US employment rate hits five year high

Jobless rate rose to 6.1 percent in August; employers cut 84,000 jobs

WASHINGTON - The nation’s unemployment rate zoomed to a five-year high of 6.1 percent in August as employers slashed 84,000 jobs, dramatic proof of the mounting damage a deeply troubled economy is inflicting on workers and businesses alike.
The Labor Department’s report, released Friday, showed the increasing toll the housing, credit and financial crises are taking on the economy.
The report rattled Wall Street again. The Dow Jones industrial average was down nearly 100 points in morning trading. All the major stock indexes tumbled into bear territory Thursday as investors lost hope of a late-year recovery. With the employment situation deteriorating, there’s growing worry that consumers will recoil, throwing the economy into a tailspin later this year or early next year.

Who are the terrorists!!!!

I apologize in advance if this blog offends anyone. This is not directed at any particular state or group but merely intends to stimulate thinking. Early Wednesday morning, the United States ground forces infiltrated Pakistani territory in pursuit of terrorist targets. In the raid, the US forces ended up killing 15 villagers, all of whom were declared innocent. No connection was found what so ever between those killed in the attack and any terrorist organization. Women and children were among those killed. This was the first US ground infiltration into Pakistan, an American ally in the war on terror. Earlier this year the US was responsible for various air and mortar strikes on Pakistani territory. Both innocent civilians and Pakistani military personal have died in a series of such attacks. One of the recent US air strikes in Afghanistan killed (according to the UN) more than 90 civilians, 60 of whom were children.

The question i would like to pose is what many of us think we know.. Who is a terrorist? The United Nations unfortunately does not have a definition, if anyone can come up with a definition, any post would be appreciated.

Investments Are Faltering in Chrysler and GMAC

Chrysler the smallest of Detroit's automakers like so many other companies has suffered from the recent down turn in the American stock market and housing bubble burst. The acquisition of Chrysler by the American private equity firm Cerberus, headed by American financier Stephen A. Feinberg, has been an uphill battle and since its purchase from German based Daimler Corporation for $7.4 billion the now privately held company has sought to cut costs. The new investors have been struggling to improve the performance of the newly named Chrysler LLC, who currently employs around 72,000 people after the massive cuts of about 28,000 employees since May of 2007 but with Feinberg's appointment of Robert Nardelli, former Home Depot CEO, Cerberus is confident their investment in one of the most recognizable American companies. This acquisition looks to be a true test of American capital investment and the deregulated nature of the U.S. economy.

Thailand declared state of emergency

Thailand's pro-democracy group "People's Alliance for Democracy" (PAD) led a protest against the government a week ago and the clash between the pro and against government groups left one person dead.

The PAD played a role in removing Thailand's ex Prime Minister Thaksin Shinawatra from his post 2 years ago, and now they're demanding the resignation of the current Prime Minister Samak Sundaravej.

The group has support of some of the ruling elite and fervent following in Bangkok, but little support from most of rural Thailand, which voted strongly for Mr. Samak.

Housing in NYC

The housing market in the US has been on an obvious downfall recently; however, New York City is not having this problem. The question is: how long can NY stay afloat? This determines how long the economy will be in a recession. New York has been named the least affordable city in the US.
Housing prices nationwide have decreased 16% in the past year but NYC has only dropped 7%. This continues to boost home prices nationwide. House prices in the New York City area have been staying very high- suggesting that much steeper declines could be in the future. How much these prices drop will play a large role in the US financial sector.
If prices were to decrease sharply it would cause a large expense in foreclosure.

Japanese prime minister resigns abruptly

Japanese Prime Minister Yasuo Fukuda abruptly announced his resignation Monday, less than a year after taking office. Japanese shares fell Tuesday as investors reacted negatively to a looming political stalemate in the wake of Prime Minister Yasuo Fukuda's surprise resignation.

However, economists said the resignation's actual effect on Japan's direction would be limited, largely because Fukuda was already an unpopular leader who had accomplished little during his year in office. They said Fukuda had largely ceded decision-making to entrenched political interests and the nation's powerful bureaucrats, making it unlikely his sudden departure would change the country's current policies.

Japan is in a very difficult situation right now. In two weeks a new prime minister will be elected and Japan's fate will depend on what kind of policies he will implement.

Oil Prices Fall Sharply as Gustav Weakens

As Hurricane Gustav have passed Gulf Coast with out major damage to the oil drilling facilities oil prices have fallen. Through there was no major damage in this crisis, one can see in this article at http://www.nytimes.com/aponline/business/AP-Oil-Prices.html?_r=1&ref=business&oref=slogin
that even a major Economic country like the United States could be hit hard by natural disaster.

Is a Dictatorship better for the Pakistan Economy

Some say 11 years of sole control and unconstitutional and at times inhumane political conduct led Pakistan into its dismal and precarious economic conditions today. The fact that the Pakistani Rupee has approximately declined by 26.67% in just the last three months shows most of the picture. Where some challenge General Musharaf’s dictatorial rule as the prime cause of this situation, others compliment it, saying it not only made them feel secure, but also stimulated the economy. If we measure the strength of an economy by looking at its GDP, then Pakistan has recorded her highest GDPs during 3 decades of dictatorship: During the 1960s rule of General Ayub, the 1980s with General Zia and from 2001 to 2008 with General Musharaf. Some would argue it is more a matter of social welfare, and high GDPs especially in dictatorial regimes mean social inequity.
Jawalaia is a small village an hour away from Islamabad (Pakistan’s Capital). Members of this village earn their living through hard labor, cultivating land for growing oranges maize and wheat. The inhabitants of this village complain about high prices. They accuse the new democratic government for this condition and say they had it easier with the dictator. They talk about General Musharaf’s policies of using the army to control prices in the flour industry. They accuse the new government of not taking any such steps. There may be truth to most of this story. Pakistan’s CPI alone saw an increase of 24.33 % in July 2008 over a period from July 2007. There is a lot more to this story and I am interested to see what all people have to say about it.

Were the Olympics good or bad for China?

People assume that hosting the Olympics is always good for a country. This article gives some reasons why the Olympics may have been both good and bad for the Chinese economy, which is supposed to one of the fastest growing in the world. We've been reading articles about pollution and the costs of the spectacular new facilities, but not about how China's show of resources and greatness might be adverse for their economic growth. some of the reasons analysts are worried about China are: They restricted multiple entry visas to the country so businessmen cant travel back and forth as easily, beijing has severe trafic restrictions in important sectors of the city for several months which means people can't access businesses as easily, the pollution ban is slowing manufacturing growth and upping prices (as companies try to comply with strict air quality conditions).

also, the olympics are a disaster as far as the famed chinese productivity is concerned; theres almost a 50% drop in chinese business during the games, mostly from workers taking time off to watch the events. this adds up to millions of dollars lost for the chinese economy.

It will take time to see if Olympics tourism and sponsorship offset these problems and the Games are ultimately beneficial to China.

What Russia's invasion of Georgia tells us about today's world

Recently, the public (should) start to have a closer look at the war between Russia and Georgia. This is considered as a serious threat to our global peace. According to this article in the Time magazine, Moscow's behavior is no longer a simple attack on Georgia. More importantly, it is a sign, an attempt that Moscow takes to reform the Soviet Union. "[Vladimir] Putin [the President-turned-Prime Minister] declared that the dissolution of the Soviet Union was 'the greatest geopolitical disaster of the [20th] century.'," quoted from "Staring Down the Russians" by Zbigniew Brzezinski. 17 years ago, Soviet Union failed to practice communism, and broke apart. Now, Russia wants to take control over all of its former colonies, and once again tries to apply such economic system. However, in my opinion, Russia is rather using a wrong approach. It is using both ruthless force and unethical economic pressures against the former colonies. For example, its tragic attacks against Georgia and its economically isolation against central Asian neighbors like Kazakhstan and Uzbekistan... I am sure each economic system has to try hard in order to survive. And I also agree that such systems can go through adaptation if needed. However, I think Russia's attempt is rather desperate and unaccepted. The international public should definitely take some actions.

The Next Credit Crunch

(Fortune Magazine) -- We made it through the bursting of the Internet bubble and now the bursting of the real estate bubble. Next we may be approaching the end of the most worrisome bubble of all: the standard-of-living bubble.

That conclusion comes from the latest data on credit card debt. It's growing fast, but the problem is bigger than that - and to understand what it means, we have to take a few steps back.

The economic ramifications of Hurricane Gustav

Around three years after Hurricane Katrina hit the south, another hurricane is poised to do the same.  One of the three inputs that determines economic outcomes is environmental factors, of which natural disasters, such as hurricanes, are a part of.  Hurricane Katrina, three years ago, severely hurt the U.S. economy.  According to this article, it was actually the costliest natural disaster in history.  So, it would be assumed that Hurricane Gustav would also cause drastic problems in the economy.  But, according to the article Wall Street hopes economy can weather storm, the economy actually seems to be holding up a lot better than expected.  In addition to the reasons that the article lists on why this could happen, I think that another factor is that there is a lot more warning about this hurricane than Hurricane Katrina, as well as more of an understanding of what to do during the storm and afterwards.

GDP in India hits 7.9% in the first quarter- Slowest in three years

In the first quarter of the current fiscal year, the Indian economy grew by 7.9%, the slowest in the past three and a half years. The economy had grown by 9.2% in the first quarter of 2007-08. Although growth was seen in agriculture, industry and services, a sharp drop in growth in manufacturing and electricity generation is seen to have pulled down overall growth. Manufacturing stood at almost half of what it was in the last fiscal year. Growth in investment expenditure moderated to single digit for the first time since the first quarter of 2002-03. This could be a result of the sky rocketing interest rates and increased input costs.

It seems contradictory however that finance minister P. Chidambaram is confident that for the entire fiscal year the economy will grow at close to 8% due to a high degree of savings and investment that the country is witnessing, considering there has been a significant drop in investment. Economists however are of the opinion that the slow down in the first quarter was in sync with the Reserve Bank of India’s aim to bring down growth to contain inflation which stood at 12.4% for the week ending August 16^th, 2008.

Pedaling Relators / Bike commuting

With rising fuel prices commuting by bike has become a popular way to get to work, class, or just getting around town. More recently some companies have including cycling in their business strategy not only to cut fuel cost, but also to reach out to the growing "green" world we are living in. This article talks about some relator's who use cycling to show homes in areas clients are interested in. This sort of business is certainly attracting a niche market at this time, but from what the article says its doing well and growing at a great pace.
I think ideas like this within a business are great. More and more people today are living green and doing their part in helping the environment. With more businesses offering eco-friendly services like this, its become easier for everyone to go green.

Big Events Means Big Business

According to an article on the NY Times website, the Democratic National Convention has brought more than just politicians and Democratic party supporters to Denver, CO. The massive attention the conventions are bringing this year represent perfect marketing opportunities for corporate America. Big name companies, such as Google, Best Buy, Pfizer, FedEx, Allstate, AT&T and Hewlett-Packard are already spending big bucks at both the DNC and the Republican National Convention to "promote their brands and their political agendas". Going with the "green theme" of the DNC, Union Pacific Railroad put on display their new hybrid locomotive, and Coco-Cola, named the "official recycling provider" promoted "recycling and offering free samples of the company’s vitamin water, lemonade, tea and Coke Zero".

The conventions are just some of the ways companies are using large scale attractions to promote their products in innovative ways. The Super Bowl is the one used most often by companies, but this summer brought the Olympics and the two political conventions, giving companies even more of a chance to showcase their goods. However, these prime marketing spots don't come cheap; Qwest, a telecommunications provider donated $6 million dollars worth of telecommunication services "to each host committee". That same amount of money will get a company only two 30 second spots at the Super Bowl.

Food for thought

China's been a bastion of human rights violations, placing the communist party's collective needs over individual rights. The way i see it, the trend of rampant capitalism overwhelming the nation's economy is going to eventually change the system of governance in China.

Consider this. As a communist country, the Chinese government controlled all assets/businesses. This changed when they allowed foreign investments in China, which began holding controlling interests in numerous companies. The Chinese people are also great entrepreneurs, starting numerous businesses and empowering poor people with money. What money gives people is limited control over their own decisions and their lifestyle, which could also be interpreted as sowing the seeds of independence from their government. They now choose what they want to eat, where they want to live, what they intend to buy, and who they intend to invest their surplus money in. In other words, over time, groups of Chinese investors/businessmen will have considerable influence over businesses and in effect, over the people that run their businesses. Soon, pockets of influence will spring up all over China, each representing their own region's interests and championing their own group's cause. Even if just restricted to the topmost percentile of Chinese citizens, these "private" investors would have the breadth to get their voices heard and the Government would be compelled to listen.

Pockets of influence also create lobbyists, who work with the upper echelons of the Goverment to promote their interests and individual requests. This is more a natural consequence of empowering people with money, rather than being a systemic disturbance in a communist society. Over a certain period of time, human rights lobbyists promoting individual rights and needs will eventually "have" to be heard and addressed. If China's going to be a progressive society that I hope it turns out to be, their citizen's voice will be heard. Their rights protected, and their identities promoted. This ofcourse would take ten of years, if not more, but their communist foundations of systemic control would eventually shatter as a result of their capitalistic aspirations.

Money empowers. Empowerment is the cradle of a progressiveness.

No Free Lunch

How many times have you heard in your Principles course the expression that there is "no free lunch?" China's experiment with shutting down the most polluting factories and limiting emissions from traffic during the Beijing Olympics has decreased air pollution to the extent that people could see the blue sky again. However, the cost of the experiment has been a slowdown of economic growth and job creation.

Welcome

Welcome to the Economic Systems blog. I am looking forward to seeing a lively and productive discussion and analysis of issues related to the course and economics in general.

Wishing you a great semester,

prof. Skosples.