Monday, July 30, 2012

General Economics

News                                                                                                                             
Market Watch | U.S. job growth, economy stuck in doldrums
Slackening U.S. and global growth likely means the nation’s unemployment rate will remain stuck around 8%, reducing the odds of a faster economic recovery kicking in before the end of the year.
WSJ | Weak Economy Heads Lower
The U.S. economy slowed sharply in the second quarter, growing just 1.5% as consumers slashed spending and businesses grew more cautious about hiring and investing, underscoring that an already wobbly recovery is losing even more steam.
Politico | Poll: Corruption is No. 2 issue for 2013
Americans view reducing government corruption as the second-highest priority for the next president, behind only job creation, according to a new Gallup poll released Monday.
Bloomberg | Euro-Area Economic Confidence Drops More Than Forecast
Economic confidence in the euro area fell more than economists forecast to the lowest in almost three years in July, suggesting the economy’s slump extended into the third quarter as governments struggled to tame the debt crisis.
USA Today | Recovery's pace may depend on worried wealthy
The shaky economic recovery may depend on wealthy consumers to keep spending — and they may not have the confidence to do the job.

Econ Comments & Analysis                                                                                            
WSJ | The 1.5% Presidency
President Obama didn't comment on Friday's report of declining growth in the second quarter, and that's no surprise. The economic story of his Presidency is by now familiar: a plodding recovery that has taken its third dip in three years and is barely raising incomes for most Americans.
AEI | Why capitalism has an image problem
Mitt Romney's résumé at Bain should be a slam dunk. He has been a successful capitalist, and capitalism is the best thing that has ever happened to the material condition of the human race.
Reason | Government Did Not Build Your Business
Evidently, the president believes that economic growth and job creation are largely the result of actions taken by benevolent government agencies. But while it is certainly the case that good governance is essential, entrepreneurs engaging in voluntary cooperation coordinated through competition in free markets is what actually creates wealth and jobs.
Bloomberg | Burn Your iPhone With Chinese Olympic Uniforms
Tonight, as American athletes enter London’s Olympic Stadium, all eyes will be on China. More to the point, on the made-in-China uniforms Team USA is sporting.
WSJ | Slow Recovery or Failed Agenda?
President Obama has a tough task ahead of him. He must convince the American voter that the economy is improving and that he deserves the credit. At the same time, he must make the case that the blame for the slowness of the recovery lies with others.
Washington Times | JORDAN AND SOUTHERLAND: To fight poverty, empower people
President Johnson declared a War on Poverty in 1964. Over the subsequent three decades, the federal government created a maze of welfare programs to distribute a growing mountain of taxpayer money. But year after year, poverty seemed to win the war.
WSJ | The Russia Trade Pile-Up
So how can legislation supported by business groups, democracy activists, Senate Democrats, House Republicans and the Obama Administration be in danger of failing? Answer: Only in Washington.
Bloomberg | How Recession Will Change University Financing
The latest recession will probably be seen as a turning point for college and university financing.

Blogs                                                                                                                             
Political Calculations | The GDP Revision
On Friday, 27 July 2012, the Bureau of Economic Analysis revised its estimates of the U.S.' inflation-adjusted GDP going back to the first quarter of 2009.
Library of Economics | Enrico Moretti on Mobility
In total, almost half of college graduates move out of their birth states by age 30. Only 27 percent of high school graduates and 17 percent of high school dropouts do so.
WSJ | Economists React: GDP ‘Not Satisfactory by Any Gauge’
Economists and others weigh in on the tepid second-quarter gross domestic product growth rate.
Calculated Risk | Unofficial Problem Bank list declines to 900 Institutions
For the week, there were seven removals and two additions leaving the list at 900 institutions with assets of $349.5 billion.
Neighborhood Effects | New Research From Henderson on Cronyism
Today Mercatus published a new piece on the economics and history of cronyism. It is by Professor David Henderson. David highlights his piece in an OpEd over at Real Clear Politics and in a blog post at EconLog.
Library of Economics | Reforming Government as an Institution
The time is ripe to push for new fiscal institutions to engage in a long-overdue rethinking of the rules shaping fiscal decisionmaking, to consolidate certain related government functions within unified bureaucratic structures and undo earlier consolidations that have failed, and to adopt measures aimed at depolarizing American politics, including reforms to the judicial confirmation process and to the congressional redistricting system.
WSJ | Is This Worst or Second-Worst Postwar Recovery?
There’s no question this is a lousy recovery. But is it the worst since World War II, or only the second-worst? It depends on how you count.
Calculated Risk | Schedule for Week of July 29th
The key report for this week will be the July employment report to be released on Friday, Aug 3rd.
Marginal Revolution | Krugman on income mobility
The rich man in his castle, The poor man at his gate, God made them high and lowly, And ordered their estate.
WSJ | Number of the Week: No Rush to Lock in Low Rate
9: Number of months in the last 12 when mortgage rates hit new record lows.
Daily Capitalist | The Japan Syndrome
Before taking a multi-week break with family in which I intend to post only for major market action, it’s time for some review.  The macro theme in the U.S. economy and financial markets strikes me as just what I stated in one of my first blogs.
AEI | Maybe private sector is doing fine? Growth in post-recession ‘private GDP’ (3%) is above average
So maybe it’s true that the “private sector is doing fine” and most of the sub-par economic growth measured by real GDP is simply reflecting the decreases in government spending, and not weakness in the private sector?

Health Care

News                                                                                                                             
NY Times | Doctor Shortage Likely to Worsen With Health Law
In the Inland Empire, an economically depressed region in Southern California, President Obama’s health care law is expected to extend insurance coverage to more than 300,000 people by 2014. But coverage will not necessarily translate into care
CNN Money | Who covers health care for Texas' uninsured? Taxpayers
Texas Governor Rick Perry says he won't expand Medicaid eligibility under the health reform law because he wants to spare taxpayers billions of dollars.

Blogs                                                                                                                             
Marginal Revolution | Medicaid wars, continuing
Phil Galewitz and Matthew Fleming surveyed all 50 states to find out how Medicaid budgets are changing.

Monetary

News                                                                                                                             
Bloomberg | Deflation Dismissed by Bond Measure Amid QE3 Anticipation
For all the handwringing over the slowdown in the U.S. economy, the bond market shows there’s less risk of deflation now than before the Federal Reserve’s first two rounds of large-scale debt purchases.
WSJ | Dollar's Surprising Strength Eats Into the Bottom Line
Exchange rates can be tricky to manage, and many companies try to persuade investors to strip out their effects when judging corporate performance. But in the past quarter, the dollar gained much more quickly than expected.
Bloomberg | Fed Weighs Cutting Interest on Banks’ Reserves After ECB Move
Federal Reserve Chairman Ben S. Bernanke may be taking another look at cutting the interest rate the Fed pays on bank reserves to bring down short-term borrowing costs and spur the slowing U.S. expansion.

Econ Comments & Analysis                                                                                            
Forbes | Ron Paul, Fractional Reserve Banking, and the Money Multiplier Myth
There’s a saying in the banking industry that for a poorly run bank no reserve requirement is stringent enough, and then for a well run bank, any reserve requirement is positively draconian.
Market Watch | 5 lessons Bernanke has learned on the job
Back in 2006 when Ben Bernanke was named chairman of the Federal Reserve, he knew he’d make some mistakes, but he was pretty sure the Fed wouldn’t do what the United States did in the 1930s or what Japan did in the 1990s that allowed depressed conditions to persist for years.

Blogs                                                                                                                             
Minyanville | Can More Fed Twisting Actually Help?
Is there correlation, non-correlation, or is it simply emotion driving the tape?  Considering the economic news released last week the US, equity markets played quite the tune, akin to a punk rock band: No rhyme or reason in its beat.
Marginal Revolution | The public choice approach to monetary policy
By speeding the flood of less expensive imported products into Japan, the strong yen is contributing to a broader drop in the prices of goods and services, known as deflation, that has helped retirees stretch their pensions and savings.

Taxes

News                                                                                                                             
National Journal | Both Parties Push Tax Plans in Race to Recess
Lawmakers in both chambers are eyeing an end-of-the-week exit for the August recess, but not before both parties work to crystallize their positions on alternate tax plans for back-home campaigning.

Blogs                                                                                                                             
CATO | On Death Tax, the U.S. Is Worse than Greece, Worse than France, and Even Worse than Venezuela
Considering that every economic theory agrees that living standards and worker compensation are closely correlated with the amount of capital in an economy, one would think that politicians would be very anxious not to create tax penalties on saving and investment.
National Review | Recovery, Keynesians, and Tax Increases
According to ABC News, and other news outlets, the president is urging House GOP members to “do the right thing” on taxes. That means let the Bush tax cuts expire for households making over $250,000.

Employment

Econ Comments & Analysis                                                                                            
NBER | Do Male-Female Wage Di fferentials Reflect Diff erences in the Return to Skill? Cross-City Evidence From 1980-2000
Over the 1980s and 1990s the wage differentials between men and women (with similar observable characteristics) declined significantly. At the same time, the returns to education increased.

Blogs                                                                                                                             
Tax Foundation | Taxes and the Outsourcing of U.S. Jobs
International business taxation and its role in outsourcing are heating up as major election-year political issues. At a campaign stop in Cincinnati last week, President Obama cited a new report as evidence that Mitt Romney’s territorial tax reform proposal would push jobs abroad
AEI | How to think about jobs numbers
President Obama frequently touts the fact that the economy has created 4.4 million new private-sector jobs over the past 28 months, being careful to add the caveat that we can’t be satisfied with the state of the labor market.

Budget

News                                                                                                                             
Washington Times | Eurogroup chair sees decisions soon in debt crisis
The German and Italian leaders issued a new pledge to protect the eurozone, while the influential eurogroup chairman was quoted Sunday as saying that officials have no time to lose and will decide in the coming days what measures to take.
WSJ | Federal Spending Cutbacks Slow Recovery
Falling military spending and the end of federal stimulus programs are further slowing the already weak U.S. economic recovery.
CNN Money | How to avoid 'lunatic' fiscal cliff
Unfortunately, the high-stakes game of political chicken currently under way in Congress is increasingly viewed as "good strategy."
Washington Times | No doubt about no debt
Head to the checkout at an Ikea in Stockholm to pay for your new leather corner sofa and with the swipe of a Visa card it’s yours. Don’t try that in Berlin — that will be $2,080 up front please.
Daily Finance | Greek Debt Crisis Fix May Cost Central Banks up to 100 Billion Euros
European policymakers are working on "last chance" options to bring Greece's debts down and keep it in the euro zone, with the ECB and national central banks looking at taking significant losses on the value of their bond holdings, officials said.

Econ Comments & Analysis                                                                                            
Fiscal Times | Disability Benefit Program Is Going Broke
For a country still gasping to recover from the Great Recession, disability payments from Social Security have evolved into a lifeline and an economic trap for millions of unemployed Americans threatening the program with insolvency in just four short years.