Wednesday, January 16, 2013

General Economics

News                                                                                                                             
Bloomberg | World Bank Cuts Growth Forecasts as Developed Nations Lose Steam
The World Bank cut its global growth forecast for this year as austerity measures, high unemployment and low business confidence weigh on economies in developed nations.
Market Watch | Two big banks in $557 mln foreclosure settlement
The Federal Reserve announced Wednesday it reached a $557 million settlement with Goldman Sachs Group Inc. and Morgan Stanley over foreclosure abuses stemming from the so-called robo-signing scandal.
Politico | AARP's Barry Rand: Mend, don't end entitlements
The head of the AARP on Tuesday acknowledged changes must be made to programs like Medicare and Social Security, but said cuts to those entitlements aren’t a solution to the nation’s fiscal woes.
Bloomberg | Foreign Demand for U.S. Assets Rises on Global Slowdown
International purchases of U.S. stocks, bonds and other financial assets were more than twice as much as forecast in November as investors sought shelter from a global economic slowdown.
Market Watch | Builder confidence clings to six-year peak
A gauge of confidence among home builders held at a more-than-six-year peak in January as fiscal uncertainty helped offset optimism about the housing market’s recovery, a trade group said Wednesday.
Bloomberg | U.S. Industrial Production Rises 0.3% on Equipment Demand
Industrial production in the U.S. climbed for a second month in December as demand picked up for capital equipment, showing factories strengthened entering 2013.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Income Redistribution Makes Our Children Poorer
Democrats love to claim that their income redistribution policies are economic stimulus programs. They believe that since poorer people spend all or almost all of their money while the rich save some of their money, the economy will be boosted by taking money from the rich and giving it to the poor. This is not only a fundamental misunderstanding of economics, but it will make our country poorer in the long run.
AEI | End the Amtrak experiment
Amtrak triumphantly proclaimed 2012 to be a success. The reason? It posted a loss of only $361 million for the year. That's its smallest operating loss since 1975, amid growing ridership along the Northeast Corridor between Washington and Boston.
Politico | Energy exports: The untapped U.S. option
Historically, we have lived in a nation of energy dependence. Dependence on others for our heating and electricity, and for our fuel for transportation. Yet today, for the first time in generations, we no longer need to view ourselves as living in a country of energy scarcity. The U.S. will soon overtake Saudi Arabia in hydrocarbon production.
Forbes | Can We Spend Ourselves From Recession To Prosperity?
Why is the recovery from the Great Recession so slow? Mounting evidence suggests there are two reasons: (1) We are discouraging employers from hiring and (2) we are discouraging the unemployed from seeking work.

Blogs                                                                                                                             
CATO | New Trade Negotiations on Services
Of all the international trade negotiations being talked about these days, the one I’m most enthusiastic about is on trade in services.  Today, the U.S. Trade Representative’s Office notified Congress of the Obama Administration’s intent to enter into negotiations for a new trade agreement on international trade in services, with a group of 20 trading partners.
Heritage Foundation | Economic Freedom in Europe: Changing of the Guard
According to the 2013 Index of Economic Freedom, just released by The Heritage Foundation and The Wall Street Journal, a significant realignment of European countries is underway. Eight countries recorded their highest economic freedom scores ever in the 2013 Index, while five others have scores equal to or below their scores from nearly two decades ago.
Economist | Mario Draghi's premature canonisation
One additional point related to the previous post: I find it shocking how readily we all seem to be accepting the European Central Bank's inaction on euro-zone economic weakness. Some perspective is in order.
Neighborhood Effects | Economic Freedom and Economic Privilege
Last week, the Wall Street Journal and the Heritage Foundation released their annual Index of Economic Freedom by Terry Miller, Kim Holmes, and Edwin Feulner.

Health Care

News                                                                                                                             
WSJ | Delays in Medicaid Pay Vex Hospitals
Hospitals in Maine, concerned that further deficit-reduction agreements in Washington could erode funding for Medicaid, are demanding hundreds of millions of dollars in back payments from the state for treatment of patients in the program.

Monetary

News                                                                                                                             
National Journal | Why the Fed Is So Worried About the Debt-Limit Dispute
Federal Reserve Chairman Ben Bernanke is worried about the game of chicken that’s being played between the White House and Congress over the debt ceiling — and not only for the obvious reason that the stakes for the economy are huge and would affect the central bank's monetary-policy stance.
Washington Post | Secrets of the crisis revealed: What to expect from transcripts of 2007 Fed meetings
For anybody who cares about how the country ended up in this precarious economic state, a very big day is coming soon, as information that has been under lock and key for the past five years will be shared with the world.
CNN Money | Inflation was tame in 2012
Consumers paid modestly higher prices for gas, food and shelter in 2012, but overall inflation was more subdued than in 2011.
Bloomberg | Fed’s Rosengren Sees Room to Expand QE to Spur Employment
Federal Reserve Bank of Boston President Eric Rosengren said the Fed could expand its $85 billion monthly bond buying should record easing not make progress in achieving full employment and stable prices.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Who Is the Fed Helping? Not the Little Guy
For more than five years the Federal Reserve has conducted an unprecedented monetary expansion. Over this stretch the Fed's balance sheet has tripled. Its key interest rate has been zero since December 2008, forcing down rates across the credit spectrum on everything from mortgages to municipal bonds.

Taxes

Econ Comments & Analysis                                                                                            
Washington Times | Tax envy
Not long ago, Warren Buffett promised raising taxes on the rich would boost the morale of the middle class. Thanks to the New Year’s “fiscal cliff” deal, the rich’s taxes have gone up, but consumer sentiment isn’t showing any signs of improvement. The attempt to channel the emotion of envy for electoral advantage can work for some politicians, but the effects are usually temporary.

Employment

News                                                                                                                             
Washington Times | Most union workers now on government payrolls
Unions were formed to bring representation to companies that otherwise were accountable to no one but their profit-making owners. But most union workers today work for government, not companies, even though there are five times as many private-sector employees overall, according to recently collected data.

Econ Comments & Analysis                                                                                            
WSJ | The Wages of Unemployment
From the mid-17th century to the late 20th century, the American economy grew roughly 3.5% a year. That growth rate has since declined significantly. When the final figures are in for 2012, the annual rate of real output growth for the first dozen years of this century is likely to be about 1.81%.

Budget

News                                                                                                                             
Politico | History could guide members out of debt morass
With the help of 29 Democrats, then-House Minority Leader Bob Michel executed a remarkable coup in June 1981 — virtually taking control of the House for 24 hours so as to make in order and ultimately enact billions in budget cuts supported by President Ronald Reagan.

Econ Comments & Analysis                                                                                            
Washington Times | A budget plan that actually works
Imagine a family sitting at its kitchen table with bills piled high. They have no budget, only a general sense of where money comes from and where it goes. The lenders to whom they owe a considerable sum are not calling yet, but they might be soon. They owe nearly 5 times as much as they spend each year and almost 7 times as much as they earn.
Politico | Why debt limit must be used to force a balanced budget
This Monday, President Obama again asserted that the country would “default” if Congress did not raise the debt limit. “The full and faith and credit of the United States is not a bargaining chip,” he said at a press conference. This is of course untrue — we have enough funds to service our debt and the only risk to our credit is the president’s demagoguery and scare-mongering.
Fortune | Why business leaders are silent on the debt ceiling
In the standoff over the debt ceiling, President Obama and Congressional Republicans continue to inhabit parallel realities. Obama insists he won't negotiate for new borrowing authority, while the GOP demands a dollar in spending cuts for every dollar lawmakers raise the limit.
USA Today | Obama owns the debt now
President Obama, the Democrats, and plenty of Republicans in Congress, would like it if you'd spend the next few weeks talking about gun control. That's because when you are, you're not talking about the country's financial situation.
NBER | Output Spillovers from Fiscal Policy
In this paper, we estimate the cross-country spillover effects of government purchases on output for a large number of OECD countries.

Blogs                                                                                                                             
Heritage Foundation | Morning Bell: Don’t Raise Debt Ceiling Without Balancing the Budget
All across America, families are balancing their budgets and even paying off debt. Since the financial panic of 2008, personal debt has fallen as Americans tighten their belts and pay back loans. Some, unfortunately, had to declare bankruptcy because their debts got too big.
WSJ | Treasury Turns $173 Million Profit on Crisis-Era TALF Program
The Treasury Department said Tuesday it has turned a $173 million profit on a financial crisis-era initiative that helped boost the market for asset-backed securities but is now winding down.