Obama Signals Openness To a Tax-Cut Deal

The topic of tax cuts has been a heated one. After the U.S. Senate recently denied the proposals of the Democrats to extend the Bush-era tax cuts for the middle class permanently, Obama said he would be open to the extension of tax cut for the affluent. Politicians have to tread very carefully here because the U.S economy hasn't been really out of the woods yet, so any tax increase might have a negative impact.

Employment growing less than expected

After so many of the things the government has done to stimulate the economy and regain job growth. Many economists expected this report to come back with unemployment lower, although it actually rose to 9.8% Employers are reluctant to hire new workers, especially full-time because of the uncertainty in tax rates, health care costs (benefits), and new governmental regulations.

Future of the euro

The European Union has tried numerous attempts at salvaging bad economies (Ireland and Greece most recently) and they seem to be ineffective for the EU as a whole. This article gives a very detailed run-down on some of the possibilities of the future of the euro currency. Many countries are done with paying for other countries failures, and who can blame them? They are calling for the split of the euro and going back to individual currencies again. Some reasons to stay together in the European Central Bank are also given.

Philippine Call Centers Overtake India

Call centers are now moving to the Philippines due to the availability of India speaking college graduates and government help.

The Philippines this year will pocket $5.7 billion for call center work from the U.S., Europe, and Australia, vs. the $5.5 billion that India's call centers will take in. India, though, continues to lead in overall outsourcing revenues at $70 billion vs. $9 billion for the Philippines. The outsourcing industry now employs 530,000 people in the Philippines and makes up about 6 percent of gross domestic product.

The Filipino government began to help the call centers because of their frustration of educated Filipinos leaving the country to work as nurses and lawyers in other countries even though it earned them a lot of foreign exchange.

This will definitely affect India's growth but by how much we do not know. Also, will labor be as cheap in the Philippines.

Retail Sales Gain Most Since March on Black Friday Boost

Retail sales rose the most in eight months, beating analysts' expectations as customers are driven by the heavy discounts on Black Friday. Although there are many gainers, including Abercrombie, J.C. Penny, and Gap Inc., stores that have previously been considered an all year "discount" like Aeropostale suffer. Contrary to others' sales jump, Aeropostale's sales dropped 1 percent last month. This is probably due to consumers hoping to purchase brand name products that are never go on sales any other time of the year.

Tata Nano on fire in a bad way

There has been an 85% decrease in the sales of the world's cheapest car due to fire outbreaks in the engine as well as an increase in the price. It is an interesting example of a less developed country trying to enter a high-end product market and a sure sign of India's transition to more technologically advanced products. If they are successful in implementing the safety upgrades I think they should market to African countries.

another russia

With the global recession the IMF has been put in the spotlight again, and no one can be sure exactly what the outcomes of it's policies will be. In 1998 the IMF was unsuccessful in helping Russia ease the burden that resulted of misguided policies of transition. Ten years later Russia is recovering due to an increase in energy prices but also due to stable macroeconomic policies. However, the IMF's role in creating these stable policies is uncertain. This is something to think about as the IMF tries to bail out other European economies that are struggling to recover...what kids of loan concessions are appropriate for the IMF to demand?

Google Is Said to Be Poised to Buy Groupon

Google has undoubtedly been the leader of the internet industry. And it seems like it is doing everything it can to cement this status. Case in point, Google is nearing a deal to acquire Groupon, the online discounter, for a whooping $6 billion. The rationale for this purchase is that it will allow Google to make a foray into local business online advertising. Since the beginning of the year, we have seen a lot of technology titans going on a buying spree, but if this deal came through, it would be the largest of the year.

Wall Street Bailout to Cost Taxpayers $25 Billion, CBO Says

According to the Congressional Budget Office, The Troubled Asset Relief Program a.k.a the financial bailout will cost taxpayers far less than initially feared which was estimated about $700 billion. This is an incredibly good news since the bailout has received so many criticism. Now the tax payers can be relieved that they will get their money back.

Unemployment Rises in Europe, Weighing on Euro

In October unemployment in the Euro zone rose to its highest amount in the past 12 years. The unemployment rate in the Euro zone was 10.1 percent in October while unemployment for the full European Union remained unchanged at 9.6 percent. However, this unemployment rate conceals large differences among countries as some, such as the Netherlands at 4.4 percent, have very low unemployment rates while others, such as Spain at 20.7 percent, have very high ones. This increase in unemployment threatens to undermine efforts to revive stagnating economies in a time of tight budgets, especially in countries such as Spain, Portugal, Italy, Greece and Ireland. This news comes as the Euro continues to remain under pressure as it has declined in value 8 percent since its most recent peak on November 4.

Optimism for '11 pushes consumer confidence higher

This article talks about how consumers are more confident in the economy then in the previous 5 months. These reports come out despite the weakening in home prices, and also the high unemployment within the economy. The consumer confidence board said that consumer confidence has gone up 5% according to their polls, I wonder if this is more of a holiday thing and that the resurgent in the market is from the holiday season.

Unemployment Benefits Set to Expire

This week Congress must decide whether to let unemployment benefits expire for millions of people jobless for over six months. Analysts predict that if they do not extend the aid offered, it will have severe economic impacts in terms of consumption and growth from this sector. Predictions include a decrease in annual economic growth of .5%-1% and a loss of up to 1 million more jobs. The average weekly payment for the roughly 8.5 million people receiving unemployment benefits is $302.90.The CBO estimates that every $1 spent on unemployment benefits generates $1.90 in economic growth (a beautiful example of the government multiplier). Those who have been jobless for more than six months generally have very little savings remaining, so all of the money spent gets put directly back into the economy in the form of consumption. What do you think? Is the money the government will save more impactful than the money the unemployed will lose? Which will benefit the US economy more - focusing on lowering the debt or increasing consumption?

Stock futures rise after strong retail sales

This article basically talks about how more shoppers were spending this holiday season then last season. Basically its talks about how the sudden spending is helping to stimulate the economy, and that there is a small improvement from last year. I think the improvements in the economy are to blame, and people are a little more confident in the US markets, hopefully we can sustain this temporary growth to some extent after the holiday season.

Fed under fire

This is an interesting article that the author presents his point of view of quantitative easing. He claims that the recent political attacks from the Republican on the Fed are misguided. He says the recent stimulus bill's focus is to  push down longer-term rates by buying longer-term government bonds rather than targeting a specific interest rate and thus the accusation of the U.S as currency manipulator is false. He emphasizes that China is the one who is manipulating the currency by amassing $2.65 trillion of reserves and is hypocritical for criticizing the Fed. However, in my opinion, this does not make it any less true. Even if manipulation of currency rates is not the "stated goal" of the Fed, this does not mean that devaluation is not a direct consequence of its actions.In addition,this inflation induced boom similar to the "boost" received in 2002-2004 that resulted in the unsustainable boom that directly led to the crash and recession we are experiencing now. While temporarily reducing unemployment is beneficial politically in the short term, inflating asset bubbles is devastating to the economy's long-term development.

Starbucks-Kraft battle gets bitter

Companies form mergers and partnerships to achieve economies of scale and these relationships usually result in a win-win situation for both parties. This article focus on the collapse of the relationship between Starbucks and Kraft. Starbucks is trying to end their packaging contract with Kraft and craft says it goes against their contract which has been in place for the past 12 years. In addition to that Kraft is demanding a lot from Starbucks as the article states, "Kraft also said that the contract calls for Starbucks to compensate Kraft for the fair market value of the business, plus a premium of up to 35% of that value. The packaged foods company claimed its resources and expertise helped build Starbucks' retail grocery coffee business from generating less than $50 million in annual revenue to about $500 million in sales each year." Although Kraft holds their ground, Starbucks has said that Kraft is also violating the contract so they do not want them to package their goods anymore. This dispute has lead to both companies falling in stock value, thus, hurting each other over their previously profitable partnership.

Obama to freeze federal wages for 2 years

Obama has planned to place a wage freeze on all federal employees. This strategy has been projected to save 28 Billion USD in the budget over the next five years. Although Obama has said it has been in place to help the economy, many people who work for the federal government may feel they are being targeted by this. The wage freeze does not extend to military personal though. If this is the first step the White House is taking, how much further are they planning to use their power to save their budget?

Down the slipway

"Quantitative Easing" is unloved and unappreciated-but it is working, announced the FED.

Even thought this method have received criticisms from many, it has been proven that quantitative easing is working and has resulted in lower yields and higher share prices. The dollar also devaluates.

"These easier financial conditions are supposed to boost growth through three channels. First, lower real yields spur borrowing and investment. This channel is bunged up: many households cannot borrow because their homes have fallen in value and because banks are less willing to lend. But the remaining two channels remain open. Higher share prices have raised household wealth by some $1.4 trillion, which will spur some spending. And the lower dollar should help trade. American factory purchasing managers reported a sharp jump in export orders in October and a drop in imports."

Japan Passes $61 Billion Stimulus Package

Japan just passed a $61 billion stimulus package to help its struggling economy recover. With falling prices and weak exports, the hope is that the stimulus will help small businesses and increase consumer spending.

The joyless or the jobless

In 2006 British economist Robert Layard argued that unhappiness is a bigger social problem in Britain than unemployment. Due to the current recession there are now more jobless than joyless in Britain. However economists and policymakers continue to take interest in happiness, as British Prime Minister David Cameron recently requested that the country's "general well-being" be measured. Many economists doubt the claim that at a certain point economic growth ceases to increase happiness. The article points out that although many people claim they would prefer happiness over increased wealth, many would still choose increased money over increased happiness. As new policies are formulated should governments give more weight to increased wealth or increased happiness since, as the article states, "Money may not buy happiness. But why take the chance?"

America's wealthiest (and poorest) states

The articles explores the wealthiest and poorest states according to the latest US Census Bureau Report. Topping the list was New Hampshire with a median family income of $65,028, and Louisiana was at the bottom with a medium family income of $42,423. I found the article to be very interesting and somewhat surprising.

Dropping Jobless Claims Give U.S. Stocks Fast Start

Jobless claims fell to 407,000, the lowest since July of 2008, and has been reflected in increases in stocks. Do you think most of this is due to the holiday season or do you believe the economy is really turning around?

BP to sell stake in Pan American Energy for $7.06B

BP is selling its Argentina-based Oil and gas producer, Pan American Energy for $7.06 Billion along with other assets they are selling off in an effort to pay off the debt that they owe for the oil spill in the Gulf of Mexico. They are selling the asset to Bridas Corp. which is also located in Argentina. The deal is suppost to be completed in the beginning of 2011. BP announced this summer that it will be selling around $30 billion of their assets for the overall clean up and response costs. This will really hurt BP and it will be safe to say that they will no longer be a leader in the oil industry. Consumers are choosing other gas stations to purchase fuel at because of the way that BP handled the spill in the Gulf.

Investors hope for a Black Friday bounce

Stock investors will use the sales on Black Friday for projections on consumer spending. About 35% of a companies revenue will come from holiday spending and about 10% of revenue comes from Black Friday alone. Last year, the major indexes gained 5% between November and December. There are other factors driving the market such as Bailouts in Ireland and Greece as well as potential bailouts in Portugal and Spain. This will turn investors back to the U.S.

Political chaos engulfs Ireland, threatens bailout

Political chaos threatened to delay the bailout Ireland expected from the IMF and EU last Tuesday. Current Prime Minister Brian Cowen is feeling the pressure from his own party, Fianna Fail, as well as the opposition. There have even been demands to hold new elections before Christmas. The only potential for an election would be in March, which is too long to wait while the economy quickly spirals downward. The EU and IMF have promised 85 billion euros to the bankrupt nation due to failure of the state-backed banking system. This bailout could be on the line if the political waters in Ireland do not calm.

Online sales see 16 percent spike on Black Friday

This article is a response to a pervious article saying Black friday sales were not as high as expected. This article points out that there was a 16% increase in sales on online websites, this might account for the weaker sales figures that they expected in stores. Obviously people would rather be shopping fro their own home then running out to crowded malls, and get stuck in lines. Im not sure what the normal annual rate for internet sales is on black friday but 16% sounds like a good increase.