Monday, August 22, 2011

General Economics

WSJ | Economists Split Over Path Forward
Business economists are split on whether more austerity or more stimulus is the best path forward for U.S. fiscal policy, according to a new survey, highlighting the dilemma facing policy makers eager to shore up the nation's economy and long-term fiscal position.
Bloomberg | Goldman Cuts U.S. Full-Year Growth Forecast on Signs Recovery Has Stalled
The U.S. will expand 1.5 percent this year, down from a previous forecast of 1.7 percent, Goldman economists in New York including Jan Hatzius said in a note published on Aug. 19. Credit Suisse was also among banks lowering growth forecasts this month.
CNN: Money | Falling oil and gas prices: A blessing and a curse
Oil prices are falling once again, and relief at the gas pump is likely on the way too. But be careful what you wish for. Low gas prices can sometimes be more a symptom of a weakening economy, than a cure to consumers' woes.

Econ Comments                                                                                                             
NYT | The Sad Statistic That Trumps the Others
THERE’S been a lot of bad economic news lately, yet we may be overlooking the most disturbing development of all: our economic productivity has been weakening. This isn’t just a problem for the United States. Because America remains a leader in technology and innovation, it is also a matter of concern for the entire world.
Forbes | Why We Don't Need An Infrastructure Bank? Japan Is Why
A state infrastructure bank will be at the core of President Obama’s “jobs program” that he plans to unveil after his vacation. He will argue we desperately need a new government entity to repair our crumbling infrastructure and create jobs.
WSJ | How Not to Grow an Economy
Day after day brings headlines of another legislative, regulatory or enforcement action that gives CEOs and investors reason to hunker down, retain as much cash as possible and ride out whatever storms are ahead. This is not the way to nurture an already fragile recovery, much less help the economy to endure shocks from Europe, natural disasters or a big bank failure.
WSJ | The Bond Bubble and the Case for Stocks
Despite the sluggish economy, the corporate sector is churning out record profits and increasing dividend payments. We believe dividend-paying stocks are the answer to a Treasury bond market that looks more dangerous than ever.
Source | There’s No Shortage of Work, There’s a Shortage of Workers
If the issue has gone ignored, that may be because it confront us with a paradox: We’re suffering from high unemployment, but that’s partly because people can’t get to those jobs that are currently available.
Washington Post | Removing the obstacles to economic growth
In fact, the Obama administration’s anti-business, hyper-regulatory, pro-tax agenda has fueled economic uncertainty and sent the message from the administration that “we want to make it harder to create jobs.”
WSJ | Time to Deregulate the Practice of Law
Every other industry that has been deregulated, from trucking to telephones, has lowered prices without sacrificing quality.

Calculated Risk | Schedule for Week of Aug 21st
The most anticipated event this coming week is Fed Chairman Bernanke's speech at Jackson Hole on Friday.
Café Hayek | Selgin on Mellon, Harding, and Hoover
Here’s George Selgin on the 1920-21 economic downturn in the U.S. His conclusion:
Calculated Risk | More downward revisions to economic forecasts
Below are some downward forecast revisions released last night and today. If these forecasts are close, then the unemployment rate will probably increase over the next few quarters too.
Calculated Risk | The New Retirement Plan: No Retirement
Already battered nest eggs took another beating this month with the market's wild swings. With interest rates essentially at zero since 2008, income from Treasurys and certificates of deposit is pretty paltry. ... On top of that, housing prices [leave] homeowners with much less equity to tap.
Calculated Risk | Unofficial Problem Bank list declines to 984 Institutions
Here is the unofficial problem bank list for Aug 20, 2011.

RCM: Wells Fargo | Weekly Economic & Financial Commentary
The Economy Continues to Lose Momentum.

Health Care

National Journal | How Much Does Healthcare Cost? Harvard Professors Offer Formula
Bringing down the cost of health care is a popular talking point for politicians and federal policy wonks alike. But two professors at Harvard Business School have a surprising discovery: No one really knows how much health care costs in the first place.
Politico | Health care law will deepen deficit
According to a recent report from the Centers for Medicare and Medicaid Services. Premiums are set to increase for most Americans, and government actuaries now estimate the growth in the net cost of health insurance will increase by 14 percent — compared to 3.5 percent if Obamacare never passed.
National Journal | CMS Gives Out Timeline on Medicare Equipment Bidding
Federal officials laid out a timeline on Friday for getting large parts of the country to compete over Medicare wheelchairs, oxygen tanks, and other large pieces of medical equipment by 2013, saying it would save the federal government $28 billion in the process.


MarketWatch | ‘Super committee’ Republican: Simplify taxes
The 12-member “super committee” tasked with cutting the U.S. budget deficit has a “great opportunity” to simplify the tax code, Sen. Pat Toomey says. What it won’t do, if the Pennsylvania Republican gets his way, is spend any government money in an attempt to boost economic growth.

Econ Comments                                                                                                             
Daily Caller | It’s time to level the sales-tax playing field for small businesses
A national debate about sales tax fairness has arisen out of some states’ efforts to introduce sales-tax parity between brick-and-mortar stores and online retailers like Amazon. It’s high time we had this debate.
Washington Times | WILLIAMS: Tax zombie that refuses to die
New Deal levy for rural phones has outlived its purpose.
WSJ | My Response To Buffett And Obama
Before you ask for more tax money from me, raise the $2.2 trillion you already collect each year more fairly and spend it more wisely.


CNN: Money | Stagflation signs: Bond yields down. Gold up
If you look beyond the latest carnage in stocks Thursday, investors are clearly sending a signal that they are worried both about stagnation and inflation. But the emphasis seems to be more on the "stag."
WSJ | Inflation Rise Puts Fed in Bind
U.S. inflation surged in July primarily because of climbing energy and food prices, but those costs are likely to retreat in coming months as prices for oil, grains, and other raw materials fall in a lagging economy. Underlying price pressures remain strong, however, which could constrain the Federal Reserve from taking more action soon to spur economic growth and hiring.
Bloomberg | Jackson Hole Central Bankers Reflect on QE2 Amid Pressure for New Stimulus
Bernanke will be making “a major speech and the chairman knows the whole world is watching, so if he chooses not to say very much, the markets and the economy in some broader sense would be disappointed,” said Soss, a former economist at the Federal Reserve Bank of New York. “It’s absolutely critical that the Federal Reserve portray itself as having some relevance to the economic problems the society faces.”
Market Watch | China lacks support for more stimulus: CS
China’s policy makers remain focused on inflation as the major risk to the economy and lack the public support for a new round of stimulus spending, according to Credit Suisse, which said its impressions were formed after recent discussions with officials in Beijing.

Political Calculations | New Deflationary Expectations Taking Hold?
Once upon a time, we found that stock prices are a contemporary indicator of the state of the U.S. economy, meaning that instead of telling us what's going to happen in the future, they tell us what's happening today.
Daily Capitalist | The Fed: “Whatever It Takes”
In order for the FOMC to keep the funds rate within the desired range, it will have to purchase whatever government debt exists or is issued into the market. This amounts to establishing a de facto QE3 policy without announcing ex ante the amount of securities it intends to purchase. Instead, the amounts purchased will be “whatever it takes.”


WSJ | Policy, Geography Boost Texas Job Growth
Several of the companies that have flocked to Texas in recent years say they were attracted by the business-friendly policies of Gov. Rick Perry—as well as by a lot of other factors not under the governor's control.
CNN Money | How can Obama solve long-term unemployment?
Some 13.9 million Americans remain unemployed, 44% of whom have been out of work for six months or longer.
WSJ | Jobless Rate Rises in Most States
Jobless rates increased in 28 states and the District of Columbia in July, the Labor Department said Friday. Nine had declines and 13 saw no change from a month earlier.


CNBC | Spending Cuts, Not Tax Hikes, Best for Deficit: NABE
The majority of economists surveyed by the National Association for Business Economics believe that the federal deficit should be reduced only or primarily through spending cuts.
WSJ | As Investors Get Bit, States Feel Pain
State-budget officials from around the U.S. were huddled in Utah earlier this month for an annual meeting when someone glanced at a BlackBerry and announced that the Dow Jones Industrial Average had fallen 500 points.
MarketWatch | Republicans ramp up balanced-budget push
Republicans ramped up their push for a balanced-budget amendment to the U.S. Constitution on Saturday, enlisting Ohio Gov. John Kasich to make their case in a weekly address.

Econ Comments                                                                                                             
Washington Times | EDITORIAL: The California cut
Even a ‘70s-era liberal realizes the need to cut spending.

EconLog | The Fiscal Outlook for U.S. States
The way I read the projections, if overall public spending on the NCH continues to rise relative to GDP while the federal government share shrinks, then state governments will have to raise taxes significantly relative to GDP in order to maintain budget balance.
Heritage Foundation | Chart of the Week: Federal Spending on Defense vs. Entitlements
In recent years, however, defense spending has continued to decline as entitlement spending increased. Priorities are being misplaced as the gap between entitlement spending and defense spending continues to widen.