The rich and the rest

The article begins by outlining the various problems a growing economic inequality may cause for our world. Big economic players from England's Prime Minister David Cameron, to Warren Buffet have continuously cautioned about the problems with the growing economic inequality from country to country. Buffet has been trumpeting a higher estate tax for years, saying that the lack thereof only allows inequality to persist. The article highlights the change in recent frame-shift in many people's views toward inequality. Pre-recession debate was largely about not having a dramatic change in inequality, but rather ensuring that the poor don't slip further into poverty, a somewhat laissez-faire approach to addressing the economic gap. Whereas many of the solutions discussed in the recent debate point to the need for income redistribution by taxing the rich, the article says that addressing issues that impede economic growth and propping up the social safety net are two ways to take on inequality without taxing the rich. These policies have been implemented in various countries, including Brazil and have curbed the growing gap. The article finishes with interesting proposals. It is posited that in many of the countries affected by income inequality, the elite are the only ones that have access to various mechanisms for getting richer. This makes sense, they have access to internet, where the poor do not, the often run in crowds that give them the opportunity to network and gain insider information. China even has restrictions on migration, keeping poor farmers in the countryside and preventing them from maybe getting a leg up. Governments should try to give a freer, better access to education, they should also break down the barriers that keep the poor from getting access to insider information. The internet could be the tool to do this, but again, it is often only available to the more well-off.

Life After Capitalism

As far as economic systems go, capitalism has proven its dominance and claimed the title of most viable and sturdy economic system when compared to socialism. At least so far. Capitalism is excellent for stimulating budding economies of underdeveloped countries by helping allocate resources for goods and services and creating jobs for people. But are there limits to how big an economy can grow under the guiding hand of capitalism? When it comes down to it, capitalism is driven by people’s interest to invest money into more money, exponentially increasing the amount of capital in an economy. But have some wealthy nations grown to the point where more is not necessarily good? Capitalism relies heavily on the attractiveness of material incentives. But as human beings become more conscious of the thin lines between morality and monetary values, theorists around the world start to question whether the drive for material might not be in the best interest of everyone. One such theorist is a man named Robert Skidelsk, who wrote the book The World After Communism. Skidelsk asserts that capitalism instills a certain amount of greed into our culture, shaping our preferences and inclinations. He goes on to say that eventually when a society reaches a point where (mostly) everyone has enough and is well off, leaders should try to more evenly distribute wealth and instill a sense of modesty within the economy. Skidelsk hypothesizes that “perhaps socialism was not an alternative to capitalism, but its heir”. Regardless of whether or not that’s true, I don’t see our country changing a system that has help it make it one of the most powerful nations in the world.

Hu Flaunts Rising China Power by Using Friendly Confines of Chicago Visit

The president of China, Hu, arrive in Chicago today for his only U.S. stop outside Washington. Instead of places with more Chinese residents and businesses in the East and West coasts in the US, Hu chose Chicago, because it is more friendly to China.
Nowadays, China is the world’s second- largest economy. As the economic power rising, US is much softer to China than before. For a lot of US companies, they get the most profits from Chinese consumption. Chinese consumption provides jobs and revenues for US market. As a result, even China and US treats each other as potential enemy, economic profits for each other now seem more important to both sides.

US looks to Chinese market to increase exports, spur job growth

On Wednesday, in the midst of Chinese President Hu Jintao's weeklong visit to Washington, President Obama summoned a handful of American corporate elites to join him at the White House for a trade summit with the visiting Chinese envoy. Specifically, President Obama and his corporate heavyweights sought to intensify their focus on US-China trade relations by increasing US exports to the ever-growing Chinese market. During the summit both parties hashed out the details of a brand new $45 billion package that aims to increase exports from corporations as GE, Boeing, and Microsoft. In my opinion, the United States reached a pivotal benchmark with this dealing because they properly acknowledged that China is their best customer.

Debt crosses $14 trillion mark

US debt has already passed the $14trillion mark this Wednesday, which puts the country only $300 billion away from the $14.294 trillion debt ceiling. The debt ceiling is a cap on how much the federal government can legally borrow. Whether or not to raise the debt ceiling is still in debate. The Treasury Department estimates that between March 31 and May 16, the debt will reach the cap. If the US reaches the debt ceiling and the lawmakers are unable to raise the ceiling by that time, the Treasury would be prohibited from borrowing more money, and the result will be disastrous. Not only the US will be greatly affected, the international market will also be hit.

U.S. Deficit

The article highlights the fact that when all is said and done, something has got to give when it comes to the United States' debt problem. Congress must approve an increase in the debt ceiling, and with Republicans now in control, that is unlikely to happen without significant concessions. The ability to carry debt is not unlimited, and the article points out that any default on Treasury debt would have catastrophic, world-wide consequences.

US equivalents

This very interesting article, maps out both the GDP and population of states within America and compares them to foreign countries with the nearest equivalence. Some states are compared to countries which would come as no surprise, though others are astonishing - Maryland's GDP is equivalent to that of South Africa. It would be interesting to include the dept of US states in comparison to foreign countries as well. This map truly shows how good we have it here in the United States..

Larry Summers: More jobs are coming

Despite the high unemployment rate, Larry Summers seems to give a very optimistic outlook on the current economic situation in the United States. Having been President Obama's chief economic advisor and secretary of treasury under Bill Clinton, Larry Summers has a very highly respected background in the business and economic worlds. He states, "I think the prospects for starting to see significant employment growth and reductions in unemployment right now are better than they've been in the United States in a number of years". This is a statement that we frequently hear as there is an extraordinary amount of analysis on the current economic situation and what is to come. On the other hand, this comment doesn't just passes over one's head when the remark is coming from a person with such great knowledge on the subject. Summers expects the economy to grow at a rate of 3% to 4% in the next few years. When discussing specific jobs, Larry Summers believes that employment in the construction industry is going to decrease tremendously while the IT and Health Care industries are much more likely to experience future job growth. He attributes the expected drop in demand in the construction industry to the large amount of current vacancies in houses and buildings. As a way to possibly prevent this fall in demand, Summers suggests infrastructure projects in order to create more jobs in construction.

Senators talk tough on China currency

NEW YORK (CNNMoney) -- Senate Democrats renewed their push to crack down on countries that manipulate their currencies, ahead of a key meeting between Chinese President Hu Jintao and U.S. President Barack Obama in Washington.

A bill introduced Monday by Senator Charles Schumer and two other Democrats, would impose penalties, including possible tariffs, on nations that manipulate their currencies -- particularly China...

What would be the implications/consequences of the economies between the United States and China if the United States were able to enact tariffs in response to China's manipulation of its currency? Would that benefit us or hurt us in short term as well as long term?

In a bold push, Target goes international

For years, Target and its competitors backed away from expanding internationally. Now, finally the Target Corporation is making their first attempt to go internationally into Canada. The Minneapolis, MN based retailer explained that their plan is to open 100 to 150 stores in Canada over a two year period starting in 2013 when Target opens its first Canadian store. In recent years Target has only been able to open up 10-21 stores. This is a huge step forward for Target. The international deal is $1.85 billion for Target to obtain leasehold interests in up to 220 stores run by Zellers Inc. (Canada’s second-largest mass-merchandise retailer).

Target is my favorite store to shop at. The store offers a broad array of unique, high-quality products at reasonable prices for its consumers. I believe Target is making a very bold move by going internationally and I think it will extremely benefit the company as a whole. This transaction is giving Target a tremendous opportunity to expand the Target brand, the Target store and the experience of shopping at Target worldwide!

Bigger Trade Deficits Coming?

In this article, the author David Leonhardt discusses how Joseph Gagnon who is a former Federal Reserve economist explained that the world's financial imbalances such as China's trade surplus and the United States trade deficit, and that it will most likely return to record levels in the soon future. It also discusses to avoid of global imbalances, economies with current deficits need to cut their fiscal deficits more than they are projected, and the account surpluses should reduce financial outflows.

National Debt: The Ugly Facts

Very relevant towards todays class discussion- the fall of capitalism. America has long been the poster child of a great economy, but now it appears that the collapse is inevitable.

Small business lending to increase, regulators say

this article talks about how the FED chairman Ben Bernanke expects 2011 to be a much better year in terms of economic stability. it mentions that the banks are starting to give out more small business loans to due to the improving credit situation in the US. This could put an end to the banks keeping large amounts of excess reserves and it could provide more money for further investment in the local markets. Bernanke also mentions that he expects retail sales grow more in the new year, but he still believes it will be some time before the unemployment rate decreases to a point were we can be comfortable.

Illinois Wakes Up

This article expands on the earlier comment I made about Illinois raising their tax rates. Income tax went up from 3% to 5% and the corporate rate rose from 7.3% to 9.5%.
Many governors are criticizing Illinois and saying business should move to their states.
However, this change will most likely not drive business out - some other states listed in the article have been higher rates .
Mostly this article applauds Illinois for finally facing their budget problems and doing something about it - something that many states refuse to do.
However, this will hurt people and businesses in Illinois - my family now lives in IL and they are already stressing about the rate change.

Solar Panel Maker Moves Work to China

Evergreen Solar, currently the third largest solar panel maker in the United States, is closing its American factory and shifting production to China. They are aided by at least $43 million by the government of Massachusetts. The move is a joint venture with a Chinese company in central China. The move was made as a result of higher support by the government in China. The move will be final by the end of March, with all 800 workers being laid off.

I believe that the move is smart for Evergreen Solar because the cost of producing in the U.S. is much higher than producing overseas. The new trend now is to outsource production and I believe this is the right move for Evergreen to continue its growth. It was said that "Evergreen’s stock, which traded above $100 in late 2007, closed Friday in New York at $3.03". As you can see the stock price has fallen dramatically due to inefficient use of sources. This seems to be the logical move to lower costs and experience growth.