Wednesday, August 24, 2011

General Economics

Market Watch | Raises aren’t keeping up with inflation
On average, employees will get a raise of about 2.8% in 2012. That’s slightly more than the 2.6% employers said they’d give workers this year, Andrea Coombes reports today. Unfortunately, that size raise isn’t keeping up with inflation: The consumer price index for all urban consumers rose 3.6% in the 12 months ending July 2011.
WSJ | Factories Retrench Amid Downturn Worries
ional surveys of manufacturers are pointing to a downshift in activity, as a key driver of the recovery retreats amid worries about an economic downturn. Separately, sales of new homes dropped to their lowest level since February, with the housing sector beset by too much supply and too little demand.
Washington Times | Businesses cool as administration moves to ease regs
The White House said Tuesday it’s going to tweak some 500 regulations it says have unnecessarily tied companies’ hands, but the announcement drew little enthusiasm from a business community that doubts the action will do much to overcome a slew of new health care and financial regulations.
Market Watch | Durable-goods orders climb 4.0% in July
Orders for U.S. durable goods jumped 4.0% in July, mainly because of higher demand for autos and commercial aircraft, the government reported Wednesday.
CNN: Money | Is yield curve signaling a recession?
Amid the growing number of signs that the United States may tip back into a recession, the bond market is sounding its own siren.

Econ Comments                                                                                                             
Washington Times | MATTHEWS: It’s time to ‘lure’ the left back to basic economic principles
All states could have job growth if they’d follow Texas’ example.
WSJ | Keynesian Economics vs. Regular Economics
Food stamps and other transfers aren't necessarily bad ideas, but there's no evidence they spur growth.
Washington Times | WOLF: Energy Obamanomics: No green jobs and plenty of red ink
It’s time to end all forms of corporate welfare.
Politico | Don't overstate reg re-examination
But despite the White House’s claims, this initiative is not “unprecedented.” Nor is it likely to have a significant effect on the current economic malaise.
AEI | Is the US Economy Freefalling?
With multiple European governments on the brink of default and Washington divided squarely along partisan lines, successful fiscal policy will be hard to implement. The Fed should declare that it will keep policy accommodative as long as its forecast falls short of its objectives, thereby encouraging risk taking by investors.
Cato Institute | Free Trade 101 for Members of Congress
Free trade promotes liberty, prosperity, and peace. That's a good deal for America.

Atlantic | Did Welfare Reform Work?
If welfare reform was meant to cut the rolls, then it definitely worked. And if it was meant to give states the flexibility to cut their spending on the program, it definitely worked. . . If you think the point of the program is to help the poor, then no, welfare reform is not working.
AEI: American | Not Free to Choose: The Reality behind Clean Energy Standards
The new stealth approach to energy policy being pushed under the guise of a Clean Energy Standard is frankly dishonest.

RCM: Wells Fargo | Philadelphia Fed Index: Can It Predict a Recession?
Last week, the plunge in business activity in the Philadelphia Fed manufacturing survey roiled financial markets. While one month does not make a trend, the drop signals downside risks to real GDP growth.

Health Care

National Journal | NIH Releases Conflict Rules for Researchers
The Department of Health and Human Services issued final rules on Tuesday on how National Institutes of Health researchers must report and manage potential conflicts of interest—a rule meant to reassure taxpayers that federally funded scientists are not getting rich on the side.
National Journal | Medicare to Offer Bundled Payments
The voluntary plan should lower costs and help doctors and hospitals better coordinate care, the Health and Human Services Department said.

Econ Comments                                                                                                             
Washington Times | LEHRER: Medicare bidding process will hurt doctors, patients
New rules leave out doctors’ views, won’t save money.

NBER | Has the Shift to Managed Care Reduced Medicaid Expenditures? Evidence from State and Local-Level Mandates
From 1991 to 2003, the fraction of Medicaid recipients enrolled in HMOs and other forms of Medicaid managed care (MMC) increased from 11 percent to 58 percent. This increase was largely driven by state and local mandates that required most Medicaid recipients to enroll in an MMC plan.


Bloomberg | Central Banks Seen Retaining Gold to Help Manage Debt as Bullion Advances
Central banks, net buyers of gold for the first time in a generation, are likely to retain their holdings even if they need to raise cash to counter an escalating debt crisis, according to Morgan Stanley.
Market Watch | U.S. dollar slides after economic data
The U.S. dollar lost ground versus major currencies on Wednesday after a report showed U.S. durable goods orders rose more than expected last month, easing worries that the economy may weaken.
CNN: Money | Economists: Fed should stay put for now
Economists aren't looking for Federal Reserve Chairman Ben Bernanke to announce some new plan to rescue the struggling U.S. economy in a much-anticipated speech this Friday.

Econ Comments                                                                                                             
Investors | Fed's Faulty Policies Will Create Inflation, Not Jobs
Investors are worried about the solvency of many European governments and the future course of U.S. fiscal policy, especially after the protracted debate on the debt ceiling.
RCM | The Fed's QE Makes Life Difficult
It is no surprise that, after the Federal Reserve (Fed) ballooned its balance sheet from $900 billion in August 2008 to over $2.8 trillion today, stock prices have soared. This decade has already seen the effects of bubblicious Fed intervention following the then unprecedented 1 percent interest rate policy under Alan Greenspan.


WSJ | Wealthy French Push for Extra Tax on Rich
As Sarkozy Seeks to Plug Holes in Budget, Heirs and CEOs Say in Open Letter That 'We Feel We Must Contribute'.
National Journal | Contra Boehner, Business Economists Favor Some Tax Hikes
"Only with spending cuts" came in third, at 12 percent, followed by "mostly with tax increases" (nearly 6 percent) and "only with tax increases" (1 percent).
WSJ | Canada Province Is Poised to Repeal Sales Tax
The 12% consumption levy, referred to as the HST, or harmonized sales tax, has sparked one of the most spirited debates in recent Canadian political history—pitting the provincial government against an unlikely coalition of right-wing, small-government advocates and the province's main left-wing opposition party.

Econ Comments                                                                                                             
Washington Times | EDITORIAL: The coming pension earthquake
Obscure government corporation has taxpayers on the hook for billions.
WSJ | A Value-Added Tax Fuels Big Government
In Europe the VAT hasn't substituted for income taxation. It's merely added to the tax burden.
Washington Post | The GOP will raise taxes — on the middle class and working poor
It doesn’t apply to any wage income in excess of $106,800 a year. It’s the payroll tax that they want to raise — to 6.2 percent from 4.2 percent of your paycheck, a level established for one year in December’s budget deal at Democrats’ insistence.
Forbes | The Laffer Curve Files: JFK's Advisor Said Tax Cuts Raise Revenue
Walter Heller, who had been John F. Kennedy’s CEA chair in the 1960s, called for “big tax cuts for stimulus to generate jobs, output and profits….Use fiscal revenues created by output gains to cover tax cuts and spending programs (repeat early ’60s).”


Econ Comments                                                                                                             
CNN Money | Washington needs to wake up to the jobs crisis
Politicians from both sides of the fence have some harsh truths to face about the true state of the nation's unemployment.


Source | France Prepares to Unveil Broad Spending Cuts
The government is considering additional budget savings of as much as €4 billion ($5.8 billion) for this year and €10 billion for 2012 in order to stick to its deficit targets and make up for softer-than-expected economic growth, said several trade unionists who spoke to French Prime Minister Francois Fillon on the phone.
National Journal | Congressional Budget Office Predicts $1.3T Deficit in 2011, Third Largest in 65 Years
The gross domestic product is expected to increase by 2.3 percent this year and 2.7 percent for 2012. The national unemployment rate, according to CBO data, should remain above 8 percent until 2014.

Econ Comments                                                                                                             
RCM | The Soprano State Gets Downgraded
It's merely a description of the financial gimmicks used by politicians in New Jersey over the last decade, the only state ever cited for fraud in its financial disclosure statements by the Securities and Exchange Commission.

CBO | Budget and Economic Outlook: An Update
The United States is facing profound budgetary and economic challenges. At 8.5 percent of gross domestic product (GDP), the $1.3 trillion budget deficit that the Congressional Budget Office (CBO) projects for 2011 will be the third-largest shortfall in the past 65 years (exceeded only by the deficits of the preceding two years).