News
U.S. Firms Build Up Record Cash Piles The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records since 1952.
Government Budget Behind Last Year’s Pace Economists surveyed by Thomson Reuters were forecasting that the May deficit would total $140 billion, significantly lower than the $189.7 billion deficit recorded in May 2009.
New Rules Would Require Government To Address Public Pension Bomb Later this month, the Governmental Accounting Standards Board plans to issue tentative accounting reforms that are expected to balloon public pension costs when they take effect, possibly in 2013. OECD: Leading Economies’ Growth Slows The world's leading economies should continue to grow in 2010, although the pace of growth is now easing, with the rate of expansion in April falling for the 19th straight month, data showed Friday.
The Beginning of the End for Wall Street …the most worrisome measures for the financial industry have come from a handful of the more than 300 amendments that were added to secure votes for the bill's passage.
Fears of China overheating are back Forget the worries about China's economy cooling off. Overheating might be the greater concern. China reported that its exports, property prices in large cities, and industrial production all grew by nearly 50%, 12% and 19 % respectively.
Research, Reports & Studies
Wells Fargo Economics Group: Higher Receipts in May Led to Smaller U.S. Budget Deficit The current run rate reflects a year-end deficit of more than $1.3T, just below prior year.
How to Fix California's Public Pension Crisis California’s pension and retiree health care benefits are unaffordable and unsustainable. How did he state get into this pension crisis and how can it be fixed.
Blogs
Matching Narrative to Policy …for regulation to be better, I think there has to be some correspondence between the narrative of what went wrong and the proposed regulatory change.
Why Are Interest Rates Low? [Kling’s] view of interest rates in the past two years is that markets have been trying to tell the financial sector to shrink.
Economists React: ‘Nothing to Worry About — Yet’ in Trade Data Economists and others weigh in on the wider U.S. trade gap for April that came amid drops in exports and exports.
Wealthy Are the Only Ones Spending Upper-income Americans’ self-reported spending rose 33% to an average of $145 per day in May — up from $109 per day in April. Meanwhile, middle- and lower-income Americans’ self-reported spending averaged $59 per day in May, unchanged from the previous month.
Economists’ Comments & Opinions
Prune and Grow In times like these, deficit spending to pump up the economy doesn’t make consumers feel more confident; it makes them feel more insecure because they see a political system out of control.
Free to Choose Why did America prosper when most of the people of the world are still poor?
Graphic of the Day
Retail sales plummeted 1.2% in May. Excluding the payback period following the cash for clunkers program, this was the worst month for retail sales since a 1.5% decline in March 2009.
"Did You Know?"
If the tax credit improvement that is in effect for 2009 and 2010 expires, a family with two children in which a parent is working at a full-time, minimum wage job will see its child credit fall from $1,725 to $248.
U.S. Vice President Joe Biden told President Barack Obama on Friday he was sorry for leaving him behind to manage the oil spill but was thrilled to be watching the World Cup
Friday, June 11, 2010
Thursday, June 10, 2010
6/10/10 Post
News
Debt Spreading 'Like a Cancer': Black Swan Author
"I want to live in a society that is robust to adverse events. We don't live in that world," Taleb said.
Economists Expect Slow U.S. Growth
Economists surveyed by The Wall Street Journal are sticking with their forecasts for slow but steady growth in the U.S. economy through the middle of 2011 despite recent turmoil in European debt markets.
Bernanke Calls for Deficit Plan
On Wednesday, Fed Chairman Ben Bernanke urged lawmakers to take the same approach as the Fed with the budget deficit: Devise a plan now, but act on it later.
US Debt to Rise to $19.6 Trillion by 2015
The report that was sent to lawmakers Friday night with no fanfare said the ratio of debt to the gross domestic product would rise to 102 percent by 2015 from 93 percent this year.
Treasury Secretary says China could become largest foreign market for US exports
China is already the third biggest market for U.S. exports. However, even with the big jump in U.S. exports, the United States still runs its largest trade deficit with China, one that last year totaled $226.9 billion.
Weekly initial jobless claims down 3,000 to 456,000
The number of initial claims made by people applying for regular state unemployment benefits fell 3,000 to 456,000 last week, the Labor Department reported.
Fee Increase for Immigration Papers Planned
Among several new fees, officials said, will be a $6,230 charge for foreigners proposing to invest $500,000
Research, Reports & Studies
Wells Fargo Economics Group: Monthly Outlook
While our forecast remains well below the consensus, we believe events over the past few weeks make a second-half slowdown more likely.
Fix Double Leverage Problem
When Fannie and Freddie preferred stock went to zero, losses were massive. The situation was naturally much worse because the stock was highly leveraged in the banks.
Lost Trust: The Real Cause of the Financial Meltdown
In the run-up to the credit-market freeze of 2008 assurance mechanisms collapsed under the weight of political and regulatory pressures to aggressively expand homeownership and other policies.
Economists' Commentary
Jobs report a nightmare for Obama progressivism
For a proper progressive, anything short of a "comprehensive" solution to, say, the problem of illegal immigration is unworthy of consideration. For today's progressive president, the prospect of a jobless recovery is a comprehensive nightmare.
Why the Next Three Weeks Will Change Wall Street Forever
There are three main reasons why the next three weeks may be the most important time for Wall Street in decades.
Blogs
The Hayek Revival
The Road to Serfdom by Friedrich A. Hayek isn't just back on the bestseller list; it’s #1 on Amazon.
New York to Shut Down?
In his recent analysis of budget rules, University of Rochester Professor David Primo finds that states with automatic shutdown provisions spend $64 more per-capita compared to states that do not have automatic shutdown provisions.
Q1 Flow of Funds: Household Net Worth off $11.4 Trillion from Peak
A majority of the decline in net worth is from real estate assets with a loss of about $6.4 trillion in value from the peak. Stock market losses are still substantial too.
"Did You Know?"
Had his life ended three months earlier, billionaire Dan L. Duncan’s riches — Forbes magazine estimated his worth at $9 billion, ranking him as the 74th wealthiest in the world — would have been subject to a federal tax of at least 45 percent. If he had lived past Jan. 1, 2011, the rate would be even higher — 55 percent. Instead, because Congress allowed the tax to lapse for one year and gave all estates a free pass in 2010, Mr. Duncan’s four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury.
Graphic of the Day
See also: The U.S. trade balance widened from -$40.0 billion in March to -$40.3 billion in April as exports and imports declined by $1.0 billion and $0.8 billion, respectively,
Debt Spreading 'Like a Cancer': Black Swan Author
"I want to live in a society that is robust to adverse events. We don't live in that world," Taleb said.
Economists Expect Slow U.S. Growth
Economists surveyed by The Wall Street Journal are sticking with their forecasts for slow but steady growth in the U.S. economy through the middle of 2011 despite recent turmoil in European debt markets.
Bernanke Calls for Deficit Plan
On Wednesday, Fed Chairman Ben Bernanke urged lawmakers to take the same approach as the Fed with the budget deficit: Devise a plan now, but act on it later.
US Debt to Rise to $19.6 Trillion by 2015
The report that was sent to lawmakers Friday night with no fanfare said the ratio of debt to the gross domestic product would rise to 102 percent by 2015 from 93 percent this year.
Treasury Secretary says China could become largest foreign market for US exports
China is already the third biggest market for U.S. exports. However, even with the big jump in U.S. exports, the United States still runs its largest trade deficit with China, one that last year totaled $226.9 billion.
Weekly initial jobless claims down 3,000 to 456,000
The number of initial claims made by people applying for regular state unemployment benefits fell 3,000 to 456,000 last week, the Labor Department reported.
Fee Increase for Immigration Papers Planned
Among several new fees, officials said, will be a $6,230 charge for foreigners proposing to invest $500,000
Research, Reports & Studies
Wells Fargo Economics Group: Monthly Outlook
While our forecast remains well below the consensus, we believe events over the past few weeks make a second-half slowdown more likely.
Fix Double Leverage Problem
When Fannie and Freddie preferred stock went to zero, losses were massive. The situation was naturally much worse because the stock was highly leveraged in the banks.
Lost Trust: The Real Cause of the Financial Meltdown
In the run-up to the credit-market freeze of 2008 assurance mechanisms collapsed under the weight of political and regulatory pressures to aggressively expand homeownership and other policies.
Economists' Commentary
Jobs report a nightmare for Obama progressivism
For a proper progressive, anything short of a "comprehensive" solution to, say, the problem of illegal immigration is unworthy of consideration. For today's progressive president, the prospect of a jobless recovery is a comprehensive nightmare.
Why the Next Three Weeks Will Change Wall Street Forever
There are three main reasons why the next three weeks may be the most important time for Wall Street in decades.
Blogs
The Hayek Revival
The Road to Serfdom by Friedrich A. Hayek isn't just back on the bestseller list; it’s #1 on Amazon.
New York to Shut Down?
In his recent analysis of budget rules, University of Rochester Professor David Primo finds that states with automatic shutdown provisions spend $64 more per-capita compared to states that do not have automatic shutdown provisions.
Q1 Flow of Funds: Household Net Worth off $11.4 Trillion from Peak
A majority of the decline in net worth is from real estate assets with a loss of about $6.4 trillion in value from the peak. Stock market losses are still substantial too.
"Did You Know?"
Had his life ended three months earlier, billionaire Dan L. Duncan’s riches — Forbes magazine estimated his worth at $9 billion, ranking him as the 74th wealthiest in the world — would have been subject to a federal tax of at least 45 percent. If he had lived past Jan. 1, 2011, the rate would be even higher — 55 percent. Instead, because Congress allowed the tax to lapse for one year and gave all estates a free pass in 2010, Mr. Duncan’s four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury.
Graphic of the Day
See also: The U.S. trade balance widened from -$40.0 billion in March to -$40.3 billion in April as exports and imports declined by $1.0 billion and $0.8 billion, respectively,
Wednesday, June 9, 2010
6/9/10 Post
News
Stimulus Talk Yields to Calls to Cut Deficits
President Obama is discovering that the tools available to him last year — a big economic stimulus and action by the Federal Reserve — are both now politically untenable.
More Job Openings, but Employers Slow to Hire
There were more job openings in April but employers didn’t rush to fill them.
Economist: Blame Government for the Crisis
Russell Roberts of George Mason University says he believes that it was inept government policy, not Wall Street greed, which allowed the financial system to spin out of control.
Senators Appear Open to Raising Capital Requirements for Financial Sector
Senate lawmakers appeared resolved Tuesday to rework capital requirements to force financial institutions to raise as much as $1 trillion in new reserve funds.
Obama tells agencies: Cut 5%
The administration issued new budget guidance calling on non-security agencies to propose ways to cut their budgets by 5%, and called on all agencies to identify their worst-performing programs.
Wholesale Inventories in U.S. Rose 0.4% in April
Inventories at U.S. wholesalers rose in April for a fourth month, accompanied by a jump in sales that signals companies will ramp up orders to meet demand.
Research, Reports & Studies
The Financial Crisis: Moral Failure or Cognitive Failure?
This may be our first epistemologically]driven depressionc That is, a large role was played by the failure of the private and corporate actors to understand what they were doing.
Are Government Workers Underpaid?
Once all promised benefits are included, how do government employees compensation at all levels measure up against private-sector workers.
The Broadband Credibility Gap
Although the Chairmanfs gThird Wayh may provide the Commission with a perceived blanket of legal comfort, that legal certainty comes at the expense of financial uncertainty.
Economists’ Commentary
ZYWICKI: Why aren't banks lending?
Despite constant urging by Washington for banks to increase their lending, credit conditions remain tight.
How Many Employers Will Drop Health Coverage Under Obama Care?
Even if you buy the deficit-reduction assumptions employed by advocates… a wave of unexpected employer coverage drops would wipe out any deficit reduction.
Graphic of the Day
Private vs. State & Local Government Workers’ Total Hourly Compensation
See: What does the Federal Budget Freeze Look Like?
See also: Small Businesses Remain Best Reflection of Weak Economy
Blogs
Fed's Beige Book: "modest" economic growth, "Shadow" inventory of Foreclosed Homes
Economic activity continued to improve since the last report across all twelve Federal Reserve Districts, although many Districts described the pace of growth as "modest."
Quick, More Stimulus!
Paul Krugman, Brad DeLong and others are now calling for bigger and better stimulus in the hopes of decreasing unemployment more rapidly. Most of this is wishful thinking or, should I say, value-signaling.
"Did You Know?"
Charitable giving fell 3.6 percent in 2009. Americans donated $303.75 billion in 2009, the second worst year since the survey began in 1956. The worst year was 1974, when giving fell an inflation-adjusted 5.5 percent
Stimulus Talk Yields to Calls to Cut Deficits
President Obama is discovering that the tools available to him last year — a big economic stimulus and action by the Federal Reserve — are both now politically untenable.
More Job Openings, but Employers Slow to Hire
There were more job openings in April but employers didn’t rush to fill them.
Economist: Blame Government for the Crisis
Russell Roberts of George Mason University says he believes that it was inept government policy, not Wall Street greed, which allowed the financial system to spin out of control.
Senators Appear Open to Raising Capital Requirements for Financial Sector
Senate lawmakers appeared resolved Tuesday to rework capital requirements to force financial institutions to raise as much as $1 trillion in new reserve funds.
Obama tells agencies: Cut 5%
The administration issued new budget guidance calling on non-security agencies to propose ways to cut their budgets by 5%, and called on all agencies to identify their worst-performing programs.
Wholesale Inventories in U.S. Rose 0.4% in April
Inventories at U.S. wholesalers rose in April for a fourth month, accompanied by a jump in sales that signals companies will ramp up orders to meet demand.
Research, Reports & Studies
The Financial Crisis: Moral Failure or Cognitive Failure?
This may be our first epistemologically]driven depressionc That is, a large role was played by the failure of the private and corporate actors to understand what they were doing.
Are Government Workers Underpaid?
Once all promised benefits are included, how do government employees compensation at all levels measure up against private-sector workers.
The Broadband Credibility Gap
Although the Chairmanfs gThird Wayh may provide the Commission with a perceived blanket of legal comfort, that legal certainty comes at the expense of financial uncertainty.
Economists’ Commentary
ZYWICKI: Why aren't banks lending?
Despite constant urging by Washington for banks to increase their lending, credit conditions remain tight.
How Many Employers Will Drop Health Coverage Under Obama Care?
Even if you buy the deficit-reduction assumptions employed by advocates… a wave of unexpected employer coverage drops would wipe out any deficit reduction.
Graphic of the Day
Private vs. State & Local Government Workers’ Total Hourly Compensation
See: What does the Federal Budget Freeze Look Like?
See also: Small Businesses Remain Best Reflection of Weak Economy
Blogs
Fed's Beige Book: "modest" economic growth, "Shadow" inventory of Foreclosed Homes
Economic activity continued to improve since the last report across all twelve Federal Reserve Districts, although many Districts described the pace of growth as "modest."
Quick, More Stimulus!
Paul Krugman, Brad DeLong and others are now calling for bigger and better stimulus in the hopes of decreasing unemployment more rapidly. Most of this is wishful thinking or, should I say, value-signaling.
"Did You Know?"
Charitable giving fell 3.6 percent in 2009. Americans donated $303.75 billion in 2009, the second worst year since the survey began in 1956. The worst year was 1974, when giving fell an inflation-adjusted 5.5 percent
Tuesday, June 8, 2010
6/8/10 Post
News
Bernanke doesn't expect U.S. double-dip recession
"My best guess is we'll have a continued recovery but it won't feel terrific."
California Is Stuck in First Gear
California is rebounding more slowly than the rest of the U.S., weighing down the nation's recovery and underscoring how hard-hit the state remains on the eve of Tuesday's primaries.
Small Firms Face Higher Payroll Tax Under House Plan
…some business owners and their Washington lobbyists argue that the tax would put a damper on entrepreneurial activity at a time the economy can ill afford it.
Drumbeat for Fed rate hike grows louder
The drumbeat from some Federal Reserve officials for the central bank to raise interest rates grew louder on Thursday.
Fedspeak Highlights
Here are some highlights from speeches since the last meeting of the rate-setting Federal Open Market Committee.
Beware of falling prices
Falling prices for the raw materials of many industries have set off deflation warning bells for some economists, possibly signaling another global economic downturn.
Research, Reports & Studies
What Can We Learn from the Greenspan Commission?
...the key lesson from the Greenspan Commission is that government action will be required to address entitlement spending at some point to avoid the exhaustion of the social insurance trust funds.
Extraordinarily Large Band-Aids
...it is a delusion to interpret economic statistics suggesting an economic turnaround over the past year without factoring out the extent to which that has been driven by unsustainable levels of deficit spending.
Economists’ Comments
Are You Smarter Than A Fifth Grader?
Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians?
LIBOR: Liquidity Or Insolvency?
Uncertainty will rule the day until policy makers face the reality that markets need to know. It also means that there will be continued pressure in the short run on the euro, until the fiscal situation is finally resolved.
Secondary Sources: Post-Keynesianism, Emerging Markets, Inflation Targeting
A roundup of economic news from around the Web.
Graphic of the Day
Our Unsustainable Debt
See also "Congressional Contest" on WSJ's interactive Google map.
Blog
Administration Advances Plan to Federalize Private Pension System
Supporters say these changes are needed to ensure Americans save more for their retirement and have lifetime income options that prevent them from outliving their retirement savings
Low Labor Turnover, Job Openings Increase in April
There were 3.1 million job openings on the last business day of April 2010. The job openings rate increased over the month to 2.3 percent. The hires rate and the separations rate were unchanged.
A Lack of Trust
The lack of trust is that those in authority will go too far unless they are reined in, even if too soon.
"Did You Know?"
California, Oregon, Wisconsin, New York Connecticut, New Jersey, and Maryland all had a Millionaire's Tax as of 2009.
Bernanke doesn't expect U.S. double-dip recession
"My best guess is we'll have a continued recovery but it won't feel terrific."
California Is Stuck in First Gear
California is rebounding more slowly than the rest of the U.S., weighing down the nation's recovery and underscoring how hard-hit the state remains on the eve of Tuesday's primaries.
Small Firms Face Higher Payroll Tax Under House Plan
…some business owners and their Washington lobbyists argue that the tax would put a damper on entrepreneurial activity at a time the economy can ill afford it.
Drumbeat for Fed rate hike grows louder
The drumbeat from some Federal Reserve officials for the central bank to raise interest rates grew louder on Thursday.
Fedspeak Highlights
Here are some highlights from speeches since the last meeting of the rate-setting Federal Open Market Committee.
Beware of falling prices
Falling prices for the raw materials of many industries have set off deflation warning bells for some economists, possibly signaling another global economic downturn.
Research, Reports & Studies
What Can We Learn from the Greenspan Commission?
...the key lesson from the Greenspan Commission is that government action will be required to address entitlement spending at some point to avoid the exhaustion of the social insurance trust funds.
Extraordinarily Large Band-Aids
...it is a delusion to interpret economic statistics suggesting an economic turnaround over the past year without factoring out the extent to which that has been driven by unsustainable levels of deficit spending.
Economists’ Comments
Are You Smarter Than A Fifth Grader?
Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians?
LIBOR: Liquidity Or Insolvency?
Uncertainty will rule the day until policy makers face the reality that markets need to know. It also means that there will be continued pressure in the short run on the euro, until the fiscal situation is finally resolved.
Secondary Sources: Post-Keynesianism, Emerging Markets, Inflation Targeting
A roundup of economic news from around the Web.
Graphic of the Day
Our Unsustainable Debt
See also "Congressional Contest" on WSJ's interactive Google map.
Blog
Administration Advances Plan to Federalize Private Pension System
Supporters say these changes are needed to ensure Americans save more for their retirement and have lifetime income options that prevent them from outliving their retirement savings
Low Labor Turnover, Job Openings Increase in April
There were 3.1 million job openings on the last business day of April 2010. The job openings rate increased over the month to 2.3 percent. The hires rate and the separations rate were unchanged.
A Lack of Trust
The lack of trust is that those in authority will go too far unless they are reined in, even if too soon.
"Did You Know?"
California, Oregon, Wisconsin, New York Connecticut, New Jersey, and Maryland all had a Millionaire's Tax as of 2009.
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