9/3/10 Post

BUZZ: Unemployment Rate Rises to 9.6%

News
'Recovery Summer' Ends With Economic Pothole
This was supposed to be the season the economy heated up, thanks to a wave of public works projects, funded by the government's stimulus program. But summer is coming to an end, and the recovery has not taken root.
White House considering emergency economic stimuli
Administration officials have been huddling almost continuously during the past week, brainstorming for ideas that would boost employment without hiking the massive federal deficit – with Treasury Secretary Tim Geithner rushing to the West Wing for further consultations late Thursday.
A slight reprieve?
Extending the cuts for a while may turn out to be prudent policy.
Wheat Rises on Russian Export Ban; Mozambique Riots
Wheat rose in Chicago after Russia, the world’s third-largest grower, extended a ban on grain exports into next year, raising the prospect of higher food prices that already have sparked riots in Mozambique.
Bernanke out of moves, critics say
With interest rates near zero and the Federal Reserve already owning a large share of the mortgage and Treasury securities markets, many investors fear the central bank may be out of ammunition should the economy take a serious turn for the worse.
GAO: State, local governments 'will steadily decline'
"... closing the fiscal gap over the next 50 years would require action to be taken today and maintained for each and every year going forward equivalent to a 12.3 percent reduction in state and local government current expenditures. Closing the fiscal gap through revenue increases would require action of a similar magnitude ...."
Obama loses backing on taxes
Defying President Obama, Congress seems increasingly reluctant to let taxes go up, even on wealthier Americans.
Jobs Suspense Keeps Dollar Down
The dollar declined modestly against the euro and yen Thursday, with investors unwilling to stake out new positions ahead of the August U.S. employment report.
Bernanke: Shut down banks if they threaten system
Federal Reserve Chairman Ben Bernanke told a panel investigating the financial crisis that regulators must be ready to shutter the largest institutions if they threaten to bring down the financial system.
July factory orders edge up as strong demand for aircraft offsets weakness in other sectors
Factory orders edged up 0.1 percent in July, the first increase after two months of declines. But the strength came in the volatile transportation sector. Excluding transportation, orders were down 1.5 percent, the biggest drop in this category in 16 months.
Budget Woes: Lessons for Washington from California
California’s budget mess has lessons for Washington: Move fast to slow the growth of government pensions, and broaden the tax base.
Struggling youth crime prevention groups see salvation
A $1.6 billion congressional bailout of sorts could help financially flailing groups that fight to keep young people out of trouble, yet lawmakers are reluctant to take up the expensive proposal amid a sour economy and other, more pressing issues.
President Obama versus the world on jobs
For a president elected on a promise of showing a kinder American face to the world, Barack Obama doesn’t seem to mind throwing a few elbows at allies and rivals alike when it comes to the economy.
Democrats Retreat from Increasing Taxes on the Rich
Worried about the fragile economy and their own upcoming elections, a growing number of Democrats are joining the rock-solid Republican opposition to President Barack Obama's plans to let some of the Bush administration's tax cuts expire.
Few options for Barack Obama on 9/11
The White House has not yet announced the president’s plans for next week, though a source familiar with the matter was doubtful Obama would travel to New York.
Chamber Urges Extension of Bush Tax Cuts
The U.S Chamber of Commerce called for an extension of the Bush tax cuts at its annual Labor Day briefing.

Blogs
Broader U-6 Jobless Rate up to 16.7%: Why the Jump?
The U.S. jobless rate rose to 9.6% in August, but the government’s broader measure of unemployment rose even more to 16.7%, the highest rate since April.
Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks
The Employment-Population ratio increased to 58.5% in August from 58.4% in July.
Relief in the Temp Sector
The temporary-help services sector added 16,800 jobs in August, the government said Friday.
Take This Job and Love It
"Employed workers are less fearful of losing their jobs than they were last year, but worries about cuts in benefits and work hours loom larger this year."
Greece: Default Probabilities before and after policy response
...now - after further analysis - the default probabilities have increased for longer time frames...
Lessons in Crony Capitalism
The United States is exploiting our economic system around the world!
The Audacity of Failure
By every objective measure, President Barack Obama’s economic stimulus package has been a complete failure. According to the latest jobs report, total U.S. employment stood at 130.3 million in August, which means the cumulative Obama jobs deficit stands at 7.5 million.
The Repeal Windfall
As November approaches, Obamacare’s defenders are quite plainly desperate. They see public opinion solidly against them, and a devastating election fast approaching.
U.N. Throws $290 Million Lifeline to North Korean Regime
North Korea can count on at least one ally. As reported by FoxNews, “the United Nations is laying plans to spend more than $290 million on a welter of programs in the communist state.” The chief U.N. organizations involved in this effort are: United Nations Development Program (UNDP), UNICEF, the World Food Program (WFP) and the World Health Organization (WHO).
Social Security: Waving the Bloody Shirt Will Delay Needed Reform
Now, it’s liberals who are “waving the bloody shirt,” this time through wild exaggerations of conservatives’ plans for Social Security reform.
How Burger King Lost Its Crown
The fast food chain, which has never been able to fully compete with McDonald's, was sold to 3G Capital for $3.26 billion
Second Gulf Explosion Doesn’t Take Away Need for Drilling
What exploded was not a drilling rig but a production platform. AP reports that the shallow-water platform was not producing oil at the time of the explosion, although the well does normally produce approximately 58,800 gallons of oil and 900,000 cubic feet of gas per day.
Important Manufacturing Indicators Look Weak
Recently released data indicate prolonged economic weakness and a continuing decline in factory orders and the build-up of inventories.

Research, Reports & Studies
Most 'Re-employed' Workers Say They're Overqualified for Their New Job
An estimated 26% (or 36 million) of the 139 million currently employed workers in the United States suffered at least one spell of unemployment during the Great Recession that began in December, 2007.
Are Economists Human?
...analyzes the apparent inability of professional economists to give a better than chance response to a very elementary question about consumer surplus.
Indian Planning and Development Economics
The growth of the Indian economy under Nehru‘s socialism, as we will see, was disappointing. More vigorous growth awaited the liberalization of the economy that began in the 1980s.
The New Face of the Union Movement: Government Employees
The American union movement has reached a historic milestone—more union members currently work for the government than for private businesses.

Economists’ Comments & Opinions
The Small Business The 97% Fallacy
The president's plan to raise top marginal rates is holding back the very people who should be leading the economic recovery.
It Isn't Just Lost Jobs—It's the Lost Jobs Machine
The American economy hasn't been a very robust jobs-producer for quite a while. That's the broader question that needs to be discussed, even as we work on the immediate problem.
120 Days to Go Until the Largest Tax Hikes in History
In just 120 days, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011.
Cantor: Beware of the Obama tax increases
Listening to the Democrats this summer, you're unlikely to hear about an impending tax increase.
Should US government debt be rated junk?
The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall.
Global Economy's Second Day of Reckoning
On the second anniversary of the Lehman crisis, the world economy finds itself yet again at a very troubling juncture.

Graph of the Day
August jobs report
See: Employment Rate Cause for Alarm
See: Monetary Illusions
See: 45% - Unemployment Ain't All Bad
See Also: U.S. Underemployment at 18.6% in August

Book Excerpts
"In the 1962 Report of the Council of Economic Advisers, full employment was officially defined to be present when there was a 4-percent measured rate of unemployment. This was, however, taken to be only some interim rate, with the long-run objective rate considerably lower. The much-discussed Humphrey-Hawkins bill in 1976 set out a 3-percent target rate, to be attained within four years. Historically, however, unemployment in the United States has only infrequently, and then only temporarily, fallen below 4 percent. During the sixty-three-year period after the creation of the Federal Reserve System, the period 1913-1975, there were only twenty years in which unemployment averaged 4 percent or less. Ten of these years—1918, 1943-1945, 1951-1953, and 1966-1968—occurred during periods when the United States was at war, although the mobilization was not so intense in the latter two periods as it was in the former two. The normal rate of unemployment, though unmeasurable, would appear to lie somewhat above 4 percent. During the fifteen-year period 1946-1960, a period that included both moderate mobilization and moderate recession, as well as predating the full Keynesian conversion of our politicians, unemployment averaged 4.5 percent. Even if we could make the heroic assumption that the institutional-structural features affecting employment have remained invariant over the long periods noted, it would seem clear that the "normal" rate of unemployment lies considerably above 4 percent. And, of course, it would be illegitimate to make such an assumption of invariance through time. Both demographic shifts within the labor force (toward younger and female workers) and policy changes (unemployment compensation, extended minimum wage coverage, increases in welfare payments and retirement support) have had the effect of increasing the level of unemployment that would be consistent with any specified rate of inflation." –James M. Buchanan and Richard E. Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes (1977)

Did You Know
Americans will take to the roads and skies for the Labor Day holiday in greater numbers than a year ago, thanks to low gas prices and pent-up demand for air travel, experts say. Auto club AAA projects a 10% increase in holiday travelers over last year. About 34.4 million people are likely to take trips of at least 50 miles.

9/2/10 Post

BUZZ: Summer of Economic Discontent

News
Small business owners to Fed: 'Get out of our way'
Some polls out this week tell us that small business owners are becoming more cautious.
Factory Growth Buoys Markets
The Institute for Supply Management, which surveys U.S. purchasing managers, said Wednesday its manufacturing index rose to 56.3 in August from 55.5 the prior month.
Boxer, Fiorina debate: California economy is center stage
Sen. Barbara Boxer and GOP challenger Carly Fiorina faced off Wednesday night, drawing sharp distinctions between them.
Economy Avoids Recession Relapse as Data Can't Get Much Worse
The U.S. economy is so bad that the chance of avoiding a double dip back into recession may actually be pretty good.
Condolences to the currency professionals
Currency markets appear vibrant, but don't trust the illusion: this is their last gasp.
With Jobs in U.S. Scarce, Illegal Immigration Slides
The influx of illegal immigrants plunged to an estimated 300,000 annually between March 2007 and 2009, from 850,000 a year between March 2000 and March 2005, according to new study released Wednesday by the Pew Hispanic Center, a nonpartisan research group.
The summer the recovery went missing
The Fed has used every tool at its disposal, but can't jump-start the stalled economy.
Low interest rates squeezing pension funds
Thanks to stock market gyrations and the lowest interest rates in 60 years, millions of Americans are struggling to keep their retirement savings intact and secure their future.
Productivity falls in the spring by largest amount in nearly 4 years while labor costs rise
Productivity in the spring fell by the largest amount in nearly four years while labor costs rose, signals that companies may have reached the limits of squeezing more work out of fewer workers.
Top Obama adviser wants more stimulus spending
President Obama's top economist, in her final speech before stepping down Friday, urged Congress to "find the will and wisdom" to spend more money to create jobs — even though lawmakers' appetite for new government spending has waned ahead of November's elections.
Bernanke Meets Buffett in Role Conceived to Protect Markets
In November 2009, Senate Banking Committee Chairman Christopher Dodd advanced a radical proposal: to create a super-regulator that would take over most of the bank supervision that had been done by the Federal Reserve System, the Federal Deposit Insurance Corp. and other agencies.
Bernanke: Shut down banks if they threaten system
Federal Reserve Chairman Ben Bernanke told a panel investigating the financial crisis that regulators must be ready to shutter the largest institutions if they threaten to bring down the financial system.
Outsourcers warn US producing too few engineers
US universities are producing too few engineers to meet industry demand, Indian outsourcing companies say, leaving such businesses little choice but to hire foreign skilled workers to fill jobs in America.
Unemployment claims drop for second straight week
The number of people requesting unemployment benefits declined for the second straight week, suggesting that the slowing economy isn't prompting widespread job cuts.
Corporate cards for consumers?
Sen. Charles Schumer, D-N.Y., is worried that credit card issuers are making it too easy for consumers to get corporate cards, which are exempt from tougher new laws.
Americans in the dark about energy use
Americans aren't known for their energy-thrift ways. Maybe that's because they have little idea as to how much energy things use.
IMF Warns Countries of Debt Risks, Dismisses Idea of Greek Default
According to the IMF analysis of 23 wealthy countries, Greece, Iceland, Italy, Portugal and Japan are very close to that point, while Ireland, the U.S., Britain and Spain are moving into dangerous territory.
Good grades for back to school sales
Retailers reported surprisingly strong August same-store sales as many consumers braved scorching summer temperatures to bag juicy discounts on school-related products.
Cash-strapped schools turn to volunteers to fill budget gaps
As state and local funding for education dries up, schools around the nation are asking their communities to help them maintain their services and programming.
U.S. Auto Sales Dive in August
Auto sales, once a bright spot in the economic recovery, grew fainter last month. Buyers who are nervous about the economy's health stayed away from showrooms, a worrisome sign since August is typically a strong month.
Bernanke, Bair presenting views of crisis, 'too big to fail' to inquiry panel
Productivity in the spring fell by the largest amount in nearly four years while labor costs rose. Productivity dropped at an annual rate of 1.8 percent in the April-to-June quarter, double the 0.9 percent decline originally reported a month ago.
Ben Bernanke defends bailout
Federal Reserve Chairman Ben Bernanke says the 2008 bank bailout worked, reiterating a long-held contention that federal action averted a much greater crisis for the U.S. economy.
Burger King to be bought
Burger King said Thursday that it has agreed to be acquired by investment firm 3G Capital in a deal valued at $4 billion.
Harrisburg, Pa., defaulting on its bonds
The capital city Pennsylvania is broke and will be skipping this month's multi-million dollar bond payment.
Family insurance costs skyrocket 14%
The spike comes even as premiums for family coverage rose only 3%. This discrepancy is a result of cost-conscious companies shifting more of the insurance burden onto employees.

Blogs
Why a civil society extends unemployment benefits
Do unemployment benefits encourage the jobless to stay jobless? If we got rid of lifeguards and let more swimmers drown, fewer people would venture into the water.
What’s Behind the Decline in Illegal Immigration? It’s the Economy, Stupid
A Pew Hispanic Center report released today confirms what has been widely known, that the number of illegal immigrants in the United States has dropped sharply since 2007. The real argument is over what’s behind the decline.
More Arguments against a Value-Added Tax
The biggest threat to fiscal responsibility is a value added tax.
CBO analysis confuses 'assumption' with 'conclusion'
Did Obama's stimulus actually stimulate the economy? The CBO analysis saying so actually used a model that with that assumption built in.
Business Start-Ups Creating Job
Half of the startups go out of business within five years; but overall they are still the ones that lead the charge in employment creation.
Do You Wish You Could Choose Your Child’s Teacher?
As important as this their influence is, most Americans have no say in choosing their child’s teacher. Parents don’t have a choice when it comes to their child’s education, despite the fact their tax dollars pay for the public schools, and their children’s futures are at stake.
The Medicare Bureaucracy: Ready To Disrupt Seniors’ Drug Coverage
Despite all the promises, a new report from Avalere Health shows that, in addition to the upheaval caused by Obamacare, the Medicare bureaucracy is taking administrative steps to change the Medicare drug program that will have adverse impact on seniors’ choices.
EPA’s New Rating System Encourages Poor Decisions
The EPA recently proposed a new grading requirement for new car stickers. The A–D grading system would rank cars according to their fuel efficiency and carbon dioxide emissions to help consumers make better choices.
The Grades Are In: Only 2% of Colleges get an “A”
Of the 719 colleges and universities analyzed in this report, only 16 institutions of higher education provide a coherent, content-rich general education or core curriculum.
Secondary Sources: Climate Change, Home Ownership, Jobs
A roundup of economic news from around the Web.
Unchecked and Unbalanced Watch
The problem with the whig-history story is that it assumes that government takes care of the problem that it is supposed to solve. But it might not. It might be the case that individuals or small organizations solve the problem better.
The New Normal for Jobless Claims?
The problem is that the number of new unemployment claims is becoming flat at a level far higher than the average 318,000 level that was typical during the full-employment, low-unemployment years of 2006 and 2007.
The Small Schools Myth
The problem is that because small school don't have a lot of students, scores are much more variable. If for random reasons a few geniuses happen to enroll one year in a small school scores jump up and if a few extra dullards enroll the next year scores fall.
The Great Micro Turbulence Amidst the Great Macro Moderation
"The main thing that concerns me is the threat of persistent high unemployment, and here the European experience of the last three decades fills me with dread."
Lawrence Lindsey Vs. Christy Romer
...I get the impression that serving as a policy adviser for an Administration tends to undermine one's ability to be objective. Advisers seem to get inordinately attached and committed to the policies they work on. Herbert Stein was a notable exception.
Progress
So [the Apple nano] is cheaper (even without accounting for inflation), weighs 1/15th as much, and holds about 40 times more music of higher quality [than the 1979 Sony Walkman].

Research, Reports & Studies
Reforming Indigent Defense: How Free Market Principles Can Help to Fix a Broken System
Public defender offices around the country face crushing caseloads that necessarily compromise the quality of the legal representation they provide. The inadequacy of existing methods for serving the indigent is widely acknowledged, and President Obama has recently taken steps to give the problem a higher priority on the national agenda.
RCM: Wells Fargo Economics Group: ISM: Growth Steady with a Positive Surprise: Orders, Jobs OK
August ISM rose to 56.3, which was better than expected. Production and employment showed gains, while
orders moderated. Firms appear to have adjusted their operations to match a slower growing economy.
The Postwar German “Wonder Economy” and Ordoliberalism
The Ordoliberals focused on finding appropriate “rules of the game” for the market order, asking: what constitutional structure and legal framework best preserves a free society and economy?

Economists’ Comments & Opinions
A "Recovery In Name Only"
To the eight million Americans who have lost their jobs during the “Great Recession,” the so-called recovery our nation is currently experiencing hasn’t been very “stimulating.”
Out of the Frying Pan and Into the Fire?
It seems the only uniformity is the trend for panic buying days and panic selling days to go tit for tat. So does that mean Friday will give us another panic selling day?
Fact, Fiction, Fantasy and Foolishness
And it is apparent to all, except for the academics that populate the Obama administration and the Federal Reserve Board that low interest rates, free money, ongoing bailouts and obeisance to political constituencies solve nothing.
Deficits and the War
Now, I am interested to hear how the president, who claimed yesterday that it’s “time to turn the page” and end “the American combat mission in Iraq,” will account in the budget for the 50,000 troops who will still be in Iraq and for the number of security contractors, which is supposed to double over the next few months.
Why Saving Is Right and Economists Are Wrong
Consumer spending is not the way to recovery, and to understand why, we must ask ourselves why we continue to have boom and bust cycles.
Why America Isn’t Working
The honest answer – but one that few voters want to hear – is that there is no magic bullet. It took more than a decade to dig today’s hole, and climbing out of it will take a while, too.

Graph of the Day
Auto sales: Worst August since 1983
See: Population Growth Rates in Selected Countries

Book Excerpts
"One would think that with at least 250 sovereign external default episodes during 1800-2009 and a least 68 cases of default on domestic public debt, it would be relatively straightforward to find a comprehensive long-range time series on public sector debt. Yet this is not the case; far from it. Government debt is among the most elusive of economic time series." –Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different (2009)

Did You Know
Health care spending this year has grown at its slowest rate in a half-century, a sign that people are forgoing medical care during the recession. Spending on doctors, hospitals, drugs and other medical care climbed at a 2.7% annual rate per person in the first half of 2010, the smallest increase since the Bureau of Economic Analysis began tracking medical care in 1959. When inflation is taken into account, spending per person actually fell 0.2% in the first six months of the year. That's the first decline since the government began adjusting for inflation in 1995.

9/1/10 Post

BUZZ: Private Sector Cuts Jobs

News
Dow Logs Worst August in 9 Years
Stocks limped to their worst August since 2001, battered by a wave of discouraging data that cast doubt on the faltering economic recovery.
Obama to loosen export control policies; could benefit defense companies
In a bid to tighten national security, U.S. President Barack Obama announced a restructuring of export control policies that would prune one-third of the items in the current control list.
Banks post strong quarter, but woes persist
Aggregate earnings grow, as does 'problem' list.
Fed Divided on Move to Buy U.S. Debt
The minutes, released Tuesday, revealed that Fed officials were divided on how effective the purchase of long-term Treasuries would be, and on whether it would complicate an eventual return to normal monetary policy.
Pakistani says floods slow growth, raise inflation
Pakistan's economic growth will plunge 2 percentage points because of the floods and lead to "massive" job losses, the prime minister warned Wednesday in a speech that predicted a grim couple of years for the already fragile country.
California Cities: D Is for Disincorporate
City officials in Half Moon Bay say the municipal budget is such a mess that it may make sense to disincorporate and turn the place over to San Mateo County.
Obama, GOP debate small-business tax
Both sides claim to be championing jobs growth.
Home Prices Rise; Outlook Dims
Potential Buyers Hesitate; 'Bunch of People Who Are Sitting, Waiting in the Wings.'
Taxing the Rich: White House in Favor of Increases
White House economics aide Jason Furman reaffirmed the White House stand in favor of extending Bush era tax cuts to all but the wealthiest Americans.
Guess who wants a carbon tax?
If Republican leaders were serious about using the Gulf oil spill as an opportunity to put the nation on a sane energy course, they'd pull out a little-noticed bill sponsored by Arizona's Jeff Flake and South Carolina's Bob Inglis and plop it atop their 2010 campaign book.
Are Americans de-banking?
The financial crisis that destroyed some of the world's biggest banks and sent others to the brink of failure have changed Americans' idea of lending and borrowing.
Fed minutes show debate on economic outlook
The Federal Reserve is the last line of defense against a weakening economy, but there has been sharp disagreement among members over what action the central bank should take.
China manufacturing could help avoid 'hard landing'
China's manufacturing sector rebounded in August, calming some fears about the pace of that country's growth.
Jobs: 'Stopped firing, not yet hiring'
The jobs picture still looks sour, but there could be light at the end of the tunnel.
Retail data: Americans spent a bit more this August than last, but back-to-school numbers weak
The good news is for consumers: Those who hoped for prices to fall and held off spending may be in luck if stores deepen discounts further to get rid of fall merchandise.

Blogs
The Press Isn’t Talking Us Into a Recession
Whatever the cause of the upward turn in the indicator’s tone, the result is the same: the U.S. press isn’t talking down the economy.
Broken Banks, Durable Delusions
This year 118 banks already failed and were taken over by the FDIC. At this rate, more banks will fail in 2010 than in 2009.
Secondary Sources: Saving Surprise, Leading Indicators, Tax Cuts
A roundup of economic news from around the Web.
Time to Make Hard Choices on the Budget
[Democrats] seem to plan on "paying" for seventeen different programs with the same pot of money. For example, it now appears to be administration policy to claim that health care reform has extended the solvency of Medicare, and has also reduced the budget deficit, which the CBO has said isn't true.
A simple parable of price stickiness and international externalities
Overall, the results may depend on whether wage rigidity is real or nominal in each currency, the degree of capital mobility, the currency of invoicing in which sticky prices are set, and how much market participants look forward and consider stocks in addition to flows... There are many permutations, to the point where they are perhaps no longer very useful.
Whack-a-Mole
As Robert Higgs notes, "Real civilian consumption and private investment both fell after 1941, and they did not recover fully until 1946. The privately owned capital stock actually shrank during the war."
MBA: Purchase Application activity suggests low level of existing home sales in August and September
"Refinance Index increased 2.8 percent from the previous week and is at its highest level since May 1, 2009."
The Best and the Brightest
Academic explorations of health care policy often suffer from several handicaps, handicaps that are exacerbated by ideological conformity.
How to fix unemployment
Monetary or fiscal stimulus just needs to give the economy a good kick in the pants to prop up demand and get firms to start hiring again. This can be expensive, especially if some of that new momentum finds itself overseas, but may be worth the cost if it can get people back to work.
The Obama Doctrine
There was nothing particularly noteworthy about President Barack Obama’s Oval Office address on Iraq last night. Again he evinced the impression that he viewed Iraq as a distraction. As forgettable as the address was however, once placed into the broader context of foreign policy speeches and actions, a clear Obama Doctrine can now be defined.
What Are America’s Interests?
It is not clear what the President meant when he said, “Ending the war was in our interest.”
Missed Opportunities in the Oval Office
Unfortunately, President Obama missed a valuable opportunity tonight to demonstrate that he is fully committed to success in Afghanistan. Instead he stubbornly reiterated his July 2011 withdrawal date.
The Sky (Still) Isn’t Falling
Deficit-spending U.S. politicians are more than happy to borrow money from China and elsewhere. It’s our own politicians and their reckless spending that Americans need to get tough with.
More Evidence against the VAT
Proponents argue that a new tax on consumption would raise the needed revenues to close the deficit gap. However, rather than putting Washington’s fiscal house back in order, a VAT is more likely to grow the size of government and encourage growth in spending.
The Justice Department Strikes Arizona Again
Eric Holder’s Justice Department really seems to believe that its primary responsibility is to help aliens who violate federal law as opposed to tax-paying citizens of the United States.
The "Us" Vs. "Them" Depression
Will acceptance of the financial malaise create a window of opportunity?
Auto Sales Fuel Consumer Spending
Competitive discounts, rebates, and financing rates helped manufacturers sell cars at an annual rate of 11.6 million in July, compared with 11.2 million in June.
The Misinterpretation of Economic Data
Many have been hailing recent housing data, but these small victories are still far from a comeback.
Why Saving Is Right and Economists Are Wrong
Consumer spending is not the way to recovery, and to understand why, we must ask ourselves why we continue to have boom and bust cycles.

Research, Reports & Studies
The Mont Pelerin Society and the Rebirth of Smithian Economics
Spontaneous-order economic theories, as developed by Smith, Menger, and Hayek, imply that mutually beneficial trades in decentralized markets, and the institutional patterns that grow from them, help to satisfy people’s aims. It promotes the wealth of nations.
Keys to Sustainable Recovery
With economic growth lower than expected, policymakers should undertake measures with a higher probability of stimulating the economy.
Should the Government Expand Telework?
Telework faces a variety of barriers, from a reluctant institutional culture to unfavorable tax laws. The government should take simple steps to lower or eliminate these barriers, saving taxpayers’ money and paving the way for a more nimble workforce.
Defining the Obama Doctrine, Its Pitfalls, and How to Avoid Them
Examining President Obama’s doctrinal statements and actions more closely demonstrates why reasserting American leadership on behalf of liberty would be the wiser course.
Reforming Indigent Defense: How Free Market Principles Can Help to Fix a Broken System
The inadequacy of existing methods or serving the indigent is widely acknowledged, and President Obama has recently taken steps to give the problem a higher priority on the national agenda,
Statistics of Income Studies of International Income and Taxes
The Statistics of Income Division of the IRS conducts 15 studies of international income and taxes. These studies provide data on the foreign activity of U.S. persons, as well as the U.S. activity of foreign persons.

Economists’ Comments & Opinions
Obama's wandering economic message
...Obama's tax increase on the rich would be used to reduce the deficit, resulting in a net contraction of economic activity. Tax increases to pay for past spending do not stimulate the economy.
America's entrepreneurial flame is fading
With each step toward socialism in our economic policy, America's defining entrepreneurial flame fades a bit more in our culture.
Entrepreneurs Know What Obama Doesn't
Entrepreneurship is neither created nor nurtured by government, nor reserved to the privileged; it springs from individuals and can be found even in the poorest communities in countries worldwide.
Dear Patients: Vote to Repeal ObamaCare
Don't believe Democrats who promise to fix the bill once they're re-elected.
The fatal flaw of Keynesian stimulus
Last week, the Congressional Budget Office released a report claiming that the $814 billion "stimulus" has added 3.4 million net jobs. This surely comes as a surprise to the 3.5 million Americans who have lost their jobs and remained unemployed since the stimulus was enacted in February 2009.
Beware Those Who Think the Worst Is Past
We have analysed data on numerous severe economic dislocations over the past three-quarters of a century. The result is a bracing warning that the future is likely to bring only hard choices.
Hands off Social Security
The White House deficit commission is reportedly considering deep benefit cuts for Social Security, including a steep rise in the retirement age. We cannot let that happen.

Graph of the Day
Problem Bank List Climbs to 829
See: Currency Trading Soars

Book Excerpts
"Mises's concept of human action embodies an insight about man that is entirely lacking in a world of Robbinsian economizers. This insight recognizes that men are not only calculating agents but are also alert to opportunities. Robbinsian theory only applies after a person is confronted with opportunities; for it does not explain how that person learns about opportunities in the first place. Misesian theory of human action conceives of the individual as having his eyes and ears open to opportunities that are "just around the corner." He is alert, waiting, continually receptive to something that may turn up. And when the prevailing price does not clear the market, market participants realize they should revise their estimates of prices bid or asked in order to avoid repeated disappointment. This alertness is the entrepreneurial element in human action, a concept lacking in analysis carried out in exclusively Robbinsian terms. At the same time that it transforms allocative decision making into a realistic view of human action, entrepreneurship converts the theory of market equilibrium into a theory of market process. " –Israel M. Kirzner, The Foundations of Modern Austrian Economics: Part 3, Essay 1, "Equilibrium versus Market Process" (1976)

Did You Know
Michigan ends summer without state fair for 1st time in 160 years. The Michigan State Fair had been a state tradition for 160 years and held at Eight Mile and Woodward, within Detroit city limits, since 1905. But the fair had been running deficits and needed $360,000 from the state in 2008 to cover losses. Fewer than 220,000 people passed through last year. At its peak in 1966, the fair drew 1 million.

8/31/10 Post

BUZZ: India Economy Expands 8.8%

News
Japan Defends Economic Policy Steps as Stocks Slide
Japanese ministers defended measures pledged by the government and the Bank of Japan yesterday after concern deepened that the steps won’t be sufficient to halt the yen’s gain and boost economic growth.
Australia Trade Deficit Smallest Since 2002
The current account deficit narrowed to a seasonally adjusted 5.6 billion Australian dollars ($5 billion) in the second quarter of 2010 from a shortfall of A$16.46 billion in the first quarter, the ABS said Tuesday.
European Inflation Slows to 1.6%, Unemployment Holds at Highest Since 1998
European inflation slowed this month and unemployment held at the highest in almost 12 years in July as companies continued to cut costs to help shore up earnings.
Home Price Rise Better Than Forecast
Prices of U.S. single-family homes gained more than expected in June and rose in the second quarter, reflecting the lingering boost from homebuyer tax credits that ended in April, Standard & Poor's/Case Shiller home price indexes showed on Tuesday.
Russian economy grew official 4.0% in first half
Russia's gross domestic product (GDP) grew by 4.0 percent in the first half of 2010.
Paying Off the House in 15 Years
Homeowners are doing the math and realizing that rates have fallen enough so the increase in payment between a new 15-year mortgage and their current loan is no longer unbearable for their budgets, says Bob Walters, chief economist at online lender Quicken Loans.
German official unemployment rate stable at 7.6%
The German unemployment rate was stable in August at 7.6 percent of the workforce, official figures showed on Tuesday as the number of people seeking work edged slightly lower to 3.188 million people.
U.S. Auto Sales May Hit 28-Year Low as Discounts Flop
U.S. auto sales in August probably were the slowest for the month in 28 years as model-year closeout deals failed to entice consumers concerned the economy is worsening and they may lose their jobs.
Ron Paul questions whether there's gold at Fort Knox, NY Fed
Rep. Ron Paul (R-Texas) said he plans to introduce legislation next year to force an audit of U.S. holdings of gold.
Gold Rallying to $1,500 as Soros's Bubble Inflates
Investors are accumulating enough bullion to fill Switzerland’s vaults twice over as gold’s most- accurate forecasters say the longest rally in at least nine decades has further to go no matter what the economy holds.
Public sours on health care reform as midterms loom
A new poll shows that public support for health care reform dropped sharply in August – a dagger in Democrats’ hopes that their landmark legislation will help them in November’s midterm.
August Torpor Leaves Dow in a Hole
This month's average daily trading of four billion shares in New York Stock Exchange composite volume makes it the slowest August since 2006, and is almost a third lower than the daily volume of 5.8 billion shares in August last year.
Democrats seek separation from Nancy Pelosi
Some of the Democratic Party’s most endangered lawmakers are taking steps to distance themselves from Speaker Nancy Pelosi in an attempt to inoculate themselves from charges that they are beholden to the unpopular House leader and supportive of the ambitious national Democratic agenda.
Obama Kicks Off Jobs Offensive
President Obama will close out the summer with a public relations blitz on jobs and the economy, the issue that is shaping the political landscape for November.
Analysts say US is expected to find that China unfairly helped its aluminum industry
The finding, which could spark higher import duties, was anticipated Tuesday as the White House attempts to strike a delicate balance ahead of November congressional elections that will be dominated by the weak U.S. economy.
U.S. Wants Report Card for Cars
System Would Rate Fuel Economy, Emissions; Industry Says Government Veers Into Issuing Opinions.
Car buyers won't see deals like 'Clunkers' for a long time as leaner automakers guard profits
Deals are getting more scarce because automakers, newly lean and profitable, are holding the line on those profit-eating promotions. And with no one expecting the government to offer a repeat of the Clunkers program, get ready for fewer discounts
Obama rips GOP for blocking small business aid bill
President Barack Obama blasted Senate Republicans on Monday for blocking a small business assistance bill, calling their opposition "pure partisan politics."
Coming Soon: Theaters, Airplanes to Post Calories
Regulators' appetite for calorie counts is about to extend beyond restaurants to thousands of other places that offer food, including airplanes, movie theaters and convenience stores.
Alabama schools turn to bank loans to operate
Alabama schools have been having a rough time of it, and it only looks like it's going to get rougher. Five school districts have already borrowed against lines of credit they have with local banks to fund basic school operations, and 25 additional districts are planning to follow suit in the next few months.
Poll: Americans Disapprove of Obama on Economy, Deficit
In nine of 15 issues examined in an Associated Press-GfK Poll this month, more Americans who expressed intense interest in a problem voiced strong opposition to Obama's work on it, including the economy, unemployment, federal deficits and terrorism.
Credit is finally available, but no one wants it
Finally, nearly two years after they were bailed out by Congress, big banks are beginning to ease lending standards for individuals and small businesses. Just when credit becomes more available, there's little evidence of a surge in demand for it.

Blogs
He Can’t Know
...between 1981 and 2008, taxes paid by this industry totaled nearly $2 trillion, an amount that exceeds oil-industry profits during these same years by almost 40 percent. The production and use of coal is also heavily taxed.
Higher Taxes May Not Push Firms to Cut Dividends
One big reason is that a growing share of U.S. equities are held by retirement funds and foreign investors that aren’t swayed by U.S. individual income-tax rates.
Inflation Regimes: the 5.5 percent barrier
The 5.5 percent barrier was crossed in 1990, with the six-month moving average peaking at 5.96 percent in August of 1990, but inflation turned down from there, falling below 5.5 percent in February of 1991 Until the 1990 recession, we might have been flirting with the high-inflation regime.
Immigrants Make U.S. Workers Richer
The research offers a detailed analysis of how, rather than depressing the wages of native born workers, immigrants help to raise them over time, largely through immigrants’ overall stimulation of economic growth.
Changes in Workers Compensation Taxes Over Time
In 2006, the taxes that support workers compensation insurance in a number of states were skyrocketing out of control. So much so that many businesses were seriously looking at uprooting their operations and moving cross country to where they could operate less expensively.
Economists React: Spending Data Indicate Recovery ‘Slogging Through the Mud’
Economists and others weigh in on the increase in consumer spending and incomes.
I, Fuel Pump
...overwhelming – and fun – evidence that markets work.
How Big a Stimulus Did We Need?
The CBO's numbers imply that even if we'd gotten a much larger stimulus--$1.3 trillion, say--unemployment would at best be something under 9%. The economy would still be underperforming.
The Unemployment Problem
We can argue about how generous the unemployment benefits should be overall, but for any level of benefits it is possible to reduce the disincentive to find work.
New database on the maturity structure of publicly-held debt
...a project with UCSD graduate student Cynthia Wu to try to assess the potential for the Federal Reserve to continue to influence long-term interest rates even when the short-term interest rate is essentially at zero.
Adam Smith on Ford's $5 a Day
Smith goes on to point out, in one of the first public choice insights in written economics, that, of course, the shopkeepers are quite happy for others to be taxed to finance imperialism because their pro rate share of taxes is less than their benefits from having a protected market.
Reversing reform
Over the past several decades, China has slowly reduced its interventions in the economy and it has encouraged state-owned firms to compete aggressively in the market. The effort to remove the heavy shackles on the Chinese economy has generated a period of record growth. Is the process of reform now threatened?
A Federal Right to Obfuscate
H.R. 3421, the “Medical Debt Relief Act of 2009,” has nothing to do with relieving people of medical debts. It adds to the list of information credit reporting agencies may not communicate to their clients.
Economic Problems Won’t Be Solved by Education Stimulus, Either
Mark Calabria does a fine job dismantling Laura Tyson’s argument that we need another stimulus to spur private demand and revive the comatose economy. I would just caution against the one thing he could be construed as implicitly supporting: more federal funding for education.
Trade Deficit Reality Check
Americans should hope for a big surge in imports in the near future. A fast-growing economy would give Americans more money to spend on imports and that—note to headline writers—would obviously be a very good thing.
Wind Energy: It’s Not Cheap or Clean
We’ve explained in detail how subsidized green jobs destroy jobs elsewhere, but it also turns out that increased wind power decreases carbon emissions much less than previously thought, and in some instances, could increase emissions.
The Obama Tax Hikes: It’s Not Their Money!
It doesn’t cost our government anything to allow us to keep the money we have earned. When a tax is not raised, the people get to keep their money, and that’s it.
More (Mis)forecasting Folly from the Keynesians
Advocates for more stimulus dollars such as economist Laura Tyson continue in their failure to recognize the fundamental adjustments needed on the economy's supply side before the economy can get back on a path of sustainable recovery.
What Can the Fed Do?
Less than most hope; more than many fear.
Don't Count the Bulls Out... Yet
In the age of feast or famine, it's alright to nibble.

Research, Reports & Studies
RCM: Wells Fargo Economics Group: Personal Income Rose Modestly in July
Personal income rose an anemic 0.2 percent in July, which was roughly in line with expectations. In real terms, spending rose a modest 0.2 percent. Increases in hours worked helped boost wage and salary growth.
Investing in Institutions
...the robustness of a country's growth path to political uncertainty depends on the degree to which individuals are invested in its current institutions.
After the Fall
Three years have elapsed since the troubles in the United States subprime mortgage market erupted in the summer of 2007. In the interim, a global panic developed and, just as normalcy began to return this year, concerns about a Greek default and widespread contagion in Europe shook the confidence of financial markets anew. As the dust has once again begun to settle, policymakers and financial market participants have begun to ponder the economic effects of these adverse shocks beyond their immediate and evident costs.
The Economic Principles of America’s Founders: Property Rights, Free Markets, and Sound Money
In light of the stark differences between the economies of the present day and the late 18th century in which the Founders lived, we can learn about economics by studying the principles and approach of our Founders.
Charter Schools: A Welcome Choice for Parents
Parents are substantially more satisfied with charter schools and the academic and social development of their children who attend compared to public school parents.

Economists’ Comments & Opinions
TARP and the Continuing Problem of Toxic Assets
It was a bold bet that the Treasury and Fed could engineer an economic recovery without allowing the repricing of U.S. housing stock.
Urban Plight: Vanishing Upward Mobility
Boosters still maintain that big cities remain unique centers for social uplift, but evidence suggests this is increasingly no longer the case.
The Fed Can't Fix An Overtaxed Economy
Big spending is another economy-killer. A recent OECD study noted that for every percentage point increase in spending among the nations studied, per capita GDP fell by 0.3% and investment by as much as 0.4%. So more government "stimulus" cures nothing.
Our Macroeconomic Fetish
Making sure that an economic recovery will never come.
PRICE: Trade is key to future prosperity
Democrats' stalling of pacts hurts American economy.
Bonds May Not Be as Safe as You Think: A Cautionary Tale
Investors seeking shelter from the uncertain economy and falling stock prices are moving into bonds in droves. But they may not be aware of the risks.
Tire-d Old Trade Policies
You can't boost exports by trashing imports.
It's a Good Time to Index Taxes On Capital
...one likely barrier to a higher inflation target is a quirk of tax policy: non-indexation of capital taxation means that higher inflation causes a stealth rise in the real tax rate on capital gains and interest income.
Social Security Bait and Switch
'Harry, am I making this up?' Yes, Mr. President, you are.
Along the Flaming Paper Trail of Crusader Elizabeth Warren
The Consumer Financial Protection Agency is the new kid on the block, a stranger among many agencies regulating financial institutions. The new kid has an agreeable name, but may turn out to be a bothersome nanny or the school bully.
Why World Markets May Continue Downtrend
Additional US stimulus will be proposed which will hold investors in the game, but additional sovereign shocks appear to be likely.
Double Dip Not Possibility but Reality
Will a weak economy bring quantitative easing estimated at $1 trillion?
Exploring Viable Policy Solutions to Fight Economic Headwinds
These actions could restore some business confidence, make a dent in unemployment, and garner a positive reaction from equity investors.

Graph of the Day
American Thinker: USA Today: Record Number in government anti-poverty programs
See: A Look at Case-Shiller, by Metro Area (August Update)
Video: President Obama’s Recovery Summer Vacation

Book Excerpts
"Opportunity cost tends to be defined acceptably, but the logic of the concept is not normally allowed to enter into and inform the subsequent analytical applications... In public finance alone, debates over tax incidence, tax capitalization, public-debt burden, and the role of cost-benefit analysis can be partially resolved when protagonists accept common concepts of cost. The unsatisfactory state of welfare economics can at least be understood and appreciated more adequately when the incorporated cost confusions are exposed. The once heated and long smouldering debate over the possibility of socialist calculation emerges with perhaps a different glow." –James M. Buchanan, Cost and Choice: An Inquiry in Economic Theory (1969)

Did You Know
Republicans led Democrats by 10 percentage points in Gallup’s most recent weekly poll of Congressional voting preferences, the largest lead for the GOP in Gallup’s history of tracking the midterm generic ballot. Gallup began tracking the generic midterm ballot in 1942. The GOP's largest previous lead was 5 percentage points in June 2002, while Democrats have regularly enjoyed far larger leads. The widest was 32 points in July 1974, just before President Richard Nixon resigned.

8/30/10 Post

BUZZ: States See Pickup in Tax Revenue

News
Bank of Japan Boosts Loan Program, Pledges More Steps If Needed
The Bank of Japan expanded a bank- loan program, stepping up its monetary stimulus for the first time since March after the yen surged to a 15-year high and the government pressured the central bank to safeguard the recovery.
Luxury booms while bargain retail suffers
Consumer spending in the US is diverging into two strands as strong growth at high-end stores such as Tiffany contrasts with continuing difficulties for mass-market retailers.
Record number in government anti-poverty programs
Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand.
Investors braced for week of key data
Investors are braced for a week of crucial economic data that could decide the Federal Reserve’s next move after chairman Ben Bernanke said it would ease policy if the outlook deteriorated “significantly”.
Cash-Poor Governments Ditching Public Hospitals
Faced with mounting debt and looming costs from the new federal health-care law, many local governments are leaving the hospital business, shedding public facilities that can be the caregiver of last resort.
Among Democrats, Economic Pressures Are Changing Tax-Cut Dynamics
In light of the recent weakening of the economy, a growing number of Democrats want to extend tax breaks for the wealthy through 2011.
Charter schools finding niches
Specialization seen as the next wave of reform.
Economic Reports This Week
Data will include personal income and spending for July (Monday); S.& P./Case-Shiller home price index for June and second quarter, Chicago purchasing managers’ index for August and consumer confidence for August (Tuesday); North American car sales for August; construction spending for July, ADP employment for August and the ISM manufacturing index for August (Wednesday); retailers’ same-store sales for August, pending home sales for July, factory orders for July and weekly jobless claims (Thursday); and unemployment for August and the ISM service index for August (Friday).
Economists: I dunno, man. What do you think?
The air is quickly coming out of the recovery balloon, and economists have mixed views on how to pump it back up.
Made in USA - For now
Despite the odds, these businesses have managed to stay truly all-American. But for how long?
Consumer spending picks up
Personal spending rose by $44.1 billion last month, or 0.4%, after falling less than 0.1% in June. This came in above the 0.3% increase economists expected.
Obama Looks to Congress to Jump-Start Economy
It is largely up to Congress to take action to speed up the economic recovery at this point, but many lawmakers are more focused on “the silly season” of campaigning instead of passing crucial legislation, President Obama said Sunday.

Blogs
NABE Survey: Most Economists Favor Extending Bush Tax Cuts
At least 60% of economists surveyed by the National Association for Business Economics said lower tax rates on capital gains and dividends should not be allowed to expire as provided under current law.
How panhandlers use free credit cards
Some were unbelieving at first. All were grateful. Some declined the offer. Some who accepted didn’t come back, but those that did had stories to tell.
Trichet: Governments Must Make ‘Ambitious’ Plans To Cut Debt
The head of the European Central Bank said Friday that highly indebted governments will need to act forcefully to lower those burdens, as his central bank continues to work to keep inflation levels low.
Schedule for Week of August 29th
This will be another busy week - the August employment report on Friday is the key economic release this week.
After Crises, Slow Income Growth and High Unemployment
Economists Vincent and Carmen Reinhart offer a grim tour of the economic landscape after financial crises — one plagued by slow economic growth and high unemployment — in the kickoff paper up for discussion at the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole.
Pray, Hear Me Out
...tax-exemption does not involve taking money from Y and giving it to X. That fact is vital.
Unofficial Problem Bank List increases to 840 institutions
"The Unofficial Problem Bank List grew by more than five percent this week as the FDIC released its enforcement actions for July 2010."
What Caused the State Budget Gaps?
The recession was the proximate cause: it sent revenues in a free fall at the same time that it put extra demands on the states’ welfare systems.
U.S. Births decline in 2009
The NCHS reports that U.S. births declined to 4.136 million in 2009, from 4.247 million in 2008. The birth rate declined to 13.5 from 13.9 in 2008 (births per 1000 total population).
How it sounds vs. how it really works
How does [the Recovery Act] sound? Great. Energy efficiency meets job creation. Green jobs helping the environment and saving people money...
The Decline in Civil Liberties
...Americans are no longer free to travel by commercial air without showing a government official a government-issued ID. So the freedom that [a U.S. foreign service officer in Moscow] sought in the United States no longer exists. In an important way, the United States has become Sovietized.
Why Does Louisiana Think This is Obama’s Katrina?
President Obama’s oil drilling ban is set to end on November 30, but hopefully the White House will begin to show some understanding of how the Gulf economy works by ending the ban before that.
Why is Obama Letting Non-Citizens Get Away with Voting?
We can now add one more general amnesty that the administration is apparently extending – no prosecution of illegal voting by noncitizens and a green light to becoming a citizen even if you have violated federal law.
Government Alters Stimulus Sign Policy, Raising More Propaganda Questions
In the 18 months following approval of President Obama’s stimulus package, the Department of Transportation required recipients of government funds to post placards touting the economic recovery. As a result, signs prominently featuring the recovery act logo appeared everywhere.
No Federal Bailouts for State and Local Government Pension Problems
There is bad news and worse news for state governments faced with underfunded pension promises.
Obama’s Economic Slide
What we are seeing is an economy that tried to recover last winter, slowed, and is now sliding steadily to stagnation. Not yet a recession, it is certainly the Obama slide.
Bernanke Pledge on Economy Gives Some Relief to Oil Prices
Ben Bernanke's comments at first sent markets down further, but stock, commodity prices rose once participants accepted the speech's takeaway: The Fed stands ready to act.
Bernanke on Monetary Policy
Ben Bernanke promised the Fed will do whatever it takes to aid the faltering U.S. recovery, and most of all to prevent deflation. The problem for the Fed Chairman is that the central bank is plainly running out of options.
The Laffer Curve Strikes Again
In the private sector, no business owner would be dumb enough to assume that higher prices automatically translate into proportionately higher revenues. In the public sector, however, there is very little understanding of how the real world works.
Is the Trade Gap to Blame for Slowing GDP Growth?
The trade gap should be the least of our worries.

Research, Reports & Studies
RCM: DEBT BE NOT PROUD
Bond investors are lenders. Why should we deliberately choose to lend more to those who are most deeply in debt?
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
U.S. Review: New Day Yesterday.
RCM: Hudson Institute Economic Report
This week saw downward revisions in GDP, a slowing housing markets, and declining durable goods orders. The stock market fell below the psychological 10,000 mark, even though it tends to rise when Congress is out of session.
The Dodd-Frank Act: Creative Destruction, Destroyed
The dominant theme of the Dodd-Frank Wall Street Reform and Consumer Protection Act is fear of instability and change, which the act suppresses by subjecting the largest financial firms to banklike regulation. The competitiveness, innovativeness, and risk taking that have always characterized U.S. financial firms will, under this new structure, inevitably be subordinated to supervisory judgments about what these firms can safely be allowed to do.
Obama’s Iraq Speech Should Stress a Resolute U.S. Security Commitment
President Obama’s televised speech on Iraq will mark the “official” end of U.S. combat operations in Iraq and the transition to an “advise and assist” mission.

Economists’ Comments & Opinions
The Folly of Subsidizing Unemployment
My calculations suggest the jobless rate could be as low as 6.8%, instead of 9.5%, if jobless benefits hadn't been extended to 99 weeks.
Government Pay: Now For The Really Bad News
High federal pay means less capital formation, lower wages and reduced innovation.
Spreading Hayek, Spurning Keynes
Professor Leads an Austrian Revival.
The CBO Promotes a Stimulus Fantasy
The striking thing about the CBO analysis is that it is "reality proof". Rather than presenting evidence that "stimulus" works, the CBO employed economic models that assume that "stimulus" works. As a result, no matter what happened to 2Q2010 GDP and employment, the CBO's calculations would always show that "stimulus" worked exactly as intended.
Time to let home prices fall?
For government to stand in the way of a further price decline is unfair to the next generation of buyers...
Seeking An Honest Social Security Fix
Social Security is not an "insurance" program. Social Security is not a "pension" program. If it were either, everyone running it should go to jail. Quite simply, Social Security is an inter-generational tax and welfare scheme. Facing up to that truth is 90% of the battle as doing so would transform the debate into two separate problems that actually have rational solutions: How do we want to tax ourselves and who should we give welfare to?
Waiting for Mr. Obama
If President Obama has a big economic initiative up his sleeve, as he hinted recently, now would be a good time to let the rest of us in on it.
You Call This a 'Recovery'?
The administration promised from the beginning of last year that recovery would start soon after the stimulus was passed. The only thing that Obama has proved is that Keynesian economics is dead. But the huge debt that our children will inherit will ensure that they remember this experiment.
Disappointing Second Quarter Growth Numbers Bode Well For A..."Lost Decade"
"While growth was still positive, its rate is downright anemic in the wake of such a steep recession. Moreover, estimates of consumer spending were adjusted upward, showing just how weak the Keynesian concept of demand-led growth, boosted by government spending, really is.

Graph of the Day
Mercatus Center: Temporary Staffing Declines in 2010
See: Media Feeds America’s Skepticism about Trade
See: Federal Outlays by Category, Excluding Interest
See also: Surprise! Banks help more homeowners than Obama

Book Excerpts
"The problems involved are not of a praxeological character, and economics is not called upon to provide the best possible solution for them. They concern pathology and psychology. They refer to the biological fact that the fear of penury and of the degrading consequences of being supported by charity are important factors in the preservation of man's physiological equilibrium. They impel a man to keep fit, to avoid sickness and accidents, and to recover as soon as possible from injuries suffered. The experience of the social security system, especially that of the oldest and most complete scheme, the German, has clearly shown the undesirable effects resulting from the elimination of these incentives. No civilized community has callously allowed the incapacitated to perish. But the substitution of a legally enforceable claim to support or sustenance for charitable relief does not seem to agree with human nature as it is. Not metaphysical prepossessions, but considerations of practical expediency make it inadvisable to promulgate an actionable right to sustenance.

It is, moreover, an illusion to believe that the enactment of such laws could free the indigent from the degrading features inherent in receiving alms. The more openhanded these laws are, the more punctilious must their application become. The discretion of bureaucrats is substituted for the discretion of people whom an inner voice drives to acts of charity. Whether this change renders the lot of those incapacitated any easier, is hard to say." –Ludwig von Mises, Human Action (1949)

Did You Know
"As the U.S. draws down in Iraq, it is leaving behind hundreds of abandoned or incomplete projects. More than $5 billion in American taxpayer funds has been wasted — more than 10 percent of the some $50 billion the U.S. has spent on reconstruction in Iraq, according to audits from a U.S. watchdog agency. For example, a $40 million prison sits in the desert north of Baghdad, empty. A $165 million children's hospital goes unused in the south. A $100 million waste water treatment system in Fallujah has cost three times more than projected, yet sewage still runs through the streets"