Tuesday, August 16, 2011

General Economics

Market Watch | Oil futures fall as global demand prospects weaken
Crude-oil futures fell by more than $1 a barrel Tuesday, pressured by a stronger U.S. dollar and weaker global demand prospects after the euro zone’s economy grew at only a modest pace in the second quarter.
Politico | Fitch keeps U.S. triple A debt rating
The ratings agency’s decision to preserve the United States at its top rating level comes after Standard & Poor’s — another of the three major sovereign debt raters — announced less than two weeks ago that it had downgraded U.S. debt to AA+ because of concerns about Washington infighting.
National Journal | The Catch-22 Recovery: We Need To Keep Gas Prices Low
How do we prevent more expensive oil from killing hiring next time around?
Market Watch | Housing starts slip 1.5% in July, U.S. data show
Starts fell to a seasonally adjusted annual rate of 604,000, down from a downwardly revised 613,000 rate in June, the Commerce Department said.
Bloomberg | U.S. Industrial Production Rose 0.9% in July
Manufacturers in the U.S. churned out more cars, computers and furniture in July, easing concern that one of the mainstays of the recovery was giving way.

Econ Comments                                                                                                             
WSJ | The Fall of the Midwest Economic Model
In 1970, the future seemed to belong to Michigan's example of big companies and big unions. Not anymore.
Bloomberg | China Slowing ‘Significantly’: Conference Board
China will achieve a “soft landing” even as growth moderates after the government tightened monetary policy, the Conference Board said as its main indicator for the economy rose.
WSJ | Lesson From Europe (Take 2)
No, social democracy doesn't 'work.'
Washington Times | EDITORIAL: Spend more - or we’ll riot
Leftists peddle Big Government as the cure for political instability.
WSJ | Ruby Red Tape
A case study in the costs of regulation, from Opal to Oregon.
Barron's | Prince or Pauper Market
What became of summer doldrums? This season, there are multiple reasons they didn't arrive: the market's wild gyrations, the S&P downgrade of U.S. debt, worries about Europe and, of course, the outlook for our economy and growth.
RCM | To Manufacture a Crisis, Ban the Shorts
Last Thursday night the European Securities and Markets Authority placed a ban on the short selling of shares in France, Belgium, Italy and Spain. Though this would constitute a major mistake in any market, given today's market uncertainty, a ban on essential market sleuths is the potential path to a market crisis.
Washington Times | WOLF: Upgrading America
Are we still the rugged Americans who once conquered a continent?

WSJ: Real Time Economics | Student Loan Debt Climbs
Americans have cut back on credit of all kinds, with one notable exception.
Minyanville | Five Things You Need to Know: Asymmetric Economy Increasingly Untenable and Unstable
This situation cannot continue without adjustment.
Heritage Foundatin | Wow! The Economy Seems Great! (But Only if You Live in D.C.)
According to a new Gallup poll, the District of Columbia is the only place in the country where a majority of people think the economy is improving (60 percent, in fact). In every state in the union, most people say the economy is getting worse.
WSJ: Real Time Economics | Stalwart Canadian Economy at Risk of Contraction
The Canadian economy, a stalwart of growth among the Group of Seven in the post-recession recovery, is at risk of shrinking in the second quarter, data released Tuesday indicated.

RCM: Wells Fargo | June TIC Flows Negative on Weak Treasury Demand
Net TIC flows were negative for the second consecutive month in June as foreigners were net sellers of Treasury bonds and notes. Meanwhile, U.S. residents were sellers of foreign securities.


Econ Comments                                                                                                             
WSJ | Upgrading the States
Florida and Ohio get rewarded for their fiscal reforms.
Washington Post | RAHN: Time for a constitutional fix
Without a clear amendment, overspending will continue.

NRO | The Debt-Ceiling Fight Was Necessary
Refusing once again to take any responsibility for the recent downgrade or any negative events (or lack of positive ones) during the last two years, the president gave a speech last night explaining how the debt-ceiling fight — i.e. those stubborn republicans — was to blame for S&P’s decision.
American: Enterprise Blog | Entitlement Spending Can be Constrained
Fortunately, agreements to cut entitlement benefits are more durable than agreements to cut discretionary spending. Because entitlement spending is not voted on each year, spending reductions remain in effect unless and until the president and Congress affirmatively pass legislation to overturn them.
NRO | The S&P Downgrade
Anyone who has looked at the Congressional Budget Office baseline knows that even if lawmakers allow the Bush tax rates to expire at the end of 2012, the debt-to-GDP ratio is still projected to go up quite dramatically over the next decade.

Mercatus Center | The Fiscal Health of U.S. States
This paper examines the fiscal health of the 50 U.S. states. Existing work considers important aspects of this issue, but it does not provide a complete picture of current and future state fiscal outlooks.

Health Care

National Journal | Appeals Court's Health Law Ruling Keeps Medicaid Intact
But there’s one unique piece of the legal challenge brought by 26 states that likely ends in Atlanta: the argument that the expansion of Medicaid in 2014 is unconstitutional because it “coerces” states into participating in the federal program.
NYT | Medicaid Pays Less Than Medicare for Many Prescription Drugs, U.S. Report Finds
Under existing law, the Congressional Budget Office estimates that the cost of Medicare’s outpatient drug benefit will increase an average of nearly 10 percent a year, to $175 billion in 2021, from $68 billion this year.

Heritage Foundation | Breaking Health Care Research: “Accountable Care” Unlikely
Medicare continues to be a looming problem in the fiscal crisis. In an effort to lower the program’s cost and improve quality of care for the seniors it serves, Obamacare creates accountable care organizations (ACOs), which are supposed to encourage health care providers to band together and create savings through better coordinated care.
AEI: American | Health Reform That Could Have Been
Health exchanges are a positive component of the law (though the regulations placed on them are burdensome), but only some consumers will gain access to them. Most (below age 65) will still obtain insurance from their employers. PPACA did nothing to move us away from employer-provided health insurance. In many ways, it even expanded the influence that employers have over our health insurance.
Daily Finance | Medicare's Next Patient: The Federal Budget Deficit
In 2010, the health-care subsidy for the elderly cost more than $524 billion, eating up 15.2% of total government spending. Even worse, its costs are projected to rise at a rate of 5.4% per year, surpassing $1 trillion in just over a decade.

NBER | Caution, Drivers! Children Present: Traffic, Pollution, and Infant Health
Using an instrumental variables approach that exploits the relationship between traffic, ambient weather conditions, and various pollutants, our findings suggest that ambient pollution levels, specifically particulate matter, still have large impacts on weekly infant mortality rates.


Econ Comments                                                                                                             
WSJ | Short on Solutions
The ban on betting against bank stocks won't fix the euro.
Daily Caller |
Obama’s inflationary policies will hit the poor the hardest

It’s the ones you love that you hurt the most. The unfortunate objects of Obama’s affection are America’s poor.
Financial Times | Why we cannot inflate our way out of debt
Recoveries from crises that result in over-leveraged balance sheets are slow, and are typically resistant to traditional macroeconomic stimulus. Over-leveraged, households cannot spend, banks cannot lend and governments cannot stimulate. So why not generate higher inflation for a while?
RCM | Forget Gold, Let's Denationalize Money
Regardless of how private currency operations would work in practice, this is primarily a moral issue. Free marketeers need to realize that money under the gold standard is still fiat money. Fiat means by government diktat. Under a gold standard, the government at a minimum is dictating the currency standard.
Cato Institute | Remembering Nixon's Wage and Price Controls
On Aug. 15, 1971, in a nationally televised address, Nixon announced, "I am today ordering a freeze on all prices and wages throughout the United States." After a 90-day freeze, increases would have to be approved by a "Pay Board" and a "Price Commission," with an eye toward eventually lifting controls — conveniently, after the 1972 election.

Minyanville | Fed's Easing Policy Means Worse Living Through Convexity
As the Fed removes interest rate risk through stealth QE3, it introduces other risks, distorting incentives for investing and weakening the economy in the long term.
Econlog | Clive Crook on Monetary Policy
The past few weeks have settled, to my satisfaction at least, a long-running debate on this very topic. Rather than targeting inflation, central banks should keep nominal incomes growing on a pre-announced path: say 5 per cent a year.


CNN Money | Decoding Buffett's tax plan
Warren Buffett is once again begging Congress to tax him more.

Econ Comments                                                                                                             
RCM | It's Wise to Ignore Buffett's Tax Rants
Even if you doubled the taxes paid by every millionaire in America, you'd still make only a dent in the deficit. Millionaires and billionaires aren't that plentiful. And that assumes they'd actually pay the higher rates, something history shows won't happen.

Cato@Liberty | Your Tax Dollars at Work
Today, under the rubric “Breakaway Wealth/Reaping Riches from Federal Spending,” the Washington Post gives us a front-page picture of where a lot of those generous and compassionate federal dollars actually go…
EconLog | Are Taxes on Corporations Taxes on People?
I remember that in addressing the issue in the 1980s, the late Herb Stein said that it's as if people think that if the government imposed a tax on cows, the tax would be paid by the cows.
Atlantic: McArdle | Thinking About Taxes
The arguments for the carried interest are fairly compelling: without it, the partners who contributed ideas and talent end up being taxed much more heavily on their earnings than partners who contributed financial assets.
EconLog | Stop Coddling Warren Buffett
The statistic I would like to see is the amount of tax paid relative to consumption. By that measure, it is possible that Buffett's tax rate was more than 100 percent.