Monday, March 5, 2012

General Economics

WSJ | Euro-Zone Business Activity Shrinks
Euro-zone business activity fell back into contraction in February, raising the chances of a recession in the first quarter of the year, a survey of business activity showed Monday.
Market Watch | China lowers growth target half a point to 7.5%
China’s government on Monday lowered its economic-growth target to 7.5% from last year’s 8%, indicating that it intends to focus on higher-quality economic development that emphasizes internal consumption and services.
Bloomberg | Stocks Cheaper Than Any U.S. Peak in 23 Years
Corporate profits that doubled since 2009 have left the Standard & Poor’s 500 Index cheaper than at all 34 peaks since 1989, even as options traders push the cost of protecting against losses to the highest in four years.
Washington Times | D.C.-area economy makes gains after recession
While the national economy struggles to attain cruising altitude, the Washington-area economy has taken a small turn for the better, according to George Mason University professor and economic forecaster John McClain.
USA Today | 30-year mortgage average rate dips to 3.9%
The average rate on the 30-year mortgage edged down this week to hover again above record lows. Cheaper rates have spurred modest improvements in the battered housing market, but not enough to signal a recovery.

Econ Comments & Analysis                                                                                            
NBER | Inconsistent Regulators: Evidence From Banking
US state chartered commercial banks are supervised alternately by state and federal regulators. Each regulator supervises a given bank for a fixed time period according to a predetermined rotation schedule. We use unique data to examine differences between federal and state regulators for these banks.
Washington Times | Small business expectations
In a speech to the Chamber of Commerce last month, President Obama proclaimed, “Now is the time to invest in America.” A National Federation of Independent Business (NFIB) survey shows small businesses aren’t buying it.
WSJ | The Export Subsidy Boomerang
If you thought Fannie Mae, Freddie Mac and Solyndra would teach Congress a lesson about politicized credit, think again. The federal Export-Import Bank is up for reauthorization, and the only question seems to be how much more taxpayer money Washington wants to put at risk. If the GOP wants to have a principled battle about fiscal waste and market distortions, this is a good one.
Market Watch | The limits of China’s state capitalism
In today’s international debate over China’s development model, a commonly heard term is “state capitalism,’ and one oft-cited example of this is the country’s development of high-speed railways.
Politico | Stop rising gas prices from killing small business
Our nation’s economy is at a fragile turning point in its recovery. Job creation, consumer spending and production data are slowly starting to show signs of improvement. But we are still far from the strong economy our nation is accustomed to.
Washington Times | Big government expectations
The government has grown so large that nobody really knows where its $3.8 trillion in annual spending goes. Each year, the Government Accountability Office (GAO) tries - and fails - to make sense of federal-agency ledgers.
Bloomberg | Cash Is Better Than Food Stamps in Helping Poor: Edward Glaeser
Newt Gingrich has been castigated for referring to President Barack Obama as the “best food-stamp president in American history.” I, too, dislike the former House speaker’s inflammatory phrasing.

Calculated Risk | Unofficial Problem Bank list at 959 Institutions
This is an unofficial list of Problem Banks compiled only from public sources.
WSJ | Housing Still Drowning in Underwater Mortgages
As Federal Reserve Chairman Ben Bernanke told Congress this week, “problems in U.S. housing and mortgage markets have continued to hold down not only construction and related industries, but also household wealth and confidence.”
Calculated Risk | Personal Saving Rate and Income less Transfer Payments
By request, a couple more graphs based on the January Personal Income and Outlays report.
WSJ | More Than 1 in 7 Use Food Stamps in U.S.
Food-stamp use jumped in the U.S. in December with more than 1 in 7 people receiving benefits, even as a program for disaster assistance related to Hurricane Irene came to an end.
Calculated Risk | Schedule for Week of March 4th
The key report this week is the February employment situation report from the Bureau of Labor Statistics (BLS) scheduled for Friday.  Other reports include the February ISM service index on Monday, and the January trade balance report on Friday.
WSJ | For Lasting Recovery, Savings as Important as Spending
Even with faster income growth and more confidence in the labor markets, U.S. consumers are not rushing to shop. The latest numbers, out Thursday, show after accounting for prices, consumer spending has been flat for three consecutive months.
John Taylor | Debating Stimulus and Harvard and Stanford
Larry Summers and I debated “Did Fiscal Stimulus Help the Economy?” at Harvard this week. There was no video streaming or recording, and I will not try to summarize the back and forth (which the overflow crowd seemed to enjoy), but here is a summary of things I said in my opening remarks.
Café Hayek | State of Manufacturing
Letting loose my inner Mark Perry (sans his skill at constructing useful graphs), I explain – in this, my latest column in the magazine President & CEO – that the state of manufacturing in America is today quite robust.

Health Care

National Journal | Survey Shows Americans Pay a Lot More For Health Care
Americans spend more than people in other countries on just about every medical procedure and doctor visit, according to a new report from the International Federation of Health Plans.

Atlantic | Explaining the U.S. Home Health Care System
Yesterday's post on early hospital discharges has triggered a lot of interesting discussion.  Two questions came up over and over:  why can't we do this more like European countries, who have single-payer systems--and why can't we do this more like our ancestors, who regarded caring for family members as an important part of familial duties?
Heritage Foundation | Setting Biden Straight on Obamacare’s Anti-Conscience Mandate
As the Obama Administration reels from the backlash for Obamacare’s anti-conscience mandate that forces religious employers to provide coverage and pay for abortion-inducing drugs, Biden yesterday set out to convince America that the Administration has a “new” version of the mandate that respects religion. The only problem is, the version is neither new nor respectful of religious liberty.


Econ Comments & Analysis                                                                                            
WSJ | The High Cost of the Fed's Cheap Money
During the past three years, the Federal Reserve has tripled the size of its balance sheet—in effect printing $2 trillion—something it had never done in its nearly 100-year history.
Forbes | The Fed and The Power To Redirect and Redistribute Wealth
A butterfly flapping its wings in a rain forest is nothing compared to a central banker flapping his lips. Federal Reserve Chairman Ben Bernanke recently told a congressional committee that, although he wouldn’t rule out another round of quantitative easing, he did not foresee another round in the near future.
Real Clear Markets | Bernanke's First Step Is Admitting There's a Problem
Economists are very fond of speaking about trade-offs, and even for monetary policy these kinds of things exist, so it makes sense to inquire about what might have been lost in the quest for so modest a recovery.
Forbes | Oil Continues to Rise Because the Dollar Continues to Fall
The primary reason that crude oil today – Brent is at $123 per barrel – is higher than its prior average around $20 in the 1990s, or the $3.00 of the 1960s, is that the dollar has lost value over that time.
NY Times | 0.2% Interest? You Bet We’ll Complain
That was the message delivered last Thursday to Americans who today make almost nothing on the savings in their bank accounts.
Forbes | The Price of Low Interest Rates? Weaker Economic Recoveries
The great Austrian School economist Friedrich Hayek had an important insight in Prices and Production which should cause us to be on the lookout for some severe economic pain

WSJ | Prices Cut Into Household Incomes
Rising prices took a toll on Americans’ incomes as the year began, halting a four-month streak of gains and renewing concerns about the consumer’s resilience amid higher gas prices.
Reason Foundation | The Victims of Cheap Money Bernanke
A few weeks ago we had a blog post highlighting some of the ways that the Fed’s ZIRP and QE policies are violating Bernanke’s maxim for Congress of “first do no harm.” Jeffrey Snider’s RCM column from two weeks ago (you can tell I’m a bit backed up on my to-read pile) lays out the argument much more eloquently


Tax Foundation | When It Comes to Business Taxes, Location Matters
Taxes are a big cost for many businesses, and vary widely based both on state and market sector. Now, for the first time, we have created a measurement of the bottom-line tax liability a firm would face doing business in each of the 50 states
Library of Economics | Was the 2001 Tax Cut Regressive?
In a post today, Paul Krugman approvingly cites Jonathan Chait's claim that the Bush tax cut of 2001 was regressive. That's false.
Daily Capitalist | The (Sad) History of the Income Tax
Great infographic on the income tax from TurboTax.
Atlantic | Why I Still Think We Should Eliminate the Corporate Income Tax
I want to pair an elimination of the tax with an end to the special low tax rates for dividends and capital gains, and maybe even an increase in rates for higher brackets if that's necessary to keep the thing revenue neutral.  Which would actually be considerably more progressive than the current system.
Daily Capitalist | Why US Companies Refuse To Repatriate Foreign Earnings
The Mercatur Center’s Veronique de Rugy illustrates the need for corporate tax reform to include the adoption of a territorial type of tax system


CNN Money | American manufacturers importing workers
U.S. manufacturers, frustrated by a shortage of skilled American factory workers, are going abroad to find them.

Econ Comments & Analysis                                                                                            
NY Times | Capital Gains, Ordinary Income and Shades of Gray
What is carried interest? And why does it get the tax treatment it does?

Political Calculations | How High Gas Prices Affect the Number of Layoffs in the U.S.
How do high gasoline prices affect the pace of job layoffs in the United States?
WSJ | Job Market Toughest for New Entrants
Even with the recent improvement in the job market, it’s a tough time to be looking for work. It’s even tougher if you’re just entering the work force.
The American | The 8.3 percent unemployment rate really isn’t so bad? Really? Really?
Except it’s not really 8.3 percent. That number is misleadingly low because it is based off a dramatically shrunken U.S. labor force


WSJ | Spain Defies EU on Deficit
Spain Friday went back on its 2012 budget-reduction commitment to the European Union, highlighting the difficulties of the EU's efforts to tighten control over the finances of its member states.
CNN Money | Washington's $5 trillion interest bill
Interest rates on U.S. bonds may be ridiculously low, but that doesn't mean the country's future interest payments on the national debt will be.
Bloomberg | EU Leaders Must Get Past Debt Swap Before Turning Page
The European Union faces a first test in its attempt to turn the page on the two-year debt crisis when Greece’s private creditors decide this week whether to sign off on the biggest sovereign-debt restructuring in history.

Econ Comments & Analysis                                                                                            
CRS | Budget Process Reform: Proposals and Legislative Actions in 2012
This report identifies, tracks, and explains current budget process reform proposals reported from committee, or considered on the floor during 2012.

CATO | Endless Spending
Urging Congress to spend more money on infrastucture, Rep. John Sarbanes (Big Government-Maryland) says, ”You’ve got to kind of get past this mentality that you can’t spend any money at all.”
Heritage Foundation | Chart of the Week: Obama Makes Defense the Lowest Budget Priority
President Obama’s budget proposes a sharp increase in entitlement spending and more outlays for domestic programs and interest on the national debt. Defense spending, meanwhile, takes a backseat to Obama’s other priorities.