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Tuesday, July 31, 2012

General Economics

News                                                                                                                             
WSJ | Taiwan GDP Unexpectedly Shrinks
Taiwan's economy unexpectedly shrank in the second quarter from a year earlier, the first on-year contraction since the third quarter of 2009 when the country was under pressure from the global financial crisis, as exports and consumption sagged.
Bloomberg | Home Prices in U.S. Fell Less Than Forecast in Year to May
Residential real estate prices declined less than forecast in the year ended May, another sign that the housing market is on the mend.
CNBC | Wanted: Wealthy Spenders to Boost Recovery
The shaky economic recovery may depend on wealthy consumers to keep spending — and they may not have the confidence to do the job.
Market Watch | Consumer spending falls again in June
U.S. consumers reduced spending for the second straight month despite a sharp increase in wages, boosting their savings rate to the highest level in a year.
CNN Money | Manufacturing boom: Trade school enrollment soars
Trade schools nationwide are bursting at the seams as demand for skilled factory workers pushes enrollment to record highs.
WSJ | In Crisis, a Rare Swede Spot
Sweden's economy, bolstered by solid exports and healthy consumer spending, is picking up considerable steam even as many of its European neighbors gasp for breath amid the struggle to contain the euro-zone debt crisis.
CNN Money | Report slams for-profit schools for expensive tuition, high drop-out rate
U.S. taxpayers spent $32 billion last year on for-profit private schools, despite the sector's relatively high drop-out rate, according to a congressional investigation released Monday.
Market Watch | Fewer foreclosed homes in June: CoreLogic
There were about 60,000 completed foreclosures in June, down from about 80,000 in the same month last year, according to CoreLogic Tuesday.

Econ Comments & Analysis                                                                                            
Fortune | America's new work ethic?
New welfare rules and booming disability insurance rolls reveal a bias toward aid checks over paychecks.
WSJ | An Intriguing Idea to Encourage Bank Lending
The Olympics aren't the only thing happening across the pond these days. The Bank of England is about to launch a creative "Funding for Lending Scheme" to boost bank lending.
Washington Times | No excuse for bad policies
The Obama administration and its apologists, including many in the media, keep telling us that the Great Recession was the worst since the Great Depression in the 1930s, and that is why the recovery has been so anemic. Is that true?
WSJ | 'A Climate That Helps Us Grow'
President Obama's riff on small business—"If you've got a business, you didn't build that, somebody else made that happen"—has become a major controversy.
News Day | Milton Friedman, a centennial appreciation
At the height of the Vietnam War, U.S. commander Gen. William Westmoreland testified before the President's Commission on an All-Volunteer Force. The 15 members of that commission were charged with exploring the feasibility of ending the military draft.
Washington Times | Crony capitalism, Countrywide and Congress
“Crony capitalism” has become a popular buzz phrase when speaking of the bailouts as American taxpayers struggle to make sense of the corrupt relationships that led to the financial crisis.

Blogs                                                                                                                             
WSJ | Halfway Through, 2012 Has Been a Disappointment
This year began with such hopeful expectations–almost all of which have been dashed.
Heritage Foundation | The Sweet Fruits of Free Trade
After years of delays and renegotiations, a free trade agreement between the United States and South Korea (KORUS) finally took effect four months ago. Some parts of the U.S. economy are already bearing sweet fruit.
National Review | Must-Read Case Study of Government Gone Wild: Ohio Edition
How did the State of Ohio go from being one of America’s top economies to an economic basket case?
AEI | Obama’s overly optimistic economic forecasts
How much confidence should Americans have in the latest economic forecasts from the Obama White House? In its latest update, Obama’s Office of Management and Budget slashed its GDP forecast for 2012, to 2.3% from 2.7%, and for 2013, to 2.7% from 3.0%. Pretty tepid growth.

Health Care

Econ Comments & Analysis                                                                                            
WSJ | 'Exchange' for the Worst
Democrats promised that health-care reform would be a smooth exercise in expert planning, but so far its "implementation" has been as anarchic and improvisational as the Affordable Care Act's passage. Yet amid the mayhem, there's a chance to mitigate some of the damage.
Daily Finance | Will Employer Health Insurance Go the Way of Pensions?
For years, employers have been getting out of the pension business. With old-style pensions giving way to 401(k) plans, most workers are now responsible for making their own investment decisions for their retirement.

Blogs                                                                                                                             
Heritage Foundation | Obamacare by the Numbers
Looking for some straight facts on Obamacare and its impact? Here are some of the most important numbers you need to know about President Obama’s health law

Monetary

News                                                                                                                             
WSJ | Heat Rises on Central Banks
The U.S. Federal Reserve and European Central Bank face critical tests this week amid heightened expectations that they are moving toward new actions to tackle fragility in the global economy.
Bloomberg | Fed Seen Forgoing New Bond Buying Program Until September
Federal Reserve Chairman Ben S. Bernanke will probably forgo announcing a third round of large- scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey.
CNBC | What Europe's Central Bank May Do to Save the Euro
The European Central Bank is thinking the unthinkable to save the euro, including resuming its controversial bond-buying program and possibly even pursuing quantitative easing — in effect printing money.

Econ Comments & Analysis                                                                                            
WSJ | The Man Who Saved Capitalism
It's a tragedy that Milton Friedman—born 100 years ago on July 31—did not live long enough to combat the big-government ideas that have formed the core of Obamanomics.
Bloomberg | Bernanke’s Plan: Sit, Wait and Then Do Something
Reporters whose job it is to tell us what the Federal Reserve tells them didn't have much to go on last week. So they told us what we already knew.

Blogs                                                                                                                             
Minyanville | The Federal Reserve, Gold, Oil, and the Dollar's Demise
The Federal Reserve, through its various monetary mechanisms, has a major impact on the value of the US dollar, and over time, has destroyed the purchasing power of the fiat base currency used in the United States.
Library of Economics | An Ode to Milton Friedman
Today would have been Milton Friedman's 100th birthday.  I only met the man long enough for him to sign my copy of Capitalism and Freedom, but he's been a tremendous influence on me. 
Economist | When money isn't everything
So, there is a class of market monetarist critics who accept that more demand would be a good thing, but who argue that there are situations in which demand ceases to be a monetary phenomenon. One sees several different stories about the precise nature of the breakdown
Think Markets | Who Should Audit the Fed?
A few days ago the House passed with a veto-proof majority the bill known as “audit the fed” or more plainly as H.R. 459, sponsored by Ron Paul. 
WSJ | A Look Inside the Fed’s Balance Sheet
Ahead of the Federal Reserve‘s policy-setting meeting this week, it’s worth taking a look at the latest figures from the Fed’s balance sheet.

Taxes

News                                                                                                                             
National Journal | House Dems Offer Senate-Passed Tax Bill
House Democratic leaders on Monday said they are preparing to introduce the Senate-passed bill to renew the President George W. Bush-era tax cuts for families earning up to $250,000 as their alternative to the House GOP plan that would extend all the tax cuts.

Blogs                                                                                                                             
Heritage Foundation | Sluggish Economic Growth: More Reason to Renounce Tax Hikes
On the afternoon of another discouraging assessment of the nation’s economic growth, the Obama Administration late Friday quietly released its mid-year update of the budget. The synchronicity made clear just how far from reality the President’s fiscal and economic policies have drifted—and the imperative of a prompt course correction.
Tax Foundation | Monday Map: Sales Tax Holidays in 2012
Today's Monday Map presents data from the report on sales tax holidays we released this morning, Sales Tax Holidays: Politically Expedient but Poor Tax Policy. 17 states have held or will hold sales tax holidays in 2012; geographically most of them are in the South.

Employment

News                                                                                                                             
WSJ | EU Jobless Rate Hits High
Unemployment in the 17 countries that share the euro hit another record high in June, a development that is likely to further weaken consumer spending and add pressure on the European Central Bank's governing council to take action at its monthly meeting Thursday.
Bloomberg | Euro-Area Unemployment Rate Reaches Record 11.2%: Economy
The jobless rate in the euro area reached the highest on record as the festering debt crisis and deepening economic slump prompted companies to cut jobs.

Blogs                                                                                                                             
AEI | Obama opposes raising minimum wage in American Samoa due to its harmful effects, will he do the same for the U.S.?
Just wondering, wouldn’t the same economic reasoning, evidence, and analysis that motivated President Obama to sign legislation freezing the minimum wage because of its harmful effects on Samoa’s economy also apply to the U.S.?

Budget

Blogs                                                                                                                             
The Hill | GAO says expanded food stamp eligibility raises costs, chances of abuse
The Government Accountability Office (GAO) released a report Monday that says the ability of states to expand eligibility for federal food stamps made about 473,000 more people eligible for food stamps, and added about $460 million in extra costs in 2010.

Monday, July 30, 2012

General Economics

News                                                                                                                             
Market Watch | U.S. job growth, economy stuck in doldrums
Slackening U.S. and global growth likely means the nation’s unemployment rate will remain stuck around 8%, reducing the odds of a faster economic recovery kicking in before the end of the year.
WSJ | Weak Economy Heads Lower
The U.S. economy slowed sharply in the second quarter, growing just 1.5% as consumers slashed spending and businesses grew more cautious about hiring and investing, underscoring that an already wobbly recovery is losing even more steam.
Politico | Poll: Corruption is No. 2 issue for 2013
Americans view reducing government corruption as the second-highest priority for the next president, behind only job creation, according to a new Gallup poll released Monday.
Bloomberg | Euro-Area Economic Confidence Drops More Than Forecast
Economic confidence in the euro area fell more than economists forecast to the lowest in almost three years in July, suggesting the economy’s slump extended into the third quarter as governments struggled to tame the debt crisis.
USA Today | Recovery's pace may depend on worried wealthy
The shaky economic recovery may depend on wealthy consumers to keep spending — and they may not have the confidence to do the job.

Econ Comments & Analysis                                                                                            
WSJ | The 1.5% Presidency
President Obama didn't comment on Friday's report of declining growth in the second quarter, and that's no surprise. The economic story of his Presidency is by now familiar: a plodding recovery that has taken its third dip in three years and is barely raising incomes for most Americans.
AEI | Why capitalism has an image problem
Mitt Romney's résumé at Bain should be a slam dunk. He has been a successful capitalist, and capitalism is the best thing that has ever happened to the material condition of the human race.
Reason | Government Did Not Build Your Business
Evidently, the president believes that economic growth and job creation are largely the result of actions taken by benevolent government agencies. But while it is certainly the case that good governance is essential, entrepreneurs engaging in voluntary cooperation coordinated through competition in free markets is what actually creates wealth and jobs.
Bloomberg | Burn Your iPhone With Chinese Olympic Uniforms
Tonight, as American athletes enter London’s Olympic Stadium, all eyes will be on China. More to the point, on the made-in-China uniforms Team USA is sporting.
WSJ | Slow Recovery or Failed Agenda?
President Obama has a tough task ahead of him. He must convince the American voter that the economy is improving and that he deserves the credit. At the same time, he must make the case that the blame for the slowness of the recovery lies with others.
Washington Times | JORDAN AND SOUTHERLAND: To fight poverty, empower people
President Johnson declared a War on Poverty in 1964. Over the subsequent three decades, the federal government created a maze of welfare programs to distribute a growing mountain of taxpayer money. But year after year, poverty seemed to win the war.
WSJ | The Russia Trade Pile-Up
So how can legislation supported by business groups, democracy activists, Senate Democrats, House Republicans and the Obama Administration be in danger of failing? Answer: Only in Washington.
Bloomberg | How Recession Will Change University Financing
The latest recession will probably be seen as a turning point for college and university financing.

Blogs                                                                                                                             
Political Calculations | The GDP Revision
On Friday, 27 July 2012, the Bureau of Economic Analysis revised its estimates of the U.S.' inflation-adjusted GDP going back to the first quarter of 2009.
Library of Economics | Enrico Moretti on Mobility
In total, almost half of college graduates move out of their birth states by age 30. Only 27 percent of high school graduates and 17 percent of high school dropouts do so.
WSJ | Economists React: GDP ‘Not Satisfactory by Any Gauge’
Economists and others weigh in on the tepid second-quarter gross domestic product growth rate.
Calculated Risk | Unofficial Problem Bank list declines to 900 Institutions
For the week, there were seven removals and two additions leaving the list at 900 institutions with assets of $349.5 billion.
Neighborhood Effects | New Research From Henderson on Cronyism
Today Mercatus published a new piece on the economics and history of cronyism. It is by Professor David Henderson. David highlights his piece in an OpEd over at Real Clear Politics and in a blog post at EconLog.
Library of Economics | Reforming Government as an Institution
The time is ripe to push for new fiscal institutions to engage in a long-overdue rethinking of the rules shaping fiscal decisionmaking, to consolidate certain related government functions within unified bureaucratic structures and undo earlier consolidations that have failed, and to adopt measures aimed at depolarizing American politics, including reforms to the judicial confirmation process and to the congressional redistricting system.
WSJ | Is This Worst or Second-Worst Postwar Recovery?
There’s no question this is a lousy recovery. But is it the worst since World War II, or only the second-worst? It depends on how you count.
Calculated Risk | Schedule for Week of July 29th
The key report for this week will be the July employment report to be released on Friday, Aug 3rd.
Marginal Revolution | Krugman on income mobility
The rich man in his castle, The poor man at his gate, God made them high and lowly, And ordered their estate.
WSJ | Number of the Week: No Rush to Lock in Low Rate
9: Number of months in the last 12 when mortgage rates hit new record lows.
Daily Capitalist | The Japan Syndrome
Before taking a multi-week break with family in which I intend to post only for major market action, it’s time for some review.  The macro theme in the U.S. economy and financial markets strikes me as just what I stated in one of my first blogs.
AEI | Maybe private sector is doing fine? Growth in post-recession ‘private GDP’ (3%) is above average
So maybe it’s true that the “private sector is doing fine” and most of the sub-par economic growth measured by real GDP is simply reflecting the decreases in government spending, and not weakness in the private sector?

Health Care

News                                                                                                                             
NY Times | Doctor Shortage Likely to Worsen With Health Law
In the Inland Empire, an economically depressed region in Southern California, President Obama’s health care law is expected to extend insurance coverage to more than 300,000 people by 2014. But coverage will not necessarily translate into care
CNN Money | Who covers health care for Texas' uninsured? Taxpayers
Texas Governor Rick Perry says he won't expand Medicaid eligibility under the health reform law because he wants to spare taxpayers billions of dollars.

Blogs                                                                                                                             
Marginal Revolution | Medicaid wars, continuing
Phil Galewitz and Matthew Fleming surveyed all 50 states to find out how Medicaid budgets are changing.

Monetary

News                                                                                                                             
Bloomberg | Deflation Dismissed by Bond Measure Amid QE3 Anticipation
For all the handwringing over the slowdown in the U.S. economy, the bond market shows there’s less risk of deflation now than before the Federal Reserve’s first two rounds of large-scale debt purchases.
WSJ | Dollar's Surprising Strength Eats Into the Bottom Line
Exchange rates can be tricky to manage, and many companies try to persuade investors to strip out their effects when judging corporate performance. But in the past quarter, the dollar gained much more quickly than expected.
Bloomberg | Fed Weighs Cutting Interest on Banks’ Reserves After ECB Move
Federal Reserve Chairman Ben S. Bernanke may be taking another look at cutting the interest rate the Fed pays on bank reserves to bring down short-term borrowing costs and spur the slowing U.S. expansion.

Econ Comments & Analysis                                                                                            
Forbes | Ron Paul, Fractional Reserve Banking, and the Money Multiplier Myth
There’s a saying in the banking industry that for a poorly run bank no reserve requirement is stringent enough, and then for a well run bank, any reserve requirement is positively draconian.
Market Watch | 5 lessons Bernanke has learned on the job
Back in 2006 when Ben Bernanke was named chairman of the Federal Reserve, he knew he’d make some mistakes, but he was pretty sure the Fed wouldn’t do what the United States did in the 1930s or what Japan did in the 1990s that allowed depressed conditions to persist for years.

Blogs                                                                                                                             
Minyanville | Can More Fed Twisting Actually Help?
Is there correlation, non-correlation, or is it simply emotion driving the tape?  Considering the economic news released last week the US, equity markets played quite the tune, akin to a punk rock band: No rhyme or reason in its beat.
Marginal Revolution | The public choice approach to monetary policy
By speeding the flood of less expensive imported products into Japan, the strong yen is contributing to a broader drop in the prices of goods and services, known as deflation, that has helped retirees stretch their pensions and savings.

Taxes

News                                                                                                                             
National Journal | Both Parties Push Tax Plans in Race to Recess
Lawmakers in both chambers are eyeing an end-of-the-week exit for the August recess, but not before both parties work to crystallize their positions on alternate tax plans for back-home campaigning.

Blogs                                                                                                                             
CATO | On Death Tax, the U.S. Is Worse than Greece, Worse than France, and Even Worse than Venezuela
Considering that every economic theory agrees that living standards and worker compensation are closely correlated with the amount of capital in an economy, one would think that politicians would be very anxious not to create tax penalties on saving and investment.
National Review | Recovery, Keynesians, and Tax Increases
According to ABC News, and other news outlets, the president is urging House GOP members to “do the right thing” on taxes. That means let the Bush tax cuts expire for households making over $250,000.

Employment

Econ Comments & Analysis                                                                                            
NBER | Do Male-Female Wage Di fferentials Reflect Diff erences in the Return to Skill? Cross-City Evidence From 1980-2000
Over the 1980s and 1990s the wage differentials between men and women (with similar observable characteristics) declined significantly. At the same time, the returns to education increased.

Blogs                                                                                                                             
Tax Foundation | Taxes and the Outsourcing of U.S. Jobs
International business taxation and its role in outsourcing are heating up as major election-year political issues. At a campaign stop in Cincinnati last week, President Obama cited a new report as evidence that Mitt Romney’s territorial tax reform proposal would push jobs abroad
AEI | How to think about jobs numbers
President Obama frequently touts the fact that the economy has created 4.4 million new private-sector jobs over the past 28 months, being careful to add the caveat that we can’t be satisfied with the state of the labor market.

Budget

News                                                                                                                             
Washington Times | Eurogroup chair sees decisions soon in debt crisis
The German and Italian leaders issued a new pledge to protect the eurozone, while the influential eurogroup chairman was quoted Sunday as saying that officials have no time to lose and will decide in the coming days what measures to take.
WSJ | Federal Spending Cutbacks Slow Recovery
Falling military spending and the end of federal stimulus programs are further slowing the already weak U.S. economic recovery.
CNN Money | How to avoid 'lunatic' fiscal cliff
Unfortunately, the high-stakes game of political chicken currently under way in Congress is increasingly viewed as "good strategy."
Washington Times | No doubt about no debt
Head to the checkout at an Ikea in Stockholm to pay for your new leather corner sofa and with the swipe of a Visa card it’s yours. Don’t try that in Berlin — that will be $2,080 up front please.
Daily Finance | Greek Debt Crisis Fix May Cost Central Banks up to 100 Billion Euros
European policymakers are working on "last chance" options to bring Greece's debts down and keep it in the euro zone, with the ECB and national central banks looking at taking significant losses on the value of their bond holdings, officials said.

Econ Comments & Analysis                                                                                            
Fiscal Times | Disability Benefit Program Is Going Broke
For a country still gasping to recover from the Great Recession, disability payments from Social Security have evolved into a lifeline and an economic trap for millions of unemployed Americans threatening the program with insolvency in just four short years.

Friday, July 27, 2012

General Economics

News                                                                                                                             
Washington Times | U.S. rate on 30-year mortgage: 3.49 pct., new record
The average rate on the 30-year fixed mortgage fell again, this time dropping below 3.50 percent for the first time on records dating back 60 years.
WSJ | Aircraft Orders Push Up Durable Goods
Orders for long-lasting goods rose in June as aircraft sales surged, though falling demand elsewhere offers the latest sign of a slowing recovery.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Sorry Mr. President, Your Economic Plan Didn't Work
President Obama tells a group of donors that "we tried our" economic plan "and it worked." Even in politics, where exaggeration is a way of life, that statement stands out as a lie for the ages.
Real Clear Markets | Large Business Vs. Small: The Ongoing Debate
Last week, Jared Bernstein wrote a good post on the differences in job gains between small and large firms. This is a perpetual debate that gets unfortunately (and inevitably) wrapped up in political persuasion, paeans to the virtues of small business, hostility toward big business, and arguments over "good" and "bad" jobs. All of this is further compounded by statistical confusion.
WSJ | New York's Charter Schools Get an A+
During the eight years I served as chancellor of New York City's public schools, the naysayers and the apologists for the status quo kept telling me "we'll never fix education in America until we fix poverty."

Blogs                                                                                                                             
Calculated Risk | Real GDP increased 1.5% annual rate in Q2
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.5 percent in the second quarter of 2012
Keith Hennessey | The policy consequences of “you didn’t build that”
“You didn’t build that,” and “You didn’t get there on your own,” and “blessed” and “fortunate” have one thing in common.  They deemphasize the idea that success is earned.  This makes it easier for President Obama to justify taking more from those who have succeeded.
Café Hayek | The worst part of Dodd-Frank
The illuminating part is that TWO YEARS after Dodd-Frank passed, its provisions are not completely specified. Frank resents the claim that it’s not even half done, but that’s quibbling.

Health Care

Blogs                                                                                                                             
Tax Foundation | Obamacare Taxes Now Estimated to Cost $1 Trillion Over 10 Years
This week the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) updated their estimates of the tax increases embedded in Obamacare, i.e. the Patient Protection and Affordable Care Act.  Turns out it’s not so affordable. 

Monetary

Econ Comments & Analysis                                                                                            
Bloomberg | Taking the L-I-E Out of Libor
The recent revelations by Barclays Plc (BARC) probably spell doom for the London interbank offered rate, at least in its present form.
WSJ | Geithner's 'Best Rate Available'
Timothy Geithner sure does lead a charmed life. As a powerful regulator throughout the financial crisis and its aftermath, he gets to blame every mistake or scandal on the evil bankers while claiming he was hot on their case all along.

Blogs                                                                                                                             
John Taylor | Benefits of More Fed “Action” Do Not Exceed Costs
The Fed has engaged in extraordinarily loose monetary policy, including two round s of so-called quantitative easing. These large scale purchases of mortgages and Treasury debt were aimed at lifting the value of those securities, thereby bringing down interest rates. I believe quantitative easing has been ineffective at best, and potentially harmful.

Taxes

News                                                                                                                             
Daily Finance | 10 Everyday Items That Cost You Way More Thanks to U.S. Import Taxes
It might be said that America is a country built on tariffs. In 1790, Alexander Hamilton proposed The Act Laying Duties on Imports, which suggested imported goods should be more expensive to protect American industries.

Blogs                                                                                                                             
Tax Foundation | Grasping at Straws
Paul Krugman has challenged us once again on the veracity of our analysis, this time regarding income inequality
Tax Foundation | Foreign Policy Mag Swings Twice, Misses Twice on Territorial Taxation
In two recent posts on the Foreign Policy blog, Clyde Prestowitz has come down hard against territorial taxation. On Monday, he argued that territorial treatment of foreign business income would result in greater levels of tax avoidance and shifting of profits into tax havens. As evidence of its failure, he claimed that the European Union is moving away from territorial taxation with its Common Consolidated Corporate Tax Base plan.

Employment

News                                                                                                                             
Washington Times | Applications for unemployment aid has biggest drop in 2 years
The number of Americans applying for unemployment benefits dropped by 35,000 last week, a figure that may have been distorted by seasonal factors.

Blogs                                                                                                                             
Political Calculations | New Jobless Claims: Initial Confirmation of Our Hypothesis
Do high gasoline prices affect the number of layoffs in the United States?
WSJ | Jobless Claims Still Too Cloudy to Draw Conclusions
Whoa! Hold your horses, stock investors. Thursday’s encouraging unemployment-benefit claim figures might bode well for the job market, but it’s too early to tell whether they’re believable.
Coordination Problem | Crony Capitalism and Government Jobs Programs
I have a few thoughts on the topic, with special reference to Solyndra, over at Liberty Fund's Library of Law and Liberty.

Budget

Econ Comments & Analysis                                                                                            
WSJ | Avoiding Another Shutdown
Republican leaders in Congress haven't done very well negotiating on the budget, and now a new threat looms: a showdown in the fall, before Election Day, that could force Republicans to choose between more spending and higher taxes or the risk of a government shutdown.

Blogs                                                                                                                             
WSJ | U.S. Probably Won’t Have to Raise Debt Ceiling This Year
A senior Treasury Department official Thursday said Congress probably won’t have to raise the country’s debt limit this year, giving lawmakers some breathing room to hash out a solution after the upcoming election.

Thursday, July 26, 2012

General Economics

News                                                                                                                             
USA Today | Drought could cost $12 billion, most since 1988
The Department of Agriculture said Wednesday that food prices next year could go up by 3%-4% as a result, with beef expected to take the highest jump at 4%-5%.
USA Today | New home sales fall to 5-month low in June
The Commerce Department said Wednesday that sales of new homes fell 8.4% last month from May to a seasonally adjusted annual rate of 350,000. That's the biggest drop since February 2011.

Econ Comments & Analysis                                                                                            
WSJ | Dodd-Frank's Unhappy Anniversary
Two years ago, I was one of 43 members of Congress appointed to the conference committee for the Dodd-Frank financial-reform bill. Along with others, I fought against the legislation and lost.
Investors | Businesses Aren't The Problem, They're The Solution
Lately, it seems that the only form of acceptable hate speech left in America is hostile invective heaped upon entrepreneurs and innovators by a vocal minority of pundits, and increasingly, political leaders who should know better.
Market Watch | Global economy’s cure is worse than the disease
The patient’s history includes a seizure in 2007/ 2008 — financial losses, banking problems, a major recession. Liberal injections of taxpayer cash avoided catastrophic multiple organ failure, assisting a modest recovery.
WSJ | America's Two Economies
For a long time, the United States had one economy. Now we have two economies that compete for America's wealth: A private economy and a public economy. The 2012 election will decide which will be subordinate to the other. One economy will lead. The other will follow.

Blogs                                                                                                                             
Library of Economics | Does Import Dependence Make Us More Vulnerable?
An increasing reliance on imports, combined with the fraying of the nation's power grid, highways and rail lines, leaves the United States more vulnerable to the damage of natural disasters and terrorist attacks, according to a report to be released Wednesday by former homeland security secretary Tom Ridge.
WSJ | Mid-Sized Companies Holding Back Investment
Mid-sized companies are holding onto cash and pulling back on investments in response to mounting fears of a global economic slowdown.
National Review | Hold on to Your Wallet: The Cost of Corporate Welfare and Rent-Seeking
Cronyism takes many forms: It is Solyndra, the farm bill, subsidies to oil-and-gas corporations, banks and automobile companies, but also the protections granted to the sugar industry and other industries, tax credits to private companies, and much more.
Coordination Problem | What Great Stagnation?
In last week's Washington Post, Robert Samuelson reported on the results of the Pew Mobility Project, looking at the income and wealth mobility of Americans over the last several decades.  Although not all the news is good, most of it is. 

Health Care

News                                                                                                                             
NY Times | Medicaid Expansion May Lower Death Rates, Study Says
Into the maelstrom of debate over whether Medicaid should cover more people comes a new study by Harvard researchers who found that when states expanded their Medicaid programs and gave more poor people health insurance, fewer people died.

Blogs                                                                                                                             
National Review | CBO Score of the Health Care Law and the Media
Whether it is in the New York Times or this morning on NPR, there seems to be a message emerging: After the SCOTUS ruling, the cost of the president’s signature health-care law is lower that previously projected.

Monetary

Econ Comments & Analysis                                                                                            
Real Clear Markets | We Can't Rely On the Fed to Rescue Us
Pity Fed Chairman Ben Bernanke. With U.S. and global growth slowing, all eyes are on next week's meeting of the Federal Reserve's policy committee. On Wednesday, the New York Times devoted its lead, page one story to nudging the Fed towards pumping more money into the banking system.
Forbes | The Fed, The Financial Crisis And Monetary History: An Interview With Dr. Allan Meltzer
I wrote my thesis on French inflation so that was the beginning, but I didn’t have any career plan to pursue either that or financial inflation.
Real Clear Markets | Let's Scrap the Fed's Open Market Committee
The board had had a shaky record, especially in recent years. It had been blamed for fueling a financial mania that precipitated a financial crisis and the worst global recession in almost a century.
CNN Money | The risks of more Federal Reserve action
Last week, Federal Reserve Chairman Ben Bernanke told lawmakers that the Fed stands ready to give the economy a boost, should the recovery continue to struggle.
Real Clear Markets | QE3's Looming Failure Means Ben's Days Are Numbered
The above-the-fold headline of yesterday's Wall Street Journal, "Fed Moves Closer to Action", signals an impossibly deluded Federal Reserve utterly blind to the damage its machinations are bringing to the U.S. and global economy. 

Blogs                                                                                                                             
WSJ | IMF Paper Warns Against Letting Inflation Target Rise
One big debate facing the Federal Reserve is whether the central bank should allow inflation to rise to help bring down unemployment and spur economic growth.
Library of Economics | The Magic Solution of Devaluation
If the Spanish and Greek governments shrank enough to balance their budgets, they'd still have 24% unemployment, if not more. Their economies are hopelessly uncompetitive at the current exchange rate.
WSJ | House Passes Ron Paul’s ‘Audit the Fed’ Bill
The House voted Wednesday to open up the Federal Reserve‘s core monetary policy decisions to the scrutiny of the federal government.

Taxes

Blogs                                                                                                                             
Library of Economics | Alan Blinder: Banks Don't Pay Taxes
Suppose the Fed cuts the IOER [interest on excess reserves] from 25 basis points to minus 25 basis points, and banks don't lend one penny more. In that case, the Fed stops paying banks almost $4 billion a year in interest and, instead, starts collecting roughly equal fees from banks.

Employment

Econ Comments & Analysis                                                                                            
The American | Mobility Matters: Understanding the New Geography of Jobs
Enrico Moretti explains why policymakers should concentrate on mobility inequality, why there is no Great Stagnation, and why economist Paul Romer has a tough road ahead.
Forbes | The Rise of The 1099 Economy: More Americans Are Becoming Their Own Bosses
While the economy has been miserable for small business, and many larger ones as well, the ranks of the self-employed have been growing.

Blogs                                                                                                                             
WSJ | Why Kids Today Have It Worse Than Their Parents
Today’s 20-somethings are, broadly speaking, the children of the last of the Baby Boomers, those born in the late 1950s and early 1960s. That generation, like this one, came of age in the midst of a brutal recession: The unemployment rate for 18-24 year-olds topped 17% at the end of 1982. (In 2010, it briefly crossed 18%.)

Budget

News                                                                                                                             
WSJ | Funds Cut Euro-Zone Bank Debt
U.S. prime money-market funds cut lending to euro-zone banks to a record low in June as concerns about Europe's debt crisis ramped up, according to a Fitch Ratings report.
WSJ | Muni Blues Worry Investors
Some cash-strapped U.S. cities are walking away from their financial obligations, exposing potential risks in the municipal-bond market.

Econ Comments & Analysis                                                                                            
Real Clear Markets | California Is Ground Zero for Muni Bankruptcies
Debates about the role of government are shifting from libraries and lecture halls to kitchen tables and coffee shops as municipal bankruptcies flare up across the country. And California is ground zero.
Project Syndicate | California Bad Dreaming
While central governments’ fiscal problems plague many economies, a parallel crisis is enveloping many subnational governments around the world. From Spain to China to the United States to Italy, these governments – regions, states, provinces, cities, and towns – face immense fiscal challenges.

Blogs                                                                                                                             
WSJ | 12 Municipalities With Money Trouble
The financial crisis prompted some distressed homeowners to mail their keys back to the bank rather than pay their mortgage. Now distressed municipalities may be taking similar steps with the keys to the city.
Daily Capitalist | Caught In A Debt Trap
As with much of the euro area, the US is in a debt trap. All the politicking in DC does not change this economic fact. The federal debt is going to be devalued.

Wednesday, July 25, 2012

General Economics

News                                                                                                                             
CNN Money | Britain's economy slumps for 3rd straight quarter
The British economy slumped for the third consecutive quarter, adding to the economic concern throughout Europe, with some economists calling this the most prolonged double-dip recession in the United Kingdom since the 1950s.
WSJ | Downturn Deepens in Euro-Zone Economy
Business activity in the euro zone contracted for the sixth straight month in July, a closely watched survey showed, with powerhouse Germany weakening and the government in Greece now predicting an even deeper economic recession for this year.
Politico | Hill braces for lame-duck frenzy
Tax rates, spending cuts and the deficit will dominate the Capitol this fall, but lawmakers and lobbyists are quietly maneuvering to use the lame-duck session to clean up a whole mess of other issues that Congress has been unable — or unwilling — to handle.

Econ Comments & Analysis                                                                                            
Smart Money | Businessmen Versus Bureaucrats
There are generally just two ways people deal with each other: with reason or with force.

Blogs                                                                                                                             
Political Calculations | The Regulation of the American People
With the role of red bureaucratic tape in hampering small business just in the news, we thought we'd take a historic look at how many pages of new rules and regulations the federal government spits out every year.
Calculated Risk | MBA: Refinance Activity Highest since 2009
The Refinance Index increased 2 percent from the previous week to its highest level since April 19, 2009. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier to its lowest level since June 22, 2012.

Health Care

Blogs                                                                                                                             
Marginal Revolution | CBO forecasts Medicaid Wars
In 2022, for example, Medicaid and the Children’s Health Insurance Program (CHIP) are expected to cover about 6 million fewer people than previously estimated, about 3 million more people will be enrolled in exchanges, and about 3 million more people will be uninsured…

Monetary

News                                                                                                                             
WSJ | Fed Moves Closer to Action
Federal Reserve officials, impatient with the economy's sluggish growth and high unemployment, are moving closer to taking new steps to spur activity and hiring.

Taxes

Econ Comments & Analysis                                                                                            
WSJ | The Tax Cliff Endangers Seniors
Most people know that the U.S. government is rapidly approaching the edge of a fiscal cliff that will raise taxes for millions of Americans—at every income level and age. What is less known is that seniors, many of whom depend on investment income to fund their retirement, will be hurt the most.

Blogs                                                                                                                             
National Review | Consequences of High Taxes: French Edition
It is official: France is about to become a tax hell. Here is a list of what French people can expect.
Keith Hennessey | Lame Ducks & Fiscal Cliffs (part 2): Income tax rates
Yesterday’s introductory post to this series gave a broad overview of the fiscal policy debate, listing issues in play at the end of this year, deadlines and timeframes, and three partisan configurations that are worthy of analysis.  Today we’ll begin to drill down into the income tax issues.
The Hill | House GOP sets out plan for tax reform in early 2013
House Rules Committee Chairman David Dreier (R-Calif.) and 22 other House Republicans introduced legislation on Tuesday that sets out guidelines for a major tax reform bill, and expedited procedures for moving that bill in early 2013.