Monday, November 26, 2012

General Economics

Bloomberg | Home Equity Loans Make Comeback Fueling U.S. Spending
After six years of declines, lending for so-called Helocs will rise 30 percent to $79.6 billion in 2012, the highest level since the start of the financial crisis in 2008, according to the economics research unit of Moody’s Corp. Originations next year will jump another 31 percent to $104 billion, it projected.
Market Watch | Understanding the GDP paradox
Like a stuffed turkey, the week after the Thanksgiving break is loaded with economic indicators, including an updated estimate of third-quarter gross domestic product that may be fattened up.

Econ Comments & Analysis                                                                                            
Washington Post | Why the recovery is feeble
Federal Reserve Chairman Ben Bernanke last week became the latest economist to ask why the current economic recovery has been so weak. The question has inspired a cottage industry of studies, papers and speeches with often-esoteric and murky theories.
Fortune | Wells Fargo CEO: Why Americans are saving so much
CEO John Stumpf discusses how his bank has seen record savings deposit growth, as more Americans look for safe places to put their cash.

Economist | Mexico rising
Last week I wrote a short post on Mexico's improving economic fortunes and its bright outlook. Conveniently, the most recent issue of The Economist features a special report on Mexico, which includes a long look at the country's promising economy.
Calculated Risk | Unofficial Problem Bank list unchanged at 857 Institutions
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.
Calculated Risk | Schedule for Week of Nov 25th
Negotiations concerning the "fiscal slope" in the US will be back in the headlines this week.  And, in Europe, the discussion on funding for Greece will resume on Monday.

Health Care

National Journal | Medicare Competition Makes Bipartisan Comeback
After President Obama’s reelection win, you might think that talk of competition in Medicare—a cornerstone of Mitt Romney’s campaign—would fall by the wayside. But introducing greater competition into the health program for older Americans is an idea that could prove ripe for a bipartisan compromise in any "Grand Bargain" on the budget.


Bloomberg | Overnight Rates Surge in Fed’s Operation Twist
You wouldn’t know the Federal Reserve has done nothing but add to its record monetary stimulus from looking at short-term funding markets.

AEI | 2 charts that show the Fed is not monetizing the debt
While there’s much in Fed policy to criticize over the past decade, there’s no need to overstate things. Right now, for instance, we see lots of talk that the Fed is monetizing the debt, which would be indistinguishable from money printing. In fact, it is money printing and risks a dangerous bout of inflation. But is that really what the Fed is doing?


CNN Money | Buffett renews argument for millionaire's tax
Warren Buffett is again arguing for higher taxes on himself and other high-income individuals, calling for an even steeper bite than in the Obama administration's "Buffett Rule."
Bloomberg | Republicans and Democrats Differ on Taxes as ‘Cliff’ Looms
U.S. Republican lawmakers advocated raising federal tax revenue by limiting deductions rather than by raising rates to avert the so-called fiscal cliff, as Democrats pushed for higher rates on upper-income earners.

Econ Comments & Analysis                                                                                            
Forbes | Before Going Over The Fiscal Cliff, Let The Markets Score The Competing Tax Plans
When it returns from its Thanksgiving break, the lame duck 112th Congress will be faced with having to do something about the “fiscal cliff”, the enormous tax increases and spending cuts that are scheduled to occur on January 1, 2013.  If nothing is done, taxes will go up in 2013 by about $500 billion, or 3.1% of GDP.  In addition, spending cuts of about $140 billion, or 0.9% of GDP, will take effect.
AEI | Should the Top Marginal Income Tax Rate Be 73 Percent?
My own view is that what we ought to do is the kind of thing that Chairman Ben Bernanke has urged the U.S. government to do: make good long-run plans for resolving our budget difficulties without imposing severe fiscal stringency in the short-run and that accommodative monetary policy is a good idea. But these are not very original ideas. I think eighty percent of the economics profession would agree with this. The problem is to figure out how in the real world to get these things done.
Washington Times | Congress faces first tax reform test
The main federal subsidy for wind energy is set to expire in six weeks. Supporters and opponents both are out in full force on Capitol Hill, for the issue has a symbolic importance. The wind energy subsidy is a bellwether for comprehensive tax reform.
IRS | A Quarterly Statistics of Income Report
The report provides the earliest published annual financial statistics obtained from the various types of tax and information returns fi led, as well as information from periodic or special analytical studies of particular interest to students of the U.S. tax system, tax policymakers, and tax administrators.

AEI | Wanted: Pro-growth tax reform for the real world
America needs faster economic growth. Faster growth would mean more jobs, higher incomes, and less debt. Not only has the economy been slow to recover from the Great Recession and Financial Crisis, it was no great shakes even before the meltdown.


WSJ | Deadline Looms for Long-Term Unemployed
More than 40% of the nearly five million Americans who receive unemployment insurance are set to lose those benefits if federal programs expire as scheduled at year-end.

WSJ | How Long Can You Collect Unemployment Benefits?
When job losses skyrocketed in 2008, Congress passed emergency measures to supplement state-level unemployment insurance programs, which generally offer six months of benefits. At their peak, the federally backed programs extended benefits to up to 99 weeks in some — though never all — states.


CNN Money | Fiscal cliff tax deal: Getting to $1 trillion
Leaders in Washington say they want to make a "down payment" on deficit reduction and avert the fiscal cliff.
NY Times | States Want to Have Say During Talks Over Budget
Their states are still recovering from the recession, and now the nation’s governors are bracing, again, for cuts in federal aid.
Washington Times | EU summit ends without budget deal
A summit of the European Union’s 27 national leaders, charged with agreeing on a long-term budget for the bloc, broke up Friday afternoon without being able to reach a deal.
CNN Money | 8 things that could kill a fiscal cliff deal
I'm not ruling out a deal before Christmas, particularly one that combines a very modest "down payment" with procedures to deliver tax and entitlement reform. I've always said I see about a 40% chance of such a deal by December 24. The problem for the market will be to gauge how much deficit reduction will ultimately be delivered. I expect to be underwhelmed.

Econ Comments & Analysis                                                                                            
Real Clear Markets | The Fiscal Cliff? Let's Rush Off Of It
Washington, the media, and many economists are consumed by the looming fiscal cliff-a combination of tax increases and spending cuts that are set to occur on January 1. Many economists, Fed Chairman Ben Bernanke among them, predict that if we go over the fiscal cliff the country will go into recession. I say let's do it.
WSJ | Les Moody Blues
Moody's stripped France of its triple-A rating last week, citing "deteriorating economic prospects," the "long-standing rigidities of its labor, goods and services markets" and "exposure to peripheral Europe." And it could get worse
NY Times | Slugging It Out, Inside Obama’s Mind
Throughout Washington, policy makers are debating  how to avoid hitting a wall on Jan. 1, when large and abrupt tax increases and spending cuts will take effect automatically unless Congress acts. The debate is perhaps no more fervent than it is inside the head of our newly re-elected president, who must now decide what kind of policy leader he will become, both in this confrontation and throughout  his second term.
Washington Times | After fiscal cliff comes fiscal avalanche
While Washington is preoccupied with the so-called fiscal cliff, little attention has been given to the fiscal avalanche that will occur if we continue down an unsustainable, long-term path, causing markets to turn sour on U.S. debt and leading to a spike in interest rates.
WSJ | None Dare Call It Default
To call Greece First World may be a stretch, but Greece has defaulted once already, and it is only a matter of time until Greece defaults again. Welcome to default-o-rama, the next chapter in the First World's struggle for fiscal sustainability.
Forbes | Avoiding The Fiscal Cliff By Fixing The Fiscal Hole
The President and Congress may throw America into another recession, thanks to the Balanced Budget Act, which was crafted so as to punish the entire country with brutal spending cuts and tax increases if politicians couldn’t agree amongst themselves on a kinder, gentler plan to tame the deficit.
AEI | Greece's only option is default
This week's gridlock over Greece's next round of bailout funds underscores an unsettling reality that Europeans would do well to realize sooner rather than later: For Greece, default is the only option.

Heritage Foundation | Avoiding a Debt Crisis, Eh? Lessons From Canada
Congressional lawmakers met last week to try to hammer out a deal to avert the fiscal cliff. Democrats insist on revenue increases as part of such a deal, saying new revenue is the only way to significantly reduce the national debt. However, it is not a lack of revenue that is driving U.S. debt; it is unrestrained federal spending. American lawmakers looking to solve America’s looming fiscal crisis need not look further than Canada.