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Politics

Behind the Crash -- The Commodities Bubble

WASHINGTON -- First was the dot-com bubble, then the housing bubble. Now comes the commodities bubble. We don't fully understand the stock market's current turmoil, but we do know it's driven at least in part by a bubble of raw material prices. Their collapse weighs on world stock markets through fears of slower economic growth and large ...Read more

Europe's Sobering Warning on Jobs

WASHINGTON -- We can learn from Europe about job creation, but many Americans may reject the underlying lesson. It is: If you price labor too high -- pay workers more than they produce -- businesses will slow or stop hiring. They won't sponsor their own bankruptcy.

Everyone knows that Europe's economy is in the doldrums. Growth in the eurozone ...Read more

Europe's Sobering Warning on Jobs

WASHINGTON -- We can learn from Europe about job creation, but many Americans may reject the underlying lesson. It is: If you price labor too high -- pay workers more than they produce -- businesses will slow or stop hiring. They won't sponsor their own bankruptcy.

Everyone knows that Europe's economy is in the doldrums. Growth in the eurozone ...Read more

China's Risky Money Game

WASHINGTON -- To understand China's surprise currency devaluation, you need context.

China is engineering a major economic transformation -- or, at least, trying. For years, it relied upon export-led growth and massive investments in housing, infrastructure (roads, rails, ports) and heavy industry (steel, glass, aluminum). This economic model ...Read more

Will the Fed's "Lift Off" Be Grounded?

WASHINGTON -- For many months, economy-watchers have been obsessed with "lift off": the moment the Federal Reserve raises short-term interest rates, which have been held close to zero since late 2008. Fed Chair Janet Yellen has indicated that, if the economy grows as it has, that moment would come "at some point this year" -- generally taken to ...Read more

Curbing Global Warming: Mission Impossible?

WASHINGTON -- On climate change, we need to go beyond the tired storyline of "deniers" versus the "scientific consensus." Until it's discredited by falling temperatures, global warming is a reality. We can still debate how much has occurred and the share attributable to human activity, but the more relevant question is what -- if anything -- can...Read more

Health Spending -- Back to the Future

WASHINGTON -- It was nice while it lasted, but it's over and may not return for many years, if ever. The "it" is the slowdown in national health spending.

From 2008 to 2013, health spending grew roughly 4 percent a year, which was less than half the 9 percent average of the three decades before the Great Recession. Because the 4 percent rate ...Read more

Minimum-Wage Madness

WASHINGTON -- A while back -- in January 1997, to be precise -- I wrote a column on the euro, which was to be introduced in 1999. I didn't find much to like. It was a "lunatic idea." A single currency worked in the United States, "because wages are flexible and workers are mobile." Europe lacked these advantages. Countries would also give up ...Read more

Explaining the World's Economic Funk

WASHINGTON -- To understand the economy, you've got to resort to psychology. Throughout the recovery, forecasters -- including those at the Federal Reserve and the International Monetary Fund -- have repeatedly overestimated the economy's strength. They've predicted faster economic growth than has occurred.

The main reason for the errors, I ...Read more

Medicare and Medicaid -- A Tarnished Triumph

WASHINGTON -- It was exactly 50 years ago this week that President Lyndon Johnson flew to Independence, Missouri and, with former President Harry Truman at his side, signed into law the legislation creating Medicare and Medicaid. It was a seminal moment in American political history.

For three decades, liberals and conservatives had warred over...Read more

The Trouble with Clinton's Profit Sharing

WASHINGTON -- Hillary Clinton has just given us an object lesson -- presumably unintended -- demonstrating why our tax system is such a complex mess. The main reason is this: Politicians of both parties cannot resist the temptation to use the tax code to promote the latest political fad or to please favored constituencies. As a result, tax ...Read more

Is Puerto Rico Our Greece?

WASHINGTON -- We're told that Puerto Rico is our Greece, and sometimes it seems so. The U.S. territory (its residents have been American citizens since 1917) has a heap of economic problems. Gov. Alejandro Garcia Padilla recently told The New York Times that its $72 billion debt is "not payable." To buttress the point, he commissioned a study of...Read more

Productivity Goes Bust

WASHINGTON -- What's surprising about the disappointing slowdown in productivity is that, by all outward signs, it ought to be booming. Productivity is economic jargon for efficiency, and robust productivity growth is the engine of higher living standards. We routinely associate faster productivity with major technology advances (the steam ...Read more

The True Danger of China's Crash

WASHINGTON -- China's spectacular stock crash poses three questions. First, what caused it? Next, will it harm the "real" economy of spending and hiring, inside China and beyond? And, finally, how will it affect China's Communist Party and its economic strategy?

If you haven't paid attention, here are some basics about the crash. The Shanghai ...Read more

Greece's D-Day

WASHINGTON -- Suddenly Greece is about a lot more than Greece.

The lopsided Greek vote -- 61 percent to 39 percent -- to reject the last rescue package from the country's creditors has cast their impasse into a high-stakes drama over the future of Europe. Greece itself is teetering on the edge of economic collapse. Its banks are virtually ...Read more

The Global Debt Trap

WASHINGTON -- We have the Greeks to thank for an elementary tutorial in what ails the world economy. Greece's central problem is that it has too much debt and too little economic growth (none actually) to service the debt. The country is caught in an economic cul de sac. It can't seem to generate growth without spending more or taxing less, ...Read more

The Next Financial Crisis?

WASHINGTON -- A central economic question of our time is whether the policies undertaken to recover from the last financial crisis are laying the groundwork for the next. We now have two reports from reputable groups suggesting just that.

The first comes from the Bank for International Settlements (BIS), which was created in 1930 to handle ...Read more

Government -- Back to the 1930s?

WASHINGTON -- A recent Congressional Budget Office report -- "The 2015 Long-Term Budget Outlook" -- reminds us that the federal government is slowly becoming an agency for taking care of the elderly. Almost everything else is being crowded out. We ignored that during the Obama presidency, and now it seems that the fledgling presidential campaign...Read more

The CEO Backlash

"Prosperity can't be just for CEOs and hedge fund managers."

--Hillary Clinton

WASHINGTON -- It seems inevitable that the unfolding presidential campaign will also become a referendum on American capitalism and, in turn, that capitalism will be defined in part by lofty executive pay. This makes CEOs among capitalism's worst advocates. ...Read more

The Retreat of 'Peak Oil'

WASHINGTON -- The recent meeting of OPEC provides an opportunity to understand the mysteries of the global oil market. As expected, OPEC decided not to cut its oil production. Barring unanticipated developments, prices will drop, says oil analyst Larry Goldstein. Potential oil supply, including drawdowns from bloated inventories, exceeds demand....Read more

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