University of Chicago Professor John Cochrane explains the causes of the financial panic and how two mistakes turned what might have been a mild recession into a deep recession. The short form is: Failure to bailout Lehman Brothers after bailing out (or at least appearing to) Bear Stearns. The chaos surrounding the TARP legislation. Cochrane [...]

In a few posts I’ve noted that we can expect lower economic growth in the future and one reason is the enormous amounts of debt that the country has been taking on. Carmen Reinhart and Kenneth Rogoff layout why this is so here. In previous cycles, international banking crises have often led to a wave [...]

Rent seeking in economics is where firms or individuals seek economic rents (unearned profits) via the political process. Here is a nice example. Senator Richard Shelby, the top Republican on the Senate Banking Committee, placed a blanket “hold” in part because of the feud pitting Airbus parent EADS and its partner Northrop Grumman against Boeing, [...]

Where should we point the fingers for our current fiscal/economic mess? Keith Hennessey has a post that I tend to agree with. Hennessey looks at the opening statements from President Obama on his new budget, The fact is, 10 years ago, we had a budget surplus of more than $200 billion, with projected surpluses stretching [...]

For the fourth time in the last 5 weeks first time jobless claims have risen. WASHINGTON (AP) — The number of newly laid-off workers filing initial claims for jobless benefits rose unexpectedly last week, evidence that layoffs are continuing and jobs remain scarce. The rise is the fourth in the past five weeks. Most economists [...]

For quite some time now, there has been claims that autism in children has been linked to vaccines, namely the MMR vaccine. The reason for this, at least in part, was an article in the Lancet. That article has been formally withdrawn. The scientific evidence since 1998 has been completely unable to find any link [...]

According to this story President Obama is planning on letting the Bush tax cuts and the ATM. In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year — effectively a tax hike by stealth. While [...]

Once Again the CBO is bringing bad news to the Obama Administration. With the expiration of the AMT provisions at the end of 2009, an estimated 27 million people will be paying some amount of the AMT paying on average an additional $3,900 in taxes (granted the median tax increase is probably considerably less). Good [...]

The CBO’s look at the numbers (the Director’s Blog post) suggest it isn’t going to work out too well for the Obama Administration and whatever administration follows on. Now granted this is just a projection and quite a bit could happen between now and 2020. However, the idea that the Obama Administration is going to [...]

Dorothy Rabinowitz’ article in the Wall Street Journal. Read the whole thing.

Several months ago there was a bit of a flap between Greg Mankiw, Arnold Kling, Paul Krugman and Brad DeLong about how robust the recovery was going to be. Mankiw and Kling were pointing out that it is entirely possible the recovery might not be that robust. Mankiw cited the “unit root hypothesis” in economics [...]

Greg Mankiw has 9 reasons on why an investment tax credit (ITC) is a good idea. The one that I think will resonate most with people is number 7, 7. So much for theory, but would it work? The cash-for-clunkers program is thought by many to have promoted, or at least accelerated, car purchases. An [...]

And be done with it for God’s sake. UPDATE (James Joyner):  An excerpt from the story for those who can’t click through or in case the story goes away: Matthew Freeman is struggling to move on with his life, six years after being convicted of having sex with a high school girlfriend who was one [...]

Over at Wikipedia an economic bubble is defined as follows, An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, or a speculative mania) is “trade in high volumes at prices that are considerably at variance with intrinsic values”. (Another way to describe it is: trade [...]

The CBO has completed an analysis where non-group health care policies will increase in price somewhat substantially, but with those increased costs being offset by subsidies. The bottom line for non-group policies, CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to [...]

The BEA has revised its estimates for the third quarter’s growth down to 2.8% from 3.5%. This is also a bit below the expected growth of 2.9% for the quarter. The main factors behind the downgrade: consumers didn’t spend as much, commercial construction was weaker and the nation’s trade deficit was more of a drag [...]

Paul Krugman has taken some rather interesting stances on the fiscal situation here in the U.S. First up is a piece entitled Fiscal Train Wreck from March 2003, With war looming, it’s time to be prepared. So last week I switched to a fixed-rate mortgage. It means higher monthly payments, but I’m terrified about what [...]

Well looks like the entire town of New London, Conn. is going to get screwed by Pfizer. “Look what they did,” Mr. Cristofaro said on Thursday. “They stole our home for economic development. It was all for Pfizer, and now they get up and walk away.” That sentiment has been echoing around New London since [...]

The Urban Institute’s Eugene Stuerle is not very happy with the health care expansion legislation that is likely to be passed into law. Stuerle argues that the legislation violates the standards of equal justice. Of course, families in this income bracket pay far more than $14,700 for health care. They get hit by uninsured expenses [...]

The recently passed health care “reform” noted by James below is going to have another impact some have noted, but many have not given much thought too. It will, in effect, make labor more expensive. When something becomes more expensive for firms then tend to use less of it. They will substitute away from it [...]

It looks like the Obama Administration’s brilliant political jujutsu move of using “jobs saved or created” is making its way around some of the economics blogs again. First up is Brad DeLong’s attack on Allan Meltzer. Meltzer wrote the following, There is no greater recognition of the failure of the stimulus program to create jobs [...]

Back when talks about bailing out General Motors started one potential issue was that GM would “encouraged” to make decisions based on political considerations vs. a sound business plan. Looks like there is evidence for such concerns with this story of how Montana’s Congressional Representative and two Senators are pushing to get a contract reinstated [...]

I was reading the review of Capitalism over at Reason and at the end it had this, One final note: Just before the film started, Moore asked the audience to turn off any recording devices because the studio did not want bootleg versions of the film getting around. Apparently this socialism stuff has its limits. [...]

While it is good news that the economy grew last quarter I think claims that the recession is over are premature. Why? Because I think the last quarter’s numbers are due to gimmicks by the Obama Administration as was discussed last night on OTB Blog Radio and also when looking at this post by Dave [...]

Jeremy Siegel of the Wharton School looks at the claims that the Efficient Market Hypothesis (EMH) is the cause of the current crisis and rejects these claims. The main part of his argument is, But is the Efficient Market Hypothesis (EMH) really responsible for the current crisis? The answer is no. The EMH, originally put [...]

The New York Times has an interesting multiple choice question regarding how to spend money to help stimulate the economy, If you wanted to help the economy and you had $14 billion to bestow on any group of people, which group would you choose: a) Teenagers and young adults, who have an 18 percent unemployment [...]

I periodically hear this during presidential campaigns and when various elected officials are trying to push a green policy, often in response to global warming. Because of [insert environmental problem here] we need to pursue a policies that will promote [insert one or more alternative fuel/energy sources here]. And not only will it address [the [...]

James Capretta does a back of the envelope calculation on the Baucus health care reform bill and concludes that it would be like having a 70% marginal tax rate on the low income. According to CBO, family coverage in 2016 is likely to cost about $14,400 under the so-called “silver option” in the health-care reform [...]

Or this post could be titled how doctors routinely fail to predict illnesses, diseases and injuries. It strikes me that this is one of the main problems with health care in this country. If only doctors could get better at practicing their art then we might not have such a problem with run away health [...]

Yes, that headline is not an exaggeration. The Chief of the Jericho Fire Department went to court and was shot by the police for disputing two tickets requiring two trips to the court house. JERICHO, Ark. — It was just too much, having to return to court twice on the same day to contest yet [...]

Tyler Cowen has written several posts in favor of the bailouts. His argument goes something like this: Note that even when the Fed “bails out” a large investment bank, or insurance company, they are checking a chain reaction which would likely spread to some commercial banks, thus bringing in deposit insurance as well, not to [...]

Over at his web site Dave has put up a post discussing how resources are allocated. I’ve touched on this very briefly in comments and a post or two, but nothing this extensive. As such, go read it, it’s good. Here is a snippet, Despite the author’s attempt to assuage concern by pooh-poohing the idea [...]

In the last several posts on health care it is often pointed out that health insurance companies engage in dubious practices. For example, they’ll deny coverage for the most trivial of reasons. Many posting comments focus on this issue as well as others such as quality of care, the moral nature of providing health care, [...]

President Obama, seeing that he is taking a beating in the polls, and that health care is starting to founder took to the pages of the New York Times to lay out the case for health care reform. I think he did a rather bad job of it. He could have done it with far, [...]

The Obama Administration may be dropping the public option requirement from its health care agenda. PHOENIX — The White House, facing increasing skepticism over President Obama’s call for a public insurance plan to compete with the private sector, signaled Sunday that it was willing to compromise and would consider a proposal for a nonprofit health [...]

John Mackey, co-founder and CEO of Whole Foods, has suggested 8 reforms to health care. Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair. Repeal all state [...]

Is it the poor health care system, or is the U.S.’s poor showing in life expectancy statistics due to something else such as behavioral or social factors? These are the questions that Samuel Preston, Jessica Ho asks and try to answer. Life expectancy in the United States fares poorly in international comparisons, primarily because of [...]

Is preventative medical care really worth it? I can see how eating a sensible diet, exercising, and such could lead to health care savings overall, but these are all things that don’t really need to involve medical care.[1] How about those preventative measures that do involve the medical industry? The CBO says, “Hang on a [...]

Looks like the Obama Administration is testing the waters on the idea of raising taxes on the middle class, WASHINGTON (AP) — President Barack Obama’s treasury secretary said Sunday he cannot rule out higher taxes to help tame an exploding budget deficit, and his chief economic adviser would not dismiss raising them on middle-class Americans [...]

In answer to James’ query below about when a state or county have forced unmarried people not to live together, meet Olivia Shelltrack, Fondray Loving and their three children. Welcome to Wednesday afternoon at 12475 Parkwood Lane in Black Jack, Mo.: In his room on the second floor, 8-year-old Cortez Loving wages an intergalactic battle [...]

The CBO has analyzed some of the suggested methods for controlling health care costs, and the Independent Medicare Advisory Council (IMAC) in particular. The findings so far is not all that good, In particular, CBO reviewed draft legislation transmitted to the Congress by the Administration on July 17, 2009, titled the Independent Medicare Advisory Council [...]

That is what Matt Welch and Nick Gillespie argue in their Washington Post article. Barely six months into his presidency, Barack Obama seems to be driving south into that political speed trap known as Carter Country: a sad-sack landscape in which every major initiative meets not just with failure but with scorn from political allies [...]

“The reforms we seek would bring greater competition, choice, savings, and inefficiencies [sic] to our health care system,….”–President Barack Obama on health care reform. Obviously the President misspoke, but given what we can see of the current reform legislation, it looks like an accidental bit of truthfulness.

The idea behind health care is that the rise in health care costs be mitigated. That is where the real problem is. If nothing is done and the trend continues (which it can’t but to illustrate why it can’t lets assume it does) health care spending by the government will eventually dominate the entire federal [...]

Via Greg Mankiw comes this quote from Michael Kinsley But people, even liberals, are starting to get unnerved by the cost of all this. We now talk of trillions the way, even a few months ago, we spoke of billions. In mid-June, the Senate health committee put out its version of reform and was horrified [...]

I actually like this article by Ezra Klein. Often I’ve found his articles lacking in understanding of economics, an appreciation for incentives, etc. But this looks quite good. Well balanced and displaying a healthy skepticism about why Medicare’s adminstative costs are lower and if we can get such low costs in general for health care [...]

In this post of mine on Efficiency and Administrative costs frequent commenter Michael Reynolds wrote, How about we take the French system plus 20%? Hell, France plus 50% would represent a staggering windfall for us. In fact, we could buy France with the savings. I don’t think that word (windfall) means what you think it [...]

For the sake of argument let us assume that Medicare’s administrative costs are lower than those of the typical health insurance company. Does this imply that Medicare is more efficient than the private company? I’ve been skeptical of this view point since one thing I’ve learned in economics is that firms want to maximize profits. [...]

Are they lower? This article by the Heritage Foundation makes an interesting point. Medicare beneficiaries are by definition elderly, disabled, or patients with end-stage renal disease. Private insurance beneficiaries may include a small percentage of people in those categories, but they consist primarily of people are who under age 65 and not disabled. Naturally, Medicare [...]

After seeing today’s job report from the BLS I have to wonder, is the stimulus working? I’m thinking no. There are two possible explanations as to what is going on here. The initial forecast for unemployment was too optimistic. The forecast was fine, but the stimulus is just not doing what it is supposed to [...]