James Pethokoukis

GM IPO gives little reason for celebration

November 18, 2010

Now you too can directly own a piece of Government Motors:

General Motors Co shares gained as much as 9 percent on Thursday as investors bet that the top U.S. automaker can make a lasting recovery after repaying a big chunk of last year’s government bailout with funds raised in a landmark initial public offering. The start of trading in GM shares represents one of the final steps in a blockbuster initial public offering negotiated by the Obama administration that raised $20.1 billion after pricing its common and preferred shares.

Sink the Fed’s dual mandate and QE2

November 18, 2010

Multitasking is hard, even for the Federal Reserve. But by law — yet another horrible policy relic of the 1970s — it has to promote both “maximum employment” and “stable prices.” Some Republicans think it better that the Fed, like its European Central Bank counterpart, focus solely on prices getting neither too hot nor too cold. And an effort by Representative Mike Pence of Indiana and Senator Bob Corker of Tennessee is just the start of a GOP push to roll back Team Bernanke’s vast authority.

Now it’s the Domenici-Rivlin plan to cut the deficit

November 17, 2010

Alice Rivlin (who is on the Obama deficit commission) and former Senator Peter Domenici have cooked up their own plan to restore America’s long-term fiscal solvency. But first, a chart from the plan itself that says a lot:

Will Roger Altman replace Larry Summers?

November 17, 2010

The latest buzz is that investment banker and former Deputy Treasury Secretary Roger Altman is the likely choice to replace Larry Summers as director of the National Economic Council.  A few thoughts:

Republicans grudgingly refuse pork with their tea

November 17, 2010

Zero pork is good for hawks. The grudging decision by U.S. Senate Republican leader Mitch McConnell to back a voluntary ban on earmarked funding for pet local projects is a win for his party’s Tea Party faction. But deficit worriers of all political stripes should welcome it, too. Financial pork may “only” cost some $17 billion a year, but it invites undisciplined spending.

McConnell reverses on earmark ban

November 15, 2010

Score another one for the Tea Party:

Senate Minority Leader Mitch McConnell declared Monday that he now supports a GOP ban on earmarks, a stunning reversal that puts the Kentucky Republican in line with the tea-party wing of his party and conservative senators who have long sought to kill off pet projects. “What I’ve concluded is that on the issue of congressional earmarks, as the leader of my party in the Senate, I have to lead first by example,” McConnell said on the Senate floor. “Nearly every day that the Senate’s been in session for the past two years, I have come down to this spot and said that Democrats are ignoring the wishes of the American people. When it comes to earmarks, I won’t be guilty of the same thing.”

Again, America has a spending — not revenue — problem

November 15, 2010

Jim Glassman of JPMorgan illustrates the problem thusly:


Balance the U.S. budget? I did it in under a minute

November 15, 2010

So I took a crack at the budget simulator cooked up over at the NYTimes Web site. It starts out with a projected 2015 deficit of $418 billion and a projected 2030 deficit of $1.355 trillion. My goal was to do it through 100 percent spending cuts.

Bernanke probably agrees with the anti-QE2 letter

November 15, 2010

A bunch of right-of-center investors, economists and journalists (under the banner of the great e21 group) have signed an open letter to Ben Bernanke: