● The Great American Bank Robbery: The Unauthorized Report About What Really Caused the Great Recession
By Paul Sperry
Summary via publisher, Thomas Nelson Inc.
The average American household lost $123,000 in wealth during the financial crisis. The Financial Crisis Inquiry Commission says Wall Street stole it, appearing to confirm the narrative told by countless politicians, economists, and pundits. The verdict seems unanimous. In fact, it’s unanimously wrong. The masterminds behind the biggest heist in history were radical social engineers on Pennsylvania Avenue, not financial engineers on Wall Street. The Great American Bank Robbery offers the first careful and thorough analysis of public policy’s role in the calamity. With stinging clarity, it indicts the real culprits–many of whom have returned to the scene of the crime in Washington. Now they’re planning an even bigger heist in the name of “economic justice.”
The Return Of The Budget Busters
Now it’s getting serious. House Speaker John Boehner warns that he’s won’t sign off on a short-term spending extension to keep the deficit-laden federal government operating. “Read my lips,” he says. “We are going to cut spending.” The budget showdown is here.
Kauffman Foundation Survey: Economic Bloggers’ Outlook Improves
The Kauffman Foundation published its new quarterly survey of “leading economics bloggers” today and the general outlook from this group is that there’s “a bit of hope” twinkling on the horizon, according to the press release. The Capital Spectator is among those surveyed.
History May (Or May Not Be) Your Guide
Economist James Hamilton reminds that we should recognize a distinction between claims that the Fed is printing money proper and crediting accounts at banks that are part of the Federal Reserve system. “These electronic credits, or reserve balances, are what has exploded since 2008,” Hamilton notes. Currency in circulation, by contrast, “has increased by 5.2% per year over the last two years, a bit below the average for the last decade.”
Consumer Prices Rise In January
In a time of soaring commodity prices, it’s no surprise to learn that consumer price inflation turned modestly higher last month. The debate is over what the latest jump in the CPI Index means for inflationary pressures down the road. Is there a new inflationary surge heading our way, as some analysts warn? Or is the firming of prices last month merely a sign that disinflation/deflationary trend of last year has been reversed and stabilized?
Research Review | 2.17.2011 | U.S. Labor Market
What Is the New Normal Unemployment Rate?
Justin Weidner and John Williams | San Francisco Fed | Feb 14, 2011
Mounting evidence suggests that structural factors may have increased the “normal” rate of unemployment to about 6.7%. Much of this increase is likely to be temporary. In particular, the extension of unemployment benefits probably accounts for about half of the increase. But, even with a 6.7% natural rate, current and forecasted levels of unemployment imply that significant labor market slack will persist for several years. It is important to stress that each of the methods used to estimate the natural rate is subject to considerable error, especially given the limited experience of very high unemployment in the post-World War II U.S. economy. As the recovery proceeds, we should develop a clearer picture of the new normal rate of unemployment.
Housing: Still Going Nowhere Fast
There’s not much cheer in housing these days, unless you’re a buyer with a fair amount of cash. Otherwise, the depressed state of residential real estate rolls on. Today’s update on building permits and new housing starts doesn’t change much, although with each month it’s becoming clearer that the bleeding has stopped. There’s also the usual bit of volatility on a monthly basis, and sometimes that dispatches a bit of good news. But it doesn’t mean much when you look at the big picture for this market. A recovery worthy of the name is still nowhere in sight.
The Thrill of Victory, The Agony of Defeat
Morningstar reminds that there are lots of fund choices for diversifying across asset classes these days, perhaps too many. “Not only has the number of mutual funds expanded by the thousands over the past decade, but numerous exchange-traded and closed-end funds, many of them with very specialized, even exotic, mandates, have also popped onto the scene,” writes Gregg Wolper,
Retail Sales Rise For 7th Straight Month
Retail sales forged higher to a new all-time record last month, rising 0.3% to $381.6 billion in January on a seasonally adjusted basis, according to this morning’s release from the U.S. Commerce Department. That was less than the 0.5% rise that economists were expecting, and January’s gain is half as much as December’s increase. But last month’s growth in retail sales is the seventh straight month of higher numbers. The various troubles that hang over the economy are far from trivial, but it’s still hard to argue at the moment that the blowback from the Great Recession is pinching consumer spending.
Strategic Briefing | 2.15.2011 | The President’s Budget Proposal
The White House released President Obama’s 2012 budget yesterday, a document that’s striking for its failure to address the main engine of the projected deficits: entitlement programs. The Republicans’ budget proposal isn’t published yet and so official comparisons aren’t available. Meantime, the President’s budget reportedly cuts the record deficit by $1.1 trillion over the next decade. Here are additional details/opinions on the numbers and the implications from various sources:
Budget Battle Lines Drawn
Wall Street Journal/Feb 15
If Congress accepted all the president’s proposals—which is unlikely—and the economy recovered, the federal deficit would fall from 10.9% of GDP this year to 3%, Mr. Obama’s goal, in 2017. The plan would place the federal government’s deficit next year at $1.1 trillion, down from $1.6 trillion this year, and the White House said it would reduce the government’s accumulated red ink over the next decade by a similar $1.1 trillion. Just over a third of that deficit reduction would come from Mr. Obama’s previously announced freeze in domestic discretionary spending. The balance would come from tax increases, largely on businesses and upper-income taxpayers; assorted fee hikes and spending reductions; and a cut in government borrowing costs, which will continue to rise dramatically but not quite as fast if the deficit is reduced.
