Economics Roundtable

Actually, I don't really disagree with Bruce on this.� But there are a few things that distinguish the Obama fiscal 2011 budget from all of the other presidential budgets that, as Bruce pointed out in his excellent history, have been quickly forgotten over the years.

First, as I noted ...

I need to rant on this one.

I was going to use a "This Is Just Silly" headline, but it's not silly: If it's true, it's infuriating and pathetic, and that's being kind.

Republican and self-professed fiscal conservative Senator Richard Shelby (AL)�yesterday supposedly put a hold on all Obama administration nominations ...

So goes the logic (with only mild exaggeration) of one of the most ridiculous policy proposals I've read in a while -- to make up for falling gas tax revenues with a new tax on miles driven.� Ashley Halsey III is on the case in The Washington Post yesterday.�

The ...

�I could hardly believe my ears just now, watching former Reagan OMB Director Dave Stockman pronounce the end of the tax cut era on the PBS Newshour.

Stockman started by lambasting Wall Street gunslingers, of which he was one, for wrecking the financial system. �Then he cited the AIG bailout ...

After President Obama visited their conference last week and took questions from them, Republicans�have become�very keen on institutionalizing the event the way it is in Britain, where the prime minister routinely takes questions from the opposition in Parliament.

It�appears to me that Republicans are simply looking to save face from having ...

Anyone who reads the Wall Street Journal's editorial page knows that it hates the value-added tax. I don't mean hate the way it hates liberals, government regulators and the capital gains tax. No, the Journal hates the VAT more deeply and strenuously than anything else.

The reason is that the Journal ...

I can't believe I didn't focus on this before.

A week ago, Shan Carter and Amanda Cox at the New York Times published this very cool, fun, interesting, and interactive chart that shows the different components of the federal budget in a way that analysts, geeks, observers, and commenters up ...

�Washington invariably prefers the quick fix and ignores the underlying causes of whatever problem it faces. What better example than the financial crisis? At its most fundamental level, we underpriced the risk of mortgages and other financial assets. Why? President Obama and Congress have focused on ...

�

Bruce raises a number of interesting points in his post on whether having a regular question time of the president by Congress similar to the questions asked of the prime minister by the House of Commons in the U.K. would be a good idea.� And you have to love ...

How bad is the asymmetric information problem in credit card markets? This is from Wall Street's Race to the Bottom, by Elizabeth Warren, arguing for a Consumer Financial Protection Agency. She describes what happened when Citigroup offered its credit card customers a better deal:

Wall Street executives explain privately that they ...

Chrysler Group LLC says it will invest $550 million to build the Fiat 500 minicar at its ...

Sorry I haven’t written much recently.  The recent snowstorms have tossed me around, as I care for my family, and those around me.  It is amusing in a backwards way, to see Washington, DC frozen at a time when there is so much volatility in global finance.  Yo, Treasury, make ...

Today I attended the RBA’s 50th anniversary symposium.� The proceedings were not for attribution, but the papers have been published on the RBA’s web site.� The session on supply-side issues was a particularly welcome contribution to an area too often neglected by central banks, but one that is ...

Daniel Little:

The inexact science of economics, by Daniel Little: Economics is an "inexact" science; or so Daniel Hausman argues in The Inexact and Separate Science of Economics (Google Books link). �As it ...

The FT and FT Deutschland lead with the story that speculation have built record large short-positions in the euro, through which they speculate on a fall in the euro-dollar exchange rate. Data from the Chicago Mercantile Exchange as of Feb 2 show 40,000 futures contracts ...

In recent years, journalists and pundits in the West have looked on China’s economic engagement with Africa, including foreign aid, with growing alarm. An NYT op-ed a few years ago called China a “rogue donor,“ giving aid that is “nondemocratic in origin and nontransparent in practice, and its effect is ...

Hey Mish

During the past several weeks we've had a lot of seniors coming ...

I have a simulated interview with William Dudley, President of the Federal reserve bank of New York, here.

Or, what would happen if we "Let Bush Be Bush". Recall the 2001 and 2003 tax cuts were written to expire, for the most part, in FY2011. The impact of extending those cuts (along with some others) is strikingly depicted in this Figure from the Center for Budget and ...

EconLog’s Arnold Kling asks a question that would fuel befuddled, and perhaps even angry, stares at the typical Manhattan or Beverly Hills cocktail party — but it’s a great question that, in fact, is not rhetorical:

Is it really the case that people want the government to create jobs? I ...

Andrew Sullivan is smitten

A simplified tax code, consisting of a two-bracket income tax with a large standard deduction and a business consumption tax, would pay for a means-tested safety net, and a system of tax credits, risk pools and low-income subsidies would underwrite a free (or, ...

Below is the abstract of a paper that looks very interesting.  Its title is “Proposition 13 and The California Fiscal Shell Game“; its authors are Colin McCubbins and Mathew McCubbins:

We study the effects of California’s Tax and Expenditure Limitations, especially Proposition 13. We find that Proposition 13 was indeed ...

Even in normal economic times, the poor as a group do not affect public policy. Why then would it be different during a financial crisis, when saving the elites and saving the ‘financial world’ is of paramount importance?

The financial crisis originated in the USA and Western Europe and spilled ...

So goes the logic (with only mild exaggeration) of one of the most ridiculous policy proposals I've read in a while -- to make up for falling gas tax revenues with a new tax on miles driven.� Ashley Halsey III is on the case in The Washington Post yesterday.�

The ...

The deficit hawks apparently believe that their case is so weak that they must resort to crass jingoism to push their agenda. NBC apparently intends to run a piece on the evening news on Tuesday that talks about the portion of the government debt that is owned foreigners, highlighting the ...

“The worst possible signal which we could send out is one calling for outside help,” [Greek Finance Minister George Papaconstantinou] said in an interview with Bloomberg Television in Athens yesterday. “We will tackle the deficit,” he ...

The president of the Federal Reserve Bank of St. Louis said Monday the U.S. central bank should begin gradually selling its mortgage securities holdings later this year despite concerns from some investors the move would raise mortgage rates.

James Bullard said in an interview the asset sales should happen before the ...

June 23, 2005 Social Security Follies

Congressional Republicans have begun talking with top White House aides about an exit ...

Make sure not to get hit by a government SUV in Washington — Daily Caller

Distilled Geography: Europe’s Alcohol Belts — Strange Maps

Edward Luce on the “fearsome foursome” (Rahm, Jarrett, Gibbs, Axelrod). Is Rahm, in particular, making mistakes? — FT

The new reality: When people get scared, they *sell* ...

Treasury Secretary Timothy F. Geithner said the U.S. is in no ...

The January bankruptcy filing basically held steady to December, according to the new bankruptcy statistics now available from Automated Access ...

If I had to guess I would say it is a pricing signal to its competitors (Kindle, Nook, Sony) saying that ...

Marco Annunziata has a diagnosis of what ails the PIGS:

Germany has been relying on an export-led growth strategy: With virtually no wage growth over several years, it has rapidly gained competitiveness against most of its European partners, running a substantial current account surplus, which stood at 6.5% of GDP ...

I’ve been banging on for a while that one key cause of the crisis was the tax-deductibility of interest payments, and the incentive that allows companies to finance themselves with dangerous debt rather than safer equity. But I didn’t realize it was this bad. Pete Davis ...

As usual Jeff Miller is indispensible. The money quote:

Anyone who does not understand and discuss the "imputation step" as part of the BLS job creation process is not a true expert.� You should ignore that source.

You don’t want to misunderstand the “imputation step” do you? Read the ...

The Administration is taking two tax provisions from the 2009 stimulus bill -- expansions of the child tax credit and the EITC -- and claiming them as part of the "current policy" Bush ...

The place that got the most snow during the recent storm was Howard County, Maryland.  Elkridge had 38″, Columbia 34″, and at Aleph Blog Global HQ we got a measly 30″.  Here are some photos:

looking out the front of the house

For all practical purposes, Hong Kong delegated the determination of its monetary policy to the Federal Reserve through its unilateral decision in 1983 ...

For years, researchers have known that there’s a link between children’s participation in high school sports and success later in life. Problem is, they haven’t understood exactly what that link is.

Justin Fox tried to adjudicate a debate on Friday. In the blue corner is Philip Augar, a British investment banker who wants to go back to a very British form of investment banking (think all those houses with Hogwarts-style names like Rothschilds and Schroders and Kleinworts and Warburgs), ...

The Chicago Mercantile Exchange has taken on more short bets on the ...

We'll get to the snarkiness in just a bit, but first, let's ...

Robert Stavins is more upbeat than I am about the prospects for "meaningful U.S. Climate policy":

Any Hope for Meaningful U.S. Climate Policy? A Somewhat Positive View, by Robert Stavins: The current conventional wisdom ­– broadly ...

The cost of insuring Spanish and Portuguese government debt against default via credit default swaps hit new records Monday, while the cost of insurance for Greek debt also rose, according to CMA DataVision.

The U.S. job picture improved for the fifth consecutive month in January, according to a report released Monday.

The Conference Board said that its January employment trends index rose to 93.2 from December’s upwardly revised 92.3, but was still down by 0.7% compared to January 2009. December was originally reported as ...

A top Federal Reserve official said Monday U.S. monetary policy is too hot for China and Hong Kong and explained any trouble those nations ultimately face because of this situation arises from their own foreign exchange policies.

“Because ...

Tune into tonight's radio broadcast with yours truly for a discussion of the finer points of asset allocation, strategic-minded investing and my new book (Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor).

That's tonight, February 8, on ...

I distribute films and did so for a major studio for some years. Not an exhaustive answer but here are a few things at work in no particular order.

The delay for video rental after the theatrical release is ...

And��finally Joshua Kurlantzick, in the Boston Globe, "Dazzled by Asia," arguing that if you're assuming an emerging Chinese hegemony, you might be disappointed. � (To which I'd my own oft-repeated observation that if the corollary is longing for American decline and the rise of a new, ...

(Photo from HuffingtonPost)

So, I’ve been pretty much paralyzed with this snowstorm (”Snowmageddon” as they’ve dubbed it) here in DC.  We have a couple feet of snow on the ground!  It’s made it difficult for me to keep up any of my ...

The New York Times is reporting that Wall Street is sending more cash to the GOP this year than Democrats. It seems that at least one branch of the East Coast Elite is having second thoughts. Perhaps Nancy Pelosi should send them a gentle reminder on the ...

China Stimulus�(217 mph):

�

U.S. Stimulus�(Napa Valley, Wine Train):

�

Hat tip: Daniel Lippman.

Here. An excerpt:

He has been narrow, not broad. He has been partial, not post-partisan. He has been ideological, not pragmatic. No number of “eloquent” speeches can alter these facts. This is why his major initiatives have failed, why his net job approval has dropped 50 points in 12 months, ...

Now add to this the promotion and tenure policies at even second rate economics departments that require and only reward publication in journals that favor morally vacant, mathematically rigorous, theoretically obtuse ...

Hi Mish

Last week, Len Burman published a provocative op-ed suggesting that President’s Obama idea of freezing non-security discretionary spending amounts to “chump change” and that if he wants to make real budget improvements the President should propose to freeze tax expenditures (i.e., all the various preferences in our famously ...

The National Tax Journal asks for views on a recent proposal from Len Burman to limit tax expenditures.   My answer:   I couldn’t agree more.

With regard to the politics, one would have to see whether the phrase “cut tax expenditures” polls more like the phrase “cut expenditures,” which ...

�Washington invariably prefers the quick fix and ignores the underlying causes of whatever problem it faces. What better example than the financial crisis? At its most fundamental level, we underpriced the risk of mortgages and other financial assets. Why? President Obama and Congress have focused on ...

U.S. prime jumbo loan performance continued to weaken in January as serious delinquencies rose for the 32nd consecutive month, according to Fitch Ratings in the latest edition of Performance Metrics.

"The new year has ...

CAP’s David Madland argues that the ongoing labor dispute between the National Football League and its player’s ...

Budget Director Peter Orszag wrote a blog post last Tuesday titled “A Short History of Deficit Reduction” in which he wrote:

The President’s Budget represents an important step towards fiscal sustainability: it put forward $1.2 trillion in deficit reduction over the ...

In hindsight, one of the silliest and most dangerous excesses of the Great Moderation was the large number of companies — foremost among them AIG, although there were lots of monoline insurers in the same trade — basically selling insurance on the world coming to an end. It’s a great ...

Talk of Euro abandonment would trigger an immediate run on Greek banks, sending the country into an even deeper hole.� Who wants a Euro deposit to be converted into a drachma deposit?

You could imagine keeping current Euro-denominated deposits and adding new drachmas to the system, circulating at a flexible exchange ...

For the last year or so I’ve been thinking about trade in a new way, a mix of Smith and Ricardo, an idea I first heard from Jim Buchanan and enhanced by conversations with Don Boudreaux and Mike Munger. In this week’s EconTalk, I lay out the idea. Hope ...

Here:

Hayek contre Keynes – VOSTfr
Uploaded by Liberte_Cherie. – Click for more funny videos.

$2 million cognac. Source: Most-expensive.net.

While some people scramble for free khakis, others are indulging in high-end indulgences like designer perfumes and $5,000 coats. The Financial Times has more:

More prosperous American shoppers seem to ...

Infomercials captivate. That’s their job. If they hold your attention long enough, you might find yourself picking up the phone and ordering that tomato peeler, talking dog collar, or remote-controlled bathroom caddy.

Yet some infomercials leave you scratching your head in amazement. Are they really trying to sell this stuff? ...

The trader then went on to tell me that Commercial Bank of Korea would sell credit default protection on bonds issued by the Commercial Bank of Korea.
"That's very interesting," I countered, ...

First, a blurb from the Globe and Mail (which I know nothing about and for all I know could be a right-wing nutjob tabloid, or a left-wing wingnut tabloid for that matter, but in this case makes a relevant point):

Until now, anyone who questioned the credibility of the IPCC ...

It's now out and my review copy has arrived; the authors are Yoram Bauman and illustrator Grady Klein.� It is the next step in economics education.� You can buy it here.

via www.marginalrevolution.com

Review copy? I had to pay for mine.

I can't believe I didn't focus on this before.

A week ago, Shan Carter and Amanda Cox at the New York Times published this very cool, fun, interesting, and interactive chart that shows the different components of the federal budget in a way that analysts, geeks, observers, and commenters up ...

Anyone who reads the Wall Street Journal's editorial page knows that it hates the value-added tax. I don't mean hate the way it hates liberals, government regulators and the capital gains tax. No, the Journal hates the VAT more deeply and strenuously than anything else.

The reason is that the Journal ...

A roundup of economic news from around the Web.

At a time when American public higher education is cutting budgets, laying off people, ...

Fed Chairman Ben Bernanke will be chatting up the central bank’s exit strategy later this week when he testifies before the House Financial Services Committee on February 10. To say that there are political and economic risks hovering over the subject is to understate the potential hazards.

There are risks to ...

In case you missed it on Friday, it’s worth checking out Tracy Alloway’s post about second mortgages in the US. She makes a very good point about how they’re making it a lot more difficult for mortgages to be modified — but we kinda knew that already. What I, ...

Warren Mosler has an interesting and provocative remedy for Europe’s current fiscal woes: the European Central Bank should simply print 1 trillion euros, and hand it out, on a pro-rated basis, to all the Eurozone states. This is a per-capita payment: it would be based on population, not on ...

It's now out and my review copy has arrived; the authors are Yoram Bauman and illustrator Grady Klein.� It is the next step in economics education.� You can buy it here.

Bauman is not just a good economist he is a very good economist, with an insightful�philosophical bent and the ...

A chorus of pantsless men sing astride a knoll.

After airing a Super Bowl commercial last night featuring men singing in their underwear, Dockers is giving away free khakis in a a raffle. You ...

Rob Bradley at Master Resource has a very nice appreciation for Julian Simon on the 12th anniversary of his death.� Julian died just as his voice was beginning to be heard, which makes a premature death even more unfortunate and unfair.� He was a model of ...

Economy expert and Syracuse University professor Len Burman proposed in the Washington Post last week an alternative to the modest savings from President Obama's spending freeze -- a freeze in some "tax expenditures," those exemptions in the tax code for different groups that work effectively like spending programs for special ...

Allan Sloan told listeners to Marketplace radio this morning that future retirees should be worried about their Social Security benefits because the program is now paying out more in benefits than it collects in taxes. In fact, the program has accumulated more than $2.5 trillion on government bonds in ...

Pretty quickly, it seems. According to a new study, schools spent 38% of their stimulus money in the ‘08-’09 school year, 48% this year, and have 14% left over for next year. From a Keynesian perspective, that seems like a pretty decent to spend $100 billion. Some states, ...

Never deal with pesky lighting problems or seatmates again…

Some selected levels of Public Sector debt in different countries

Other selected Levels of ...

I suppose that it is hard to get information about the federal budget way out in the outskirts of downtown Washington. This no doubt explains why Robert Samuelson doesn't seem to know about the Social Security tax. In fact, he doesn't seem to know much about the federal budget at ...

The Washington Post ran another appeal for congressional passage of trade agreements negotiated with South Korea and Colombia. It refers to these deals as "free trade" agreements even though an important part of both deals involves increasing protectionist barriers in the form of patent and copyright protection. This increased ...

Russ Roberts, host of EconTalk, does a monologue this week on the economics of trade and specialization. Economists have focused on David Ricardo's idea of comparative advantage as the source of specialization and wealth creation from trade. Drawing on Adam Smith and the work of ...

Heh.

Guaranteed future headline: "Obama administration surprised at lower than expected revenues from taxes on the wealthy."

They never learn, do they?
�

One of my favorite examples of the cost of interfering with the market is rent control. And while I've been collecting rent control stories my whole career, William Tucker's great new piece, "Taxpayers, Meet Your Tenants," has two gems I hadn't seen before:

Deprived of any chance of evicting ...

"Our currency, the RMB, has appreciated more than 20 percent against the U.S. dollar since July 2005, when China moved to a floating exchange ...

Hi Mish

I believe the seasonal adjustment is no longer valid given that anticipated job creation down the road has not and will not be happening. I ...

"Collection of Studebaker National Museum, South Bend, Ind." "Those who disparage buggies as a dead end forget Studebaker switched from carriages to cars." ...

Readers Question: Can you please discuss the nature of the current account deficit and the exchange rate in the UK along with the theory that would suggest there is a relationship between the exchange rate and the current account.

In theory, the exchange rate will have an impact on the current ...

The Senate is broken, and government won't function properly until it is fixed:

America Is Not Yet Lost, by Paul Krugman, Commentary, NY Times: We’ve always known that America’s reign as the world’s greatest nation would eventually end. But most of us imagined that our downfall, when it came, would ...

In the latest effort to find better - and cheaper - ways of operating, Colton officials are exploring the possibility of disbanding the city fire department and contracting with an outside agency.

At the G7 meeting in Iqaluit, Canada, the Europeans made it clear that they will sort the Greek out by themselves. Bloomberg reports that European finance ministers said they would help ensure Greece tackles the deficit. US treasury secretary Tim Geithner is quoted as saying ...

Not long ago, I was returning home from a trip when the airline bumped me from my flight due to overbooking. The airline rep was very sympathetic, but I didn’t want her sympathy, I wanted A Seat On the Plane. She had traded off my wishes against those of other ...