Corporate Sponsors Faulted for Sochi Participation

Multi-National Corporations (MNCs) are having a problem with protests because of their sponsorship of the Olympics in Sochi.   Coke, McDonald's and other corporations are not boycotting Sochi because they know it will bring in lots of profits.  Russia's anti-gay laws have created a lot of protests and backlash.
Some Americans would like MNCs to highlight this homophobic problem because it could make a difference and shine a light on the problem but they have decided not to.  What is surprising is that Coca-Cola, the oldest Olympic sponsor usually has a good record on gay rights in the U.S.  Yet they are going against their values for the Olympics.
The Olympics gets thousands of international viewers that can bring in profits yet this human rights debate has put 10 major corporate sponsors in an awkward position.  This has changed the focus of the games, and has reflected poorly on the companies willing to participate.  But what are the incentives?


http://america.aljazeera.com/articles/2014/1/31/olympics-sponsorsfaultedforgoingtosochi.html

Proposed overhaul at the EU

It has been a long time coming, but the overhaul is finally here. Like the Volcker Rule in the United States, the European Union released proposals today that would limit the likelihood that big banks will again endanger the financial system with the kind of behavior that brought on the financial crisis. This is just the first step though. Some, like the Finnish, were expecting a more drastic change. But ultimately have hopes of creating a universal bank for the EU to use. This hopeful article seems like a reassuring step in the right direction for large economic institutions. 


http://dealbook.nytimes.com/2014/01/29/e-u-bank-proposal-arrives-but-late-to-the-party/?_php=true&_type=blogs&ribbon-ad-idx=11&rref=business/international&module=ArrowsNav&contentCollection=International%20Business&action=keypress&region=FixedLeft&pgtype=article&_r=0

Fed Again Cuts Monthly Bond Purchases

On Wednesday, the Fed announced that it would cut another $10 billion in monthly bond purchases, referencing "growing underlying strength in the broader economy" for its decision. It is also "likely"that there will be another pullback at the next meeting in March. However, there will be no change in the benchmark short-term interest rate which will remain near zero.

This announcement comes amidst the recent economic turmoil in emerging markets. Turkey and South Africa's currencies declined sharply in value due to fear of insufficient monetary protection against a foreign investment pullback. As a result of this, the US stock market readjusted downward, with the Dow falling 1%. On the other hand, the Fed's reduced bond purchases is contributing to the global shift in investments as people prepare to take advantage of greater returns from higher interest rates in the US.

Income Inequality in the U.S. Means Princes Don't Go After Cinderellas

A new working paper conducted by the National Bureau of Economic Research argues that Americans are more likely to marry someone who is economically similar as they are. This tendency is called, “positive assortative mating.” According to census data from 1960 to 2005, it also appears that the odds of people who have the same education level increased by 12 points.

Interestingly, the authors used the Gini coefficient to compare to their marriage model. From 1960 to 2005, “the Gini coefficient in the United States increased to 0.43 from 0.34, representing the dropping share of income controlled by poor families.” Ultimately, if people married randomly, without considering education or economic levels of each other, the Gini coefficient would have been “significantly lower.” It appears that who we marry does actually impact society at large. 

http://economix.blogs.nytimes.com/2014/01/27/income-inequality-in-the-u-s-means-princes-dont-go-after-cinderellas/?_php=true&_type=blogs&ref=economy&_r=0

Deflation in the Euro Zone

Deflation in the Euro ZoneThis article discusses the possibility of prices lowering in the Euro Zone and addresses the concerns of the deflation. Although prices are still on the rise, the possibility of that ending soon is high. Some of the effects of deflation are already in action and some are not. The author explains the effects and how they are relevant to citizens today. The author also concludes that "The only institution that can prevent disinflation from turning into deflation is the European Central Bank. But that institution is staying on the sidelines, observing and doing nothing. " This reflection poses the question of when the European Central Bank will take action and discontinue simply observing.

Climate Change Changing Economies

Climate Change Changing Economies

This article takes a look at the externalities of climate change. We are all feeling the effects of the "polar vortex". The short-term impacts include a decrease in American output. The impacts in the long-run are often harder to formulate. The article looked specifically at nations that have higher average temperatures, such as nations in the Caribbean, and the implications they face when temperatures raise an average on one degree Celsius. While the correlation between average temperature and GDP may not be entirely valid, there is a relationship, and likely a third factor contributing to these changes. The article suggested diseases such as malaria being more predominant in the countries that have higher average temperatures as well as lower GDPs. I am interested in the possible link between types of economic systems that are present in countries with higher average temperatures and the relation, if any, to GDP.

Paranoia of the Plutocrats - Paul Krugman

In short, Paul Krugman expressed his annoyance about Plutocrats whining. 

As mentioned by many articles recently, the raising of income inequality is becoming a popular topic, and it seems to be one of the priorities of Obama's term of office. Krugman wrote income inequality leaded to "stagnant wages despite rising productivity, rising debt that makes us more vulnerable to financial crisis. It also has big social and human costs. There is, for example, strong evidence that high inequality leads to worse health and higher mortality" (the reference to inequality is not accurate to the topic because it is not income inequality but just inequality - which includes racial component). However an interesting reaction he pointed out is this creates a whiny class of rich people. 

It is true that under Obama's term, rich people are getting less and that they would have gotten more if Romney had won. Thus they criticized, complained about the policies and the regulations that the government was enforcing upon their benefits. They are whiny because  a pinch of their wealth was taken away from them and they weren't used to it. And they excused themselves by saying they were creating jobs, making the economy better and they deserve more (while, according to Krugman, what they really did was to take advantages of weak regulations rather than adding real value to the economy - interesting point of view).

In the end, Krugman supported what Obama was doing, in short, saying screw the plutocrat's complaints.

I quite agree with Krugman. I think great businessmen don't get work up over something like regulations, they find the real opportunity/future to invest in (like Warren Buffet). Comparing to other economic system, the U.S.'s system seems to be the most effectively lenient system already, so if they ever complained, it is because they have been spoiled for so long. And it also seems to me that the rich are getting more and more selfish since objectively their wealth only grow a little slower than they used to be. After WW II, U.S. also fell into depression but the rich were fine with increasing tax then. Now, even though they are richer, they complain. 

http://www.nytimes.com/2014/01/27/opinion/krugman-paranoia-of-the-plutocrats.html?ref=opinion

Restoring the Pacific Through International Trade Laws

This is an interesting article talking about protecting the Pacific Ocean. It talks about the importance of this resource to trade and businesses around the world. It states a major issue of over fishing in the Pacific and gives a couple facts on it. It is interesting how they are taking the idea of the importance for the Pacific with trade to attack this situation. The article raises some interesting points and is a pretty good read.

Economic Shifts in U.S. and China Batter Markets

According to the article, a major reason for the growth of developing countries is the the rise of China as an economic super power and the Federal Reserve stimulating the economy. However with China's economy faltering a little bit and and the Fed has caused a widespread ripple effect resulting in investors fleeing even far off places like Buenos Aires and Istanbul with the most affected being the countries that predominantly depended on China for raw materials and are experiencing political instability.

The Fed's decision about not supporting the bond buying stimulus programs that were keeping interest rates low. So the countries that were depending on these low interest rates might possibly see an increase in the price of borrowing and cause further damage to their economies. 

http://dealbook.nytimes.com/2014/01/24/a-worldwide-market-slump-gains-traction/?_php=true&_type=blogs&ref=economy&_r=0

Ukraine crisis: Opposition rejects offer of PM post

http://www.bbc.co.uk/news/world-europe-25900267

Ukrainian leadership refused to enter into a trade agreement with the EU in December of last year, which spurred protests in the capital and in other cities around the country. The decision behind not joining EU was because of the significant pressure from Russia. This was initially an economic issue because the agreement would have allowed Ukraine to eliminate trade barriers with EU countries. Russia in order to influence the deal warned Ukrainian government of canceling contracts and agreements set up by two countries. While, this would have been harmful to Ukraine's initial growth and unemployment, in a long run, it would have been beneficial as Ukraine would have been able to trade goods and services on the open market and become independent from Russia.

Furthermore this standoff between the government and opposition revealed corruption and significant abuse of power at the top of the governing body. As the protests progressed it has become a fight for more transparency of Ukrainian government and freedom from politico-criminal nexus that occupied the government. The West has been discussing an option of freezing accounts of politicians and oligarchs, who were proven to be involved in corrupt activities. Neither the EU or the US have done so yet, which points to a strong lobbying influence.

Ukraine is facing a very difficult challenge. Young generation of educated and democratically-minded people made it clear that they want the future full of economic opportunities, and free and fair government.

In Housing, Big Is Back (Not Counting the Extras)

http://www.nytimes.com/2014/01/26/business/in-housing-big-is-back-not-counting-the-extras.html?ref=business&_r=0

There is now a rebound in the housing market as more and more people start to buy luxury homes.  After the recession there was a stall in house sales, but wealthier people are now beginning to buy more expensive and more lavish houses.  However, the lower end of the market, the cheaper houses, are still stagnant.  Home loans have also increased as wealthier buyers are selling their homes and receiving loans to buy larger ones with added features such as an additional kitchen for food preparation and a media room.  In addition, potential buyers are also opting to build their own houses.  There is now high demand for expensive homes but low supply, so many buyers are finding building their own house less expensive.  They also have more options to customize their house for their needs.

Sporting Events Economic Impact on cities

http://www.washingtontimes.com/news/2014/jan/26/2014-super-bowl-economic-impact-new-york-area-coul/?page=2

Experts are arguing that the current energy trade laws in the U.S. are hindering the domestic energy boom. America's Energy Advantage, a group supporting protectionist policies, likes the idea of restricting the exportation of liquid natural gas. But some say that they are misguided in their attempts to control their market share. The article goes on and explains that without those exports, many industries suffer because the demand for production goods like steel decreases. Policy makers should be warned that if these protectionist policies remain,we run the risk of missing the opportunity to improve the lives of U.S. citizens through economic growth in the energy industries.

http://www.exxonmobilperspectives.com/2014/01/02/a-clarion-call-for-free-trade-and-a-warning-if-we-fail-to-heed-it/

Starbucks Just Sold $1.4 Billion in Gift Cards. What Did It Do With That Cash?

According to Bloomberg Businessweek, coffee giant Starbucks sold $1.4 billion last quarter in gift cards and people putting money on their Starbucks app. The increase undoubtedly resulted from many people buying gift cards for family and friends during the holiday season. The article says that Starbucks has already began to invest some of these earnings into high-grade corporate bonds, Treasury notes, and certificates of deposit that mature in three to 12 months. The author goes on to discuss how much Starbucks has been investing recently. It says, "In the past four quarters, Starbucks has made $146 million on interest alone—or 8 percent of total profit." This article is an interesting look at how Starbucks has been able to market its app and gift cards so well, while at the same time using the earnings wisely and investing in the future.

http://www.businessweek.com/articles/2014-01-24/starbucks-just-sold-1-dot-4-billion-in-gift-cards-dot-what-did-it-do-with-that-cash#r=nav-r-story

Argentina’s Currency Falls Sharply Against the Dollar

The Argentinean peso fell by more than eight percent to against the dollar on Thursday.  This is the largest decline since the 2002 financial crisis, and fear of inflation has seen a sharp increase.  The peso has been gradually losing strength in the past months, but officials insist this plunge is a result of the economic forces coming together.  At the end of business Thursday, the peso closed at $7.75 to the dollar.  The government has decided not to utilize their reserves as much in an attempt to tighten currency controls and not allow reserves to contract.  Some residents have also started buying dollars on the black market to capitalize on a better purchasing rate.  Another main concern is that imported products will cause inflation to increase since they are more expansive.  The shift in Argentina’s economy has also started to raise concerns in surrounding Latin American countries.  While not as drastic, currencies has also weakened and the stock index is depleting. 

http://www.nytimes.com/2014/01/24/world/americas/argentinas-currency-falls-sharply-against-the-dollar-stirring-inflation-fears.html?ref=americas

Social Responsibility Weighs Heavy on Economic Chieftains at Davos

Many political leaders think that wealth should distributed equally among the people. Pope Francis even agreed to this. He believes that humanity should be served by the wealth and no ruled by it. Other politicians agree that those that are wealthy should shared among those that are not. Once you used your wealth for the necessities, then the left over wealth should do to the philanthropies. Others believe that it is unfair for the redistribution of wealth.

http://dealbook.nytimes.com/2014/01/25/social-responsibility-weighs-heavy-on-economic-chieftains-at-davos/?_php=true&_type=blogs&ref=international&_r=0