Tuesday, August 2, 2011

General Economics

News                                                                                                                             
Bloomberg | Consumer Spending in U.S. Fell in June
Purchases declined 0.2 percent after a 0.1 percent gain the prior month, Commerce Department figures showed today in Washington.
Politico | Energy programs prepare for debt deal pain
Popular energy and environmental programs should prepare for a decade of spending cuts under the debt deal reached late Sunday between the White House and congressional leaders.
CNBC | The Global Recovery Is Over': Siemens CEO
Siemens, the German engineering and power giant, on Thursday posted third-quarter earnings that missed analyst forecasts blaming a slowdown in the global economy for the drop in profits.

Econ Comments                                                                                                             
Washington Times | BLANKLEY: Status quo shrugs off urgency - again
Timid establishment chooses incrementalism over saving the future.
Politico | AAA credit but junk bond politics
What if there’s another recession? That’s still a threat, even if the debt deal passes. If the recession starts while Barack Obama is president, it would normally be called “the Obama recession.”
WSJ | Excessive Optimism and Other Economic Biases
No president, chairman of the Council of Economic Advisers, Secretary of the Treasury, or chairman of the Federal Reserve has ever forecast a recession.
Washington Times | FEULNER: Time for a red-tape rescue
Jettisoning useless rules can keep economy from flat-lining.
CNN: Money | The start-up law of comparative advantage
Applying macro economic theory to the start-up environment.

Blogs                                                                                                                             
Political Calculations | Will the Microrecession Grow Into a Full Blown Recession?
To find out, we applied our forward-looking GDP forecasting tool to project where GDP will likely be in the third quarter of 2011. The chart below illustrates our results:
Café Hayek | Bloody Keynesians
Paul Krugman, reinforces the impression that I’ve always had of Keynesian economics and continue to have to this day: it mistakes a symptom for an underlying problem and then proposes to treat the symptom.
Atlantic: Megan McArdle | The Coming Intra-Party Wars
Me, I'd like a single entitlement system that takes care of people who are actually destitute and unable to work, not this mad scheme whereby America's middle class is supposed to get rich by picking its own pockets.
Daily Capitalist | The Global Manufacturing Slowdown
The global community is learning that you actually have to produce something to make an economy grow. That is, you can’t grow by debt alone. And to grow you need capital, real capital, not just pieces of paper printed by some monetary authority.
Atlantic: Megan McArdle | The Power of Political Narrative
One of the frustrating things about the debt ceiling debate has been dealing with the competing narratives spun by those supporting the various positions. It isn't that these narratives are necessarily wrong, but that the people offering them present them with the confidence of someone describing settled history, rather than one possible way (and often far from the most likely way) that events could play out.

Reports                                                                                                                         
Heritage Foundation | High on Ozone: The EPA’s Latest Assault on Jobs and the Economy
The U.S. economy won a temporary reprieve with the Environmental Protection Agency’s (EPA) announcement last week that new ozone standards, which had been slated for this summer, will be delayed. The EPA’s “reconsideration” of the ozone standards it set in 2008 and issuance of more stringent standards violate all three of the fundamental values EPA Administrator Lisa Jackson pledged to honor: “science-based policies and programs, adherence to the rule of law, and overwhelming transparency.”
RCM: Wells Fargo | ISM Manufacturing: Slowdown in the Train, Easing Prices
U.S. manufacturing continues to expand with evidence of gains in output and employment, but the pace has clearly slowed. Meanwhile, the moderation of prices paid suggests some moderation of inflation ahead.

Health Care

News                                                                                                                             
Market Watch | Medicare fears ripple out to health insurers
Heavy cuts in Medicare payments to nursing-home operators, plus a lingering concern over Medicaid reductions, cast managed-care stocks down by wide margins Monday.
Politico | Medicare providers face cuts
Physicians, home health practitioners and other providers could see an additional 2 percent pay cut on top of double-digit Medicare reductions already slated for 2012 under the debt ceiling deal reached by the White House and congressional leaders late Sunday.
CNN: Money | What health care reform is (and isn't) doing now
Here are answers to common questions about what health care reform is doing right now.
National Journal | HHS Will Require New Insurers to Foot Costs for Birth Control, Domestic Counseling
The Health and Human Services Department accepted a slate of controversial recommendations for women’s health care on Monday, issuing new regulations that will require health insurers to pay for birth-control services, breastfeeding support, and domestic violence screening and counseling.
WSJ | The Soaring Public Health Tab
Government pension liabilities have been in the news, but an even more urgent problem is the skyrocketing cost of health benefits. That's the gist of a new study by Josh Barro of the Manhattan Institute which finds that health-care costs for local and state governments have tripled in 15 years, outpacing the growth in private insurance premiums by about 20%.

Blogs                                                                                                                             
Heritage Foundation | Could Britain’s Health Care Rationing Come to the States?
Unfortunately, under current law, Obamacare could lead to a health care system similarly plagued by long waits and reduced access to services.
NRO: The Corner | Cadillac Coverage: The High Cost of Public Employee Health Benefits
Now that we can pretend for a few weeks that we are done with the federal debt deal, it’s time to look at the looming debt crisis in the states: public employees’ health costs.
Heritage Foundation | Cost Shifting on the Increase under Obamacare
In a recent article in Health Affairs, health economist James Robinson reveals that in areas where hospitals consolidate and enjoy a larger market share, providers are more likely to charge higher prices, as low competition gives them a monopoly in delivering patient care in the regio.

Monetary

News                                                                                                                             
Bloomberg | Fed May Weigh More Stimulus on Slowing Recovery
Federal Reserve policy makers may start weighing additional steps to prop up the recovery after growth fell below 1 percent in the first half of this year and economists began cutting second-half growth forecasts.
Bloomberg | Yen’s Surge Threatens to Wipe Out Japan’s Recovery From Quake
The yen’s biggest monthly advance since 2008 is threatening profits of exporters from Nissan Motor Co. to Sony Corp., endangering the nation’s rebound from March’s record earthquake.
Market Watch | Safe-haven Swissie soars on euro and dollar
The Swiss franc stole the show in currency markets Tuesday, soaring to a record high on the euro and trading against the U.S. dollar near an all-time high as global growth worries and debt concerns on both sides of the Atlantic fueled safe-haven flows.
WSJ | OECD Inflation Rate Eases
The annual rate of inflation across developed economies eased in June, the first decline since November 2010. If sustained, that drop in the inflation rate should make the job of policy makers easier. They had faced a difficult balancing act, with commodity prices surging even as the economic recovery remained fragile.

Blogs                                                                                                                             
Marginal Revolution | Why I am more pessimistic about the euro than are most people
Imagine if the FDIC weakened or eliminated its deposit guarantees to regional banks, once those regions started experiencing some economic troubles.  That’s the parallel situation in Europe.  If sovereign debt isn’t secure, how can the guarantees of those sovereign states to their banking systems be secure?  And then why should non-guaranteed banking systems recover?

Taxes

Reports                                                                                                                         
Mercatus Center | The Relationship Between Taxpayers and Tax Spenders
Does a Zero Tax-Price Matter?

Budget

News                                                                                                                             
NY Times | States and Cities Brace for Less Federal Money
Mayors, governors and state lawmakers spent Monday trying to measure how much the deficit deal might cost them in aid, a frustrating task given the fact that many of the details of the reductions in federal spending will not be known until later in the year.
WSJ | Uneasy House OK's Debt Deal
Both Parties Find Fault With Bill; Senate to Vote Tuesday.

Econ Comments                                                                                                             
Washington Times | RAHN: Democracy’s spending curse
Buying voter support with taxpayer funds inevitably ends in ruin.
Washington Times | BLANKLEY: Status quo shrugs off urgency - again
Timid establishment chooses incrementalism over saving the future.

Blogs                                                                                                                             
Heritage Foundation | Even the Fakery is Fake: Joint Committee is Not Required to Recommend $1.5 Trillion in Deficit Reduction
The “Budget Control Act of 2011″ (BCA) contains provisions for a joint committee of Congress, whose supposed job it is to make recommendations to reduce the deficit by $1.5 trillion.
Atlantic: McArdle | In Defense of the Debt Ceiling Deal
So, the debt deal.  Basically, it's a small increase in the debt ceiling, and a small basket of spending cuts, combined with a large future increase in the debt ceiling, and a larger round of future . . . something.
Café Hayek | The power of the polemical
There is no evidence that the deal slashes spending. There isn’t any evidence that it cuts it. It might cut the rate of growth. We’ll see.
Kids Prefer Cheese | Rhetoric vs. Reality
"The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent."
EconLog | Compared to What?
I think it is reasonable to worry that the spending levels in this plan will become a floor rather than a ceiling.
ThinkMarkets | Spending Cuts and Politics of Bureaucracy
Professor Tullock derives his insights from the basic observation that when embedded in an administrative hierarchy that is supposed to serve some – typically vague – public interest, people remain individuals; they still have their own preferences and interests.
WSJ: Real Time Economics | Reactions to the Debt Deal
Some people love the debt deal, some people say it goes too far, and some people say it doesn’t do enough.
Reason: Hit & Run | The Debt-Ceiling Debate is Dead! Long Live the Debt! Or, Will ObamaCare Cover What Krugman's Smoking?
In fact, the real reason to be bothered by the whimper with which the debt-ceiling squabble seems to be ending is this: It doesn't address the real issue, which is the debt load of the country.
NRO: The Corner | The Trigger and the Debt-Ceiling Deal
In fact, by 1990, it became very clear that Congress had put into place so many loopholes and exempted so much spending from sequestration that the entire framework was falling apart.

Reports                                                                                                                         
Heritage Foundation | A Dangerous Debt Ceiling Deal
The deep cuts in defense spending envisioned in the just-announced debt ceiling deal raise a fundamental question for Americans: Will we let a deal stand that promises to end American security as we know it?

Employment

News                                                                                                                             
Bloomberg | Barclays Cuts 3,000 Jobs on Revenue Hit
The bank has already cut 1,400 of the positions this year, Chief Executive Officer Robert Diamond, 60, told reporters after Barclays Capital reported a 27 percent decline in pretax profit to 1.42 billion pounds ($2.31 billion) in the three months to June 30.
WSJ | U.S. to Assist Immigrant Job Creators
Among the initiatives is a plan to make it easier for some foreigners to qualify for legal permanent residence, or green cards, if they can demonstrate their work will be in the U.S. national interest. The changes will also include a way for entrepreneurs to obtain work visas without a job offer from an established company.

Reports                                                                                                                         
NBER | What Explains the German Labor Market Miracle in the Great Recession?
Germany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss.