Monday, April 30, 2012

General Economics

WSJ | Data Deepen Spanish Gloom
Spain's economy contracted for the second consecutive quarter in a row in the first quarter of the year confirming that technical recession has taken hold in the country as it braces for a week of anti-austerity protests.
CNN Money | Spain falls into recession
Spain has fallen into its second recession since 2009 as its economy shrank for the second consecutive quarter, according to a government report Monday.
Bloomber | Consumer Spending in U.S. Increases as Incomes Rise
Consumer spending in the U.S. climbed in March after the biggest gain since August 2009, and incomes picked up, indicating the biggest part of the economy will help sustain the expansion.
WSJ | Housing Ends Slide but Faces a Long Bottom
Nearly six years after home prices started falling, more U.S. housing markets appear to be nearing a new phase: a prolonged bottom.
CNN Money | U.S. 'dirty oil' imports set to triple
U.S. imports of what environmentalists are calling "dirty oil" are set to triple over the next decade, raising concerns over the environmental impact of extracting it and whether pipelines can safely transport this Canadian oil.
WSJ | Slowing Growth Stirs Recovery Fears
The economy lost steam in the first quarter, as onetime engines of growth sputtered and robust consumer spending was unable to propel the recovery on its own.

Econ Comments & Analysis                                                                                            
WSJ | How Big Banks Threaten Our Economy
As of this past January, any bank operating in the United States with more than $50 billion in assets must have the business equivalent of a living will—plans for what to do in the event of catastrophe. Every well-managed business should have contingencies and ways to assess its health and viability. But the fact that the Dodd-Frank financial regulations require the largest banks to submit detailed plans for worst-case scenarios suggests something is seriously amiss.
Washington Times | Obama keeps poor in their place
President Obama revived his Buffett-rule talking points on how raising taxes on the wealthy will restore the middle class. Actions mean more than such empty rhetoric. The president speaks of supporting fairness, but some of his actions actually favor the wealthy over lower-income earners.
WSJ | Chile's Cautionary Lesson for Americans
Communists are not taking over Chile. But you wouldn't know it from watching the media frenzy surrounding 23-year-old student leader and avowed communist Camila Vallejo in Santiago.
Real Clear Markets | If I Wanted America to Fail: Free Market Agitprop With a Lesson
A powerful YouTube video essay that premiered on Earth Day has since gone viral. I first saw it when it cracked 100,000 views. At last count, over 1.7 million people have seen it, a number that grows daily. It started out being passed along by conservative Americans but has begun spreading into wider circles.
WSJ | The Growth Deficit
The weakest recovery on record continued in 2012's first quarter, with the Commerce Department's Friday report of 2.2% growth. That's down from 3% at the end of last year, but closer to the 1.7% for all of 2011. It's enough to give the word recovery a bad name.
Forbes | Obama's Plan To Seize Control Of Our Economy And Our Lives
President Obama has made clear that he’s determined to continue pushing his “progressive” agenda, regardless of constitutional limitations on his power.  He aims to have his way by issuing more and more executive orders.
Reason Foundation | How Big Government Is Killing California
The new USC study pointing to a much-slower population growth rate in California has been greeted by demographers and urban planners as good news, in that it supposedly gives our state’s leaders a little breathing room to plan better for the future. The rate of growth has slowed to about 1 percent a year, the result of fewer immigrants coming here and so many Californians heading to other states.
Wharton School of Business | Optimism Is Up, but the U.S. Housing Market Faces a Painful Shift
It's spring, the time when Americans traditionally think about new homes -- trading up for growing families, downsizing for retirees, picking up a vacation home or buying a starter home to escape renting.
Washington Times | The cost of a collapsing Europe
The erosion of the Schengen Agreement, which permitted free movement within the EU, is an important indicator of how far the political situation has deteriorated.

Calculated Risk | Schedule for Week of April 29th
The key report for this week will be the April employment report to be released on Friday, May 4th. Other key reports include the ISM manufacturing index and vehicle sales on Tuesday, and the ISM non-manufacturing (service) index on Thursday.
Political Calculations | A First Look at Where GDP Will Be in 2012-Q2
On 2 April 2012, we forecast that the U.S.' real GDP for the first quarter of 2012 would be $13,508.2 billion in terms of constant 2005 U.S. dollars. This value represents the midpoint of our projected forecast range for where GDP in 2012-Q1 would most likely be recorded.
Library of Economics | The Bottom One Percent
There are about 313 million people in America today. 1% of 313 million is 3,130,000. In our prisons today are 2,200,000 people. So the people in prison are 2/3 of one percent. And their wages are typically about 23 cents an hour. They are, essentially, the bottom 1%.
Calculated Risk | Recovery Measures
By request, here is an update to four key indicators used by the NBER for business cycle dating: GDP, Employment, Industrial production and real personal income less transfer payments.
Marginal Revolution | The Big Easy’s School Revolution
The population of New Orleans changed pre and post-Katrina so it’s difficult to compare pre and post-Katrina test scores; although given the state of the schools pre-Katrina it’s hard to believe that the schools have not greatly improved.
Calculated Risk | Unofficial Problem Bank list declines to 930 Institutions
Very busy week for the Unofficial Problem Bank List because of failures and the FDIC releasing its enforcement actions through March.
WSJ | Economists React: GDP Is ‘Disappointing but Also Puzzling’
Economists and others weigh in on the 2.2% increase in U.S. gross domestic product in the first quarter.

Health Care

Bloomberg | Fracking ‘Health Challenges’ to Be Examined by U.S. Advisers
The Institute of Medicine will examine whether the process of hydraulic fracturing to extract natural gas from rock “poses potential health challenges,” a Centers for Disease Control and Prevention official said.
Politico | States could be in a bind on mandate
If the Supreme Court strikes down the health reform law’s individual mandate, the states at the forefront of implementing the law could find themselves like Wile E. Coyote in the Road Runner cartoons: racing ahead only to discover there’s no ground underneath their feet.

Econ Comments & Analysis                                                                                            
Forbes | The Lone Path to Cheap Healthcare Is Expensive Healthcare
All of which brings us to the current debate about healthcare. As evidenced by the wailing on both sides about making healthcare “affordable” through legislative fiat, it’s apparent that the Right and Left both are unaware of the beautiful truth that much like all other market goods, expensive, largely inaccessible healthcare must be introduced free of government distortion at nosebleed prices so that those same prices can eventually fall.
NBER | Does Universal Coverage Improve Health? The Massachusetts Experience
In 2006, Massachusetts passed health care reform legislation designed to achieve nearly universal coverage through a combination of insurance market reforms, mandates, and subsidies that later served as the model for national health care reform.

Heritage Foundation | Opening the Door to Health Care Rationing Under Obamacare
One of the biggest fears Americans have about Obamacare is who will ultimately control health care decisions: the government or patients and their doctors.


Market Watch | Euro-zone April annual inflation slows to 2.6%
The annual pace of inflation in the 17-nation euro zone slowed less than expected to 2.6% in April from 2.7% in March, the European Union statistics agency Eurostat reported Monday.
WSJ | Banks Push Fed on Rule
Giant banks are making a major push to blunt the impact of a proposed rule that could further constrain their trading profits.

Econ Comments & Analysis                                                                                            
Atlantic | The 2% Catastrophe: How One Number Explains the Miserable Economy
The Federal Reserve balance sheet contains roughly $2.5 trillion worth of Treasuries, Fannie Mae bonds and mortgage-backed securities. But there is one asset the Fed considers invaluable. Credibility.
US News | To Fix the Federal Reserve, Fix Congress First
You might have thought the most broken thing in Washington is Congress, not the Fed. But the mirrors on Capitol Hill apparently don't work, so legislators aren't aware of their own abject ineptitude. All they see are problems elsewhere, which of course require Congressional action.

Daily Capitalist | Monetary Policy, The Real Economy, And Asset Prices: Where Are We?
As the Federal Reserve staff prepares for this week’s meetings of the Open Market Committee, it is worth taking stock of the current situation from Fed Chairman Ben Bernanke’s perspective, now three years into economic recovery. Whether or not the prediction of some that 2012 will result in yet a new recession is correct or not, the U.S. economy remains sluggish


Econ Comments & Analysis                                                                                            
AEI | The new age of anxiety
Taxmegeddon is coming. This grim prophecy refers to the scheduled termination of a wide array of tax policies at the end of this year. The list is staggering. It includes the expiration of the Bush-era tax cuts, the end of the payroll-tax holiday, and the start of the new healthcare surtax and the Medicare payroll-tax increase.

WSJ | State Governments Are Big Mega Millions Winners
Just as cash-strapped states began to worry about bridging gaps in their annual budgets, a nationwide lottery craze took hold last month when the world’s biggest Mega Millions jackpot swelled to $640 million.


Econ Comments & Analysis                                                                                            
Washington Times | Obama’s weakly job numbers
The credibility gap is widening between what the Obama administration says about the jobs picture and what Americans sense is the grim reality. Despite the official line that things are getting better, the employment situation is growing progressively worse.

FOX Business | What's Keeping Jobs Overseas
Today's new Dreamliner is a triumph for American labor. Six thousand workers are busy at Boeing's South Carolina plant. And don't forget that building the state of the art facility provided jobs for ten thousand construction workers. But victories like this one are becoming rarer and rarer in this country.
Atlantic | How to Get a Bigger Keynesian Multiplier
In a normal economy, 40% of new hires are people who switched right over from another job: Friday at Walmart, Monday at Target. The other 60% come from some mix of the unemployment lines and the ether. 


CNN Money | The $7 trillion fiscal cliff
Congress has invented a new extreme sport: Skating on the edge of a $7 trillion fiscal cliff.
Bloomberg | Father of Treasury Floaters Says Now Worst Time for Sales
Almost two decades after advising the U.S. to sell floating-rate notes to lower debt expenses, Campbell Harvey says starting to issue the securities now would be a costly mistake for American taxpayers.

Econ Comments & Analysis                                                                                            
Politico | Obama’s deficit attention disorder
President Barack Obama seems to be governing in some parallel universe — where the United States exists without mortal dangers threatening its economy and the nation’s most pressing exigency is the reelection of its president.
WSJ | How Retirement Benefits May Sink the States
Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state's future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, "You won't recruit a business, you won't recruit a family to live here."
Fortune | How to cut Social Security mercifully
Well, there's at least one virtue to the depressing numbers that Social Security's trustees unveiled last week -- they prove that I was right in February when I wrote that the system's finances had deteriorated badly thanks largely to the energy price boosts created by Arab Spring. Those increases were the primary factor in Social Security's inflation adjustment being 3.6% this year rather than the 0.7% assumption that had been baked into the trustees' 2011 report.
CATO | How the Swiss 'Debt Brake' Tamed Government
Americans looking for a way to tame government profligacy should look to Switzerland. In 2001, 85% of its voters approved an initiative that effectively requires its central government spending to grow no faster than trendline revenue.

American | Senate transportation bill opens door to more bailouts
House and Senate conferees will meet on May 8 to iron out differences between the two chambers’ versions of the highway reauthorization bill. In addition to the transportation policy under debate, the 47 Senate and House members serving on the conference committee will decide the fate of an unrelated and troubling provision in the Senate-passed bill: Defined-benefit pension plan funding relief for corporations.
National Review | Can Spending Caps Constrain the Size of Government?
The reform, called a “debt brake” in Switzerland, has been very successful. Before the law went into effect in 2003, government spending was expanding by an average of 4.3% per year. Since then it’s increased by only 2.6% annually.
American | GDP and the slowdown in government spending
An across-the-board fall in government consumption and investment subtracted 0.60 percentage points from overall economic growth, the bulk coming from a fall in defense spending, which fell at an 8.1 percent annualized rate. State and local government expenditures fell at a 1.2 percent rate in the quarter, subtracting 0.14 percentage points from growth in GDP.
National Review | There’s Austerity and Then There’s Austerity
Austerity means different things to different people. For some people, austerity means adopting a debt-reduction package made of a mix of spending cuts and tax increases. For others, it means adopting a package made mainly of spending cuts — including reforms of social programs.