Tuesday, June 5, 2012

General Economics

News                                                                                                                               CNN Money | Average income of super rich: $202.4 million
The 400 tax filers at the top of the income scale hauled in an average of $202.4 million in 2009 -- a 25% haircut from the prior year, according to the latest tax data from the IRS.
Politico | Washington ignores bond market on borrowing
Here’s one benefit to the continued economic troubles: Interest rates on government debt are plummeting to record lows.
 WSJ | Australian Economy Shows Surprising Strength
Australia reported its economy was the fastest-growing in the developed world in the first three months of 2012, sweeping aside growing gloom that has triggered aggressive interest rates cuts in the past month.
USA Today | Most state economies still recovering after recession
The residents of only nine states have returned their economic output to the level that existed before the downturn struck at the end of 2007 — and most of those states are energy producers, according to data released Tuesday.  
NY Times | Veterans Pension Program Is Being Abused, Report Says
A yearlong investigation into a federal pension program for low-income veterans has concluded that weak oversight and unclear rules have made the system ripe for abuse, including by financial planners and lawyers who help well-off retirees qualify for benefits by transferring or hiding assets.  
Market Watch | Regulator reviews oversight in wake of J.P. Morgan
The primary regulator for J.P. Morgan Chase & Co. on Wednesday said the agency is conducting an internal review of its oversight of the mega-bank in light of the institution's announcement last month that it is taking losses of at least $2 billion from credit derivatives trades.  
WSJ | Productivity Revised Lower
The productivity of U.S. workers declined more than initially thought during the first quarter of the year, yet another sign of sputtering economic growth.
CNN Money | Push for more student loan disclosure
The Obama administration announced a push to have colleges make better disclosures to students about the true cost of loans, as well as graduation and loan default rates at each school.
 WSJ | European Data Adds to Anxiety
A fall in German industrial output in April suggested the debt crisis may finally be impacting Europe's largest and strongest economy.

 Econ Comments & Analysis                                                                                       
WSJ | Big Banks Are Not the Future
The halcyon days of large financial conglomerates are over.  
Forbes | Obama Runs From His Failed Presidency As Fast As He Can
As President Barack Obama approaches the final hundred days before his election, events have forced his campaign to adopt a new political strategy: hoping Americans forget the first hundred days of his presidency.

Blogs                                                                                                                              Heritage Foundation | More Than 40 Percent of Americans Are on Some Government Program
How many Americans depend on a government program for a basic (or not so basic) need? According to recently released Census Bureau data and Heritage Foundation calculations, the number is 128.8 million. That is the number of individuals directly receiving aid that they depend on for their daily consumption of things such as rent, prescription drugs, and higher education.
Marginal Revolution | Thoughts on how to avoid another Great Depression
I believe people should take more seriously the notion that the ECB will remain hopeless, and that the crisis can only be addressed by some kind of joint US-German-UK-toss-in-the-other-sound-countries radical multilateral move.
Greg Mankiw | Barro on the Slow Recovery
Consider the expansion of social-safety-net programs, including food stamps, unemployment insurance, Medicaid (prospectively) and housing and mortgage programs.  
WSJ | Distressing Mortgage Conditions
Though mortgage distress peaked in 2010, many areas of the country continue to struggle and some regions are getting worse, according to data presented by Federal Reserve Bank of St. Louis President James Bullard.  
Café Hayek | The State of Economics and Economics Journalism
The reaction to the May employment report has been depressingly predictable: Republicans have been gleefully proclaiming that President Obama’s fiscal stimulus didn’t work. Many people who commented on my post about the political impact of the job figures parroted the same line, arguing that the lacklustre economy demonstrates Keynesianism is a bust.

Health Care

National Journal | Hospital CEOs Develop Care Checklist
Top executives at eleven hospitals have developed a checklist to improve the value of health care for their patients.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Dueling Forces In Today's Healthcare Markets
All types of monopoly are not created equal in the U.S. economy. In a forthcoming study later this month for the American Enterprise Institute, Barak Richman of Duke Law School emphasizes that health care providers with market power enjoy substantially more pricing freedom than monopolists in other markets.

Heritage Foundation | Medicare Part D Proves That Competition Lowers Health Care Spending
Some policymakers have difficulty understanding competition’s role in health care. There is a historical reason: With a legacy of third-party micromanagement, something like Medicare Part D—a program where about 1,100 drug plans compete for enrollees—is remarkably foreign.


Bloomberg | Fed Presidents Clash Over Need to Provide More Stimulus
 Federal Reserve regional bank presidents voiced opposing views over whether the central bank should step up record accommodation following the lowest monthly increase in U.S. payrolls in a year.  
WSJ | Draghi Sees Increased Risks to Economy
The European Central Bank Wednesday dashed hopes for a cut in interest rates or other radical steps to unfreeze the euro zone's dysfunctional markets, choosing instead to tweak its current policy and hint at action in a month's time.

Econ Comments & Analysis                                                                                            
Market Watch | Fed's Lockhart: Extending Twist on the table
 Lockhart said that he saw a higher probability of a negative influence on the U.S. economy coming from Europe than he did at the last Federal Open Market Committee meeting in April.

Free Banking | Bob Keleher's market price approach to monetary policy
The particular forward-looking market price indicators the framework recommends examining are broad indices of commodity prices; foreign exchange rates; and bond yields. No mechanical rule suffices for judging whether the central bank is supplying an equilibrium amount of the monetary base, so the book explains how to examine indicators jointly and extract signals from them.
Greg Mankiw's Blog | Summers on Quantitative Easing 
 Any rational chief financial officer in the private sector would see this as a moment to extend debt maturities and lock in low rates – exactly the opposite of what central banks are doing. In the U.S. Treasury, for example, discussions of debt-management policy have had exactly this emphasis.


Washington Times | EDITORIAL: Unequal protection for taxpayers
Liberals may talk a good game about tax fairness, but, in the end, they don’t really mean it. Tax fairness is not really a claim for equality of treatment, but rather about enacting policies that ensure the government maintains an unlimited claim to the wealth created by others.
Econ Comments & Analysis                                                                                            
Politico | Prop 29: California cigarette tax too close to call
The proposed $1-per-pack tax would raise $735 million per year if implemented, but California has not raised taxes since 2000.


WSJ | Meet the JOBS Act's Jobs-Free Companies
Just eight weeks after its passage, however, more than a dozen of the companies seeking to use its looser rules for going public aren't the type of high-tech growth companies lawmakers had in mind.
USA Today | Nation's service sectors grow in May, job growth slowing
U.S. service companies, which employ roughly 90% of the work force, grew at a slightly faster pace in May, marking the 29th straight month of expansion.

Econ Comments & Analysis                                                                                            
Politico | BLS off the mark in initial jobs report.
It’s the initial figures that dominate the headlines. The revised tallies — which come out a full two months later — are barely covered at all. And that can miss major changes: The same day the May report was released, the Labor Department announced it had overestimated April’s job growth in its initial report, releasing a preliminary downward revision of its estimate of 115,000 jobs added. Now the number’s at just 77,000.

WSJ: Real Time Economics | New Hires Getting Left Behind on Pay
The weak pace of hiring in May cast a big cloud on the future of consumer spending. But the outlook dims more when you consider even those fortunate to get jobs are generally earning less than the average worker.


CNN: Money | Europe unveils bank-bailout plan
The EU proposal would include a single deposit guarantee organization covering all banks in the union, something similar to the FDIC that covers U.S. bank deposits.
Market Watch | CBO paints grim long-term debt picture
The U.S. debt will exceed the size of the nation’s economy in 25 years if the federal government doesn’t chart a “sustainable fiscal course,” the Congressional Budget Office warned in a new estimate on Tuesday.  
WSJ | Dire CBO Report Urges Fiscal Fixes
By the end of this year, the CBO said, cumulative federal debt will reach roughly 70% of gross domestic product—the value of all goods and services produced by the economy—the highest level since just after World War II.
 National Journal | Congress Embarks on Spending Spree
Congress is expected to do what it does best—spend money—this week, with the House taking up three appropriations bills and the Senate starting work on farm subsidies.
USA Today | Europe faces make-or-break month in dealing with debt
Europe is facing a make-or-break month. Its economy is sinking and the debt crisis that has hit some of its members threatens global economic disaster. Now its central bank appears likely to delay helping — in the hope that Europe's divided leaders will be pushed into action.  
WSJ | Spain Warns It Needs Help
Spain made its most explicit suggestion yet that it would seek help from Europe for its struggling banks, as the country's budget minister said high interest rates on Spanish bonds were a signal the government risks losing access to financial markets.

Econ Comments & Analysis                                                                                            
Washington Times | FRASER: The broken budget process
Congressional and executive oversight of the federal budget is in turmoil. The political aversion to tackling federal overspending is enhanced and enabled by the inadequate processes that govern the budget.
CBO | Testimony on the 2012 Long-Term Budget Outlook
According to CBO’s projections, if current laws remained in place, spending on the major federal health care programs alone would grow from more than 5 percent of GDP today to almost 10 percent in 2037 and would continue to increase thereafter.1 Spending on Social Security is projected to rise much less sharply, from 5 percent of GDP today to more than 6 percent in 2030 and subsequent decades.
Bloomberg | Japan’s Unsustainable Deficit-Financing Model
Financing government debt and deficits hasn’t been a problem for Japan: Until recent years, the country’s big-saving consumers provided the funds to finance the shortfalls.
WSJ | Obama's Debt Boom
The longer we extend Mr. Obama's legacy of slow growth and more debt, the greater the economic price to fix it.

Political Contributions | President Obama's Unsustainable Fiscal Path
  We find then that President Obama's claim of putting an extra $1,000 in the typical middle-class family's pocket is both a bit understated and also ignores the true cost of the impact of his policies upon the nation's fiscal situation.  
NRO: The Corner | Do Low Interest Rates Mean the Government Should Borrow More?
Interest rates are low. For some, that means that the U.S. government should borrow more money.
AEI: American | The 7 scariest facts from the new CBO long-term budget forecast
Today’s long-term budget forecast from the Congressional Budget Office is a great counter to the sudden enthusiasm for more government spending to boost the economy. Among the most interesting—and scary—factoids:
 Cato @ Liberty | Will More Federal Debt Improve the U.S. Government’s Creditworthiness?
Many in the United States and Europe are arguing for further quantitative easing to bring down longer-term interest rates. …However, one has to wonder how much investment businesses are unwilling to undertake at extraordinarily low interest rates that they would be willing to undertake with rates reduced by yet another 25 or 50 basis points.  
NRO: The Corner | A Look at Private-sector Austerity in the U.K.
As you know by now, much of the criticisms about austerity measures implemented in the U.K. make it sound like the country has dramatically cut spending. But the data show that to be far from the truth. Spending in the U.K. is growing at a slower rate than it was scheduled to, but it is growing.
AEI: American | The national debt isn’t $15 trillion. It’s $50 trillion
Measuring America’s debt on an accrual, rather than cash basis, grows the current shortfall from $15.7 trillion to over $50 trillion. America’s debt is traditionally measured on a cash basis, which values the current debt at $15.7 trillion.
 Cato @ Liberty | Spending Cut Goal: 10% in Two Years
Many in Congress will resist of course, but presidents have their most leverage in the first year. Mitt will have nothing to lose but the country into a vortex of debt and economic despair if he doesn’t at least try.  
AEI: American | CBO: Massive rise in U.S. debt crashes our economic forecasting model in 2035
Debt is so high, a massive 250% of GDP, that the CBO can no longer calculate its harmful impact on the economy, though one can assume the direction is down.