James Pethokoukis

Unemployment rate skewing U.S. politics

October 12, 2010

Between the House passing the China currency bill (and I think the Senate may as well) and various politicians pushing for a foreclosure moratorium, one has to wonder what sort of politics/policy another year of 9-10% unemployment will generate. I am guessing China will finally emerge as the new bipartisan big bad for U.S. politics (more for economic than military reasons), while  there will probably a flurry of new housing ideas like this one proposed by economist Glenn Hubbard.

How Ben Bernanke is trying to raise taxes

October 12, 2010

It’s the return of the inflation tax, as Ed Yardeni rightfully notes:

The rational for another round of QE is to boost economic growth and to avert deflation. In other words, Fed officials would welcome a pickup in the inflation rate. The problem is that they are stoking an inflationary fire in the commodity pits. I doubt that’s the sort of inflation they are rooting for. Presumably, they want prices for consumer goods and services to rise moderately to stimulate producers to expand their capacity and to hire more workers. Higher commodity prices are a tax on consumers and producers and can have the opposite effect.

9.6 reasons why the jobs report is bad for Democrats

October 8, 2010

How bad was the September jobs report? Even the White House had trouble spinning it. As economic adviser Austan Goolsbee wrote on his WH blog: “Given the volatility in the monthly employment and unemployment data, it is important not to read too much into any one monthly report.” But this chart sort of says it all:

Foreclosure freeze could put banks at home in DC

October 7, 2010

It’s not just JPMorgan and Bank of America that need to worry about President Obama’s rejection of a bill potentially unfriendly to homeowners and Congress investigating reports of improperly evicted borrowers. The fallout risks further erosion of the whole industry’s already shaky position in Washington. Wall Street could easily find itself in the crosshairs again next year.

Dems want to use trade as a political weapon

October 6, 2010

Here is what James Carville and Stan Greenberg want Democrats to say about trade to voters (Via Sean Higgins at Investor’s Business Daily:

Five depressing thoughts from Goldman Sachs

October 6, 2010

Via the GS econ team (as excerpted and outlined by me):

1. We see two main scenarios for the economy over the next 6-9 months—a fairly bad one in which the economy grows at a 1½%-2% rate through the middle of next year and the unemployment rate rises moderately to 10%, and a very bad one in which the economy returns to an outright recession.

Obama’s sinking polls

October 6, 2010

Presidential approval ratings are hugely influential in congressional midterms. Unfortunately for Democrats:

Another enlistee for the trade war with China

October 6, 2010

China just lost Martin Wolf. The FT columnist spends a good chunk of his latest column on why the yuan needs to rise. He then outlines a plan of action:

What happened to Obama’s bank tax?

October 5, 2010

Via my Breakingviews opinion-torial:

Detecting a political pulse on the proposed U.S. bank tax is hard. Yet bankers still fret a revival. They know Congress, eager to pay for expiring tax cuts, sees them as a pool of ready cash. And even if Wall Street dodges that bullet, the cost of rescuing mortgage giants Fannie Mae and Freddie Mac may still shock the levy back to life.