Wednesday, June 29, 2011

General Economics

News                                                                                                                             
Market Watch | Congress near compromise on free trade
Free-trade proposals with South Korea, Panama and Columbia could be one step closer to approval after top senators agreed to extend a program that helps out-of-work Americans.
CNBC | Economy May Grow 4% in Second Half
U.S. eocnomic growht is poised to pick up in the second half of the year after a sluggish start, a top Federal Reserve official knonw for his hawkish views on inflation said Tuesday.
Bloomberg | Crude Oil Advances a Second Day on Speculation OPEC May Reduce Production
Futures advanced as much as 1.5 percent after rallying 2.5 percent yesterday. The IEA’s plan to release strategic reserves sparked speculation that the Organization of Petroleum Exporting Countries may limit output. A U.S. report today may show crude stockpiles fell more than forecast last week, and Greece’s parliament will vote on a plan to cut spending and sell assets.
National Journal | Ethanol Compromise Might Be Close
Sen. Amy Klobuchar, D-Minn. says that she and Sen. John Thune, R-S.D.  are nearing a compromise with Sen. Diane Feinstein, D-Calif. on phasing out costly ethanol subsidies by diverting part of the remaining 2.5 billion in subsidies from this year toward the debt and  the other part of it to promoting advanced biofuels such as cellulosic ethanol .
CNBC | Bleak View of Economy Spreads to Wealthy Americans
Nearly two thirds of the nation is pessimistic about the current state of the economy and its future, with just 6 percent optimistic about both.
Market Watch | U.S. home prices up for first time in eight months
U.S. home prices in April rose for the first time in eight months, according to data released Tuesday that may reflect more of the beginning of buying season than a new sign in the troubled sector of the economy.
CNN: Money | Talk of natural gas bubble draws industry ire
Big energy company executives and government researchers are firing back at a recent New York Times story suggesting the recent boom in natural gas production from shale rock is unsustainable and perhaps fraudulent.
Politico | Economic uncertainty blame game
Federal Reserve Chairman Ben Bernanke has offered this startling confession about the economy saying, "We don’t have a precise read on why this slower pace of growth is persisting."
Washington Times | Economic stimulus measures unconventional
Last week’s decision to join other oil-consuming nations in releasing 60 million barrels of premium crude onto world markets to lower the price of fuel was widely viewed in economic circles as a first effort of that kind to stimulate the global economy. High fuel prices have been dragging down economic growth as well as the political prospects for incumbents from Washington to Tokyo.
USA Today | Virginia named America's Top State for Business in 2011
Virginia topped our inaugural study in 2007 with Texas at number two. In 2008, they switched positions and Texas took the title. In 2009, it was Virginia/Texas. In 2010, Texas/Virginia.

Econ Comments                                                                                                             
Washington Times | DANKER & HOENIG: Don’t leave small business behind
Friday’s gloomy economic forecast from Goldman Sachs solidified a consensus that the economy is just treading water. Goldman’s downgrade from 3 percent to 2 percent gross domestic product (GDP) growth for this quarter would nearly match last quarter’s anemic 1.8 percent growth rate if it bears out.
AEI | The United States and China: Macroeconomic Imbalances and Economic Diplomacy
The United States and China are now the tow largest economies in the world. For the last decade, the United States has been an important net source of demand for the world economy, running persistent large current account deficits.
WSJ | How China's Banks Break the Rules
In October, I sat down in Nanjing with a senior banker for one of China's "Big Four" state banks. I asked him about the new regulations just put in place by Beijing to restrain the growth in lending. "There are ways around these rules," he said.
Washington Times | BAYH & CARD: Regulatory reform restart
As the country emerges from one of the most serious economic downturns in recent history, the last thing we need are more regulations that impose heavy burdens on job creators. One way to get Americans back to work is by removing excessive and costly regulations that make it harder for businesses to grow.
Cato Institute | Shut Down the Strategic Petroleum Reserve
Whenever gasoline prices go through the roof, we're treated to the same, never-ending political spat that we went through last week; liberals want to release crude from the U.S. Strategic Petroleum Reserve (SPR) to help poor, downtrodden motorists while conservatives scream that the SPR is for supply emergencies only and not for domestic political gestures
Washington Times | WOLF: Obamanomics is shovel-ready
The failure of Keynesian economics is no laughing matter, Mr. President.
WSJ | Basel's Capital Gang
Making banks safe is not as easy as it seems.
Bloomberg | Shilling: China Heading for a Hard Landing, Pt. 3
China is hoping to cool its white- hot economy without precipitating a recession. Doing so will be extremely difficult: Inflation fears are growing, the government’s ability to respond is quite limited, and China’s economic model, which leaves bureaucrats guessing about the market effects of their directives, is ultimately untenable.
Financial Post | Peter Foster: The demons in Krugmanomics
Paul Krugman’s affection for ­markets fell as he became obsessed with inequality, market instability and catastrophic climate change.
Washington Times | Washington Times EDITORIAL: Another ‘recovery summer’
A year ago, Vice President Joseph R. Biden proclaimed the administration’s $830 billion stimulus spending spree would kick off “Recovery Summer.” It never came. For those hoping the dog days of 2011 might bring a change in the economic climate, the latest figures suggest this won’t be a summer of recovery, either.

Blogs                                                                                                                             
Minyanville | Why the GDP Is Useless and Deceptive
The basis for the so-called "recovery" was a rise in GDP, that measure of what we have spent in the economy. But GDP is a fairly useless bit of data. Here's why.
Café Hayek | Markets or Mandates?
Here’s a superbly done video – rich with facts – on the importance of economic freedom. 
Independent Institute | World War II: Still Being Touted as the Quintessential Keynesian Miracle
Someone must have imagined that my hopes for improved economic understanding might be excessively optimistic today and thus needed to be curbed to restore my normal emotional balance, because that person undertook to smash any such hopes to dust by e-mailing me a link to a HuffingtonPost article by Paul Abrams, “Economically, World War II Was Stimulus on Steroids.”
Cato @ Liberty | Dirty Deal Done Not So Dirt Cheap
Interestingly and alarmingly, because implementing the FTAs (which will lower tariff revenue) and paying for the billion-dollar-plus TAA extension “requires” offsets, the draft language specifies in Sec. 601 that revenue should be raised by increasing customs user fees.
Political Calculations | Chinese, U.S. Economies Both Decelerating
Previously on Political Calculations, we discovered that we can use international trade data to diagnose the relative health of national economies.
Econlog | Is Social Security a Ponzi Scheme?
A couple of years ago, I claimed on this blog that Social Security is a Ponzi scheme. Various commenters objected but didn't persuade me. This week, John Seater, an economist whom I respect a great deal, wrote that it is not a Ponzi scheme. He's given the best argument I've seen yet for that view. I'm still not persuaded. Seater wrote:

Reports                                                                                                                         
RCM: Wells Farge | Job Worries Weigh On Consumer Confidence
Consumer confidence fell 3.2 points in June to 58.5. The recent deluge of weak economic reports has led to more concerns about employment prospects, which more than offsets any relief from falling gasoline prices.
Mercatus Center | Pick Your Poison: Do Politicians Regulate When They Can't Spend?
In this paper, the authors investigate whether laws restricting fiscal policies across U.S. states lead politicians to regulate more instead. The authors first show that partisan policy outcomes do exist across U.S. states, with Republicans cutting taxes and spending and Democrats raising them.

Taxes

Econ Comments                                                                                                             
WSJ | A Stealth Tax Hike
The return of the deduction phase-out gambit.
Fox Business | Do Higher Taxes and More Government Rules Create Jobs?
Do more government rules create private sector, or government jobs? Do more government rules incentivize bureaucrats to keep the rule machine grinding, to justify their jobs?
Minyanville | Federal Withholding Tax Data Says US Already in Recession
The drop in mid-May -- versus the strong gains in March and April -- suggests that the US may have entered recession a month ago.

Health Care

News                                                                                                                             
National Journal | Lieberman, Coburn Unveil Medicare Proposal
The package is one of the first bipartisan—Lieberman caucuses with the Democrats—proposals to wring significant savings from the federal health program for the elderly. The senators estimate it will save at least $500 billion from the program over 10 years, with nearly half of the savings coming from an increase to seniors’ premiums for doctor visits.
Politico | Medicaid cuts could come from Democrats
Defenders of Medicaid have been fighting hard against Republican proposals to cut the program, but they're just waking up to the threat of one proposed by the Obama administration.
National Journal | Tommy Thompson: Health Exchanges Important
In an opinion piece published in the Huffington Post on Monday, Thompson, who was HHS secretary from 2001 to 2005, wrote that the exchanges have the potential to be a market-based solution. States should see the exchanges as an opportunity for innovation and, more importantly, a way to keep the federal government out of Medicaid, according to Thompson.

Blogs                                                                                                                             
Cato @ Liberty | Republicans Getting Rich off ObamaCare
Here we have the spectacle of a former Republican Health and Human Services secretary getting rich by helping states implement ObamaCare.
Atlantic: Megan McArdle | Pharma Spending Less on Finding New Drugs
For the first time ever last year, the global drug industry cut its R&D spending.  The trend is expected to continue, at least in the near term.
Reason | ObamaCare Continues to Make Consultants Richer
Individual polls obviously vary, but the overall trend since last fall is clear: Fewer and fewer people favor the law, while outright opposition continues to hold steady. 

Monetary

News                                                                                                                             
Market Watch | Major China bank sees inflation hitting 6.2%
China’s June consumer price index inflation is set to hit 6.2%, as food prices continued to rise, said a report released Monday by China International Capital Corp.
Market Watch | Fed may loosen debit-card swipe-fee rules
The Federal Reserve may provide some moderate relief to banks when it votes Wednesday afternoon to adopt a controversial debit-card rule that is set to shift billions of dollars in revenue from financial institutions to merchants.

Budget

News                                                                                                                             
Politico | Treasury: Debt ceiling deadline is real
The Treasury Department is swatting down reports that the deadline to raise the debt ceiling could be shifted from early August to the end of that month, saying that at most the drop-dead date to hike the limit might be only a few days later than initially expected.
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.
Market Watch | ‘Significant’ debt deal possible: White House
Top Senate Republican to meet Obama as tax disagreement lingers.
National Journal | Uncle Sam's International IOUs
Chinese investors are betting big on U.S. debt.
Politico | Bill Clinton: Stimulus wasn't big enough
“I think the stimulus did as well as it could have done — there just wasn’t enough of it,” Clinton told reporters on Tuesday.

Econ Comments                                                                                                             
Politico | The courage to balance the budget
Yogi Berra once made the statement, “It’s déjà vu all over again.” I look at the current budget and debt limit debate and I can’t help but think he was right. It’s just like 1995 all over again, except this time the stakes are much higher.
Minyanville | Kass: Debt Is Suffocating Recovery
Despite clear signs from the housing market and from a plethora of numerous soft economic releases, consensus S&P estimates have not yet been adjusted lower. Nor have S&P year-end price targets budged.

Blogs                                                                                                                             
Mercatus Center: Neighborhood Effects | Illinois’ “Goldilocks” budget
This year Illinois’ budget is larger than last year even though the state anticipates a shortfall of over $9 billion.

Reports                                                                                                                         
Bankrupting America | Budget Briefing Book: Volume Three
Our three part Budget Briefing Book provides a rundown of all the facts you need when it comes to how the government spends your money and the subsequent effects.

Employment

News                                                                                                                             
Politico | Manufacturing advocates: White House is no jobs factory
[Obama's] latest initiatives, though, focus mostly on trends that predate the recession, such as the years of layoffs caused by factories moving overseas and machines displacing workers.

Blogs                                                                                                                             
Coordination Problem | Munger on Why Creating Jobs is Not Government's Job
The other day I linked to his numerous podcasts at EconTalk, so today I will give you the video feed.
Marginal Revolution | The wisdom of Scott Sumner
Monetary policy should be expansionary, but structural forces behind unemployment can make traditional fiscal policy either more or less effective (it is more important to target disaffected workers, but also harder to do so) and you can think of that as the frontier policy question of the day.