Monday, August 1, 2011

General Economics

News                                                                                                                             
Market Watch | Cloud over economy unlikely to lift in July
If the struggling U.S. economy is at a tipping point, the data for July is unlikely to provide a clear idea of whether the direction is up or down.
National Journal | Composition of Super Committee Will Be Key
A key component of the tentative deficit reduction debt-ceiling deal is the creation of a so-called super congressional committee – to be made up of six senators and six House members, with an equal number of Democrats and six Republicans.
Market Watch | U.S. stocks suffer worst week in a year
U.S. stocks slid Friday, sending two major indexes to their worst week in more than a year, as Congress prolonged the uncertainty over the nation’s debt ceiling.
WSJ | Why Canada Is Beating America
It shrank government, and now unemployment and debt are declining.

Econ Comments                                                                                                             
Minyanville | An Economy at Stall Speed
There is no way to spin the GDP report that came out last week as anything but very bad. Normally at this time in a recovery we are growing at a much faster clip.
Bloomberg | Manufacturing Weakens From China to U.K.
Manufacturing indexes from Asia to the U.S. to Europe fell in July as demand weakened and the global recovery from recession lost momentum.
Washington Times | EDITORIAL: Obama’s economic collapse
Rosy scenarios defeated by grim reality.
WSJ | Four Ways the Economy Could Grow -- or Shrink
It looked as if the pieces were finally coming together for the U.S. economy in 2011. Instead, they fell apart.

Blogs                                                                                                                             
WSJ: Real Time Economics | Number of the Week: China’s Population Bust
China’s era as the world’s go-to provider of inexpensive labor may be drawing to a close. Workers are demanding higher wages and low-end manufacturers in coastal areas have in recent years complained of labor shortages.
Calculated Risk | Schedule for Week of July 31st
The key report for this week will be the July employment report to be released on Friday, August 5th. The ISM manufacturing report will be released on Monday, and the ISM non-manufacturing report on Wednesday. Also the automakers report July vehicle sales on Tuesday.
Political Calculations | The U.S. Enters Into Microrecession
Last Friday, the U.S. Bureau of Economic Analysis revised its real GDP data going back to the start of the 2007 recession. Our animated chart below, created with the Make a GIF online app, shows what changed:
Calculated Risk | Problem Banks: Comparing Official and Unofficial Counts
For Q1 2011, the FDIC listed 888 institutions and $390 billion in assets (somewhat less than the unofficial list a month later). The FDIC Q2 2011 Quarterly Banking Profile will be released in a few weeks.
Source | Basic Economics for Financial Journalists and Other Dummies
In recent years, though, I’ve begun to realize that many people are accidentally sympathetic to the Keynesian government-spending-is-stimulus approach. They mistakenly think the theory makes sense because they look at GDP, which measures how national income is spent. They’d be much less prone to shoddy analysis if they instead focused on how national income is earned.
Calculated Risk | Unofficial Problem Bank list increases to 995 Institutions
After eight additions and six removals this week, the Unofficial Problem Bank List includes 995 institutions with assets of $415.4 billion.
WSJ: Real Time Economics | Vital Signs: Fewer Home Vacancies.
Fewer homes in the U.S. are sitting empty than earlier in the year. Residential vacancy rates ticked down during the second quarter from the first quarter as well as the year-ago period, to 9.2% for rental properties and 2.5% for privately owned homes.

Reports                                                                                                                         
RCM: Wells Fargo | Subpar Economic Growth Defines the Second Quarter
"The economy grew at a sluggish 1.3 percent in the second quarter after growing a mere 0.4 percent in the first quarter. Stagnation in personal consumption expenditures in the second quarter suggests that higher prices played a role in restraining consumer spending."

Health Care

News                                                                                                                             
National Journal | HHS Regulations Require Free Preventive Services for Women
HHS said in a statement on its website that private insurance plans will have to provide birth control, cervical exams, breast exams, and other preventive services to women. Religious institutions may opt out of covering contraceptive services for employees.
Politico | Health care reform key to debt crisis
At the heart of the gridlock is a deep disagreement over the role that out-of-control government spending plays in our current predicament — and nowhere is this disagreement more strongly expressed than in the debate over the government’s role in health care.

Econ Comments                                                                                                             
Politico | U.S. health care system fails to deliver
Improving care and lowering costs are at the heart of the Affordable Care Act. As a pediatrician, as a patient and now as administrator of the Centers for Medicare & Medicaid Services, I have seen our health care system both at its best and at its worst. We know that system that we want — and with the ACA, we can have it:
Politico | Health care reform's poor prognosis
Last year’s health care reform law may have a green yard and some flowers planted in the front, but the deeper we look into it, the worse it looks. Over the past six months, the House Energy and Commerce Committee has been conducting a thorough appraisal of health care reform, and it looks as if the country has been sold a lemon.

Blogs                                                                                                                             
Heritage Foundation | CMS Projections Confirm Runaway Health Care Spending
Runaway spending has overtaken the United States health care system and is on the rise. More notably, the study confirms Obamacare does not “bend the cost curve” but only increases government’s share of spending in the health care system instead.

Monetary

News                                                                                                                             
Bloomberg | Asia’s Economic ‘Soft Patch’ Jars With Inflation, Posing Dilemma on Rates
Asian manufacturing is cooling even as accelerating inflation puts pressure on officials to keep tightening monetary policy, adding to headwinds for the global economy after recoveries faltered in the U.S. and Europe.

Econ Comments                                                                                                             
NYT | What’s With All the Bernanke Bashing?
Critics on the left look at the depth of the recent recession and the meager economic recovery we are experiencing and argue that the Fed should have done more. They fear that the United States might slip into a long malaise akin to Japan’s lost decade, in which unemployment remains high and the risks of deflation deter people from borrowing, investing and returning the economy to its potential.
Minyanville | Q2 GDP Reveals Continued Stagnation
By all measures, the economy is stalling out and prices are rising.

Blogs                                                                                                                             
Free Banking | More on free banking and the historical gold standard
Jon Catalan and David Glasner made comments about my post on free banking and the historical gold standard that are worth responding to, so here are some further thoughts on the subject.

Reports                                                                                                                         
Cato Institute | Capital Inadequacies: The Dismal Failure of the Basel Regime of Bank Capital Regulation
The Basel regime is an international system of capital adequacy regulation designed to strengthen banks' financial health and the safety and soundness of the financial system as a whole.

Taxes

Econ Comments                                                                                                             
Washington Times | GRATZER: Fat taxes go over like a lead ballon
Research shows obese more responsive to incentives than penalties.

Blogs                                                                                                                             
Cato@Liberty | Deconstructing the Revenue Side of the Debt-Ceiling Deal: Yes, There’s a Real Threat of Higher Taxes
The fighting we’re seeing today revolves around a “super-committee” that’s been created to find $1.5 trillion of additional “deficit reduction” over the next 10 years (based on Washington math, of course).

Budget

News                                                                                                                             
NY Times | In World’s Eyes, Much Damage Is Already Done
Even before negotiations went down to the wire on Sunday night, the bitterness, division and dysfunction that resounded around the world in recent weeks as the United States veered toward default did more than just fuel a perception that Washington is approaching Japan-like levels of political gridlock.
Source | Downgrade of U.S. Debt Amounts to Only Few Basis Points in Ratings History
As the prospect for the loss of the U.S.’s AAA credit rating approaches and congressional leaders agree on a pact to avert default, bonds and currencies are signaling increasing demand for the assets of the world’s largest economy.
NY Times | Opposing the Health Law, Florida Refuses Millions
While 36 states shared $27 million to counsel health insurance consumers, Florida did not apply for the grants. And in drafting this year’s budget, the Legislature failed to authorize an $8.3 million federal grant won by a county health department to expand community health centers.
WSJ | An Agreement Is Struck, but the Deficit Isn't Solved
The firmest piece of the deal to which congressional leaders of both parties and the Democratic president agreed Sunday is a 10-year cap on annually appropriated spending for domestic and defense programs.

Econ Comments                                                                                                             
WSJ | A Tea Party Triumph
The debt deal is a rare bipartisan victory for the forces of smaller government.
WSJ | Why Canada Is Beating America
It shrank government, and now unemployment and debt are declining.

Blogs                                                                                                                             
Forbes: Political Economy | The Small Government Establishment Joins the Establishment
What’s funny about a 40% reduction is that far from draconian or painful as both the big and small government wings would like us to believe, such “austerity” would simply bring us back to 2006 Bush era levels of spending.
Heritage Foundation | Scribecast: Sen. Mike Lee on the Need for a Balanced Budget Amendment
Sen. Mike Lee (R-UT) is a man on a mission. The freshman senator came to Washington after defeating an incumbent Republican, angering some in the GOP establishment but exciting Tea Party activists for his desire to end Washington’s reckless spending.
Atlantic: McArdle | A Few More Charts That Should Accompany All Debt Ceiling Discussions
In fact, most of what's driving our current deficits is the economy, and the onrushing retirement of the Baby Boomers.  Those are the things that are changing rapidly, not the size of the Bush tax cuts.

Reports                                                                                                                         
Mercatus Center | The Real Debt Crisis: What Can Be Done?
The specter of a credit downgrade looms, and it is frightful. A downgrade threatens to push interest rates higher, making it more difficult for consumers to borrow, for businesses to hire, and for the economy to grow.

Employment

News                                                                                                                             
CNN Money | Community colleges step in to fill 'skills gap'
Companies are helping schools design their curriculum, providing more internships for students, and in some cases, even helping the cash-strapped schools finance their programs and pay their teachers.

Econ Comments                                                                                                             
Minyanville | The Futility of the Great American Job Search
The great American job search in the Information Age amounts to a considerable waste of time, energy, and resources -- especially in a dire economy.

Blogs                                                                                                                             
Heritage Foundation | Members of Congress Earn Big Salaries and Fringe Benefits
Even if you compare Members of Congress to more educated, private sector employees, they’re still doing pretty well—those Americans earn on average $83,000 per year according to the Bureau of Labor Statistics.