Friday, December 7, 2012

General Economics

Bloomberg | Bernanke Cliff Analogy Overstates Immediate Economic Harm
While the U.S. Congress views the convergence of more than $600 billion in tax increases and spending cuts set for Jan. 1 as a “fiscal cliff,” the metaphor misses the economic reality of what could follow.
Washington Times | Rate on U.S. 30-year mortgage ticks up to 3.34 pct.
Average U.S. rates on fixed mortgages ticked up this week just slightly above record lows, keeping home-buying and refinancing attractive to consumers.
CNN Money | Germany may fall into recession in 2013
Germany's central bank said the country may slip into recession early next year, confirming Europe's biggest economy has lost much of its immunity to the economic gloom pervading the region.
Bloomberg | Michigan Consumer Sentiment Declines More Than Forecast
The Thomson Reuters/University of Michigan preliminary consumer sentiment index decreased to 74.5, the weakest in four months, from 82.7 in November. Economists projected a preliminary reading of 82 for December, according to the median of 67 estimates in a Bloomberg survey.
WSJ | Cautious Companies Stockpile Cash
U.S. companies were sitting atop a record pile of cash at the end of September, but have slowed their saving as the economy has emerged from recession.
Bloomberg | Bundesbank Slashes 2013 German Growth Forecast to 0.4% on
The Bundesbank sliced more than 1 percentage point off its forecast for economic expansion in Germany next year after the sovereign debt crisis pushed the euro area into recession and global growth slowed.

Econ Comments & Analysis                                                                                            
WSJ | Energy Economics in One Lesson
America's shale gas boom is so promising that it has some people discombobulated—including, naturally, our politicians. The same folks who complain about America's trade deficit now want the U.S. government to ban the export of liquefied natural gas (LNG). This is one way to ruin what has been a very rare piece of good U.S. economic news.
NBER | Estimates of the Trade and Welfare Effects of NAFTA
We build into a Ricardian model sectoral linkages and differing productivity levels across sectors to understand how the gains from tariff reductions in a given sector spread to the rest of the economy. We also propose a new method to estimate sectoral trade elasticities consistent with any trade model that delivers a gravity trade equation.

Economist | Forget the "fiscal cliff" and say hello to the "agriculture abyss"
Farm subsidies cost America’s government tens of billions of dollars each year, even though many farmers are earning more than ever thanks to high commodity prices. Little surprise, then, that with Congress desperate to avoid painful tax increases and spending cuts, both Republicans and Democrats are prepared to eliminate direct payments to growers.

Health Care

Econ Comments & Analysis                                                                                            
Market Watch | Medicare is unsustainable in current form
Entitlement reform is a major sticking point in fiscal cliff negotiations. Republican House Speaker John Boehner has proposed cutting $900 billion in entitlement spending over the next decade, and President Barack Obama’s plan doesn’t include entitlement reform.


Bloomberg | Fed Exit Plan May Be Redrawn as Assets Near $3 Trillion
A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month-old blueprint for an exit from record monetary stimulus.
Market Watch | Majority of ECB council open to rate cut: report
The euro extended a loss versus the dollar Friday after a news report said a majority of European Central Bank Governing Council members were open to a cut in the central bank's key lending rate when they met a day earlier.


CNN Money | Payroll tax cut: Is it in, or is it out?
In all the rhetorical noise about the fiscal cliff, the discussion has focused most heavily on the Bush-era income tax cuts.
CNN Money | Hundreds of companies -- especially utilities and telecom firms -- are sharpening their lobbying efforts, with seven executives flying to Washington next week to tell lawmakers that dividend hikes will hit seniors hard.
Big biz pushes to stop dividend tax hike

Econ Comments & Analysis                                                                                            
Fortune | Will Obama and Congress punt on real tax reform?
Whether or not the president and lawmakers reel us in from the fiscal cliff, the tax debate is sure to keep going.
WSJ | Obama's Famous Tax 'Victory'
To read the current fiscal-cliff coverage, President Obama holds the upper hand and is poised for the "victory" of winning an increase in the top two tax rates.
CBO | Taxing Businesses Through the Individual Income Tax
Since the individual income tax was instituted in 1913, the profits of most businesses have been allocated, or “passed through,” to their owners and subjected to that tax—rather than to the corporate income tax.
Washington Post | The death of tax reform
The story behind the story is that “tax reform,” as we know it, is dying. During the 1980s, no major piece of legislation better symbolized bipartisan consensus than the Tax Reform Act of 1986, which was regarded by both liberal and conservative experts as the best tax law since World War II.
WSJ | The Fantasy of a 91% Top Income Tax Rate
Democratic Party leaders, President Obama in particular, are forever telling the country that wealthy Americans are taxed at too low a rate and pay too little in taxes. The need to correct this seeming injustice is framed not simply in terms of fairness.
Washington Times | Europe’s tax hydra
The eurocrats presented a “30 point action plan” aimed directly at Switzerland, and European Union members Ireland and Luxembourg, which offer comparatively low tax rates. Private companies that legally take advantage of these existing laws also find themselves in the crossfire.


Market Watch | U.S. creates 146,000 jobs in November
Businesses maintained a steady but unspectacular pace of hiring in November and the unemployment rate fell to the lowest level in four years as the huge U.S. economy brushed off the damage caused by Hurricane Sandy.

WSJ | Least Important Jobs Report in 5 Years
The government’s monthly jobs report is the most closely watched economic indicator on the planet, and that’s not likely to change any time soon. But Friday’s release for November will be the least important look at the labor market in about five years.
WSJ | U.S. Small Business Hiring Plans Plunged in November
In a sign of deep pessimism about the economy, U.S. small-business hiring plans plunged to their lowest level in four years last month, a survey released Thursday said.


WSJ | Fiscal Talks Spur Charitable Giving
Tax uncertainty in Washington is setting off a mad scramble among wealthy taxpayers and charities to maximize donations before the end of the year.
Market Watch | Households back to slashing debt, Fed says
Households went back to shedding debt in the third quarter, with Americans repaying mortgages even as student and car loans piled up, the Federal Reserve said Thursday.
WSJ | Ireland Outlines Austerity Budget For Next Year
Ireland's government detailed a tough 2013 budget designed to cut its budget deficit under its agreement with its bailout creditors and to secure a permanent return to the bond markets at the end of next year.

AEI | 10 charts showing America’s stunning entitlements explosion
AEI scholar Nick Eberstadt’s latest book, A Nation of Takers, provides a sobering analysis of the entitlements explosion and its effect on the American economy and culture.