Wednesday, September 5, 2012

General Economics

News                                                                                                                             
WSJ | Swiss Economy Shows Weakness
The Swiss economy has long appeared to be surprisingly resilient to the economic downturn across Europe, but statistics released Tuesday showed that Switzerland is slowing down as well.
Market Watch | ISM factory index contracts for third month
A gauge that measures the strength of the factory sector remained below the 50% mark for the third straight month, stirring fears that a slowdown in manufacturing was lingering, according to a closely followed survey of top executives released Tuesday.
FOX News | Gulf oil platforms are beginning to produce again and refineries are slowly coming back online
Offshore oil platforms are beginning to ramp up production as crews are returning. Refineries are beginning to restart units as power is restored and floodwaters are cleared out.
USA Today | Corporate defaults are on the rise
A: Consumers aren't the only ones choking on debt payments. A growing number of companies also are struggling to keep above water.
WSJ | Manufacturing Contracts as New Orders Show Decline
The U.S. factory sector contracted for the third straight month in August, a worrying sign from a corner of the economy that has been a bright spot in a lackluster recovery.
CNN Money | China needs Europe to get its act together
Activity in China's manufacturing sector slowed dramatically in August -- and weak demand in Europe, its largest trading partner, is at least partially to blame.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Could School Choice Erase the Income Gap?
As the Democratic convention unfolds this week in Charlotte, North Carolina, one of the predictable themes is going to be inequality, the gap between the rich and the poor.
Washington Times | Regulatory reform is job one
The upcoming election presents a referendum on the incumbent Obama administration’s record. Given the ongoing economic malaise, this referendum will focus primarily on the administration’s mishandling of the economy, on taxes and spending, and on massive legislative programs.
WSJ | Food Stamp Nation
The Obama and Romney campaigns spent Tuesday sniping over whether the President deserves an "incomplete" grade, as Mr. Obama put it, for fixing the economy. The more revealing news was the Department of Agriculture report, released on the Friday before Labor Day weekend, that 46,670,373 Americans are now on food stamps.
Washington Times | Economic recovery in name only
So how’s the economic recovery treating you? For many Americans, the answer is, not well. In fact, some may ask: What recovery?

Blogs                                                                                                                             
CATO | Study from German Economists Shows that Tax Competition and Fiscal Decentralization Limit Income Redistribution
If we want to avoid the kind of Greek-style fiscal collapse implied by this BIS and OECD data, we need some external force to limit the tendency of politicians to over-tax and over-spend.
Economist | The geography of poverty
Economists have probably been debating the uses and abuses of foreign aid since the first denarius was sent to the first Roman imperial province. This week’s Free Exchange looks at the issue through an unusual lens: that of geography.
Library of Economics | Gordon on Growth: A Critique
On Sunday I laid out Robert J. Gordon's reasons for thinking that growth of per capita income in the future for most Americans will be substantially lower than it has been for the last two centuries.
WSJ | Hard to Pass Food-Price Spikes on to Consumers
America’s widest drought since 1956 has killed corn, soybean and wheat crops and raised the risk of higher prices for everything from hamburgers and Coke to cooking oil. But how bad are prices going to get?
Economist | Why not to expect recovery anytime soon
Signs of weakness in advanced economies seem to have taken some by surprise. In America, GDP growth slipped in the second quarter of 2012 to a revised figure of 1.7% after growing at a rate of 2% in the first.
AEI | New evidence that Obama’s Keynesianism has had little positive impact
Economist Daniel Gros compares the U.S. and Europe and finds America’s efforts at Keynesian stimulus have accomplished little. That, even though a) the U.S. has been been running deficits 40% bigger than Europe’s, and b) debt as a share of GDP has risen by 41 percentage points vs. 25 for the eurozone.
Café Hayek | What Barofsky learned
This week’s EconTalk is a conversation with Neil Barofsky, author of Bailout. Barofsky was the first Special Inspector General of the TARP funds–his job was to monitor how the money was spent, prevent fraud if possible and prosecute any criminal behavior surrounding the TARP.

Health Care

Econ Comments & Analysis                                                                                            
The Independent Institute | A Simple Way to Control Healthcare Spending
As I wrote in my recent book, Priceless: Curing the Healthcare Crisis, there is something rather simple the federal government could do that would have enormous impact in controlling healthcare costs: Allow deposits to FSAs to roll over at year end and grow tax-free.
CATO | Fixing Medicare Requires Seniors to Pay Quite a Bit More
In the Obama campaign's attack on the Romney-Ryan proposal to "voucherize" Medicare, one accusation is that the plan would force seniors to pay more of their healthcare costs: about $6,400 more per beneficiary, according to a recent TV ad known as "Facts." Regardless of the "facts" in the ad, this attack takes as a given that any such outcome is undesirable.

Blogs                                                                                                                             
National Review | Why Medicare Must be Reformed, in One Chart
Based on the data from the Trustees’s Report and the CBO, the cost per capita of Medicare is expected to roughly double between now and 2040 and so is the number of enrollees.

Monetary

News                                                                                                                             
WSJ | Lending Gaps Challenge Central Bank
The European Central Bank's latest interest-rate cut isn't helping the economy as much as it should because of differences in businesses' borrowing costs across the euro zone, a top ECB official said Tuesday.
Bloomberg | ECB Plan Said to Pledge Unlimited, Sterilized Bond-Buying
European Central Bank President Mario Draghi’s bond-buying proposal involves unlimited purchases of government debt that will be sterilized to assuage concerns about printing money, two central bank officials briefed on the plan said.

Blogs                                                                                                                             
John Taylor | Strong Push Back at Jackson Hole
Many Fed watchers interpreted the benefit-cost analysis in Ben Bernanke’s speech as signaling more quantitative easing. But viewed in the context of the whole Jackson Hole meeting, which many FOMC members attended, the benefits are considerably smaller than stated in that speech, and perhaps even negative.
WSJ | Two Big Reports This Week for Fed: One Already Bad
As noted in the statement after the Fed’s last policy meeting, central bankers “will closely monitor incoming information on economic and financial developments” before deciding about a third round of quantitative easing.
Coordination Problem | The Unintended Consequences of Ultra Easy Monetary Policy
The variety of economic models used by modern academics and by policymakers give few insights as to how the economy really works. If we accept this ignorance as an undesirable reality, then it would also seem hard to deny the possibility that the policy actions taken in recent years might also have unintended consequences.

Taxes

Econ Comments & Analysis                                                                                            
Market Watch | ‘Fiscal cliff’ tax hike won’t kill dividend income
The possibility of an increase in the tax on stock dividends next year will kick up a lot of dust in the next few months about the diminished value of these payouts in that scenario — and about the threat of share prices tumbling as dividend stocks fall out of favor.

Blogs                                                                                                                             
Economist | In flagrante
The problem of tax evasion in Greece has been pointed out many times during the debt crisis: Christine Lagarde, the head of the IMF, got into hot water over the summer with her comments that she felt more sympathy with children in Africa than tax evaders in Greece. But eradicating a culture of tax evasion is no small task

Employment

News                                                                                                                             
Bloomberg | America Proves Nothing Like Europe as Joblessness Dips
James Ensley of Rocky Face, Georgia, took a $10,000-a-year job last month as a school-bus driver after almost two years of unemployment benefits ran out. While that’s a third of his prior pay as a warehouse manager, the father of two says he’s content.
Politico | White House: We're not worried about new jobs report
Regardless of whether the unemployment rate rises or falls on Friday when new monthly figures are released, the White House will continue to make the same pitch to voters: the economy is moving in the right direction.

Blogs                                                                                                                             
Café Hayek | Superabundance?
Here’s a simple question – one that I (and others) have asked before [although I'm too busy now to search for relevant links] – namely, by what logic does an unemployment rate a few percentage points higher than the natural rate nullify the foundational laws of economics?  

Budget

Econ Comments & Analysis                                                                                            
AEI | Can Europe make it all the way to November?
The European debt crisis took a breather in the summer months as thinner markets and promises of central bank intervention from both the U.S. and Europe bolstered equity prices.
Bloomberg | CBO Demands a Leap of Faith on the Fiscal Cliff
Last month, the Congressional Budget Office released a report warning that the “fiscal cliff” would cause a new recession. It came to the right conclusion for all the wrong reasons.

Blogs                                                                                                                             
AEI | Social Security: A prime example of Obama and opportunity cost
Even if we slowed everyone’s benefit growth – from the poorest to the richest – to price inflation, we could no longer maintain solvency while holding harmless those over the age of 55.
Heritage Foundation | Morning Bell: $16,000,000,000,000
Yesterday, the U.S. national debt passed $16 trillion. On President Barack Obama’s watch, the debt has increased by 50 percent, as campaign promise after campaign promise has drowned in a sea of federal spending.
The Hill | Treasury reports national debt exceeds $16 trillion for first time
The Treasury Department reported on Tuesday that the national debt rose to more than $16 trillion for the first time.