The federal budget continues to attract the attention of policy wonks and investors. And well it should. The upcoming 'fiscal cliff' — the combination of tax increases and spending cuts poised to phase in starting January 1, 2013 — may cause the economy to lurch back into recession. But the 50 states, which are supposed to be laboratories of democracy, may also be functioning as 50 laboratories for fiscal crises down the road. That's the conclusion of a new report from the State Budget Crisis Task Force

The task force, a non-partisan, non-profit outfit jointly chaired by former Federal Reserve Chairman Paul Volcker and Richard Ravitch, the former Lieutenant Governor of New York, looked into the long-term prospects of six large states: California, Illinois, New York, New Jersey, and Texas. Donald Boyd, executive director of the task force, is our guest on the Daily Ticker. He warns that it's worth paying to attention to the fiscal challenges faced by these large states. Even though

On Wednesday the stock market was muddling through another boring day. Then at 2:00, the major indices took a brief dive. The reason? The minutes from the June Federal Reserve Open Market Committee's meeting were released. Investors were disappointed that the central bank was not promising more efforts to stimulate the flagging economy.

This reaction may be the most convincing argument yet against the assumption that markets are efficient. For how could anyone be surprised that the nation's central bank has run out of ideas, energy and desire to goose the U.S. economy?

In 2008 and 2009, the Federal Reserve undertook a series of extraordinary exertions in 2008 and 2009 to save the economy from a second Great Depression (go read David Wessel's In Fed We Trust for the back-story). Between 2009 and 2011, the Fed engaged in two big spells of quantitative easing — creating money to purchase assets such as government bonds and mortgage-backed securities in the hopes of bringing down long-term

As the fourth anniversary of the Lehman Brothers debacle approaches, the government rescue efforts and bailouts continue to wind down.

The central component of the TARP was the Capital Purchase Program (CPP), under which the U.S. Treasury purchased preferred shares in hundreds of banks and received warrants in return. Banks started to return the capital in June 2009, with the largest institutions repaying first. Counting the extra assistance given to Citigroup (C) and Bank of America (BAC), CPP recipients took $242.9 billion in funds. Banks have returned $230.71 billion of that total. Add in dividends ($14.69 billion), gains on the sale of Citigroup common stock ($6.85 billion) and funds received from the sale of warrants ($9.08 billion) and the CPP has turned a "profit" thus far of about $18.4 billion. (Here's the most recent TARP summary.)

Cash continues to return to Treasury through a variety of means. Some banks repurchase the preferred shares that Treasury bought in 2008 and 2009.

As has frequently been the case in recent years, Friday was the night the lights went out for a bank in Georgia. This time it was Montgomery Bank and Trust, a two-branch bank with $174 million in assets. The bank failed and was taken over by America Bank.

Friday, July 6, was the first Friday in three weeks that a bank failed. The time off from chronicling the woes of the banking industry has given us a chance to step back and look at some trends in financial failure. For some time, it has been clear that, while pain persists in the credit markets — especially when it comes to housing — the rampant financial failure that crippled the system and the economy in 2008 and 2009 has been ebbing. As a general rule, people are doing a much better job keeping up on their financial obligations than they were a few years ago. Bankruptcy filings are down. In the first quarter of 2012, there were 332,973 filings in federal bankruptcy courts, a 12 percent decline from the 366,178 filings in the first

At a time of slow job growth, it's one of the most thankless jobs in Washington. The first Friday of every month, the Obama administration's economic spokespeople fan out to television studios, dial in to radio shows, and hold briefings. This morning, Alan Krueger, chairman of the White House Council of Economic Advisers, stepped out into the sweltering sun to speak with The Daily Ticker about the jobs numbers. As the accompanying video shows, it's tough to put an optimistic gloss on the figures.

It's impossible to divorce the jobs figures from the current election campaign. For Romney, each poor jobs report opens a clear opening. On Friday, his campaign got back on message. Romney called the report "disturbing" and a "kick in the gut" and reiterated his charge that President Obama has failed to get the economy moving.

For the Obama administration, the response is more complicated and less declarative. And in our interview, Krueger followed a four-step formula.

First, look backward.

Another month, another blah jobs number. The private sector added 80,000 positions in June and the unemployment rate remained constant at 8.2 percent. If three underwhelming employment reports constitute a trend, then we have a definite trend of slower employment growth. In the first quarter, the economy added an average of 226,000 jobs per month. But the pace of job creation has been a lot like the weather in San Francisco — ranging from the 60s to the 80s. In April, the economy added 68,000 jobs (revised down in this report from 77,000); in May, 77,000 (revised up from 69,000).

A few takeaways:

Austerity bites. What I've dubbed "the conservative recovery" is still in effect. Virtually every month for the past two years, the private sector has added jobs while the public sector — federal, state and local government — has cut jobs. That trend continued in June, when the private sector added 84,000 and government cut 4,000 jobs. With government revenues stabilizing, there are signs

The monthly payroll jobs report, due out on Friday, has emerged as the Super Bowl of economic data — a hype-ridden event that attracts the attention of a very large audience. Thursday brought the pre-game show, in the form of three employment-related data points. And the news was surprisingly good. First time unemployment claims came in at 374,000, down from the (upwardly revised) total of 388,000 last week. Challenger, Gray & Christmas reported that companies announced 37,551 layoffs last month — a 13-month low. And ADP said that private-sector firms created 176,000 jobs in May.

After months of nauseating weakness, is something going on in the labor market? It's quite possible, although my guest on The Daily Ticker, Larry Kudlow, host of the Kudlow Report on CNBC, is less sanguine. "If we get more jobs, count me thrilled and happy," he said. "If you had a 300,000 number on ADP I'd be more enthusiastic." Three years into the economic expansion, the pace of job recovery remains too low

Every day, Michelle Leder and the crew at Footnoted.com scour through Securities and Exchange Commission filings in search of news nuggets and excessive executive compensation. America's publicly held companies oblige with a perennial crop of goodies for top officials.

Level Up! The video game company Electronic Arts has been struggling to adapt to the new world of social gaming. Check out this sad two-year stock chart, which shows the company has lost about half its value since last November. But it's been a good year for CEO John Riccitiello. As Footnoted.com reports, his total compensation rose from $5.9 million in fiscal 2011 to $9.5 million in fiscal 2012. "The lion's share of his compensation, $7.1 million, came in the form of Restricted Stock Units (RSUs)," Footnoted.com notes. "But he also got $865,538 in salary (which includes a raise of $65,538 from the $800,000 salary he got the prior year) and a non-equity incentive bonus worth more than $1.5 million. That's actually a