10/1/10 Post

BUZZ: McDonald's May Drop Health Plan

News
The legacy of the 111th Congress
Like a tale of two cities, the 111th Congress roared out of the starting gate in January 2009 only to gasp to a pre-election halt this week after punting major spending and tax decisions to an uncertain lame-duck finale.
Pew Report Finds 'No Silver Bullet' For Deficits
Both tax hikes and spending cuts will be needed to reduce crippling national debt, new study shows.
Foreclosures Slow as Document Flaws Emerge
Evictions are expected to slow sharply, housing analysts said, as state and national law enforcement officials shine a light on questionable foreclosure methods revealed by two of the country’s biggest home lenders in the last two weeks.
Bloomberg Would Extend Tax Cuts For Two Years
"I'd be worried a little about the economics of stopping any growth," he told the audience gathered at the Newseum for the Washington Ideas Forum. "The economy is so fragile you don't want to do that."
Many wheat growers won't benefit from price jump
Although the poor harvest in Russia helps U.S. wheat growers, no one expects wheat prices to reach the record levels they did two years ago when the world was down to almost a 60-day supply of wheat.
Dollar Reverses Course on Upbeat U.S. Data
Second-quarter gross domestic product data, weekly jobless claims and a closely watched survey of Chicago-area purchasing managers all gave investors heart that the economy may be regaining some steam.
Americans tread water in gulf between rich, poor
The recession technically ended in the middle of last year, but the numbers can't tell the whole story. The census report translates to stories of impatience, resignation and hopelessness for those who are living it across the country.
Austerity Plan Spurs Bond Rush
A measure on the Colorado ballot for November would ban all borrowing by the state and severely restrict it at the municipal level, making Colorado the only state whose agencies would be unable to issue debt, municipal experts say.
Holiday hiring picture gets a bit merrier
The jobs probably won't be enough to be a dent in the nation's nearly 10 percent unemployment rate, but for Americans desperate for some work, they're far more than an early Christmas present.
Bernanke: Teach us out of the next crisis
Fed Chairman Ben Bernanke told a crowd of schoolteachers in Washington Thursday they can help prevent the next big financial crisis by teaching students personal finance basics of saving and budgeting.
Veteran Staffer To Replace Emanuel
White House Chief of Staff Rahm Emanuel, one of the most visible faces of the Obama presidency, will step down Friday to run for mayor of Chicago, leaving the high-profile post at least temporarily to a longtime Obama aide who has guarded his privacy fiercely.
Postal Service denied rate hike
Christmas is not coming early this year for the U.S. Postal Service, after regulators denied a request Thursday that would have raised the price of a first-class stamp by 2 cents, to 46 cents.
Irish Crisis Shakes Europe
Dublin to Spend Billions More to Shore Up Lenders; Jitters Over Euro's Future.
Personal income is up, and so is spending
Personal income increased $59.3 billion, or 0.5% last month, while spending by individuals remained steady.
Regulators: Much to do on Wall Street reform
The Federal Reserve has 50 new rules to write, the Federal Deposit Insurance Corp. has 44 new rules to write. The Securities and Exchange Commission has 100 rules and 20 studies on its plate. And Treasury has two new agencies and an oversight council to set up.
U.N. Says Global Employment Needs 5 Years to Rebound
To get back to the level of employment in 2007, the global economy needs to create nearly 23 million jobs, including more than 14 million in developed countries, the report said.
China manufacturing sector grows
China's manufacturing sector picked up pace in September, easing some fears that the world's third largest economy might be in for a rapid slowdown.
China warns U.S. currency bill might hurt ties
Beijing warned Washington Thursday that economic ties might be damaged after American lawmakers escalated the conflict over China's currency controls, inching the two economic giants closer to a trade war.
Health reform to worsen doctor shortage: group
The U.S. healthcare reform law will worsen a shortage of physicians as millions of newly insured patients seek care, the Association of American Medical Colleges said on Thursday.
Ireland Prices Bank Rescue; Deficit at 32% of GDP
Ireland's central bank has put a 34 billion euro price on bailing out stricken Anglo Irish Bank under a worst case scenario and said Allied Irish Banks needs to raise an additional 3 billion euros by the end of the year.
Global employment crisis will stir social unrest, warns UN agency
Global employment will not recover to pre-crisis levels until 2015 if current policies are pursued, creating social tension, the International Labor Organization has warned.
Thousands show up in LA for free mortgage help
Armed with folding chairs, coolers and jugs of water, thousands of people who want to avoid losing their homes lined up around the Los Angeles Convention Center on Thursday seeking help with mortgages they can no longer afford.
Latest unemployed: Stimulus-subsidized workers
Tens of thousands of low-income workers lost their jobs Thursday as a stimulus-subsidized employment program came to an end.
Consumer spending, incomes both rose in August
Consumer spending rose by a moderate amount in August while incomes increased by the largest amount in eight months, a gain that was propelled by the resumption of extended unemployment benefits.
Child nutrition bill stalls in House
First lady Michelle Obama's campaign for healthier school lunches has stalled in Congress after anti-hunger groups and more than 100 Democrats protested the use of food stamp dollars to pay for it.
Second-Quarter Growth Is Revised Higher, to 1.7%
Still, that is a sharp slowdown from a 3.7 percent rate in the first quarter and does not change the big picture: the economy has been losing momentum since the end of last year.

Blogs
ObamaCare Prods Yet Another Insurer to Flee the Market
By forcing the exit of Principal Financial Group — which ran a profitable, $1.6 billion health insurance business — ObamaCare has now left 840,000 Americans to find another source of coverage.
Hotel Occupancy Rate: Slightly below 2008 Levels
"Overall, the U.S. hotel industry rose 7.5% in occupancy to 64.2%, average daily rate was up 2.6% to US$103.09, and RevPAR ended the week up 10.3% to US$66.15."
Postal Service’s Financial Woes
The U.S. Postal Service is in a lurch after Congress wrapped up business until November without giving the USPS a break on a $5.5 billion retiree health benefits payment that’s due tomorrow. Combined with an expected loss in the billions of dollars, the USPS could run out of money in October.
Which Cities Face Biggest Housing Risks?
Within more than 500 metro areas, the top 20 most stressed include nine in California and six in Florida, where the housing bust has been particularly acute. Among the most populous cities, Miami tops the list, followed by California’s Inland Empire, Los Angeles and San Diego.
McDonald’s Case Highlights ObamaCare’s Threat to Low-Income Workers’ Health Insurance, Political Freedom
Many employers, such as McDonald’s, provide health benefits that are less comprehensive than most. They may have an annual claims limit of $10,000 or less. These are the health plans (and the workers), however, that are seeing the highest premium increases under ObamaCare.
What Makes the US Health Care System So Expensive?
In particular, Aaron Carroll's series on What Makes the US Health Care System so Expensive does a very good job of locating the sectors where the US health care system is more expensive than we would expect compared to other countries (it's less good at identifying why these sectors are expensive but we have to start somewhere.)
Overhauling CBO and JCT Is a Real Test of GOP Resolve, not the ‘Pledge to America’
Redemption is a good thing, however, so maybe the GOP actually intends to do the right thing this time around. One key test is whether Republicans do a top-to-bottom housecleaning at both the Congressional Budget Office and the Joint Committee on Taxation.
Secondary Sources: Small Business Job Creation, Fiscal State of the Union, Economics of Lobbying
A roundup of economic news from around the Web.
One reason why fiscal reform is difficult
The dilemma is simple: variations in Medicaid coverage account for a lot of the variation in the health of state government finances. Yet if states cut back on Medicaid in some manner, there will be more people on the more expensive subsidized exchanges, come the full onset of the Obama health plan.
Geithner on the Economy, Politics and More
Treasury Secretary Timothy Geithner spoke for roughly a half hour at The Washington Ideas Forum hosted by The Atlantic and the Aspen Institute on Thursday. Here are some points he made during his appearance...
Balancing the Fed’s Hawks, Doves
The Senate’s confirmation of Janet Yellen and Sarah Bloom Raskin to the Federal Reserve’s Board of Governors, continues to shift the balance of those who want more action to spur growth with those who are more concerned about inflation.
The Keynesian Attraction
Introspection, though fallible, is genuinely informative. We use it all the time to our great profit. And Keynesians should celebrate this truth, because some of their key premises pass the test of introspection with flying colors. Much unemployment is involuntary - there's no denying it. And workers genuinely resent - and employers therefore genuinely fear - nominal wage cuts. ...Of course, once Keynesians admit their real reasons, they do have a little problem: Some of their positions fail the introspective test!
Goolsbee Takes a Turn at the White Board to Explain Tax Cuts
Austan Goolsbee, the newly minted chairman of President Barack Obama’s Council of Economic Advisers, takes a turn at the White Board to explain the tax fight in Congress – and why Obama does not want to extend the expiring tax cuts of George W. Bush for households earning more than $250,000.
Is a Municipal Debt Crisis Imminent?
The basic problem: state and local governments are facing a new budgetary reality.
China's Embarrassing Foreign Aid Scam
While China spent tens of billions on hosting the Olympics, it still has its other hand out asking for donations.
Let the Market Control Pharmaceutical Costs
US consumers are being burdened with unnecessary costs that could be alleviated if worldwide prices were factored into the equation.
Is the Obama DOJ Committed to Race Neutral Law Enforcement?
On May 14, 2010, Department of Justice Civil Rights Division Assistant Attorney General Thomas E. Perez testified before the U.S. Commission on Civil Rights about the DOJ’s decision to completely drop charges against the New Black Panther Party and two of its members for alleged voter intimidation in violation of the 1964 Voting Rights Act.
Duck Season Opens
As Congress vacates Washington to campaign, they promise to return after Election Day to clean up the mess they leave behind.
Side Effects: Massachusetts Seniors Will Lose Medicare Advantage Plans in 2011
President Barack Obama’s promise that “if you like it you can keep it” may be this generation’s “read my lips—no new taxes,” claim.
The “Myth” of the American Founding
You should think twice the next time you invoke the Constitution or argue that the federal government is overreaching its power. According to The Economist, you may well have succumbed to “The Perils of Constitution Worship.”

Research, Reports & Studies
Canada’s Budget Triumph
...just 16 years later, Canada’s federal debt had fallen from 67 percent to only 29 percent of GDP. Moreover, in every year between 1997 and 2008, Canada’s federal government had a budget surplus.
Fiscal Policy Report Card on America's Governors: 2010
America needs a lot more "A" governors to face the fiscal challenges and make the needed tax and spending reforms.

Economists’ Comments & Opinions
Echoes of the Great Depression
As in the 1930s, policy uncertainty and hostility to business have retarded recovery. At least this time around the political price for economic failure promises to be swift.
Workers, Not Employers, Bear the (Full) Cost of Health Benefits
The Kaiser Family Foundation recently issued its annual survey of employer-sponsored health benefits, declaring: "Family Health Premiums Rise 3 Percent to $13,770 in 2010, But Workers' Share Jumps 14 Percent as Firms Shift Cost Burden." That's half-right — but the other half perpetuates a myth about employee health benefits that stands in the way of real health care reform.
CBO: Obama's Tax Plan Could Be Worst of All
...Obama's plan to extend only 80 percent of the Bush tax cuts could be worse for the economy in 2020 than the Republican plan to extend 100 percent, even though the GOP's plan would saddle us with more debt.
Curb Medicare Spending the Ryan Way
Nothing presents as great a threat to the federal budget — and therefore to economic growth — as the persistent and rapid growth of Medicare spending.
The Newspeak of Paul Krugman
To believe that spending — any kind of spending — is the cure for what ails us is to ignore the subjective nature of wealth and the microeconomic basis of economic growth in favor of an absolute reification of economic aggregates such as GDP and unemployment.
WARREN: It's Time to Simplify Financial Regulation
Perhaps most remarkably, the agency will not simply create new regulations: It has the power to get rid of old ones that are outdated, expensive or don't work.
They’re Coming to Get You
A fiscal horror story so terrifying, it can only be told in 3D!
Consumers Still Unaware of Impending Doom, Part 1
Credit cards and the government have encouraged spending, leaving many completely unprepared for retirement. This financial crisis will take decades to repair.
Why America Won't Have Hyperinflation
Many of the most respected names in economics predict hyperinflation, yet none of the actual economic or political factors required are present.
Consumers Still Unaware of Impending Doom, Part 2
Nobody believes today that major mega retailers like Target might not exist in 10 years, but it's an entirely plausible scenario.
David Rubenstein: U.S. is losing its competitive edge
The Carlyle Group co-founder says the U.S. threatens to fall behind China, thanks to our growing deficit and government debt. Meanwhile, Treasury Secretary Tim Geithner downplays the threat of a looming trade war.

"We get rich by finding ways to do more with less. As productivity increases in manufacturing and agriculture, employment falls." -Russ Roberts, Twitter

Graph of the Day
Mercatus Center: Tax Cuts, or Hikes, Are a Sideshow
Bush Tax Cuts: The Cheat Sheet
See: The Luck of the Irish
See: Where your taxes all go
VIDEO: The Latest from the Standup Economist

Book Excerpts
"The consumer-voter may be viewed as picking that community which best satisfies his preference pattern for public goods. This is a major difference between central and local provision of public goods. At the central level the preferences of the consumer-voter are given, and the government tries to adjust to the pattern of these preferences, whereas at the local level various governments have their revenue and expenditure patterns more or less set. Given these revenue and expenditure patterns, the consumer-voter moves to that community whose local government best satisfies his set of preferences. The greater the number of communities and the greater the variance among them, the closer the consumer will come to fully realizing his preference position." –Charles M. Tiebout, "A Pure Theory of Local Expenditures," (1956)

Did You Know
In Washington D.C. and the surrounding suburbs, 47.3% of people 25 years or older have bachelor's, master's, professional school or doctorate degrees, according to new Census Bureau data released Tuesday. The national average barely tips 25%. That metro area has the nation's highest percentage of residents with college degrees so you can call it America's brainiest place to live.

9/30/10 Post

BUZZ: Spain loses AAA status, presents tough budget

News
Jobless Claims Post Decline
Initial unemployment claims fell by 16,000 to 453,000 in the week ended Sept. 25, the Labor Department said in its weekly report Thursday. New claims for the previous week, ended Sept. 18, were revised upward to 469,000 from 465,000.
In Tax Cut Plan, Debate Over the Definition of Rich
One proposal being discussed is a millionaires’ tax, which would create one or two additional tax brackets for the wealthiest Americans and eliminate the Bush tax cuts only for those who earn more than seven-figure incomes.
House passes tariff bill to stop China's yuan imbalance with U.S.
Republicans from industrial states joined most Democrats in giving new powers to the Commerce Department to consider whether China's policy of tying the value of its currency to the dollar, rather than allowing it to rise in response to market forces, represents an unfair trade practice.
European debt woes hit world markets
A new flare-up in Europe's debt crisis hit world stock markets Thursday after Ireland announced it would sink more billions into its failed banks and Spain's public debt rating was downgraded.
Foreclosures Make Up 24% of Home Sales
A total of 248,534 U.S. properties in some stage of foreclosure -- default, scheduled for auction or bank repossession -- sold to third parties in the second quarter. While this represents an increase of nearly 5% from the previous quarter, the figures are down 20% from the same time last year.
US mortgage rates at record lows-Freddie Mac
Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.32 percent for the week ended Sept. 30, down from the previous week's 4.37 percent and matching a record low set earlier in the month, according to the survey.
Oops! F.D.A. Error Is Talk of Henhouse
Ms. Balmer was in Pennsylvania to teach inspectors about how to keep germs away from poultry flocks, known as biosecurity. But the industry executives and state officials said she was breaking a basic biosecurity rule: keep vehicles, which may have driven through manure on rural roads or other farms, as far from the hens as possible.

Blogs
Three Fed Officials, Three Divergent Views
Three Federal Reserve officials are out today with divergent views on the economy and on whether the Fed should buy more Treasury bonds (which is known to some as quantitative easing) to push down long-term interest rates and stimulate growth.
Fannie Mae and Freddie Mac: Serious Delinquent Rates decline
Fannie Mae reported today that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business decreased to 4.82% in July, down from 4.99% in June - and up from 4.17% in July 2009.
Secondary Sources: September Consumption, Basel III, Development Research
A roundup of economic news from around the Web.
CBO Says China Currency Bill Won’t Do Much
A little perspective may be helpful here. In 2009, U.S. imports of goods from China were $297 billion. So we’re talking about an average tariff rate change of 0.0017 percent. That’s expected to triple in fiscal 2013, to $15 million in revenue, perhaps 0.005 percent.
Worried Consumers and CEOs Are Stuck in Logjam
Earlier this week, the Conference Board’s consumer confidence index unexpectedly plunged to 48.5 in September, the lowest reading since February. On the heels of the consumer report came news from the Business Roundtable that its CEO economic outlook index fell to 86.0 in the third quarter, from 94.6 in the second.
Recalculation vs. Structural Unemployment vs. AS/AD
The information technology workers laid off from financial firms may need different skills in order to be able to work on projects in nonfinancial businesses. They may need to start their own enterprises.
City Unemployment: Uneven
The Labor Department’s report on metro area employment Wednesday showed jobless rates in August were lower in 182 of 372 metro areas surveyed, compared to a year ago. But the unemployment rate was up in 169 places and flat in 21. El Centro, Calif. and Yuma, Ariz., led the pack with the highest jobless rates at 30.4% and 30.2%, respectively.

Research, Reports & Studies
Competition, Consumer Welfare and State Alcohol Regulation
Prudent public policy seeks the right balance between the responsible consumer’s interest in low prices and availability and the potential social costs associated with underage drinking and irresponsible use of alcohol by adults. The Commerce Clause and the Granholm decision require just such a balance. Creating some form of a Commerce Clause exemption for state alcohol laws would disturb this balance and raise the risk that anticompetitive laws would be tailored to take advantage of such a refuge.
Trade Freedom Continues to Advance—Barely
The 10 countries with the highest percentage of people living in poverty have an average freedom score of only 70.3 in the 2011 Index. By contrast, the 31 countries with the lowest poverty levels have an average trade freedom score nearly 10 points higher, at 79.9. The lesson here is that reducing trade barriers reduces poverty.

Economists’ Comments & Opinions
Outsourcing and the 21st-Century Economy
Taxing new U.S. corporate investment at 35%, when the world average is just over 18%, pushes companies to invest offshore.
The Only Policy Left: Growth
Reducing spending, controlling entitlements, reforming public pensions—all of that matters. It's important. But any population being asked to "sacrifice" needs to be able to believe something better is possible.
Why A Deficit-Financed Stimulus Leads Nowhere But To Stagnation
In the business or entrepreneurial sector, rising productivity and an enhanced pace of technological innovation mean that the economic value of investing is higher. Consequently, by employing more resources today, greater consumption will be possible tomorrow.
In Elizabeth Warren We Trust?
The unaccountable head of the new Consumer Financial Protection Bureau has repeatedly used shoddy data to push policies she favors.
Two Cheers for the New Bank Capital Standards
Why do we still rely on the rating agencies, and why are we still allowing Lehman Brothers levels of leverage?

Graph of the Day
CNN: Rising Medicaid costs to blow hole in state budgets
Where Did the TARP Money Go?

Book Excerpts
"The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." –Ludwig von Mises, Human Action (1949)

Did You Know
"...24% of men in newly formed couples in 2010 didn’t work last year compared to 14% in 2009. Meanwhile, the percentage of couples in which one partner was employed and the other was unemployed increased to 15% in 2010 from 8% in 2008, suggesting economic concerns are pushing people together. ...However, even as more people are moving in together, the U.S. marriage rate continues its long-term trend downward, according to data released last month by the Centers for Disease Control and Prevention. The marriage rate in 2009 fell to 6.8% in 2009 from 7.3% in 2007. There were 80,000 fewer marriages in 2009 than 2008, even as the population base rose 2.3 million."

9/29/10 Post

BUZZ: Home Prices Edge Up But Outlook Darkens

News
Schaumburg Votes to Lower Property Taxes
The village of Schaumburg bucked the national trend of raising taxes and fees to cover rising expenses when its board unanimously approved a 4.4 percent reduction to the 2010 property tax levy.
French budget makes 'historic' spending cuts
President Nicolas Sarkozy's government launched a "historic" attack on France's soaring overspending on Wednesday, unveiling a budget which closes tax loopholes and imposes unprecedented spending cuts.
Dollar tumbles, gold hits record high
The dollar sank against the euro and hit a record low point against the Swiss franc on Wednesday while gold struck a new all-time peak, as traders mulled possible US moves to boost its ailing economy.
CEOs less willing to hire, sales a worry
U.S. chief executive officers' view of the economy darkened in the third quarter, with top executives saying they were less willing to hire new workers as they fear sales growth will slow.
Haitians suffer as U.S. aid is stuck in red tape
Nearly nine months after the earthquake, more than a million Haitians still live on the streets between piles of rubble. One reason: Not a cent of the $1.15 billion the U.S. promised for rebuilding has arrived.
Senate advances bill aimed at averting shutdown
A stopgap spending bill that's needed to avert a government shutdown on Friday advanced in the Senate as lawmakers prepared to head for the exits for the midterm elections.
House set to approve bill on China’s yuan
The House of Representatives is poised on Wednesday to pass legislation to pressure China to let its yuan currency rise more quickly, fanning the flames of a long-running dispute over trade and jobs.
Inhofe Says EPA's New Boiler Rule Could Kill Nearly 800,000 Manufacturing Jobs
The top Republican on the Senate environmental panel released a scathing report Tuesday that he contends shows that the Environmental Protection Agency's new proposed rule on cleaning up boilers nationwide could devastate America's manufacturing base and imperil hundreds of thousands of jobs without providing any real public health or environmental benefits.
Why Gold is Soaring
Gold has topped $1,300 an ounce for good reason. The Obama administration has flooded the world with greenbacks and Treasuries, global investors have little confidence in the management of the U.S. economy, and investors have taken refuge in gold.
Southwest's AirTran Acquisition May Bring Higher Ticket Prices
Southwest Airlines Co.’s planned purchase of AirTran Holdings Inc. may lead to higher ticket prices as a low-fare competitor is eliminated and the merged carrier works to make up for higher costs.
Recession's Toll in U.S. Ranged From Incomes to Marriage, Census Data Show
The worst U.S. recession since the Great Depression last year hurt almost every part of American life, from household finances to marriage rates and teenage employment, according to Census Bureau figures.
Final Senate jobs bill fails
The jobs agenda put forth by Senate Democrats has begun to lose support within their own caucus, including a Tuesday vote in which a bipartisan filibuster defeated a bill to stop jobs from being shipped overseas.
EU proposes tougher budget rules
The European Commission proposed new penalties for countries that spend themselves into debt in hopes of preventing another crisis like the one that pushed Greece ot the edge of bankruptcy and shook confidence in the euro.
Deficit-cut panel convenes amid skepticism
With just two months left before it has to issue a final report, a U.S. commission looking at ways to cut the federal deficit was to meet again on Wednesday amid questions about its hard-headedness.
Treasury nears plan to exit AIG
The U.S. government and AIG are finalizing a plan for how the Treasury Department would exit its majority stake in the insurance giant, according to several published reports.
Tax cuts: Extend them but beware
The problem is that if those tax cuts are not accompanied by other changes in the government budget, and are simply funded through borrowing, that borrowing crowds out other private investment in productive capital ... the computers, the machinery, the buildings, that are the source of long-term economic growth.
Small business for Congress!
Small business people are frustrated. They don't feel like Congress, specifically, and the government, generally, gets what they need, especially in a difficult economy
25 percent increase in depression cases along Gulf Coast since massive BP spill
A Gallup survey released Tuesday of almost 2,600 coastal residents showed that depression cases are up more than 25 percent. The conclusions were consistent with trends seen in smaller studies and witnessed by mental health workers.
Oil prices rise as corporate deals encourage investors, gas pump prices continue down
Benchmark crude for November delivery rose 13 cents to $76.66 a barrel in midday trading on the New York Mercantile Exchange. At the pump, the national average for a gallon of regular dipped to $2.691 on Tuesday. That's 3 cents lower than a week ago, although it remained 19.2 cents higher than a year ago.
Fate Of Fannie, Freddie Could Test Limits Of GOP Pledge
Beneath the bold promises of the GOP's Pledge to America rests the tough task of implementing policy. And on that front, a battle over housing policy offers a glimpse of how difficult it may be for House Republicans to carry forward their goal of smaller government in the next Congress.
Stimulus, Deficit Drive Debate At Workforce Conference
Experts on both sides of the chasm separating deficit reduction and economic stimulus argued Tuesday over the best solution to the hot-button issue of economic recovery.
Gulf leaders push to revive economy
Now that the oil has stopped flowing in the Gulf of Mexico, renewed economic development efforts have begun along the Gulf Coast.

Blogs
Do You Hold These Truths?
For more than 200 hundred years, America’s first principles—liberty and equality, natural rights the consent of the governed, private property, religious freedom, the rule of law and constitutionalism—have defined us as a nation and united us as a people.
Secondary Sources: Currency Manipulation, Jobs Bill, Asia vs. Latin America
A roundup of economic news from around the Web.
Leaving Children Behind? It’s Time to Embrace Online Education
It’s 2010, but you wouldn’t know it from looking at the American school system. Technological advances that we all take for granted in our homes, offices, and cars have yet to fully make their way into our children’s classrooms.
MBA: Mortgage Applications Purchase Index increases slightly
"The Refinance Index decreased 1.6 percent from the previous week, which is the fourth straight weekly decrease. The seasonally adjusted Purchase Index increased 2.4 percent from one week earlier."
Congress Again Creates Confusion and Again Harms the Economy
The inability of Congress to stop the Obama tax hikes is already having a real, negative impact on the U.S. economy. Businesses are delaying hiring and investment decisions because they do not know what their tax liability will be next year. Even tax experts have noticed the incredible amount of confusion that now exists as Congress flees D.C. without preventing the tax hikes.
CEOs Grow More Pessimistic
A third-quarter survey of chief executives showed they predict the economy will grow 1.9% this year, down from their 2.7% estimate last quarter, the Business Roundtable, an association of U.S. CEOs, said Tuesday.
Side Effects: Doughnut Hole Deal Not so Sweet
Currently 3.4 million Americans seniors covered by Medicare find themselves in a giant “doughnut hole,” but despite the tasty terminology, there’s nothing sweet about it.
Krugman Mangles Smith
In fact, as Smith’s example of the laborer’s woolen coat shows, he thought of the real division of labor as being carried out across the whole globe, across many, many years, and among a multitude of enterprises. Whereas Smith saw the progress of the division of labor as depending on the “extent of the market,” Krugman translates that to “the size of the factory”!
The Protectionist Threat of Another Great Depression
A financial bubble fueled by easy money and loose credit bursts. Unemployment shoots up, and gross domestic product falls sharply. Some in the U.S. Congress blame foreigners for unfair trade practices and pass a trade bill that prompts widespread retaliation, exacerbates the popping of the bubble, and sends the country into further economic trouble. That is what happened with the Wall Street Crash of 1929, the Smoot–Hawley Tariff Act of 1930 and the Great Depression.
Why Don't U.S. Corporations Threaten to Exit?
Within the U.S., there is some evidence that economic activity has shifted away from business-hostile "blue" states to business-friendly "red" states. To the extent that this is true, it does not seem to have caused politicians in blue states to switch colors.
Estimate of Decennial Census impact on September payroll employment: minus 78,000
The Census payroll decreased from 83,955 for the week ending August 14th to 6,038 for the week ending September 18th.
If Not Fannie, then Who?
We devote too much capital to mortgages, at the expense of more productive sectors of our economy.
End Drug War, Save Billions in Wealth
A new Cato Institute report examines the budgetary impact of ending the drug war and concludes that $88 billion could be saved each year (about $41 billion from canceled spending and about $47 billion in new tax revenue).

Graphic of the Day
Fixing Europe's Single Currency
See: Dealing with Debt
See also: U.S. Economic Confidence Remains Steady at 2010 Low

Economists' Comments & Opinions
The Pelosi-Reid Deficits
Blame Congress, not presidents Bush or Obama, for our perilous fiscal situation.
First, Do No Harm--But Please Do Something
If Congress wants to get serious about the jobs challenge ahead, the sooner we pass it, the better.
40 Years of Energy Panic
We seem to get all the oil we want at a price we're willing to pay.
Cut Taxes and Help Government Steal Less
Progressives want to raise taxes on individuals who make more than $200,000 a year because they say it's wrong for the rich to be "given" more money. Sunday's New York Times carries a cartoon showing Uncle Sam handing money to a fat cat. They just don't get it.
Department of Disinformation
Sebelius tells a North Carolina fairy tale.
Why the Statistical "Recovery" Feels Bad
The alleged recovery is nothing more than an illusion caused by unsustainable deficit spending.
The Light Bulb Switchover: In the Dark
So, are you ready to comply with the federal government’s ban on incandescent light bulbs? Starting in January 2012, a little over a year from now, the phase-out begins.

Research, Reports & Studies
Making Budget Rules Work
Congress faces two sets of problems, a commitment problem and an enforcement problem, that prevent well-meaning legislators from effecting change.
Going Cold Turkey
Most of the plans put forward for replacing Fannie Mae and Freddie Mac involve some continuing role for the government in housing finance. The reasons behind these plans are less than persuasive, and recent experience has shown that the moral hazard created by the government's presence in the housing-finance market can produce catastrophic results for taxpayers.
RCM: Wells Fargo Economics Group: Consumer Confidence Falls in September
The Consumer Confidence Index fell 4.7 points in September to 48.5. Both the current conditions and expectations series declined during the month, and the labor market components of the survey weakened.

Book Excerpts
"The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources — if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality." –F.A. Hayek, "The Use of Knowledge in Society" (1948)

"Did You Know"
The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008, a 3% real increase over five years, to about 14% of U.S. national income. This cost is in addition to the federal tax burden of 21%, for a combined cost of 35% of national income. One out of every three dollars earned in the U.S. goes to pay for or comply with federal laws and regulations, and new policies enacted in 2010 for health care and financial services will increase this burden.

9/28/10 Post

BUZZ: Consumer confidence slumps in September

News
Democrats to stuff 20 bills into post-election lame-duck session
Democrats are considering cramming as many as 20 pieces of legislation into the lame-duck session they plan to hold after the Nov. 2 election.
House prices continue to deflate
Home prices decelerated further in July as the housing market lost ground after the expiration of a federal tax incentive for homebuyers. Prices overall are at the levels last seen in late 2003
IRS: No more tax forms in the mailbox
Electronic filing of tax returns has become so popular that the Internal Revenue Service will no longer automatically mail a traditional paper form.
State and Local Tax Revenue Inches Up
Gain of Just 1.7% in Second Quarter Suggests Budgets Will Remain Tight This Year and Beyond; Corporate Payments Fall.
Bill on outsourced jobs fails Senate test
As expected, a Senate bill designed to end tax breaks for U.S. companies that move jobs and manufacturing plants overseas failed a key test vote Tuesday.
Study: One-Third of Americans Have Low Credit Scores
A controversial new study suggests that one-third of all Americans hoping to buy a home will not qualify for a mortgage because of poor credit scores.
D.C. workers have America's highest salaries
Washington, D.C.'s workers enjoy the highest salaries of any major U.S. city., with a median household income of $85,198. The nation's capital fared better than most of the rest of the country in 2009, according to the Census Bureau's annual survey of income and poverty in the United States, which was released on Tuesday.
California eyes $5 billion bank loan
California is in talks with Wall Street banks to secure up to $5 billion in short-term loans following an exceptionally long budget impasse.
Busily going nowhere
Low interest rates have been a mixed blessing for equities.
Jobless told they owe money to the ESC
Thousands of long-term unemployed North Carolinians could soon owe the state money because the Employment Security Commission improperly made about $28 million in payments over the last two years.
U.S. Economy "Close to a Destructive Tipping Point," Glenn Hubbard Says
"America is very close to a destructive tipping point," co-authors Glenn Hubbard and Peter Navarro warn in their new book Seeds of Destruction. "We must change how we conduct our politics and economics...or we will inevitably go the way of all once-great nations and suffer an irreversible decline."
Dollar Trades Near Five-Month Low After U.S. Home Price Rise Slows in July
The dollar traded at almost a five- month low against the euro after U.S. home prices rose at a slower pace in July, fueling speculation the Federal Reserve will ease monetary policy.
Toys R Us to hire 45,000 workers for holidays
Toys R Us will hire about 45,000 employees to help with the holiday season, doubling its U.S. work force.
Census data: Marriages in 2009 at record low level
The recession took a dramatic toll on the institution of marriage in America last year, new figures show, with weddings for people 18 and older at the lowest ebb in over a hundred years.
'I'll work till I die': Older workers say no to retirement
Gone are the days of golf and gardening into the golden years. Many older workers are working well into retirement and it's not just because they have to, it's because they want to.
Crisis panel head: How did Wall Street miss it?
Phil Angelides says he just doesn't get how Wall Street executives say they never saw the financial crisis coming. The head of a federal panel charged with determining what caused the meltdown says the proof was sitting in plain view.
Recession's impact: Census shows growing income gap as young adults, children take big hits
The income gap between the richest and poorest Americans grew last year to its widest amount on record as young adults and children in particular struggled to stay afloat in the recession. The top-earning 20% of Americans received 49.4% of all income generated in the U.S., compared with the 3.4% earned by those below the poverty line. This ratio of 14.5-to-1 is an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.
To avoid government shutdown by end of week, Senate to move on stopgap spending bill
Lawmakers are largely ignoring an Obama administration shopping list as they fashion a stopgap spending bill that's needed to avoid a government shutdown Friday.
Small-Business Bill Signed By Obama
President Obama on Monday celebrated a rare victory over determined Republican opposition in the Senate and signed into law a bill designed to make more loans available to entrepreneurs, calling the law "the most significant step on behalf of our small businesses in more than a decade."
D.C. disconnect: 400 fundraisers in 14 days
Inside the Capitol, lawmakers are largely marking time by naming post offices and passing a resolution to keep the government running through the elections. But outside the Capitol, in the private rooms of Washington’s top steakhouses, political clubs and Capitol Hill townhouse salons, there is an epic money grab under way, with more than 400 fundraisers for House candidates in the two weeks leading up to Friday’s congressional adjournment.

Blogs
Health alert: Paying for Health Reform
The people getting hit with these very expensive [health reform] tabs live in predominately low-income households. They are disproportionately minorities. They have trouble paying their own medical bills.
Those unintended consequences
Laws against texting while driving may lead to more accidents.
CBO’s Elmendorf Measures Impact of Tax Options
Congressional Budget Office Director Douglas W. Elmendorf on Tuesday broke down four different tax policy options and projected what their impact would be on the deficit.
Headline: “Poll: Nevadans favor balanced federal budget, let states repeal federal laws”
49 percent of Nevadans supported the concept; 27 percent were opposed; with 24 percent undecided. Of course, like any proposal limiting state or federal power, a Repeal Amendment can be demagogued, and it surely will be if it gains any political traction.
A Look at Case-Shiller, by Metro Area (September Update)
The S&P/Case-Shiller Composite 20 home price index, a broad gauge of U.S. home prices, posted a 3.2% increase from 2009, but the gains decelerated in the waning days of government tax credits.
Forecasting the Cost of College
...unless and until the current pattern breaks, you can reasonably expect that the average cost of college forecast by our tool will generally follow the pace set by the federal government's projected levels of future spending.
Secondary Sources: State Surpluses, Income Inequality, Mergers and Markets
A roundup of economic news from around the Web.
Minimum Wage Hurts The Poor
Fortunately, the US minimum wage is still low enough that it only affects about 5% of the workforce. But South Africa is an example of what would happen if it were increased...
More Americans Expect Recovery Will Take Years
Some 46% said it will be 2013 or later before that happens. A smaller 36% predicted a recovery sometime before 2013.
Unemployment May Be Headed Up Despite Growth
The strong likelihood of tepid economic growth through next year suggests unemployment may rise, rather than fall, as many forecasters currently predict.
More Unintended Consequences
Companies fed up with America’s exorbitant corporate taxes can move their headquarters and operations overseas entirely. At some point, it simply prudent to do that. High taxes in the USA could even make that the CEO’s fiduciary responsibility.
Strike Action in the 21st Century
With the various reforms, especially the Employment Contracts Act of 1991, the NZ labor market became more fluid, unemployment went down, and the cost of striking increased. When living in NZ, one forgets that pre-1990s, the country was constantly threatened by strikes, the way France (and others) are now (and have been for a long time).
Public Sector Silver Parachutes
Under a 1979 law to promote work attendance, state employees can turn in one-quarter of their unsued sick days for a retirment bonus. Facing a $4.5 billion budget gap, some are questioning whether the benefit should be kept.
Meme of the Week: Reductio Ad Somalia
...subtle conflation of "society" and "the government" makes this sort of absurd reductio possible. Because of course, while it is true that living in America makes one vastly better able to create wealth than living almost anywhere else, much of that wealthy creation comes not from anything the government provides, but from the infrastructure of people, skills, and norms that surround one.
Inequality and Moral Hazard Rents in the Financial Sector
The increased completeness of markets means that banks and hedge funds can implement almost any payoff they desire. Attempts to make markets less complete are futile and any attempts to do so can and will be subverted by economic agents.
GOP’s Pledge to America
The House Republicans’ release of its “Pledge to America” has been met with criticism from across the ideological spectrum. While excoriation from the left was inevitable, those who were hoping that the GOP would set out a detailed agenda for limiting government were also not satisfied.
The Lower Spending Solution to Deficits
With the expiration of the 2001 and 2003 tax cuts fast approaching, the debate over whether to extend the cuts, and for whom, has taken on a new face.
Education Reform’s Kryptonite
A quality education in America shouldn’t come down to a lottery ball. But that’s exactly how life plays out for many low-income families seeking an alternative to failing public schools.
Keeping the Pledge on Marriage-Friendly Federal Policy
The Heritage Foundation’s “Solutions for America” series is designed to provide concise policy proposals that focus on a wide array of concerns, including ideas for “Making Federal Policy Marriage Friendly.” Specifically, a Congress concerned about the erosion of traditional marriage, especially in lower-income communities, could:
How Much More Can They Get Wrong? The New Obamacare Impact Calculator Answers
So how much more could the new health law impact Americans and the health sector if other forecasts, such as those from the Congressional Budget Office, turn out to be false? Heritage’s brand-new Obamacare Impact Calculator shows the real-time results of what these changes could mean to you, the federal budget and the US economy if the CBO is wrong.
In the Green Room: Scott Rasmussen on Tea Parties, Obamacare’s Unpopularity
We discussed the values of the tea party movement, the early and persistent underestimating of the movement by many who didn’t recognize its broad appeal, and Obamacare’s consistent unpopularity among the American people.

Research, Reports & Studies
Fiscal Adjustments: What Do We Know and What Are We Doing?
Governments that have initiated thorough and successful fiscal adjustment policies have not systematically suffered at the polls.
Guaranteed 22 Percent Benefit Cuts If Social Security Is Taken off the Table
A number of unions and other organizations have banded together under the banner “Strengthen Social Security” to oppose any change to Social Security benefits, including raising the retirement age or including any form of means testing.
"Consumer Safety" Bill Could Boomerang against U.S. Manufacturers
Barriers to trade can be straightforward and transparent, even if wrongheaded, such as a 27.5 percent tariff that certain members of Congress threatened to impose on imports from China.
The Child Care Tax Credit: Not Just Another Middle-Income Tax Break
The section 21 child and dependent care tax credit has received little attention in recent tax policy debates. When the credit is discussed, its supporters and opponents often treat it as simply another middle-income tax break. The child care tax credit, however, is not just another middle-income tax break. By providing tax relief for work-related costs, it helps offset the work penalty imposed by the income tax and promotes economic efficiency.

Economists’ Comments & Opinions
Paycheck Fairness Act: A flawed approach to job bias
Take an employer who gives a hefty raise to a valued male employee who has gotten a job offer from a competitor. Would a court agree that the raise advanced a legitimate business purpose or could the employer be slammed unless he also bumps up the salary of a similarly situated female employee?
Austerity Agonistes
Why left-wing economists’ warnings against austerity programs are wrong.
ObamaCare's Hotel California
The state moves to impose price controls you can never leave.
They're Playing Chicken with Tax Cuts
Apparently, the voters know something that congressional Democrats don't. An urgent letter to President Obama from 313 leading economists warns that letting the Bush cuts expire - even just on the rich - willl lead to serious economic consequences for the U.S.
Let's reform state government
Here are some major reforms these state policymakers could pass immediately:
Repeal Obamacare and Go Home
If Congress wants to do something useful before the fall elections, they should merely repeal Obamacare then go home. Every second Congress is in session, they do more damage to America.
Why America Needs China to Invest in GM
If SAIC Motor picks up a stake in General Motors, everyone stands to profit.
Tax Cuts and Revenue: What We Learned in the 1980s
There will be no gain in long-term tax revenue from increasing tax rates on those making more than $200,000 per year, despite claims by President Obama's Office of Management and Budget, and the Congressional Joint Committee on Taxation, which studied the administration's tax proposals. The current debate over the expiring Bush tax cuts is a replay of the debate about the Reagan tax-rate reductions of three decades ago.
Regulators Have Learned Nothing from the Financial Crisis
The Basel III process so far has indicated that bank regulators have learned almost nothing from the crisis. Many of the contributors to the crisis, including Basel II, are being expanded instead of being scrapped. At least this time around we'll know that the stool we're being asked to sit on doesn't have any legs.

Graph of the Day
Mercatus Center: This Decade: Government Pay Growth Outpaces Private Pay Growth
ObamaCare: Never Supported by a Majority, Now 10-Points behind with Likely Voters
Congress down to wire with no budget

Gender Pay Gap JEC Hearing
Rep. Brady Opening Statement JEC Hearing on Gender Pay Gap



Representative Kevin Brady, the Senior House Republican on the Joint Economic Committee gives his opening statement at a hearing on the Gender Pay Gap for Women and Mothers in Management.


Book Excerpts
"This distinguishing feature of all indirect taxes may be illustrated by an elementary comparison between the corporate and the personal income tax. Under the latter, the individual varies his own tax liability, in tax-price terms, by varying the amount of taxable income that he earns. His own ability to do so implies also that the tax-price he faces is indirectly dependent on the behavior of others who can react similarly. In acting to reduce the tax base, each taxpayer imposes an external diseconomy on all fellow taxpayers. To an extent, this sort of personal interdependence remains under the corporate tax. Individuals may, within limits, reduce the tax-price per unit of public goods through withdrawing resources from corporate investment. And any one person's final tax obligation becomes reciprocally dependent on the activity of all other persons in making such allocative adjustments. In this respect, the two taxes differ only in the degrees of response. The additional factor that the corporate tax necessarily introduces is the "bridge" between the individual and the corporate entity. To become liable for tax, it is the corporation that must earn taxable income, not the individual. And to reduce its liability for the tax directly, the corporation must reduce taxable income. In order to estimate his own share, therefore, even apart from his own influence over aggregate investment in the corporate sector, the individual must predict how the corporation itself will behave in response to the tax. In other words, an additional decision-making entity is introduced between the individual and the fisc. A whole set of new predictions must be made concerning the decision-making processes of this in-between institution, the corporation, processes themselves involving most of the problems of group rather than individual decision-making." –James M. Buchanan, Public Finance in Democratic Process: Fiscal Institutions and Individual Choice (1967)

Did You Know
CEOs across America say they plan to increase capital spending, but have lowered their expectations on employment and sales for the short-term future, according to a survey released Tuesday by Business Roundtable. A majority of the CEOs surveyed, about 66%, said they expect sales to increase over the next six months. But that number is down from 79% of those surveyed in the group's last poll, which was conducted in the second quarter. But only 31% of those surveyed said they expected to increase their number of U.S. employees, a figure that was down from 39% in the second quarter.

9/27/10 Post

BUZZ: Credit Unions Bailed Out

News
European Central Banks Halt Gold Sales
Europe’s central banks have all but halted sales of their gold reserves, ending a run of large disposals each year for more than a decade.
Obama to sign $42 billion bill aimed at helping small businesses
President Obama will sign a $42 billion bill to aid small businesses Monday. The bill seeks to create thousands of jobs and will offer about $12 billion in tax breaks.
Bill to Slow Overseas Hiring Debated
Mr. McConnell said on the Senate floor last week that many American companies opening factories abroad are doing so to sell into the foreign market, not to export products back to the U.S.
California closer to getting a budget
California has created a framework for an agreement on a budget that could solve the state's $19 billion deficit.
Banks Keep Failing, No End in Sight
Since WaMu Fell, 279 Lenders Have Collapsed; Lost Jobs, Curtailed Lending and the Big Get Bigger.
Taxpayers could profit on GM bailout
General Motor's value has gone from zero to more than $60 billion in just over a year. That might just be fast enough for U.S. taxpayers to start recouping their investment.
Recession not over, public says
Economic experts may believe the recession is over, but try telling that to the public.
Thousands face job loss when part of stimulus expires
Tens of thousands of people will lose their jobs within weeks unless Congress extends one of the more effective job-creating programs in the $787 billion stimulus act: a $1 billion New Deal-style program that directly paid the salaries of unemployed people so they could get jobs in government, at nonprofit organizations and at many small businesses.
Southwest Airlines to buy AirTran for $1.4B
Southwest Airlines said Monday it will buy AirTran for about $1.42 billion. The move will put Southwest in head-to-head competition with Delta Air Lines in Delta's home base of Atlanta.
NFL ticket prices on the rise
The average ticket price for professional football games increased 4.5 percent this year to $76.47, even as some teams struggled to fill every seat. The increase comes largely at the expense of the fans of the New York Jets and New York Giants, who face ticket price increases of 38.1% and 26.0% respectively.
Japan: the next global time bomb?
A rapidly aging population and the government's deepening financial struggles make Japan a potential powder keg for international investments.
Tax cut stew for Christmas
It's official: Now that resolution on the Bush tax cuts has been postponed until after the Nov. 2 mid-term elections, lawmakers have punted nearly every major time-sensitive tax issue until the end of the year.
Bernanke says Federal Reserve's efforts to aid economy, lower unemployment have fallen short
Even though the Fed has held a key interest rate at a record low near zero for nearly two years, economic growth is only plodding ahead and unemployment remains elevated. It's now at 9.6 percent.
Poll: Rocky road seen ahead for Obama
A significant majority of voters are considering voting against President Barack Obama in the 2012 election, expressing sour views of his new health care law and deep skepticism about his ability to create jobs and grow the sluggish economy.

Blogs
Secondary Sources: Unemployment, Bernanke, Housing
A roundup of economic news from around the Web.
Rebranding Additive Shocks
...suppose you had pneumonia, and then someone stabbed you in the gut. You show up at the hospital, and the doctor says "there's no need to patch up that knife wound, your real problem is pneumonia." I think you'd look for another doctor. A severe AD shock causes lots of unemployment; that's true whether you start from full employment, or whether you already have lots of unemployment from structural problems.
Mortgage Delinquencies Drop, as Foreclosures Jump
All together, 87.3% of mortgages were current and performing, unchanged from the first quarter but still 1.3 percentage points less than a year earlier.
Unofficial Problem Bank List increases to 872 institutions
"The Unofficial Problem Bank List underwent significant changes this week from failures and the FDIC releasing its enforcement actions for August 2010. The list finished the week at 872 institutions with assets of $422.4 billion, up from 854 institutions with assets of $416 billion last week."
Secondary Sources: Toxic Asset’s Death, Stressful Cities, Income Diversity
A roundup of economic news from around the Web.
Chicago Fed: Economic activity weakened in August
"Led by declines in production- and employment-related indicators, the Chicago Fed National Activity Index decreased to –0.53 in August from –0.11 in July."
Nick Bilton on how technology creatively disrupts society
He also discusses effects of combining human curation with computer algorithms, hyperpersonalization, informational veggies, and serendipity. He concludes with his theory about today’s news (and the reason he doesn’t worry about missing tweets): “If it’s important, it will find me.”
How Much Has the Fed Lost?
The Federal Reserve has spent over one trillion dollars buying mortgage backed securities, so-called toxic assets. How much are these assets worth? It's a simple question but one that is exceedingly difficult to answer not the least because the Fed has resisted being audited in defense of its so-called independence.
Taking on the Unions
Public pensions have unfunded liability of $1 trillion to $3.5 trillion...
The Shape of Things to Come and Not to Come
People will write profound books and papers on how and why "status quo bias" has strengthened, and then one day some new technological development will change everything. It's an open question whether this will happen before or after the sovereign debt crisis.
New Home Sales: Lowest Median Price since 2003
Over 52% of all home sales were under $200K in August - the highest percentage since 2003.
Foreclosures
Judges in some jurisdictions have reacted by routinely throwing out foreclosures if the documents are not up to snuff. Interestingly in a high proportion of cases, the foreclosure is never refiled.
Weekly Schedule for September 26th
The key economic releases this week are the ISM Manufacturing index on Friday (and the regional releases earlier in the week), and the personal income and spending report for August (also on Friday). For housing, the key economic release is the S&P/Case-Shiller Home price index on Tuesday. There will be several Fed speeches this week to review for possible hints on QE2.
Europe’s $2.5 Trillion Pension Gap
To fill it would require an extra $15,800 per person in annul retirement saving, if retirees wish to maintain their pre-retirement standard of living. These findings are based on the base case scenario, which assumes that retirees need to replace 70 percent of their pre-retirement income to maintain their standard of living.
Cuban Government Will Choke the Nascent Private Sector
Don’t expect a thriving private sector in Cuba any time soon.
Why Public School Merit Pay Doesn’t Work
A sophisticated study released this week finds that merit pay for public school teachers doesn’t seem to improve student achievement. Why not?
How Many People Have Exhausted Their Unemployment Benefits?
The number could be higher than 6,927,372 because for every person who found a job, there was someone in the eligibility pool who exhausted all benefits.
The Heritage Pledge
The stakes couldn’t be higher for our nation at this moment. In the coming months, Americans will help choose which direction our nation’s future will take. Will the federal government continue to spend more, tax more, control more, and defend our liberties less?
Schools Need a Hero
National attention has been focused on education reform at unheard-of levels in the last weeks.
Obamacare at Six Months
Here’s a quick review of what’s happened since then and what we have learned about the law:
Pledge to America is Step in Right Direction
The Pledge rightly frames the argument to be about the choices we face going forward and the need to return to core first principles, about the role of the state, popular consent and self-government.

Research, Reports & Studies
In the Long Run, We’re All Crowded Out
...job creation and economic growth are affected not only by the easily observed results of policy, but also by the less-obvious results, many of which negatively impact the economy. What is more, these negative effects can last long after current policy makers have left office.
Hudson Institute Economic Report
Housing starts in August were higher than July, and higher than the consensus forecast among economists. Total starts were 598,000 at a seasonally adjusted annual rate, up 10.5 percent from July’s 541,000.
Spending Restraint in Florida
If Florida had held spending constant for the last 20 years while adjusting for inflation and population growth, it would have avoided its 2009 budget gap. Moreover, the state can avoid future budgetary problems by restraining the growth of spending, permitting Floridians greater economic freedom, and adopting stronger balanced-budget requirements.
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
Housing Data Bounces, FOMC Refocuses on Prices; Sovereign Debt Issues Resurface in the Eurozone
Let’s Not Blame Immigrants for High Unemployment Rates
Throughout American history, immigrants have been among the usual suspects when looking for culprits in times of economic trouble. However, an understanding of how immigrants function in the labor market and an examination of the likely causes of high unemployment rates illustrate why the foreign- born are not at fault for unemployment in America.
Still No Good News for ObamaCare
ObamaCare addresses every healthcare problem, with every solution further centralizing power and decision making in Washington. The promises do not come cheap.
The Budgetary Impact of Ending Drug Prohibition
State and federal governments in the United States face massive looming fiscal deficits. One policy change that can reduce deficits is ending the drug war. Legalization means reduced expenditure on enforcement and an increase in tax revenue from legalized sales.

Economists’ Comments & Opinions
The Post Office Hustle
Next to the public schools, the postal service may be the most inefficient monopoly in America. The post office lost $3.5 billion last quarter, and losses are expected to be a cumulative $238 billion over the next decade, by its own admission.
Mad money: Why the rich are angry, and why you should worry about it
The President or the press can insult those people or try to jack up their taxes and give their money away to other people. But if we want recovery and growth rather than redistribution and recrimination, a better approach would be to stop treating rich people as though they are the cause of America's problems and start concentrating instead on what can be done to create more of them.
The Regulation Tax Keeps Growing
In per-household terms, the combined federal burden of regulation and taxes is a remarkable $37,962. Increased transparency in both the cost and benefit side of the regulatory equation is necessary to determine whether what we spend is worth the 35% of national income that it costs, and whether the distribution of the burden is relatively efficient.
Rather Than Bash the Rich, We Should Emulate Them
The rich, by virtue of being rich, are society’s ultimate benefactors thanks to them doing things that remove unease from the lives of others, and then, rather than wasting those gains, their delayed consumption is transferred to other ambitious entrepreneurs who access the capital they don’t consume in order to make our lives better themselves.
How to Grow Out of the Deficit
Limiting spending increases to inflation minus 1% would balance the budget in less than a decade.
If Congress Stalls, Do Stocks Rise?
...researchers found that more than 90 percent of the price gains over the 108-year life of the Dow Jones industrial average through 2006 came on days when Congress was out of session. And in periods when polls showed that Congress was least popular, this “Congressional effect” was most pronounced.
The Genius of the Tinkerer
The secret to innovation is combining odds and ends, writes Steven Johnson.
Exploring the Implications of a New Round of Quantitative Easing
Can a few trillion dollars spent purchasing government debt do the trick? What if invitations to an inflation party were sent out and nobody came?

Graph of the Day
Business Insider: Here's Where All That Government Spending Is REALLY Going
See: The gold and silver rush is on!

Book Excerpts
"Outlay on public works is not of itself, and apart from the revenue to be thence derived, different from the cost of war, or other unproductive expenditure. No readier or more dangerous mode of increasing debt can be found than the execution of works that are not economically productive. Vague assertions of indirect benefits should not be allowed to conceal the fact that 'improvements' of this kind should be paid out of income, and cannot be regarded as investments in the proper sense of the term." –Charles F. Bastable, Public Finance (1892)

Did You Know
A space ambassador could be appointed by the United Nations to act as the first point of contact for aliens trying to communicate with Earth. Mazlan Othman, a Malaysian astrophysicist, is set to be tasked with co-ordinating humanity’s response if extraterrestrials make contact. Aliens who land on earth and ask: “Take me to your leader” would be directed to Mrs Othman. She will set out the details of her proposed new role at a Royal Society conference in Buckinghamshire next week.