Friday, February 10, 2012

General Economics

News                                                                                                                             
Market Watch | December trade deficit at widest in six months
The trade deficit widened in December to a six-month high, the Commerce Department said Friday, as the pickup in the U.S. economy attracted more imported goods.
WSJ | Greece Sets Austerity Plan
Greece's political leaders agreed on unpopular budget, wage and pension cuts that moved Europe to the verge of approving a new bailout to stave off a messy Greek debt default.
NY Times | Education Gap Grows Between Rich and Poor, Studies Say
The achievement gap between rich and poor children is widening, a development that threatens to dilute education’s leveling effects.
Washington Times | Government announces $25 billion deal on mortgage abuses
The Obama administration and 49 states announced on Thursday a record $25 billion mortgage settlement with the nation’s five largest banks - the president’s latest attempt to help homeowners and halt the still-sagging housing market’s drag on the economy.
CNN Money | 30-year mortgage rate holds at record low
The 30-year fixed rate held steady at an average of 3.87% for the week ending February 9, the lowest rate ever recorded in the 40-year history of the Freddie Mac Primary Mortgage Market Survey. That compares with the 5.05% rate recorded at the same time a year ago.
Bloomberg | U.S. Michigan Consumer Sentiment Index Falls
Confidence among U.S. consumers declined more than forecast in February from the highest level in almost a year as rising gasoline prices began to stress household budgets.
USA Today | Trade deficit widens to $49 billion in December
U.S. exports to Europe rose at a healthy clip in December, a sign that the critical U.S. trading partner continues to buy American goods despite its weakened economy.
CNN Money | Banks may finally improve foreclosure practices
The country's largest mortgage servicers will now have to follow a strict protocol when trying to foreclose on a delinquent borrower, thanks to a $26 billion mortgage settlement spearheaded by state attorneys general.
FOX News | 13,000 is next Dow milestone, with record in sight
Now the Dow is within reach of the rarefied 13,000 mark — a level it hasn't seen since May 2008, four months before the financial system almost came apart.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Economics: The 'Science' of Hubristic Hope
Last week's payroll report had me thinking of Alexander Pope's 1733 "Essay on Man", particularly the well-known line of "Hope springs eternal in the human breast."
WSJ | What's the Hold-Up on Alaskan Oil?
Finally, some welcome news from Washington: With a bipartisan voice, the House Natural Resources Committee passed H.R. 7, the American Energy Infrastructure & Jobs Act.
WSJ | Dodd-Frank and the Myth of 'Interconnectedness'
In a report last week, Treasury Secretary Tim Geithner noted that the Financial Stability Oversight Council will name the first "nonbank systemically important financial institutions" this year.
WSJ | $25 Billion Bank Job
Obama Administration officials and various state Attorneys General looked gleeful yesterday announcing a $25 billion settlement with five big tobacco—er, banks—and why not?
City Journal | Farewell to the Free Market?
In the years leading up to 2007, the rules necessary to govern a flourishing market economy broke down, producing a financial and economic crisis. Rather than responding to the crisis by fixing those rules, the West aggressively repudiated market economics, and the repudiation continues to this day.

Blogs                                                                                                                             
Marginal Revolution | How large is the output gap really?
There is still not enough talk of wealth effects in current macro debates, as they are invoked only selectively.
Atlantic | Will Inequality Keep Getting Worse?
I think the answer at the moment is that we simply don't know--I'm not sure there's empirical reason to prefer one story or the other.  I do think that we should be wary of confident extrapolations in either direction.
WSJ | Incomes Rebound, but Still Have Ground to Make Up
Americans saw their incomes rise steadily at the end of 2011 but have yet to make up a good deal of ground lost during the downturn and recovery.
Marginal Revolution | What else predicts mobility?
But what about all the other potential reasons, beyond what their Gini Coefficient was in 1985, for varying levels of social mobility between countries as diverse as Japan, France, and New Zealand?
Political Calculations | Using Miles to Measure Recessions
Can we use the odometers in the vehicles driven by millions of Americans to tell if the United States is experiencing an economic recession?
CATO | Data in New World Bank Report Shows that Large Public Sectors Reduce Economic Growth
When Ronald Reagan said that big government undermined the economy, some people dismissed his comments because of his philosophical belief in liberty.
CATO | Questions and Thoughts on the Mortgage Settlement
If you missed the news (Obama actually made a “big” speech about it), the federal government, along with 49 state AGs, reached a settlement with the largest mortgage servicers over servicing violations. 

Health Care

News                                                                                                                             
National Journal | Health Spending Grew Just 4.4. Percent in 2011, Study Says
Spending grew 4.4 percent from 2010 to 2011, for a total of $2.71 trillion, the nonprofit Altarum Institute reported. “This represents an increase over the government’s official estimate of spending growth in 2010 (3.9 percent) that was released last month,” the report reads.
National Journal | Kyl Says Hopes Dim for Permanent Doc Fix
Senate Minority Whip John Kyl of Arizona said he’s not hopeful Congress will get a permanent fix to their perennial Medicare payment problem.

Econ Comments & Analysis                                                                                            
NBER | Take-Up of Public Insurance and Crowd-out of Private Insurance Under Recent CHIP Expansions to Higher Income Children
We analyze the effects of states’ expansions of CHIP eligibility to children in higher income families during 2002-2009 on take-up of public coverage, crowd-out of private coverage, and rates of uninsurance.

Blogs                                                                                                                             
CATO | Under ObamaCare, Anti-Discrimination Law Trumps Religious Liberty
The three-week battle over ObamaCare’s contraceptive-abortifacient ruling isn’t letting up. Catholics for Choice has a full-page ad in this morning’s Washington Post, urging the president to stay firm.
Atlantic | Battle Over California Medicaid Reimbursement Is a Preview of Our Future
It is, of course, absolutely true that you can save a great deal of money by forcing providers to sell things below their cost of goods.  It is not necessarily true that this is a sustainable long-term strategy.

Monetary

News                                                                                                                             
Bloomberg | Bank of Japan to Reject More Easing as Quake Rebuilding Supports Economy
The Bank of Japan is set to refrain from additional monetary easing next week because of signs of strength in the global economy and the boost from reconstruction work after last March’s earthquake.

Econ Comments & Analysis                                                                                            
WSJ | Dodd-Frank and the myth of 'interconnectedness'
Under the Dodd-Frank financial-reform law, large nonbank firms may be declared systemically important because their failure will cause a systemic breakdown. In effect, this amounts to a government statement that these firms are too big to fail.

Blogs                                                                                                                             
The American | Painful inflation lessons for the United States and China
Much to the chagrin of party officials, China’s inflation rate rose by 0.4 percent in January, ending a much-needed five-month drop in the rate. While commentary has rightly noted that the rise in prices is largely due to holiday shopping, the continued volatility of China’s inflation rate has to be a concern.

Taxes

News                                                                                                                             
NY Times | Pessimism High, Republicans Warn of Possible Expiration of Payroll Tax Cuts
Congressional Republicans said Thursday that negotiations over extending a payroll tax cut were going so poorly that it was possible the tax break — along with added unemployment benefits — could expire at the end of the month.
Roll Call | GOP Rejects Democrats’ Latest Offer on Payroll Tax Cut
Republicans resoundingly slammed a second offer by Senate Democrats on the payroll tax cut conference committee, dismissing the proposal as not serious and further calling into question the prospects that a deal can be reached by the end of the month.

Blogs                                                                                                                             
The American | More evidence the Buffett rule is a sham
So, basically, Obama is saying high-end tax rates must never be lowered. No wonder he stiff armed his own debt commission, which was calling for  lowering top rates to as low at 23 percent while getting rid of numerous tax breaks.

Employment

News                                                                                                                             
WSJ | Unemployment, Production Data Show Greece's Economy Worsening
The Greek economy continued to show signs of erosion under the pressure of government austerity toward the end of last year, marked by an accelerating rise in unemployment and a deepening slump in industrial production.
Washington Times | Unemployment-aid applications near 4-year low
The number of people seeking unemployment aid neared a four-year low last week, an encouraging sign that strong hiring could continue in the coming months.

Econ Comments & Analysis                                                                                            
Forbes | Don't Be Fooled, The Obama Unemployment Rate Is 11%
In the latest, much celebrated, unemployment report, the labor force participation rate had plummeted to 63.7%, the most rapid decline in U.S. history.  That means that under President Obama nearly 5 million Americans have fled the workforce in hopeless despair.

Blogs                                                                                                                             
WSJ | Unemployment Extension Likely to Be Less Generous Than Current Law
The federal jobless benefits that take effect when state aid expires are about to become less generous, and Democrats and Republicans in Congress are now fighting over how much to shorten the duration of aid or whether expanded benefits should continue at all
Minyanville | Economists Surprised Again by Unemployment Claims Number, but Why?
The mainstream media proclaimed an unexpected "beat" of the first time unemployment claims number today. The fake, seasonally fudged number dropped to 358,000 in the week ended February 4.

Budget

News                                                                                                                             
WSJ | Budget Ducks Big Benefit Cuts
President Barack Obama's budget proposal Monday will offer several measures to trim the federal deficit in the next 10 years. But it would leave largely unchanged the biggest drivers of future government spending: the Medicare, Medicaid and Social Security programs that are expanding rapidly as the baby boom turns into a senior boom.
Market Watch | Greek coalition party won't back austerity
The leader of Greece's nationalist LAOS party, a junior member of the country's coalition government, said Friday the party won't back new austerity measures demanded by the euro zone in return for a second bailout package
CNN Money | Broken budget process hurts Wall Street reform
President Obama is likely to propose a substantial funding increase for Wall Street regulators in his forthcoming budget. But there won't be any cheering in the boardrooms and hallways of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Econ Comments & Analysis                                                                                            
Washington Times | Obama’s predictable budget
President Obama will deliver his budget to Capitol Hill Monday, one week past the statutory deadline. This will be his fourth, and possibly final, proposal for how Americans’ hard-earned money should be spent.
Heritage Foundation | President Obama’s Budget: What to Watch For
No one expects President Obama to transform into a conservative. But he cannot ignore the fundamental problems of runaway spending and debt, and he can no longer turn these problems over to fiscal commissions or super committees

Blogs                                                                                                                             
Heritage Foundation | Morning Bell: Budget? Why Follow A Budget?
Families and businesses have budgets, yet Washington doesn’t — and it hasn’t for the last three years. Senate Majority Leader Harry Reid (D-NV) doesn’t think this major omission is that big of a deal, and the White House has no opinion on the matter.
National Review | FY 2012 Spending Blows Through Debt Ceiling Cap
As you may remember, the debt-ceiling deal was supposed to set caps on spending. These caps were supposed to control spending, but the Heritage Foundation’s Patrick Knudsen calculates that Congress already has exceeded the caps by some $156 billion.
The American | The key assumption of Obama’s budget
Over the past few years, interest rates on federal debt have fallen to historically low levels thanks to manipulation by the Fed and risk aversion by markets. An unintended consequence of these low interest rates is that the federal debt has been financed very cheaply.
National Review | Obama’s Budget: Just More of the Same
Based on the rhetoric at campaign stops and the president’s State of the Union speech, we already know what we can expect to see on Monday: more of the same policies that make the tax code so inefficient and unfair.