Wonkbook: ADP report raises hope for promising jobs numbers on Friday:
Karl Singer is writing Wonkbook while Ezra is traveling.
Top stories
1) The ADP report raised hope for promising jobs numbers on Friday."Private employers added workers at a healthy clip last month, raising hopes that Friday's government employment report will also point toward an improving job market. Private-sector employers hired 209,000 workers in March, after an upwardly revised 230,000 in job gains in February, said payroll processor Automatic Data Processing Inc. and Macroeconomic Advisers, LLC, a consulting firm. January's figures also were revised higher. Private employers have added nearly 2 million workers over the past 12 months. The report comes ahead of Friday's jobs snapshot from the government, which will include public and private employers. While the ADP update isn't as comprehensive as the government's, Wednesday's reading raises hopes that the government's figures will show reasonable gains. Many economists expect Friday's government report to show that the U.S. added 203,000 nonfarm jobs in March, slightly below the 227,000 new jobs in February." Neil Shah in The Wall Street Journal.
@JimPethokoukis: Based on that ADP number, I think the jobs report will be good, bad or -- perhaps -- just so so. Of that, I have no doubt
@grossdm: I guess all that uncertainty over taxes and regulation that has allegedly hindered job creation has dissipated in past few months.
2) Another wave of foreclosures may be coming. "Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low. But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures. 'We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,' said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio. 'Last year was an anomaly, and not in a good way,' he said." Nick Carey in Reuters.
3) Markets are worried about a possible end to stimulus. "Fears that the central banks of Europe and the U.S. may soon end efforts to support financial markets as well as fresh concerns about the health of Europe's weakest countries drove down stock markets around the world Wednesday. European Central Bank President Mario Draghi indicated he would be hesitant to undertake more monetary easing, citing concerns about inflation. That surprised investors who had been relying on the ECB to help support the region's economy and financial markets...Stock indexes from New York to Frankfurt to Tokyo fell sharply. The Dow Jones Industrial Average fell 124.80 points to 13074.75, its worst day since March 6...The slide began in the U.S. Tuesday after signs from the Federal Reserve that it won't immediately embark on a new round of bond buying. That dashed hopes of investors who had anticipated a new program would further juice financial markets and the economy." Jonathan Cheng and Charles Forelle in The Wall Street Journal.
4) Lawmakers are fighting cuts to veterans health care. "The Obama administration’s budget proposal to cut defense spending, in part, by increasing the cost of health care for retired service members has riled veterans groups and members of Congress...With U.S. combat troops out of Iraq and a timetable set for drawing down in Afghanistan, the Pentagon is under increasing pressure to cut spending to help ease the nation’s burgeoning deficit. Among other things, the administration has proposed increasing the fees and co-pays for retired service members covered by the military’s health care program, TRICARE. The increases, to be phased in over four years, must be approved by Congress, which is facing the prospect of deep defense cuts already mandated by law...Veterans’ organizations are angry at the proposed TRICARE cost increases. The Veterans of Foreign Wars, for example, panned them as an attempt to balance the budget on the backs of disabled veterans and men and women in uniform." Leigh Munsil in Politico.
5) Wall Street is digging through the JOBS Act. "Wall Street is examining whether it will benefit from a little-known section of a broad new law that President Obama is expected to sign on Thursday. Provisions tucked into the so-called JOBS Act, or the Jumpstart Our Business Startups, will roll back some major securities regulations and parts of a landmark legal settlement struck almost a decade ago. That 2003 settlement built a Chinese wall between Wall Street research analysts and investment bankers, an effort to prevent analysts from improperly promoting stocks to help their firms drum up business from corporate clients. Under the new legislation, some of those restrictions would be eased when it comes to smaller companies, so-called emerging growth companies. Wall Street senses an opportunity...Almost every big bank on Wall Street, including Goldman Sachs, Morgan Stanley and Bank of America, is poring over the provisions, which some firms say will open a new front on their business model.'" Susanne Craig and Ben Protess in The New York Times.
Top op-eds
1) KLEIN: Don't worry too much about deficit reduction. "I’m not particularly worried about the budget deficit. In fact, of all the major problems the U.S. faces, I’m least worried about the deficit. That’s not because we don’t have to get the problem under control; it’s because I’m pretty sure we will. Why? The budget deficit is unique: If Congress is unable to agree on a remedy, the problem goes away on its own. Would that all of our challenges were so cooperative...I’m confident that we will, one way or another, muddle through. Because when it comes to the deficit, Congress really has two choices: Do something to solve it, or do nothing and let that solve it. The same can’t be said for issues such as infrastructure and loose nukes and climate change and preparing for pandemic flu. On those questions, congressional inaction isn’t enough to make the problem disappear. So those are the issues I worry about." Ezra Klein in Bloomberg.
2) WESSEL: Bank regulation requires a careful balance. "Continued financial innovation--as Yale University's Robert Shiller puts it in his new book, 'Finance and the Good Society'--is 'necessary for managing the risks that enable society to transform creative impulses into vital products and services.' Discouraging those innovations is hazardous to our economic future. But bankers devote a lot of creativity--and platoons of lawyers, lobbyists and financial engineers--to figuring out how to maximize profits while meeting the letter of the rules and how to continue to take risks that will produce profits for them if all goes well and prove costly to taxpayers if all goes wrong...We are watching an arms race, a contest in which the rules get ever-more complicated as well-resourced banks try to outflank regulators and regulators try to catch up. If the banks go too far, we'll get more frequent and severe financial crises. If the regulators go too far, we'll lose the benefits of truly valuable financial innovation." David Wessel in The Wall Street Journal.
3) WATERS: It's unclear if the JOBS Act will create any jobs. "At least some aspects of the Jobs Act should bring clear improvements. The lifting of the 'general solicitation' rule that prevents private companies from even admitting that they’re trying to raise capital, as well as the bar on research reports about upcoming IPOs by banks involved in the process, will remove some of the unnecessary barriers that limit communication around deals. But, at its heart, the new law is a package that reflects the various lobbying efforts of a coalition of financial interests. The new intermediaries that will spring up to service the crowdfunding business, the secondary market operators who fear that their businesses will shrink after Facebook goes public, the bankers, lawyers and accountants starved of IPO fees: all of these stand to gain. Whether more innovation - and jobs - will follow is harder to predict." Richard Waters in The Financial Times.
4) STIGLITZ: Having the U.S. pick the World Bank's head undermines the Bank's effectiveness. "President Obama’s nomination of Jim Yong Kim for the presidency of the World Bank has been well-received--and rightly so, especially given some of the other names that were bandied about. Kim is the Dartmouth president and previously led the World Health Organization’s HIV/AIDS department. But the candidate’s nationality, and the nominating country--whether small and poor or large and rich--should play no role in determining who gets the job...Should America continue to insist on controlling the selection process, it is the bank itself that would suffer. For years, its effectiveness was compromised because it was seen, in part, as a tool of Western governments and their countries’ financial and corporate sectors. Ironically, even America’s long-term interests would be best served by a commitment--not just in words, but also in deeds--to a merit-based system and good governance." Joseph Stiglitz in Slate.
5) FELDSTEIN: The bond vigilantes are good for Europe. "Spain's disappointing government-bond auction this week is a sign of things to come: If Europe's debt-bound governments won't get their fiscal houses in order, the bond vigilantes will descend, pressuring them to do so. Europe's heads of state, however, still seem to think the solution is greater political unity not individual fiscal discipline. Indeed, 25 euro-zone governments are now engaged in ratifying a 'fiscal compact.' Its stated purpose is to prevent a repeat of the explosive increase of sovereign debts that can still threaten the solvency of those nations...The treaty will come into effect if just 12 of the 27 European Union countries ratify it, a low-enough hurdle to make its adoption virtually certain. Political leaders will claim that this is a major milestone en route to European political union. But it is really an empty gesture that will have no effect on future deficits and debts. Fortunately, the bond vigilantes understand this and are on the job." Martin Feldstein in The Wall Street Journal.
@ryanavent: There are lots of euro solutions that COULD work if Germany were open to them, which they aren't, which is the problem
Icelandic folk interlude:
Of Monsters and Men play "Little Talks' live on 89.3 The Current.
Got tips, additions, or comments?
E-mail me.
Still to come: Office vacancies shrink; an anti-smoking effort gets bad news; new focus on food safety; clean energy loans have been slowed down; and a dog just wants to stare at you.
Economy
Americans aren't prepared to manage their own retirement funds. "When lawmakers added a subsection to the tax code called the 401(k) more than three decades ago, they could not have imagined that this string of three numbers and a letter would become a fixture in the financial lexicon. A poll by Gallup last year showed that for two-thirds of Americans, not having enough money for retirement topped seven other financial worries, including medical bills, mortgage payments and their children’s college tuitions. Worrying about having enough money for retirement is not a new phenomenon. But the rise of the 401(k), dating to the early 1980s, has steadily shifted more financial responsibility onto the shoulders of many Americans who are -- let’s face it -- clueless. The number of people who are unprepared is growing. In 1983, researchers...calculated that 31 percent of working-age households were 'at risk' of not being able to maintain their standard of living after they retired. By 2009, it was 51 percent." Jia Lynn Yang in The Washington Post.
Office vacancies dropped slightly. "Employers added office space in the first three months of 2012 at a sluggish rate that reflected broad uncertainty about the economy's direction. The national vacancy rate in the office market fell slightly to 17.2% at the end of March, from 17.3% in the fourth quarter of 2011, according to real-estate research service Reis, Inc. That rate has stayed stubbornly high since the recession, and is well above the 12.5% vacancy reached in 2007, before companies moved out of massive amounts of office space. Looked at another way, businesses added about 6 million square feet of space during the quarter in the 79 U.S. markets tracked by Reis. That's a bit more than the quarterly average of 5.1 million last year, but a tiny amount compared with the 139.9 million square feet of space that employers shed during the downturn...The health of the office sector depends heavily on employment levels, and real-estate analysts say vacancy will likely stay high so long as companies have a dim outlook for growth." Eliot Brown in The Wall Street Journal.
Spain is back to crisis state. "Spanish Prime Minister Mariano Rajoy warned Wednesday that his country was facing 'extreme difficulty' as its cost of borrowing money on global markets jumped and doubts increased about whether the government can stick to the strict austerity program designed to bring its debt under control. Facing recession and treacherously high unemployment, Spain is struggling to keep its debt from exceeding targets set by European officials. So far, Spain has been able to remain in the good graces of international investors, raise the money it needs to finance itself and avoid the need for an international bailout...In the past month, the borrowing costs faced by Spain -- the fourth-largest economy in the euro zone -- have increased sharply, renewing fear that the European financial crisis could dangerously escalate. An auction of Spanish five-year and 10-year bonds Wednesday was met with weak demand from investors; interest rates on the country’s 10-year note have risen above 5.6 percent, from less than 5 percent in early March." Howard Schneider in The Washington Post.
A report found a racial discrepancies in the upkeep of foreclosed properties. "Banks and lenders have maintained and marketed foreclosed properties far better in white neighborhoods than in minority neighborhoods, according to a report released Wednesday by the National Fair Housing Alliance. Investigators for the group evaluated more than 1,000 foreclosed properties...They found that properties in predominately black and Latino neighborhoods were far more likely than those in predominately white areas to be left in disrepair, with maintenance problems such as broken or boarded-up windows, unkempt yards, water damage and unsecured entrances. In addition, foreclosed properties in minority neighborhoods were routinely less likely to have for-sale signs than those in white communities. Poor upkeep of so-called 'real estate owned,' or REO, properties can have a detrimental effect on the surrounding community, forcing down property values, attracting crime and vagrancy and presenting potential health hazards." Brady Dennis in The Washington Post.
New Census data offers a picture of the impact of the recession. "The Census Bureau offered the first detailed picture of population shift in the United States since the end of the recession, releasing data that showed that population growth in outer suburbs -- the fastest growing areas in the last decade -- all but ground to a halt in 2010 and 2011, as the painful effects of the housing crisis lingered. The country’s outer suburbs, often referred to as the exurbs by demographers, were at the forefront of the country’s population growth for most of the last decade. New houses mushroomed in those areas as young families bought homes on credit that was easy to get, following the tradition of moving to the suburbs to begin adult lives. But when the housing market collapsed, growth in those areas slowed drastically. The economic recovery has not revived population growth in those areas and, according to an analysis by William Frey, a demographer at the Brookings Institution, has only served to flatten it further." Sabrina Tavernise in The New York Times.
Stop motion interlude:
How Fender Stratocaster guitars are made
Health Care
There are some alternatives to the mandate. "If the individual mandate falls, the Washington health policy community is left with a difficult question: What policy, that isn’t a tax penalty, could stand in its place? Some might say the question is moot. If the Supreme Court rules against the mandate, congressional Republicans will never permit the Obama administration to repair the battered law. But it might not be up to them. If the mandate is overturned but the rest of the law stands, many states might go looking for policy solutions to stabilize the health-care markets that they set up under the Affordable Care Act, but that are now missing the steadying influence of the mandate. And they’ll probably start with a 2011 Government Accountability Office report that lays out nine alternatives to the individual mandate...The fear is that without the requirement to buy coverage, young, healthy Americans will skip buying insurance until they’re sick. That will leave only older, less healthy individuals in the pool, and that will mean higher premiums for everybody." Sarah Kliff in The Washington Post.
The WTO dealt a blow to an anti-smoking effort. "In a blow to the Obama administration's efforts to prevent youth from smoking, a World Trade Organization appeals panel Wednesday upheld an earlier decision that a U.S. ban on clove cigarettes discriminates against Indonesia. The ruling, issued Wednesday, took issue with the 2009 Family Smoking Prevention and Tobacco Control Act that gave the Food and Drug Administration power to regulate the tobacco industry. The ruling found that the law violated global trade rules by banning the production and sale of cigarettes with cloves and many other flavors, but not menthol...Indonesia, the world's leading producer of clove cigarettes, challenged the law in 2010 after losing access to a market worth $15 million a year. Jakarta argued the law unfairly favors U.S.-based menthol-cigarette makers. An earlier WTO decision agreed with Indonesia on the discrimination charge, while acknowledging that the law's aim of discouraging young people from smoking was legitimate." Tom Barkley in The Wall Street Journal.
@afrakt: What percentage of people saying "we spend too much on health care" are really saying "we don't want to raise taxes"?
Domestic Policy
The FCC is planning its spectrum auctions. "Congress granted Federal Communications Commission Chairman Julius Genachowski’s wish for the power to hold an airwaves auction that will pay broadcasters to abandon some of their frequencies, but turning that wish into reality is going to be a challenge. The agency is trying to figure out how to design and conduct the complex auctions, which for the first time will pay people to give up valuable airwaves. Congress provided for the auctions in the payroll tax package. The goal: to free up a big chunk of spectrum for commercial wireless carriers...In a nod to the difficulty of the task, Genachowski recently announced a new incentive auction task force, headed by Ruth Milkman, a former chief of the Wireless Telecommunications Bureau. Genachowski also hired a who’s who of auction experts to aid the commission in its efforts." Brooks Boliek in Politico.
The salmonella outbreak is putting food safety rules back into the spotlight. "Federal and state health officials are focusing on sushi as a possible cause of a widening salmonella outbreak that has sickened at least 93 people over two months...Food-safety advocates said that the salmonella outbreak might well prove to be the sort of sickness preventable by a federal law signed by President Barack Obama last year, but first the administration has to issue wide-ranging standards under the law. The law is supposed to shift the Food and Drug Administration's focus to prevention instead of reacting to problems. In 2009, following a salmonella outbreak involving peanut products, the newly elected Mr. Obama said more vigilance was necessary on food safety, citing his personal stake in the issue, because one of his daughters regularly ate peanut butter at lunch. But while the FDA sent new rules to the White House months ago, the Office of Management and Budget hasn't finished reviewing them." Thomas Burton, Bill Tomson, and Betsy McKay in The Wall Street Journal.
Animals staring deep into your soul interlude:
A dog challenges you to a staring contest.
Energy
Fallout from Solyndra has stalled clean energy loans. "The Energy Department was in such a rush three years ago to issue a loan to solar-panel maker Solyndra LLC that it gave the Treasury Department only a day to review the deal, according to a government report released Wednesday. Today, the situation is the opposite, industry officials say: The department is putting loans through such exacting reviews that some renewable-energy funds look as if they never will be disbursed. The issue came into focus Tuesday when the new chief executive of Fisker Automotive Inc. said the company would consider giving up on a hybrid-electric car factory in Delaware and building it overseas if it can't secure its financing. Until recently, the cornerstone of that financing was to come from a $529 million loan by the Energy Department...The department froze loan disbursements last May after Fisker missed a performance milestone, and the two sides have been negotiating since. Fisker now is seeking new partners." Ryan Tracy in The Wall Street Journal.
It would take years for most fuel-efficent cars to pay off. "Shoppers have more options than ever to fight back, including hybrids, plug-ins, electric vehicles and 'eco' or 'super fuel economy' packages. But opting for models that promise better mileage through new technologies does not necessarily save money, according to data compiled for The New York Times by TrueCar.com, an automotive research Web site. Except for two hybrids, the Prius and Lincoln MKZ, and the diesel-powered Volkswagen Jetta TDI, the added cost of the fuel-efficient technologies is so high that it would take the average driver many years -- in some cases more than a decade -- to save money over comparable new models with conventional internal-combustion engines. That is true at today’s pump prices, around $4, and also if gas were to climb to $5 a gallon, the data shows. Gas would have to approach $8 a gallon before many of the cars could be expected to pay off in the six years an average person owns a car." Nick Bunkley in The New York Times.
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.
Karl Singer is writing Wonkbook while Ezra is traveling.
Top stories
1) The ADP report raised hope for promising jobs numbers on Friday."Private employers added workers at a healthy clip last month, raising hopes that Friday's government employment report will also point toward an improving job market. Private-sector employers hired 209,000 workers in March, after an upwardly revised 230,000 in job gains in February, said payroll processor Automatic Data Processing Inc. and Macroeconomic Advisers, LLC, a consulting firm. January's figures also were revised higher. Private employers have added nearly 2 million workers over the past 12 months. The report comes ahead of Friday's jobs snapshot from the government, which will include public and private employers. While the ADP update isn't as comprehensive as the government's, Wednesday's reading raises hopes that the government's figures will show reasonable gains. Many economists expect Friday's government report to show that the U.S. added 203,000 nonfarm jobs in March, slightly below the 227,000 new jobs in February." Neil Shah in The Wall Street Journal.
@JimPethokoukis: Based on that ADP number, I think the jobs report will be good, bad or -- perhaps -- just so so. Of that, I have no doubt
@grossdm: I guess all that uncertainty over taxes and regulation that has allegedly hindered job creation has dissipated in past few months.
2) Another wave of foreclosures may be coming. "Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low. But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures. 'We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,' said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio. 'Last year was an anomaly, and not in a good way,' he said." Nick Carey in Reuters.
3) Markets are worried about a possible end to stimulus. "Fears that the central banks of Europe and the U.S. may soon end efforts to support financial markets as well as fresh concerns about the health of Europe's weakest countries drove down stock markets around the world Wednesday. European Central Bank President Mario Draghi indicated he would be hesitant to undertake more monetary easing, citing concerns about inflation. That surprised investors who had been relying on the ECB to help support the region's economy and financial markets...Stock indexes from New York to Frankfurt to Tokyo fell sharply. The Dow Jones Industrial Average fell 124.80 points to 13074.75, its worst day since March 6...The slide began in the U.S. Tuesday after signs from the Federal Reserve that it won't immediately embark on a new round of bond buying. That dashed hopes of investors who had anticipated a new program would further juice financial markets and the economy." Jonathan Cheng and Charles Forelle in The Wall Street Journal.
4) Lawmakers are fighting cuts to veterans health care. "The Obama administration’s budget proposal to cut defense spending, in part, by increasing the cost of health care for retired service members has riled veterans groups and members of Congress...With U.S. combat troops out of Iraq and a timetable set for drawing down in Afghanistan, the Pentagon is under increasing pressure to cut spending to help ease the nation’s burgeoning deficit. Among other things, the administration has proposed increasing the fees and co-pays for retired service members covered by the military’s health care program, TRICARE. The increases, to be phased in over four years, must be approved by Congress, which is facing the prospect of deep defense cuts already mandated by law...Veterans’ organizations are angry at the proposed TRICARE cost increases. The Veterans of Foreign Wars, for example, panned them as an attempt to balance the budget on the backs of disabled veterans and men and women in uniform." Leigh Munsil in Politico.
5) Wall Street is digging through the JOBS Act. "Wall Street is examining whether it will benefit from a little-known section of a broad new law that President Obama is expected to sign on Thursday. Provisions tucked into the so-called JOBS Act, or the Jumpstart Our Business Startups, will roll back some major securities regulations and parts of a landmark legal settlement struck almost a decade ago. That 2003 settlement built a Chinese wall between Wall Street research analysts and investment bankers, an effort to prevent analysts from improperly promoting stocks to help their firms drum up business from corporate clients. Under the new legislation, some of those restrictions would be eased when it comes to smaller companies, so-called emerging growth companies. Wall Street senses an opportunity...Almost every big bank on Wall Street, including Goldman Sachs, Morgan Stanley and Bank of America, is poring over the provisions, which some firms say will open a new front on their business model.'" Susanne Craig and Ben Protess in The New York Times.
Top op-eds
1) KLEIN: Don't worry too much about deficit reduction. "I’m not particularly worried about the budget deficit. In fact, of all the major problems the U.S. faces, I’m least worried about the deficit. That’s not because we don’t have to get the problem under control; it’s because I’m pretty sure we will. Why? The budget deficit is unique: If Congress is unable to agree on a remedy, the problem goes away on its own. Would that all of our challenges were so cooperative...I’m confident that we will, one way or another, muddle through. Because when it comes to the deficit, Congress really has two choices: Do something to solve it, or do nothing and let that solve it. The same can’t be said for issues such as infrastructure and loose nukes and climate change and preparing for pandemic flu. On those questions, congressional inaction isn’t enough to make the problem disappear. So those are the issues I worry about." Ezra Klein in Bloomberg.
2) WESSEL: Bank regulation requires a careful balance. "Continued financial innovation--as Yale University's Robert Shiller puts it in his new book, 'Finance and the Good Society'--is 'necessary for managing the risks that enable society to transform creative impulses into vital products and services.' Discouraging those innovations is hazardous to our economic future. But bankers devote a lot of creativity--and platoons of lawyers, lobbyists and financial engineers--to figuring out how to maximize profits while meeting the letter of the rules and how to continue to take risks that will produce profits for them if all goes well and prove costly to taxpayers if all goes wrong...We are watching an arms race, a contest in which the rules get ever-more complicated as well-resourced banks try to outflank regulators and regulators try to catch up. If the banks go too far, we'll get more frequent and severe financial crises. If the regulators go too far, we'll lose the benefits of truly valuable financial innovation." David Wessel in The Wall Street Journal.
3) WATERS: It's unclear if the JOBS Act will create any jobs. "At least some aspects of the Jobs Act should bring clear improvements. The lifting of the 'general solicitation' rule that prevents private companies from even admitting that they’re trying to raise capital, as well as the bar on research reports about upcoming IPOs by banks involved in the process, will remove some of the unnecessary barriers that limit communication around deals. But, at its heart, the new law is a package that reflects the various lobbying efforts of a coalition of financial interests. The new intermediaries that will spring up to service the crowdfunding business, the secondary market operators who fear that their businesses will shrink after Facebook goes public, the bankers, lawyers and accountants starved of IPO fees: all of these stand to gain. Whether more innovation - and jobs - will follow is harder to predict." Richard Waters in The Financial Times.
4) STIGLITZ: Having the U.S. pick the World Bank's head undermines the Bank's effectiveness. "President Obama’s nomination of Jim Yong Kim for the presidency of the World Bank has been well-received--and rightly so, especially given some of the other names that were bandied about. Kim is the Dartmouth president and previously led the World Health Organization’s HIV/AIDS department. But the candidate’s nationality, and the nominating country--whether small and poor or large and rich--should play no role in determining who gets the job...Should America continue to insist on controlling the selection process, it is the bank itself that would suffer. For years, its effectiveness was compromised because it was seen, in part, as a tool of Western governments and their countries’ financial and corporate sectors. Ironically, even America’s long-term interests would be best served by a commitment--not just in words, but also in deeds--to a merit-based system and good governance." Joseph Stiglitz in Slate.
5) FELDSTEIN: The bond vigilantes are good for Europe. "Spain's disappointing government-bond auction this week is a sign of things to come: If Europe's debt-bound governments won't get their fiscal houses in order, the bond vigilantes will descend, pressuring them to do so. Europe's heads of state, however, still seem to think the solution is greater political unity not individual fiscal discipline. Indeed, 25 euro-zone governments are now engaged in ratifying a 'fiscal compact.' Its stated purpose is to prevent a repeat of the explosive increase of sovereign debts that can still threaten the solvency of those nations...The treaty will come into effect if just 12 of the 27 European Union countries ratify it, a low-enough hurdle to make its adoption virtually certain. Political leaders will claim that this is a major milestone en route to European political union. But it is really an empty gesture that will have no effect on future deficits and debts. Fortunately, the bond vigilantes understand this and are on the job." Martin Feldstein in The Wall Street Journal.
@ryanavent: There are lots of euro solutions that COULD work if Germany were open to them, which they aren't, which is the problem
Icelandic folk interlude:
Of Monsters and Men play "Little Talks' live on 89.3 The Current.
Got tips, additions, or comments?
E-mail me.
Still to come: Office vacancies shrink; an anti-smoking effort gets bad news; new focus on food safety; clean energy loans have been slowed down; and a dog just wants to stare at you.
Economy
Americans aren't prepared to manage their own retirement funds. "When lawmakers added a subsection to the tax code called the 401(k) more than three decades ago, they could not have imagined that this string of three numbers and a letter would become a fixture in the financial lexicon. A poll by Gallup last year showed that for two-thirds of Americans, not having enough money for retirement topped seven other financial worries, including medical bills, mortgage payments and their children’s college tuitions. Worrying about having enough money for retirement is not a new phenomenon. But the rise of the 401(k), dating to the early 1980s, has steadily shifted more financial responsibility onto the shoulders of many Americans who are -- let’s face it -- clueless. The number of people who are unprepared is growing. In 1983, researchers...calculated that 31 percent of working-age households were 'at risk' of not being able to maintain their standard of living after they retired. By 2009, it was 51 percent." Jia Lynn Yang in The Washington Post.
Office vacancies dropped slightly. "Employers added office space in the first three months of 2012 at a sluggish rate that reflected broad uncertainty about the economy's direction. The national vacancy rate in the office market fell slightly to 17.2% at the end of March, from 17.3% in the fourth quarter of 2011, according to real-estate research service Reis, Inc. That rate has stayed stubbornly high since the recession, and is well above the 12.5% vacancy reached in 2007, before companies moved out of massive amounts of office space. Looked at another way, businesses added about 6 million square feet of space during the quarter in the 79 U.S. markets tracked by Reis. That's a bit more than the quarterly average of 5.1 million last year, but a tiny amount compared with the 139.9 million square feet of space that employers shed during the downturn...The health of the office sector depends heavily on employment levels, and real-estate analysts say vacancy will likely stay high so long as companies have a dim outlook for growth." Eliot Brown in The Wall Street Journal.
Spain is back to crisis state. "Spanish Prime Minister Mariano Rajoy warned Wednesday that his country was facing 'extreme difficulty' as its cost of borrowing money on global markets jumped and doubts increased about whether the government can stick to the strict austerity program designed to bring its debt under control. Facing recession and treacherously high unemployment, Spain is struggling to keep its debt from exceeding targets set by European officials. So far, Spain has been able to remain in the good graces of international investors, raise the money it needs to finance itself and avoid the need for an international bailout...In the past month, the borrowing costs faced by Spain -- the fourth-largest economy in the euro zone -- have increased sharply, renewing fear that the European financial crisis could dangerously escalate. An auction of Spanish five-year and 10-year bonds Wednesday was met with weak demand from investors; interest rates on the country’s 10-year note have risen above 5.6 percent, from less than 5 percent in early March." Howard Schneider in The Washington Post.
A report found a racial discrepancies in the upkeep of foreclosed properties. "Banks and lenders have maintained and marketed foreclosed properties far better in white neighborhoods than in minority neighborhoods, according to a report released Wednesday by the National Fair Housing Alliance. Investigators for the group evaluated more than 1,000 foreclosed properties...They found that properties in predominately black and Latino neighborhoods were far more likely than those in predominately white areas to be left in disrepair, with maintenance problems such as broken or boarded-up windows, unkempt yards, water damage and unsecured entrances. In addition, foreclosed properties in minority neighborhoods were routinely less likely to have for-sale signs than those in white communities. Poor upkeep of so-called 'real estate owned,' or REO, properties can have a detrimental effect on the surrounding community, forcing down property values, attracting crime and vagrancy and presenting potential health hazards." Brady Dennis in The Washington Post.
New Census data offers a picture of the impact of the recession. "The Census Bureau offered the first detailed picture of population shift in the United States since the end of the recession, releasing data that showed that population growth in outer suburbs -- the fastest growing areas in the last decade -- all but ground to a halt in 2010 and 2011, as the painful effects of the housing crisis lingered. The country’s outer suburbs, often referred to as the exurbs by demographers, were at the forefront of the country’s population growth for most of the last decade. New houses mushroomed in those areas as young families bought homes on credit that was easy to get, following the tradition of moving to the suburbs to begin adult lives. But when the housing market collapsed, growth in those areas slowed drastically. The economic recovery has not revived population growth in those areas and, according to an analysis by William Frey, a demographer at the Brookings Institution, has only served to flatten it further." Sabrina Tavernise in The New York Times.
Stop motion interlude:
How Fender Stratocaster guitars are made
Health Care
There are some alternatives to the mandate. "If the individual mandate falls, the Washington health policy community is left with a difficult question: What policy, that isn’t a tax penalty, could stand in its place? Some might say the question is moot. If the Supreme Court rules against the mandate, congressional Republicans will never permit the Obama administration to repair the battered law. But it might not be up to them. If the mandate is overturned but the rest of the law stands, many states might go looking for policy solutions to stabilize the health-care markets that they set up under the Affordable Care Act, but that are now missing the steadying influence of the mandate. And they’ll probably start with a 2011 Government Accountability Office report that lays out nine alternatives to the individual mandate...The fear is that without the requirement to buy coverage, young, healthy Americans will skip buying insurance until they’re sick. That will leave only older, less healthy individuals in the pool, and that will mean higher premiums for everybody." Sarah Kliff in The Washington Post.
The WTO dealt a blow to an anti-smoking effort. "In a blow to the Obama administration's efforts to prevent youth from smoking, a World Trade Organization appeals panel Wednesday upheld an earlier decision that a U.S. ban on clove cigarettes discriminates against Indonesia. The ruling, issued Wednesday, took issue with the 2009 Family Smoking Prevention and Tobacco Control Act that gave the Food and Drug Administration power to regulate the tobacco industry. The ruling found that the law violated global trade rules by banning the production and sale of cigarettes with cloves and many other flavors, but not menthol...Indonesia, the world's leading producer of clove cigarettes, challenged the law in 2010 after losing access to a market worth $15 million a year. Jakarta argued the law unfairly favors U.S.-based menthol-cigarette makers. An earlier WTO decision agreed with Indonesia on the discrimination charge, while acknowledging that the law's aim of discouraging young people from smoking was legitimate." Tom Barkley in The Wall Street Journal.
@afrakt: What percentage of people saying "we spend too much on health care" are really saying "we don't want to raise taxes"?
Domestic Policy
The FCC is planning its spectrum auctions. "Congress granted Federal Communications Commission Chairman Julius Genachowski’s wish for the power to hold an airwaves auction that will pay broadcasters to abandon some of their frequencies, but turning that wish into reality is going to be a challenge. The agency is trying to figure out how to design and conduct the complex auctions, which for the first time will pay people to give up valuable airwaves. Congress provided for the auctions in the payroll tax package. The goal: to free up a big chunk of spectrum for commercial wireless carriers...In a nod to the difficulty of the task, Genachowski recently announced a new incentive auction task force, headed by Ruth Milkman, a former chief of the Wireless Telecommunications Bureau. Genachowski also hired a who’s who of auction experts to aid the commission in its efforts." Brooks Boliek in Politico.
The salmonella outbreak is putting food safety rules back into the spotlight. "Federal and state health officials are focusing on sushi as a possible cause of a widening salmonella outbreak that has sickened at least 93 people over two months...Food-safety advocates said that the salmonella outbreak might well prove to be the sort of sickness preventable by a federal law signed by President Barack Obama last year, but first the administration has to issue wide-ranging standards under the law. The law is supposed to shift the Food and Drug Administration's focus to prevention instead of reacting to problems. In 2009, following a salmonella outbreak involving peanut products, the newly elected Mr. Obama said more vigilance was necessary on food safety, citing his personal stake in the issue, because one of his daughters regularly ate peanut butter at lunch. But while the FDA sent new rules to the White House months ago, the Office of Management and Budget hasn't finished reviewing them." Thomas Burton, Bill Tomson, and Betsy McKay in The Wall Street Journal.
Animals staring deep into your soul interlude:
A dog challenges you to a staring contest.
Energy
Fallout from Solyndra has stalled clean energy loans. "The Energy Department was in such a rush three years ago to issue a loan to solar-panel maker Solyndra LLC that it gave the Treasury Department only a day to review the deal, according to a government report released Wednesday. Today, the situation is the opposite, industry officials say: The department is putting loans through such exacting reviews that some renewable-energy funds look as if they never will be disbursed. The issue came into focus Tuesday when the new chief executive of Fisker Automotive Inc. said the company would consider giving up on a hybrid-electric car factory in Delaware and building it overseas if it can't secure its financing. Until recently, the cornerstone of that financing was to come from a $529 million loan by the Energy Department...The department froze loan disbursements last May after Fisker missed a performance milestone, and the two sides have been negotiating since. Fisker now is seeking new partners." Ryan Tracy in The Wall Street Journal.
It would take years for most fuel-efficent cars to pay off. "Shoppers have more options than ever to fight back, including hybrids, plug-ins, electric vehicles and 'eco' or 'super fuel economy' packages. But opting for models that promise better mileage through new technologies does not necessarily save money, according to data compiled for The New York Times by TrueCar.com, an automotive research Web site. Except for two hybrids, the Prius and Lincoln MKZ, and the diesel-powered Volkswagen Jetta TDI, the added cost of the fuel-efficient technologies is so high that it would take the average driver many years -- in some cases more than a decade -- to save money over comparable new models with conventional internal-combustion engines. That is true at today’s pump prices, around $4, and also if gas were to climb to $5 a gallon, the data shows. Gas would have to approach $8 a gallon before many of the cars could be expected to pay off in the six years an average person owns a car." Nick Bunkley in The New York Times.
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.
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