Weekly Economic News Digest

Here are some things you should take time to read:

Richard Posner talks about the financial crisis in an interview with the Freakonomics blog. He suggests waiting a year to overhaul financial sector regulations so we don’t overreact. In his view, “the goals of tighter regulation could probably be achieved just by more assiduous enforcement of existing regulations; regulatory laxity was a particularly marked characteristic of theBush administration’s economic philosophy.”

I wonder why credit card interest rates jumped last week? It couldn’t have been because the government threatening to control them and the companies want to get rates as hight as possible before the hammer comes could it? John Stossel rips into the subject as well.

Musician Andrew Lloyd Webber wrote a scathing commentary on England’s new tax increases for the UK’s Daily Mail. He fears an “inevitable exodus of the talent that can dig us out of the hole we find ourselves in. It is inevitable, given that other countries are bidding for entrepreneurs.” He notes that the new taxes set to take effect over the next two years are 50 percent plus 14.8 percent for national healthcare–the highest tax rate in any developed country. America’s banking sector faces a similar problem with proposed salary caps and bonus taxes for executives and financial experts.

A House of Representatives Transportation Committee report last week found that funding for transportation and infrastructure in the stimulus plan has only “created or sustained” 1,288 jobs nationwide as of the end of March.

FDIC continues to seek power over more firms deemed “systemically” key companies.

Bank of American still needs $60 to $70 billion more capital dollars to function

According to an AP report, the recession “has hammered state budgets nationwide, with at least 43 states projecting deficits totaling more than $121 billion next year.” Of course, that isn’t the whole story. As Mike Flynn and Adam Summers point out in their cover story for Reason Magazine’s May 2009 issue, states have been on a spending binge that left them vulnerable to a downturn, much the same as freewheeling banks that are now so reviled.

Robert Frank wrote in a Sunday NYT column about the untapped talent of people in undeveloped countries. But instead of promoting free trade and relaxed immigration policies he said. “Well-paid Americans owe an enormous, if rarely acknowledged, debt to the social investments that supported their success.” EconLog’s David Henderson comments on this:

First, I think he’s wrong to say that we owe a debt to “social investments,” if he means by that term what I think he means. I think he uses “social” to mean “government” and “investments” to mean “spending.” But it’s hard to see how, for example, expensive but mediocre government schools are an important cause of our wealth. There’s a more-obvious cause of the wealth that we have been born into: a great deal of economic freedom compared to that in other parts of the world.

Don Boudreaux has some questions for protectionists, because he finds the allure of protectionism understandable but “Quite Especially Dumb.”

Megan McArdle has an excellent post on how to view Wall Street pay, leading up to this: “So for all the bankers annoy me, their pay–and its difference from mine–doesn’t outrage me. The difference between their pay and that of a physical therapy assistant or an auto line worker doesn’t outrage me. No one deserves their pay, so I can hardly be angry at the folks on Wall Street for taking what they could get.”

From CalculatedRisk: homeownership rate of Q1 2009 back to 2000 levels. But is that a bad thing? Not everyone can have a home, nor should they be in a home.

And then, here is a wonderful confluence of ideas on the economy: