Monday, April 28, 2014

General Economics

CNN Money | Stocks: Get ready for the summer bummer
Over the past 50 years, the S&P 500 has gained just 1.3% on average in the May to October period, compared with an average gain of 7.1% in the other six months of a given year, according to Jeff Hirsch, editor of the Stock Trader's Almanac.
Bloomberg | Pending Sales of U.S. Existing Homes Rise Most Since 2011
Contracts to purchase previously owned U.S. homes climbed in March by the most in almost three years, showing residential real estate was starting to stabilize entering the spring selling season.
CNN Money | Bank of America's big math error
The Federal Reserve required BofA on Monday to ditch its plans to return cash to shareholders after the bank said it incorrectly reported capital ratios in recent stress tests.
Bloomberg | Fannie-Freddie Fate Hangs on Senate Action This Week
A U.S. Senate plan for Fannie Mae and Freddie Mac, the most thorough yet for winding down the two mortgage financiers, faces a first test this week with its authors making last-minute changes to gather more support.
Market Watch | Spring tide seen lifting economy, U.S. hiring
A flood of reports this week, led by job creation in April, is likely to show that U.S. growth is cresting higher. And the Federal Reserve is expected to affirm its own confidence in the health of the recovery by taking another step to scale down its easy-money strategy.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Are We Under-Saving for Retirement?
Can America afford to retire? As millions of baby boomers pass their mid-60s, the specter of widespread under-saving has taken hold. Huge numbers of present and future retirees will exhaust their savings before they die. Mass hardship looms, even as the costs of an aging society already weigh on the young and middle-aged. It's a scary vision. But is it likely? Probably not.
Washington Times | In New York vs. Texas, it’s TKO by Texas
Every successful politician understands that you never start a fight you can’t win, and it’s an adage that Gov. Andrew Cuomo of New York has taken to heart. Rick Perry, the governor of Texas, flew to New York City the other day to round up entrepreneurs to take a few of them back home to the business-friendly Lone Star State. Before he left, Mr. Perry dared Mr. Cuomo to stand up for his state’s economic policies in a one-on-one debate.
Real Clear Markets | Government Shouldn't Block Our Chance to Own, and Grow Rich
Asset limits were created to reduce welfare fraud. The worry was that people who had the means to support themselves from assets (mainly bank savings) would collect government benefits instead when their incomes were low enough to qualify. It is unclear if this ever was a large scale problem, but it sends exactly the wrong message to people on the edge between poverty and self-sufficiency.
WSJ | Demand-Side Policy Gave Us the Big Economic Fizzle
Nearly five years since the recession ended in June 2009, economic policy discussions continue to focus on dubious short-term countercyclical measures to "stimulate demand." The Economic Report of the President for 2014 wastes an entire chapter rehashing the jobs supposedly "saved or created" by the 2009 fiscal stimulus and Federal Reserve easing.
Fortune | In Brooklyn, a grasp at giving 'big data' meaning
Big data will save the world, they say. It will change the way we do business, they say. It could tell us things we didn't know we didn't know, they say. Some of that might be true and some of it may not -- but the point is that the hype around the term "big data" is thick enough to require a chainsaw to cut through. The technology is promising; the semantics are another story.

WSJ | Five Takeaways From New GDP-by-Industry Report
The Commerce Department on Friday presented a new quarterly breakdown of gross domestic product by 22 industries, a report that is meant to complement the department’s widely followed gauge of economic output by types of expenditure like personal consumption and business investment.
CATO | Supply-Side Economics from the Founder of the Brookings Institution
“Within limits, the system of progressive taxation is defensible and effective.  Beyond a certain point, however, it dulls incentives, and may destroy the principal source of funds for new enterprises involving exceptional risks.”–Harold G. Moulton
WSJ | How Much Will Mortgage Rates Rise In Fannie, Freddie Overhaul?
The Senate Banking Committee beginning Tuesday will take up a bipartisan bill that so far has attracted the most support from lawmakers from both parties. It would replace Fannie and Freddie with a new system by which private firms could issue mortgage-backed securities and purchase federal insurance. Private investors would be required to take initial losses before government guarantees would kick in.

Health Care

Politico | Behind the scenes, much of is still under construction
The Obamacare website may work for people buying insurance, but beneath the surface, is still missing massive, critical pieces — and the deadline for finishing them keeps slipping.


CNN Money | Russia hikes rates as credit rating cut
Russia hiked interest rates for a second month running Friday in an effort to limit the economic damage of rising tensions over Ukraine.
CNBC | Wall Street looking for more hawkish Fed policy
The April CNBC Fed Survey shows respondents looking for a 1 percent Fed Funds rate on average to end 2015, up from 0.83 percent in March. The median is up a full quarter point. And half of the respondents now believe the Fed will reverse quantitative easing in 2015 and begin to reduce the size of its balance sheet. That's up from 39 percent in the March survey.

Econ Comments & Analysis                                                                                            
Forbes | Dreams of a Central Planner
The Federal Reserve has arrived at last.  Exhibit A: The tremendous number of people interested in who would be confirmed as the new Fed Chairman last January.
Market Watch | Why Draghi believes the FOMC way is the best way
Mario Draghi, the European Central Bank president, believes “less is more.” He’s a master of artfully constructive opacity, rarely saying too much when too little would suit him better.

WSJ | Inflation Expectations Hold Steady—For Now
According to Friday’s consumer sentiment survey put out by Thomson-Reuters and the University of Michigan, consumers think inflation will be 3.2% a year from now, little changed from expectation readings so far this year.


Econ Comments & Analysis                                                                                            
WSJ | Germany Debates Tax Cuts Amid Rapid Rise in Revenue
While most governments across Europe are looking for ways to cut their budget deficits, Germany faces a different dilemma: mounting tax revenue and what to do about it.
Mercatus | Capital Punishment: Why a Global Tax on Wealth Won't End Inequality
Every now and then, the field of economics produces an important book; this is one of them. Thomas Piketty’s tome will put capitalist wealth back at the center of public debate, resurrect interest in the subject of wealth distribution, and revolutionize how people view the history of income inequality. On top of that, although the book’s prose (translated from the original French) might not qualify as scintillating, any educated person will be able to understand it -- which sets the book apart from the vast majority of works by high-level economic theorists.
NBER | The “Amazon Tax”: Empirical Evidence from Amazon and Main Street Retailers
Several states have recently implemented laws requiring the collection of sales tax on online purchases. In practice, however, only has been affected. We find that households living in these states reduce Amazon expenditures by 9.5%, implying an elasticity of –1.3.


CNN Money | Minimum wage: Congress stalls, states act
Odds remain low that Congress will raise the $7.25 federal minimum wage anytime soon. But the issue will be revisited in coming days as the Senate takes up a bill to increase it to $10.10 an hour. And President Obama and congressional Democrats plan to push the issue on the campaign trail ahead of the November mid-term elections.

Econ Comments & Analysis                                                                                            
Fortune | How Corporate America can create better jobs
It's possible if you look at companies such as Southwest Airlines and Costco that provide great returns to shareholders and great jobs for employees. 

WSJ | More Stay-At-Home Dads Finding Jobs
The number of married couples where a mother is employed but the father isn’t slipped to just over 1.45 million in 2013, the Labor Department said Friday, down from about 1.5 million the prior year and a peak of nearly 1.79 million in 2009.
WSJ | Fact Check: Does Private Equity Kill Jobs?
In 2013, private equity firms owned or otherwise backed more than 17,000 U.S. companies employing about 7.5 million people. Yet despite its reach—and the drubbing it received when former Bain Capital executive Mitt Romney ran for president in 2012—little research has been conducted to understand private equity’s effects on workers.


Econ Comments & Analysis                                                                                            
WSJ | Defining Delinquency Down
ObamaCare may get most of the press, but don't forget the growing mess that is the Obama Administration's student-loan program. We reported last week on the rising costs of the President's income-based repayment plans, but it seems we weren't alarmist enough.