Wednesday, November 14, 2012

General Economics

News                                                                                                                             
Bloomberg | Retail Sales in U.S. Decrease for First Time in 4 Months
U.S. retail sales fell in October for the first time in four months, partly a reflection of the toll that superstorm Sandy exacted on East Coast residents and merchants.
Market Watch | Business inventories climb 0.7% in September
Inventories at U.S. businesses rose 0.7% in September, compared with a 0.6% rise in August, the Commerce Department said Wednesday. Business sales jumped 1.4% in September.
Bloomberg | Bank of America Sued Over $261 Million in Mortgage Bonds
Bank of America Corp., the second- biggest U.S. lender by assets, was sued by investors over $261.2 million worth of residential mortgage-backed securities.
CNN Money | Nearly 50 million Americans in poverty under alternate measure
There were nearly 50 million Americans living in poverty in 2011, under an alternative measure released by the Census Bureau Wednesday.
FOX News | World Bank: Middle class grows by 50 percent in Latin America, Caribbean region
The middle class in Latin America and the Caribbean region grew by 50 percent over the past decade, according to a World Bank report released Tuesday. Higher levels of education, smaller families and more women and urban dwellers entering the work force were among factors contributing to the increase.

Econ Comments & Analysis                                                                                            
The American | Reforming the Housing Transaction
If policymakers truly want to make things better for home buyers, they should look for ways to streamline and modernize the housing transaction itself.
Forbes | Why The Glass-Steagall Myth Persists
The growth of government intervention over the last century was built on the back of a handful of myths. A generation ago, the dominant myth was that free markets had caused the Great Depression, a falsehood ultimately debunked by economists like Milton Friedman. Today, the key myth is that financial deregulation caused the 2008 financial crisis.
Bloomberg | Obama’s Welfare State Needs Republican Guardians
For most of the past century, the U.S. and continental Europe have followed different paths. Social Democrats often ran European governments, which typically taxed and spent a greater share of their national incomes on social programs, such as public health care. The U.S. has been far more conservative.
Forbes | President Obama Doesn't Even Believe His Own Economic Hype
Now that Barack Obama has been re-elected President, he’s going to have to deal with the mess he inherits. That was the chuckle James Taranto of the Wall Street Journal had at the expense of the results last week.
Real Clear Markets | Europe Could Still Blow Up, Let's Not Be Complacent
European leaders, and their suffering peoples, are clearly making real progress in working through the Euro Crisis. However, some observers have lapsed into complacency, assuming that the worst is definitely over.
WSJ | The Business Plan for American Revival
Four years ago, it was said that the incoming Obama administration aspired to the dynamic that existed in Abraham Lincoln's cabinet, where former competitors and antagonists came together to help the country through the Civil War.

Blogs                                                                                                                             
Calculated Risk | The Recession Probability Chart
One of the most frequent questions I receive via email is: "Is another recession starting?"  There are quite a few people who have been calling a recession recently (ECRI has called several recessions since August 2011 or so).  They still have time on their most recent calls, but their earlier calls were wrong.
Café Hayek | Tom Palmer on the Origins of State and Government
Why do people have wealth?  Charles Dunoyer, an early libertarian sociologist, explained that “there exist in the world only two great parties; that of those who prefer to live from the produce of their labor or of their property, and that of those who prefer to live on the labor or the property of others.”  Simply put, makers produce wealth while takers appropriate it.
Calculated Risk | Unofficial Problem Bank list declines to 860 Institutions
CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining recently.
AEI | What if everything goes wrong — fiscal cliff, hard landing in China, and multiple eurozone exits?
If the United States federal government fails to resolve the fiscal cliff and the other plausible events unfold — including a surge in oil prices caused by escalating Mideast conflict, the rapid departure of six countries from the Eurozone and a significant slow-down of China’s economy

Health Care

News                                                                                                                             
Politico | Medicaid expansion decision looms for many states
Clues about governors’ intentions for Medicaid expansion are beginning to seep out of tight-lipped state capitals, and it may be the start of a deluge.

Blogs                                                                                                                             
Library of Economics | Coming ObamaCare Challenges
John Goodman had an excellent post yesterday discussing the coming challenges in implementing the Affordable Care Act.

Monetary

News                                                                                                                             
Bloomberg | Wholesale Prices in U.S. Unexpectedly Fall on Fuel, Vehicles
Wholesale prices in the U.S. unexpectedly fell in October for the first time in five months as energy and vehicle costs dropped.
Market Watch | Fed’s Yellen backs new way to give guidance
Federal Reserve Vice Chairman Janet Yellen on Tuesday backed a sea change in the central bank’s communication policy, saying that the Fed should tie rate hikes to specific levels of unemployment and inflation.

Econ Comments & Analysis                                                                                            
Real Clear Markets | The Fed Dismisses the Needs of Savers
With a second Obama administration, many expect that the Federal Reserve will continue quantitative easing. This has lowered interest rates, reducing the return from savings. Seniors are particularly hard-hit, because 10 percent of their income comes from interest on savings.

Blogs                                                                                                                             
Economist | Is there a problem?
Throughout the recovery, I have used movements in inflation expectations as a gauge for the strength of the economy. I have done so for a few reasons.
John Taylor | Milton Friedman and the Power of Monetary Ideas
Last Friday the University of Chicago hosted a wonderful Centennial Celebration of Milton Friedman and the Power of Ideas. All of the speakers, especially Jim Heckman, Kevin Murphy, Bob Lucas, and Gary Becker chose to focus on how amazingly well Milton integrated data, theory, and policy in inseparable ways in his research and writings, and that this was the key to the power of his ideas.

Taxes

News                                                                                                                             
Bloomberg | Geithner Says Higher Income Tax Rates Can’t Be Avoided
Treasury Secretary Timothy F. Geithner said it will be necessary to raise personal income tax rates on the wealthiest Americans to reduce long-term budget deficits, because capping deductions won’t raise enough revenue.
Market Watch | Obama to seek $1.6 tln in new tax revenue: reports
President Barack Obama plans to open talks over the tax component of the so-called "fiscal cliff" by calling for $1.6 trillion in new tax revenue over the coming decade, according to reports late Tuesday.
National Journal | Taxes a Hot Topic as Gang of Eight Reunites
The Gang of Eight bipartisan senators who are trying to prevent the country from going over the fiscal cliff reunited this week for the first time since the elections for a series of back-to-back get-togethers, where taxes on the wealthiest Americans emerged as a big focus of discussion.

Econ Comments & Analysis                                                                                            
Real Clear Markets | All Tax Increases Are Not Created Equal
In a speech immediately following the election, House Speaker John Boehner offered President Obama an olive branch on taxes: Republicans are open to raising more taxes to help close the budget deficit, Boehner said, but it must be through tax reform rather than raising tax rates.

Blogs                                                                                                                             
Tax Foundation | The Carrot Rebellion
While the fiscal cliff has us all pondering higher tax rates, we should also think about how taxpayers are likely to respond to these higher rates, especially those who didn’t vote for them.  Spain provides a cautionary tale, where a “carrot rebellion” is taking hold as a result of the value added tax going from 8 to 21 percent
Heritage Foundation | What Are Economists Really Saying About Tax Rate Increases?
On Friday, Representative Pete Sessions (R–TX) and House Speaker John Boehner (R–OH) ran afoul of Glenn Kessler’s “Fact Checker” blog regarding a study of President Obama’s proposed tax increase. Before deciding on a tax change, policymakers are wise to look at the economic impacts of the change.
Calculated Risk | Fiscal Slope: Alternative Minimum Tax (AMT)
Fiscal Slope: Alternative Minimum Tax (AMT)
Tax Foundation | Rules of Thumb for Least Harmful Ways to Raise New Revenues
With the fiscal cliff looming in the near distance, House Speaker John Boehner has signaled a willingness to accept new revenues as a measure of good faith in negotiating a meaningful deal to reducing the federal deficit.
AEI | Is 18% of GDP revenue a realistic number going forward?
Over the past half century, federal government revenue has averaged around 18% of GDP. But is that a realistic marker going forward given the aging of America? Last year a group of AEI scholars put together a long-term budget plan.
Tax Foundation | Texas Margin Tax Repeal Would Improve Lone Star Business Tax Climate
Today, Senator Craig Estes introduced a bill in the Texas legislature to abolish the Texas margin tax, a complicated and cumbersome tax on businesses that we have been critical of since its enactment in 2008.

Employment

Blogs                                                                                                                             
Marginal Revolution | Undercounting very discouraged workers
I estimate that there are over four million fewer labor force participants than what would have occurred if age-adjusted participation rates maintained their pre-recession trend.

Budget

News                                                                                                                             
WSJ | Business Leaders Spooked by 'Fiscal Cliff'
Fears about Washington's inability to avoid looming tax increases and spending cuts have eclipsed concerns about Europe's debt crisis, top business executives said Tuesday, worrying that political gridlock might tip the economy into recession next year.
CNN Money | Obama brings CEOs in for fiscal cliff talks
President Obama will meet with some unusual potential allies Wednesday -- CEOs of some of the nation's biggest companies.
WSJ | Greece Avoids Default With T-Bill Auction
Cash-strapped Greece on Tuesday raised the money it needs to avoid default when a Treasury bill matures later this week, but investor nerves are unlikely to be calmed as negotiations for the next slice of much-needed aid continue.
Market Watch | U.S. runs $120 billion deficit in October
As the White House and Congress inch closer to talks on a deal to tackle the federal budget deficit, the red ink continued to flow in October, according to the latest government data released on Tuesday.
Washington Times | Opening the door to a fiscal deal
Before the election ballots were fully counted last week, equity markets were sending President Obama a blunt vote of no confidence.

Blogs                                                                                                                             
Keith Hennessey | The President sends mixed signals on the fiscal cliff
My interpretation was far from unique.  Several other observers drew similar conclusions from the President’s apparent constructive ambiguity. It appeared the President was, in reaction to Speaker Boehner, leaving the door open to a deal that raised taxes on the rich but did not raise their tax rates.
Think Markets | Fiscal Cliff: Sense and Nonsense
Nothing significant will happen to improve the US fiscal situation until the impact of the fiscal situation truly becomes a crisis with sharp economic effects. Too bad. It does not have to be that way.
WSJ | Fiscal Health of States Shows Growing Divergence
While the overall financial health of U.S. states is modestly improving, there’s a growing disparity between strong and weak states, a report from asset manager Conning said.
National Review | U.S. Net Financial Position Continues to Worsen
Last week, I mentioned that, considering the explosion in spending that we face, the president and Congress will have some tough choices to make if we want our fiscal outlook to improve.