Thursday, October 6, 2011

General Economics

WSJ | Big Banks Find No Comfort in Capital Cushion
Three years ago this month, U.S. taxpayers bailed out the big banks. That led to repeated promises by policy makers to change the rules to avoid future bailouts of banks that are "too big to fail."
WSJ | Post Office's Rescue Plan: Junk Mail
Many consumers are irked by the catalogs, credit-card pitches and other "junk mail" they receive. But the U.S. Postal Service loves it—and wants to deliver more.
WSJ | Tale of Two Loan Programs
U.S. Funds Targeted for Small Business Instead Used by Banks to Repay TARP.

Econ Comments                                                                                                             
Washington Times | GROVER: Economic blowback from ‘Durbin fees’
Democrat’s bank card price controls hurt consumers.
Forbes | Making The Next Financial Crisis Worse, One Regulation At A Time
While accurate disclosure in securities offerings is desirable, unfortunately what the SEC has done is not to fix the problem, but rather to increase the odds and severity of the next financial crisis.
AEI: American | Free Trade’s Rude Awakening
The president has submitted three free trade agreements to Congress. But four years of tortuous domestic debate over the FTAs has led the world to doubt U.S. commitment to opening markets.
WSJ | The Banker Baiters
Punish bank earnings, so banks raise fees. Then denounce banks for raising fees.
AEI | A Two-Speed Reaction To the Euro Crisis
US policymakers should be bracing for a meaningful economic shock emanating from a European banking crisis.

Econlog | Joseph Stiglitz on Recalculation
The problem is analogous to that which arose at the beginning of the twentieth century, when rapid productivity growth in agriculture forced labor to move from rural areas to urban manufacturing centers.
Reason Foundation | Free Trade Agreement Review Series: Panama-U.S.
This is something that we and a chorus of others have argued should be a priority for the White House and we hope that Congress acts on addressing the FTAs immediately. But the trade deals are not perfect.
Daily Capitalist | Declining Manufacturing Will Let The Air Out Of The Economy
The Institute For Supply Management’s Manufacturing Index for September came out positive, increasing one point to 51.6%, the 26th consecutive month of growth according to the ISM. Anything over 50% is regarded as an expanding economy.
Café Hayek | Trickle Down
If you look at the mean income for the top 20% of all families, it also shrinks between 1989 and 1992, grows between 1992 and 2000 and falls between 2000 and 2010. So those tax cuts for the rich didn’t even help the rich. Kind of ruins the class warfare story, doesn’t it?
Daily Capitalist | Steve Jobs
Fifty-six is a short time on the planet these days but Steve Jobs changed the world in his time.
WSJ: Real Time Economics | ECRI Explains Its Recession Call
Economic Cycle Research Institute said the U.S. has already or is about to tip into recession. The announcement, made public Friday, was met with skepticism by other economists who are more hopeful the U.S. and the world will skirt recession.
Cato @ Liberty | Create Jobs? China Currency Bill Is at Least 300 Percent More Likely to Destroy Jobs
Supporters of the so-called China Currency legislation fall into two camps. There are those frustrated by the fact that the Chinese government no longer asks “How high?” when U.S. policymakers shout “jump!”

NBER | Capital Allocation and Delegation of Decision-Making Authority within Firms
We survey more than 1,000 CEOs and CFOs to understand how capital is allocated, and decision-making authority is delegated, within firms. We find that CEOs are least likely to share or delegate decision-making authority in mergers and acquisitions, relative to delegation of capital structure, payout, investment, and capital allocation decisions.
RCM: Wells Fargo | ISM Holds Up Slightly Better Than Expected In September
The ISM non-manufacturing survey held up better than expected in September, with the headline index falling 0.3 points to 53.0. The employment series fell more sharply, however, sliding 2.9 points to 48.7.

Health Care

National Journal | Can the CLASS Act Ever Work?
The future is increasingly uncertain for the CLASS Act, a controversial long-term care insurance program created by the 2010 federal health law and championed by the late Sen. Edward Kennedy, D-Mass.

Econ Comments                                                                                                             
Politico | Denny Rehberg: Health law cuts a 'super' idea
A top House Republican says he has an idea for how the supercommittee can reach its entire $1.2 trillion savings goal with two simple cuts from the health care reform law.

Marginal Revolution | Personalized Medicine
We must move the FDA away from pre-market gatekeeping and towards post-market surveillance and information provision.


Market Watch | Bank of England launches more QE; ECB on hold
The Bank of England stunned currency markets Thursday by announcing another round of quantitative easing, responding to threats to the U.K. economic recovery and prompting a steep selloff in the British pound.

Heritage Foundation | Supply and Demand, Part II: The Money Supply
By increasing the money supply, however, there could be risk of stoking inflation, which would increase money demand as people seek to hold more cash in the face of rising prices.


Bloomberg | Repatriation Bill Would Tax Offshore Profits at 8.75 Percent
The rate on repatriated profits would drop to 5.25 percent if a company’s payroll expanded during 2012, according to a summary of the bill confirmed by an aide to McCain, an Arizona Republican. The current top corporate rate is 35 percent.
WSJ | Democrats Float Tax on Top Earners
Senate Leaders Propose 5.6% Bite on Income Over $1 Million to Stem Defections From Obama's Jobs Bill.
National Journal | Van Hollen Has Tax Reform on His Mind
For super committee member Rep. Chris Van Hollen, the Holy Grail of deficit reduction may lie in reforming the tax code.

Econ Comments                                                                                                             
Project Syndicate | The Wrong Tax for Europe
Higher transactions taxes increase the cost of capital, ultimately lowering investment.
WSJ | Harry Reid's Household Remedy
Economy got you down? Pass a millionaire surtax.

Atlantic: McArdle | Should We Tax Financial Transactions?
Tiny taxes on high-volume transactions raise a lot of money, but they also cost money to record, collect, and audit, which is why few jurisdictions have 0.25% sales taxes.


Market Watch | Weekly initial jobless claims up 6,000 to 401,000
The number of people who applied for unemployment benefits rose slightly last week, only partially reversing a sharp decline two weeks ago, U.S. data showed Thursday.
WSJ | Labor Reports Indicate No End to Jobs Worries
In further worrying signs for the labor market, separate reports Wednesday showed that layoffs surged in September and that services businesses aren't hiring more workers despite the sector's relatively strong growth.
CNN Money | Holiday hiring expected to be ho-hum this year
Retailers are expected to hire just 480,000 to 500,000 seasonal workers this year, according to a report released Thursday by the National Retail Federation. That's in line with the 495,000 seasonal employees they hired last year, but still far from pre-recession highs.

Econ Comments                                                                                                             
Washington Times | KLINE: Fighting Obama’s job-killing agenda
New bill can right the wrongs of the NLRB.
RCM | To Create Jobs, We Must Destroy Them First
...the paradoxical truth is that the fastest path to true job creation is one that seeks to reduce labor costs through job cuts.
Washington Times | HALL: Fighting Obama’s job-killing agenda
Shaky science behind EPA actions.
Daily Caller | President Obama’s jobs plan is just more of the same
...the president is asking Congress to approve a second massive stimulus — this one costing taxpayers $447 billion, with Zandi now saying it will “cut the unemployment rate by a full percentage point.” Sorry, but we’ve heard that story before.

Marginal Revolution | On the theory of unemployment
This is from the NYT, about a farmer who tried to hire American workers rather than illegal immigrants…


Market Watch | Economic growth in government crosshairs
As Congress wields its budget ax, some investors are worried that deep federal spending cuts could hurt job growth in the short term and further damage a U.S. economy already in fragile shape.
CNN Money | How debt committee could fake its way to $1.2 trillion
With next month's deadline looming, the panel may be tempted to go the easy route by offering up what are in essence fake savings.
Bloomberg | Supercommittee May Seek Commission on Federal Pay and Benefits
The panel might operate similarly to the 2005 Defense Base Closure and Realignment Commission, which presented Congress with a plan it had to either accept or reject without changes, according to two congressional staff members who weren’t authorized to speak on the record.
NY Times | Freddie and Fannie Reject Debt Relief
If banks would forgive some of a homeowners’ mortgage debt, the state said it would pay half, up to $50,000 of a $100,000 loan reduction. Despite the generous terms, most banks balked.
Market Watch | China lending not like U.S. subprime debt: analyst
China’s 4-trillion-yuan ($627 billion) unofficial lending market doesn’t pose a threat equal to that of pre-crisis subprime lending in the U.S., according to Bank of America-Merrill Lynch.

Mercatus Center: Neighborhood Effects | An Unbalanced Budget: Fiscal Pollution
A balanced budget amendment, by internalizing this externality, would correct these misaligned incentives.

Mercatus Center | Administration Efforts on Line-by-Line Budget Review
Veronique de Rugy testified before the House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations about a line-by-line budget review process.