link here to article
This article (via Manan Shukla) provides a good description of the Wall Street culture, which helps to explain why we had the financial crisis. It also explains why Wall Street is back to its old tricks of pursuing individual financial goals without regard to the external culture. They realize that the financial reforms resulting from the crisis are toothless and that the public has a short memory. The public even admires the masters of the universe because they respect wealth and financial success despite their envy.
Monday, April 11, 2011
Regional Fed President Comments on Commodity Prices and Impact on Economy
link here to article
Janet Yellen reported that recent increases in commodity prices are due to temporary disruptions in supply and increasing demand as economies recover from recession. She noted that increases in gasoline prices have important impacts on the economy because they act as a tax on consumption that goes to foreign suppliers. Fed studies show that a $1/gallon increase in gasoline prices, similar to what we have observed this year, have the effect of a 1% decline in disposable income. A 1% fall in disposable income will lead to a comparable decline in consumption. This will also affect the outlook for businesses that depend on household consumption, and discourage business investment. The result is a slowdown in recovery and job growth.
She views the disruption in supply as a temporary problem however, and she does not believe that it will have a long term impact on growth or on the inflation outlook. Consequently, she sees no reason for the Fed to alter current monetary policies. Of course, she also stated the Fed will continue to be vigilant and that it will be alert to anything that might affect the inflation outlook.
Janet Yellen reported that recent increases in commodity prices are due to temporary disruptions in supply and increasing demand as economies recover from recession. She noted that increases in gasoline prices have important impacts on the economy because they act as a tax on consumption that goes to foreign suppliers. Fed studies show that a $1/gallon increase in gasoline prices, similar to what we have observed this year, have the effect of a 1% decline in disposable income. A 1% fall in disposable income will lead to a comparable decline in consumption. This will also affect the outlook for businesses that depend on household consumption, and discourage business investment. The result is a slowdown in recovery and job growth.
She views the disruption in supply as a temporary problem however, and she does not believe that it will have a long term impact on growth or on the inflation outlook. Consequently, she sees no reason for the Fed to alter current monetary policies. Of course, she also stated the Fed will continue to be vigilant and that it will be alert to anything that might affect the inflation outlook.
Did We Elect the Tea Party to the Presidency?
link here to article
The White House is still reeling from the Scott Brown upset in the Massachusetts Senate race. Brown won in a state with a huge democratic majority by winning over the "independent" voters. He also won because the democrats put up a weak candidate and there was a much lower democratic turnout than there was in the presidential election. The message that the White House received, however, was that independents are the important group to win over because the democrats wont vote for republicans. I don't think they will vote for a weak democrat either who loses every battle with the republicans.
This article outlines some of the details of the negotiations with the republicans over the budget. The GOP got most of what it wanted. The president showed that he is bipartisan and willing to concede to the GOP in order to claim that he made a deal. Good luck in 2012.
The White House is still reeling from the Scott Brown upset in the Massachusetts Senate race. Brown won in a state with a huge democratic majority by winning over the "independent" voters. He also won because the democrats put up a weak candidate and there was a much lower democratic turnout than there was in the presidential election. The message that the White House received, however, was that independents are the important group to win over because the democrats wont vote for republicans. I don't think they will vote for a weak democrat either who loses every battle with the republicans.
This article outlines some of the details of the negotiations with the republicans over the budget. The GOP got most of what it wanted. The president showed that he is bipartisan and willing to concede to the GOP in order to claim that he made a deal. Good luck in 2012.
Friday, April 8, 2011
Ryan Healthcare Plan Cuts Deficit by Shifting Costs Not Cutting Them
link here to article
Ezra Klein reports that the Ryan plan shifts Medicaid costs to the states who will have to cut benefits or raise state taxes. According the CBO is shifts Medicare costs from the federal government to seniors. They pay 30% of the cost today and and they will pay 70% of the cost under the Ryan plan.
The Ryan plan, therefore does not cut healthcare costs but we have a plan that does. It is the Affordable Care Act that the GOP hates. Klein does a better job of describing the ways in which costs are reduced in the plan without shifting the costs to others.
The democrats have a golden opportunity to show the differences between the ACA and the Ryan plan. Someone needs to teach them how to explain what they have and explain why it is better for everyone than the Ryan Plan.
Ezra Klein reports that the Ryan plan shifts Medicaid costs to the states who will have to cut benefits or raise state taxes. According the CBO is shifts Medicare costs from the federal government to seniors. They pay 30% of the cost today and and they will pay 70% of the cost under the Ryan plan.
The Ryan plan, therefore does not cut healthcare costs but we have a plan that does. It is the Affordable Care Act that the GOP hates. Klein does a better job of describing the ways in which costs are reduced in the plan without shifting the costs to others.
The democrats have a golden opportunity to show the differences between the ACA and the Ryan plan. Someone needs to teach them how to explain what they have and explain why it is better for everyone than the Ryan Plan.
Thursday, April 7, 2011
Off to Bainbridge Graduate Institute for the Week End
I'm off to the Seattle area to teach in a graduate program this weekend. Posts will be sparse in that period.
Wednesday, April 6, 2011
Fact Checking the Ryan Plan
link here to article
The Washington Post Fact Checker raises real questions about the factual basis of the Ryan plan. They found many of the problems that we have reported about the facts. This article does not go into the vision aspects of the plan.
The Washington Post Fact Checker raises real questions about the factual basis of the Ryan plan. They found many of the problems that we have reported about the facts. This article does not go into the vision aspects of the plan.
More Commentary on The Ryan Plan and AWOL President
link here to article
Meyerson takes an approach to Ryan plan similar to that in our earlier post on the plan. The big picture is that it is very different vision of the kind of America that was implicit in Roosevelt's and Lyndon Johnson's vision which has been the bedrock of the Democratic Party. The Ryan plan replaces the Democratic vision with a vision driven by adherence to laissez-faire economics that should have been destroyed by the financial crises that required the visible hand of government to rescue a financial system that was enabled by deregulation to let the invisible hand work its destructive magic. The real surprise to me in the Ryan plan is that the GOP has the audacity to propose it. Perhaps Ryan will write a book on the "Audacity of Despair".
Meyerson takes an approach to Ryan plan similar to that in our earlier post on the plan. The big picture is that it is very different vision of the kind of America that was implicit in Roosevelt's and Lyndon Johnson's vision which has been the bedrock of the Democratic Party. The Ryan plan replaces the Democratic vision with a vision driven by adherence to laissez-faire economics that should have been destroyed by the financial crises that required the visible hand of government to rescue a financial system that was enabled by deregulation to let the invisible hand work its destructive magic. The real surprise to me in the Ryan plan is that the GOP has the audacity to propose it. Perhaps Ryan will write a book on the "Audacity of Despair".
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