While globally the downturn of the economic tide has affected many nations, countries like Argentina, Turkey, Ukraine, and Thailand might have another factor to blame for their current economic instability: their national governance. While the macroeconomic dilemmas have not gone away in these countries, they were foreseeable and some countries have been meeting them and have returned to somewhat financial normalcy. The article goes onto describe the role of governance in the countries above and how these countries need to begin to look inward if they hope to make it out and not fall of the track of progress altogether.
This article brings up a good point about how sometimes in the aftermath of economic downturn the government will still attribute poor conditions to economic factors even if they no longer have a bearing on the situation. Is there a point to doing this other than trying to keep the population calm or save the government's image because they are failing at correcting the problem? In so, is there a way to correct these governments without violence or upheaval?
http://www.nytimes.com/2014/02/09/business/international/why-emerging-markets-should-look-within.html?_r=0
Saturday, February 8, 2014
Workers Face Police Gunfire Amid Unrest in Cambodia
There has been several serious protests going on in Phnon Penh, Cambodia. Phnon Penh of Cambodia is where many garment manufacturing companies are located. Most of these companies are owned by Chinese, Korean and Indian clothing companies. Military police officers fired on protesters who demand higher wages. Last Friday, they killed three people. Most of those workers work in garment factories and their average wages are around 140 USD per month. But recently, they were underpaid. (The garment workers currently receive a monthly minimum of $80.) The garment workers are demanding a doubling of their monthly wages, (“We condemn the act of violence against the monks, against the workers who are demanding the minimum wage of $160,”) and they have been at the forefront of growing protests against Mr. Hun Sen’s authoritarian government. On Sunday, tens of thousands of people rallied to demand that he step down.
http://www.nytimes.com/2014/01/04/world/asia/cambodia-protests.html?_r=0Time for a ceasefire
Time for a ceasefire: Technology and fresh ideas are
replacing classroom drill—and helping pupils to learn
Being competent in
mathematical skills is important for any real world job, from service to
management positions, and so this correlation makes sense. Technology, being
the current leading sector in the worlds growing economies, have given means to
new strategies to teach math in schools that better equip students for today’s
real world jobs, moving away from “drill” teaching and towards a problem-solving curriculum.
It is interesting
to look at the data shown in this article and relate it to a countries GDP.
With the exception of China, the countries with the lowest average PSI in math
scores in 2012 ranked higher in GDP in 2012. For example, The US had the lowest
PSI in math scores but ranked first in GDP (similar results with Britain and
Germany). America, during the American “math wars” of the 1980s, implemented
this new view on teaching math. This may show that the math curriculum used is
more important to prepare students for real world jobs than mastering “drill”-type
math problems. Conrad Wolfram’s argument that new technology makes rote
procedures, such as long division, obsolete. Therefore, a curriculum that caters
to today’s world which allows students to solve equations and visualize
mathematical functions is better preparation for real world situations. Estonia,
who ranked fourth in average PSI in math scores and 103rd in GDP in
2012, will start pilot lessons built around open-ended problems which have no
single solution. It will be interesting to see, if Estonia continues this
program, if their GDP rises in the future. I agree with Andreas Schleicher’s
point that it is still important that students master rote procedures for
problem solving and mental arithmetic. These foundational mathematical skills
are important to master so they can be applied to real world problem-solving. In
conclusion, this change in the educational system is beneficial only if
traditional practices are not lost with it.
Other sources: http://databank.worldbank.org/data/download/GDP.pdf
Federal Reserve Continues to Reduce Their Monthly Bond-Buying despite weak job report
The jobs report on Friday
was disappointing, which makes people questioned whether the economy lives up
to the forecast, yet Federal Reserve officials will continue to reduce
bond-buying. In January, the purchase amount was lowered to $65 billion and
officials want to cut it to $55 billion at their next meeting in March.
Fed Chairwoman Janet
Yellen will have to explain these contradictory signals next week, when she
testifies before Congress on the outlook for the economy and monetary policy.
Regarding the bond-buying program, Mr. Rosengren said: "We should be
fairly slow moving until we get a better assessment of the economy's
performance.”
Another challenge facing
Ms. Yellen is to explain how the unemployment rate and expected short-term
interest rates. The Fed has said it wouldn't consider raising rates until the
unemployment rate declined to 6.5%, but the unemployment rate has fallen much
faster than officials expected over the past year. Many officials believe the
Fed can still keep rates low because inflation is well below target.
I agree with Fed sticking
to its policies. According to the article, he job report on January could be
affected by the harsh weather. As November and December are holiday season, the
job reports for these months can inflated due to the growth of retailer sales.
Thus, we could not expect January to do as well. Overall, the economy is still
growing and head to the right direction, and lower bond-buying by nearly 15% is
still bond-buying.
ECB's bond-buying plan referred to Europe's top court
http://www.bbc.co.uk/news/business-26080410
The European Central Bank is being taken to the European Court of Justice to determine the legality of the ECB's Outright Monetary Transactions (OMT) program. What is interesting that the article points out is that the OMT program allows the ECB to buy unlimited amounts of a country's debt if investors pull out. However many legal experts worry that this violates the ECJ's ban on the ECB funding governments.
The piece of news that really brought me to this article is that the OMT program has not even been used yet. Simply advertising the existence of the plan and its possible implementation has been enough to help calm turbulent markets since 2012. The nature of the ECJ and how it goes about coming to its rulings is of particular interest in this case. A legal expert from the University of London said, "practically speaking, the court is not an independent organisation but is pre-disposed to interpret legal questions in the interest of the European Union."
Given that the existence of the OMT program has been used to stabilize markets and that the ECJ is expected to take up to 2 years to make a ruling, it seems that the OMT program is a case of the ECB influencing the market without direct monetary policy. The question is whether the ECJ is allowing the success the ECB has had with stabilizing markets to influence its decision in a way that will have negative consequences down the line. Should the ECJ declare the OMT program unlawful it could unsettle all the work that has been done under the assumption that OMT was a possibility. On the other hand should it be allowed it opens up a dangerous door where countries in the European Union can go to the ECB and request that the bank buy their debt when times get tough, something that isn't sustainable at all.
Friday, February 7, 2014
http://money.cnn.com/2014/02/07/news/economy/january-jobs-report/
This article discusses job growth and unemployment rates from January 2014. Although there was job growth, it was a lot less than expected. The new report was a "disappointment and weak". Although it was not a success, economists state that it is not a disaster either.
The article also discusses how the unemployment rate is the lowest in 5 years, which was also not as low as expected. This may be because of Americans leaving the work place.
It is interesting how numbers are not the only aspects to the economy. It is more than just unemployment rates, it is also how many are in the work force. It will be interesting to see what economists have to say about the numbers for February.
This article discusses job growth and unemployment rates from January 2014. Although there was job growth, it was a lot less than expected. The new report was a "disappointment and weak". Although it was not a success, economists state that it is not a disaster either.
The article also discusses how the unemployment rate is the lowest in 5 years, which was also not as low as expected. This may be because of Americans leaving the work place.
It is interesting how numbers are not the only aspects to the economy. It is more than just unemployment rates, it is also how many are in the work force. It will be interesting to see what economists have to say about the numbers for February.
Thursday, February 6, 2014
The Olympics: A Costly Feel-Good Moment
The host country spends so much on the Olympics, however, the tourism does not make up for the amount they spend. There is not enough tourism in the two weeks to cover the costs the host has spent. Countries that host the Olympics should not be looking for an economic success. The Games are becoming more and more expensive because the hosting countries want to out-do the previous host. One of the reasons that the countries want to host is because it makes them feel good.
www.nytimes.com/2014/02/06/business/economy/the-olympics-a-costly-feel-good-moment.html?ref=economy&_r=0
www.nytimes.com/2014/02/06/business/economy/the-olympics-a-costly-feel-good-moment.html?ref=economy&_r=0
Locus of Extremity: Developing Economies Struggle to Cope with a New World
http://www.economist.com/news/finance-and-economics/21595485-developing-economies-struggle-cope-new-world-locus-extremity
With low interest rates in America, many investors turned to developing nations and the BRICS to invest their money. However, with the Fed talking about tapering its bond purchases and the American economy strengthening, investors will slowly begin turning back to American financial markets. This is bad news for the developing economies, who have been gaining from the low interest rates in America. Countries such as Turkey and India have been trying to hold off raising their interest rates but can no longer afford to do so. In addition, their currencies are falling rapidly against the dollar. Economists have coined the term the "fragile five" for Turkey, India, Brazil, Indonesia, and South Africa. The countries that were once investing hot-spots are now facing difficulties as their central banks struggle to stabilize their currencies and interest rates as America recovers from the financial crisis.
With low interest rates in America, many investors turned to developing nations and the BRICS to invest their money. However, with the Fed talking about tapering its bond purchases and the American economy strengthening, investors will slowly begin turning back to American financial markets. This is bad news for the developing economies, who have been gaining from the low interest rates in America. Countries such as Turkey and India have been trying to hold off raising their interest rates but can no longer afford to do so. In addition, their currencies are falling rapidly against the dollar. Economists have coined the term the "fragile five" for Turkey, India, Brazil, Indonesia, and South Africa. The countries that were once investing hot-spots are now facing difficulties as their central banks struggle to stabilize their currencies and interest rates as America recovers from the financial crisis.
Sochi or bust for Russia
http://www.economist.com/news/briefing/21595428-conspicuous-dazzle-games-masks-country-and-president-deepening-trouble-sochi
The glitz and glamour associated with the olympic games are masking Russia's deep seeded issues. In the article, the author highlights the similar situation Russia was in when it hosted the 1980 Moscow Olympics. While major governmental and social changes have occurred, economically speaking, the country is in a familiar position.
After having modest economic growth in 1980, Russia's regime began to crumble. One of the biggest reasons for the collapse was a reliance on oil and other imports. At that time gas and oil made up roughly 67% of all exports. Today gas and oil make up 75% of Russia's exports. Furthermore, the country lacks domestic production and relies very heavily on imports.
These parallels led the author to conclude that Russia is in a very unstable economic position. How the olympic games will effect them is unknown, but it is known that hosting is more expense than ever. The cost on the country is estimated to be $50 billion.
The glitz and glamour associated with the olympic games are masking Russia's deep seeded issues. In the article, the author highlights the similar situation Russia was in when it hosted the 1980 Moscow Olympics. While major governmental and social changes have occurred, economically speaking, the country is in a familiar position.
After having modest economic growth in 1980, Russia's regime began to crumble. One of the biggest reasons for the collapse was a reliance on oil and other imports. At that time gas and oil made up roughly 67% of all exports. Today gas and oil make up 75% of Russia's exports. Furthermore, the country lacks domestic production and relies very heavily on imports.
These parallels led the author to conclude that Russia is in a very unstable economic position. How the olympic games will effect them is unknown, but it is known that hosting is more expense than ever. The cost on the country is estimated to be $50 billion.
Wednesday, February 5, 2014
The Economist: Tactless tapering
Tactless tapering (Article)
The Fed's recent tapering has had its effects on the US economy
but the issue seems to come with the effects on other nations. Willem Buiter,
the chief economist at Citi bank, says the Fed has not said a thing about the effects
tapering has had overseas and that they have displayed bad manners in doing so.
The governor of the Reserve Bank of India
(RBI) would like to see more co-operations between the central banks. Because
the US is such a big country with such big influence around the world the
leaders of the other world banks would like more interaction with the US Fed in
order to better plan monetary policies.
Cross-border financial flows from the US
are extremely large and because the majority of the US's foreign liabilities
are held in the dollar the international liabilities fall when the dollar falls
at home. It seems as if the Fed only cares about the immediate needs of the US
but, this plays both ways with other international central banks. Since the
other banks are not as big as the US Fed they do not have as big of an effect elsewhere.
We should see some concern come from the
Fed in the near future as many of the other central banks are upset. We can expect
to see some kind of meeting/discussion with the other banks to try and get on
the same page as US Fed.
China Sets Clean Air Targets
We all know about the rising pollution in China and this article talks about their future plans on reducing the pollution. In the next three years they want to reduce the toxic emissions by 25 percent. This will be a major impact on how things are operated in China. It will be interesting to see how it affects our trade and outsourcing with them as they are looking to make major changes.
Google Reaches Deal to Settle European Antitrust Case
Google had been accused of using its dominance in the market share of internet search in Europe to promote its own products. This is a concern of keeping a competitive market in Europe, which Google had almost completely taken over. In this settlement, Google agreed to give prominence to rivals in its promoted search results for the next five years. Joaquin Almunia, The European Union's competition commissioner, said that this decision was not likely to change, even though some of Google's competitors are not satisfied. They believe that this agreement still allows Google to lead in profit from advertising and from searches. Also, they are concerned that Google will not hold themselves accountable to these changes.
http://www.nytimes.com/2014/02/06/technology/google-reaches-tentative-antitrust-settlement-with-european-union.html?hp
http://www.nytimes.com/2014/02/06/technology/google-reaches-tentative-antitrust-settlement-with-european-union.html?hp
Obamacare! An impartial 3rd party gives us some unbiased data
http://www.economist.com/blogs/democracyinamerica/2014/02/obamacare-and-employment?fsrc=scn/fb/wl/bl/grimprognosis
The affordable healthcare act is an extremely interesting and contorversial topic. It has dictated all the actions of the democrats and the republicans in the past 3 years. People supporting Obamacare(which by the way is another name for it) love the overall idea and justify it by pointing put to other countries that have universal health care. However just as Hayek had said, a government planned program will require immense amount of information. As such this program has a lot of loopholes which this article exposes.
The law of compounding numbers says that a .1% growth will help double the economy standard of living in 70 years, and obamacare seems to be making a rather bug dent in the future1 growth of the economy.
Having said that republicans have not come up with a better solution, but an interesting idea they cam e up with is discussed in the article.
The affordable healthcare act is an extremely interesting and contorversial topic. It has dictated all the actions of the democrats and the republicans in the past 3 years. People supporting Obamacare(which by the way is another name for it) love the overall idea and justify it by pointing put to other countries that have universal health care. However just as Hayek had said, a government planned program will require immense amount of information. As such this program has a lot of loopholes which this article exposes.
The law of compounding numbers says that a .1% growth will help double the economy standard of living in 70 years, and obamacare seems to be making a rather bug dent in the future1 growth of the economy.
Having said that republicans have not come up with a better solution, but an interesting idea they cam e up with is discussed in the article.
Tuesday, February 4, 2014
Factory, construction spending data hint at slowing economy
This article discusses how the U.S manufacturing activity has slowed down in the last month. Economists have argued it is mainly due to the frigid temperature and expect a rebound in the next couple months. Bad weather has hurt more than just the U.S manufacturing industry, but also U.S auto sales. This includes Ford Motor Co, General Motors Co, and Japan's Toyota Motor Sales.
http://www.reuters.com/article/2014/02/03/us-economy-construction-idUSBREA120X320140203
Walmart vs. Amazon
This article looks at the business ventures of super brand Walmart and its attempts over the recent years to combat a change in consumer buying habits. The article summarizes some of the challenges that Walmart has faced and the bad name they get for employee relations. In 2009 the brand got a new CEO with a plate full of problems to sift through. First, the brand over-estimated their growth potential on international soil. They opened 14M square feet, compared to a planned 22-23M square feet over the past year. International markets did not receive these superstores with open arms. Internationally, consumers tend more towards smaller convince stores, close to home. Secondly, Walmart has been adjusting to a new superstore competitor, Amazon. With no bricks-and-mortar store front, some might say Amazon has a disadvantage, but that has not prevent to be the case. Consumer's shopping habits tend more towards online purchases, both domestically and internationally. Amazon sets themselves apart by offering Prime membership to customers, which offers free shipping on prime items. Amazon has noted a shift in shopping trends from electronics and speciality purchases, to everyday goods such as diapers and detergent, making it a large competitor to Walmart.
So, what will Walmart do? They have looked at plans to make stores smaller to fit better into towns, and close-by shopping habits, as well as acting as their own middle man. What I mean by this is that consumers can go online to Walmart.com and select all the items they need, pay online, and go to a store for pick-up. The only problem that arrises is Walmart's supply chain that took them years to develop and implement. Walmart has low prices because of how they distribute the products, with tight delivery schedules and packaging regulations for distributors.
While this idea is a valid attempt to combat online competition, it is going to be hard to implement. I believe that Walmart needs to take a critical look at how they run their business and make changes from the bottom up. While they should attempt the online order fulfillment in stores, they should not bank on this as their saving grace. I know many people who would be more inclined to spend suggested retail at a store where the employees are respected and valued, rather than three cents less than suggested retail at a store that limits employee mobility.
So, what will Walmart do? They have looked at plans to make stores smaller to fit better into towns, and close-by shopping habits, as well as acting as their own middle man. What I mean by this is that consumers can go online to Walmart.com and select all the items they need, pay online, and go to a store for pick-up. The only problem that arrises is Walmart's supply chain that took them years to develop and implement. Walmart has low prices because of how they distribute the products, with tight delivery schedules and packaging regulations for distributors.
While this idea is a valid attempt to combat online competition, it is going to be hard to implement. I believe that Walmart needs to take a critical look at how they run their business and make changes from the bottom up. While they should attempt the online order fulfillment in stores, they should not bank on this as their saving grace. I know many people who would be more inclined to spend suggested retail at a store where the employees are respected and valued, rather than three cents less than suggested retail at a store that limits employee mobility.
Monday, February 3, 2014
Goldman CEO Blankfein Earns $23 Million in 2013
Goldman Sachs Group, Inc. awarded its chief executive officer, Llyod Blankfein a compensation package of $23 million in salary and bonuses for 2013. This definitely is a large compensation package that some might question that he deserved such a generous package. Mr. Blankfein's compensation package is on par with other CEOs compensation in the investment banking firm. James Dimon, the CEO at Morgan Stanley was awarded a compensation package of $20 million in 2013. Both CEOs received compensation packages that increased from their 2012 earnings because their firms each saw over a 33% increase in their share price and beat the S&P 500 index.
The risk he takes as a CEO of the largest investment banking firm in the United States should be compensation with an income level in accordance. If we go through income determinants, he must meet and exceed expectations. He must have exceptional talent and ability as evidenced through Goldman's revenues of $34.2 billion and a net income increase 8% from 2012. So, when revenues of that amount are generated, Mr. Blankfein does deserve his compensation. In fact, his earnings for 2013 account for less than 1% of the total earnings for Goldman Sachs Group, Inc. Mr. Blankfein's acquired skills and effort can be seen as he steered the firm through the pitfalls of the financial crisis by steadily rebuilding relationships with investors and government regulators.
A private managing director of a New-York based compensation-consulting firm Johnson Associates, Alan Johnson, said that Mr. Blankfein's compensation is on par with how Goldman Sachs Group, Inc. performed. I believe his compensation is warranted and as a young adult interested in corporate management, it is encouraging to see top level executives compensated fairly.
http://online.wsj.com/news/articles/SB10001424052702303973704579353170299234620?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303973704579353170299234620.html
The risk he takes as a CEO of the largest investment banking firm in the United States should be compensation with an income level in accordance. If we go through income determinants, he must meet and exceed expectations. He must have exceptional talent and ability as evidenced through Goldman's revenues of $34.2 billion and a net income increase 8% from 2012. So, when revenues of that amount are generated, Mr. Blankfein does deserve his compensation. In fact, his earnings for 2013 account for less than 1% of the total earnings for Goldman Sachs Group, Inc. Mr. Blankfein's acquired skills and effort can be seen as he steered the firm through the pitfalls of the financial crisis by steadily rebuilding relationships with investors and government regulators.
A private managing director of a New-York based compensation-consulting firm Johnson Associates, Alan Johnson, said that Mr. Blankfein's compensation is on par with how Goldman Sachs Group, Inc. performed. I believe his compensation is warranted and as a young adult interested in corporate management, it is encouraging to see top level executives compensated fairly.
http://online.wsj.com/news/articles/SB10001424052702303973704579353170299234620?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303973704579353170299234620.html
The Weather Report
http://www.economist.com/news/finance-and-economics/21594252-economists-are-getting-grips-impact-climate-change-weather
This article discusses the economic impact of global climate change. It compares how developed countries are affected versus less developed countries, and it discusses the correlation between countries with higher median temperatures and their economic output. The article cites multiple studies that show there is a negative correlation between temperature and economic output. Melissa Dell of Harvard University, Benjamin Jones of Northwestern University and Benjamin Olken of the Massachusetts Institute of Technology found that for every 1 degree Celsius increase, GDP is 8.5% lower. They noted that this does not mean that if global temperatures raised by 1 degree Celsius, that GDP would would lower by 8.5% across the world. This shows that there are external factors causing lower economic outputs in areas where there also higher temperatures. Unfortunately, the article does not go into depth discussing possible factors that could be causing the decreased economic output.
The article also notes that the relationship between temperature and economic output is not linear. This means that an increase from 22 to 23 degree Celsius may not have an effect on economic output, but an increase from 35 to 36 degrees Celsius may have a significant affect on a country's economic output. Less developed countries typically rely more on agriculture for there economy, and agriculture is negatively affected by extremely high temps and droughts. Thus, less developed countries typically feel the impact of global climate change more so than developed countries.
I think the most effective way to examine the difference in how less developed countries and developed countries are impacted by global climate change is by studying two countries of different levels of economic development that have experienced similar weather patterns.
This article discusses the economic impact of global climate change. It compares how developed countries are affected versus less developed countries, and it discusses the correlation between countries with higher median temperatures and their economic output. The article cites multiple studies that show there is a negative correlation between temperature and economic output. Melissa Dell of Harvard University, Benjamin Jones of Northwestern University and Benjamin Olken of the Massachusetts Institute of Technology found that for every 1 degree Celsius increase, GDP is 8.5% lower. They noted that this does not mean that if global temperatures raised by 1 degree Celsius, that GDP would would lower by 8.5% across the world. This shows that there are external factors causing lower economic outputs in areas where there also higher temperatures. Unfortunately, the article does not go into depth discussing possible factors that could be causing the decreased economic output.
The article also notes that the relationship between temperature and economic output is not linear. This means that an increase from 22 to 23 degree Celsius may not have an effect on economic output, but an increase from 35 to 36 degrees Celsius may have a significant affect on a country's economic output. Less developed countries typically rely more on agriculture for there economy, and agriculture is negatively affected by extremely high temps and droughts. Thus, less developed countries typically feel the impact of global climate change more so than developed countries.
I think the most effective way to examine the difference in how less developed countries and developed countries are impacted by global climate change is by studying two countries of different levels of economic development that have experienced similar weather patterns.
Superbowl XLVIII's Big Victory for...US Customs and Border Protection
They won't be hoisting the Lombardi trophy this February, but the US Customs and Border Protection scored a major haul last week with their seizure of $21.6 million in counterfeit NFL merchandise ahead of Superbowl XLVIII. A striking move, especially since it's not every day that the Feds spend their resources toward ensuring that a private event goes off without a hitch. In this case, though, there's been massive worry about illicit activity centered around the annual event, from social media's widely-shared admonition against human trafficking to troubled rapscallion Justin Bieber's pot party plane.
So why do the Feds have their eyes on Superbowl-related treachery? $21.6 million is a staggering figure, and is surely just a fraction of the sum netted by counterfeiters. It's in the government's interest to inhibit evildoers in order to boost confidence in the market. Not only does the move deal a blow to fake merchandise producers abroad, which fits in with overall US trade policy interests, but increases American spending in American franchises. After all, what's more American than America?
So why do the Feds have their eyes on Superbowl-related treachery? $21.6 million is a staggering figure, and is surely just a fraction of the sum netted by counterfeiters. It's in the government's interest to inhibit evildoers in order to boost confidence in the market. Not only does the move deal a blow to fake merchandise producers abroad, which fits in with overall US trade policy interests, but increases American spending in American franchises. After all, what's more American than America?
Sunday, February 2, 2014
Etihad and Alitalia airlines announced future merger
Etihad Airways and Alitalia
announced that they are close to agreeing upon an investment deal to help the
troubled Italian airline. Though it may
take several more days, sources have revealed the investment deal could give
nearly 40% of the rights to Etihad Airways, an Abu Dhabi carrier that has
recently taken stakes in a few other European airlines. The Italian company, Alitalia, is facing
large sums of debt, has already been bailed out by the government, and is regarded
as one of the country’s most important assets.
The deal would be a strong base to get Alitalia back on their feet,
while also sparking the development of the firm’s employee base.
I found this article to be
rather interesting especially since there was a merger a few months ago between
American Airlines and US Airways. Since
their merger, both firms have profited.
Hopefully Alitalia will be able to get back on their feet, and Etihad
Airways will be able to generate strong business.
http://www.bbc.co.uk/news/business-26011191
Wal-Mart warns food stamp cuts to hit earnings
The part of this article that stuck me the most was that Wal-Mart will be cutting over 2,300 jobs and closing stores. Partially in response to this cut to Food Stamps, but more because their profits would drop. This is potentially an example of where a government pulling its involvement has hurt the economy, with workers losing jobs and forcing them to potentially pull even more money into other welfare programs like unemployment. Not because the workers were lazy, but because the firms would rather see workers unemployed than lose any amount of profits.
Read the article here
Read the article here
Mexico Surpassing Japan as No. 2 Auto Exporter to U.S.
After the enactment of NAFTA (North American Free Trade Agreement) in 1994, Mexican auto exports to the United States more than quadrupled between 1993 and 2013. Estimates reveal that Mexico is likely to take the top spot from Canada in 2015 with 1.9 million cars exported to the US. Japan has controlled one of the top rankings since the 1970s with Honda, Toyota and Mazda, but Mexico was able to surpass Japan making passenger vehicles and light trucks. However, interestingly enough, Mexico has seen much of this success due to producing cars like the Nissan Sentra and Honda Fit. More Japanese based auto firms are building production facilities in Mexico, due to the cheap labor and the benefits of NAFTA. It will be interesting to see if Mexico's auto industry continues to grow the way that it has been, or if it will level off as wages increase.
http://www.bloomberg.com/news/2014-01-31/mexico-surpassing-japan-as-no-2-auto-exporter-to-u-s-.html
http://www.bloomberg.com/news/2014-01-31/mexico-surpassing-japan-as-no-2-auto-exporter-to-u-s-.html
Class in America: Mobility, measured
This article was based on a new study by economists at Harvard University and the University of California, Berkeley on social mobility in America. According to their findings, America may not be socially less mobile than it was 40 years ago, despite its dramatic increase in income inequality. The researchers reported that the correlation between parents' and children's income and the odds that a child born into the bottom fifth of the income distribution will climb all the way up to the top fifth have not changed much over the years. "In 1971, a child from the poorest fifth had an 8.4% chance of making it to the top quintile. For a child born in 1986, the odds were 9%." Their results have caused a huge stir, not only because their findings run counter to public perceptions, but also because cross-country analyses have suggested that there is an inverse relationship between income inequality and social mobility (a phenomenon that has become known as the "Great Gatsby" curve").
The article went on to provide some explanations for this case. One, social stratification might take time to become entrenched. Second, even as income gaps have widened over the past 30 years, other barriers to mobility, such as discrimination against women and blacks, have fallen. Third, the correlation between vast wealth accruing to the top 1% of the population and the ability of people to move between the rest the income ladder may be small.
http://www.economist.com/news/united-states/21595437-america-no-less-socially-mobile-it-was-generation-ago-mobility-measured
The article went on to provide some explanations for this case. One, social stratification might take time to become entrenched. Second, even as income gaps have widened over the past 30 years, other barriers to mobility, such as discrimination against women and blacks, have fallen. Third, the correlation between vast wealth accruing to the top 1% of the population and the ability of people to move between the rest the income ladder may be small.
http://www.economist.com/news/united-states/21595437-america-no-less-socially-mobile-it-was-generation-ago-mobility-measured
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