Wednesday, December 21, 2011

General Economics

Bloomberg | Italy’s GDP Contraction Might Indicate Fifth Recession Since 2001: Economy
The Italian economy contracted in the third quarter, signaling the country may have entered its fifth recession since 2001 as the government adopts new austerity measures that will further weigh on growth.
Politico | Wanted: Guide to retool manufacturing
Like presidents before him, Barack Obama is ramping up efforts to stoke a manufacturing renaissance — and he wants generations accustomed to factory layoffs believing in a turnaround.

Econ Comments                                                                                                             
WSJ | The Financial Crisis on Trial
The SEC fingers the government-backed mortgage buyers, not Wall Street greed.
AEI | Save the euro, end the Atlantic alliance
After the European Union’s latest crisis summit last week, international financial markets reacted cautiously. And well they should, since this umpteenth effort to save several Eurozone countries from fiscal collapse, and the common currency itself, produced mediocre results.
Cato Institute | Keystone XL: Liberal Histrionics Answered with Conservative Histrionics
Both opponents and proponents of the project are offering palpable nonsense to gin up their respective bases in hopes of horsewhipping their electoral opponents in 2012.

Calculated Risk | Existing Home Sales in November: 4.42 million SAAR, 7.0 months of supply
Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 4.0 percent to a seasonally adjusted annual rate of 4.42 million in November.
Heritage Foundation | Gas Prices at All-Time Christmas High
Americans hitting the road this week are likely to encounter the highest-ever price for gas at Christmas in history. According to figures from AAA, the nationwide average for regular unleaded is $3.21 per gallon — an increase of 23 cents over last year’s Christmas record.
Calculated Risk | MBA: Mortgage Purchase Application Index decreases, Mortgage rates at low for year
The Refinance Index decreased 1.6 percent from the previous week. The seasonally adjusted Purchase Index decreased 4.9 percent from one week earlier.
WSJ: Real Time Economics | Secondary Sources: Finance Dominance, New Economic Order, Central Bank Imbalances
A roundup of economic news from around the Web.
WSJ: Real Time Economics | Housing Market’s Foundation Looking More Stable
Builders were busier than expected in November, and many are more upbeat heading into 2012. In recent years, housing was supported by temporary help from government tax rebates. Now, the sector looks as if it can stand on its own.

Mercatus Center | A Comparison of Indices that Rank State Economic Competitiveness
Studies from the Mercatus Center, the Tax Foundation, and the American Legislative Exchange Council have ranked the states on the basis of their economic and social policies. These organizations have designed indices to help individuals select states with the fiscal climates that most closely match their ideals as well as to provide state policymakers with ways to compare their states’ legal and economic climates.

Health Care

National Journal | Lobbying Groups Criticize House Doc Fix Vote
The House voted 229 to 193 to disagree with the Senate bill, a procedural motion that denied lawmakers an up-or-down vote on the legislation. If Congress does not act before the end of the year, Medicare doctors get a 27 percent cut in pay.

Heritage Foundation | Obama Administration Agrees: Florida Medicaid Reform Pilot Good for Patients and Taxpayers
The bottom line with Florida’s Medicaid Reform is that when the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.
Mercatus Center | Medicare fraud: bogus clinics in barns
Each year the Medicare program loses millions of dollars to fraud. Applicants simply set up fake clinics using stolen medical IDs and real addresses in barns, UPS stores and abandoned apartments.

Heritage Foundation | How Medicare Price Controls Have Contributed to Drug Shortage
As Congress searches for policy solutions, it is crucial that lawmakers understand the role that government price controls, specifically in Medicare, have played in the crisis.


Market Watch | ECB lends $641 billion to European banks
The European Central Bank on Wednesday attempted to send a strong signal to financial markets by offering to loan $641 billion to 523 euro-area banks in a massive three-year funding operation.

Econ Comments                                                                                                             
Forbes | Why The Fed Can't Be Counted On To Save The Economy
Over the years, the Fed has been directed to achieve more and more conflicting priorities, including economic growth, price stability, interest-rate stability, financial market stability and exchange‑rate stability as well as government funding and full employment.
Reuters | Fed up with Bernanke
Guaranteeing cheap money is a Keynesian way of restoring health to an economy in recession, though Keynes himself was aware that low interest rates do not automatically lead to jobs.

Econlog | Eurobanking
What you have in Europe, even more than in the U.S., are banks that have grown much too large, using these dangerous leverage techniques.
Econlog | Robert Hetzel on the Liquidity Trap
The institutional fact that makes a liquidity trap an irrelevant academic construct is the unlimited ability of the central bank to create money.


Washington Times | LAMBRO: Reid’s legislative trap
Senate leader intends to blame GOP for payroll-tax hike.
Politico | Payroll tax cut down to who blinks first
The hardened positions suggest the impasse will stretch on for at least a few more days — and possibly even into the new year, when American paychecks will shrink by 2 percent if there’s no deal.

Econ Comments                                                                                                             
CNN: Money | Payroll tax deadlock could hobble economy
Most of the economists surveyed worry that raising the tax bite on most workers by up to $2,000 will put a crimp in spending in the new year and will be a drag on the economy.
WSJ | Want Growth? Try Stable Tax Policy
The payroll tax cut is one of 84 tax provisions expiring this year, 10 times as many as expired in 1999.

WSJ: Real Time Economics | Vital Signs: Slower Growth in State Tax Revenue
State tax revenue has slowed its rate of growth. In the third quarter, states saw their overall tax revenue increase 5.6% from the same period a year ago.


Politico | Lack of immigrants could hurt growth
Congress could be hampering economic growth by moving slowly on immigration reform. | China Is Not The Source Of Our Jobs Problem
In 2010, total imports were about 16 percent of U.S. gross domestic product, and of that, 2.5% came from China.

WSJ: Real Time Economics | Jobless Rates Fall in 43 States
Nationally, the unemployment rate declined to 8.6% last month from 9% in October. Nineteen states and Washington have rates higher than the national average. Just three states — New York, Rhode Island and Wyoming — reported increases in their unemployment rates, while four — Hawaii, New Jersey, Indiana and Oklahoma — were unchanged.


Market Watch | Europeans at doorway to fiscal discipline
The European Union debt crisis is coming to a head. At a recent summit, EU members took a major step toward closer integration. Britain vetoed a proposed treaty, but a plan for tougher government budget rules could be implemented through an agreement by the other 26 EU countries.

Econ Comments                                                                                                             
AEI | AEI 2011: Building a better budget
In the last two weeks of this year, the AEI 2011 series will highlight the institute's work that has made an impact, made a difference and made headlines over the past year.

Cato @ Liberty | Sen. Coburn’s 2011 Wastebook
Yes, the money involved here amounts to pocket change in comparison to the $3.7 trillion the federal government spent last year. But as Coburn asks in the introduction, “Do these initiatives match your understanding of the role of the federal government as outlined by the Enumerated Powers of the U.S. Constitution?”
Econlog | Thomas Sargent on Government Default
How should you judge this decision not to bail out? If the feds had bailed them out, would you have had these balanced-budget amendments? Also, wouldn't you have set up incentives for future profligacy at the state government level and, therefore, future bailouts? Also, wouldn't the feds, because they were bailing out, have exercised stronger control of the states?
Coordination Problem | What's an $800 Billion Stimulus Worth?
Burton Abrams argues that it is worth negative $475 billion.