Monday, January 30, 2012

General Economics

Market Watch | Wages up 0.5% in December; spending ebbs
The Commerce Department said personal income jumped 0.5% last month, while personal spending fell less than 0.1%. Economists surveyed by MarketWatch forecast income to rise by 0.4% and spending by 0.1%.
Bloomberg | Obama Recovery Proves No Morning in America Yet
President Barack Obama presides over an economy that eluded the threat of a double-dip recession in mid-2011 and now is strengthening, with growth accelerating in the fourth quarter to a 2.8 percent rate, the fastest in 18 months, from 1.8 percent the previous quarter. Still, the pace remains well short of the recovery that helped propel the re-election of Reagan.
USA Today | December rise in incomes caps a dreadful year for consumers
Americans' incomes rose last month by the most in nine months, a hopeful sign for the economy after a year of weak wage gains. But consumer spending was flat.
WSJ | Fitch Downgrades Five Euro-Zone Members
Fitch Ratings downgraded Italy, Spain, Belgium, Cyprus and Slovenia's sovereign debt ratings Friday as it wrapped up a review of the region.
Bloomberg | Global Economy, Recession Risk Are Bankers’ Main Concern, Survey Reports
Macro-economic risk rose to become the number-one concern among bankers, the Centre for the Study of Financial Innovation, a forum for bankers and regulators funded by institutions including the Bank of England, reported in a survey today. The amount of debt some countries have, access to liquidity and a scarcity of capital were their next worries, it said.
FOX News | American economy not healthy yet, but it's healing
The 2.8 percent annual growth rate reported Friday for the fourth quarter was the fastest since spring 2010 and was the third straight quarter that growth has accelerated. Experts cautioned, however, that the pace was unlikely to last and that it's not enough to sharply drive down the unemployment rate.
WSJ | Spanish Economy Contracts
Two years after it clawed back from recession, the Spanish economy shrank in the last three months of 2011 as government austerity measures crimped spending and Europe's debt crisis drove up financing costs.

Econ Comments & Analysis                                                                                            
Atlantic | The Innovation Nation vs. the Warfare-Welfare State
We like to think of ourselves as an innovation nation, but our government is a warfare/welfare state. To build an economy for the 21st century we need to increase the rate of innovation and to do that we need to put innovation at the center of our national vision.
WSJ | The 1.7% Year
The U.S. economy continued its progress as a good news-bad news story, with yesterday's report that fourth quarter growth was 2.8%. That's an acceleration from the 1.2% average of the previous three quarters, but it's still well below cruising speed for 30 months into a recovery after a deep recession
Daily Finance | 5 Intriguing (and Less Painful) Fixes for Social Security
There's widespread worry about the long-term solvency of Social Security. The potential remedies we hear the most about aren't pretty
WSJ | The Solyndra Rule
President Obama keeps pushing the (Warren) Buffett rule that nobody making more than $1 million a year should pay less than 30% in taxes. He'd do better by the economy if he adopted a Solyndra Rule
Washington Times | Obama’s next bailout
On Jan. 23, U.S. Department of Housing and Urban Development Secretary Shaun L.S. Donovan met in Chicago with several Democratic state attorneys general (AGs) in an attempt to strong-arm them into signing up for an administration-backed agreement to settle the “robo-signing” scandal.
WSJ | The Coming Tech-led Boom
In January 1912, the United States emerged from a two-year recession. Nineteen more followed—along with a century of phenomenal economic growth. Americans in real terms are 700% wealthier today.

Calculated Risk | Schedule for Week of Jan 29th
The key report is the January employment report to be released on Friday, Feb 3rd. Other key reports include the Case-Shiller house price index on Tuesday, the ISM manufacturing index on Wednesday, vehicle sales on Wednesday, and the ISM non-manufacturing (service) index on Friday.
WSJ | Economists React: GDP ‘Less Impressive Than It Looks’
Muddling through is the best term that can be applied to the current economic environment, even though the risks of a downturn have been reduced.
Atlantic | When Will Housing Hit Bottom?
The National Association of Realtors is (quelle surprise!) quite bullish on the future of the housing market.  Not so fast, says Lance Roberts of StreetTalk Advisors:
Daily Capitalist | The Meaning Behind Q4 GDP Numbers
While there were some positive signs in the report, the report was obscured by a potential negative indicator, inventory build, which signals trouble for Q1 2012. And there are other things.
WSJ | Outsized Impact of Inventories on GDP Growth
For U.S. gross domestic product growth, the disappointment devil is in the details
Calculated Risk | Unofficial Problem Bank list declines to 958 Institutions
Here is the unofficial problem bank list for Jan 27, 2012.
Keith Hennessey | The President’s economic policy priorities
There is nothing wrong with prioritizing long-term economic problems and challenges; in fact, quite the opposite.  Washington usually focuses only on problems and challenges that will bite before the next election.

Health Care

National Journal | Bipartisan Task Force's Report Agrees on Health-IT Problems, but Not Much Else
Everyone in Washington loves to love bipartisanship. It’s a lofty goal that is rarely achieved inside the Beltway, but perhaps sometimes that’s a good thing, because being bipartisan can mean you don’t get much done.
National Journal | Government Tells Supreme Court It Can Split Up Health Care Reform Law
The Supreme Court should uphold the individual mandate to buy insurance at the heart of the health care reform law, but if it strikes it down, it need not invalidate the law's many unrelated provisions, the government says.

Volokh Conspiracy | Most Americans Want Mandate Struck Down
The Kaiser Family Foundation’s latest poll (toplines here) finds that two-thirds of Americans oppose the individual mandate and a clear majority — 54 percent — want the Supreme Court to invalidate the provision.


Econ Comments & Analysis                                                                                            
Washington Times | Fleeced by the Fed
The Federal Reserve Board announced plans last Tuesday to keep short-term interest rates at near zero for another three years and said it might embark upon another bond-buying program to drive down long-term interest rates.

WSJ | Richmond Fed’s Lacker Explains His Dissent
U.S. Federal Reserve Bank of Richmond President Jeffrey Lacker, explaining an earlier dissent, on Friday said he doesn’t believe economic conditions are likely to warrant an exceptionally low federal funds rate through late 2014.


Econ Comments & Analysis                                                                                            
Washington Post | ‘Buffett Tax’ and truth in numbers
Obama thinks he can ride resentment against the rich into the White House for a second term; and Republican Romney’s fortune, estimated at $190 million or more, qualifies him as super-rich.
Daily Caller | Obama’s recovery plan: tax investment
You would think that with one of the weakest economic recoveries on record, President Obama would be desperately searching for ways to promote economic growth. But instead, Obama used his State of the Union speech to rail on about fairness, inequality and redistribution.
Politico | McConnell declines to write off tax increase
As he vowed to extend the payroll tax holiday through the end of the year, Senate Minority Leader Mitch McConnell (R-Ky.) on Sunday declined to definitively write off the possibility of paying for it at least partially with a tax increase.
Washington Times | Tax the ‘rich’
Each presidential candidate’s position on investment tax rates is a critical issue. The current rates, set by President George W. Bush, will expire at the end of this year, so whoever sits behind the desk in the Oval Office next January will have the power to stop the capital-gains tax rate from jumping to 20 percent and qualified dividends rising to 39.6 percent.
WSJ | Will Buffett Avoid the Buffett Rule?
In the current debate, President Obama is pushing the "Buffett Rule" to ensure that high-income earners pay higher tax rates. But even if it's enacted, don't expect the Buffett Rule to have much impact on Mr. Buffett.

AEI | Tax Analysts exclusive: a conversation with Alex Brill
Tax reform is a two-front war. On one side there is the battle of dollars and cents: special interests using every trick in the book to preserve their tax breaks. On the other side there is the ideological battle: liberals versus conservatives
Heritage Foundation | Chart of the Week: Top 1 Percent Paid 38 Percent of Taxes
This week’s chart reveals the top 10 percent of income earners paid 70 percent of all federal income taxes in 2008, while the bottom 50 percent paid only 3 percent. Remarkably, 49 percent of U.S. households paid no federal income tax at all.
Tax Foundation | “Buffett Rule” Will Boost Top Dividend Rate to Over 62%, Highest in OECD
Lost in the intense scrutiny of the 15 percent tax rate that Mitt Romney paid on his capital gains and dividend income is the fact that capital gains and dividend taxes are a second layer of tax on corporate profits.
Minyanville | Will Tax Breaks Bring Manufacturing Jobs Back to the US?
In his State of the Union address on January 24, President Obama spoke of a possible manufacturing renaissance popping up right here in the United States. With the right tax policies in place, over time, Mr. Obama believes that this potential renaissance could be a reality.


Econ Comments & Analysis                                                                                            
FOX News | Private sector unions add members as jobs return
Union membership grew slightly last year, giving labor leaders hope that a period of steep declines has finally bottomed out.

CNN Money | A German solution to an American jobs problem?
One common refrain heard at this year's World Economic Forum in Davos: "we need to create more jobs." The rub is that with high consumer and government debt levels in much of the developed world, no one seems to have any idea how to achieve this goal.


Bloomberg | Greek Debt Talks Risk Derailing EU Summit
EU chiefs arrived in Brussels today to put the finishing touches on a German-led deficit-control treaty and to endorse the statutes of a 500 billion-euro ($656 billion) rescue fund to be set up this year.
Washington Times | Retiring later a tough sell in cutting deficit
The Congressional Budget Office recently found that gradually raising the retirement age by just three years for seniors to collect Social Security and Medicare benefits would go a long way toward curing the looming shortfalls in those programs
WSJ | Portuguese Borrowing Costs Hit New Record
Borrowing costs for Portugal pushed to euro-era highs for the second consecutive day Friday, while the cost of insuring that debt also hit fresh records, as market participants increasingly considered what a Greek restructuring deal could mean for those holding Portuguese debt.

Neighborhood Effects | New Education Funding in Illinois Goes to Pensions
According to the state’s numbers, Illinois’s unfunded pension liabilities amount to roughly $85 billion but as Eileen Norcross and I have argued, the amount is actually closer to $173 billion.