US Trade Gap Widens Unexpectedly

Recently released figures indicate the trade gap, the difference between imports and exports, grew 18.2% to $36.5 billion from August. The reason why we have seen such a huge trade gap is due to the deep recession that has crippled the US economy and plummet the value of the dollar. Furthermore, US imports from OPEC rose to $11.9 billion in September. We are heavily relying upon OPEC for our supply of oil and this can cause huge implications. However, imports have increased 5.8%, which is a strong indication the consumer spending and confidence is slowly recovering. If this trend continues it will be beneficial for the economic welfare of the US.

Obama vows renewed ties with Asia

This article highlights President Obama's attempts at renewing interaction with Asia. He mentions that the happens of Asia have a "direct impact" on the United States economy. What will renewed ties with Asia mean for the global economy?

Boom Times

Raising prices during a recession usually isn't a great idea. For America's colleges, however, it has been a successful strategy. College enrollment rates are at an all-time high across the country. In October, 41% of 18-24 year olds were enrolled, up from 39% a year ago. This is in spite of tuition fees that have risen 4-7%.

The economy seems the most likely culprit, as unemployment hit 10.2% in October. It was an even higher 19.1% for 16-24 year olds. Other possible reasons are the college premium and the fact that the pool of potential college-goers has grown.

Subcrime

"Wall Street 1, US 0." That was the headline after Ralph Cioffi and Matthew Tannin were acquitted of lying to investors about the state of subprime hedge funds at Bear Stearns.

Prosecutors tried to prove that emails between the two showed them panicking behind the scenes as they reassured the public. However, the jury decided that the emails had been taken out of context, even praising them for working so hard so save their funds. They decided that the losses of $1.6 billion resulted from poor judgment, but nothing illegal.

The trials likely aren't over, though; prosecutors are working on building cases against former bosses at Lehman Brothers and AIG, among others.

US trade gap widens unexpectedly

The US trade deficit gap widened in Sept. The difference between imports and exports grew by 18.2% to $36 bn from August. Import rose biggest since 5.8%. The trade gap with China has narrowed by 15.9%. US imports from the oil cartel Opec rose to $11.9bn highest since Nov 08.

Swiss Privacy Agency to Sue Google Over Street View

This article talks about the recent action Swiss officials have taken in to sue Google to get them to tighten privacy safeguards on its Street View online service. Street View shows a panoramic view of streets all across the world. Google blurs out faces and license plates that might show up and users of the service can also request that images of their homes can be removed or blurred. Initially, the Swiss had been accepting of Street Views but now are going back on their offer. The complaining agency said that Google was not clear with their intentions and they thought it would just be in busy areas. Google has gone into more secluded neighborhoods where people can be identified even if their faces are blurred. This is yet another case of Google being a large influence on technology and innovation. The courts have not yet made a ruling, but it will be interesting to see what happens in the future.

Arby's Slipping Down the Food Chain

This outlines the problems experienced by fast food restaurants hardest hit actor - Arby's. In the recession, McDonald's is said to be the overall "winner" and it's counterpart is Arby's - the "loser." This is partly because in consumer spending, the article says, it is a zero-sum game. Statistics have been low for the restaurant the last seven quarters it was measured. This year, the numbers have fallen even more dismally.

It then discusses possible reasons behind this issue - especially focusing on Arby's lack of options for healthy choices and lowering prices on items while selling less as well.

New Fed rules require customer consent on many overdraft fees

Financial institutions will soon be banned on charging overdraft fees to their customers without giving them consent. This is an effort by the Federal Reserve to protect consumers who are being hit hard from the recession.

Geithner Affirms Strong Dollar Policy

TOKYO -- U.S. Treasury Secretary Timothy Geithner said Wednesday that maintaining a strong dollar is "very important" for the country's economy, sticking to his mantra on foreign-exchange policy as the U.S. currency continues its broad downtrend.

"I believe deeply that it's very important for the U.S. and the economic health of the U.S. that we maintain a strong dollar," he said at a roundtable discussion with Japanese reporters. "We bear special responsibility for trying to make sure that we are implementing policy in the U.S. that will sustain confidence not just among American investors and .. savers but investors around the world" that the U.S. will fix its budgetary problems as its economy improves.

Lack of major changes in his tone indicates that, while he doesn't want any dollar freefall to shake the recovery in the U.S. economy, he may find it comfortable as long as the currency declines at a manageable pace. A weaker dollar could boost U.S. exports by making them less expensive abroad, lifting the nation's growth and cutting its trade deficit.

Job openings remain close to record-lows

WASHINGTON (AP) -- Job openings are at rock-bottom levels, according to government and private surveys released Tuesday, a trend that could keep the unemployment rate high even as layoffs slow. Small businesses in particular are reluctant to add workers as they struggle to obtain credit. Many are pushing their current employees to produce more. Economists say small businesses account for about 60 percent of new jobs.

U.S. Says Mortgage Help Is Reaching More Homeowners

WASHINGTON (AP) — After a slow start, the Obama administration’s mortgage relief program has reached one in five eligible homeowners, a government report said Tuesday.

Energy agency warns of falling investment

The global financial crisis has led to a dangerous drop in energy investment around the world which could choke off the nascent economic recovery, the International Energy Agency said Tuesday.

The EU has said that there should be a euro100 billion ($150 billion) annual package of public and private finance by 2020 to help poorer nations develop green industries and adapt to climate change.

The IEA, a policy adviser to 28 mostly industrialized oil-consuming nations, estimates that the financial and economic crisis is responsible for a $90 billion drop in global oil and gas investment this year, a 19 percent cut from 2008. The resulting drop in oil and electricity supplies could "undermine the sustainability of the economic recovery," the IEA warned.

Meanwhile, oil demand is set to continue rising over the next two decades, with a drop in developed countries oil use more than offset by increases in the developing world, mainly China and India, the IEA said.

It seems as if people's marginal utility for spending on "green" energy for the environment has decreased, which will not only result in the negative externality of further pollution, but could also lead to higher oil prices in the short term during the current crisis.

Health insurance tax = higher wages?

Many economists are beginning to assume that wages actually might rise over time if lawmakers end up taxing the most expensive health plans offered by employers. The tax is the leading proposal in the Senate to pay for the expansion of health insurance coverage to the roughly 46 million Americans who are uninsured. It would apply to high-cost health plans offered by employers, which typically include health, vision and dental insurance, among other health-related benefits. The proposal would raise an estimated $201 billion over 10 years, according to the Joint Committee on Taxation (JCT). But it could raise a lot more beyond 10 years, since the thresholds would rise on a formula based on inflation, and health care costs increase far faster than inflation. Translation: As health care costs rise, more and more plans will exceed the threshold.

Stock volatility is back, a sign of an aging bull?

This article points out that stock market volatility is back, which is a sign that the powerful rally that started in early March may be coming to an end. The Dow Jones rose and fell more than 100 points in seven of the past 12 days. The reason for this volatility is simple. Investor anticipation of an economic recovery played a large role in the stock market's advance over the last eight months, but recent economic indicators have been sending mixed signals, leading some economists to predict a double-dip recession and others to forecast a recovery as steep as the decline.

As Dan Deming, a trader with Stutland Equities, says, “it is a psychology that drives a big chunk of the market. This is not a typical year, and we've seen huge gains. People are looking to take risk off the table, and looking to get out of the market.”

Too Little Of A Good Thing

This article discusses the effects of Obama's stimulus plan. The author Paul Krugman explains that, as macroeconomists had predicted, the stimulus is far too small given the scale of our economic problems. Additionally, unless something changes drastically, we’re looking at many years of high unemployment. However, Krugman does go on to complement the Obama stimulus plan on its ability to do enough to break the vicious circle of economic decline. Aid to the unemployed and help for state and local governments were probably the most important factors. Overall, the most important thing is that the US continue with the stimulus plans, but to increase them much more.

Pay For Delay

This article discusses country's abilities to help domestic unemployment during these recessionary times. The US may lead the rich world in periods of prosperity, but Europe has shown a greater talent for dealing with recession. Unemployment in theEurope has risen by 30% from its pre-crisis levels. America’s jobless rate has more than doubled. Wage subsidies and fatter jobless benefits have softened the impact of the recession but may yet hurt recovery.

Medical Industry Grumbles, but It stands to gain from Overhaul

The Health Care issue still stands. The businesses in the United States are still unhappy and complaining about the House bill that will make huge changes in the health care system by providing insurance to millions more of Americans. The new bill is going to make a government-run insurance program, which upsets insurance companies. Also it is going to cause drug makers to give the government back billions of dollars of rebates over 10 years. On top of that it will cause providers of artificial hips, heart defibrillators, and other medical devices to put a 2.5% tax on their products, which upsets them. Large and small business employers are complaining because health care as been a long-time benefit for many of them, and will now be a "federally mandated obligation."

However, Steven D. Findlay, a senior health policy analyst, says that the new bill will not hurt any industries, but rather will help all of them. He said that as many more Americans receive health coverage, the businesses will receive revenue streams that they did not have before.

Although the analysts are making this bill sound like it will be a gain for all businesses, it will actually only be a gain for those businesses in the health product industry. For those businesses who are just providing health care coverage, the new bill is not something they are going to be happy about.

Twin deficits will help gauge economic health

Economist believe that more economic damage is ahead of us do to the fact that the United States is importing a lot more than we are exporting, thus causing a trade deficit. As well as deep budget deficit because the government is spending more money that it’s bringing in. In October it is set that the federal government spent $150 billion dollars more than it brought in.

Haute Couture, Available Through the Netflix Model

This article discusses how the fashion industry is taking advantage of the Netflix business model by renting out high end dresses.

China Pledges $10 Billion to Africa

China has recently offered a multibillion dollar package of assistance to African governments. They has also agreed to forgive remaining debt with Africa. This deal will include greater access to oil and minerals, which is important because Africa is very resource rich. The Prime Minister of China reported that this plan "represents a new stage of development in relations with Africa." However, China's clear focus on extracting Africa's resources has many Africans questioning the deal. In addition, reduced trade barriers will bring new Chinese goods into Africa, which might crowd out consumption of locally made goods.

As Downturn Eases, India's Leader Forecasts Growth

This article talks about India's incredible recovery from the global recession and its pledge on spending more on health care and education in the coming year.

India's Prime Minister, Dr. Manmohan Singh also promises to make his country more attractive in order to attract an increased amount of foreign investment, in the country's already massive $1.2 trillion economy.

At the recent World Economic Forum, he said India's growth in 2009 stood at 6.5%, and he further predicted that 2010's growth would be at a staggering 7%!

India's move away from recession was summed up in Dr. Singh's words that stated, 'the worst is behind us!'

Wal-Mart's New India Push

Wal-Mart is looking to take advantage of opportunities in growing economies. India is the second-fastest growing economy after China. The company's influence in America is substantial, but the opportunities for growth here may be exhausted. Their future strategy is focused on international expansion. The company has over 8,000 retail units under 53 different banners in 15 countries and sees emerging markets as a significant source for growth. Currently though, " Indian laws don't allow foreign retailers to open multi-brand stores. Foreign investment is allowed only in single-brand retail to the extent of 51%." Wal-Mart is making the case for job creation in India's economy and how it will aid farmers and small and medium size enterprises.

The Wall and the End of History

This article highlights the changes that have occurred in the past 20 years since the fall of the Berlin Wall.

Jobs gloom, with glimmers

This article is about the recent hike in the unemployment rate. This is some what of a surprise with the recession being apparently over. Luckily the job market is set to rebound in the near future.

Bank pumps $41B more into UK economy

The Bank of England's monetary policy committee voted Thursday to pump $41 billion in cash into the UK economy. The recession we feel here in the U.S is mirrored in the United Kingdom. The goal of the money is to induce spending, known as "quantitative easing." One major goal of the program is to instill confidence in consumers, that the bank still has ammunition to attack the recession. Speculation remains on the effectiveness of the quantitative easing program. Quantitative easing is a new program and its effects are not clearly understood yet. The third quarter registered continued contraction in the UK economy. One critical factor delaying Britain's exit from recession is the difficulty smaller firms face obtaining adequate finance.

German Reunification: From Rejection to Inevitability

This article appearing in The New York Times makes reference to the reunification of Germany after the collapse of the Berlin Wall and what is going on today. The author notes that Germany still "functions with an intensifying sense of self-interest and irritated discomfort in the face of responsibility" and many have said Germany has been financially selfish not worrying how their actions affect the rest of Europe. The article discusses the different people that rejected the reunification of Germany, Margaret Thatcher being one of them. As we learned in class, East Germany diminished as a state, and fell behind in matching West Germany’s "immediate promise of freedom and economic well-being for all Germans", making reunification seemed inevitable.

House Passes Health-Care Bill in Historic Vote

As of yesterday, the health care bill just barely passed in the House and will now be awaiting the results in the Senate. However, the author of this article brings up a good point in that "The narrow passage in the House, where the Democrats have a large majority, underscores the divisiveness of the legislation. It faces a tougher fight in the Senate where Republicans and some Democrats argue that the bill is too costly and won't achieve its goals." 

I think that Representative Paul Ryan makes a very vital point for this $1.2 trillion bill: "Does this bill mean the government will take over running health care? Yes. "But what's worse, this bill replaces the American idea with a European-style social welfare state." 

The bill is face tougher competition in the Senate vote and go through lots of modification before it even comes close to being passed there. 

Interesting to note is that "To pay for expanding insurance coverage, the bill calls for hundreds of billions of dollars in cuts to Medicare aimed at eliminating its wasteful spending. It levies a 5.4% tax on the wealthy that targets individuals earning more than $500,000 a year and couples earning more than $1 million a year. All but the smallest employers would be required to provide insurance and pay for most of the premium, or they would face a fine of up to 8% of their payroll." 

The World After 1989: Walls in the Mind

This article discusses the climate of the ex-Communist, Central European countries after the fall of the Berlin Wall. After the fall, capitalism began to grab hold. Entrepreneurs came from all over to take advantage of the low costs, and entrance into the EU, promised billions of euros for modernization. The graph in the article shows that these countries still have a long way to go to be considered economic powers. The highest GDP per person is in Slovenia where GDP per capita is $24,180. While the fall of communism proved good for these countries in all aspects, they still need to truly show that they can grow their economies.

Rebuilding Haiti: A Step Backward

Haiti is in a fragile political, social, and economic state. Modest gains that had been made in political stability were undermined by the overthrow of the prime minister after a year in office, for reasons that seem insufficient. Luckily bloodshed did not ensue after the overthrow, however the impact of this move could affect donor aid to the much in-need people of Haiti. This article gives a snapshot of life in the poorest country in the Western hemisphere, and the importance of aid for economic growth there. Weak institutions, high levels of corruption, and geographic location among many other factors, have historically held Haiti back from growth and even created negative growth in recent decades. A significant change in institutions and stability will need to occur before significant growth and poverty alleviation will become apparent in Haiti, and setbacks such as the recent overthrow of a political figures are hopefully on the decline.