Libya looks to Islamic banks to lure deposits

http://www.dailystar.com.lb/Business/Middle-East/2012/Apr-24/171180-libya-looks-to-islamic-banks-to-lure-deposits.ashx#axzz1tOlVmAix

This article shows the confidence that companies have in Islamic banks. "Ahmed Saeed, a Libyan poultry farmer, says he’s waiting for his country to open Islamic banks to deposit money for the first time." Mainly because the system prevents usury, it's more in tune with the culture and has the reliability aspect most people crave. 
This article simply displays how Islamic banks have a large contingency of followers because of how user-friendly the system is. No interest rates attract large amounts of people, and according to a few authority figures  it would circulate money into the economy that normally wouldn't have been there. By adding Islamic banks into a country it would attract more investors, something countries like Libya need. 

Economy's Biggest Drag Right Now Is Government

Government has become its own worst enemy when it comes to the economy, with public spending putting a damper on growth that otherwise continues at a steady if unspectacular pace.

Friday'S GDP report confirmed what a drag government can be: While consumer spending grew at a 2.9 percent clip, state and local governments cut back spending by 1.2 percent on an annualized basis and the federal government pulled back by 5.6 percent.

Islamic banking grows 10 to 15% annually: IF chairman

http://arabnews.com/economy/article615047.ece

This article gives an overview of how Islamic banks have been the least affected banks from the financial crisis. It also urges Muslim countries to decrease their dependence on World Bank and the IMF and rather depend on their own resources to build their economies like China, Brazil, South Africa and Vietnam. The article also says that in the time of crisis when people are thinking about switching to an alternative system, Islamic banking is something which they can consider. If not completely, Islamic banking can work in conjunction to the present system.

Plan to fix Postal Service passes Senate

http://money.cnn.com/2012/04/25/news/economy/postal-service-senate/index.htm?iid=SF_E_River

Not surprisingly, The Senate on Wednesday passed a plan to save the struggling U.S. Postal Service. This that could save thousands of jobs and 100 mail processing plants now slated to be closed or consolidated next month.
As we talked in class, The Postal Service in the United States is facing much challenging from its private competitors. Without help, the Postal Service would otherwise cut Saturday service, delay mail delivery and close hundreds of postal processing plants and post offices, triggering thousands of job cuts nationwide.
The House has yet to take up a different bill to reform the Postal Service.  And this Senate bill, offered by members in both parties, forces the Postal Service to ease off part of its plan to slow down the delivery of first-class mail, the kind of mail that most consumers use. The bill makes controversial changes, including cuts to workers' compensation benefits, as well as a transition from door-to-door delivery to curbside delivery in some areas, such as suburban neighborhoods. The Senate bill also prevents the Postal Service from cutting Saturday delivery for two years.

It is surprising to me that the operation of Postal Service doesn't use tam money. It is, by law, an "independent establishment" of the executive branch. The profit in postal service has be sucked much by private companies. Treasury loan only cannot save its life, some proper reforms are still needed.

Gas prices seen headed lower at the pump

http://money.cnn.com/2012/04/26/markets/gas-prices/index.htm?iid=Lead

It was reported earlier in the year that gas prices would hit $5 by summer, yet gas prices have been lowering throughout the month of April and they are likely to further decline during the summer months. This is due to the fact that the price of one of the most common types of gasoline futures has dropped 30 cents. This drop in gas price futures will start to appear at gas stations over the next few weeks. Brent crude oil has been dropping in price due to tensions easing with Iran over its nuclear program. 

Initial 1st quarter growth is disappointing

http://www.ft.com/intl/cms/s/0/2f8b181c-9066-11e1-8adc-00144feab49a.html#axzz1tIeXzqg2 Comment/Summary: Overall, this is a good article that highlights why the U.S. GDP didn't grow as much as some economists predicted. US consumption increased, investment decreased slightly, and these factors were not enough to cover the decrease in federal spending. The article states that consumer saving had decreased and created the increase in consumption, government cut defense spending, and investments stalled as inventory stocks up. This is just the initial number until more information is gathered about the economy. Article: The US economy grew a disappointing rate of 2.2 per cent in the first quarter of 2012 as inventories piled up and the federal government cut spending. The annualised growth rate for gross domestic product came in below market expectations of 2.7 per cent and compares with 3 per cent growth in the fourth quarter of last year. More The weak performance did not, however, break a pattern of steady if mediocre expansion in the US, as consumption and investment grow too slowly to make up for cuts in federal spending. “The US economy remains a bright light in the global economy, although the light is hardly blinding and also showing some signs of fading,” said Chris Williamson, chief economist at Markit in London. Consumption was robust, growing at an annualised pace of 2.9 per cent and adding 2 percentage points to the growth rate. Real disposable income rose by only 0.4 per cent, however, suggesting consumers are saving less money. The savings rate fell to 3.9 per cent from 4.5 per cent in the previous quarter. “Undoubtedly the brightest spot in this report was the resurgence in consumer spending,” said Beata Caranci, deputy chief economist at TD Bank, but she warned that “we don’t expect to see a repeat performance in the strength of spending” in the second quarter. Investment would also have been almost flat if not for an inventory build-up that added 0.6 percentage points to growth. Cutbacks to federal spending, especially defence, subtracted 0.6 percentage points from the total. The first estimate of GDP must be treated with caution because crucial information – such as customs documents for March – is not ready. The number is often revised once more precise data arrives. “The latest report continues a pattern of moderate growth in the private sector components of GDP and contraction of the government components of GDP,” said Alan Krueger, chairman of the president’s Council of Economic Advisers. Republicans seized on the weak business investment. “This is the first decline in fixed business investment since the fourth quarter of 2009,” said representative Kevin Brady, vice-chair of the joint economic committee of Congress. “We need to get government out of the way and let the free market create jobs and opportunity for all Americans.” Final sales to domestic purchasers, a crucial measure of underlying demand in the economy, rose at a pace of only 1.6 per cent. That is slower than the economy’s long-run trend rate and the figures do little to resolve a divergence between weak demand and stronger job creation that has puzzled the US Federal Reserve. Many economists expected a weak first quarter after large inventories accumulated at the end of last year, but unseasonably warm weather encouraged construction activity in northern states and lured consumers out to the shops.

Why half of us don't pay income tax

http://money.cnn.com/2012/04/26/pf/taxes/income-tax/index.htm?iid=SF_BN_Lead 

This article is about the impact/effect of the current tax form in the States. It states that nearly half of U.S. households end up owning no federal income tax. A result from the tax breaks by both Democrats and Republicans, and the fact that the U.S. tax code is progressive. It is said that over the years, lawmakers have enacted reams of tax breaks, such as tax credits for work, kids and education. Therefore, the number of non-payers is increased. According to Robert Greenstein, president of the liberal Center on Budget and Policy Priorities, the major reason for the lawmakers to approve temporary tax breaks is that they want to stimulate the economy after the 2008 financial crisis. The tax Policy Center estimates that 46% of households will end up owing nothing in federal income taxes for the tax year of 2011. Greenstein added that, the percentage was closer to 40% before the recession. The Zero Tax Club includes some very high-income households. Nevertheless, it is made up disproportionately of low- and lower-middle-income households.

On the other hand, if payroll taxes are counted, the number of non-payer households’ drops precipitously, it is estimated 18% in 2011. It is because payroll taxes fund the entitlement programs, and it hits low-income households harder than most; 100% of the low-income households’ income is subject to the payroll taxes. At this point, high-income filers pay a lower percentage of their income in payroll taxes since wages subject to the Social Security tax are capped at $110,100. In addition, according to Roberton Williams a senior fellow at the Tax Policy Center, most of those 18% of households that owe neither federal income nor payroll taxes are elderly or had income under $20,000. But, they still end up paying something in taxes, such as sales taxes, state and local income taxes. From this perspective, virtually, no household in America would qualify for the non-payer group.

As tax is always one of the heated topics concerning an economy system, people have various opinions and estimations on the tax policies. Therefore, it is hard to say what polices are the best or most suitable ones to the economy. Trials and errors are inevitable.

Spain's jobless rate hits record high

This article discusses a weakness of Spain's economy; their unemployment rate. Unemployment has been an ongoing problem for Spain's economy, and according to this article it is getting worse. Today, Friday April 27th 2012, the Spanish government reported that the unemployment rate has reached an all time high of 24.4%. This new unemployment rate is equivalent to a total of 5,639,500 people in Spain that are jobless.
http://money.cnn.com/2012/04/27/news/economy/spain-jobs-growth/index.htm?iid=HP_LN

BOJ Plans To Boost Bond Purchases

http://online.wsj.com/article/SB10001424052702304811304577368901431588644.html

The Bank of Japan announced that it will increase its purchases of government bonds to help prevent deflation. The bank bought an addition ¥10 trillion in assets to their already ¥5 trillion. Along with this they decided to make many other changes including reducing their six-month fixed-rate loan provisions by ¥5 trillion. They hope that a combination of all of this will help to restore Japan's economy and experience sustainable growth. However, Japan's finance minister said more will need to be done to stop deflation so it will be interesting to see what the else the BOJ decides to do.

Groupon Must Avoid Taking 'Stupid Risks,' CEO Says

Groupon was the fastest company ever to get to 1 billion dollars in revenue. Since its founding Groupon had gone through multiple VC rounds of funding and mostly recently had its IPO and now is a publicly traded company. But this rapid climb to become a publicly traded company has had its fair share of trouble. The two biggest missteps was the delaying the IPO because of financial leaks within the company and most recently they needed to restate there earnings, which is a huge blunder for the company. The challenges that Groupon faced in becoming a legitimate public company shows the difficulty of creating a stock market with thousands of publicly traded company all need submit high level financial statements for the system to work. The challenges that Groupon faces reminds me of the Russian plan to make all of the government owned companies, public in a year and a half when the process should have years maybe even a decade.

Remembering One Past Industry used to Promote a New Industry

http://www.economist.com/node/21551529

Tourism in Northern Ireland: Horrible histories


This article describes how one past booming industry in Northern Ireland was shipbuilding. This is no longer the case, they could not compete with the Asian competition. However, in its prime, the shipyards in Belfast made many impressive ships including The Titanic. Ship building in Northern Ireland is a lost industry, but its memory is being used to promote another: tourism. Tourism in Northern Ireland has been dismal in comparison to Ireland, Scotland and Wales. They brought in approximately 2.6 million visitors in comparison to Scotland who brought in 12.4 million and Wales which brought in 8.7 million visitors. This probably has a lot to do with the historic violence in this region. However, recently there has been peace. Both sides of the government was pro-building a monument/museum about The Titanic. They were for building this monument in the hopes that it would encourage tourism. Clearly this is an industry that they are concerned about promoting. It is interesting how the loss of one industry helps promote another. This article shows how when a country decides to promote a certain sector or industry they are able to be investing in certain projects.

Buttonwood Feeling peaky The economic impact of high oil prices

Buttonwood

Feeling peaky

The economic impact of high oil prices

Apr 21st 2012 | from the print edition

AS THE developed-world economy tries to gain momentum, it faces a persistent headwind. The oil price remains stubbornly over $100 a barrel, acting like a tax on Western consumers. Some blame the high price on evil speculators—Barack Obama unveiled plans to increase penalties for market manipulation on April 17th. But there is a simpler explanation: that supply is inadequate to keep up with rising demand.
The concept of peak oil—the idea that global crude production may be at, or close to, its limit—is far from universally accepted. One leading asset manager talked recently of the world being “awash with energy” because of the exploitation of American shale gas. Nevertheless, oil is still the main fuel for cars and trucks. And crude output (as opposed to alternatives such as biofuels and liquids made from gas) has been flat since 2005.
A number of countries (including Britain, Egypt and Indonesia) have turned from net oil exporters into importers in recent years. And although rich countries have curbed their energy-guzzling a little, demand continues to surge in emerging markets.
This has left the oil market very vulnerable to temporary supply disruptions, such as the war in Libya. Speaking at a conference in Dublin this week, organised by the Institute of International and European Affairs and the Association for the Study of Peak Oil and Gas, Chris Skrebowski, a consulting editor of Petroleum Review, argued that spare capacity in the oil market could be eroded by 2015.
The peak-oil concept was devised by the late M. King Hubbert, who correctly predicted in 1956 that oil output in the lower 48 states of America would peak by around 1970. At the conference Michael Kumhof, an economist at the International Monetary Fund, presented the findings of a forthcoming working paper which showed that adding the idea of a “Hubbert peak” to energy production greatly improved the ability of a model to forecast oil prices. Based on an expected 0.9% annual increase in production over the next decade, the model predicts that real oil prices will nearly double over the same period.
The economic damage caused by such a rise is predicted to be modest, perhaps 0.2% of global GDP a year. In the past changes in oil prices have had a limited long-term impact, since any losses to oil importers are matched by gains by oil exporters. To the extent that high oil prices played a role in the recessions of the early 1980s and 2008-09, the main reason is that oil-producing countries tend to have a lower marginal propensity to consume their income, denting global demand.
Nevertheless, Mr Kumhof worries that if oil prices are high enough, the economic impact might increase substantially. On the most extreme assumptions, it could be 2% a year.
Even if the world can find more oil—in the Arctic or tar sands, say—the longer-term question is whether the era of “cheap energy” is over and how the world can adjust if it is. Developed economies are built on easy access to cheap energy, importing goods that are transported from around the world, with consumers driving many miles to work in air-conditioned offices and then flying off to sunny climes for their annual holidays. Persistently high oil prices would clearly lead to substitution (electric cars, natural-gas-powered trucks) but the transition costs could be significant.
Furthermore some potential substitutes for, or new sources of, oil (such as biofuels and tar sands) are a lot less efficient, in the sense that they require significant amounts of energy simply to produce. To the extent that this equation (energy return on energy invested, or EROI) is deteriorating, that must surely have an effect on economic growth.
“What is the minimum EROI that a modern industrial society must have for its energy system for that society to survive?” ask Carey King and Charles Hall in a recent paper*. The academics’ answer: “Complex societies need a high EROI built on a large primary energy base.”
This issue is not much considered by mainstream economists, who are too busy focusing on monetary policy, the impact of fiscal austerity or the need for labour-market reforms. But just as the industrial revolution was built on coal, the post-second-world-war economy was built on cheap oil. There will surely be a significant impact if it has gone for good.

^{“Relating Financial and Energy Return on Investment”, October 2011.}

^{Economist.com/blogs/buttonwood}

End of Cheap China

http://www.economist.com/node/21549956


China is the world’s largest manufacturing power. Its output of televisions, smartphones, steel pipes and other things you can drop on your foot surpassed America’s in 2010. China now accounts for a fifth of global manufacturing. Its factories have made so much, so cheaply that they have curbed inflation in many of its trading partners. But the era of cheap China may be drawing to a close.  


China has a manufacturing system that is difficult to replicate elsewhere, mainly due to the cheap labor cost.  However as salaries raise for manufacturing will China be in a good bargaining position towards consuming countries in the West?  Will we see Chinese exports to the West decrease?  I believe so, this could actually be a good thing as people in the US choose domestic manufacturing over abroad.  On the other hand, transportation cost have been rising and (in many cases) have negated the lower labor cost of a distant country.

State Bank in India

http://www.economist.com/node/21553039

This article discusses the reforms and public perception of reforms that India has undergone regarding its State Bank.  Recently the Bank has been seen to be fairly aggressive and more politicized as an integral part in the sphere of the state.  The author raises the question about the future direction of the State Bank.  It has the potential to follow the Western model and become a private bank, but also has the potential to stay become state-led especially with support from similar banks in China.  What direction do you see the bank going?  What are future implications for this strategic decision?

In French Elections, Le Pen Voters To Make Or Break Hollande

http://www.ibtimes.com/articles/332540/20120424/france-elections-sarkozy-hollande-le-pen-national.htm

The first round of the French presidential election has put Socialist candidate Francois Hollande in first, current President Nicolas Sarkozy in second, and extreme right-wing candidate Marine Le Pen in third.

This is the first time in recent history that the president did not win the first round of the re-election campaign. Another first is the record-high 17.9% earned by the National Front party candidate, Le Pen.

Le Pen supports abandoning the euro currency and severely restricting immigration. She questions the other candidates view on France's sovereignty.

Hollande strives to bring National Front voters back to the left who have voted right because of "social anger" and anti-Sarkozy feelings. He supports anti-EU and pro-job movements.

Le Pen is calling for her followers to not vote for Sarkozy in the second round, which would lead to his defeat. She is also turning her party's attention to the parliamentary elections in June. In 1986 there were 35 members of parliament in the National Assembly but there are currently none.

Small Banks Get a Freer Hand

Small Banks Get a Freer Hand
The JOBS Act signed into law this month includes a provision that raises the number of shareholders at which small banks must register with the SEC to 2,000. The JOBS Act aims to increase jobs by reducing regulations on companies. I am all for this provision because I like anytime America can increase competition and being part of family that own's a small business I am always rooting for the small businesses. 

Business and Future of Space Travel

This article may not be very relevant, but I wanted to share it because I thought it was kind of cool to think about the possibilities that can exist with potentially colonizing in space and space travel, and to think about what kind of society and economic system could exist should colonization occur. Elon Musk, multi-billionaire, is making the steps to introduce private shuttles, which could open up the industry to other potential private spacecraft companies to enter the industry if this launch is successful, and expand humanity outside of Earth, opening up the possibility of new societies and governments.

http://www.forbes.com/sites/alexknapp/2012/04/23/spacexs-elon-musk-on-the-business-and-future-of-space-travel/

And another link -- Musk says humans are a multi-planet species, which is the premise of his mission behind his SpaceX company.

http://www.space.com/15361-spacex-dragon-mars-settlement.html

China's economic growing pains

http://money.cnn.com/2012/04/23/news/economy/china-economy/index.htm?iid=Lead

China has become an economic powerhouse in the past few decades, yet the country is now experiencing problems associated with their rapid growth.  Despite being the second largest economy in the world, China still lags behind many developing countries.

China's GDP per capita still ranks 91 in the world, at around $9, 143. Countries like Iran and Botswana are actually richer per person. China is experiencing a huge demographic shift from the rural areas to the city, which has lifting many out of poverty. However, there is still a huge problem of inequality between the rural and urban areas. It is to say that the wealth in China is not being evenly distributed among its 1.4 billion citizens. 200 million people in China live on less than $2 a day.

The growth in GDP is expected to slow this year, and it could take until 2018 or 2019 for the country to see a level of GDP that is considered to be a rough minimum for a developed country.

China’s Biggest Banks Are Squeezed for Capital

Within the last year, seven of the biggest Chinese banks tapped the markets for 323.8 billion renminbi ($51.4 billion ) in new funds, according to Citigroup estimates. Several financial firms are expected to raise another $17.7 billion in the next few months, with China’s fifth-biggest lender, the Bank of Communications, accounting for $9 billion. Banks around the world have been tapping investors for new funds as they struggle with slumping share prices and waning profits. But Chinese firms have maintained that their profit growth is strong and their balance sheets are solid, raising red flags among some analysts about the banks’ persistent capital needs.

 Wal-Mart: Another corrupt big business?
http://www.nytimes.com/2012/04/22/business/at-wal-mart-in-mexico-a-bribe-inquiry-silenced.html

In September 2005, a senior Wal-Mart lawyer received an alarming e-mail from a former executive at the company’s largest foreign subsidiary, Wal-Mart de Mexico. In the e-mail and follow-up conversations, the former executive described how Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country.
The executives of the Wal-Mart branch are corrupt and head the way for big business manipulation. If we cannot have more regulation over big business like Wal-Mart they will continue to dominate the world and politics through their manipulation.

Gas prices actually start falling around the US

http://www.msnbc.msn.com/id/47122307/ns/business-oil_and_energy/#.T5S1_rN8Ca8

After enduring a four month increase of gas prices, economists believe that the worst is over and that we are going to start see a decrease in gas prices.  Over the past two weeks, the national average has dropped six cents to $3.88 and believe it to drop another five cents in the next couple weeks.  This drop will save approximately two dollars per fill up.  Another historical fact is that the current price is lower than last years average so signs of improvement are definitely there.  The rumors of prices reaching up to five dollars a gallon have been almost entirely wiped out which was a much larger topic a few months ago.  Unfortunately there are still potential factors that could spike prices back up however, for now, we are seeing a steady decline in the gas prices.

This is great news for the travelers of this country.   I think we all felt the effects of high gas prices and I, myself, would try and drive as little as possible just to keep from killing the wallet.  Bikes had become more and more common on the streets as people could not afford to lose seventy dollars on one fill-up.  It is great to see the decrease in prices especially with summer approaching and job travel is what is likely in store for a lot of us seniors.

US Postal Service Closings Making Small Businesses Nervous

http://money.cnn.com/2012/04/18/smallbusiness/postal-service-closings/index.htm?iid=HP_River

With the tightening of the Federal Budget comes a shrinking US Postal Service.  For the average citizen it means little.  Most of us communicate electronically.  But to small businesses around the country, closing post offices are reason to be afraid.  Small businesses rely on the US Postal Service for deliveries.  Now because of less post offices and less postal workers, small businesses are suffering.  The reliability of the USPS is gone.  Packages are not delivered on time, and small business owners must go out of their way to make sure mail is delivered. 
Forcing small business owners to go out of their way is hurting efficiency....and the bottom line. 

Earth Day Analysis: How Waste Hurts the Economy http://blogs.wsj.com/speakeasy/2012/04/22/earth-day-analysis-how-waste-hurts-the-economy/

This article addresses the problem with waste, and what we should think about in the future. Every American on average produce more than 7 pounds of trash per day ,compare to just over 2 pounds per day by Japan. It's not about running out space for the garbage, but it's about how much resources we are wasting every year. I think this can be considered a market failure, and it requires effort and changes not just from the people, but the government as well.