Monday, August 13, 2012

General Economics

News                                                                                                                             
Bloomberg | America’s Energy Seen Adding 3.6 Million Jobs Along With 3% GDP
On the eastern bank of the Mississippi River, about an hour upstream from New Orleans, the outline of Nucor Corp. (NUE)’s new $750 million iron-processing plant is rising between fields of sugar cane and sweet gum trees.
Market Watch | U.S. economy downshifting but not stalled
Call it the 2% (or less) economy: The U.S. is still expanding, but at a lukewarm pace that’s unlikely to heat up before the end of the year.
WSJ | Troubles Abroad Keep Cash Flowing to U.S.
Fears the U.S. will go over the "fiscal cliff" at the end of the year suggest not much has changed in Washington since the debt-ceiling battle hit the struggling economy a year ago.
USA Today | Economists see budget impasse blocking growth
Most economists surveyed by USA TODAY have little faith a divided Congress will adequately address looming tax increases and spending cuts, significantly hampering economic growth well into 2013.
Bloomberg | Hedge Funds Reduce Wagers After Longest-Ever Rally
Hedge funds trimmed bets on a commodity rally for the first time in nine weeks as signs of U.S. growth and speculation that central banks will do more to stimulate economies drove prices to a three-month high.
WSJ | Japan's Economy Slows
The Japanese economy grew at a weaker-than-expected annualized pace of 1.4% in the April-June quarter, as exports slowed and a domestic-demand led recovery showed signs of faltering.
CNN Money | USDA predicts big drop in corn yield
Corn yields are shriveling up as the drought continues to wreak havoc on crops across the Midwest.
FOX News | Sudden gasoline price spikes have experts scrambling for explanation
AAA calls it the steepest one-month climb in gas prices since they started keeping track in 2000.

Econ Comments & Analysis                                                                                            
Washington Times | Obama: Let’s take over every industry
First President Obama said “the private sector is doing fine.” Then he lectured business owners, “you didn’t build that.” Now he wants to extend the government’s auto-industry takeover across the board. Mr. Obama simply cannot understand how the economy can function without government’s firm guiding hand.
Project Syndicate | Europe’s Summer Reading List
In August, Europeans head for the beach. The continent shuts down on the assumption that nothing of consequence will happen until everyone returns, suitably tanned, in September. Never mind the subprime crisis of August 2007 or, closer to home, the European monetary crisis of August 1992: the August holiday is a venerable tradition.
Washington Times | The Social Security Ponzi scheme
As of last year, a married couple earning two average incomes would have paid more into Social Security that they could expect to receive from it. If the man lives to the expected age of 82 and the woman to 85, they would get back $556,000 of the $598,000 they paid into the system over their lives, according to the Urban Institute.
NBER | Has Surface Water Quality Improved Since the Clean Water Act?
On the fortieth anniversary of the Clean Water Act this paper reports the first quantitative assessment of the aggregate trends in water quality in the U.S. using a single standard over the years 1975 to 2011. The analysis suggests that fresh water lakes for the nation as a whole are about at the same quality levels as they were in 1975.
Market Watch | Japan’s economic growth weakens sharply
Japan’s economic growth sharply decelerated in the April-June period as consumption weakened after a solid increase in the preceding quarter and as exporters struggled because of a strong yen.

Blogs                                                                                                                             
Calculated Risk | Unofficial Problem Bank list increases to 900 Institutions
The list pushed back up to 900 institutions but assets dropped by $780 million to $348.6 billion after three additions and two removals. A year ago, the list held 988 institutions with assets of $411.3 billion.
Calculated Risk | Schedule for Week of August 12th
There are two key housing reports to be released this week: August homebuilder confidence on Wednesday, and July housing starts on Thursday.

Health Care

News                                                                                                                             
NY Times | Ambiguity in Health Law Could Make Family Coverage Too Costly for Many
The new health care law is known as the Affordable Care Act. But Democrats in Congress and advocates for low-income people say coverage may be unaffordable for millions of Americans because of a cramped reading of the law by the administration and by the Internal Revenue Service in particular.

Blogs                                                                                                                             
Heritage Foundation | Morning Bell: Facing the Medicare Debate Head-On
As the debate reignites over the government’s health care plan for seniors, which has a long-term unfunded liability of nearly $37 trillion, two things are important to remember
Marginal Revolution | Some raw numbers on health care costs
During the past months, a number of important articles have appeared in the healthcare literature on the subject of the recent slowing of health-spending growth in the U.S.
Marginal Revolution | Are health care costs really slowing down?
The New England Journal of Medicine published a paper this week titled “When the Cost Curve Bent,” where researchers from the Center for Sustainable Health Costs suggest that the slowdown happened way before the recession.

Monetary

News                                                                                                                             
Market Watch | Dollar slips, euro gains; investors eye ECB
The euro rose against the U.S. dollar Monday, as investors mulled prospects that the European Central Bank may intervene in bond markets to lower borrowing costs for Spain and Italy.
Bloomberg | Yellen Must Show How 12 Fed Opinions Become One Policy
Federal Reserve Vice Chairman Janet Yellen may face her biggest challenge yet as head of a panel on communications: showing how 12 Fed officials with clashing views unify behind a single policy.

Econ Comments & Analysis                                                                                            
WSJ | How We'll Build European Monetary Union 2.0
The euro zone is at a decisive juncture—not only in its three-year-old debt crisis but in its 13-year-old history. And the two are inextricably linked: The short-term symptoms of this crisis have their roots in long-term ailments.

Blogs                                                                                                                             
WSJ | BofA Sees 80% Chance of QE3 Priced Into Markets
Bank of America sees an 80% chance of another round of large-scale asset purchases by the Federal Reserve priced into markets.
Free Banking | Friedman on flexible exchange rates
Friedman wrote his most frequently cited essay on exchange rates, “The Case for Flexible Exchange Rates,” as a proposal for a quick way for Western European countries to eliminate the exchange controls that they had established before World War II and that persisted in the early 1950s. Exchange controls hindered trade.

Taxes

Econ Comments & Analysis                                                                                            
Real Clear Markets | President Obama, and the Myth About 4.5 Million New Jobs
Has the U.S. job market been improving during the recovery? The Obama administration likes to point to the 22 months of consecutive job growth. The recovery itself supposedly started in July 2009.
Market Watch | Shield yourself from coming $21 bln tax fraud
More than $5.2 billion of U.S. taxpayer money may have been paid out in tax refunds to fraudsters who filed about 1.5 million fake returns in 2011, and scammers are likely to skim another $21 billion over the next five years, according to an estimate by a government watchdog.
AEI | Taxing state governments under a federal value added tax: Part 2
As I have discussed elsewhere, a good's status as a production input depends on whether it increases the production of other goods on the margin.2 For example, food is not a production input for me or for most American workers, because a slight increase in food consumption would not make us more productive and a slight reduction in food consumption would not make us less productive.

Blogs                                                                                                                             
AEI | Chart: A look at who pays the income tax in America
Base broadening and statutory rate reductions are not ends in themselves. Like other tax policies, these reforms should be evaluated by whether they promote efficiency, simplicity, and fairness.

Employment

News                                                                                                                             
CNN Money | Motorola Mobility to reduce staff by 4,000
Cellphone maker Motorola Mobility, which is owned by Google Inc., will reduce its staff by 4,000 jobs, or one-fifth of its total workforce.

Econ Comments & Analysis                                                                                            
Hamilton Project | A Record Decline in Government Jobs: Implications for the Economy and America's Workforce
The labor market continued its modest rate of expansion in July, according to today’s employment report. Employers added 163,000 jobs last month, the largest increase since February. The unemployment rate remained essentially unchanged at 8.3 percent.

Blogs                                                                                                                             
Minyanville | Auto Industry Fast Adding Jobs -- 236,000 and Counting
Strengthened interest by consumers and government in fuel-efficient vehicles has accelerated job growth throughout the US auto industry, according to a recent report by a consortium of environmental advocates.

Budget

News                                                                                                                             
WSJ | Hard Times Spread for Cities
Fiscal woes that have caused high-profile bankruptcies in California are surfacing across the country as municipalities struggle with uneven growth and escalating health and pension costs following the worst recession since the 1930s.
Bloomberg | IMF Says Bailouts Iceland-Style Hold Lessons in Crisis Times
Iceland holds some key lessons for nations trying to survive bailouts after the island’s approach to its rescue led to a “surprisingly” strong recovery, the International Monetary Fund’s mission chief to the country said.

Econ Comments & Analysis                                                                                            
CNN Money | Opinion: Finally, a serious fiscal debate. Maybe
Thank you, Mitt Romney. Your choice of House Budget Chairman Paul Ryan as your running mate might kick off the kind of serious fiscal debate the nation needs.

Blogs                                                                                                                             
Heritage Foundation | The Results Are In: Chinese Stimulus Fails
In the U.S., the unemployment rate is still over 8 percent. In the second quarter of 2012, official Chinese GDP growth slipped to 7.6 percent, the lowest in three years.
Think Markets | Student Debt Bubble Side Effect
Federal policy is to encourage people to go to college. For this purpose, the government backstops student loans—with the result that total student debt outstanding surpassed $1 trillion in late 2011.
AEI | Why it is hard to do fiscal stimulus
Embedded in the Obama stimulus plan was this idea: Give people a temporary increase in their income and they will spend that money — at least some of it — boosting the economy. But as many predicted, the temporary tax cuts didn’t provide much bank for the buck.
Coordination Problem | Did It, or Didn't It ...
Work ... fiscal stimulus that is.  Many studies have been released that claim the fiscal stimulus programs that have been pursued in the US since 2008 have not worked.  I tend to side with those studies because of my priors.