Wednesday, August 3, 2011

General Economics

Bloomberg | Panel Sees Odds of U.S. Recession Rising
The two-year-old U.S. recovery’s staying power may be diminishing as consumers and the government pare spending, say five of the nine economists on the academic panel that dates recessions.
National Journal | Moody's: U.S. to Keep its AAA Rating
The agency said that the Budget Control Act, which President Obama signed into law on Tuesday afternoon, provides for the "long-term fiscal consolidation needed to maintain the U.S. government debt metrics within Aaa parameters over the long run."
Bloomberg | Shipping Boom Seen for U.S. Ports Catering to Japan Needs: Freight Markets
“Demand will start to pick up in the second half and it will probably last for a year or two,” said Hakan Ekstrom, president of Wood Resources International. “Weyerhaeuser, since they are a huge company and they have long, long relations with Japanese companies, will benefit.”
Fox News |
Energy in America: New Liquid Fuel Faster, More Efficient -- and Greener, Too

With a little help from genetic engineering, researchers at one Massachusetts company say they've created an organism that takes sunlight, water and carbon dioxide and creates liquid fuel.
WSJ | Consumer Pullback Slows Recovery .
With consumers slowing spending on everything from restaurants to tax-preparation services, economists have begun downgrading forecasts for faster growth in the second half.
NYT | AAA Rating Is a Rarity in Business
More and more, in fact, companies have found that a AAA credit rating is not something worth aspiring to if a more conservative approach means lower profits.
WSJ | Economic Fears Hit Global Markets
Worries about the global economy rippled through financial markets on Tuesday, driving down share prices from Tokyo to New York and placing new strains on Spanish and Italian bonds.

Econ Comments                                                                                                             
WSJ | Another Crisis Wasted
The truth is, we can't bind future presidents and Congresses by telling them what benefits to pay or what resources will be available to pay them. Cutting benefits for those not yet born or far from retirement, as much as this has been the rich world's preferred way of dealing with its fiscal challenges, is a bit of an empty gesture.
Minyanville | Economic Issues Remain in Wake of Debt Resolution
The 11th hour agreement by the US government is unfortunately not where the story ends.
CNN: Money | The U.S. economy needs to break its stimulus habit
Despite what various politicians and experts say, real productivity gains and real economic growth do not come from stimulus.
RCM | Heading For a Double-Dip Recession?
A day after purchasing managers reported an "unexpected" slump in manufacturing, another surprise report shows consumer spending falling for the first time in nearly two years. Double dip, anyone?
WSJ | Stimulus Optimists vs. Economic Reality
Financial crises create long periods of slow growth, for which increased spending isn't the solution.

WSJ: Real Time Economics | Secondary Sources: Paychecks, Debt Deal, Middle Class Pain.
A roundup of economic news from around the Web.
Atlantic | The 4 Scariest Economic Graphs I've Seen This Year
This is a remarkable sequence of pictures from Calculated Risk showing that no major economic indicator has returned to its pre-crisis level. In other words, after two years of recovery, not a single key broad measure of the economy has actually recovered.
WSJ: Real Time Economics | Consumer Bankruptcies Drop.
Consumer bankruptcies declined 5% in July, from a month earlier, the latest in a series of signs that the worst of the bankruptcy-filing boom has passed.


WSJ | Amazon Battles States Over Sales Tax Inc., the world's largest online retailer, hasn't charged sales tax in most states since its founding in 1994. And it has taken some extreme measures to keep it that way.

Econ Comments                                                                                                             
Washington Times | EDITORIAL: Unplug the Internet tax
Congressional Democrats scheme to prop up state spending with online levies.
Politico | A will without a way for tax reform
President Barack Obama and fellow Democrats are still eager to trim the budget deficit by closing tax loopholes for the corporate jet set, but the bipartisan debt ceiling deal pushed through Congress will most likely complicate the efforts.
MarketWatch | Geithner: Tax hikes back on table
U.S. Treasury Secretary Tim Geithner said in an editorial that lawmakers may look at ways to raise revenue in the wake of a debt-cutting deal that focuses solely on trimming spending.
CNBC: NetNet | It's Time For Paul Krugman to Support Tax Cuts
Even if Americans just used the extra money from the tax cut to deleverage, we'd at least be helping the economy move out of the balance sheet recession faster.

Health Care

National Journal | New Committee, Same Old Health Cost-Cutters
The debt-ceiling deal signed by President Obama on Tuesday has locked a brand-new procedure for government savings in place. But when it comes to cutting health care costs, the as-yet-unnamed members of the deficit committee will have little choice but to use the same Medicare and Medicaid cost-savers that have been floating around for months.
WSJ | Debt Deal May Hit Medicare .
Medicare beneficiaries escaped direct cuts in Washington's debt deal, but the agreement could eventually hit seniors and disabled Americans who rely on the program for medical coverage.

Econ Comments                                                                                                             
LA Times | Debt ceiling deal ignores real driver of deficits: healthcare costs
Participants in the debt ceiling debate placed the spotlight on programs with a barely measurable impact on the deficit and put off to the indefinite future the things that really matter.

Heritage Foundation | Make Obamacare Accountable to the American People
In recent Heritage research, Boston University law professor Gary Lawson describes the shortcomings of the current informal rulemaking process, in which bureaucrats use power delegated to them by law with little oversight or accountability. Using Obamacare as his prime example, Lawson writes:
Heritage Foundation | Women’s Preventive Services: A Slippery Slope to Higher Health Care Costs
HHS issued regulations last July on the preventive measures that insurers must cover with no cost-sharing, but as part of the new law, the agency was to review preventive services specific to women’s health and could include further guidelines, which were issued yesterday.

Heritage Foundation | HHS’s New Health Guidelines Trample on Conscience
The Department of Health and Human Services’ (HHS) new preventive services guidelines are a disaster for freedom of conscience and a fresh illustration of the political hammerlock “reproductive rights” organizations have on the Obama Administration.


Econ Comments                                                                                                             
RCM | We Need a Gold Standard Now
Monetary policy in Washington - and it is done in Washington - is completely cock-eyed and broken. We are in the third year of a zero interest rate regime. Now that sounds good -- it was something that was supposed to get us out of that horrible economic crisis we were in. What could be better than very cheap money; essentially being able to borrow money for nothing?
Forbes | The Downside Of Monetary Easing
One of the overlooked consequences of the Federal Reserve's recent monetary stimulus initiatives has been the adverse impact those policies have had on interest income. The abnormally low interest rates created by the Fed have made life particularly difficult for retirees and others who depend on income from interest-sensitive investments.

Daily Capitalist | World Inflation Is Up; GDP Down
The OECD, the consortium of 34 nations, are experiencing price inflation in the face of economic downturn.


CNN Money | Spending cuts: Here comes the hard part
Congress cut spending, but still has to decide which programs and agencies will receive less money.
Washington Times | U.S. debt deal alone won’t sustain AAA rating
The U.S. averted a debt default Tuesday when President Barack Obama signed a bill raising the country’s debt ceiling. But the debt deal might not be enough to maintain its coveted AAA debt rating, according to two credit rating agencies.
WSJ | Deficit Battle Shifts to Panel
The Senate approved—and President Barack Obama immediately signed—the long-awaited deal to raise the nation's debt limit Tuesday, as the battle shifted to how a special committee created by the measure will cut the deficit by $1.5 trillion.
NY Times | Worries Rise Over Spain and Italy Debt
Just as European markets seemed to resume their normalcy after the tumult of their sovereign debt crises, the wolves are back at the door.
WSJ | Moody's, Fitch Affirm U.S.'s Triple-A Rating
Moody's Investors Service confirmed its Aaa rating on the U.S. but maintained a downbeat outlook, saying more progress is needed for the government to shrink its fiscal deficit.

Econ Comments                                                                                                             
Washington Times | DE BORCHGRAVE: Unthinkable is reality
Dysfunction reigns in U.S. policies at home and abroad.
National Journal | 'Not a Solution' or 'A Good Result'? Lawmakers, Officials Sound Off on Debt Compromise in Op-Eds
With a compromise deal to raise the debt ceiling and reduce the deficit signed into law, a handful of politicians and officials took to op-ed pages Wednesday morning to weigh in on the deal, the process, and the future of the nation's economy. Here's a roundup of what was written.
NY Times | A Crisis Merely Postponed
LAST month, President Obama and Congressional leaders came close to an agreement that could have set our nation on a sound fiscal path, only to see deal after deal, compromise after compromise, collapse.
RCM | A Debt Opportunity Deferred, Not Entirely Lost
Fortunately, the opportunity to tackle this problem hasn't been lost, only deferred. The new law gives Republicans and Democrats the tools they need to address the fiscal imbalance later this year, if they can find the courage and flexibility to use them.
AEI | The Debt Ceiling Deal: Kicking the Can Down the Road
It offers fiscal half-measures at best, setting the country up for a replay of this year's contentious debate in 2013, and it forecloses serious policy consideration of reforms needed to put Medicare on a sustainable fiscal path.

Cato@Liberty | Debt Deal to Slow the Economy?
The Washington Post reports that spending cuts in the budget deal threaten to slow the economy. The article quotes a number of economists who seem to harbor a rather extreme Keynesian bias in their thinking.
Volokh Conspiracy | The Debt Deal and Divided Government
If nothing else, the deal provides additional evidence in support of the proposition that divided government reduces the growth of the state, and makes deregulation and spending cuts more likely.
Daily Capitalist | Market Sees Through Budget “Solution”
While politician are congratulating themselves today (Senate Majority Leader Harry Reid: ”Our country was literally on the brink of disaster.”), the markets weren’t fooled by their hyperbole and the Dow declined 2.19% (265 points) and the S&P dropped 2.56%.
NRO: The Corner | What’s Missing from the Debt Deal: Entitlement Reform
Under current law, CBO projects that spending on Social Security and major health care programs — mainly Medicare, Medicaid, Children’s Health Insurance Program — would be 12.2 percent of GDP in 2021; a 70 percent increase relative to the historical average.

CBO | CBO Analysis of August 1 Budget Control Act
The Congressional Budget Office (CBO) has estimated the impact on the deficit of the Budget Control Act of 2011, as posted on the Web site of the House Committee on Rules on August 1, 2011.


MarketWatch | Private-sector jobs up 114,000 in July, ADP says
Payrolls at U.S. companies increased by a tepid 114,000 in July, suggesting modest job growth continued in the fragile economy, according to the ADP employment report released Wednesday.

Econ Comments                                                                                                             
WSJ | The Cost of Lisa Jackson
Why the EPA doesn't consider job losses when it creates new rules.

WSJ: Real Time Economics | Friday’s Jobs Report: The Good News and the Bad
Here’s the good news about the July jobs report due out Friday: The payroll numbers are likely to be better than June’s. Here’s the bad news: They will reflect continued torpor in the labor market.

RCM: Wells Fargo Economics Group | Employment: Beyond the Sound Bites—Reading the Signals II
Sometimes life is unfair and so too goes the labor market. Labor market weakness in the latest recession has been compounded by long-term changes in the supply and demand for labor. Education is the dividing line.