Daily Show: "Whacking the Wall Street Piñata"

In this Daily Show clip, Jon Stewart provides an example of how inequalities can lead to social strife in a democratic system:

A hedge-fund manager at a CNBC town hall meeting is upset about President Obama's tone toward irresponsibility on Wall Street contributing to the recent economic crisis and Obama's plan to allow the Bush tax cuts for the rich to expire in order to decrease the deficit. He asks the president when he will stop "whacking at the Wall Street piñata?"

Stewart replies: "I don't know - maybe when the f#cking candy comes out." And later adds: "You feel like the government is whacking you with a stick? Because what you call a stick, Americans call a trillion dollar bailout of your industry."

Stewart is expressing a common animosity and I can't help but agree with him. We are at 9.5% unemployment. 1 in 7 Americans is below the poverty line. People are suffering - for real. Can anyone explain to me how a hedge fund manager is justified in whining about a 3% tax increase in his income above $250,000 (from 36 to 39% - the same as under the prosperous Clinton years), especially given that his industry was saved by taxpayer money and given the millions of Americans truly suffering from the recession?

Unemployment filings jump back up

This article is about how the unemployment rate has grown even more. The first filings for unemployment rose to 465,000 this past week. The number was higher than economists' forecasts of 450,000 for the week. Both this week's higher figure, and the upward revision to last week's number disappointed investors, driving stock futures lower in pre-market trading. Initial claims had declined in the two prior weeks, giving investors some hope for the job market. But overall, the weekly number has made little progress since November, hovering in the mid to upper 400,000s and even moving to above 500,000 in mid-August. Since unemployment figures remain one of the defining measures of the recovery, economists say they're looking for weekly initial claims to trend below the current range before they're entirely optimistic about the economy. Do you feel the rise and peak in unemployment is a indicator that the economy is turning back around and things will began to get positive?

European Banking System Remains Fragile

European Bank markets have continued to be unsecured and unbalanced. A survey by the European Central Bank stated that about half of the 105 banks have lent money to other banks without requiring collateral. In an unsecured market, these liquidity conditions have increased heavily, before 2008 this number would never reach above 20% now it is around 90%. Since banks depend on the market to raise money for them, without securing these loans, the market will remain unstable? How should European Banks curtail this problem?

Irish Economy Shrank in Second Quarter

The Irish economy, which was one of the main countries in Europe to suffer duing the recent financial crisis has suffered another major setback as the economy shrank by 1.2%. It was only a few months ago that economists highlighted Ireland's economy because of a 2.2% increase, which led to many economist believing that this number would soon increase within the next couple months. This slow growth has led to a budget deficit equal to the small countries GDP which means that the government must do something to generate tax revenue for the country. Along with this the Irish government must cover real estate and bank loans which adds up to 30% of all economic output. Other consequences of this financial crisis to Ireland is the decision to make major cuts to public sector wages and pensions. These budgets have lead to a growing distaste of the Prime Minister Brian Cowen. How do you think the prime minister and the Irish government should handle this current crisis. Do you believe that the banks should play more of a role?

Congress passes $42B bill for small businesses

Last week I posted about the Senate passing a bill aimed at helping small businesses to create half a million jobs and cut $12B worth of taxes. This bill has been passed through Congress, and now only has one more step to becoming a law- Obama's signature, which it is expected to get.

UK recovery 'slower than thought'

UK GDP is expected to grow now by 2% rather than the previous calculated 2.5%. Fragile banks, less consumer spending is spurring investor fears. Uncertainty still floods the European markets and spending cuts are expected later this year.

What would you to help the UK economy recover? Would more stimulus be appropriate and how can we ease investors fears in the market place?

Sweden baffled - but rise of the right was obvious

Thousands of swedish people are protesting agains the far right elections. The Swedish prime minister said that he supports the green party for his new government. All this was taking place once it was confirmed that 20 democrats won seats. It is interesting to see what happens because so many thousands of people are against the far right party. It has been a long such a long time since the government has been in a far right position.

How will this effect the Swedish economic system? A major concert to Swedish people is immagration. Today we talked about the necessity for a closed community, so people can keep having great job benefits. The swedish people are not happy about what either side of the government is doing, what would you do with their economic system and immigration issues?

Tax credit bonanza for small businesses

When you think of a business starting up nowadays, it is rather hard to imagine. A company trying to compete against Walmart, IKEA, IBM or any other company, it is more of a fantasy for a company to gain market share against these companies which have such a large market share. The article tells us about the fiscal polices which the government is taking to help such small-start up companies. By giving the new companies a tax credit, they are helping them gain a small market share which they can still compete and survive upon.

Of course there are certain regulations which a company has to have for them to be eligible for this. The article gives the details as, "To get the credit, a business must have fewer than 25 full-time workers or the equivalent (the hours worked by part-timers count), pay an average annual wage of less than $50,000 and cover at least half the cost of health insurance premiums for their workers." The question remains, will this be enough for these companies to survive in the long run and how long is the government willing to actually giving money to these people?

Is rising inequality in America exaggerated?

This article illustrates the effort into seeing what is the real inequality in the United States. The factors taken into consideration are the, "impact of one of the usual suspects—immigration, trade, de-unionisation, education, executive pay." Almost very country in the world has some level of inequality, yet, the US seems to have the most concern about it. This may be just our proximity to the situation as it is natural to view people as different even though we are all created equal. What policies is the US government taking into consideration when it has larger issues to deal with?

Income Gap in the United States

Through data this article shows the increasingly large gap between the top 1% of our population and the middle class/ lower classes in our society. Such data include the fact that the top 1% income's increased, has grown 281% since 1979 whereas the middle class only grew 25% and the lower class only 18%. This disparity of wealth does not show any signs of slowing down even though the rich lost tons of money during the recession, history shows (2001 market crash and dot-com bust)that the rich recover quickly. The more concerning question is what does this mean for the future, how will our generation be effected by the increasing power and wealth of the rich?

The Global Cities Index 2010

Foreign Policy magazine has announced its annual Global Cities Index for 2010. According to FP, "we are at a global inflection point" and this index "reveals a snapshot of this pivotal moment". 5 out of the top 10 cities on the list are in Asia and the Pacific while only 2 are from Europe which signals a significant shift of what FP calls "global clout" from West to East. The index is calculated using information that falls into one of five dimensions: business activity, human capital, information exchange, cultural experience and political engagement. According to FP, cities on this list are not only global players economically but also culturally and politically. The index measures how much influence a city has beyond its own borders including its "influence on and integration with global markets, culture and innovation". Do you agree with Foreign Policy's ranking of these cities? Are there some that should have been on the list but were not, or vice versa?

Dollar Falls Toward Five-Week Low Versus Euro Before Housing Report

Relative to the euro, the dollar has fallen to a five-week low. This article demonstrates the power of speculation in today's economic systems. Speculators expect the housing market index, which reports today, to show low demand and lack of momentum in the housing market. Also, the FOMC makes its announcement on Tuesday with regards to what the target federal funds rate level will be. Speculators think (rightfully so) that the rate will stay unchanged at a rate of %0.00 to %0.25. The question is whether or not the Fed will use quantitative-easing measures to stimulate the economy. This is an attempt to raise the money supply in an economy by increasing excess reserves - this would put downward pressure on the dollar though.

Many economists say to stay with Bush's tax cut program

The debate is still on-going, whether to cut taxes, raise them, who to cut/raise them on, and by how much. In this article, 31 top economists were surveyed and 18 said to extend tax cuts (that is, not increase taxes on anyone, not even the top tax brackets). The arguments for all sides are interesting, each with their own relevant and valid theories of support.

Cuba Resets the Revolution

Article suggests that Cuba might be looking to de-nationalize. Cuban officials have been reported saying that labor is inefficient in Cuba as the status quo of the average worker is lazy. Government worker programs allow people to live without having to work/commit to a job. Cuba plans to correct this by reducing the amount of government employed workers and supporting small businesses and allowing private small business to exist in order to create employee/employer relationships. Questionable on whether or not these businesses will be able to compete/market with no business background.
Article mentions that Cuba might be slow/weary of transforming the economy because of its disdain for America and the American system. I think that it would be more because of what the revolution means to Cuba and how communism has become part of the Cuban identity.

What America needs is a payroll tax cut

This article argues for reduction of payroll tax across the board. According to his logic if payroll taxes are cut there will be a higher demand for labor, while at the same time putting money in the pockets of the lower income bracket, who have a tendency to spend nearly all their income. This would increase consumption and lower unemployment at the same time. Why stop at payroll tax cuts? Why not cut corporate gains taxes as well? It seems the most important agenda right now is to get unemployment under control and to get money moving again.

Companies Still Hoarding Tons of Cash

Companies are spending money but not on employment. Companies are using there money for new software and equipment but not on more labor. The recession caused companies to make cutbacks and the unnecessary labor workers were the first to go. Companies have not started to hire more workers probably because they do not find it efficient anymore to keep so many workers. If companies are able to remain productive with less workers than that is what a capitalist will do. A capitalist does not hire workers in order to help the economy reach a equilibrium. American is one of the most capitalistic countries in the world and if companies can find ways to be more productive with software or better equipment then that is what is going to happen.

Cramer: Tax the Rich

Cramer says that millionaires should pay more in taxes. The tax cuts that president Bush put in place will be expired December 31 of this year. The democrats are fighting over whether to extend it or not. Republicans want the tax cuts to stay steady across the board while the democrats don't think that we should have them anymore. In my opinion, the government should extend the tax cuts. If taxes are raised in the U.S. then people will spend less of their money because they will not have as much disposable income. Also the rich will not have as much incentive to work as hard. A bigger percentage of their earnings will go to the government. The article says that the middle class makes about $250,000 a year. Cramer makes the argument that in big cities that is on the low side for middle class and it should be upwards of $400,000 to be considered middle class. Either way though, the tax cuts should be extended until more people get jobs and get back on their feet from the recession.

A Feud Between Airbus and Boeing Has Given Neither Side a Clear Advantage

The Airbus vs. Boeing feud is really an argument over aircraft subsidies. Boeing has benefited from improper subsidies in the US and Airbus has used more blatant and aggressive types of subsidies in Europe. The US complained to the World Trade Organization that European countries had given Airbus more than $20 billion in questionable aid. Boeing claimed that Airbus used the loans to steal sales from Boeing. But Airbus counter sued, saying that Boeing received at least $5 billion in federal research contracts and subsidies. However, the lawsuits have not stopped the companies in moving forward with development of new planes. The WTO has no enforcement mechanism to resolve this dispute of subsidies so talks between the US and European officials will have to settle the issue. Efforts to resolve the trade dispute could also be complicated by other subsidized competitors all over the world.

Inflation rate flat amid price confusion

Are we in a period of inflation or deflation? Or is it neither? That is what this article aims to clarify about the American economy. Over the last 12 months general food and energy prices have been slightly higher than the year before - this slow increase has led the government to assert that prices have been flat over the past few years. Economists have argued that though price increases have remained slightly above zero, they are not as high as expected and it has led many to wonder, is deflation a bigger threat than inflation to the U.S. economy? Essentially, for consumers, low prices are a good thing – but what about the unemployed? If firms are not benefiting from rising prices, then unemployment doesn’t really have a shot at getting any better. Right now, what the U.S. government is trying to accomplish is to raise the momentum of the economy, reduce unemployment and make sure that the CPI does not reach zero.

Who's Picking Up the Tap for America's Spending?

The World's willingness to pay for U.S. budget defecits shows no signs of slowing down, especially with Europe's finances in dissarray. Foreign buyers added $76.4 Billion in U.S. treasury long-term debt in April, the Treasury department reported Tuesday. According to this article, The British ($42B), Japanese ($13.3B) , and Cayman Islands ($6.34B) have purchased a majority of these bonds from the U.S. There are concerns that if the U.S. plows itself too far into debt, than it will find itself in the same situation as Greece. This creates a bad lesson to learn: borrowers can cover up debt for only a certain amount of time. Eventually, those in Greece cashed in their bonds and the government was back into debt again. Hopefully, the U.S. government can learn from this and prevent itself from making a similar mistake.

Slowdown in European Economy

The pace of economic growth has slowed in"the euro zone" of Europe, despite the fact the levels of production have not returned to what they were before the current recession. The region is only at half of the production level that it was at before the recession. Experts feel that European growth peaked before reaching old levels, and see that the recovery will be slower from here on out. It is not predicted that the region will fall back into recession, but Jean-Claude Trichet, president of the European Central Bank, commented that the growth of Europe and other advanced countries has been modest in comparison to less developed countries. This makes sense because even in a recession, it is difficult for an industrial advanced country to grow economically as much as a country whose economy has not been developed and is developing.

Are we there yet?

Okay my only comment is on the need for more awareness about the state of the economy in congress and for actual steps to revive the economy be the most important issue. I agree with the need to rescue the housing market but am not sure if re valuing mortgages is the way to go.

U.S. woes are not our fault, Chinese economists say

I find it humorous that China still denies running a mercantilist economy. They knew just as well as everyone else that American's rely all too much on debt, and I don't think China has anyone to blame but themselves for being in the spotlight.

Are we there yet? America’s recovery will be much slower than that from most recessions; but the government can help a bit

This article talks about the somewhat unusual slow recovery rate of the American economy post-recession. Some of the possible reasons for this include a complete breakdown in the finance sector, which delays growth, and poorly structured morgages that are worth more than the actual house. The author suggests a number of solutions. The one I found most interesting suggests keeping Bush's tax cuts and running a loose fiscal policy. This will no doubt increase the deficit. So, is it more important to cut the deficit or encourage growth?

Budget deficit in U.S. narrowed 13 percent to $90.5 billion in August

The article gives a summary of the changes going on in the US economy currently. The tax revenue has helped to narrow the August budget deficit by 13% even thought it still remains high at $90.5 billion. However the Congressional Budget Office is still forecasting a $1.34 trillion deficit for the year, which would be the second largest on record. The US Treasury says that government revenue has climbed 13% compared with last year while government spending has increased by 2.2% yoy. The highest spending so far this year has been by the Defense Department, Social Security Administration and the Department of Health and Human Services. Even though the US economy started to recover in the second half of 2009, the growth in 2010 has been sluggish with unemployment, budget deficits and economic growth being the key macroeconomic factors which are lagging. As a result these topics will come under heavy fire as the November Congressional elections draw closer.

White House defends $814 billion stimulus, highlights top projects it says are creating jobs

This article talks about how the white house is backing there 814 billion dollar stimulus package, which is suppose to go towards about 100 new programs which will give some americans jobs temporarily. All of this spending is good in the short term, and will make growth look better then it actually is. Down the road this stimulus package I think is just gonna be another dead end way to spend 800 billion dollars, and since the Obama administration is becoming desperate to appeal to people again its sounds like a way to keep the heat off of them for a while..

France Moves to Raise Minimun Age of Retirement

French President Nicolas Sarkozy was able to pass a vote in the lower-house of the French government to increase the age of retirement in France to 62. The previous age of retirement in France was 60 and one of the lowest ages of retirement in Europe. This increase in retirement age may seem very small for most countries. Retirement age in the US is 65 and Britain and Portugal have committed to moving retirement to 68. However, France has reacted less than favorably to the changes. Sarkozy's approval rating are at a record low and there have already been strikes of discontent from the French people last week. Another strike is scheduled for September 23. The retirement age will reach 62 by 2018 increasing by 4 months a year. Sarkozy offered commission for people with grueling jobs or who began working at a younger age. The move to 62 will begin to save the pension system with people living longer and baby-boomers beginning to retire. "It's about preserving the pension system for out children." says Jean-Francois Cope, leader of the National Assembly.

Barclays, BNP Sell Record Samurai Bonds as Yield Demand Trumps Europe Rise

As European markets dropped on friday on US consumer confidence news banks and utilities were especially hit hard. European banks sold an incredible amount of Yen bonds in Japan this quarter.

Barclays Plc, BNP Paribas SA and three other European commercial lenders raised 499.7 billion yen ($5.83 billion) in Japan since July 1.

A staggering amount of money for a recovering economy. Since the sell off Japan is in trouble and is dealing with the lowest domestic yields and spreads to date. However European banks and taking on more and more debt every year especially since buying Greek, Spanish and Portuguese bonds.

What are your thoughts? Do you think we are going to see a trend going back to the European bonds since banks are selling off the Yen Bonds? Also the Yen to USD has been a strong play this summer, now that all the bonds are being sold back is it still a strong play?

ZEW Indicator of Economic Sentiment - Expectations Decrease Strongly

First to Clarify ZEW is a survey conducted in Germany which helps forecast the development of the German Economy. Almost like the economic sentiment indicator (ESI) in the US.

This article states that the ZEW indicated that the German economy is to decline sharply in the next half of the year. The indicated last month was up 14 points but now stands at a negative 4.3. This is due to terrible industrial production that was dormant in july. This will most likely lead to an economic slow down. How bad it will get we will have to find out.

Analysts are especially nervous because of all the money they loaned to Greece. The article seems to state that there will a complete slow down of economic activity.

Thoughts? What should they do?

Elizabeth Warren to Head Creation of Consumer Financial Protection Bureau

President Obama has tapped Elizabeth Warren, a primary architect of this summer's financial reform bill, to head the Consumer Financial Protection Bureau (CFPB) that the legislation created. Warren writes: "The new consumer bureau is based on a pretty simple idea: People ought to be able to read their credit card and mortgage contracts and know the deal." Warren is committing the CFPB to correct market failures resulting from imperfect information being passed on to consumers in the form of deceptive credit agreements. Warren believes that if such safeguards had been in place, our current recession could have been prevented by government intervention to stop deceptive and predatory lending.

Another nose in the trough

The world has two major plane manufacturers. THese being Boeing and Airbus. Anyone who has flown a commercial plane has been in one of these two brands. This article talks about the subsidies these companies are receiving and the complains from Airbus that Boeing is getting an unfair advantage. As it was later pointed out, "The trade referee found that much of the $22 billion benefit Boeing enjoyed from tax breaks and defence and research contracts was also an illegal subsidy. Airbus has long complained that, whereas it repays the launch aid with interest, Boeing never has to pay back a cent." So Boeing was gaining money from the US government. Yet, I do believe that the US government will continue to do so as they feel it is a necessity to keep Boeing alive as it helps with governmental contracts for the DOD. Does the WTO really have any say in what one of the most influential countries is doing since they are also highest contribution to the WTO?

Small Businesses are getting help

The senate passed a bill that will next go on to the House, then to President Obama where it will likely be signed into law. This bill is intended to help small businesses by increasing their ability to receive credit, which in turn will allow them to increase hiring. An estimated 500,000 jobs will be created, in all types of markets, thanks to this bill. The increased credit and job creation will lead to growth within the businesses, and hopefully be one way to stir the economy back up.

BP chief tells MPs Gulf spill was "devastating to me"

So devastated is the BP chief after the gulf spill that he wants his normal life back. In his hearing at Louisiana, Mr. Haywards mentioned that BP had spent $14 billion in safety, maintenance and hiring of the right kind of individuals. According to him, the gulf oil spill was particularly devastating for him due to "the immense progress the company had made in the past three years." Even though the company has reimbursed the families of the 11 workers it has still not taken sufficient steps for the conservation of environment. And this is not the first time that BP has come under fire due to negligence. So my question is, why is the government allowing a company like BP to move on with normal proceedings after so much colossal damage? Shouldn't there be a regulation where negligent companies like BP should be fined so heavily that other companies take more steps to ensure safety and environment conservation?

A step closer toward religious discrimination in France?

The French senate has recently approved the law banning any veils that cover the face -- including the burqa which some Muslim women wear. This makes France the first European country to initiate such measure. The law imposes a fine of 150 euros as a fine for a person wearing any face covering veil.

Obesity costs US 215 billion dollars: study

This article is about obesity and how it cost America so much money ($215 billion a year). The study went on to explain that through direct and indirect causes obesity costs the economy the $215 billion by medical expenses and lost productivity. The study was conducted by Brookings Institute found that medical costs for obese adults costs $147 billion more than their healthy peers and $14.3 billion more for obese children. Don't you feel it would be cheaper to put together extensive programs to prevent people from becoming obese? (i.e. school classes, government funded lunches for all schools, or some kind of government funded exercise facilities). Besides the direct costs of the medical expenses you also have to consider the other effects the obesity has on the economy such as costs that come from lost productivity, absensteeism, disability and premature death. With all this in mind would could be the answer to solve this problem? It doesn't seem to be this big of a problem in other countries.

Strong Yen Fuels Rise in Japanese Takeovers

Japanese companies are known to be strong, disciplined and patriotic. The strong yen has allowed Japanese companies to have greater purchasing power overseas. Within this year Japan has spent about 27 Billion USD in buying companies outside their country. Examples of this trend would be, "The purchases pale in prestige compared with deals like Sony’s takeover of Columbia Pictures, or Mitsubishi’s purchase of the Rockefeller Center." What does this say about the US economy? that it does not have enough presence to keep their own companies domestically? Will the yen, in the near future feel a change in this trend as more of their money goes overseas?

Organic Glow

Light is taken for granted in society today. This article takes into consideration a new break through by the Philips corporation and how it has found a light that saves both energy and emissions. This new light is "Compared to an incandescent bulb, which might cost only about 50 cents and burn for 1,000 hours, CFLs cost around $3—although they use up to 75% less power and last much longer. LED lights cost a lot more, but they are even more efficient. Osram, which is part of Germany’s Siemens, recently launched the Parathom Classic, a LED lamp shaped like conventional 60 Watt light bulb. It uses 90% less power than an old-type bulb and has an average life of 25,000 hours." Although this may seem insignificant to most, the new trend of countries wishing to go more green. THis may be a way to increase their environmentally friendly side while saving money.

Cuba to cut one million public sector jobs

Cuba's communist government is making radical changes to its economy due to the crisis they faced over the last two years. Being a communist nation, most people work for the state; however, this is going to change. "Cuba has announced radical plans to lay off huge numbers of state employees, to help revive the communist country's struggling economy".

The Cuban labor department said that more than 1 million people will lose their jobs but will be encouraged to work in the private sector wherein some of the restrictions will be lifted or become self employed. The article states that this will be a good thing because either way the state employees were hardly paid much and they would earn more by working in private firms.

All this said, how many jobs can the private sector create? Will it be able to absorb the 1 million or even if people become self employed and open new businesses, in todays competitive world are they going to be profitable businesses? Will they last?

Does this show a shift towards a market system?

Would a political stalemate lead to a rebuilt economy?

This article presents a theory of purely open and free markets. It says nothing about Democrats or Republicans having a better strategy to rebuild the economy or stock market, but rather implies that with a split Congress, little to no regulations will get passed, therefore freeing businesses from "regulatory uncertainty". This theory is one of pure laissez-faire economics, in practice though not by definition; stumbled upon by political coincidence.

Bill Clinton, president during one of the best economic stretches in US history (certainly modern) is referenced in the article- how he essentially "let the government shut down in response to the Republican stalemate."

Chinese inflation causes concern that China will slow growth

The Consumer Price Index (CPI) in China has risen 3.5 percent in the month of August, up from a 3.3 percent increase in July. This increase is due mainly to an increase in Chinese food prices, which account for approximately a third of China's CPI. This inflationary trend has caused concern in the global market that China may slow its growth in order to tame inflation. Doing this would substantially impact the global market because China is currently the driver of economic growth in many other countries. Though, traditionally China has been much more partial to promoting economic growth than to combating inflation, many expect China to raise their interest rates in an effort to prevent domestic unrest in the form of food production employees demanding higher wages.