Though it reached no agreement, the special Congressional committee on deficit reduction built a case for major structural changes in Medicare that would limit the government’s open-ended financial commitment to the program, lawmakers and health policy experts say.

Members of both parties told the panel that Medicare should offer a fixed amount of money to each beneficiary to buy coverage from competing private plans, whose costs and benefits would be tightly regulated by the government.

Republicans have long been enamored of that idea. In the last few weeks, two of the Republican candidates for president, Mitt Romney and Newt Gingrich, have endorsed variations of it.

The idea faces opposition from many Democrats, who say it would shift costs to beneficiaries and eliminate the guarantee of affordable health insurance for older Americans. But some Democrats say that ”” if carefully designed, with enough protections for beneficiaries ”” it might work.

Read it all.

A woman trying to improve her chance to buy cheap electronics at a Walmart in a wealthy suburb spewed pepper spray on a crowd of shoppers and 20 people suffered minor injuries, police said Friday.

The attack took place about 10:20 p.m. Thursday shortly after doors opened for the sale at the Walmart in Porter Ranch in the San Fernando Valley.

Read it all.

Update: there is still more on this here.

Christmas is nearly upon us. Americans, once again, are told that it’s our civic duty to shop. The economy demands increased consumer spending. And it’s true. The problem is that millions of lower- and middle-income households have lost their capacity to spend. They lack savings and are mired in debt. Although it would be helpful if affluent households spent more, we shouldn’t be calling upon a struggling majority to do so. In the long run, the health of the economy depends on the financial stability of our households.

What might we learn from societies that promote a more balanced approach to saving and spending? Few Americans appreciate that the prosperous economies of western and northern Europe are among the world’s greatest savers. Over the past three decades, Germany, France, Austria and Belgium have maintained household saving rates between 10 and 13 percent, and rates in Sweden recently soared to 13 percent. By contrast, saving rates in the United States dropped to nearly zero by 2005; they rose above 5 percent after the 2008 crisis but have recently fallen below 4 percent.

Unlike the United States, the thrifty societies of Europe have long histories of encouraging the broad populace to save….

Read it all.

Of course, simply offering blank checks to the profligate is not a good solution either. But the current way the European Central Bank is acting may be the worst of all worlds. By buying government bonds while insisting it will soon stop, it is sending the message that bondholders had better sell quickly.

By contrast, if the bank made a promise to buy all the bonds that were offered to it ”” backed by its ability to print money ”” it might have to buy few bonds.

There is a real risk of moral hazard in central bank bailouts. The theory offered by Bagehot in the 19th century called for banks to make loans on securities that are of high quality and will be liquid when the panic passes, but not on low-quality securities. Telling the good from the bad during a panic is not always easy.

But we have until now assumed that a central bank would find bonds issued by its own government to be good paper, and investors could act accordingly.

Read it all.

Ms. [Nancy] Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials who give them a chance at early clues to the central bank’s next policy moves, according to interviews and hundreds of pages of documents obtained by The Wall Street Journal through open records searches. Ms. Lazar, an economist with International Strategy & Investment Group Inc., wouldn’t comment for this article.

The access is part of a push by hedge funds and other traders to get more information about the inner workings of government. Developments in Washington have become more important after the financial crisis in 2008 spawned new regulations and a stronger hand by lawmakers in businesses.

Read it all.

In one of the least successful debt sales by Europe’s powerhouse economy since the launch of the single currency, the low returns offered – just 2pc annually over 10 years – deterred investors made uneasy by the escalating cost of the crisis to Germany.

That meant the central bank had to pick up 39pc of the €6bn (£5.2bn) of debt Germany had hoped to sell after commercial banks bought just €3.644bn of the issue.

“It is a complete and utter disaster,” said Marc Ostwald, strategist at Monument Securities in London.

Read it all.

This Thanksgiving, many families are closer — really closer — than they’ve been in years.

An increasing number of extended families across the USA are under the same roof, living together either permanently or temporarily. Sometimes these arrangements are multigenerational, with adult children, grandchildren or an elderly parent sharing quarters. In other cases, an extended family bunks together, with siblings, cousins, nieces or nephews sharing space.

The reasons are economic, social and demographic. The recession and its aftermath have pushed extended families to share space at a time when the average age at first marriage has climbed to 28.7 for men and 26.5 for women. And life expectancy — now 75.7 for men and 80.6 for women in the USA — continues to rise. The flow of immigrants into this country also has been a factor; immigrants are more likely than other groups to live with members of their extended family.

Read it all.

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

Read it all.

Euro-zone leaders say they are determined to save the single currency. But the smart money is voting with its feet. First, short-term U.S. dollar-funding markets effectively closed, then the senior unsecured-bond markets shut down, then the interbank market. Now, corporate customers appear to be withdrawing their deposits from some countries’ banks. With an estimated €1.7 trillion ($2.29 trillion) of funding to roll over in the next three years, the stresses in the euro-zone banking system look doomed to get worse.

In some cases, the drop in corporate deposits has been startling. In Italy, nonretail customers withdrew €56 billion in the three months to the end of September, a fall of 12%. Intesa Sanpaolo and UniCredit saw corporate deposits decline by 16% and 10%, respectively, according to Citigroup research. Similarly, in Spain, nonretail deposits fell by 20% in the third quarter, with Santander and BBVA losing 10% and 11%, respectively. Even the French banks weren’t immune: Société Générale and BNP Paribas saw their corporate-deposit balances fall by 7% and 6%, respectively.

Read it all.

Banks clamored for emergency funds from the European Central Bank on Tuesday, borrowing the most since early 2009 in a clear sign that the euro region’s financial institutions are having trouble obtaining credit at reasonable rates on the open market.

Indebted governments among the 17 members of the European Union that use the euro are also finding it harder to borrow at affordable rates as investors lose confidence in their creditworthiness.

Read it all.

The Archbishop of York today welcomed today’s report of the High Pay Commission’s independent inquiry into high pay and boardroom pay across the public and private sectors in the UK. The Commission, established by Compass with the support of the Joseph Rowntree Charitable Trust, is calling for an end to corrosive pay deals.

Read it all.

Ninety-three percent of Italians believe cutting the country’s hobbling public debt is a top priority, but few are willing to make personal sacrifices to do so, according to an AP-GfK poll released Tuesday.

Only about a quarter of Italians favor reforming labor laws to make it easier to fire workers, or raising the retirement age from 65 (and sometimes lower) to 67 – two of the reforms considered critical to curb Italy’s public spending and boost economic growth.

Read it all.

We haven’t had the robust democratic debate about the role of government that lies at the heart of America’s budget stalemate. The truth is that most Democrats and Republicans want to avoid such a debate because it would force them into positions that, regardless of ideology, would be highly unpopular. This does not mean that the congressional supercommittee, charged with making modest cuts in deficits, need fail. There is a basis for honorable compromise; squandering it would confirm politicians’ preference for fighting over governing.

Contrary to much press coverage, the committee’s Republicans opened the door to compromise by abandoning — as they should have — opposition to tax increases. Sen. Pat Toomey of Pennsylvania proposed a tax “reform” that would raise income taxes by $250 billion over a decade. First, he would impose across-the-board reductions of most itemized deductions and use the resulting revenue gains to cut all tax rates. Next, he would adjust the rates for the top two brackets so that they’d be high enough to produce the $250 billion. All the tax increase would fall on people in the top brackets….

Read it all.

Committee members continued to meet on Capitol Hill to present legislation that could be voted on by the Congress to cut $1,200bn from the budget over 10 years.

But both sides had already begun to blame each other, with Republicans resisting tax rises in any form and Democrats demanding extra revenues be balanced against spending cuts on the grounds of fairness.

Read it all.

At five Bon Secours Health System hospitals on the East Coast, giving fewer blood transfusions during heart surgeries has had some counterintuitive results: Not only did costs fall, but care improved, officials say.

“People think transfusions are good, but ”¦ the higher rate of transfusions that people get, that’s associated with a longer hospital stay and a higher death rate,” chief medical officer Marlon Priest says.

Bon Secours’ campaign to reduce blood transfusions during heart bypass and valve replacement surgeries is part of a growing national trend to standardize care and rein in differences in how doctors and hospitals practice medicine.

Read it all.

The Council of General Synod (CoGS) has approved a balanced 2012 budget for the national church of $12.698 million.

At its Nov. 18-20 meeting here, a balanced budget was also forecast for 2013 with “no further staffing cuts” before 2016.

That’s the good news. The bad news is that declining revenues coupled with cost-push inflation could mean that General Synod will once again face a deficit budget in 2014. This deficit could balloon to $1 million by 2016, according to a report submitted to CoGS by the church’s Financial Management Committee (FMC).

Read it all.

The impact on family finances has been direct and dismaying: In 2003, 14 percent of the average Missouri worker’s median household income went to cover premium costs for health insurance through her employer. By 2010, that household was paying 19.6 percent of its income for health insurance.

The more of a family’s income that’s spent on health insurance costs, the less there is to pay for housing expenses, utilities, transportation, college education for children and savings for emergencies and retirement. Instead of looking toward for the future, families find themselves scrambling to cover the rising expenses of the present.

Read it all.

The Roman Catholic Church is about to buy a beacon of Protestant televangelism.

The Crystal Cathedral, a temple of glass in Garden Grove, Calif., will be sold to the Catholic Church for $57 million ”” a decision that left some congregants furious and their future up in the air.

When the Crystal Cathedral declared bankruptcy last year, it soon became clear that the legendary building would have to be sold. There were several offers, but in the end, the church’s board favored the Catholic diocese in Orange County.

Sheila Schuller Coleman, the cathedral’s pastor, said in a videotaped message that it was the best way to save the church.

Read it all.

When the tech firm Yipit moved last month from General Assembly, a communal office campus on 20th Street and Broadway, to its own loft space on 18th Street and Fifth Avenue, its 14 employees simply grabbed their coffee cups and MacBook Airs and did the job on foot.

Arriving at their new home, they milled about, admiring the water-cooler, and the breath mints in the bathroom, and then got down to work, requiring no more than a power source and a pass code for the Wi-Fi. By the time the two guys from Moishe’s Moving Company arrived with a half-dozen boxes of office sundries, Yipit was back in business. There had already been a staff meeting, conducted while a handyman knelt in the rec room setting up a Ping-Pong table. All told, the move took about 10 minutes.

With a recent $6 million Series-B (or second round) financing deal, and plans to double its workforce in a year, Yipit sits in the mid-to-low range of New York’s thriving tech spectrum, below the behemoths, like AOL and Twitter, and the happily mid-sized, like Foursquare and Gilt Groupe, but above the sort of start-ups that had been their neighbors at General Assembly’s shared tables.

Read it all.

Conceding that talks on a grand budget deal are near failure, Congressional leaders on Sunday pointed fingers at each other as they tried to deflect blame for their inability to figure out a way to lower the federal deficit without having to rely on automated cuts.

The testy exchanges ”” which dominated the Sunday talk shows ”” made clear that leaders in both parties now see the so-called sequester ”” a term meaning an automatic spending cut ”” as the most likely solution to reduce the federal deficit by $1.2 trillion over 10 years, instead of a negotiated package of spending reductions and tax increases, something they have been unable to achieve over the last 10 weeks.

Read it all.

Their letter to the Observer begins this way:

The introduction of a cap on benefits, as suggested in the Welfare Reform Bill, could push some of the most vulnerable children in the country into severe poverty. While 70,000 adults are likely to be affected by the cap, the Children’s Society has found that it is going to cut support for an estimated 210,000 children, leaving as many as 80,000 homeless. The Church of England has a commitment and moral obligation to speak up for those who have no voice. As such, we feel compelled to speak for children who might be faced with severe poverty and potentially homelessness, as a result of the choices or circumstances of their parents. Such an impact is profoundly unjust.

Read the rest.

They drive cars, but seldom new ones. They earn paychecks, but not big ones. Many own homes. Most pay taxes. Half are married, and nearly half live in the suburbs. None are poor, but many describe themselves as barely scraping by.

Down but not quite out, these Americans form a diverse group sometimes called “near poor” and sometimes simply overlooked ”” and a new count suggests they are far more numerous than previously understood.

When the Census Bureau this month released a new measure of poverty, meant to better count disposable income, it began altering the portrait of national need. Perhaps the most startling differences between the old measure and the new involves data the government has not yet published, showing 51 million people with incomes less than 50 percent above the poverty line. That number of Americans is 76 percent higher than the official account, published in September. All told, that places 100 million people ”” one in three Americans ”” either in poverty or in the fretful zone just above it.

Read it all.

Land in some parts of Spain is literally worthless, said Fernando Rodriguez de Acuna Martinez, a consultant at Madrid- based adviser R.R. de Acuna & Asociados. More than a third of Spain’s land stock is in urban developments far from city centers. About 43% of unsold new homes are in these areas, known as ex-urbs, while 36% are in coastal locations built up during the real-estate boom.

“If you take into account population growth for these areas, there’s no demand for them, not now or in ten years,” he said. “Around 35% of Spain’s land stock is in the ex-urbs, which means it’s actually worth nothing.”

Read it all.

Only the fiercely conservative stewards of the European Central Bank have the firepower to intervene aggressively in the markets with essentially unlimited resources. But the bank itself, and its most important member state, Germany, have steadfastly resisted letting it take up the mantle of lender of last resort.

European politicians and analysts say that unbending stance now threatens the survival of the euro and the broader integration of Europe itself.
“There is no solution to the crisis without the E.C.B.,” said Charles Wyplosz, a professor at the Graduate Institute in Geneva and co-author of a standard textbook on European integration. “The amounts we are talking about are too big for anybody but the E.C.B.”

At issue is whether the bank has the will ”” or the legal foundation ”” to become a European version of the Federal Reserve in the United States, with a license to print money in whatever quantity it considers necessary to ensure the smooth functioning of markets and, if needed, to essentially bail out countries that are members of the euro zone.

Read it all.

Critics say Germany is falling between two stools. It has backed EMU rescues on a sufficient scale to endanger its own credit-worthiness, without committing the nuclear firepower needed to restore confidence and eliminate default risk in Spain and Italy. It would be hard to devise a more destructive policy.

There is no change in sight yet. Chancellor Angela Merkel repeated on Thursday that Germany would not accept joint EU debt issuance or a bond-buying blitz by the ECB. “If politicians think the ECB can solve the euro’s problems, they’re trying to convince themselves of something that won’t happen,” she said.

Yet she offered no other way out of the logjam, and each day Germany is sinking a little deeper into the morass.

Read it all.

Occupy Toronto protesters cannot use the city’s landmark cathedral to evade eviction if the courts rule they have to leave the park they took over more than a month ago, the Anglican dean of Toronto said Thursday.

Rev. Douglas Stoute said the church owns some of the land adjacent to the majestic St. James Cathedral, but the city owns the rest and runs park as a “seamless garment.”

“We have no authority to allow them to stay here or not,” Stoute said of the protesters.

Read it all.

European banks, increasingly concerned about their ability to access funding, are devising complex and potentially risky new deals that enable them to continue borrowing from the European Central Bank.

The banks’ moves, which include behind-the-scenes swapping of assets among financial institutions, could heighten risk across Europe’s already fragile financial system, say some senior industry officials and regulators.

They also are a sign that struggling banks across Europe are preparing for a period of prolonged reliance on financial lifelines from the ECB. The Continent’s intensifying financial crisis has made it difficult for many banks to obtain funding from customary market sources.

Read it all.

Fixing a painful toothache isn’t in the budget of Brandon Crew, a 24-year-old maintenance worker and father to be.

Neither is food.

Earning $300 per week working at a local hotel, Crew said he and his girlfriend are barely “scraping by….”

Read it all.

Every year, young adults leave the nest, couples divorce, foreigners immigrate and roommates separate, all helping drive economic growth when they furnish and refurbish their new homes. Under normal circumstances, each time a household is formed it adds about $145,000 to output that year as the spending ripples through the economy, estimates Mark Zandi, chief economist at Moody’s Analytics.

But with the poor job market and uncertain recovery, hundreds of thousands of Americans like Ms. [Hollis] Romanelli (and her boyfriend, who also lives with his parents) have tabled their moves. Even before the recession began, young people were leaving home later; now the bad economy has tethered them there indefinitely. Last year, just 950,000 new households were created. By comparison, about 1.3 million new households were formed in 2007, the year the recession began, according to Mr. Zandi. Ms. Romanelli, who lives in the room where she grew up in Branford, Conn., said, “I don’t really have much of a choice,” adding, “I don’t have the means to move out.”

Read it all.

Occupiers’ primary outrage seems to be against poor stewardship. They use the language of “increasing inequality,” but more precisely they may object to the unreliable correlation between productivity and compensation. Few resented Steve Jobs his wealth, given the value created by Apple, but who does not resent golden parachutes paid out to senior executives of unprofitable, much less failed, companies? Occupiers will garner powerful and unexpected allies ”” big shareholders, hedge funds, and activist investors ”” if they use this language of just stewardship rather than a resentful Robin Hood rhetoric.

In trying to uncover the causes of today’s crisis, occupiers would also do well to apply their axe to the roots of the problem, which an even cursory study of economic history would reveal is hardly the prominent branch of banker malevolence. During the last Great Depression, people and governments wanted to consume more and grow faster than their productivity allowed. If you are unwilling to accept the financial limits of your own productivity, you borrow. But from whom? Contrary to populist belief, the private sector is not generally eager to lend to parties lacking income, assets or collateral. Consequently, ever since Franklin D. Roosevelt created “government sponsored entities” (like Fannie Mae), GSEs and their ballooning balance sheets have encouraged new loans to parties the “greedy banks” would not generally have lent to of their own volition. These GSEs promise to buy much of the debt generated by politically evocative but generally not creditworthy groups ”” veterans, students, low-income and first-time homebuyers, farmers in a rapidly industrializing economy. While a case can certainly be made for using government to encourage constructive behavior or to help disadvantaged groups, there are ways to do this without so profoundly distorting the economy.

Read it all.