James Pethokoukis

A phony recovery?

June 16, 2009

From former Morgan Stanley economist Andy Xie:

Contrary to all the market noise, there are no signs of a significant economic recovery. So-called green shoots in the global economy are mostly due to inventory cycles. Stimuli might juice up growth a bit in the second half 2009. Nothing, however, suggests a lasting recovery. Markets are trading on imagination. … The noise would be to emphasize the “temporary” nature of the stimulus. The market will probably be fooled again. It will fully wake up only in 2010. The United States has no way out but to print money. As a rational country, it will do what it has to, regardless of its rhetoric. This is why I expect a second dip for the global economy in 2010. … The world is setting up for a big crash, again. Since the last bubble burst, governments around the world have not been focusing on reforms. They are trying to pump a new bubble to solve existing problems. Before inflation appears, this strategy works. As inflation expectation rises, its effectiveness is threatened. When inflation appears in 2010, another crash will come.

Obama’s bad healthcare day

June 16, 2009

First, Obama gets booed by the doctors at the AMA conference. Then the Congressional Budget Office prices the Kennedy-Dood healthcare bill at $1 trillion over ten years but only covers an additional 16 million people. The analysis does not include an expansion of Medicaid — which, of course, would mean more people would be covered but at a higher cost. Drip, drip, drip …

Amazing stat of the day!

June 15, 2009

I don’t know what this means, but I think it means something that will change all of our lives in a deep and profound way. From the wonderful Mark Perry:

Obama vs. Obama on healthcare

June 15, 2009

Obama today, in front of the AMA: “What are not legitimate concerns are those being put forward claiming a public option is somehow a Trojan horse for a single-payer system. ”

My quick take on the Obama financial reform plan

June 15, 2009

You can find the broad strokes of the Obama-Geithner-Summers plan here. Here is my spin:

Study: Cap-and-trade will cost U.S. families $1,200 a year

June 15, 2009

From the non-partisan Tax Foundation:

A new Tax Foundation calculator now shows how much a U.S. cap-and-trade system would cost individual households annually. The Tax Household Cap-and-Trade Burden Calculator is based upon a study released in March, Tax Foundation Working Paper No. 6, “Who Pays for Climate Policy? New Estimates of the Household Burden and Economic Impact of a U.S. Cap-and-Trade System.” The study shows that a cap-and-trade system designed to reduce greenhouse gas emissions by 15 percent would place an annual burden of $144.8 billion on American households. The average annual household burden would be $1,218, which would be approximately 2% of the average household income.

Iran election, America and globalization

June 15, 2009

Geopolitical strategist Tom Barnett weighs in on the Iran “election” (note, especially, his final point):

BRICs and the move to dump the dollar

June 15, 2009

Great, great stuff from the great Andy Busch of BMO Capital Markets:

According to the US Treasury, the two largest holders of U.S. debt are China with $768 billion and Japan with $687 billion.  Brazil owns $126.6 billion and Russia owns $138.4 billion.  Without question, markets were nervous over the actions by these players during the last auction period by the US government.  While it may seem that they are going to continue to buy US dollars and buy US debt, they are telling the world they are actively seeking alternatives. There may not be many alternatives now, but over long enough time frames there will be.  More importantly, the BRICs are telling the world they want to find ways out of investing in a country that is fiscally irresponsible and unlikely (healthcare) to change their spending habits any time soon.  Eventually, they will find a way.

Recessions and entrepreneurs

June 15, 2009

A great study on recessions and creative destruction from the Kauffman Foundation:

Obama stimulus vs. Reagan tax cuts

June 15, 2009

Paul Krugman worries that phony inflation fears will lure policymakers into withdrawing fiscal and monetary stimulus too soon. In the process, he takes a shot at Reaganomics: