Connecticut Is Increasing Minimum Wage to $10.10 an Hour

In his State of the Union address, President Obama said he wants to increase the minimum federal wages for workers to $10.10. Two months later, Connecticut did exactly the same. According to the article, on Wednesday March 26, Connecticut lawmakers became the first in the country to pass legislation that would increase a state’s minimum wage to $10.10 an hour by 2017. The bill was approved 21 to 14 in the Senate and 87 to 54 in the House.

There are controversies regarding this matter. Advocates, including president Obama, believe that Connecticut’s vote cleared the way for other states. However, Legislative Republicans and various business groups criticized the increase as another action making Connecticut uncompetitive, as it hurts business, especially smaller ones.

Increasing minimum wages may seem to be a good way to reduce poverty, but it is true only when the economy is doing very well. If minimum wages increase while firms do not make more money, fewer people will be employed, and some may even be fired because their employers cannot afford to pay them. That will make poverty even worse in the US and will hurt the recovering economy, especially when the unemployment rate now is still a concern and is decreasing at a slow rate. Connecticut set policy for the year of 2017, which means it believes the economy must be growing at that time. This assumption can be true, but can also be overoptimistic, consider the slow recovery rate of the economy.

http://www.nytimes.com/2014/03/27/nyregion/connecticut-is-increasing-hourly-pay-to-10-10.html?ref=economy

Holding Back Half the Nation

Japan’s working-age population is expected to fall by 40% by 2050. How is this possible for a country with such a large population? One of the main reason is because female participation in the labor force is far lower than in other rich countries, at 63%. This isn't because they aren't qualified, Japan educates its women to a higher level than nearly anywhere else in the world. It is due to the fact that that conservatives were worried it would damage family values, Japanese culture, and it made economic sense since they were the country's "baby-making machines". However, the fertility rate in Japan plunged further and it is why now, Japan is expecting a sharp decrease in it working force in the future.

However, even if the idea women working changes, there will be obstacles for Japanese women to obtain quality jobs. "Corporate culture is by far the biggest obstacle for Japanese women. The practice of hiring graduates fresh out of university and employing them for their entire working lives makes it difficult for employees to take career breaks and seek new positions elsewhere afterwards." Culture once set in place is hard to change especially if people do not see a reason for change. How can the government in Japan help ease this transition to a larger women work force? Will women just never have equal representation with men in top level management position? And if changes aren't instituted now, how will this effect Japan's economy in the future besides a decrease in its work force?

http://www.economist.com/news/briefing/21599763-womens-lowly-status-japanese-workplace-has-barely-improved-decades-and-country

Britain Reaches Deal to Clear Trades in Chinese Currency

Great Britain is looking to become the world’s leading hub for Chinese currency outside of Asia.  By being able to clear trades in Chinese currency, Britain is hoping to attract as much Chinese investment as possible so as to get a first mover advantage on the rapidly growing Chinese economy.  Connecting themselves to the most rapidly growing economies in the world is a major part of their economic plan.  The Bank of China has also recently put a 2.5 billion renminbi bond in the London Stock Exchange’s Professional Securities Market, the largest of its kind.

http://dealbook.nytimes.com/2014/03/26/britain-reaches-deal-to-clear-trades-in-chinese-currency/?_php=true&_type=blogs&ref=international&_r=0

China's Economy: an alternate view

http://www.economist.com/news/finance-and-economics/21599051-chinas-official-figures-both-understate-and-overstate-inflation-alternative-view

This article provides an alternate view on the view of China's economy as continually strong and growing. The article provides the statistics that everyone has heard about the growth of GDP in 2013. But then discusses the declining house prices and the weak exports. The article states, "Forecasters expected industrial output to grow by 9.5% in the first two months of 2014, compared with a year earlier; it grew by only 8.6%." The article then discusses an important aspect of the Chinese economy: inflation. Is inflation significant? Does China realize this negative of their economy?

Wall Street falls, NASDAQ under 50-day moving average

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US stocks fell sharply today (Monday, March 24) as the NASDAQ has had its biggest daily percentage drop since February, with technology and biotech companies (recent best performers) leading the fall.

This has come as a result with the recent crisis in Ukraine and fear that the conflict may escalate. Investors are nervous because there is a potential for an economic fall out to the rest of the global economy.

Netflix Inc. has been the S&P 500’s biggest loser falling 8.9% followed by Facebook Inc. and TripAdvisor Inc. Again all three of these companies had performed well in 2013.

Markit – a financial data firm – has said even with manufacturing activity slowing in March the rate of growth and rate of hiring has remained strong. 

US Targets Putin's Banker, Threatens Trade

President Obama signed an executive or to effectively sanction Russian industries including financial services, metals, and engineering. These round of sanctions could cripple the Russian economy that is heavily reliant on oil and natural gas exports. As tensions in Crimea increase, the US sanctions has the potential to hurt not only the Russian economy, but much of Europe that relies on many exports will hurt because of it too. As the number one supplier of energy, Russian sanctions will limit the amount of power they will be able to produce and export. Threats to increase the severity of sanctions from the US will likely hurt other industries not only in Russia, but their trading partners.

U.S. targets Putin's banker, threatens trade

A 'Crisis' in Online Ads: One-Third of Traffic Is Bogus

http://online.wsj.com/news/articles/SB10001424052702304026304579453253860786362?mod=WSJ_business_LeadStoryRotator&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304026304579453253860786362.html%3Fmod%3DWSJ_business_LeadStoryRotator

Digital advertising is now a $50 billion dollar industry, and it continues to grow, but many firms are cautious about how much more money they will put in digital advertising. This caution is because of the growing fraudulent digital advertising industry. Typically, marketers pay for ads when users visit a web site, whether or not the user is a human. The frauds create web sites and then create computer generated programs to visit those sites to make it seem as if people are actually visiting the web site. According to the article, about 36% of all web traffic is fake.

Quentin George, a co-founder of ad-technology firm Unboud, says that there should be more money in digital advertising considering how much time people spend on the internet, but issues like fraud limit firm's confidence in the effectiveness of digital advertising. Marketers are responding to the issue for fraud by actively monitoring for fraud, and by demanding a refund if fraudulent digital advertising is found. Another option is some marketers are now only paying the website when there is clear evidence that the user has signed up for their product. The article notes many of many of the "fraudsters" are from eastern Europe. If the eastern European fraudsters are stealing money from what are mostly western firms, do the marketers or security services have any incentive to catch and punish the fraudsters, or should they be more focused on finding new ways to charge marketers that will prevent fraudsters from abusing the system?

The End of the Crony Era

Recently, favor and favoritism has not been smiling on crony capitalists. Their self-serving behavior often spills over into politics and government. The attention that Viktor Yanukovych and Rinat Akhmetov have garnered in recent news has brought about this turn. Government's are markedly cracking down on cronies within the system. In Ukraine especially, monopolies and oligarchs are under scrutiny. A new generation has begun to emerge that casts capitalists in a better light. This article outlines the transition from crony capitalists to the new generation of economic tycoons that are taking over the economic world.

http://www.economist.com/news/leaders/21598996-political-connections-have-made-many-people-hugely-rich-recent-years-crony-capitalism-may

Teens face toughest job market on record

Teen employment has reached the lowest rate on record since World War II, with 26% of 16-19 year olds being employed (2001 data), a 19% drop from 2000.  While there have been some rises in enrollment rate in college and high school, the modest increases have not been able to explain why so many youth are not employed.  And even if they are employed, they are most likely to be underutilized.  College age adult employment has also dropped from 72% in 2000 to 61% in 2011.

Education has been shown to be a problem, with high school not being able to prepare students for a job.  With high schools not being able to prepare students for college coursework and job training, apprenticeships and applied 2-year degrees not being a priority for the large number of American youths who don’t even make it to college.

Read article here: http://money.cnn.com/2014/03/14/news/economy/youth-employment/index.html?iid=SF_E_River

Investors Are Falling For Indonesia Again

In the past nine months, Indonesia was part of "fragile five" economies that was most vulnerable to quantitative easing policies in the United States. As a member of the "fragile five" economies, analysts thought Indonesia might be heading for another 1997 crisis, where the Indonesian currency fell 70%, GDP declined 14%, and inflation rose 70%. But during that nine month time period, investor sentiment has gone from excessively pessimistic to optimistic in regards to the Indonesian economy. The Indonesian currency fell more than 30%, but it allowed for an opportunity to lower their current-account deficit by making exports cheaper in foreign markets and imports more costly. Currently, interest rates and inflation rates are low setting the Indonesian economy up for potential growth. As it stands, the former "fragile five" economy is one of the world's best markets year-to-date up 23% in US dollar terms. Although, there is opportunity for growth, this is not a sure thing. The risks from a China economic burst and difficulties with a new presidential reform are both under-estimated. Additionally, Indonesia is trading at 15x this year's earning, a 32% premium to Asia (minus Japan). In order to lower the risk of a foreign long-term investment , I might be better suited to find a better value in South Korea that is trading at approximately half (8x earnings) of Indonesia's valuation.

http://www.forbes.com/sites/jamesgruber/2014/03/23/investors-fall-for-indonesia/

World Food Programme: Giving Generously

This article illustrates some of the changes and progress made by the World Food Programme (WFP) to better assist starving people in struggling countries across the world. According to 2013, the WFP fed over 90 million people in 80 different countries. While this is an amazing feat, the WFP has been reassessing how to go about distributing food to each area. As of late, they have determined that importing food directly to the people can, “undercut local food markets and cause more fundamental economic problems,” and would generally disrupt the local economy. Buying and redistributing locally is the better alternative. Now that these logistics have been improved, economists like Lynn Brown from the World Bank have been seeking to improve nutrition as opposed to just starvation, among other ways to improve food assistance. It’s great to see economic efficiency improving and progress being made with this challenge. 

http://www.economist.com/blogs/freeexchange/2014/03/world-food-programme

Coping When Not Entering Retirement Together

http://www.nytimes.com/2014/03/22/your-money/coping-when-not-entering-retirement-together.html?ref=business

This article caught my eye due to my Public Finance course with Professor Gitter. The article deals with handling the benefits you can receive after retirement. With many countries having different systems, this one addresses the US system. It talks about a man and the lifestyle he wants to live after retirement but also balancing his wants with his wife as she is still working. Knowing the system we have is important for us much later in life. It will be interesting to see how much things change from now until our retirement time down the line.

The once and future currency

http://www.economist.com/news/finance-and-economics/21598651-new-book-examines-worlds-love-hate-relationship-dollar-once-and

This article talks about the world's love hate relationship with the dollar. It talks about a new book that was released that talks about the ups and downs associated with our currency. With the economy fluctuating so much in the past few years, this book could be an interesting read for those interested in exchange rates, trade and all things that focus on the strength of the dollar. The value of a country's currency can make or break an economy at times so learning about the dollar through this book can be very beneficial.

UN: Water and Energy Must Work Together

Water and energy are vital resources yet are depleting in our world because of the overuse of water.  The United Nations states that they need to be managed together properly because they are interrelated.  The increase of hydraulic fracturing has put pressure on water sources and has led to water contamination.  This is bad for water and the environment and thus how we get electricity needs to be rethought.

The U.N blames this on financial subsidies that are keeping the price of water artificially low. This is caused by governments who make water cheap or free for energy producers.  But this does not give them an incentive to conserve.

http://america.aljazeera.com/articles/2014/3/21/water-un-energy-worlddayreport.html

Not just java: Beer and wine coming to Starbucks

Morning coffee stop, study destination, meeting place with friends, and soon to be, evening destination for wine and beer. Starbucks started serving wine and beer in one of their cafes in downtown Seattle, (no surprise), back in 2010. The company waited a while before taking the change further. Currently there are 26 cafes serving alcohol, certainly not Delaware, Ohio, with plans to increase the number to 40 by the end of the year. That is 40 out of nearly 11,000 US cafes, so I'm not holding my breath that Delaware will be on the receiving end of this deal. The move might seem bold but it is an active attempt to increase sales after the morning commute. Starbucks also plans to introduce hors d'œuvres to the alcohol serving cafes. It will be interesting to see how this change effects the brand that Starbucks has built. Could this possible be a more successful attempt on an international scale?

Billions to Capitalists, not Charities

Google CEO Larry Page on Wednesday, March 19 said at a TED Q&A session that instead of giving his billions to philanthropic organizations, he'd rather give his cash to capitalists like Elon Musk, the founder of Tesla, SpaceX, and Solar City. Larry Page went further and argued that everyone should give their money to corporations trying to accomplish big things. However, it's still a little unclear to what extent the Google CEO was being serious about the matter.

Do you agree or disagree?

Data Wizard Relaunches New Site

Statistician genius, Nate Silver, has relaunched his FiveThirtyEight website.  Most familiarly known for accurately predicting each state in the 2012 election, the site has been published under ESPN ownership.  Silver says the site will offer more than politics and sports, he claims to cover science, economics, and lifestyle as well.  Silver argues that his 2012 predictions are overrated, and that his new team includes more data visualization and computer programming tactics.  By spanning more coverage areas, he hopes the site will increase popularity and branch away from the 2012 hype.  While “explanatory journalism” has recently increased, Silver claims his staff is “unique and weird nerds, essentially outsiders.” 

 http://www.newsweek.com/data-wizard-nate-silvers-new-site-launches-under-espn-ownership-232154

The Home Front: The Kremlin’s belligerence in Ukraine will ultimately weaken Russia

http://www.economist.com/news/europe/21599061-kremlins-belligerence-ukraine-will-ultimately-weaken-russia-home-front

This article makes a very interesting analyses of sanctions that the EU and the US are threatening Russia with. As article points out this is exactly what Mr. Putin wants and it provides him with a great opportunity to blame Russia economic downturn on the West. This might not satisfy the elites, who store their money and buy assets abroad, but considering how slow the West has been in assigning sanctions, they might have enough time to move their cash elsewhere. Putin has been warning the elites, but it mostly lead to capital flight, increase in the cost of borrowing and restriction of the new investments.

Putin is painting a bright picture through the total control of the media sources. But not everyone is buying what Putin is selling even in his own country. The article refers to the letter sent to Putin by a journalist from Vologda, the heart of Russia, provides a clue as to how some ordinary Russians feel. “Could you also send the troops to the Vologda region?” it said. “We are all Russian-speakers here and our rights are really infringed upon: our sick cannot get medication and care, our education is getting worse every year, our agriculture is dead.” I am personally very curious as to how economist got its hands on this letter but regardless this is how a great number of people in Russia feel about Putin and his propaganda machine. 

China’s military spending At the double

China announced a defence budget for 2014 of $132 billion which is an increase of 12.2% on the year before. This sets off a flurry of alarm among neighboring countries. They see the relentless growth in China's military spending- double digit increases almost every year for the past two decades, and now the biggest in three years. This growing military capability causes concern. Even though China's military budget is only about a third the size of America's but, if present trends continue, the gap will quickly narrow. Japan, Korea and Vietnam are raising their military spending in response to the Chinese military build-up, but China will still vastly outspend the combined efforts of all its maritime neighbors. 

http://www.economist.com/news/china/21599046-chinas-fast-growing-defence-budget-worries-its-neighbours-not-every-trend-its-favour

Higher education: Harvard's exit strategy

http://www.economist.com/blogs/freeexchange/2014/02/higher-education

This article is about how online education might affect higher education. Stanford economist Caroline Hoxby responded to this issue stating that “For top schools, the best bet may simply to preserve their exclusivity.” I agree that top schools must preserve their exclusivity in order to maintain their current business model, but I wonder if the increased popularity for online courses is an indicator that the system needs a change. Competition between universities for professors and attracting students at elite universities is very expensive, as the article explains. Costs of education and costs for universities have increased tremendously. NPR’s Planet Money reports in the article that “In 1984, it cost $10,000 a year to go to Duke University. Today, it’s $60,000 a year.” I would be curious to find out if the quality of education has increased at the same rate. As time goes on, new technologies emerge and more information is available, which has strengthened our education system and also changed the traditional way of educating. Online courses are a new method of education that has been embraced by our society due to its lower costs and flexibility. Better institutions will remain “better” because they will offer more both in online and classroom settings. Whether online or in the classroom, the price of education should be relative to the quality offered. Elite institutions will remain elite if they continue to offer the highest level of education to the students accepted and if the competition for acceptance remains challenging. 

Bargain Retail Taking Over

Nearly everyone in America would say that the Great Recession of 2008 affected them in one way or another. This reigns true today for many "large, old retailers" such as JCPenny and Sears. This article discusses the shift from large anchor stores, such as JCP and Sears, to bargain retailers, specifically big box stores, such as TJ Maxx and Nordstrom Rack. This shift is likely caused by consumers hesitation to spend full price on practically anything, and the satisfaction of buying items at a reduced price. The pain consumers are still feeling from the recession is not likely to disappear any time soon. Are we still in a recession? I believe not, but it is hard to change the minds of consumers as a whole. "In 2013 nearly 10,500 new retail stores opened, compared with about 2,600 closures, according to Factset research." (MacLaughlin, 2014) This is simply a shift in buying styles and will cause businesses to close as well as others to open. The market is the midwife and the undertaker. 

People Think We’re in a Recession. Don’t Blame Them.

Americans were asked if they think we are still in a recession. Majority of them said yes because they cannot find a job or have not received a raise in years. The higher profits and stock prices have not created higher wages for the employees. The current economic policy focuses on improving the overall economic growth and not improvements to employment and wages. The policies that the Obama administration have been put in effect, only help the poor and provide little help to the middle-class. Education and human capital policies have been thought of to help improve the overall growth. Most of these policies will help in the long-run.

http://economix.blogs.nytimes.com/2014/03/14/people-think-were-in-a-recession-dont-blame-them/?ref=economy