The pressure on companies from activist shareholders continues to grow

"Shareholder activism" is a way in which shareholders can influence a corporation's behavior by exercising their rights as owners. An activist shareholder may attempt to put public pressure on a corporation's management to address financial, social or management issues. The article gives scenarios of numerous activist shareholders such as Carl Icahn, Dan Loeb, Nelson Peltz and Bill Ackman using this strategy of activism to somewhat "control" the corporations. According to the article, the activists' growing influence has many causes, such as the rule changes which have given shareholders more voting power and made institutional investors cast their votes more thoughtfully, and the advancement in social media that has allowed activists to mount a campaign with more ease.
On one hand, activists' critics with strong assumption that activists are profit-oriented people, have stated that activists encourage firms to do things that boost their share price in the short run but harm their long-term performance. On the other hand, the article suggests that there has been no empirical proof that activists focus only on short-term growth of corporations. Critics on this side of the story argued that activist shareholders should not be viewed negatively. To them, activists are "governance intermediaries" that find under-performing firms and offer their managers and institutional shareholders "concrete proposals for business strategy through mechanisms less drastic than takeovers."
Then the question is, which side is accessing shareholder activism without bias?

http://www.economist.com/news/business/21596556-pressure-companies-activist-shareholders-continues-grow-anything-you-can-do

School Snow Days a Challenge for Low-Income Parents

For most people snow days are fun but for working class parents it is not as relaxing.  When both parents work or do not have sick or vacation benefits they have to find day care services for their children.  People without paid time off, single parents or hourly wage earners get hit the hardest with school snow days. School is a safe and reliable place for children to be, and thus some schools were kept open during the winter storms. Especially because some people's homes lost power and heat, they could even get sick if they were home.

http://america.aljazeera.com/articles/2014/2/13/school-snow-daysachallengeforlowincomeworkingparents.html

Class in America: Mobility, measured

This article strongly reflects concepts in the article written by Julie Isaacs that we read this past week. The authors reference a new study suggesting that, “America may be no less mobile a society than it was 40 years ago.” Although a large portion of data tested did not result in much change from data tested years ago and even “challenges several smaller recent studies that conclued that America had become less socially mobile,” the study did find a connection between social mobility and different regions across America. Ultimately, they found that social mobility is higher in places with strong educational institutions, families, and senses of community belonging. 

http://www.economist.com/news/united-states/21595437-america-no-less-socially-mobile-it-was-generation-ago-mobility-measured

Yellen Begins Her Reign at the Fed

Today, Ms. Yellen, the new chairwoman of the Federal Reserve gave her first major speech under her new title. Many expected that a woman taking the position would cause a radical shift, but her sentiments gave the air of continuity rather than departure. She stated that she will continue policies that cut back on bond buying, a major emphasis of her predecessor, Ben S. Bernanke. Yellen also encouraged an increase in communication with investors and the public. She feels that communication and transparency enhances the power of monetary policy. This seems to be a favoring toward a completely informed society to me! One of the key elements to a successful and efficient market. While the economy is still a bit bruised by the collapse of the housing bubble, Yellen seems optimistic that the Fed has the power to change the current economic situation. As she was making her speech, it seemed that investors let out a sigh of relief and magically the stocks began to rise. This seems like the Fed is off to a great start!

http://www.nytimes.com/2014/02/12/business/yellen-testifies-in-congress-on-economy.html?ref=economy&_r=0

Keep the door open: How Europe Nearly Lost Ukraine - But May Yet Regain It

http://www.economist.com/news/europe/21595957-how-europe-nearly-lost-ukrainebut-may-yet-regain-it-keep-door-open?zid=307&ah=5e80419d1bc9821ebe173f4f0f060a07

This article takes a look at the reasons for the mass protests that erupted in Ukraine in November and continue till this day. It also talks about the economic implications of Ukrainian transition to the new government for Ukraine, Russia and EU. 

Article makes a good point that Russia made a stronger stance for keeping Ukraine away from EU, while EU did little to support Ukrainian people and to bring the country on board. The protests and uprising of the people gave EU another opportunity to bring Ukraine to the table of negotiations and free it from Russia's gridlock. The issue here, that article doesn't point out, is that the government in power will do everything in their power and beyond to secure their assets and power. The reason behind this is the fear of the president along with other politicians and oligarchs of facing the confiscations of assets and trials for criminal activities and corrupt practices. 

Article makes a valid point that the best time for a reform and a new agreement with EU might be during the two weeks of the winter Olympics in Sochi, when Putin will be too preoccupied with his own problems (as we know there are a lot of issues concerning security and poor planning). Additionally, Europe's task here is to not only promote the agreement but also to tie the hands of corrupt politicians and businessmen by freezing their international accounts and blacklisting them, thus prohibiting them from entering other EU countries. These actions would shut off the oxygen of financial support that is necessary for the president to keep his colleagues quite and for funding lobbying efforts in the US and EU against the opposition. If EU sets this example then the hope is that US and other countries will follow the same path. 

Industry and Congress Await the FCC Chairman's Next Moves on Internet Rules

http://www.nytimes.com/2014/02/10/business/economy/industry-and-congress-await-the-fcc-chairmans-next-moves-on-internet-rules.html?ref=economy&_r=0

During his time as the Federal Communications Commision's chairman, Tom Wheeler was able to accomplish much in the means of mobile phone communications. The FCC's initial rules to maintain an open internet, by that meaning companies that control the internet cannot determine who gets the internet. This restricts internet providers from charging different prices for different kinds of content. In last the federal appeals court invalidated those rules created by the FCC. Many republican members of congress told the FCC that it does not have the authority. Though in an interview friday, Wheeler stated that the Open Internet Order was not thrown out by the court and the FCC in face does have the authority.

During a period of vast technological growth and internet based companies worth billions, the means of how consumers purchase digital goods has so far been used openly and has little restriction. Though that freedom probably will not last long as congress and the FCC work to change internet laws. This will certainly affect those tech giants who are used to providing costumers with open internet that does not restrict content.

Will Saving on Health Care Hurt the Economy?

While the government is concerning about the expansiveness of Health Care program, the article raised an issue about Health Care and the economy:

 

Binyamin talked about how the recession has affected negatively on Health Care industry. In particular he mentioned the health care payroll grew at 1.4% - 1 percentage point lower than the annual average in the decade fore recession. Price was also rising more slowly. According to him, this slow growth pulled back the economy by first, cutting the employment in health care industry, and second, cutting the spending in everyone's pocket. He especially made an argument about how inflation is good for the economy (of course his intention was referring to the health care inflation - thus he was making the point that the low inflation in health care was affecting negatively to the economy). He referred that some economist thought :"We’re spending less on health care because we’re spending less on everything."

First it is about the program. It has been growing too large too fast, I think. Government has spent ~5% of GDP in 1960s to 17.4% of GDP in 2009. This, of course makes the whole industry blossom, and increase the employments in Health care industry drastically. However, what is the output come out from that spending? If the population's health quality is not increasing at same pace, government probably have spent too much, there're probably more doctors and nurses and hospitals and meds than needed. Thus, it is time to cut back on those that's unnecessary (just like how the stock market was inflated due to irrational behavior of investors and it had to correct itself by a down turn). It may not look good in short term, but in long term, a more stable and effective health care system is better than an inflated one. 

And secondly I want to mention something about that health care inflation. We're spending less on health care may be because we are taking good care of our health because it is very expansive to pay for health care in the U.S. Really ... spending a lot on health care is not something to be proud of Mr. Appelbaum.

http://www.nytimes.com/2014/02/09/sunday-review/will-saving-on-health-care-hurt-the-economy.html?hp&rref=opinion&_r=0

U.S. Jobs Data Improves, but Weak Exports May Hurt Growth

http://www.nytimes.com/reuters/2014/02/06/business/06reuters-usa-economy.html 

 This article talks about how the general outlook of the labour market has gotten better. It does this by telling us that the number of Americans filing new claims for unemployment benefits has gone down. While all this seems like good news, the article says that it's not all good news.
   It goes on to tell us about how exports for the fourth quarter of 2013 have been at their lowest since October 2012. This is bound to put a damper on the governments predictions, and some analysts say it could affect the growth by a much as half a percent.
   The adverse/extreme weather conditions seem to be a big reason for the slump in exports. Factory had slowed down and retailers had low output. However, the article says there was increased hiring in the private and services sector.
    Overall, the articles depicts a somewhat rosy picture of the future of the US economy. What do you guys think?

Switzerland: Passed Referendum to Limit EU Immigration

In Switzerland, a referendum passed that would limit the amount of immigration coming from the European Union.  While Switzerland is not in the EU, it does have treaties with the EU.  One of those treaties grants freedom of movement to and from Switzerland (almost akin to the freedom of movement within the EU).  This referendum will likely put an end to that freedom of movement.  The cause for this movement seems to have been a result of that freedom of movement, for that has also caused reactions throughout the other EU member states, yet Switzerland is free to cancel some of those treaties whereas the EU member states would have a difficult time restricting immigration laws since it could violate EU laws.  This referendum will have repercussions; as an EU MP said, "If Switzerland suspends immigration from the EU, it will not be able to count on all the economic and trade benefits it is currently enjoying. We will not allow ... cherry-picking."  At the end of the article, there seems to be a counter to the statement, "Swiss voters generally have a history of voting down proposals that they feel could hurt their country's economic success story or threaten its competitiveness."  This statement seems apparent, for Switzerland is one of the best examples of a direct democracy, a system that thus far seems to have worked for Switzerland despite the glaring flaws of a such a system on a large scale.  The question now is, how negative of an impact will this referendum have on the Swiss economy?  It might be that in order to negate the full power of any economic "sanctions" from the EU, the immigration limits will appear negligible in comparison to the current immigration rates.

http://www.reuters.com/article/2014/02/09/us-swiss-vote-immigration-idUSBREA180H220140209

College Athletes Petition to Unionise

Five football players from Northwestern recently petitioned the National Labour Relations Board to let the wildcats form a union. The NCAA has recently been under a lot of scrutiny because of the unfair treatment they give Athletes. They have been known as being like a dictatorship and this is the case for a lot of non-profit organizations. The Northwestern players are petitioning for health and safety. They say that players who suffer incapacitating injuries can lose their scholarships and face huge medical bills. In order to win this petition the NLRB must see the students as university employees. The most recent case like this denied Brown University graduate students to unionize even though they were paid for their teaching duties in 2004.

Another hot topic regarding college athletes is if these players should get paid more than just the scholarship they receive. College football and basketball generated 4.7 billion in revenue in 2012-13 and these athletes didn't see any of that money, while the head of the NCAA makes 1.7 million. They can't even sign autographs for money without it being a violation and they could be ruled ineligible. The Coaches of these teams are typically the highest paid employees at their institutions and still student-athletes don't see any of that. Many people think that a full athletic scholarship is more than enough, but for some of the big name athletes I just don't think that is the case. This topic isn't going anywhere and college athletes petitioning to Unionize is just another step in the direction of reducing the NCAA's power.

http://www.economist.com/news/united-states/21595967-why-college-football-players-want-unionise-wildcat-formation

Comeback Kids

It's no secret that the job prospects for 20-somethings in America have been dismal recently. A notable 36%  of young Americans between the ages 18-31 have yet to move out of their parents' house. The global financial crisis is held culpable for the ill-fate of the millenniums. However, 2014 might be a welcomed change for those about to graduate. Hiring new graduates is expected to be the highest it has been in years. This hiring is spurred by private sector firms like Google and Brisitsh Airways, and by programs in the public sector such as TeachFirst. International Monetary Fund, encouraged by news in the US, Japan and EU, increased it global growth forecast from 3.6% to 3.7%. This growth may may afford those recent college graduates to flee from their childhood bedrooms and spring for a place of their own.

http://www.economist.com/blogs/theworldin2014/2014/01/youth-unemployment

Obamacare deadbeats: Some don't pay up

CNN reports that 20% of those that signed up for federal healthcare last year have not paid their first month’s premium. 2.1 million signed up to have their coverage begin on January 1^st, but they will not receive coverage if they miss the extended deadline.  The Texas-based insurer expected its payment rate to be in the high 80% range by its deadline. Insurers are pleased with the payment rates and experts say that there has been a huge uptick in payments in recent weeks.  Most people have until Friday to make their payments or their coverage will be terminated before it even started. I wonder how long it will take to sort out the glitches in the new system.

http://money.cnn.com/2014/01/30/news/economy/obamacare-premiums/index.html?iid=SF_E_River

Unemployment Rate Telling a Much More Hopeful Story

Although the official unemployment rate dropped to 6.6 percent in January 2014, some critics have noted the sluggish pace at which the economy is adding jobs. However, this article notes a significant 0.4 percent drop in the under-employment rate in January, which economists note as an encouraging factor in economic recovery.

The under-employment rate, also known as the "U-6" broader unemployment rate, dropped to 12.7 percent - the lowest rate in the past five years. And although the labor force participation rate is low at 63 percent, it has been moving upward. Looking at all of these factors, economists say that some workers may be leaving the workforce unwillingly or giving up on the job search, but that there are signs that people who have been under-employed are now employed full-time, people not actively seeking but wanting work are finding jobs, and that new jobs are being created.

This article points to positive trends which bode well for the economy in the short run. However, I fear that recent seasonal surges in employment within the housing construction market and manufacturing (a sector that many fear will slow down severely) may be giving an overly-optimistic forecast. Even if those two sectors have added jobs, the housing market has been recovering more slowly than anticipated, and the manufacturing sector may begin to decline even further than it already has, so in the long run, those jobs may be lost all over again. In the short run, though, I hope that the recent decline in unemployment and under-employment boosts consumer confidence and overall economic performance.

http://blogs.wsj.com/economics/2014/02/07/unemployment-rate-telling-a-much-more-hopeful-story/