Monday, January 7, 2013

General Economics

Bloomberg | Cheap Money Era That Saved U.S. Housing Seen Bottoming
The era of increasingly cheap money that fueled the housing recovery and record home-lending profits is showing signs of ending in the mortgage bond market.
CNN Money | Bank of America in $10 billion settlement with Fannie Mae
Bank of America has reached a $10.3 billion settlement with Fannie Mae to deal with questionable home loans it sold to the government-backed mortgage financer during the housing bubble.
WSJ | Debating Whether Economy's Best Years Are Behind It
After three years of anemic growth, the U.S. economy is confronting the nagging question of whether its best years are behind it.
Bloomberg | Tarullo Sees Big Banks With Fed Rule Protecting Taxpayer
Federal Reserve Governor Daniel Tarullo is pushing an agenda to regulate banks beyond the restraints in the Dodd-Frank Act, including making them fund more of their assets using long-term borrowing.

Econ Comments & Analysis                                                                                            
Washington Post | If we can’t kill farm subsidies, what can we kill?
Symbolic of the debate we’re not having about government’s size and role — the essence of the deficit problem — is the future of farm subsidies. Running $10 billion to $15 billion annually, they don’t do much good.
Barrons | Washington's Next Big Fight
Enjoy the brief calm before the next political hullabaloo. Full-throated resumption of the deficit feud between Capitol Hill Republicans and Democrats will occur on the night of President Barack Obama's State of the Union address, likely during the first week in February.
Market Watch | Prepare for zero real growth in the U.S. in 2013
The fiscal-cliff deal — the tax half of the deal anyway — is now past us, and the reflation trade continues along. However, what we now see, which the very scary Paul Farrell pointed out this week, is a number of very strong headwinds developing for 2013 and 2014.
Mercatus | 10 Ways Dodd-Frank Will Hurt the Economy in 2013
The fiscal cliff deal painfully hammered out in the waning hours of 2012 likely foreshadows the battles yet to come this year over the country's fundamental mismatch between revenue and spending. But these fiscal fights are not the only reason 2013 promises to be interesting.
CATO | To Expand Commerce and Grow the Economy, Trade Freely with Europe
Recessions bring out the worst in people. The search for economic scapegoats almost always turns to trade. People want to pull up the drawbridge to imports, further reducing growth around the world.

Library of Economics | Murphy on Fiscal Austerity and Higher Tax Rates
As these quotations from [Paul] Krugman and [Christina] Romer illustrate, many of today's proponents of Keynesian policy do not simply disagree with their critics, but go further by leading the general public to believe that only the Keynesians have scientific research on their side.
Market Watch | Why the next U.S. downgrade will really matter
RBC Capital Markets is calling it: the U.S. is going to  lose its triple-A rating from another rating agency. And this one may matter more because it would affect how investors have to look at the government’s debt.
WSJ | Banks Are Still Too Big and Fragile, Economist Says
What a difference a few years makes. Or not, in the case of banking regulation, says Anat Admati, a Stanford University economist who studies banks and finance.

Health Care

Washington Times | States surrender to health care law, set up exchanges
President Obama’s signature health care reforms are accelerating into the new year, with a growing number of state-run insurance markets getting the green light from the federal government, even as critics decry the law as a dagger to small businesses and a tea party icon attempts to repeal it for the 34th time.
NY Times | Scorecard on Health Insurance Exchanges
Twenty-three states, most led by Republican officials, have declared that they will not set up their own health insurance exchanges to help individuals and small businesses find affordable coverage. Instead, they want to offload that task to the federal government.

Heritage Foundation | Fiscal Cliff Deal Undoes Part of Obamacare
Though the government’s entitlement spending is still spiraling out of control, taxpayers have finally caught a break: The recently passed “fiscal cliff” deal included the repeal of one of Obamacare’s worst provisions, the Community Living Assistance Services and Supports (CLASS) Act.


Market Watch | Global regulators water down bank liquidity rules
Bank shares were poised to gain some ground Monday after global regulators watered down new rules on how much capital lenders have to set aside and delayed their implementation until 2019 in order to avoid crimping lending and an economic recovery.
Bloomberg | Draghi Seeks Extended Calm in 2013 on Fading Euro Economy
European Central Bank President Mario Draghi will turn his attention to nursing the euro region back to economic health this week as the urgency to deploy emergency crisis measures recedes after three years.
WSJ | Is the Fed Doing Enough—or Too Much—to Aid Recovery?
The Federal Reserve's decision to tie interest-rate increases to specific unemployment and inflation levels will likely be only a temporary part of its tool kit, central-bank insiders say.

Econ Comments & Analysis                                                                                            
WSJ | In Defense of the Fed's New Interest-Rate Policy
At the most recent meeting of its Federal Open Market Committee, the Federal Reserve broke new ground by announcing the explicit criteria it would use to begin raising its target for the federal-funds rate. The FOMC said it will keep the rate near zero as long as the unemployment rate remains above 6.5%, and the inflation rate one to two years ahead is projected to be no higher than 2.5%.

WSJ | Yellen: Fed Likely to Vary Interest Rates for Reserves in Future
The Federal Reserve will “almost surely” use its power to change the interest rate on reserves that banks park at the central bank when the time comes to tighten its easy-money policy, Fed Vice Chairwoman Janet Yellen said Saturday.


WSJ | U.S. Tax Bonanza May Be Tapped Out
All the talk about the fiscal cliff and the inadequacy of the last-minute deal to avert it obscures one fact: It probably provided the government with tens of billions of dollars in unexpected tax receipts.
Bloomberg | Wages a Balm for U.S. Workers Facing Payroll-Tax Shock
An improving job market is boosting wages and providing needed relief just as every American worker gets hit with a tax increase.
NY Times | The Next Round of Tax Increases
When the White House announced the deal on the fiscal cliff last week, it was quick — and correct — to note that much was left undone. There was still “substantial” room, the administration said, to raise taxes on high-income Americans, to reform corporate taxes and to reform entitlements, with the aim of “balanced” deficit reduction.

Econ Comments & Analysis                                                                                            
Fortune | Good luck estimating your new tax rate!
About the only thing the new legislation guarantees is job security for accountants. The already incomprehensible tax system even more incomprehensible.

Reason | Why Double Taxation Must Cease
One of the tax changes in the just-passed bill to avert the so-called fiscal cliff is a rise in the long-term capital gains tax for upper-income people (over $400,000 for single filers). During the George W. Bush years, the tax on capital gains (and dividends) dropped to 15 percent.


CNN Money | Jobs with the lowest (and highest) unemployment
The top jobs with the lowest unemployment rates for 2012 include fields in areas from health care and finance, to social services and engineering -- and all require a lot of education and training.

Econ Comments & Analysis                                                                                            
Washington Times | Obama’s malaise
The jobs numbers released by the Bureau of Labor Statistics on Friday confirm the economy probably won’t see robust growth any time soon. The official unemployment figure remains a disappointing 7.8 percent, though this only presents a partial view of what’s going on.
Heritage Foundation | Heritage Employment Report: In December Out with the Old, In with the Same Thing
The December employment report from the Bureau of Labor Statistics (BLS) shows that 2012 ended with an unemployment rate of 7.8 percent and 155,000 new jobs. The labor market has not had an adequate recovery and has made little progress from 2011 to 2012.
Real Clear Markets | Friday's Unemployment: "Good" Only By "New Normal" Standards
The publication of Friday's "Employment Situation" report from the Bureau of Labor Statistics (BLS) gives us our first opportunity to take stock of the first four years of Barack Obama's presidency. This is because the jobs numbers are the first of the major economic data series to be reported after the end of a period.

Market Watch | Why the next U.S. downgrade will really matter
RBC Capital Markets is calling it: the U.S. is going to  lose its triple-A rating from another rating agency. And this one may matter more because it would affect how investors have to look at the government’s debt.
Economist | Running out of time
With another month of jobs data in hand, economics writers can't help but note the remarkably stable pattern in employment growth. Payrolls rose by 155,000 jobs in December of 2012, according to figures released by the Bureau of Labour Statistics on Friday.


WSJ | Battle Lines Drawn on Budget
Republicans won't accept further tax increases in coming budget and debt negotiations, the party's Senate leader said Sunday, putting GOP lawmakers on a collision course with Democrats over raising the government's borrowing limit.

Econ Comments & Analysis                                                                                            
Washington Times | ‘Fiscal cliff’ compromise deal betrays lack of courage
My neighbor’s 10-year-old station wagon has a terrible noise coming from the engine compartment that has been getting louder over time. Something is obviously very wrong. His solution? He can’t afford to have it repaired, so he simply keeps turning up the radio until he can’t hear it anymore.
AEI | The budget battles ahead
Two months after the president handily won a second term and the Democrats increased their numbers in both the House and Senate, GOP congressional leaders were in no position to negotiate a good “fiscal cliff” resolution. So it’s not at all surprising that what emerged from the Biden–McConnell negotiations has satisfied almost no one, and certainly not many conservatives.
CRS | The "Fiscal Cliff" and the American Taxpayer Relief Act of 2012
Despite the enactment of ATRA, many policy issues affecting the federal budget remain unresolved. Specifically, in early 2013, Congress will likely consider a debt limit increase, additional actions related to the postponed BCA automatic spending reductions, and appropriations for the final six months of FY2013. Finally, long-term fiscal sustainability issues remain unresolved.

WSJ | Vital Signs Chart: Growing National Debt
The national debt is growing. Total public debt outstanding was $16.07 trillion as of the third quarter, up from $15.86 trillion three months earlier. The federal debt is now equivalent to 101.6% of the nation’s gross domestic product, up from 53.5% in early 1990.
CBO | The “Fiscal Cliff” Deal
We’ve received a number of questions in the past few days about the budgetary and economic impact of the significant budget legislation just enacted by the Congress. Here are some of the most common questions and our answers to them