Tuesday, July 5, 2011

General Economics

News                                                                                                                             
WSJ | Profits Thrive in Weak Recovery
While the U.S. economy staggers through one of its slowest recoveries since the Great Depression, American companies are poised to report strong earnings for the second quarter—exposing a dichotomy between corporate performance and the overall health of the economy.
USA Today | U.S. to fall behind India in world trade, report says
In less than 40 years India will overtake the U.S. as the world's second-largest trading nation, pushing today's superpower into third place and Europe in to the little leagues, according to a report by Citi.
Fox News | The economic recovery turns 2: Feel better yet?
Two years after economists say the Great Recession ended, the recovery has been the weakest and most lopsided of any since the 1930s.
Bloomberg | Advanced Energy Cuts Revenue Forecast as Solar Panel Prices Drop
Advanced Energy Industries Inc. (AEIS) cut its revenue forecast for the second quarter, saying price declines for solar panels are causing some customers to delay orders.
CNN: Money | The scariest risks to the economy
U.S. policymakers are racing to reach an agreement before the debt ceiling is breached. But the biggest risks to the U.S. economy are mostly out of their hands.

Econ Comments                                                                                                             
WSJ | The Future Still Belongs to America
This century will throw challenges at everyone. The U.S. is better positioned to adapt than China, Europe or the Arab world.
Washington Times | GHEI: The IMF’s moral hazard
It’s time to jettison this obsolete and dangerous international organization.
WSJ | The Rise and Needless Decline of the Golden State
John Steele Gordon writes in The Wall Street Journal that more Americans left California than arrived in the last decade. What caused this great migration? Politics.
Bloomberg | Recession Trade Sends Cyclicals to Two-Year Low
The biggest rally in a year for companies most tied to economic growth is generating gains for BlackRock Inc. and Federated Investors Inc., and the advance may continue after valuations slipped to a two-year low.
Washington Times | RAHN: Regulators causing bank failures
Beware Greeks bearing debt - or any other country that has too much of it. Despite ever-increasing government regulation of banks, which often are required to hold government debt as reserves, the systemic risk of a failure in the global financial system is growing rather than diminishing.
WSJ | America's Troubling Investment Gap
For the first time in decades, America is on net losing, not attracting, growth capital.
Washington Times | EDITORIAL: Wasteful energy
Leftists shun Earth-friendly renewable power source that turns a profit.
Minyanville | How Dumping Strategic Petroleum Reserves Can Lead to a Rally in Oil
The market is expecting another shoe to drop in the oil market.

Blogs                                                                                                                             
Calculated Risk | Unofficial Problem Bank list at 1,003 Institutions and State Stress Level
Here is the unofficial problem bank list for July 1, 2011.
Econlog | The Right Amount of Manufacturing
In my latest Freeman column, I take on Huffington Post author Ian Fletcher on his claim that the United States doesn't have enough manufacturing. Some excerpts from my article:
Calculated Risk | Schedule for Week of July 3rd
Reis is expected to release their Q2 Office, Mall and Apartment vacancy rate reports this week. Last quarter Reis reported falling vacancy rates for apartments, rising vacancy rates for regional malls, and the first decline (small) in the office vacancy rate since 2007.
Daily Capitalist | Manufacturing: Following The Dollar
The ISM Manufacturing Index showed a modest gain in June, most likely reflecting some post-Tsunami inventory restocking. Exports were the main driver of the report, a result of a weak dollar for the past year. This is the 23rd month of growth in manufacturing .
WSJ | World-Wide Factory Activity, by Country
Global manufacturing slowed across the globe in June, with a global index produced by J.P. Morgan and Markit falling to a 23-month low, though it still remained in expansionary territory. The U.S. managed to buck the trend, notching a strong expansion.

Reports                                                                                                                         
NBER | Financial Literacy and Retirement Planning in the United States
We examine financial literacy in the United States using the new National Financial Capability Study, wherein we demonstrate that financial literacy is particularly low among the young, women, and the less-educated.
RCM: Wells Fargo | RCM: Wells Fargo Weekly Economic & Financial Commentary
Weaker-than-expected consumer spending and income growth for May are causing many economists to further scale back their consumer spending and GDP growth forecasts for the second quarter.

Health Care

News                                                                                                                             
Politico | Guide to health industries at risk in debt deal
Last year, health care industry groups gave President Barack Obama’s reform plan the support it needed to become law. Now, those same groups are sweating over what might happen in the debt ceiling talks — because their fortunes might be about to change.

Econ Comments                                                                                                             
Cato Institute | Entitlement Bandits -- How the Ryan Plan Would Curb Medicare and Medicaid Fraud
The budget blueprint crafted by Paul Ryan, passed by the House of Representatives, and voted down by the Senate would essentially give Medicare enrollees a voucher to purchase private coverage, and would change the federal government's contribution to each state's Medicaid program from an unlimited "matching" grant to a fixed "block" grant.

Blogs                                                                                                                             
Heritage Foundation | House Subcommittee: Obamacare Will Burden Small Businesses
To illustrate the magnitude of the new regulatory burdens on businesses, subcommittee chairman Joe Pitts (R–PA) displayed a stack of over 3,500 pages of Obamacare rules, notices, and regulatory guidance issued so far by the Administration. This additional burden, the hearing highlighted, will harm employers’ ability to offer health coverage and disrupt coverage for Americans across the country.

Taxes

News                                                                                                                             
WSJ | Deficit Talks Focus on Taxes
Democrats, GOP at Odds Over Raising Revenue as Negotiations Hit Critical Stage.
MarketWatch | Obama: U.S. can’t afford all corporate tax breaks
Indiana’s Coats says president’s economic policies have failed.

Reports                                                                                                                         
Tax Foundation | California Becomes Seventh State to Adopt "Amazon" Tax on Out-of-State Online Sellers
Beginning July 1, California's "Amazon" law goes into effect. Named after their most visible target, these laws deem an out-of-state company to be an in-state company for sales tax collection purposes if the company receives commissioned referrals from in-state resident "affiliates."

Monetary

News                                                                                                                             
WSJ | OECD Inflation Rate Surges
With the recovery still fragile in many developed economies, the response of central banks is likely to vary. The European Central Bank raised its key interest rate in April and has signaled it will do so again Thursday, but the Federal Reserve and the Bank of England aren't expected to match that move for many months.

Econ Comments                                                                                                             
Minyanville | Risk & Reward: Q2 Recap and Opportunities for Q3
Here, a trip through currencies, bonds, equities, and commodities to see where there might be profitable trading opportunities in the third quarter.

Budget

News                                                                                                                             
MarketWatch | China debt woes point to bank bailout
China’s banking system will require an eventual bailout by the central government, according to some analysts, who said figures released last week on the size of local-government borrowings point to the need for a rescue.
WSJ | Minnesota Shutdown Continues; GOP Meets at Capitol
Minnesota prepared for what could be a lengthy government shutdown, as the holiday weekend passed without Democratic Gov. Mark Dayton or Republican lawmakers returning to the bargaining table.
Bloomberg | Cornyn Says Republicans May Accept ‘Mini’ Deal on Raising U.S. Debt Limit
The idea may delay politically difficult decisions if it’s structured to postpone action on a larger package of spending cuts or revenue increases until after the 2012 election cycle, an analyst said.

Econ Comments                                                                                                             
FT | America and Europe sinking together
In Washington they are arguing about a debt ceiling; in Brussels they are staring into a debt abyss.
Daily Caller | Federal spending doesn’t work
Despite ongoing federal deficits of more than $1 trillion a year, many liberals are calling for more government spending to “create jobs.”
Cato Institute | Stealing from Future to Continue Borrowing
The negotiations must now be completed by those in the highest pay grades, including President Obama. But he has pledged not to increase taxes on 95 percent of Americans.

Blogs                                                                                                                             
Volokh Conspiracy | In Defense of the Debt Limit’s Constitutionality
The Honorable Michael McConnell responds to claims that the debt ceiling is unconstitutional and that Section 4 of the 14th Amendment authorizes the President to issue additional debt if necessary to meet existing debt obligations.
EconLog | Murphy to U.S. Government: Sell Assets
...there are many assets the federal government shouldn't own anyway and that now is an especially propitious time to sell them off. And the government doesn't even need to sell Yosemite.
Atlantic: McArdle | Debt Politics: The Lunatics Are Burning Down the Asylum
There is no scenario in which either the Republicans or the Democrats get to dictate terms and have everything their own way: all tax hikes, or all spending cuts.  As I keep saying over and over, you cannot have a policy plan that assumes the opposition party out of existence.
FT: The A-List | A default deal is not enough to fix America’s fiscal problems
As the equanimity in financial markets is signalling, some deal to avoid default will probably be cobbled together; the consequences for America and for the world of failing are just too great.

Employment

News                                                                                                                             
Fiscal Times | Unemployment Fraud: $17 Billion Last Year Alone
As much as 30 percent of the wrong payments in 2010 went to people who had returned to the workforce but continued to claim benefits, according to Dale Ziegler, deputy administrator for the Office of Unemployment Insurance at the U.S. Department of Labor.

Blogs                                                                                                                             
EconLog | Some Indications of Structural Unemployment
In manufacturing, it almost appears that employment and output are decoupled. Output can increase while employment declines or just edges up.
Calculated Risk | Some Employment Statistics
The key report for this week will be the June employment situation report to be released on Friday.