Monday, February 11, 2013

General Economics

FOX Business | OECD: Economic Outlook Shows Improvement
Several of the world's leading economies are showing signs of improvement while the euro zone has stabilized even if France remains weak, an indicator compiled by Organisation for Economic Cooperation and Development suggested on Monday.
Market Watch | At the retail level, economy could stutter
We’re about to find out how consumers reacted to higher taxes and less take-home pay in January.

Econ Comments & Analysis                                                                                            
NY Times | Give Me Your Tired, Your Poor and Your Economists, Too
All the recent talk in Washington about reforming immigration policy brings to mind Pat Paulsen, the comedian who, every four years, conducted faux campaigns for president.
Washington Times | Printing more money won’t stop economy from shrinking
Upon learning recently that the economy shrank for the first time in more than three years, the Federal Reserve decided to continue its longstanding policy of printing money at full speed until investor confidence runs out or the ink runs dry. Unfortunately, this is all within its purview due to its “dual mandate,” which requires it to focus on the often contradictory mission of “maximum employment” and “stable prices.”
Four Percent Growth | Forgetting Prosperity
There’s a growing portion of Americans who consider this a real possibility. It is common to hear people discuss 2% annual growth and 8% unemployment as the “new normal.” Respected economists like Robert Gordon even contend that our country’s franchise on innovation is being lost. Perhaps most alarming is that Americans between the ages of 18 and 27 have never known what it’s like to participate in a robust, growing, economy.
NBER | Multi-Product Firms and Product Quality
This paper proposes that quality differentiation is an important feature of the operations of multi-product firms. We develop a model in which manufacturers vary product quality across their product range by using inputs of different quality levels.

Economist | Adding value?
The private equity industry justifies its high fees to institutional investors in part by claiming that PE allocations improve a portfolio's diversification. While there may be individual PE firms that can deliver this kind of uncorrelated outperformance, there is significant evidence that the industry in the aggregate provides few services for its investors that cannot be obtained elsewhere at far lower cost.
Heritage Foundation | Free Trade Twist: China No Longer Cheapest Labor
As wages in China rise with economic growth, some companies are beginning to look elsewhere for what was once China’s selling point: cheap labor. It just highlights the power that free trade provides—growing economies and raising living standards.

Health Care

Econ Comments & Analysis                                                                                            
CATO | Obamacare’s ‘Giveaway’ Is Anything But Free
If a deal sounds too good to be true it usually is. That’s a maxim that Gov. Scott Walker and Wisconsin legislators should keep in mind as they wrestle with the question of whether to expand the state’s Medicaid program in conjunction with the Patient Protection and Affordable Care Act, a.k.a. Obamacare.


Bloomberg | Fed Easy Credit Becomes Inside Debate Focusing on Escape
Federal Reserve Chairman Ben S. Bernanke says the end of the central bank’s bond buying won’t constitute a move toward tighter policy. He may have a tough time convincing stock and bond investors that’s true.
Bloomberg | Fed Joining in Alarm Over Distortion It Enabled: Credit Markets
A Federal Reserve governor is joining those warning that junk-debt investors are poised for losses, while his institution’s policies spur them to keep buying the debt.


Politico | House GOP: No new tax bills
House Republicans are now trying to wield the term to their political advantage, intentionally postponing passage of any tax bills until the party decides whether to reform the Tax Code. That includes repealing the tax on medical devices touted by Majority Leader Eric Cantor (R-Va.) in a high-profile policy speech last week. In fact, the House hasn’t passed a single measure this Congress that either raises or cuts revenue.

Econ Comments & Analysis                                                                                            
Washington Times | Obama’s insatiable appetite for taxes
President Obama has a way to delay the across-the-board $85 billion sequestration scheduled for March 1. His not-so-surprising proposal is to raise taxes so he can spend more. Fortunately, the GOP is not going along with this tired, old plan.


CNN Money | Obama to propose pay hike for federal workers
President Obama plans to propose a 1% pay hike for civilian federal workers in his budget proposal for 2014.
Washington Times | Bring up right to work
Tired of lagging economic growth, wasteful government spending and high unemployment, states in the industrial Midwest have decided to break the iron triangle between Big Labor bosses, union political spending and the politicians who do their bidding. Now it’s time for Washington to do the same.

Econ Comments & Analysis                                                                                            
Politico | It’s time to give workers basic skills
During his first term, President Barack Obama called for greater investments in the skills of our people — our young, our poor, men and women laid off after lifetimes of work — so they could participate in our country’s economic recovery.


Bloomberg | Treasuries Fluctuate as U.S. Readies $72 Billion in Debt Sales
Treasuries were little changed as the U.S. government prepared to sell $72 billion in coupon- bearing securities this week.
Market Watch | Tax rift hardens as ‘sequester’ nears
A rift over how to replace the automatic budget cuts known as “sequestration” hardened on Sunday, as Democratic and Republican leaders clashed over including tax increases in any proposal to replace the looming spending reductions set to kick in on March 1.

Econ Comments & Analysis                                                                                            
Real Clear Markets | The Neglected Cost of Government Spending
With the news that real GDP growth in the last three months of 2012 disappeared (with -0.1% being the early estimate), calls for more government spending are again rising from Democrats in Congress. Now, they say, is the wrong time to cut spending as the economy cannot afford the additional hit from a reduction in federal spending.
Washington Times | Taking an ax to spending
When it comes to federal spending, $85 billion is a drop in the bucket. Howls can be heard over the mere suggestion that outlays might be reduced by this amount through sequestration. The concern is overblown, as we’re only talking about 2 percent of a $3.8 trillion budget.
Mercatus | The Congressional Budget Office's Grim New Budget Report
Pointing to a few positive projections in the Congressional Budget Office's latest budget report, many proclaimed the U.S. economy and federal budget on the road to recovery. Problem almost solved! Unfortunately, this assessment is ridiculously shortsighted; it is also a dangerous misrepresentation of the nation's fiscal situation.

CATO | So You Want to Cut Spending
Back in 2011 there was a titanic fight between President Obama and the newly energized House Republicans over the federal budget. The ballyhooed result, which averted the frightening specter of a “government shutdown,” was “the largest annual spending cut in our history,” in the words of President Obama and the national media.
Politico | Pelosi: 'We've had plenty of spending cuts'
House Minority Leader Nancy Pelosi says the tens of billions of dollars of spending cuts under sequestration that kicks in on March 1 can be avoided through eliminating tax subsidies for oil companies.
Economist | The austerity is real
Both outlays and receipts are, as a share of GDP, below pre-crisis levels. And while receipts are now forecast to rise back to pre-crisis level by 2014, outlays are expected to remain about two percentage points higher than before the recession. But the point remains that the "austerity" of 2011-2012 wasn't "austerity" but austerity.