I wrote yesterday about the pending litigation over the IRS’s decision to make tax credits available on federally operated exchanges, notwithstanding a facially plausible statutory argument that doing so would contravene the ACA. My timing was good: earlier today, Judge Friedman, a district court judge in D.C., released the first opinion reaching the merits of the dispute. It’s a resounding victory for the government. Friedman’s opinion tracks the analysis I laid out yesterday. He starts with the observation that “the plain language” of the statute, “viewed in isolation, appears to support plaintiffs’ interpretation.” The Incidental Economist
The Fiscal Times - Business, Economics, Politics and Finance
This is the introductory video in a series sponsored by Econ4. From their website: Our aim is to change both the economics profession and common-sense understanding about how the economy works and should work. For this we need to disseminate new ideas, train the new generation of scholars and public intellectuals, and advance new research agendas. The producer sent this note: Introducing New Video Series, The Bottom Line
Number of the Week 48,000: The difference between the three-month average jobs added now and July. Nothing puts the joy in holidays like a burst of job growth. Friday’s employment report showed the U.S. economy generated 203,000 new jobs in November on top of 200,000 added in October. Payrolls have grown by an average of 193,000 in the past three months, up from 145,000 in the three months ended July.
The Other School of Economics
From the corridors of power in Washington to protest encampments on Wall Street, economic inequality is once again at the forefront of American public debate. The combination of rising fortunes at the upper end of the income distribution and stagnation lower down has led to calls from the left for actions to redress the imbalance and punish what Theodore Roosevelt called "malefactors of great wealth." If the immediate circumstances are new, however, battles over the significance and implications of inequality are not, and in this context we feel it useful to resurrect a skeptical perspective on the subject from a previous era. Irving Kristol's 1980 essay "Some Personal Reflections on Economic Well-Being and Income Distribution," originally prepared for the National Bureau of Economic Research and published in Reflections of a Neoconservative, is thus reprinted below. Why Inequality Doesn't Matter
AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters' worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy. The study's assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable. The idea that a few bankers control a large chunk of the global economy might not seem like news to New York's Occupy Wall Street movement and protesters elsewhere (see photo). Revealed – the capitalist network that runs the world - physics-math - 19 October 2011
On this week’s Political Scene podcast, Dorothy Wickenden asked me why inequality has suddenly emerged as a live political issue. After ignoring the subject for years, even Republicans are being forced to address it. Eric Cantor, the House Majority Leader, is set to deliver a speech today about income disparity and ideas for promoting social mobility. On one level, the answer to Dorothy’s question is obvious: the reason inequality is a big deal is because it has risen so much. Rational Irrationality: Charting the Great Inequality Debate
The Shadow Superpower - By Robert Neuwirth With only a mobile phone and a promise of money from his uncle, David Obi did something the Nigerian government has been trying to do for decades: He figured out how to bring electricity to the masses in Africa's most populous country. It wasn't a matter of technology. David is not an inventor or an engineer, and his insights into his country's electrical problems had nothing to do with fancy photovoltaics or turbines to harness the harmattan or any other alternative sources of energy. Instead, 7,000 miles from home, using a language he could hardly speak, he did what traders have always done: made a deal.
The True Costs of Humanitarian Intervention As forces fighting Libyan leader Muammar al-Qaddafi consolidated control of Tripoli in the last days of August 2011, many pundits began speaking of a victory not just for the rebels but also for the idea of humanitarian intervention. In Libya, advocates of intervention argued, U.S. President Barack Obama had found the formula for success: broad regional and international support, genuine burden sharing with allies, and a capable local fighting force to wage the war on the ground. Some even heralded the intervention as a sign of an emerging Obama doctrine. It is clearly too soon for this kind of triumphalism, since the final balance of the Libyan intervention has yet to be tallied.
David Rosenberg: "It's Time To Start Calling This For What It Is: A Modern Day Depression" By now only the cream of the naive, Kool-Aid intoxicated crop believes that the US is not in either a deep recession, or, realistically, depression. For anyone who may still be on the fence, here is David Rosenberg's latest letter which will seal any doubts for good. It will also make it clear what the fair value of the stock market is assuming QE3 fails, which it will, and the market reverts to trading to fair value as predicated by bond spreads. To wit: "If the Treasury market is correct in its implicit assumption of a renewed contraction in the economy, then we could well be talking about corporate earnings being closer to $75 in 2011 as opposed to the current consensus view of over $110. In other words, we may wake up to find out a year from now that whoever was buying the market today under an illusion of a forward multiple of 10x was actually buying the market with a 15x multiple."
The Ticking Euro Bomb: What Options Are Left for the Common Currency? - SPIEGEL ONLINE - News - International This is the final installment, comprising Parts 3 and 4 of SPIEGEL's recent cover story on the history of the common currency. Be sure to read Part 1 and Part 2 as well. Act III: The Euro Crisis (2010/11) How Greece becomes a pawn in the hands of investors.
At 9:03 a.m. on September 11, 2001, Britt Newhouse stood in the lobby on the 52nd floor of the south tower of the World Trade Center. After United Airlines Flight 175 banked above the harbor behind him, it was pointed at the 50th floor. If not trimmed correctly, an airplane will rise as it accelerates, and the man who had killed and replaced the airplane’s pilot added power until he hit the south tower 24 floors above Newhouse. He doesn’t remember the sound of the impact. At the time, Newhouse ran Guy Carpenter’s Americas operation. The God Clause and the Reinsurance Industry
Essays When the rest of the world are mad, we must imitate them in some measure. —John Martin, Martin's Bank, 1720 As long as the music is playing, you've got to get up and dance. —Charles Prince, Citigroup, 2007 It would be fair to guess that Charles Prince’s echo of John Martin, a banker who was nearly ruined by the South Sea Bubble, reflects a sincerity that was blissfully ignorant rather than an irony that wasn’t. Buying Tomorrow
Share For many Washington policymakers, the official denouement of the debt ceiling debate came not only when President Obama signed an increase into law yesterday, but when two credit rating agencies, Moody’s and Fitch, affirmed the country’s triple-A rating. Throughout the rancorous debate, just about every player managed to agree that the United States’ AAA rating should not be threatened, even if they disagreed about how to save it. Is It Time to Downgrade the Rating Agencies?
Business and economics are tied up together in lots of people's minds. After all, they're both about money, aren't they? An awful lot of people seem to believe that economics is Big Business and business is small economics. (Even the generally reliable Economist magazine seems to use this definition in deciding what should go in its business or economics sections.) The failure to keep the two apart leads to some bizarre misconceptions in the popular understanding. For example the idea that countries are businesses in competition with each other, or that business is about self-serving greed and economics is the soulless science of large scale greed. The art of business and the science of economics
What is Debt? – An Interview with Economic Anthropologist David Graeber
John Lanchester · The Non-Scenic Route to the Place We’re Going Anyway: The Belgian Solution · LRB 8 September 2011
Out of Control: The Destructive Power of the Financial Markets - SPIEGEL ONLINE - News - International
The world economy: Be afraid
Economy on the Edge of a Nervous Breakdown