Lobbying Appears to be Recession-Proof

This article talks about the increase in spending on lobbying. Companies and interest groups are reported to have increased lobbying spending by 5% despite the recession and the decline of the dollar. On the one hand, it seems like companies and interest groups would want to cut down on lobbying expenses given the state of the economy, but on the other hand it would make sense that in a time like this companies and interest groups will be willing to spend more to further their specific interests. Lobbying expenditure was mostly on issues like health care, financial reform, climate-change legislation - all things that are extremely important for the future.

In Hungary, Potential Lessons for Greece

Hungary is looking to adopt the Euro, despite recent problems dealing with Greece. Even though they became part of the European Union in 2004, they still have conditions to meet before they can adopt the Euro. In addition to Hungary, Latvia, Poland and Estonia also would like to adopt the Euro as their currency. In 2008, Hungary had to be bailed out by the IMF, which set restrictions in order to get Hungary back on their feet. This has drawn attention to the fact the the E.U. monetary fund cannot help bail Greece and other countries out, and that Greece, Spain, and Portugal should learn from Hungary. In order to adopt the Euro, labor costs need to decline, they need to build a stronger and bigger economy to compete with bordering countries and and have sustained growth equivalent to two percentage points above the E.U. average. One of the most important things to do is have a strong and constraint fiscal policy in Hungary.

Britain Runs Deficit

This article talks about the ramifications of Britain's deficit. Britain ran a budget deficit for the month of January for the first time in 17 years. January stereotypically yields the highest taxes for Britain. The situation is made worse by the fact that Britain had expected a government surplus. This has lead to a slew of debates on how to curb government spending. This is further complicated by the need for economic recovery, and certain officials fear that if spending is cut it could thwart the recovery process. In addition the number of people collecting unemployment rose despite predictions that it would fall. All of this could have repercussions for the labor party as the country has a general election before summer (a reminder that economic policy is intricately intwined with politics).

On anniversary, Obama defends economic stimulus

This article dicusses Obama's defense of his year old stimulus package. He issued statements trying to ensure the public, skeptical of its progress, that the package has done good for the economy. "Our work is far from over but we have rescued this economy from the worst of this crisis," he said. He said in 2010 it will continue to create and/or save atleast 1.5 million more jobs. All this comes at a time of opposing majority in congress and a linger of doubt from many Americans on Obama's success.

Fed Tenuously Begins Raising Rates

The Federal Reserve Board voted to raise the discount rate by a quarter point to 0.75% today in an effort to begin unwinding the hugely expansionary policies undertook in the depths of the financial crisis. The move also widened the gap between the discount and federal funds rates, encouraging institutions to rely more on money markets instead of the Fed for short-term liquidity demands to try and stave off the looming spector of inflation.

The question remains, however, if the discount rate is even an effective tool for managing the money supply and inflation with financial institutions holding so many excess reserves, or if it is mainly a signal that the Fed is beginning to return to business as usual as the recovery appears to have gained a foothold. The rate hike will likely have little effect on the credit market with banks holding so much cash in reserve and the federal funds rate sitting below the discount lending rate, a sentiment echoed by stock markets which posted gains despite the move by the Fed.

HHS warns of double-digit spike in health premiums

I want everyone who does not support health-care overhaul to read this and then thank themselves for helping keep the costs of my health insurance high for the last two decades, and are supporting politicians who will continue to keep costs high by preventing any reform from taking place. Thank you, guys! You're destroying my future!

White House-2 million Jobs Saved or Created from Stimulus

For all the flack that the government has been getting for not doing enough in creating jobs, I thought this was a good article just to highlight some of the positive things that the stimulus has done for the economy. Nonetheless, the fact is that only 6% of the public believes that the stimulus has created jobs and this perhaps is reflective on the failure on communication on the government. Sometimes its not what really is being done, but also the perception of what is being done that is also just as important.

Hewlett-Packard Lifts Outlook as Profits Rises by 25%

This article is about Hewlett Packard's quarterly profits increased by 25% due to cost cutting. Revenue had risen in most of the company's technology division. Net income in the last quarter was $2.3billion or 96 cents a share, compared to $1.9billion which was 75 cents a share. Revenue increased by 8% which was above what had been forecast for that quarter.
If big companies like Packard are on the road to performing better, it just shows that the consumer confidence has risen and people are becoming more confident in the economy.

Industrial production rises 0.9 percent in January

This is an interesting tidbit; I was under the assumption that industrial production would lag, not lead, any recovery. It would be more interesting if the article discussed which sectors among manufacturing led the way compared to others that may still be contracting or stagnating.

Pork Barelling

This article is relevant to us for two reasons. First, it describes an argument our graduation speaker, Senator McCain, is currently having. Secondly, it reveals a real-life example of pork barreling.

Britain no longer a welfare state

This article discusses how Great Britain has moved away from being a welfare state (like our European models in class) and now resembles more Anglo-Saxon economies. As predicted, their more flexible labor markets have led to higher inequality as indicated by their Gini coefficient.

Energy Company Mergers Are Expected to Rise

After two-years of few merger and acquisitions in the Energy market things look to be changing. Companies are beginning to buy new technologies and buy potential oil or gas fields. Large oil companies are looking to buy or acquire smaller faster-growing companies that will give them new fields around the world in places like Ghana, Sierra Leone, and the deep waters in the Gulf of Mexico to find potential oil. Deals have come from a regular occurrence because of America's interest in and development of technology for Natural Gas. Last year there was a total of $144 billion up from $104 billion from 2008. The future for energy companies has become eat or be eaten. “The mandate of national oil companies is to go and find reserves around the world,” said Jon McCarter, the oil and gas transactions leader for the Americas at Ernst & Young. “They have been very active and very aggressive.”

The $555,000 Student-Loan Burden

For a country that relies as heavily as ours on the development of human capital for our economic growth, it is absolutely appalling that ANY student has to pay this much money. That kind of debt will keep future generations unable to save, invest, spend as consumers, or advance our society if all we are doing is paying away debt. At the same time, we need to get away from a culture of spending now, saving later. Our generation, according to the article, has $730 billion in student debt - something is clearly wrong.

Fed: "Look for 3% Growth Next 2 Years"

This article corresponds directly with the information sent from Dr. Emre Ergungor at The Economic Outlook Conference. As presented by Professor Skosples, Dr. Ergungor and the Fed are predicting a growth of 3% in GDP for the next two years. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota also says, along with our speakers, that unemployment will not be falling by significant amounts either. It also mentions that inflation levels will be relatively low.

Barclays Reports Profit Doubled in 2009

This article relates to the issue of top executives earning big bonuses and the presence of an unequal income distribution. Even though this London bank's profits more than doubled last year, its top two leaders, the chief executive and president, gave up their bonuses for the second year in a row in response to the public anger over bank executives taking large bonuses. Other members of Barclays executive committee will have their bonuses given to them over a three year time span, all depending on how profitable their unit is. This is not the only company where this is happening in Britain. Royal Dutch Shell said that pay practices for top management positions were changing. The salaries of top executives are being frozen until 2011 at levels that are 20 percent below those of the previous executives for this company in response to shareholder uprising last year. I think this is interesting because it does not seem that executives here in the US are taking pay cuts, even in response to the recession and the current low earnings of companies.

Withdrawing the Drugs

This article discusses the future of economic recovery efforts around the world. The world economy is starting to turn around and governments are now faced with reducing the assistance they have been providing. Governments must decide when will be the best time to tighten the fiscal and monetary policies, which tactics should they use, and how should they approach these tactics. Various ideas are suggested, but in the end, the key is to make sure the changes are coherent and coordinated. Even with these changes, things will never be the same as they were before the economic downturn.

One of the key factors to this article is that when a government helps out an industry or market, taking this help away is always difficult. The industry and market come to rely on the help they receive from the government and will work hard to keep it, even if it is no longer needed. They will employ lobbyists to get the government to act in the industry's best interest. Even if the help is reduced, people know that the government will step in and help. This has left the world changed.

Another key point is that there is no one way to reduce the help governments have provided. Governments around the world are faced with different economic systems. This has led to these governments taking different approaches to the economic downturn and means different solutions will be needed to fix the problem of reducing the help.

Analysis: Greek financial crisis coming to America?

The European Monetary Union doesn't include some type of a bail-out of the Greek government from the European Union, the EU central bank or any other member states. There is an article that allows for the intervention of the European Council to assist member states, however, the member state must be seriously threatened by a natural disaster or an exceptional occurrence beyond its control.

The structure of the European Monetary Union does not allow for the devaluation of Greece's currency and, most importantly, does not allow for it to leave the eurozone. Greece is forced to assume one of three positions. Greece can either default on all or part of the Greek government's debt, reduce its deficit drastically within just trhee years (13% to 3%) or considered being bailed out by Berlin.

Vancouver Faces Olympian Burden Thanks to Swallen Budget

With all the Winter Olympics madness going around, I thought this would be a perfect article to take a look at the actual financial costs of the Vancouver events.

This article talks about the failed attempt by the Canadian government to boost the economy by making a large profit, creating new jobs and improving the tourism sector. In reality, however, this year’s host ended up with only $1 billion in profits as compared to the previously estimated $9.6 billion. Many experts seem to agree that this negative outcome is due to a financial crisis and miscalculations by the government, but representatives of the city administration “continue to maintain that the Olympics will have positive long-term effects”.

U.S. Housing Aid Winds Down, and Cities Worry

The article focuses on the effects of the Obama administration's withdrawal of its program to buy up mortgage securities, as small town populations such as Elkhart, Indiana become more dependent on government funding. It explains that the government's programs are distorting the market and it is unclear whether the government can cut back without the housing markets going into another tailspin. The special inspector general for the government’s Troubled Asset Relief Program, Neil Barofsky stated "one difference from the last bubble: taxpayers, rather than banks, are now directly at risk in these new mortgages".

The Economics of the NBA

This article sheds some light on the financial side of the National Basketball Association. As the article describes some of the current problems, such as the projected league-wide loss of nearly $400 million this year, we realize that even something as immensely popular as the NBA can have financial problems that are not easily solved.

Future Bailouts of America

Once a small membership organization comprising of Fannie Mae and Freddie Mac, the mortgage finance giants, and the occasional troubled auto company, the Future Bailouts of America Club now includes a long list largely populated by financial institutions.

As taxpayers, we obviously can’t rely on lawmakers to address the risks we face from the ever-expanding corporate safety net thrown under teetering behemoths. But because we are footing the bills for these rescues — and will do so again if more crises occur — don’t you agree that we should know what these implied federal guarantees will cost us?

If the government won’t reduce the size of the safety net, and it has shown no appetite for doing so, it should at least tell us the price tag.

Wall St. Helped to Mask Debt Fueling Europe’s Crisis

Interesting outlook on the crisis in Greece, and the US level of involvement.

The crisis in Greece poses the most significant challenge yet to Europe’s common currency, the euro, and the Continent’s goal of economic unity. The country is, in the argot of banking, too big to be allowed to fail. Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.

Europe's PIGS: Country by Country

I thought this was an interesting addition given the current anxiety over the bailout of Greece.

The article gave a good summary of the pretty dire situation that Portugal, the Irish Republic, Greece, Spain and the UK are facing. I think the statistics speaks clearly for itself.

Contemplating the Future of the European Union

The European Union consists of 27 nations, 16 of which use the EU currency. The European Union is facing its demise because of Greece's recent economic problems. Depending on how they handle this problem it could make or destroy the Union. The troubles of Greece have driven the value of the Euro down compared to the dollar. Their are talks of bailing Greece out now. But then comes the question of what will happen with other deficit stricken countries like Portugal or Spain. How can the EU stop itself from falling apart? “The crisis should lead to political unity, but it could just as easily lead to a divided Europe,” said an economist from the Center for European Reform. Wealthier countries worry that they will have to use their taxpayers' dollars to bail out the deficit stricken nations. The problem has come because many countries were using the "euro like a credit card" and overspending to avoid a recession but by doing this ran up a huge deficit.