Monday, June 16, 2014

General Economics

Bloomberg | Bond’s Liquidity Threat Is Revealed in Derivatives Explosion
The boom in fixed-income derivatives trading is exposing a hidden risk in debt markets around the world: the inability of investors to buy and sell bonds.
National Journal | Democrats Should Be Talking More About Economic Mobility
Hillary Clinton took heat for suggesting that her family was "dead broke" after leaving the White House, a remark that made her look out of touch with the working-class voters she'll need to woo in a presidential campaign. But while her gaffe isn't likely to resonate beyond the book tour, her party faces challenges in developing an economic message that's in tune with the pervasive anxiety that nonaffluent Americans face in their daily lives.
CNN Money | Why are oil prices rising?
Oil experts say the 4% price spike since June 6 -- which has taken a barrel of crude to $107 for the first time since September 2013 -- is being driven by fear that exports could be hit later this year, just as world demand peaks.
Bloomberg | Industrial Production in U.S. Increases More Than Forecast
Output at factories, mines and utilities rose 0.6 percent after a revised 0.3 percent drop in April that was smaller than previously estimated, a report from the Federal Reserve showed today in Washington. The median forecast in a Bloomberg survey called for a 0.5 percent increase. Manufacturing, which makes up 75 percent of total production, also increased 0.6 percent.
Market Watch | June Empire State index steady at 4-year high
Manufacturing activity in the New York region basically held steady in June after hitting an almost four-year high in May, the Federal Reserve Bank of New York said Monday.

Econ Comments & Analysis                                                                                            
Politico | As factories die, income gap grows
In August 2008, factory workers David and Barbara Ludwig treated themselves to new cars — David a Dodge pickup, Barbara a sporty Mazda 3. With David making $22 an hour and Barbara $19, they could easily afford the payments
Politico | Turn Detroit into Drone Valley
Imagine a Bitcoin Valley, for instance, where some country fully legalizes cryptocurrencies for all financial functions. Or a Drone Valley, where a particular region removes all legal barriers to flying unmanned aerial vehicles locally. A Driverless Car Valley in a city that allows experimentation with different autonomous car designs, redesigned roadways and safety laws. A Stem Cell Valley. And so on.
WSJ | End Corporate Welfare? Start With the Ex-Im Bank
Here's a neat trick: Ask a room full of congressmen what they think of corporate welfare. The scene will devolve into competing campaign speeches, each politician trying to one-up their peers' rhetoric. Now ask that same room what they think of the federally run Export-Import Bank. You'll only hear crickets—even though the bank is one of Washington's biggest corporate-welfare cash cows.
Washington Times | Uninspired growth makes weak recovery one of the longest
The U.S. economic recovery has distinguished itself as one of the weakest since World War II, but at five years and counting, it may go down as one of the longest as well.
Daily Signal | Elizabeth Warren Is Wrong. Big Government Programs Will Just Increase College Costs.
Congress has long tried to help students afford a college education. It has cut interest rates on federal student loans, vastly expanded federal lending and lifted caps on borrowing. In the 1980s, it even let parents borrow directly from the feds — through the Parent PLUS program — to pay for their children’s college.

WSJ | Blast From the Past: Could Stocks Melt Up?
Even after small declines last week, the major stock indexes remain near records. Money managers and analysts are beginning to talk about an idea that dates from the roaring ’90s: a rapid stock gain known as a melt-up.
WSJ | Senior Fed Economist Sees Future U.S. Growth Restrained by Productivity Slowdown
The surge in U.S. workers’ productivity from the mid-1990s to the mid-2000s appears to have been a temporary effect from advances in information technology, a Federal Reserve economist argued in a research paper earlier this month. As a result, the U.S. economy’s potential future growth is more modest than previously assumed because productivity gains in the last decade have returned to their lower historical trend.

Health Care

Econ Comments & Analysis                                                                                            
CRS | Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System
The Sustainable Growth Rate (SGR) is the statutory method for determining the annual updates to the Medicare physician fee schedule (MPFS). Under the SGR formula, if expenditures over a period are less than the cumulative spending target for the period, the annual update is increased. However, if spending exceeds the cumulative spending target over a certain period, future updates are reduced to bring spending back in line with the target.


Bloomberg | Fed Watchers See Restaurants Test Disinflation
Restaurants could see an opportunity for additional price increases as Americans encounter more expensive food at grocery stores.
FOX Business | IMF: Fed Could Keep Rates Near Zero Until Mid-2015
The International Monetary Fund cut its growth forecast for the United States on Monday and said the economy would not reach full employment until the end of 2017, allowing the Federal Reserve to bide its time before raising interest rates.
CNN Money | All eyes on the Fed this week
Most investors expect rates to rise in 2015. An increase before that could rattle markets or even stunt economic growth, but waiting too long to raise rates could cause bubbles. It's a tough call.
Market Watch | Interest-rate puzzle confronts Federal Reserve
When Federal Reserve officials gather for their policy meeting Tuesday and Wednesday, the most challenging question won’t be where to push interest rates in the next few days, weeks or even months. It will be where rates belong years into the future.

Library of Economics | Fiscally inefficient monetary policy
This time around, Abe didn't ignore the economy. Backed by economic adviser Koichi Hamada and Bank of Japan Governor Haruhiko Kuroda, Abe first implemented the biggest monetarist push in world history. He went the opposite direction of Europe, and -- unlike the United States -- he gave every indication that the shift toward monetarism was permanent. The result: Japan has escaped deflation. The stock market is up, growth is way up and even wages are finally starting to rise.


Econ Comments & Analysis                                                                                            
Real Clear Markets | Politicians Prefer Taxes That Are Invisible
Most business regulations add to the costs of doing business, raising prices to customers who must ultimately pay the costs. Regulators have theoretically determined that citizens benefit from the regulation by an amount greater than the costs imposed. However, a new type of regulation is increasingly being pushed by politicians, one with benefits meant for a small, targeted group.

Market Watch | Medtronic, big health companies look to dodge U.S. taxes
Yet another large American medical company apparently is looking to buy a foreign rival and move its headquarters overseas to take advantage of lower taxes. And the losers would be the Treasury, American workers and the U.S. economy.
WSJ | OECD Urges Broad Tax Reform In U.S.
The U.S. should reform its tax code with “a degree of urgency” to overcome challenges to long-term economic growth, including an aging population and rising household inequality, the Organization for Economic Cooperation and Development said in a report Friday.


Econ Comments & Analysis                                                                                            
Daily Signal | How Part-Time Jobs Became the New Normal for Millions
Marsadeise Barginere, a food service worker in Cleveland, has had her hours cut from full-time to part-time. She’s not alone. Luke Perfect “barely scrape(s) by” at his job in a Subway in Maine. Nonetheless his employer will also put him on part-time status once Obamacare takes effect.


Fiscal Times | VA Bill Means a New $50 Billion Entitlement
Congress is rushing to pass Veterans Affairs Department spending legislation to respond to the patient scheduling scandal that may have cost the lives of dozens of veterans who were intentionally kept off an official electronic appointment list and didn’t receive the prompt treatment they required. - See more at: