Wednesday, July 6, 2011

General Economics

News                                                                                                                             
Bloomberg | U.S. Housing Recovery Stymied by Government
While a record share of Americans want to buy homes, U.S. policies, often working at cross-purposes, are making it more difficult. Government-controlled Fannie Mae and Freddie Mac have boosted standards so high that some people previously considered prime borrowers no longer qualify.
WSJ | OECD Growth Steady
Developed economies grew at an unchanged rate in the first quarter of 2011, although a decline in the contribution from consumer spending and a rise in the contribution from stock building pointed to weakness ahead.
USA Today | Foreign buyers lifting U.S. home sales
Foreign buyers are helping to stoke home sales in U.S. vacation hot spots decimated by the real estate crash, especially in southern Florida.
CNN: Money | The hidden costs of fuel economy regulations
They are at it again -- the government and the automakers are trying to determine what's good for American car buyers. As usual, they have the right destination in mind, but they are heading in the wrong direction to get there.
Fox News | White House Disputes Study Saying Stimulus Cost Taxpayers $278,000 Per Job
The report released by the president's Council of Economic Advisers late Friday ahead of the July 4 holiday weekend estimated the Recovery Act saved or created between 2.4 million and 3.6 million jobs by the end of March 2011. Spending equaled $666 billion by that time.
Politico | State budgets are set to cause strain on the economy
To make ends meet, Arizona will drop Medicaid coverage for 130,000 childless adults. Michigan will slice public school funding by $470 per student. New York will reduce education aid by $1.3 billion. Wisconsin plans to chop into the Earned Income Tax Credit, which hurts household budgets of the working poor.

Econ Comments                                                                                                             
WSJ | Inside the Disappointing Comeback
Two years ago, officials said, the worst recession since the Great Depression ended. The stumbling recovery has also proven to be the worst since the economic disaster of the 1930s.
Market Watch | The next, worse financial crisis
The last financial crisis isn’t over, but we might as well start getting ready for the next one.
WSJ | Overcaffeinated CAFE
Obama's crusade to increase automobile fuel-economy standards makes little economic sense—and it won't save the planet.
AEI: American | Housing Finance: For Once, Please Leave It Alone
The housing sector is not well. Politicians to the rescue?
Daily Caller | What would the founders do about welfare?
In the early days of the American experiment, local governments — not the feds — assumed this responsibility. But there was careful emphasis that “poor laws not go beyond a minimal safety net,” West notes, and that aid be provided only on the condition of labor. Only the truly helpless, those “who had no friends or family to help, were taken care of in idleness.”
AEI | How Effective Was the 2009 Stimulus Program?
No doubt that there were some worthy ARRA projects, and some dollars that were well-spent. But when a bureaucracy and political culture so thoroughly internalize the idea that spending, any spending, is "better than nothing," the result is broadband lines at $7 million a pop.

Blogs                                                                                                                             
Café Hayek | Down is Not Up
Here’s Mark Perry’s take on David Brooks’s belief that, to quote Brooks, it’s among America’s “problems” that “[m]anufacturing employment is cratering even as output rises.” (We might cite also Pres. Obama’s concern that technologies such as ATMs ‘destroy’ jobs.)
Econlog | PSST and Aggregation
I think that economic activity consists of taking advantage of specialization and trade. When you work in the market, you are doing a relatively narrow, specific job in order to be able to consume a remarkable variety of goods and services that would be much harder for you to provide for yourself.
Economics One | No, A Bigger Stimulus Would Not Have Worked Either
As early as the summer of 2009 it was clear that ARRA was not working as intended, as John Cogan, Volker Wieland and I reported. Research since then has uncovered the reasons why. One reason is that very large stimulus grants to the states did not go to infrastructure spending as intended, and that’s what Ned Gramlich found out about Keynesian stimulus packages thirty years ago.

Reports                                                                                                                         
RCM: Wells Fargo | Factory Orders Nearly Offset April’s Decline
Factory orders climbed 0.8 percent in May, nearly offsetting April’s upwardly revised 0.9 percent decline. Manufacturing orders appear to be bouncing back following the Japan earthquake and tsunami shock.

Taxes

News                                                                                                                             
WSJ | A Debt-Limit Breakout
Republicans should call Obama's bluff on tax increases.

Health Care

News                                                                                                                             
National Journal | NYT: Medicare and Medicaid Could See $340 Billion in Cuts in Debt-Limit Deal
Talks between the White House and Republicans came to a halt two weeks ago, even though they agreed to make cuts on Medicare and Medicaid. In a news conference last week, Obama said the administration needs to “see where we can reduce the cost of health care spending and Medicare and Medicaid in the out years.”
National Journal | CMS Proposes Rule to Address Medicare Payment Problems
The Centers for Medicare and Medicaid Services have introduced proposed rules to deal with potentially the largest Medicare payment cut to doctors, and CMS Administrator Donald Berwick says it's time to make the "doc fix" permanent.

Blogs                                                                                                                             
AEI: American | Are U.S. Doctors Overpaid? Health Care Fact of the Week
According to recently released data from the Bureau of Labor Statistics, medical and dental professions now account for 14 of the 15 highest paid occupations in the United States (measured in terms of annual income). Put another way, of nearly 800 occupations surveyed, doctors and dentists were at the top of the list. In contrast, chief executive officers ranked ninth. Does this mean U.S. doctors are overpaid?
Political Calculations | Visualizing the Growth of Complexity in Medicare
We see that over time, more and more pages have been required to "explain Medicare", although the real explosion in the government program appears to have taken place since 2007.
Heritage Foundation | DeMint Bill Expands Seniors’ Health Care Freedom
Senator Jim DeMint (R–SC) and 12 of his Senate Republican colleagues recently introduced the Retirement Freedom Act. The bill would allow senior citizens to buy a better health plan than traditional Medicare, if they wish to do so, without having to give up their Social Security benefits.

Monetary

News                                                                                                                             
WSJ | Developed Nations See a Jump in Inflation
Consumer prices in developed economies rose in May at the fastest pace since October 2008, driven by energy and food inflation, and big price jumps in Canada and the U.S.
Financial Times | China raises interest rates to 6.56%
China has raised interest rates for the fifth time in eight months, indicating that the country’s leaders are still focused on taming inflation, despite evidence that the world’s second-biggest economy is slowing.

Blogs                                                                                                                             
Heritage Foundation | Consumers Lose, No One Happy, with Final Fed Swipe Fee Regulations
Splitting the difference does not improve bad policy. The final regulations adopted this week by the Federal Reserve Board to impose price caps on “swipe fees” paid by merchants when customers use debit cards to pay for purchases will still hurt consumers.
Minyanville | With QE2 Dead, Are We Staring Down a Bull or Bear?
Quantitive Easing II is over, but is the economy ready to stand on its own two feet? Here, an investigation of possible scenarios.

Budget

News                                                                                                                             
WSJ | Moody's Warns on China Debt
Moody's Investors Service said China's main government auditor may have understated banks' loans to local governments by half a trillion dollars, escalating the ratings firm's warnings that the scale of such loans could pose a threat to China's banking system.‬
Washington Times | Obama prods Congress on debt deal
Calls on Hill to ‘do something big,’ sets White House talk with leaders.
Bloomberg | Bank Regulators Need Power to Close Failing Institutions, Basel Group Says
Bank regulators need greater powers to close failing banks in an orderly fashion so that taxpayers don’t have to bear the costs of rescuing lenders during a crisis, global regulators said.

Econ Comments                                                                                                             
Politico | Clinton budget bind, the sequel
Sixteen years ago this summer, a Democratic president found himself on the political defensive.
FT | Moment of truth for the eurozone
The biggest question in any debt crisis is whether a credible path back to solvency can be found.
Washington Times | MILLER: Make the debt talks public
Taxpayers deserve a seat at tax-and-spend negotiation table.
WSJ | A Debt-Limit Breakout
Republicans should call Obama's bluff on tax increases.
Daily Caller | Why California Democrats crafted a fiscally conservative state budget
Last week, Democrats in the California Legislature sealed a budget deal with Democrat Governor Jerry Brown.

Blogs                                                                                                                             
Atlantic: McArdle | What Can the Treasury Legally Do if the Debt Ceiling Isn't Raised?
Maybe we just hack 40% off every single expenditure.  Or maybe we have a constitutional crisis.
Mercatus Center: Neighborhood Effects | Governor Christie’s pared down budget
The Star Ledger reports that Governor Christie, “took an axe” to the state’s budget and “slashed $900 million in a budget he blasted as ‘unconstitutional.’”
Atlantic: McArdle | GOP Base: Spending Cuts Now, or Never
One thing that I hear over and over from my conservative interlocutors on the budget is that they need spending cuts right now because they just don't trust the Democrats (or indeed the Republicans) to make spending cuts in the future.

Employment

News                                                                                                                             
CNN Money | Challenger report: More job cuts ahead
As the economic recovery continues to lose momentum, more job losses are on the horizon for thousands of Americans, according to a report released Wednesday.
MarketWatch | June U.S. jobs data could be made in Japan
Report to shed more light on whether slowdown is temporary.
USA TODAY | Jobs in post-recession USA demand multiple skills
At a General Motors plant here, transmission assembly looks a lot like musical chairs.
WSJ | Jobs Study Is Too Late for Debate on Trade
As a divided Congress moves closer to a decision on three big international trade pacts, the Labor Department is four years late in delivering a study that is supposed to measure the efficacy of a program to provide extra benefits to workers who lose their jobs through globalization.

Econ Comments                                                                                                             
Washington Times | MILLOY: Last chance for GOP to stop EPA train wreck
Obama’s greenhouse-gas regulations about to kill more jobs.
Bloomberg | Job Gains in Private Sector Are Illusory for U.S.: Alan Tonelson
As bad as the U.S. employment picture looks, the official Labor Department figures understate the magnitude of the crisis.

Blogs                                                                                                                             
Café Hayek | Unemployment and education
...the unemployment rate for high school dropouts instead of being four or five percentage points higher than that of people who have at least a college degree–it’s now more like TEN percentage points higher.
The Weekly Standard | Obama’s Economists: ‘Stimulus’ Has Cost $278,000 per Job
The stimulus is now causing the economy to shed jobs.

Reports                                                                                                                         
Heritage Foundation | Years of High Unemployment Ahead at Recovery’s Pace
Despite the official end of the recession in June 2009, the labor market remains stagnant. Employment has fallen by nearly 7 million jobs since the recession began.