Monday, July 16, 2012

General Economics

News                                                                                                                             
Bloomberg | IMF Cuts Global Outlook as EU Ensnares Emerging Economies
The International Monetary Fund cut its 2013 global growth forecast as Europe’s debt crisis prolongs Spain’s recession and slows expansions in emerging markets from China to India.
WSJ | Moody's Cuts Pakistan Rating
Moody's Investor Service Friday downgraded Pakistan's sovereign credit rating by a notch, citing strains on the economy's external payment position, which has been hurt by a widening trade deficit and a decline in capital inflows.
Market Watch | Manufacturing rebounds a bit in New York
Manufacturers in the New York region said business improved modestly in early July, after barely expanding in June, according to a report released Monday by the New York Federal Reserve Bank.
NY Times | Two Classes, Divided by ‘I Do’
The economic storms of recent years have raised concerns about growing inequality and questions about a core national faith, that even Americans of humble backgrounds have a good chance of getting ahead. Most of the discussion has focused on labor market forces like falling blue-collar wages and lavish Wall Street pay.
Bloomberg | Business Inventories in U.S. Increased in May as Sales Fell
Inventories in the U.S. rose more than forecast in May as sales declined for a second month, indicating companies may limit factory orders.
CNN Money | Severe U.S. drought slams small businesses
Farmers, boating companies and restaurants are among the growing number of small businesses reeling from the worst drought to hit the United States in 12 years.

Econ Comments & Analysis                                                                                            
Washington Times | Crowding out the middle class
When people talk about the problem with immigration, they usually are referring to illegals. It is easy to scapegoat the rule-breakers who escape corrupt countries such as El Salvador and Mexico for a better life in America. But the truth is, the 11 million or 12 million illegals in this country represent just a fraction of the problem.
CBO | Infrastructure Banks and Surface Transportation
From 2008 to 2011, governmental spending on surface transportation infrastructure—highways, mass transit, and passenger rail—totaled $200 billion a year. The federal government spent more than $50 billion a year—mostly in the form of grants to state and local entities, which then determined what projects to fund—and state and local governments spent more than $150 billion a year of their own funds.
WSJ | Clean Green Scam
The EPA runs a program that is supposed to ensure 36 billion gallons of biofuels are blended into the gasoline supply by 2022. Every gallon produced earns something called a renewable identification number, or RINs, which are then sold to and traded among refiners and other "obligated parties" to help meet their annual biofuel quotas.
Washington Post | Changing focus to inequalities in opportunity
Even if the process proves protracted, the U.S. economy will eventually recover. When it does, issues relating to inequality are likely to replace cyclical issues at the forefront of our economic conversation.
WSJ | The Shale Gas Secret
'Whoever owns the soil, it's theirs up to Heaven and down to Hell." So goes the ancient common-law principle. Today, however, almost no major country recognizes full subsurface private property rights, except for the United States.
Daily Beast | Are Millennials the Screwed Generation?
‘Boomer America’ never had it so good. As a result, today’s young Americans have never had it so bad.
Washington Times | High cost of fantasy fuel
Why does America’s economy feel like an SUV running on fumes? The Obama administration’s laughably rigid enforcement of a Bush-era ethanol mandate typifies today’s regulatory climate. When Uncle Sam governs with a tire iron in his hand, U.S. companies wisely pull off the road and pray for new management.
WSJ | When Pockets of Strength Just Aren't Enough
America's Great Plains and Midwest regions are rebounding from the recession faster than other parts of the country, but economists say their recoveries aren't enough to lift the rest of the economy out of the doldrums.
City Journal | The Road to Recovery
Burdened by slow growth and high unemployment—especially long-term unemployment—the American economy faces an uncertain future.
Bloomberg | What the U.S. Can Learn From Australia’s Coal Mines
America became great because it transformed its vast natural resources -- Iowa farmland, Mesabi iron, Texas crude -- into human capital, equipped with skills to succeed in the Information Age.
WSJ | It's True: Corporations Are People
Of course corporations are people. What else would they be? Buildings don't hire people. Buildings don't design cars that run on electricity or discover DNA-based drug therapies that target cancer cells in ways our parents could never imagine.

Blogs                                                                                                                             
Calculated Risk | Schedule for Week of July 15th
This will be a very busy week for economic data. Key reports include retail sales, housing starts, and existing home sales for June.
Library of Economics | A Short History of Gasoline Price Controls
And one thing you know from experience is when you control the price of something, you end up getting less of it. So if you control the price of health-care providers, you will have fewer of them and that's gonna wind up as a crisis. The most vivid expression of that . . . was Jimmy Carter's gas lines.
National Review | Cronyism + Dependency = the Farm Bill
With the support of many Republicans, the House Agriculture Committee has approved a five-year farm and nutrition bill. The 35–11 committee vote is troubling when you realize how incredibly similar the House version of the bill is to the horrendous Senate version.
Politico | Analyst: Today's economy is November's economy
Neither President Barack Obama nor Mitt Romney should expect big changes in the economy by November, a top economist said Sunday.
Calculated Risk | Unofficial Problem Bank list declines to 912 Institutions
As such, it was a quiet week for the Unofficial Problem Bank List with two removals and one addition. The changes leave the list with 912 institutions with assets of $352.9 billion.
John Taylor | One of the Most Important Lessons of Modern Macroeconomics
I completely agree with John Cochrane when he writes in his review of my book First Principles that the “preference for rules is one of the most important lessons of modern macroeconomics” and that it is still the major point of disagreement among those writing about economic policy today.

Health Care

News                                                                                                                             
FOX News | Repealing Obama's health care law won't be easy
Yes, if Mitt Romney wins the White House and his Republican allies retake the Senate, he could shred most of President Barack Obama's health care law without having to overpower a Democratic filibuster.
USA Today | Health care options for young, healthy and broke
They're young, healthy and flat broke — and now the government says they have to buy thousands of dollars' worth of medical insurance. What should tapped-out twenty-somethings do?

Econ Comments & Analysis                                                                                            
Daily Finance | Obamacare Could Kill One Type of Cheap Health Insurance
One of the biggest challenges facing the country right now is getting skyrocketing medical costs under control. The hope of proponents of the health care reform law that the Supreme Court upheld last month was that it would help reduce overall costs.
CATO | Forget about the Mandate. Let's Fix Health Care
On June 28, the Supreme Court upheld President Barack Obama’s health-care law. Opponents and supporters are still sparring over whether its mandate is a tax. It’s time to get over this debate. The mandate’s mild penalty was never this law’s central economic and policy flaw.

Blogs                                                                                                                             
Marginal Revolution | The new tug of war over Medicaid
Medicaid has never been especially popular, and when its expanded role becomes more widely understood, it is likely to become less popular still.
WSJ | Number of the Week: Public Workers More Likely to Have Health Benefits
51%: Percent of private-sector workers who receive health benefits from their employers. For state and local government employees, the figure is 73%.It’s no secret that public employees tend to get better benefits than their private-sector counterparts.

Monetary

News                                                                                                                             
Market Watch | U.S. wholesale prices climb 0.1% in June
U.S. wholesale prices rose slightly in June as higher costs of food, trucks and appliances offset another decline in energy costs, the Labor Department said Friday.

Econ Comments & Analysis                                                                                            
Heritage Foundation | Federal Reserve’s Operation Twist Takes Wrong Turn
At its meeting on June 20, 2012, 11 of 12 members of the Federal Open Market Committee (FOMC) voted to apply another $267 billion to continue Operation Twist through the end of this year.

Blogs                                                                                                                             
Daily Capitalist | The Real Story Behind Consumer Credit
Last week we heard that consumer credit (consumer borrowing) had “improved” substantially in May, which was said to be a very positive economic indicator. Overall, the Fed reported, such credit increased 8.0% overall on an annualized basis.
Political Calculations | Whither QE3?
Once upon a time, Harvard economist Greg Mankiw concocted a mathematical formula for predicting how the U.S. Federal Reserve would set its basic interest rate for U.S. banks: the Federal Funds Rate.

Taxes

Econ Comments & Analysis                                                                                            
WSJ | The Tax Cliff Is a Growth Killer
The United States faces an economic collapse thanks to massive tax increases on Jan. 1, and continued deficit spending for years on end.
NBER | Trade Credit and Taxes
This paper analyzes the extent to which firms use trade credit to reallocate capital in response to tax incentives. Tax-induced differences in pretax returns encourage the use of trade credit to reallocate capital from firms facing low tax rates to those facing high tax rates.

Blogs                                                                                                                             
CATO | The CBO on Falling Incomes and Rising Tax Shares of the Top 1%
New Congressional Budget Office (CBO) figures show that the top 1% paid 21.3% of all federal taxes from 1993 to 2000, when Clinton was president, but they paid 25.1% from 2003 to 2008, after the Bush tax cuts.   If 21.3% was a fair share in the Clinton years, then the top 1% has been paying much more than its fair share since 2003.
Greg Mankiw | The Progressivity of Taxes and Transfers
To update one of the tables for the next edition of my favorite textbook, I have been looking at the new CBO report on the distribution of income and taxes.  I found the following calculations, based on the numbers in the CBO's Table 7, illuminating.

Employment

News                                                                                                                             
USA Today | Service businesses lead uneven jobs recovery
Service businesses are leading an uneven jobs recovery that has pushed sectors such as warehouse club retailers back to their pre-recession employment levels while related categories — such as department stores — are still far from recouping their losses, a USA TODAY analysis shows.
CNN Money | Summer jobs: Cities push companies to hire teens
Faced with greater demand but dwindling dollars, cities are leaning more on local employers to hire teens.

Econ Comments & Analysis                                                                                            
WSJ | How Europe Can Create Jobs
Last week Spanish Prime Minister Mariano Rajoy proposed his fourth round of spending cuts and tax hikes since taking office in December. He is following the IMF-Brussels orthodoxy, but he'd do better if he reversed the labor policies that have led to a 24% jobless rate.

Budget

News                                                                                                                             
CNN Money | IMF: Deal with fiscal cliff and debt ceiling soon
Hit the brakes on the fiscal cliff and hit the gas on raising the debt ceiling.
Market Watch | U.S. retail sales fall for third straight month
U.S. retail sales fell in June for the third straight month as consumers cut spending on most goods and services, reflecting a sharp slowdown in economic growth in the second quarter.
WSJ | Spaniards Feel Sting of Big Budget Cuts
Spaniards Feel Sting of Big Budget Cuts
USA Today | Students, families, seek ways to trim college costs
The skyrocketing cost of tuition and tough economic times are forcing American families to cut back on college spending.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Austerity Works: It's Time to Give It a Try
European Union finance ministers last week gave Spain permission to delay cutting some government spending and reducing its deficit, though many such as The Economist magazine fear that even the cuts that will be made go too far. A similar decision may soon have to be made for Greece.