The article discusses how the Congressional Budget Office supplied data on the widening income gap, which has produced more conversations about inequality in the United States. In comparison to other rich countries, the United States is the place where economic and social status is most likely to be inherited. The main disagreement with inequality is whether it is about morals or money. People who say that the problem is morals explain how there have been a decrease in the working-class family values. On the other hand, people who say that the problem is money explain how many Americans have a high school education or less, marriage rates and male labor force participation have decreased, and births out of wedlock have increased. The article discusses how these negative aspects of Americans cause terrible implications for the society as a whole. Also, one obvious answer for these negative aspects of Americans includes the decrease in the work opportunities available to less-educated Americans. Due to the decrease in employment benefits, health benefits, and entry-level wages for lower-education working Americans, the United States has become a society in which less-educated Americans have a hard time finding jobs with decent wages and good benefits. Therefore, the social changes that have taken place in America’s working classes are the consequence of rising inequality, but not the reason for it.
Saturday, March 3, 2012
Money and Morals
http://www.nytimes.com/2012/02/10/opinion/krugman-money-and-morals.html?scp=9&sq=income%20distribution&st=cse
Europe strengthens fiscal ties
In a step toward greater economic and political integration, all but two members of the 27-nation EU signed a treaty aimed at ensuring fiscal discipline.
The goal is to prevent a future crisis and foster economic growth by ensuring that governments do not spend beyond their means and rack up unsustainable debts, said European Council president Herman Van Rompuy at Friday's signing ceremony.
The goal is to prevent a future crisis and foster economic growth by ensuring that governments do not spend beyond their means and rack up unsustainable debts, said European Council president Herman Van Rompuy at Friday's signing ceremony.
Thursday, March 1, 2012
'Stingray' Phone Tracker Fuels Constitutional Clash
Stingray is a great example of how certain policies affect markets. Designed to locate a mobile phone whether or not it is in use, there is a strong demand for the product from law enforcement bodies. however some argue that the device violates the fourth amendment and to regulate its use.
http://online.wsj.com/article/SB10001424053111904194604576583112723197574.html
http://online.wsj.com/article/SB10001424053111904194604576583112723197574.html
Wednesday, February 29, 2012
US Pushes Target for Hiring the Disabled
http://online.wsj.com/article/SB10001424052970204520204577251303726662194.html?mod=WSJ_hps_sections_careerjournal
This idea is interesting, though controversial. The government seems to be trying to create incentives for the hiring of disabled Americans by having a policy that could remove government contracts from companies that do not have the required employment rate (7%) of disabled to non-disabled workers. There are questions as to whether this violates the 1990 Americans with Disabilities Act or is progressing the 1973Rehabilitation Act. But one reason I think the government has this policy is to successfully reincorporate veterans from Iraq and Afghanistan into the workforce, because when veterans returned home from Vietnam in the late 1960s and early 1970s most faced discrimination in the workplace.
This idea is interesting, though controversial. The government seems to be trying to create incentives for the hiring of disabled Americans by having a policy that could remove government contracts from companies that do not have the required employment rate (7%) of disabled to non-disabled workers. There are questions as to whether this violates the 1990 Americans with Disabilities Act or is progressing the 1973Rehabilitation Act. But one reason I think the government has this policy is to successfully reincorporate veterans from Iraq and Afghanistan into the workforce, because when veterans returned home from Vietnam in the late 1960s and early 1970s most faced discrimination in the workplace.
Goodbye, First Amendment: ‘Trespass Bill’ will make protest illegal
Late yesterday, the House of Representatives approved a bill that would make it illegal to protest at any event where Secret Service is present or "nearby". This includes any event Romney, Santorum, and Gingrich are attending. The bill only requires the President's signature to become a law. Are we moving away from a democratic state?
http://www.economicpolicyjournal.com/2012/02/houses-passes-new-bill-that-would-make.html
http://rt.com/usa/news/348-act-tresspass-buildings-437/
http://www.economicpolicyjournal.com/2012/02/houses-passes-new-bill-that-would-make.html
http://rt.com/usa/news/348-act-tresspass-buildings-437/
Tuesday, February 28, 2012
1 in 5 older Americans scrimp on health care to save money
I thought this was a very interesting article but at the same time I found it to be very tragic. In recent statistics, twenty percent of Americans over the age of fifty have switched to cheaper prescriptions rather than taking the medications they are recommended to take. Also, more citizens of this age are choosing to skip out on doctor visits and all of this can be credited to the current high health care costs that we have in the United States. An even staggering percentage was that nearly one in five persons over the age of fifty either skipped or postponed a visit to the doctor to save their money. Still, others who have taken the route of taking generic drugs or even sticking to free samples to take care of their bodies rather than prescribed medicines. Those who reported they were doing these cutbacks also said they would often take half of the pill or reduce the dosage to make them last longer. This is very scary to see that people are jeopardizing their own health just to save a little extra cash but at the same time this tells us just how much this Great Recession has impacted our everyday lives and financial situations.
Economists see more reasons for optimism this year
According to a survey, many economists are gaining confidence that some facets in the U.S. economy will begin to improve within the next year, however they are not fully capable of excluding caution in their expectations for overall economic growth. With that said, the forecasts for employment, home construction and business spending are looking up. With the average GDP growth rate forecasted to grow around 2.4%, a slight improvement from 2011, things may be looking up.
Unemployment seems to be fairly consistent, however it did go down by .6% since Novermber, and Panelists are continually forecasting very strong business spending this year.
http://www.msnbc.msn.com/id/46540520/ns/business-stocks_and_economy/#.T00qfRzx24Q
Monday, February 27, 2012
New Push for Reform in China
This article examines a recent report on economic development of China by the World Bank and government insiders considered to have the ear of the nation's leaders. China could face an economic crisis unless it implements deep reforms, including scaling back its vast state-owned enterprises and making them operate more like commercial firms. The report warns that China's growth is in danger of decelerating rapidly and without much warning, which resembles what has occurred with other highflying developing countries such as Brazil and Mexico. The phenomenon, "middle-income trap", might occur when a certain income level was reached , a sharp slowdown could deepen problems in the banking sector and elsewhere, prompting a crisis.
What if Greece had to get a new currency?
http://www.bbc.co.uk/news/business-16981897
In class, professor Skosples mentioned how Greece's problem could be solved by an overnight conversion of currency. However, this article points out that it takes at least 4 months to develop a new currency system for the troubled country.
It also mentions that it's impossible to prevent information leakage if such plan is to be carried out. In that case, people will simply try to convert their monetary asset into another stable currency, thus leading to severe devaluation of the Euro.
In class, professor Skosples mentioned how Greece's problem could be solved by an overnight conversion of currency. However, this article points out that it takes at least 4 months to develop a new currency system for the troubled country.
It also mentions that it's impossible to prevent information leakage if such plan is to be carried out. In that case, people will simply try to convert their monetary asset into another stable currency, thus leading to severe devaluation of the Euro.
Sunday, February 26, 2012
Europe Gets Ready for Round 2 of Bank Loans
http://www.nytimes.com/2012/02/27/business/global/27iht-ecb27.html
The European Central bank is still struggling with creating a plan to sucessfully pull the Eurozone out of its current financial and credit crisis. How do we get more money to countries that are already heavy in debt? I don't know but, "this week the bank will offer a second installment of the three-year loans. After the first injection of cash helped reopen bank financing markets in Europe and bolster stock and bond markets around the world, there is intense interest in how much money banks will borrow, and what the effect will be." These cash injections are for private banks that do not have enough capital to accommodate the market demand. If there is a lot of borrowing then this means banks are willing to take the money and hunker down. There is already easier money to borrow out there without the restrictions attached to this money; this is only a "tweak" in current monetary policy. If banks borrow a lot now it would be bad for the markets some experts say.
To be honest, I have read a lot about the European Debt crisis but apparently it is not enough because I am never quite positive on the end goal or the macro approach of the ECU. I hope others have had more cognitive success
The European Central bank is still struggling with creating a plan to sucessfully pull the Eurozone out of its current financial and credit crisis. How do we get more money to countries that are already heavy in debt? I don't know but, "this week the bank will offer a second installment of the three-year loans. After the first injection of cash helped reopen bank financing markets in Europe and bolster stock and bond markets around the world, there is intense interest in how much money banks will borrow, and what the effect will be." These cash injections are for private banks that do not have enough capital to accommodate the market demand. If there is a lot of borrowing then this means banks are willing to take the money and hunker down. There is already easier money to borrow out there without the restrictions attached to this money; this is only a "tweak" in current monetary policy. If banks borrow a lot now it would be bad for the markets some experts say.
To be honest, I have read a lot about the European Debt crisis but apparently it is not enough because I am never quite positive on the end goal or the macro approach of the ECU. I hope others have had more cognitive success
Euro Zone Decision on Bailout Funds' Size Likely to be Delayed
With Germany still opposed to the bailout, the euro zone leaders may not be able to meet international demands. The euro zone wants to lend more money to the IMF in hopes of repairing the broken European economies but without Germany, the euro zone's biggest economy, they cannot afford to do so.
The European Central Bank supports the increase but Germany is insistent that the current bailout fund is large enough and if it were to increase, nations would try less to work their own way out of debt.
The meeting to be held tomorrow will vote on this and the funds would be given to Greece to expand its financial lifeline.
The US and Canada are both denying requests to participate in the funding so the euro zone is looking at countries like China and Japan. These two nations have stated that the euro zone must move first before they will consider participating.
The European Central Bank supports the increase but Germany is insistent that the current bailout fund is large enough and if it were to increase, nations would try less to work their own way out of debt.
The meeting to be held tomorrow will vote on this and the funds would be given to Greece to expand its financial lifeline.
The US and Canada are both denying requests to participate in the funding so the euro zone is looking at countries like China and Japan. These two nations have stated that the euro zone must move first before they will consider participating.
Measuring Housing's Drag on the Economy
This article aims to assess how much of the recent financial crisis can be blamed on the housing market. Housing had a major part in causing the recession and it is also slowing the recovery. The article comes to the conclusion that over half of the reason the recovery has been so slow is housing. Due to the housing crisis, it was impossible to get interest rates low enough that enough people would want to borrow to buy a house (due to the Fisher equation we learned in class). It also points out that the states that were hit the hardest by the housing bubble are the ones that are having the hardest time recovering. Overall, the article comes to the conclusion that a great deal of blame can be put on housing for the recent recession and slow recovery.
Corporate tax rates: a useful trim
This article discusses President Obama's proposed corporate tax reform. The corporate tax rate in the United States, including state and local taxes, is currently 39.2%; this is high above the OECD weighted average, which is just under 30%. This high tax on corporations has encouraged more firms to produce abroad, causing domestic employment to decline. Obama plans to lower the tax rate to 32.6% and provide tax credits which incentivize domestic investment. This is expected to cost about $950 billion altogether, which Obama claims he will pay for by eliminating other tax breaks to make up for the new ones. He has, however, been somewhat vague about what which tax breaks to eliminate, which is always a difficult decision to make. There have also been arguments that large corporations who invest heavily abroad, such as Apple, will be hurt by these tax breaks and lobby to resist them.
http://www.economist.com/node/21548245
http://www.economist.com/node/21548245
BP oil spill trial delayed
This article covers the recent postponement of the BP trials in Louisiana Federal Court. There is still a chance of some out of court settlements, but BP is mainly focused on the trial. The plaintiffs are a collection of fishermen, and hotel owners. BP's oil spill infringed on other business, it is very rare to see externalities of this size.
Tangled up in green tape
http://www.economist.com/node/21547804
This article is about the regulation imposed by the EPA and how the nature of it has become enormously confusing. Several pieces of legislation have been approved, only to be struck down right before they come into effect, or end up being severely reworked. This causes difficulties for companies trying to prepare around these regulatory shifts and financial loss on their end.
The article also discusses the difficulty these regulations have in getting approved. Congress had made the issue of environmental safety and reform a partisan one, making it far more difficult to get any regulation through without huge discussion and legal challenges. The difficulty of the American regulatory system makes trying to counter these market externalities a near impossibility, and point out a glaring flaw in the way we operate.
This article is about the regulation imposed by the EPA and how the nature of it has become enormously confusing. Several pieces of legislation have been approved, only to be struck down right before they come into effect, or end up being severely reworked. This causes difficulties for companies trying to prepare around these regulatory shifts and financial loss on their end.
The article also discusses the difficulty these regulations have in getting approved. Congress had made the issue of environmental safety and reform a partisan one, making it far more difficult to get any regulation through without huge discussion and legal challenges. The difficulty of the American regulatory system makes trying to counter these market externalities a near impossibility, and point out a glaring flaw in the way we operate.
Analysis: U.S. factory jobs rebound seen destined to fizzle
This article talks about the increase in the labor market, especially in the manufacturing sector, is only temporary. The firing of large numbers in the automotive industry and the even more emergence of other foreign dramatically cheaper labor markets caused a sharp decline in the labor markets but will not be the cause of stopping of the current growth. Chinas labor market wages have been increasing and the
Your Very Own Floating Bond-Villain Lair for $680 Million
http://www.businessweek.com/lifestyle/your-very-own-floating-bondvillain-lair-for-680-million-02242012.html
It should be clear that if the mega rich are still able to flip the bill for a $680 million dollar toy, there are still people that are doing just fine despite the economy. I found this particularly interesting given the various news stories that have risen over the last couple days detailing how many of the c-level executives at many major corporations have received multimillion dollar bonus checks despite their company actually losing money for the year. Some companies have taken the correct step and lowered these bonuses but obviously, not every firm is doing this if people are still able to buy things such as a floating island yacht.
It should be clear that if the mega rich are still able to flip the bill for a $680 million dollar toy, there are still people that are doing just fine despite the economy. I found this particularly interesting given the various news stories that have risen over the last couple days detailing how many of the c-level executives at many major corporations have received multimillion dollar bonus checks despite their company actually losing money for the year. Some companies have taken the correct step and lowered these bonuses but obviously, not every firm is doing this if people are still able to buy things such as a floating island yacht.
Restructuring Greece Within the Euro is Illusory
http://www.spiegel.de/international/europe/0,1518,816410,00.html
This is an interview with Hans-Werner Sinn, a German economist who is the head of an economic think tank. It is about why he believes that, in order to resolve the issues that Greece is facing, the country must stop using the euro. He argues that, unless Greece drops the euro, its external debt will continue to increase, and it will never be able to pay it off.
If, as he suggests, Greece were to drop the euro in favor of its own currency, it would allow the country to become competitive again. Currently, goods made in Greece are far too expensive even for Greeks to purchase them. However, a change in currency, Sinn posits, would dramatically reduce the price of these goods, encouraging citizens to buy domestic goods instead of importing them. It would also make the tourism industry cheaper, attracting more tourists.
This is not to say that leaving the euro will immediately solve the problem. Sinn estimates that the country will descend into turmoil for up to 2 years. However, this would offer a permanent fix, rather than just buying time like the recent loans have. Greece, he says, will still need the planned bailout of €130 billion in order to make this transition too. It is impossible to know whether this plan would actually work without implementing it, and there is heavy opposition by those who have investments which rely on Greece's continued use of the euro. For this reason, it is uncertain that this is ever likely to happen
This is an interview with Hans-Werner Sinn, a German economist who is the head of an economic think tank. It is about why he believes that, in order to resolve the issues that Greece is facing, the country must stop using the euro. He argues that, unless Greece drops the euro, its external debt will continue to increase, and it will never be able to pay it off.
If, as he suggests, Greece were to drop the euro in favor of its own currency, it would allow the country to become competitive again. Currently, goods made in Greece are far too expensive even for Greeks to purchase them. However, a change in currency, Sinn posits, would dramatically reduce the price of these goods, encouraging citizens to buy domestic goods instead of importing them. It would also make the tourism industry cheaper, attracting more tourists.
This is not to say that leaving the euro will immediately solve the problem. Sinn estimates that the country will descend into turmoil for up to 2 years. However, this would offer a permanent fix, rather than just buying time like the recent loans have. Greece, he says, will still need the planned bailout of €130 billion in order to make this transition too. It is impossible to know whether this plan would actually work without implementing it, and there is heavy opposition by those who have investments which rely on Greece's continued use of the euro. For this reason, it is uncertain that this is ever likely to happen
8 reasons why gas will hit $5 a gallon this year
This article is one that none of us want to see when it comes to gas prices. Currently, barrels are going for about $100 a barrel compared to the $75 a barrel last October. The average price right now is $3.62 which is ten percent higher than it was only two months ago. One reason gas prices will continue to increase is because of the situation we have in Iran. With the U.S. embargo with Iran, we have continued to look for even more from the smaller country of Japan as they have cut more oil ties with Iran as well. Another reason is due to the economic recovery in the U.S. As we continue to improve the economy, this means that we will have to suffer higher prices and with any recovery, the demand for oil-based products will increase. A third reason is that with summer approaching, history shows that there is typically a boost in demand for gasoline with all of the vacation driving that takes place. This is very unfortunate to read because I think we are all already worried about securing a job for the summer and on top of that a great deal of expense will be added on having to drive too and from work. I'm sure many of us seniors are hoping to save as much as we can to pay off loans and these gas prices are certainly going to take a large portion of our cuts.
U.S. Auto-Makers Face Tougher Times in China
The Chinese government has begun removing incentives that used to be given to the three American auto-akers, General Motors, Ford and Chrysler when the auto-industry was on the rise. Now that the industry is decreasing, China wants to put limitations on these companies. For example, the government is making it much more difficult to receive construction permits, which in turn is making it much more difficult for these american auto companies to build their factories. After a 23% fall in auto sales in January the future of the American auto industry in China looks like it will only continue to shrink in the near future. This current decline in China's auto-industry is sending a message to the foreign automakers. According to Alex Taylor III the message that China is sending is, "We still want you here, but we don't need you as much as we used to". As long as auto sales continue to drop in China, foreign auto-makers such as GM, Ford and Chrysler will continue to struggle there.
Fed Likely to 'Sit Back' as Economy Gets Better: Bullard
Unemployment should drop below 8 percent this year as part of an
improving economic climate that could take more monetary easing off the
table, Fed President James Bullard told CNBC.
he thinks the unemployment rate, currently at 8.3 percent, drops to 7.8 percent by year's end, allowing the central bank to take more of watchful eye and less of an aggressive role in molding economic outcomes.
http://www.cnbc.com/id/46510655
he thinks the unemployment rate, currently at 8.3 percent, drops to 7.8 percent by year's end, allowing the central bank to take more of watchful eye and less of an aggressive role in molding economic outcomes.
"With
the better data, the super-easy policy already in place — I think we've
got a lot on the table here," Bullard said. "So this is a normal
situation for the committee to sit back, get more data, try to collect
our thoughts about the things that are affecting our economy right now."
The
Fed last year implemented what is known as Operation Twist, a $600
bond-buying program that sells shorter-dated notes and buys longer-dated
ones in an effort to drive down long-term borrowing rates. The program
expires in June.
http://www.cnbc.com/id/46510655
At the ECB, the Tweak that Quietly Saved the Banking System
http://www.nytimes.com/2012/02/27/business/global/27iht-ecb27.html?pagewanted=2&hp#
The European Union has, as we know, been struggling to maintain
its economic prominence during the recession. The globalized nature of policy
has created a so called “domino affect” through which large and small Euro Zone
countries have been tied together. When one country has problems in its economy,
it has relied on EU institutions – notably the European Central Bank (ECB) – to
provide loans to banks, in order to stimulate the economy. ECB changed its policy in November by
allowing 3 year loans (three times more than previously) at a 1% interest rate.
These loans were made available for a time in December and will become
available once more this week. This decision was made as a compromise of how
this institution should deal with the debt crisis. While the intent is to
increase economic vitality, the ECB does not know what the exact response from
banks will be. Earlier this year, 489 billion
Euros were borrowed from a variety of banks across the Euro Zone. If banks
utilize this money effectively, these loans could be the right start for
resolving the crisis.
'Stupid' and Oil Prices
This article examines the reason why the oil price in the US has rising dramatically recently. President Obama has been blaming the rise in oil price due to the increasing demands of Brazil and China, the turmoil in the Middle East, especially new fears of a supply shock from a conflict with Iran. However, the more likely suspect is what Mr. Obama does not like to mention, the monetary policy of U.S. Oil trade is in dollars, and its price therefore rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Obama's term has pursued the easiest monetary policy in modern times.
More Uncertainty for 2013
One of the tool the government can use to intervene in the market is tax. But the tax system in United State has so many uncertainty, which affects how many companies and individuals make decision. I think the tax system needs to change, and a more stable tax system seems to be more appropriate for long-term growth.
Saturday, February 25, 2012
Greece has a habit of bringing down Monetary Unions
This article covers the brief history of Monetary Unions, apparently the earliest attempt was recorded in 400 BC between the Greek city-states. This features different Monetary Unions, but I found the Latin Monetary Union interesting. It was a union that was started 1866 with France, Belgium, Italy, and Switzerland. Now remember, the domestic gold standard was still a policy within these countries. Instead of sharing one legal tender, the currencies were pegged to each other.
Once Greece gained it's independence from the Ottoman Empire, it's fragile economy joined the union. Needless to say, they didn't contribute much to the union and the union eventually failed with the beginning of World War I.
Once Greece gained it's independence from the Ottoman Empire, it's fragile economy joined the union. Needless to say, they didn't contribute much to the union and the union eventually failed with the beginning of World War I.
Fed-watching gives Asian central banks cause to pause
The following article details how the Central Banks in several Asian nations have lowered their interest rates recently to try to continue growth that is expected to slow down in the future. However, the Asian nations are watching the US fed as well. Many of these nations are exporters, and a strong dollar with US economic growth would bode well for their economies. Therefore the Asian nations will try to implement monetary policy to make sure that their currency's value stays at an exchange rate that is favorable for the US to buy goods and services from them.
http://www.reuters.com/article/2012/01/30/us-asia-policy-fed-idUSTRE80T0XK20120130
http://www.reuters.com/article/2012/01/30/us-asia-policy-fed-idUSTRE80T0XK20120130
Protest in Russia
http://www.economist.com/blogs/easternapproaches/2012/02/protest-russia
In
Moscow on February 4th 2012, middle-class Russians began a protest march
against Vladimir Putin. Tens of thousands of Muscovites carried creative signs
and white balloons, strolled, unfazed by a temperature of -20°C, towards the
Kremlin. Politically-affiliated columns of Communists, nationalists, anarchists
and monarchists were overtaken and outnumbered by middle-class citizens who
valued their private space too much to form columns. This was no revolutionary
crowd—they came to display their dignity and demand honest elections, not to
storm the Kremlin. They reject Mr Putin not as some ruthless tyrant (he is not)
but as the lynchpin of a corrupt system of governance based on the supremacy of
the bureaucrat over the private citizen.
The official name of the crowd was
for fair elections and for a less corrupt government. Putins has been seen as a
strong politician however Russian citizen have been expressing their demands in
a strong vocal and organized way.
It will be interesting to see if Putin gets re-elected this March.
Time for action: Another set of measures to tackle deflation
http://www.economist.com/node/21547808
This article talks about how the (central) Bank of Japan is trying to boost Japan's economy. Out of the recent five quarters, the Japanese economy has shrank in four of them. The Bank of Japan has increased its credit-easing program and is aiming for a 1% inflation in order to avoid deflation.
This article talks about how the (central) Bank of Japan is trying to boost Japan's economy. Out of the recent five quarters, the Japanese economy has shrank in four of them. The Bank of Japan has increased its credit-easing program and is aiming for a 1% inflation in order to avoid deflation.
US Postal Service to Cut 35,000 Jobs Amid Processing Plant ClosuresUS Postal Service to Cut 35,000 Jobs Amid Processing Plant Closures
The financial issues faced by the United States Postal Service are mainly due to the changing fashion in which people send mail. By 2015, the USPS will face an annual loss $18.2. With losses like that, changes need to occur within the USPS in order to stay viable. They have closed 214 mail-processing facilities since 2005, and close 226 more before February 2013. Unfortunately, this means many job losses, but a government institution cannot lose that kind of money each year and expect not to be privatized. Some other ways the USPS is trying to lower costs is asking for legislation to cut employee pensions and stop delivery service on Saturdays.
Dow 13,000 is a big number, but it's just a number
The Dow hit 13,000 this week, the highest it has been since the start of the financial crisis. This event has definitely caused people to start talking, but is 13,000 just a number? Many people think so. After all, the Dow only follows 30 companies, with the most expensive stocks carrying the most weight. The Dow can also rise even when the economy is shrinking and the number of jobs falling. But then again, seeing the number 13,000 can play games with people's minds, and different groups of people will react differently. Market investors will see this mark as a time to get out. Even though the Dow is far from being an accurate measure of the economy, it still manages to create a stir.
Shareholders vs. Stakeholder capitalism
Shareholders vs Stakeholder capitalism
As I did some research about Stakeholder capitalism, I found an interesting article from The Economist about the debate revolving around this issue. This topic is raised again due to the recent crisis. Even though the article was posted in mid 2010, I feel that it still raises quite relevant arguments that we should be aware of.
As I did some research about Stakeholder capitalism, I found an interesting article from The Economist about the debate revolving around this issue. This topic is raised again due to the recent crisis. Even though the article was posted in mid 2010, I feel that it still raises quite relevant arguments that we should be aware of.
Nelson Mandela stable after surgery
Nobel Peace Prize winner and former president of South Africa recently underwent surgery for abdominal pain. The whereabouts and specific reason for the surgery are unknown, but it has been reported that the 94 year old is currently in good shape and faces no immediate health risks. Although Mr. Mandela no longer plays a physical role in the South African government, he symbolizes change and equality in a country that unfortunately has not changed much economically since apartheid. Some fear that civil unrest and a fight for a change of government will come with the death of Madiba. Lets hope that this country, that has already suffered, will find a peaceful solution to these economic and social problems.
http://www.bbc.co.uk/news/world-africa-17163576
http://www.bbc.co.uk/news/world-africa-17163576
Friday, February 24, 2012
Why the Federal Reserve can't fix housing
As
it says in the article, the Federal Reserve cannot fix the housing problem
anymore. This news is a reflection on the U.S. Monetary Policy Forum, which is
a one-day meeting presented by the University of Chicago Booth School of
Business. Attendance includes Federal Reserve officials, members of foreign
central banks and economists from some of the world’s largest banks and top
universities. The U.S. Monetary Policy was held last Friday, February 24, 2012.
This forum focused heavily on weaknesses in the housing market and was not very
optimistic. Traditionally, the Fed aided the housing market by lowering its key
interest rate and thereby owning mortgage rates. The main problem is that the
current Fed’s interest rate is already near zero. Moreover, the mortgage rates
are already at record lows. However, even through the rates are approaching to
a historic low, the housing market remains in a slump. There are some arguments
saying that the Federal Reserve can continue to lower the interest rates with
unconventional moves; an example is the asset purchases that is called
quantitative easing. However, it states (in this article) that such policies
are unlikely to have a meaningful impact on housing for now. The main reason for
this is that more of the homeowners who might qualify for refinancing at lower
interest rates have already done so. Furthermore as Fed president Charles
Plosser stated that the Fed’s policies—buying assets that target housing
specifically like mortgage-backed securities—has already overstepped its bounds
in 2008, when it started buying mertgage-backed securities. He believes those
actions have blurred the lines between fiscal and monetary policy, which is a
growing problem in the wake of the financial crisis that Plosser calls
“dangerous.”As says in the article, according to the purview of Congress, the
Fed Reserve officials have recently become more outspoken about problems concerning
the housing market. According to St. Louis Fed President James Bullard’s
opinion, the housing market is largely out of the Fed’s hands now.
As shown in this article,
government intervention is a means to control or alleviate the problems
existing in the economy. Nevertheless, policies are not always as effective as
they may seem. Therefore, the people and policy tools that should be involved are
tough issues that the governments and economists are facing today.
Google to Sell Heads-Up Display Glasses by Year’s End
By the end of 2012 Google is planning to launch a new breed of smart-phone. Android based, these Google Glasses are expected to stream and retrieve data about their surroundings through 3G or 4G data collection, GSP, bluetooth, motion sensors, and more. Costing about the same as current smart-phones, consumers will be able to connect and share with those around them just by looking.
Although the article doesn't directly talk about the economic effects, it does generates some questions about where our country is headed in terms of regulation and privacy rights. where are Google's boundaries in relation to privacy tracking their consumers and recording on the front built-in camera? How is this going to affect driving laws?
http://mashable.com/2012/02/22/google-glasses-2012/
http://bits.blogs.nytimes.com/2012/02/21/google-to-sell-terminator-style-glasses-by-years-end/
Although the article doesn't directly talk about the economic effects, it does generates some questions about where our country is headed in terms of regulation and privacy rights. where are Google's boundaries in relation to privacy tracking their consumers and recording on the front built-in camera? How is this going to affect driving laws?
http://mashable.com/2012/02/22/google-glasses-2012/
http://bits.blogs.nytimes.com/2012/02/21/google-to-sell-terminator-style-glasses-by-years-end/
Shaun Donovan: Why the mortgage settlement is a fair deal
http://money.cnn.com/2012/02/24/real_estate/donovan_mortgage_settlement/index.htm?iid=HP_LN
As an effort to "stop the neighborhood from burning down" President Obama and Secretary of Housing and Urban Development Shaun Donovan have engineered another plan to help homeowners who have either been foreclosed upon or are currently living in an "underwater" home. The settlement is $25 billion in relief for homeowners. $2,000 will go to homeowners who were unjustly removed from their homes.
Among other things included in the deal were a "bill of rights" for homeowners. They would be entitled to receiving help from their lenders among other things. This is a response to the way banks often treated borrows while the borrowers were in trouble. It was often found that banks did not help their borrowers or even inform the borrowers that they were in trouble.
This move is in a lot of ways symbolic. $2000 dollars will not help families without homes. The move is there to create a legal base to show the Federal Government will help families struggling and how the Federal Government will no longer tolerate the actions of banks who treat their borrowers poorly.
Something of a move away from Laissez-faire Capitalism.
As an effort to "stop the neighborhood from burning down" President Obama and Secretary of Housing and Urban Development Shaun Donovan have engineered another plan to help homeowners who have either been foreclosed upon or are currently living in an "underwater" home. The settlement is $25 billion in relief for homeowners. $2,000 will go to homeowners who were unjustly removed from their homes.
Among other things included in the deal were a "bill of rights" for homeowners. They would be entitled to receiving help from their lenders among other things. This is a response to the way banks often treated borrows while the borrowers were in trouble. It was often found that banks did not help their borrowers or even inform the borrowers that they were in trouble.
This move is in a lot of ways symbolic. $2000 dollars will not help families without homes. The move is there to create a legal base to show the Federal Government will help families struggling and how the Federal Government will no longer tolerate the actions of banks who treat their borrowers poorly.
Something of a move away from Laissez-faire Capitalism.
Europe's Banker Talks Tough
This article focuses on the tough realities that many of Europe Zone countries are facing do to unsustainable government spending and social contracts that have hinder growth. With the Euro Zone on the threat of a recession and many countries nearly on default there have been many different calls for limiting cuts in government in favor for higher taxes to drive revenue and keep debt market stable, but the ECB leader Mario Draghi threaten the latter might have real effects on the growth of the economy. He hopes that euro zone countries will be to able grow there way out of the challenges they face. He also talks about the challenges the Euro will face as there is no way to shift wealth between the different countries that make up the Euro currency.
Thursday, February 23, 2012
White House privacy push seeks cooperation
WASHINGTON |
(Reuters) - The White House proposed on Thursday a "privacy bill of rights" that would give consumers more control over their data but relies heavily for now on voluntary commitments by Internet companies like Google Inc and Facebook.
The White House on February 23 proposed a “bill of rights”
that would give online consumers a greater privacy protection and government a
greater power to police Internet firms.
Obama claimed that as the Internet grows, consumer trust is
essential for the growth of the digital economy. Therefore an online privacy Bill of Rights is
so important. internet companies such as
Facebook and Google have been accused for tracking customer’s online activities
and then used to generate advertising revenue.
36 state attorneys sent letter to Google on wed expressing
the concern about Google’s plan to share user’s information across their
products without giving consumers an opt-in-option.
Many internet companies agreed to give
consumers a more privacy. Although,
there are doubts about implementation and enforcement.
As most of us conceive that the digital economy is growing,
it is still in an immature stage. There
haven’t been much regulatory on it and there is a risk of system failing, due
to how the information online is handled.
We learned in class that there is a market failure if there is a lack of
information. Thankfully, Internet
provides information and made our life more efficient. If internet companies are upfront with people about
how they handle the information they collected, advertising revenue wouldn’t be
hurt and people won’t feel uncomfortable, but it is an impossible
scenario. Like the article says, the
implementation and enforcement of “online bill of rights” is doubtable.
Home Resales Climb Higher
Home Resales Climb Higher
The housing market has been one of the weakest parts of the U.S. economy, but there are signs it is starting to recover after a price collapse that began 5.5 years ago. In 2011, about 4.26 million homes were sold, up 1.7% from 4.19 million in 2010. Seeing an increase in home sales is very encouraging to me because you have to have pretty high consumer confidence to buy a home, possibly the biggest purchase of your life. Hopefully this is a sign that the economy is on the up and we will see continued growth in the economy for the months to come.
The housing market has been one of the weakest parts of the U.S. economy, but there are signs it is starting to recover after a price collapse that began 5.5 years ago. In 2011, about 4.26 million homes were sold, up 1.7% from 4.19 million in 2010. Seeing an increase in home sales is very encouraging to me because you have to have pretty high consumer confidence to buy a home, possibly the biggest purchase of your life. Hopefully this is a sign that the economy is on the up and we will see continued growth in the economy for the months to come.
Wednesday, February 22, 2012
Japan's Economy Contracting
With our review of the Japanese economic system this past week, this article seemed relevant. Japan is experiencing a contraction in it's economy. There are multiple factors influencing the shrink, but part of it is obviously due to the current economic situation. High unemployment in countries such as the US can result in problems for Japan which is a largely export-driven economy. Japan has also been affected similarly by the debt crisis in the eurozone as well as floods in Thailand hurting the regional economy. Despite the government intervention that exists in the country, Japan is still very much feeling the effects of a global recession.
http://www.bbc.co.uk/news/business-17008164
http://www.bbc.co.uk/news/business-17008164
Postal Service seeks 50-cent stamps
http://money.cnn.com/2012/02/17/news/economy/stamp_price_hike/index.htm?iid=SF_E_River
The US Postal Service is currently in financial troubles and presented their 5-year business plan to Congress last week. One part of the plan was to raise first-class stamp prices to 50 cents (currently it is at 45 cents). The Postal Service said if nothing is done they could lose up to $18 billion in the next five years if nothing is done.
The rise in stamp price could "yield $1 billion a year in new revenue." Also in the plan, they have suggested closing down some mail processing plants and cut the delivery of first class mail from six days to five days. The Postal Service would also cut jobs and force employees who are eligible to retire to retire. The plan has received opposition from employee unions and Congress. The unions wants Congress to act. The plan of the cuts were introduced in December of last year but were delayed until May 15th, if Congress does not act by then the Postal Service will go through with these cuts.
I thought this article was interesting because we were talking about the government's role in providing certain goods if there are market failures. Do you think the government should run the Postal Service or should a private firm do it?
The US Postal Service is currently in financial troubles and presented their 5-year business plan to Congress last week. One part of the plan was to raise first-class stamp prices to 50 cents (currently it is at 45 cents). The Postal Service said if nothing is done they could lose up to $18 billion in the next five years if nothing is done.
The rise in stamp price could "yield $1 billion a year in new revenue." Also in the plan, they have suggested closing down some mail processing plants and cut the delivery of first class mail from six days to five days. The Postal Service would also cut jobs and force employees who are eligible to retire to retire. The plan has received opposition from employee unions and Congress. The unions wants Congress to act. The plan of the cuts were introduced in December of last year but were delayed until May 15th, if Congress does not act by then the Postal Service will go through with these cuts.
I thought this article was interesting because we were talking about the government's role in providing certain goods if there are market failures. Do you think the government should run the Postal Service or should a private firm do it?
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