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January 31, 2015

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Posted: 31 Jan 2015 12:06 AM PST

'Don't Trade Away Our Health'

Posted: 30 Jan 2015 09:34 AM PST

Joe Stiglitz:

Don't Trade Away Our Health: A secretive group met behind closed doors in New York this week. What they decided may lead to higher drug prices for you and hundreds of millions around the world.
Representatives from the United States and 11 other Pacific Rim countries convened to decide the future of their trade relations in the so-called Trans-Pacific Partnership (T.P.P.). Powerful companies appear to have been given influence over the proceedings, even as full access is withheld from many government officials from the partnership countries.
Among the topics negotiators have considered are some of the most contentious T.P.P. provisions — those relating to intellectual property rights. And we're not talking just about music downloads and pirated DVDs. These rules could help big pharmaceutical companies maintain or increase their monopoly profits on brand-name drugs. ...

U.S. Workers Still Waiting for Wage Growth

Posted: 30 Jan 2015 09:34 AM PST

Jeffrey Sparshott of the WSJ:

U.S. Workers Still Waiting for Wage Growth: U.S. employers aren't yet getting squeezed by workers demanding higher wages.
The employment-cost index, a broad gauge of wage and benefit expenditures, rose a seasonally adjusted 0.6% in the fourth quarter last year, the Labor Department said Friday. That's down from 0.7% in the two earlier quarters and jibes with other data showing only limited wage pressure across the U.S.
Wages and salaries, which account for about 70% of compensation costs, climbed 0.5%, a slowdown from the third quarter's 0.8% pace. Benefit costs rose 0.6%, matching the prior quarter.
The data is better than recent hourly earnings figures, which showed wages declining in December despite a postrecession low for the unemployment rate. ...

'Audit the Fed? Not So Fast'

Posted: 30 Jan 2015 09:34 AM PST

Catherine Rampell:

Audit the Fed? Not so fast: Not this again.
Calls to "Audit the Fed" are back. And just as before, they are extraordinarily dangerous to the health of the U.S. economy.
First, a little background. Conspiracy theories about the Federal Reserve's wacky technical mumbo-jumbo voodoo have a long populist history. Monetary policy is complicated and abstract; entrusting it to a secretive, propeller-headed cabal naturally arouses suspicion. No surprise, then, that libertarian hero and former Texas congressman Ron Paul for years tried to persuade his colleagues to curb the central bank's power and independence with recurrent calls to "Audit the Fed" (if not kill it entirely). He made Fed audits a centerpiece of his 2008 and 2012 presidential campaigns.
Now, with Republicans controlling both houses of Congress, he might finally get his way.
Sen. Rand Paul (R-Ky.) has picked up his father's mantle and reintroduced the proposal as the Federal Reserve Transparency Act of 2015. Sen. Ted Cruz (R-Tex.) — like Paul a likely 2016 presidential contender — has also joined the cause, along with 29 other co-sponsors. A companion bill was introduced in the House by Rep. Thomas Massie (R-Ky.). ...

'Real GDP increased at 2.6% Annualized Rate in Q4'

Posted: 30 Jan 2015 09:34 AM PST

Bill McBride at Calculated Risk:

BEA: Real GDP increased at 2.6% Annualized Rate in Q4: From the BEA: Gross Domestic Product: Fourth Quarter and Annual 2014 (Advance Estimate)

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.6 percent in the fourth quarter of 2014, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0 percent.
...
The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by an upturn in private inventory investment and an acceleration in PCE.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 0.3 percent in the fourth quarter, in contrast to an increase of 1.4 percent in the third. Excluding food and energy prices, the price index for gross domestic purchases increased 0.7 percent, compared with an increase of 1.6 percent.
The advance Q4 GDP report, with 2.6% annualized growth, was below expectations of a 3.2% increase.

Personal consumption expenditures (PCE) increased at a 4.3% annualized rate - a strong pace!

The key negatives were trade (subtracted 1.02 percentage point) and Federal government spending (subtracted 0.54 percentage points). ...

Overall this was a solid report with strong PCE and private domestic investment.

Paul Krugman: Europe’s Greek Test

Posted: 30 Jan 2015 09:22 AM PST

Will Europe pass its latest test?:

Europe's Greek Test, by Paul Krugman, Commentary, NY Times: ... Recent events in Greece pose a fundamental challenge for Europe: Can it get past the myths and the moralizing, and deal with reality in a way that respects the Continent's core values? If not, the whole European project — the attempt to build peace and democracy through shared prosperity — will suffer a terrible, perhaps mortal blow. ...
...to oversimplify things a bit, you can think of European policy as involving a bailout, not of Greece, but of creditor-country banks, with the Greek government simply acting as the middleman — and with the Greek public, which has seen a catastrophic fall in living standards, required to make further sacrifices so that it, too, can contribute funds to that bailout.
One way to think about the demands of the newly elected Greek government is that it wants a reduction in the size of that contribution. ... But doesn't Greece have an obligation to pay ... debts? That's where the moralizing comes in.
It's true that Greece (or more precisely the center-right government that ruled the nation from 2004-9) voluntarily borrowed vast sums. It's also true, however, that banks in Germany and elsewhere voluntarily lent Greece all that money. We would ordinarily expect both sides of that misjudgment to pay a price. But the private lenders have been largely bailed out... Meanwhile, Greece is expected to keep on paying.
Now,... nobody believes that Greece can fully repay. So why not recognize that reality and reduce the payments to a level that doesn't impose endless suffering? Is the goal to make Greece an example for other borrowers? If so, how is that consistent with the values of what is supposed to be an association of sovereign, democratic nations? ...
Objectively, resolving this situation shouldn't be hard. ...Greece has actually made great progress in regaining competitiveness; wages and costs have fallen dramatically, so that, at this point, austerity is the main thing holding the economy back. So what's needed is simple: Let Greece run smaller but still positive surpluses, which would relieve Greek suffering, and let the new government claim success, defusing the anti-democratic forces waiting in the wings. Meanwhile, the cost to creditor-nation taxpayers — who were never going to get the full value of the debt — would be minimal.
Doing the right thing would, however, require that other Europeans, Germans in particular, abandon self-serving myths and stop substituting moralizing for analysis.
Can they do it? We'll soon see.

Links for 01-30-15

Posted: 30 Jan 2015 12:06 AM PST

[Had this set to autopost, but accidentally hit p.m. instead of a.m., so it's very late...]

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