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Is America at China's Mercy?
Tweet Share on Facebook May 30, 2007 CommentJust how vulnerable is the U.S. economy to troubles in China? It's a question I really started pondering after watching the 6.5 percent drop overnight in Chinese stocks in response to a government tripling of a tax on stock trading. Now Wall Street is sure reacting much better to the decline than it did back in February when the Shanghai Composite index fell 9 percent, sparking a 400-point drop in the Dow Jones industrial average. This time, the Dow industrials were flattish in midday trading.
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Bush Gets No Credit
Tweet Share on Facebook May 29, 2007 CommentDespite rising gas prices and falling home prices, American consumers are actually becoming more upbeat. According to the Conference Board, its consumer confidence index rebounded to 108 from an upwardly revised 106.3 (previously 104.0) last month. Consumers' assessment of their present situation, including the job market, rose to 136.1 from 133.5, and the expectations index increased to 89.2 from 88.2.
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Gasoline Prices Are No Conspiracy
Tweet Share on Facebook May 25, 2007 CommentAs an old X-Files fan, I like almost nothing better than a good, old-fashioned conspiracy theory. And apparently so does Congress. Earlier this week, the House passed an anti-price-gouging bill in response to higher gasoline prices. The legislation would make it a crime to overcharge for fuel. Gas prices must not be "unusually excessive"—though if that standard applied to other consumer items, every Starbucks in America might be shuttered. But there is little evidence that conspiracies or collusion among gas stations or oil companies is what's behind the rise in gas prices to over $3 a gallon nationwide. (We're at record levels in inflation-adjusted term, but prices would need to be at least a dollar higher to take into account that the average American is richer now than during the last peak back in 1981.) A new piece of analysis from economics consulting firm Global Insight makes some good points on the issue:
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Free Trade: Under Siege
Tweet Share on Facebook May 24, 2007 Comment"It's going to be the perfect storm" is how one knowledgeable Capitol Hill insider described the upcoming efforts by protectionists of both parties in Congress to pass trade legislation punishing China for running a $200 billion-plus trade surplus with the United States. This week's high-level "strategic dialogue" between a Chinese trade delegation and American officials from the White House and Congress did nothing to change that assessment. There's too much momentum behind the push, the insider told me, from members who worry about the economic impact of a weak Chinese currency and from those who fret about China as a potential military threat.
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Immigration and Western Union
Tweet Share on Facebook May 23, 2007 CommentTime does not seem to be on the side of the controversial immigration reform bill. One reason proponents wanted a quick vote–now pushed back into June–was that they feared just the sort of storm from the left and the right they are now feeling.
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A Day Without Mexicans
Tweet Share on Facebook May 21, 2007 Comment (1)Does the American economy really need low-skilled, low-wage Mexican immigrants? We sure do, according to the 2004 film A Day Without a Mexican. The satirical movie imagines what would happen to California if suddenly 14 million of its citizens of Mexican descent up and disappeared. As the film's website puts it:
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Immigration and Social Security
Tweet Share on Facebook May 18, 2007 CommentOne apparent result of the immigration deal between the White House and congressional Democrats is that there seems little chance that the flood of immigrants, legal or otherwise, into this country will slow anytime soon. One economic argument for more immigration is that all those new workers will help keep Social Security solvent. This rationale from the National Foundation for American Policy is typical:
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The Post-Wolfowitz World Bank
Tweet Share on Facebook May 17, 2007 Comment (13)Paul Wolfowitz's time as president of the World Bank can probably be measured in hours rather than days at this point. But if and when he departs, his replacement will face tremendous challenges.
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The Paulson Bull Market?
Tweet Share on Facebook May 16, 2007 CommentMaybe it's a coincidence, but the stock market hasn't had a down day since that trade compromise between the White House and congressional Democrats–brokered by Treasury Secretary Hank Paulson–on adding labor and environmental standards to future trade agreements. But the winning streak shouldn't be surprising given how heavily trade issues and protectionism have been weighing on the mind of many on Wall Street. So any good news on that front is welcome. Here is economist Ed Yardeni's sigh of relief:
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Could We Afford a President Edwards?
Tweet Share on Facebook May 15, 2007 CommentYou've got to give John Edwards some credit. Unlike most of the presidential candidates of both parties, he's actually proposing some very specific economic policies--and even putting some price tags on them. (Hint to GOP candidates debating tonight in South Carolina.) Universal healthcare? Somewhere between $90 billion and $120 billion a year. Then there's his $20 billion spending program to end poverty. And his $13 billion spending program to revamp American energy use.
