Hu's US Visit May Signal Easing by China on Currency

The arrival of Chinese President Hu Jintao has brought a new series of implications and speculation of whether or not the Chinese will adjust their currency. Several economists give theories of what the effects would be on the United States if the currency would be appreciated to the dollar. One of the main reasons of this issue is that China is strictly an export economy, shunning the very people who have brought this country to the upper economic echelon. This is a fair article looking at both sides of the issue.

U.S. Sets New Car-Mileage Standards

The Obama administration set in place a new and stricter set of mileage standards for cars and light trucks, as a part of its goal to cut harmful emissions and ease the nation’s dependence on foreign oil. The plan is to raise the average mileage of new cars on U.S. roads to 35.5 miles per gallon by 2016, a 34% increase from the current 26.4 mpg level. On the negative side, the cost of a car will increase on average by about $1,000. And making the cars meet this new target will cost the automotive industry about $52 billion. On the positive side, the government estimates a savings of about 1.8 billion barrels of oil, and translates to fuel savings of about $3,000 per car. It is also expected to reduce emissions of carbon dioxide and other greenhouse gases by about 30% from 2012 to 2016.

The Obama Coalition

This is mostly a political article, but it does discuss the political ramifications of the structural change to the American economy that is currently underway.

Automakers Report Rise in Sales, Helped by Incentives

The auto industry is declaring that March has been one of the best months for vehicle sales in the United States. Ford and General Motors both saw sales increase. Toyota said that they also expect an increase. The article claims that this is because there has been a push in incentive spending, as Toyota buyers could get zero percent financing for five years or low lease payments on many models.

Obama energy plan would open Atlantic and Gulf drilling

President Obama made an announcement today about U.S. plans to open coastal waters (Atlantic and Gulf) for natural gas and oil drilling. This involved lifting a 20-year ban off of drilling on Virginia's coastline and prohibiting any drilling off the Alaskan coastline. Obama's reasoning for this decision is that in order to remain economically sustainable (and create jobs) we need to utilize our domestic oil supply, but at the same time find means of producing renewable, "homegrown" energy. Obama alluded the fact that his decision was not based on political ideology (to drill or not to drill) but simply the economic pressures the United States faces today.

Nissan will sell electric car for just over $25K

This article is sweet not just because I like eco-friendly cars, but because Nissan is a respectable automaker and they sell a good product. And if it goes for $25,000, that's a wonderful price!

North Korea

An interesting collection of facts about North Korea. If you also haven't heard of the website stumbleupon.com, I suggest you check it out.

Out-of-Pocket Health Care Spending

Americans spent $138.5 billion in out-of-pocket health care expenses in 2008, according to the Bureau of Labor Statistics. And that number excludes health insurance premiums, nursing home care, nonprescription drugs, nonprescription vitamins, and topical remedies and dressings. There is going to be a lot of change in the health care system in the coming years and a lot of it has to do with problems relating to this.

The Lobby: Intel's R&D Tax Push

This article discusses the importance of innovation in the product life cycle that we discussed in class on Friday. A writer for cnn interviewed the head lobbyist of Intel about some of his priorities. Right now they are lobbying to make the Research and Development tax credit a permanent fixture for companies. Companies receive a tax credit for increasing R&D but the credit must be renewed every year by Congress. This is the first thing the lobbyist talked about and I think it is indicative of how lucrative the R&D aspect of a business can be. Ideas are a huge source of profit for companies and being the first to come up with something can mean making a lot of money. The article also addresses immigration reform to allow talented foreign workers (specifically those who have graduated from American universities) to receive green cards more easily, antitrust laws, and patent reform (again, addressing the importance of innovation).

Sony Pursues a Bold Success to Match Its Scale

Sony has opened up a new store in Nagoya, a central Japanese city. The article states how Sony is trying to be competitive against Apple as the store resembled an Apple store. It seems as though Sony is trying to catch up with its competitors instead of moving ahead. Sony will also be introducing a new online service where consumers can download anything they want from Sony's library.
Sony's finances are also improving after the downturn of the economy. With their comeback, and potential new products, Sony may be back on the road to success.

Kohn ‘Confident’ Fed to Tighten Credit Before Inflation Flares

Federal Reserve Vice Chairman Donald Kohn believes that the Fed will act in a timely enough manner to prevent inflationary problems related to increasing the money supply with over a $1 trillion in bailouts. The current interest rates are much too low however he is confident that the Fed will increase interest rates high enough to prevent excessive bank lending; increasing the money supply causing inflation. Furthermore, the Fed is taking measures to decrease the excess reserves that banks are holding onto because it is currently hindering the Fed's ability to control the money supply and the economy through policies.

Obama Team is Divided on Tactics Against Terrorism

This article debates between current President Obama and recent President Bush on their belief differences on terrorism policies. Bush believed that imprisoning anyone who seemed a threat without trial was fair, while Obama does not quite agree. I think all deserve at least trial, because their is a lot of racism which leads to unfair judgement.

Natural Gas and Alternative Energy: A Promising Combination

This article provides some solutions on how to solve some problems with natural energy consumption that is currently being faced by the US.

It is predicted that natural gas should be a good substitution to oil, especially with all the increases in prices of oil we are having nowadays. But in order to increase the market use of natural gas, there is a need to reduce its use in homes (since this is where largest natural gas consumption occurs). Some options proposed by the article are wind energy, and window replacement program, solar hot water system.

Economic aid for Pakistan a victim of corruption worries

This article addresses the issue of corruption and the economic consequences it may have.

Pakistan, the country that has always had its ups and downs with the US in its political and economic relationship, is faced with a dilemma: it either starts fighting corruption within the government or it loses all the aid by the US.

It is important for the entire country, but especially for the Tribal Areas, to start recovering from the consequences Taliban has had on the region, and start rebuilding its infrastructure. $7.5-billion package of aid signed into law by President Obama in October was supposed to be used as means to do so, however, due to officials corruption, very little of that aid has actually been reaching those underdeveloped areas.

Apple has run out of iPads

This article talks about how the demand for Apple's iPads is more than the supply of iPads, forcing Apple to push the iPad pre-order shipment date back by nine days. As of today, 240,000 iPads have been preordered online, and the least expensive is priced at $499.00 (the most expensive is $829.00). Obviously Apple makes great products, and it is amazing that people have such confidence in Apple products that it has actually created a shortage.

Housing Upturn Proves Elusive

Tightly linked to the previous post with regards to the high unemployment rates, the housing market is recovering, albeit rather slowly. 2 factors that affect the housing markets are the job market and foreclosure supply. There is concern with regard to how many of the foreclosed houses will be pushed into the market thus further depressing the prices.

The housing market is a crucial component of the economy and many argue that a strong economic recovery is not very likely without a robust improvement in the housing sector.

The Jobs Puzzle Bernanke Can't Solve

This article focuses on several comments made by Fed Chairman Ben Bernanke made during questioning at a Congress hearing. The chairman gave two reasons of why jobs have not been on the rebound with the economy. I prefer the latter reason, which is "The other is that the productivity gains were greater than we thought they would be when firms were able to cut their work forces and still maintain output." This means that as times got rough starting in 2007, firms recognized this and adjusted their operations to still produce output and keep costs low. Two other economists also argue that GDI rather than GDP should be used as a measurement for the economy.

Student Loan Overhaul Approved by Congress

On Thursday Congress voted commerical banks out of the federal student loan market (an attachment to the Health Care Reform.) These bank-based loan programs, such as Sallie Mae, receive guaranteed federal subsidies to lend money to students while the government assums all the risk. As California Democrat Representative George Miller states, "Why are we paying people to lend the government's money and then the government guarantees the loan and the government takes back the loan?" While this has huge Democratic support, some Republicans are viewing this as too much government involvement.

Tighter Financial Restrictions Get Friction From Lobbyists

This article is about the huge wave a of lobbyist groups trying to weaken of kill altogether the bill to overhaul regulations on the financial industry. Groups ranging from pro - business groups, to Wall Street, to United States Chamber of Commerce are spending money trying to kill the bill. Many groups have begun portraying the bill as government bailouts. This article goes all the way back to our first few lectures about market failure. This article is a reminder that lobbying can make a market failure worse instead of better. Furthermore, this article takes a look at how personal political interests can affect the way our economy operates. Finally, if this bill is passed it could change some of the ways our economic system currently operates.

I would also like to point out that some of the attacks call Obama a socialist in order to prove their point, a fact that is clearly not true.

For Those About to Graduate, We Salute You

As March rolls into April and the last month of our college career begins, we soon-to-be graduates face some tough choices. Not that these decisions differ all that greatly from those faced by other classes, we just have to make them under somewhat extenuating circumstances. Even with the green chutes of recovery beginning to appear we face the toughest job market in decades, and it doesn't look like it's going to be any better come May 9. I know, I know, we don't want to be reminded, but let's face it - it's not only ours, but the nation's 800 pound gorilla.

As Derek Thompson writes in a recent article in The Atlantic, this may be the mother of all jobless recoveries. His piece serves as commentary on a Cleveland Fed report entitled "Are Jobless Recoveries the New Norm?", which takes a look at why, in spite of modest signs of recovery, unemployment still lingers at 9.7%. The report's author, Murat Tasci, postulates that the recession we are currently climbing out of is much more similar to the previous two that to those before, especially in the fact that pain in the labor market remained for some time after the initial downturn. Fewer new jobs were created or regained leading to longer spans of unemployment for those who lost jobs during the recession.

As one would expect, after two quarters of positive GDP growth this economy is no longer hemorrhaging jobs, but it is failing to create them. Increased demand, hailed as the savior of the labor market by many, will not be so this time around because of the huge amount of slack in the market. As firms begin seeing business pick up they will begin adding more work hours courtesy of their already grossly underemployed staff. The average work week currently stands at 33.1 hours and the number of individuals working part-time (not by choice) has jumped by 4.1 million since December 2007.

The real kicker, though, is that according to the Fed, nearly 95 percent of the change in the unemployment rate is due not to jobs lost, but jobs not found. "During the past three recessions, the decline in the job finding rate has been playing a bigger role in unemployment rate fluctuations. Relative to the change in separations, the job finding rate changed (declined) much more in the past three episodes," writes Mr. Tasci.

There is at least one light at the end of the tunnel, however. Once the economy recovers enough that baby boomers' wealth returns, they'll begin retiring in droves. Maybe this will give the country the empty jobs it needs to make up for the past few decades' loss, and us the opportunities we need to move ahead.