U.S. group urges strong patent rights in climate deal

This article is a great example of public goods as a market failure. The good in question is air. Currently, companies have patents on technology that is better for the environment, and they do not want others to cash in on it, even though it would make the environment much better off. They are concerned that they will be losing their intellectual property. One proposed solution is for the government to issue licenses that would allow people to use the technology. Other countries are lobbying for the rights to the technology, but allowing this to happen would cost the United States millions of jobs.

TARP: Taxpayers on the hook for $200 billion

This is a very interesting article about the effects of the so called "glorious" stimulus package. Originally created during the Bush administration, the $700 billion package was supposed to used to buy struggling banks' assets to be an investment but has been used for many other things like bailing out AIG, automakers and struggling homeowners. Financial experts estimate a $100 billion to $200 billion lose to the Treasury, or in other words money that the tax payers will have to dish out. This article has a detailed break down of where the stimulus package is being spent. 

Greenspan Predicts Economic Growth to Hit 3 Percent or Higher

Alan Greenspan, Federal Reserve Chairman, has predicted that the economy will grow by 3 percent or higher in the third quarter this year. He also predicts that the unemployment rate will increase over 10 percent. Part of this growth is due to the fact that only 40 percent of President Obama's initial stimulus package has been spent. When there is an increase in savings, there is an increase in investment, which in turns increases growth. Also, Greenspan has offered some short-term steps that will assist with the economic growth of the country.

A “new normal” for the world economy

This article provides an interesting view of the economy as we move towards a "normal" state. Although things are turning around the economy still has lots of ground to make up.

Japan prices fall at record rate

Consumer prices fell at a record level in Japan in August. There is an increase in unemployment and falling wages are keeping the domestic demand weak. There has been a six month straight decline in CPI. Deflation can lead to problems like it can prevent the companies from profiting and consumers will postpone their purchases that will lead companies to cut down on production. Japanese new govt. is trying to boost up domestic demand....

Unemployment Rate at 9.8 Percent, Highest Since 1983

Unemployment rates have reached an all time high since 1983, at 9.8%. While the number of nations jobless rose to 15.1 million. To make matters worse economist expect the unemployment rate to rise in the upcoming months. "It's safe to assume that the recession is technically over, but when is it going to feel like its over in the real economy?" Heidi Shierholz, an economist at the Economic Policy Institute said, "It's safe to assume that the recession is technically over, but when is it going to feel like its over in the real economy?" Over one third of the nations 15.1 jobless people have been unemployed for more than 6 months.

After The Storm

This article is about the future prospects of the world economy after this most recent recession. It seems that the worst is behind us, being that output has ceased its shrinking in all of the World's largest economies. Additionally, the IMF, in its latest forecast, has reckoned that global GDP will expand by 3.1% next year, 1.2 percentage points faster than it forecast in April.

However, as we have learned in this course, not all growth is promising for the future of Country's economies. The article states, "Unemployment is still rising and much manufacturing capacity remains idle. Many of the sources of today’s growth are temporary and precarious. The rebuilding of inventories will not boost firms’ output for long." This is describing the fact that the wealth and prosperity of Countries lied within intensive growth, not extensive. Extensive growth operates with diminishing returns, so over the long-haul it does not promote prosperity. It is important, then, for Country's to focus on the long-term, and increase education and other elements of intensive growth.

Consumer Spending Rose in August

Consumer spending and pending home sales surged in August, but the increases were substantially driven by government stimulus that has, or is about to, expire. Income gains were modest.

Separately, more Americans sought jobless benefits last week and a key gauge of the U.S. factory sector slowed in September, adding to concerns about the economy's fragile recovery.

The Commerce Department reported Thursday that U.S. consumer spending increased by 1.3% in August compared with July and personal income rose 0.2%. The jump in spending was the largest since a 2.8% increase in October 2001 and exceeded Wall Street expectations.

The big gain was driven by higher gasoline prices, back-to-school sales and the "cash for clunkers" government voucher program that let motorists swap gasoline guzzlers for newer car models. But the government stimulus, an attempt to fuel the economy's rise out of recession, expired in late August.

Listless spending the rest of the year would mute the recovery from the long recession because what consumers do with their wallets makes up a big part of the U.S. economy.

Dollar's Pain Is Big Gain for Rivals

This article in the Wall Street Journal talks about the falling value of the dollar to other currencies and how that is going to impact the US and the world economy.

The greenback has been tumbling for a while as the Federal Reserve lowered the interest rates. Since the other countries are expected to raise their interest rates before the Federal Reserve, the dollar is expected to loose more of its value. However, as the dollar continues its downward slide, policy makers in other countries will start complaining that a weak dollar hurts their ability to export goods to the US which might help revive the dollar.

In the quarter, the dollar lost 4.1% of its value against the euro and dropped 6.8% against the Japanese Yen. One of the main reasons why the dollar has been loosing its value over the past few months has been the fact that the Federal reserve seems in no hurry to raise interest rates and thus invite people to invest in the dollar. For this reason, several Asian banks have been buying the dollar to keep their exports competitive.

Although the dollar has been tumbling for a while now, it is expected to regain its value soon as pressure from other countries' rises and as the economic situation in the country improves which would allow the Fed to raise interest rates.

Consumer confidence dip is bad holiday omen

A key measure of consumer confidence fell in September, after a gain in the previous month, raising concerns about retail sales in the upcoming holiday season. Because of fears about the short-term economic outlook, people are spending less and as a result, economists are concerned that this frugalness will carry over into the very important holiday season for retail sales. Part of the false hopes for a continuing rise in consumer confidence was the increase in spending last month, but that was a result of the Cash for Clunkers program. However, the success of the program proved that consumers will respond to incentives so perhaps retailers will focus on finding new ways to attract consumers.

Senate panel rejects public healthcare option

A Senate panel on Tuesday rejected a government-run "public" insurance option as part of a broad healthcare overhaul. The Senate Finance plan by Baucus is the only healthcare reform bill pending in Congress that does not have a public insurance plan, which Obama and other backers say would boost competition for insurers. The public option would devastate the private insurance industry and ultimately lead to a government takeover of the sector.

In Madoff’s Wake, S.E.C. Is Told to Revamp Inquiries

This is a blog post from DealBook, a blog edited by Andrew Ross Sorkin on the New York Times website.  This entry discusses the Security and Exchange Commission's response to its failure to detect Madoff's Ponzi scheme.  The post includes the official report and memorandum from the S.E.C.’s inspector general, H. David Kotz.  The post discusses the 21 recommendations that Kotz made to the S.E.C.’S division of enforcement.  I find this article interesting because it shows even though the government has commissions in place to regulate the economy they often fail to do their jobs.

Fujii Denies Backing Stronger Yen, Says Japan May Act

I am really interested in the blog that Christina posted on Monday and I want to write about this topic as well. Japan is definitely an export-oriented country and the biggest single partner is the USA which imports more than one quarter of all Japanese exports. Japan exported 81.01 trillion yen (Around $900 billion) of goods and services to the foreign countries in 2008 and this number is about 21% of Japanese GDP. However, trade surplus decreased more than 80% in 2008 compare with 2007 since the yen has gained about 16 percent in 2008 against US dollars and also more than 10% against Euros.

Japanese trade statistics from 2004-2008:
http://www.customs.go.jp/toukei/shinbun/trade-st_e/2008/200828fe.pdf

In this sensitive time, I do not support Fujii's statement on September 24th which Japanese government appreciates strong yen and avoid the idea of easy intervention in the market. At least, I do not understand why he said it to the public. Because of the strong yen could decrease the demand of Japanese exports, it causes further damages for Japanese firms in this great recession. Moreover, because of the investors expect the damages to Japanese export-oriented companies, it gives negative effects for Nikkei 225 stock market.

Fujii said the government may act to stabilize the foreign exchange market and denied that he supported a stronger yen, a day after the currency surged to an eight-month high ($1 = 88yen). “If the currency market moves abnormally, we may take necessary steps in the national interest,” Fujii said at a news conference in Tokyo on September 29th. I hope the statement stabilize the foreign exchange market in Japan.

Rising Yen Leads Japan Into a Tricky Balancing Act

The Japanese government is facing some difficult decisions as the yen continues to strengthen. The yen rose to 88.23 per dollar, up 11% from early June. This is problematic for Japan because of its heavy dependence on exports. Japan is very sensitive to currency swings such as this because a strong yen makes Japanese goods more expensive. A number of factors are believed to have influenced the strength of the yen, including the recent elections and short-term lending rates that are higher than those in the US. The current strength of the yen could be an opportunity for Japan to move away from its dependence on exports. However, the interim could be difficult, particularly for exporters. Of course, this may not even be an issue if the yen again weakens relative to the dollar.

Hidden Culprit of Product Scandal Made in China

The article is about the blame on China for its unsafe goods. The authors starts with his own anecdote about his visit to a knockoff market in Shanghai. He met an American who thought of himself as an experienced shopper at this market. Actually, he is willing to pay more than a hundred dollars for some fake designer watch that is worth only about ten bucks, and yet he thinks it's cheap enough for something branded Rolex. Not only making fake designer stuff, China also exports many unsafe and low- quality products every year. However, the author makes the point that China should not be solely blamed. It produces and exports those products partly because of our "instatiable appetite for its cheap products, labor and loose regulations."

Tech: The Return of Risk-Taking

This article reveals good news on increased risk-taking activities by tech companies. According to the author, the first three weeks of September saw $19.3 billion in technology mergers and acquisitions. Also, Mark M. Zandi, chief economist of Moody's Economy.com, predicts that tech spending in the U.S. will increase 4% in 2010 and 10% in 2011, after dropping 10% this year.

Gas prices in two-month slide

This article is quite interesting since it talks about gas prices dropping on a regular basis, as opposed to the fact that at one point in time, people couldn't believe the rate at which it was growing!
According to a recent survey, gas and crude oil prices have dropped at a rate of 12 cents since the 7th of August 2009. The reason for the sudden drop is being blamed upon the steep unemployment rate and the country's recession.
A point to note is that, the highest price for gas in the country stands at $3.29 a gallon in Alaska, and the lowest, $2.16 a gallon in St. Louis, Missouri.

Coalitions of the willing

It will be interesting to see what happens during and especially after this election in Germany.

Toyota Boosts Sales Forecast

This article, while short, shows a lot of promise. The recession has it many industries very hard, and automakers have been at the heart of those in crisis. While this is only one automaker's report (and a non-domestic one at that), it is still good news of a hopeful rebound in demand for automobiles, and eventually other products as well.