The Stockholm Syndrome

Since we are talking about Sweden in class, here is an clip on Sweden from the Daily Show.

part 1

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
The Stockholm Syndrome Pt. 1
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

and part 2

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
The Stockholm Syndrome Pt. 2
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

Regulation: How Much Is Too Much?

http://www.economist.com/node/21547789

This article points out that though America claims to be a lassiez-faire economy, there are tons of regulations on the books, some of which that apply to only extremely strange and rare occurrences.  Many Americans poke fun at these regulations, but they are no laughing matter.  These regulations create seas of red tape for businesses to work their way through haphazardly.  And most of these regulations are never taken off the books, even if they are realized to have little value, which is scary.

The author also points out how this has infiltrated American life in general, with the numerous regulations on flying caused by Republicans to the health care bill passed by Obama that did little about reducing the complexity of the American health care system.  He also brings up the point about legislation like this catering to special interest groups, something that we have talked about in class as a weakness of government.

Q&A: Will China come to the EU's rescue?

It's becoming a familiar scenario in the wake of the eurozone crisis. Indebted nations have made repeated entreaties to Chinese leaders for bail out help in the form of buying government debt bonds or direct investment. And, indeed, Beijing has pledged to help, and Chinese investment in European companies has skyrocketed.

Germany's Hidden Weaknesses

http://www.nytimes.com/2012/02/09/opinion/germanys-hidden-economic-weaknesses.html?scp=2&sq=germany&st=cse

Europe’s strongest economy, Germany, has plans to potentially step in to bail out their careless neighbor, Greece, due to their obligation to bring distortion back into balance and to their better performing qualties over other European countries . Germany’s unemployment has been cut by almost half and they grew by 3.5% in 2010 and 2011. Additionally, they increased their market share in world exports, which exceeded their imports. Although many positive things have recently occurred, there are many reasons why they should resist demands to intervene with this plan. One issue is that Germany’s position is hardly permanent and their economic growth is estimated to slow down. With a decrease in economic growth, their debt would be dangerously high. Additionally, it would make it harder in the long run with their plan to create a fiscal union or a United States of Europe. The question asked is whether Germany really is the star performer or if lucky coincidences just occurred on their behalf. The article explains that the coincidental occurrences of improvements to their structure are more believable and that Germany should not waste their recent gains on Greece. The final advice to Germany is to promote sustainable reforms in Greece, to avoid short-term bailouts, and to lead the way to a true fiscal union for all of Europe.       

Building competitiveness A fare fight Taxi markets are a perfect test of Europe’s willingness to change. The first in an occasional series on structur

MANY a journey starts in a taxi. So it is with the road to deregulation in the euro zone’s economies. Mario Monti, Italy’s prime minister, has prioritised liberalisation of taxi licences; Italy’s cabbies are striking as a result. Greek taxi-drivers have blockaded streets several times in protest against deregulation. Why have taxis become emblematic of the battle to free hidebound economies?

The superficial answer is that taxis are iconic: think of the badges, the bold colours and the recognisable models. The complex answer is that these features are themselves the result of regulation, and not just in the euro zone. From the turning-circle of a London taxi to the medallions on the hood of a New York cab, this industry picks up rules as easily as fares.

Taxi markets should be simple. Costs of entry are low. There are rarely large incumbent firms. On paper, competition should flourish. But low barriers to entry create a risk of having too many taxis on the roads. The number of taxi drivers in New York and Washington, DC, shot up between 1930 and 1932, as the unemployed sought work during the Depression. Such surges lead to rules to reduce congestion. America started to set up new regulatory authorities in the early 1930s; Britain established binding numerical limits on horse-drawn coaches way back in 1635.

Cab fares can be problematic, too. Unregulated competition means that fares fall to little more than a driver’s expenses. These expenses are influenced by distance (fuel costs), duration (the cost of time) and destination. The end-point for a trip is vital: some destinations (airports, say) will pretty much guarantee a return fare; others will not. This means journeys of a similar distance can have very different costs, so working out a fair price is tricky. In an unregulated market passengers would have to search out a competitive price, a time-consuming process of hailing or calling a number of cabs. That allows taxi operators to run an opaque pricing structure.

The response to this problem in many jurisdictions has been regulation to establish a uniform price, giving customers certainty over what they will pay. But as a result journeys that are the same distance end up varying hugely in value for drivers. Short trips around tourist destinations are lucrative; trips to more remote areas, or on congested commuter routes, are much less profitable. Since full-time cabbies cannot raise prices, they may refuse to operate at less popular times or to carry passengers who live at the wrong end of town.

Lessons of the 1930s -- There could be trouble ahead

This article cited the great depression in the 1930s as an example to learn lessons from. It also talked about whether the current recession will lead to a doubt of the value of liberal capitalism.

http://www.economist.com/node/21541388

"On the present course, conditions in developed economies look like getting worse before they get better. Growth in America and Britain will probably be less than 2% in 2012 on current policy, and in both recession is quite possible. A euro-zone recession is likely. The ECB could improve the euro zone’s economic outlook by loosening its monetary policy, but widespread austerity and uncertainty will be difficult to overcome. As in 1931 and 2008, a grave financial crisis may cause a large drop in output. That, in turn, would place more pressure on euro-zone economies struggling to avoid default."

"Even so, prolonged economic weakness is contributing to a broad rethinking of the value of liberal capitalism. Countries scrapping for scarce demand are now intervening in currency markets—the Swiss are fed up with their franc appreciating against the euro. America’s Senate has sought to punish China for currency manipulation with tariffs. Within Europe the turmoil of the euro crisis is encouraging ugly nationalists, some of them racist. Their extremism is mild when compared with the continent-wrecking horrors of Nazism, but that hardly makes it welcome.
The situation is not yet beyond repair. But the task of repairing it grows harder the longer it is delayed. The lessons of the 1930s spared the world a lot of economic pain after the shock of the 2008 financial crisis. It is not too late to recall other critical lessons of the Depression. Ignore them, and history may well repeat itself."

Volcker to Push Back on Banks' Trading

This article talks about the role of the Volcker Rule which limits proprietary trading of Banks and how comment letters are being submitted on each side of the proposed new regulation. Regulation of financial markets have over the last thirty years been trending more towards deregulation but after the crisis of 2008 the Dodd-Frank bill is the frist step to add relegation back into the market. Nearly four years later many regulations have not been implemented this shows how difficult the regulatory climate is and how it is very tough for the government to be effective.

The Most Important Man in Europe

Here is a very interesting article from TIME magazine I really want to share with you guys. The photo of Mario Monti is the cover of Time magazine in Europe and asian edition.


At first glance, it seems impossible that the fate of the world economy rests in Mario Monti's hands. The Prime Minister of Italy has the aura of a gentlemanly grandfather--the polite demeanor, the soft voice, the smiling eyes--not the tough taskmaster Italy so desperately needs to escape its dangerous and protracted debt crisis. Monti, 68, speaks in the long, precise, jargon-laden sentences of an academic economist, which he was only four months ago. He does not employ the rousing rhetoric of a typical politician. He seems like the sort who'd get chewed up by Italy's political machine, not reform it.
Listen to what he says, though, and the real Monti emerges. His words are edged with steel. He talks not merely of ending Italy's economic crisis but also of pursuing a sweeping agenda to set free the energies of a moribund economy, fixing a deadlocked democracy and charging forward with greater European integration. Listen carefully and you realize Monti is not hoping for quick fixes. He's aiming at nothing less than a wholesale overhaul of Italian society. As he recently told TIME during an interview in the Prime Minister's stately office in Rome, "I believe that reforms will not really take hold if they do not gradually come into the culture of the people."
Monti's mission matters to everybody--from Wall Street financiers to Chinese factory workers. That's because Italy's problems have become the world's problems, and Monti must fix Italy to prevent another global financial crisis. His most pressing issue is the precarious state of Italy's national finances, including a mountain of government debt equivalent to more than 120% of GDP--the second highest level in the euro zone, after that of troubled Greece.
But Italy's difficulties run even deeper. From 2000 to 2007, Italy's GDP grew at an average annual rate of 1.5%, compared with nearly 2.2% for the euro zone overall. Though Italy's economic woes are nothing new, when the contagion from the European debt crisis struck, it focused investors on Italy's enfeebled condition. In mid-2011, they began fleeing Italian government bonds, sending 10-year yields past 7%--a level that would eventually become too expensive to bear. The terrifying possibility emerged that Italy--the euro zone's third largest economy--could default or require a large-scale bailout.
And as Italy goes, so goes the euro. Italy looms as the biggest threat to the embattled currency's survival, because Italy is paradoxically both too big to fail and too big to save. While Europe rescued Greece, Ireland and Portugal, a bailout of Italy would require such huge sums--by one estimate, $900 billion--that its neighbors, including giant Germany, would likely be unable, financially or politically, to ante up the cash. Yet if Italy tumbles into insolvency, it could set off a chain of events that unravels the monetary union and puts Europe's even grander half-century experiment in democratic integration in peril.
The consequences of an Italian default--and even worse, a collapse of the euro--are almost unimaginable. Shock waves would ripple through global financial markets to every corner of the world, sinking banks and economies along the way. The fates of Monti, Europe and the worldwide recovery have thus become inexorably entwined.
Monti ended up in this position through one of the more unusual twists in modern European governance. His predecessor, the colorful Silvio Berlusconi, had dominated Italian politics for a decade, but as the crisis spiraled in late 2011, he proved unable to rally the country's politicians to tackle it. Discredited, Berlusconi resigned in November. The failure, though, was not his alone. Italy's political establishment woke to the reality that partisan politics had failed the nation. The left and right "are both incapable of doing the reforms," says Pier Ferdinando Casini, leader of the Union of the Center political party. "We are afraid of losing votes."
The solution was Monti. Italy's President, Giorgio Napolitano, called on him to step in and run the government. The Yale-educated economist was president of Milan's Bocconi University, and he had studiously avoided the corrupting influence of Italian domestic politics throughout his career. But, he says, the request to serve came "at such a severe time of crisis for Italy that I could not refuse."
Today he reigns over Rome like a new Caesar. In effect, the democratic process has been suspended to allow an unelected technocrat to implement policies that elected politicians could not. Monti calls it a "temporary mutual disarmament" of the left and right. Nearly all the major political parties set aside their differences and threw their support behind him, and that has given Monti almost uncontested control of the nation's decisionmaking.
He has used his mandate to the fullest. In December he implemented a biting austerity program of tax hikes and spending cuts, aiming to balance the budget by 2013, and a reform of the country's pension system with phased increases in the retirement age. In January he announced a sweeping liberalization of professions that are regulated and protected from open competition, like pharmacists, taxi drivers and lawyers. Next on the agenda is a major overhaul of the distorted labor market to make it more flexible and create jobs for the nation's army of unemployed youth. His efforts have already had an impact. Bond yields have fallen by about 1.5 percentage points since Monti took charge, to (a still elevated) 5.6%, easing fears of an imminent European meltdown.
Conflicts with Interest
Not everyone is enthralled, of course. Monti is taking on entrenched interest groups that have repeatedly defended their privileges, and they're not going down without a fight. Taxi drivers staged strikes in Rome and other major cities. Pharmacists are threatening to do the same. Truckers blocked roadways to protest a fuel-tax hike. To these constituencies, Monti's reform agenda is radical, even dangerous. "In Italy, the economy was more based on rules that used to be applied to create wealth for the general public," says Loreno Bittarelli, president of Uritaxi, a national taxi union, which is opposed to Monti's program. "I don't understand why suddenly the only solution [to the crisis] is to get rid of the rules." His enemies see him as an elitist who is unsympathetic to the struggles of middle-class Italians. "Monti has always lived in the salons," says Bittarelli. "He really doesn't know the problems of ordinary people."
Monti's response might surprise. "Maybe they're right," he says. Though Monti has attempted to appeal to the masses--he refused to accept his Prime Minister's salary out of a spirit of shared sacrifice--he cannot honestly claim to be a man of the people. His father was a banker, and Monti was once an adviser to what some see as the quintessence of rapacious capitalism: Goldman Sachs. He has not run in any election for any office, and his friends think he never will.
Monti believes his detachment gives him an edge. The cozy relationship between politicians and their constituents, he argues, is the exact source of the nation's woes. "Italy has piled up huge public debt because the successive governments were too close to the life of ordinary citizens, too willing to please the requests of everybody, thereby acting against the interests of future generations," he says.
And don't expect him to bend. While he was commissioner for competition at the executive body of the European Union from 1999 to 2004, he earned the nickname Super Mario for butting heads with some of the world's most influential businessmen, from Microsoft CEO Steve Ballmer to former General Electric CEO Jack Welch. In 2001, Monti squelched a merger of GE and Honeywell, charging that the combination would smother competition in the aviation-equipment industry. Monti came under intense pressure from the U.S. to change his mind--Paul O'Neill, then U.S. Treasury Secretary, labeled his stance "off the wall"--but Monti refused to blink. Welch describes him as "cold-blooded."
The Danger of Success
Ironically, the more successful Monti becomes, the more trouble he might face. The country's politicians have backed him only because of the economic crisis, so the more reforms he implements and the further Italy pulls back from the brink, the less incentive they have to support him. As austerity measures begin to hurt, his popularity could also begin to evaporate. That potentially leaves Monti with a very narrow window of opportunity to implement change. In theory, he will remain Prime Minister until the next election, in the spring of 2013--barely enough time to realize his agenda--but he could find that window closing long before then. "The point is how to keep this pressure [to reform] even once the most visible elements of emergency hopefully are over," Monti says.
For Monti, the future of Italy and the future of Europe are intrinsically connected. He has always been a passionate advocate of European integration and has consistently pressed for more of it. In his TIME interview, Monti expressed gratitude for the support given to him by the rest of Europe but lamented that faster euro-zone reform might have blunted some of the worst effects of the crisis. An unwillingness to devote sufficient resources to expand the zone's bailout fund, for example, has hampered the creation of a so-called firewall to protect Italy and other struggling countries from contagion. He also favors the introduction of eurobonds, which would be backed by all euro-zone governments, though other European leaders have fiercely opposed the idea. However, the bickering that has stymied such action, he believes, may finally be coming to a close. "I think there is a genuine wish on the part of the E.U. and Germany and France to again play an active game with Italy for a relaunch of European integration," he says. "I think we will be seeing an acceleration of the good news."
He's seeking more good news in the U.S. On Feb. 9, Monti has a high-profile summit with President Obama, and then he is off to New York City for meetings with the U.S. financial community. If he can convince global investors that Italy is truly reforming and is a safe place for their money, he will alleviate any fears of an Italian default. That alone would help further Monti's status as the man who's saving Europe. Italy's problems, though, run so deep that reform will need to continue long after he exits the scene. Monti hopes his administration can act as an example for his successors--of the benefits of the spirit of compromise. "Others will come," Monti says, and they will sense that public opinion no longer tolerates daily political conflicts whose objective is "to destroy your adversary and not to save the country." Italy and the entire global economy can only hope that is true.

War on American Manufacturing?

http://www.bloomberg.com/news/2012-01-18/america-s-dirty-war-against-manufacturing-part-1-carl-pope.html?sXFc&cmpid=spn.evrgrnuv.leaders.dirtywar.autotarg&sQZc 

This fascinating article about the state of manufacturing in America starts with a surprising premise: manufacturing jobs are not going overseas because of lower wages. In fact, Germany and Japan have higher wages than the US, yet they are both strong manufacturing nations. So what's going on? This article argues that the US has set up a serious of policies that take away the incentive for businesses to create American factories. These range from unions to high taxes to other regulatory pressures. One example is a man who wanted to build a plant on Long Island, until he was told that in case of an emergency, the golf courses would receive water before the factory did. Regardless of whether or not manufacturing is an area that America wants to revive, this kind of anti-business attitude will only hurt the economy.

U.S. Trade Gap Widened in 2011

This article talks about the widened deficit of U.S. trade deficit as rising consumer spending and restocking by U.S. businesses led imports to grow faster than exports. Domestic economy is pulling in more foreign goods to feed reviving demand. Export growth is continuing but has eased from high levels seen early last year. Exports have been a driver of the U.S. recovery. U.S. trade deficit with China grew sharply in 2011, rising 8.2% from the year before to $295.7 billion. Trade with China is a hot-button issue in this election year and is likely to gain more attention with the visit to Washington by Chinese Vice President Xi Jinping.

We Can't Keep Growing Like This

http://www.businessinsider.com/we-cant-keep-growing-like-this-2012-2

This article, although debatable, suggests that our world population cannot sustain itself in the future, in that that we cannot sustain ourself if our population continues to grow or if our economies continue to expand. The author of this article, Henry Blodget, further suggests that we are content with the fact that we will survive in the short run using up our finite natural resources, and that our brainpower and innovation will find a way to tide us over and support ourselves. It is controversial to say this, but as selfish humans, maybe we don't seem to care about the future of humans enough to change anything about how we live today as we are all fueled by our own selfish intentions and have finite lives. I don't necessarily agree or disagree with this article, but it is something to think about.

The rising cost of catastrophes

This article is about the rising costs that are associated with natural disasters. The article states that there is little evidence that more hurricanes come ashore than a century (so we cannot blame these disasters entirely on global warming). However, these natural disasters like "earthquakes in Japan and New Zealand, floods in Thailand and Australia and tornadoes in America" last year are making real economic problems for companies and citizens. The reason for this is that people and companies are inhabiting areas that are of high risk for natural disasters, therefore if disaster is to strike the "clean up" will be much more costly than if it was just farm land for example. This article also aims to help prevent some of these costs. Because, as we've discussed in class even planned economic systems cannot account for things such as natural distasters. Firstly the article suggests that buildings are built soundly and maintained, also suggesting that building (like schools) should be designed for dual purpose. Secondly, the article suggests that the government regulates  companies and individuals so that they will not only develop for their own interest and build without the proper planning and rationale. Thirdly, governments should encourage people not to live in places that are prone to natural disasters. As the article states, disasters are inevitable and cannot be planned for, but it is possible to plan for the probable. 


http://www.economist.com/node/21542771

Payments in the E-Market

This article is relevant to the future of the monetary market and why consumers and businesses will eventually convert to e-currency.

It should be stated that your debt card, gift cards, credit cards are example of e-money. In a cashless society, you can no longer bribe anyone with a Mr. Lincoln. The Federal Government is the largest user of e-currency as it uses Fedwire to transfer any funds between foreign governments and U.S. government agencies. This is primarily due to the large amount money within the transfer, increasing the convenience for the government.

The goal of e-currency is to get corporations and consumers to jump on board and this will be solving problems with the current payment system. Currently, only 1% of corporations use trade payments electronically. 90% of consumers still rely on checks and cash for their payments. In order to have consumers and corporations jump on board and increase electronic transfer payments, the market will need standardization, economic incentives such as frequent filer miles, and education as many may be too scared about the programs.

What are everyone's thoughts on cashless society?

Income inequality: who exactly are the 1%

The article talks about the fact that Mitt Romney is the first US presidential candidate from the area of high-level finance. He serves as an example of the changing perception of the "rich" in America. Nowadays they are mostly people of finance. Chicago university's Dr. Kaplan thinks that finance is the reason of a rise in inequality. Finance professionals have already replaced top businessmen and corporate executives at the top of an income ladder. The percentage of people involved in finance among the top 1% of the richest is noticeably higher in english-speaking countries. Politically, the rich voters also have eclectic views supporting both liberals and conservative. It is interesting to note that many of the top 1% stated their support of the "Occupy Wall street" movement. This is because many of them have build their businesses themselves and consider Wall street as the place where businesses are "taken apart and controlled by someone else". Overall, the article gives us a pretty good idea about the demographics of the rich percentile, their political, economic and social preferences.

Trouble in the air, double on the ground

http://www.economist.com/node/21547283

This article is about the European Union trying to put tighter emission regulations on airplanes and China's anger towards them.  Many countries have displayed disdain over the regulation changes, however China is the only country to officially ban their airplanes from complying.

This article really speaks to how governments rank priorities differently and weigh externalities differently depending on morals.  Should private enterprise be accountable for every negative externality they cause? Will these costs be fed directly to consumers, I would say so, especially in a strained and competitive industry like commercial airlines.  To digress, should air lines be given back money for positive externalities associated with frequently air travel?  I am indecisive.

The Investment You Think Is 'Safe' Is Actually The Riskiest In The World

http://www.businessinsider.com/warren-buffett-the-investment-everyone-thinks-is-safe-is-actually-the-riskiest-in-the-world-2012-2

This is an interesting article about the comparative risks of investment and cash. According to Warren Buffett, cash, which many consider to be the safest investment, is actually the riskiest. The reason for this seemingly counterintuitive observation is inflation. Any cash saved is virtually guaranteed to continuously lose a great deal of its value due to constant inflation. To illustrate just how major a factor inflation is, a dollar today has about the same value as 3.8 cents in 1900.

Buffett does not, however, recommend having no cash. The depreciation of cash can be made up by its flexibility in some circumstances, such as when one would otherwise need to sell long term investment when their value is low to raise money. Still, money is generally safer when invested than left to gradually lose its value.

India's Telecoms scandals - Corruption and Public Failure

India's Telecoms scandals: Megahurts

In short, this well documented article portrayed a fair picture of the India's telecom scandal that happened recently. This is one example of the corruption problem of the India's government. Put in another level, this is a good example of the first public failure from which a market economy like India can suffer: the capture of regulators.

I like the way this article delineate the ramifications from this corruption occurrence as its conclusion. It hurts in total a lot more than it benefit to some. 

Nintendo Needs a Hit in a Hurry

In today's market we are seeing more and more of the perennial powerhouse companies be overtaken in their industry within a quite short period of time.  It's fascinating because just days ago I was reading about how the top three phone providers from 5 years ago, are now not even within the top 5 nowadays.  The question is what has caused this movement to occur?  A possible problem is that these companies were unwilling to alter their corporate strategy while other new entrants reinvented the industries.

http://www.businessweek.com/magazine/nintendo-needs-a-hit-in-a-hurry-02022012.html

U.S. Is Asked to Review Bankruptcy Bonuses

I think this is a good example of how government should intervene with the market, and what the role of the government should be. The government should not intervene too directly in the market, such as using money to bail out companies-which in the future would be too big to bail-instead, they should focus on long-term changes, in this case better code of law. In other words, they should focus on creating more healthy environment for companies to compete.

Nikkei rises after Greek approves austerity steps

http://www.reuters.com/article/2012/02/13/us-markets-japan-stocks-idUSTRE81B10920120213

This article shows how the Nikkei (the Japanese stock market) rose after Greece passed an Austerity bill, giving them a second bailout from the EU and the IMF. This shows that even though Japan and Greece are not connected tightly in terms of economics one country can easily affect the other. The systems within the countries are very different, and yet Greece (the struggling country) somehow manages to help out Japan (a more thriving economy). This has to do with the industry of the two countries, Japan has the possibility to create new technology, whereas Greece has been sucking money out of the government for months.

Japan economy contracts amid strong yen and Thai floods

http://www.bbc.co.uk/news/business-17008164

The article presents a government activities through monetary policies: the Bank of Japan keeps the discount rate at historically low - 0 to .1% in order to maximize the money supply. As the money supply increases, the government expects to stimulate the market as banks are more likely to loan out to businesses, thus stabilizing the long depressed Japanese economy. However, the article points out that BoJ's options are limited since the money supply is at its pick level already and there's no more room for adjustment for the government bank.

This article also shows how the Japanese economy is reliance on other economies both from the supply side and from the demand side. Their economy is disrupted by the shortage of food supply from Thailand while their exporting is hurt by debt-crisis in Europe, the slowing growth of Indian and Chinese economy and the slow recovery of the U.S. economy.

Keep on trucking: Why the old should not make way for the young

http://www.economist.com/node/21547263

The point of this article is largely that the current retirement age is too low and needs to be raised. When 65 was decided on, it was above the average life expectancy. Now, however, life expectancy is almost 80 in the United States and more and more people are continuing to claim benefits long after it was expected they'd be gone. This has put unprecedented pressure on the Social Security system within The United States.

While I agree that steps need to be taken to help alleviate the problems with Social Security, I am not convinced that raising the retirement age is the best solution. As we discussed in class, the most economically efficient or logical course of action may not always bring the most good to society. Raising the retirement age will lead to many who have begun their twilight years to have to work until they die. Society has come a long way since the first social security programs, and the expectations people have towards work and retirement have changed since then, making this idea one that would be very hard to actually see implemented.

The visible hand

This report introduces the new state capitalism, mainly focusing on China, Russia and Brazil.  The article claims that modern state capitalism represents a significant advance on its predecessors for following reasons:

            “First, it is developing on a much wider scale: China alone accounts for a fifth of the world’s population. Second, it is coming together much more quickly: China and Russia have developed their formula for state capitalism only in the past decade. And third, it has far more sophisticated tools at its disposal.”

The state capitalism looks like a coming trend.  Brazil government forced some private companies for being too independent, French government has set up a sovereign-wealth fund, and South African government is talking about nationalizing companies and making one a monopoly.  However, there are many doubts about the state capitalism, how to capitalize on its successes when it wants to innovate rather than just catch up or questions about how can you ensure a fair trading system if some companies enjoy the support of a national government and some don’t. 

This article will go deep into questions about the state capitalism.

http://media.economist.com/sites/default/files/sponsorships/MM150/20120121_state_capitalism.pdf

Bernanke: Housing problems hold back recovery

http://money.cnn.com/2012/02/10/news/economy/bernanke_housing/index.htm?iid=SF_E_LN

On Friday, Ben Bernanke spoke before the National Association of Home Builders about how the struggling housing market is restraining the American Economy. This has limited the effectiveness of the Federal Reserve policies. One of the problems are that households with good credit are finding it difficult to obtain mortgages or refinance.

Bernanke cited some statistics and said that the declining home prices has resulted in more than $7 trillion in lost household wealth. The decrease in household wealth has decreased consumer spending between $200 billion to $375 billion.

Some suggestions that Bernanke offered was to turn foreclosed properties into properties that people can rent. But he said that this policy would be a "silver bullet."

Romney Gambles on Minimum Wage Increase

Despite his remark after the Florida primary, Romney actually seems to be looking out for low-income Americans. The Republican presidential candidate supports automatic increases in federal minimum wage to keep pace with inflation. Although Congress has not raised the minimum wage since 2007, several states have taken the initiative to raise their individual minimum wages. Many argue that raising the minimum wage would make the cost of labour too expensive and force employers to hire less workers, increasing the unemployment rate. However, some believe shifting money from profits to wages will increase both consumption and the circulation of money. Could linking minimum wage to inflation adjust minimum wage better than the market? How would this affect small businesses and the income gap?


http://www.ft.com/intl/cms/s/0/8dfba482-5346-11e1-aafd-00144feabdc0.html#axzz1mCH8RN7l