Source: http://www.economist.com/news/finance-and-economics/21571883-financial-education-has-had-disappointing-results-past-teacher-leave-them?fsrc=scn/fb/wl/pe/teachleavethemkidsalone
A survey by the Cleveland Fed and a few other sources indicate that Americans have extremely low financial literacy. One survey found that Americans who have taken basic courses in finance such as personal finance or money management were no more financially literate than they were prior to taking the courses. A student survey also found that those who had not taken a finance course are more likely to pay their full credit by the end of the month and avoid the fees. Many Americans are simply uninterested as free online courses are offered to struggling credit card borrowers, yet only .4% accessed the website and .03% completed the course. The Cleveland Fed researchers concluded that there should be additions and improvements to financial education in the United States similar to how the Brits shifted their curriculum. However, many questions are raised from such conclusion.
Who would pay for these educational programs?
Will consumers even budge with the courses (since many Americans would rather seek financial advice than making their own)?
How will we change financial education? Perhaps strengthening mathematics standards at least?
How will we make financial education work? (as the article discussed the lack of effectiveness)
Saturday, February 16, 2013
Airline Mergers Mean More Lost Luggage and Flight Delays
It is expected that US Airways and American Airlines are going to merge in the near future, and this article highlights the challenges that are to be expected based on past airline merges. The article states that merging airlines is like merging two different cultures. This can be difficult because one culture is used to going about things one way, and the other culture has their own, different routine. An example of this is integrating the computer systems the airlines use to book and arrange flights. "This can take years to straighten out,"which probably means there are going to be some glitches resulting in lost luggage and decreasing customer satisfaction. In addition, employees are nervous about their job security with a big merge on the rise, which will effect their overall happiness with the new and changing management. If the pilots and staff are unhappy, there will be more of them calling in sick, delaying or canceling flights, according to two past significant airline merges. In addition, fares are likely to increase due to reduced competition.
http://money.cnn.com/2013/02/13/news/companies/airline-merger-problems/index.html?iid=SF_E_River
http://money.cnn.com/2013/02/13/news/companies/airline-merger-problems/index.html?iid=SF_E_River
The Stockholm Syndrome
Here are the funny videos on Sweden that I was unable so show in class. Hope you enjoy it
Friday, February 15, 2013
Consumer sentiment improves in February
The Thomson Reuters/ University of Michigan's preliminary reading on the overall index of consumer sentiment rose to 76.3 from 73.8 in January. The barometer of current economic conditions rose to 88 from 85, while the gauge of consumer expectations rose to 68.7 from 66.6. Households with incomes below $75000 were among the most optimistic. There were different views about this data. Overall, they think the reading was a nice surprise. Given the increase in gas prices and payroll taxes, the increase in consumer confidence and expectation reflects the fact that consumers were getting over their smaller paychecks and housing prices and the stock market have been recovering. However, Cary Leahey, senior advisor of Decision Economics, New York, commented that families' perceptions of current condition were not really problem. The real problem was expectations remained low at 68.7, 10 points below the recent highs in October, 2012. Households were obviously concerned about the impact of the upcoming budget cuts and the recent increases in
tax rates (the termination of the 2 percent payroll tax
credit in December). To me, the small increase reading, even though it looks optimistic, didn't confirm anything yet. To be more certain, the economy needs to observe the change in the reading for a little bit more.
Source: http://news.yahoo.com/instant-view-consumer-sentiment-improves-february-150501716--business.html
Source: http://news.yahoo.com/instant-view-consumer-sentiment-improves-february-150501716--business.html
Thursday, February 14, 2013
On minimum wage, US lags many rivals
http://money.cnn.com/2013/02/13/news/economy/minimum-wage-countries/index.html?iid=SF_E_River
President Obama wants to increase the minimum wage to $9 an hour, up from the $7.25 that it is at now. However, there are nine other industrialized nations that are already above this. Australian workers get $16.91 an hour while the French get $12.68 an hour. Also, not every country has minimum wage, such as Italy and Germany. Additionally, other countries are paid a minimum wage per month, rather than per hour. Workers in the Shenzhen province of China are the highest paid in the nation at $240.49 a month. I think this article relates to what we talked about in class about how the values of the country influence the economic structure.
President Obama wants to increase the minimum wage to $9 an hour, up from the $7.25 that it is at now. However, there are nine other industrialized nations that are already above this. Australian workers get $16.91 an hour while the French get $12.68 an hour. Also, not every country has minimum wage, such as Italy and Germany. Additionally, other countries are paid a minimum wage per month, rather than per hour. Workers in the Shenzhen province of China are the highest paid in the nation at $240.49 a month. I think this article relates to what we talked about in class about how the values of the country influence the economic structure.
French Economic Policy
This article from the Economist reviews the confusing economic policy of France's new president François Hollande. Hollande is a socialist and not surprisingly his first few actions as president were to lower pension ages, increase family benefits, and even capped petrol prices. But Hollande is now faced with a dire situation. France's economic growth is near zero, its public spending as a share of GDP is 56%, and the high cost of french workers is making many french firms uncompetitive. It seems Hollande has recongnized the situation and the need for spending reform but the socialist party in France is opposed to many of the necessary reforms. The drawback of the French model is in full view. While good for reducing the impact of recessions the model also retards growth.
http://www.economist.com/news/europe/21571900-elected-left-frances-president-seems-be-veering-towards-centre-which-way-mr
Personal Income Tax Rates across the world
I came across a nice resource if anyone is doing research or writing a paper on the personal income tax rates across different countries. Countries that belong to the nordic economic system, which we are studying in the next few days, rank among countries with the highest rates.
Former Blackberry C.E.O. Sells All Shares
http://bits.blogs.nytimes.com/2013/02/14/former-blackberry-c-e-o-sold-all-company-shares/?ref=business
Jim Balsillie, the former co-chief-executive officer of Blackberry, has been reported to have sold all of his shares of the company as of February 14. This is a bold move for Balsillie, considering the fact that Blackberry is set to release its new line of phones shortly and he will not benefit at all if they happen to do well. Blackberry has been criticized for not stepping up to the competition from other smart phones. Their new line of phones is not thought to increase the company's declining market share. Blackberry used to dominate the smartphone industry but I don't see the company lasting much longer, especially if former C.E.O.s are not even willing to own any shares in the company.
Jim Balsillie, the former co-chief-executive officer of Blackberry, has been reported to have sold all of his shares of the company as of February 14. This is a bold move for Balsillie, considering the fact that Blackberry is set to release its new line of phones shortly and he will not benefit at all if they happen to do well. Blackberry has been criticized for not stepping up to the competition from other smart phones. Their new line of phones is not thought to increase the company's declining market share. Blackberry used to dominate the smartphone industry but I don't see the company lasting much longer, especially if former C.E.O.s are not even willing to own any shares in the company.
Wednesday, February 13, 2013
Recovery Sign: More People Are Quitting Their Jobs
This article offered some encouraging facts about the current state of the economy. The writer believes consumer confidence and job growth are on the rebound based on some positive data that was released this week. In the month of December, according to government data, the fewest lay-offs occurred since the government began tracking the data in 2000. This shows that firms are retaining a larger number of their workers and are clearly not trying to shrink their businesses, a positive sign as we look to move out of the recession. Also, the most people quit their jobs in the month of December since June of 2008, indicating people are more confident about their chances of obtaining a better job and their economic status in general as people are unlikely to quit a job they have if they are concerned about these issues. The article goes on to discuss how if a deal to address our debt issues can be reached we could see major acceleration in economic growth. I agree that the economy is suffering from major fiscal drag, as businesses remain cautious in their actions as they wait to see if a deal can be reached and what that deal would mean for their respective operations. Therefore, I am optimistic about the current data that has been released but I believe we will not see major economic improvements without a fiscal deal.
http://www.cnbc.com/id/100457099
http://www.cnbc.com/id/100457099
Sunday, February 10, 2013
Bond Markets Soar in European Countries
Government bonds in European countries are lower than they have been in a while and the rate on some countries' debts are lower as well. Furthermore, some banks are even beginning to pay back the European Central Bank. With the rising demand for bonds and the lowering debt rates, the European economy appears to be slowly but surely mending. The incentive to saving the Euro by doing anything possible is part of the reason why the demand for bonds has gone up. Also, in order to keep the interest rates lower, investors are still selling bonds even though they are getting cheaper. The European economy and the Euro might actually be on the mend after all.
China and Equality
http://www.economist.com/news/china/21571460-chinas-government-unveils-sprawling-plan-fight-inequality-house-divided
Despite being a "communist nation", supposed dedicated to complete equality, there is a lot of income inequality in modern day China. This is not a new problem for China, as they have been struggling with really serious consequences that stem from income inequality recently. In order to combat this, China recently instituted a sweeping plan of reforms.
The plan targets typical Chinese state spending, with focuses on Education, Social Security, Public Housing, and Health Care. This plan is relatively late in addressing this issue, but economists say that late is better then never in this case. Lastly, there are serious doubts about the actual implementation of this plan, as many of the main policy makers would be personally negatively affected by the changes.
Despite being a "communist nation", supposed dedicated to complete equality, there is a lot of income inequality in modern day China. This is not a new problem for China, as they have been struggling with really serious consequences that stem from income inequality recently. In order to combat this, China recently instituted a sweeping plan of reforms.
The plan targets typical Chinese state spending, with focuses on Education, Social Security, Public Housing, and Health Care. This plan is relatively late in addressing this issue, but economists say that late is better then never in this case. Lastly, there are serious doubts about the actual implementation of this plan, as many of the main policy makers would be personally negatively affected by the changes.
Big financial impact from the weekend blizzard
http://money.cnn.com/2013/02/10/news/snowstorm-economic-impact/index.html?iid=SF_E_LN
Many businesses are still suffering from the economic effects
of October’s storm- Sandy. This weekends blizzard which affected many areas of
the Northeast made this situation even worse. More than 5000 flights were
cancelled, nearly 700,000 people were out of power, rail transportation wasn’t working
and in some states the US Postal service did not deliver. Snowstorms affect the
flow of supplies, communication, they kill off livestock, hourly workers lose wages
because everything closes down and a lot of money has to be spent on snow
removal and reparation of damages. In 2010, more than $2 billion were just in
insurance-related damages. According to the Labor-Department, workers are more likely
to skip work because of bad weather in winter than in the summer. This is also
because the storms in winter usually affect broader geographic areas than the
disasters in the summer.
HP Strides in Standards For Outsourced LAbor
HP has demanded more stringent regulations for its factories responsible for manufacturing its products in China. Outsourced labor has always been criticized for lack of regulations and "under-the-table" dealings for underage workers. However, there has been a movement among leading producers in the tech industry such as Apple and HP to require better standards overseas. Underage workers are often recruited by agencies on the basis of internships and temporary assignments. However, it is common practice that documents are forged and not permitted to leave on their own accord. Now, HP is demanding that suppliers must allow students to leave whenever they want, student employment will be limited, and all Chinese labor regulations will be followed. The real question is why this wasn't the case before. But for what it's worth, I think it is important for Apple and HP to be paving the way for other companies and industries as well. With these new regulations and future regulations, will more companies consider production domestically?
http://money.cnn.com/2013/02/08/technology/hp-china-student-labor/index.html?iid=SF_E_River
http://money.cnn.com/2013/02/08/technology/hp-china-student-labor/index.html?iid=SF_E_River
North Korea: Rumblings from Below
Article found here
The increasing flow of information into North Korea is beginning to bring about massive changes in the nation's economic structure. As people become more aware of the world outside North Korea, demand for contraband products (such as DVDs, mobile phones, and computer equipment) from China has skyrocketed. It's interesting to see how North Korea's burgeoning black market is affecting not only economic development but gender politics as well. Women who hawk their wares in the underground economy are increasingly becoming the main sources of income for their families, while more and more men are staying at home or trapped slaving away for meager wages in lowly government jobs.
Despite the nation's spiraling inflation, some North Koreans living in the showcase capital city of Pyongyang have managed to become extremely wealthy (by North Korean standards, anyway) by taking advantage of the growing black market. With "luxury" products like apples and bananas costing as much as a month's worth of official wages, it's easy to see why more and more North Koreans are willing to risk their lives smuggling contraband into the country.
It will be interesting to see how the regime responds to the emergence of a "nouveaux riche" class of North Koreans who have made their money almost entirely illegally. For now, it looks like most authorities are turning a blind eye to black market traders as long as they receive a cut of the profits, but I don't think this can continue on for much longer before the regime starts to feel threatened. Perhaps North Korea, like China, will implement a crackdown on these "rogue capitalists."
The increasing flow of information into North Korea is beginning to bring about massive changes in the nation's economic structure. As people become more aware of the world outside North Korea, demand for contraband products (such as DVDs, mobile phones, and computer equipment) from China has skyrocketed. It's interesting to see how North Korea's burgeoning black market is affecting not only economic development but gender politics as well. Women who hawk their wares in the underground economy are increasingly becoming the main sources of income for their families, while more and more men are staying at home or trapped slaving away for meager wages in lowly government jobs.
Despite the nation's spiraling inflation, some North Koreans living in the showcase capital city of Pyongyang have managed to become extremely wealthy (by North Korean standards, anyway) by taking advantage of the growing black market. With "luxury" products like apples and bananas costing as much as a month's worth of official wages, it's easy to see why more and more North Koreans are willing to risk their lives smuggling contraband into the country.
It will be interesting to see how the regime responds to the emergence of a "nouveaux riche" class of North Koreans who have made their money almost entirely illegally. For now, it looks like most authorities are turning a blind eye to black market traders as long as they receive a cut of the profits, but I don't think this can continue on for much longer before the regime starts to feel threatened. Perhaps North Korea, like China, will implement a crackdown on these "rogue capitalists."
Obamacare putting people in jeopardy?
http://www.economist.com/news/business/21570756-will-obamacare-spur-firms-drop-workers-health-cover-insured-and-unsure
Many of the provisions of Obamacare start to be initiated in 2014 meaning that a lot of companies are looking to get rid of many necessary insurance based incentives. As many as 30 percent of companies are looking to get rid of healthcare provisions due to the fact alot of these incentives will be covered by the new obamacare laws, making it more profitable for companies to take the subsidies that these laws will provide. This will push america more towards a socialist nation with the universal healthcare, but we will still be a much more liberal nation than most of the nations in the world
Many of the provisions of Obamacare start to be initiated in 2014 meaning that a lot of companies are looking to get rid of many necessary insurance based incentives. As many as 30 percent of companies are looking to get rid of healthcare provisions due to the fact alot of these incentives will be covered by the new obamacare laws, making it more profitable for companies to take the subsidies that these laws will provide. This will push america more towards a socialist nation with the universal healthcare, but we will still be a much more liberal nation than most of the nations in the world
Muang Thai Life anxious to expand abroad
This article discusses the plan of Muang Thai Life Assurance Plc to expand into the Asean economic community.
The Asean economic community is an attempt to integrate the economic region of Southeast Asia. Although the goal of the community is for integration in 2015, firms such as Muang Thai Life Assurance Plc, a rapidly growing company, is studying the opportunities of the near future to expand particularly into nearby ASEAN nations, Laos, Cambodia, and Vietnam. The region will most likely benefit from the integrated economy as the cooperation involves development in multiple areas such as infrastructure and human capital, which the region is lacking. Some expected results would be free movement of goods, services, investment, skilled labor, and free flow of capital.
http://www.bangkokpost.com/business/economics/335298/muang-thai-life-anxious-to-expand-abroad
The Asean economic community is an attempt to integrate the economic region of Southeast Asia. Although the goal of the community is for integration in 2015, firms such as Muang Thai Life Assurance Plc, a rapidly growing company, is studying the opportunities of the near future to expand particularly into nearby ASEAN nations, Laos, Cambodia, and Vietnam. The region will most likely benefit from the integrated economy as the cooperation involves development in multiple areas such as infrastructure and human capital, which the region is lacking. Some expected results would be free movement of goods, services, investment, skilled labor, and free flow of capital.
http://www.bangkokpost.com/business/economics/335298/muang-thai-life-anxious-to-expand-abroad
Azerbaijan, Post-Soviet and Possibly the Next Dubai
This article focuses on Ibrahim Ibrahimov and his plans to
build a large complex of islands, with many luxury attractions and dwellings
(think Dubai but in the Caspian sea). MORE importantly, it talks of the
troubles facing a post-soviet Azerbaijan, it’s economic struggles, and how far
it has come since becoming truly independent.
After the dissolution of the USSR in the early 90’s,
Azerbaijan gained it’s independence in 1991. Since then, they have experienced
tremendous growth and greater economic freedom from the transition of a command
to a market economy. Compared to other ex-soviet countries in the area,
Azerbaijan is particularly well-off considering it sits atop large oil
reserves. Primarily an oil-based economy, Azerbaijan is looking to diversify.
And with the help of some of its most wealthy and ambitious citizens this is a
possibility.
India's Private Sector Facing a Challenge
http://www.economist.com/news/finance-and-economics/21568397-indias-love-affair-public-private-partnerships-faces-stern-test-rippp
When it came to creating new infrastructure in India, the private sector took the lead over the public sector. But the recent trends show otherwise.
Nothing illustrates this better than the troubles faced by several trophy public-private partnerships in India. These partnerships are mainly deals ‘for private firms to build or run public infrastructure that fall short of outright privatization.’
Many private sector run infrastructure projects are losing money and many government run projects are blooming. An example is that of the fancy airport in the capital city of India, Delhi. The airport is facing huge losses and the metro in the same city, that is government run, is blooming. The saddest part is that in the past five years, there has been massive investment by the private sector in the infrastructure business and most of it is going down the hill.
The problem lies in the gap between the expectations of the investors and the unpredictability of the outcomes of these ventures.
Barnes and Nobel shutting down some stores
A couple of years ago the famous bookstore, Borders ran out
business. Barnes and Noble took the lead when it came to bookstores providing a
good variety of books to their customers across the nation.
Sadly, Barnes and Noble is been talked about as being the
next one in line in running out of business. This article explains that the
Nook sales have been weaker than before and due to this reason, Barnes and
Noble is shutting down some of it stores including their high profile outlet in
DC’s Union Station.
The author highlights in the article, that closing stores is
a good way to save money and it is largely due to the fact that all customers
are turning to Amazon to buy books. This is due to two reasons. First being,
they can buy used books for half the price and the second that they don’t have
to go anywhere physically. Just by sitting on their couches, sipping their tea
they can order books online, that too for half the price.
The only sector in which Barnes and Noble is making money is
through their college bookstores business.
http://www.thedailybeast.com/articles/2013/02/06/why-is-barnes-and-noble-getting-out-of-the-bookstore-business.html
I'd Rather Hire a Foreigner
I found this article to be very interesting. The article talks about Ola Ayeni and his start up business. He believes that hiring foreign workers will result in a better choice and provide more results than hiring an american worker because of work ethic. Ayeni says, "instead of settling for second-tier American candidates…Ayeni would prefer better access to Class-A foreigners." He believes that foreigners have a better and stronger work ethic and will strive to get the job done, opposite their american co-workers. What do you guys think?
http://money.cnn.com/2013/02/07/smallbusiness/hire-foreigner/index.html
Are Wages About to Start Rising?
This article discusses the trend in rising wages in the computer technology, accounting, and engineering fields. Weber comments on how Wages rose 3.4% from 2011 to 2012 for full-time workers in computer and mathematical occupations, 5.1% for accountants and auditors, 7.5% for electrical engineers, and 4.4% for mechanical engineers. Weber further discusses how we need to start looking at increases in wages to determine what fields of work will have the best return.
http://blogs.wsj.com/atwork/2013/02/08/are-wages-about-to-start-rising/
GLOBAL ECONOMY-G20 to skirt potholes and follow growth signposts
http://www.reuters.com/article/2013/02/10/economy-global-weekahead-idUSL4N0B90RP20130210
It is good to see that the global economy is on an upward rise, even it may be a slow growth. A more interesting part of the article is the last part, which cites currency wars as a primary reason for concern among many countries. However, with the G20 summit, it seems that these countries are willing to work together for the betterment of all countries and that they have an incentive to continue to do so.
It is also interesting that China is still continuing its high growth. Although it is a capitalist economy, it still retains some measure of central-planning. However, for whatever reason, their model has been working extremely well. Most likely China is still not producing at the Production Possibility Frontier and it seems likely that their growth will stave off just like it had for all other countries, but the consistent high growth they have been able to accomplish cannot be underestimated.
It is good to see that the global economy is on an upward rise, even it may be a slow growth. A more interesting part of the article is the last part, which cites currency wars as a primary reason for concern among many countries. However, with the G20 summit, it seems that these countries are willing to work together for the betterment of all countries and that they have an incentive to continue to do so.
It is also interesting that China is still continuing its high growth. Although it is a capitalist economy, it still retains some measure of central-planning. However, for whatever reason, their model has been working extremely well. Most likely China is still not producing at the Production Possibility Frontier and it seems likely that their growth will stave off just like it had for all other countries, but the consistent high growth they have been able to accomplish cannot be underestimated.
Columbia B-school's Glenn Hubbard: Is an MBA worth it?
http://management.fortune.cnn.com/2013/02/08/glenn-hubbard-columbia/?iid=HP_LN
In this article, Hubbard discusses the reality of getting an MBA today. Last year Columbia's MBA program decreased in applications by 19%. Hubbard explains this because of the high opportunity cost of getting an MBA. He also says that it is only worth going to business school if you are going to the top four or five business schools. The problem with that is the high tuition of those schools. While Harvard gives a comparatively large amount of financial aid, Columbia and other schools do not. Hubbard also said that Columbia is trying to make more teaching more informal in order to be compatible with learning today. Additionally, they want to make tools classes (stats, microeconomics, etc.) online in order to give every student the same preparation and to make the time with the professor more worthwhile. I thought it was interesting that he would only recommend the top 4-5 schools even though those are more expensive. This really makes students decide how important the name of a school is in comparison to the amount of money they are willing to spend on tuition.
In this article, Hubbard discusses the reality of getting an MBA today. Last year Columbia's MBA program decreased in applications by 19%. Hubbard explains this because of the high opportunity cost of getting an MBA. He also says that it is only worth going to business school if you are going to the top four or five business schools. The problem with that is the high tuition of those schools. While Harvard gives a comparatively large amount of financial aid, Columbia and other schools do not. Hubbard also said that Columbia is trying to make more teaching more informal in order to be compatible with learning today. Additionally, they want to make tools classes (stats, microeconomics, etc.) online in order to give every student the same preparation and to make the time with the professor more worthwhile. I thought it was interesting that he would only recommend the top 4-5 schools even though those are more expensive. This really makes students decide how important the name of a school is in comparison to the amount of money they are willing to spend on tuition.
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