DEMOCRACY, IF YOU LIKE IT. I don't quite know what Jackson Diehl is trying to say about Ukraine here, but his column seemed to me to partake freely of various unfortunate but all-too-common presuppositions. As you'll recall, back in 2004 Viktor Yanukovich was Ukraine's ruling party's candidate for president. He lost to Viktor Yushchenko, but Yanukovich tried to steal the election through fraud. Then came the "Orange Revolution" and Yanukovich was forced to back down and let Yuschenko take office.
Last quarter the markets were surprised by a stronger than expected number for personal consumption expenditures in March. I commented that the surprise was surprising because March personal consumption expenditures were embedded in the first quarter GDP data that had been released the prior week.
Apparently the reporters at MarketWatch can't. An article noting the uptick in labor compensation reported in the second quarter Employment Cost Index reported that Fed Chairman Ben Bernanke said that higher labor costs need not lead to inflation, if they are offset by rising productivity. Well, in the very next sentence Mr. Bernanke also said that higher labor costs could be offset by lower profit margins:
The House came up with the brilliant idea of linking the partial repeal of the estate tax with raising the minimum wage. In the words of West Virginia Representative Shelley Moore Capito, this linkage made sense because, "the sustaining of small businesses by keeping their vital assets will allow those making the minimum wage to continue working. This is a jobs bill."
I'm sorry, this is nuts. Only a tiny percentage of small businesses will ever be liable for the estate tax and it is paid out after they are dead. It has no obvious effect on how they would operate their business. It is hard to see how cutting the estate tax will save even a single minimum wage job.
The weak second quarter GDP numbers were driven in part by the housing sector as noted in the NYT. See also the separate piece on the housing market. In addition to the GDP data, the Commerce Department also released data on vacancy rates for the second quarter. The vacancy rate for ownership units hit a new record.
Remember the inverted yield curve and the hoola hoop? A few months back, the prospect of an inverted yield curve was seen as an ominous warning sign of bad times ahead. An inverted yield curve was supposed to signal an upcoming recession. This seems worth mentioning now because the yield curve is becoming seriously inverted as long-term rates have edged downward, even as short-term rates remain relatively high.
LEBANESE DEMOCRACY? I often had cause to wonder whether or not people understood this during the Cedar Revolution, and in light of the president's repeated insistence that Hezbollah is afraid of democracy during today's press conference, it's clear that the White House doesn't. Democracy, simply put, isn't what's at issue in Lebanese politics.
TRICKY, TRICKY. Oh, those Republicans. Tired of being such grinches on the minimum wage, they flipped on the bill, crafting a proposal to raise the wage and rollback the estate tax. The Democrats, it seems to me, have precisely the right response to this gambit:
Its political blackmail to say the only way that minimum wage workers can get a raise is to give a tax giveaways to the wealthiest Americans," said Sen. Edward Kennedy, D-Mass. "Members of Congress raised their own pay � no strings attached. Surely, common decency suggests that minimum wage workers deserve the same respect."