Saturday, February 7, 2015
Anxiety and Interest Rates: How Uncertainty Is Weighing on Us
This article is talking about interest rates within the US and how technology such as the internet are taking away certain jobs and it is effecting employment. It is very odd that with interest rates being so low that Americans are still saving a large percentage of their incomes and this is due to low consumer confidence and the uncertainty of the future. With inefficient markets this anxiety of Americans is being amplified and causing many to take action with their assets when no action is actually needed. The current credit expansion is creating wealth illusions when we really need to come up with an insurance plan for whatever does loom ahead. What do you think could be done to help with this financial/asset anxiety?
http://www.nytimes.com/2015/02/08/upshot/anxiety-and-interest-rates-how-uncertainty-is-weighing-on-us.html?ref=economy&abt=0002&abg=0
The Shrinking American Labor Union
http://www.nytimes.com/2015/02/08/business/the-shrinking-american-labor-union.html?ref=business&_r=0
24.2%: private sector union membership rate, 1973
6.6%: private sector union membership rate, 2014
“The causes of falling union participation are hard to pinpoint but may be attributed to several factors, including the pressures of global trade, technological change, the shift away from domestic manufacturing and a tougher stance against unions from government and corporate leaders.”
24.2%: private sector union membership rate, 1973
6.6%: private sector union membership rate, 2014
“The causes of falling union participation are hard to pinpoint but may be attributed to several factors, including the pressures of global trade, technological change, the shift away from domestic manufacturing and a tougher stance against unions from government and corporate leaders.”
The Enforcer - How the ECB can dictate to the Greek government
According to the article, the European Central Bank has disallowed the Greek government and Greek banks from putting up their own government bonds as collateral for loans from the ECB, dissolving a waiver previously granted to the Greeks despite being in junk bond status and having technically already been disallowed from this practice. This served as a warning shot to the potentially volatile and new Greek leftist, anti-austerity government, trying to prevent the new government from demanding a renegotiation of terms of debt and austerity in exchange for payment of debts incurred by the government. As a result, the new Greek government will be heavily reliant on Emergency Liquidity Assistance with its harsher array of terms and conditions, effectively giving over more control of the Greek economy to planners at the ECB.
The ECB, the central bank for all nations sharing the Euro as a currency, finds itself in a precarious position, significantly of its own making. The Greek sovereign debt crisis sparked the pan-Euro debt crisis, nearly causing the currency to collapse due to the heavy debt burdens of generally smaller, less-producing nations, such as Greece, Cyprus, and others, with the crisis nearly causing a crisis of confidence in larger nations with larger GDP, such as France. The ECB, mostly controlled by the solvent Germany, forced heavy austerity in exchange for financial rescue to keep the monetary status quo. Since then, the Euro crisis has been in a sort of suspended animation. This decision is an effort to keep the Euro at status quo on a trans-national scale to prevent wholesale collapse of either Greece or the Euro.
http://www.economist.com/news/finance-and-economics/21642210-how-european-central-bank-can-dictate-terms-greek-government
The ECB, the central bank for all nations sharing the Euro as a currency, finds itself in a precarious position, significantly of its own making. The Greek sovereign debt crisis sparked the pan-Euro debt crisis, nearly causing the currency to collapse due to the heavy debt burdens of generally smaller, less-producing nations, such as Greece, Cyprus, and others, with the crisis nearly causing a crisis of confidence in larger nations with larger GDP, such as France. The ECB, mostly controlled by the solvent Germany, forced heavy austerity in exchange for financial rescue to keep the monetary status quo. Since then, the Euro crisis has been in a sort of suspended animation. This decision is an effort to keep the Euro at status quo on a trans-national scale to prevent wholesale collapse of either Greece or the Euro.
http://www.economist.com/news/finance-and-economics/21642210-how-european-central-bank-can-dictate-terms-greek-government
US Job market booms as recovery accelerates.
http://www.bbc.com/news/business-31167969
This article gives a summary of the jobs added figures for the month of January. This is the 11th consecutive month for the US has added more than 200,000 jobs per month, the best streak since January. It's getting clearer and clearer that the US is approaching full recovery, as Obama stated in his State of Union address that the US has added more jobs than Europe, Japan and all advanced economies combined. The unemployment rate is at 5.7% now, as more people are now actively ,seeking jobs. While the numbers are positive and the Fed as stopped buying bonds vigorously, there's still 'easy' money, explained by the low interest rates. It is anticipated that the Fed will raise interest rates slowly in 2015. One revealing statistic from the article is that right now between ages 16-64, 76.5% are employed, while in mid 2008 it was 81%.
This article gives a summary of the jobs added figures for the month of January. This is the 11th consecutive month for the US has added more than 200,000 jobs per month, the best streak since January. It's getting clearer and clearer that the US is approaching full recovery, as Obama stated in his State of Union address that the US has added more jobs than Europe, Japan and all advanced economies combined. The unemployment rate is at 5.7% now, as more people are now actively ,seeking jobs. While the numbers are positive and the Fed as stopped buying bonds vigorously, there's still 'easy' money, explained by the low interest rates. It is anticipated that the Fed will raise interest rates slowly in 2015. One revealing statistic from the article is that right now between ages 16-64, 76.5% are employed, while in mid 2008 it was 81%.
Unemployment for January
US unemployment for january slightly increased to 5.7%. This increase is viewed as a positive since it means more people are looking for jobs now that employment has been higher, showing a “confidence in the job market.” The article provides a graph showing the number of jobs available each month since January 2014. Several concerns, however are present in large companies: the strong dollar and fall in oil prices that may cost American workers their jobs in the energy sector are two of the main concerns. A positive is the wage gains growing steadily.
How can this affect mobility, such as it is explained in the article for lecture reading?
Friday, February 6, 2015
Money Voted as Top Stressor for Americans
According to a recent study, 90% of Americans report that their
stress level regarding money has remained neutral or even increased despite the
recent improvement in the economy.
Also, 75% report having been stressed out about their financial
situation within the last month. Top
sources of stress regarding money include unexpected expenses, saving for
retirement, and paying for essential things such as food and housing. The study suggests that a household
income of $50,000 seems to be the threshold for how much stress one will
experience, as the gap between the stress levels of those below and above $50,000
is increasing. The article also
suggests that stress over money is contributing to unhealthy lifestyles, such
as increased intake of tobacco and alcohol. I can see why people are stressing over retirement
since no one can rely on receiving much social security in the future, but why hasn’t
improvement in the economy decreased some of the stress across America?
http://money.cnn.com/2015/02/04/pf/money-stress/index.html?iid=SF_PF_River
Chinese Firm Challenges the State, and Wins?
http://www.economist.com/news/business/21642188-alibaba-runs-regulatory-ruckus-love-rocks
No one would call China a free market or anything close to capitalist, but one firm has recently challenged the oversight of the State Administration for Industry and Commerce (SAIC) and seems to have come out close to victorious. Alibaba, China's largest e-commerce firm, it notorious for being ardently opposed to copious entanglement with the government and Communist Party. Jack Ma, the chairman, has stated that he wants the firm to be regarded as a global player, and he has opened up relationships with American groups in order to encourage more transaction. The latest brawl with regulatory institutions has been over a document from last July that cites that Alibaba is not doing enough to fight fake goods sold through its sites. The document was conspicuously not released until after Alibaba's initial public opening on Wall street, and now they face mounting class-actions suits in the United States. This would be enough to shut up almost any Chinese firm, but Mr. Ma has continued to challenge the regulators ruling and even denounce the document as false. After sitting down with officials from SAIC, Mr. Ma has somehow convinced them to retract the document, citing that it was only the minutes from that meeting last summer. And still Mr. Ma doesn't call himself a "red capitalist".
The internet has caused a lot of problems for Communism, and I believe that this is certainly not going to be the last altercation the State has with firms over what to do with emerging industries. These conflicts are a signal of the creeping capitalism that may be the Communist Party's undoing if they fail to fuel their booming development. But I think they'll run out of coal before that.
No one would call China a free market or anything close to capitalist, but one firm has recently challenged the oversight of the State Administration for Industry and Commerce (SAIC) and seems to have come out close to victorious. Alibaba, China's largest e-commerce firm, it notorious for being ardently opposed to copious entanglement with the government and Communist Party. Jack Ma, the chairman, has stated that he wants the firm to be regarded as a global player, and he has opened up relationships with American groups in order to encourage more transaction. The latest brawl with regulatory institutions has been over a document from last July that cites that Alibaba is not doing enough to fight fake goods sold through its sites. The document was conspicuously not released until after Alibaba's initial public opening on Wall street, and now they face mounting class-actions suits in the United States. This would be enough to shut up almost any Chinese firm, but Mr. Ma has continued to challenge the regulators ruling and even denounce the document as false. After sitting down with officials from SAIC, Mr. Ma has somehow convinced them to retract the document, citing that it was only the minutes from that meeting last summer. And still Mr. Ma doesn't call himself a "red capitalist".
The internet has caused a lot of problems for Communism, and I believe that this is certainly not going to be the last altercation the State has with firms over what to do with emerging industries. These conflicts are a signal of the creeping capitalism that may be the Communist Party's undoing if they fail to fuel their booming development. But I think they'll run out of coal before that.
China's Central Bank is Attempting to Initiate Growth
http://www.nytimes.com/2015/02/05/business/international/china-moves-to-free-up-money-in-its-economy.html?_r=0
Last year, China's GDP growth was 7.4%. That was its lowest level since 1990. Real estate and industry have been two sectors that have been hit exceptionally hard. In an attempt to stimulate growth, the People's Bank of China enacted a policy that reduces the reserve requirement of Chinese banks. This should increase lending, and it will be especially helpful to the two aforementioned industries. The People's Bank of China lowered interest rates in November of last year. They are attempting to spur growth in a clearly decelerating climate. The article also noted that there are dramatic spending increases during the Lunar New Year. That partially explains the timing of the decision, but the underlying fundamentals of the economy remain unchanged. Expansionary policies have been implemented in a number of countries, so this problem is not isolated in China. Although, it does appear that the People's Bank of China will be active in the coming months.
This is a very interesting issue. First, Krugman has noted the issues facing the Chinese. Without improvements in consumer spending and agile policy changes, China could be headed for a recession. Additionally, this could heat up the currency debate. A decrease in the value of the renminbi would make Chinese exports more attractive. This would increase net exports and GDP, ceteris paribus. What do you think?
Last year, China's GDP growth was 7.4%. That was its lowest level since 1990. Real estate and industry have been two sectors that have been hit exceptionally hard. In an attempt to stimulate growth, the People's Bank of China enacted a policy that reduces the reserve requirement of Chinese banks. This should increase lending, and it will be especially helpful to the two aforementioned industries. The People's Bank of China lowered interest rates in November of last year. They are attempting to spur growth in a clearly decelerating climate. The article also noted that there are dramatic spending increases during the Lunar New Year. That partially explains the timing of the decision, but the underlying fundamentals of the economy remain unchanged. Expansionary policies have been implemented in a number of countries, so this problem is not isolated in China. Although, it does appear that the People's Bank of China will be active in the coming months.
This is a very interesting issue. First, Krugman has noted the issues facing the Chinese. Without improvements in consumer spending and agile policy changes, China could be headed for a recession. Additionally, this could heat up the currency debate. A decrease in the value of the renminbi would make Chinese exports more attractive. This would increase net exports and GDP, ceteris paribus. What do you think?
Tuesday, February 3, 2015
Standard & Poor Settles Mortgage Securities Lawsuits For $1.5 Billion
Today the ratings agency, Standard & Poor, has settled a lawsuit after almost two years of litigation with the Department of Justice. The Wall Street Journal has also reported that the Justice Department lowered the settlement figure and dropped their demand
that S&P admit to violating the law, while S&P agreed to take
back its claim that the lawsuit had been an act of retaliation against the downgrade of the US government debt from AAA in 2011. The agency has agreed to pay $1.375 billion to US regulators after allegations that S&P knowingly inflated their ratings of risky mortgage bonds to encourage financial institutions to buy and sell financial products. The bonds were blamed for the collapse of the US property market and the ensuing global financial crisis. Half of the $1.375 billion will go to the federal government while the other half will go to the 19 states and the District of Columbia, who also filed lawsuits against the ratings agency.
http://www.wsj.com/articles/s-p-pact-hinged-on-trade-offs-with-justice-1422915828?mod=WSJ_hp_LEFTTopStories
http://www.wsj.com/articles/s-p-pact-hinged-on-trade-offs-with-justice-1422915828?mod=WSJ_hp_LEFTTopStories
Monday, February 2, 2015
Slump in Oil Prices Brings Pressure and Investment Opportunity
This article focuses on the company Resolute Energy, that
was part of the big energy boom but is now unsteady, because they borrowed a
lot of money and are having trouble getting it back. This trouble could lead to
many layoffs and losses for investors as well as banks. When Resolute announced
that they were buying land for oil investors came running. The problem was that
the company had little knowledge of the cost associated with horizontal
drilling. Getting money was easy in this industry until the plunge in oil
prices occurred. Banks then started to cut down the size of credit line for the
company and imposed new conditions for lending. All of this together caused
their stock price to decrease. But Resolute like many other companies have come
up with ways to pay their investors back. If there is still a need for oil
these companies wont give up they will find new ways to get money and stay
alive.
http://dealbook.nytimes.com/2015/02/02/slump-in-oil-prices-brings-pressure-and-investment-opportunity/?ref=business
Sunday, February 1, 2015
Obama’s Plans for Deficit and Taxes Are Detailed on Eve of Budget Proposal
http://www.nytimes.com/2015/02/02/us/obama-budget-to-seek-to-stabilize-deficit-and-address-income-inequality.html?hp&action=click&pgtype=Homepage&module=first-column-region®ion=top-news&WT.nav=top-news&_r=0
President Obama new budget for the next 10 years will be proposed on Monday, Feb 2nd 2015. This new budget, although does address stabilizing the current deficit, it focuses more on solving income inequality in the U.S with more tax policies that hit higher income classes and raising middle class income.
The proposal might be a trigger for a long debate between the President side and the Congress, or more specifically the Republican side which has been wanting a new President for a long while.
I personally feel that Obama's priorities are justified, as income inequality has become more and more of a glaring weakness that might not be better for the next few decades if we keep using the excuses of policies like these are killing the economy. Debt level should not be that much of a concern as it has been shown that projected debt will be manageable even until 2025 at 2.5% of gross domestic products. If once again the Republican side gains advantage, it would be great news for the minority rich of the country, and income inequality might be here to stay for much further.
President Obama new budget for the next 10 years will be proposed on Monday, Feb 2nd 2015. This new budget, although does address stabilizing the current deficit, it focuses more on solving income inequality in the U.S with more tax policies that hit higher income classes and raising middle class income.
The proposal might be a trigger for a long debate between the President side and the Congress, or more specifically the Republican side which has been wanting a new President for a long while.
I personally feel that Obama's priorities are justified, as income inequality has become more and more of a glaring weakness that might not be better for the next few decades if we keep using the excuses of policies like these are killing the economy. Debt level should not be that much of a concern as it has been shown that projected debt will be manageable even until 2025 at 2.5% of gross domestic products. If once again the Republican side gains advantage, it would be great news for the minority rich of the country, and income inequality might be here to stay for much further.
Obama doubles down on "middle class" economics
http://www.politico.com/story/2015/01/barack-obama-economics-114793.html
As he did with the State of Union, Barack Obama has slowly been providing previews to his budget for 2015. In the past week, the latest details emerged: a one-time 14% tax on foreign earnings and a 19% yax on futureu corporate profits overseas to help pay for half a billion in infrastructure spending over six years. Obama has been spreading his message of "middle class economics" since he became president, but has increased his intensity since his parties' embarrassment in the November elections. Most of Obama's proposals have been met with swift opposition from the Republican Congress, especially his wish to end the sequester.
I think middle class economics are the best way to help the US economy. Although the economy has drastically improved over the last 5 years, wages have remained stagnant. It is important middle class families are helped because they have received very few benefits of the economic recovery.
What do you think is the most effective way to improve the US economy? :"Top down" economics or "middle class" economics?
As he did with the State of Union, Barack Obama has slowly been providing previews to his budget for 2015. In the past week, the latest details emerged: a one-time 14% tax on foreign earnings and a 19% yax on futureu corporate profits overseas to help pay for half a billion in infrastructure spending over six years. Obama has been spreading his message of "middle class economics" since he became president, but has increased his intensity since his parties' embarrassment in the November elections. Most of Obama's proposals have been met with swift opposition from the Republican Congress, especially his wish to end the sequester.
I think middle class economics are the best way to help the US economy. Although the economy has drastically improved over the last 5 years, wages have remained stagnant. It is important middle class families are helped because they have received very few benefits of the economic recovery.
What do you think is the most effective way to improve the US economy? :"Top down" economics or "middle class" economics?
The Economic Benefits of Paid Parental Leave
http://www.nytimes.com/2015/02/01/upshot/the-economic-benefits-of-paid-parental-leave.html?abt=0002&abg=1
The article discusses President Obama's push for paid leave for new parents and for people caring for ailing relatives to become national policy. Obama said this policy would help increase the number of women in the work force and help middle-class families earn stable incomes. Opponents of paid leave say it is an economic burden that can be expensive for businesses which do not need more mandates from the government on how to operate their enterprises.
The article continues by providing results from three states- California, Rhode Island, and New Jersey- that already have operational paid leave programs. Economists have found that paid leave raises the probability that mothers return to employment later, and then work more hours and earn higher wages. They also found that more people take time off, particularly low-income parents who may have taken no leave or dropped out of the work force after the birth.
The article concludes by saying that a paid leave law helps, but that it is not enough. The article advocates for changes in public awareness and workplace culture.
I believe that paid leave for new parents and for people caring for ailing relatives goes beyond being economically beneficial. Do you think paid leave for new parents and people caring for ailing relatives is economically beneficial?
The article discusses President Obama's push for paid leave for new parents and for people caring for ailing relatives to become national policy. Obama said this policy would help increase the number of women in the work force and help middle-class families earn stable incomes. Opponents of paid leave say it is an economic burden that can be expensive for businesses which do not need more mandates from the government on how to operate their enterprises.
The article continues by providing results from three states- California, Rhode Island, and New Jersey- that already have operational paid leave programs. Economists have found that paid leave raises the probability that mothers return to employment later, and then work more hours and earn higher wages. They also found that more people take time off, particularly low-income parents who may have taken no leave or dropped out of the work force after the birth.
The article concludes by saying that a paid leave law helps, but that it is not enough. The article advocates for changes in public awareness and workplace culture.
I believe that paid leave for new parents and for people caring for ailing relatives goes beyond being economically beneficial. Do you think paid leave for new parents and people caring for ailing relatives is economically beneficial?
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