Still on the Edge

The article goes into great detail regarding the recent progression of the Ukrainian economy and that even though it is progressing there are things to be skeptical about. Value added tax rebates on exports have been a particularly tricky issue because no one has actually tried to clean up the lucrative system of actually claiming them. However; the 2016 budget proposal is pretty reasonable but it is hindered by people who are resisting the abolition of inefficient tax loopholes.

There dodgy elements in  the Ukrainian economy are a source of skepticism for locals as well 

as foreigners. With threats of resignations still up in the air, Ukraine remains at  risk.

Berlin's refugees wait to register, Businesses cannot wait to employ them

Germany has been struggling to cope with the 1 million refugees that have entered the country this year, Berlin receiving about 90,000. Refugees have been waiting in queues to get registered with the state so that they are able to receive health care and services as well as employment. Berlin is not a very competent city for this task. Even before refugees began to arrive, it was in deep debt, received subsidies from other states, and the schools are among some of Germany's worst.

Humanitarian organizations in Germany have been watching a humanitarian crisis build up in Berlin. Refugees who have experienced trauma and arrive with health problems still wait to be registered, some barely able to communicate with locals and fill out paperwork because of their broken English. A refugee boy was plucked from the line one day by a German man and was then sexually abused and strangled.

On the other hand, Berlin's civil society is "brimming with energy." Volunteer efforts to collect clothes and food, teach refugees German and English, and provide shelter have flourished. For those refugees who have been able to be placed with an internship or job, the reviews from the German public have been good. Businesses are pleased with their new employees and are excited to hire more with the same work ethic.

This goes against the talk of refugees bringing an economy down as they take jobs from citizens. While its still early to make a judgment, it appears as though businesses are still doing well.



http://www.economist.com/news/europe/21684169-berlins-refugees-wait-register-businesses-cannot-wait-employ-them-all-down-line?fsrc=scn/tw/te/pe/ed/alldowntheline

Hundreds of Companies Paid Little or No Tax in Australia

        Australian tax authorities have recently released a report saying that on third of the largely foreign-owned corporations, including Google and Apple, paid very little or no tax in 2014. Names of some of the companies that did not pay taxes were oil services company Halliburton, the hotel chain Hilton Worldwide Holdings, the aviation company Boeing, its British rival BAE Systems, the beer company SABMiller and the automakers Honda Motor and the Ford Motor Company. However, for SABMiller case, they had no taxable income, while Google and Apple pay only a small portion of their income. Their representatives have been refusing to make any comment on such subject. Peter Burn, head of policy at business lobby the Australian Industry Group, said the data release showed tax laws needed to be updated, not that companies were evading their responsibilities.

Source: http://www.nytimes.com/2015/12/18/business/international/hundreds-of-companies-paid-little-or-no-tax-in-australia.html?ref=economy

GOP, House Poised to Renew $600B in tax cuts

GOP members of the house appear to be poised to push the $600B tax cut through by Thursday, amid some opposition from house Democrats, notably minority leader Nancy Pelosi. She called the proposition "practically an immorality," as some Democrats believe the cut is too focused on business, saying 60% of cuts are directed at permanent reductions to businesses and 40% to families. Republicans believe that this tax cut will be a start to further tax and health care overhauls next year, fully expecting vetos and hoping to excite conservative voters ahead of next years election.

This news coupled with the Fed's announcement of raised interest rates may cause more inflation than expected. It will be interesting to see how voters view these tax cuts, as most voters are not educated in economics and are more adverse to taxes than nearly any other nation. I am concerned that many are unaware of the possible negative impact this could have on the economy.



http://www.cnbc.com/2015/12/17/led-by-gop-house-poised-to-renew-600b-in-tax-cuts.html

FED Raises Key Interest Rate for First Time in Almost a Decade

Today, for the first time in almost a decade, the Federal Reserve has raised interest rates. This highly anticipated move only comes because of the strength of our domestic economy. Unemployment has fallen to below five percent, a level historically consistent with a healthy economy. Inflation also remains somewhat low. However some areas of the economy are weak, like the recent drop in oil prices. The FED must keep an eye on the changes in the economy both domestic and globally. If they wait too long they risk losing control of inflation. http://www.nytimes.com/2015/12/17/business/economy/fed-interest-rates.html?_r=0

Canadian start-up sells bottled air to China, says sales booming

A Canadian company selling air bottled in a ski resort says it's now seeing huge demand from Chinese customers.

Vitality Air said that the first batch of 500 canisters filled with fresh air from the Rocky Mountain town of Banff went on sale in China last month and sold out within two weeks.

"Now we're taking lots of pre orders for our upcoming shipment. We're getting close to the 1,000 mark," said Harrison Wang, director of China operations.

The air sells for $14 to $20, depending on the size of the canister.

Read More

Northern China is often cloaked in smog, especially during the cold winter months when homes and power plants burn coal to keep warm. Last week, Beijing issued its first ever red alert because of poor air quality, closing schools and restricting traffic.

http://www.cnn.com/2015/12/15/asia/china-canadian-company-selling-clean-air/index.html

Financial Turmoil in South Africa?

Within the last week, South Africa has had three finance ministers. The current minister, Pravin Gordhan, took his position on Sunday night and tried to ease some of the confusion in the country. Gordhan addressed journalists explaining the government will begin in emphasize sound fiscal management and smart spending by state-owned enterprises like South African Airways. These promises seem meaningless to some people when previous finance ministers have promised the same thing. The South African president, Jacob Zuma, fired the previous minister last week who tried to cut down spending. This caught many people off guard and has led many to demand the recall of the president. This is one of the many acts that have led to the anger against the ANC, the party in control currently. Some political analysists have marked this period as the Fall of the ANC. We could see big changes in South Africa if President Zuma continues on this path and ignores the voices of the people.  

http://www.economist.com/news/middle-east-and-africa/21684043-investors-are-hoping-south-africas-latest-finance-minister-can-steady-ship-south 

In Denver, Worries That the Fed Will Chill a Sizzling Recovery

The Denver-area economy has enjoyed one of the strongest rebounds from the recession, even amounting to a 3.1% unemployment rate in October. However, with the looming rise in interest rates, many local businesses are worried. They're concerned that people won't be able to spend their extra income on these newly formed businesses.

Along with a rapidly growing economy, housing prices have climbed 24% above what they were before the recession. Some say that modestly higher interest rates won't slow the growth, however, others think it definitely will. People think the economy isn't strong enough to handle the possible higher rates.

I do wonder if similarly sized cities are worried about this as well. Also, if interest rates are raised, it would be harder to sell houses and property. Will rates actually affect the incredible expansion of this city? Or are these worries not necessary?

http://www.nytimes.com/2015/12/14/business/economy/in-denver-worries-that-the-fed-will-chill-a-sizzling-recovery.html?ref=business&_r=0

Ecological Economics

Kenneth Boulding, a British economist, talks about the need for economic policies that are conscious of our Earth's finite resources and utilizes them in a manner that allow for sustainability. Practitioners of this have begun calling themselves Ecological Economists.
To its practitioners, ecological economics is neither ecology nor economics, but a fusion of both. Their starting point is to recognise that the human economy is part of the natural world. Our environment, they note, is both a source of resources and a sink for wastes.
There are two ways our economies can grow, ecological economists point out: through technological change, or through more intensive use of resources. Only the former, they say, is worth having. They are suspicious of GDP, a crude measure which does not take account of resource depletion, unpaid work, and countless other factors. In its place they advocate more holistic approaches, such as the Genuine Progress Indicator (GPI), a composite index that includes things like the cost of pollution, deforestation and car accidents.
The GPI however, is highly criticized as a subjective measure and should not carry much weight. Either way I believe it is important to consider the effect on the environment when creating economic plans.

China's pollution causes environmental concern

http://www.wboc.com/story/30734058/chinas-efforts-on-climate-deal-partly-due-to-its-pollution

Up until 2015 China had been the world's fastest growing economy. The growth was due in large part to the construction "of hundreds of coal-fired power plants and an increase in car ownership" (Watt, 2015). As China continues to innovate and progress its society with the implementation of new technology, it also pollutes the air on its own and from their factories.

With the public becoming increasingly aware of these environmental concerns, economic growth has taken a slight backseat to the environment among the Chinese population. The article states that China's cities are "among the world's dirtiest" which has people concerned "with environmental issues and taking that on par with wanting to make money".

With these concerns, the Chinese government is trying for a push for a global climate pact. Its purpose would be to pledge to "keep global temperatures from rising another degree Celsius (1.8 Fahrenheit) between now and 2100." China's president, Xi Jinping, has pledged $3.1 billion to help other developing countries fight climate change. Already China has become a leader in curbing greenhouse gas emissions "by investing in solar wind and hydro power". The efforts by China should be applauded by the rest of the world as they help take a step in the direction of maintaining a livable environment on our planet. Although their coal power plants were a major cause of a large portion of the world's greenhouse gas emissions, their current efforts to clean the air should not go unnoticed.

Interest Rate Expectations Provide for an Unclear Future

Everyone has been awaiting the Federal Reserve's decision to raise interest rates for some time now. In this time, many investors have taken action on investments without considering the full risk in hopes for a greater return. With this type of wishful thinking, many have taken personal pleasure in their investments crediting it to their self worth, while disregarding the future implications of the near zero interest rates.
Further, as the time gets closer for the Federal Reserve to make their deacon about raising rates this December, it is unclear how the markets will reacts once the rates do increase. At this point, there has been so much talk about a hike in rates this December that it would be pretty crazy if the Fed didn't raise them. Therefore, with people trying to make predictions about the outcome of the rate change, it is quite difficult to know since the circumstances are so unique. The last time rates rose after being so low was in 1941, which was clearly a long time ago with very different circumstances. Therefore, there are a couple different ways of analyzing the effects of the Federal Reserve.
First off, it is possible that the stock market could weaken with the increased demand of low-risk Treasury bills and people being already wary about shares prices. Housing prices may also weaken when interest rates increase because mortgages will become more expensive. Another thing to consider would be inflation. As raising the interest rates would indicate that of a growing economy, inflation comes hand in hand with economic growth.
There is also the Efficient Markets Theory that denotes all available information is already reflected in market prices. Furthermore, since markets already know everything about rates, an increase in interest rates should already be discounted into share prices. Another approach to look at would be "nonconsequentialist reasoning" which implies that we can't think through consequences of an event until it actually occurs.
It is clear that there are a number of different results the interest rate hike could create, but the real surprise would be if interest rates didn't increase at all.
So what do you guys think will happen at the end of this month? How will the markets react?

http://www.nytimes.com/2015/12/06/upshot/for-any-fed-action-on-interest-rates-an-unforeseeable-reaction.html?ref=economy&_r=0

Volkswagen Holds Talks with Core Investor in Qatar

http://www.wsj.com/articles/volkswagen-holds-talks-with-core-investor-in-qatar-1449425599


Top VW officials had to meet with an important investor on Sunday to discuss the future of the car company. It is believed that the top investor is asking for multiple changes in the car company in order to gain back popularity. Officials said that this was a normal meeting, but many people speculate this. Volkwagen is trying to climb back to the top, and are trying to do so by first closing a deal worth 20 billion euros. Some things these investors are going for is to decrease worker representation on the board and decline the idea more diesel cars instead of electric. Even though, the meeting was rumored to have a lot of talks on labor issues, it was denied. So look to see VW to make a push in the market sometime soon.

Ukraine at a Fork in the Road

http://www.economist.com/blogs/freeexchange/2015/12/other-war-ukraine

The Ukraine has mixed politics with economics and is stuck in a debate between two plans. Plan A is pushed by the Ministry of Finance and supported by the IMF because it will make the budget deficit only 4% of its GDP. The IMF is known for having strict policies and because of this they do not support Plan B which would allow for a 10% Budget Deficit. Plan B, however, is supported by a member of the the president's party and is politically beneficial because it offers the public "hefty tax cuts."

This is another good example of economics and politics colliding. If Plan B is chosen then the IMF will stop disbursing bail-out funds to the Ukraine which would be detrimental to their economy. The current president, however, is worried about popularity, and tax breaks are always popular to the general public. The Ukraine is at a fork in the road and if they choose the wrong route, they will be looking at even tougher times ahead.

Whaling in Japan

The International Court of Justice ruled last year that Japan's whaling expedition were not for scientific purposes making them illegal, many hoped that this practice would come to an end. Despite this ruling, Japan has sent out a fleet to catch 333 whales which is a third size of the last catch. Some people argue that the Japanese tradition of whale hunting is only practiced by a small number of people in Japan and gets more heat and attention than is necessary. The consumption of whale meat has gone down dramatically since the international community began fighting against this practice two decades ago. The whaling program has cost Japanese taxpayers more than $400 million in subsidies since 1988. Do you think this practice gets an unnecessary amount of attention from the international community? Or do you think all the action taken against whaling is necessary? Are the whaling policies harmful to Japan's economy? 

http://www.economist.com/news/asia/21679603-japan-returns-southern-ocean-japans-whaling-fleets-steam-out-fight-western-culinary

South Korea Fines Volkswagen and Orders Recall Over Emissions Scandal

Article: http://www.nytimes.com/2015/11/27/business/international/volkswagen-south-korea-recall.html?ref=international

            On Thursday November 26^th, South Korea has recalled over 125,000 Volkswagen cars. This was due to South Korea’s Environment Ministry ruling after their investigation into Volkswagen automotive cars; their investigation determined that the German carmaker had illegally manipulated an emissions device in cars with older diesel engines.  The investigation conducted by the Environment Ministry started in September after Volkswagen admitted that approximately 11 million cars worldwide had been fitted with cheating software. These devices made it appear that the diesel-powered Volkswagen cars were emitting less nitrogen oxide levels than they actually did. On November 26^th, at a press conference in Sejong, South Korea, Director of South Korea’s Environment Ministry Hong Dong-gon announced the findings from their investigation of Volkswagen that proved the illegal manipulation of nitrogen oxide emissions. Moreover, the engine breached set emission levels when the car was not under the usual test conditions such as during sudden acceleration, when air conditioner was turned on, and when the car was on the road said Director Hong Dong-gon. Volkswagen has completely acted unethically by abusing their moral obligations and violating environmental regulations. The cause of this can be related to various things such as decision making processes, organizational culture, and leadership, but so far we cannot confirm the root of this problem within Volkswagen. This led to the collapse of Volkswagen’s brand value. 

China’s economy may be slowing, but consumers haven’t stopped spending

China’s economy may be slowing down, even though consumers haven’t stopped spending. The Chinese consumer seems oblivious to the broader state of the economy. Whereas gross domestic product growth in China has fallen from 7.9 percent two years ago to 6.9 percent in the past quarter, retail sales growth has held firm at about 11 percent. Although sales growth of big-ticket items such as cars has been relatively modest, spending on smaller items and services such as movie tickets and mobile phone subscriptions has increased at a breakneck pace. There are many explanations for the consumer’s resilience. China’s government is actively promoting policies to shift its economy toward consumption. Income per capita is rising, and the middle class is growing, driven by urbanization, which typically involves the movement of populations from rural areas to coastal cities. Some of the strength in Chinese spending can be explained by people moving back to smaller cities after trying their luck in the large tier-1 cities, such as Shanghai and Beijing, where migrant workers often discover that life isn’t easy.

http://www.businessinsider.com/chinese-still-spending-as-economy-slows-2015-12

The Economy Is Growing, but Not Fixed Yet

This article agrees with the comments and predictions the economists made at the Economic Outlook Conference in that the economy is growing. In fact, "The unemployment rate was unchanged at 5 percent, and average hourly earnings rose 0.2 percent last month, both identical to the forecasters’ projections." These numbers actually lines up with what people have been predicted. However, although the new jobs number has been increasing, it does not show progression or fix some key weaknesses of the economy. The ratio of the population working was unchanged at 59.3 percent.

Source: http://www.nytimes.com/2015/12/05/upshot/the-economy-is-growing-but-not-fixed-yet.html

a capitalist fairy tale to counter growing inequality

The CEO of a medium sized credit card processing company, called Gravity Payments, has announced that the minimum salary will be $70,000 a year. He was able to do so by cutting his own compensation and benefits. Though in the spirt of doing good and helping people, it has caused several problems for the company. Many higher waged based employees have found it unfair to reward those who does work as hard or achieve as much as they do. The added attention to the company has overwhelmed them with job applications, thus relocating some employees to the recruitment department. Though the added publicity has helped to bring in new clients, the added costs of attempting to equalize the"middleman" company may end up damaging it more. http://www.bloomberg.com/features/2015-gravity-ceo-dan-price/

The Economic cost of civil war in Syria

The civil war in Syria does not seem to be ending anytime soon and unfortunately that means that Syrians will have to come to grips with the fact that they will either have to flee or stay in Syria and not only fall prey to the horrors of war but also the economic downturn that comes with it. A Harvard Center for International Development study estimated that large government-involved civil wars typically reduce GDP by 1.25 % each year whereas Syria’s 2013 GDP dropped a staggering 20.6 percent and the GDP in 2014 cannot even be calculated because the economy is so broken down. Fast forward to 2015 and the sheer amount of destruction means that there is no good way to put the situation in any words. Disturbingly so, the Syrian HDI has fallen back to a point where it was 38 years ago. THat means that the Syrian today has the same life expectancy, education and overall quality of life as a Syrian in 1977. 

The un employment rate is at 57 percent, one of the highest in the entire world. Comparable to nations like Haiti. The entire economy has become a sort of conflict economy which is forcing Syrians to try and attempt to "thieve" their way into the markets in Damascus. Sources predict that it will take over 30 years for Syria to return to its Pre War conditions and you really being to wonder when you put it in perspective, is it all worth it?

http://www.globalenvision.org/2015/03/25/cost-civil-war-syria%E2%80%99s-economy-after-four-years-conflict

Free for All

It was probably anticipated that during OPEC's meeting in Vienna today that they would decide to keep on pumping out oil.  However, few probably anticipated that this would be an individual effort. At their chaotic meeting today the members decided to toss aside the idea limiting production to control prices. Instead, the organization decided to not work as a cartel and instead make the oil market an every man for himself competition. The result of this will be that countries will pump immense amounts of money as long as they can still turn a profit. The leaders in this will be the countries who can produce with the lowest costs, mainly the Saudis. Their goal will be to produce as much as possible as fast as possible in order to push rivals out of the market and gain market share. They will most likely push Russia and U.S. shale producers who require higher margins to stay profitable out of the market. It has been said that "OPEC is dead." Since the countries within OPEC account for roughly 40% of the world's oil production, there will be extreme repercussions of limitless production. What do you think will happen to the global economy? Clearly companies like EOG and Exxon won't be able to compete. Do you think the U.S. will have to push for some sort of agreement?

Low gas prices boost SUV and pickup sales

The sale of large gas guzzling SUV's and pickup trucks has increased by 10% this year with the direct correlation coming from that of low oil prices. As stated by CNN money, "Buyers seem quick to respond to changes in gas prices, both up and down" which has translated to an increase in these styles of vehicles and away from the more environmentally friendly options such as the Prius. The logic behind this shift deals with how as the economy strengthens with low interest rates and reduced gas prices, consumers are wanting to "buy as much car as they can." The lower fuel prices are making more room in consumers budgets to be able to afford more expensive vehicles, despite the reality of how gas prices could spike at any time, ultimately posing the idea that they may not be able to afford to drive these vehicles in some time to come. 

One thing that is beneficial to this shift in vehicle purchasing behaviours is how majority of these SUV's and pickups are made by American car producers. Companies such as General Motors and Ford, with their extensive product lines, clearly dominate this car sector which has increased domestic car production and purchases. 


http://money.cnn.com/2015/12/04/autos/gas-prices-suv-pickup-sales/index.html?iid=hp-stack-dom

Wall St. sharply higher on upbeat jobs data

   All three major U.S. indexes were up more than a percent on Friday after stronger-than-expected U.S. jobs data built the case for the Federal Reserve to raise interest rates this month for the first time in nearly a decade. All but one of the 10 major S&P 500 sectors were higher. The energy index fell after sources told Reuters that OPEC would maintain its production in an oversupplied market. Nonfarm payrolls increased 211,000 in November, the Labor Department reported, while September and October data was revised to show 35,000 more jobs than previously reported.

The unemployment rate held at a 7-1/2-year low of 5 percent, even as people returned to the labor force in a sign of confidence in the jobs market.

   This news mirrors the analysis Ben Ayers, George Mokrzan and Mark Shweitzer  delivered at the economic outlook conference, several weeks ago. From a regional perspective, the perennial losers in terms of overall economic growth had included states in the midwest including Michigan, Ohio, Indiana, actually have above average growth as well as decreased unemployment. Although the current climate can be seen from a glass-half-full perspective, it is important to note like several audience members at the conference explained, that economic conditions in the midwest haven't return to what they were in the beginning  part of the decade. Additionally, job growth in the midwest had been driven by manufacturing job opportunities, many of which have been eliminated as the midwest moves out of the manufacturing sector.

http://www.reuters.com/article/us-markets-stocks idUSKBN0TN19520151204#peRxyqsoVxlEMyrv.97

Terrorism and Fear May Spur Economic and Social Change

Yesterday in San Bernardino, California, tragedy struck at the Inland Regional Center, who provides services for people with developmental disabilities. Fourteen people were killed, and others injured. The attacks were taken out by two sick and stupid terrorists, who are deranged and do not deserve for their names to be put into this article.

Mass shootings come a dime a dozen nowadays in America. Nothing is happening. Gun control isn't as simple as taking away guns from people who have them, or preventing mentally unstable people from getting them. People are still able to get guns illegally, as well as create terror with other weapons, like knives, baseball bats, etc.

But this senseless terrorism has touched a nerve this time. It's bad enough to do it to any group of people, but to people with autism and disabilities? That's when you cross the line. The fact that this couple had been in touch with radical Islamic views too is disturbing.

What does America do? Where do they go from here? Legislators have yet to put into place anything rationale that can stop these mass shootings from occurring. Both parties can't agree on any issue, let alone this. It's time to make a change and crack down on psychopaths and moronic terrorist wannabes who want to do nothing but get on a few newspapers at the cost of American lives.

Security in America will spike up in response to fear and worry of future attacks, anywhere. I just pray that it stops, because it is truly sickening to read about, and I feel for the families that were involved in that situation.

The problem with American society is that news stations like CNN and Fox News glorify the shooter's name, when the focus should be on the victims. Forget the shooter's name, that's only giving psychopaths more reason to try and commit mass shootings and destruction themselves. Reporting is also done to ensue fear in American lives: make them buy things, make them watch the news more so that ratings spike, and make people talk poorly about what America is or isn't doing.

The fact of the matter is, Donald Trump may be saying crazy things to get the attention of people, but if you look closely, that's what news stations have been doing their entire duration: saying crazy headlines and portraying certain aspects of stories to get higher ratings. Pardon my French, but that is f***** up.

American society can connect with each other so much quicker now thanks to social media, which is a blessing and a curse. With the internet increasing in information and globalization increasing exponentially, it is easier for terrorist groups and those of bad influence to get their two cents to people who will feed off of their senseless terror. Something has to be done to prevent this from constantly occurring, because honestly, I'm fearful of it happening in my own neighborhood, and I'm tired of seeing it the greatest country in the world, which is exactly the goal of these terrorist groups and crazy people.

http://www.nytimes.com/2015/12/04/us/san-bernardino-shooting.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=a-lede-package-region&region=top-news&WT.nav=top-news

ECB’s Stimulus Moves Fall Short of Market Expectations, Hammering Stocks

The European Central Bank's stimulus package, including expanding their bond purchasing program and lowering their already negative deposit rate, proved to be insufficient. Even with these actions in place the euro appreciated in value from $1.05 to $1.09. The moves the ECB made moved the stocks, the euro, and bond yield in the opposite direction that the ECB wanted them to go, as they seek inflation and lending. Paul Lambert, head of currency at London-based asset managers Insight Investment said, "The ECB had earned itself a reputation of late as an institution that understood markets and how to beat expectations." The euro surged more than 3% against the dollar, which is the biggest daily surge in six years. The Dow Jones and S&P 500 closed 1.4% lower than when they opened. Mario Draghi, president of the ECB, stated that their bond buying program will be extended by six months. One of the reasons he has for the lack of results they have been getting is that the plans have not had the correct amount of time to show results yet. They project increasing inflation rates in each of the next three years. With the ECB's current policies not meeting their Target's, do you guys believe that their targets will be met in the next couple of years?
http://www.wsj.com/articles/ecb-cuts-deposit-rate-draghi-to-announce-further-measures-1449147451

Russia punishing Turkey economically

Recently Turkey shot down a Russian warplane over Syria, and since then Russia is looking to punish Turkey. One of the first things it's doing is imposing trade sanctions on Turkey, and now it has resorted to suspending a pipeline project that would go through the Black Sea. This leaves gas pipes stranded on the shore with a value of almost $2 billion. The pipeline would come from Russia through Turkey, bypassing Ukraine, to bring gas to Europe. The pipes can only be used in the Black Sea so for now, the Russian Energy company Gazprom is forced to put the pipes in storage.

This will severely hurt Gazprom, who previously has spent millions of dollars ($10-14) Turkish Stream. Russian does not plan on moving forward with project until tensions have subsided, which they're not sure will happen in two years or in fifty years. Russia is one of the biggest steel pipe producers in the world.

http://www.businessinsider.com/spat-with-turkey-leaves-russia-stuck-with-abandoned-gas-pipes-worth-billions-2015-12

Tax on Sugar?

Earlier this year we discussed the state's role in externality management. Akin to a carbon tax, a tax on sugar seeks to make the private costs more equal to the social costs. Places in England, Mexico, and California have already implemented these taxes in response to obesity/diabetes. People who consume excessive amounts of sugary soda drinks often end up being diabetic or obese which warrants tremendous increases in healthcare costs.

Do you see this and other disincentivising taxes as a valid way to curb externalities or do they represent an overly controlling "nanny state"? What about offering incentives for proper behavior rather than disincentivising undesirable behavior?

http://www.economist.com/blogs/freeexchange/2015/12/money-talks

China yuan steps up to global stage

http://www.afr.com/news/world/china-yuan-steps-up-to-global-stage-20151201-glc7c8

IMF agrees to include China's RMB in benchmark SDR currency basket. This is really a big time for China's RMB. It makes Chinese assets become a bit more attractive. One analysis pointed out that China's RMB getting into SDR means China's RMB will depreciate to almost 7:1 USD. In the international business market, the depreciation would definitely bring benefits to Chinese export. And China's RMB may be more important in international trades.

The CEO Paying Everyone $70,000 Salaries Has Something to Hide

http://www.bloomberg.com/features/2015-gravity-ceo-dan-price/

Gravity Payments CEO, Dan Price told the company he was raising the minimum salary of all workers in the company to $70,000. It is said that this would double the wages of some of the employees. He planned to do this by cutting his own salary of $1.1 million.

He was criticized by some of the hgher paid workers saying that some of their wages are being taken away and some commentators have called him a socialist. He was praised many for the move and has been offered to go to many conferences to speak, write a book, and appear on TV shows. Now his brother who owns 30% of the company is suing him, claiming that he had paid himself too much from the beginning. Allegedly this lawsuit was brought about from his actions to raise the minimum wages. A move that was so praised has now caused a huge rift between him and his brother.

For company's of similar size, the CEO's have been paid significantly less. He refutes the claims that he was paid to much as the board, including his brother, have approved his pay raises.

UK interest Rates

UK Interest Rates Expected to Stay Constant

            Mark Carny, the Bank of England governor stated that United Kingdom interest rates are likely to remain low for the near future. The Bank of England expects interest rates to be held at 0.5% until 2016. Carny believes that if interest rates are gradually increased it will still result in a relatively low interest rate environment. Carny stated that interest rates is strongly related with the strength of the domestic economy. The Bank of England is closely monitoring study groups of households that aim to find the impacts of an interest rate increase. Productivity of the UK economy is expected to exceed expectations, eliminating the pressure of inflation on prices.

            Andy Haldane the chief economist of the Bank of England expects more downside risks to growth and inflation than indicated by Carny. He believes that an interest rate decrease may be the most effective move. Haldane stated, “I see the balance of risks around UK GDP growth and inflation as skewed materially to the downside, more so than embodied in the November 2015 Inflation Report.”

            The UK Pound continues to devalue relative to the U.S. dollar and the Euro. This is concerning as the Bank of England continues to hold off on an interest rate change. I believe the UK needs to make interest rate changes sooner than later so the implications are made fully aware. Adjustments then can be made so that the economy can fully recover from its current downfall.

http://www.bbc.com/news/business-34910401

Kohl's Ivests in The Beatles for the Holidays

Kohl's approaches the holiday season with a new tactic this year: incorporating The Beatles' iconic song "All Together Now" into 15-30 second commercials. These commercials will feature the idea of members of a diverse extended family gathering for the holidays. Kohl's will have short clips of cover artists singing the infectious tune throughout the commercial. This way, the company saves some money on featuring cover artists rather than using the original song which would double the cost. However, considering the popularity of this song, the process took five months to finalize production. The article also discusses that there will be online components of the idea including heart warming stories of families reunited. Customers will also be encouraged to share their own personal holiday traditions, which will be translated into animated clips. There will also be two pop- up events in New York City featuring a story booth where customers can share their holiday traditions.

Kohl's idea for the holidays is strategic because they will be tugging at the heart strings of their customers, making the individual customer feel important in sharing their personal stories. This will make customers feel apart of the Kohl's family. Also, the idea of showcasing a diverse extended family in commercials will appeal to every type of person - an identity for each age, race, and sexual orientation. Moreover, Kohl's has pretty much incorporated family, diversity, holiday traditions, and a super catchy tune into one big campaign for the holiday season.

If there are no hiccups in the plan, it seems as if Kohl's will have a great profitability turnout for the season. What do you think? Will their marketing tactics work?

http://mobile.nytimes.com/2015/11/30/business/media/kohls-invests-in-beatles-tune-for-holiday-campaign.html?referer=https://www.google.com/

When will UK's interest rate rise?

'Mild' deflation has continued with the cost of living falling again for British households, the latest ONS figures show.

CPI came in at -0.1 per cent for October, the same as September. This was spot on expectations and is unlikely to shift the outlook for rates.

Bank of England deputy governor Ben Broadbent warned at a Reuters event this week that investors should not rely on the money market's expectations for when and how rates will rise, with the outlook drifting further out once more. 

Interest rates will not move until mid-2016 and may not even rise for the whole of next year, economists have suggested following the latest Bank of England inflation report.

A big shift back in the markets outlook for rates had preceded the second Super Thursday combination of an MPC verdict, minutes and Inflation Report.

The Bank's report suggested once more that this most likely path for rates should see inflation return to target without risking the economy's recovery.

That has widely been taken as meaning that there will be no shift in Bank Rate until well into 2016 - even if the US Federal Reserve raises rates next month.

 

http://www.thisismoney.co.uk/money/news/article-1607881/When-UK-rates-rise.html

A longer paternity leave: is it good for the U.S. economy?

Facebook CEO Mark Zuckerberg is changing the face of social media once again. Beginning in January, 2016, Facebook will offer up to four months paid paternity leave to its full-time male employees around the world. This coupled with a $4,000 “new child benefit” option will affect 34 international offices and nearly 12,000 employees – making Facebook’s parental benefits among the best in the U.S.

Facebook is not the only company looking to offer better paternal benefits. Spotify, Netflix, and Amazon have also begun to strengthen their paternal benefits. For example, Netflix has begun to offer unlimited paid time off until a child’s first birthday to all male and female employees. While this phenomenon is not uncommon to countries outside of the U.S., it is a very drastic change for U.S. companies who in the past have not offered paternal benefits and only offered a maximum of 8 weeks’ maternity leave for new mothers.

With this new benefit being offered to new fathers in companies across the U.S., what do you think will happen to the current work force? Since this new benefit is only offered to full-time employees, do you think a hike in part-time employment will occur in the coming future?

Link: http://money.cnn.com/2015/11/25/pf/jobs/facebook-international-paternity-leave/index.html