How American Inequality in the Gilded Age Compares to Today

Income inequality is a result of capitalism that is regularly criticized and debated on. The main point of this article was to examine if the amount of income inequality was increased or decreased from the time of the Gilded age (1865-1900). What was found was that there has been major cycles of income inequality throughout the history of the US. Times such as the gilded age and today are fairly similar in the amount of income inequality, but there are also times with lower income inequality including the progressive era (1920's) and the great depression (1929-1933). A historian, Nell Painter, says, “We’re in these cycles in which we learn and forget and learn and forget.” The difference found between the Gilded Age and now is that people today don't like to allow other people to know their social class; conversely, during the Gilded Age, wealthy people flaunted their money.

http://time.com/5122375/american-inequality-gilded-age/

Making a Crypto Utopia in Puerto Rico

 This article talks about a group of Californians who have invested heavily and become rich in the Bitcoin boom, who are moving to Puerto Rico to, firstly avoid paying mainland USA taxes on their fortunes, and secondly, to build a "crypto utopia," or a city based on crypto currency. They've begun to purchase property and they're close to the local government letting them create the very first crypto currency bank.

These investors see Puerto Rico as an optimal location for their social experiment because of it's experience with Hurricane Maria and subsequent economic downturn. These people call themselves "benevolent capitalists," though Puerto Rican opinions are mixed. Some believe that having the rich in the area will stimulate the local, government-backed-currency economy. Others argue that Puerto Rico has become the "playground for the rich," where foreigners can get business permits to try experimental practices that may fail and hurt the locals more than the business owners. Another question being raised is if the slowly moving hurricane recovery can support the electrical power to support all the internet-based currency trading.

 Personally, I think the idea of creating a city using only crypto currency could lead to some serious problems should the currency crash without a government or strong institution backing it. However, I do see the need for innovation to support Puerto Rico, so while a crypto currency utopia seems just that, utopic, if they can make it work, all power to then.

https://www.nytimes.com/2018/02/02/technology/cryptocurrency-puerto-rico.html?rref=collection%2Fsectioncollection%2Fbusiness-economy&action=click&contentCollection=economy&region=stream&module=stream_unit&version=latest&contentPlacement=10&pgtype=sectionfront

Villagers in Bangladesh migrate to cities to find work

Villages in Bangladesh are highly agricultural based with almost all income comes from farming. However, in the low seasons as the crop grows, unemployment is very high which leaves many families starving. An initiative by Yale University economist Mushfiq Mubarak allows the men in the family to go to the city to earn by providing a low interest loan. As these men are able to earn more by working more hours, their income rises. In the field they would earn an average of 250 Taka ($3) a day, whereas by going to the city they earn 700 Taka ($8.40) a day.

It looks like this initiative is suiting the villagers well with more migrating to urban cities every year. However, I wonder what impact it has on the cities and the labor already present, whether they have higher level of unemployment or reduced wages due to competition. I would also think that in these months the city gets more populated and there is a higher burden on accommodation as the villagers don't have permanent homes in the city. Overall it looks like this is good for the economy and a solution to the poverty trap these villagers usually face.

https://www.economist.com/news/finance-and-economics/21735597-paying-poor-rural-families-send-seasonal-workers-city-seems-work

German workers win right to 28-hour week

German workers won a fight for better work-life balance. Although Germany has the standard of 35 hours working week, the workers can choose to work for 28 hours. Labor union, IG Metall made an agreement with the representative of more than 700 companies like Daimler, the carmaker, and Bosch. This agreement is limited to the metal and electrical sector but it will probably roll out to other sectors. The flexibility of hours worked would help workers to spend more time with their children and families. Companies like Bosch will offer the same pay rate and benefits to their workers despite the reduction in hours worked. On the other hand, a lot of companies see this agreement as a burden which will make it difficult for them to survive.

Rabobank pays big for processing illicit funds

The California unit of Dutch bank Rabobank has agreed to pay $368 million after processing funds linked to drug-trafficking. The bank has been allowing untraceable transactions from Mexico adding up to hundreds of millions of dollars over a matter of months. These transactions have not been monitored or reported like they should have been giving federal regulators a hard time tracing down the suspicious activity. Assistant U.S. Attorney General John Cronan Rabobank has said, Rabobank chose to “look the other way” when it learned of transactions indicative of international drug trafficking, organized crime and money laundering. This is not the first offense by Rabobank, who has repeatedly stood in the way of the U.S. Office of the Comptroller of the Currency with investigations in 2013, 2012, 2008, and 2006. Looking into the actions of Rabobank makes one question the effectiveness of the government regulators who have, while finally catching Rabobank, let them slipped by with bad practices many times in the past. Should there be stricter regulation giving the controllers more access to confidential bank information, or would that be too invasive? 

https://www.reuters.com/article/us-rabobank-fraud-usa/rabobank-agrees-to-pay-368-million-over-processing-illicit-funds-idUSKBN1FR2U4

Chipotle Dessert Flops

Amy Peters

Chipotle Dessert Flops

            Chipotle Mexican Grill’s plan to add a dessert to their menu has now been put on hold due to poor customer reviews at their test kitchen site in New York City. The fried tortilla dessert is just one of many of the dishes coming out of their test kitchen site in the hopes of adding some new, fresh dishes to their menu. Ever since their E. coli outbreak back in 2015 the company has struggled to regain sales, with other food safety issues and hacker problems plaguing the chain recently as well. Their founder Steve Ells announced that he will be stepping down this November in the hopes that a new leader can head this turnaround. Their brand image has been incredibly tarnished from what it once was, with it starting as an innovative and popular take on fast casual dining, but as this market has become so saturated, I argue Chipotle has lost its edge. I believe launching a new menu is the wrong approach to take, as its simple menu is what made them famous initially, and they should be focusing more on food safety and employee training, but this might be Chipotle’s last cry for help.

https://www.bloomberg.com/news/articles/2018-02-02/chipotle-dessert-flops-sending-company-in-search-of-new-options

Thoughts and Prayers and N.R.A Funding

In class, we discussed different incentives for actions that take place in different economic systems.  Some decisions we make are because of moral reasons, in the U.S we would never walk into our neighbors house and steal food out of their fridge because it is not socially acceptable and would most likely be considered rude.  On the other hand, however, morality is not always taken into account when people make decisions.  This short article lists the top 10 career recipients of N.R.A. funding.  Current House and and Senate members words and actions seem to contradict each other as they give thoughts and prayers to the victims of the Las Vegas shooting but refrain from changing current gun laws in any way, as they are receiving generous donations from the N.R.A.  John McCain is at the top of the list,  stating “Cindy & I are praying for the victims of the terrible #LasVegasShooting & their families.” while simultaneously having received $7,740,521 from the N.R.A.   No one can determine another persons true incentives, but this article leaves readers to ponder just where in fact the line can be drawn between moral and profitable decisions, and additionally, how these decisions can effect not only the economy but the people living within it.

Dow Jones TUMBLES: Is this the beginning of US stock market crash?

On Tuesday, Jan 30th, Dow Jones dropped nearly 400 points which creates fear that the S&P 500 could end its record streak without consecutive declines. This is the steepest decline in eight months, because of rising bond yields and sell-off in healthcare. Amazon, Berkshire Hathaway and JP Morgan mentioned that they plan to form a venture aimed at lowering healthcare costs for their employees, which led to falling shares of healthcare related companies. The stocks on Wall Street fell by around one percent.

Stocks also fell lower due to a decline in energy shares along with ongoing evidence of a rise in crude oil prices. The S&P health sector fell by 1.8%, the most among the 11 major sectors. Health insurer UnitedHealth's shares dropped by 3.2%, Express Scripts' shares fell by 6.2% which weighed the most on NASDAQ and S&P. Pfizer shares price fell by 3.3%.

Investors were negatively affected by the two day decline on Wall Street and this pushed people into the arms of the safety of US government bonds. The Federal Reserve started its two day monetary policy meeting following the crash, and there is a market expectation of a hike of 5.2% to be implemented. Investors are getting worried about inflation which has led some people to believe that the Federal Reserve might be more aggressive when raising interest rates.

In the article, it is also mentioned that the dollar exchange rate index fell following the crash. But overall, with a healthy economy of low unemployment rates and high economic growth rates, the inconsistency lies within the stock market, as said by analyst Charles Schwab.

In such a situation of declining stock prices in the health sector, this would negatively affect investors in the short run by decreasing their optimism towards investing in the future, thereby affecting firms in the health sector in the long run.

Dow Futures are Down

On Friday we witnessed the Dow plunge around 666 points which caused Dow futures to fall close to 250 points. This slight plunge comes after Janet Yellen made this statement about stock prices, "well, I don't want to say too high -- but I do want to say high." Now, this slight plunge could be a healthy pullback for the economy to correct some inflated stock pricing. However, when Monday's opening bell rings we should see some serious volatility. If stocks can remain above support levels we could see a rebound. If they break those levels they could plunge further. We will just have to wait and see.

https://www.thestreet.com/story/14474023/1/stock-futures-janet-yellen.html

ExxonMobil Benefits from Tax Cuts

ExxonMobil received a huge gain from the tax reform that has taken place under the current administration. The tax cut will save Exxon’s company six billion dollars that they can use the try and increase oil production which fell 3% in 2017. The company promised to invest 50 billion in the U.S. over the next five years and create thousands of jobs to boost the economy. ExxonMobil is also expected to shift it’s resources back to America after the company decided to focus on overseas projects instead.

http://money.cnn.com/2018/02/02/investing/exxon-earnings-tax-law-oil/index.html

Wall Street Faces Fed Stress Tests That Assume Another Meltdown

"Wall Street banks must prove they are able to weather a serious global recession as part of an annual Federal Reserve exercise meant to ensure the biggest lenders won’t collapse in a new crisis."

I found this article extremely interesting as it explains how the Fed will be using a series of stress tests to challenge 18 firms on how sturdy they are given a significant blow in the economy. It speaks to dividend payments and the ability to buy back stock on an individual firm basis. This exercise implemented by the Fed is referred to as Comprehensive Capital Analysis and has been in place since 2008's financial crisis.

https://www.bloomberg.com/news/articles/2018-02-01/wall-street-faces-fed-stress-tests-that-assume-another-meltdown