Get Ready for a New Tax

This article is about how income taxes alone won't help the economy recover from the recession. The Tax Policy Center did some calculations on how the congress could cut the current deficit to 2% of the GDP. The calculated what would happen to tax revenues under three plans which were to raise the top 3 income tax rates, raising taxes proportionally for everyone or raising taxes for couples whose incomes is over $250,000 and singles whose incomes is over $200,000. President Obama said he would only raise taxes for the latter. However, the results were ridiculous and tax rates would have to be increased by a very large amount to help the economy with its deficit.

Haiti Emergency Summit Planned by UN to Organize A

This article talks about the earthquake that hit Haiti and the effects it has had on the countries infrastructure. The earthquake destroyed one third of the buildings in Haiti's capitol Port-au-Prince along with its seaport and sewage system. Already the poorest country in the Western hemisphere, Haiti has a long way to go to rebuild and reach a point of economic stability. Many actors from the United States have given generous donations toward rebuilding Haiti. The Inter-American Development Bank, which supports economic development in the Caribbean, is considering a plan to alleviate Haiti’s $441 million in debt to the bank, the group said in a statement yesterday. This is an interesting plan, but would make sense considering that Haiti has no way of paying back the amount owed, especially with the current state of the country.

Green With Envy

This article, published in the November 2009 issue of The Economist magazine, grapples with the quintessential issues surrounding the rising interests among Washington bureaucrats to pass a carbon-reduction cap-and-trade policy. Despite the urgency to resolve climate change, cap-and-trade carbon-reduction policies have been met with widespread resistance. Economists have pointed to the fundamental tensions between the effectiveness of such environmental policies and a countries allegiance to globalize open trade as the underlying issue. Is what’s good for the environment good for the global market?

She Works. They're Happy

This article relates to a discussion we had in class about women in the workplace. The article talks about that women are entering the workforce more and more and that women are becoming the bread winner in more marriages in the past twenty years. The article also correlates the fact that the more women are able to be independent and self sufficient the more likely that marriages will be successful.

Incentive structures of Economic Systems

I found this article to be one particularly pertaining to the incentive structure of economic systems. This is a particular strong example and I believe it to be one that shows the changing dynamics of capitalism in the U.S. As the article mentions, for some, Idaho power's choice to pay customers to not use power may seem a bit crazy, but it is working in Idaho! After all, people respond to incentives!

Obama: Bank Regulators May Have Gotten Too Tough

I thought this articles was interesting as it reflected what we went through in class about how a change in policies does not mean a fundamental change in the economic system. Although policy such as the government bailout can become politicized, it is clear that the banking and financial markets as well as the automobile industry still retain control over its business decisions and thus talk about america going 'socialist' is clearly an absurd assertion.

Get Ready for a New Tax

In order to cut the deficit to 2% of GDP, the Tax Policy Center thinks that there will need to be help from more than just income tax. Rosanne Altshuler, Katherine Lim and Roberton Williams talked about three different tax proposals such as "raising all tax rates proportionally; raising only the top three income tax rates; and raising rates only for couples with income over $250,000 and singles with income over $200,000." However, they realized that this would not be beneficial in decreasing the deficit unless the tax rates were extremely high so the best bet would to be to decrease government spending.

Obama vs. Big Banks

This article discusses President Obama's statement on banking made yesterday. Obama announced that there will be stricter regulations on banks. There is a tax proposal to tax the nations 50 largest banks. This tax will raise $90 billion over ten years. The article involved a great deal of discussion over it being a populist stance. This article not only deals with a larger government involvement in private business, but the political decisions behind making such a decision. This seemed especially interesting because economic decisions are not made in an political vacuum.

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Chilly Climate for Oil Refiners

This article discusses the sharp decrease in demand for gasoline. Refineries are shutting down because refiners are convinced that even after we recover from the recession, demand is not expected to increase due to the increase in ethanol use and the availability of other alternative biofuels. Automobile fuel-efficiency standards are increasing as well with averages rising to 35.5 miles/gallon by 2016 from 25 miles/gallon today. The number of refineries in the U.S. has fell from 300 in 1982 to about 150 today showing that demand continues to decrease. It is suggested in the article that gasoline consumption peaked in 2007 at 9.7 million barrels a day and will not rise to that amount again. This unanticipated drop in demand of gasoline is not only an issue for the U.S., but for the entire world. This article relates to markets and sovereignty. Consumers are not demanding gasoline so markets are responding causing refineries to shut down. What will the shutting down of refineries lead to? Also, won't this be somewhat inefficient because the land will be ruined where these refineries once stood?

US Military Operations Block Relief efforts in Haiti

This is an article I find very complicated. Basically in this article, the US military forces have taken over the Port-au-Prince airport in Haiti in an effort to help with the sudden disaster. The problem with this takeover is that doctors and other health providers are complaining of US forces denying humanitarian flights the permission to land. Most of these flights are flights with supplies needed to treat victims with crushed limbs and other infections. The two sides of the story is that, US forces are very concerned of the fact that since the earthquake, everybody is flying in to help, which to some extent is a great thing; however, it is making things very difficult because too many people are trying to fly in. The airport on the other hand, has only one runway and there are literally hundreds of flights trying to make it in; therefore they decided to give priority to US military flights and the flights that that they know and can identify have contents of Humanitarian supplies. On the side of the Doctors, they are complaining that most of the flights with the supplies are being redirected and these flights contain the things they need immediately to treat the victims. According to them, the delay in getting the supplies is causing them to amputate most of the victims in order to prevent the infections from spreading.
This is a conflict that is very tricky because both sides have a point, but the question here is how will they come to a decision of figuring things out to achieve the ultimate goal of helping the people in Haiti.

Fed up with the Fed

The article talks about the Federal Reserve's current policy of keeping interest rates near zero, "zero interest rate policy". The policy has helped consumers spend more than they normally would, but that increase in spending has not been much, 2.7% over the past 12 months. The problem with keeping interest rates consistently low is that it causes inflation. The article cites the increases prices of gas lately. The article argues that while inflation may not be horrible right now, the fed can not keep interest rates at zero indefinitely and expect everything to be okay.

How to Build a Better Bond Portfolio

The article talks about how bonds used to be a safe investment with a constant return and how they have now shifted from that to being unreliable. The author gives you three different options/strategies for people. The first option is for people who don't want much risk, the second is for people who want some risk and the third is for people who are willing to take risks to gain profit.

Efficiency in the Marijuana Business

This article, although somewhat satirically, captures the second (efficiency) of the five performance criteria for economic evaluation. The focus is on the efficiency of Mexico's drug cartel primarily in the marijuana business. One of Mexico's lead officials even goes so far as to say that marijuana should be allowed to be legally grown in California in order to be grown more efficiently in a better climate as well as to be grown closer to the ultimate consumers.

The Principal-Agent Problem

This article exemplifies the principal-agent problem discussed in class earlier this week. The article describes to the reader how to best go about receiving disability insurance, while also shedding light on the ways disability insurance companies make it difficult for consumers to receive full payouts, such as by making it more difficult for consumers to qualify for benefits and also by limiting payouts for certain types of diseases.

Japan Gives Downbeat Forecast, Warns of Deflation

This article from www.cnbc.com explains some of the economic woes facing Japan. After reading this, we can draw some parallels between the USA and Japan. Japan is currently facing a mild deflation of prices and large job losses across the island country. The Japanese government is depending on the Bank of Japan to help fight against the deflation and form a better monetary policy. The deflation hurts company profits because the consumer will wait to see if prices will drop more. Industrial output is increasing but core machinery orders are decreasing. This is a fragile economy with limited resources but can almost be seen as a very small reflection of the United States.

Expanding Use of Wind Power Feasible, but May Be Costly

This article basically states that by 2024, wind power would replace coal and natural gas for about 20 to 30% of the electricity supplied on the eastern part of the United States. This shift in energy, however, will obviously be very costly, but they will have a dramatic effect on cutting carbon emissions.

The new study, conducted by EnerNex Corp., of Knoxville, Tenn., is the first major effort to compare those assertions. It found that in the “reference” case, with new windmills being built to satisfy state-by-state requirements for renewable energy, yearly electricity costs in the Eastern Interconnection would be about $125 billion (in today’s dollars) in 2024. Building enough windmills in the Midwest, with matching transmission lines, would raise that to about $140 billion, and building offshore would bring costs of about $150 billion.

I thought this article was interesting since we dicussed about scarce resources and ideas today, which this article is a good combination of the use of both of them.

Landesbank Losses May Bring Change to German

http://www.nytimes.com/2010/01/12/business/global/12landesbank.html

The mishandling of funds by Bayerische Landesbank, a state-owned German bank based in Munich may bring change to the German banking system. Being a state-owned bank, BayernLB has resulted in cries from rivaling commercial banks, economicsts and European Union antitrust regulators to reevaluate the German banking system. BayernLB has been forced to scale back their operations, essentially resulting in more space for private-sector banks such as Deutsche Bank and other commercial banks to step in and have more impactful positions in the German economy. Although Germany is currently the largest economy in Europe, their big banks have the lowest profit margins among Western European countries.

The mistakes by BayernLB have forced for a larger separation between government involvement in the banking sector and will eventually result in the restructuring of the banking system in Germany.

China's growth rate

This article talks about how China may be growing at too fast of a rate to sustain. It is consistent with Romer's podcast because it supports the notion that China is growing so quickly due to it's ability to copy technology that already exists. While the Chinese government is concerned with strengthening domestic demand, the article goes on to discuss why withdrawing their current stimulus measures may not be such a bad thing.

Glassmaking Thrives Offshore, but Is Declining in U.S.

The decline of glassmaking in America started gradually in the 1990s and accelerated during the Great Recession. What’s more, the big companies, like Corning and Guardian Industries, say that even as the economy improves, they are unlikely to bring domestic employment and production back to prerecession levels. Imports, for one thing, inhibit sales. And bigger profits lie abroad, so they are channeling investment and expansion to their overseas factories.

“Those who are looking through the rearview mirror, waiting for the glass industry in this country to come back, should know it isn’t going to come back, not the way it was,” Russell J. Ebeid, Guardian’s chairman, said in an interview.

In War Against the Internet, China Is Just a Skirmish

I thought this article is a good addition to the previous post- "Google's Threat Echoed Everywhere, Except China". This article touches on how other countries such as South Korea and France, are attempting some form of internet censorship. The UK is looking with interest on how France's law on allowing Internet connections to be cut off if a user is pirating copyrighted material. There appears to be an increasing belief among media companies and governments that "curbing some freedoms is necessary to foster the development of legitimate business on the Internet".

It will thus be interesting to see how this will pan out in different systems, each having its own unique set of cultural norms.

The Beginnings of the Real Recovery?

A report published Friday by the Federal Reserve Bank of New York indicated that manufacturing had expanded beyond expectations in the region during the month of January, pointing to gains in production as a cause of the lifting economy.

The New York Fed's general economic index rose to 15.9 from 4.5 in December, and readings above zero signal expansion in manufacturing in New York State and parts of New Jersey and Connecticut. Lean inventories combined with gains in consumer and business spending have led the turnaround in combination with strong growth in export demand, which has showed seven straight months of improvement as of November, on the back of a relatively weak U.S. dollar.

Inflation Remains Tame, With a Warning Sign

Holiday discounting helped keep inflation at bay in December, but fresh data on the state of U.S. industry suggest price pressures could yet become an obstacle to recovery.

The Labor Department reported Friday that its index of consumer prices rose a tame 0.1% in December from the previous month, held down by decelerating fuel prices and declines in the prices of items such as toys, televisions and new cars. In a reflection of the depth of the recession and a sharp drop in oil prices, the index average for all of 2009 was 0.4% lower than in 2008.

Subsidies Help Missouri Cotton Farmers

Missouri’s Bootheel cotton country has been given millions in federal farm subsidies to help against the recession. Four of the top 50 cotton-growing counties are included in Missouri’s Bootheel. These counties that are heavily dependent on agriculture have a per capita income that’s at least 30 percent lower than the U.S. average. Thanks to the $70 million in subsidies given in 2008, cotton could be grown and harvested this year. However, critics of the subsidies say they don’t produce enough jobs and that much of the money farmers spend goes to fertilizer and pesticide makers outside the Bootheel area.