The President Repudiates His Own Approach On The Economy

After an $800B non-stimulative stimulus that included "tax breaks" for those who pay no taxes, the Obama Administration appears to be slowly realizing that the business climate in this county is a pitiful shamble, largely due to policies of their creation.  Nothing like the prospect of a pasting in the Fall elections to sharpen the political instincts.  Keynes is dead, and Obama killed him. 

Krugman Is Answered, Again

Paul Krugman took to his perch on the NYT Editorial page yesterday to make yet another statement on macroeconomics that struck me as misguided when I first read it. But since Krugman won the NOBEL PRIZE, I generally feel I ought to defer to him. Unless of course, real economists also say he's crazy.

Which brings me to this post from our friends at Cato. Krugman states in his column today that "Both textbook economics and experience say that slashing spending when you’re still suffering from high unemployment is a really bad idea — not only does it deepen the slump, but it does little to improve the budget outlook, because much of what governments save by spending less they lose as a weaker economy depresses tax receipts."

Cato's answer concentrates on the "slashing spending" part--pointing to the post-WWII US experience in which spending was cut dramatically in one year. In Krugman's defense (or is it contra-Cato), the US was hardly suffering from "high unemployment" at war's end--though the return and discharge of millions of servicemen did raise that specter.

Who Owes First?

Once you get past the frightening gravity of what is being said, the following video clip is actually very funny.



This explains in part my pessimism on the strength and endurance of the 'recovery'.

Hat Tip: Greg Mankiw

Samuelson On The Greek Tragedy

Robert Samuelson has an excellent and sobering column up today on why Americans need to pay attention to the meltdown in Greece (and eventually to wider Europe). I'll give you a hint - this is only Act I.

The Next American Real Estate Bubble...

...is upon us. Let's review--low interest rates + low money down + $8K tax credit = bubble. As long as we continue to subsidize bad personal investing behavior (the mortgage interest deduction which drives poor investment balance and diversification) we will find ourselves fighting this ridiculous boom/bust real estate cycle.

China's Housing Bubble?

Goldwater's Ghost has been on this one for some time--we're not out of the woods yet.

H/T--Instapundit

A Victor Davis Hanson Travelogue

VDH describes his travels around his homestate of California. Some really interesting observations here, including:

"A strange elite I suppose likes and pays for the ambiance — that is, living among people like themselves — of upscale university centered communities. Why? I have a theory. It allows them to be liberal and progressive in the abstract, without having to live the logical consequences of their utopianism, or deal with the underbelly of American life. Take the most sophisticated Palo Alto dweller, and a week outside of Laton on a farm would make her, well, “seasoned” so to speak, and challenge much of her assumptions about wealth and poverty."

We really don't spend much time considering what poor in America means these days. Hanson does. He reminds us that it means running water, corpulence, air conditioning, cell phones, and flat screens. This "unjust" and "unfair" system of market capitalism has done a pretty fair job providing even its underclass a pretty fair deal.

All this courtesy Instapundit.

Five Lies About The American Economy

Reason online has a post containing five lies one often hears about our economy these days, mostly from Obama Administration officials. I go along with the first three, disagree with #4 and don't have enough data about #5 yet.

H/T Instapundit

Why Economists Aren't Taken Seriously

I love economics and I enjoy reading the work of many economists. But if you ever want to deal with a bunch of fence-sitting "on the other" handers, then spend some time with economists. Here's the latest example.

"Rise in Washington Area Unemployment Seen as a Good Sign for Economy's Recovery." How's that again? Well, here's the explanation from the article:

"Rising unemployment as a positive sign may sound counterintuitive, but economists explain it this way: The increase suggests that long-term unemployed people in the D.C. area who had given up looking for work have restarted their job hunt, perhaps because they see evidence that the region's economy is improving and that employers are beginning to hire again. On the other hand, the declining national rate indicates that discouraged workers elsewhere have remained out of the labor force because they do not see any reason to look for work."

I understand the logic--but it just seems another example of why hard scientists and theorists don't take economists seriously. Give them a set of observations and they can reach virtually any conclusion.

A Few Minutes With Greg Mankiw

Need something to do this weekend? Read the paper linked to in this Greg Mankiw post.

Absolutely fascinating.

George Will on Paul Ryan

George Will writes approvingly of Rep. Paul Ryan's "Roadmap for America's Future", a serious set of proposals for how to get this country back on track fiscally, monetarily, and economically. I'm intrigued by a number of the proposals here, including tax simplification, a change in the way corporations are taxed, and how individuals would purchase health care.

Lots of lawyers, accountants, and community activists would be put out of work by these proposals, but lots of other jobs would get created along the way.

I'd be interested to know if CBO has scored this or any significant portions thereof....I'd be very interested on what the revenue predictions would be under this plan.

Paul Ryan's an interesting fellow--someone to watch.

Why No Job Growth? Why is The Dow Wheezing?

Tigerhawk and Glenn Reynolds at Instapundit team up in this post to give a pretty fair overview. Businesses aren't going to hire if they're waiting for the next shoe to drop.

The Wimpy School Of Economics

"Now, I know that some in my own party will argue that we can't address the deficit or freeze government spending when so many people are still hurting. And I agree, which is why this freeze won't take effect until next year, when the economy is stronger. That's how budgeting works." -- President Barack Obama, January 27, 2010

"I will gladly pay you Tuesday for a hamburger today. That's how budeting works." -- Wimpy

My Kind of Rap

Keynes and Hayek, back from the dead, to lay it down. Knowamsayin?

Greg Mankiw Strikes Again

Greg Mankiw's blog has the graphic reproduced here on it today. He wonders aloud why consumers aren't more cost conscious--and then gives us the answer....

They Teach Economics At Berkeley, Don't They?

The AP is reporting that police stormed a campus building at UC Berkeley and arrested 65 student demonstators who had been holed up in the building for several days to protest campus cuts and rising fees.

My favorite line of the story: "Student protestors said they were caught off-guard by the raid and complained the police had not warned them."

That's why they call 'em raids.

Martin Feldstein and Perverse Incentives

A great column here by Harvard economist Martin Feldstein, laying out for us why Obamacare's insistence on guaranteeing insurance to those even WITH pre-existing conditions provides a perverse incentive to drop healthcare altogether. A rational, healthy young person would be a fool to buy healthcare--pay cash for doctor's visits and if something catastrophic comes up, why, no insurance company will be able to turn you down. Fine them, you say? Fines in the current bills still provide our fine young cannibal with over $360 a month in extra walking-around money.

Hat Tip: Greg Mankiw

Some Lefty Views on Soaking the Rich for Healthcare

Greg Mankiw provided us with these two views of left-of-center economists, neither of whom believes soaking the rich is the way to improve healthcare. Wahooligan asked in a post yesterday for this blog to cover the issue of healthcare more meaningfully, and so in an effort to do so, I'll be looking for more information to distribute.

Simply put, soaking the rich to pay for everyone else's healthcare does NOTHING but reinforce the notion that healthcare has no costs (except of course, to those whose taxes are raised). Soaking the rich does nothing to impact THE DEMAND side of healthcare, the side in which defensive medicine and a detachment from the true cost of procedures to the consumer conspire to drive up healthcare costs beyond the rate of inflation.

So if we did raise taxes on the rich to finance universal healthcare, it might ensure more of the uninsured (but not all of them) , but it would do nothing at all to help the lot of everyone else who believes that there is a problem with our healthcare system.

One thing I'd like to put out there for public discussion...I was talking with a friend recently who was talking about the costs of healthcare to him, his wife and three children. I asked him how much it cost him to cover his family, and the answer was in the neighborhood of $800 a month. This was--to him--excessive. So I did a little math in my head and asked him straight up..."dude, you're bitching about paying $2000 a year per person for 1) the piece of mind of knowing that your family won't be financially crippled in the event of a catastrophic health condition and 2) for truly world class healthcare along the way?" This fellow was pulling down somewhere are $120K a year, so what this boiled down to was about a tenth of his annual take home. This is to much to take? Other people should be taxed at a higher rate so that you don't have to put out a tenth of your income for healthcare? And let's not forget--because he's "insured", when his family members do go into the system for some reason, they are very likely to be ridiculously over treated and overtested...something for which he will suffer very little additional financial penalty.

What value did he place on that piece of mind? Clearly not $9600 aggregate dollars....but you see, that's the trouble with insurance. It's an expensive nuisance....until you really need it.