New Chinese Stock Market Greeted With Enthusiasm

A new stock market in China, ChiNext, opened on Friday. The market was designed for technologically oriented companies and was modeled after the the Nasdaq stock market. In the first day alone the total value had almost doubled. The market was clearly well received. This market is growing far more than other Asian markets at this time. Unfortunately, the shares can be bought by mainland Chinese with few exception, even though there has been a lot of foreign interest.

E pluribus tunum

Everyone loves getting a bargain, which comes from paying less than you were willing to pay. This article looks at the topics of consumer surplus and maximum willingness to pay in the online music business, particularly iTunes. Apple's initial pricing strategy on iTunes was perplexing to some, because it charged a flat 99 cents per song for every song and every consumer. The argument is that Apple could have profited more and generated more surplus for consumers by adopting a more tailored pricing strategy.

A study at the University of Pennsylvania Wharton School of Business indicates that the market would sustain a higher uniform price than 99 cents. One alternative to this pricing scheme is to adopt song-specific pricing, similar to what iTunes did with its multi-tier system in April. The problem with this is that it would increase profits by only 3%, as consumers that are willing to pay more for one song are also likely to be willing to pay more for other songs, as well. Another option is an entry fee and then smaller per-song costs. The study indicated that an entry fee of $21.19 and a fee of 37 cents per song would raise both producer and consumer surplus.

One of the biggest issues with complicated pricing schemes is the cost to develop and implement them. However, it may be something that will become more common with technological improvements and firms looking for new ways to stay afloat.

US economy is growing once again

U.S. economy grew from pace of 3.5% between September and July. Obama is welcoming this news and he says that the steps taken by the government made a difference but there is still a long way to go. U.S. economy grew 0.9% compared to the last three months. It is the first time the US economy has expanded since the second quarter of 2008. But there are still some challenges the US has to face because the growth is shaped by government stimulus.

US Economy Exits Recession???

After four consecutive quarters of contraction the US economy has shown a positive GDP growth of 3.5% in the third quarter of 2009. Even though the article states we have exited the recession, US treasury secretary, Timothy Geithner, has acknowledged that the recession remains very much alive for millions of Americans who are still struggling with the financial downturn. The rebound in GDP was primarily led by an increase in consumer spending. However, many analysts expect the economic momentum to slow down in the fourth quarter. Nonetheless, I hope this upturn ignites some optimism among Americans and spur us further to pull ourselves out of this economic slump.

Iceland says bye to Big Mac

This article talks about how Iceland is also targeted by the world financial crisis. Symbol of globalization Big Mac is shutting down in captial Reykjavik. It is too expensive to keep them because of the economic situation and most of the imports come from Germany. There has been increase in costs due to fall of Krona currency and high tariffs on imported goods.

Home prices up slightly for third straight month

Home prices rose in the month of August. Although there has been stabilization in Home prices, economist feel that with the increasing unemployment rate and the expiration of home-buyer tax credit this could cause a decline. But for now in 20 metropolitan cities, home prices rose 1 percent. With low interest rates, cheap foreclosure properties and tax credits for first time-home buyers, economists believe there is an end in sight.

Where Jobs Are: The U-Haul Indicator

This article describes the less formal statistics that the author finds helpful to determine where unemployment and job opportunities exist and do not exist. Instead of looking in the usual places, like the Bureau of Labor Statistics or any other federal agency, but from U-Haul rates and prices. Places where jobs are low cost a lot to leave from, but not much at all to travel to. This article overall provides a different take on how to see the economy's effect on multiple facets of life.

Venture Capital Investment Still Lacking in Europe

This article discusses the lack of investments by venture capitalists in Europe ever since the global economic downturn. Third-quarter figures show a 48% decline in investments compared to a year ago. However, this doesn't mean that venture capitalists aren't spending their money, they are just spending their dollars more wisely. Not only in Europe, but in the United States as well, we need venture capitalists to invest their dollars, particularly in start-ups. This very well may be the match we need to ignite the global recovery.

Legalize It: Insider Trading Is a Victimless Crime, Says James Altucher

James Altucher, managing director at Formula Capital, believes that insider trading should be legalized after the fallout of the Galleon Group. Altucher feels that insider trading should be legalized because "it's a victimless crime, almost impossible to prosecute, and a big waste of taxpayer money". He also feels that the SEC should be focusing on tracking down frauds and the next Madoff or Enron. Additionally, he believes that insider trading can have the same positive effect on the market similar to the role that speculators play in leveling prices. It is an interesting proposition, but a most unlikely one.

Fraud Plagues Sugar Subsidy System in Europe

This article is proof that people abuse government subsidies.  The European Union provides 50 billion Euros ($75 billion at current exchange rates) in agricultural subsidies.  The EU recently discovered truck drivers were taking a 2,500 mile route instead of the direct 900-mile in order to receive more money in subsidies.  

Risk Trade Returns as Stocks, Oil Drop and Dollar Gains

NEW YORK -- With equities and oil prices falling in tandem with a rebounding dollar Monday, global markets demonstrated that they have not yet broken free of the risk-conscious trading logic that first emerged during the financial crisis a year ago.

The trend suggested that despite clear signs of global economic recovery the dollar continues to be seen as a safe haven play, rallying when investors become risk averse, as they did Monday, and falling as they gather confidence, which is what had been happening for most of the past eight months.

It also underscores how difficult it is to stake a claim on future trends for the recovery. In the past trading sessions, one sector tended to lead while others lagged. The sense that the worst of the downturn was behind us boosted riskier assets, driving down the dollar.

Stimulus fuels South Korea recovery

This article talks about how the Korean economy has increased in its fastest pace since the last seven years. The GDP has gotten better for the first time in four quarters. Private consumption and facility also helped in economic growth. Private spending, exports and capital investment all rose as well. There has been an increase in Asian economies recovery during the current global recovery.

Who cares if Wall Street 'talent' leaves?

On Thursday, White House pay czar Kenneth Feinberg outlined compensation restrictions at seven firms that got special bailouts, and the Federal Reserve proposed to review pay practices at 28 unnamed giant banks. Critics warn that reining in pay makes it hard to keep talented employees. Hemmed in, institutions like AIG, Bank of America and Citigroup could lose their best people. These firms would then perform even more abysmally, if that's possible, leaving them hard pressed to repay tens of billions of dollars of taxpayer-backed loans. Wall Street's employees have always received exceptional bonuses despite their performance, but now with a decrease in pay on the horizon, it appears that they have officially lost all motivation. Perhaps part of Wall Street's demise is that its employees had no incentives to perform better if their compensation always remained the same?

Can Main Street Catch Up with Wall Street?

On the one hand, the Dow Jones industrial average once again danced around 10,000 last week. Earnings of Caterpillar (CAT), Google (GOOG), and Apple (AAPL) far exceeded expectations. If U.S. gross domestic product rebounds as expected on Oct. 29 and turns positive for the first time in 15 months, it would confirm that the recession ended in the third quarter, at least statistically. Meanwhile, back on Main Street U.S.A., the picture is drastically different. Unemployment has doubled in a year, to 9.8% in September, and there are about six unemployed Americans for every job opening.

An uncelebrated century: Smaller American banks are now at the centre of the credit storm

PARTNERS BANK of Naples, Florida, earned a dubious distinction on Friday October 23rd. It became the 100th American bank failure of the year. On the same day six other lenders—two more in Florida and banks in Minnesota, Wisconsin, Illinois and Georgia—joined the rollcall of failure in the aftermath of the credit crisis. More banks have failed in other years. The post-war record was set in 1989 when 534 banks went under. That was at the peak of the savings-and-loan (S&L) crisis, which erupted in the late 1980s and continued in the early 1990s. This year has seen more failures than any since 1992, but another 75 banks must go under to overhaul that year’s total.

An IMF Just for Emerging Markets

The article discusses the role of the International Monetary Fund as the lender of last resort to countries wresling with economic crisis. The IMF was set up after World War II, and its structure by then was based on the balance of power between the U.S. (its main creditor) and European countries. Nowadays, the IMF's role in stabilizing the world economy might be limiting because of the prejudices among the developing countries against the dominating roles of the U.S. and the Western Europe in the IMF. During the Asian financial crisis in 1997, the IMF lent out funds to many Asian countries. However, it also imposed on some of those countries strict monetary and fiscal policies which were not very efficient at that time. The author mentions the idea of a new version of the IMF called Emergency Monetary Fund, which might become the lender that developing countries can rely on.

China's economy picks up steam

This article talks about how China in the third quarter of the year has expanded its economy by 8.9 per cent from last year. The government's massive stimulus plan of $586bn helped the economy. Another factor that helped the economy is domestic consumption such consumer spending which helped third of the economic growth.

When Two Plus Two Equals Three

The author reports on the minor changes that the Cuban government is trying to make in order to come out of its dire economic state. The food shortages that are characteristic for a socialist economy are very severe. According to the author, "despite its abundant farmland, Cuba imports 80% of its food." This tell a lot about the inefficiencies of the Cuban economy. Another problem, is corruption. Very similar to the Soviet Union, bureaucracy is abundant and the government leaders are appointing people to the key positions not according to their qualifications, which creates additional barriers for efficiency.

US bank failures top 100 for year

U.S. bank failures have reached 100 this year. Because of the bad economy there has been an increase in loans that may lead more banks to suffer. Fortunately savers' money is not in danger because it is backed by the US government. Banks are buying other banks to save them from collapsing.

As Detroit Crumbles, China Emerges as Auto Epicenter

China has taken over the reigns in the auto industry surpassing the likes the Detroit auto industry. This year China will become the world’s largest car producer. Speculation has been circulating that the Chinese are looking to bid for American car companies such as Ford and GM. With world class technologies China can become a dominant force in the auto industry.

Losing Their Lifeline - 7,000 a Day

This article headlines the fact that while the Senate debates on whether or not to continue unemployment benefits, around 200,000 people are set to stop receiving checks at the end of October. This take place a full month after the House has already confirmed the bill. The goal is to lengthen the period of time for benefits for 14 more weeks. Leaders from both parties are trying to solve the dilemma, and possibly get the bill to the floor by next week. The article also features the efforts of several people to obtain new jobs in wake of the vast unemployment throughout the nation.

Sarkozy Pushes for More Control of European Central Bank

French President Nicholas Sarkozy has called for a change in the way the European Central Bank is run. He believes that the ECB needs to change their monetary policy and start to publish minutes from their meetings. Sarkozy believes that they need to do something other than raise interest rates in order to curb inflation.