Tech Earnings

Stock futures declined as shares of Google and Advanced Micro Devices fell despite better-than-expected earnings reports. BofA and GE shares were higher.

China's Economy Roars into 2010, Tighter Policy Seen

This article gives more insight into China's economic growth as it tightens up it's monetary policies. Lending will also decrease in China to slow down their rapid growth. Inflation will be one of the Chinese main concerns this year as well as increased pressure from Washington to regulate its currency. Retail and industrial growth have also been increasing in the first quarter as well. It will be interesting to see if the United States can gain some ground against the Chinese this year.

The New Masters of Management

An interesting article about how developing countries are not only competing in terms of low cost but also creativity. Developing countries are increasingly becoming more innovative in redesigning products/processes to reduce costs.

As more R&D companies shift to developing nations, there is a fear that america might lose its edge in breakthrough ideas that can transform industries. Although this is a legitimate fear, this first mover advantage should not be over-hyped. Innovation has a contagion effect and is not a zero sum game.

What was interesting for me was the perception of fear that many Americans have toward these up and coming countries and how they might start pushing for protectionist measures which would ironically hurt in the US in the long run.

Post Office Needs to Make More Cuts

Over the last three years, the U.S. Postal Service has lost nearly 12 billion dollars because the volume of mail plunged 17%. This is due to the weak economy and the high usage of e-mail. Even though it chopped 40,000 positions through early retirement packages and attrition in fiscal 2009 alone, the agency expects to suffer a record loss of more than 7 billion dollars in fiscal 2010. According to the postmaster general, swift action must be taken to avert a financial crisis because the Postal Service’s business model is not viable. The Government Accountability Office’s report said that the recently proposed turnaround plan recognizes that immediate actions are needed and that the Post Office has made “limited progress” on some options like closing facilities.

Imports Rose in February, Building Hope for Recovery

On Tuesday, trade data announced that there was a 1.7% increase in imports, signaling that consumer and business spending might be gaining some speed. This increased our trade deficit to 7.4%, $39.7 billion more than originally forecast. Experts believe that as the stimilus programs end and domestic demand slows, exports may start to outpace imports and help our GDP. The reason for consumer growth in imports was because of an increase in consumers goods because of the job market beginning to show some light. Businesses began to restock inventories, replace old equipment, and add capital goods brought a lot of growth. Our trade gap shrunk to $16.5 billion from $18.3, hopefully helping China's currency appreciate against the dollar. China's ability to control currency is giving them an unfair advantage in global trade.

Haiti to unveil $3.9B restructuring plan at the U.N

In an effort to reconstruct Haiti, President René Préval will be unveiling a $3.9 billion plan to begin the reshaping of the country's post-earthquake economy and infrastructure. The action plan marks the first phase of a highly ambitious reconstruction effort that could pour more than $11 billion in international aid into Haiti over the next decade. The overall cost of the damage and losses is said to be more than $8 billion. More than 1.3 million people have been displaced by the earthquake and are living in hundreds of settlements and makeshift camps.

In India, Wal-Mart Gores to the Farm

Wal-Mart came to India two years ago to try to change India's business models by using its hyper-efficient practices to improve the flow of goods and increase productivity. Some think that Wal-Mart will threaten shopkeepers and lead them out of business. Wal-Mart is still not allowed to sell directly to consumers. However, farmers like working with the company and get paid 5 t0 7 percent more and do not have to pay to transport produce. Wal-Mart has been gaining trust from the locals by paying on time and giving farming advice about farming more efficiently. Wal-Mart wants to establish a bigger presence in emerging markets such as India's where modern stores make up a small percentage of the country's retail industry. New restrictions are being introduced by the government to limit Wal-Mart's earnings and prevent food prices from increasing. Although it will take time to make the experiment sustainable, the model hopefully will be taken to other areas and proved that it works.

European officials agree on loan terms for Greece

On Sunday, officials from the European Union agreed to give Greece a loan as much as $40 billion in an effort to help Greece's possible economic collapse. An emergency video conference among finance ministers, the 16 nations was called to discuss on the rescue plan for Greece

Germany opposed the idea because they claimed Greece handled its finances irresponsibly. In spite of this it agreed on the amount of money Greece should have available in three-year loans and on the 5 percent interest rate that would be charged.

Under the terms of the European plan as described by officials after the meeting, the IMF would provide perhaps an additional $20 billion in loans, and Greece would be expected to accept the strictures that the international agency typically sets on government spending and finance.

Dow ends above 11,000 on profit optimism

More optimism for U.S. markets today, as the DOW at the highest level it has seen since 2008. The article explains that many of the companies' stocks have been growing since the start of the year and gives some reasons.

Polish president killed in plane crash

We talked briefly about Poland's recent (2004) entry into the European Union in class on Friday. Poland was a communist country until the late 1980s and has been a capitalist economy ever since. A plane crash early Saturday morning killed the president of Poland, his wife, and several top military and government officials. The plane was in route to Russia to ease some of the tension between the two countries. This catastrophe makes me wonder if Poland will be able to continue their climb to a successful market economy. They have been successful thus far and have weathered the current crisis better than most of the other European countries. Will having to replace a huge part of their government cause them to slide back into the old ways of heavy government involvement or will they be able to stay on the path to a thriving capitalist society?

Investors hone in on profits to drive stock market

Stock market investors have declared that profit-reports from January to March will show that the business are regaining their profit margins. However, this isn't all optimistic news because it was not difficult to surpass the profits from last year. Emphasis is still being placed on consumer spending and the hopes are that as the economy continues to recover, increased consumer spending will trickle over to all other sectors.

China reports rare monthly trade deficit

China reported it's first trade deficit in 6 years because exports increased by $112.11 billion to $119.35 billion, resulting in a $7.24 billion trade deficit. A representative from the Ministry of Commerce commented that China did not intend to have a trade deficit and hopes to achieve trade balance in the near future.

Turnaround of India State Could Serve as a Model

India's focus on becoming one of the world's newest and efficient global power can be credited to forward thinking leadership and optimism. One of the harshest states in India, Bihar, has made giant strides and is on the way for setting the model of recovery in a country that has struggled for so long. Bihar was in such terrible shape and was the stereotypical Indian state where corruption and other dismal conditions were rampant. This article describes the turnaround and how India will fit in the global picture in years to come.

Time to Rebalance

For all the blame that China has been getting for causing the global imbalance, I thought this was a good article which takes a hard look at the America demand side of the issue. Clearly, there is a need for a change in lifestyle and the mentality toward savings and consumption. As the world steps out of the global recession, things might be very different for the United States.

Innovation, by Order of the Kremlin

This article talks about new methods of innovation in Russia. Russia wants to imitate the innovation and success of the United States more so Silicon Valley. Russia used to have large technological complexes that were funded by the state and the new innovations went to the military. These complexes were closed cities and were patrolled to keep people inside. This new scientific city will attract new firms, universities, and other new investments to the country. One line that I found interesting was, "Skeptics see a deeper strain of Russian tradition: trying to catch up with the West by wielding the power of the state". One of the two people charged by the Russian President is an oligarch with the money and experience and also one who made his money after markets opened up in Russia.

The Unpaid Intern, Legal or Not

This article analyzes the popularity of unpaid internships especially as employment opportunities for young people continues to dwindle. Following the recent recession, many firms continue to offer unpaid internships to cut costs while still receiving free labor in exchange. Many states are investigating the minimum wage laws and suspect that unpaid internships fall under that category. More specifically, for economics majors looking to work at for-profit financial firms, there is very little justification for for-profit firms to offer unpaid internships. This will be particularly useful for us as we search for internships over the summer.

Interest Rates Have Nowhere to Go but Up

Even though we still have ever-increasing debt problems and the possibility of inflation, economists say it is inevitable that interest rates will rise. The raise has hit the housing market first. The next areas targeted are credit card use and then car loans.

Fannie Mae's Failure Revisited

A Congressional panel heard clashing views about what caused the failure of Fannie Mae on Friday, one that blamed the "impossible" balancing act of the company's competing missions, while a former regulator blamed management failures.

Hiring in the Tech Industry

This is an article that details how some of the United States' top technology firms are possibly violating laws when deciding whether or not to hire new employees.

Euro-Zone Nations Offer $40 Billion to Greece

Greece was offered up to €30 billion from the 16 nations that use the Euro, with low rates. Greece has not formally asked for help yet though, but this is available if they wish to ask for it. They would receive the money with 5% interest for three years. The IMF has also said that they will be willing to give financial support as well, but the amount has not been determined yet. All 16 nations are going to make contributions to Greece including those that are also having difficulties such as Spain, Portugal and Ireland. The European Commission president, José Manuel Barroso, said that this act “shows that the euro area is serious in doing what is necessary to secure financial stability.”

rzone nations lend to greece

This article discusses how the eurozone nations lent $40 billion to Greece, even without greece formally requesting monetary assistance. This says to me that not only should greece be concerned, but the rest of the eurozone nations are concerned as well, and sees the financial stability of greece as very important. And possibly even more important for the global economy as a whole. As the previous post mentions there are still several options, and ones that could possibly be added to the $40 billion from the eurozone nations.

Greek Woes Raise Eurozone Questions

The article brings up and analyzes different options which Greece may have in order to improve its domestic situation. Some of the options include "taking a 'Europe holiday'", whereas someone suggested Greece operating "parallel domestic and international currencies".

Departure from the eurozone is, technically, possible. However, the article argues, it would be least favorable option for Greeks themselves as well as the investors in the country who would suffer most immediate losses, so they may end up leaving. Especially taking into consideration the fact that the previous Greek currency was not ever as strong.