8/26/10 Post

BUZZ: Jobless Claims Decline

News
White House claims for stimulus rely on rosy assumptions, best-case scenarios
The Obama administration claimed this week that $100 billion invested in innovative technologies under the economic stimulus law is "transforming the American economy." But an examination of details in the 50-page report unveiled Tuesday by Vice President Joe Biden reveals something a bit different: a collection of rosy projections that ignore many of the challenges, pitfalls and economic realities in all those areas.
Ford to expand presence in Asia
Ford Motor Co. announced on Thursday that it will ramp up its presence in the fast-growing Asian and African markets.
One in 10 mortgage holders faces foreclosure
One in 10 American households with a mortgage was at risk of foreclosure this summer as the government's efforts to help have had little impact stemming the housing crisis.
How the Stimulus Is Changing America
The American Recovery and Reinvestment Act of 2009 — President Obama's $787 billion stimulus — has been marketed as a jobs bill, and that's how it's been judged. The White House says it has saved or created about 3 million jobs, helping avoid a depression and end a recession. Republicans mock it as a Big Government boondoggle that has failed to prevent rampant unemployment despite a massive expansion of the deficit. Liberals complain that it wasn't massive enough.
Slower U.S. Capital Investment May Reach Job Market
A slowdown in U.S. business investment may soon hit the job market, further hindering a recovery in the world’s largest economy.
Housing's a wreck. Builders rally. Huh?
Existing home sales plummeted in July. New home sales sunk as well, hitting a record low. But luxury homebuilder Toll Brothers reported a surprise quarterly profit Wednesday.
Co-chair of Obama debt panel under fire for remarks
Reforming Social Security has always been a political lightning rod, and none more so than this mid-term election year. Simpson's remarks could further inflame an already divisive debate and complicate the task of the bipartisan commission, which is attempting to broker solutions that both sides of the aisle can support.
Pressure mounts for 'Sheriff' Elizabeth Warren
Pressure continues to mount on President Obama to select Elizabeth Warren as the nation's first consumer financial protection regulator.
That sinking feeling: More bad news for the economy has people talking recession again
Businesses are ordering fewer goods. Home sales are the slowest in decades. Jobs are scarce, and unemployment claims are rising. Perhaps most worrisome, manufacturing activity, which had been one of the economy's few bright spots, is faltering.
SEC Gives Big Investors More Say Over Corporate Boards
The Securities and Exchange Commission voted to give shareholders greater power to nominate candidates to the boards of public companies, handing unions and institutional investors a win in their campaign to have more say over corporate policies.
Democrats privately fear House prospects worsening
Top Democrats are growing markedly more pessimistic about holding the House, privately conceding that the summertime economic and political recovery they were banking on will not likely materialize by Election Day.
Taxing Times for U.S. Investors
Another uncertainty facing U.S. investors: impending tax-law changes.
US tax swoop faces banking backlash
The rules could drive smaller financial institutions out of the US market to escape the impact of the withholding tax, say industry groups.
Not Cash to Burn, but Money in the Bank
The nation's money stock, which includes currency plus bank deposits and households' money-market fund holdings, grew to about $8.64 trillion as of Aug. 9, from $8.48 trillion at the start of the year, according to the Federal Reserve.
Senate tax duel centers on small business
Both parties point to jobs.
Orders and Home Sales Underscore Slowdown
Weakness in durable-goods orders and a drop in new-home sales to historic lows offered more signs that the economy is losing momentum.
Stimulus Assessments Overly Optimistic
...an examination of details in the 50-page report unveiled Tuesday by Vice President Joe Biden reveals something a bit different: a collection of rosy projections that ignore many of the challenges, pitfalls and economic realities in all those areas.

Blogs
Or a Program That Was Actually Going to Work
Obama hasn’t been as successful selling his economic program as Reagan was.
Government’s Unwelcome Economic Distortions
Many of the “seeds” for the recession were planted by government. Regardless, the average citizen reflexively looked toward Washington to quickly fix the economy.
The Report on Stimulus CBO Wishes Would Go Away
As part of the stimulus legislation, Congress mandated CBO report regularly on how well the stimulus is doing. Money spent, economy faltering, Congress wants happy news about their stimulus, and in response all CBO can do is continue to run their antiquated models telling us that down is up and slow is fast.
Liberalism is Failing
…there is no such thing as a free lunch.
Slicing the Bagel Reveals VAT Flaws
Under the tax laws extant in the Big Apple, if a bagel is sold whole, then it is, well, a bagel. But if the bagel is sliced before it is sold, then it falls under the category of “processed foods.” And processed foods are subject to a higher tax—a nine cent higher tax, to be specific.
Side Effects: College Students May Lose Health Care Option Under Obamacare
What about kids without parental coverage? The new law’s requirement that insurance cover children up to age 26 won’t make any difference.
There’s No Such Thing as a Free Energy Audit
D.C.’s Department of the Environment (DDOE) teamed up with Patuxent Environmental Group (PEG) and other contractors to provide “free” energy audits, of course it didn’t end well for the consumer. But most residents didn’t realize that PEG would place liens on their houses for not paying for the audit.
Economy Getting Sicker by the Day, But What It Really Needs Is a Fever
The only cure for the global economy is to eliminate all this government intervention and waste, and then eliminate the artificial excesses coming from the Fed.
New Fed Proposal to Bankrupt America: Government Guarantee of Entire ABS Market
In essence, some economists are saying that bureaucrats are capable of managing the insurance of markets that may exceed $20 trillion.
How An Even Slower Recovery Would Feel
After some improvement in the data over the spring and early summer, the recent news is describing an economy growing below 2%. While technically not a double-dip recession, the recovery could be so weak it will feel like another downturn.
Spending vs. PSST
I would like to see less emphasis on measuring economic activity as spending. I would like to see more effort put into understanding economic activity as patterns of sustainable specialization and trade.
Why were the measured productivity gains so high in 2009?
...interpret the "high productivity innovation" as the decision to lay the workers off, and the selection of workers, not the sudden advent and withdrawal of some new high productivity technology.
CBO Report: We're Still Using the Same Stimulus Model, and It Still Says the Same Thing
Every few months, this comes out, and every few months, a bunch of commentators treat this as if this were an empirical analysis, rather than a case of the CBO sticking the numbers back into the same model, re-running them, and conclusively proving that . . . their model still generates the same results.
Gridlock is Great for Stock Market Returns
Unified governments spend far more, and more quickly, and expand regulation much more than split governments do.
Regime Uncertainty: Are Interest-Rate Movements Consistent with the Hypothesis?
If mainstream analysts continue to disregard the role of regime uncertainty in the major depressions of the modern era, especially in accounting for their extraordinary duration, then they will only demonstrate the poverty of their own mode of analysis.
Fannie, Freddie and Mortgage Addiction
The key is to sell the accumulated mortgages slowly, in small increments. This will take years— after all, it took decades for the government to create the mess.
The Role of Regulation
Matt Yglesias has been fighting a good fight against occupational licensing regimes that mostly serve to restrict entry.
Biden’s Fatal Conceit
Biden repeatedly stated that the “government plants the seed and the private sector makes it grow.” Because the government possesses no “seeds” that it didn’t first confiscate from the private sector, what the vice president is advocating is the redistribution of capital according to the dictates of the Beltway.
The stimulus is working … just not for you
Had we wanted to stimulate the entire economy we would have seen tax cuts for all employers and employees, a sure-fire way to put money in the pockets of everybody.
Is That the Most They Can Say in Stimulus Spending’s Defense?
If a job exists only because of the existence of government dollars, then the job will go away when the government dollars go away.
All This Talk About Deficits Is Getting In the Way Of Preserving and Expanding Our Entitlement Spending
Newly minted White House budget director Jacob Lew said essentially the same thing a decade ago when he told Congress that “fiscal discipline is essential to protect Social Security and strengthen Medicare, so that both will be there in the years ahead.” In this view, fiscal responsibility is useful insofar as it allows for the expansion of government.
The Fed Should Exit Its Low-Rate Policy
...this solution is not sustainable in the long term: The cost is exorbitant, and the short-term and long-term distortions would be devastating.

Research, Reports & Studies
RCM: Wells Fargo Economics Group: New Home Sales Drop to a New Record Low
New home sales fell 12.4 percent in July, which was well below the consensus estimate. Prior months’ data were revised downward. The absolute level of sales dropped to a 276,000-unit pace, which is a record low.
Another Presidential Rescue Mission in North Korea
August has become the month when former U.S. Presidents fly to Pyongyang to gain the release of U.S. citizens incarcerated for illegally entering North Korea.
Cyber Security: A Complex "Web" of Problems
Today, as it pertains to cyber security, America still needs clearer lines of authority within the federal government and a more coherent structure of public–private interaction to allow for effective action.

Economists’ Comments & Opinions
Ask Unemployed How the Stimulus is Working
When the stimulus package was enacted in February 2009, the labor force participation rate, the percentage of Americans who say they are working or looking for work, stood at 65.6%. Last month it was 64.6%, a full percentage point lower.
No Need To Over-Regulate Banker Compensation
Dodd-Frank strengthened shareholder power. Now give bank shareholders the right incentives and let compensation reform itself.
Fed to Savers: Drop Dead
Thoughts while pondering the 43 cents of interest I earned on my savings.
Honey, I Shrunk My Approval Ratings
The White House is having a disastrous 'summer of recovery.'
Where Are the New Jobs?
The statisticians at the National Bureau of Economic Research declared the Great Recession over -- but tell that to people who can't find jobs.
The Fed Is Running Low on Ammo
It still has options if more monetary easing is needed. But they're not very effective.
Harsanyi: Gridlock: our greatest hope
There is no greater check on power in Washington than two strong political parties.
The IRS Targets Incompetent Tax Preparers
That's good news. But the agency is going overboard.
VENABLE: Texas fights global-warming power grab
Lone Star state won't participate in Obama's lawless policy.
ObamaCare: It Is Here
While many of Obama Care's major pieces won't kick in until 2014, a few big changes are already under way--and offering an early taste of what's in store for American health care. It ain't pretty.
Why we're not Greece - yet
The U.S. is not Greece. But this does not mean we cannot learn lessons from a nation that is marked by both great beauty and regular bouts of fiscal madness.
Dow plunge is wake-up call to deal with debt
The market could be in for a very bumpy ride in the coming months -- except it won't have technical glitches to blame. U.S. debts, more likely than not, could be an underlying culprit.
Meaningless Multipliers Sank the Recovery Act, Part 1
Keynesian economists never have to "find" the jobs created; they simply make them up with multipliers.
We're All in a Race to the Bottom
There will be no winners in this economy as the government solves debt with more debt and fears of deflation increase.

Graph of the Day
Jobless claims slide more than expected
See: No Visa Required
See: Existing Home Sales
See also: Future of the Bush Tax Cuts
VIDEO: Public Pulse: how the American public views its government

Book Excerpts
"We shall find too that such current notions as that society ‘acts’ or that it ‘treats’, ‘rewards’, or ‘remunerates’ persons, or that it ‘values’ or ‘owns’ or ‘controls’ objects or services, or is ‘responsible for’ or ‘guilty of’ something, or that it has a ‘will’ or ‘purpose’, can be ‘just’ or ‘unjust’, or that the economy ‘distributes’ or ‘allocates’ resources, all suggest a false intentionalist or constructivist interpretation of words which might have been used without such connotation, but which almost invariably lead the user to illegitimate conclusions. We shall see that such confusions are at the root of the basic conceptions of highly influential schools of thought which have wholly succumbed to the belief that all rules or laws must have been invented or explicitly agreed upon by somebody. Only when it is wrongly assumed that all rules of just conduct have deliberately been made by somebody do such sophisms become plausible as that all power of making laws must be arbitrary, or that there must always exist an ultimate ‘sovereign’ source of power from which all law derives." –F.A. Hayek, Law, Legislation, and Liberty (1982)

Did You Know
Any way you slice your bagel, if you slice it in New York, it's going to cost you more. New York State tax officials are enforcing a sales tax for sliced or prepared bagels, the tax on a sliced bagel is roughly 8 cents. In 2009 2,732 restaurants were audited state-wide. That year, 646 restaurants were audited for bagel malfeasance in New York City alone. In 2010 that number jumped to 1,077.

8/25/10 Post

BUZZ: U.S. Economic Confidence Down in Recent Weeks

News
Morgan Stanley Says Government Defaults Inevitable
Investors will face defaults on government bonds given the burden of aging populations and the difficulty of securing more tax revenue, according to Morgan Stanley.
US New Home Sales Sink to Lowest Pace on Record
New U.S. single-family home sales unexpectedly fell in July to set their slowest pace on record while prices were the lowest in more than 6-1/2 years, government data showed on Wednesday.
Biden: 'We've seen this movie before'
VP criticizes Boehner as 'nostalgic' for Bush policies.
U.S. Durable Goods Orders Show Sign of Cooling Economy
Orders for U.S. durable goods increased less than forecast in July, a sign that one of the few remaining bright spots in the economy is cooling.
Credit Card Debt Drops to Lowest Level in 8 Years
The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002.
Lack of Jobs, Foreclosures May Keep U.S. Housing Depressed
Sales of new homes probably held at a 330,000 annual pace in July, the second lowest on record. Bernanke's helicopter could move to new altitude
In an all-out effort to get the economy moving again, Federal Reserve Chairman Ben Bernanke may be getting ready to take his money-creating helicopter to a new altitude.
10 states with ridiculously low unemployment
Every U.S. state experienced job losses during the recent downturn, but thanks to the right mix of industries, natural resources, and skilled workers, some states have a far lower unemployment rate than the 9.5 percent national average.
Workplace safety violations can't just be speeding tickets
Something is wrong with the citation system if companies with unsafe practices don't get penalized until after a disaster.
Colorado Budget Cut by $60 Million
Over the past three years, the governor and legislature have cut shortfalls totaling $4.3 billion.
More employers make 401(k) enrollment automatic
The percentage of employers that offer automatic 401(k) enrollment has increased dramatically to 38%. That's more than seven times the rate in 2005, when automatic enrollment was at 5%.
I.R.S. Plan to Uncover Companies’ Tax Strategies
Beginning next year, the agency plans to mandate that corporations also provide a brief description of their uncertain tax positions and their rationale, offering essentially a road map for its auditors.
100-plus tax breaks on the line
Leaving big tax decisions to the fourth quarter isn't unusual: Congress often waits for "the two-minute warning" before voting on so-called tax extenders.
Government Says Gulf Seafood Safe
More Gulf waters are reopening to fishermen, and government officials say seafood cleared for sale has been thoroughly vetted. Whether consumers are buying those assurances — and the fish — remains to be seen.
Biden slams GOP's economic plan
Biden slammed Boehner and Republicans, saying they lack a real economic agenda that would move the country forward. Calling for “truth in advertising,” the vice president called GOP claims about Bush-era upper-income tax-cuts “a myth.”
House Could Return to Fight Over Stem Cell Research
A fall battle is shaping up over embryonic stem cell research after a federal judge ruled Monday against President Barrack Obama’s executive order allowing the research under some circumstances.
Egg recall is a golden opportunity to whip food safety into shape
More than 500 million eggs have been recalled in recent weeks because of salmonella poisoning, an outbreak that originated at a pair of Iowa farms and has spread to at least ten states.
Britain, Germany Slash and Burn Spending Programs
Powerhouse Germany and debt-ridden England have slashed and burned through social programs to salvage the euro zone economy.
'Crisis of Confidence' Sparks a Commodities Selloff
Rotation Out of Riskier Bets Leads Investors to Dump Crude, Copper and Even Cocoa; Gasoline at Lowest Since Dec. '09.

Blogs
A War We Can’t Afford to Lose
Succeeding in Afghanistan will require more patience from the American people. A summer of high casualty rates and reports about corruption of Afghan President Hamid Karzai’s administration are casting doubt among Americans about the effort.
This Just In: White House Disappointed with America…Again!
Disappointed in both America’s history and current situation, the UPR report declares to the world that the Obama Administration looks “to the future with pride and hope.”
Senators Exaggerate Number of Teachers’ Jobs in Jeopardy
In early August, when the U.S. Senate earmarked $10 billion to recover lost jobs in education, supporters of the measure claimed the money would save thousands of teachers’ jobs.
Obama to Gulf: Oil Ban Stays
When President Obama’s oil spill commission first met in July, they said that the President’s decision to ban oil drilling in the Gulf fell outside their mandate. But after a number of highly charged field hearing in the Gulf, the commission did a 180-degree reversal and promised to press the Obama administration about the ban.
The True National Debt
Fannie Mae and Freddie Mac must be included, pushing actual debt to $18.964 trillion.
Housing and Jobs: Underlying Problems Reemerging
The housing market and unemployment numbers will continue to worsen so long as we continue to delay recovery.
A Real Debate on Spending
From Washington’s perspective, extending current tax policy may look like a tax “cut,” but to American families paying the same amount in taxes next year as they do today, it is in no way a cut.
Biden’s Fatal Conceit
The White House’s misbegotten “Summer of Recovery” continued today with the release of another administration “analysis” that purportedly demonstrates the stimulus’s success in “transforming” the economy.
Economists React: Home Sales ‘Eye-Wateringly Weak’
Economists and others weigh in on July’s plunge in home sales.
ObamaCare on Campus
"Colleges and universities say that some rules in the new health law could keep them from offering low-cost, limited-benefit student insurance policies..."
Secondary Sources: Mortgage Funding, Japanese Deflation, Celebrity Forecasting
A roundup of economic news from around the Web.
Super-naive
Although much more mundane than the prospect of altruistic action heroes sweeping in to teach our children, giving parents choice (say, through tuition tax credits) will spark the many ordinary men and women working in K-12 schools to work harder and more creatively to educate their students.
S&P Cuts Ireland's Rating, Outlook Negative
The 10-year Ireland-to-German bond spread has risen to 318 bps, and is now above the peak during the European crisis in May.
Munger on rent-seeking
Mike talks about his recent trip to Chile and looks at how the reform of the Santiago bus system is going.
Sovereign Debt Wonkery
Think of the following as an analogy. A guy is paddling down a river without realizing that he is headed toward a waterfall. When is the last point that you can warn him in time so that he can paddle to safety? It depends on how fast the river is moving, how fast he can change direction, how strongly he can paddle, and so on.
Richmond Fed: Manufacturing Growth Continued to Ease in August
This is similar to the NY Fed and Philly Fed surveys - although the Philly Fed showed contraction in August. Growth in the manufacturing sector is clearly slowing.
Econ. 101
No permanent demand for housing was created by the program. The accelerated purchase of homes had to come at the expense of future sales. Instead of stimulating the demand for housing in the future, the program depressed it.
Home Sales Plunge In July
...we're going to have to work out the aftermath in months of low home sales.

Research, Reports & Studies
Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output From April 2010 Through June 2010
The Congressional Budget analyzes the impact of the American Recovery and Reinvestment Act on the economy over the past couple of months.
How Obamacare Empowers the Medicare Bureaucracy:
The Patient Protection and Affordable Health Care Act makes statutory changes that could challenge the autonomy of physicians to treat patients as they think best, undercut the freedom of physicians to remain in private practice, and threaten the continuation of fee-for-service medicine regardless of the preferences of doctors and patients.
More Than Lip Service: Why Private Sector Engagement Is Essential
Perhaps one of the most significant lessons learned from recent U.S. disasters is that the private sector is a critical actor in the homeland security enterprise.
RCM: Wells Fargo Economics Group: Existing Home Sales Plummeted in July
Existing home sales dropped 27.2 percent in July, which was well below expectations. The monthly decline was the largest on record. Payback from the tax credit is largely responsible for the sizeable decline.

Economists’ Comments & Opinions
The Deficit Is a Symptom, Spending Is the Disease
Sometime in the next week or so, the U.S. national debt will exceed $13.4 trillion. To put that in perspective: If you earned $1 every second, it would take you 425,000 years to earn enough money to pay off that debt. And it's not likely to get much better any time soon.
Central Banks: Heads They Win, Tails We Lose
Deflation is the cleansing of the speculative excesses and a return of general population profits back to their rightful owners -- the central banks and those behind them.
Stop the Madness
Washington is spending the country into economic decline.
Geithner and Summers Must Go
"Recovery Summer" turns out to be a dud, Geithner, Summers, Vice President Joe Biden and others have insisted that prosperity is just around the corner - and that if it's not, George W. Bush is to blame.
The Housing Mirage
Homeowner subsidies have only delayed the day of reckoning.
What’s Going On with Interest Rates?
What will happen to interest rates in the short run is a question that divides economists.
Obama's Housing Policies Are Killing Growth
These policies have stunted the spending of tens of millions of consumers who continue to pay high interest rates on unsecured mortgage balances which, absent those policies, would have been compromised and written off long ago.
Putting the Brakes on ObamaCare
How a Republican Congress could begin the process of repealing this unpopular law.
HELMER: Global warmists abandoned fact for fancy
To understand climate hysteria, we need look no further than the Watergate advice: "Follow the money."

Graph of the Day
Mercatus Center: Update: Stimulus Funds and Unemployment
See: Trading Places
See: Plunge in Home Sales Stokes Economy Fears
See: Global economy going nowhere fast
See also: Where the Stimulus (ARRA) Goes
See also: 29% vs. 16% - Found a Job, but How Good Is It?

Book Excerpts
"A people among whom there is no habit of spontaneous action for a collective interest—who look habitually to their government to command or prompt them in all matters of joint concern—who expect to have everything done for them, except what can be made an affair of mere habit and routine—have their faculties only half developed; their education is defective in one of its most important branches." –John Stuart Mill, Principles of Political Economy with some of their Applications to Social Philosophy (1848)

Did You Know
"Budget cuts are forcing police around the country to stop responding to fraud, burglary and theft calls as officers focus limited resources on violent crime. Cutbacks in such places as Oakland, Tulsa and Norton, Mass. have forced police to tell residents to file their own reports — online or in writing — for break-ins and other lesser crimes."

8/24/10 Post

BUZZ: Existing-Home Sales Plunged in July

News
Why Quantitative Easing is Likely to Trigger a Collapse of the U.S. Dollar
A week ago, the Federal Reserve initiated a new program of "quantitative easing" (QE), with the Fed purchasing U.S. Treasury securities and paying for those securities by creating billions of dollars in new monetary base. Treasury bond prices surged on the action. Unfortunately, the unintended side effect of this policy shift is likely to be an abrupt collapse in the foreign exchange value of the U.S. dollar.
Dollar's post-election dive a 'knee-jerk reaction'
Australia’s volatile local currency is taking its cues from offshore again after diving one US cent on Monday over uncertainty about the federal election result.
State tax hikes could go too far
Some U.S. states facing steep budget gaps have resorted to tax policies that could be harmful over the long term.
New Fees Weighed for Mortgage Industry
The Obama administration may propose that any federal backing of mortgages be paid for through fees on the lending industry, according to people familiar with the internal discussions.
Yen soars to 15-year high against dollar
The Japanese yen surged to a fresh 15-year high against the U.S. dollar Tuesday, after the Japanese government failed to say it would take steps to curb the currency's strength amid growing concerns about the pace of the recovery.
John Boehner says Obama economic team should resign
House Republican leader John Boehner on Tuesday called for the resignation of President Barack Obama's embattled economic team, including Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.
Health Care Law: Paperwork Burden Could be Repealed
The requirement would hit about 38 million businesses, charities and tax-exempt organizations, many of them small businesses already swamped by government paperwork, according to a recent report by the National Taxpayer Advocate, an independent watchdog within the Internal Revenue Service.
Fed divided on Aug decision to buy Treasuries: report
At least seven of the 17 top Federal Reserve officials at the U.S. central bank's August meeting had reservations about the decision to buy more Treasuries.
Greek Banks Pressured to Merge as Economy Hurts Profits
Greek banks are under growing political pressure to merge as second-quarter earnings probably slumped on rising loan losses and worsening asset quality in the debt-burdened country.
Credit card interest rates are through the roof
The average interest rate on existing cards jumped to 14.7% last quarter, up from 13.1% a year earlier.
Taleb's Pessimism Lures CIC
China's Sovereign-Wealth Fund Is in Talks to Invest in Universa's Bearish Wagers.
Bacon prices sizzle. Consumers feel the heat.
Last week, prices of pork bellies -- from which bacon is cut -- jumped to an all-time high of $1.42 a pound. Prices have soared more than 200% from a year ago.
Contentious times for Bernanke and the Fed
Divisions among the 17 key Federal Reserve officials about how to deal with the economic situation reached a peak at their meeting earlier this month.
Stocks retreat following overseas markets lower;
U.S. traders braced for another disappointing report on the housing market later in the day. Overseas markets tumbled.
No fed cash for stem cell research
A federal judge on Monday issued a temporary ban on federal funding for embryonic stem cell research, sidetracking President Barack Obama’s executive order which had expanded federal funding for human stem cell research last year.
Economic Slowdown Is One for the Textbooks
What is occurring is practically a textbook slowdown: The stock market sells off, leading economic indicators roll over, economists mark down their growth forecasts and earnings growth slumps. It is the speed of it all that is remarkable.
What to watch in Tuesday's primaries
Five states — Alaska, Arizona, Florida, Oklahoma and Vermont — go to the polls Tuesday but only three of them can point to primary elections that are being closely monitored by a national audience.
New Ads Urge Democrats to Support Health Care Repeal
Heritage Foundation is hoping to pressure Democrats, who voted against the final health care bill, to sign a discharge petition that would force an up-or-down vote on a repeal of the health care reform law.
Bank Sovereign-Debt Disclosures Get Muddied
A primary goal of Europe's recent "stress" tests of its banks was to illuminate their holdings of potentially risky government-issued debt. But that clarity has been fleeting.

Blogs
Secondary Sources: Tax Cuts, Americans’ Pessimism, Health Care Costs
A roundup of economic news from around the Web.
A Consensus to Question
Old consensus: we need Freddie and Fannie in order to make housing "affordable." New consensus: we need them in order to "prevent further house price declines," in other words, to make housing less affordable.
Presumptions Matter
According to Paul Krugman, for government not to raise taxes is for government “to cut checks” to persons whose taxes aren’t raised...
Health Insurance Coverage at Small and Large Firms
...we've mined the Kaiser Family Foundation's 2009 Annual Survey of Employer Health Benefits, which breaks the data down by plan type.
A Failure to Tax Is Not a ‘Corrupt’ Government Giveaway
[Krugman] sees individuals’ incomes as government’s to give back, not something they have an implicit right to keep. This column is far less useful for its policy arguments than it is as a window on how Krugman views the world.
Credit Card Interest Rates Much Higher
The spread on credit card interest--the difference between the interest rate on your charges, and the Treasury benchmark rate--is the highest it's been in 22 years.
Krugman's Way-Too-Simple Mode
...there's absolutely no notion of capital or the idea that production takes time here.
Further sentences to ponder, or my Arnold Kling imitation
"63% of the Political Class think the government has the consent of the governed, but only six percent (6%) of those with Mainstream views agree."
Macroeconomic Puzzles
Trying to explain why those $20 bills are left on the sidewalk is what leads one in the direction of Zero Marginal Product and the Recalculation Story.
Federal Bailout of GM Still Horribly Wrong
Our friends at The Economist magazine usually talk good sense about free trade and free markets, which makes their retrospective endorsement of the government bailout of General Motors all the more disappointing.
Public Schools Are Modern Monuments to Profligacy
It’s the hot new public-sector trend; massively expensive K-12 school buildings.
Confused Administration Keeps Pushing Conventional Arms Treaties
No wonder U.S. policy toward these treaties is muddled.
“When Liberalism Doesn’t Work It Discredits Liberalism”
It is far past time for the federal government to stop mucking up the housing market. The government should end the interventions it has made since 2008, starting with abolition of the TARP program.
First Principles and Foreign Policy
The Heritage Foundation believes that the first principles on which the United States was founded must guide its foreign as well as its domestic policy.
Housing Isn't Really Dead
To suggest that real estate as an asset class is gone forever is to grossly misunderstand not only housing, but the nature of human progress itself.
Is Printing Money Really Safe in This Strange Market?
Even if the bond market rally has a little more gas left in the tank, anything being propelled by the promise of freely printed money is becoming suspect.
Why the US Dollar Is Key to How the Markets Unfold
The future of stocks and gold will be determined as the dollar heads into its yearly cycle low.

Research, Reports & Studies
America's Best (and Worst) Cities for School Reform: Attracting Entrepreneurs and Change Agents
Which of thirty major U.S. cities have cultivated a healthy environment for school reform to flourish (and which have not)?
Guessing the Trigger Point for a U.S. Debt Crisis
This paper explores the possibility of the U.S. experiencing a debt crisis in the medium run, meaning somewhere between 2015 and 2035. It is impossible to state precisely the trigger point for a crisis. At best, we can make guesses about some of the key parameters.
New Technologies, Future Weapons: Gene Sequencing and Synthetic Biology
With every technological advancement, comes new national security risks. Without a clear understanding of the actual risks associated with synthetic biology, the U.S. is in danger of responding to fears with overregulation
Make China Account for Its Dismal Human Rights Record
Successive editions of the U.S. Department of State’s annual Country Reports on Human Rights Practices have documented China’s lack of progress in human rights, ranging from continued abuses in Tibet to imprisonment and harsh treatment of political prisoners to a general crackdown on religious groups that are not sanctioned by the government.

Economists’ Comments & Opinions
Virginia Is for Surpluses
Erasing red ink without a tax increase.
Lessons from the Bell, California Fiasco
High government salaries means soaring pension costs that taxpayers cannot afford.
The Politics of Plastic
The war against credit cards is raising costs and harming consumers.
The public workers you support
This stark picture clearly reflects upside-down priorities -- particularly if officials care about boosting the truly productive parts of the economy.
Social Security in 2015: Red Ink Returns for Good
When America’s most successful social welfare program starts to run permanently in the red in 2015, people may start to look at it in a whole new way.
Why Small Businesses Aren’t Hiring
...unless we fix the residential real estate mess, we won’t see small business hiring anytime soon.
Obama Misreads Message of ‘Live Free or Die’: Amity Shlaes
The results of the government experiment are in, courtesy of the states. Double dips are more likely with policies like [Obama's].
The Fed Can Create Money, Not Confidence
Inflation—or stagflation—remains the more serious danger than deflation.
Hyperinflation Is Fiscal, Not Monetary Phenomenon
Too many analysts believe there has to be some economic demand or some consumption to stimulate inflation or hyperinflation.
The Road to Stagflation
The Fed is dealing with underlying problems by papering them over, which will lead to inflation and economic stagnation.
Reagan’s Words Still Speak Volumes Today
“This is the issue of this election: Whether we believe in our capacity for self-government or whether we abandon the American revolution and confess that a little intellectual elite in a far-distant capitol can plan our lives for us better than we can plan them ourselves….A government can’t control the economy without controlling people. And they know when a government sets out to do that, it must use force and coercion to achieve its purpose.”
Beware the light at the end of the tunnel
It's a debt train about to collide with federal obligations.
Social Security Is "Beyond Comprehension"
There is work that has been done in the past where we looked at what people thought their benefit was going to be, relative to what it turned out to be. It showed that even people who were right on the verge of retirement are all over the place in terms of being able to predict the benefit.

A major message of economics is that incentives often don't predict outcomes. We call this 'the invisible hand.' -Garett Jones, Twitter

Graph of the Day
Obama's failed Stimulus Program cost more than the Iraq War
See: Weekly Initial Jobless Claims (SA)
See also: Visa Waiver Program Promotes Travel to the U.S.

Book Excerpts
"I believe it can be demonstrated that many of what are said to be the great problem areas of urban America—housing, transportation, school systems, tax burdens, etc.—are directly traceable to overextension of government's role in human affairs." –Benjamin A. Rogge, Can Capitalism Survive? (1979)

Did You Know
"China is working to unclog the world's longest traffic jam stretching from Beijing to the northern province of Inner Mongolia. This 60 mile backup has resulted in cars and trucks only traveling about 2 miles per day. This traffic jam as also resulted in local entrepreneurs setting up shop on the highway selling food and water."

8/23/10 Post

BUZZ: $4.4 Trillion: That's how much the spending baseline has increased in 31 months.

News
Hungary Central Bank Keeps Key Rate On Hold As Expected
The National Bank of Hungary's monetary policy council Monday left its key rate on hold, as expected, as looming fiscal concerns persist in Hungary and across Europe.
EU Says Greece Is Ahead of Schedule on Deficit-Cutting, Sees Loan Approval
Greece is ahead of schedule in meeting its deficit-cutting commitments and making structural reforms, putting the country on track to secure the next loan installment, the European Commission said.
LA unveils $578M school, costliest in the nation
Next month's opening of the Robert F. Kennedy Community Schools will make the inauguration of the nation;s most expensive public school ever with an eye-popping price tag of $578 million.
China becomes world's second-largest economy
As China's economy last week nudged Japan's into second place in the world rankings, it was a reminder, if any was needed, of its growing importance and influence. China may be only 1/10th of Japan's gross domestic product per capita, but there is no disputing when it comes to trade that China is the 800 lb. gorilla.
Foreclosure prevention program losing its punch
Only 36,695 troubled homeowners received long-term mortgage modifications in July under the Obama administration's Home Affordable Modification Program. This brings the total to 434,717 borrowers who have successfully made it out of the trial phase.
Facing Budget Gaps, Cities Sell Parking, Airports, Zoo
Cities and states across the nation are selling and leasing everything from airports to zoos—a fire sale that could help plug budget holes now but worsen their financial woes over the long run.
California's Furlough Fridays are back
The furloughs affect about 150,000 state employees and will save $150 million a month, the governor's office said.
Government Debt: A Bubble in the Treasury Market?
Treasury bonds maturing in 20 years or more have returned 21 percent so far this year.
Brokers could face fines over 'flash crash'
Brokers who may have had a role in May's devastating "flash crash" could face fines from the Financial Industry Regulatory Authority.
Mortgage Fraud Is Rising, With a Twist
Adopting to Tighter Rules After Collapse, Scammers Turn to More Complex Plots.
Five 'new normals' that really will stick
Whenever we go through a major change in our culture, it seems we have to adjust to 'the new normal.' And today is no exception.
Government says more than 23K workers affected by Gulf of Mexico drilling ban
A six-month ban on deepwater drilling in the Gulf of Mexico would directly put more than 9,000 people out of work and indirectly affect another 14,000 jobs.
Economic Reports This Week
Data will include existing home sales for July (Tuesday); durable goods for July and new home sales for July (Wednesday); weekly jobless claims (Thursday); and the first revision of second-quarter gross domestic product and the Thomson Reuters/University of Michigan consumer sentiment index for August (Friday).
Gulf Coast tourism suffers from perception of oil-coated towns and may take years to recover
With the summer tourist season coming to a close after Labor Day weekend, destinations are scrambling to keep businesses afloat and hang on to the region's 400,000 travel industry jobs.
McConnell Insists Repeal Of Tax Cuts Wouldn't Generate Revenue
“The problem is the spending problem," he said. "If we grind down the spending, we'll begin to get a handle on this."
American Crossroads Collects More Million-Dollar Checks
In its July filing with the IRS, Amercian Crossroads reported receiving $1 million from the Jerry Perenchino Living Trust and $1 million from the Dixie Rice Agricultural Corp.
Credit-Card Rates Climb
Levels Hit Nine-Year High as New Rules Limiting Penalty Fees Help Fuel Rise.

Blogs
Has ObamaCare’s Unpopularity Caused ‘Abject Panic at the White House’?
Americans still support ObamaCare’s price controls — which force insurance companies to over-charge the healthy and under-charge the sick — by 58-42 percent. But as President Obama has himself acknowledged, those price controls don’t work without the individual mandate. Unless a majority also supports the mandate, you don’t have majority support for either.
Surreal Environmental Regulations ? Even for California
This November, along with a host of anxious politicians, California’s own greenhouse gas law, AB 32, will be on the ballot.
GM: Successful Bailout or Successful Restructuring?
General Motors is making moves to sell some of its government-owned stock back to the private sector in what would be one of the largest initial public offerings in U.S. history.
The Left is in Full Retreat
Health care is not the only issue where the left is retreating in the face of strong disapproval from the American people.
Where Is the V-Shaped Recovery?
Unemployment and continuing claims have started to rise again. This isn't what happens in V-shaped recoveries.
Chamber of Commerce Reenters Dark Ages
Senior director says it's women's choices that have maintained the pay gap.
Growing Rental Trends Undermining US Home Sales
The American dream is on hold as the convenience of renting outweighs the risks and hassles of owning a home in this market.
Congressional Budget Office Says We Can Maximize Long-Run Economic Output with 100 Percent Tax Rates
The Capitol Hill bureaucracy basically has a deficit-über-alles view of fiscal policy. CBO’s long-run perspective is that deficits reduce output by “crowding out” private capital and that anything that results in lower deficits (or larger surpluses) will improve economic performance — even if this means big increases in tax rates.
July Unemployment Rates, by State: Uneven Progress
The job market’s slow recovery was a bit uneven last month, the Labor Department’s report on state employment showed Friday.
Which States Expected and Got the Worst?
Believe it or not, most politicians and bureaucrats don't live in a total vacuum, despite recent evidence to the contrary. If they know that trouble lies ahead, they prepare for it.
Secondary Sources: Bankruptcies, Education, Death of Manufacturing
A roundup of economic news from around the Web.
Perils of Macro Aggregation
Richard Ebeling, as usual, does an excellent job of showing how the inability to see macroeconomic phenomena as the outcome of complex micro-processes leads to poor policy prescriptions.
U.S. Debt: An Expensive Habit
If the US keeps borrowing money to finance large budget deficits, will the rest of the world have enough money to lend? A new paper from two economists, one of whom works for the US Treasury, suggests the US can make it through the year 2020, but only at great expense.
Solar Stimulus
"Solar panel experts say that panels have about a 25-year life, but the latest models, which no doubt are used in Ennis, may have a 40-year life. Taking that estimate, the panels leave us in the financial dark by 30 years. The rate of return looks like Las Vegas housing the past couple years."
Did Stimulus Work?
Stimulus is always going to get wrapped up in the agenda of whatever party is in power--it will concentrate too much on long-term strategic attempts to change the aggregate level of government expenditure; it will be deployed inefficiently; it will be stretched out to maximize electoral rather than economic effectiveness.
Summary for Week ending August 21st
Single Family Housing Starts decline in July...
Unleashing the power of Keynes
It turns out that the project that President Obama highlighted the other day–a police station renovation–was not a police station and wasn’t funded by the stimulus package.
Deficient Economics
...foreigners accept dollars because they want to spend those dollars, either on American exports or on American assets. Another term for spending dollars on American assets is “investing in America.”
Schedule for Week of August 22nd
Three key housing reports and the second estimate of Q2 GDP will be the highlights this week. Existing home sales will be released on Tuesday, New Home sales on Wednesday, the MBA Q2 National Delinquency Survey on Thursday, and Q2 GDP on Friday.
Locavores are loco
"The larger point is that not only is it not really bad to eat non-local food: eating food from a long way off is often the single best thing you can do for the environment, as counterintuitive as that sounds."

Research, Reports & Studies
RCM: Hudson Institute Economic Report
The surprising news this week was the continued deterioration in the jobs market. The number of seasonally adjusted initial claims was 500,000 with an unexpected increase of 12,000 from the upwardly revised figure of last week.
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
U.S. Review: A Clear Step Backward.
Getting the Small-Boat Threat Right
Suggesting that the primary risk to U.S. national security lies with the millions of American pleasure boaters is the wrong way to approach the small-boat challenge.

Economists’ Comments & Opinions
Prime Numbers: Data Spurs Doubts about Recovery
With new data showing that the economy is growing more slowly than earlier predicted, there is little agreement about what and how much needs to be done.
Don't Tax -- Cut!
...Clinton didn't leave office with a surplus because of higher tax rates, but because of much less spending and a critical tax cut!
China's Looming Real-Estate Bubble
A massive Keynesian spending program has misallocated capital and set the stage for a crisis.
Bury Keynesian Voodoo Before It Can Bury Us All: Kevin Hassett
The fact is, the U.S. stimulus was the largest among members of the Organization for Economic Cooperation and Development, and the biggest ever tried in the U.S.
The unkindest cuts
It’s not just ‘the rich’ — we all will pay more taxes if Congress fails to act this fall.
The Case Against Corporate Social Responsibility
The idea that companies have a duty to address social ills is not just flawed, argues Aneel Karnani. It also makes it more likely that we'll ignore the real solutions to these problems.
When Economic Policy Became Social Policy
The recent Treasury Department conference is further proof we will never get out of this housing mess until we are ready to face facts.
ObamaCare's Tax on Taxes
The latest gambit to punish for-profit health insurers.
The Real Tax Gap: Paying for Unfunded Benefits
The Health Care Reform Bill is the largest Medicare cut ever. But it’s not enough.
How States Hide Their Budget Deficits
The SEC's charges against New Jersey for misleading investors should warn other states against sweeping the truth under the rug.
Inflation, not deflation, Mr. Bernanke
In the wake of a barrage of bad economic data, the yield on two-year U.S. Treasury notes has tumbled to 0.5% and the 10-year note to 2.8%, almost reaching the levels after Lehman's collapse. Pundits in the U.S. and other Western countries are talking about deflation again.
The "Courage" to Spend
Earlier this month, Secretary of Education Arne Duncan heaped praise on Congress for including $10 billion for "EduJobs" in a state-aid package that it had enacted. The move to subsidize teacher salaries and avoid layoffs was so admirable, Duncan told the press, because Congress's "historic vote means school officials won't need to make those tough calls." Indeed, Duncan termed mailing 10 billion borrowed bucks to the states "a real, real act of courage."
Economic Doldrums Leave Americans in No Mood for Obama's Liberal Agenda
Like many Democrats over the past 40 years, Barack Obama has hoped that his association with unpopular liberal positions on cultural issues would be outweighed by pushing economic policies intended to benefit the ordinary person.
Why Bond Volatility Is Acting Abnormally
Have bond traders lost the fear of their own shadows and decided to pursue getting paid back at par after paying a premium?
What Does Sudden Shift in Headline Risk Tell Us?
Investors must watch the shift in tonality by financial news outlets.

Graph of the Day
Political Calculations: The Obama Spending Future
See: Government Spending, Selected Categories
See also: CBO's Latest Projection

Book Excerpts
"Unemployment insurance is definitely a misnomer. There can never be any statistical foundation for such an insurance. Most countries have acknowledged this by dropping the name "insurance," or at least by ignoring its implications. It has now become undisguised "assistance." It enables the trade unions to keep wages up to a rate at which only a part of those seeking work can be employed. Therefore, the assistance of the unemployed is what first creates unemployment as a permanent phenomenon. At present many European states are devoting to the purpose sums that considerably exceed the capacity of their public finances." –Ludwig von Mises, Socialism: An Economic and Sociological Analysis (1922)

Did You Know
"Gallup's Potential Net Migration Index finds Singapore, New Zealand, Saudi Arabia, Canada, Switzerland, Australia, and Kuwait atop the list of countries that could see the highest net adult population growth from international migration. If all adults worldwide who desire to migrate permanently to other countries actually moved where they wanted today, each country would see their adult populations double or even triple."

8/20/10 Post

BUZZ: As job losses rise, rebound from recession called 'anemic'

News
Census Survey Asks Too Much, G.O.P. Says
The Republican National Committee is demanding that the Census Bureau stop being so nosy, or at least stop requiring that Americans comply.
Paper chains
Tight policies in surplus countries helped undo the gold standard, which is a lesson for the euro.
Obama had facts wrong about visit here
A local project that President Barack Obama cited during a visit Wednesday to Columbus as an example of how the federal stimulus package has worked isn't actually being funded with stimulus dollars.
Social Security Cuts Weighed by Panel
A White House-created commission is considering proposals to raise the retirement age and take other steps to shore up the finances of Social Security, prompting key players to prepare for a major battle over the program's future.
Sales taxes are highest in ...
Tennessee has the highest combined state and average local sales tax rate of any U.S. state, at 9.44%.
A bitterly divided Congress, fanned by the White House
On Capitol Hill, a new layer of bitterness and distrust will haunt Congress when it returns after Labor Day to stare down a deep, dark well of troubles -- jarringly high unemployment, a mounting debt that threatens the nation's fiscal solvency, immigration fears creating emotion-charged divisions.
Feeling flush: Virginia's budget surplus doubles
After facing a $1.8 billion shortfall in the middle of the year, Virginia closed its fiscal 2010 budget with a $403.2 million budget surplus.
California close to issuing IOUs - again
The state's financial crunch stems from the fact that it does not have a budget for the current fiscal year, which began July 1. The governor and lawmakers continue to squabble over how to close an estimated $19 billion shortfall.
401(k) withdrawals surge, says Fidelity
62,000 people made hardship withdrawals from their 401(k) workplace plans during the second quarter, compared to 45,000 during the prior quarter, a 37 percent increase.
What's missing for back-to-school? 135,000 teachers
Tight fiscal times are forcing school districts to lay off teachers, enlarge class sizes, cut programs and charge for services that were once free.
Budget analysts sees $1.3T deficit this year
This year's federal deficit will surpass $1.3 trillion, a slight improvement over last year's record red ink, Congress' top budget analysts said Thursday.
CBO: Tax Cut Extensions Will Yield Mixed Results
Permanently renewing most of the tax cuts passed in 2001 and 2003 under former President George W. Bush would provide a short-term lift to the economy, but a long-term drag on the nation's finances.
Obama Announces Four Recess Appointments
President Obama announced Thursday that he plans to make recess appointments for four of his nominees who have waited an average of 303 days for Senate confirmation.
Obama Urges GOP to Back Small-Business Bill
Obama gave a final push to Senate Republicans to get behind a stalled small business jobs package before heading out the door for a 10 day vacation.
The new battle: What it means to be American
Obama has sparked an even more visceral values debate about whether he's moving the country toward socialism and over the very definition of what it means to be American.

Blogs
Pay Gap Puts Feds on the Defensive
The Obama administration has been on the defensive about exorbitant federal pay ever since a Heritage Foundation report revealed government workers earn significantly more money than their private-sector counterparts.
Outside the Beltway: Who are We Bailing Out?
A report that came out last week notes that some of the states who received the bailout funds were never actually in danger of having to lay off teachers.
We Can’t Spend Our Way to Recovery
$3 billion in Cash for Clunkers bailouts, $10 billion in government union bailouts, $16 billion in Medicaid bailouts, $13 billion in home buyer tax credits, and $814 billion in stimulus act spending later the nation’s unemployment rate stands at 9.5%.
Weekly Unemployment Claims Exceed Expectations
Weekly unemployment claims hit 500,000. To be consistent with an economy adding jobs coming out of a recession, the number needs to fall to the 400,000 level.
Market Fails at 50 Day Moving Average
At the same time, Fronteer Gold came out with its best drill results yet at its Long Canyon Project, which is being viewed as one of the greatest high-grade gold discoveries in Nevada.
State Unemployment Rates: Generally unchanged in July
Eleven states now have double digit unemployment rates. A number of other states are close.
Why Wasn’t United States v. Arizona Filed in the Supreme Court from the Outset?
Why has United States v. Arizona — the case in which the U.S. is challenging the constitutionality of Arizona’s law dealing with illegal immigrants — hasn’t been filed from the outset before the United States Supreme Court. Article III, section 2 of the Constitution provides, in relevant part.
Live Free Or Die
The lives of individuals are the property neither of any government nor of officious “public interest” groups.
LA Times Ranks Teachers
The LA Times investigative report on teacher quality is groundbreaking. The teacher's union has already started a boycott but, as the shock recedes.
On National Education Policy
Imagine what would happen if education policy were decentralized. In order to have influence, a self-styled education expert would have to convince families that the expert has helpful ideas about how their children ought to be educated.
Geraldo Rivera as Coase
Property rights tend to solve problems.
Don’t Be Afraid of the Chinese Economic Tiger
There are roughly 10 times as many people in China as there are in Japan, so the fact that total gross domestic product in China is now bigger than total gross domestic product in Japan is hardly a sign of Chinese economic supremacy.
U.S. Debt: An Expensive Habit
If the US keeps borrowing money to finance large budget deficits, will the rest of the world have enough money to lend?

Research, Reports & Studies
Consumer Power: 5 Lessons from Utah’s Heath Care Reform
Utah’s specific model could yield positive results in other states, but states should adapt Utah’s broader approach to their own individual markets and conditions.
Developing a Strong Border and Immigration Policy
Americans are demanding a border and immigration policy that will keep the U.S. free, safe, and prosperous—not an amnesty that simply exacerbates the problem.
Holding Terrorists Accountable
The United States is at war. Since the September 11, 2001, attacks, the United States has detained alien unprivileged belligerents under the law of war and the congressional Authorization for Use of Military Force.
Leading Economic Index Signals Slow Growth
Positive contributions from the interest rate spread and vendor performance offset drags from consumer expectations and building permits, which allowed the Leading Economic Index to notch up slightly in July.
Housing Boom and Bust
American housing starts eked out a minor gain in July reaching an annual rate of 546,000. But even that small movement was evident only because the prior month was revised down to 537,000 from 549,000.

Economists’ Comments & Opinions
China Wealthy? That's Rich!
It was big news around the world: China has "overtaken" Japan as the world's second-richest economy. Except, well, it's not really news, it's not really big, and it's not entirely true.
Top of the Ticket
Obama now blames poor job numbers on congressional inaction. Wait! His party runs Congress.
Dr. Keynes Killed the Patient
Right now, economic quackery - in the form of Keynesianism - has overtaken Washington.
U.S. deficit forecast masks true scope of problem
If America ran its books more like a business, the real state of its finances would be clearer. U.S. budget scorekeepers now predict a $1.34 trillion deficit for 2010, a tad less than forecast in March. Still, it’s an enormous gap. And the headline number lowballs the shortfall.
We can't afford this government
Costs of bureaucracy spread like a deadly virus.
How Wall Street Is Screwing up the Recovery
Huge Question: Are we recovering? Or is we not? And whoa! Did you see those employment numbers? What a shock! Why are they still so BAD?
Did Stimulus Work?
When you combine middling and hard-to-prove results with the fact that the stimulus we got was so obviously wrapped up in the political agenda of the Democratic Party, I think that the case for stimulus has gotten weaker.
Why Small Banks Are the Key to Recovery, Part 2
The failure of some banks to deal with delinquent CRE loans may lead to their demise.
After the Bond Bubble, Cash Will Be King
It's not likely that money will head into stocks. Instead there will be an unprecedented rush for cash -- T-Bills, physical cash, you name it.

Graph of the Day
New CBO Budget Baseline Shows that Soaring Spending Risks Drowning America in Debt
See: Government Motors no more
See: Wiggle it. Just a little bit

Book Excerpts
“To prohibit a great people ... from making all that they can of every part of their own produce, or from employing their capital and industry in the way that they judge most advantageous to themselves, is a manifest violation of the most sacred rights of mankind"–Adam Smith, Wealth of Nations (1776)

Did You Know
The City of Cleveland plans to sort through curbside trash to make sure residents are recycling-- and fine them $100 if they don't. The city next year plans to release new trash and recycling carts embedded with radio frequency identification chips and bar codes. The chips will show city officials how many times residents bring their recycling to the curb for collection. If the chips shows that the recyclable cart has not been rolled out to the curb for collection in a long time, city officials will sort through the trash for recyclables. The City Council recently voted to spend $2.5 million on high-tech carts for 25,000 households in the city.

8/19/10 Post

BUZZ: 2010 budget deficit at $1.342 trillion

News
Weekly Jobless Claims Jump to Nine-Month High
The number of U.S. workers making new claims for jobless benefits unexpectedly rose last week to the highest level in nine months, a distressing sign for an already weak labor market.
Government Figures Show a Cooling Chinese Economy
In the latest signs that the Chinese economy is beginning to cool after setting a torrid pace in the first half of this year, several government indicators slowed slightly last month, Beijing announced Wednesday morning.
Japan Rises on Hopes of Stimulus
Japanese shares fronted a rally across Asia on Thursday as expectations of further monetary easing measures weakened the yen and bolstered electronics and automobile exporters.
US Homeowner Confidence Drops in Second Quarter
U.S. homeowners were less confident about the value of their homes in the second quarter, with one-third believing home prices had not yet reached a bottom.
Data Point to a Strengthening Recovery in Britain
Britain’s budget deficit shrank at a faster pace than expected in July and retail sales rose the most in five months, according to data announced Thursday — signs that the country’s economic recovery could be strengthening.
Leery of Washington, Alaska Feasts on Its Dollars
More and more Alaskans, particularly of the Republican stripe, identify the federal government and pork-barrel spending as the enemy, although Alaska was built by both.
Five job-killing stimulus projects
Republican Sens. Tom Coburn of Oklahoma and John McCain of Arizona issued a report in early August highlighting about 100 examples of wasteful spending in the $862 billion — the cost as tallied in the senators’ Summertime Blues report — 2009 American Recovery and Reinvestment Act.
Tea Party coalition forming to push for balanced budget amendment
A new Tea Party coalition, the Balance Budget Amendment Now, has begun to push for an amendment to the constitution requiring that the federal budget be balanced every year.
GM files to sell shares to the public
General Motors filed registration documents Wednesday to sell shares to the public again, setting the stage for the U.S. government to reduce its ownership of the automaker.
Common sense saves Illinois $140 million in health care costs
Several states have started "medical home" programs, which centralize patient information around one home base, and one primary care provider. So far, these programs have saved states hundreds of millions of dollars in medical costs.
SEC sues New Jersey for fraud
The SEC alleged that New Jersey misled investors in municipal bond sales totaling $26 billion over a six year period ending in April 2007.
Long-term debt: The real problem
Lawmakers have yet to seriously address how to rein in the country's long-term debt. That broader debate will involve significant policy changes: A likely overhaul of the federal tax code and a reduction in spending across the board.
Taxpayers on the hook for $3 trillion in pensions
Under the current system, unfunded benefit liabilities -- the amount states owe in promised retirement benefits beyond what they've collected -- exceed $3 trillion.
Crude prices resume slide after gov't report shows more oil in storage than expected
Oil prices settled lower on Wednesday as the government said crude supplies shrank less than analysts expected and stock markets showed only modest gains after Tuesday's rally.
Big business in middle of brawl
It seems that no matter what direction business leaders turn, the hyper-partisan atmosphere on Capitol Hill puts them in the unenviable position of either angering the Democrats they need to enact their priorities or the Republicans they want to block anti-business legislation.
GOP Majority Equals Return to Past, Obama Warns
Obama says that the GOP plan for cutting the deficit is a return to “the exact same agenda” of the Bush Administration.
State and Local Debt: $2.4 Trillion
The bottom line: If this debt in the states should be added to the federal debt — and especially if this debt has to be repaid back with higher taxes — there is one very large bill coming our way.

Blogs
The Age of Entitlements Must End
The latest Democracy Corps poll, shows that by a 64% – 29% margin, the American people believe that things in this country “have gotten pretty seriously off on the wrong track.”
Obamacare: A Parent’s Worst Nightmare
At the heart of Obamacare is more government regulation. While it’s true that more families will be covered under the law, the new entitlement comes with strings attached.
Why the Issue of Overpaid Government Workers Matters
Federal workers receive both wages and benefits above market levels. State and local workers receive sub-market wages, but they make up for it with excessive benefits.
Americans to Obama: Don’t Cut Defense
A solid 57 percent of adults say it would be “unacceptable” to reduce spending on national security and defense weapons systems.
What Fed's Decision on Buying Treasuries Means for Economy Fed's objective isn't to move Treasury market or reduce balance sheet, but to tighten credit/collateral.
Are Right and Left Changing Where They Stand on Standing?
Democrats are once again competitive in presidential politics. And the rise of conservative and libertarian public interest law groups combined with a more conservative Supreme Court, ensure that the right can play offense as well as defense in constitutional litigation.
Unions, Peaceful Picketing, And Coercion
….. all picketing in numbers should be prohibited, since it is not only the chief and regular cause of violence but even in its most peaceful forms is a means of coercion.
You're not a Frequent Trader? We'll Take Your Stuff
In other words, I had to take action to prevent E*Trade from turning over my property to a government--I think the California state government.
The Horwitz Challenge
The next time you're engaged in a political discussion with someone who has very strong views different from your own, ask them if they can name two famous thinkers or politicians whose politics are opposed to theirs who they also think are very smart and genuinely concerned with making the world a better place.
Economic Development Agencies Come Under More Fire
Yesterday’s Greater New York section details a scathing report about New York’s economic development efforts, which charges that some of the state’s economic development bodies spend too much money for too few jobs and that “spotty reporting has it made it difficult to analyze the cost and benefits of their projects.”
Fed Officials All Over the Map in Explaining Policy Shift
In the days since the Federal Reserve unveiled a notable shift in its portfolio strategy, policy makers have offered discordant explanations about what’s going on.
Summer spikes
Last week, Casey Mulligan noted that teenage employment continues to rise in the summer as students are let out of school, despite the recession—a sure sign, in his view, that labour supply is a crucial factor in determining the unemployment rate, even in recessions.
The wrong direction
Last week, initial claims touched 500,000. As you can see, this isn't simply an outlying data point. Initial claims have been moving slowly upward for much of the year, with a substantial and almost uninterrupted climb in the last two months.
Democratic Misgivings on a Size Cap for Banks
The Brown-Kaufman amendment to the recently enacted financial regulatory overhaul proposed a size cap on our largest banks, limiting their assets to a very small fraction of the size of our economy. But this proposal to modify Dodd-Frank, as the financial reform legislation is known, failed in the Senate in early May, with 33 votes in favor and 61 — including 27 Democrats — opposed.
The Stealth Debt Restructuring: Inflation
Europe’s sovereign debt crisis seems to have gone on holiday along with most of the rest of the Continent during August. But many economists warn that the underlying debt problem is merely in remission and could recur at any moment, once again upsetting world markets.
Rep. Paul Ryan’s Roadmap in Charts
If you haven’t read the plan, you should — it’s only 87 pages long — but if you don’t read it, Paul Krugman summarizes it well when he says that the plan “calls for steep cuts in both spending and taxes.”

Research, Reports & Studies
The Economic Freedom Act: Economic and Fiscal Effects
The Economic Freedom Act, proposed by Representative Jim Jordan, would terminate the ineffective Troubled Assets Relief Program (TARP), and substitute a proven way to stimulate the economy:
Overcriminalization
Federal criminal law has exploded in size and scope—and deteriorated in quality. Honest, hard-working Americans doing their best to be respectable, law-abiding citizens can no longer be assured that they are safe from federal prosecutors.
The Role of the Courts
The Founders envisioned the judiciary to be the “least dangerous branch,” but activist judges have transformed the courts into policymaking bodies that wield wide-ranging power over virtually all aspects of American life.
Ensure that Congress Follows the Constitution
Congress does not just ignore the constitutional limitations on its powers. Members have repeatedly failed to read the bills upon which they were voting, and some have even declared that they have to pass gargantuan bills first so that they can find out what is in them.
Long-Term Case for Stocks and Commodities Stronger than Case for Bonds
In their understandably concerned state of mind in the present day, investors may have lost sight of the longer-term drivers of asset prices. Bonds, especially U.S. Treasuries, have merit presently as high levels of debt have sparked concerns about deflation. However, in the long-run, the case for stocks, commodities, commodity-related currencies, and precious metals looks quite a bit stronger than the case for bonds.
The Risk of Out-of-Pocket Health Care Expenditure at End of Life
Health Care spending in the last year of life is estimated to be $11,618 on average, with the 90th percentile equal to $29,335, the 95th percentile $49,907, and the 99th equal to $94,310. These spending measures represent a substantial fraction of liquid wealth for decedents. Total out-of-pocket expenditures are strongly positively related to wealth and weakly related to income.

Economists’ Comments & Opinions
At 75, Social Security Isn't Aging Well
The Social Security program turned 75 on Aug. 14, and it's not aging well.
Big investors pulling the exit chute
It's just that no one knew when or how it would manifest itself. Same thing is happening right now with the bond bubble.
Free Cities
Free Cities would exemplify free-market globalization, rather than the economic exploitation of protectionist colonialism.
Why Small Banks Are the Key to Recovery, Part 1
Banks need to start lending, but the process by which they do this -- and create real, organic economic growth -- requires two things to happen.
Unserious Cost Cutters Only
The bottom line is that policymakers of all stripes say they want taxpayer money spent more efficiently and effectively. Therefore, if taxpayers want structural changes that will limit the burden of government, they’re going to have to demand that policymakers offer more than just platitudes.

Graph of the Day
A Conservative Foreign Policy
See: Small Firms Lagging, With Bulk of Job Losses
See: Weekly unemployment claims

Book Excerpts
“Stop asking the government for free goods and services however desirable and necessary they may seem to be. They are not free. They are simply extracted from the hide of your neighbors and can be extracted only by force. If you would not confront your neighbor and demand his money at the point of a gun to solve every new problem that may appear in your life you should not allow the government to do it for you. This one insight understood this one discipline acted upon and taught by millions of Americans to others could do more to further freedom in American life than any other.” –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
Authorities in southern Sudan have unveiled a $10bn (£6.4bn) plan to rebuild the region's cities in the shapes of animals and fruit. Elaborate blueprints for the new cities have already been drawn up.