Friday, August 24, 2012

General Economics

News                                                                                                                             
Market Watch | Airlines, autos boost durable-goods orders
Orders for big-ticket items such as autos and airlines surged in July, but other areas of the U.S. manufacturing sector softened for the second month in a row, according to a government report.
WSJ | U.K. Economy Shrinks Less Than Thought
In its second estimate of the second quarter, the Office for National Statistics said gross domestic product shrank 0.5% between April and June, compared with its preliminary estimate on July 25 of a contraction of 0.7%.
Bloomberg | Online Buoys Global Growth by Paring Distance: Cutting Research
Trading more online could help boost global economic growth, according to a paper published this week by the Centre for Economic Policy Research.
WSJ | France, Germany Unify Approach to Greek Talks
The official spoke after German Chancellor Angela Merkel and French President Fran├žois Hollande met for a working dinner in the chancellery for a wide-ranging discussion about the euro zone and international politics.
WSJ | Sales of New Homes Climb Sharply
Sales of newly built homes rose briskly in July, and inventory fell to the lowest level on record, suggesting the housing market is showing continued signs of recovery and that builders may need to ramp up construction in the coming months.

Econ Comments & Analysis                                                                                            
Washington Times | LAMBRO: Obama economy even worse than anticipated
If you think the feeble economy under this administration is bad, wait until next year when the Congressional Budget Office says it could fall into another deep recession if there’s no year-end deal to forestall nearly half-a-trillion dollars in income tax hikes and spending cuts.
CBO | CBO Releases Latest Quarterly Report on ARRA’s Effect on Output and Employment
CBO’s current estimates of the economic effects of ARRA for 2009 through 2013 are nearly identical to those the agency published in May 2012. Some estimates of quarterly economic effects for 2012 and 2013 have changed slightly, reflecting minor shifts in the quarterly pattern of ARRA outlays.
NBER | When Does It Pay to Delay Social Security? The Impact of Mortality, Interest Rates, and Program Rules
We found that for current real interest rates, delaying is actuarially advantageous for a large subset of people, particularly for primary earners in married couples. In this paper, we quantify the degree of actuarial advantage or disadvantage for individuals whose mortality differs from the average.
WSJ | Regulators Captured
SEC rules have long allowed money-fund operators to employ an accounting fiction that makes their funds appear safer than they are. Instead of share prices that fluctuate, like other kinds of securities, money funds are allowed to report to customers a fixed net asset value (NAV) of $1 per share—even if that's not exactly true.
Washington Times | ANGEL: Walk, don’t run, toward money-market fund reform
Proposed “reforms” include abolishing the industry by getting rid of the stable $1 net asset value that is the essence of the product and requiring costly “capital buffers” that would tax investors far beyond any realistic estimates of risk.
Fox Business | Another Flawed Study on the 'Rich'
Pew defines median middle class income as $70,000. The income range for the middle class is fairly wide here, $39,418 to $118,255 in 2011.

Blogs                                                                                                                             
Calculated Risk | New Home Sales and Distressing Gap
This is still a very low level of sales, but clearly new home sales have bottomed and are starting to recover.
Heritage Foundation | Conflict Minerals: Another of Dodd–Frank’s Hidden Costs
On Wednesday, the Securities and Exchange Commission (SEC) adopted a little-known section (and there are many) of the Dodd–Frank financial regulation bill that will end up doing the most harm to the people in the Congo that it purports to help.
Marginal Revolution | The other Malthusian problem
After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.
AEI | My counter: Why U.S. economic growth doesn’t have to come to an end
This paper raises basic questions about the process of economic growth. It questions the assumption, nearly universal since Solow’s seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever.
Mercatus Center | One Man’s Privilege is Another’s Punishment
To make matters worse, economic theory and evidence long ago established the point that the costs borne by consumers outweigh the benefits bestowed on producers.
EconLog | Lee Ohanian on the Great Recession
So, employment today relative to the working age population is lower now than it was at the NBER-defined 2009 June trough, and it's lower today than it was at the height of the financial crisis when the stock market was falling 20%, everybody thought the world was coming to an end...

Monetary

Econ Comments & Analysis                                                                                            
AEI | The uses of LIBOR and the victims of its manipulation: A primer
Banks can collude to move the trimmed average, and traders at several financial institutions are being investigated for doing so from 2005 to 2011.
RCM | A Brief History of Modern Money's Inadequacy
The markets of capitalism cannot function over the long run without successful intermediation, but intermediation as it currently exists of interbank money and ledger money cannot be successful as it is now construed. Something has to give.

Blogs                                                                                                                             
CNN Money | Oil near $100. Thanks a lot, Fed!
The price of crude oil is getting dangerously close to $100 a barrel again. It hasn't been above that level since May. The euro has strengthened against the dollar as of late, partly due to hopes that the European Central Bank will step in and buy more Spanish bonds and also because of rising expectations for QE3.

Health Care

Econ Comments & Analysis                                                                                            
Cato Institute | Romney and Obama: Both Wrong on Medicare
Obama's implication that current seniors would lose their Medicare benefits under Romney's plan is particularly dishonest.

Blogs                                                                                                                             
Heritage Foundation | Debunking Medicare Reform Myths
Premium support is the only reform option that will ensure that Medicare is still around for future generations. It also has the added advantage of a long history of bipartisan support.

Taxes

Econ Comments & Analysis                                                                                            
Fox Business | One Tool Left to Jumpstart Economy: Lower Taxes
Today the story is troubling -- more so than in any other time I can remember. The tool of lowering interest rates is no longer available to us. Rates are basically at zero and we obviously cannot lower them any further.

Employment

News                                                                                                                             
WSJ | China's Labor Market Tightens
Job cuts in China appear to be on the rise, dimming prospects for a labor market that has been a resilient bright spot amid a slowdown in the world's second-largest economy.

Econ Comments & Analysis                                                                                            
AEI | A Qualitative Reading of the July Jobs Report
It should be obvious that the seasonal adjustment could be slightly off. Changes in the way that auto companies handle temporary layoffs, the budget shortfalls at the state and local level which have resulted in teachers being permanently let go, unusually warm winters, massive uncertainty over government policy, strong economic headwinds from Europe, structural changes to the labor market caused by the Great Recession - all these, and more, could render the seasonal adjustment factors slightly, or seriously, inaccurate.

Blogs                                                                                                                             
WSJ: Real Time Economics | Jobless Claims Hint at Another Middling Employment Report
In other words, layoffs aren’t slowing enough and hiring isn’t picking too fast–so there just isn’t a lot of economic momentum.
Political Calculations | A Missed Prediction
The reason why is because that means the world has turned out to be a much more interesting place than we had previously supposed.

Budget

News                                                                                                                             
Market Watch | Germany: 'Nothing new' about euro crisis planning
A working group set up to study potential scenarios tied to the euro-zone debt crisis has been in place for more than a year and is "nothing new, a German finance ministry spokesman said Friday, downplaying a report in the Financial Times Deutschland newspaper that the ministry's preparations for a potential Greek exit from the euro were more extensive than previously known.
CNN Money | Fed turns AIG bailout into $18 billion profit
The Federal Reserve finally has wiped its hands clean of AIG and turned a nearly $18 billion profit for taxpayers in the process.

Blogs                                                                                                                             
Cato@Liberty | It’s Simple to Balance the Budget with Modest Spending Restraint
Now that new numbers have been released by the Congressional Budget Office, it’s time once again for me to show how easy it is to balance the budget with modest spending restraint (though please remember our goal should be smaller government, not fiscal balance).
WSJ: Real Time Economics | Hitchcock Could Teach Congress About Dangers of ‘Fiscal Cliff’
In Hitchcock’s view, if a movie audience watches an innocent-looking scene and a bomb under a chair goes off, the reaction is immediate surprise. But if the audience knows the bomb is under the chair and timed to go off in five minutes, they will watch the scene holding their breath, fingernails digging into their armrests.