Thursday, August 4, 2011

General Economics

CNN: Money | Recession warnings on the rise
conomists have been ringing alarm bells after disappointing readings on some key economic indicators, including those measuring consumer spending, manufacturing, job cuts and gross domestic product.
WSJ | S&P Still Mum on U.S. Credit Rating
S&P, which along with Moody's Investors Service put the U.S. government on a review for possible downgrade last month, was seen during the fractious debate over the debt ceiling as taking the most aggressive position of the ratings firms.
CNN: Money | How China hurts its own economy
When lending, Beijing favors state companies over private ones. Trouble is, that's not where innovation happens.
Bloomberg | Consumer Confidence in U.S. Declines
The Bloomberg Consumer Comfort Index was minus 47.6 in the period to July 31, the lowest since May, compared with minus 46.8 the prior week. Confidence among women fell to the lowest level since October 2009, while Americans making more than $100,000 a year were the most pessimistic since November 2009.
WSJ | Gold at Record for Second Day on Refuge Demand
Gold futures continued their march into record territory, with some traders and analysts expecting prices to soon breach $1,700 a troy ounce as worries about the health of the global economy mount.
WSJ | Ex-Fed Officials Back More Stimulus
The Federal Reserve should consider a new round of securities purchases to spur the economy if growth and employment keep languishing and inflation recedes, former top Fed officials said in a roundtable with The Wall Street Journal.

Econ Comments                                                                                                             
Project Syndicate | The Second Great Contraction
Why is everyone still referring to the recent financial crisis as the “Great Recession”? The term, after all, is predicated on a dangerous misdiagnosis of the problems that confront the United States and other countries, leading to bad forecasts and bad policy.
CNN: Money | The recession never truly ended
How can we have a double dip when we never climbed out in the first place?
Financial Times | The coming crises of governments
The global crises of financial and housing markets are now being superseded by new crises of governments.
Daily Caller | Why there won’t be a double-dip recession
Granted, the economy is sputtering, with less than 1 percent growth in the first half of the year. But if there is a recession in the cards, it will be the first time one occurs when the yield curve is steeply positive (an ultra-easy Fed) and corporate profits are strong.
Market Watch | Stocks pricing in a new recession
You know it’s going to be a wild day in the market when investors look to Silvio Berlusconi for a pep talk.
Minyanville | Are We Heading For a Double Dip? Four Basic Perspectives
Sometimes its better to analyze the analyses.

Free Banking | Behind the Scenes at the Hayek v. Keynes Debate
A body of economic doctrine that lends itself to such a serious misapprehension of the basis for economic prosperity can hardly be expected to provide sound advice for nursing a sick economy to health.
Econlog | Econlog More Thoughts on Metaphors
I think of government as a monopoly offering lousy service and determined to maintain and extend its franchise come hell or high water.
AEI: American | AEI: American What Investment Returns Are Public Pensions Really Assuming?
Most public sector pension plans assume they’ll receive an 8 percent investment return in future years. There are a few problems with that assumption. First, as I’ve previously argued, even if 8 percent is an accurate figure, pensions shouldn’t be using this number to calculate the value of their liabilities.

RCM: Wells Fargo | RCM: Wells Fargo Slow Ride Gets Slower: Weak ISM Non-Manufacturing Print
Against a backdrop of what has felt like universally bad economic news in recent weeks, the ISM non-manufacturing index for July came in at 52.7—weaker than expected and consistent with slow growth.


Econ Comments                                                                                                             
SmartMoney | Why Taxes Will Jump If Stocks Drop
A market decline could be doubly costly for investors.

Cato@Liberty | Education Tax Credits More Popular Than Vouchers & Charters
Public opinion is consistently and strongly in favor of education tax credits over vouchers and even charter schools. And thankfully, they’re a much better policy as well.

Health Care

Econ Comments                                                                                                             
WSJ | More Medicare Cuts*
Most everyone seems to agree that the debt deal's "super committee" is supposed to reform the entitlement state, somehow. "Yes," President Obama said Tuesday, "that means making some adjustments to protect health-care programs like Medicare so they're there for future generations." Now there's a statement of vaulting ambition.


Market Watch | Bank of Japan expands asset purchases
The Bank of Japan boosted its asset-purchasing program on Thursday, at a policy setting meeting that was cut short following the nation’s intervention to weaken the yen.
Bloomberg | Currency Intervention Reappears as Fed May Ease
The risk of a U.S. return to recession, forcing the Federal Reserve to another round of monetary easing, has exacerbated dollar weakness. The currency’s drop last year left all of Asia’s 10 biggest economies seeking to influence their own exchange rates to aid exporters and growth.


Bloomberg | Jobless Claims Fall, Signal Weak Labor Market
Initial claims for unemployment insurance payments in the U.S. fell last week to a level that shows limited improvement in the labor market.

EconLog | GDP and Employment in the Current Cycle
Until the two most recent recessions, the bottoms of the icicles look similar. That is, if GDP bottoms out at 97 percent of peak, then employment bottoms out at about 97 percent of GDP. But the two most recent recessions are different.


Daily Finance | Alabama County Could File for Biggest U.S. Municipal Bankruptcy Ever
So far, the negotiations have come up short by $300 million. Jefferson County has asked bondholders to forgive $1.3 billion of its debt, while creditors have offered to write off $1 billion, according to Bloomberg.

Econ Comments                                                                                                             
WSJ | How Silent Cal Beat a Recession
The late president inherited a bad economy, and he cut taxes and slashed spending to spur growth.
RCM | A Small Step Toward Fiscal Solvency
Few people realize that congressional spending cuts for a given year are not subtracted from the prior year's spending. Rather, cuts are subtracted from a budget that grows on autopilot, particularly entitlement programs.
WSJ | Make the Dollar-for-Dollar Rule Permanent
Matching debt increases with spending cuts will balance the budget in a decade without raising taxes.
Washington Post | TYRRELL: The long war over the budget
The Tea Party is essential to eventual victory.
WSJ | Obama's Deal With the Debt Devil
Cruel history turned against the president and the left's long-term spending dreams.

Reuters | Entitlement reform would indicate maturity
Spending in 2011 is estimated to come in at $3.8 trillion or just over 25 percent of GDP. That’s the highest ratio since 1945 — in 2005, the ratio was under 20%. Calling $3.8 trillion dollars “very low” is very hard to understand, unless you see a crying need for an even larger number.
Atlantic: McArdle | How Long Will US Debt Remain the Destination of Choice for Global Capital?
Mitch McConnell is apparently promising that last week's histrionics over the debt ceiling were merely a prelude to a lengthy drama in which we re-enact this battle every time the debt ceiling needs to be raised.
Reuters | Regretting raising the debt-ceiling
Larry Summers’ cynicism about the new debt deal is justified. What, indeed, is the baseline from which $1.5 trillion is to be subtracted?
CafĂ© Hayek | Fabulous picture, but…
But for me the more interesting (and misleading) aspect of the chart is the “modest” increases in the deficit coming from Obama, a “mere” $1.44 trilion. There’s a pernicious assumption built into that conclusion, that all previous spending is “mandatory.”

Mercatus Center | The Never-ending Emergency
...serious concerns have emerged about the nature and size of supplemental appropriations bills and in particular about the abuse of emergency spending.