8/2/10 Post

BUZZ: Economic Outlook: Data to show EU and US divergence

News
House approves bill to crack down on offshore drilling
The legislation, which passed 209-193, has yet to be taken up in the Senate, where partisan disagreements will likely delay final consideration of a joint House-Senate bill until after the August congressional recess.
Those predicting a double dip recession may be helping to cause one by raising consumer anxiety
Most mainstream economists agree the recovery road will be long and bumpy, but probably without leading into double-dip territory. But there are plenty of other voices warning of grimmer times ahead.
Former Federal Reserve chief Alan Greenspan says economic recovery is modest but 'in a pause' Greenspan says long-term unemployment is pulling the economy apart even though large banks are doing much better and large companies are in excellent shape.
Why fears of hyperinflation won't die
Deflation may be on Federal Reserve Chairman Ben Bernanke's tongue, but inflation is wagging in at least one corner of the economy.
China manufacturing growth slows
China's manufacturing sector is still growing, but the pace is starting to slow. That could set off some alarm bells in the financial markets about the state of the global economy.
The red-hot debate over raising the retirement age
Of all the flash points in the debate over Social Security, few generate as much heat as raising the retirement age. It's time to lay bare the arguments.
Manufacturing expands in July, but at slower pace
The Institute for Supply Management (ISM) index of U.S. manufacturing dropped to 55.5 in July from 56.2 in June. Any score above 50 indicates growth in the manufacturing sector.
Economy Gets Healthier as Company Yields Narrow to Treasuries
For all the concern about another recession, the outlook for America’s economy is looking brighter in the bond market, where investors are accepting the lowest yields since 2004 to lend companies money.
Little improvement in labor market seen in July
The U.S. economy likely added about 100,000 private sector jobs in July. This will be slightly above the 83,000 private sector jobs added in June.
Bernanke says states should build bigger buffers
Federal Reserve Chairman Ben Bernanke on Monday called for states to build up larger rainy-day funds as he said consumer spending is set to sustain the economic recovery.
Geithner: Bank reform cannot move at 'glacial' pace
Treasury Secretary Timothy Geithner said that Bank and securities regulators need to move quickly to write rules based on sweeping bank reform legislation approved in the wake of the financial crisis.
Hopes for a Rebound Show a Modest Increase
Executives at U.S. Companies Expect Improvements in Revenue in Next 12 Months, but Hiring Is Tentative, Survey Says.
Hurdles Deter Obama’s Pledge to Double Exports
in hundreds of pages of comments filed last week with the Commerce Department, industries as varied as winemaking and long-haul trucking identified dozens of smaller hurdles — including regulatory barriers and a shortage of customs officers — that they claim hinder trade.
Investors on Defense as Fed Considers New Game Plan
The combination of a lower growth rate and a downward trajectory puts the economy on a worrisome path. The Conference Board, a New York-based consultancy, expects GDP growth will slow to a 1.6% pace in the second half of this year.
Prime Numbers: State Woes Threaten National Economy
Nearly two-thirds of 42 economists surveyed by the Associated Press viewed the intense pressure on state and local finances as either a “significant” or “severe” threat to the national economy.
Dollar Could Lose if U.S. Economy Slips More
...if data continue to point to a slowing U.S. economy, the dollar should also weaken against the yen, against which the dollar dropped to an eight-month low on Friday.
Economic Reports This Week
Data this week includes the Institute for Supply Management manufacturing index for July and construction spending for June (Monday); personal income and spending for June, pending home sales for June and factory orders for June (Tuesday); ADP employment for July and the I.S.M. service index for July (Wednesday); weekly jobless claims (Thursday); and unemployment for July and consumer credit for June (Friday).
Business Tax Surprise in Health Care Law
Tucked into the new health care law is a requirement that could become a paperwork nightmare for nearly 40 million businesses. They must file tax forms for every vendor that sells them more than $600 in goods. The goal is to prevent vendors from underreporting their income to the Internal Revenue Service. The government must think vendors are omitting a lot because the filing requirement is estimated to bring in $19 billion over the next decade.
Rep. Ryan pushes budget reform, and his party winces
He is determined to persuade colleagues to get serious about eliminating the national debt, even if it means openly broaching overhauls of Medicare and Social Security.
Bernanke faces US growth mysteries
There are two ways to read the revisions. One is that the economy is even further from using its full capacity than previously believed – an argument for more easing by the Fed. The other is that the economy’s capacity to grow is less than thought.
Turbines Too Loud? Here, Take $5,000
Patricia Pilz of Caithness Energy, a big company from New York that is helping make this part of Eastern Oregon one of the fastest-growing wind power regions in the country, is making a tempting offer: sign a waiver saying you will not complain about excessive noise from the turning turbines — the whoosh, whoosh, whoosh of the future, advocates say — and she will cut you a check for $5,000.

Blogs
Welfare in the Bronx: Personal Responsibility Is Still the Key
Remarkably, the amount government spends on means-tested welfare is four times what would be necessary to lift every poor person out of poverty.
It’s About the Spending, Speaker
The solution to our economic troubles is not higher taxes, it is less spending: If the federal government managed to return to the per-household spending level of the Reagan administration, the budget would be balanced by 2012 without any tax hikes.
Federal Judge Denies Obama Administration’s Motion to Dismiss Virginia’s ObamaCare Lawsuit
Virginia’s lawsuit challenging the Obama administration’s health care reform law has cleared its first legal hurdle.
With Tax Increases Looming, CBO Does About-Face and Frets about Deficits and Debt
Now that tax increases are the main top the CBO has done a 180-degree turn and has published a document discussing the negative consequences of too much deficits and debt.
Secondary Sources: Middle Class Crisis, Government Jobs, Resilient Texas
A roundup of economic news from around the Web.
Health care and revenue competition in Britain
...although full details are not yet clear, it seems doctors will be much more in charge, in a decentralized manner.
Number of the Week: Default Repercussions
25%: The share of Americans with a credit score of less than 600.
Negative Equity in Underwater Homes
"There are 14.75 million underwater homes and 4.1 million of these have more than 50% negative equity (the homeowners owe 50%+ more than their homes are worth)."
Q&A: Romer Reacts to GDP Data
Christina Romer, who chairs the president’s Council of Economic Advisers, spoke with the Journal about the report. She said that there is room for the government to do more to promote economic growth and jobs, and noted some encouraging signals, including a higher savings rate that indicates much of the necessary consumer retrenchment may be past.
Ending Austerity in the Austerity Debate
What is particularly interesting about this work is that it shows that important distortions can be produced by excessively low interest rates before either “full employment” is reached or the price level begins to rise at all.
Democracy as Cure to Resource Curse
...two International Monetary Fund economists, Rabah Arezki and Markus Bruckner, parse the data to find an intriguing difference among 30 commodity-exporting developing countries, between 1997 and 2007. Those that were democracies flourished during price boons; those that were autocratic didn’t.
Weekly Summary and Schedule, August 1st
The key economic report this week will be the July Employment Report to be released on Friday. It will be a busy week ...
Weak Labor Cost Data Darken Consumer Outlook
Compensation is barely growing and that highlights an obstacle to growth: consumers–even those with jobs–are strapped for cash. Without household spending rising at a healthy clip, the recovery will struggle to gain traction.
Blunt opinions, supported elsewhere but not here
I don't trust stimulus analyses which fail to assign a central role to confidence and confidence is hard to model.
Greenspan: A ‘Quasi-Recession’
The U.S. is in the midst of “a pause” in a “modest recovery” that feels like a “quasi-recession,” Greenspan said on NBC’s “Meet the Press” television program.
Growth of Problem Banks (Unofficial)
...the number of institutions on the unofficial problem bank list now over 800...
“Measuring” the impact of the stimulus
...we don’t have a reliable model of the economy in its current state. The CBO concludes that we should instead look at previously estimated relationships in the economy (holding everything else constant) and that’s the best we can do. I conclude we’re incapable of holding everything else constant and therefore the CBO’s results are fake science.
Banks, Private Benefits, and Social Benefits
...when one financial intermediary competes with another, the ability to use high leverage makes a large difference in market share and profits, even though it makes only a small difference in the ultimate cost to the the users of the intermediary's services. The ability to achieve high leverage creates private competitive benefits that far exceed the social benefits.
Estimate of July Decennial Census impact on payroll employment: minus 144,000
The employment report will be released on August 6th, and the headline number for July - including Census numbers - will probably be negative again.
Plagiarism 2.0
The mash-up culture is not a culture of plagiarism. Those who copy music, lift riffs, or appropriate images don’t usually claim authorship of the original source material or claim it as their own. They use this material in works of their own, while freely acknowledging its provenance. The creativity and originality comes from finding the right source material and putting it to good use, not from denying the original source. Whether such copying and appropriation should be legal, it’s not the same as plagiarism, as it’s sourced.

Research, Reports & Studies
We Do Not Have Liftoff
The sharp loss of demand growth will mean a substantially weaker second half of 2010 for the U.S. economy, with the possibility of negative growth by the fourth quarter.
Obamacare Only Gets Worse Upon Further Review
Based on the administration's own numbers, as many as 117 million people might have to change their health plans by 2013.
Voters Want Supersized Government To Go on a Crash Diet
Government has grown vastly more expensive but has not acted with the speed and suppleness that it did under Franklin Roosevelt in the 1930s.
Utah’s Defined-Contribution Option: Patient-Centered Health Care
The state of Utah has addressed many of the problematic issues of health care, by the creation of a defined-contribution option for employer-sponsored health insurance administered by a state health insurance exchange.
Who Decides on Health Care Value?
Bureaucrats now have the power to force private health plans to make business decisions based on regulations rather than on what is best for company or customer health.
Hudson Institute Economic Report
This week’s major news is that GDP growth slowed more than forecast in the second quarter, as consumers cut back on spending out of concern for future economic conditions.
Spending Beyond Our Means
The U.S. fiscal picture is shaping up to be a category 3 hurricane of red ink. Unless Congress takes action immediately to reduce the deficit, the deficit will inflict devastating damage on our economy.
Privatization and Nationalization Cycles
...national ownership results in more redistribution of income and more equality, but undermines incentives for effort.
Wells Fargo Economics Group: Weekly Economic & Financial Commentary
The Second Quarter Ended on a Soft Note.

Economists’ Comments & Opinions
The New Credit-Card Tricks
Just months after historic legislation banned certain billing practices, card issuers have dreamed up new ones designed to trip up consumers.
High prices will fix what politicians cannot
The fact that high oil prices survived the crisis excises the ghosts of the 1980s, and gives entrepreneurs and investors confidence to support cleaner vehicles and develop alternative fuels.
Jerry Brown's Pension Punt
This year, the Golden State is running a $19 billion deficit, at least $6.2 billion of which is owed for retiree pension and benefit payments. That number is expected to nearly triple in the next decade as the pension tsunami gains speed. All told, California's unfunded pension liability is scored at more than $120 billion, with some estimates rising to $500 billion.
Soaking the Rich
The key lesson is that higher tax rates on entrepreneurs and investors are misguided.
The Stimulus: The Government Job Creation Myth
Policymakers today have no choice but to drastically reduce spending if we are to head off the looming fiscal train wreck.
Testimony of Dr. Anthony B. Sanders Before the House of Representatives Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
Topic: “The Future of Housing Finance: The Role of Private Mortgage Insurance”
How Texas Is Dominating the Recession
Maybe it's the lack of a state income or capital gains tax. Or the dearth of union workers. Or the plentiful labor supply on the border of Mexico, or the lower wages, or the stable and lean regulations. There's something about Texas that makes it the most popular place for business to do its business, as CEO Magazine and CNBC both found the last year. As Brooke Rollins, president of the Texas Public Policy Foundation, told me: "Our research shows that the more tax incentives and less regulation you have, and the less likely businesses are to get sued, the more likely it is they'll want to come and prosper in your state."

The wage equals the marginal product of labor, but the MPL depends on the marginal production function. -Garett Jones, Twitter

Graph of the Day
Mercatus: Companies Reluctant to Spend in Uncertain Regulatory Environment
VIDEO: The Decline: The Geography of a Recession
See: Federal Debt Held by Public
See also: A Clear Picture of the Class Program

Book Excerpts
"Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues." –President John F. Kennedy, Economic Report of the President (1963)

Did You Know
Illinois will offer tax-free shopping this month for the first time, bringing to 18 the number of states that suspend sales tax on designated days, up from 16 states in 2009 and seven in 2000. The end of summer is the most popular time for tax holidays: 15 states will suspend sales taxes this month.

7/30/10 Post

BUZZ: U.S. Growth Slowed in 2nd Quarter

News
States Going Deeper into Debt
The amount of debt that states are carrying spiked 10.3% last year to $460 billion, according to Moody's Investors Service. The debt is paid for through taxes and fees, making residents ultimately responsible.
South America Beckons to U.S. Firms
With the U.S. and European economies recovering in fits and starts and companies' beachheads in China providing more potential than profits at this point, robust demand from Brazil, Argentina and other countries in South America has bailed out companies that would have otherwise fallen short of expectations.
Treasuries Gain as Growth Slows, Pushing 2-Year Note Yields to Record Low
Treasuries climbed, pushing two-year note yields to the lowest ever, as a government report showing U.S. economic growth slowed in the second quarter spurred demand for the world’s safest securities.
Economic Growth Now Hinges on Consumer Spending
The fading inventory effect means growth now largely depends on how much people are willing to spend on finished goods—not the calculus at companies about how much they need to build stocks to meet future demand.
The New Abnormal
Americans are broke and depressed—and also swilling $3 lattes and waiting in line for iPhones. Welcome to the schizophrenic economy
Strong Profits. Weak Economy. Odd Couple?
GDP growth, which is seasonally adjusted, is usually reported on a quarter-to-quarter basis. Corporate profits, which can be highly seasonal, are typically expressed in year-on-year terms. When GDP growth is viewed on an annual basis, the story is more consistent: Growth turned positive in the fourth quarter, the same time S&P 500 earnings growth resumed after nine quarters of declines.

Blogs
Economists React: GDP Signals Companies More Optimistic Than Consumers
Economists and others weigh in on the slower gross-domestic-product growth.
Memo to My Beloved NY Times: The Stimulus Was Not $787 Billion
When the stimulus package was adopted in February 2009, the Congressional Budget Office estimated its cost for fiscal years 2009 through 2019 at $787 billion. In Appendix A of its January 2010 economic and budget outlook, however, CBO revised its estimate to $862 billion. The agency found that unexpectedly high unemployment had boosted the cost of the package’s jobless and food stamp benefits and that state and local governments had issued an unexpectedly large volume of the new Build America Bonds authorized by the stimulus package. These differences, as reinforced and offset by other minor changes, added $75 billion to the estimated cost.
Wage, Benefits Costs Rising Slowly
The Labor Department’s Employment Cost Index, which measures changes in the cost of labor, rose 1.8% for all civilian workers in the second quarter compared to a year ago. It was the largest year over year increase since the second quarter of 2009. The index rose 0.5% on a quarterly basis.
Some Further Comments on Blinder-Zandi
There is no specialization and trade in a representative agent model. Since I think that economic activity consists of sustainable patterns of specialization and trade, in my view these models contain no economic activity. Consequently, they capture none of the characteristics that I think are important for explaining macroeconomic outcomes.
Which country has the largest (percentage) ramp-up fiscal stimulus?
According to the IMF it is Saudi Arabia.
Revisions: Real GDP and PCE far away from previous peak
In fact real GDP in Q2 2010 was lower than originally reported for Q1 2010. And annualized real GDP is still 0.85% below the pre-recession peak. This means that real GDP would have to grow at a 3.4% rate over the next four quarters to reach the recession peak by the end of Q2 2011.

Research, Reports & Studies
Social Entrepreneurship: Concepts and Implications for Problem Solving
"Social entrepreneurship" describes the efforts of highly motivated individuals and organizations to solve economic and social problems for the benefit of society in general through the use of business methods and innovative strategies. These solutions are the result of the application of new resources or new combinations of existing resources and of the mobilization of diverse funding mechanisms which increase the sustainability, quality, and scalability of social enterprises.

Economists’ Comments & Opinions
Bank reforms to pinch consumer credit
Call it the law of unintended consequences. That's what many finance experts are saying will be the result of Congress' latest attempt to micromanage the world of consumer credit through the financial-reform measure President Obama signed into law last week.
Urban Myths
...the number of private-sector jobs on average each month has been 96,000. That's well below the 125,000 that economists say is needed each month just to keep up with growth in the work force. We're not even treading water.
Son of TARP
More politically directed credit, this time for small banks.
The Growth Imperative
We could be in for a long, slow decade. There’s a confluence of forces that are probably going to retard economic vitality.
Who Decides on Health-Care Value?
New rules to micromanage insurance companies could cost patients.
Want to Stimulate the Economy? Lower the Retirement Age to 55 Now!
If enough Boomers left the job market, it would even flip the current dynamic of too-many-people-chasing-too-few-jobs upside down, and create a tight labor markets. Tight labor markets drive up wages.
What Would Happen if the Bush Tax Cuts Expire
Much of the focus has been on the wealthy, but what will the expiration of the tax cuts mean for everyone else?

Graph of the Day
American Thinker: 2009 Median Hourly Earnings, Selected Occupations
See: US State Deficits: Minding the Gap

Book Excerpts
"Greater consumption due to an increase in population and growth of income heightens scarcity and induces price run-ups. A higher price represents an opportunity that leads inventors and businesspeople to seek new ways to satisfy the shortages. Some fail, at cost to themselves. A few succeed, and the final result is that we end up better off than if the original shortage problems had never arisen. That is, we need our problems, though this does not imply that we should purposely create additional problems for ourselves." –Julian Simon, The Ultimate Resource 2 (1996)

Did You Know
"China’s chief currency regulator, Yi Gang, revealed today that China has overtaken Japan as the world’s second-largest economy, and is now dwarfed only by the United States. However, projections from banks and economists suggest that China will trump the U.S. by 2025."

7/28/10 Post

BUZZ: Haven appeal of US Treasuries wanes

News
AMERICA’S NEW HEALTH CARE SYSTEM REVEALED
Updated Chart Shows Obamacare's Bewildering Complexity
“For Americans, as well as Congressional Democrats who didn’t bother to read the bill, this first look at the final health care law confirms what many fear, that reform morphed into a monstrosity of new bureaucracies, mandates, taxes and rationing that will drive up health care costs, hurt seniors and force our most intimate health care choices into the hands of Washington bureaucrats,” said Brady, the committee’s senior House Republican. “If this is what passes for health care reform in America, then God help us all.”
Brownback, the committee’s ranking member, added, “This updated chart illustrates the overwhelming expansion of government control over health choices and the bewildering complexity facing everyone affected by this law. It doesn’t take long to see how the recently signed health care bill causes a hugely expensive and explosive expansion of federal control over health care. Personal choices that should be between a doctor and a patient will quickly be strangled in a never ending web of bureaucracy.
- Committee News, Joint Economic Committee

Durable-Goods Orders Slide
Demand for U.S. manufactured durable goods slid in June for a second consecutive month in another sign the manufacturing sector expansion is slowing.
Home Prices Rise but Outlook for Sector Dims
Consumer Confidence Dropped Again in July.
Texas Battles Health Law Even as It Follows It
...the law’s advocates argue that Texas stands to gain as much as any state. But leaders in Austin are focused on the fiscal threat it poses, which they estimate could cost the state $27 billion in the 10 years beginning in 2014.
Public Employees Get More Benefits
An annual scorecard on benefits shows that public employees continue to have richer benefits than their private-sector counterparts, but squeezed state and local budgets could push governments to start cutting back.
Earnings Streak Defies Consumer Fears
The profit recovery isn't something that consumers, coping with stagnant wages, a weak jobs market and flat to declining housing values, feel. And it shows in their mood and in recent retail spending declines.
Congress passes trade bill extending tariff relief for manufacturing components
Congress has passed legislation that temporarily reduces or suspends tariffs on 639 items, mostly components that American manufacturers use in their production processes.
SEC: More transparency coming
The Securities and Exchange Commission will make it easier for the public to join in the rulemaking discussion, as required by the new Wall St. reform law.
Home ownership falls to lowest level in 11 years
The Census Bureau said the home ownership rate fell to 66.9% in the second quarter of 2010, down half a percentage point from the previous year. The home ownership rate was 67.1% in the first quarter of the year.
Employers get tough on insuring 'family'
Beginning next year employers will have to provide coverage for dependents of employees 'till age 26. That will further inflate coverage costs for companies at a time when employers are already bracing for a 9% jump in their health care plan expenditures in 2011.
Capital Goods Orders in U.S. Climb, Signaling Investment Pickup
Orders for non-military capital equipment excluding aircraft climbed 0.6 percent last month after jumping 4.6 percent in May.
Toned-down Senate energy bill step in right direction, Obama says
President urges comprehensive bill as Senate, House mull smaller ones. For the time being, the president's goal of a sweeping bill to address climate change and put a cap on carbon emissions looks elusive at best.
BP taking tax credit from Gulf spill
BP PLC will reduce its contribution to U.S. coffers by roughly $10 billion due to a tax credit the company is claiming it incurred from the Gulf of Mexico oil spill.
Cities threaten to cut jobs
Cash-strapped cities and counties have been cutting jobs to cope with massive budget shortfalls -- and that tally could edge up to nearly 500,000 if Congress doesn't step up to help.

Blogs
Secondary Sources: Stimulus Effects, Federal Debt, Forecasts
A roundup of economic news from around the Web.
‘Public Employees Get More Benefits’
Comparing salaries between public- and private-sector employees is a relatively straightforward process. Comparing benefits is much less so. Nevertheless, despite some shoddy reasoning in today’s Wall Street Journal article, there’s a good case to be made that public-sector benefits are significantly more generous than those paid to the typical American worker.
Housing, Rental Vacancies Flat From Year Ago
The data are just the latest to show that home vacancies remain high despite low interest rates and federal tax credits designed to spur home sales.
Durable Goods orders fall 1% in June
This was well below expectations, and is further evidence of a slowdown in the manufacturing sector.
Words, Not Deeds, Are Central Bank’s Main Power
New research on monetary policy is reinforcing the idea that when it comes to the Federal Reserve, watching what officials say is as much or maybe even more important than watching what they do.
MyTaxBurden Calculator Review
The bottom line? The MyTaxBurden calculator is a very well done tool that will allow its users to obtain high quality information of special relevance to them.
MBA: Mortgage Purchase Applications increase slightly last week
Although the weekly applications index increased slightly, the 4-week average is still near the levels of 1996.
Ross Douthat's case against cap-and-trade
The bill seems to bureaucratize the energy sector, forgo most of the revenue opportunities, produce massive time consistency problems (postpone real adjustment and then give out more permits over time), and all without getting public buy-in to the idea of higher carbon prices.
No, There Are NOT “Five Job Seekers for Every Job Opening” “There are now roughly five unemployed people for every available job.” Regardless how often you hear this, the statement is completely false.
Ready for the Next Trillion-Dollar Bailout?
Obamacare has been rightly blasted as fiscally irresponsible, yet few have noticed what may be Obamacare’s largest ticking entitlement time-bomb: the CLASS Act.
100 Days Later, Obama Still Failing the Gulf
President Obama’s administration has turned a crisis into a disaster, and someone needs to be held accountable.
The Good, the Bad, and the Early in the Senate Spill Bill
At the very least, Senators should refrain from the instinct to “do something” on the oil spill and take a close look at the legislative proposal on the table.
Contract on America, Parody Actually Sounds Pretty Good
The Democratic National Committee is announcing today the “Republican Tea Party Contract on America.” Echoing Newt Gingrich’s 1994 “Contract with America,” the faux manifesto contains the following ten points:

Research, Reports & Studies
U.S. Long-Term Debt Situation Is One of the World’s Worst
This year, the U.S. public debt is projected to reach 62percent of the economy—up from 40 percent in 2008 and nearly double the historical average, according to recent CBO estimates.
Spain Is Caught Up in Self-Delusion
Spanish authorities have deluded themselves into believing that their economy is about to rebound and that Spain can muddle through, but as Greece painfully learned earlier this year, it is better to get ahead of the policy curve than wait for a full-blown financing crisis.
Dividends, Share Repurchases, and Tax Clienteles: Evidence from the 2003 Reductions in Shareholder Taxes
This paper jointly evaluates firm-level changes in investor composition and shareholder distributions following a 2003 reduction in the dividend and capital gains tax rates for individuals.

Economists’ Comments & Opinions
Atlas Didn't Shrug
He's just sitting on his hands while he confronts regulatory and tax uncertainty.
Arizona's Immigration Surprises
The new law will be a boon to lawyers and a burden on police and businesses.
Government Austerity: The Good, Bad And Ugly
Spending cuts: good; tax hikes: ugly.
The last gasp of government.com
Commentary: History doesn't always repeat itself but it often rhymes.
World economy: Vulnerable to vertigo
The picture is one of slow underlying growth coupled with austerity in the public sector in advanced economies and much faster growth in the emerging world.
88 keys to economy
Our little piano fable takes us to where we are in America today. It's too bad that the voices of the lonely souls are being drowned out by the cacophonous screams of the stimulus crowd.
Financial Reform Bill Means Job Losses on Wall Street
The President signed a new law last week governing financial services. The measure is projected to destroy jobs on Wall Street. The Business Roundtable estimates that this new law may discourage investment and job growth. It says the law “takes our nation in the wrong direction.”
What's Their Plan?
There are really only three options for Social Security reform: raise taxes, cut benefits or invest privately.

Graph of the Day
JEC: Your New Health Care System
See: What a Toxic Asset looks like
See Also: President Obama Job Approval

Book Excerpts
"On the visible level—the result of years of increasingly irrational government manipulation of the economy—the diagnosis was inflation, recession, and unemployment. This diagnosis was easily made and communicated to the public because everyone could see… On the invisible level—which is to say, the long-range casual level—the diagnosis was more extensive and even more disturbing, but it was rarely talked about at all." –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
Releasing criminals back into society increases crime. Former prisoners have high arrest rates after returning to society. A Justice Department Bureau of Justice Statistics study of 272,111 state prisoners released in 1994 found that two-thirds of prisoners are rearrested within three years. After release, these offenders generate:
• Over 744,000 total arrests,
• 2,871 arrests for murder,
• 2,362 arrests for kidnapping, rape, kidnapping,
• 2,444 arrests for rape,
• 3,151 arrests for other sexual assaults, assaults,
• 21,245 arrests for robbery
• 54,604 arrests for assault.

7/27/10 Post

BUZZ: Consumer Confidence Falls, Lowest Since February

News
Waiting for home prices to come back quickly? Don't hold your breath.
Despite four years of falling prices and recent signs that they were finally bottoming out, homes are expected to lose still more value in many metro areas over the next year.
The tax hike nobody's talking about
Get ready for a smaller paycheck. At least that's what could happen if Congress doesn't approve President Obama's proposal to extend the Making Work Pay tax credit soon.
States face another $12 billion budget shortfall
States filled an $84 billion gap to balance their 2011 fiscal year budgets, which took effect earlier this month. But they could collectively face a new $12 billion hole if Congress fails to help cover growing Medicaid costs.
The fear economy
Uncertainty about the economy is proving pretty scary, and a major drag on the recovery.
Home Prices in 20 U.S. Cities Rose More Than Forecast
The S&P/Case-Shiller index of property values increased 4.6 percent from May 2009, the biggest year-over-year gain since August 2006.
Investors will have more power in 2011
The Securities and Exchange Commission is committed to adopting rules that would give greater power to shareholders and investors next year.
August conference set on what next for Fannie and Freddie
The Obama administration has scheduled an Aug. 17 conference on the U.S. housing finance system, including mortgage-finance giants Fannie Mae and Freddie Mac.
Euro-zone credit expands at a crawl
M3, the broadest measure of money supply in the 16-nation euro zone and the ECB's favorite measure of near-term inflation pressures, grew 0.2% in June compared to the same month last year, the first positive reading since October.
Top 10 consumer complaints
These are just a few of consumers' biggest complaints, according to a survey released Tuesday by the National Association of Consumer Agency Administrators and the Consumer Federation of America.
Course of Economy Hinges on Fight Over Stimulus
The debate is more than academic. It is shaping congressional decisions on whether to respond to the distressing prognosis for the U.S. economy with more government spending or a dose of deficit reduction.
Defense can't account for $8.7 billion
The Defense Department is unable to account for $8.7 billion of the $9.1 billion in Development Fund for Iraq monies in received for reconstruction in Iraq. This according to a study published today by the Special Inspector General for Iraq Reconstruction.
States Expect Tax Collections to Rise
State governments expect tax collections to grow for the first time in two years as tax increases and a recovering economy lead to higher collections.
North Dakota, Alaska lead US job creation, study says
Forty states have fewer jobs now than five years ago.
Temp Jobs Gain as Uncertainty Reigns
Despite rising profits, big businesses remain hesitant to hire permanent employees, a reluctance that is fueling demand and higher profits for the companies providing temporary staffing services.
Property Taxes Soar to Close Budget Gaps
Homeowners are feeling the strain of higher property taxes as state and local governments struggle to balance their budgets.
IMF Sees Yuan as Undervalued
Despite China's decision to adopt a "flexible" exchange rate, the International Monetary Fund's long-delayed review of the Chinese economy found that the yuan is "substantially undervalued," according to IMF officials.
Google eyes more government deals for online apps
Google Inc. is gearing up to sell its e-mail and other Web-hosted applications to a wider range of government agencies after winning a prized security clearance.
Dow Climbs 100.81 Points, Now Up in '10
The Dow Jones Industrial Average closed up 100.81 points, or 0.97%, to 10525.43, with all but one component rising. The Dow's three-day winning streak has pushed the index back into positive territory for the year.
Texas beats Virginia for best-business title
States come out winners again in an analysis of 10 categories

Blogs
Public Service Is Not What It Used to Be
Managing the city of Bell, California, is apparently twice as challenging as being President of the United States. The Los Angeles Times reported on July 15, that Bell’s soon-to-be-former Chief Administrative Officer Robert Rizzo earns $787,637 a year.
Tax Break for the Trial Lawyers: A Bad Idea
Do the nation’s trial lawyers deserve a taxpayer bailout? That’s what they’re after: a special-interest tax break of $1.6 billion.
Let’s Not Make a Deal
Now that the President’s signature foreign policy achievement, the New START nuclear agreement with Russia, is on the ropes, the left is again back to their hyperbolic ways.
Chinese Investment: Danger or Opportunity?
China doesn’t invest widely in the U.S due to political interference here. For understandable reasons, Chinese investment in technology has been blocked.
Rep. Paul Ryan (R-WI) Tells MSNBC Where to Cut
Rep. Paul Ryan (R-WI) made the case for preventing President Barack Obama’s impending job killing tax tsunami.
Age is Not the Only Number for Social Security
There are other ways of looking at the impact of raising the retirement age, and more structural – dare I say “progressive” – ways of reforming Social Security in the context of alleviating the long-term deficit problem.
Dallas Fed: Manufacturing Activity Remains Sluggish in July
...with the inventory adjustment over, export growth appearing to slow, and domestic consumer demand sluggish, these surveys might provide a hint of weakness in the manufacturing sector.
A Look at Case-Shiller, by Metro Area (July Update)
The S&P/Case-Shiller Composite 20 home price index, a broad gauge of U.S. home prices, posted a 1.3% gain in May from a month earlier and rose 4.6% from 2009, as the expiration of a federal tax credit boosted prices.
Goats do a better job than government workers
According to a June 2010 report on the use of goats, it costs an annual $5,300 to employ government workers to clear the brush and $1,995 to “employ” goats. Also, clearing the brush took 1 week when government workers did the job, but the goats did it in just 3 days.
Q&A: Rethinking U.S. Poverty Measure
It is pre-tax money income, which is compared to thresholds that were set in the ’60s. It’s bad because it doesn’t account for taxes or transfers such as the earned income tax credit, Medicaid, public and subsidized housing, food stamps. None of those enter the official measure even though those are the main things we’ve done to reduce poverty over the past 30 years.
Structural Unemployment
...a sustainable pattern is one in which comparative advantage is realized. An unsustainable pattern is one in which comparative advantage is not realized, presumably because people are deceived for a while about the costs of their enterprises.
Health Care Reform's Terrible, Tiny Tax
...starting in a few years, businesses will have to provide 1099s for goods as well as services.
Q2 2010: Homeownership Rate Lowest Since 1999
The homeownership rate increased in the '90s and early '00s because of changes in demographics and "innovations" in mortgage lending.
Secondary Sources: Basel III, Structural Unemployment, Securitization
A roundup of economic news from around the Web.
The Limits of Enforcement
In the case of the 1099s, at $1.7 billion a year I don't see how the increased taxes can possibly justify the enormous new compliance burden, especially when you consider that some of that burden will be a direct cost to the government in the form of IRS agents dispatched to untangle the inevitable false flags in the audit system.
Economists React: European Stress Tests Leave Unanswered Questions
Economists and others weigh in on the European stress tests.
Mark Thoma Doesn't Get It
What he has not shown us and, more upsetting, what so few advocates of government intervention even try to show us, is how a government regulator will have the right incentive to do the right thing.

Research, Reports & Studies
How the Death Tax Kills Small Businesses, Communities—and Civil Society
What does the death tax kill? The best of American life and civil society itself. The death tax is simply antithetical to the core of the American dream.
Wells Fargo Economics Group: New Home Sales Bounce Off Their Revised May Low
New home sales rose 23.6 percent in June but the increase came with substantial net revisions to the previously published data. Total June sales net of revisions would have been just 268,000.
CBO: Federal Debt and the Risk of a Fiscal Crisis
Over the past few years, U.S. government debt held by the public has grown rapidly—to the point that, compared with the total output of the economy, it is now higher than it has ever been except during the period around World War II.
The Evolution of Rule of Law in Hayek's Thought, 1935-1955
Friedrich Hayek‘s interest in the ideal of rule of law as the centerpiece of a free society grew out of his analysis of the nature of centralized economic planning. This paper traces the development of rule of law in Hayek‘s thought from his early studies on economic planning through his political analysis of economics and political life as contained in The Road to Serfdom to his lectures on The Political Ideal of the Rule of Law delivered in Cairo in 1955.

Economists’ Comments & Opinions
On The Way: Job-Killing Tax Hikes
The top 5% who will be targeted for tax hikes by the Obama administration at year-end are the nation's premier small business creators and entrepreneurs. The tax hike against the "rich" is in fact a tax hike on small businesses.
Economists dispute effect of US stimulus
Robert Barro of Harvard University argues that they find big effects for stimulus because they assume that higher government spending causes higher output, whereas it might be the other way around.
Financial Reform Bill: Don’t Bank on Government Regulation
Our faith in government to make things worse has yet again been vindicated. Government tends to create problems, and then respond by developing new rules that cause even more harm.
Obama's Soft-Core Socialism
A comedian or satirist could not have come up with the recent scenario of Treasury Chief Timothy Geithner and other Administration officials suddenly trying to reassure corporate chieftains that the Obama Administration is pro business and loves free enterprise.
Section in Health-care law puts serious accounting strain on small businesses
During the heat of the debate over heath care reform, House Speaker Nancy Pelosi famously told the American people, “we have to pass the bill so that you can find out what is in it.” It seems that small businesses are now doing just that, focusing in on a mandate that will raise business expenses and bury them in paperwork.
Why Jobs, Not Housing Data, Is the Key
...the key figure this week won't be in the spate of housing reports but rather in Thursday's weekly tally of new claims for unemployment benefits. The best hope to reduce those stubbornly high numbers isn't for more government intervention, but for companies, fueled by more strong earnings, finally to start rehiring.

Graph of the Day
The debt continues to grow
See: How Much Money Will You Earn in Your Lifetime?
VIDEO: Financial regulation reform is now law: what’s next?
See also:New Calculator Shows How Much More Taxes Will You Pay Next Year

Promoting a Clean Energy Economy Hearing


"To observe our Administration's energy decisions is to wonder whether it has any comprehension of the future energy supply challenges our nation faces.

The drilling moratorium is already killing well paying American energy jobs, sending rigs overseas and with them our workers, equipment, capital and eventually America's traditional energy infrastructure. Given the global nature of energy production, these rigs won't be returning anytime soon.

According to a recent IHS Global Insight study, if policies were adopted by Congress or White House that effectively prevent independent oil companies from participating in future Gulf offshore development the employment loss would reach 300,000 jobs and the loss of local state and federal revenues would total $147 bilion over the next decade.

Our national economy, already suffering with 9.5% unemployment and a subpar recover, cannot be harmed further with a devastating drilling moratorium and hasty legislation that kills jobs and makes us more dependent on foreign oil.

By all means, let's help renewable energy develop its potential, but let's not foolishly thwart the growth potential of our establisthed energy industry which provides the affordable bridge to America's green future."


- Congressman Kevin Brady, Ranking Republican House Member, Joint Economic Committee


Book Excerpts
"To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm." –F.A. Hayek, The Pretence of Knowledge (1974)

Did You Know
The number of households that moved in the past year because they were evicted soared 127% to 191,000. 3.1 million households, or 18% of those who moved in the past year, said they're in a worse home, up 10% from 2007; 2.3 million, or 13%, said they're in a worse neighborhood, a 12% increase. Houses continue to shrink as the number of homes that are 4,000 square feet or larger dropped 14%.

7/26/10 Post

BUZZ: Forecast for 2011 Deficit Is Raised to $1.4 Trillion

News
Fight brews over drilling watchdog
Now the agency that oversees offshore drilling - already entangled in a sex, drugs and rubber-stamping scandal even before the BP disaster - is up for a complete overhaul.
Tax hikes for the rich: Can the economy afford them?
The debate over what Congress should do, which has been playing out for months in policy circles, is now receiving more prominent attention.
Private sector must drive economy
The U.S. economy is gradually recovering, but the private sector now must drive growth rather than the government.
New-home sales rebound from record low in June
Sales rose 23.6% in June to a seasonally adjusted annual rate of 330,000.
Obama, Republicans spar over jobs
Obama has argued that the health-care law and the economic stimulus package will save money and create jobs. But Republicans say Democrats' spending is out of control and cite the deficit as they try to regain control of Congress this fall.
Democrats' fix for thorny economic debate: Manufacturing
With their manufacturing agenda, Democrats can skip the internal stimulus versus deficit-cutting debate altogether. The party is holding close its plans for the entire legislative package.
Europe's prospects brighten as U.S. fades
Dig beneath the headline and the contrast between the United States and Britain looks even sharper. Nearly all the growth in the British economy came from the private sector, led by construction and services.
Economic Outlook: US recovery stall expected
Recent weeks have been marked by increasing concern about the slow pace of recovery in the US and by disputes among policymakers on both sides of the Atlantic about whether stimulus measures should be maintained or public deficits cut.
Britain Plans to Decentralize Health Care
Practical details of the plan are still sketchy. But its aim is clear: to shift control of England’s $160 billion annual health budget from a centralized bureaucracy to doctors at the local level.
Health Law Augurs Transfer of Funds From Old to Young
The trims mark the leading edge of a spending shift that could broaden as lawmakers grapple with a deficit expected to hit $1.47 trillion this year. Left unchanged, Medicare and Social Security will consume half of all federal spending by 2035, up from about one third today, according to the Congressional Budget Office.
At Risk: The Impact of Long Term Unemployment
Men hit hardest, suffering 75 percent of job losses.
Taleb: Government Deficits Could Be the Next 'Black Swan'
In a new edition of The Black Swan, author Nassim Nicholas Taleb warns against depending "on financial assets as a repository of value."
Next Test for Europe's Banks: Finding Funds
Europe's Tentative Economic Recovery May Hinge on Financial Institutions' Ability to Raise Billions to Lend to Business.
Cities View Homesteads as a Source of Income
The calculus is simple, if counterintuitive: hand out city land now to ensure property tax revenues in the future.
Van Jones: Stop worrying about the deficit.
The government can just take more money from rich companies.

Blogs
Secondary Sources: Jobless Recovery, Happiness and Productivity, Uncertainty
A roundup of economic news from around the Web.
New Home Sales: Worst June on Record
May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.
What Kind of Job Can You Hope to Get with Your Education? Georgetown University's Center on Education and the Workforce is out with its latest publication: Help Wanted: Projections of Jobs and Education Requirements Through 2018.
Number of the Week: Tax Cuts and Debt
0.26%: Added revenue, as a percentage of annual economic output, generated by raising tax rates on top earners.
Does Europe Have a Paul Ryan? It Needs One
I think this is what keeps Rep. Paul Ryan up at night.
Taxes With and Without Bush Tax-Cut Extension
The Tax Foundation has come up with a new tax calculator that allows people to figure out their 2011 tax burden under three scenarios.
Chicago Fed: Economic activity declined in June
"The index’s three-month moving average, CFNAI-MA3, decreased to –0.05 in June from +0.31 in May."
The Complicated Economics of a Postal Increase
The cost of a stamp has increased from 34 cents in 2001 to, if approved, 46 cents in 2011.
Measuring fiscal policy and evaluating its results
The most important, most effective, and least controversial forms of fiscal policy are the automatic stabilizers.
Good Gubmint Rithmitick!
Our ethanol follies reduce a ton of carbon for the cost of $754 per ton.
Weekly Summary and Schedule, July 25th
The focus this week will be on the Q2 GDP report to be released on Friday. There are also two key housing reports: New Home Sales on Monday and Case-Shiller house prices on Tuesday.
The Recalculation Story: A Summary
Try not to think of macroeconomics in terms of equations or in terms of aggregate demand. Try to learn to think in a new language, rather than translate from the Recalculation language to something you are used to...
Exporting Trade Fallacies
"Alas, there’s nothing special about exports – which is to say, there’s nothing special about the geographic locations in which products are sold."
Fun Facts to Know and Tell: Stimulus Job Creation Edition“… the Mid-Willamette Valley Community Action Agency in Oregon had claimed to create 205 jobs with its $397,761 in stimulus money — spending less than $2,000 per “new” job.”
More Weird Metrics for Elizabeth Warren
Todd Zywicki wrote this a few years back; it's typical of the problems with the Two Income Trap.
Unintended Consequences, Episode 5829104571
"Some major health insurance companies will no longer issue certain types of policies for children, an unintended consequence of President Barack Obama’s health care overhaul law, state officials said Friday."
The Mid-Session Review
This budget document shows what would happen to the federal budget under the Administration's economic forecast and assuming that all the President's proposed policies are adopted.
The Government's Role in the Housing Bubble
As it happens, I think that the government did play a role. A big role. But I think it's rather subtler, and thus, rather more problematic, than most people on either side are discussing.
This Week’s Sign of the Economic Apocalypse
The government’s recipe for brownies is … 26 pages long. You cannot make this stuff up.
European Bank Stress Test Results
German financial supervisors say Hypo Real Estate is the only German bank to fail stress test. All Dutch banks pass. All Spanish listed banks pass.
The White House Has Declared Class War on the Rich, but the Poor and Middle Class Will Suffer Collateral Damage
The folks at the White House apparently don’t understand, however, that higher direct costs on the “rich” will translate into higher indirect costs on the rest of us.
Federal Court Strikes Down Another Example of Overcriminalization
A Colorado federal court last week struck down another of Congress’s well-intentioned but poorly drafted criminal laws—a law that exemplifies some of the root problems of overcriminalization.
An Admission of Failure
According to Friday’s report, the Obama administration now projects that unemployment will average 9% throughout all of next year and 8.1% throughout 2012.

Research, Reports & Studies
Wells Fargo Economics Group: Weekly Econmoic & Financial Commentary
Home Is Where the Economy's Heart Is...
The Role of Immigrants in the U.S. Labor Market: An Update
...the growth of the foreign-born labor force was much slower between 2004 and 2009 than between 1994 and 2004. In that earlier period, the size of the foreign-born labor force grew at an average annual rate of more than 5 percent, whereas from 2004 to 2009, the rate was about 2 percent.
Some Welcome Signs of Life From Private Sector
The American private sector somehow seems to be exerting itself despite the vast expansion of government by the Obama administration and congressional Democrats.
Obama Defines Dysfunction with One Appointment
One of President Barack Obama's first acts in office was signing Executive Order 13502. Obama launched a dizzying flurry of actions designed to reward organized labor at the expense of everyone else. Perhaps the low point was his attempt to appoint Becker to the National Labor Relations Board.
The “Beijing Consensus” in Energy and the Environment
There are many flaws in the notion of using the Chinese economy as a model, perhaps chief among them that widespread imitation of Chinese policies would cause those same policies to no longer work for China itself.
Crisis Economics
Why were the administration's projections off the mark? What should their experience teach us regarding stimulus policies in future downturns? And what can the government do now, as unemployment remains very high, to help the patient heal faster? Trying to resolve these questions illustrates not only the difficulty confronting policymakers in a crisis, but also the inherent limitations of the economics profession — limitations that both economists and politicians would be wise to keep in mind.

Economists’ Comments & Opinions
Sam's Club Exposes The Bank Bailout Lie
By leaving the economy alone, non-traditional forms of finance grow and traditional banks decline in relevance.
Uncle Sam has worse woes than Greece
...debt alone tells us little about a country’s fiscal condition. Economists call this the labelling problem, because governments can describe receipts and payments in any way they like. Payroll taxes to fund pensions and healthcare can, for instance, be labelled as borrowing, with the future benefits called repayment less a future tax. Measured thus, the US budget deficit is 15 per cent of GDP, not 9 per cent.
Prime Numbers: Deficit Cuts A Priority for Americans
Big deficits rob national savings, pushing up interest rates and crimping private investment, which eats into economic growth. They limit the government’s ability to respond to recessions, and can erode investors’ confidence in the government’s fiscal responsibility.
The Democratic Fisc
The White House budget office offers a scorecard on Obamanomics.
Autopilot Thinking on the Bush Tax Cuts
Congressional tax analysts largely do not take into account how people and businesses react--whether they shift income into different, non-taxable investments, work more or less, or hide their income to lower their taxes.
Early Returns on ObamaCare Are Disappointing
The evidence suggests that it is a failure even by the standards of its supporters.
How financial reform could impede growth
If we have made the financial institutions much less profitable that they no longer have as much money to lend, or they're going to be so gun shy that they don't even lend to even very credit-worthy customers, then that would impact economic growth.

Graph of the Day
Mercatus Center: Marginal Tax Rates Must Nearly Double to Fund Entitlement Spending
See: Big Mac index suggests the euro is still overvalued
See also:Federal Spending per Household Is Skyrocketing

Book Excerpts
"Forecasting by bureaucrats tends to be used for anxiety relief rather than for adequate policy making." –Nassim Nicholas Taleb, The Black Swan (2007)

Did You Know
The World Trade Organization (WTO) today issued its World Trade Report 2010, an annual publication that offers definitive statistics on international trade. In recent months, media reports have widely described China as the world’s largest exporter, but today’s report indicates that the United States remained the world’s largest exporter of goods and services through 2009. China has indeed overtaken the United States and Germany to become the world’s largest exporter of merchandise.

7/23/10 Post

BUZZ: Senate Halts Effort to Cap Emissions

News
Geithner: Taxes on Wealthiest to Rise
Mr. Geithner said the White House would allow taxes on top earners to increase in 2011 as part of an effort to bring down the U.S. budget deficit. He said the White House plans to extend expiring tax cuts for middle- and lower-income Americans, and expects to undertake a broader revision of the tax code next year.
Pentagon Faces Growing Pressures to Trim Budget
At the moment, the administration projects that the Pentagon’s base budget and the extra war spending will peak at $708 billion in the coming fiscal year, though analysts say it is likely that the Pentagon will need at least $30 billion more in supplemental war financing.
Geithner bored by complaints from business about Obama policies
“Businesses always want their taxes lower and always want to live with low regulation,” Geithner said. “There is nothing remarkable, or particularly interesting frankly, that we’re in the midst of another debate, which you hear in almost any administration, with people looking for ways to help affect the outcome on the basic path of regulation and taxes.”
Home Sales Dip as Unsold Inventory Persists
Glut of Properties on Market Hints at Falling Prices Through Rest of Year as Sector Adjusts to End of Buyers' Tax Credit.
Less Money for Dead People: Obama Signs Waste Law
President Barack Obama on Thursday signed legislation intended to slash by $50 billion the taxpayer money improperly paid to dead people, fugitives and those in jail who shouldn't be getting benefits.
SEC Breaks Impasse With Rating Firms
Late Thursday the agency said it would temporarily allow bond sales to go ahead without credit ratings in bond offering documents, a move that would end an effective stalemate between ratings agencies and issuers.
Biden: 'The heavy lifting is over'
The "heavy lifting is over" when it comes to the Obama administration's legislative priorities this year, Vice President Joe Biden said Thursday evening... “Barack and I are realists," the vice president added.
Measure creating $30B lending fund for small businesses clears GOP filibuster in Senate
Democrats in Congress said the banks should be able to use the money to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets. GOP opponents called it another unwise bank bailout.
Jobless benefits restored for millions
Hours after the House voted Thursday to push back the deadline to file for extended unemployment benefits until the end of November, President Obama signed the measure into law.
Senate shelves global warming bill
Democrat leaders in the Senate decided Thursday to sideline a contentious plan to limit greenhouses gases. Instead, they will push for a much more modest energy measure which focuses on conservation and issues related to offshore drilling.
Newark mayor: No toilet paper for city offices
In a desperate attempt to fill a $70 million budget hole, Newark's mayor is taking a chainsaw to the town's budget.
Fed prepared to ease if economy weakens: Bernanke
"We are ready and we will act if the economy does not continue to improve -- if we don't see the kind of improvements in the labor market that we are hoping for and expecting,"

Blogs
The Origins of Moral Sentiments
Just as workable economic arrangements are not, and cannot be, designed and imposed by a higher power, so too, Smith explained, workable morality itself is the product not of any grand design but of the everyday actions, reactions, and observations of ordinary people going about their daily business.
Hungary debt may be downgraded by S&P and Moody's
"Moody's placed Hungary's Baa1 local and foreign currency government bond ratings on review, citing increased fiscal risks after the International Monetary Fund and the European Union suspended talks over their 20 billion euro ($25 billion) financing deal at the weekend."
What's the critical debt-gdp ratio?
I don't agree with Jim Buchanan on either a balanced budget amendment (I am against it, preferring deficits in recessions), or on the intergenerational incidence of domestic debt. Nonetheless his writings are an undervalued resource in this debate. Very often he focuses on what debt does to a country, drawing upon the Founding Fathers, the classical economists, and the Italian public finance theorists, among others.
Cowen on Monetary Misperception
The difference is that when central banks create excess supplies of money and push interest rates below their natural level, there really are resources available to borrowers.
Prufrockian Political Economy
When I talk about risk and safety, I always like to point out that it’s easy to make sure that no one ever dies in an airplane crash: ban air travel. The fact that we don’t suggests that we really don’t want perfectly safe air travel... Similarly, we don’t want ratings agencies to be perfect seers.
Unemployment Insurance, Take II
So: low income people are more likely to be unemployed; and according to the Sahm, Shapiro, and Slemrod study, low-income workers seem not to have high marginal propensity to consume. Putting these two facts together, I would be surprised if unemployment insurance were particularly stimulative.
Conservative Scare Tactics to Blame for Loss of Faith in Social Security? Or Reality?
Gallup recently released new polling on Social Security that found confidence in the system at an all-time low. Some bloggers on the left take this to be a product of conservative scare tactics against the program. But a closer look at the poll shows that’s probably not the case.
How Long Might It Take You To Get A New Job?
By and large, the answer to these questions depends specifically upon what kind of work you can do, but surprisingly, it also depends upon where you might work.
Side Effects: Obamacare Encouraging Insurers to Cut Corners
Americans could end up with plans that restrict their access to care due to provisions that raise premiums.
Gulf Spill Update: Obama Deepwater Ban Becoming Total Drilling Ban
The Obama administration’s recently re-imposed deepwater drilling moratorium is now reportedly stopping shallow-water drilling as well.
New START, New Slogan … Trust But Don’t Verify
Only in the bizarro world of the Obama administration is this country made any safer by signing treaty that the counter party has no intention of following. And that is just the beginning of New START’s many fatal flaws.
The ‘Public Option’ Is Back
The Congressional Budget Office scores the bill as reducing federal deficits by $53 billion by 2019. How? Paying doctors and hospitals less!
Obamanomics 101: Failure Explained
According to President Obama, “every economist who’s looked at it says that the Recovery Act has done its job.”

Research, Reports & Studies
Fiscal Evasion in State Budgeting
This paper establishes a basic definitional framework that can be used to assess long-running fiscal practices in the states against a standard of fiscal prudence. The aim is to further refine this framework to capture the drivers of the states’ long-running fiscal problems and to offer recommendations for reform.
Economic Recovery: Sustaining U.S. Economic Growth in a Post-Crisis Economy
There is concern that this time the U.S. economy will either not return to its pre-recession growth path but perhaps remain permanently below it, or return to the pre-crisis path but at a slower than normal pace. Problems on the supply side and the demand side of the economy may lead to a weaker than normal recovery.
The Drawbacks of Dutch-Style Health Care Rules: Lessons for Americans
In 2006, the Dutch government implemented a universal insurance mandate. After just three years, the Dutch insurance market is a clear-cut oligopoly. America appears to be on a similar path.
The CLASS Act: Repeal Now, or Face Permanent Taxpayer Bailout Later
Proponents of Obamacare claim that it will simultaneously provide millions of Americans with health insurance and reduce the budget deficit by hundreds of billions of dollars. Yet Obamacare’s proclaimed budgetary discipline rests on unlikely assumptions and budget gimmicks.

Economists’ Comments & Opinions
Rebooting America
The interest rate elevator doesn't have a button for going lower than the subbasement.
Liberal Tax Revolt
Some Democrats decide they prefer lower rates. Obama isn't one of them.
No Answers, New Lows
Bernanke offers no silver bullets, which means depressed yields and P/Es amid more dreary, deflation.
It's a Fiscal Problem, Not a Fed Problem
Think of all the economic obstacles of spending, taxing, and regulating coming out of Washington. What should be done to spur growth? Keep tax rates down. And stop passing massive regulatory bills, like the bank reform Obama just signed into law.
Jobless Numbers Are Worse Than You Think
The situation is much more dire now than it was during the 1980s.
Why Is the Euro Rising and the US Dollar Falling?
An analysis of Fundamental Equilibrium Exchange Rates might provide some clues.
The U.N. Threat to Internet Freedom
The FCC's move to treat broadband providers like phone company monopolies could spur international efforts to regulate the Web.
Unnecessary evils
The next big task of financial reform: dismantling Fannie and Freddie.

Graph of the Day
Seeking Alpha: The One Economic Chart That Really Matters
See: Facebook has become the third-largest nation

Book Excerpts
"If the energy industries were simply freed from their regulatory bondage and are allowed to function sanely, they will pay for their own expansion out of their own profits. That is free enterprise, and in the entire history of mankind, nothing has ever served better as a “catalyst and stimulant” to invention and innovation than the profit system." –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
Improper payments totaled nearly $110 billion in 2009, according to the White House. They included payments made in error or because of fraudulent claims by contractors, and benefits sent to deceased or jailed people. Obama has set a goal to cut wasteful, improper payments by $50 billion.