S&P upgrades Greece out of selective default

http://www.boston.com/news/world/europe/articles/2012/05/02/sp_upgrades_greece_out_of_selective_default/

     This article talks about how the Standard and Poor's rating agency recently upgraded Greece's credit status from selective default to CCC. This rating is still junk status and is not investment grade, however it is a step in the right direction for Greece. Standard and Poor's said it made this upgrade because Greece has successfully finalized a bond swap which has wiped 100 million euros off their debt. Greece negotiated this deal which caused private bondholders to lose about 75% or the value of their investment.
     Greece has been in a recession for six straight years and it leads to question whether their economic system is effective. A huge problem Greece is facing right now is that they are unable to pursue monetary policy since they are a part of the European Union and have no central bank.

Istanbuls and Bears (Turkish Economy)

Istanbul is a bustling center of one of the world's fastest growing economies. Recent figures revealed a 8.5% growth for 2011. However, the fast growth does not come without side effects for Turkey. For example inflation rate for march was 10.4%. Even bigger concern is Turkey's dependence on foreign capital for economy. It is even more concerning that most of this capital comes from the banking deals and therefore can leave as easily as it entered. However, enthusiasts are sure that the advantages far outweigh the economics problems of Turkey. Its domestic market is big and is expected to grow even further.
The central bank of Turkey has recently adopted a policy to help Turkey overcome "hot money" problem, associated with the euro crisis. The objective of the government is a 5% interst rate, which Turkey projects to hit in 2013.
Another one of Turkey problems is competitiveness of turkish businesses, many of which prefer to stay small, due to many imposed regulations. But the main concern is still that current-account deficit and "flighty" capital, will weaken Turkey and make it less resilient for economic troubles.http://www.economist.com/node/21552216

Start-Ups Look to the Crowd

This article talks about the success a start up website is having. Not many would think that simply publishing a business plan online would attract a million dollars in start up capital. All from strangers you have never met investing anything from one hundred to thousands of dollars. An entrepreneur by the name of Eric Migicovsky is seeing this kind of success thanks to a start-up website called kickstarter. They found  more than enough start-up capital for his line of ipod adaptable watches. Will this be positive for the economy? The possibility of economic through encouraging innovation and entrepreneurship. Or will investors be taken advantage and the group of crowd investing organizations fail?


http://www.nytimes.com/2012/04/30/technology/kickstarter-sets-off-financing-rush-for-a-watch-not-yet-made.html?_r=1&ref=global

The New American Manufacturing

http://online.wsj.com/article/SB10001424052702304811304577369771991833552.html?mod=WSJ_PersonalFinance_PF14

This article focuses on the resurgence of American manufacturing. With a weak dollar, stalled labor costs, and growing labor costs in China, America is poised to regain a lot of manufacturing. Particularly prevalent are producers of steel, autos, and chemicals. This transition could have important implications for global markets, as the emerging middle class in BRICS countries begins to demand goods from countries like the U.S.

Another one bites the dust

This article explain the hardships that Romania has been going through regarding the constant governmental failures that have been plaguing the country. The most recent area for concern deals with dubious firms selling under the market price in return for huge bribes. The author notes that one specific example of this comes from sales of shale- gas to Chevron (the American energy giant). Multiple other corruption based scandals similar to this in the past few years have brewed feelings of uncertainty for the European Union. Romania was accepted to the Union 5 years ago, and just last year was lend 5 billion Euros to stimulated it's economy. Scandals like this must cause huge concerns for the EU who's countries are for the most part struggling. Corruption and government failures not only hinder Romania's economy, but the world at large.

http://www.economist.com/blogs/easternapproaches/2012/04/romanian-government-falls

Federal Reserve sees economy improving

http://money.cnn.com/2012/04/25/news/economy/federal-reserve-policy/index.htm?iid=SF_E_River

This article discusses the Fed's predictions on economic recovery for the next year. The Fed notes that although there has been some recent improvement, it does not want to make any policy changes at the current time. The FOMC has revised unemployment rate forecasts to be between 7.8 and 8% by the end of the year. The Fed also believes growth will be between 2.4-2.9%. Although these figures are nowhere close to ideal, they represent consistent, moderate improvement in overall economic performance. The Fed believes this growth can be sustained, and hopefully will take a sharp upturn in the coming years.

Wasting Our Minds

http://www.nytimes.com/2012/04/30/opinion/krugman-wasting-our-minds.html?_r=1

This article by Paul Krugman suggests that conservative policies are harming the ability of America's youth of getting an education, and then getting a job. College is extremely expensive, and republicans like Mitt Romney are in favor of cutting government aid to students. At the same time, Romney encourages young people to "get an education" and start a business, borrowing money from their parents if necessary. Krugman argues that this ignores the fact that a huge portion of Americans don't have the financial means to follow this advice.

In addition, the article addresses the issue of tax cuts for corporations and the wealthy, and how they hurt job creation rather than aiding in it. Even those who do manage to get a decent education are by no means guaranteed to get a job as a result. Because of this, a high percentage of the recently graduated are unemployed. This is bad for the government, as these people will make up a large portion of the tax base in the future. Education is important, but many policy maker's ignore this fact, instead favoring the already wealthy.

U.S. Growth Slows to 2.2%, Report Says

This article discusses the slowdown in growth that occurred after the first quarter. It says that Republicans may try to use this to say that the Obama administration is hindering economic growth. However, the Obama administration is focusing on the positives, such as growth in consumer spending and an increase in residential building. They also say that the private sector is still picking up and the president's policies aim to help this. The growth was less than expected but did not have a large negative effect on the stock markets. Business investment declined but consumer spending increased. Construction related to mining, oil, and gas had the largest decrease in investment, while investment in factories and office buildings increased. It is not believed that another slowdown will occurs seeing as the one last year was caused by external shocks. The article ends with the idea that the growth rate of 2.2 is sustainable but then questions whether or not it is acceptable.

China's rising military and economy

This was a debate on the state of China's modernization, including its rise in the sectors of the military and economics. The debate focuses on whether or not China's influence as a superpower will make it a regional hegemon in the future. To what degree did the Asian model contribute to China's success? Would a battle over Taiwan cause negative economic effects for mainland China? How would the Chinese military and economy interact in this instance?

http://www.economist.com/debate/debates/overview/227

New rivers of gold -- Remittances from unlikely places are helping poor countries in the downturn

http://www.economist.com/node/21553458


The article talks about the remittance corridor between rich and poor countries. In recent years, the value of remittance to poor countries is enormous, and remittances are also growing in spite of the global economic crisis. Workers working abroad and send their wages back to their home countries will help the poor countries to increase investment in the economy. But in the rich world, many countries have closed their borders to protect home-grown workers. America has made its southern frontier harder to cross, which partly explains the slowdown in immigration from Mexico. Emigration has risen, too, since the economy stalled. But perhaps because they know it will be harder to come back, migrants are staying longer. According to the Pew Hispanic Centre, 27% of Mexicans deported from America in 2010 had been in the country for at least a year, up from 6% in 2005. That may help explain why remittances from America fell by only 5% in 2009, whereas in Britain, which has open borders with some of its biggest senders of immigrants, they fell by 27% (exchange rates played a part, too). Stricter border controls keep migrants in as well as out, and the remittances flowing.

This article, published by the Onion, details how a previously unemployed man has been hired, but makes 20K less than when he was laid off in 2009.  While the article is written by the Onion and is not factual in any manner, it does lend an idea of how we can tell if the US economy is improving and will soon move out of the recession.  More employed workers means that more consumer debt that has been accrued can be paid off and consumer confidence can increase.  The paying off of debt will add ballast to the housing sector and potentially catalyze banks to lend money.

http://www.theonion.com/articles/the-recovery-is-here-reports-underemployed-man-mak,27760/

ILO warns global employment situation is 'alarming'

http://www.bbc.co.uk/news/business-17890575

The UN is back-stabbing itself.

The International Labor Organization blames the government spending cut in Europe as the cause for high unemployment. They encouraged these countries to follow expansionary fiscal policy and increase governmetn spending in order to revive the economy.

However, the International Monetary Fund, another UN agency, is notorious for bailing out troubled economies on the condition of financial austerity. In other words, the IMF have always required weakened economy, such as Spain and Greece, to cut the spending and balance the book. This is, ironically, contradicting the recommendation of the ILO.

Now on sale at Costco: Mortgages

http://money.cnn.com/2012/04/26/real_estate/costco-mortgages/index.htm?iid=HP_River

This article on CNN money reveals that Costco is now selling mortgages "in partnership with First Choice Bank, a New Jersey-based community bank, and 10 other lenders." Eventually Costco plans on selling both auto and student loans, expanding its market from retail goods to whatever you need as a consumer. Doing something like this really expands the market Costco has, and the rates that Costco are giving out top that of some banks. Whether or not people will switch to receiving mortgages from non-bank sources is up for debate, but it certainly seems like those who have switched are benefiting.  

Gas Prices in U.S. Still Dwarfed by European Costs

http://www.ibtimes.com/articles/302292/20120221/gas-prices-worldwide-united-states.htm

The price of gasoline has increased by 29 cents since December raising the national average to $3.57 even though oil prices have remain relatively constant globally.  But speculation over the uncertainty in Iran has lowered consumer confidence in Europe and the US. Some economists predict the price per gallon of gas will reach $5 soon, but should we be complaining?  In Singapore, a gallon of gas cost $6 and in Turkey $9.  When comparing Europe to the United States, the main difference between is the value added tax where in the US it is 10% and in Europe, its 50%.

China's Slowdown Hurts Global Manufactures

http://www.nytimes.com/2012/04/28/business/global/chinas-slowdown-hurts-global-manufacturers.html?ref=economy

Companies like Caterpillar, 3M, United Technologies and ABB are among manufactures that have reported a decreased performance in China's last quarter. China's economic growth has slowed to its three year low. Investors are nervous but a lot of chief executives think the economy will grow again when the government eases the monetary policy and inland expansion. The Chinese government has responded that the struggling housing market has influenced consumer and industrial demand. Official forecasts for 2012 are an eight year low growth rate of 7.5%. The slowdown has also been attributed to the weaker demand from companies that rely on exports to Europe due to the debt crisis occurring on the continent. However some companies like Apple have increased their sales due to their iPhones. Even if China's growth picks back up, it is not expected to be at the rate it was the past decade especially in sectors like the automobile industry. 

India's Economic Reforms: Now Finish the Job

Although India has accomplished much in recent years, this article blames current leadership for the inability to reach its true economic potential. President Singh has done very little to promote domestic growth and has not taken advantage of the growing Indian middle class. This has led to stagnated growth in one of the most populated countries in the world. Although the license permit raj has not been used legally in the last 20 years, it continues to play a role in limiting foreign investors and corruptions have remained prevalent. More reforms and enforcement should take place in order to create stability and economic growth. 

http://www.economist.com/blogs/banyan/2012/04/indias-economic-reforms

The poor stay poor by Tami Luhby

by Tami Luhby
The title is somewhat self explanatory, the article covers the inability of the lowest income quintile to progress to higher income. Instead, the gap between the lowest and highest quintile in the United States has increased by approximately $30,000 in the past two decades.

Why China’s Rise Is Great for America

While a raise in wages for China will definitely increase prices, Eric Liu argues that this is actually a good thing for Americans. As wages increase in China, so does the amount of people that can afford American goods, potentially leading to higher wages in America.
http://ideas.time.com/2012/02/22/why-chinas-rise-is-great-for-america/

Stiglitz discusses policy making and politics

http://theeuropean-magazine.com/633-stiglitz-joseph/634-austerity-and-a-new-recession

In this interview, Joseph Stiglitz details a few issues that he has with the way that economic systems are being discussed in the academic and political sphere.

In a statement that relates to our early classroom discussion about measuring economic systems, Stiglitz argues that we should be more interested in the welfare of the majority of citizens in an economic system than the overall GDP numbers. I can't say I disagree with Stiglitz here, but he does fail to provide a counter to GDP. Although equality could be measured by the Gini coefficient, Stiglitz seems to want a merge between the two.

Stiglitz also expresses dismay at academia who still believe in the market after the financial crisis, arguing that they are preventing potential economists with different ideas from entering that market, and also blames these academics for providing oversimplified and distorted economic models to the public and policy makers. In this assertion, I feel as though Stiglitz is being unnecessarily cocky and harsh towards economists who happen to have differing views. In all honesty, I do not think Stiglitz's viewpoint is any more clearly correct than the academics he attacks. Although he sees the economic collapse of the U.S while Scandinavian countries were performing well, he fails to note the economic failure of countries that fell within the European model, including Greece and Spain.

The rather dangerous Monsieur Hollande

http://www.economist.com/node/21553446

This article describes how, following the results of the first-round election in France, Francois Hollande seems likely to be France's next President. While Monsieur Hollande does advocate for the relaxation of the fiscal austerity that is causing economic recession in Europe, he is doing so for the wrong reasons. Hollande, says The Economist, is a traditional European Socialist, following the tax and spend model of governance. Hollande wants to grow the French bureaucracy and state even further, despite the fact that it already has the highest proportion of GDP made up of government spending in Europe.  France is in need of dramatic change to help shift its policies from those of deficit spending and massive social programs, and Hollande is not the candidate who would be willing to make the tough choices.

U.S. anti-cocaine push embitters Peru chocolate makers

USAID introduced the high-yielding but acidic tasting CNN-51 coca, the key ingredient in cocaine, to Peru in 2002, to offer farmers an alternative planting coca.  


CCN-51 cocoa, developed in Ecuador in the 1960s and planted throughout Africa to supply makers of mass-produced chocolate, grows faster and yields more than most native varieties. 


"We want to help Peru become one of the world's leading specialty cocoa producers," said Loren Stoddard, director of alternative development at USAID in Peru.


Despite the program, chocolate makers are encouraging farmers to instead cultivate smaller amounts of rare, native cocoa that fetches higher prices from buyers who value complex and subtle flavors and judge chocolate by the personality of its cocoa.


Building on a culinary and economic boom in Peru, start-up chocolate makers are holding tastings to highlight accents ranging from nutty to floral in chocolate made from cocoa native to distinct microclimates, altitudes and latitudes.  They say Peru will never become a global bulk cocoa supplier like the Ivory Coast, so they instead want it to be the main cocoa source for high-end chocolate makers.  However, this can be a tough sell because Peru and its neighbor Colombia are the world's biggest cocaine producers and when farmers do abandon coca planting they usually choose the highest-yielding alternative crops.  There is a lot of pressure to plant CCN-51 from institutions.


It would be interesting to see how Peru will position themselves in chocolate market and build-up their economy.  
http://www.reuters.com/article/2012/04/25/us-peru-cocoa-idUSBRE83O19I20120425

Russia's Economy Pre- and Post- Recession

http://www.economist.com/blogs/graphicdetail/2011/12/focus-1

They did not escape the impact of the recent global crisis, but yet overall their economy was not performing poorly, and in fact it has been improving significantly: Inflation decreased to 8% from over 20% at the beginning of 2000s, unemployment has been kept in check, and an average annual growth rate of 5% since 2000.

However, most noteworthy was their fiscal surpluses over this period. This, as we learned in class, was due to their heavy reliance on oil exporting. It is noted in the article that if you stripped out revenues from oil, Russia's public finances have been worsening since 2005. Also, they criticized Russia for its high income inequality, unfriendly business environment. I think such economic conditions is quite compatible with what we saw of Putin's policy from the documentary we watched during class.

Overall, just an interesting piece of information about one of our focuses in class.