Wednesday, January 11, 2012

General Economics

Bloomberg | Europe’s $39T Pension Threat Grows
State-funded pension obligations in 19 of the European Union nations were about five times higher than their combined gross debt. The countries in the report compiled by the Research Center for Generational Contracts at Freiburg University in 2009 had almost 30 trillion euros ($39.3 trillion) of projected obligations to their existing populations.
CNN: Money | Middle class dropouts
Nearly one third of Americans who were raised in the middle class dropped down the economic ladder as adults -- and that's before the Great Recession hit.
Bloomberg | Bernanke Doubles Down on Fed Mortgage Bet
Since the Fed started buying $1.25 trillion of mortgage bonds in January 2009, the value of U.S. housing has fallen 4.1 percent, and is down 32 percent from its 2006 peak, according to an S&P/Case-Shiller index.
WSJ | German Economy Shrank Slightly at End of 2011
Germany's economy contracted slightly in the fourth quarter, raising questions about how much longer Berlin will continue to shoulder the burden of rescuing fiscally wayward euro-zone members.

Econ Comments and Analysis                                                                                          
AEI | Founding fathers would have wanted to keep CFPB in check
In a democracy, no one—not a single individual or collective body—should be 'independent.' All should be subject to checks and balances — just as designed by the American Founding Fathers."
Washington Times | EDITORIAL: The free market’s new frontier
Private space adventurers make their own plans to see the universe.
WSJ | Europe Weird and New
Below-zero bond yields and other signs of the Apocalypse. | U.S. Government Goes Gazelle Hunting
While most Americans are familiar with the financial terms "bull" and "bear," a lesser-known animal metaphor economists like to use is "gazelle" — referring to a small business that, like the animal, is known for being lean and swift.
Washington Times | MURRAY AND BIER: Avoiding a lost decade
Obama on course to repeat Japan’s errors of the 1990s.

Heritage Foundation | Falsehoods Abound in Case of California High-Speed Rail
Their projections for new demand for high-speed rail travel are inflated, which allows them to claim that highways throughout the Los Angeles–San Francisco corridor would have to be expanded by three lanes—regardless of current demand and congestion levels.
Minyanville | The Key Lesson From Fourth Quarter 2011
A lot of the outperformance for the quarter came due to a correction in late September before the quarter began.
Econlog | Why Foreclosure Prevention is Not Helpful
As I have said many times, foreclosure prevention keeps the housing crisis in front of us, rather than putting it behind us. It is an exercise in futility that is equivalent to the oil price controls of the 1970s.
Café Hayek | Be careful what you wish for
One lesson we might learn is that private-public partnerships are dangerous. The other lesson we might learn is how to think about data. What was the alleged impetus for a national strategy to increase home ownership?
Daily Capitalist | Gasoline Use and NFIB Survey Still Recessionary
Fuel use fell below a year earlier for the 18th consecutive time last week, slipping 3 percent from 2010 levels. Fuel demand over the previous four weeks was 3.4 percent below a year earlier, the 41st consecutive decline in that measure…
Econlog | Type the Title You Want People to See
The nature of the transformation is highlighted by the 50 fold change in the relative price of a television set of a constant quality and a day in a hospital over the last generation.
Heritage Foundation | A Not-So-Happy New Year for the Entrepreneur in 2011
Last week, The Heritage Foundation co-hosted the launch of the 2012 Global Entrepreneurship and Development Index (GEDI), a new tool giving insight into the effect that various drivers of entrepreneurship have on economic development in countries around the world.
WSJ: Real Time Economics | Senate Republicans Criticize Fed on Housing Advocacy
Top Federal Reserve officials came under fire on Capitol Hill on Tuesday as Republicans criticized the central bank for advocating more steps to aid the battered U.S. housing market.

Health Care

National Journal | Raising Medicare Age Would Save $148 Billion, CBO Says
The projected savings are lower than CBO’s March estimate of $162 billion, but the earlier calculation did not include the premiums that seniors must pay into the program.
National Journal | Soda Tax Could Save 26,000 Lives, Study Projects
A tax on sugary soft drinks could discourage consumption just enough to save 26,000 people from dying of strokes, heart attacks, or other obesity-related ills over the next decade, researchers reported on Tuesday.
National Journal | In Supreme Court Brief, States Take On Medicaid Expansion
The 26 states opposing health care reform argued on Tuesday that the law's Medicaid expansion was so coercive to the states that it goes beyond Congress's power to spend in a brief filed to the Supreme Court Tuesday afternoon.

Econ Comments and Analysis                                                                                          
CBO | Raising the Ages of Eligibility for Medicare and Social Security
Raising the ages at which people can collect Medicare and Social Security would reduce federal spending and increase federal revenues by inducing some people to work longer. However, raising the eligibility ages for those programs also would reduce people's lifetime Social Security benefits and cause many of the people who would otherwise have enrolled in Medicare to face higher premiums for health insurance, higher out-of-pocket costs for health care, or both.


Market Watch | New Fed voters point out stimulus benefits
Two of the regional Federal Reserve presidents who get to vote on interest-rate decisions on Tuesday made clear their support for the central bank’s extraordinary efforts to boost the economy ahead of a key meeting.

Econ Comments and Analysis                                                                                          
Fox Business | Fitch: ECB Needs to Act to Prevent Euro Collapse
The European Central Bank should ramp up its buying of troubled euro zone debt to support Italy and prevent a "cataclysmic" collapse of the euro, David Riley, the head of sovereign ratings for Fitch, said on Wednesday.
Reuters | The hidden dangers of low interest rates
The Fed’s campaign to hold short-term interest rates near zero is a loser for taxpayers. A rise in rates would also burden taxpayers, but it would come with a benefit for those who save.
Forbes | The Fed's Incredible Rate Forecasting Hubris
The problem is that the Fed’s dual mandate is flawed and the Fed has no business manipulating interest rates, which are relative prices best set by millions of counterparties in free capital markets.  There are limits to what monetary policy can accomplish and to forecasting random variables like interest rates and asset prices.

WSJ: Real Time Economics | New Kansas City Fed Chief Gives First Policy Speech
While the economy has been picking up lately, there remains a broad-based expectation the central bank will provide additional stimulus at some point this year.
Greg Mankiw's Blog | The Liquidity Trap may soon be over
At the current inflation rate, the unemployment rate needs to drop to 8.3% from the current 8.5% for the model to signal positive rates. We’re getting close."


Econ Comments & Analysis                                                                                            
RCM | Rethinking the "Other" Payroll Tax
Congress returns for its next session later this month (despite rising popular demand to just stay away), with a long list of unfinished business items.
WSJ | Class Warfare and the Buffett Rule
Implementing a surtax on 'millionaires' would hurt just about everyone but the super rich like Warren Buffett.
Heritage Foundation | Financial Transactions Tax Would Hurt the Economy and Kill American Jobs
The Congressional Budget Office (CBO) warns that a tax on certain financial transactions could “diminish the importance of the United States as a major financial market” and that, in the short run, “imposing the transaction tax would probably reduce output and employment."


Washington Times | Hiring rose in November, but job openings dipped
U.S. employers stepped up their hiring in November but pulled back slightly on the number of jobs they advertised.
CNN Money | Obama battles job crisis: 3 years...and counting
Before Obama even took office, America had lost 4.4 million jobs. It would lose another 4.3 million before jobs started trickling back.
Bloomberg | Job-Market Gains Underscored as Hiring Catches Up With Openings: Economy
Gains in hiring are catching up with job openings, pointing to greater willingness among U.S. companies to expand as the economy improves.

NRO: The Corner | High-speed Rail to Nowhere
Finally, as my colleague Matt Mitchell and I have documented in the past, claims that investment in infrastructure projects will stimulate the economy and will create many jobs are, at best, dubious. 
Calculated Risk | BLS: Job Openings "unchanged" in November
Jobs openings declined slightly in November, but the number of job openings (yellow) has generally been trending up, and are up about 7% year-over-year compared to November 2010.


CNN Money | Federal Reserve pays $77 billion to Treasury
The Federal Reserve announced Tuesday that it plans to pay the Treasury $76.9 billion, the bulk of the Fed's 2011 income after accounting for its own operating expenses.
CNN Money | Obama budget pick faces Capitol Hill challenge
With budget chief Jack Lew stepping up to be President Obama's new chief of staff, Washington is abuzz over who -- if anyone -- will be tapped as the president's new budget director.

Econ Comments & Analysis                                                                                            
Washington Times | MILLER: Putting out the debt fire
GOP candidates address America’s overspending.
Daily Finance | Will Budget Cuts Leave America Defenseless? Hardly
Reaction to President Obama's proposed cuts to national defense spending have run the gamut from panic to ... more panic.