Thursday, October 18, 2012

General Economics

Market Watch | Euro nations try to limit Spain exposure: WSJ
Euro-zone governments are hoping they will only need to make a small contribution to any Spanish bailout request, with the European Central Bank making up the bulk, according to a report in The Wall Street Journal on Thursday, citing senior officials.
CNN Money | China's GDP growth slides to 7.4%
More bad news about the global economy: Growth slowed last quarter in China to its lowest level since early 2009.
Bloomberg | Spain Banks Face Pain as Worst-Case Scenario Turns Real
Spain’s banks face more loan losses as the pace of an economic slump risks turning a worst-case scenario dismissed in stress tests into reality.
WSJ | States Shift Foreclosure-Suit Funds
When states received $2.5 billion from big banks in a mortgage-foreclosure settlement earlier this year, the expectation was that most of it would be used to aid distressed homeowners. But so far, less than half of the money has been designated for that cause—with much of the rest going to help close state budget gaps, says a report scheduled for release Thursday.
Bloomberg | Morgan Stanley Beats Estimates on Fixed-Income Gains
Morgan Stanley, the sixth-largest U.S. bank, reported third-quarter results that beat analysts’ estimates as revenue from fixed-income trading almost doubled from the second quarter.

Econ Comments & Analysis                                                                                            
CATO | Why Is There So Much Government Waste?
Every year the office of Sen. Tom Coburn (R-OK) releases a compendium of the worst examples of government waste. And every year I’m reminded of H.L. Mencken’s quote that “Every decent man is ashamed of the government he lives under.” Released this week, the 2012 edition should leave even the indecent ashamed of how the federal government spends our money.

National Review | Another Stimulus Beneficiary Bites the Dust
Yesterday, I mentioned a few of the companies that went under after receiving stimulus money. Today, another stimulus recipient announced that it was filing for bankruptcy.
John Taylor | Weak Recovery Denial
Paul Krugman disagrees with my recent post that the recovery is weak compared to recoveries from past serious U.S. recessions including those associated with financial crises. I’ve been writing about the reasons for weak recovery for two years, but the issue has heated up because of its relevance to the elections this fall.

Health Care

Econ Comments & Analysis                                                                                            
NBER | Consumer Inertia and Firm Pricing in the Medicare Part D Prescription Drug Insurance Exchange
I use the Medicare Part D prescription drug insurance market to examine the dynamics of firm interaction with consumers on an insurance exchange. Enrollment data show that consumers face switching frictions leading to inertia in plan choice, and a regression discontinuity design indicates initial defaults have persistent effects.

Political Calculations | Update: Visualizing the Growing Complexity of Medicare
How many pages does it take to explain the basics of the U.S. Medicare program?


Bloomberg | FOMC Straying on Price Target, Former Fed Officials Say
The Federal Reserve appears to be backing away from its commitment to keep inflation at 2 percent with its plan to buy mortgage-backed securities until employment improves, two former Fed officials said.

Econ Comments & Analysis                                                                                            
Washington Post | The Fed’s mission creep
Before the Fed was created 99 years ago, the U.S. economy was in recession 48 percent of the time; since 1913, it has been in recession only about 20 percent of the time. The Fed has done much good. It cannot, however, do every good thing, although Congress now seems to think it should.

Think Markets | “Modern Market” Monetarism?
Douglas Irwin, a very fine economist at Dartmouth College, has a very puzzling opinion piece in yesterday’s Financial Times. The root of the puzzle is that Irwin seems to accept what I consider the na├»ve monetarist view, yet calling it by a new name “market monetarism,” that the effectiveness of monetary policy largely revolves around portfolio adjustment effects that are induced by an increase in real balances.


CNN Money | Tax deduction cap: How much would it raise and who'd pay?
One of the big unknowns about Mitt Romney's $5 trillion tax plan is how he would pay for it.

Econ Comments & Analysis                                                                                            
Washington Times | Kill death tax choking the American dream
As we near the end of 2012, the focus of the political world likely will be on the massive income and business tax increases scheduled to go into effect after midnight Dec. 31. Pundits and talking heads will be debating whether the current tax rates should be extended for small businesses and high-income Americans and what effect allowing those tax cuts to expire would have on the economy and job growth.

Greg Mankiw | People Respond to Incentives
France's new 75 percent income tax on the rich may not be popular with millionaires. But it's being cheered by another group: Paris real-estate buyers.
AEI | Why taxing capital income is unfair
Is Mitt Romney’s federal income tax rate – 14% in 2011 – too low or too high? As most of Romney’s income comes from his investments, the answer depends largely on how capital income should be taxed.


USA Today | Employment surges for community college grads
These days, there may be something more valuable to job seekers than a four-year college degree: a two-year college degree.


WSJ | S&P Downgrades Cyprus Further Into Junk Territory
Standard & Poor's Ratings Services downgraded Cyprus's sovereign ratings three notches further into junk territory, saying the island nation's creditworthiness had deteriorated significantly since its ratings were lowered in August.
Bloomberg | U.S. to Get Downgraded Amid Fiscal ‘Theater,’ Pimco Says
The sovereign credit rating of the U.S. will be cut as “fiscal theater” plays out in the world’s biggest economy, according to Pacific Investment Management Co., which runs the world’s largest bond fund.
WSJ | Europe Seeks a Spain Strategy
Euro-zone governments are counting on the European Central Bank to provide most of the firepower if Spain requests a bailout, with only a modest contribution coming from the bloc's bailout fund, senior officials said.
NY Times | Student-Loan Borrowers Average $26,500 in Debt
The average student-loan debt of borrowers in the college class of 2011 rose to about $26,500, a 5 percent increase from about $25,350 the previous year, according to a report by the Institute for College Access and Success’s Project on Student Debt.

Econ Comments & Analysis                                                                                            
Washington Post | The fiscal future? Well, that can wait.
What we heard in the second presidential debate was President Obama and Mitt Romney not discussing the nation’s future. Almost every expert agrees that controlling health costs is the crux of curing chronic budget deficits.
The American | Don Quixote Is Alive and Well and Living in Spain
Spain is the euro area’s fourth-largest economy. Bad government policy threatens the whole euro project and the global economy.

WSJ | Moody’s Zandi Warns of Need to Deal With Fiscal Woes
Mark Zandi, the chief economist of Moody’s Corp.’s research arm, believes the U.S.’s fiscal woes will take a turn for the better — but not just yet.