November 15, 2012

Posted by orrinj at 9:46 PM


The coming 'economic renaissance' (Annalyn Kurtz, November 15, 2012, CNN Money)

Could an energy boom, a housing recovery and easy money from the Federal Reserve be the perfect mix for an American revival? Consulting firm Oxford Economics certainly thinks so.

New forecasts released by the firm predict the U.S. is on the brink of an "economic renaissance," with economic growth accelerating to more than 3% a year starting in late 2013. (Gross domestic product is currently growing around 2% a year.)

The key contributors could include an increase in U.S. exports and a boom in domestic energy production.

The sooner John Boehner cuts a deal the better for the GOP.

Posted by orrinj at 9:42 PM


Fetish for making things ignores real work (John Kay, 11/17/12, Financial Times)

When you look at the value chain of manufactured goods we consume today, you quickly appreciate how small a proportion of the value of output is represented by the processes of manufacturing and assembly. Most of what you pay reflects the style of the suit, the design of the iPhone, the precision of the assembly of the aircraft engine, the painstaking pharmaceutical research, the quality assurance that tells you products really are what they claim to be.

Physical labour incorporated in manufactured goods is a cheap commodity in a globalised world. But the skills and capabilities that turn that labour into products of extraordinary complexity and sophistication are not. The iPhone is a manufactured product, but its value to the user is as a crystallisation of services.

Many of those who talk about the central economic importance of manufactured goods do so from an understandable concern for employment and the trade balance. 

The insistence that the makework be done domestically at higher wages is antieconomics.

Posted by orrinj at 9:40 PM


Romney Lost, but His Ideas May Still Be Winners (YUVAL ROSENBERG, 11/15/12, The Fiscal Times)

Republicans, including House Speaker John Boehner, have signaled a willingness to eliminate or cap tax deductions as a way to raise more revenue. That's an idea that Romney floated toward the end of the campaign (and it's similar to a proposal presented to Congress by President Obama that would cap the rate for deductions at 28 percent).

Now a new Gallup poll of 1,009 adults conducted after the election suggests that some elements of Romney's plan are still resonating with Americans. Almost all those surveyed said the economy and job market need to be a top priority in Obama's second term. But 88 percent say entitlement reform is extremely or very important, with another 10 percent calling it somewhat important. About 70 percent say cutting federal spending and simplifying the tax code should be priorities.

Posted by orrinj at 5:38 AM


Costs of employee health benefits rose just 4.1 percent in 2012 (DIANE STAFFORD, 11/14/12, The Kansas City Star)

The cost of employee health benefits in 2012 grew just 4.1 percent nationally, the smallest increase in 15 years. [...]

Twenty-two percent of all employers offer consumer-directed plans, and the percentage leaps to 59 percent among the largest employers.

An employer's cost of coverage in a typical consumer-directed plan is about 20 percent lower than the cost of providing employee access to a more traditional Preferred Provider Organization plan, the Mercer report said.

Nearly half of employers, 45 percent, said they now had or were considering using a defined contribution plan that would require their employees to pay anything above the employer's set contribution.

Thanks, W.

Posted by orrinj at 5:34 AM


It's Income, Not Ethnicity (Fred Bauer, November 13, 2012, National Review)

Comparing the numbers of today with those of 2004 is instructive. While Romney lost households making between $30,000 and $49,999 by 15 points, George W. Bush lost them by only 1 point in 2004. Obama won voters from households making under $100,000 by ten points in 2012; Kerry won them by 1 point in 2004. In most of the battleground states, Kerry eked out a narrow margin of victory among those households making between $30,000 and $49,999; by 2008, Obama was scoring blowouts in that demographic. For example, Bush won it by three points in Pennsylvania in 2004, but Obama won it by 17 points in 2008 and 23 points in 2012. If Romney had pulled even somewhat near Bush's 2004 performance among voters making under $50,000, he would be president-elect at this moment.

Granted, inflation means that $30,000 was worth more in 2004 than it is today, and therefore this category represents a poorer demographic now, but the changes in voting patterns are still striking. The 20-point sea change in Pennsylvania working-class support between 2004 and 2008 cannot simply be chalked up to inflation or to a change in ethnic composition. Nor can Romney's poor performance with the working class be attributed entirely to the president's Bain attacks: The biggest Republican drop among the working class occurred in many states between 2004 and 2008.

The Republican shortfall with the working class in 2012 was due not simply to the nominee's personal background but to wider issues with Republican policies. In the wake of a decade of lost economic ground and the near-meltdown of 2008, many non-affluent voters seem to have a deep distrust of the ability of Republican policies to work for them. Romney's poor showing among this demographic underlines the fact that Republicans have not yet found an antidote to this distrust. Further tax cuts will not counter it, nor will promises to end Obamacare. As Ross Douthat suggested the other day, the concerns of average Americans are not the same today as they were in 1979, so Republican policies will have to change with them. By the end of the campaign, Governor Romney was beginning to tout a more forward-looking economic message, one that emphasized industrial renewal, energy development, and middle-class restoration. It was this message that made the election as close as it became on November 6.

Moving economic discussions beyond a fetishization of tax cuts need not be a surrender to the Left. There are, after all, authentically conservative responses to financial consolidation, deindustrialization, escalating health-care costs, soaring energy prices, and middle-class decline. It seems clear that, if Republicans cannot craft a message and a policy platform that speak to the needs of many in the middle and working classes, their ability to form a national governing coalition will remain in doubt.

Unsurprisingly, the party has declined to exactly the extent it has renounced its most successful presidencies.

Posted by orrinj at 5:25 AM


China's Bad Loans Rise for Fourth Quarter as Economy Slows (Bloomberg News, November 15, 2012)

Chinese banks' bad loans increased for a fourth straight quarter, the longest streak of deterioration since the data became available in 2004, highlighting pressures on profit growth as the economy weakens.

Non-performing loans rose by 22.4 billion yuan ($3.6 billion) in the three months ended Sept. 30, to 478.8 billion yuan, the China Banking Regulatory Commission said in a statement on its website today. Bad loans increased at all types of institutions, including the largest state-owned lenders, rural banks and foreign banks, the regulator said.

China's banking system is grappling with rising defaults and weaker loan demand after economic growth decelerated for a seventh quarter.