Economy

Implementing ARRA--Another Way to Gauge Stimulus Success
August 31, 2009

With the President Obama’s $787 billion stimulus package (aka, the American Recovery and Reinvestment Act or ARRA) six months old now, it's fair to ask like everybody else is: How’s it working? One way to decide is to simply count the jobs created and jobs preserved. And on that front the commentariat has been quick to pronounce.

The Two-Track Economy Arrives
August 31, 2009

The notion of a two-track economy seems to be taking hold. We kicked the concept around pretty well last week--your 130 comments (as of this morning) helped clarify a great deal of what we know, don’t know, and need to worry about. The two-track concept overlaps with, and builds on, long-standing issues of inequality in the U.S., but it’s also different. Within existing income classes, some people find themselves in relatively good shape and others are completely hammered. New dimensions of differentiation are also taking hold within occupations and within industries--the WSJ this morning has

Are Speculators to Blame for Oil Prices?
August 29, 2009

A new paper by Ken Medlock and Amy Myers Jaffe of Rice University on oil speculation attracted a lot of unquestioning attention late this week. In the study, Medlock and Jaffe accuse the CFTC of missing the way rampant speculation may have driven up oil prices earlier this decade. But after reading the paper, it’s pretty clear that Medlock and Jaffe don’t have anything resembling a smoking gun. They largely rely on one correlation to support their case: That volume in oil futures contracts increased sharply at the same time that oil prices did.

Who Knew? Mickey Did.
August 28, 2009

My friend Mickey Kaus has a rejoinder to my latest column, in which I suggest that the emphasis on cost-cutting--while most likely a strategic mistake--was nevertheless easy to understand in retrospect. Among other things, he suggests, some people did predict this. Like, for example, Mickey. Well, he's absolutely right about that. He was a critic of this argument as far back as April: Isn't it an epic mistake to try to sell Democratic health care reform on this basis?

The Metro Orbit of Small Town America
August 28, 2009

Given the American appetite for rankings as well as hometown pride, it’s not surprising that our media is awash with lists of the most desirable communities. This month’s entry came from Money Magazine, with its annual list of “100 Best Places to Live in America.” As part of the effort, “America’s best small towns,” were chosen with special focus placed on communities of moderate size (populations between 8,500 and 50,000), desirable location (within 60 miles of a major airport) and a modicum of diversity. As the magazine tantalizingly described, “Yes, local economies still exist. These small

Why Taxing Trades Could Make Sense
August 27, 2009

The UK's top financial regulator, Adair Turner, has suggested a tax on all financial transactions around the world. The purpose of this tax, he argues, would be to prevent the return of "business as usual" for the banking sector: "If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit." Transaction taxes -- better known as Tobin taxes after Yale economist James Tobin -- have been proposed and implemented in the past to discourage speculative short-term trades and reduce market volatility.

Worth Reading
August 27, 2009

Bernanke feels your pain: the chairman falls prey to identity theft.  Fed may not spend all $1.25 trillion set aside for mortgage securities. Society won't necessarily benefit from a post-finance job market. An argument against the banning of flash-trades? Another defense of the Taylor Rule by its creator. Has the placebo effect become more powerful?

Do Markets Increase Trust?
August 27, 2009

What's the relationship between markets and morality? The standard assumption is that markets have little impact on the moral character of people who operate within them. But it doesn't look like that's necessarily the case. Patrick Francois and Tanguy van Ypersele studied what happened to people's level of "trust in others" in states that deregulated their financial sectors in ways that increased competition. Trust can be considered a moral attribute, and given what's happened in the subprime market, you'd think that deregulation might lead to a drop in trust.

The Economic Storm Ahead
August 26, 2009

 With the near-simultaneous release this morning of CBO's updated Budget and Economic Outlook and OMB's Mid-Session Review, we have the most detailed economic analyses and forecasts we are likely to see for the rest of the year. If the consensus these documents represent is in the ballpark, the country and the Obama administration are in for a rough ride.

Worth Reading
August 26, 2009

California is auctioning items on eBay to raise funds. What Bernanke's reappoinment means for Larry Summers. Cowen, Thoma, DeLong, Reinhart, and Galbraith on Bernanke's future. Why the health insurance market isn't competitive right now. Expats from the UK are heading home. 

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