Friday, June 3, 2011

General Economics

The Street | U.S. Debt Rating Under Threat: Moody's
Credit rating agency Moody's Investor Services said Thursday that unless a deal is reached in the next several weeks regarding the debt ceiling, that the U.S. government's "Aaa" rating will be placed on review "due to the very small but rising risk of a short-lived default."
Source | Measuring the Human Cost of an iPad Made in China
If Apple ordered up a batch of its iPad computers to meet surging market demand and an explosion in the workshop killed three workers and injured 15 others, an army of regulators, cops, and plaintiffs lawyers would descend on the company to emand an accounting.
Washington Times | Lack of retirement savings makes entitlements sacrosanct
Type the sentence(s) summarizing the link here.
CNN: Money | Warning: Economic recovery at risk
Job growth seems to be losing momentum, home prices just slumped to new lows and consumers are feeling far from rosy about the economy.
Fox News | Factory orders fell in April after parts shortage
Business cut back on their orders for heavy machinery, computers and autos in April, partly because the March earthquake in Japan has made components parts harder to come by.
Consumer Reports | Elderly Americans lose $2.9 billion annually to financial abuse
Financial abuse of older Americans has increased by 12 percent over the last three years, according to a study released Wednesday by the MetLife Mature Market Institute.
National Journal | States Want Leading Role in Natural Gas Regulation
While the Energy Department and Environmental Protection Agency continue to look into the risks of natural gas drilling, state regulators say it's a job better left to the states, which can teach the federal government a thing or two.

Econ Comments                                                                                                             
Reason | "Buy American" Is Un-American
WE need more competition in the auto industry, not less.
Washington Times | EDITORIAL: Consumers lack confidence in Obama
When lawmakers borrow heavily from private-sector markets to feed their trillion-dollar overspending habit, less capital is available to the rest of the market. That’s one of the ways in which the policy impasse on Capitol Hill is sapping energy out of the economy and hope out of consumers. Unless there are some credible signs of fiscal responsibility soon, the high unemployment rates might be here to stay.
Cato Institute | Winners, Losers and Government
The stability of D.C. prices can be found in one word: government — although in more ways than you think. Prices are ultimately driven by supply and demand, and government has had a major impact on both.

WSJ: Real Time Economics | World-Wide Factory Activity, by Country
Global manufacturing slowed across the globe in May, amid lackluster consumption in the U.S. and Europe and lingering effects of Japan’s earthquake and tsunami.
Econlog | PSST vs. Potential GDP
The AS-AD paradigm includes a concept called potential GDP. Mainstream macro-economists sort of force-feed macroeconomic history into AS-AD by talking about "cyclically-adjusted productivity" when they talk about AS and "trend-adjusted GDP" when they talk about AD.
Cato @Liberty | The Flawed Logic of Trade Adjustment Assistance
A recently posted article from Reuters contains quotes that are worth sharing, because they perfectly encapsulate what I think is the flawed logic behind trade adjustment assistance, the program that extends enhanced benefits to workers who lose their jobs because of import competition. There are many reasons to oppose this program, as I have outlined before. 

RCM: Wells Fargo | Factory Orders Slip in April After Surge in March
Factory orders shed 1.2 percent in April following an upwardly revised 3.8 percent spike in March. That gain was the largest in seven years, so some pullback is not shocking, but the outlook for May is not looking good.


National Journal | Levin Lays Out Democrats’ Tax-Reform Priorities
Levin's plan largely reiterates a loose collection of Democratic talking points and is the first effort to create a clear response to the powerful GOP messaging machine.

Tax Foundation | More States Abandon Film Tax Incentives as Programs’ Ineffectiveness Becomes More Apparent
In 2010, a record 40 states offered $1.4 billion in film and television tax incentives. All told, states have provided nearly $6 billion for such programs over the past decade. 2010 will likely stand as the peak year, since many governors and legislators are ending their programs, preferring to use the money for other priorities or leave it with taxpayers.

Health Care

National Journal | Colorado Moves Forward on Insurance Exchanges
Colorado Gov. John Hickenlooper signed a bill on Wednesday to set up a marketplace for individuals and small businesses to buy health insurance, making it the eighth state to voluntarily set up the exchanges since President Obama signed the 2010 health care law.

Econ Comments                                                                                                             
Washington Times | DONATELLI: GOP mustn’t go wobbly on Medicare reform
Public will listen if we just point out the impending financial crash.
Washington Times | EDITORIAL: Obamacare’s unlimited power
White House health care plan represents massive government expansion.
WSJ | What Paul Ryan's Critics Don't Know About Health Economics
A premium-support system would create the right incentives for cost cutting without putting undue burdens on seniors.
Politico | Ryan plan would endanger Medicare
The Center for Economic and Policy age of 55, they will have to save an extra $182,000 for retirement to pay for their health care costs if the Republican plan is enacted. For those in their thirties, they will have to save an extra $400,000 on top of regular retirement savings, to pay for health insurance in their golden years.

Atlantic | Medicare Pilot Program Fails to Achieve Significant Cost Control
In 2010, the final year, just four of the 10 sites, all long-established groups run by doctors, slowed their Medicare spending enough to qualify for a bonus, according to an official evaluation not yet made public. Two sites saved enough to get bonuses in all five years, the evaluation shows, but three did not succeed even once.
Atlantic | Why Hasn't Anyone Signed Up For the High-Risk Health Insurance Pools?
I've predicted that lots of parts of Obamacare will not work the way they're expected to.  But here's one I wouldn't have predicted: the high-risk pools, which were meant to tide people over until 2013, have signed up just 18,000 people as of March.
Heritage Foundation | Liberals’ Main Medicare Cost-Reduction Strategy Already Proves Ineffective
Typically, demonstration programs exist to prove the effectiveness of a reform proposal before implementing it nationwide. This was apparently forgotten in the drafting of Obamacare, which relies heavily on accountable care organizations (ACOs) to curb runaway spending in Medicare and the health care system at large.


Market Watch | China likely to opt for faster yuan appreciation
China is likely preparing its currency for faster appreciation, as it hopes a stronger currency will help cool prices, analysts said.
Bloomberg | Treasuries Rise as U.S. Employers Add Fewer Jobs in May Than Forecast
Treasuries advanced, pushing yields on 10-year notes toward their lowest level this year, after the U.S. payrolls report showed employers added fewer jobs in May than economists forecast and the jobless rate rose.

Econ Comments                                                                                                             
Forbes | The Choice With Currencies Today: Fixed Or Floating?
Fooling with currencies is always destructive.
Bloomberg | Gross Says More Buying by Fed Unlikely Even as Job Growth Slows: Tom Keene
Pacific Investment Management Co.’s Bill Gross said the Federal Reserve is unlikely to do a third round of quantitative easing even with the economy adding fewer jobs than forecast.

WSJ: Real Time Economics | Fed’s Fisher: Additional Easing Isn’t Warranted
The Federal Reserve has done enough to spur economic growth and new steps to boost the economy aren’t warranted, Richard Fisher, president of the Federal Reserve Bank of Dallas, said in an interview with The Wall Street Journal.
Daily Capitalist | Sinking Manufacturing Is A Stagflationary Trend
What I see is economists focusing on the wrong things. They tend to believe that what I see as “good”things are bad. And conversely,what I see as “bad”are seen as good things. Housing and quantitative easing are the most obvious examples of this phenomenon.


CNN Money | Bond experts to Congress: Don't mess it up
Many of the bond experts indicated they would welcome a plan for deficit reduction if it were tied to the vote, but no one said the ceiling shouldn't be raised in the absence of one.
Fiscal Times | Farm Subsidies Are on the Chopping Block
Pawlenty, the former Minnesota governor, is hardly the first prominent farm- state politician to take aim at the once politically sacrosanct ethanol program--or other costly farm safety net programs.
MarketWatch | Greece stepping up cuts in return for aid: report
Greece will agree to tougher austerity measures and accelerate its privatization program in return for a fresh international bailout package, according to a media report Friday.
CNN Money | No budget, no pay for California lawmakers
California lawmakers can kiss their pay goodbye if they don't pass a balanced budget by June 15.

Econ Comments                                                                                                             
Washington Post | Our salutary debt-ceiling scare
As the sun rises in the east, the debt ceiling will be raised. Getting there, however, will be harrowing. Which is a good thing.
AEI | Limit the Real Debt
The debt limit covers two very different types of obligations.

WSJ: Real Time Economics | CBO: Fannie, Freddie Guarantees to Cost Government $42 Billion
If the two continue to do business on current trends, the CBO “estimates that the new guarantees the [enterprises] will make over the 2012-2021 period will cost the government $42 billion,” Ms. Lucas said.


Econ Comments                                                                                                             
Washington Post | A healthy dynamic in job creation: Destruction
The U.S. economy has become less dynamic and entrepreneurial.
Investors | 10-Year Real Wage Gains Worse Than During Depression
The past decade of wage growth has been one for the record books — but not one to celebrate.
WSJ | Brain Gain and Drain
How America loses by pushing away immigrant talent.

Calculated Risk | Labor Mobility: Starting to Increase
In 2010, there were a record low percent of job seekers who relocated for a new position (percent of those who found jobs). The percentage picked up a little in Q1 2011, but it is an easy comparison to last year.
WSJ: Real Time Economics | Obama Likely to Face Highest Jobless Rate of Any Postwar Incumbent
Barack Obama is likely to confront the highest unemployment rate that any U.S. president seeking re-election has ever faced since the second World War, a private think tank predicted Thursday.