The Ticker Quick Views on Politics, Economics and Finance
Flight delays aren’t the only high-profile problem created by budget sequestration. The military, facing mandatory spending cuts of 10 percent across most programs, has canceled several public events including New York Fleet Week, scheduled for May 23 to 30.
It’s not a surprising cut. Fleet Week is a nice-to-have celebration, not a core function of the Navy. Official reaction has been muted; the office of New York Mayor Mike Bloomberg issued a statement saying “We understand the Navy's budgetary limitations and hope that the Fleet Week tradition can continue in 2014." (Bloomberg is the principal owner of Bloomberg L.P.) But should Fleet Week come back in 2014 -- or is its dispensability a sign that the event should be scrapped for good?READ MORE
Yesterday, we got results from the two-year Oregon Health Study, which randomly assigned some low-income people to receive Medicaid coverage while others did not. The study found that Medicaid led people to consume more health care and was effective in reducing both financial strains due to medical costs and depression. But it did not find significant effects on the physical health measures that were tracked.
Despite efforts to spin it to the contrary, this is bad news for advocates of the Medicaid expansion. While Medicaid is clearly good for some things, it was supposed to be good for all of the measures tracked.READ MORE
When I woke up yesterday, like every day, I grabbed my iPhone from the bedside table and began looking through my e-mail and checking my stock portfolio, Facebook and Twitter. I was interested to note that Apple Inc. (AAPL) plans to work with several car manufacturers to integrate maps and other products into cars -- the reaction, however, was scant at best.
In the Steve Jobs era, this would be the type of event reserved for the Worldwide Developers Conference; now, like the last several launches of “new” products, it was thrown into the garbage heap of “So what?”READ MORE
Matthew C. Klein
In many countries, May 1 is a public holiday in honor of "International Workers' Day." The day has its roots in the global communist movement which is one reason Americans and Canadians prefer to celebrate Labor Day in September. (In the U.S., May 1 is technically both Loyalty Day and Law Day.) Today seems as good a time as any to take a quick look at what the socialists and communists actually achieved on behalf of workers.
On the positive side of the ledger, agitators gave us things like the eight-hour workday, prohibitions against child labor and the minimum wage. Some economists have argued that each of those laws is a form of discrimination that privileges some workers over others. Most people either doubt the existence of such negative effects, or think they are well worth enduring for the sake of humane working conditions.READ MORE
Ramesh Ponnuru & Margaret Carlson
Bloomberg View columnists Margaret Carlson and Ramesh Ponnuru met online today to talk about the case of Kermit Gosnell, the Philadelphia doctor who is charged with killing fetuses during late-term abortions. (The case went to the jury yesterday.) What follows is a lightly edited transcript.
Margaret: Ramesh, I'm sensitive about your side criticizing mine for not jumping on the Kermit Gosnell case. By the time conservative critics were doing their criticizing, it had been covered (although I'm ashamed to say not by me; I wish I'd known what was going on but I didn't). And conservatives were covering it in the meta sense -- writing about the coverage. That's because there is no fight from the other side. None. How could anyone support what Gosnell is accused of doing, never mind the conditions of filth and neglect, or the inhumanity to both mother and child?READ MORE
I had an odd conversation with Rhode Island Governor Lincoln Chafee this week.
Chafee has been in the job since 2011. During that time, Rhode Island has endured some of the most intense fiscal stresses of any state. Several decades of economic underperformance have led to severely underfunded state and local public employee pension systems. The economic crisis of the last few years, which hit Rhode Island exceptionally hard, exacerbated those pressures.READ MORE
I keep hearing about the deleterious effect cuts in government spending are having on the U.S. economy. The Federal Reserve said as much in its statement following today's meeting. I decided it was time to take a peek at the data.
In nominal terms, federal government spending and investment, as reflected in the Bureau of Economic Analysis's National Income and Product Accounts, has been relatively stable since U.S. President Barack Obama took office. It was $1.2 trillion in the first quarter of 2013 compared with $1.1 trillion in the first quarter of 2009. In inflation adjusted terms, government spending shows little change in the past four years. Compared with the peak of $1.1 trillion in the third quarter of 2010, however, it is down 10 percent to $983.2 billion.READ MORE
At first, it struck many people (including me) as passing strange that Apple Inc., which is sitting on a $145 billion cash stockpile, would partially finance a $100 billion reward for shareholders by issuing $17 billion in debt.
Apple's annual cash flow, moreover, is twice the size of the debt issue.READ MORE
Matthew C. Klein
Before Peter Jackson chose to film the "Lord of the Rings" and "Hobbit" films in his native land, New Zealand was mostly known as the small country next to Australia. Its main exports are milk and meat from pasture-raised sheep, cows and deer.
This hasn't prevented a few pastoral islands from playing an outsized role in the controversy surrounding Carmen Reinhart's and Kenneth Rogoff's research into the connection between government indebtedness and economic growth.READ MORE
The European Court of Human Rights ruled today on what was already obvious: that Ukraine's imprisonment of former Prime Minister Yulia Tymoshenko on abuse-of-office charges was politically motivated -- or at least unrelated to the accusations themselves.
The timing of the court's decision is inconvenient for Ukraine's government and for the European Union. Both want to declare that Ukraine has met its conditions for signing an Association Agreement, which has a May deadline.READ MORE
On Day 2, the Jason Collins story became a little more complicated.
Except maybe in the narrow mind of ESPN basketball analyst Chris Broussard -- who said that Collins is “walking in open rebellion to God” -- there aren’t any value judgments to be made. What does seem worth discussing, in the wake of the flood of media coverage -- plus a mention at a presidential press conference -- is whether we are maybe giving this story a little more attention than it deserves. The answer is yes and no.READ MORE
So much for the notion that diluting banks' shareholders is necessarily bad for them.
Shares of Deutsche Bank AG were up as much as 8.5 percent this morning after Germany's largest bank sold 2.96 billion euros ($3.88 billion) of stock at 32.90 euros each. Only a few months ago, Deutsche Bank's co-chief executive officer, Anshu Jain, said issuing new shares wasn't in investors' interests. Oh well.READ MORE
Matthew C. Klein
Although low interest rates haven't conquered unemployment in the rich world, they're having a big impact elsewhere. Junk spreads are exceptionally low and the issuance of bonds with weak underwriting standards has soared. Yield-starved investors are gobbling up new "covenant lite," "payment in kind" and "dividend recapitalization" bonds at a faster pace than during the credit bubble.
One recent beneficiary of this "dash for trash" is the small landlocked country of Rwanda. Last week, the government of Rwanda sold $400 million in dollar-denominated 10-year bonds at an annual yield of just 6.875 percent and a bid-to-cover ratio of nearly 10. (Typical U.S. sovereign debt auctions have a bid-to-cover ratio between 2 and 3.)READ MORE
I’m glad NBA player Jason Collins has publicly announced that he’s gay. But I’m already sick of hearing how “brave” that was. A main reason professional sports (especially male team sports) have remained a bastion of homophobia is that gay players have failed to show leadership by coming out and insisting on acceptance. By coming out, Collins is fulfilling an obligation to lead -- belatedly.
Unlike the military, sports teams are not bureaucratic enterprises where attitudes can be changed by orders from above. Instead, they will have to change the way broader society did: through gay people making themselves known to be existing, nonthreatening and valuable. Yet it took until today to have even one out male professional athlete in major team sports -- and we may not even have that. Collins is a free agent who hopes to play next season, but might not. So the NBA could still be looking for its first out player.READ MORE
It was only a matter of time, and that time has arrived: In the latest issue of Sports Illustrated, NBA center Jason Collins has come out as gay.
The first thing to note is that this is a historic moment. Think about how long it has taken. Dave Kopay, a former NFL running back, declared he was gay 38 years ago, when he was three years removed from his playing career. Since then, other ex-athletes in major sports have come out. And active athletes in minor sports --- such as Martina Navratilova in tennis -- have come out.READ MORE
President Barack Obama is arguably the nation's top gun salesman. The "Obama surge," as the Wall Street Journal calls it (others call it the "Obama bubble"), appears to have increased gun sales in the U.S. by millions of units over his presidency.
The chart with the Journal story shows the sustained -- and rising -- bump.READ MORE
Yuval Levin, among other conservatives, has made an offer to liberals: Let’s delay the implementation of Obamacare for a year and make everybody better off:
Congressional Democrats surely want to avoid being blamed for a meltdown of American health care during a congressional election year, the people implementing this law at every level could certainly use the time, and Republicans believe that more time would not make Obamacare more popular but would allow them to further develop and articulate their alternatives (and allow another election to intervene earlier in the rollout process, making a replacement more plausible).
Liberals, wisely, are saying no. What’s funny about this conversation is that conservatives have been accidentally managing expectations for implementation: By harping constantly on what a disaster the rollout is going to be, they will make what actually happens look good by comparison.READ MORE
Clearly the wheels are starting to come off Europe's austerity train, as German Finance Minister Wolfgang Schaeuble unveils a bilateral investment plan for Spain later today and Italy declares a change of course. And suddenly, I have some sympathy for Germany's austerians.
Germany's policy for fixing the euro area's debt crisis has been wrong -- especially in terms of its own tight fiscal stance, as Megan Greene writes on Bloomberg View today. Yet, as so often, finding the right alternative to replace a failed policy won't be easy. To get an idea of what there is to be afraid of, just look at the document from France's Socialist Party that leaked late last week.READ MORE
As I discuss in my column this week, President Barack Obama and congressional Republicans haven't fulfilled their ambitions for the first 100 days of the new term. The polls are telling: The president hasn't had a bump in voter approval since his re-election in November; the already diminished Republican brand name has sunk a little lower.
The average of five national polls conducted in April gives the president a 49 percent job-approval rating, with a little more than 46 percent disapproval. That's about the same result as the aggregation of surveys in October 2012, before the election.READ MORE
Here's the challenge U.S. financial markets face next week: Open and close for five days straight without a major glitch, trading halt or inexplicable computer blowup that makes the world wonder about the integrity of our high-tech exchanges. This shouldn't be a big challenge, though after this week, you have to wonder.
Just to recount: On Tuesday, a computer hacker broke into the Twitter account of the Associated Press and sent a post that said explosions at the White House had injured President Barack Obama. Before anyone could bother to check whether the claim was accurate, the algorithms built into traders' high-speed computers glommed onto the words in the Twitter posting.READ MORE