Thursday, November 10, 2011

General Economics

WSJ | EU Could Face 'Deep, Prolonged Recession'
The European Union on Thursday slashed its growth forecast for the 27-nation bloc in the coming year and said it can't exclude the possibility of a "deep and prolonged" recession.
NY Times | Greece Selects Prime Minister After Days of Wrangling
Lucas Papademos, a respected economist with an avuncular style, was named prime minister of Greece on Thursday. He will lead a unity government that has pledged to quickly approve the tough terms of a European aid package and save the country from bankruptcy.
WSJ | Russia to Join WTO
Russia on Thursday won approval from a key committee to join the World Trade Organization, boosting the trade bloc's clout among major world economies and sealing the Kremlin's intentions to open up the economy after 18 years of negotiations.
Washington Times | China mocks U.S. political model
Chinese political and business leaders are increasingly triumphant after two decades of rapid economic growth that lifted unprecedented millions of people out of poverty and turned the nation into an economic superpower, saying their success proves its political and economic system is superior to the Western model.
Market Watch | Foreclosures jump 7% in October from September
Foreclosure activity rose 7% in October compared with September, a sign that lenders are picking up the pace after foreclosure processing problems caused delays, RealtyTrac said Thursday.
WSJ | Home Prices Keep Dropping
U.S. home prices fell in nearly three-quarters of metropolitan areas in the third quarter and the national median price dropped 4.7% as the housing market continued to show weakness.
USA Today | Economy, lack of engineers could hinder U.S. innovation
The federal government's support for R&D, as a share of the U.S. economy, has plummeted by nearly two-thirds since the 1960s, says Rep. Rush Holt, D-N.J., who has a doctoral degree in physics. The Congressional Research Service estimates the federal government provided $147 billion for R&D last year.
WSJ | Moody's Cuts South Africa Outlook
Gridlock in South Africa's government over how to spur growth and reduce unemployment is straining the budget and spooking investors—a gloomy picture that prompted Moody's Investors Service Inc. to cut its outlook on the debt of the continent's largest economy.
CNN: Money | Global economy at the tipping point
Europe is heading for recession. China is battling its own economic demons. And with the United States also facing problems at home (9% unemployment anyone?), it's hardly in a position to help.
WSJ | New EPA Rules Split Power Industry
The Environmental Protection Agency is set to make final new air-pollution standards for coal-fired power plants by mid-December, sparking disagreement among power companies about how quickly aging coal plants need to be pushed offline.

Econ Comments                                                                                                             
Atlantic | I Was Wrong, and So Are You
A libertarian economist retracts a swipe at the left—after discovering that our political leanings leave us more biased than we think.
Washington Times | GHEI: Italy on the brink
Collapse of a bloated European welfare state is inevitable.
RCM | Forget the Wealth Gap, It's the Age/Income Gap
The Census Bureau has just released a supplementary measure of poverty for 2010. It finds that more Americans were in poverty than under the standard measure. Americans aged 65 and older showed the largest increase in poverty rates under the supplemental measure.

Econlog | Is the Government an Efficient Charity?
In 1979, households in the bottom quintile received more than 50 percent of all transfer payments. In 2007, similar households received about 35 percent of transfers.
Mercatus Center: Neighborhood Effects | Mayor-Elect Stanton Offers an Excellent Introduction to Public Choice
As Bastiat put it some 150 years ago: “Government is the great fiction through which everybody endeavors to live at the expense of everybody else.”
Source | What Greg Mankiw's Defenders Missed
Last Wednesday, Greg Mankiw blogged about the students who walked out of his Ec10 class. They have various complaints about it that you can read here.
Atlantic: Megan McArdle | The Financial Folly of Fairness
When I was a young and naive economics writer, I used to write about developing countries a fair amount. Time and again they would make these bizarre and pointless moves, like suddenly and for no apparent reason defaulting on a bunch of debt.

Health Care

WSJ | Wal-Mart to Add Clinics
Retailer Seeks Partners for Services, Plays Down Ambitions.
National Journal | Kansas Announces Sweeping Medicaid Restructuring
Republican Kansas Gov. Sam Brownback announced a major overhaul of his state’s Medicaid program this week that would put nearly all Medicaid recipients into private, managed-care plans.
Politico | Supreme Court health care reform path could be set Thursday
The Obama administration has asked the court to jump in, so it appears more than likely the justices will agree to decide whether the health law’s requirement that nearly all Americans obtain insurance is constitutional.
National Journal | Democrats Put Some Detail to Medicare and Medicaid Cuts
Democrats on the super committee laid out the basic details on nearly $400 billion in Medicare and Medicaid savings Wednesday, proposing cuts that will hit everyone in the health care industry, including beneficiaries.

Heritage Foundation | Surprise, Surprise: Yet Another Part of Obamacare Increases Premiums and Kills Jobs
Even without Obamacare, the United States faces rising health care costs and an economy struggling to recover from the recent downturn.

Heritage Foundation | Florida’s Medicaid Reform Shows the Way to Improve Health, Increase Satisfaction, and Control Costs
Numerous studies have shown that the best coverage for improving patient health is private insurance. However, in today’s health care marketplace, not everyone has access to private coverage, and the social safety net of Medicaid is provided to the truly needy and those with disabilities.


Market Watch | Bank of England holds fire on more easing
The Bank of England, as expected, left its key lending rate unchanged on Thursday and made no move to boost the size of its quantitative-easing program after reviving it last month in a bid to stave off a deflationary spiral.

Econ Comments                                                                                                             
NY Times | How to Leave the Euro
Having been led down an ever-worsening spiral by the euro zone and its own government, Greece now faces two options, both of them painful: stay the course, or default and exit the monetary union.

Free Banking | Paper bugs, or, Stupid Arguments Against Gold
Persons familiar with my writings on monetary reform know that, far from being anyone's idea of a gold bug, and despite my conviction that those monies work best that governments govern least, I've always shied away from arguing that we ought to re-establish a gold standard.
WSJ: Real Time Economics | Drilling Down on Bernanke’s Inflation Record
On the question of whether we were trying to defend Mr. Bernanke, we would point you to the lower section of the posting, which reviews his shortcomings on unemployment and financial stability and notes the risk that inflation could still get out of control.
Daily Capitalist | The Benefits Of The Eurozone
We have been so critical of the euro, the ECB, and the spendthrift socialist states in the eurozone that perhaps we have missed something important.
Reason Foundation | Capital Requirements Do More Harm Than Good
The newest of capital requirements established under Basel III and set to go into effect in 2019 establish banks’ core capital ratio to 9.5 percent of risk-weighted assets, but because core capital is not universally definable, and risk weightings are discretionary, nothing is accomplished save added confusion.


WSJ | A Super Offer Rejected
...Mr. Toomey explained that this week the GOP Six offered to raise revenues by $500 billion over 10 years as part of a tax reform that would lock in lower tax rates in return for giving up deductions. Democrats have rejected it, which is puzzling since it would achieve so many of their stated goals.
Washington Times | Senate bill aims to close online tax loopholes
A bipartisan group of senators introduced a bill Wednesday aimed at giving states more power to collect billions of dollars in sales taxes on out-of-state Internet and catalog purchases.

Econ Comments                                                                                                             
IBD | Who Pays For Corporate Taxes?
What about a corporation? As it turns out, a corporation is an artificial creation of the legal system and, as such, a legal fiction. A corporation is not a person and therefore cannot pay taxes. When tax is levied on a corporation, who pays it?
Fox Business | Enough is Enough, It's Time to Revamp the Tax Code
Politicians are lining up to revamp the tax code. However, it’s kind of like what they say about nuclear fusion – it’s 10 years away and always will be.

Political Calculations | Whose Income Should You Tax?
If you want to keep those vital government programs on a sound financial footing, without jeopardizing the well-being of the people who rely on those programs in hard economic times, upon whose income should you most rely for your income tax revenue?
American: Enterprise Blog | Yes, Warren Buffett is confusing the tax debate
Munnell goes on to point out that America has quite a progressive tax system. This surprises many people given the posturing of OWS and the Obama administration (although it is not a surprise to readers of this blog).

NBER | Payout Taxes and the Allocation of Investment
Investment is “locked in” in profitable firms when payout is heavily taxed. Thus, apart from any aggregate effects, payout taxes change the allocation of capital.
CRS | A Securities Transactions Tax: Brief Analytic Overview with Revenue Estimates
Policymakers are currently considering taxing certain financial securities transactions. There are two justifications commonly offered for imposing such a tax: (1) it would reduce financial market volatility, and (2) it would be a significant source of revenue. Existing empirical research, however, suggests that volatility could actually increase in response to a securities transactions tax (STT), although the existing research may not be directly applicable to today's environment. Estimates do indicate that an STT could be a significant revenue source if designed properly.


CNN Money | Initial unemployment claims drop to 7-month low
About 390,000 people filed for initial unemployment benefits in the week ended Nov. 5, the Labor Department said Thursday. The number of claims fell 10,000 from the revised 400,000 in the prior week, and is now at the lowest level since April 2.

Econ Comments                                                                                                             
Washington Times | MORRIS: Wanted: 10 million skilled workers
To some degree, our current unemployment problem is cyclical. To a considerable extent, however, I believe it is structural. This mismatch between abilities and available jobs is a clear sign that yesterday’s skills don’t meet the requirements of today’s workplaces.

Coordination Problem | Understanding Labor Market Woes
Tyler Cowen makes what I would interpret as a similar point today to those who resist the economic analysis of the labor market and the role of education and occupational choice in explaining the recent woes of college graduates in finding employment.


NY Times | Obama Cuts $4 Billion, Then Uses It Elsewhere
Cutting wasteful government spending is one of those exercises that even the most ardent political opponents agree is a good thing. But what one does with those savings is quite another matter.
National Journal | Debt Panel Misses First Deadline
With a third of November gone, the super committee has missed a soft deadline to deliver a deficit-cutting package to the Congressional Budget Office, and that means time is nearly up for lawmakers to propose anything the numbers-crunchers haven’t seen before.
NY Times | Panel Is at Impasse, but Obama Sees No Reason to Step In
The White House’s expectations for the special Congressional committee on deficit reduction, never high, have been all but dashed now that the panel has reached a partisan impasse less than two weeks before it is supposed to recommend a compromise plan.

Econ Comments                                                                                                             
Washington Times | MILLER: A bipartisan Balanced Budget Amendment
House Republicans pick pragmatism over purity in deficit fight.
Politico | The answer is: Spend less. Period.
The federal government is spending too much money. Our nation has made more than $63 trillion in unfunded promises, to be paid for by future generations. It poses an existential threat to America’s dynamic, pro-growth economy. The solution to this problem is to reduce federal spending.

American: Enterprise Blog | Why Republicans should insist on dynamic scoring
Democrats argue against assuming that tax cuts would—at least to some extent—pay for themselves. In fact, they have been making that “static scoring” argument for 30 years.
Heritage Foundation | Austerity Successes in Previous Downturns
The left continues to resist any suggestion of spending cuts right now. In their view, a depressed economy is no time to slash spending; that would only further weaken demand. The successful austerity policies adopted in response to the downturn of 1920, however, offer a clear rebuttal to this notion.