"US government shows responsibility is tackling financial crisis"--Barroso

Some of the world biggest economies have welcomed the US lawmakers’ approval of the 700 billion dollar bail out. China, together with the EU member countries feels that the US law makers have shown responsibility in tackling the financial crisis.

I think its interesting how so many countries are tied to the US and how the situation in the US affects so many countries on so many levels. I am interested in seeing how much this bail out plan is going to help bring back to economy to where it used to be and in how much time.

Apple is under pressure to shut down iTunes?

Apple could shut down the iTunes Store, the world's biggest online music store, if a ruling expected Thursday forces the company to pay more to music makers for each downloaded track.

The Copyright Royalty Board (CRB) in Washington, D.C., will decide whether to grant the request of American music publishers to increase "mechanical" royalty rates on songs bought from online music stores such as iTunes.

The National Music Publishers' Association, which represents the interests of music makers and songwriters in the U.S., wants rates to be increased 9 cents to 15 cents, which represents a 66 percent rise.

Apple has vehemently opposed the move. In a statement to the ruling body in 2008, the company threatened to shut down iTunes rather than raise the price of songs in order to afford the higher royalty rates.

"If [iTunes] was forced to absorb any increase in the ... royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss — which is no alternative at all," iTunes vice president Eddy Cue said.

According to another article, recently Apple has sold more than 4.5 billion songs through iTunes in under 2 years, and that adds up to more than $4 billion revenue in sales. My question is if I-Tunes shut down, will it just increase the load of people downloading music off the internet and decrease sales, which doesn't help the economy at all?

Source

Senate passes revised bailout Bill

The Senate has passed a revised version of the bailout (technically not a bailout) bill after the original one lost in the Congress. It passed 74 to 25 votes on Wednesday night. This revised bill has all the same features as the one that failed in the House along with some additions. These additions include: the amount that average citizens deposits are insured for in a bank when up to $250,000 from $100,000. This helps small businesses because people become less likely to take their money out of the bank, this way small businesses can borrow that money. New tax breaks for both people and business the total reduction in taxes is $110 billion. Many are optimistic it will pass the House on Wednesday.

Japan Posts a Rare Deficit

For the first time since November 1982, Japan posted a trade deficit. This has increased worries that Japan is headed for a recession. As we talked about in class, Japan is a country that saves a lot and consumes very little which explains there constant trade surplus. So what is to blame for the change in the Japanese economy. An article published on the BBC website points to many different factors. Japan is not a resource rich country and with the rise in prices of natural resources such as oil, coal, and natural gas, has caused an increase in the imports of Japan. Also, Japan has suffered from a decrease in exports do to the down turn in the international economy. The U.S. is a major importer of Japanese goods and the demand for products has gone down especially in the area of automobiles where there has been a 21% decrease in exports. With demand already low in Japan and a worsening economic system in Europe as well which has decreased there imports, Japan very well may be headed for recession.

Early Vote Tensions

Tensions have already started brewing over early vote in the in the highly influential swing state of Ohio. Early vote started today in several states including other swing states like Michigan and Florida.

The Ohio Republican Party for weeks now has accused Brunner of interpreting the early voting law to benefit her own party by allowing same-day registering and voting. Republicans argued that Ohio law requires voters to be registered for 30 days before they cast an absentee ballot.Secretary of State Jennifer Brunner, a Democrat, was backed by the state Supreme Court and two federal judges, to allow new voters to register and cast an absentee ballot on the same day from Tuesday through Oct. 6.

The Republican dominated Ohio Supreme Court ruled Monday what Brunner was doing was constitutional. The decision was backed by a federal judge in Cleveland. Another federal judge in Columbus declined to rule, deferring to the state Supreme Court's decision.

On Tuesday, the Ohio Republican Party suggested the 6th U.S. Circuit Court of Appeals in Cincinnati to either stop same-day voting or at least require the state's top election officials to separate the ballots that were carried out with a registration so they can be verified. Secretary of State Brunner already instructed election officials to segregate and and verify the registrations of those who cast their ballots and registered on the same day, before they are counted.

In total five lawsuits have been filed against Ohio's secretary of state in September alone.

There were problems prior to just now "but four years ago, the secretary of state was also a co-chair for George Bush's Ohio campaign". Brunner points out.

Law professor Dan Tokaji of Ohio State says it is "not such a bad thing to clarify the rules in advance of the elections". I guess he is right. Better than on the final day.

Another law suit was based on return mail. The problem here is that in most lower-income neighborhoods the mailing system is very unreliable. Then in 2004, Republicans challenged 35,000 voters based on returned mail. John McClelland of the Ohio GOP declined to be interviewed for this story, saying they "don't discuss political strategy". Did he just implicitly state that it is strategy for the Republican party to find ways to not allow citizens to vote?

here is a link to other Republican strategy to not let people vote.
http://michiganmessenger.com/4076/lose-your-house-lose-your-vote

http://michiganmessenger.com/4231/republicans-recant-plans-to-foreclose-voters-but-admit-other-strategies

Bailout a no go

The $700 billion bailout rescue plan was rejected by the House of Representatives 228 to 205 votes. 140 Democrats voted for it while 95 voted against it. Only 65 Republicans voted in favor while 133 voted against. President George W Bush said he was "very disappointed" by the vote's result as the marked dropped another 770 points. Treasury Secretary Henry Paulson said he will continue be work with congressional leaders to get something done "as quickly as possible". Since the vote several things happened around the world:

• Wachovia, the fourth-largest US bank, was bought by larger rival Citigroup in a rescue deal backed by US authorities
• Benelux banking giant Fortis was partially nationalised by the Dutch, Belgian and Luxembourg governments to ensure its survival
• The UK government announced it was nationalising the Bradford & Bingley bank
• Global shares fell sharply - France's key index lost 5%, Germany's main market dropped 4% while US shares plunged after the vote result was announced.

UK Prime Minister Gordon Brown said he was disappointed by the vote's failure and would do everything he could to protect the British economy.

This is kind of weird that the Democrats are so gun-hoe about a bill proposed by GEORGE BUSH and it fails because of the Republicans. I don't know how partisan things are, when Bush invited the lawmakers to that meeting in the White House everything seemed to be going smoothly. Then yesterday Speaker Pelosi seemed so optimistic. Now there is so much finger pointing I don't even thing Congress knows what to do next. You have "big government" Democrats supporting a GOVERNMENT bailout plan proposed by a "trickle-down economics deregulation" president but fails because HIS party Republicans don't want to reward greedy behavior of men who financed many of their campaigns. Man. I don't know what you call it.

In terms of the presidential candidates it seems John McCain is attacking Barack Obama on not being decisive enough and suspending his campaign to get the job done. I don't know that Barack has blamed McCain yet, all I find on his response is telling the American people to remain calm. I do not think that it is, but if anything it's John McCain's fault. Wasn't it he the one who dramatically suspended his campaign and raced back to Washington to focus on the crisis and negotiate the plan? Well at the end of the day it's because of his own party that it doesn't pass. The man does all this and couldn't even convince his OWN party!
But I really don't want to blame anyone because who am I to do that.

I do think though those Republicans who voted it down need to come up with an idea of their own though, not just let Nancy, Republican whip Roy Blunt, most the Democrats and some Republicans do all the work and then vote it down. Also I am not sure if some of the Republicans who voted down the plan have a valid reason. Congressman Jeb Hensarling we would be "headed down and slippery slope to socialism". That is all find a dandy you like capitalism and de-regulation, but if the market crashes because of your paranoia that's not good either. Congressmen Ted Poe didn't want the average- Joe to pay for the greedy wall-street. That is the best reason yet, however I hope he understands that if Joe's taxes doesn't bailout Wall Street and then things get worse, everyone including Joe looses. And a lot more than he would have paid in taxes. Maybe this is naive, but I'd like to think that we are bailing out Wall Street because it could ruin all the other sectors of the economy not just cause it's Wall Street the "fat-cats". Other Republicans including congressman Eric Cantor said they were prepared to vote "yes" until Nancy Pelosi gave a very divisive partisan speech right before the vote. You don't vote based on if a speech someone gives rubs you the wrong way. You vote based on the ideas and policies presented.

Bernanke Moves Closer to Rate Cut as Risks Intensify

By Scott Lanman and Craig Torres

Sept. 25 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke moved closer to cutting interest rates, signaling that risks to U.S. growth are greater than policy makers saw them just last week.

The ``intensification'' of the financial crisis in recent weeks is curbing Americans' access to borrowing, making the outlook for consumer spending ``sluggish at best,'' Bernanke told lawmakers in Washington yesterday. While he noted that risks to inflation remain, the Fed chief's testimony focused on ``grave threats'' to the banking system.

Aso, Brown Efforts to Save Themselves May Help Bush

I thought this article was interesting, it takes a look at how other countries we have talked about in class are being impacted from the credit crisis here in the US, and how those countries are dealing with it.

By Rich Miller and Simon Kennedy

Sept. 29 (Bloomberg) -- Embattled political leaders in Tokyo and London may end up coming to the aid of President George W. Bush in containing the economic fallout from the credit crisis as political self-preservation trumps nationalism.

Confronting a recession, Japan's new prime minister, Taro Aso, is likely to promise tax cuts and higher spending in a bid to win a parliamentary election as early as next month. British Prime Minister Gordon Brown, who faces unrest in his party over its and his sagging popularity, may also opt for budget-busting measures to turn around the weakest U.K. economy since the early 1990s.

Delta to Add First-Class Seats to Shuttle Flights

I know I just posted something, but I found this article quite interesting, even if it's not particularly groundbreaking.

Delta has decided to add first class seating to its East Coast shuttles*, charging $100-$250 more for first class. This means that VIPs no longer have to battle mere commoners for seats. Instead, they only have to fight with about 14 people for choice seats. US Airways has already implemented this.

I can see positives with this decision. One positive: it’s finally a source of revenue for airlines that offers something back to the consumer. Instead of “There will be a small fee for check-in baggage/priority seating/meals/cocktails/a bottle of water,” it’s “We’ll make the fares tons more expensive and not apologize for it, but it's worth it.” They’re targeting a market with relatively inelastic demand for seats. If someone has to get to Boston urgently, an extra 100-250 is not so much. Also, since frequent fliers get complimentary upgrades, it may encourage brand loyalty.

There are some negatives too, though I can’t think of as many. It could make certain consumers acutely aware of class and entitlement, so that if they don’t get a first-class seat, they may feel resentment at having to sit in coach when it was the norm before. And there may be companies for whom an extra 100-250 all the time is a big deal, and if they have no choice they will see traveling costs add up.

How can struggling airlines best earn revenue? Should non-budget airlines follow the budget route and keep charging for the little services, or should they bring back partitions and earn revenue by catering to those who can (ironically) afford to have those services for free? Should United and American follow suit?

*I first read this in the NYTimes, but if you don't have an account you can find a similar but more brief article here.

Al-Qaeda stronger than ever?

According to a BBC World Service Poll, since George W. Bush's 'War on Terror', 30% people believe Al-Qaeda stronger has become stronger. Only 22% say Al-Qaeda is weaker while 29% of the polled adults polled believe the war has had no effect on Al-Qaeda. 4% of the people polled had never heard of Al-Qaeda, and 15% are not sure if the War on Terror has made it stronger. 21 of the 23 countries surveyed held poor veiws on Al-Qaeda except Egypt and Pakistan. Around 60% of Egyptians said they had either a positive or mixed view, while in Pakistan, where much of the battle against al-Qaeda is being fought, just 19% said they had a negative view of Osama Bin Laden's organisation. Clearly indicating this war is not winning the hearts and minds of the most important citizens involved.

Some 24,000 adults across 23 countries were polled for the BBC World Service between 8 July and 12 September.

Vietnam death toll rises

Typhoon Hagupit, one of the worst of the season, has just hit Vietnam killing 32 people so far. The damage is still indeterminable, of the storm that has already struck China and the Phillipines. Police and soldiers were sent into the most vulnerable areas of North Vietnam to evacuate as many as possible. Hagupit, which means "lashing" in Filipino, killed at least eight people in the Philippines and at least 17 in China where it triggered a huge storm tide. The Red River near the capital Hanoi was expected to reach dangerously high levels on Sunday (today), rising to 8.6 metres (28 ft).

I had a chance to visit Hanoi and northern Vietnam in June of this year and I remember people talking about this typhoon season was supposed to be as bad as any season in the past years. When I was in Japan we got some of the weaker ends of the typhoons in July.

Falling Oil Prices: Good News or Bad?

Oil prices have been decreasing from the record-high of $150 this summer, as Caity’s post from last week mentioned (Gas prices down 10 cents in 4 days). This article further elaborates on the potential impact of falling prices. You’d think falling oil prices would be met with cheers all around, and maybe that’s a good thing. But for the US economy as a whole, are falling prices something to worry about?

The article argues that the decline actually reflects lower consumer demand and indicates that an economic recession is right around the corner, if not at our doorstep. With recession comes less jobs, which will further pressure demand. Americans are driving 4% less than the previous year, and are using 2% less energy. The economy – the industrial sector in particular – suffered huge blows from the recent crude-price surge. After slashing output and jobs, and shifting production focus from oil guzzlers to smaller cars, companies like General Motor might view a fall in gas prices to be like trying to stick a Band-Aid on a sinkhole – too little, too late. Those jobs are gone. The market that made them money (trucks, etc) is floundering.

Also, because people are starting to realize they can’t keep living beyond their means due to a shrinking credit window, they’re not going to demand SUVs and trucks just because gas is cheaper. They’re not going to be demanding much of anything, actually. However, the article ends on a (slightly) optimistic note, saying that oil prices may continue to fall, and fall hard. This may alleviate some of the pressure on the average American wallet, and allow people to spend, save, or repay debts.

Are falling oil prices enough to offset some of the impacts of an economic recession? I think probably not to a great extent. But it’s something that will help out the everyday population, which I think is significant. It’s something that will alleviate some of the stress placed on households, small businesses, and anyone who is waiting for the trickles of a $700 billion bailout to reach them. Oil prices – along with Wall Street’s wake-up call – may provide America with an opportunity for a breather: to stop, sit back, evaluate spending habits and reliance on credit, and prepare for a very possible recession.

Equador's Symbol for Change

President Rafael Correa, a 45 year old US trained economist, is introducing a 444-article plan for the future to his country of Ecuador. Some of the most contraversal are

• The state to tighten control of vital industries such as oil, mining and telecommunications and reduce monopolies
• Some foreign loans to be declared illegitimate, which could allow the government to stop debt repayments
• The state allowed to expropriate and redistribute idle farm land and ban large land-holdings
• The president allowed to stand for a second four-year term in office
• Free health care for older citizens
• Civil marriage for gay partner

He is very popular amongst the lower income and indigenous communities. The problem with that is most of the people who's support he needs are already too disenfranchised with the political system they might not even vote. His objectors come from business owners who are worried about their investments. Some say with this the president will have too much power, others say he is just a puppet of Venezuelan President Hugo Chavez. This fight for the middle class versus the elite is definitely analogous to the presidential campaign now.

Kgalema Motlanthe sworn in as President of South Africa

Kgalema Motlanthe was recently sworn as president of South Africa after the recent resignation of Thabo Mbeki. Thabo Mbeki's resignation came right after his mediating the talks of the Zimbabwe heads of states. He was very much criticized for his private talks there but they ended up paying off after all. Not paying off enough however, to help his standing at home and still was forced to resign based on failed domestic policies.

Kgalema Motlanthe, who secured 269 of 360 votes by parliment members, will seek to do some mediating and tension cessation of his own while in office. He will lead a very divided party in the ANC (since Mbeki's resignation, 11 cabinet members resigned) and also have to ease tensions between supporters of Mbeki and his rival Jacob Zuma.

It seems as though S Africa would like to travel back to it's routes in choosing Kgalema Motlanthe, not in the sense of age (Motlanthe is younger), but struggle. Thabo Mbeki was a more rigid, and an acedemic, at times seeming out of touch with the everyday S African. His economic policies are indicative of that as he favors heavy deregulation. Motlanthe did not go abroad to become educated and spent 10 years on Robben Island. He only has a year as interim president, until Jacob Zuma is expected to take office, but he may be able to revive S Africa and the ANC with it.