Russia and Poland agree on long-term gas supplies

Russia and Poland signed a long-term contract of gas supplies which should last until 2045. The article indicates that the contract is almost official as there are few more documents that need to be signed. Russia used to be the main supplier of natural gas to CEE until it cut the exports a few years back which put Poland into a deficit. It is not stated who initiated this type of deal but it would be interesting to find out what was the motive of Vladimir Putin for doing so.

A College Offers Job Guarantees - Or Else a Refund

This is an interesting article about Lansing Community College in Michigan offering 61 applicants a chance to take a six-week long course in a specified technical area with a money-back guarantee if they don't land a job within one year. While the students won't get a degree, they will earn a certificate of qualifaction as call-center specialists, pharmacy technicians, etc. It is an interesting proposition, but even more interesting is the timing and location where this is taking place. LCC is located in an area of Michigan where unemployment is at 11.7%, with little prospect of lessening in the near future. New jobs aren't being created, and the number of job opportunities are actually decreasing. It's certainly a risky move proposed by LCC to offer a refund if students don't get a job, but on the other hand it may force these students to put more effort into the job search, especially with a certificate of qualification in their hands.

When capitalism and communism collide

The article follows the story of Cathy Huang, a student at Beijing University. She was born in an outer province of China to a police officer and a factory worker. She got the best score on her entrance exams and was accepted to Beijing. She wants to be an investment banker and has already worked for Goldman Sachs and Lehman Brothers. She joined the communist party at the college. To join the party you must take an entrance exam so that it can "capture the best and the brightest, those with most initiative and executive capability. Its members are the pool from which the economic, military and political leaders of the country are drawn, so the advantage in making that reserve as deep as possible is clear. Party members are overwhelmingly urban and educated, largely from the upper-working or lower-middle classes - exactly the social strata that could pose the most threat if they were not given a strong stake in the current system." Cathy says that the "new" communist ideals have changed, they focus more on excellence, cooperation and patriotism rather than ideology. She explains that being a member is not a political choice but rather about contributing to China. The party recruits the students who have the top marks, which also makes you among the elite if you join. It is interesting to see the merger of capitalism and communism that is happening in China right now.

China: Capitalism Doesn't Require Democracy

The article talks about how China calls themselves communists but when you look at their economy they are really pretty capitalist. The article explains that China is only communist when it comes to the political party in charge, but that their economic system is a capitalist one. "China shows that when it comes to economics, the dividing line among the world's nations is no longer between communism and capitalism. Capitalism has won hands down. The real dividing line is no longer economic. It's political. And that divide is between democracy and authoritarianism. China is a capitalist economy with an authoritarian government." The article then talks about how the world has thought that capitalism and democracy have been seen as being a pair, and how democracy "needs" capitalism, but looking at china it seems as if capitalism does not "need" democracy.

Bernanke Says U.S. Must Choose a Fiscal Path

Ben Bernanke said that since America's population is aging, we will be posed with fiscal problems and that we need to start preparing now. He does not expect the government to raise taxes or cut spending anytime soon. However he did say that in order to not go into huge deficit spending, in the future higher taxes might have to happen, or, a different approach to Social Security and Medicare. He also talked about how more than 40% of the unemployed have been so for six months or longer and he said: “I am particularly concerned about that statistic, because long spells of unemployment erode skills and lower the longer-term income and employment prospects of these workers.”

Airline Merger

This article talks about how US Airways and United may merge. It is interesting to see how airlines look to stay alive in such trying times.

Greek Banks Ask to Tap Support Fund

Last year, Greece spiraled into fiscal crisis and saw its borrowing costs spike after it revealed its budget deficit was more than double the previous estimate. Because of this, banking institutions have been doing very poorly and now have come out publicly asking for help from a support fund that was set up by the previous government administration in case of a global credit crisis. Greek banks have repeatedly said they are not facing any liquidity problems, but some have found it harder to raise funds in money markets, making them more dependent on money market funding from the European Central Bank.

Reserve Bank of Australia Raises Main Interest Rate Target Again

RBA has increased its main target interest rate for a fifth time in the last 6 months by a quater point to 4.25%. I think Australian Central Bank is an interesting one to watch as they were one of the first few central banks in the world to start increasing its interest rate.

What perhaps has helped Australia is that it is riding on Asia's fairly decent growth due to strong growth from China despite of the global economic downturn . All in all, this is good news as its another affirmation that the outlook for the global economy is looking better.

US, India Must Push for Balanced Growth: Geithner

As the April 15th deadline for the United States to label China as a currency manipulator, the US is trying to shore relations with the emerging economic power, India. It is a great strategy to make China sweat a little bit. The US Treasury Secretary lauded India for its growth and ability to make relatively good strides in this bad economy. The Secretary also talked about how India has made an appeal to recognized in the IMF and World Bank and said that India should be recognized. This meeting had no references to the China currency problem but did speak on how countries need to be more flexible to other currencies to ease out of the economic crisis.

Your retiree medical bill: $197,000

Many insurance companies have estimated that individuals will require at least $197,000 to cover all of their out-of-pocket medical bills during their retirement. Some have predicted this number to be even higher and the average deduct of pay for Social Security benefits is around $110.50 monthly for Medicare plan B.

These ridiculously high medical costs begs the question whether government funded medical benefits, much like the systems used throughout Europe, may prove to be more beneficial in the long run. As the economy continues to recover from the recession, it seems that retirees have to add medical bills to their list of necessities required to survive. It will be interesting to see how mortality rates may possibly increase with such high costs of living.

U.S. is Seeking the Maximum Fine Against Toyota

The Transportation Department announced Monday that it is fining Toyota $16.4 million for failing to recall vehicles in the United States. Toyota began to recall vehicles in the U.S. starting in January, even though it knew of the problem back in September. They began to recall vehicles in Europe and Canada for a sticking accelerator problem at this time. Under U.S. law, car companies are required to make the government aware of vehicle problems as soon as they realize they exist. This has been the case since the signing of the Tread Act. Toyota now has two weeks to contest or accept the fine. Other fines may also be on their way as the government is currently investigating if other recalls were done in a timely manner.

This article demonstrates one of the big roles the government has played in the capitalist markets. The government many times over the past century has stepped in when businesses have endangered the lives of their customers. This may mean pollution or unsafe products. Customers want to know that the products they use are safe, so the government creates regulation to deal with imperfect information and externalities.

Launch pad Apple’s iPad will help persuade consumers that a tablet is a must-have

Another article about Apple's "amazing" new ipad and a good example of how a market economy differs from a socialist economy. For example, the inefficient cost of advertising.

Desegregation and schools: No easy answers

In 1971, in Charlotte, NC the court ruled that school districts may use busing, quotas and other methods to assure integration. Now in Wake County, the same issue is arising, some arguing that the program should remain which assigns students to schools based on levels of family income. However, the board voted against this policy. In 2000, the board decided to integrate its schools by income level rather than race. The board said that no more than 40 percent of students at a school should receive free or subsidized lunches. Under this plan, students appeared to be outperforming state averages on standardized tests. But, looking closer into the statistics, scores of black students were behind those of white students and poor students fared worse than the wealthier students, their graduation rates being lower than the state average. The chair of the board's reassignment committee believes the next step is for the county to be split into neighborhood zones and parents in poor zones can choose to send their children to schools in wealthier districts.

March jobs report shows growth

A 162,000 job growth for the month of March was reported, giving signs that the job market is heading in the right direction. The 162,000 job increase followed a 14,000 job loss for the month of February. The labor market has begun to stabilize, but the unemployment rate still remains at about 9.7%. Analysts say that just like the weather was a factor in February for the job losses in this month associated with the winter storms in the East Coast, the good weather has bolstered jobs in March.

Signaling Jobs Recovery, Payrolls Surged in March

Some positive news, for us seniors... The labor department reported that 162,000 jobs were added last month. This is the first time since the recession began that there was positive growth in the job market. This is the first sign that were moving in the right direction but by no means are we in the clear yet. In order for the job market to continue to move in the right direction the economy needs to add 100,000 jobs per month. The chief economist at RDQ Economics said "Every major industry, except financial services and information, showed gains in employment. From manufacturing to construction to retail, it really didn't matter. They're all hiring now." 40,000 temp jobs added, 27,000 in the health care, and 48,000 new census employees.

Greenspan Cites Economic 'Momentum"

The former chairman of the Federal Reserve, Alan Greenspan who describes himself as a Republican libertarian, reinforced assessments that the country's latest job numbers show that the economy is making a comeback. 162,000 jobs were created last month compared to losing 600,000 jobs last March. More jobs are being created and that trend is expected to continue. The unemployment rate remains at 9.7 percent but this is because of the improving conditions which causes more people start to look for jobs and are counted back in the labor force. Progress doesn't show up immediately in the unemployment rate. He also said the economy is "running somewhat ahead of what the administration was forecasting". Hopefully 2010 turns out to be a better year than expected.

Grants to Aid Arts Spaces and Their Communities

The Ford Foundation plans on giving $100 million to developing art space nationwide within the next 10 years. Not only is the goal to help art groups build new spaces and renovate and expand old ones but to encourage the construction of affordable housing for artists to help spur economic development in surrounding areas. This has economic benefits because according to Mr. Landesman, chairman of the National Endowment for the Arts, "From the foot traffic of people coming to studios and rehearsals to the influx of people looking for a place to eat or drink after an art opening or before a show..these buildings attract new people and often expendable income to neighborhoods.” They see their giving as something that can contribute towards community development.

One thing to think about is that many schools are trying to cut down costs. Unfortunately, the arts (including music too) is the first to go. This is just another reason to reconsider cutting these first because they do offer benefits.

Hu's US Visit May Signal Easing by China on Currency

The arrival of Chinese President Hu Jintao has brought a new series of implications and speculation of whether or not the Chinese will adjust their currency. Several economists give theories of what the effects would be on the United States if the currency would be appreciated to the dollar. One of the main reasons of this issue is that China is strictly an export economy, shunning the very people who have brought this country to the upper economic echelon. This is a fair article looking at both sides of the issue.

U.S. Sets New Car-Mileage Standards

The Obama administration set in place a new and stricter set of mileage standards for cars and light trucks, as a part of its goal to cut harmful emissions and ease the nation’s dependence on foreign oil. The plan is to raise the average mileage of new cars on U.S. roads to 35.5 miles per gallon by 2016, a 34% increase from the current 26.4 mpg level. On the negative side, the cost of a car will increase on average by about $1,000. And making the cars meet this new target will cost the automotive industry about $52 billion. On the positive side, the government estimates a savings of about 1.8 billion barrels of oil, and translates to fuel savings of about $3,000 per car. It is also expected to reduce emissions of carbon dioxide and other greenhouse gases by about 30% from 2012 to 2016.

The Obama Coalition

This is mostly a political article, but it does discuss the political ramifications of the structural change to the American economy that is currently underway.

Automakers Report Rise in Sales, Helped by Incentives

The auto industry is declaring that March has been one of the best months for vehicle sales in the United States. Ford and General Motors both saw sales increase. Toyota said that they also expect an increase. The article claims that this is because there has been a push in incentive spending, as Toyota buyers could get zero percent financing for five years or low lease payments on many models.

Obama energy plan would open Atlantic and Gulf drilling

President Obama made an announcement today about U.S. plans to open coastal waters (Atlantic and Gulf) for natural gas and oil drilling. This involved lifting a 20-year ban off of drilling on Virginia's coastline and prohibiting any drilling off the Alaskan coastline. Obama's reasoning for this decision is that in order to remain economically sustainable (and create jobs) we need to utilize our domestic oil supply, but at the same time find means of producing renewable, "homegrown" energy. Obama alluded the fact that his decision was not based on political ideology (to drill or not to drill) but simply the economic pressures the United States faces today.

Nissan will sell electric car for just over $25K

This article is sweet not just because I like eco-friendly cars, but because Nissan is a respectable automaker and they sell a good product. And if it goes for $25,000, that's a wonderful price!

North Korea

An interesting collection of facts about North Korea. If you also haven't heard of the website stumbleupon.com, I suggest you check it out.

Out-of-Pocket Health Care Spending

Americans spent $138.5 billion in out-of-pocket health care expenses in 2008, according to the Bureau of Labor Statistics. And that number excludes health insurance premiums, nursing home care, nonprescription drugs, nonprescription vitamins, and topical remedies and dressings. There is going to be a lot of change in the health care system in the coming years and a lot of it has to do with problems relating to this.

The Lobby: Intel's R&D Tax Push

This article discusses the importance of innovation in the product life cycle that we discussed in class on Friday. A writer for cnn interviewed the head lobbyist of Intel about some of his priorities. Right now they are lobbying to make the Research and Development tax credit a permanent fixture for companies. Companies receive a tax credit for increasing R&D but the credit must be renewed every year by Congress. This is the first thing the lobbyist talked about and I think it is indicative of how lucrative the R&D aspect of a business can be. Ideas are a huge source of profit for companies and being the first to come up with something can mean making a lot of money. The article also addresses immigration reform to allow talented foreign workers (specifically those who have graduated from American universities) to receive green cards more easily, antitrust laws, and patent reform (again, addressing the importance of innovation).

Sony Pursues a Bold Success to Match Its Scale

Sony has opened up a new store in Nagoya, a central Japanese city. The article states how Sony is trying to be competitive against Apple as the store resembled an Apple store. It seems as though Sony is trying to catch up with its competitors instead of moving ahead. Sony will also be introducing a new online service where consumers can download anything they want from Sony's library.
Sony's finances are also improving after the downturn of the economy. With their comeback, and potential new products, Sony may be back on the road to success.

Kohn ‘Confident’ Fed to Tighten Credit Before Inflation Flares

Federal Reserve Vice Chairman Donald Kohn believes that the Fed will act in a timely enough manner to prevent inflationary problems related to increasing the money supply with over a $1 trillion in bailouts. The current interest rates are much too low however he is confident that the Fed will increase interest rates high enough to prevent excessive bank lending; increasing the money supply causing inflation. Furthermore, the Fed is taking measures to decrease the excess reserves that banks are holding onto because it is currently hindering the Fed's ability to control the money supply and the economy through policies.

Obama Team is Divided on Tactics Against Terrorism

This article debates between current President Obama and recent President Bush on their belief differences on terrorism policies. Bush believed that imprisoning anyone who seemed a threat without trial was fair, while Obama does not quite agree. I think all deserve at least trial, because their is a lot of racism which leads to unfair judgement.

Natural Gas and Alternative Energy: A Promising Combination

This article provides some solutions on how to solve some problems with natural energy consumption that is currently being faced by the US.

It is predicted that natural gas should be a good substitution to oil, especially with all the increases in prices of oil we are having nowadays. But in order to increase the market use of natural gas, there is a need to reduce its use in homes (since this is where largest natural gas consumption occurs). Some options proposed by the article are wind energy, and window replacement program, solar hot water system.

Economic aid for Pakistan a victim of corruption worries

This article addresses the issue of corruption and the economic consequences it may have.

Pakistan, the country that has always had its ups and downs with the US in its political and economic relationship, is faced with a dilemma: it either starts fighting corruption within the government or it loses all the aid by the US.

It is important for the entire country, but especially for the Tribal Areas, to start recovering from the consequences Taliban has had on the region, and start rebuilding its infrastructure. $7.5-billion package of aid signed into law by President Obama in October was supposed to be used as means to do so, however, due to officials corruption, very little of that aid has actually been reaching those underdeveloped areas.

Apple has run out of iPads

This article talks about how the demand for Apple's iPads is more than the supply of iPads, forcing Apple to push the iPad pre-order shipment date back by nine days. As of today, 240,000 iPads have been preordered online, and the least expensive is priced at $499.00 (the most expensive is $829.00). Obviously Apple makes great products, and it is amazing that people have such confidence in Apple products that it has actually created a shortage.

Housing Upturn Proves Elusive

Tightly linked to the previous post with regards to the high unemployment rates, the housing market is recovering, albeit rather slowly. 2 factors that affect the housing markets are the job market and foreclosure supply. There is concern with regard to how many of the foreclosed houses will be pushed into the market thus further depressing the prices.

The housing market is a crucial component of the economy and many argue that a strong economic recovery is not very likely without a robust improvement in the housing sector.

The Jobs Puzzle Bernanke Can't Solve

This article focuses on several comments made by Fed Chairman Ben Bernanke made during questioning at a Congress hearing. The chairman gave two reasons of why jobs have not been on the rebound with the economy. I prefer the latter reason, which is "The other is that the productivity gains were greater than we thought they would be when firms were able to cut their work forces and still maintain output." This means that as times got rough starting in 2007, firms recognized this and adjusted their operations to still produce output and keep costs low. Two other economists also argue that GDI rather than GDP should be used as a measurement for the economy.

Student Loan Overhaul Approved by Congress

On Thursday Congress voted commerical banks out of the federal student loan market (an attachment to the Health Care Reform.) These bank-based loan programs, such as Sallie Mae, receive guaranteed federal subsidies to lend money to students while the government assums all the risk. As California Democrat Representative George Miller states, "Why are we paying people to lend the government's money and then the government guarantees the loan and the government takes back the loan?" While this has huge Democratic support, some Republicans are viewing this as too much government involvement.

Tighter Financial Restrictions Get Friction From Lobbyists

This article is about the huge wave a of lobbyist groups trying to weaken of kill altogether the bill to overhaul regulations on the financial industry. Groups ranging from pro - business groups, to Wall Street, to United States Chamber of Commerce are spending money trying to kill the bill. Many groups have begun portraying the bill as government bailouts. This article goes all the way back to our first few lectures about market failure. This article is a reminder that lobbying can make a market failure worse instead of better. Furthermore, this article takes a look at how personal political interests can affect the way our economy operates. Finally, if this bill is passed it could change some of the ways our economic system currently operates.

I would also like to point out that some of the attacks call Obama a socialist in order to prove their point, a fact that is clearly not true.

For Those About to Graduate, We Salute You

As March rolls into April and the last month of our college career begins, we soon-to-be graduates face some tough choices. Not that these decisions differ all that greatly from those faced by other classes, we just have to make them under somewhat extenuating circumstances. Even with the green chutes of recovery beginning to appear we face the toughest job market in decades, and it doesn't look like it's going to be any better come May 9. I know, I know, we don't want to be reminded, but let's face it - it's not only ours, but the nation's 800 pound gorilla.

As Derek Thompson writes in a recent article in The Atlantic, this may be the mother of all jobless recoveries. His piece serves as commentary on a Cleveland Fed report entitled "Are Jobless Recoveries the New Norm?", which takes a look at why, in spite of modest signs of recovery, unemployment still lingers at 9.7%. The report's author, Murat Tasci, postulates that the recession we are currently climbing out of is much more similar to the previous two that to those before, especially in the fact that pain in the labor market remained for some time after the initial downturn. Fewer new jobs were created or regained leading to longer spans of unemployment for those who lost jobs during the recession.

As one would expect, after two quarters of positive GDP growth this economy is no longer hemorrhaging jobs, but it is failing to create them. Increased demand, hailed as the savior of the labor market by many, will not be so this time around because of the huge amount of slack in the market. As firms begin seeing business pick up they will begin adding more work hours courtesy of their already grossly underemployed staff. The average work week currently stands at 33.1 hours and the number of individuals working part-time (not by choice) has jumped by 4.1 million since December 2007.

The real kicker, though, is that according to the Fed, nearly 95 percent of the change in the unemployment rate is due not to jobs lost, but jobs not found. "During the past three recessions, the decline in the job finding rate has been playing a bigger role in unemployment rate fluctuations. Relative to the change in separations, the job finding rate changed (declined) much more in the past three episodes," writes Mr. Tasci.

There is at least one light at the end of the tunnel, however. Once the economy recovers enough that baby boomers' wealth returns, they'll begin retiring in droves. Maybe this will give the country the empty jobs it needs to make up for the past few decades' loss, and us the opportunities we need to move ahead.

Does This Watchdog Have A Bite

States Seek to Tax Services, From Head to Toe

States are considering taxing more things than what already is for the main reason of raising more revenue. Opponents claim they are hurting as it is and more of a tax will only keep customers away. On the other hand, the political leaders state that the they are hurting from lack of revenue and say it is inevitable that taxes will need to change. They're suggesting "adding scores of services to their states' sales tax requirement and lowering the tax rate under a widened tax base."

China's Role in Clean Energy

I thought this was a good slide show just to illustrate China's growing role in clean energy. This short slideshow clearly shows that China is trying to move beyond pure manufacturing to innovation and sales which are are of higher value to the nation.