Wednesday, September 21, 2011

General Economics

WSJ | Obama Shift Marks New Bet
More-Populist Stance Is an Effort to Harness Sentiment, but Move Carries Risks.
CNN: Money | A rough 10 years for the middle class
For American households in the middle of the pay scale, income fell to $49,445 last year, when adjusted for inflation, a level not seen since 1996.
WSJ | Government Shutdown Possible Over Disaster Aid
Congress once again found itself embroiled on Tuesday in a display of brinksmanship and the threat of a government shutdown, despite the public's recoiling against such maneuvering earlier this year.
WSJ | IMF Cuts Growth Forecast
The International Monetary Fund cut its forecast for global growth to 4% and warned of "severe repercussions" to the global economy unless euro-zone nations strengthen their banking system and the U.S. gets its fiscal affairs in order.
National Journal | GOP Likely to Prevail on Limiting Disaster Aid; Expect to Avert Shutdown
Republican Senate leaders are likely to prevail in defeating an amendment adding billions of dollars in disaster aid to a federal funding bill set for House passage, making prospects of a government shutdown unlikely, leadership aides in both parties and a key senator predicted on Tuesday.

Econ Comments                                                                                                             
RCM | A Politician's Version Of Ponzi Scheme
Looking out over the policy decisions that have shaped Social Security, it may not be accurate to call it an investment fraud. But it does seem to resemble what I call the politicians' version of a Ponzi scheme, that is, a spending program whose long-term unsustainability is clear early on and often in subsequent years, but whose advocates leave it to some future generation of political leaders to do the tough job of fixing it.
CNN | Social Security -- Are you kidding me?
Yes, I've paid into Social Security. No, I don't expect to benefit from it, at least not at the level those who are currently collecting are benefiting. And I don't know anyone in any line of work my age or younger who does.
RCM | Was Solyndra's Fall the Fault of China?
Trade is a favorite scapegoat whenever jobs are lost. That's why Congress is holding free trade hostage to a porky program that would give more aid to displaced workers. Solyndra's failure shows why it's a bad idea.
Cato Institute | Still Spreading the Wealth
The American welfare state is alive and well.

Café Hayek | Digging into the Data
The reason median household income has not grown is because we have far more households per capita than we used to.
Econlog | More on the Economic Freedom Indexes
Time to start looking into buying property in one of those other countries.
Cato @ Liberty | Free Market Capitalism vs. Cronyism in Russia
Russian philosopher Leonid Nikonov explains the differences between socialism, cronyism, and free market capitalism.

NBER | Complex Mortgages
We investigate the characteristics and the default behavior of households who take out complex mortgages. Unlike traditional fixed rate or adjustable rate mortgages, complex mortgages are not fully amortizing and enable households to postpone loan repayment.
RCM: Wells Fargo | Housing Starts Drop Much Fruther Than Expected in August
Housing starts fell 5% to a 571,000 unit pace in August with weakness in single family and multifamily starts. Building permits howerever rose 3.2% and are up 7.8% on a year ago basis.

Health Care

NY Times | In Cuts to Health Programs, Experts See Difficult Task in Protecting Patients
President Obama and some members of Congress assert that, in cutting Medicare and Medicaid, they can whack health care providers while protecting beneficiaries. But experts say it is not so simple.
National Journal | CEOs Argue Express Scripts/Medco Merger Would Lower Drug Costs
If Express Scripts is allowed to buy Medco Health Solutions, the resulting new giant pharmacy benefit manager would bring down drug costs and help the U.S. government track waste and fraud, executives of the two companies told a House subcommittee looking at the proposed $24 billion deal Tuesday.

Cato @ Liberty | Private Insurance Is More Efficient than Medicare–By Far
Many of the administrative activities that private insurers undertake serve to increase the insurers’ efficiency. Avoiding those activities would therefore make a health plan less efficient. Existing government health programs also incur administrative costs that are purely wasteful. In the final analysis, private insurance is more efficient than government insurance.


Bloomberg | Bernanke Has Few Tools to Heal Economy
Sales of existing homes dropped in July to the lowest since November, and the median price slid 4.4 percent from a year earlier. Rising foreclosures, tighter lending standards and unemployment stuck near 9 percent for more than two years are all weighing on the market. Lower borrowing costs aren’t likely to make a difference.
Bloomberg | Bank of England Policy Makers See Greater Stimulus as Increasingly Likely
Bank of England officials said they may need to buy more bonds to bolster a faltering recovery after holding off adding stimulus this month in a decision that was “finely balanced.”

Econ Comments                                                                                                             
WSJ | The Fed 'Twist' That Won't Dance
Bond-buying creates an obvious conflict of interest because the Fed's portfolio loses value if it raises interest rates.
Politico | No more stimulus, Republican leaders say
Republican House and Senate leaders told Federal Reserve Chairman Ben Bernanke to “resist further extraordinary intervention in the U.S. economy,” saying in a letter sent Monday that steps intended to boost growth might actually make things worse.
WSJ | Why China Is a Financial Midget
Beijing's economic model will prevent the yuan from replacing the dollar as the world's reserve currency.
Forbes | The Fed is Failing its Unemployment Mandate
Since undertaking the so-called QE2 round of asset purchases last fall, the Fed’s aggressive policy actions have been on hold.
Washington Post | Twisting away our economic woes?
The economy needs robust demand for new products and services, but that won’t materialize until the housing market recovers and the American middle class pays down its accumulated debts.

Atlantic: Megan McArdle | Higher Inflation, Lower Real Wages?
What would higher inflation mean for that median worker whose wages, we keep hearing, are stagnating so quickly?


NY Times | $16 Muffins, and Taxpayers Pick Up the Tab
The report scrutinized spending at a sampling of conferences from October 2007 to September 2009, focusing on eye-popping calculations of food and beverage expenses.

Econ Comments                                                                                                             
Washington Times | LAMBRO: Obama digs up dead tax hikes
Unearthing the blame-the-rich shibboleth is useless economic strategy.

Political Calculations | The Biggest Driver of U.S. Government Revenue
...a simple power law relationship exists between the amount of median household income in the United States and the total amount of money that the federal government collects each year
Cato@Liberty | Tax the Rich? Depends On How You Define Rich
As the myriad of media polls have made clear, Americans are typically averse to tax increases except if offered the option to tax the “wealthy.”
Heritage Foundation | Obama’s Attack on Big Oil: Fair Share or Targeted Tax Hike?
If Congress opened access and placed a freeze on environmental regulations and the Administration moved to effectively permit new projects, the federal government would collect more than $36 billion as soon as 2015 and more than $800 billion by 2030, according to a study from Wood Mackenzie.


CNN Money | GM adding 6,400 jobs under UAW deal
Union officials revealed some details of the pact Tuesday, including a $2.5 billion investment by GM (GM, Fortune 500) in its U.S. plants, the reopening of a closed auto plant in Spring Hill, Tenn., and a new full shift at a plant in Wentzville, Mo..

Econ Comments                                                                                                             
Washington Times | MILLER: Obama’s jobless economy
President’s tax package harms job creators the most.
WSJ | A Jobs Bill That Boggles the Mind
The president worries about the fiscal misfortunes of local governments, then proposes a plan to penalize municipal bond buyers.
Washington Times | MILLOY: Democrats need to choose: EPA or jobs
TRAIN Act would mandate cost analysis of economy-killing rules.

Reason: Out of Control Policy Blog | Job Creation Tax Credits Don't Create Many New Jobs
Seventy percent or more of new hires for firms using these credits would have hired them anyway.


Market Watch | Obama’s debt plan may hit your retirement
If you’re wealthy or you receive Medicare, President Obama’s proposal to cut the federal deficit could very well either raise your taxes or cut your benefits. There’s no winning if you’re both rich and a Medicare beneficiary.
Fox Business | Who Else Pays for the President's $3.6 Trillion Deficit Cutting Plan?
Increase unemployment insurance premiums: Raise the wage base for unemployment insurance premiums from the first $7,500 to the first $15,000 of wages (starting in 2014).

Heritage Foundation | The President’s “Debt Reduction”: $1.6 Trillion in Tax Hikes, Almost No Net Spending Reductions
During his Rose Garden speech Monday, the President claimed that his new “debt reduction” plan would provide $2 of spending cuts for every $1 of tax increases. A closer look at the administration’s own numbers, however, suggests the President, well, exaggerated.