A handy chart from JPMorgan:
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.
Exactly a month ago, I wrote a piece on a “secret GOP plan” to nudge fiscally troubled states in bankruptcy, giving their governors a chance to rewrite existing public employee union contracts and take other drastic measure to restore solvency. Step 1: Eliminate the Build American Bond subsidy to make it hard for states to borrow. [DONE] Step 2: Force states to reveal the true extent of their pension liabilities. [COMING SOON] Step 3. Rewrite the federal bankruptcy code [COMING SOON]. Two recent events give me further confidence in my call:
Larry Kudlow likes what he see so far:
The point is, if Team Obama is moving towards an entrepreneurial incentive model of growth, and away from the false consumption model of big-government spending, it’s very good news. Already we have seen a new free-trade initiative. And there’s even talk of broad-based, personal-income tax-rate flattening that could be part of a big-bang tax-reform package.
It looks like Robert Gibbs will be leaving the White House to run his own consultancy and work on Obama’s 2012 campaign. Ruy Teixeira, a politics guys not an econ guy, thinks the Obama-Republican tax deal makes it far more likely that campaign will be a successful one:
If President Barack Obama chooses JPMorgan executive William Daley as his next chief of staff he could at last build bridges with the disgruntled U.S. business community, both on Main Street and Wall Street. Daley’s pro-trade views are a big reason the buzz around his potential nomination is so loud. The pick would also bode well for reaching deals with Republicans on taxes and spending. A few observations (via my column for Reuters Breakingviews):
In theory, at least, the House GOP is exactly right:
The new House Republican majority will use the three weeks before President Obama’s State of the Union address to repeal the healthcare law, cut spending and scrap federal regulations, incoming Majority Leader Eric Cantor (R-Va.) said Tuesday.