Tuesday, May 1, 2012

General Economics

WSJ | Politics Drive BOJ Where It Doesn't Want to Go
With political pressure apparently overcoming its reluctance to be seen as financing the nation's budget deficit, the Bank of Japan has drastically increased its purchases of government bonds.
Bloomberg | Manufacturing in U.S. Unexpectedly Expands at a Faster Pace
Manufacturing unexpectedly expanded in April at the fastest pace in 10 months, driven by gains in orders and production that signal the U.S. remains a source of strength for the global economy.
WSJ | Freddie, Fannie Departures Escalate
Concerns are growing about departures at mortgage-finance giants Fannie Mae and Freddie Mac, a situation that some executives argue is making it difficult to manage the companies and their $5 trillion mortgage business.
CNN Money | Reporting of fracking and drilling violations weak
For Pennsylvanians with natural gas wells on their land, chances are they won't know if a safety violation occurs on their property.
WSJ | Taiwan Sees Growth After Period of Contraction
Taiwan emerged from a half-year of economic contraction in the first quarter, as expected, but an uncertain outlook for its major trading partners—China, the U.S. and Europe—and a rising local currency prompted the government to trim its export and economic growth forecasts for the year.
FOX News | US construction spending barely increased in March
U.S. builders barely increased their spending on construction projects in March after two straight months of declines. A pickup in single-family home construction and commercial projects offset a steep drop in state and local government building.

Econ Comments & Analysis                                                                                            
NBER | Does Inequality Lead to a Financial Crisis?
The recent global crisis has sparked interest in the relationship between income inequality, credit booms, and financial crises. Rajan (2010) and Kumhof and Rancière (2011) propose that rising inequality led to a credit boom and eventually to a financial crisis in the US in the first decade of the 21st century as it did in the 1920s.
Washington Times | Government shutdown threat returns
Senate Majority Leader Harry Reid is worried House Republicans might try to save a little money with the budget they’re set to release next week.
Politico | Cutting food stamp funding hurts the poor and rural America
The Agriculture Department published new research this month that further cements the significant positive impact of the Supplemental Nutrition Assistance Program, or food stamps, in combating poverty’s effects on low-income Americans.
Washington Times | Obama’s blame game
President Obama must not be familiar with the old saying, “He who excuses himself accuses himself.” With a pessimistic populace still dealing with high unemployment, low economic growth and rising fuel prices, he can’t campaign on his record. His only hope for re-election is to pin the blame on someone or something else.
WSJ | Education Is the Key to a Healthy Economy
In addressing our current fiscal and economic woes, too often we neglect a key ingredient of our nation's economic future—the human capital produced by our K-12 school system. An improved education system would lead to a dramatically different future for the U.S., because educational outcomes strongly affect economic growth and the distribution of income.
Washington Times | Have free car, will travel
Americans love their cars, and federal employ- ees are no different. Bureaucrats espe- cially love when those wheels are paid for and maintained at taxpayer expense. With gas prices sky-high, ordinary citizens have had to cut back. Uncle Sam ought to follow suit.
WSJ | Virginia Could Be an Energy Power—If Washington Would Let It
When President Obama endorsed an "all of the above" energy strategy in this year's State of the Union address, he gave the impression that he was finally adopting an aggressive policy. Unfortunately, the president's words are worlds apart from his actions—especially when it comes to developing our nation's abundant offshore oil and natural gas resources.
Politico | Trustees’ projections mask Social Security shortfall
The Social Security Trustees’ new report reveals serious deterioration in the program’s financial outlook. This decline could have been known much earlier — instead of being gradually revealed to us — if the trustees had used correct projection methods.

National Review | More Evidence That ‘Pro-Business’ and ‘Pro-Market’ Don’t Go Together
The very “pro-business” and very not-pro-market letter, which you can find here, is disconcerting for many reasons, the least of which is that Republicans should understand that crony capitalism isn’t capitalism.
Daily Capitalist | The Big Lie—TARP Made Money
The Obama Administration and most liberals repeat over and over that TARP didn’t cost taxpayers a dime and that it made money. Yet it is a lie. SIGTARP (Special Investigator General of TARP) says in its latest report to Congress that so far we have lost $60 billion and another $118.5 billion  is owed and unpaid. 
Calculated Risk | Personal Income increased 0.4% in March, Spending 0.3%
Personal income increased $50.3 billion, or 0.4 percent ... in March, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $29.6 billion, or 0.3 percent.

Health Care

Politico | GOPers split over how to reform health care
Ask the 242 House Republicans what kind of health policy they’d like to enact instead of President Barack Obama’s health care reform law and you might get 242 different answers.
National Journal | House Republicans Say Companies Might Stop Health Coverage
A report Tuesday from the House Ways and Means Committee predicts that businesses will stop offering health coverage, choosing instead to save hundreds of millions of dollars a year by simply terminating health insurance for their workers and dumping these employees into taxpayer-funded health care exchanges.

Heritage Foundation | Medicare: Admitting You Have a (Structural) Problem Is the First Step
A new study by the Urban Institute reconfirms a vital fact: Medicare’s massive increase in enrollment, largely attributable to retiring baby boomers, is driving its fiscal instability.
The American | Is health spending really flattening out?
The New York Times reports that health spending may be flattening out, something that has surprised the experts. This apparent slow-down was spotted by AEI’s J.D. Kleinke in February. But if this trend is genuine, the best hope for its continuation would be to repeal and replace Obamacare.


Bloomberg | Fed Said to Criticize Banks on Risk Models in Stress Test
The Federal Reserve criticized how some of the 19 largest U.S. banks calculated potential losses and planned dividends in this year’s stress tests, people with knowledge of the process said.
CNBC | Fed Hawk and Dove Agree: No More Easing
Two top Federal Reserve officials — one with a dovish, employment-focused bent, and the other a self-avowed inflation hawk — on Monday both said they see no need for the U.S. central bank to ease monetary policy any further.

Econ Comments & Analysis                                                                                            
Bloomberg | Krugman Says Fed ‘Reckless’ to Allow High Jobless Rate
Nobel Prize-winning economist Paul Krugman suggested Federal Reserve policy makers led by Ben S. Bernanke are “reckless” for refusing to pursue higher inflation, which he said could lower U.S. unemployment.


Bloomberg | Higher Taxes Won’t Discourage Wealthy From Working Harder
That’s the view of economists Emmanuel Saez and Thomas Picketty: They argue higher taxes will not discourage the wealthy from working harder or slow the economy, unlike in Ayn Rand’s 1957 novel, “Atlas Shrugged.” Its hero, John Galt, led a strike by industrialists and others against the government, partly because they thought they were too highly taxed.

CATO | Corporate Tax Laffer Curve
The Sunday New York Times described Apple’s successful efforts to reduce its U.S. and California corporate tax burdens. The article hints that the situation is a moral outrage, and it includes sob stories of governments that are supposedly hurting because they don’t raise enough tax revenues from businesses.
FOX Business | NY Times Gets Apple's Effective Tax Rate Wrong
The New York Times reported on Saturday that Apple lowers its tax bill with various tax moves that involve using offices in lower tax regimes.


National Journal | Wireless Industry Makes 3.8 Million Jobs, Report Says
The wireless broadband industry added $195.5 billion to the U.S. gross domestic product in 2011 and could lead to nearly $1.5 trillion in productivity gains over the next 10 years, a report commissioned by the wireless industry projects.

Econ Comments & Analysis                                                                                            
CNN Money | Large layoffs loom on Wall Street
Latest wave of financial industry cuts could eliminate 21,000 jobs, rivaling the financial crisis.


WSJ | Europe, in Slump, Rethinks Austerity
Spain has joined seven other euro-zone nations in recession, according to data released Monday, providing new evidence that austerity policies are failing to spark confidence in the region's economies ahead of a week of expected anti-austerity protests and a string of important national elections.
WSJ | Portugal Commits to Budget Cuts
Portugal's government Monday approved a strategic budget plan for the next four years, which includes spending limits and, as expected, commits to stringent budget deficit targets for next year.

Econ Comments & Analysis                                                                                            
Forbes | Austerity, And The Failure Of The Governing Elite
European austerity has failed — fiscally, economically and politically.  Even more, austerity is a failure of the governing elite who continue to flail about, believing in their self-anointed right to “manage the economy” and plunder the private sector to keep their power and their government-centric world alive.
AEI | Europe’s future on the ballot
On May 6, all eyes will be focused on the second round of the French presidential election, which Socialist challenger Francois Hollande is likely to win. Equally important for Europe’s future is the Greek parliamentary election scheduled for the very same day.
NY Post | How US debt risks dollar doomsday
The US dollar is getting perilously close to losing its status as the world’s reserve currency. Should it cross the line, the 2008 financial crisis could look like a summer storm.
Real Clear Markets | The Fiscal Game In Washington Is At Odds With Reality
You are a legislator in a fictional country. You pride yourself on being fiscally responsible. Under current law, the government will run a small budget deficit. As a result, the nation's debt will increase. But debt will grow more slowly than income. So, the ratio of debt to national income will fall.
WSJ | The New Earmarkers
President Obama has been heard of late ballyhooing what he's done to cut federal red tape. Left unsaid is what he is doing to fashion golden handcuffs for local transit agencies. Consider the work of his artisans at the Federal Transit Administration (FTA).

National Review | When Will the Social Security Trust Funds be Exhausted?
Sooner than we think. According to the latest trustees’ report for Social Security released last Monday, Social Security’s combined trust funds will be exhausted by 2033 — three years earlier than last year’s projections, and seven years earlier than projections made in 2006. This means that by 2033, Social Security benefits would have to be slashed significantly. Sounds bad, right? Well, it gets worse.