Washington elites making their move on Social Security – Alan Simpson and Erskine Bowles, the co-chairs of President Obama’s deficit commission … released their proposal to reduce the federal deficit… In releasing their plan, the co-chairs went out of their way to make clear that they were proposing changes to Social Security “for its own sake, not for deficit reduction.” … Simpson and Bowles just couldn’t keep their hands off the program. One thing they propose is increasing Social Security’s retirement age to 69. … Increasing the age to 69 would cut benefits by one-quarter from a decade ago, when the retirement age was 65. The co-chairs also want to increase the early retirement age to 64. …As a new General Accountability Office report concluded… Raising the early retirement age will shut out workers who are disproportionately low income and minority, potentially forcing them to seek disability benefits or welfare. Over the last quarter-century, life expectancy of lower-income men increased by one year, compared to five for upper-income men. And lower-income women have experienced declines in longevity. … In effect, the Bowles-Simpson plan says to America’s workers that they must work longer for less because the rich are living longer.
An Open Letter to Ben Bernanke – Ours is not an economics column, nor do we profess to grasp the mechanics of how it is, exactly, that you do what you do. Nonetheless, while we admit to not being schooled enough to grasp the finer points of your job as Fed Chairman, we do have a strong opinion about your persistence in bemoaning the state of the current unemployment rate, as well as your determination to plow ahead with the purchase of billions of dollars of Federal debt at negligible interest rates in order to, somehow, cure that high unemployment rate. Our opinion is that your plan it is doomed to look foolish thanks to an impending rise in employment, and corresponding drop in unemployment, that we think will happen even without you buying a single government bond. How, you may ask, do we dare argue given our own lack of schooling in your own chosen field?
Cancun and Climate: Government Won’t Act, But Business Will – Over the next two weeks, Cancun will be in the spotlight for something other than spring break madness. As host of the annual climate summit that once saw such promise in Kyoto in 1997, Cancun in 2010 is framed by the spectacular failure of last year’s Oslo talks and by the stark realization that nearly 200 nations simply cannot agree on anything of consequence. No matter how unequivocal the scientific evidence is that climate is changing and human activity is a central factor, nearly 7 billion people loosely represented by a few hundred governments are agreed on nothing. We know the reasons why action on climate is frozen: emerging countries such as China, India and Brazil will not accept limits that stifle their rapid emergence; developed countries such as the United States and the European Union can’t or won’t subsidize efforts abroad; and the U.S. federal government can’t even agree on binding limits for America itself. While everyone shares the sentiment that they do not want to destroy the earth or ruin it for their grandchildren, there is no consensus on how to shift global economic activity in a more sustainable direction. That should be cause for despair, and much of the commentary this week will likely conclude that we are on an inexorable and negative path towards deleterious climate change. But that is only because we collectively focus too much on government and its failings rather than on business and its successes.
Lacking All Conviction – Krugman – Mark Thoma directs us to an appalling story — apparently Obama held a meeting after the midterm to debate whether our unemployment problem is cyclical or structural. What I want to know is, who was arguing for structural? I find it hard to think of anyone I know in the administration’s economic team who would make that case, who would deny that the bulk of the rise in unemployment since 2007 is cyclical. And as I and others have been trying to point out, none of the signatures of structural unemployment are visible: there are no large groups of workers with rising wages, there are no large parts of the labor force at full employment, there are no full-employment states aside from Nebraska and the Dakotas, inflation is falling, not rising. More generally, I can’t think of any Democratic-leaning economists who think the problem is largely structural. No wonder we’re in such trouble. Obama must gravitate instinctively to people who give him bad economic advice…
Science & the Public: Lakes are warming across the globe – Throughout the past quarter-century, inland lakes have been experiencing a small, steadily rising nighttime fever. Globally, the average increase has hovered around 0.045 degrees Celsius per year, but in some regions the increase has been more than twice that — or about 1 °C per decade. In some regions — notably the Northern Hemisphere’s mid and upper latitudes — lakes have been warming faster than have surrounding air temperatures. No question, the upticks have been small. They also appear to have been inexorable since at least 1985. Indeed, these observations, published November 24 in Geophysical Research Letters, represent “a new independent data source for assessing the impact of climate change throughout the world,” JPL’s thermal survey of 167 major lakes relied on satellites. Like hovering thermometers, those eyes in the sky have been collecting infrared — heat — measurements of surface features. Nighttime lake surfaces were surveyed during summer months in the Northern Hemisphere and in January through March in the Southern Hemisphere.
Your One-Stop Guide To Frontrunning Monday’s Double POMO – On Monday, Brian Sack will go for an all-out onslaught of Netflix and Amazon shorts. For the first time ever the New York Fed will hold not one but two monetization procedures. Incidentally both will focus on the part of the curve that in the past two weeks has been performing best: the sides of the belly. The two operations, expected to be about $2 and $7 billion, will focus on bonds in the 10-17 Y and 2.5-4 Y sector. In keeping with the tradition of sharing with our readers the bonds that Sack will almost certainly end up monetizing, we present the 10 cheapest bonds that will likely end up being acquired on Monday. As the Fed is now the largest single holder of Treasurys (since the announcement of the SOMA reinvestment program on August 10, the NY Fed has purchased a total of $124bn Treasuries / TIPS: of the $105bn scheduled for the current month, the Fed has purchased $48bn per MS) expect to see increasingly more detailed analyses of the Fed’s SOMA composition as cartoons about how to front run the Fed become increasingly more popular. Primary Open Market Operation