Wednesday, September 12, 2012

General Economics

WSJ | Footnote to Financial Crisis: More People Shun the Bank
The Russell family of Kirkland, Wash., makes about $230,000 with Charles Russell, 43 years old, working as a systems analyst for Microsoft Corp. According to the U.S. Census Bureau, that puts them among the top 5% of American households.
Market Watch | Small-business index climbs in August, NFIB says
Small-business optimism rose in August as owners become more optimistic on the economy and future sales and increased their plans to hire, according to an index released Tuesday.
WSJ | Trade Deficit Widens as Exports to Europe Fall
U.S. exports fell in July after rising earlier in the summer, adding to concerns that troubles in Europe and elsewhere are slowing the U.S. economy.

Econ Comments & Analysis                                                                                            
WSJ | Why Markets Need 'Naked' Credit Default Swaps
Many regulators, politicians and academics consider credit default swaps to be insurance contracts. These folks then use the insurable-interest rule—which limits life-insurance claims to individuals adversely affected by the death of the insured—to recommend banning "naked" CDS purchases, that is, buying sovereign credit default swaps without holding the underlying sovereign bond.
AEI | Three tough choices: The Fed, the euro and the US
With the FOMC meeting Wednesday and Thursday, European leaders parsing the details of new rescue packages, and Moody's threatening to downgrade the U.S.' credit rating, AEI economists offer their thoughts on the difficult choices facing policy makers.
WSJ | Speech of the Year
While Americans were listening to the bloviators in Tampa and Charlotte, the speech of the year was delivered at the Federal Reserve's annual policy conference in Jackson Hole, Wyoming on August 31. And not by Fed Chairman Ben Bernanke. The orator of note was a regulator from the Bank of England, and his subject was "The dog and the frisbee."
NBER | Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program and Ozone Reductions
Willingness to pay for air quality is a function of health and the costly defensive investments that contribute to health, but there is little research assessing the empirical importance of defensive investments. The setting for this paper is a large US emissions cap and trade market – the NOx Budget Trading Program (NBP) – that has greatly reduced NOx emissions since its initiation in 2003.

Heritage Foundation | Freeloaders on Safety Net Programs Double Dip to Get Thousands in Taxpayer Dollars
In July, the Government Accountability Office (GAO) issued a report showing that, as many Americans suspect, there are places where government safety net programs are abused and ripe for reform.
Café Hayek | Nosek on the elusiveness of truth
Truth in the social sciences (and elsewhere) is elusive. This week’s EconTalk is a conversation with Brian Nosek on the conflict between truth and professional incentives that exists in university life, particularly in the social sciences.
Neighborhood Effects | Government Failure and Market Failure
Chicago school economists are often maligned for their supposed blind faith in markets. And it is true that some of the theories associated with Chicago have a certain Panglossian feel to them; they give the impression that markets everywhere and always yield the best possible results.
AEI | Does this look like an economy that’s moving forward? 9 reasons why it really doesn’t
I would like to believe the U.S. economy is firmly back on track and headed toward renewed prosperity. A slow track, to be sure, but at least things are moving forward. That would be something, at least.
National Review | A Reminder of How Bad the Farm Bill Is
Mix cronyism and dependency and you get this gigantic farm bill. As such, lawmakers should be careful what they wish for when they call for its adoption–and so should the American people.
AEI | Cronyism and concrete: Big cracks developing in China’s infrastructure build out
On a visit to China last year, I remember chatting with an environmentalist, an American, who bemoaned how democracy got in the way of a bigger clean-energy push in the United States. The dictators of Beijing, she said approvingly, knew how to get big things done.

Health Care

WSJ | Health-Plan Costs Rise More Slowly
After a sharp jump in 2011, the amount employers paid for their workers' health insurance rose more slowly this year, with the average cost of a family plan growing 4%, according to a major survey.
National Journal | Poll: Americans Wary of Changes to Medicare
The latest United Technologies/National Journal Congressional Connection Poll also shows plurality support for the much-maligned economic-stimulus package that was pushed through by Democrats at the start of Obama’s presidency, as well as sharp divisions among different ethnic groups on questions about both the president’s health care law and Medicare.
Politico | Kaiser: Health insurance premiums continue modest growth
The average employer-provided health insurance premium notched up in the low single digits last year, continuing a relatively modest growth in the past five years that experts are still struggling to explain.

Econ Comments & Analysis                                                                                            
WSJ | The Day Health Insurance Died
Angela Braly lost the hang of the CEO's performance art. Shareholders like their surprises on the upside. She kept delivering downside surprises. Two weeks ago, amid a clamor from investors, she stepped down as chief of America's biggest private health insurer, WellPoint.


CNN Money | Hedging QE3 bets, 52% say Fed won't act after all
This week's Federal Reserve meeting is front and center, with many still on the fence about whether or not the central bank will announce any new stimulus measures.
Market Watch | Expectations ramp up for QE3 — but maybe not now
Fed watchers have little doubt the central bank is getting ready to launch what’s commonly called “QE3,” or a new large-scale asset purchase plan, but many think the countdown will be placed on hold until later this year.
CNN Money | QE3 won't create jobs
The Federal Reserve's policymaking committee is meeting for the next two days, and it is widely expected to announce a third round of quantitative easing, known as QE3.
Market Watch | U.S. import prices climb 0.7% in August
The prices paid for U.S. imports rose 0.7% in August, the first increase in five months, the Commerce Department said Wednesday.
Market Watch | IMF: New rules will only have modest rate impact
Regulations adopted in response to the financial crisis of 2008 will likely increase modestly lending rates in the United States, Europe and Japan with relatively small economic effects, a study released Tuesday by the International Monetary Fund said.

Econ Comments & Analysis                                                                                            
WSJ | The Hidden Costs of Monetary Easing
Since mid-September of 2008, the Federal Reserve balance sheet has grown to $2,814 billion from $924 billion as it purchased massive amounts of U.S. Treasurys and mortgage backed securities. To finance those purchases the Fed increased currency and bank reserves (base money).
Bloomberg | Bernanke Has Already Told Us: More Stimulus Is Coming
Let us begin by stipulating that Federal Reserve Chairman Ben Bernanke will be damned if he does and damned if he doesn't on Wednesday.
Washington Times | The wrong doctors
On Wednesday, a German court is going to rule whether the European Central Bank can buy an unlimited amount of debt from the national banks of the countries in the eurozone without violating German law. By week’s end, the U.S. Federal Reserve likely will decide if it is going to engage in another round of massive debt buying.

Economist | On gold and golden ages
Apparently, while I was out on paternity leave, the Republican Party flirted with adding a return to a gold standard to its official platform, thereby touching off an online debate on the merits of such a standard. Belatedly, I'd like to offer a few thoughts.
Calculated Risk | QE Timeline Update
By request, here is an updated timeline of QE (and Twist operations)


NY Times | Amazon, Forced to Collect a Tax, Is Adding Roots
At the moment, it is little more than dirt and gravel. But a sunbaked field at the edge of this farming town will play a significant role in one of the most ambitious retailing ventures of the era: the relentless quest by the online mall to become all things to all shoppers.


Market Watch | Job openings decline to 3.66 million in July
Job openings at U.S. workplaces decreased to 3.66 million in July from 3.72 million in June, the U.S. Labor Department reported Tuesday.

Econ Comments & Analysis                                                                                            
WSJ | How Public Unions Became So Powerful
The Chicago teachers strike has put Democrats in a difficult position. Teacher unions are the most powerful constituency in the Democratic Party, but their interests are ever more clearly at odds with taxpayers and inner-city families.
Real Clear Markets | Deloitte Has New Ideas For Fixing Joblessness
On Monday, following a disappointing August jobs report, Deloitte LLP, one of the big four national accounting and consulting firms, published a new set of recommendations on how to revive the labor market. It was the fourth in Deloitte's series of studies on economic issues.
Washington Times | Obama on track to have worst job record since World War II
August’s abysmally weak job growth proved yet again that President Obama’s economic policies are a miserable failure that will continue to undermine our country until he leaves office.

Calculated Risk | BLS: Job Openings "little changed" in July
There were 3.7 million job openings on the last business day of July, little changed from June, the U.S. Bureau of Labor Statistics reported today.
WSJ | Most Labor Force Dropouts in August Had Jobs
Of the 7.4 million people who left the labor force in August, well over half — 4.1 million — had been employed in July. Fewer than three million were previously unemployed people who stopped looking for work.


WSJ | Shutdown Is Unlikely; Fiscal Cliff Still a Risk
Congress appears on track to avert a politically perilous fight over a government shutdown, but the top House Republican said Tuesday he has little confidence that lawmakers will be able to prevent an economically damaging combination of tax increases and spending cuts due to take effect in the new year.
Politico | Hill ignores fiscal cliff warnings
Farm bureaus, financial credit rating agencies, Wall Street, the defense industry, chambers of commerce and postal groups have all sounded the alarm bell warning D.C. about all manner of debt, spending and tax crises. They’ve largely failed to spur the action they were seeking.

Econ Comments & Analysis                                                                                            
CATO | Has the ECB Provided the Missing Piece to Resolve the EU Debt Crisis?
On September 6, Mario Draghi, president of the European Central Bank (ECB), announced that the ECB would engage in unlimited secondary market purchases of government bonds of member countries adhering to the policy conditions agreed to with the IMF and EU (and thus qualified to borrow from the European Financial Stabilization Fund — EFSF — or the European Stabilization Mechanism — ESM) to the extent needed to promote the efficient transmission of monetary policy throughout the Euro area.
Heritage Foundation | Excess Spending Seen as Greatest Threat to Economic Freedom in Europe
Europe’s continuing failure to remedy massive government over-spending and indebtedness remains the principal threat to its economic freedom, according to Heritage Foundation Research Fellow James Roberts.

Market Watch | Republican leader says he’s not sure ‘fiscal cliff’ can be avoided
Speaker of the House John Boehner, R-Ohio, on Tuesday said he’s not sure Congress and President Obama can reach a deal to avoid a so-called fiscal cliff that could damage the U.S. economy. Higher taxes and deep cuts in federal spending are slated to take effect on Jan. 1 unless Democrats and Republicans agree to change current law. The defense budget would be especially hard hit.
Heritage Foundation | U.S. Budget Deficit for Fiscal Year 2012 Already at $1 Trillion
The federal budget is reaching benchmarks of astronomical proportions. Hold your applause, though; the budget trends are increasingly headed in the wrong direction.