Daily Show: "Whacking the Wall Street Piñata"

In this Daily Show clip, Jon Stewart provides an example of how inequalities can lead to social strife in a democratic system:

A hedge-fund manager at a CNBC town hall meeting is upset about President Obama's tone toward irresponsibility on Wall Street contributing to the recent economic crisis and Obama's plan to allow the Bush tax cuts for the rich to expire in order to decrease the deficit. He asks the president when he will stop "whacking at the Wall Street piñata?"

Stewart replies: "I don't know - maybe when the f#cking candy comes out." And later adds: "You feel like the government is whacking you with a stick? Because what you call a stick, Americans call a trillion dollar bailout of your industry."

Stewart is expressing a common animosity and I can't help but agree with him. We are at 9.5% unemployment. 1 in 7 Americans is below the poverty line. People are suffering - for real. Can anyone explain to me how a hedge fund manager is justified in whining about a 3% tax increase in his income above $250,000 (from 36 to 39% - the same as under the prosperous Clinton years), especially given that his industry was saved by taxpayer money and given the millions of Americans truly suffering from the recession?

Unemployment filings jump back up

This article is about how the unemployment rate has grown even more. The first filings for unemployment rose to 465,000 this past week. The number was higher than economists' forecasts of 450,000 for the week. Both this week's higher figure, and the upward revision to last week's number disappointed investors, driving stock futures lower in pre-market trading. Initial claims had declined in the two prior weeks, giving investors some hope for the job market. But overall, the weekly number has made little progress since November, hovering in the mid to upper 400,000s and even moving to above 500,000 in mid-August. Since unemployment figures remain one of the defining measures of the recovery, economists say they're looking for weekly initial claims to trend below the current range before they're entirely optimistic about the economy. Do you feel the rise and peak in unemployment is a indicator that the economy is turning back around and things will began to get positive?

European Banking System Remains Fragile

European Bank markets have continued to be unsecured and unbalanced. A survey by the European Central Bank stated that about half of the 105 banks have lent money to other banks without requiring collateral. In an unsecured market, these liquidity conditions have increased heavily, before 2008 this number would never reach above 20% now it is around 90%. Since banks depend on the market to raise money for them, without securing these loans, the market will remain unstable? How should European Banks curtail this problem?

Irish Economy Shrank in Second Quarter

The Irish economy, which was one of the main countries in Europe to suffer duing the recent financial crisis has suffered another major setback as the economy shrank by 1.2%. It was only a few months ago that economists highlighted Ireland's economy because of a 2.2% increase, which led to many economist believing that this number would soon increase within the next couple months. This slow growth has led to a budget deficit equal to the small countries GDP which means that the government must do something to generate tax revenue for the country. Along with this the Irish government must cover real estate and bank loans which adds up to 30% of all economic output. Other consequences of this financial crisis to Ireland is the decision to make major cuts to public sector wages and pensions. These budgets have lead to a growing distaste of the Prime Minister Brian Cowen. How do you think the prime minister and the Irish government should handle this current crisis. Do you believe that the banks should play more of a role?

Congress passes $42B bill for small businesses

Last week I posted about the Senate passing a bill aimed at helping small businesses to create half a million jobs and cut $12B worth of taxes. This bill has been passed through Congress, and now only has one more step to becoming a law- Obama's signature, which it is expected to get.

UK recovery 'slower than thought'

UK GDP is expected to grow now by 2% rather than the previous calculated 2.5%. Fragile banks, less consumer spending is spurring investor fears. Uncertainty still floods the European markets and spending cuts are expected later this year.

What would you to help the UK economy recover? Would more stimulus be appropriate and how can we ease investors fears in the market place?

Sweden baffled - but rise of the right was obvious

Thousands of swedish people are protesting agains the far right elections. The Swedish prime minister said that he supports the green party for his new government. All this was taking place once it was confirmed that 20 democrats won seats. It is interesting to see what happens because so many thousands of people are against the far right party. It has been a long such a long time since the government has been in a far right position.

How will this effect the Swedish economic system? A major concert to Swedish people is immagration. Today we talked about the necessity for a closed community, so people can keep having great job benefits. The swedish people are not happy about what either side of the government is doing, what would you do with their economic system and immigration issues?

Tax credit bonanza for small businesses

When you think of a business starting up nowadays, it is rather hard to imagine. A company trying to compete against Walmart, IKEA, IBM or any other company, it is more of a fantasy for a company to gain market share against these companies which have such a large market share. The article tells us about the fiscal polices which the government is taking to help such small-start up companies. By giving the new companies a tax credit, they are helping them gain a small market share which they can still compete and survive upon.

Of course there are certain regulations which a company has to have for them to be eligible for this. The article gives the details as, "To get the credit, a business must have fewer than 25 full-time workers or the equivalent (the hours worked by part-timers count), pay an average annual wage of less than $50,000 and cover at least half the cost of health insurance premiums for their workers." The question remains, will this be enough for these companies to survive in the long run and how long is the government willing to actually giving money to these people?

Is rising inequality in America exaggerated?

This article illustrates the effort into seeing what is the real inequality in the United States. The factors taken into consideration are the, "impact of one of the usual suspects—immigration, trade, de-unionisation, education, executive pay." Almost very country in the world has some level of inequality, yet, the US seems to have the most concern about it. This may be just our proximity to the situation as it is natural to view people as different even though we are all created equal. What policies is the US government taking into consideration when it has larger issues to deal with?

Income Gap in the United States

Through data this article shows the increasingly large gap between the top 1% of our population and the middle class/ lower classes in our society. Such data include the fact that the top 1% income's increased, has grown 281% since 1979 whereas the middle class only grew 25% and the lower class only 18%. This disparity of wealth does not show any signs of slowing down even though the rich lost tons of money during the recession, history shows (2001 market crash and dot-com bust)that the rich recover quickly. The more concerning question is what does this mean for the future, how will our generation be effected by the increasing power and wealth of the rich?

The Global Cities Index 2010

Foreign Policy magazine has announced its annual Global Cities Index for 2010. According to FP, "we are at a global inflection point" and this index "reveals a snapshot of this pivotal moment". 5 out of the top 10 cities on the list are in Asia and the Pacific while only 2 are from Europe which signals a significant shift of what FP calls "global clout" from West to East. The index is calculated using information that falls into one of five dimensions: business activity, human capital, information exchange, cultural experience and political engagement. According to FP, cities on this list are not only global players economically but also culturally and politically. The index measures how much influence a city has beyond its own borders including its "influence on and integration with global markets, culture and innovation". Do you agree with Foreign Policy's ranking of these cities? Are there some that should have been on the list but were not, or vice versa?

Dollar Falls Toward Five-Week Low Versus Euro Before Housing Report

Relative to the euro, the dollar has fallen to a five-week low. This article demonstrates the power of speculation in today's economic systems. Speculators expect the housing market index, which reports today, to show low demand and lack of momentum in the housing market. Also, the FOMC makes its announcement on Tuesday with regards to what the target federal funds rate level will be. Speculators think (rightfully so) that the rate will stay unchanged at a rate of %0.00 to %0.25. The question is whether or not the Fed will use quantitative-easing measures to stimulate the economy. This is an attempt to raise the money supply in an economy by increasing excess reserves - this would put downward pressure on the dollar though.

Many economists say to stay with Bush's tax cut program

The debate is still on-going, whether to cut taxes, raise them, who to cut/raise them on, and by how much. In this article, 31 top economists were surveyed and 18 said to extend tax cuts (that is, not increase taxes on anyone, not even the top tax brackets). The arguments for all sides are interesting, each with their own relevant and valid theories of support.

Cuba Resets the Revolution

Article suggests that Cuba might be looking to de-nationalize. Cuban officials have been reported saying that labor is inefficient in Cuba as the status quo of the average worker is lazy. Government worker programs allow people to live without having to work/commit to a job. Cuba plans to correct this by reducing the amount of government employed workers and supporting small businesses and allowing private small business to exist in order to create employee/employer relationships. Questionable on whether or not these businesses will be able to compete/market with no business background.
Article mentions that Cuba might be slow/weary of transforming the economy because of its disdain for America and the American system. I think that it would be more because of what the revolution means to Cuba and how communism has become part of the Cuban identity.

What America needs is a payroll tax cut

This article argues for reduction of payroll tax across the board. According to his logic if payroll taxes are cut there will be a higher demand for labor, while at the same time putting money in the pockets of the lower income bracket, who have a tendency to spend nearly all their income. This would increase consumption and lower unemployment at the same time. Why stop at payroll tax cuts? Why not cut corporate gains taxes as well? It seems the most important agenda right now is to get unemployment under control and to get money moving again.

Companies Still Hoarding Tons of Cash

Companies are spending money but not on employment. Companies are using there money for new software and equipment but not on more labor. The recession caused companies to make cutbacks and the unnecessary labor workers were the first to go. Companies have not started to hire more workers probably because they do not find it efficient anymore to keep so many workers. If companies are able to remain productive with less workers than that is what a capitalist will do. A capitalist does not hire workers in order to help the economy reach a equilibrium. American is one of the most capitalistic countries in the world and if companies can find ways to be more productive with software or better equipment then that is what is going to happen.

Cramer: Tax the Rich

Cramer says that millionaires should pay more in taxes. The tax cuts that president Bush put in place will be expired December 31 of this year. The democrats are fighting over whether to extend it or not. Republicans want the tax cuts to stay steady across the board while the democrats don't think that we should have them anymore. In my opinion, the government should extend the tax cuts. If taxes are raised in the U.S. then people will spend less of their money because they will not have as much disposable income. Also the rich will not have as much incentive to work as hard. A bigger percentage of their earnings will go to the government. The article says that the middle class makes about $250,000 a year. Cramer makes the argument that in big cities that is on the low side for middle class and it should be upwards of $400,000 to be considered middle class. Either way though, the tax cuts should be extended until more people get jobs and get back on their feet from the recession.

A Feud Between Airbus and Boeing Has Given Neither Side a Clear Advantage

The Airbus vs. Boeing feud is really an argument over aircraft subsidies. Boeing has benefited from improper subsidies in the US and Airbus has used more blatant and aggressive types of subsidies in Europe. The US complained to the World Trade Organization that European countries had given Airbus more than $20 billion in questionable aid. Boeing claimed that Airbus used the loans to steal sales from Boeing. But Airbus counter sued, saying that Boeing received at least $5 billion in federal research contracts and subsidies. However, the lawsuits have not stopped the companies in moving forward with development of new planes. The WTO has no enforcement mechanism to resolve this dispute of subsidies so talks between the US and European officials will have to settle the issue. Efforts to resolve the trade dispute could also be complicated by other subsidized competitors all over the world.

Inflation rate flat amid price confusion

Are we in a period of inflation or deflation? Or is it neither? That is what this article aims to clarify about the American economy. Over the last 12 months general food and energy prices have been slightly higher than the year before - this slow increase has led the government to assert that prices have been flat over the past few years. Economists have argued that though price increases have remained slightly above zero, they are not as high as expected and it has led many to wonder, is deflation a bigger threat than inflation to the U.S. economy? Essentially, for consumers, low prices are a good thing – but what about the unemployed? If firms are not benefiting from rising prices, then unemployment doesn’t really have a shot at getting any better. Right now, what the U.S. government is trying to accomplish is to raise the momentum of the economy, reduce unemployment and make sure that the CPI does not reach zero.

Who's Picking Up the Tap for America's Spending?

The World's willingness to pay for U.S. budget defecits shows no signs of slowing down, especially with Europe's finances in dissarray. Foreign buyers added $76.4 Billion in U.S. treasury long-term debt in April, the Treasury department reported Tuesday. According to this article, The British ($42B), Japanese ($13.3B) , and Cayman Islands ($6.34B) have purchased a majority of these bonds from the U.S. There are concerns that if the U.S. plows itself too far into debt, than it will find itself in the same situation as Greece. This creates a bad lesson to learn: borrowers can cover up debt for only a certain amount of time. Eventually, those in Greece cashed in their bonds and the government was back into debt again. Hopefully, the U.S. government can learn from this and prevent itself from making a similar mistake.

Slowdown in European Economy

The pace of economic growth has slowed in"the euro zone" of Europe, despite the fact the levels of production have not returned to what they were before the current recession. The region is only at half of the production level that it was at before the recession. Experts feel that European growth peaked before reaching old levels, and see that the recovery will be slower from here on out. It is not predicted that the region will fall back into recession, but Jean-Claude Trichet, president of the European Central Bank, commented that the growth of Europe and other advanced countries has been modest in comparison to less developed countries. This makes sense because even in a recession, it is difficult for an industrial advanced country to grow economically as much as a country whose economy has not been developed and is developing.

Are we there yet?

Okay my only comment is on the need for more awareness about the state of the economy in congress and for actual steps to revive the economy be the most important issue. I agree with the need to rescue the housing market but am not sure if re valuing mortgages is the way to go.