Wednesday, January 23, 2013

General Economics

Bloomberg | IMF Cuts Forecast on Second Year of Europe Contraction
The International Monetary Fund cut its global growth forecasts and now projects a second year of contraction in the euro region as progress in battling Europe’s debt crisis fails to produce an economic recovery.
FOX Business | Study: CEOs Wary About Short-Term Prospects
Chief executives are less optimistic about short-term growth prospects for their companies than a year ago, according to a survey that offers a reality check on rising stock markets.
CNN Money | Keystone pipeline faces new hurdles
The Keystone oil pipeline may have won approval from Nebraska's governor Tuesday, but the final decision rests with President Obama.
Bloomberg | Draghi Says ‘Darkest Clouds’ Over Europe Have Subsided
European Central Bank President Mario Draghi suggested the worst of the sovereign debt crisis may be over, saying the “darkest clouds’ over the euro area have lifted due to decisive policy steps last year.
Real Clear Markets | Don't Be Fooled About Low Rates and the Housing Bubble
One of the most persistent explanations for the 2008 financial crisis-especially among economists-is the notion that monetary policy in the early to mid-2000s was responsible for creating the immense housing price bubble that brought on the crisis when it collapsed in 2007.

Econ Comments & Analysis                                                                                            
Washington Times | Uncle Sam’s risky home loan rules
The political world is full of myths. Last week, the Consumer Financial Protection Bureau instituted a new regulation over the troubled mortgage market in an attempt to define certain lending practices as good or bad.
Fortune | Natural gas is just what clean energy needs
Exporting natural gas would be more likely to displace coal both at home and abroad, resulting in a lower net carbon emissions overall.
NY Times | Reports Reveal Financial Challenges, but Few Solutions
The important and self-important of global finance are again gathering at the annual World Economic Forum in Davos, Switzerland. This year, the mandatory reading should be two recent reminders from JPMorgan Chase and the Federal Reserve that we are light years from understanding or preventing financial crises.
WSJ | Exports Sagging? Try Some Free Trade
When the latest U.S. trade statistics came out this month, they conveyed one sobering message: President Obama's National Export Initiative is in danger of failing. Success can still be snatched from the jaws of defeat—but only if the president and Congress quickly and aggressively pursue freer trade and liberalize many other policies connected to the global economy.
Fortune | How Ed Whitacre brought GM back from the brink
Days after General Motors went bankrupt, former AT&T CEO Ed Whitacre took over as chairman. He found a company paralyzed by old ways and seemingly unable to change. Inside his fight to get GM moving again.
Washington Times | International relations get a jolt from U.S. energy
There is an energy revolution under way in the United States. Booming oil and natural gas production is transforming our economic outlook, ushering newfound wealth to our rural areas and providing high-paying jobs for middle-class workers across the country.

WSJ | Secondary Sources: Don’t Obsess Over Deficits, Smaller Government, Inefficient Markets
A roundup of economic news from around the Web.
Coordination Problem | Compare and Contrast --- Economic Analysis of Mercantilism and Its Contemporary Relevance
Rodrik claims that "The liberal model has become severely tarnished, owing to the rise in inequality and the plight of the middle class in the West, together with the financial crisis that deregulation spawned."  But the reason for this is precisely because for the past 6 decades it hasn't only been the Asian countries that have pursued Mercantlist policies (as Rothbard explained 50 years ago).
Calculated Risk | Predicting the Next Recession
A few thoughts on the "next recession" ... Forecasters generally have a terrible record at predicting recessions. There are many reasons for this poor performance.

Health Care

Econ Comments & Analysis                                                                                            
The Bulletin | Undermining Obamacare
Now that President Barack Obama has been reelected, his Affordable Care Act, "Obamacare," will move forward, which is good news for the health, safety, and security of the United States. But setting up Obamacare and actually providing it are two different challenges. Both will be hard.

Library of Economics | The ObamaCare-Induced Shift to Part-Time Work
Then House of Representatives Speaker Nancy Pelosi, in pushing for the Affordable Care Act, aka ObamaCare, said, "We have to pass the bill so that you can find out what's in it." We're finding out what's in it and we're also finding out some unintended, but totally predictable, consequences.


Reuters | Fed missed warning signs in 2007 as crisis gained steam
Top policymakers at the Federal Reserve felt for most of 2007 that problems in housing and banking were isolated and unlikely to tear down the U.S. economy as they ultimately did.

Econ Comments & Analysis                                                                                            
Telegraph | Central bankers should be brought to heel by elected parliaments
Intellectual fashion is changing. Central bankers around the world no longer command the charisma of a high priesthood.

Economist | The microfoundations of banking
Mainstream macro models fail to represent some of the most basic realities of the financial system. One reason is that doing so is hard. Another is that for a long time it did not seem to make much difference.
WSJ | Fed’s Fisher Used Market Experience to Warn FOMC in 2007
One of Richard Fisher‘s defining features during his seven years at the Federal Reserve is his status as one of the very few American central bankers who has actually worked in financial markets.


Politico | Ambitious governors dominate tax debate
From Louisiana to New York, and Wisconsin to Massachusetts, some of the nation’s most prominent governors in both parties — more than a few of whom have grander aspirations — are using their megaphones to propose bold state tax initiatives.
WSJ | Financial-Transaction Tax Advances in EU
The European Union gave the green light for 11 countries that account for two-thirds of the bloc's economy to impose a small tax on trades in stocks, bonds and derivatives.

Econ Comments & Analysis                                                                                            
Mercatus | Taxing the Rich to Pay for Big Business Tax Credits
While much ado was made about taxing the rich, scant attention has been paid to other provisions in the fiscal cliff bill, namely large tax credits filling the pockets of big businesses and energy projects.

CATO | California’s One-Man Laffer Curve
I’ve already condemned the foolish people of California for approving a referendum to raise the state’s top tax rate to 13.3 percent. This impulsive and misguided exercise in class warfare surely will backfire as more and more productive people flee to other states – particularly those that don’t impose any state income tax.
NY Times | When Tax Cuts Were a Tough Sell
Those who don’t know the history probably assume that the tax cut was a slam-dunk for Kennedy, something that was overwhelmingly popular. In fact, a big tax cut was highly controversial because at that time Republicans actually cared about the deficit and recognized that tax cuts would increase it.


Washington Post | AP IMPACT: Middle-class jobs cut in recession feared gone for good, lost to technology
Five years after the start of the Great Recession, the toll is terrifyingly clear: Millions of middle-class jobs have been lost in developed countries the world over.


Bloomberg | Debt-Limit Vote in House Refocuses Republican Cuts Plan
The Republican-led U.S. House plans a vote today to temporarily suspend the nation’s borrowing limit, removing the debt ceiling for now as a tool for seeking deeper spending cuts.
Bloomberg | Ryan Says Republican Goal Is ‘Big Down Payment’ on Debt
House Republicans want to force “a big down payment on the debt crisis” during the debate on spending cuts and extending the U.S. government’s borrowing authority, said Budget Committee Chairman Paul Ryan.

Econ Comments & Analysis                                                                                            
CNN Money | U.S. delaying debt reckoning - UBS chief
Relying on the Federal Reserve to shore up the economy while agreeing to short-term budget deals risks storing up trouble for the United States down the road, Axel Weber, chairman of Swiss bank UBS, said Wednesday.

Heritage Foundation | Morning Bell: It’s Time to Balance the Budget
Today, the House will vote on a proposal that would suspend the debt ceiling until May 19, buying a bit more time for the overarching budget debate. This puts off the difficult decisions that are needed to get the country’s fiscal situation in order.
CafĂ© Hayek | Arnold Kling on Tying Government’s Hands to Balance its Budget
In short, giving governments the discretion to run deficits does not work out well. In theory, government is supposed to fight recessions with deficits, which should then be replaced during normal times by balanced budgets and surpluses.
FOX Business | Why Senate Democrats Haven't Passed a Budget in Four Years
Yesterday, we talked about golfer Phil Mickelson and his comments. He said he needed to make "drastic changes" in his life because of higher taxes. Currently, he's facing a new 13% income tax on millionaires in California and an increase in his federal tax rate to 39.6%.