Commentary

The nation's home builders celebrated Tuesday with the release of July's Housing Market Index, which showed a six-point jump in the measure of builder confidence on the heels of a seven-point jump one month earlier. In the last three months, confidence--as measured by the index--is up 16 points, or almost 40 percent. With giddy numbers like these, one would think builders would rush to break ground--or at least file the paperwork to do so, but they're not.

Ben Bernanke was up at the National Bureau of Economic Research (NBER) to celebrate the Federal Reserve's 100th birthday. Despite being chairman of the Fed, instead of receiving a birthday gift, he gave a birthday gift--and Wall Street partied. Bernanke was generous in comments to the beleaguered housing sector when he listed his reasons for optimism about the economy. But Bernanke saved his biggest boost for stock investors when he made clear the Federal Reserve has no intention of abruptly raising interest rates or cutting back on its $85 billion a month bond purchase program.

Legislators heard--or perhaps misheard--customers when they grumbled about ATM fees and clamped down even though there is a logical argument for them. Now, a new fee opportunity for major banks comes in the form of pay cards--debit cards loaded with your take-home pay each time you get paid. Workers must pay a fee to access their own wages and may be charged a fee for not using the card. The pay cards slither under, over, or around the definitions resulting from Dodd Frank for fees banks are permitted to charge for credit and debit cards or even for store cards.

The reaction to Thursday's report on personal income and spending for May was generally positive. Personal income rose 0.5 percent from April--five times what was expected--and personal consumption expenditures (or PCE) were up 0.3 percent, matching economist forecasts.

The recent jump in home prices has led to speculation that the rapid surge in home prices could be the sign of a new housing bubble similar to the one that led to the Great Recession. Is it? The not-so-short answer is, not yet. An increase in prices itself does not signal a bubble. An unsustainable increase, not supported by other data, however, would. In the run-up to the 2006 collapse, the higher prices--which had been trending up for four years--led to a sharp uptick in construction wholly unsupported by demographics.

In a newly published paper posted on the New York Federal Reserve website, Robert Hockett, a Cornell University professor of financial and monetary law, proposes using government's eminent domain authority as a solution to underwater mortgage debt. In reviewing Hockett's suggestion, the Wall Street Journal concentrated not on the idea itself, but on the fact that Hockett ""turns out to have been on the payroll of none other than Mortgage Resolution Partners."" There may be a lot of good reasons to discard Hockett's suggestion, but his past relationships are not among them. His idea deserves a fair hearing, not a digression.

Can the drop in homeownership be good news? When President George W. Bush followed his predecessor Bill Clinton in pushing homeownership, one loud dissenter was British economist Andrew Oswald who argued that far from improving the economy, as Bush (and Clinton before him) said it would, homeownership hurts the economy in the long run. Oswald produced data to show that every five percent rise in homeownership results in a one percentage point increase in the unemployment rate.

Recent reports from the National Association of Realtors and the Census Bureau/HUD showed sharp increases in unit sales and prices, as well as increases in the inventory of homes for sale for April. Has housing turned the corner? Look again. Sales up, prices up, what's wrong with this picture? The last time both prices and sales of new homes increased in the same month was last September. In all of 2012, sales and prices moved in opposite directions in seven of the 12 months. What of course is missing from the two data sets is any indication of demand.

Economists usually do it with models, so it's rare in economics to be able to conduct a laboratory experiment. Currently, though, we're watching two experiments in different corners of the world that support the idea that stimulus works to repair a troubled economy and austerity doesn't. Japan and the eurozone are, through their actions, demonstrating how economies can move in opposite directions with Japan's stimulus plan succeeding and the eurozone's austerity program failing.

""Fiscal policy,"" simply put, is the means by which a government adjusts its levels of spending in order to monitor and influence a nation's economy. At the heart of the spending/growth disparity is a philosophical debate over the role of government: those who believe government should be run like a business and avoid debt and those who see the role of government as spending counter-cyclically, that is increasing spending when the nation's economy is challenged to avoid further struggles. direct a country's economic goals.