The Undismal Weekly Wrapup - July 12-18, 2009

Analytical Summaries of Key Stories of the Week on Economics and Public Policy

Interesting week, with major themes focusing on cautious optimism on signs of recovery (but with a tone of expectations management on its pace) and next moves for the Fed.

America Needs a National Manufacturing Policy. Now. (Huffington Post)
In a guest column for the Huffington Post, Sen. Sherrod Brown (D-Ohio), Chairman of the Senate Banking Subcommittee on Economic Policy, points to the pivotal role of the declining manufacturing base in the U.S. in the current plight of the middle class, and argues for an urgent need for “a national plan … that aligns federal actions with the goal of strengthening our manufacturing sector.”

Experts Tell Congress to Lay Off the Fed (Wall Street Journal)
David Wessel of the Wall Street Journal reports that 250 noted economists, including Robert Shiller, have urged congress not to cave in to pressure to intervene in the Fed’s policy making efforts, driven by critics of the central bank. They also caution that efforts currently under discussion to revisit the Fed’s powers and governance structure could backfire.

Geithner Says Global Economy Faces Recovery Setbacks (Bloomberg)
Speaking in Saudi Arabia, U.S. Treasury Secretary Timothy Geithner cautions that the recovery of the global economy is likely to be gradual with a higher than normal share of temporary fluctuations and reversals, due to such factors as wealth lost during the crisis and the heavy increase in public debt, according to this report for Bloomberg from Rebecca Christie.

McCulley Says Fed Needs To ‘Be Irresponsible’ If Prices Tumble (Bloomberg)
Dakin Campbell reports for Bloomberg on advice to the Fed from Paul McCulley of Pacific Investment Management Co., who argues that, if the U.S. economy falls into a protracted slump similar in character to Japan’s lengthy recession, the central bank may need to initiate radical interventions that set aside the normal context of keeping inflation within a targeted level.

Paulson Defends His Response to Economic Crisis (Associated Press)
Responding to the substantial second-guessing of the Bush administration’s responses to the economic crisis toward the end of 2008, former Treasury Secretary Henry Paulson contends, according to this report from AP’s Ann Flaherty, that the actions prevented suffering of a “far more profound and disturbing level.”

Summers: Economy Has Moved Back from Catastrophe (Associated Press)
Obama economic advisor Larry Summers makes a case, as reported by AP’s Jim Kuhnhenn, for cautious optimism -- based on several indicators, including a decrease in public gloom evidenced by declining Google searches for the phrase “economic depression,” a slower pace of economic contraction, improving consumer confidence, and stronger quarterly earnings reports.
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The Undismal Weekly Wrapup -- July 5-11, 2009

Analytical Summaries of Key Stories of the Week on Economics and Public Policy

A Possible Bailout for Small Business (Forbes)
Brian Wingfield reports on the possibility, currently under consideration by the Obama administration, of making a portion of the original $700 billion TARP allocation available to aid small enterprises via the small business administration.

Do We Need Another Stimulus? (Washington Post)
Economists and politicians weigh in on the issue, including: Robert Reischauer, President, The Urban Institute; Rep. Donna Edwards (D-Maryland); Rep. John Boehner (R-Ohio), House Minority Leader; Mark Zandi, Chief Economist, Moody’s Economy.com; Martin Feldstein, Professor of Economics, Harvard University; Dino Kos, Former New York Fed Executive Vice President; Douglas Holtz-Eakin, Former Director, Congressional Budget Office; and Lanny Davis, Former Special Counsel to President Clinton.

Fed's Stern: First Stage Of Recovery 'Close At Hand' (Wall Street Journal)
Michael S. Derby reports on comments by Gary Stern, President of the Minneapolis Fed, who cites positive indicators in consumer spending, manufacturing, and housing sales, while also cautioning about the possible pitfall of asset price instability, which could hinder the recovery and is difficult to control through the Fed’s normal monetary policy arsenal.

How Did California Get Into This Mess? (Los Angeles Times)
Examining the complex, multifaceted causes of California’s budget crisis, John Vasconcellos contends that there’s plenty of blame to go around, not only in the realms of government but also among California voters, whose contradictory support of both tax reductions and increased services placed the state government in a quandary.

The Stimulus Trap (New York Times)
Commenting on the political predicament President Obama may soon find himself in amidst declining public confidence in his economic policies, economist Paul Krugman makes the case that the current best option is to pause and observe, giving the original package time to work, while simultaneously evaluating options for strengthening the current policies should they prove to have been insufficient.

Weekend Opinionator: Is GM Back from the Dead? (New York Times)
Tobin Harshaw explores opinions from various analysts on what’s in store for General Motors after a fast-track emergence from bankruptcy. Sphere: Related Content

The Undismal Weekly Wrap-Up -- June 14-20, 2009

Analytical Summaries of Key Stories of the Week on Economics and Public Policy

As U.S. Takes Tumble, Growing Cries For Policy (Reuters)
Nick Carey reports that, in the wake of the current economic crisis, not only the general public, but now even corporate leaders are beginning to embrace the concept of an increased role of government in formulating financial, economic, and industrial policies and regulations.

Green Economy Investments Bring 300 Percent More Jobs, Reports Find (Reuters)
Analysis by Matthew Wheeland of reports from Green for All, the Natural Resources Defense Council, and the University of Massachusetts at Amherst's Political Economy Research Institute (PERI) indicates that moving toward a low-carbon, energy efficient economy could create 1.7 million new jobs.

How is Money Created? Debunking Some Myths About Recent Policies to Stabilize the Financial System and the Economy (FindLaw)
Neil H. Buchanan addresses popular misconceptions about current monetary policies in response to the recession, such as the misguided belief that the Fed’s actions are tantamount to “printing money” and pose the threat of hyperinflation.

Public Starting to Question Obama Economic Policies (ABC News)
In a review of several recent polls, Jake Tapper reports on indications of increasing unease among the general public about President Obama’s fiscal policies, in spite of his enduring personal popularity.

South Korean PM Says Threats From Climate Change, Economic Crisis Not Mutually Exclusive (Associated Press)
AP journalist Kelly Olsen reports on comments by Prime Minister Han Seung-soo of South Korea about the threats climate change poses to Asia and the danger of separating this situation from the global economic crisis.

Twin Threat: Jobless Rate, Deficit (Wall Street Journal)
Jonathan Weisman explores the quandary the Obama administration faces in attempting to deal with the often-conflicting goals of stemming the tide of unemployment while also trying to restrain runaway budget deficits.

US FED: Warsh Warns Against Singular Focus On 'Stability Experiment' (Forbes)
Federal Reserve Governor Kevin Warsh has cautioned that policy efforts that overemphasize economic stability could stifle future economic growth, according to this report from Reuters. Sphere: Related Content

The Undismal Weekly Wrap-Up -- June 7-13, 2009

Analytical Summaries of Key Stories of the Week on Economics and Public Policy

National Summit Arrives Amid Economic Trouble (Associated Press)
AP’s Jeff Karoub reports on a National Economic Summit being held under markedly different circumstances than those at the time it was originally planned, describing the climate as scaled back but no less determined to lead to tangible action.

G8 Finance Mins Start to Plan for End of Crisis (Wall Street Journal)
Luca Di Leo and Paul Hannon report from the G8 meeting in Lecce, Italy, on discussions focused on how to ramp down the pace of stimulus funding that member nations have infused into their economies in hopes of accelerating recovery.

Obama’s Spending Plans May Pose Political Risks (Washington Post)
Polling data and concerns among administration insiders indicate that President Obama may risk losing political capital if efforts toward reducing the pace of spending increases are not demonstrated soon, according to a story by Scott Wilson of the Washington Post.

2010 Vote Shift Could Bring Fed Policy Showdown (Reuters)
A standard rotation procedure scheduled for January will lead to changes in which members of the Fed’s Open Market committee will have voting authority, possibly leading to shifts based on such issues as differing viewpoints on the risk of inflation under the current policies.

Following the Money in the Healthcare Debate (New York Times)
Some $2.5 trillion and daunting issues about how it will be reduced and divided among numerous interest groups are at stake in the healthcare reform debate. Reed Abelson of the New York Times explores the complexities in an in-depth report.

Geithner Says 'Too Soon' for G-8 to Pull Back on Economic Aid (Bloomberg)
The U.S. Treasury Secretary cautions that G8 member nations need to stay the course on current stimulus efforts, focusing for now on restoring growth rather than reducing deficits, as reported by Bloomberg’s Rebecca Christie.

Lawrence Summers Defends Obama Policy (United Press International)
UPI reports on a speech to the Council on Foreign Relations by Nobel Laureate and top Obama economic guru Larry Summers, attempting to allay perceptions that the administration may have taken excessive measures to involve government in managing major segments of the financial, medical, and industrial sectors.

The Politics of Jump-Starting (Huffington Post)
Charles D. Ellison poses the question of just how well the tireless optimism and energetic initiatives of the Obama administration, such as the new 100-day effort to accelerate the pace of recovery, are actually resonating with the American public. Sphere: Related Content

The Undismal Weekly Wrap-Up -- May 24-30, 2009

Analytical Summaries of Key Stories of the Week on Economics and Public Policy

Fed’s Trouble with Bubbles
In the Wall Street Journal’s Real Time Economics blog, Michael S. Derby reports that the Fed’s views are evolving beyond their historic reluctance, based on doubts about their ability to detect them accurately, to target interventions at preventing or mitigating price bubbles.

Geithner Goes to Beijing to Manage Bad Marriage: Relationship, Smooth During Recession, May Get Stormy
With the U.S. highly dependent on China, which now holds $1.55 trillion in dollar assets, to purchase U.S. debt, Greg Robb of Marketwatch describes the relationship as “a marriage of convenience” that may have new strains on the horizon.

How Economists Can Misunderstand the Crisis
In an article reprinted from the Financial Times, Harvard University Professor Laurence A Tisch counters many economists by arguing that current U.S. fiscal policy of heavy deficit spending financed by massive issuance of new bonds is likely to lead to inflation and upward pressure on long-term interest rates.

Marginal Workers, Underemployed Push Economic Fringe to Limit
Citing sources from the Center on Budget and Policy Priorities, the Economic Policy Institute, the National Jobs for All Coalition, and the Employee Benefit Research Institute, Martha C. White reports in the Colorado Independent on the plight of the underemployed, “a diffuse, often poorly tracked cross section of citizens … living on the economic fringes” and who, when added to the more widely reported circumstances of the outright jobless, paint a much bigger picture of economic strain in the U.S.

Millionaires Go Missing: Maryland's Fleeced Taxpayers Fight Back
Are millionaires in Maryland pulling a John Galt and disappearing? A column in the Wall Street Journal’s Opinion Journal reports that “nearly one-third of the millionaires have disappeared from Maryland tax roles” since the creation by the state legislature of “a millionaire tax bracket” that raises the state’s top marginal income rate.

Public Health Care and Health Insurance Reform — Varied Preferences, Varied Options
Taking the perspective that healthcare reform is inevitable, with only details in question, Mark V. Pauly, Ph.D., argues in the New England Journal of Medicine in favor of a menu of health insurance plans, available to all population groups, managed by both public and private organizations, to meet highly variable preferences of consumers. Sphere: Related Content