Economics

Which Cities will Survive/Thrive?

"I doubt that anyone in 1968 predicted Detroit would lose most of its industrial base and half its population over the next 40 years (1970 - 2010). Such a forecast was beyond even the most prescient futurist. Four decades is not that long a time period, and our inability to predict large-scale trends over that time frame reveals intrinsic limitations in forecasting. Nonetheless, the dramatic decline of Detroit and other industrial cities makes me wonder if there are dynamics that we can identify that could enable us to predict which cities will thrive and which will decay." Continue reading →

Continue ReadingWhich Cities will Survive/Thrive?

San Francisco still has a seedy heart

"The Tenderloin is a large turd – often a literal one – floating in the crystal punchbowl that is San Francisco. So why is it still here? Because the city wants it to be here. For decades, the Tenderloin has been carefully protected by the city and various non-profit organizations. It’s not that these officials, social workers, homeless advocates and low-cost housing activists want to maintain a zone of misrule, crime and filth in the heart of the city: it’s simply an inescapable consequence of their laudable commitment to defend society’s most vulnerable members. The result is, in effect, a protected urban wildlife zone, a Bottle City of Squalor." Continue reading →

Continue ReadingSan Francisco still has a seedy heart

When Price Controls Reach Your Dining Table

"Those of us who are West Indian (Caribbean) have had, over the last fifty years, the opportunity to observe this situation previously in island nations that made the mistake of choosing socialism or communism as a 'better way,' then discovered the way in which collectivism limits or eliminates basic necessities. In particular, in Cuba, a toilet paper shortage twenty years ago resulted in restaurants hiring aides to sit by the door of the loo and hand out paper – six squares to a diner. Observing the above occurrences seems almost comical… unless you are actually experiencing it first-hand. Then it is not humorous at all." Continue reading →

Continue ReadingWhen Price Controls Reach Your Dining Table

Bill Bonner: The worst candidate to replace Ben Bernanke

"Ben Bernanke is leaving the Fed at the end of the year. The leading candidates to replace him are all fully committed to continuing his policies, which consist of providing as much credit rope as you need to hang yourself. People come to think what they need to think when they need to think it. When they approach the 'end of their rope' phase of a financial catastrophe they need to believe that they have no choice but to play out a little more line. Doubts give way to desperate faith. Reflection is abandoned for action. All of the announced candidates for Bernanke's job -- Yellen, Summers and Kohn - are believers." Continue reading →

Continue ReadingBill Bonner: The worst candidate to replace Ben Bernanke

The Financial Tale of Two Cities: Detroit and Chicago

"At State Data Lab, we calculate and report a metric called ‘Net Revenue’ for all 50 states. Net Revenue subtracts total reported net expenses from general revenue. It can inform whether a state is truly ‘balancing its budget,’ at least as far as reported results. Net revenue can also be calculated for cities. The chart above shows how net revenue in Detroit was persistently negative in the five years before its bankruptcy filing. The chart also shows an even more alarming trend for the city of Chicago. And those results can understate reality; they rely on the city’s financial reports, which do not include accumulating off-balance sheet retirement obligations." Continue reading →

Continue ReadingThe Financial Tale of Two Cities: Detroit and Chicago

Aetna withdraws from Maryland Obamacare exchange after state demands lower rates

"Aetna Inc pulled out of Maryland’s health insurance exchange being created under President Barack Obama’s healthcare reform law after the state pressed it to lower its proposed rates by up to 29 percent. Each U.S. state will have an online exchange where Americans will be able to buy insurance plans, starting on October 1. The government is counting on about 7 million people to enroll next year for this insurance, many of whom will qualify for subsidies. According to online documents, Aetna had requested an average monthly premium of $394 a month for one of its plans and the agency had approved an average rate of $281 per month." Continue reading →

Continue ReadingAetna withdraws from Maryland Obamacare exchange after state demands lower rates

Employment Ratios: Total, Men, and Women

"Tyler Cowen and Scott Sumner are debating over the significance of the sharp decline in the employment ratio (which looks at what percentage of the working-age population is employed, and is a different indicator from the labor force which considers the percentage of those actively seeking employment). Although someone brought it up in his comments, Scott didn’t deal with what is clearly one of the huge drivers of the total ratio over the last 50 years: women entering the work force. When you decompose it by sex (red=women, green=men, blue=total), it sure does look like the economy is broken." Continue reading →

Continue ReadingEmployment Ratios: Total, Men, and Women

Government Proposes in Effect to Put Itself in Charge of Apple Pricing

"This was actually an attempt by publishers to regain control over their e-book pricing from retailers, and ended when publishers signed consent decrees with the government. This should be the end of the story but instead the government now wants to appoint a monitor who will review all Apple pricing for the next ten years. No economy can thrive without an honest and unmanipulated price system, as the Soviet Union demonstrated so vividly by collapsing. Yet we are at a moment in which our government wants to control more and more prices throughout the economy, now even wanting to control a leading technology company’s prices for a decade." Continue reading →

Continue ReadingGovernment Proposes in Effect to Put Itself in Charge of Apple Pricing

The Sad Unemployment Picture Now Compared to the 1982 Recession Recovery

"The chart below via John Taylor shows the change in the employment-to-population ratio—the percentage of working age population that is actually working--now compared with the end of the 1982 recession. The current increase in jobs is not enough to employ a greater fraction of the working population. Blame it on growing regulations businesses are forced to deal with, minimum wage laws and the confusion and unknown costs associated with Obamacare." Continue reading →

Continue ReadingThe Sad Unemployment Picture Now Compared to the 1982 Recession Recovery

Top Federal Reserve economist slams ‘incoherent’ European Central Bank

"A paper by the Richmond Fed said the ECB is hamstrung by institutional problems and acts on the mistaken premise that excess debt is the cause of the eurozone crisis when the real cause is the collapse of growth. 'The ECB lacks a coherent strategy for creating the monetary base required to sustain the money creation necessary for a growing economy,' said the paper, written in July by Robert Hetzel, the bank’s senior economist. It called for direct action to buy 'bundles' of small business loans, as well as 'packages of government debt' across EMU states, including German Bunds." Continue reading →

Continue ReadingTop Federal Reserve economist slams ‘incoherent’ European Central Bank