James Pethokoukis

Illinois, a kleptocracy in action

January 14, 2011

What should America do about its troubled economy? Sometimes the real world provides the best laboratory for political and economic experiments. Democratic capitalism vs. totalitarian communism? One quick look at East Germany and West Germany in the 1980s or North Korea and South Korea today provides easy analysis of which is the preferable way to create and organize a peaceful and prosperous society.

U.S. growth agenda must broaden beyond tax cuts

January 14, 2011

U.S. Treasury Secretary Timothy Geithner’s meeting with chief financial officers further suggests the White House may push for corporate tax reform. But with unemployment high, President Barack Obama’s efforts to boost growth shouldn’t stop there. More government investment in research and infrastructure is also warranted.

The U.S. jobs problem in chart

January 13, 2011

Until this  lump moves through the python (full of workers growing less employable by the day), unemployment may stay unusually high for years. From the Economic Policy Institute:

More questions on U.S. credit rating from Moody’s, S&P

January 13, 2011

Once again, S&P and Moody’s are raising question about America’s creditworthiness (via the WSJ):

Does Bill Daley appointment further enshrine Too Big To Fail?

January 11, 2011

Cato’s Mark Calabria thinks the problem is not people but policy:

MIT Professor Simon Johnson recently argued that Bill Daley’s appointment as Obama’s Chief of Staff signals that “too big to fail”, as it relates to our largest financial institutions, is here to stay. Personally I never thought it was in doubt. With Geithner at Treasury and Dodd-Frank further codifiying “too big to fail”, its been clear for sometime that the bailout net is larger than its ever been, and is not being pulled back.

What is tax-crazy Illinois thinking?

January 11, 2011

The news just gets worse and worse from my home state (via The Tax Foundation):

llinois’ legislature is currently considering an alternative to the initial tax increase proposed last week. Instead of pushing for a 75% increase in the personal income tax and a 49% increase corporate income tax, this proposal would raise the individual income tax rate to 5% and the corporate rate 9.5%. While this proposal is more modest than the first, but it still hurts the competitiveness of Illinois when it comes to maintaining and attracting new business.

Will the Fed need (gasp!) a government bailout?

January 11, 2011

Interesting piece from Team Reuters that examines that possibility (and what it really means) as a result of all the central bank’s asset buys (bold is mine):

The Great Wage Drop and wage insurance

January 11, 2011

Big WSJ story on how the Great Recession has reduced wage growth. When the unemployed do return to work, it is often with markedly lower salaries. Here is the money graf:

Hawks and doves on the Fed

January 10, 2011

A handy chart from JPMorgan:

fed

Is America growing politically unstable?

January 10, 2011

Is America becoming less politically stable? A glance at some foreign newspapers would certainly give that impression. This is an important economic question. The global primacy of Treasury bonds and the dollar stems mostly from the nation’s massive economic might. But confidence in U.S. political stability also plays a role. The shooting of Arizona Congresswoman Gabrielle Giffords, though tragic, shouldn’t alter those perceptions — unless freedom of speech suffers.