James Pethokoukis

Wall Street pay continues to be the Great Distraction

October 27, 2009

Again, all this focus on Wall Street pay distracts from more important issues.  Gary Becker summarizes:

Riding a downbound train

October 27, 2009

This has to be a classic piece of analysis by David Rosenberg:

Without either deep spending cuts or tax increases (a dirty three-letter word in the U.S.A. — remember Bush Sr.’s “read my lips” back in the early 90s that cost him the election?) the only way out of this fiscal mess caused perhaps by the prior Administration and now accentuated by the current Administration will be by monetizing the debt. …  In the final analysis, we all should know how this is going to play out. It is going to be somebody else that foots the bill for all this government incursion, and that is very likely the creditors who hold U.S. government paper. Not that the U.S. would ever default; that will never happen. However, there is very likely going to be a stage where this mountain of public sector debt gets monetized, and while gold is inherently difficult to value, what is going to drive the price higher, in the future, to new record highs will be the supply of bullion relative to the supply of dollars. ( …  Let’s face it, the degree of retrenchment that would be needed to bring the deficit-to-GDP ratio down to the 3-4% level that would allow the debt/GDP ratio to stabilize, would simply be too much for the U.S. electorate to put up with.

Healthcare Reform: The Day After

October 27, 2009

Paul Krugman takes a look at the impact of  healthcare reform:

Like the bill that will probably emerge from Congress, the Massachusetts reform mainly relies on a combination of regulation and subsidies to chivy a mostly private system into providing near-universal coverage. It is, to be frank, a bit of a Rube Goldberg device — a complicated way of achieving something that could have been done much more simply with a Medicare-type program. Yet it has gone a long way toward achieving the goal of health insurance for all, although it’s not quite there: according to state estimates, only 2.6 percent of residents remain uninsured.

The internal contradictions of ObamaCare

October 26, 2009

At the heart of the economic case for U.S. healthcare reform is a simple comparison: Whereas America spends 16 percent of GDP on healthcare, the average across OECD countries was 8.9 percent, as of 2007.

The deficit’s risk to the dollar

October 26, 2009

Allan Meltzer on deficits and the dollar:

The administration admits to about $1 trillion budget deficits per year, on average, for the next 10 years. That’s clearly an underestimate, because it counts on the projected $200 billion to $300 billion of projected reductions in Medicare spending that will not be realized. And who can believe that the projected increase in state spending for Medicaid can be paid by the states, or that payments to doctors will be reduced by about 25%?

Scary unemployment in metro areas

October 26, 2009

An analysis by IHS Global Insight looks at unemployment in major metro areas:

Looking ahead, payrolls will be rising in most metros for consecutive quarters a year from now, but the unemployment rate will have shown little improvement, as employment gains will not be sufficient to absorb enough job seekers.  A third of metro areas will have jobless rates in double digits in the fourth quarter of 2010, with 16 exceeding 15%.  … By the end of 2012, the jobless rate will still be above historic norms, but it will finally slip below 8% in more than half of metro areas.

Oil prices, inflation and a double-dip recession

October 26, 2009

Andy Xie paints a dire scenario:

Central banks around the world have released massive amounts of money in response to the current financial crisis … But the proposition that a weak economy means low inflation is false. The stagflation of the 1970s proves it.

Study: US healthcare system wastes $800 billion a year

October 26, 2009

This study from the healthcare analysis unit of Thomson Reuters has a high degree of truthiness, it seems to confirm what many Americans intuitively think and believe:

Popping the China Bubble

October 23, 2009

Good sense from Michael Auslin in The American:

Just like today with China, pundits, investors, and the media largely proclaimed that the Japanese party would go on forever. Today, the sophisticated management of the Chinese government is offered as proof that China will always experience growth (or if contraction, a soft landing). Back in the 1980s, Japanese companies were assumed to have discovered the secret to hyper-efficient production and thus endless profits, while the country’s bureaucrats were lauded as perfect macro-planners. Inefficiencies, protected industries, poor management, and a sclerotic bureaucracy were all ignored by those who wanted to believe the hype. Yet such weaknesses were exacerbated by a culture of excess that destroyed consumer reality. Once it took root in Japan, expectations changed permanently and traditional restraint was abandoned. The savings rate dropped, and people paid exorbitant amounts for new houses and cars. I remember watching as whole parties in Tokyo restaurants walked away from tables full of food that was ordered and then left to be thrown away. The economics fed and then followed the social disease. Eventually, the asset bubble burst and the whole edifice came crashing down.

Is another ‘Perot Moment’ on its way?

October 23, 2009

I found this to be a very interesting quote from Even Bayh (in the WaPo):

People understand that we’re stealing from future generations …We’re setting the stage for another Perot moment.