It would have been worth mentioning this fact in a piece that discussed Germany’s effort to insist on fiscal responsibility in the euro zone’s member states in the context of support for bailouts. Most of the currently troubled countries, with the major exception of Greece, would have met almost any standard of fiscal responsibility prior to the crisis.
The current problems of these countries stem from the collapse of housing bubbles that for some reason the top officials of the European Central Bank either did not see or did not take seriously. It would have been worth pointing out that Germany’s fiscal responsibility agenda would not have helped in the current situation.
It would have been worth mentioning this fact in a piece that discussed Germany’s effort to insist on fiscal responsibility in the euro zone’s member states in the context of support for bailouts. Most of the currently troubled countries, with the major exception of Greece, would have met almost any standard of fiscal responsibility prior to the crisis.
The current problems of these countries stem from the collapse of housing bubbles that for some reason the top officials of the European Central Bank either did not see or did not take seriously. It would have been worth pointing out that Germany’s fiscal responsibility agenda would not have helped in the current situation.
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It seems that he doesn’t from the quote buried at the end of a NYT piece on U.S. trade with China. In reference to the trade deficit, Gary Locke, the Commerce Secretary said:
“The reality is that if we are to close the trade deficit, Americans need to export more and the Chinese need to purchase more.”
Actually exports are only half of the story in trade. A trade deficit means that the United States imports more than it exports. Adjusting to more balanced trade almost always means both reducing imports and increasing exports. It is virtually impossible to envision a scenario in which the country moves to anything close to balanced trade without adjustments on both sides.
It is also worth noting that this piece very casually refers to “piracy” in reference to China’s lack of respect for U.S. intellectual property claims. In many cases, the unauthorized copies of U.S. products may not violate current Chinese law. In such cases there is no piracy involved.
It also would have been wort mentioning that enforcement of U.S. intellectual property claims will impose substantial costs on Chinese consumers and is likely to sharply slow growth by reducing their purchasing power.
It seems that he doesn’t from the quote buried at the end of a NYT piece on U.S. trade with China. In reference to the trade deficit, Gary Locke, the Commerce Secretary said:
“The reality is that if we are to close the trade deficit, Americans need to export more and the Chinese need to purchase more.”
Actually exports are only half of the story in trade. A trade deficit means that the United States imports more than it exports. Adjusting to more balanced trade almost always means both reducing imports and increasing exports. It is virtually impossible to envision a scenario in which the country moves to anything close to balanced trade without adjustments on both sides.
It is also worth noting that this piece very casually refers to “piracy” in reference to China’s lack of respect for U.S. intellectual property claims. In many cases, the unauthorized copies of U.S. products may not violate current Chinese law. In such cases there is no piracy involved.
It also would have been wort mentioning that enforcement of U.S. intellectual property claims will impose substantial costs on Chinese consumers and is likely to sharply slow growth by reducing their purchasing power.
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The Post showed once again why it is known as “Fox on 15th Street” when it used a front page news story to tell readers that members of Congress:
“acknowledged the need to avoid expiration of the Bush tax cuts and the likely shock to the economy that would result.”
It may be the view of the Post’s editors that there is a “need” to avoid expiration of the Bush tax cuts, but this is not an objective fact about the economy. While the expiration of the tax cut without any other action by Congress would be a hit to the economy, the impact is not larger than other negative shocks that the Post has largely ignored in the past, such as the collapses of the housing and stock bubbles or the run-up in the value of the dollar in the Clinton years.
It is also important to note that the failure to approve legislation now does not preclude Congress from acting next year as the Post’s article implies. If the economy remains weak, as is likely, there will be substantial pressure on Congress to approve additional stimulus. It is highly unlikely that Congress would do nothing if the economy stagnated and unemployment continued to rise. There is no precedent for such behavior.
The Post showed once again why it is known as “Fox on 15th Street” when it used a front page news story to tell readers that members of Congress:
“acknowledged the need to avoid expiration of the Bush tax cuts and the likely shock to the economy that would result.”
It may be the view of the Post’s editors that there is a “need” to avoid expiration of the Bush tax cuts, but this is not an objective fact about the economy. While the expiration of the tax cut without any other action by Congress would be a hit to the economy, the impact is not larger than other negative shocks that the Post has largely ignored in the past, such as the collapses of the housing and stock bubbles or the run-up in the value of the dollar in the Clinton years.
It is also important to note that the failure to approve legislation now does not preclude Congress from acting next year as the Post’s article implies. If the economy remains weak, as is likely, there will be substantial pressure on Congress to approve additional stimulus. It is highly unlikely that Congress would do nothing if the economy stagnated and unemployment continued to rise. There is no precedent for such behavior.
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The headline of a Washington Post article told readers:
“Economic recovery gains momentum.”
The report that provided the basis for this assertion was the Fed’s release of data on industrial production for October. This report showed a rise in production of 0.4 percent in November, after a revised decline of 0.2 percent (previously reported as 0.0 percent) in October. However, this swing was entirely the result of a reversal in the output of utilities, which plunged in October and then jumped in November.
Fluctuation in utility output are overwhelmingly determined by weather conditions, not the state of the economy. Economists usually focus on manufacturing output which is more stable. This increased by 0.3 percent in November, the same as the rate now reported for October (revised down from 0.5 percent). This is a somewhat slower pace of growth than the 5.3 percent rate over the last year.
The headline of a Washington Post article told readers:
“Economic recovery gains momentum.”
The report that provided the basis for this assertion was the Fed’s release of data on industrial production for October. This report showed a rise in production of 0.4 percent in November, after a revised decline of 0.2 percent (previously reported as 0.0 percent) in October. However, this swing was entirely the result of a reversal in the output of utilities, which plunged in October and then jumped in November.
Fluctuation in utility output are overwhelmingly determined by weather conditions, not the state of the economy. Economists usually focus on manufacturing output which is more stable. This increased by 0.3 percent in November, the same as the rate now reported for October (revised down from 0.5 percent). This is a somewhat slower pace of growth than the 5.3 percent rate over the last year.
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The interest rate on 10-year Treasury bonds plummeted in the summer, falling at one point to under 2.4 percent. It has recently risen back to a still very low rate just under 4.5 percent.
The Washington Post had a front page piece that highlighted this run-up in rates. The piece warned that higher rates will slow the economy and raise the government’s borrowing costs. It suggested that the higher rates could be attributable to the tax deal between President Obama and the Republicans in Congress which will close to $900 billion in debt over the next two years.
It is worth noting that the recent rise in interest rates puts them at almost exactly the level projected by the Congressional Budget Office (CBO) last summer. CBO projected that the 10-year Treasury bill rate would average 3.4 percent for 2010 and 3.5 percent for 2011. The CBO projections suggest that the drop in interest rates was the development that needed to be explained, not the recent increase.
The interest rate on 10-year Treasury bonds plummeted in the summer, falling at one point to under 2.4 percent. It has recently risen back to a still very low rate just under 4.5 percent.
The Washington Post had a front page piece that highlighted this run-up in rates. The piece warned that higher rates will slow the economy and raise the government’s borrowing costs. It suggested that the higher rates could be attributable to the tax deal between President Obama and the Republicans in Congress which will close to $900 billion in debt over the next two years.
It is worth noting that the recent rise in interest rates puts them at almost exactly the level projected by the Congressional Budget Office (CBO) last summer. CBO projected that the 10-year Treasury bill rate would average 3.4 percent for 2010 and 3.5 percent for 2011. The CBO projections suggest that the drop in interest rates was the development that needed to be explained, not the recent increase.
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The auto industry put out a study that apparently assumes that if people don’t spend money on cars, they will not spend it on anything. This was in the context of evaluating the employment impact of proposals to substantially increase mileage standards.
The NYT uncritically reported the projections from this study, which found that a large increase in mileage standards could reduce the number of jobs nationwide by 1.3 million. The article did not include the views of any economists who would have pointed out the unrealistic nature of this assumption.
The auto industry put out a study that apparently assumes that if people don’t spend money on cars, they will not spend it on anything. This was in the context of evaluating the employment impact of proposals to substantially increase mileage standards.
The NYT uncritically reported the projections from this study, which found that a large increase in mileage standards could reduce the number of jobs nationwide by 1.3 million. The article did not include the views of any economists who would have pointed out the unrealistic nature of this assumption.
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The Washington Post has long expressed its disdain for the Social Security program in both its opinion and news section. It continued this practice by not even mentioning the potential impact of the tax compromise on Social Security in an article reporting on the progress of the bill in the Senate.
The risk is that the Republicans will put pressure on President Obama to extend the payroll tax cut beyond this year by describing the end of the tax cut as a tax increase. This raises the prospect of a permanent reduction of 2 percentage points in the payroll tax. The loss of this revenue would effectively double the projected shortfall in Social Security over its 75-year planning horizon putting its future in serious jeopardy.
While this article reported the results of a poll on the package it ignored the most obvious implication. The extension of unemployment insurance benefits is hugely popular even among Republicans. This suggests that the benefit of extension would likely pass as a stand alone effort. That means that politicians who are raise concerns about the unemployed as a reason for supporting this package are not being honest.
It also would have been helpful if the numbers in this piece were expressed as a share of the budget and/or the economy. That way most readers may have been able to assign them some meaning. As it is, the Post could have just substituted the words “really big number,” RBN to save space, and provided as much information to the overwhelming majority of its readers.
The Washington Post has long expressed its disdain for the Social Security program in both its opinion and news section. It continued this practice by not even mentioning the potential impact of the tax compromise on Social Security in an article reporting on the progress of the bill in the Senate.
The risk is that the Republicans will put pressure on President Obama to extend the payroll tax cut beyond this year by describing the end of the tax cut as a tax increase. This raises the prospect of a permanent reduction of 2 percentage points in the payroll tax. The loss of this revenue would effectively double the projected shortfall in Social Security over its 75-year planning horizon putting its future in serious jeopardy.
While this article reported the results of a poll on the package it ignored the most obvious implication. The extension of unemployment insurance benefits is hugely popular even among Republicans. This suggests that the benefit of extension would likely pass as a stand alone effort. That means that politicians who are raise concerns about the unemployed as a reason for supporting this package are not being honest.
It also would have been helpful if the numbers in this piece were expressed as a share of the budget and/or the economy. That way most readers may have been able to assign them some meaning. As it is, the Post could have just substituted the words “really big number,” RBN to save space, and provided as much information to the overwhelming majority of its readers.
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Yep, that’s when you know when your economy is really in trouble. The NYT told readers today that China is suffering from inflation:
“Wages have also risen sharply this year in coastal provinces amid reports of labor shortages and worker demands for higher pay. Many analysts expect more wage increases next year.
“That may be good for workers, analysts say, but it will also change the dynamics of the Chinese economy and its export sector while contributing to higher inflation.”
One might think a good remedy for this situation would be to raise the value of China’s currency, which would reduce exports and the demand for labor in export industries. This would alleviate the labor shortage and the upward pressure it places on wages and thereby inflation.
But, “Beijing contends that raising the value of its currency would hurt coastal factories that operate on thin profit margins, forcing them to lay off millions of workers.”
Okay, so Beijing is worried that measures to alleviate the labor shortage that it is concerned about will lead to layoffs of workers. There is either something being seriously misreported in this news story or China’s leadership has less understanding of economics than the leaders in the United States.
Yep, that’s when you know when your economy is really in trouble. The NYT told readers today that China is suffering from inflation:
“Wages have also risen sharply this year in coastal provinces amid reports of labor shortages and worker demands for higher pay. Many analysts expect more wage increases next year.
“That may be good for workers, analysts say, but it will also change the dynamics of the Chinese economy and its export sector while contributing to higher inflation.”
One might think a good remedy for this situation would be to raise the value of China’s currency, which would reduce exports and the demand for labor in export industries. This would alleviate the labor shortage and the upward pressure it places on wages and thereby inflation.
But, “Beijing contends that raising the value of its currency would hurt coastal factories that operate on thin profit margins, forcing them to lay off millions of workers.”
Okay, so Beijing is worried that measures to alleviate the labor shortage that it is concerned about will lead to layoffs of workers. There is either something being seriously misreported in this news story or China’s leadership has less understanding of economics than the leaders in the United States.
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In an article that discussed the benefits of the tax deal for the middle class the NYT told readers:
“And other provisions that benefit the middle class have gotten virtually no attention, including a temporary repeal of a limit on itemized deductions and repeal of the phaseout for personal exemptions. Together, those tax breaks will cost nearly $21 billion.”
The phaseout of the personal exemption only begins to kick in for couples with incomes over $250,000. This places them above 98 percent of the population in income.
In an article that discussed the benefits of the tax deal for the middle class the NYT told readers:
“And other provisions that benefit the middle class have gotten virtually no attention, including a temporary repeal of a limit on itemized deductions and repeal of the phaseout for personal exemptions. Together, those tax breaks will cost nearly $21 billion.”
The phaseout of the personal exemption only begins to kick in for couples with incomes over $250,000. This places them above 98 percent of the population in income.
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That is a question that the Post might have asked in a short piece that discussed the possibility that President Obama’s re-election campaign will cost $1 billion.
That is a question that the Post might have asked in a short piece that discussed the possibility that President Obama’s re-election campaign will cost $1 billion.
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