Wednesday, August 1, 2012

General Economics

WSJ | Euro-Zone Manufacturing Decline Steepens
Euro-zone factory activity fell at its steepest rate in more than three years in July, and export orders plunged despite a weakening euro, suggesting the economy will struggle to recover from its downturn any time soon.
CNN Money | Are you poor if you have a flat-screen TV?
For instance, some 62% of households earning less than $20,000 annually owned between two and four televisions, according to the 2009 Residential Energy Consumption Survey, conducted by the U.S. Department of Energy. That compares to 68% of those earning $120,000 or more.
WSJ | Asia Shows More Signs of Slowing
A slowdown in China's manufacturing sector in July added to a broader ramp-down in the region, as slack demand in Europe and the U.S. continued to erode growth in Asia's export-driven economies.
Market Watch | Standard & Poor's keeps Spain outlook at negative
Standard & Poor's Ratings Services said Wednesday it is keeping Spain's long and short-term sovereign debt rating at BBB+/A-2 and the outlook negative.
WSJ | Hopes for a Turnaround Grow Dimmer as Worried Consumers Save, Don't Spend
Americans are earning more money—but socking it away and not spending, undermining hopes for a consumer-driven rebound.
FOX Business | Manufacturing Sector Shrinks for Second Month
The U.S. manufacturing sector shrank for the second month in a row in July as new orders improved modestly but employment dropped to a 2-1/2-year low.
WSJ | Moody's Cuts U.K. Economic Forecast
Moody's Investors Service on Tuesday cut its forecast for the U.K. economy, saying the country's economic and fiscal outlook have weakened due to the euro-zone crisis.
WSJ | Housing Notches Gains
Home prices rose for the fourth consecutive month across the nation, providing more evidence that the housing market is recovering.

Econ Comments & Analysis                                                                                            
Heritage Foundation | Commemorating Milton Friedman’s 100th Birthday with the Index of Economic Freedom
July 31, 2012, is the one hundredth anniversary of the birth of the great economist and thinker Milton Friedman. It was Friedman who first suggested that the economic freedom of countries be measured and monitored, and The Heritage Foundation has been doing so since 1995 in its Index of Economic Freedom.
Washington Times | Unsustainable investments
Spending other people’s money is what the left does best, so it’s no surprise congressional Democrats would come up with a scheme to bankroll pet causes with cash from retirees.
CNN Money | Invest for a low, slow recovery
In three years since the Great Recession ended, the economy has been running at temps that only a barbecue pit master could love: just hot enough to smoke a bit but nowhere near enough to sizzle. And that's not likely to change anytime soon.
CATO | Regulation, Market Structure, and Role of the Credit Rating Agencies
During the financial crisis of 2008, the financial markets would have been better served if the credit rating agency industry had been more competitive.
WSJ | How to Avoid Another Bank Bailout
Federal deposit insurance was enacted in the 1930s to prevent runs on banks by giving nervous depositors confidence that Uncle Sam would protect their money. But Congress was not about to let federally insured commercial banks trade, underwrite and speculate in securities or commodities.
NBER | The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance
A long line of research on behavioral economics has established the importance of factors that are typically absent from the standard economic framework: reference dependent preferences, hyperbolic preferences, and the value placed on non-financial rewards.

Political Calculations | Updated GDP Forecast for 2012-Q2 and a Peek at Q3
Going by our preferred Modified Limo forecasting technique, we now see a 50% probability that real GDP in 2012-Q2 will be finalized at a value over $13,608.0 billion, and a 50% probability that it will be finalized under that level.
Library of Economics | Gillespie and de Rugy on Generational Warfare
One thing that has always bothered me, that started in the 1970s and early 1980s, was the language used to talk about Medicare and Social Security. In Washington, these programs are referred to as "mandatory."
Calculated Risk | MBA: Refinance Activity Highest in Three Years
The Refinance Index increased 0.8 percent from the previous week to its highest level since the week ending April 17, 2009.
Economist | The bad horribles
For over a year, the Treasury Department has been trying to gin up more assistance for struggling underwater homeowners.
Greg Mankiw | The President's Rosy Scenario
I have been looking through the Obama administration's midsession review, which was released a few days ago.  I found the comparison between the adminstration's economic forecast and the Blue Chip consensus of private forecasters noteworthy. 
WSJ | Families to Shoulder Rising College Tuition Costs, Treasury Official Says
Higher education is critical for economic mobility, but rising tuition costs and a decrease of public funding means that more of the financing responsibilities could be shifted to family wealth — a particular challenge in today’s economy, the Treasury Department’s top economist said Tuesday.
John Taylor | Still Learning from Milton Friedman
We can still learn much from Milton Friedman, who was born 100 years ago today. Here I focus on his role in the macroeconomic debates of the 1960s and 1970s, because they are so similar to the debates raging again today.

Health Care

National Journal | Dems broaden health care debate
The Obama administration’s requirement that nearly all insurance plans provide contraceptives without a co-pay begins Wednesday, giving Democrats a new talking point about the benefits of the law and Republicans a new hook to repeal the whole thing.
Politico | As Contraception Rule Goes Into Effect, Unusual Silence From Republicans
Religious freedom from government regulations was once seen as a winning talking point for Republicans. But on the day that a contraception regulation takes effect that several religious groups are challenging in court, Republicans are barely mentioning the topic.


WSJ | Gauging the Triggers to Fed Action
The Federal Reserve's unconventional measures to boost the recovery in recent years have followed a pattern in benchmarks of the economy's health. In months before past Fed action, private payroll growth worsened, the economy stalled or contracted and stocks weakened, depressing consumer and business confidence.
CNN Money | Central banks take center stage
As central bankers in Europe and the United States gather this week, investors around the world are wondering what the monetary authorities will do to support the global economy.
Politico | Fed running out of ammo
When it comes to aiding the economy, the Federal Reserve is the only game in town, but the central bank may not have much game left.

Econ Comments & Analysis                                                                                            
Bloomberg | Ben Bernanke Could Lose for Same Reason as Olympic Sailor
Ben has the right map. That’s the assumption about Ben Ainslie, the U.K.’s top sailor, as he competes in the Olympics this week.
Washington Times | Bernanke and Draghi: Bluff and bluster
Two of the most powerful men in the world, supposedly, are Ben S. Bernanke and Mario Draghi, the respective chairmen of the Federal Reserve and the European Central Bank (ECB). Central banks, and therefore central bankers, are supposed to be powerful; today, not so much.
AEI | The Fed should do more
All eyes are on the Fed today, as the Federal Open Market Committee (FOMC) concludes its fifth policy meeting of the year.  Expectations are running high for further easing at this meeting to support the anemic economy. 
Bloomberg | Central Banks’ Unorthodox Actions Are Cutting Lending
The unintended consequences of financial policy intervention are providing fresh evidence for chaos theory’s idea that the flap of a butterfly’s wings can spark a tornado on the other side of the world.

NY Times | The Fed Should Stop Paying Banks Not to Lend
The Federal Open Market Committee, the policy-making arm of the Federal Reserve, meets Tuesday and Wednesday to discuss what, if anything, it will do to stimulate economic growth. There is widespread speculation that it will adopt further “quantitative easing” and inject more money into the economy.
Free Banking | Friedman and free banking
Friedman’s ideas on monetary policy changed over time. He began as a convinced Keynesian. Then, of course, he became the leader of the monetarist school, and wrote with Anna Schwartz the groundbreaking Monetary History of the United States, 1867-1960. The most influential aspect of the book was how it changed the views of economists about what caused the Great Depression—and, by implication, many other economic disasters.
Coordination Problem | Imposed versus Adopted Monetary Rules
One kind of rule is what we might call a policy-guiding rule (or what Buchanan might call a “post-constitutional rule”), such as the Taylor Rule.  Yes, it’s a rule, but it’s a rule that informs the central bank of what sort of action it should take.


Politico | Max Baucus, Orrin Hatch strike deal on business tax package
Top Democrats and Republicans on the Senate Finance Committee have struck a deal to extend billions of dollars in business and personal tax breaks in a sign that members from both parties can still cut deals when popular items are on the line.

Econ Comments & Analysis                                                                                            
WSJ | No Internet Taxation Without Representation
Our nation was born from the idea of "no taxation without representation"—that citizens should not be taxed by governments in which they have no political voice. Yet now lawmakers in Washington want to overturn that bedrock principle in order to extract more revenues from American consumers.
Forbes | As California Founders, It's Time For A Tax Cut In Texas
The public finance news out of California is slipping from grim to bleak. First Stockton in the Central Valley declared bankruptcy. Then, San Bernardino followed suit.
AEI | Tax hikes will slow growth, kill jobs -- but won't reduce the debt
Last week, the Senate voted in favor of the Democrats's tax plan to extend the Bush tax cuts for Americans earning less than $200,000 and against the Republicans' tax plan for extending the cuts to all Americans. This would mean a tax hike for high-income Americans.

Tax Foundation | How the States Would Be Affected by Extension of the Bush Tax Cuts and Other Provisions
With just five months to go until the largest tax increase since World War II, a.k.a. “Taxmageddon”, some people are getting concerned about the impact on the economy.  This week the House will vote on a GOP proposal to extend through 2013 the Bush tax cuts of 2001 and 2003 and the Alternative Minimum Tax (AMT) patch, two of the largest components of Taxmageddon. 


WSJ | Joblessness Hits New High in Euro Bloc
Unemployment in the 17 countries that share the euro hit another record in June, a development likely to further weaken consumer spending and add pressure on the European Central Bank's governing council to take action at its monthly meeting Thursday.
Market Watch | U.S. adds 163,000 private-sector jobs, ADP says
The private sector added 163,000 jobs in July, as employment growth ticked down from the prior month, according to data released Wednesday.
WSJ | U.S. Faces Uphill Battle in Retraining the Jobless
The federal government spent about $18 billion on training and job-search programs, running 47 separate programs offering training, in the year ended September 2009, the most recent tally by the Government Accountability Office.

Calculated Risk | ADP: Private Employment increased 163,000 in July
Employment in the U.S. nonfarm private business sector increased by 163,000 from June to July, on a seasonally adjusted basis.


WSJ | Deficit Grows in Spain as Capital Flight Accelerates
Spain's central government reported a new deterioration in its finances and struggled to impose budget discipline on the country's restive regions as data showed a surge in capital flight from the euro zone's fourth-largest economy.
Market Watch | Congress strikes stopgap spending deal
House and Senate leaders on Tuesday struck a deal to fund the government for six months, a move that averts the threat of a shutdown in September and gives negotiators breathing room to hash out differences over looming tax hikes and spending cuts.
National Journal | Appropriations Status: Senate Panel Passes Defense Approps Bill
The Senate Defense Appropriations Subcommittee on Tuesday passed its defense funding bill, which the full Appropriations Committee is scheduled to mark up on Thursday along with legislation to fund the legislative branch.
Bloomberg | U.S. Treasury Plans Floating-Rate Notes in Year or More
The U.S. Treasury Department said today it is developing a floating-rate note program that could be operational in a year or more, while it is preparing for possible negative-rate bidding.
CNN Money | Deficit hawks: Now's not the time for austerity
Now is not the time for austerity. That's a message many independent fiscal hawks are sending as Congress continues to dawdle on a deal to avert the so-called fiscal cliff.

Econ Comments & Analysis                                                                                            
Politico | Fiscal cliff dive only way out
To be sure, the risks of going over that cliff are great. It means potentially pushing the nation into recession; contraction of gross domestic product by 1.3 percent; unemployment above 9 percent. But the rewards are also great.

The American | The New ‘Buffett Rule’ Everyone Is Ignoring
Taking our eyes off the overwhelmingly important goal of returning the economy to robust growth is a waste of valuable time.