Greece and Bad Politics

http://www.bbc.com/news/business-32154876

The Syriza-led administration is making unrealistic promises while campaigning. Alexis Tsipras promised new jobs and a rise in minimum wage, while creditors are supporting bailout only if the country has reduced spending and increased revenues. Increase in wage will not do that. New forms address increased government revenues, but also extra spending. It is up to the creditors to decide if the reform proposals are satisfactory. Unsurprisingly, blame for Greece's inefficiency falls on poor politics.

There is consideration of departure from the eurozone, but it is still an ongoing debate.

Judo to Save Ukraine

Ladies and Gentlemen,

This is it. The world at its finest. Putin versus Poroshenko in a judo match to determine the final fate of Ukraine. Of course, this is just the proposal...no one has accepted it yet. Still, wouldn't it be better to think that nations could actually settle things one on one instead of via armies and the unnecessary deaths of civilians. Would this be the final solution? Would both Russia and Ukraine then agree to let things go as the saying goes, "to the victor goes the spoils?" Some morning news that is interesting to think on for global policy...even if it doesn't end up happening.

(Unfortunately, as this comes from my usual credible newssource, The Economist, I believe it. However, it could be an elaborate April Fools' Day Prank. I have no idea.)

Milk and economic development: No use crying

http://www.economist.com/news/finance-and-economics/21647352-ability-digest-milk-may-explain-how-europe-got-rich-no-use-crying

Humans can digest lactose with the help of an enzyme called lactase.  Two-thirds of people stop producing it after they have been weaned.  However, one-third of people have "lactase persistence" which allows them to continue to produce lactase into adulthood.  The article discusses a recent paper that argues that this genetic quirk helps to explain why some countries are rich and others are poor.

Justin Cook, the author of the paper, uses data on historical migration flows to estimate the ethnic composition of 108 countries in Africa, Asia, and Europe in 1500.  He then estimates what proportion of the population would have been able to digest milk based off data on the lactose tolerance of different ethnic groups.  Cook estimates that pre-colonial countries in western Europe tended to have the highest rates of lactase persistence.  The lowest levels were in Sub-Saharan Africa and South-East Asia.

One-standard-deviation increase in the incidence of lactase persistence was associated with a 40% rise in population density.  People who could digest milk used resources more efficiently than those who couldn't.  They could extract milk, or liquid energy, from livestock.  The nutritional value of milk also could have balanced the pre-colonial diet to reduce the incidence of disease.  If animal milk was used as a substitute for breast-feeding, it could reduce weaning time and thus, the time between mothers' pregnancies.  These ideas support the theory that societies with higher lactase persistence could support higher population densities.

As common theory goes, the higher the population density, the faster the growth.  Areas with higher population densities see an increase in infrastructure, an increase in the development of cities, and an increase in technological innovation.  The main point of the paper is that areas with higher population densities in pre-colonial times tend to be relatively rich today.

Do you think it is a coincidence that areas with higher population densities in pre-colonial times are relatively richer today than areas with lower population densities in pre-colonial times?  Do you think that Cook's theory makes sense?  Are there weaknesses in his theory?  What are the strengths of his theory?

Women in Silicon Valley: an employment trend?

http://www.bbc.co.uk/news/technology-32115446

An interesting article on a trend in business, most specifically in the world of high technology. As a female entering the business field, I am all too aware of this trend. People often expect women to step aside as their career life continues, trading a successful business career for a career as a successful homemaker instead. Does this mentality not discourage women from being employed or putting themselves out there in the first place? Does it not hurt the idea of the workforce overall if have of the population is subtly encouraged to go home or looked down upon? 

For the purpose of disclaimer: I would like this post to be a good discussion and it is not meant to be offensive against men but rather a look at some possible subtle discriminatory practices that are allegedly and anacdotally taking place in the workforce already.

French deficit figures mean economy is improving, minister says

France has managed to pick up some speed in showing signs of recovery from the European recession.  The signs that the french economy is getting better stems from the fact that the french government has decided to cut its budget deficit target for the year of 2015.  Finance Minister of France, Michel Sapin, commented on the data of the deficit from the previous year.  He mentioned that the figures of the budget deficit were projected to be 4.4% but ended the 2014 year at 4%.  There is a similar situation for the year of 2015; the budget deficit is forecasted to decrease again at 3.8%. Europe's second largest economy showed signs of growth in 2014 and has plans to continue to grow. Despite the increasing unemployment rate in the country, there are positive signs to the economy and business confidence continues to improve. It will be interesting to see if France can maintain this economic growth and maintain these cuts in budget deficits.

Article Link: http://www.bbc.com/news/business-32063448

Federal agency seeks to restrict payday loans

http://www.sanduskyregister.com/news/government/7799391

Pay-day loan companies have employed tactics like posing as a credit-repair organization, posing as a mortgage lender, using a bank as a front, using a Native American tribe as a front, offering cash for free to hook borrowers, lengthening loan terms when rules targeted short-term loans, and larding loans with useless insurance in order to make a large profit off of everyday consumers. These practices are usually used against the poorest citizens in the U.S. because they are the ones who often need cash on hand at quick notice. The Consumer Financial Protection Bureau (CFPB), created by the 2010 financial reform bill, has the authority to regulate high-cost loans on the federal level for the first time. And on Thursday morning, the agency unveiled a first draft of new rules that would sharply reduce the number of payday loans made in the country.

The U.S. economy is showing cracks

http://money.cnn.com/2015/03/29/investing/stocks-market-lookahead-us-economy-jobs/index.html?iid=Lead

The United States economy is starting to show cracks after finishing out a strong 2014. The U.S. job market had its best year of gains since 1999, and economic activity hit a whopping 5% in the third quarter the best quarter since 2003. Yes, the economy looks like it is moving along in the right direction, but it seems as though we are losing momentum. Federal Reserve chair Janet Yellen states, "If underlying conditions had truly returned to normal, the economy should be booming." We are currently facing two main problems according to economists: wages aren't growing much and many foreign economies are slowing down, which puts pressure on the U.S. The U.S. added over a half a million jobs in the first two months of this year alone. Thats a 50% increase from the same two-months stretch a year ago. Unemployment is down to 5.5%, its lowest mark in seven years. These are all positive signs, but wage growth is a major issue. It has barely grown over the year. With little wage growth over the year and recent months, will this lead to the consumer saving and slow the growth of our economy?

Can you measure GDP if ownership is over?

 The rapid growth of technology is allowing for younger generations to own less. With the ownership of assets becoming "less attractive" it is becoming harder to measure economic growth. Software company Tradeshift's chief executive of buisness-to-buisness, Christian Lanng, was quoted on the topic at the Credit Suisse Asian Investment Conference and said "American teenagers don't want cars. It's not on their top-10 list of things they want when they turn 18 for the first time in 30 years. Why  own a car when I have an Uber app and I can get a car in three minutes? It's a very silly thing to own,". Lanng recognizing that there has been no increase in productivity and believes only measuring productivity in economic output is not right. When measuring GDP we are only looking at final point sales but do not calculate all of the free stuff which allows us to do things more efficiently and with higher quality than before technology had such a big impact.

http://www.cnbc.com/id/102539984

Western banks axed 59,000 jobs last year

http://www.businessinsider.com/r-western-banks-axed-59000-jobs-last-year-more-cuts-to-come-in-europe--2015-3

Over the past year, western banks have been cutting employees like crazy.  Many lenders have decided to cut employees due to the rising concerns of regulators that these banks have become too big and complex.  Many analysts believe that banks in the euro-zone will continue this trend because they are continually the most unprofitable banks in the world.  Another factor that has lead to the amount of jobs being cut is the shift to an online and mobile banking system.  However, this shift to digital banking and more efficient processing is expected to add pressure for the banking employees in the upcoming years.  It will be interesting to see how this affects the financial jobs market in the next couple of years.

U.S consumer prices rebound

The U.S labor department reported a CPI increase of .2% last month after experiencing consecutive months of decline.  As the U.S begins to get back on track in terms of economic stability the market is showing signs of moving in the right direction.  With economic activity on the rise the Fed has talked about increasing interest rates, which has been near zero since 2008.  Janet Yellen has stated that she plans on increasing the interest rate back to its 2% target point by possibly this summer.  As long has the economy continues to show improvement expect interest rates to rise over the near future.


http://www.cnbc.com/id/102529569 

Powerful dollar = More International Travel

Now that the dollar is strengthening, it is a really good thing for Americans who want to buy things from abroad or for people, namely business people, who want to or have to travel. It makes it cheaper for them to buy plane tickets, goods, etc. I know for myself, as I am thinking of moving to Europe after graduation, I am very excited about the depreciation of the Euro.

Unfortunately, it may not be as much of a good thing for people who are coming from other countries to the US as the exchange rate is now higher. This means that for people who work in the tourist business in America, they may receive a very large decrease in their customer base for a while until the dollar weakens again.

2016 Hopefuls and Wealthy Are Aligned on Inequality

Appearing at a candidate forum in late January, three likely Republican presidential contenders — Senators Ted Cruz,Marco Rubio and Rand Paul — all made a striking confession: They considered “the increasing gap between rich and poor” to be a problem. However, when asked if the government should intervene, they answered differently. When “government takes over the economy,” Mr. Cruz said, “it freezes everything in place. And it exacerbates income inequality.” He proposed lowering taxes and loosening regulations instead. 

Mrs. Clinton sounded similar notes when discussing inequality at the Aspen Institute in June, during an interview at a conference in February and during a forum last week at the Center for American Progress, a liberal think tank. Before the well-heeled crowd at Aspen, she said, “We have to have a concerted effort to meet a consensus about how to deal with this.” She alluded only elliptically to “hard choices” that her husband’s administration had made, saying that “they’ve become harde than they were even 15, 18 years ago.”

Asked whether those hard choices she referred to were tax increases, a Clinton spokesman said he was not sure.None of this surprises Professor Page. “It seems clear that wealthy Americans play a big part in shaping policy discussions and policy itself, from taxes to regulation to social welfare policies,” he said. “Definitely, they affect what candidates can say.

What do you think? should the government intervene to help the society become more equal and how? 

Australia to Join Regional Development Bank Led by China

      Australia has announced that it is joining an Asian infrastructure bank started by China. This move is in reversal to its earlier decision of not becoming a member under US pressure. A lot of American allies, like Britain, France, Italy and now Australia have under Chinese pressure joined the bank, leaving the US vulnerable.

    The office of Prime Minister Tony Abbott said in a statement " Australia still had concerns about the management of the bank but recognizes the pressing needs for infrastructure in Asia". 

   The main concern of the US is that IMF and the World Bank might which are under US leadership might get undermined by the Chinese led Asian Bank.  The Chinese counter by mentioning the dismal bureaucracy at the World Bank and the Asian Development Bank, which hampers growth worldwide.

After Australia's joining the bank the US has been left with only Japan as its main Asia Pacific ally and this has resulted in some experts suggesting that the US might reconsider joining the bank. However its unlikely that President Obama would change his decision and Congress would reject such a move as well.

http://www.nytimes.com/2015/03/29/world/asia/australia-to-join-regional-development-bank-led-by-china.html?ref=international

Brazil's Economy Grows 0.01% in 2014

http://www.bbc.com/news/business-32082662

Even though Brazil is the world's 7th largest economy, they it just barely broke out of contracting in the last fiscal year. The last four years have shown a gradual slowing of the Brazilian economy although it has been growing rapidly for the last ten years overall. The slow is probably the result of low commodity prices and low investment and invest confidence. The government has been offering labor tax breaks, subsidizing gasoline, and lowering the price of electricity in order to stimulate the slowing economy. The current finance minister, Joaquim Levy, has been raising taxes and and implementing some austerity measures in order to balance the budget. Analysts say that 2015 might be an even tougher year for Brazil.

University of Phoenix Enrollment Numbers are Down

http://www.businessinsider.com/university-of-phoenix-enrollment-numbers-are-down-2015-3

Despite the growing demand for college education in the workforce, it appears people are going away from the for-profit model of higher education. Maybe it is because the for-profit education is seen as less valuable; maybe it really is less valuable. Whatever the case, it appears as if the industry of higher education is going to look different in 5 years, with non-profit education holding an even greater command over the economy than it already does.

Eurozone can't survive in current form, says PIMCO

http://www.telegraph.co.uk/finance/economics/11501280/Eurozone-cant-survive-in-current-form-says-PIMCO.html

The Pacific Investment Management Company (PIMCO) stated that they do not believe the Eurozone's current structure is sustainable in a long run. They believe that a monetary union without a fiscal union is not tenable in the long run. Persistently slow growth in the Eurozone has led to the rise of populist parties in many of the Euro countries. They also use the example of the Latin and Scandanavian unions of the 19th Century that lasted about 50 years. One of the few solutions they see to the problem is the potential need to establish some sort of fiscal union to complement the existing monetary union. The current system is also hurt by France and its inflexible labor market which has not had sufficient reforms. This has led to the growth of parties that are opposed to the Euro currency. The increased popularity of these parties may be indicative of a lack of faith of the people in the Eurozone.  

What the Fed’s 2009 Transcripts Reveal About Its Handling of the Recession by BINYAMIN APPELBAUM and NEIL IRWIN

http://www.nytimes.com/interactive/2015/03/04/business/economy/fed-2009-transcripts.html?ref=economy


This article from the New York Times discusses the policies of the Fed right after the 2008 crisis (The Great Recession) to arrest it in its early stages. The five year transcript talks about the steps that the Fed took and what called for those steps. The article is divided into periods.
January to March '09 was the period when quantitative easing was introduced. According to the article : Over the next six years, it will eventually amass more than $4 trillion in mortgage bonds and Treasury securities.
The article talks about the pros and cons of quantitative easing and what institutions were  affected by it.
A must read for anyone who wants to understand the recent economics of the USA.

Inequality and Housing: Through the Roof

http://www.economist.com/news/finance-and-economics/21647349-rising-house-prices-may-be-chiefly-responsible-rising-inequality-through

This article discusses Matthew Rognlie's criticism of Thomas Piketty's idea of increasing inequality in a rich world.  Piketty argues that, over the long run, rate of return on wealth will exceed economic growth.  He shows, through is argument, that the relationship between rate of return on wealth and economic growth will increase inequality, as the share of national income going to those who own capital will rise--it will increase for the rich, and the portion going to all other classes will decrease.  Rognile disagrees with Piketty's argument and shows this through three criticisms.  First, he argues that Piketty has an inflated idea of the current return due to various technological advancements and such, meaning that the returns for the wealthy may not be growing in real terms.    Second, Rognile argues that higher returns to wealth have not been distributed equally across all investments.  He explains that surging house prices are almost completely responsible for growth.  Third and finally, Rognile argues that the idea that workers' share of wealth can continue to decline depends on how easy it is to substitute capital.

Like Piketty, Rognile has critics as well, who argue that he underestimates the role that changing technology takes in inequality.

Black Unemployment

This article explains the struggle for black America in today's economy. Many people today mention how "anyone who's qualified and wants a job can find one", or "as long as you have the skills". This proves to be untrue. It is not a difference in skills for candidates. This article explains the situation of Sikiru Tijani who graduated from Illinois Wesleyan University, moved to Japan to teach English, worked in city hall, translated/interpreted, planned events with local officials and foreign dignitaries. Today, he has worked in a part time retail job for over a year with no luck of finding a career. This situation of constant rejections is putting him to wonder about the race factor, and how employers feel when they see his name on an application. A startling statistic that this article shows is that black college graduates suffer from an unemployment rate roughly double that of whites. A really interesting study was done that tested whether employers would hire a Dylan versus DeAndre. It found that job applicants with black-sounding names were 50% less likely to get a call back compared to a white-sounding name. It's hard to believe that to this day, there is this drastic difference employment and stereotyping.

http://www.ibtimes.com/black-unemployment-college-degree-offers-advantages-no-escape-racialized-job-markets-1861838