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