Russia Faces Recession Risk

The World Bank has warned that the Russian economy is at risk of facing a recession. However, it is too early to make any definite forecasts due to a high uncertainty of macroeconomic situation. The bank states that GDP could contract by 1.8% this year if the political conflicts lead to a severe shock to economic and investment activities.  If the East-West tensions continue to occur, this could greatly impact foreign investment, perpetuate economic stagnation and could even undermine Russia's own political stability.

Investors are pulling money out of the country, growth will be likely to decrease if capital outflows reach $100 billion. Capital has fled Russia, stocks are falling following Moscow's seizure of Crimea from Ukraine and Western sanctions against several Russian individuals. This situation has a negative impact on the economy worldwide, both in Russian and Europe.

The currency of Russia, the rouble, is down 10 percent against the dollar. Analysts have said steps are being taken to prevent the rouble from falling even more. This includes raising interest rates and spending billions in reserves to support the currency. This may push the country into a recession.

Turkey's Bubble Trouble

Numerous sources are voicing concern over the state of Turkey's economy of late. Granted, critics have been voicing concern over numerous aspects of the state of Turkey's affairs lately, from foreign policy problems to domestic political problems. Yes, Turkey's AKP is still large and in charge, and the problem it's currently battling in the headlines is its blockage of Twitter and YouTube in light of serious leaks. Of more interest to macroeconomists and observers is the future of the country's investment bubble.

For much of the last decade, Turkey was hailed as a model for the developing world, and certainly for the Muslim world for their successful incorporation of Islamic banking principles. The recently elected AKP seemed to be doing a great job cleaning up the corruption that had beleaguered the country for years, and achieving the sort of economic growth other nations hungered for. One of the MINT countries, it seemed like Turkey was en route to becoming a major component of the international economy, augmented in 2009 when the country was seen as a safer investment as the world's economies suffered from the recession. During this time, China continued to expand rapidly, creating a huge demand for exported resources. Turkey filled in this role, which supplied them with abundant credit, and also capitalized on rock-bottom interest rates in much of the developed world. According to CNN,the party's ending with the United States scaling back its quantitative easing program, in part thanks to increased confidence domestically since the recession. Some others say Turkey's economic woes are a function of the pushback against corruption that's taken the news by storm of late.

That said, Erdoğan has been skeptical of some of the proposed solutions, including raising interest rates. The IMF has proposed other solutions, including reining in expenditures, improving competitiveness, and becoming less vulnerable toward fluctuations in international investments. It's projected, however, that Erdoğan might remain recalcitrant on some of these proposals until after upcoming elections.

The Crisis in Thailand Keeps Dragging Down The Economy

http://www.businessweek.com/articles/2014-03-28/the-crisis-in-thailand-keeps-dragging-down-the-economy

The antigovernment protesters in Thailand successfully disrupted the vote which could have provided Yingluck with a foundation to form a new government, causing the elections not to be able to take place on the same day nationwide. Thailand’s constitutional court ruled the February elections invalid due to this disruption from the opposing Democrats’ boycott.

The crisis in Thailand is negatively impacting the kingdom’s economy. The head of Finance Ministry’s fiscal policy office had cut its export growth forecast from 6.5% down to 5% and has also cut its forecast for GDP growth to 2.6%. Tourism has declined in Thailand as well, which has contributed to their underperformance. If the crisis drags on much longer, more bad news might be ahead. It is obvious that an systematic change is needed, but the conflict between Yingluck and her critics makes this tricky. 

Ranking: States where you have the best and worst chance of achieving the American Dream

http://www.forbes.com/sites/danalexander/2014/03/29/ranking-states-where-you-have-the-best-and-worst-chance-of-achieving-the-american-dream/

A group called Opportunity Nation created a ranking of all the US states in relation to how well its citizens can achieve the American Dream.  The researchers used 16 economic indicators, including unemployment rate and the percentage of adults who volunteer.  States who invested a lot in education also tended to rank higher.  The North and Midwest were the highest ranking regions, with the southern states more towards the bottom. This is interesting because we talked a lot in class about social mobility and opportunities available to people in different countries, and this shows that even within the US these opportunities differ.

Regional director of the NLRB rules that Northwestern football players can unionie

A regional director of the National Labor Relations Board ruled on Thursday that the Northwestern football players can unionize, making them university employees, but nothing has been won yet and this could be a long drawn out process.  The University says that it plans to appeal and will go to the full National Labor Relations Board who's members are appointed by the president and approved by Congress. Depending on the decision here it could move onto the Supreme Court where a final decision will be made. This process could take a couple of years, so what is up next? This situation will lead to more lawsuits filed by other players as the NCAA continues to be scrutinized as taking advantage of major college athletes and being a dictatorship like most non-profit organizations are. There is already a suit against 5 major conferences to block enforcement of the amount of financial aid players can receive. It is known that major college athletics generates billions of dollars and high profile players can't see any of it in order to keep their amateur status. I think we will continue to see this topic escalate and that there isn't going to be an end anytime soon. http://blogs.wsj.com/law/2014/03/27/northwestern-labor-decision-what-happens-next/?KEYWORDS=northwestern+football

IMF Reaches Deal to Provide Up to $18 Billion to Ukraine

The IMF is creating a plan to help bailout Ukraine. Ukraine is expected to receive a $27 billon loan over the next two years. The exact amount will be depend on how much the supporting countries will lend. These countries include the US and European Union. This is Ukraine's biggest economic crisis in their post-Soviet history.

The United Nations General Assembly voted for a nonbinding resolution. This would make the Crimean referendum to rejoin Russia in valid and urged other nations not to recognize it. This vote showed that there is very little international support for Russia over the Ukrainian crisis. Russian President Valdimir Putin is preparing for the sanctions from the West.

Ukraine is holding presidential elections in May, which makes it difficult for the actions in order to receive the IMF loan to be completed. This loan will range from $14 billion to $18 billon. The IMF is requiring Ukraine to have regulations to ensure its banks, improve the business environment, and fight corruption.

http://online.wsj.com/news/articles/SB10001424052702304418404579464712032792176?mod=WSJ_economy_LeftTopHighlights&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304418404579464712032792176.html%3Fmod%3DWSJ_economy_LeftTopHighlights

Connecticut Is Increasing Minimum Wage to $10.10 an Hour

In his State of the Union address, President Obama said he wants to increase the minimum federal wages for workers to $10.10. Two months later, Connecticut did exactly the same. According to the article, on Wednesday March 26, Connecticut lawmakers became the first in the country to pass legislation that would increase a state’s minimum wage to $10.10 an hour by 2017. The bill was approved 21 to 14 in the Senate and 87 to 54 in the House.

There are controversies regarding this matter. Advocates, including president Obama, believe that Connecticut’s vote cleared the way for other states. However, Legislative Republicans and various business groups criticized the increase as another action making Connecticut uncompetitive, as it hurts business, especially smaller ones.

Increasing minimum wages may seem to be a good way to reduce poverty, but it is true only when the economy is doing very well. If minimum wages increase while firms do not make more money, fewer people will be employed, and some may even be fired because their employers cannot afford to pay them. That will make poverty even worse in the US and will hurt the recovering economy, especially when the unemployment rate now is still a concern and is decreasing at a slow rate. Connecticut set policy for the year of 2017, which means it believes the economy must be growing at that time. This assumption can be true, but can also be overoptimistic, consider the slow recovery rate of the economy.

http://www.nytimes.com/2014/03/27/nyregion/connecticut-is-increasing-hourly-pay-to-10-10.html?ref=economy

Holding Back Half the Nation

Japan’s working-age population is expected to fall by 40% by 2050. How is this possible for a country with such a large population? One of the main reason is because female participation in the labor force is far lower than in other rich countries, at 63%. This isn't because they aren't qualified, Japan educates its women to a higher level than nearly anywhere else in the world. It is due to the fact that that conservatives were worried it would damage family values, Japanese culture, and it made economic sense since they were the country's "baby-making machines". However, the fertility rate in Japan plunged further and it is why now, Japan is expecting a sharp decrease in it working force in the future.

However, even if the idea women working changes, there will be obstacles for Japanese women to obtain quality jobs. "Corporate culture is by far the biggest obstacle for Japanese women. The practice of hiring graduates fresh out of university and employing them for their entire working lives makes it difficult for employees to take career breaks and seek new positions elsewhere afterwards." Culture once set in place is hard to change especially if people do not see a reason for change. How can the government in Japan help ease this transition to a larger women work force? Will women just never have equal representation with men in top level management position? And if changes aren't instituted now, how will this effect Japan's economy in the future besides a decrease in its work force?

http://www.economist.com/news/briefing/21599763-womens-lowly-status-japanese-workplace-has-barely-improved-decades-and-country

Britain Reaches Deal to Clear Trades in Chinese Currency

Great Britain is looking to become the world’s leading hub for Chinese currency outside of Asia.  By being able to clear trades in Chinese currency, Britain is hoping to attract as much Chinese investment as possible so as to get a first mover advantage on the rapidly growing Chinese economy.  Connecting themselves to the most rapidly growing economies in the world is a major part of their economic plan.  The Bank of China has also recently put a 2.5 billion renminbi bond in the London Stock Exchange’s Professional Securities Market, the largest of its kind.

http://dealbook.nytimes.com/2014/03/26/britain-reaches-deal-to-clear-trades-in-chinese-currency/?_php=true&_type=blogs&ref=international&_r=0

China's Economy: an alternate view

http://www.economist.com/news/finance-and-economics/21599051-chinas-official-figures-both-understate-and-overstate-inflation-alternative-view

This article provides an alternate view on the view of China's economy as continually strong and growing. The article provides the statistics that everyone has heard about the growth of GDP in 2013. But then discusses the declining house prices and the weak exports. The article states, "Forecasters expected industrial output to grow by 9.5% in the first two months of 2014, compared with a year earlier; it grew by only 8.6%." The article then discusses an important aspect of the Chinese economy: inflation. Is inflation significant? Does China realize this negative of their economy?

Wall Street falls, NASDAQ under 50-day moving average

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US stocks fell sharply today (Monday, March 24) as the NASDAQ has had its biggest daily percentage drop since February, with technology and biotech companies (recent best performers) leading the fall.

This has come as a result with the recent crisis in Ukraine and fear that the conflict may escalate. Investors are nervous because there is a potential for an economic fall out to the rest of the global economy.

Netflix Inc. has been the S&P 500’s biggest loser falling 8.9% followed by Facebook Inc. and TripAdvisor Inc. Again all three of these companies had performed well in 2013.

Markit – a financial data firm – has said even with manufacturing activity slowing in March the rate of growth and rate of hiring has remained strong. 

US Targets Putin's Banker, Threatens Trade

President Obama signed an executive or to effectively sanction Russian industries including financial services, metals, and engineering. These round of sanctions could cripple the Russian economy that is heavily reliant on oil and natural gas exports. As tensions in Crimea increase, the US sanctions has the potential to hurt not only the Russian economy, but much of Europe that relies on many exports will hurt because of it too. As the number one supplier of energy, Russian sanctions will limit the amount of power they will be able to produce and export. Threats to increase the severity of sanctions from the US will likely hurt other industries not only in Russia, but their trading partners.

U.S. targets Putin's banker, threatens trade

A 'Crisis' in Online Ads: One-Third of Traffic Is Bogus

http://online.wsj.com/news/articles/SB10001424052702304026304579453253860786362?mod=WSJ_business_LeadStoryRotator&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304026304579453253860786362.html%3Fmod%3DWSJ_business_LeadStoryRotator

Digital advertising is now a $50 billion dollar industry, and it continues to grow, but many firms are cautious about how much more money they will put in digital advertising. This caution is because of the growing fraudulent digital advertising industry. Typically, marketers pay for ads when users visit a web site, whether or not the user is a human. The frauds create web sites and then create computer generated programs to visit those sites to make it seem as if people are actually visiting the web site. According to the article, about 36% of all web traffic is fake.

Quentin George, a co-founder of ad-technology firm Unboud, says that there should be more money in digital advertising considering how much time people spend on the internet, but issues like fraud limit firm's confidence in the effectiveness of digital advertising. Marketers are responding to the issue for fraud by actively monitoring for fraud, and by demanding a refund if fraudulent digital advertising is found. Another option is some marketers are now only paying the website when there is clear evidence that the user has signed up for their product. The article notes many of many of the "fraudsters" are from eastern Europe. If the eastern European fraudsters are stealing money from what are mostly western firms, do the marketers or security services have any incentive to catch and punish the fraudsters, or should they be more focused on finding new ways to charge marketers that will prevent fraudsters from abusing the system?

The End of the Crony Era

Recently, favor and favoritism has not been smiling on crony capitalists. Their self-serving behavior often spills over into politics and government. The attention that Viktor Yanukovych and Rinat Akhmetov have garnered in recent news has brought about this turn. Government's are markedly cracking down on cronies within the system. In Ukraine especially, monopolies and oligarchs are under scrutiny. A new generation has begun to emerge that casts capitalists in a better light. This article outlines the transition from crony capitalists to the new generation of economic tycoons that are taking over the economic world.

http://www.economist.com/news/leaders/21598996-political-connections-have-made-many-people-hugely-rich-recent-years-crony-capitalism-may

Teens face toughest job market on record

Teen employment has reached the lowest rate on record since World War II, with 26% of 16-19 year olds being employed (2001 data), a 19% drop from 2000.  While there have been some rises in enrollment rate in college and high school, the modest increases have not been able to explain why so many youth are not employed.  And even if they are employed, they are most likely to be underutilized.  College age adult employment has also dropped from 72% in 2000 to 61% in 2011.

Education has been shown to be a problem, with high school not being able to prepare students for a job.  With high schools not being able to prepare students for college coursework and job training, apprenticeships and applied 2-year degrees not being a priority for the large number of American youths who don’t even make it to college.

Read article here: http://money.cnn.com/2014/03/14/news/economy/youth-employment/index.html?iid=SF_E_River

Investors Are Falling For Indonesia Again

In the past nine months, Indonesia was part of "fragile five" economies that was most vulnerable to quantitative easing policies in the United States. As a member of the "fragile five" economies, analysts thought Indonesia might be heading for another 1997 crisis, where the Indonesian currency fell 70%, GDP declined 14%, and inflation rose 70%. But during that nine month time period, investor sentiment has gone from excessively pessimistic to optimistic in regards to the Indonesian economy. The Indonesian currency fell more than 30%, but it allowed for an opportunity to lower their current-account deficit by making exports cheaper in foreign markets and imports more costly. Currently, interest rates and inflation rates are low setting the Indonesian economy up for potential growth. As it stands, the former "fragile five" economy is one of the world's best markets year-to-date up 23% in US dollar terms. Although, there is opportunity for growth, this is not a sure thing. The risks from a China economic burst and difficulties with a new presidential reform are both under-estimated. Additionally, Indonesia is trading at 15x this year's earning, a 32% premium to Asia (minus Japan). In order to lower the risk of a foreign long-term investment , I might be better suited to find a better value in South Korea that is trading at approximately half (8x earnings) of Indonesia's valuation.

http://www.forbes.com/sites/jamesgruber/2014/03/23/investors-fall-for-indonesia/

World Food Programme: Giving Generously

This article illustrates some of the changes and progress made by the World Food Programme (WFP) to better assist starving people in struggling countries across the world. According to 2013, the WFP fed over 90 million people in 80 different countries. While this is an amazing feat, the WFP has been reassessing how to go about distributing food to each area. As of late, they have determined that importing food directly to the people can, “undercut local food markets and cause more fundamental economic problems,” and would generally disrupt the local economy. Buying and redistributing locally is the better alternative. Now that these logistics have been improved, economists like Lynn Brown from the World Bank have been seeking to improve nutrition as opposed to just starvation, among other ways to improve food assistance. It’s great to see economic efficiency improving and progress being made with this challenge. 

http://www.economist.com/blogs/freeexchange/2014/03/world-food-programme

Coping When Not Entering Retirement Together

http://www.nytimes.com/2014/03/22/your-money/coping-when-not-entering-retirement-together.html?ref=business

This article caught my eye due to my Public Finance course with Professor Gitter. The article deals with handling the benefits you can receive after retirement. With many countries having different systems, this one addresses the US system. It talks about a man and the lifestyle he wants to live after retirement but also balancing his wants with his wife as she is still working. Knowing the system we have is important for us much later in life. It will be interesting to see how much things change from now until our retirement time down the line.

The once and future currency

http://www.economist.com/news/finance-and-economics/21598651-new-book-examines-worlds-love-hate-relationship-dollar-once-and

This article talks about the world's love hate relationship with the dollar. It talks about a new book that was released that talks about the ups and downs associated with our currency. With the economy fluctuating so much in the past few years, this book could be an interesting read for those interested in exchange rates, trade and all things that focus on the strength of the dollar. The value of a country's currency can make or break an economy at times so learning about the dollar through this book can be very beneficial.