Monday, November 14, 2011

General Economics

WSJ | Obama Seeks New Pacific Influence
President Says 'We Are Here to Stay' at Start of East Asia Trip, but Beijing Challenges U.S. Role as Dominant Power.
USA Today | Foreclosure activity hit 7-month high in Oct.
More U.S. homes entered the foreclosure process in October than in the previous month, with Florida, Pennsylvania and Indiana registering among the largest monthly increases, new data show.
Market Watch | November UMich consumer sentiment rises to 64.2
The sentiment reading, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87 in the year before the start of the most recent recession.
WSJ | Euro-Zone Factory Output Falls
Industrial output fell 2% in September from August, more than reversing the prior month's gain of 1.4% and marking the biggest drop since February 2009, the European Union's statistics agency Eurostat said Monday.
Source | Rate on 30-year mortgage below 4% for 2nd time in history
The average rate on the 30-year fixed mortgage fell below 4% last week. It's only the second time rates have ever dipped that low.
WSJ | Japan Economy Rebounds From Earthquake
The Japanese economy grew at a brisk 6% annualized rate in the July-September period, as strong rebounds in exports and consumption helped fuel a recovery from the massive dislocations caused by the March 11 earthquake and tsunami.
USA Today | Record exports trim September trade deficit to $43 billion
The U.S. trade deficit fell in September to the lowest point this year as foreign sales of American-made autos, airplanes and heavy machinery pushed exports to a record high.

Econ Comments                                                                                                             
Washington Times | DOAK: Insurance oversight overkill
New federal office interferes with efficient state insurance regulation.
RCM | What's At Stake In the Net-Neutrality Fight
Two fundamental issues lie at the heart of the contentious battle over the Federal Communications Commission's (FCC) attempt to establish "network neutrality" regulations over the freewheeling Internet. Freedom of speech is not one of them.
WSJ | Japan's Third Opening
Trans-Pacific trade talks can force domestic economic reform.
Washington Post | Housing woes won’t yield to quick fix
We Americans think of ourselves as problem-solvers, but the housing collapse has so far eluded all solutions. Perhaps 10 million homes have gone into foreclosure since 2006; millions more will follow.
Barron's | Less Recession Risk, With Caution
There are some glimmers of hope, but the economic misery still looks like it will be prolonged. A real jobs uptick in 2015?
Politico | Let states regulate fracking
Too often, Washington ignores the complexities inherent in our vast and diverse nation and reverts to a one-size-fits-all approach in which Washington “knows” best.
WSJ | The EPA's Reliability Cover-Up
Why did the agency erase its own doubts about the U.S. electrical grid?
WSJ | Why China Is Unhappy
Rising discontent is challenging Communist Party rule.
Washington Times | DECKER: Obama: China’s stooge
President blames America while running economy into the ground
Source | Whatever Happened to Discipline and Hard Work?
In the future, complaints about income inequality are likely to grow and conservatives and libertarians won’t have all the answers. Nonetheless, higher income inequality will increase the appeal of traditional mores — of discipline and hard work — because they bolster one’s chances of advancing economically.
Morningstar | China's Unsustainable Investment Boom
The country has to boost household consumption to maintain heady GDP growth.

Calculated Risk | Schedule for Week of Nov 13th
Two key housing reports will be released this week: November homebuilder confidence on Wednesday, and October housing starts on Thursday.
Reuters | Reuters Europe’s necessary creative destruction
What we’re seeing in Europe — in rising Italian borrowing costs and the felling of two prime ministers — is the growing impatience of the markets for a resolution to the euro zone crisis.
Econlog | Mark Thoma: Government Welfare Programs Have no Effect on Incentives
The poverty rate was declining fairly steadily before President Johnson, in 1965, started his so-called Great Society programs and increased government transfers to low-income people. Since then poverty has declined, but more slowly.
Calculated Risk | If Europe is in a recession, how about the U.S.?
If we look at the channels of contagion, it seems the impact from Europe – barring a blow-up – will be fairly small. Of course, with sluggish growth, the U.S. is very susceptible to economic shocks, and it also appears that the U.S. is moving to more austerity in 2012 – and that is an additional concern.
NY Times | What Percentage Lives in Poverty?
Do poor people represent the bottom 16 percent of the population or the bottom 15 percent? The answer matters more than you might think.
Calculated Risk | Calculated Risk Unofficial Problem Bank list declines to 981 Institutions
Another quiet week for the Unofficial Problem Bank List. The list includes 981 institutions with assets of $405.9 billion after two removals.
Source | What we’ve learned from the euro crisis, part I
It is a disaster and a dead-end situation when a country uses its automatic stabilizers in a manner which supports rent-seeking and harms growth. There is, in a time of crisis, no way out of the resulting trap.
Atlantic | The Limits of Risk Engineering
Regulators bear much of the responsibility. Before 1999, when Europe forged its monetary union, regulators permitted banks to treat as risk-free the debt of any country that belonged to the Organization for Economic Cooperation and Development, a club of developed nations that includes the United States and most of Europe.
WSJ: Real Time Economics | Number of the Week: What If Rest of World Had as Many Cars as U.S.?
4.5 billion: Additional cars, trucks and buses on the world’s roads if every place had the same number of vehicles per capita as the U.S.
NRO: The Corner | NRO: The Corner Special-Interest Politics and Regulatory Complexity
Over at Mother Jones, Kevin Drum has a piece where he says, essentially, companies may complain about complex regulations but the truth is that they love them, because they can use complex regulations to their advantage when competing with other businesses. In fact, Drum argues, companies lobby hard to turn simple rules into complex ones:
AEI:The American | AEI:The American The chart that shows America’s vulnerability to a EU financial crisis
What would happen to the U.S. economy if the EU’s debt problems dramatically worsened? The collapse of MF Global certainly raises concerns that policymakers might not have a good handle on risk.

Philadelphia Fed | Philadelphia Fed Supply-Side Policies and the Zero Lower Bound
This paper examines how supply-side policies may play a role in …ghting a low aggregate demand that traps an economy at the zero lower bound (ZLB) of nominal interest rates. Future increases in productivity or reductions in mark- ups triggered by supply-side policies generate a wealth e¤ect that pulls current consumption and output up.

Health Care

National Journal | Gallup: Fewer Americans Covered by Employer-Based Insurance
Only 44.5 percent of American adults received health insurance from an employer in the third quarter of 2011, the latest low point in a steady decline in employer-based coverage measured by Gallup and Healthways since 2008.
WSJ | Health System Reflects Greece's Ills
Greece's constitution obliges the state to provide health care to citizens. By and large, it does. But the system is a mess. It is stuffed with debt, plagued with corruption.
National Journal | QUICK TAKE: White House to Announce $1 Billion in Health Care Grants -- WaPo
The Obama Administration will announce on Monday as much as $1 billion in grants to help groups, doctors and communities hire and train health-care workers.

Econ Comments                                                                                                             
AEI | Medicare's Failed Physician Payment Policy
Medicare has been paying your doctor too much, and it wants its money back. To make up for years of high payments, Medicare fees are scheduled to drop 27.4 percent in January.

Daily Capitalist | Obamacare of Spain Is Running Out Of Money
This article about Spain’s public health care system demonstrates what happens when the government starts running out of money. Of course, that couldn’t happen here.
Heritage Foundation | Reforming the Military Health Care System
A number of military and veterans groups are expressing concern over a letter that Senator John McCain (R–AZ) has sent to members of the congressional Joint Select Committee on Deficit Reduction suggesting they adopt earlier proposals from a March report of the Congressional Budget Office (CBO) for scaling back military health care benefits and increasing fees.


WSJ | Euro Risks Hit Banks
Mounting concerns over the euro-zone crisis are prompting some of the world's largest banks, including U.S. banks, to release more information about their exposure.
WSJ | Republican Gets Serious Look for Fed Board Spot
The White House, which has been looking for months for a Republican for one of the two vacancies on the Federal Reserve Board, is seriously considering a former Treasury official in the George H. W. Bush administration, said people familiar with administration deliberations.‬

Econ Comments                                                                                                             
Forbes | Message To Greece: To Leave The Euro Isn't To Leave The Euro
At present roughly 67 percent of all U.S. dollars in circulation are overseas or held by those with a foreign address. This reality is necessitated by the fact that for good or bad, the dollar is the world’s currency.
RCM | The Fallacy Of Persistent Credit Creation
Those who know the history of the Federal Reserve System are fairly acquainted with the idea of money elasticity. The latter half of the 19th century was marked by severe bank panics that occurred with an almost alarming frequency.
CNN Money | $400,000 prize offered to break up the euro
Economists are terrified about the chaos they expect if some countries decide to stop using the euro. But one person thinks there may be a way to jump ship safely -- and he's got a $400,000 bounty for anyone who can figure out how to do it.
Bloomberg | Fed Theoreticians Need Some Real-World Feedback: Caroline Baum
If the Fed’s contingency plan is based on a forecast, we’re in trouble. This is the same Fed that was fighting phantom deflation in 2003, didn’t foresee the depth or the breadth of the subprime crisis, failed to identify the undercapitalized banks it regulates, and downgrades its forecast with every backward-looking revision to gross domestic product.

CRS | Federal Reserve: Oversight and Disclosure Issues
Critics of the Federal Reserve (Fed) have long argued for more oversight, transparency, and disclosure. Criticism intensified following the extensive assistance provided by the Fed during the financial crisis.


Investors | ObamaCare A Big Hurdle To Bipartisan Tax Reform
Everywhere you turn in Washington these days, there's talk of reforming the nation's Byzantine tax code. Earlier this year, President Obama called on Congress "to reform our individual tax code so that it is fair and simple."
NY Times | Tax Burdens Tilt Coastal, and System’s Fairness Is Debated
THE wealthy have been the subject of much discussion lately, from the protesters on Wall Street to lawmakers in Washington.
WSJ | Deficit Deal Might Delay Tax Overhaul
A top House Republican raised the possibility Sunday of pushing a tax-overhaul effort to next year, as part of a broader deficit-reduction effort that is closing in on a deadline just days away.
NY Times | Deficit Panel Seeks to Defer Details on Raising Taxes
With a little over a week left to reach a deal, members of the Congressional deficit reduction panel are looking for an escape hatch that would let them strike an accord on revenue levels but delay until next year tough decisions about exactly how to raise taxes.

Econ Comments                                                                                                             
Cato Institute | Better Education Through Lower Taxes
Coloradans have said no to higher education taxes, voting down Proposition 103 by a two-to-one margin. There was good reason for that decision. Total per-pupil spending in Colorado has more than doubled since 1970, even after accounting for inflation. The same is true at the national level.
WSJ | About That 'Christmas Tree Tax'
The real story is a case of business and government collusion.
American Action Forum | Interest Expenses and Tax Reform
The goal of any fundamental corporate tax reform should be to improve the attractiveness of the United States as a location for investments in human, technological, and physical capital (i.e. “competitiveness”) and eliminate to the extent practical economic distortions introduced by the tax code.
WSJ | The Folly of the Flat Tax
Eliminating the biggest deductions and exclusions is extremely unlikely, and flatter rates alone won't make the tax system any simpler. It would, however, make it far less progressive.

AEI: The American | 90 percent or bust? Why the United States can’t go back to 1950s tax rates
Indeed, from 1950 to 1963, the top marginal rate was either 91 percent or 92 percent and average annual GDP growth was a peppy 3.67 percent. But there are a few problems with this story:


USA Today | Growing number of programs across USA help vets to get jobs
Helmets to Hardhats is among many initiatives nationwide, both public and private, aimed at getting veterans back to work. The unemployment rate as of October for post-9/11 veterans was 12.1%, according to the Bureau of Labor Statistics — 3% above the national unemployment rate.
Fox News | MF Global Terminates Entire Workforce of 1,066 Employees
James W. Giddens, the court-appointed trustee for the liquidation of MF Global, said in a statement that the company is dismissing workers in accordance with a bankruptcy court mandate. Between 150 and 200 former employees are being hired to assist with the liquidation and court proceedings.
USA Today | More boomers working past retirement
So much for kicking back at the lake house, long afternoons of golf or pretty much anything baby boomers had dreamed about in retirement. For many, the plan now calls for logging more hours at the office and renewed worries about money, according to a new poll.

Econ Comments                                                                                                             
Forbes | If State Capitalism Is So Good, Why Are Russian And Chinese Entrepreneurs Fleeing?
State capitalism was touted by Lenin as a positive step on the road to socialism. By state capitalism, Lenin meant a “commanding heights” of large businesses and trusts controlled by a state that served the interests of the working class.

WSJ: Real Time Economics | Nearly Quarter of Workers Are Depressed
Today’s economic situation is depressing. Literally.
WSJ: Real Time Economics | Generation Jobless: By the Numbers
As the recovery limps along and unemployment remains high, we’ve found young adults moving back in with their parents to save on expenses, rejecting Ivy League schools for less expensive state universities, and choosing liberal-arts majors even though science and engineering grads are in greater demand by employers. Below, we pull out some of the numbers that illustrate these and other trends.


WSJ | Hints of Hope as Deficit Deadline Approaches
Despite sharp divisions within Congress's special deficit-cutting panel, members of both parties say its goal of trimming at least $1.2 trillion from federal deficits over 10 years remains within grasp, and President Barack Obama tried to provide an additional push Friday.
CNN: Money | Year-end budget busters: $600 billion on the line
Debt reduction may be consuming Capitol Hill these days, but lawmakers have a number of pricey budget decisions to make before the year's out.

Econ Comments                                                                                                             
WSJ | Train to Neverland
California's railway gets more fantastic all the time.
Roll Call | Deficit Panel Faces Critical Week
With only 10 days left to craft a deficit reduction deal, the super committee is facing its now-or-never moment.
Washington Post | Before Solyndra, a long history of failed government energy projects
Solyndra, the solar-panel maker that received more than half a billion dollars in federal loans from the Obama administration only to go bankrupt this fall, isn’t the first dud for U.S. government officials trying to play venture capitalist in the energy industry.

WSJ | Supercommittee Failure Could Throttle Holiday Spending
Consumers are starting to feel a bit more confident about the economy, according to the latest Thomson Reuters/University of Michigan consumer sentiment index out today. But a cloud forming over Washington threatens to darken the mood.
NRO: The Corner | I Thought the Supercommittee Was Supposed to Reduce the Deficit
Democrats on the supercommittee have proposed that the savings from the end of the wars in Iraq and Afghanistan be used to pay for a new stimulus package.
WSJ: Real Time Economics | Greenspan: Europe’s Debt Crisis Comes Down to North vs. South
The divergence between northern Europe’s powerhouse economies and the comparatively less competitive southern region is an “odd dilemma” that euro-zone leaders must confront, former Federal Reserve Chairman Alan Greenspan said Thursday.

CBO | Regulations From the Executive in Need of Scrutiny Act of 2011
H.R. 10 specifies special Congressional procedures and explicit timelines for enacting a joint resolution of approval for major rules. Under H.R. 10, if the Congress fails to enact a joint resolution of approval within 70 legislative (or session) days of receiving the major rule and accompanying report from a federal agency, the rule may not take effect.