Monday, December 10, 2012

General Economics

WSJ | Consumer Spending Wobbles
U.S. consumer spending, a rare pillar of economic strength in recent months, is showing signs of weakening.
Washington Times | Economy Briefs: Consumer borrowing rises to record $2.75 trillion
Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high.
WSJ | Crisis-Era Measure Nears End
Small banks are making a last-ditch attempt to persuade Congress to extend a crisis-era blanket guarantee on nearly $1.5 trillion in deposits before it expires at the end of the year.
WSJ | Japan Says Recession Has Probably Started
An index of data reflecting the current state of Japan's economy fell in October for the seventh straight month, indicating a high possibility that the country has already fallen into a recession.
Bloomberg | Japan Sinks Into Recession as Abe Calls for More Stimulus
Japan’s economy sank into recession in the second and third quarters, fueling opposition leader Shinzo Abe’s calls for more stimulus and highlighting the risk that weak growth will derail a planned sales-tax rise.

Econ Comments & Analysis                                                                                            
WSJ | The North American Gusher
President Obama has promised to get the anemic U.S. economy going again by boosting exports. Besides the export of billions of freshly printed U.S. dollars from the Federal Reserve, it is not clear exactly what the president has in mind.
Trib Live | ‘Riding’ Social Security off a cliff
Suppose Jones proposes to ensure that each and every retired American enjoys at least a minimum annual income. Jones’ plan is to ask every working American to voluntarily contribute money each year to a fund that he will set up and administer.

Calculated Risk | Schedule for Week of Dec 9th
The key event this week is the two day FOMC meeting on Tuesday and Wednesday.   With the coming conclusion of Operation Twist, there is a very strong possibility that the Fed will announce additional accommodation.
CATO | Exporting Natural Gas
Suddenly, due to improved drilling techniques, the U.S. is overflowing with natural gas, driving down domestic prices. But foreign prices remain high, which means there is an opportunity for us to export natural gas.
AEI | A chat with Richard Burkhauser on income inequality
On my latest Ricochet Money & Politics Podcast, I chatted with Richard Burkhauser, economics professor at Cornell University.
Coordination Problem | Prices Doing Their Job
Lionel Robbins in his introduction to Philip Wicksteed's classic, The Common-Sense of Political Economy, first explains Wicksteed's exposition of individual maximzing behavior and the optimaility conditions associated with system equilibrium.
Calculated Risk | Unofficial Problem Bank list declines to 849 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 since then.
Think Markets | Interests are More Powerful than Ideas?
There is an interesting interview with Ed Feulner, the outgoing president of the Heritage Foundation, in the weekend (Dec. 8-9) Wall Street Journal. The interview got me thinking about the progress made in the pro-economic-liberty cause, not only over the years of Heritage, but since, say, 1960.
Coordination Problem | The Function of Market Agitation
Individuals will continually pursue trades until the mutual gains are exhausted.  Market agitation reflects the changes being made by market participants in their attempt to bring their plans into consistency with the plans of others as embodied in the data of the market.
WSJ | Number of the Week: As Companies Borrow More, Where Is Money Going?
$8.4 trillion: The amount of debt owed by U.S. corporations at the end of September.

Health Care

Politico | What Medicaid cuts might look like
In the ongoing battle over the fiscal cliff, Democrats and Republicans have exchanged plenty of words about what they would or wouldn’t do to Medicare. The same can’t be said about Medicaid.

Heritage Foundation | Obamacare May Hike Your Pet’s Health Care Bills
American health care consumers aren’t the only ones who will be hit by slated Obamacare tax hikes. Medical bills for their pets may go up as well.
The Volokh Conspiracy | The Other Beneficiaries of ObamaCare
Whether or not you believe the PPACA has been or will be good for the American people, it has certainly been good for the lobbyists and legislative staffers who wrote it


Bloomberg | Central Banks Ponder Going Beyond Inflation Mandates
Inside the world’s oldest central bank, a new debate is raging over a dilemma facing monetary authorities around the globe.
CNN Money | Inflation rises in China
Inflation in China accelerated in November, as economic growth picked up and food prices rose.
Market Watch | Type the Title You Want People to See
The Federal Reserve is set to take more action this week to support financial markets and the economy, as the central bank tries to stay predictable given all the uncertainty surrounding the fiscal cliff.
Bloomberg | Long Bond Rallying Five Times TIPS Gives Fed Room for QE4
As investors sought a refuge from inflation in August amid concern about Federal Reserve efforts to prop up the U.S. economy, David Brownlee was buying the securities most vulnerable to rising consumer prices.

Econ Comments & Analysis                                                                                            
Bloomberg | Central Banks Ponder Going Beyond Inflation Mandates
Inside the world’s oldest central bank, a new debate is raging over a dilemma facing monetary authorities around the globe.

Daily Capitalist | More Hints That QE Will Not Be Unwound Any Time Soon; Implications May Continue To Be Bullish For Treasury Bond Prices
The Fed is hinting that quantitative easing is here to stay:  there may be no unwinding of its expanding balance sheet in 2015.
AEI | John Taylor has some good things to say about market monetarism
I enjoyed reading this book, perhaps because I agree so much with the general themes and conclusion that U.S. monetary policy—by creating a boom and a bust—led to the financial crisis and the great recession.
Free Banking | Sumner v. Cantillon
After trying a couple months back to defend the Austrian-School thesis that excessively rapid monetary expansion might give rise to what I termed "Intermediate Spending Booms," I promised myself that I'd keep out of the recent, related exchange between Scott Sumner and Sheldon Richman (among others) concerning so-called "Cantillon" effects.


CNN Money | Businesses' fiscal cliff fear: The payroll tax cut
Of all the fiscal cliff issues, there's one that scares small businesses most of all: The end of the payroll tax holiday.
NY Times | New Taxes to Take Effect to Fund Health Care Law
For more than a year, politicians have been fighting over whether to raise taxes on high-income people. They rarely mention that affluent Americans will soon be hit with new taxes adopted as part of the 2010 health care law.
CNN Money | Favorite tax deductions of the rich
The wealthy could see their tax burden go up by an average of $14,000 if lawmakers limit itemized deductions as part of a fiscal cliff deal.
Politico | Time to reform complex tax code
There are very few “teaching moments” in politics, but the drama surrounding the current debate over the fiscal cliff is one of them. As it unfolds, it is becoming clear that it is time for comprehensive tax reform. Last reformed in 1986, America’s Tax Code was once the envy of our trade competitors.

Econ Comments & Analysis                                                                                            
WSJ | The Republican Tax Panic
If any Republicans thought that President Obama would respond with magnanimity in victory, they now know better. He is determined to rout them on taxes, give as a little as possible on spending, and blame them for any economic damage in the bargain.
NY Times | Tax Arithmetic Shows Top Rate Is Just a Starter
Despite hints in recent days that President Obama and House Speaker John A. Boehner might compromise on the tax rate to be paid by top earners, a host of other knotty tax questions could still derail a deal to avert a fiscal crisis in January.
AEI | Here’s a new tax on savings you didn’t know about
In the debate over the looming fiscal cliff, U.S. President Barack Obama often plays down any adverse economic impact from letting the 2001 and 2003 tax cuts expire for high-income Americans, claiming that the top tax rates would merely return to where they were during the Clinton years.


WSJ | Chinese Survey Shows a Higher Jobless Rate
A new survey shows that the real unemployment rate in China is double the official level, and layoffs rose sharply among migrant workers in the past year, underlining a challenge for China's new leaders to maintain growth.
WSJ | Labor Market Plods Forward
Hiring increased at a slow but steady pace at American businesses last month, despite a massive storm and growing fears of a brewing fiscal crisis in Washington.

AEI | The Jobs Gap | Missing: 15 million jobs from the private sector
Let’s keep it simple. For the past three decades, US private sector jobs have grown by about 1.8%-2.0% a year. But that’s not been happening since the Great Recession. Private sector jobs fell sharply in 2008 and 2009.
Calculated Risk | Labor Force Participation Rate Update
The recent decline in the participation rate was expected, and most of the decline in the participation rate was due to changing demographics, as opposed to economic weakness.
AEI | Why we may have seen the low point in unemployment for some time
Both the unemployment rate and labor force participation rate declined by 0.2 percentage point between October and November. Digging into the underlying flow, the improvement on the unemployment front reflects mainly an unexpected increase in the rate at which unemployed people leave the labor force.
National Review | Job Numbers, Recovery and Labor Force Participation
Patrick has already given us all of the relevant information about the job numbers but I thought these charts were visually informative.
AEI | Everything you need to know about the November jobs report in one chart
Note that HPS puts the demographically-adjusted unemployment rate at 9.7%. The way I calculate it, the rate could be anywhere between 9.2% and 10.4%, roughly. So 9.7% is nice ballpark figure


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.

Econ Comments & Analysis                                                                                            
Washington Times | Government spending the true ‘dark money’ scandal
The country is on the verge of barreling over a “fiscal cliff.” Absent any change, taxes will spike by more than $500 billion next year (an average of $3,500 per household), which economists think could precipitate another recession.
Real Clear Markets | Under Obama, Economic Stagnation Is the New Normal
Friday's "Employment Situation" report from the Bureau of Labor Statistics (BLS) showed that 5.4 million Americans have dropped out of the labor force since Barack Obama took office. The labor force declined by 350,000 in November, despite an increase of 191,000 in our working age population.
WSJ | Obama's Historic Budget Opportunity
Since the election, PresidentObama has focused the debate about the fiscal cliff on taxes. This tactical political positioning is putting at risk the strategic objective of a pro-growth budget package to reduce U.S. debt.
Washington Times | Resist the siren song on compromise in budget talks
Nothing could be more intellectually fashionable these days than the idea that the middle ground is where the solution to all problems can be found, particularly when it comes to the ailing U.S. economy. But “compromise,” the New Oxford American Dictionary tells us, has another meaning: “the acceptance of standards that are lower than is desirable.”
CBO | Monthly Budget Review
The federal budget deficit was $292 billion for the first two months of fiscal year 2013, $57 billion more than the shortfall recorded in October and November of last year, CBO estimates.
Heritage Foundation | The Fiscal Cliff and the Perils of Grand Budget Deals
One of the major complications in the current fiscal cliff debate is that both sides are overreaching, trying to tie a near-term resolution to a sweeping deficit reduction plan that would address the longer-term budgetary crisis looming in the years ahead.

WSJ | Vital Signs Chart: Americans’ Shrinking Debt Burden
Consumers are both paying off debts and seeing their after-tax incomes rise modestly.