The Debt

I'm often asked about the "problem" our debt represents. Below is a largely good video explaining who holds the debt and the "problem" it presents. One VERY important caveat. While the author gets the idea correct that what matters is publicly outstanding debt, since inter-government debt is merely a wash, he does not accurately address this same issue when talking about bonds as financial assets. Remember that a US government bond is an asset to the holder, but a liability to the tax payer. We care about our net position as tax payers. Also, from an economic perspective, bond holders and tax payers are not the same people, so there are distributional consequences to changes in the level of the debt. But with that said this might help somewhat.

Great Questions

Pulled from Marginal Revolution:

What will result from the intersection of two possible trends: insistence on a greater equality in health care outcomes, and the development of new technologies -- some at the genetic level for the individual -- which will lead to a greater inequality of health care outcomes?

Sales Taxes

The Tax Foundation has updated their data on state and local sales tax here.

Credit Scores

Credit Scores by email address. Google beats Yahoo.

Finances Altered?

I believe the findings of this survey, support what I have been saying.

"This new survey points to a profound shift in the way people think about their saving and spending," said Eric Eve, senior vice president of global community relations at Citi. "The current economic environment is altering, perhaps permanently, the way we think about spending money."

Taxes

Bruce Bartlett interviewed by Ezra Klein on taxes here. The most frustrating thing for economists, is the truism of this statement:

One reason I've been more sympathetic to a carbon tax than other conservatives is that if you did it right it would be pretty close to a VAT. One of the objections a lot of us have to cap-and-trade is that it's too easily manipulated. It sounds good in theory, but once in the political meat-grinder, its failures become overwhelming.

How many times can we say that? Its a good idea in theory, but the political process will make a mess of it. When will demand our politicians take the time to understand a little economics?

Consumer Sentiment

The recent consumer sentiment figures were not good.

Its preliminary index of confidence for July fell to a reading of 64.6 from the final reading for June of 70.8.


July's preliminary reading was well below economists' median forecast for 70.5 and the first fall in the index since February.

In April I presented the results for the local consumer sentiment index: