The last idealists

The integration of currencies in Europe, aka the Euro has been having many positive impact on overall economy of the continent. However, with some countries in Europe being in crisis, questions have been raised about what would happen if there were default. In this article, the author mentions the fact that European banks are built on a single currency zone, and put forth answers about the consequences if parts of it default or leave.

Chinese inflation spikes on food costs

High food costs are likely the cause of high inflation in China. In one year, the consumer prices have increased 5.1% and food prices have increased 11.7%. To make matters worse, China's trade surplus has decreased 16% over a month. In order to prevent run-away inflation the People's Bank of China may move to increase interest rates.

Obama Tax Cut Deal More Expensive Than Stimulus: CBO

In an interview of Barack Obama last Friday, he stated that despite a rebellion by many Democrats against his tax deal, it will pass because "nobody – Democrat or Republican – wants to see people's paychecks smaller on Jan. 1 because Congress didn't act." The deal is supposed to extend cuts to income tax rates for all earners that would otherwise expire in January. "The Wall Street Journal" reports that an estimate from the nonpartisan Congressional Budget Office pegs the cost of the tax cut deal at $858 billion, a figure that would make the deal more expensive than the 2009 stimulus, which cost $787 billion. Any opinions?

A Gentle Nudge About the Deficit

Looking at the recent deal to extend tax cuts, cut payroll taxes and extend unemployment benefits, it may seem like Washington does not care about the nation's deficit. Higher taxes and and fewer government services are unpopular however this may be a way to reduce the deficit in which the economy's is facing. The Congressional Budget Office, whose mission is to keep tabs on the long-term fiscal picture, sent out a gentle nudge today though and stated that by waiting to put fiscal policy on a sustainable course will be costly in multiple ways such as: higher debt would make it harder for policymakers to respond to unexpected problems, such as financial crises, recessions, and wars, and it would reduce the amount of U.S. savings devoted to productive capital and therefore would result in lower incomes than would otherwise occur, making future generations worse off. Any opinions?

November federal budget deficit highest on record

The federal budged deficit has reached an all time high! The budget rose 150 billion dollars this past month marking the highest monthly increase. This is only going to get higher especially if congress passes a tax cut plan that will cost 855 billion over the next two years. However it is poised to raise growth as well.

How do you think that this will impact the US economy?

November federal budget deficit highest on record

This article is talking about how the United States deficit had largest gap increase ever in the month of November. It is going to raise even higher with Obama's tax breaks for the next two years. The deficit ended up raising $150.4 billion in November and the two year tax cut plan is said to be worth $855 billion. This article makes you wonder if the tax breaks are a good idea at this time where the U.S. is in such a hole and we are just digging ourselves deeper and deeper. It is something that really needs to be looked at and we need to get out of this deficit and stop spending money that we do not have.

The state of Russia: Frost at the core

This article coincides with the video we watched in class on the Russian oligarchs, picking up where the video left off. Russian oligarch Mikhail Khodorkovsky's jail sentence expires next year and the Russian government has now charged him with stealing money in order to keep him in jail. Once the symbol of the "injustice and inequality of the 1990's" he is now the "symbol of the injustices perpetrated by corrupt bureaucracies and members of the security service." The article talks about how under Putin, and now Medevdev, a new breed of "bureaucrat-entreprenurs" came to power. They have privatized the Russian state, a "asset that was under-capitalised and weak." State corruption in Russia is now estimated at $300 billion, 20% of GDP, mostly in the form of contracts awarded to bureaucrats and their companies. This comes in a time of decreased economic growth causing an increasing feeling of injustice, even among oligarchs. The system no longer works and the economy is starting stagnate. According to the article, much of the elite have come to realize the system is ineffective and are no longer willing to support it and when "the ordinary people come to share this view, the system is in grave danger." The article brings about the question: what will the future of the Russian state be? Will corruption and economic stagnation become too much for the people to bear and eventually cause a regime change?

Cuba to be insolvent within 2-3 years

I found this article to be very interesting and relevant to our discussions in class. Cuba, one of only two communist nations left, is predicted to be insolvent as early as late 2011. This provides further evidence that communism in practice is not a viable economic system and Cuba will be going through a transition economy in the near future. What are you thoughts regarding the Cuba's solvency issues?

Politics gets in the way of progress

President Obama has worked with Republicans to pass a new tax deal that will set tax rates on the wealthiest, something that Democrats are not happy with. This is playing into the thought that there are things going wrong and unsmoothly between the Democratic party. Republicans seem to be in favor of the new deal, and Obama, working on progress through bipartisanship seems to be less productive than before- and its within his own party that he is getting stuck.

Push for tax reform grows, but politics will still be tough - Dec. 10, 2010

Push for tax reform grows, but politics will still be tough - Dec. 10, 2010

Sparked by comments from Chairman Bernanke on "60 Minutes" this week, CNNMoney explores tax reform. Although much talk about closing loopholes and therefore lowering overall rates has occurred in the recent months, Bernanke's comments sparked a new debate on the topic.

President Obama seemed to also support some sort of tax reform, although he was less clear about the specifics of a plan. He simply maintains that he is in favor of tax reform sometime before the expiration of current tax cuts in two years.

CNNMoney maintains that tax reform has significant support from both sides of the political aisle. Although the odds of tax reformation occurring within the next few years are improving, it's "still a long shot."

Trade gap in U.S. narrows. So does China's trade surplus - Dec. 10, 2010

Trade gap in U.S. narrows. So does China's trade surplus - Dec. 10, 2010

The U.S. trade balance now stands at $38.7 billion, representing a decrease of approximately 13% from September's level of $44.6 billion. This decline was fueled by a 3.2% increase in exports and a slight decrease in imports.

Additionally, China's trade surplus decreased from $27.2bn to $22.9bn.

What implications will this have on the U.S.-China Joint Commission on Commerce and Trade meeting next week?

Censors’ sensibilities

India has enjoyed the freedom to speak and criticize, much like many western countries. However, in this pretty interesting article, the author suggests that the freedom is not as good as it is cracked up to be. Many scandals are unfolding in the country; however journalists there seem still pretty hesitant in challenging the authority and in some cases can be easily bribed. Also, censors are getting increasingly intense as well. What do you think are some reasons for this unwanted change?

We Have Lift-Off

For the first time ever, a space shuttle capsule has been launched into outer space and orbited by a privately run firm. Without anyone actually in the ship, SpaceX wanted to prove that it's product, the Dragon, could make trips to the International Space Station and back. Earlier this year there was a battle amongst Congress arguing over a private firms right to launch something into outer space. Ironically, it was the Democrats who called for private firms and Republicans who wanted government only launches. Is this an area where the U.S. government should be allowed to make decisions? What is the future of private and government run space launches? And there's a video..

Would you pay a bribe to get something done?

An interesting report on corruption both in developing and developed world and when businesses pay bribes to be able to conduct business. An interesting point is raised toward the end of the report when corruption in India and China is compared and the one of the reporter claims that corruption in China is more efficient.

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In this article written by former UK prime minister, Gordon Brown, he discusses the upcoming challanges to getting western European and the American economy back on track. He believes the key to future growth is accommodating the inevitably high demand of an emerging Eastern Asian middle class for high tech and luxury goods. I believe Mr. Brown has hit the nail right on the head with his assessment. It is very hard to deny that economic globalization is constantly growing. With that being said, it is very prudent for the aforementioned nations to start looking globally instead of domestically for a solution to the current economic slump

Fewer Americans file for unemployment insurance

According to the Labor Department, the number of Americans filing for unemployment benefits fell last week indicating a minuscule improvement in the employment sector. Claims fell from 438,000 from the week before to 421,000 (a 17,000 drop). While the numbers indicate that there is SOME improvement, it is not sufficient enough to illustrate a change in the economy. According to certain economists, in order for there to be a positive trend in the economy, unemployment claims need to go below 400,000 per week. Moreover, employers are still hesitant to hire more employees as consumer forecasts for the next year are still hazy at best.

Happy International Anti-Corruption Day

December 9 is the International Anti-Corruption Day. It's role is to raise awareness of corruption and of the role the UN Convention against Corruption.

Can you think of a more appropriate day than today to issue an arrest warrant for a former PM of Croatia for corruption? (Croatian Lawmakers Strip Immunity of Sanader, Who Left Country)

Number of Journalists in Jail Is Highest Since 1996, Group Says

The number of journalists in jail (145) is at its highest since 1996. This has been fueled by a small group of countries, including predominantly Iran and China. In China, for instance, the rate rise has been from detaining Tibetan journalists who try to voice out their opinions. Is there anyway we can help out?

No Signs OPEC Must Adjust Quotas, Qatar Minister Says

Oil futures are at a 2-year high ($90 a barrel), but Qatar's oil minister, Al-Attiyah, says the price spike has nothing to do with supply and demand. Oil inventories (supply) are actually the highest they have ever been, according to Al-Attiyah. OPEC has not adjusted oil production quotas in 2 years. Al-Attiyah says that oil is currently oversupplied and that demand for oil is not increasing that much - this should cause a price decrease but prices are at a 2-year high. Al-Attiyah offers no insight into why this has happened. Any ideas?

Security in Brazil

Brazil has for a longtime been a city of poverty and crime. In the past two(ish) decades Brazil has been able to stabilize its economy. The benefits of that now are being put towards many social programs (Brazil is recognized for its Bolsa Familia program). Winning the Olympic bid made it that much more important for Brazil to make headway on fixing its social problems and increasing infrastructure. Despite leftist presidents, Brazil has undertaken conservative macroeconomic policies in hopes of attracting foreign investment, especially into the port area. With the recent discovery of offshore oil the future for Brazil looks only brighter. However, the areas known as favelas, especially those in Rio de Janeiro where the olympics will be held pose a big security problem. Drug trafficking gangs control the slums with violence, where most people survive on an informal economy and pirate their electricity, "living life outside the law." The city government is trying to reduce this violence so that the state can regulate this economy. They have only had some success as they still need to win over the faith of the poor.

India's Economy Expands

During this time of global financial crisis, India's economy recently expanded by 8.9% due to the impacting output from farming and manufacturing. The farming sector grew by 4.4% while the manufacturing sector rose by 9.8% due to the heavy emphasis for domestic demand in manufacturing within India. Private spending and investments also increased during the last fiscal quarter which all contributed to an increase in GDP. This growth in overall GDP comes at a peculiar time due to increasing interest rates set by the Central bank of India. Governor Subbarao believes that there will be a decrease in policy rates as a way to ease inflation within the country as the world economy is still very fragile and unstable. In fact unless the growth in the nation increases again, the central bank is very unlikely to increase policy rates during this fiscal year to ease the growing inflation.

Enterprise to Blame for Bad U.S. Economy?

Henry Mintzberg, a professor at McGill University believes that the United States declining economic performance should not be blamed on faulty macroeconomic policies, but on the big business corporations and enterprises that place their own self-interest ahead of the market. Many CEO's of big corporations have been exploiting the system as a way to increase prices of stocks. They do so by depreciating their brand, cut investments in research and development, and altering prices by raising prices of stocks at a high enough level for the high-end executives can cash in on bonuses. Along with this, the massive lay-offs by these corporations were seen as a way to increase productivity, but according to Mintzberg it actually decreases productivity because of the lack of middle-management within these corporations and enterprises. Mintzberg also compares America's productivity to that of Canada's which in his eyes has been performing better over the last few years. He ends his piece by stating that it is not the individual, or the economy, but the economic analyst and corporate executives that are at the core of the problem. Should the United States try to reform the economy in a way that sees less power going to the big Wall Street CEO's and elites?

The Economic Incompetence Of The Political Class

This article makes a compelling point about the greed and irresponsibility of unchecked government spending. From cities to states to federal government, politicians are borrowing money and leveraging debt at unhealthy levels, which can be seen with the current debt crisis in Europe. With nations spending more than 100 percent of their GDP, it seems it is time for more scrutiny and accountability for the way politicians spend money.

In Entrepreneurship We Trust

In this article, the author stresses the importance of entrepreneurship in creating growth in the U.S. and other world economies. He sites statistics that state small businesses accounted for nearly one trillion dollars of earnings in 2009. Also small business start-ups grew steadily during the recession. It seems that the small businesses are going to play a large part in bringing the world out of the current economic sluggishness.

New $100 bill flaw, $110 billion Fed headache

More than 1.1 billion new $100 bills recently printed by the Federal Reserve are now in quarantine due to a flaw in the printing. These bills were designed to combat counterfeiting by including a new 3D ribbon, however creasing during the printing process has rendered the majority of these bills unusable. These quarantined notes represent $110 billion in US currency, however the Fed has already ordered the printing of the current design to compensate for their loss. Fortunately the flawed bills were not yet in circulation but this mistake still comes at a tough time for the Fed with the current recession since, as a similar article pointed out, "You can't stimulate the economy via the money supply...if you can't print the money correctly."

How Long Will Google's Magic Last?

In just 12 years, Google has grown from a start up to a business worth $180 billion. But Google faces some problems. First, Google faces charges of abusing market power by manipulating search results to give an unfair advantage to its own services. Second, Google is having trouble finding a new source of growth - beyond search-based advertising. Investors fear Google will become like Microsoft and fail to find a new source of funding for aging growth sources. Also, Facebook (which now has more online traffic in the US than Google) offers a new way to search for information. Will Google be able to adequately respond to its new competition and problems?

Bernanke goes on 60 minutes

On Sunday, a 60 minutes special aired with Fed Chairman Ben Bernanke. On the special, he discussed current economic issues such as unemployment, the increasing deficit, and the latest $600 billion purchase of the U.S. Treasury Bill.

Below is the link for on CBS for the video..

http://www.cbsnews.com/video/watch/?id=7120553n

A Bottled-Water Drama In Fiji

Surprisingly, Fiji water does come from Fiji! It is also Fiji's number one export in dollar value. However, recently the military government has demanded the company pay a 15 cent per liter tax, compared to the 1/3 of a cent tax in previous years. The Government even threatened to take Fiji's water wells and their rights to sell the water. Fiji's holdout did not last long as they agreed to pay the tax and maintain ownership. The Fijian government will defiantly benefit from this tax increase and hopefully the 50% of Fijians that do not have access to healthy water will also benefit.

Kia Motors' Hires Boost Economy, Spirits In Georgia

Being from the state of Georgia it is nice to see foreign investments boosting the local economy. It is vital for companies such as Kia to build manufacturing plants in towns such as LaGrange, in order to lower the high unemployment these "small towns" tend to experience. Since unemployment is major concern within the US economy we should be more open to foreign investments as it seems it can help desolate towns become productive again.

Euro don't go

This article discusses the blow out to countries in the euro zone if they moved the Euro. Besides the tremendous costs involved in a country reprogramming its entire economy to be represented in a different currency, the devaluation for the weak countries or appreciation of currency for the strong currency would cause chaotic capital flows that would hampered business process in Europe and the worldwide. Agreed Neither Germany and Netherlands do not what to be held responsible for Greece and Ireland's failure, nor do Greece and Ireland wish to suffer under the Euro but even though the economic bail outs are not as effective a change in currency would only harm their respective economies

Nuclear Talks Start Between Iran and 6 Nations

This article explains the latest development in nuclear peace talks between Iran and 6 other nations like the US, Great Britain, China, Russia, France and Germany. The pressure on the other countries to indulge Iran in peace talks, arose after Iran claimed to have used domestically mined uranium ore to make the material needed for uranium enrichment. Iran’s successful processing of uranium ore from a domestically mined source suggested the Iranians had found a way to bypass United Nations sanctions that ban them from importing raw uranium. It also reflected Iran’s intention to show that it remains unfazed in its pursuit of nuclear capabilities, despite significant setbacks.

Inflation Risk Is Low

In an attempt to support the the bond-buying program, Fed Chairman Ben Bernake, said that the economic recovery is not self-sustaining and the high level of unemployment may lead to another crash. He has given his 100% confidence that there will be no runaway inflation due to the bail-out. This is another piece of news in the constant high inflation vs low inflation argument that has been doing the rounds after the second bailout announcement.

Tentative deal between US and S. Korea reached

A tentative trade deal between the United States and South Korea has been reached, according to a White House official. The deal, originally negotiated by the Bush Administration in 2007, eliminates tariffs on 95 percent of all traded goods and will increase US exports from 10 billion to 11 billion dollars, according to the White House official. The trade deal originally struggled in Congress because of disagreements over US access to Korean automobile and beef markets. The White House is touting the potential of this deal to increase job opportunities in the US, while others in Congress are happy with the stronger diplomatic ties that it fosters with the democratic ally.

Year-end harvesting

The article talks about the fact that many investors have been selling their long term investments which have resulted in the long term capital gains. This is due to the fact that in 2001, President Bush has passed the Economic Growth and Tax Relief Reconciliation Act that pose a maximum tax of 15% upon the long-term capital gain. However, this tax benefit is going to expire on December 31, 2010. Starting on Jan. 1, 2011, the maximum long term rate may jump up to 20% rate. Therefore, the stock market may have some unpredictable volatility that is totally unrelated to current economic situations.