Chávez Is Optimistic, Says Venezuelan Vice President

In this class Venezuela would certainly be considered a country of interest. We discussed on the first day how Cuba and North Korea are really the only socialist nations left today, but Venezuela was one of the countries mentioned that is still called socialist by some people. Although Venezuela may not considered to be socialist, Hugo Chavez has still built himself quite a reputation. I wonder what would happen if anything did go wrong with his operation.

Has Apple Peaked?

--> Has Apple Peaked?

Despite Apple’s incredible past success, it has hit its peak and declined in profit down to the same level as many of the other technological companies. Samsung, on the other hand, is becoming the new talk in the world of technology. Samsung has increased its spending and is becoming much more successful in creating new, popular technology. Apple has reached a point where they are only updating their current products instead of making new, better products like Samsung has been doing. One thing that Apple has been working on is the iTV. Television has a lot of potential for change and technological advancements. For a company that has mostly mobile, computer, and music devices, an iTV would give a broader range of devices to Apple. However, the cost of the iTV will be high, so it is “limiting their mass market appeal.” Also, since the death of Steve Jobs, new breakthrough products have not yet come to market for Apple. Apple’s price earnings have not been too high for Apple in a while either. Their earnings have been around market average since around 2008. One thing that Apple is thinking of doing is aiming a cheaper iPhone at emerging markets, like China, where people may not be able to afford the iPhone at the price it sells at today. Apple’s new strategies and technological advances will hopefully bring them out from being your average technology company and put them back on top.  

 

http://www.economist.com/news/business/21570751-worlds-most-valuable-firm-may-be-past-its-prime-has-apple-peaked

The Eurocrisis to heat up in 2013?

http://news.yahoo.com/economist-euro-crisis-could-erupt-again-080530769--finance.html

While the United States has been experiencing the worst economic crisis in recent memory, an arguably more serious crisis has been occurring in the European Union. Starting in early 2008, many euro zone countries have been facing major economic setbacks and issues. Four members of the European Union have already required bailouts: Greece, Ireland, Portugal, and Spain. Most of this considerable cost has fallen on Germany, indisputably the strongest economic force in the EU.

Last Friday the European Central Bank expressed it optimism in the rising futures of the the eurozone, but economists are skeptical about the future. They assert that the eurozone could easily plunge right back into the crisis if countries fail to put in place and follow much needed policies. If that doesn't happen, many economists believe that the eurozone, the worlds single largest economy, could collapse.

Japan's Economic Plan May Be Bad News For Everyone Else

In an attempt to revive a "moribund" economy for such a long time, Japanese Central Bank decided to pour money into the economy or in other words, pursuing monetary policies to make it more viral in exporting. However, a concern has been arisen, being voiced up by German Chancellor Angela Merkel about a "Currency War". Logically, pursuing a net-export economy requires the Japanese government to manage to export more by deflating their own currency. However, this is going to impact many countries pursuing the same resolution in the face of European economic crisis. The biggest concern from other countries we can understand here is that they are going to lose more market share which was already not optimistic in the already gloomy economy, letting alone inflation factors which may be source of social upheaval.

Click on this link to read more...

Time to celebrate?

One major indicator for how well the economy is recovering is the change in government bond prices, and by this measure many European countries are well on their way to recovery. Interest rates on Spanish ten-year government bonds fell below 5% for the first time in over a year, 2.5 percentage points lower than July, 2012. Meanwhile, Italy, Greece, and Portugal are experiencing similar drops in their interest rates. Not only this, but long-term bonds seem to be increasing in sales as the risk of taking them on lessens. This is in large part due to institutional investors such as pension fund managers and insurers returning to this market. The bonds still offer favorable yields but now come with less risk.

This new-found security may be owed largely to the European Central Bank's announcement that it will do whatever it takes to save the Euro. The ECB's president believes that a "positive contagion" is sweeping over Europe. We're not out of the woods yet, though. While many view confidence in the bond-markets as a turning point in our recovery, others believe that the majority of this new demand for long-term government bonds comes from domestic banks. This is concerning to some because it could mark a strengthened connection between weak banks and weak governments. There is also concern that this upturn may blunt incentives for policy makers to make the tough decisions needed for economic reform.

http://www.economist.com/news/finance-and-economics/21569727-government-bond-markets-peripheral-countries-are-soaring-time-celebrate

Single-Family Home Sales Decline

According to Reuters, the Commerce Department said that sales declined 7.3% and their statistics were seasonally adjusted. Although the housing market has shown a decline in December, it has had a positive impact on the economy the past year. Even though there was a decline in sales, the median new home price increased from $245,600 in November to $248,900 in December. The rising prices can be an indicator that the economy is improving. Many economist believe that this is the first year since 2005 that the housing market has added positive growth to the economy.

http://www.nytimes.com/2013/01/26/business/economy/single-family-home-sales-decline.html?ref=todayspaper&_r=0

Jobs recovery favors highly educated workers

http://money.cnn.com/2013/01/24/news/economy/college-degree-jobs-recovery/index.html?iid=SF_E_River

It is without any doubt that our economy is on the road to recovery. According to the article, however, the recovery is following the conventional wisdom by favoring those with a college degree and leaving behind those with a high school diploma or less.

People with a high school education or less make up about 36% of all workers over age 25 in the U.S. Their job losses started in 2007 and have yet to stop. About 767,000 fewer workers reported having a job in 2012, than they did in 2010.

Meanwhile, workers with bachelor's degrees have reported 5% employment gains.

Workers with the highest level of education - including master's, doctorates and professional degrees are experiencing the fastest employment gains. About 1.1 million more of them say they had jobs in 2012.

One of the explanations is that highly educated workers have to resolve to take low-wage jobs for which they are overqualified, pushing the "not-as-educated" workers to unemployment. As a matter of fact, there are over 1 million people with bachelor's degrees who are retail sales clerks in the United States. It is sad but it's what's happening right now. People would much rather have a low-wage job than be unemployed these days. So your parents might be right after all. It is very likely that you will be better off with at least a college degree.

The Great Migration

Justin's post below reminded me of this article in the New York Times this morning:

http://www.nytimes.com/2013/01/25/opinion/brooks-the-great-migration.html

Mr. Brooks raises the idea meritocracy, an elite group of people whose progress is based on ability and talent rather than on class privilege or wealth, in his article The Great Migration. Many of you are the "Smart high school students from rural Nebraska, small-town Ohio and urban Newark" who have the opportunity to attend a good school. Do you want to return there after graduation? Mr. Brooks would guess not. The highly educated relocate to a few particular areas. They tend to move to Washington, Boston, San Jose, Raleigh-Durham and San Francisco. There, almost 50 percent of the residents have at least a bachelors degree.

As Justin pointed out below, those with college degrees are more likely to find employment. Well sure, after all, that is why we are all here. But studies like the one conducted by Robert Oprisko of Butler University suggest that half of the jobs in university political science programs go to graduates of the top 11 schools (Harvard, Princeton, Yale). If one has earned a degree from one of the other 100 degree-granting universities, his or her odds are not as good. Even these other 100 schools prefer not to hire the sort of graduates they themselves turn out. They want the cream of the crop.

Mr. Brooks then goes on to discuss the current administrations efforts to close the wealth gap and the problems that have and will arise. I will spare you my opinions on the matter, as I am sure they would not be well received. 

Jobs recovery favors highly educated workers.

If there were any OWU students doubting the value of getting an undergraduate degree, here is your proof. This article discuss the importance of having a college degree and provides some empirical data to support it. The job recovery right now is currently favoring the college educated but leaving behind those with a high school diploma or less. People who have a high school diploma or less are not only able to find fewer jobs but are also leaving the workforce entirely. This article points out just how important higher education is in reference to job recovery. 

Unemployment in Poland Keeps Climbing

http://www.washingtonpost.com/business/polands-unemployment-rate-rises-to-134-percent-in-december-from-129-percent-previous-month/2013/01/24/6dca0470-6618-11e2-889b-f23c246aa446_story.html

If 7.8% unemployment in the U.S. makes Americans cringe, who knows what would happen to them if the were living in Poland right now. The unemployment rate reached 13.4% in December in Poland, up 0.5% from November. Although an increase in unemployment during the winter due to a loss of outdoor jobs is common in Poland, with these kind of numbers they cannot afford to have it climb any higher. To make matters worse, their growth rate is only projected to be 1.5% in 2013. Many huge industries are being hit hard by this decrease in growth, causing more and more layoffs. While this rate of unemployment is extremely disconcerting for Americans to look at, individuals in Poland might be relieved that it has come down from the 20% unemployment that was present a decade ago. If Poland's labor system does not become more flexible in future years, we will likely continue to see unemployment rise towards that number again.

How The Mighty Fall..

Whether you are a novice investor, or a senior analyst at Goldman Sachs, Apple shares have always brought attention. This stock has been a staple in 401k's and IRA's across the nation. In an article titled, "Apple's drop shows price of popularity" Mark Hulbert expresses the reality that many investors have bought the hype. To be fair, Apple has been an outstanding company with products that have developed a cult-like following. However, Apple shares are down 40% since their peak in September now trading at around $443/share. Lack of innovation, leadership and clarity pertaining to the future of this company have left many investors confused. With doubts like this, an already over-emotional market will show its true colors. There has been a massive sell-off, and the market is still scratching it head.

Is this just a great entry point for a cheap Apple stock or is the market tired of AAPL?

http://www.marketwatch.com/story/apples-drop-shows-price-of-popularity-2013-01-25?pagenumber=1

U.S. companies betting big in China

http://money.cnn.com/galleries/2012/news/economy/1204/gallery.us-companies-in-china/index.html

This is an interesting article as it actually surprised me a little bit when I read it. I never actually expected US companies like Apple to be able to do well in a market like that of China. It is worth noting that in 2009 when Apple's launch of the first iPhone in China was rather a disappointment. This is totally understandable as I have seen knockoff iPhones made in China with my own eyes and I have to tell you that they are not bad at all. Obviously they are not as good as the original but for a fraction of the price of a real iPhone, it is still a good deal. But now Apple's sales in the country have more than quadrupled over the last year alone, totaling $12 billion in 2011. China now makes up about 12% of Apple's total revenue and there are no signs that indicate that number is not going to stop rising. This is maybe a result of good strategies from Apple as Apple CEO Tim Cook told investors, "We've been very, very focused on China."

India's infastructure facing a real test

http://www.economist.com/news/finance-and-economics/21568397-indias-love-affair-public-private-partnerships-faces-stern-test-rippp

India in the past 4 years has been trying to increase its infastructure and benefits to the society by placing more emphasis on private sector investment. Although seemingly a wonderful idea the private sector has been over bidding on contracts and investing way to much capital into these projects that will very rarely turn a profit due its public nature and its inability to generate a gain. Between 2007 and 2012 there was a combined total of 225 billion dollars put into the system from the private sector, equivelent to 12 percent of GDP in 2012. Many of these infastructures are losing value however with the pipeline projects in the past year have lost 52 percent of their value, causing many of the people who were tempted to try and invest in these infastructures are skeptical and this economy needs the new infastructure to create the new economy that they need without the help from the public governments constant struggles to get anything going.

Raising the Medicare age could hurt young workers

http://money.cnn.com/2013/01/23/news/economy/medicare-age/index.html?iid=SF_E_LN
 This article discusses how young workers can be negatively impacted due an increase in the age requirement for medicare.  This is because elderly workers are not going to retire and lose their healthcare from their employer without being covered by medicare.  Because there are less people retiring, it is harder for younger workers to obtain entry level positions and it is harder for people mid-career to advance.  It was reported that in 2012, 18.5% of the workforce was 65 or over.  This is up from the 16% of the senior citizens who were working in 2007.  Comparatively, the percentage of workers with the ages 25-54 decreased from 83% to 81.4% in 2012 and 2007.  I think that while this article has good points, it overlooks that there are many elderly workers who continue to work for reasons other than health insurance.  It give the impression that elderly employees should not be working, even though they have just as much of a right to work as young employees if they so choose.  

Waiting for Change: The Battle Over the US Penny

This video explains the meaning of seigniorage. Seigniorage is the difference of the face value of a coin and the production cost of that coin. It takes the US 2.4 cents to mint each penny, giving it a -1.4 seigniorage. The first time it cost more than 1 cent to make a penny was in 2006, and it's been increasing ever since then. In 2011, $60 million was spent on the production of the penny.

The penny hasn't been eliminated yet because penny production relies mostly on a company in Tennessee, Jarden Zinc., that makes all the blank pennies to send to the US mint. If the penny was to be eliminated, Jarden would lose a lot of money. Also, a lot of Americans say they still like the penny. Even though it's mostly used for tossing into fountains, for those of us who count out exact change, we can't imagine a wallet without pennies. Canada's penny will be going out of circulation this February, citing that no one really uses it anymore and that it's not worth the production cost....our currency is very similar to theirs, and I would be surprised if our penny lasts another 5 years. What do you think?

http://business.time.com/2013/01/24/waiting-for-change-the-battle-over-the-u-s-penny/

Dubai's Renaissance!

Dubai is an expansively luxurious city that is trying to continue to grow.  The city is mostly run by the government with the four largest businesses being government run, but it is still considered a capitalist market.  Dubai has come close to failing before by spending too much money on diversifying their city and then being unable to repay their debts.  If the government hits another road bump, they could easily fail again since it is the government that is unable to repay their debts.  

Since the government is so busy planning and building infrastructure, they have lagged behind in creating policy to protect new businesses that are not government run.  This makes it so that new businesses aren't interested in starting there to boost the economy and bring in more revenue because the risks of failure are too great.  

This is a capitalist system, but it has a lot of government intervention.  This could be part of the reason that it has almost failed before.  Dubai has the potential to be an interesting economic system, but it has not had the best start.  

Dubai's Renaissance Article

Made in North Korea?

North Korea's Sesame Street Export Business
As all of you will soon find out, I am extremely interested in the nation of North Korea. Any time I can post anything on here that's tangentially related to the country, I'm going to do it. Prepare yourselves.

Anyhow, this is an article detailing the ways in which toys produced in North Korea (essentially with slave labor) may now be available on the international market. Sesame Street plush toys have come under especially heavy scrutiny after it was discovered that official Sesame Street products bear a close resemblance to those featured in North Korean foreign trade advertisements. The American company responsible for producing Sesame Street plushies outsources most of its production to China, which is not highly unusual. However, recent wage increases in China have made it more profitable for Chinese companies to outsource in turn to North Korea, where workers often do not receive any form of compensation.

This is not the first time a Western company has been involved with subcontracting to North Korea, as the article indicates. Clothing items bearing tags that read "Made in China" may very well have been produced in North Korea and merely tagged for resale in China. Such products often end up here, even though companies selling products in the United States are legally barred from outsourcing production to North Korea. The North Korean Sesame Street lookalikes may also be knockoffs, which would not be surprising either given the country's well known forays into state-sponsored counterfeiting operations.

The Happiest Countries in the World

Happiness Economics is a relatively new field that is still being discovered and studied.  The 2012 Happy Planet Index (HPI) and the 2012 OECD Better Life Index are both used to measure the levels of happiness found in different countries across the globe.  This is a hard factor to measure between individuals, let alone diverse cultures that hold different values; however, researchers have found that using cross-sectional data across nations and time produce patterns in the determinants of happiness.  
The HPI looks at how many long, happy and satisfied lives are produced per unit of environmental output in 151 countries.  This takes into consideration life expectancy, ecological footprint, and life satisfaction.  According to this way of ranking, Costa Rica tops the list.  Nine of the top ten countries in this list are from Latin America and the Caribbean while a majority of the countries at the bottom of the list are from Africa and the Middle East.  Developed nations come in lower on this list due to their tendency to score low in the aspect of an ecological footprint (the United States comes in at 105 on this list).  
The OECD Better Life Index looks at more factors in determining happiness; however, they only rank 36 countries.  Though they take many more variables into consideration, this index focuses on the Life Satisfaction Survey which measures how people feel about the entirety of their lives rather than their happiness at that moment.  On this list, Denmark comes in first with countries from Northern and Central Europe looking to be the happiest and countries in Eastern and Southern Europe fill the bottom of the list.  The United States comes in twelfth in this list.
Though these lists are different in their findings, I think that the study of happiness economics is an interesting one and could hold potential for vast discovery in the future with some refining of the research methods used.  Countries that rank high on these lists are not necessarily the same ones that rank high on other economic charts.  
http://www.gfmag.com/tools/global-database/ne-data/11940-happiest-countries.html#axzz2If1h8WcD

President of E.C.B. is happy Improvement

The President of the European Central Bank, Mario Draghi, is very happy with the European Union's progress. Despite major concerns for 2012, countries have taken many necessary steps to improve the European Union. Mr. Draghi thanked the European leaders because they gave the E.C.B. authority to make the very important decision on regulating euro zone banks. Despite the praise, he does want continued ambition and doesn't want the leaders to be content with their current status: “Relative calm in financial markets should not lead to a lowering of our ambitions to fix the structural flaws in the governance framework of the euro area.” 

Article: http://www.nytimes.com/2013/01/23/business/global/ecb-chief-hails-progress-in-euro-zone.html?ref=economy

Greece's Unemployment Highest in EU

The Greek economy is facing some difficult times. They are currently cutting budgets and facing massive cuts to meet austerity measures. Citizens are not taking these cuts lightly, and there has been revolt within the country. The job market has taken a big hit, with recent unemployment numbers hitting 26.8% - the highest in the European Union. Despite the high unemployment number, many people foresee the figure rising due to more spending cuts this year.

Article: http://www.bbc.co.uk/news/business-20968845

Unlucky in Love? Don't Make Snap Financial Decisions

This article presents the findings of a new study recently published in the Journal of Consumer Research. The study shows that people who experience feelings of social isolation often choose to take risks in their financial decisions. The leader of the study, Rod Duclos, reported that people who are unhappy or feel socially void use investments and the chance of financial success as a way to fill that void. The experiment involved an online virtual game of ball-toss. To recreate the impact of social isolation, the researchers rarely passed the ball to certain participants. Those subjects reported feeling rejected and left out. They were then given the choice between a safe bet of an 80% chance of winning $200 (with a 20% chance of winning nothing) and a 20% chance of winning $800 (with an 80% chance of winning nothing). The players who were rejected the most during the ball toss went for the lucrative bet.

I think it's interesting how our social interactions effect our financial decisions, and most of the time, we don't really realize it. It's also a little unsettling to me that our daily expenses vary depending on our mood for the day and our reaction to social settings, and to avoid that, we must be keenly in-touch with our emotions and the role they play in the science of economics.

http://lifeinc.today.com/_news/2013/01/22/16625505-unlucky-in-love-dont-make-snap-financial-decisions?lite

Offshore drilling

Following up my post on the estimation of the U.S. being energy self-efficient, there was an article commenting on Exxon's big plans for spending $14 billion to drill one of the biggest oil fiels in North Atlantic for Canada. The criticisms focused on the risk Exxon's taking as in 1982, the Ocean Ranger drill rig has been capsized and sank in nearby water, killing all 84 members aboard. They said drilling in icy, remote condition remained very dangerous. However, Exxon denied the criticisms by stating the fact that they had been operating in the Arctic for decades (constructed a similar platform nearby in 1990s) and had learned a lot of how to keep it safe. The Canadian waters were much closer to ports so that ships and other infrastructure could be used in an emergency.
It really posed the question on how Americans think about opening U.S. waters to drilling. Americans are opposite of Canadians and some other countries as "other countries are not letting the grass grow under their feet when it comes to offshore energy development". The policy director for the Institute for Energy Research, an organization that's long called for more domestic drilling explained that "oil naturally leaks into ocean every day anyway, and the benefits of more jobs and more domestic energy far outweigh the risks." He also said that renewable energy couldn't supply adequately. Others disagreed, and said the naturally slow speed of oil leaking could not be compared with the potentially massive blowout and the fact that the industry had to go ever more remote and risky places was proof of the necessity of renewables and conservation.
It's time, again, for the debate of the risks the people have to bear and the profit the companies benefit from. And it's also time to ask why Canadian government allow Exxon to drill oil in North Atlantic ocean.

Source: http://money.cnn.com/2013/01/17/news/economy/exxon-offshore-drilling/index.html?iid=SF_E_River

Why A Labor Shortage Is Good News For The Chinese Economy

Why A Labor Shortage Is Good News For The Chinese Economy

I saw Viny's post on China's prospective labor shortage and seemed like this was an interesting article. Panos Mourdoukotas writes for Forbes that the labor shortage, although bad news for China in the short-run, may be beneficial for the Chinese Economy in the long run. This is because other economies that depended on surplus labor, when faced with labor shortage, innovated labor-reduction methods that led to economic growth. While China has been benefiting from high growth rates, there also seems to be a consensus that their economy will slow down. It will be interesting to see whether the Chinese can successfully adapt to the changing circumstances of their economy.

FDI in Indian Retail Sector

http://www.dailypioneer.com/home/online-channel/360-todays-newspaper/
97727-fdi-will-kill-indian-retail-small-industry.html

India is a mixed economy with some socialist elements (along with a capitalist structure). Recently the

country allowed foreign direct investment in the retail sector. The retail sector, like agriculture has been

restricted to domestic producers. The article shows the criticism received by this decision from all political

quarters. The arguments include the fact that the domestic retail sector and small businesses are not 

equipped to compete with international giants such as Walmart. This would also affect the employment

situation of the Indian Economy. 

The article serves as a great example of the apprehensions of developing nations for barrier-free

global trade. This makes sense from the domestic employment situation though it is highly inefficient.

Also, one can see the difficulty involved in transformation of  a socialist institute to a capitalist institute.

OECD Better Life Index

The OECD has published its Better Life Index that looks at a number of different aspects of all OECD countries like jobs, housing, income, education, and environment. Respondents are asked to rank these categories in terms of their importance to them. For instance, looking at the education category, the top three countries are Sweden, Japan, and Finland. The United States was more in the middle of the pack. For the environment the top three countries were Iceland, the United Kingdom, and Sweden. Again, the United States was found in the middle of the pack. Although these numbers are somewhat arbitrary the index can shed some light on how people from various countries value different things, allowing us to possibly draw some conclusions between answers in various categories and how well that country's economy is preforming.

Chinese Labor Pool Begins to Drain

According to the Chinese National Bureau of Labor Statistics, China's working-age population shrank in 2012.  This is the first year this has occurred and some analysts believe this is a major worry for a nation that has relied very strongly on its immense manufacturing capabilities to spur its growth over the last decade.  According to the Bureau, China's working-age population was 937.27 million people in 2012 a drop of 3.45 million from 2011.  This drop comes on the back of positive fourth quarter growth in China, as the country ended seven consecutive quarters of slowing growth by beating expectations and growing at 7.9% for the year.  The decline in growth is especially worrying as consensus estimates believed the decrease in the population of working aged people would not start until the middle of the decade and suggests the continued decline of this demographic will increase at a faster rate in the future.  It will be interesting to see the effect this will have on manufacturing in China and if the country can sustain their high level of growth in the future.

http://www.cnbc.com/id/100392731