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."

9/21/10 Post

BUZZ: Obama Hints at High-Level Changes

News
Risk of double-dip recession: Unlikely, but rising
While the risk of the U.S. economy falling into a double-dip recession is rising, there is only about a one-in-four chance of that happening, according to a CNNMoney.com survey of top economists.
Fed Purchases Lift Treasurys
In recent trading, the benchmark 10-year Treasury note was up 6/32 in price, and its yield fell to 2.719%. The 30-year bond was 16/32 higher to yield 3.875%. Bond prices move inversely to their yields.
Obama defends economic record
Obama said he has limited discretion over the biggest aspects of the budget, including Social Security and Medicare. But he said his administration has identified billions of dollars in spending and tax loopholes that can be eliminated in the 2011 budget.
The real fix for the economy: Savings
We've said it before, and we'll say it again: Savings are a better stimulus for the economy than consumer spending. For the skeptics, here's what you need to know.
Economy improving, but still hurting
Even if the economy avoids falling into a double-dip recession, the next year will probably feel like one anyway. Unemployment is expected to remain high, economic growth is expected to be anemic at best.
As Tax Cut Expirations Near, Democrats Tackle the Issue on GOP’s Terms
Despite solid majorities in both chambers and ample time to develop their own ideas, Democrats head into this fall’s fiscal debate trapped inside a tax agenda constructed by Republicans.
Looming Tax Hike Stays Under the Radar
While Democrats and Republicans debate extending Bush-era tax cuts for the wealthy, a middle class tax cut Congress passed as part of last year’s stimulus package is set to expire. Neither party’s leaders have put forward a play to extend it.
Capitol Police shortfall may hit $21M
The department already has a history of budgetary miscalculations and cost overruns.
Home construction jumps 10.5 pct in August
Home construction increased last month and applications for building permits also grew. The gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector.
U.S. Loses No. 1 to Brazil-China-India Market in Investor Poll
The U.S. has fallen behind emerging markets in Brazil, China and India as the preferred place to invest, a Bloomberg survey shows, though the world’s largest economy still ranks highest of all major developed countries.
U.S. household net worth drops
U.S. household wealth fell by $1.5 trillion in the second quarter, according to Federal Reserve data on Friday that showed the strain a slow-paced recovery and high unemployment are putting on Americans.
UN: Rich must not cut aid to poor to balance budget
U.N. Secretary-General Ban Ki-moon pressed debt-ridden donor countries on Monday not to cut aid to the poor despite their budgetary woes.
Fed Mulls Trillion-Dollar Policy Question
The Federal Reserve is scheduled to meet Tuesday to debate what would warrant pumping more money into the financial system.
Jobs picture gets worse in 27 states
The national unemployment rate may have only ticked up slightly in August, but on a state-by-state basis, the jobs picture continues to look a lot more grim in places like Nevada, Michigan and California.
Dollar Falls on Euro; Aussie at 2-Year High
Late Monday, the euro was at $1.3064 from $1.3039 from late Friday. The dollar was at 85.70 yen from yen 85.82, while the euro was at yen 111.96 from 112.89 yen. The U.K. pound was at $1.5547 from $1.5626.

Blogs
Recession is Officially Over--Now What?
One way to look at this is that we are one year into a "lost decade" of economic stagnation. While the Obama Administration can slough off blame for the Great Recession, it's going to have to take responsibility for America's Lost Decade
Lame Policy for Lame Duck
It seems that many in Washington had their books upside down when they studied economics.
Secondary Sources: Recession End, Hard Times, Individualism
A roundup of economic news from around the Web.
A Leftist Wish List vs. National Security
This week the U.S. Senate is scheduled to take up the FY 2011 National Defense Authorization Act. This legislation is necessary to fund the defense of the United States and its interests abroad. The House already passed their bill in May. But Majority Leader Harry Reid (D-NV) would rather talk about amnesty.
New data on income inequality and finance
"...for 2004, nonfinancial executives of publicly traded companies account for less than six percent of the top 0.01% income bracket. In that same year, the top twenty-five hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&P 500. The number of Wall Street investors earning over $100 million a year was nine times higher than the public company executives earning that amount."
Progressivism: Still Dangerous After All These Years
Progressivism rejects America’s foundational principles. For the past one hundred years, progressive intellectuals and politicians have been desperately trying to sever Americans’ attachment to the principles of the Declaration of Independence and instead embrace a more European model of governance.
Did the Recession End 15 Months Ago?
I have gotten so used to not thinking of economic activity as spending that I am totally blowing off the fact that GDP has been increasing for the past year. Instead, I focus on patterns of sustainable specialization and trade, which I think are better indicated by employment.
Big Spending, Not Tax Cuts, Drive U.S. Budget Deficits
The left wants you to believe that we must pass the Obama tax hike because low taxes on wealthy Americans are the cause of our nation’s budget deficits.
Obama’s Wants a 23.9% Capital Gains Tax, but the Rate Actually Will Be Much Higher Because of Inflation
The capital gains tax rate will jump to 20 percent next year if the President gets his way. This sounds bad (and it is), but the news is even worse than you think.
Not From the Onion
"The UK's tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer."
ObamaCare’s Premium Refunds: Bad News for the Sick
USA Today and Politico Pulse report that ObamaCare has prompted BlueCross BlueShield of North Carolina to rebate $156 million to its customers in the individual market. This may seem like good news. It’s actually bad news, particularly for BCBS’s sickest customers.
Why Can't We Have Higher Inflation?
At Brookings' semi-annual presentation of economics papers, which I attended on Friday, one of the participants made an interesting point: the fear of nominal losses made the crisis much worse than it had to be.
How should economic instruction change?
...along with responses by Alberto Alesina, Laurence Kotlikoff, Michael Pettis, Gilles Saint-Paul, Paul Seabright, Richard Baldwin, Michael Bordo, Guillermo Calvo, Tyler Cowen, Harold James, David Laibson, and Eswar Prasad [All Responses].

Research, Reports & Studies
Obama Tax Hikes: Economic Harm to All Americans
The economic effects of not extending the 2001 and 2003 tax laws would impact all Americans, especially those who will just start their economic lives and the millions more trying to find work...
The Obama Administration’s Ambitious Export Control Reform Plan
On August 31, the White House announced its plan to reform both the policy and process for controlling the export of militarily sensitive commodities and technologies. It is clear that the United States’s export control system is in need of reform.
Budgetary Savings from Military Restraint
Concern about deficits has prompted greater scrutiny of all federal spending...
The Value Added Tax: Too Costly for the United States
This study projects that if the United States introduced a VAT in 2010, its net effect on tax revenue would be minimal by 2030 because VAT revenue would mostly be offset by declines in revenue from other tax bases.

Economists’ Comments & Opinions
Why It Feels Like We're Still in Recession
The NBER has declared that the recession ended in June 2009, but money credit and other indicators show that we're still a long way off from recovery.
A Very Grim Reaper
While Washington debates whether to raise taxes on incomes and dividends next year, another huge tax increase looms as an even grimmer reaper: The death tax, which is currently zero, but will return to a rate of 55% next year if Congress fails to act.
Why Pensions Are in So Much Trouble
It was only a matter of time before pensions were subject to the same transparency as banks, however it's happening sooner than expected.
Foolhardy Tax Hikes
"Raising taxes on the top 2% of households, as Mr. Obama proposes, would bring in $34 billion next year: enough to cover nine days' worth of the deficit," notes The Economist. So that is what all the political fuss about extending the Bush tax cuts for another year is all about. Does this make any sense?
Cap Gains Taxation: Less Means More
A new study suggests a zero cap gains rate could create millions of jobs at a fraction of the cost of the spending stimulus.

Graph of the Day
WSJ: Charkbook: The Depth of the Downturn
See: The Housing Recession Isn't Over
See also: The Biggest Issue of 2010, In One Chart

Book Excerpts
"'Taxes upon the transference of property from the dead to the living,' said Adam Smith, 'fall finally, as well as immediately, upon the persons to whom the property is transferred.' But this view altogether neglects the ulterior effects on the distribution of wealth that the duties may bring about. If, as Ricardo argued, they fall mainly on capital, it is evident that the whole society suffers by less efficient production, and it is also probable that the higher value of the remaining capital will lead to a rise in interest and a consequent fall in wages." –Charles Bastable, Public Finance (1892)

Did You Know
"Secretary of State Hillary Clinton will announce on Tuesday a U.S. contribution of more than $50 million toward providing clean cooking stoves in developing countries to reduce deaths from smoke inhalation and fight climate change. The U.S. funding, which will be spread over five years, is part of a Global Alliance for Clean Cookstoves being started to combat a problem officials equate with malaria and unclean water in terms of their health impact worldwide. More efficient stoves can be purchased for $10 to $100, according to one senior U.S. administration official, who spoke on condition of anonymity ahead of Clinton's funding announcement."

9/20/10 Post

BUZZ: Bond Markets Get Riskier

News
Nevada unemployment rises to 14.4 percent
Even as thousands of Nevadans abandoned the state's workforce, unemployment in the Silver State has risen to a record yet again, new numbers reveal.
For the Unemployed Over 50, Fears of Never Working Again
Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group — 7.3 percent — is at a record, more than double what it was at the beginning of the latest recession.
Americans' Net Worth Falls Along With Stocks
The Federal Reserve reported Friday that household net worth—stocks, bonds, homes and other assets, minus mortgages and other debts—fell 2.8% to $53.5 trillion in the second quarter, driven by a sharp decline in the value of stock investments.
Fed Expected to Weigh More Stimulus
With tax rates at the center of the debate over how to revive the stalled recovery, the Federal Reserve is likely to spend its policy meeting on Tuesday weighing the merits of additional steps to stimulate the economy, while deferring some major decisions until later this year.
Global ‘internet treaty’ proposed
Deal would enshrine in law the founding principles of open standards and net neutrality, and protect the web from political interference.
Government could seek foreign investors for GM
Investment bankers handling the upcoming General Motors Co. stock sale are expected to court foreign investors as well as those in North America, according to a U.S. Treasury Department statement.
Inflation remains flat in August as consumer prices rise 0.3 percent
Consumer prices posted a small rise in August, but outside of a big jump in volatile gasoline prices, inflation was essentially flat.
UK Proposes All Paychecks Go to the State First
The UK's tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.
Economists: Extend Bush tax cuts for everyone
With income tax rates set to go up on Dec. 31, Congress is hotly debating what to do next. But most economists agree: Keep them where they are.
GOP Aims to Erode White House Agenda
Eyeing a potential Congressional win in November, House Republicans are planning to chip away at the White House's legislative agenda—in particular the health-care law—by depriving the programs of cash.
Tax cuts: Small biz fact check
Republicans say raising taxes on the wealthy would cause small businesses to pull back on hiring. Many leading Democrats say that's nonsense. Who's right? The answer isn't black and white, despite politicians' confident assertions to the contrary. It's more like multiple shades of gray.
Pension Gaps Loom Larger
Funds Stick to 'Unrealistic' Return Assumptions, Threatening Bigger Shortfalls.
States playing fast and loose with teachers' jobs money
Congress gave states $10 billion to save 145,000 teachers' jobs. But it won't help all school districts rehire educators since some governors are planning to take away state aid.
Treasurys Can Be Painful, as History Shows
Investors in 10-year Treasurys would lose around 20% if yields rise to, say, 7% over the next two years. Thirty-year Treasurys would lose about 34% if the yield rises to 7.5%.
Retailers to boost holiday jobs
Stores could add up to 600,000 jobs during the holidays -- up from last year but still not in line with pre-recession levels, report says.
Wall Street Reform Spurs Hiring Spree on K Street
The nation’s banks seem to have received one powerful message from this year’s finicial services reform measure: Get more help on K Street.
DeMint to GOP: We must produce
Sen. Jim DeMint (R-S.C.) says the Republican Party - even if it regains control only of the House - is "dead" unless it follows Americans' demands to rein in government spending.

Blogs
NAHB Builder Confidence stuck at low level in September
The National Association of Home Builders (NAHB) reports the housing market index (HMI) was at 13 in September. This is the same low level as in August and below expectations.
Defaults Account for Most of Pared Down Debt
0.08% — The annual rate at which U.S. consumers have pared down their debts since mid-2008, not counting defaults.
Greenspan Paradox on Recovery
Alan Greenspan exemplifies an inconsistency that appears to be widespread. He reportedly said that the stimulus has fallen far short of expectations and the government should get out of the way and allow businesses to power the recovery. At the same time, he’s so worried about budget deficits that he supports higher taxes.
We Have Obama's Number!
...under the president’s proposal, virtually all of top earners’ ordinary income will be taxed at 44.6 percent, starting in 2013.
The Anti-Government Straw Man
Nearly all economists agree that these kinds of failures can justify some degree of state intervention. Furthermore, it is legitimate (in our view) for society to provide some minimum basic standard of living for all, and government has a role to play in that process.
Weekly Schedule for September 19th
Four key housing reports will be released this week: the September homebuilder confidence survey (Monday), August housing starts (Tuesday), August existing home sales (Thursday), and August new home sales (Friday). Also the FOMC meets on Tuesday.
Dirtier Dishes, Cleaner Lakes
...the environmental benefits of reformulated products can depend on how consumers respond. Low-flow toilets don’t save as much water if they prompt some users to flush multiple times. Might there be a similar rebound effect with low-phosphate detergents? Perhaps.
The Second Austrian Moment
...the consequences both for policy and the future of economics depend on the interpretation of the financial crisis and the Great Recession.
Q2 Flow of Funds: Household Net Worth off $12.3 Trillion from Peak
According to the Fed, household net worth is now off $12.3 Trillion from the peak in 2007, but up $4.7 trillion from the trough in Q1 2009.
My Hammer and Some Nails
I would like to be able to subscribe to the school system of my choice, the financial regulatory system of my choice, the food inspection system of my choice, and so forth. Monopoly based on geography is not necessary for most government services.
Unofficial Problem Bank List increases to 854 institutions
"...the Unofficial Problem Bank List stands at 854 institutions with assets of $416 billion, up from 849 institutions with assets of $415.3 billion last week."
Krugman and Taxes
Well, yes: save for corporate-welfare kings and queens, rich people earn their riches. They are, in fact, entitled to their money, and entitled to be angry when government tries to take more of it.
No increase to Social Security Benefits for 2011 (unofficial)
It won't be official until the BLS releases the September CPI-W report, but we can already say there will be no increase in Social Security benefits or the Maximum Contribution Base in 2011 (assuming no new legislation).
Underestimating the Pension Bomb’s Impact
...over a 25 year period pension plans had an annualized median return of 9.3%. Over a 10 year period that fell to 3.9%. However in choosing a discount rate it’s not simply the number or time-period they’re selecting that matters. It’s the rationale.
Mad Ireland Hurt Them Into Austerity
Alex Massie offers a powerful rebuttal to those who would use Ireland's woes to argue that this somehow "proves" that austerity is bad: they didn't really have much choice.
Companies Still Holding Lots of Cash
Nonfinancial firms held $1.845 trillion in cash and other liquid assets last quarter, down from $1.847 in the first quarter, the Federal Reserve’s flow of funds report shows. Meantime, the value of companies total assets rose to $14.366 trillion. Cash as a share of total assets edged down from 7.1% to 7%.
For Needy Families, a Needy Program
Temporary Assistance for Needy Families, our nation’s primary cash-welfare program for families with children, would more accurately be named Inadequate Assistance for Needy Families.
This Week in Government Failure
These wasteful government issues have been exposed...
China Currency Hearings a Distraction
The chief obstacle to America’s recovery is not China’s currency regime, but a housing market that remains depressed, soaring government spending and debt, looming tax increases, and grandstanding politicians who refuse to remove those very large boots from the neck of the American economy.
Is the U.S. Still the Land of Opportunity?
The Global Entrepreneurship and Development Index (GEDI) report by researchers at the Small Business Administration shows that the U.S. may be slipping in its ability to sustain productive entrepreneurship relative to other countries.
The Economic Toll of the Obama Tax Hikes
Before the recession, federal spending totaled $24,000 per U.S. household. President Obama’s FY 2011 budget would hike it to $36,000 per household by 2020. But spending is just one-half of this White House’s economic plan. Massive wealth-distributing tax hikes are the other half of President Obama’s wish list, and they are just as big a threat to our nation’s economy.
Increasing Numbers of the Poor: Why Government Anti-Poverty Programs Have Failed
Since 2008, food stamp rolls have risen by nearly 50 percent to more than 40 million, and the number of welfare recipients rose to 4.4 million, an 18 percent increase. In fact, government expenditure for anti-poverty programs is now at an all-time high.
Why Preserve the Constitution?
For over a hundred years, Progressives have been trying to persuade Americans that times have changed, and therefore our founding documents must evolve to meet the needs of a developing society.
The Cause and Effect of Financial Recklessness
We can blame consumers, policymakers, and risk for the current financial situation, but isn't it time to stop the finger pointing?
In Reality, Housing Is Not Even Close to Stabilizing
Shadow inventory -- distressed residential properties that will almost certainly come onto the market in the not-too-distant future -- paints a more accurate and more dismal outlook than many claim.
Misguided Stimulus: Businesses Won't Hire Until Demand Exceeds Supply
The Obama administration's stimulus package doesn't guarantee businesses will immediately grow employment and work toward expanding the economy.

Research, Reports & Studies
Hudson Institute Economic Report
This week saw better than expected economic news. Retail sales rose 0.5% in August from July, and were up 3.7% from last year...
RCM: Wells Fargo Economics Group: U.S. Review
Mostly Better News But Sluggishness Still Reigns.
Closing the Racial Achievement Gap: Learning from Florida’s Reforms
An education gap between white students and their black and Hispanic peers is something to which most Americans have become accustomed. But this racial division of education—and hence of prospects for the future— is nothing less than tragic. The good news is that the racial divide in learning is a problem that can be fixed.
Obama Tax Hikes: The Economic and Fiscal Effects
Since 1996, Congress after Congress has voted to lighten the tax burden on Americans. The current Congress will decide this fall whether to continue this policy or to significantly raise personal income taxes.

Economists’ Comments & Opinions
Can the Fed Offer a Reason to Cheer?
As high unemployment continues, more and more people, including top economists, are asking the Fed to promise a credible commitment to a more expansionary monetary policy. This approach will work only if the Fed finds a way to be bold — and if we find a way to believe in it.
Many Are the Errors
Perhaps Paul Krugman believes that by labeling other economists as politically extreme, he can undercut their credibility. But his is badly weakened by the myriad errors he makes.
Solving the Unemployment Crisis
If we truly want to create jobs, it is not enough to simply berate business to create them. We must address the dynamics that keep businesses from offering jobs and that keep people from accepting jobs.
The Christie Example
Far from being onerous, these changes are consistent with current standards across private industry. The Christie plan would eliminate a major chunk of the state's unfunded liabilities, and for that he deserves kudos.
Stimulus for Clunkers
The [Cash for Clunkers] program "had no long run effect on auto purchases." It did juice sales during its two-month run last summer, by about 360,000 cars, but then it quickly hurt sales by about the same amount, in effect stealing purchases from the future.
The Estate Tax Is A Tax On Those Without Estates
All entrepreneurial concepts morph into innovative realities thanks to the savings of others. When estates are left alone, the money doesn't disappear; rather it's lent to or invested in the ideas of those not yet wealthy.
Why It's Time for the Tea Party
One difference so far between the tea party and the great wave of conservatives that elected Ronald Reagan in 1980 is the latter was a true coalition—not only North and South, East and West but right-wingers, intellectuals who were former leftists, and former Democrats. When they won presidential landslides in 1980, '84 and '88, they brought the center with them.
Pelosi's False Tax Choice
Stop the presses: House Speaker Nancy Pelosi has discovered fiscal discipline.
More Proof We Cant Stop Poverty By Making It More Comfortable
One definition of insanity is doing the same thing over and over and expecting different results. Perhaps that's something to keep in mind the next time we hear a call for more welfare spending.
How Underwater Mortgages Can Float the Economy
Recent calls for another federal stimulus package raise an important question: Before considering costly short-term measures to raise overall consumer demand, have we done enough to ensure that financial markets will work properly and lead us to recovery?
A Poverty of Statistics
Unfortunately, official U.S. poverty statistics do not satisfy this assigned function.
A Conservative Plan to Transform America
"Solutions for America," a comprehensive 54-page guide from The Heritage Foundation that presents more than 120 conservative policy prescriptions to get our nation back on the right track. Some of the recommendations are groundbreaking. Others are familiar. All have one thing in common: They would return power to the people. And, collectively, they will transform America.
The Economics of Mass Destruction, Part 2
Governments around the world are focused on spending money, but these policies are ultimately destroying capital.
What America Needs Is Complete Economic Overhaul
Nouriel Roubini argues that our country needs a payroll tax cut, but that will do little to nothing to actually stimulate the economy.


"Insight from the Median Voter Theorem: Zero-based budgeting can lead to bigger government. Why? b/c MV thinks 1.2X>0X." -Garett Jones, Twitter

Graph of the Day
Recession officially ended in June 2009
Medicaid: Are Costs Up or Are We Buying More?

Book Excerpts
"[Economists] ask first: what are the effects of confiscatory taxation on capital accumulation? The greater part of that portion of the higher incomes which is taxed away would have been used for the accumulation of additional capital. If the treasury employs the proceeds for current expenditure, the result is a drop in the amount of capital accumulation. The same is valid, even to a greater extent, for death taxes. They force the heirs to sell a considerable part of the testator's estate. This capital is, of course, not destroyed; it merely changes ownership. But the savings of the purchasers, which are spent for the acquisition of the capital sold by the heirs, would have constituted a net increment in capital available. Thus the accumulation of new capital is slowed down. The realization of technological improvement is impaired; the quota of capital invested per worker employed is reduced; a check is placed upon the rise in the marginal productivity of labor and upon the concomitant rise in real wage rates. It is obvious that the popular belief that this mode of confiscatory taxation harms only the immediate victims, the rich, is false." –Ludwig von Mises, Human Action: A Treatise on Economics (1949)

Did You Know
"The House last week advanced a bill that would for the first time require federal health officials to ask patients about their sexual orientation and gender identity. The proposal was introduced by Rep. Tammy Baldwin, D-Wis. Under the proposal, programs and surveys administered through the Department of Health and Human Services would be required to ask people about their sexual orientation and gender identity, though the response would be voluntary. "