9/28/10 Post

BUZZ: Consumer confidence slumps in September

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

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

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

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

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

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



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


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

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

9/27/10 Post

BUZZ: Credit Unions Bailed Out

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

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

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

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

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

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

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

9/24/10 Post

BUZZ: Senate Democrats Delay a Vote on Bush Tax Cuts

News
Warren Buffett to CNBC: "We're Still In a Recession"
Warren Buffett tells CNBC that by his own "common sense" definition, the United States is "still in a recession."
Gold Climbs to $1,300 on Dollar Concern; Silver at 30-Year High
Gold futures rose to a record $1,300 an ounce in New York as investors sought a protection of wealth and an alternative to a weakening dollar. Bullion traded at an all-time in London and silver reached the highest price since 1980.
Congress sends small-business fund to Obama
The Democratic-controlled Congress on Thursday sent President Barack Obama a long-delayed bill to help struggling small businesses with easier credit and other incentives to expand and hire new workers.
Thomas Hoenig Is Fed Up
Within the Federal Reserve, there is one very powerful voice of dissent.
Sales of new homes flat in August
Supply of houses on market drops to lowest level in 42 years.
PIIGS roast: Euro debt fears return
Ireland's gross domestic product fell in the second quarter. Since Ireland is one of the I's in the so-called group of troubled PIIGS nations in Europe -- Portugal, Italy, Greece and Spain make up the rest of the club -- that is not good news.
Durable-Goods Orders Drop
Durable-goods orders declined by 1.3% to a seasonally adjusted $191.17 billion, the Commerce Department said Friday. This is the biggest drop since August 2009.
Lawmakers curb SEC power to keep secrets
Lawmakers moved Thursday to repeal a provision in the financial reform law that shields the Securities and Exchange Commission from requests under the Freedom of Information Act.
For love or money? Census reports sharp rise this year in unmarried couples living together
The number of opposite-sex unmarried couples who shared living arrangements jumped 13 percent this year to 7.5 million. That's compared to a 2 percent decrease between 2008 and 2009.
Claims Alleging Job Bias Rise With Layoffs
For the six months that ended April 30, more than 70,000 people filed claims with the Equal Employment Opportunity Commission saying they had suffered job discrimination, a 60% increase in bias claims compared with the same period a year earlier.
Blame the rich: Wall Street an appealing target for Democrats, especially in Washington state
Patty Murray was stuck. Down in the polls for months and facing a well-known Republican challenger, the three-term Democrat was finding a difficult market for her hard-working-Senator sales pitch. Then she started bashing Wall Street.
'Pledge to America'
A quick look at the detailed provisions, in the GOP’s ‘Pledge to America’.
Andrew Jackson's tea party movement
The swift rise and recent success of the tea party movement have caught many observers by surprise. To a historian of the early American republic, however, the phenomenon displays an eerie familiarity. Andrew Jackson’s campaigns for president in the 1820s betray many parallels with today’s tea party movement.
F.C.C. Opens Unused TV Airwaves to Broadband
The change in available airwaves, which were freed up by the conversion of television signals from analog to digital, constitutes the first significant block of spectrum made available for unlicensed use by the F.C.C. in 20 years.
US investors shaken by jobless news
US stocks slid back under the key 1,130 level led by losses for financials and industrials after initial jobless claims unexpectedly climbed for the first time in four weeks.
Small Gifts Sent to Ease U.S. Debt
Last year, the Bureau of the Public Debt recorded $3.1 million in gifts, more than has been usual since the government began accepting such donations in 1961. At that rate, it would take millions of years to retire the $13.4 trillion the country owes its creditors, foreign and domestic.

Blogs
Many Supporters Not Willing to Trumpet ObamaCare’s Achievements
Many are trying to back away slowly from their previous support of ObamaCare.
Secondary Sources: Toxic Asset’s Death, Stressful Cities, Income Diversity
A roundup of economic news from around the Web.
A Novel Way of Keeping Fiscal Deficits Under Control?
Having inherited an 8 percent budget deficit from the previous socialist government, the new conservative-liberal government of Slovakia has come up with a novel way of keeping budget deficits under control in the future. Starting in 2011, salaries of government ministers will rise and fall depending on the evolution of the fiscus.
Outside the Beltway: A Taxpayer Victory in Bell, CA
Last month, we highlighted wasteful spending in Bell, Calif., that resulted in paying the City Manager nearly $800,000 a year. This gross misuse of public funds prompted an investigation by prosecutors and what they found was amazing. They found that not only was the City Manager, Robert Rizzo, grossly overpaid, but the city council failed to oversee his actions, which resulted in Rizzo making unauthorized city loans to himself.
ObamaCare Leads Minnesota Insurers to Suspend Sales
Two of Minnesota’s biggest health plans said Thursday they have temporarily suspended sales of individual health insurance policies because of uncertainty related to the new federal health reform law.
The Fight to Protect Your Employee Health Care Coverage
Obamacare includes a provision to allow existing plans to be “grandfathered” under the new law, so that Americans won’t have to change coverage they like to adhere to the new law’s numerous rules and regulations.
Side Effects: Premiums Will Rise Because of Obamacare
Even President Obama admitted that his health care plan was “going to increase our costs—we knew that.”
Inflation Fears of Rich, Poor Diverge
There are “differences in inflation expectations across demographic groups’ and there are “marked changes in the sizes of those differences over time,” a new report issued by the Federal Reserve Bank of New York said Thursday.
CLASS Act Repeal Should Be Taken Seriously
Should Americans be forced into mandatory participation in a government-run long-term care Ponzi scheme? Or is a taxpayer bailout of another congressional misadventure a better idea?
The Attack on Civilization
"Somewhere along the way, during the last 50 years, the critique of capitalism changed from condemning its failure to spread the wealth to condemning the very opposite. Suddenly the great sin of capitalism was that it was producing too much, making us all too materialistic, fueling economic growth at the expense of other values, spreading middle-class decadence, and generally causing society to be too caught up in productivity and too focused on the standard of living."
Waiting for Crazy
President Barack Obama’s second address to the United Nations General Assembly almost sounded as if he were speaking to voters on the campaign trail in Iowa, instead of fawning diplomats in Manhattan.
The High Cost of College
I'm tempted to simply say we ought to end the subsidies altogether, but I don't know what the counterfactual is. When my parents were in college, it was possible to work your way through a good four year school; these days, that's difficult to impossible. Have loans really increased access? Or have they simply made it more expensive?

Research, Reports & Studies
The Uncertainty of Health Care Projections
Many economists and policy analysts have very different views on what effect PPACA will have on business, government finances, and the health care industry. During the debate, the Congressional Budget Office (CBO) had the daunting task of issuing the official estimate of the bill’s costs and savings.
Obama Tax Hikes: Bad for All Americans
If Congress adopts the President’s plan, it will eliminate all the growth-promoting policies in the 2001 and 2003 tax relief packages slowing down economic growth and job creation while the economy struggles to recover. Slower economic growth will not only hurt those that will pay higher taxes under President Obama’s plan—it will hurt Americans at all income levels
Government’s Light Bulb Ban Is Just Plain Destructive
In 2007, Congress passed an energy bill that placed stringent efficiency requirements on ordinary incandescent bulbs in an attempt to phase them out beginning in 2012 and have them completely gone by 2014. But the politicians, as they typically do, failed to see the unintended consequences of this program.
RCM: Wells Fargo Economics Group: LEI Inches Up: Slogging Along in the Slow Motion Recovery
For the 16th time in 17 months, the Leading Economic Index nudged higher, while the Coincident Index was unchanged and the Lagging Index added a modest 0.2 percent.
RCM: The curse of government failure
There is no doubt that the U.S. has witnessed a regime change in terms of the relative size of the federal government. The “Law of the Ratchet” is alive and well.

Economists’ Comments & Opinions
Change at the National Economic Council: What does it mean?
...any administration’s communications successes and failures are as much the responsibility of policy staff as of the communications staff. I strongly disagree with many of the Obama administration’s economic policy choices, but there are limits to what it can do to predict and strengthen national economic performance – even if their policy analysis and prescriptions are perfectly optimized.
Why Business Bashing Has Flopped
Former CEOs and Wall Street vets are holding up well against Democratic attacks.
Poor Kid on Block Fleeced by the Elderly: Laurence Kotlikoff
The personal savings rate, like the federal deficit, is a made-up, accounting measure, with no economic content. Its value and changes through time are entirely dependent on how we classify things. For example, counting Social Security contributions dramatically raises the personal savings rate, but lowers its recent growth.
The Responsibility Deficit
The heart of any moral system is the connection between action and consequences. Today’s public anger rises from the belief that this connection has been severed in one realm after another.
The IPO and the American Dream
Well-functioning capital markets are critical for job creation. Congress should ease the burden on companies that go public—and fast.
The Battle for the Future
For most of the life of America, and when it grew fastest, government spent just a few hundred dollars per person. Today, the federal government alone spends $10,000. Politicians talk about cuts, but the cuts rarely happen. The political class always needs more.

Graph of the Day
Cato: What Constitution? What Monopoly? What Failure?
See: Recession or Not, U.S. Job Market Woes Persist

Book Excerpts
"As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. " –Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776)

Did You Know
The United States is the fattest nation among 33 countries with advanced economies. Two-thirds of people in this country are overweight or obese; about a third of adults — more than 72 million — are obese, which is roughly 30 pounds over a healthy weight.

9/23/10 Post

BUZZ: The Carter-Obama Comparisons Grow

News
Republican 'Pledge to America': spending caps, tax cuts
House Republicans are set to release on Thursday a "Pledge to America," an ambitious and sweeping set of proposed changes to domestic and security policy, including promises to freeze most federal government hiring, cut Congress' budget, place hard caps on domestic spending accounts, prevent the phase-out of tax cuts that are set to expire in 2011 and "repeal and replace" the new health care law.
Democrats guess wrong on health care
Rarely have so many political strategists been so wrong about something so big. But when it comes to the health care bill, everyone from former President Bill Clinton on down whiffed on some of the more significant predictions.
Both Sides Tiptoe Around Tax Cuts
Neither Republicans nor Democrats in the Senate appear to have the appetite for a floor fight before the midterm elections over extending Bush-era tax cuts, making it more likely than ever that the chamber will punt the issue to a lame-duck session.
White House says no quick decision expected on a replacement for departing economic adviser
The White House says that naming a successor to President Barack Obama's top economic adviser, Lawrence Summers, is not imminent. Summers plans to leave his post as director of the National Economic Council at the end of the year to return to Harvard University. He is the third high-ranking member of Obama's economic team to leave this year.
The Fed worries about something unusual: Inflation may actually be too low
The Fed says a little more inflation might be just the thing to start a chain reaction that would ultimately create jobs — and avoid a spiral of falling prices that could damage the economy
Unemployment filings jump back up
Initial filings for unemployment insurance ticked up in the latest week, but continued to hover in the same range they have been since November. The number of first-time filers for unemployment benefits rose to 465,000 in the week ended Sept. 18.
What deflation? Prices are rising!
Deflation might be the economic buzzword right now, yet prices seem to be going up on everything from a cup of coffee to Dallas Cowboys tickets.
The real wallop of raising taxes on the rich
If President Obama's plan for the Bush tax cuts is enacted, the wealthiest residents of New York City would feel real tax rates of 50.7%, highest of any place in the country. Right behind is Hawaii, where residents would pay 49.7%.
Existing home sales bounce back in August
Existing home sales bounced back in August after plunging in the previous month.
Wage scandal tarnishes India's crisis-hit Games
As India struggled to prevent the Commonwealth Games from being cancelled on Thursday, rights groups said that construction workers were paid half the country's minimum wage to toil on sites where accidents have killed dozens.
California Budget Impasse Set to Break 85-Day Record as No Vote Scheduled
California is poised this week to break its record of going 85 days without a budget as Governor Arnold Schwarzenegger and lawmakers remain at odds over closing a $19 billion deficit in the most populous U.S. state.
France slammed by new strikes over retirement age
French commuters squeezed onto limited trains or fought for rare parking spots Thursday as a second round of strikes against President Nicolas Sarkozy's plan to raise the retirement age to 62 hobbled trains, planes and schools across the country.
The secret deal that changed the monarchy
The Queen has been forced to give up the ultimate right to manage the Palace's financial affairs in a secret deal signed by Palace aides and the Government.

Blogs
The Right Way to Limit Pre-Existing Condition Exclusions
The inability of some Americans to obtain health insurance for pre-existing medical conditions continues to be used by Obamacare supporters as justification for the mammoth legislation. The truth, however, is that the problem was nowhere near as big as portrayed, and the solution doesn’t require 2700 pages of legislation or $1 trillion in new government spending.
Blast From the Past - Just How Well We Have It
As a society, and as individual households, we simply have so much more wealth than 80 years ago that even in the worst of circumstances, we are unlikely to suffer as we did back then. So even as the recession continues, it's worth remembering just how good we have it, and just how far we would really have to fall to find ourselves back in the misery of the Great Depression.
Red Tape Rises Again: Cost of Regulation Reaches $1.75 Trillion
While the revenues and expenditures of the government are budgeted and accounted for each year, the costs of regulation are largely hidden from view, paid for indirectly via higher prices, fewer choices, and less innovation.
Unfunded Obligations of State and Local Governments
"When adjusted using a more appropriate discount rate, however, states' unfunded obligations were 22 percent of U.S. GDP. All but 10 states and the District of Columbia have total adjusted unfunded liabilities above 15 percent of their state GDP, and four states -- Alaska, Hawaii, New Jersey and Ohio -- have adjusted unfunded liabilities above 35 percent of their state GDP."
Why Are the Rich So Rich?
It's hard to explain how the wealthy are manipulating the regulatory apparatus to make Apple vastly more profitable than it would have been forty years ago.
Max Baucus Clears One Hurdle on Dividends Tax Rate—Where’s Harry?
For the second time in a week, Senate Finance Committee Chairman Max Baucus (D–MT) has called for the suspension of PAYGO budget rules to pass necessary and vital tax policies. First, Baucus suggested waiving PAYGO as it pertains to the death tax. Now he’s calling for the Senate to rightly ignore PAYGO so it can keep the tax rate on dividends from skyrocketing to almost 40 percent from its current 15 percent level.
Digging Deeper into Bell, California’s Corruption
...Foster raises a troubling paradox: the role crisis plays in bringing to light the causes of the crisis.
Coverdell Education Accounts Are in Danger of Becoming Less Useful
Coverdell Education Savings Accounts were created in 2001 to provide parents with more options to pay for their children’s elementary, secondary, and college education. Unless Congress quickly takes action, those accounts will no longer be allowed to fund secondary and elementary school expenses.
Correlating Federal Spending and College Tuition
These high and increasing levels of correlation between total federal spending and the average cost of college tuition strongly indicates that the federal government is directly responsible for the escalating cost of attending college for the vast majority of students.
The U.N. Wants to Tax the World Out of Poverty
At the United Nation’s Millennium Development Goals (MDGs) Summit in New York this week, French President Nicolas Sarkozy and Spain’s Prime Minister José Luis Zapatero both called for a global financial transaction tax to fund foreign aid projects to lift the world’s poor out of poverty.
Weekly Initial Unemployment Claims increase
"In the week ending Sept. 18, the advance figure for seasonally adjusted initial claims was 465,000, an increase of 12,000 from the previous week's revised figure of 453,000."
Tax Hikes Are Not the Right Path to Reducing the Deficit
Congress must soon reach a consensus on whether, and on whom, they will raise taxes in 2011. With the economy at the forefront of Americans’ concerns, the effects of raising taxes for any income bracket are a serious matter.
The Good Old Days Are Now: Trickle-Down Automotive Safety
Partly as a result of the “trickle down of advances” that are now becoming standard on even low-priced, compact cars like the Chevy Cruze, traffic fatalities fell to a 60-year low in 2009 of 33,808 deaths, the lowest level since 1950 (see top chart).
Six Months Closer to Repeal
…the evidence that the American people have completely rejected Obamacare is overwhelming. Rasmussen Reports, Gallup and CNN all put opposition to Obamacare somewhere between 56% and 61%.
Secondary Sources: Unemployment, Succeeding Summers, ECB and Fed
A roundup of economic news from around the Web.
Existing Home Sales at 4.1 million SAAR, 11.6 months of supply
Sales in August 2010 (4.13 million SAAR) were 7.6% higher than last month, and were 19.0% lower than August 2009 (5.1 million SAAR).
Fed May Get Some Help From Weakening Dollar
That’s because a weak dollar, if sustained, will offer some aid to the central bank in achieving its two main goals outlined in Tuesday’s statement: supporting the recovery and lifting inflation.
The Irish haven't in fact tried "austerity"
"The escalating cost of bailing out Anglo Irish Bank is set to balloon the deficit to at least 25 per cent of GDP this year, cancelling out the benefits of previous austerity budgets."
U.S. Innovation Clustered on Coasts
U.S. innovation is most concentrated on the coasts, with the highest density on the West Coast, according to urban theorist Richard Florida.

Research, Reports & Studies
Obamacare: Impact on the Economy
Contrary to a key intention of the legislation, the combination of mandates and taxes will not help to reduce the deficit. In fact, the PPACA will likely increase the deficit by an average $75 billion per year, and as a result, the nation’s publicly held debt will be $753 billion higher at the end of 2020.
The United Nations and Development: Grand Aims, Modest Results
In reality, little evidence indicates that U.N. development assistance has contributed to economic growth in the recipient countries. In general, countries that receive significant U.N. assistance show no better development results than those that receive little aid.
Meeting the Long-term Challenge of Old Age Entitlement Spending
...deficits have soared in response to the financial crisis and the recession.Second, spending on Medicare, Medicaid, and, to a lesser extent, social security is projected to increase drastically over the next 60 years, engendering extraordinary fiscal pressure.

Economists’ Comments & Opinions
Your Stimulus Tax Dollars at Work
According to the International Business Times, with the $111 million in stimulus money that the city of Los Angeles received, it created 55 jobs. The city controller is understandably disappointed.
Obama's Problem Is Ideology
In his speeches, Mr. Obama has repeatedly called for raising taxes on joint filers with $250,000 or more of gross income and singles making more than $200,000 -although in the fine print of his budget his tax hikes would affect joint filers with more than $209,000 of taxable income and singles with more than $172,000, potentially ensnaring households at lower levels of gross income than he advertises.
Too Little Inflation?
Central bankers who say they want higher prices usually get them.
Summers’ departure opens door for new ideas
America is not producing new jobs in anything like the quality or the quantity it needs to replace the high-end jobs it is losing. Mr Summers’ exit therefore offers Mr Obama an unusually important chance to think radically about the kind of economic legacy he wishes to leave.
How Seniors Will Pay for ObamaCare
In many areas, Medicare Advantage enrollees will lose about one-third of their health insurance benefits. The cuts will finance new subsidies for younger people.
Is the Fed Really Gearing Up for Monetary Stimulus?
Expansion of the Fed's balance sheet in the current context is a reactive accommodation of expansionary fiscal policy.
Obama Must Look to Private Sector to Replace Summers
JPMorgan's Jamie Dimon, Jack Welch of GE, and Michael Bloomberg are just a few of the leaders who have proved they can build a major organization from the ground up.
Three Reasons China Is Right (and the US Is Wrong) About the Yuan
While China has bowed to US pressure and allowed the yuan to appreciate, the move could end up backfiring on both parties.
How to Get Housing Off Government's Juice
In a year when angry voters are demanding a reduced government role in the economy, it is remarkable that most of the ideas for supplanting Fannie Mae and Freddie Mac are just imaginative ways of keeping government in the business of housing finance.
Still No Good News for ObamaCare
ObamaCare addresses every healthcare problem, with every solution further centralizing power and decision making in Washington. The promises do not come cheap.
Obamacare is even worse than critics thought
Six months ago, President Obama, Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi rammed Obamacare down the throats of an unwilling American public. Half a year removed we now know much more about the bill than we did then.
The Pain Begins
Today, six months since Congress passed the Patient Protection and Affordable Care Act, President Obama will be celebrating the signature achievement of his administration. It's apt to be a lonely celebration: Few Democratic candidates are willing to talk about the health-care bill — except the ones running ads to remind the electorate that they voted against it.
Tax Hikes Not Needed to Balance the Budget
Washington insiders say that tax increases are unavoidable because deficits are too large. Since these often are the same people who supported "Obamacare" and the so-called stimulus, their crocodile tears about red ink probably are not very sincere.
Six Months Later...
Six months ago today, President Obama signed the Patient Protection and Affordable Care Act, commonly known as Obamacare. The intervening six months have shown that this health care law offers neither patient protection nor affordable health care — in fact, quite the opposite.

"Debt is a disciplining device for firms and nations: In both cases, you're Briar Patching a LR commitment." -Garett Jones, Twitter

Graph of the Day
WSJ: Local Debts Defy Easy Solution
Rising Welfare Costs
The Millennium Development Goals: Meeting Targets
Poverty and Unemployment could remain high after recession

Book Excerpts
"Above all, what cannot be calculated are the wealth and number of jobs that would have been created had this regulatory assault not taken place and had these immense fortunes in capital been invested in production. What we know with certainty is that the regulatory process—acutely stepped up since the sixties—has had a devastating impact on investment, price stability, innovation, productivity, and economic development... The incredible irony is that all this, allegedly executed in the interest of the consumer, has ultimately come out of the consumer’s pocket." –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
Video-rental chain Blockbuster filed for Chapter 11 bankruptcy protection today but plans to keep stores and kiosks open and operating. The filing comes about a month before the 25th anniversary of the opening of Blockbuster's first store in Dallas. The video chain owned 3,023 stores in the U.S. and had 402 franchises as of July. A bankruptcy "will enable (Blockbuster) to break the leases," says Kenneth Latz, director of the New York office of financial restructuring firm Conway MacKenzie.

9/22/10 Post

BUZZ: Summers to Step Down

News
Senate Democrats want middle-class tax cut vote
Senate Democrats are aiming to force a vote extending tax breaks for the middle class -- and not for those in the top income bracket -- before they adjourn for the midterm elections. But it's not clear the vote will happen; and it depends on Democrats working out a procedural deal with Republicans.
Fed hints it could buy more bonds
The Federal Reserve has opened the door to buying billions of dollars of Treasury bonds in a further programme of quantitative easing by making a substantial change to the policy statement issued after its September meeting.
Fed: Recovery continues to slow
The U.S. economic recovery continues to lose steam, the Federal Reserve said Tuesday, but the central bank unveiled only tougher language but no new policies to try to spur growth. While the Fed said it expects improvement ahead, it cautioned "the pace of economic recovery is likely to be modest in the near-term."
Obama Tax Credit Looks Endangered
Senate Democrats struggled Tuesday to develop a plan to extend the Bush-era breaks for middle-class people, and it is doubtful the Making Work Pay credit would be included, according to several people familiar with the situation.
Tax credit bonanza for small businesses
Six months after sweeping health care reform was enacted, the cost of health insurance remains one of the most pressing issues facing small businesses. Premiums typically run 18% higher for small businesses than for larger companies.
Default Rate Nears '08 Level
Measure Heads Below 3%, From 14.6% Last Fall; 'The Rebound Is Breathtaking'.
Big changes to your health insurance
Here's what you need to know about how your insurance is affected.
The disconnect between productivity and hiring
Generally employers hire more employees to boost productivity. There are reasons why, despite dropping productivity numbers, it's not happening this time around.
Auction of warrants from insurance company Hartford Financial brings government $706.3 million
It was the latest move to recoup costs for taxpayers from the $700 billion financial bailout.
Senate tax vote still possible
Senate Majority Leader Harry Reid said he is “working hard for a vote” next week on middle-class tax cuts and laughed off suggestions that he wants to retreat now to safer ground by waiting until after November’s election.
Senate Republicans block 'don't ask, don't tell' repeal
An effort to repeal the military’s “don’t ask don’t tell” policy, which bans openly gay men and women from serving in the armed forces, went down to defeat Tuesday afternoon, with Senate Democrats and Republicans unable to move past a procedural-vote impasse.
The Profumo affair
Alessandro Profumo was the creator of UniCredit, Italy's biggest and most successful international bank. But his relations with its directors and some big shareholders have been deteriorating for some time and, on Tuesday September 21st, the bank's board called an extraordinary meeting and decided, after a lengthy debate, to accept his resignation as chief executive.
Greenspan’s Warning About Gold Echoes After Fed Speaks
Only days after the former Federal Reserve chairman Alan Greenspan warned that “fiat money has no place to go but gold,” the dollar has collapsed to a new low.
UK minister criticises capitalism, irks business
Britain's business secretary attacked unfettered capitalism on Wednesday and unveiled plans to review the way companies are governed and how takeovers work, angering business leaders.

Blogs
What is Obama President of Again?
Instead of listening to his generals, we learn that President Obama was “at odds with his uniformed military commanders. When the Pentagon presented President Obama with a “low risk option” of an additional 80,000 troops that had the “best chance to contain the Taliban-led insurgency and stabilize Afghanistan,” Obama “bristled at what he saw as military commanders’ attempts to force him into a decision he was not yet comfortable with.”
Should Government Tax Debt?
Certain economists, most notably Harvard professor Gregory Mankiw, have long advocated so-called Pigovian taxes aimed at discouraging pollution and other socially costly activities. Now two academics are suggesting such a tax might be applied to a dangerous behavior that has become popular in the U.S.: Taking on too much debt.
Side Effects: The Obamacare Threat to Your Liberty
Starting this year, Obamacare prohibits plans from placing lifetime limits on coverage, severely limits rescissions, and requires all plans to cover children up to age 26.
When Did House Prices Get Out of Hand?
If house prices hit bottom earlier this year (admittedly, that is a big if), then the house price index at the end of 2004 was at reasonable levels. The real bubble took off from 2005 through the middle of 2007.
Are U.S. Interests Being Advanced at the U.N.?
In anticipation of President Obama’s second address to the United Nations this week, the White House has published a lengthy press release titled “Advancing U.S. Interests at the United Nations” that lists the achievements of the administration at the United Nations.
Economists React: Fed Prepares for ‘Gnarly Ride’
Economists and others weigh in on the Fed’s statement following its September meeting.
Higher Taxes = Deficit Reduction? Maybe in a Static Economy
A Washington Post article reports that letting the Bush tax cuts expire would nearly close the fiscal gap. This static logic misses two key dynamic aspects of the economy: (1) the political incentives that higher taxes bring about, and (2) the economic incentives of such policy.
Some Things at Stake in the Tax Fight
"Add in an average state rate of 5% and it is quite possible that higher income individuals will pay over 50% marginal tax rates, not counting existing FICA and Medicare tax of another 7.65% — we are approaching a European-like 60% federal and state tax burden."
The Poverty Solution: Marriage or Bust
In 2009, 3.7 million more Americans joined the ranks of the poor. Buried in the Census report are startling figures revealing that the collapse of marriage is creating this crisis of poverty.
Parsing the Fed: How the Statement Changed
The Fed’s statement following the September meeting included concerns about a low level of inflation and a slow recovery, indicating that though no new action was taken at this meeting more bond purchases may be in the offing.
Did the Fed Really Say Inflation Isn't High Enough?
What the Fed statement really means for your portfolio.
The Lone Dissenter: Kansas City’s Hoenig Enters New Territory
Hoenig’s vote against the FOMC’s 8-1 decision to keep the federal funds rate near zero marked his sixth straight dissent of the year, the most by a Fed policymaker in a single year since at least 1994 when the Fed overhauled its communications practices.
MBA: Mortgage Purchase Activity declines slightly
"The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier."
Who's Behind the U.S. Higher Education Bubble?
We didn't set out to go looking for it, but we couldn't help but notice what would appear to be a really unique correlation between the average annual tuition at a four-year higher education institution in the United States and the total amount of money the U.S. federal government spends every year.
How it sounds vs. How it really works, Part II
Fifteen years seems like a pretty long payback period. That may explain why these houses (and mine for that matter) weren’t weatherized already.
What Do Americans Want?
It turns out that when Americans say they want spending cut, what they really mean is the trivial sum we spend on foreign aid; it also turns out that Americans actually don't know much about the structure of the US tax code.
What New Jersey Pays for its Police
The Ledger also compiled a database for police salaries by municipality. Their analysis reveals that three out of every 10 officers makes over six figures and that the largest salaries are generally paid to officers in towns with the least crime.
The Bad Financial Luck of the Irish
In order to say that Irish austerity offers a grim lesson for us, you need to know the counterfactual: how bad would growth, tax revenues, credit spreads have been without the austerity? And because of the magnitude of their problems, it is far from clear that austerity has made things worse.
It’s over! (A long time ago)
"The trouble is that we now know the recession ended just as the stimulus money started to get spent. According to the White House’s own 100-day stimulus report, issued at the end of May 2009, only $45.6 billion in spending and tax relief had gone out the door by then."
Un-Stimulating Bureaucracy
Fortunately, more and more Americans appear to be realizing that the government and its experts are the problem rather than the solution.
New Orwellian Tax Scheme in England Would Require All Paychecks Go Directly to the Tax Authority
Our tax system in America is an absurd nightmare, but at least we have some ability to monitor what is happening. The serfs in the United Kingdom, however, are in much worse shape.
ObamaCare’s First Adverse-Selection Death Spiral
ObamaCare supporters can take comfort in this: since it might take healthy people a while to figure out that they’re better off financially if they drop their coverage and pay the individual-mandate penalty, ObamaCare’s health insurance exchanges might not collapse before their January 1, 2014, launch date. They could last until January 2.

Research, Reports & Studies
U.N. Millennium Development Goals: Foreign Aid v. Economic Freedom
The U.N.’s statist approach to development has led to the design of ineffective and sometimes wasteful development projects in Africa and elsewhere that generally do not address the underlying problems even as they strengthen the corrupt regimes that are the main obstacle to progress.
Obamacare Increases Health Insurance Premiums
One of the major impacts of the Patient Protection and Affordable Care Act is that individuals and families will see higher health insurance premiums. Obamacare imposes several costly new mandates and restrictions on health insurers and providers that will raise healthcares costs and therefore premiums.
Free Markets and National Defense: U.S. Import Dependence on China
The ideal policy would achieve the benefits of open exchange with a rival while preparing for the possibility of import interruption.
Budgetary Savings from Military Restraint
Concern about deficits has prompted greater scrutiny of all federal spending. But the cuts here would be prudent even in an era of surpluses. The United States does not need to spend $700 billion a year — nearly half of global military spending — to preserve its security. By capitalizing on our geopolitical fortune, we can safely spend far less.
RCM: Wells Fargo Economics Group: Housing Starts Rose More Than Expected in August
Housing starts rose 10.5 percent in August, which was well above expectations. Starts of single family homes increased 4.3 percent, the first monthly increase since April. Multi-family starts rose 32.2 percent.

Economists’ Comments & Opinions
Obama Tricks Voters as Enron Hoodwinked Public: Amity Shlaes
Even Holtz-Eakin approximated, texting back a formula that might serve as the theme song for tax year 2011: “39.6 + 2 (phaseout of pep and pease) + 3.8 (Medicare net investment income tax) = 45.4. Add in state-level taxes and 50 is easy to reach.”
1920: The Great Depression That Wasn't
The depression of 1920 was notable not only for its quick turnaround but also for its absence of political and monetary intervention. In many ways it was to be the curtain call for American laissez faire; to read of 1920 today sounds not only of another time but of another country altogether.
COLE: Bank bailout's wasted cash
First and most important, the $30 billion won't actually go to small businesses in the form of loans; it will go to small banks in the form of capital. At its heart, this plan is nothing more than a Son-of-Paulson TARP (Troubled Asset Relief Program) bank bailout - except, of course, that it is much smaller and is focused on community banks rather than Wall Street banks.
Fair Pay Isn’t Always Equal Pay
A recent survey found that young, childless, single urban women earn 8 percent more than their male counterparts, mostly because more of them earn college degrees.
The victims of 'consumer protection'
When new laws and regulations limit the circumstances when banks can charge fees, they have to make their money in other ways. My bank used to offer me free no-minimum-balance checking -- but now wants to charge me $15 a month for the privilege.
The Currency Crisis Has Begun
The currency crisis was bound to happen as soon as it became apparent that the dollar was caught in the grip of the 3-year cycle decline.
The Defining Characteristics of a Good Trade
A good trade fits your comfort zone, has a profit worth earning, has an acceptable level of risk, and has numbers to justify the trade.
Fair Pay Is Not Always Equal Pay
Some of the bill's supporters admit that the pay gap is largely explained by women's choices, but they argue that those choices are skewed by sexist stereotypes and social pressures.
'Trannie Mae' and special interests
President Obama's proposal for a transportation infrastructure bank has been lauded as a way to bring "rationality" to federal transportation spending. In fact, such a bank - call it "Trannie Mae" - will just increase the politicization and reduce the effectiveness of transportation dollars.

Graph of the Day
Mercatus Center: Current Spending Cuts Insufficient to Balance Budgets in the Long Run
See: The Jobs Timeline
See also: August Unemployment Rates, by State: Stagnant Labor Market

Book Excerpts
"Private property rights do not conflict with human rights. They are human rights. Private property rights are the rights of humans to use specified goods and to exchange them. Any restraint on private property rights shifts the balance of power from impersonal attributes toward personal attributes and toward behavior that political authorities approve. That is a fundamental reason for preference of a system of strong private property rights: private property rights protect individual liberty." –Armen A. Alchian, "Property Rights" (2008)

Did You Know
"In Garfield Heights Ohio, more than 900 drivers who received tickets from speed cameras in Garfield Heights are getting their money back. The city is reimbursing about 980 drivers who were ticketed $100 for going exactly 10 miles per hour over the posted speed limit. Any driver caught going 11 miles per hour or more over the limit by a speed camera is issued a ticket."