Month: April 2011

No Inflation

04/15/2011

Bernanke and a majority of Fed officials predict that the surge in oil prices will lead only to a modest and short-lived increase in consumer prices as firms will have a very tough time passing cost increases on to consumers…

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Beauty Beats Bucks

04/14/2011

While money may not buy happiness beauty buys both money and happiness. Economic research shows that the beautiful are happier than the plain. Moreover, the majority of beauty’s effect on happiness works through its impact on economic outcomes! For example,…

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Budget Brawl Begins

04/13/2011

The budget battle over FY ’12 is here! The R plan makes big cuts to Medicare & Medicaid, ignores Social Security (SS) and keeps the Bush tax cuts. The D plan, will also ignore SS (2 risky) and will propose;…

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Big Banks are Challenged

04/12/2011

The lobbying power of big banks is being seriously challenged by an alliance of big retailers. The issue; the Durban amendment lowering interchange fess that banks collect when anyone buys anything with a debit card. Retailers pay the fee but…

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Chinese Trade Deficit!

04/11/2011

Yesterday China reported that imports ($400bn) had exceeded exports ($399bn) in Q1 ‘11. This tiny deficit, China’s first in 7 years is an encouraging development for the world economy. It comes after 2 successive years of import growth outpacing exports.…

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Republicans Budgeting Badly

04/08/2011

The Ryan G.O.P. Budget Proposal to abolish Medicare and replace it with vouchers to be used to buy private health insurance may be a great idea but privatizing Medicare does nothing to limit health-care costs. In fact, it almost surely…

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ECB Wrongly Raises Rates

04/07/2011

The ECB hiked its main interest rate to 1.25% from 1%, yet inflationary pressures and growth prospects are no different in Europe than in the US and UK and they are not raising. This decision marks the moment when differences…

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No Government, No Problem!

04/06/2011

If the federal gov’t closes does it matter to the economy? NO! Social Security checks will continue arriving and air traffic controllers will still land planes. The fragile recovery will not be harmed. The most serious and negative consequence; a…

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Dibilitating Debt Service

04/05/2011

Interest on the federal debt is 1.4% of GDP; $200 billion. But, it is projected to ramp up fast for 2 reasons. 1st we add $1.4 tillion to it every year and 2nd interest rates are at historic lows. If…

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Treasury Yields, Stay!

04/04/2011

There seems to be widespread view that Treasury yields will rise sharply once QE2 is over since the captive market for bonds, the Federal Reserve, will be gone. Wrong, wrong, wrong! The only way Treasury yields will increase is if…

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