts, while debt rises faster than GDP.