Japan, in wake of nuclear crisis, orders summer energy cutbacks

This article reports about the energy cutbacks ordered by the Japanese government as result of crisis at Fukushima Daiichi nuclear plant.  The large businesses are ordered to cut back energy consumption by at least 25 percent, smaller by 20 percent and households by 15 percent.  These cut backs in energy consumption will most likely result in decreased productivity that will "lead to a lessening in terms of international competition for Japan" according to a head of energy task force. The biggest problem of this energy cutback order will be to work around the changes in a way that can satisfy both business demand as well as the workers.  Companies will be required to use less energy to produce products of equal quality which some people see as a challenge to lead in green-energy technology revolution.  Another implication due to the earthquake/tsunami is Japan's pledge to cut greenhouse gas emission by 25 percent by 2020.  The lessening of nuclear power will push for a different energy source.  Japanese government is faced with tough questions that will effect the future of its citizens and its place in the world.

Budget Deal Avoids Shutdown

This article talks about the most recent news about the infamous "SHUTDOWN", there isn't going to be one! Now I know the news has been blown up with all the scare about this big bag shutdown, but all along did you really see this happening? NO WAY! These politicians utilize the shutdown as a negotiation tool. Time is one of the most important aspects of negotiation, so to set a time limit on the deal both sides are forced to think quickly. From what the democrats have said in this article they have really got the Sh** end of the stick on the deal, giving up more spending cuts than they wanted, and agreeing to tax cuts for the rich in December.

US corn reserves expected to fall to 15-year low

ST. LOUIS (AP) -- Rising demand for corn from ethanol producers is pushing U.S. reserves to the lowest point in 15 years, a trend that could lead to higher grain and food prices this year.

The Agriculture Department on Friday left its estimate for corn reserves unchanged from the previous month. The reserves are projected to fall to 675 million bushels in late August, when the harvest begins, or roughly 5 percent of all corn consumed in the United States. That would be the lowest surplus level since 1996.

The limited supply is chiefly because of increasing demand from ethanol makers, which rose 1 percent to 5 billion bushels. That's about 40 percent of the total crop.

This is an interesting article because the corn reserve is being reduced to the lowest point all-time in 15 years. This was caused by a rising demand for corn and other foods related to corn products such as high fructose corn syrup, which is a very common ingredient for all sugar products such as sodas, popcorns, some snacks etc. This would lead to a higher price of food. Corn is also used to feed on the animals as well, so meat products would be expected to increase as well. This may be good for the agriculture industry and may possibly increase its production of corn. Nevertheless, it would hurt most of the consumers with tight budgets who are already hit by the recession.

Who gets paid in a shutdown? Congress!

If lawmakers can't agree on a spending bill before midnight today, a couple million federal workers won't be getting paychecks on time. Troops fighting in Afghanistan won't be paid on time either. Some 800,000 workers likely to be furloughed aren't guaranteed back pay. BUT...someone is still getting paid--Members of Congress and President Obama. Rank-and-file members of the House get paid $174,000 a year. And Obama is paid $400,000 a year.

The salaries paid to lawmakers and the president are financed through mandatory appropriations. And that part of the budget won't be affected by the shutdown.

The failure of lawmakers to change the status quo has led some members of Congress to pledge their salaries to charity or give the money back to the Treasury. Now, more than twenty members have signed a letter circulated by Sen. Joe Manchin of West Virginia that asks members to forgo their pay. "I can't imagine that the president, vice president or any member of Congress -- Republican or Democrat -- thinks they should get paid when the government has shut down," Manchin writes in the letter.

At long last, Portugal pleads for EU bailout

The Portuguese government finally threw in the towel on Wednesday and petitioned the European Union for a bailout. Portugal follows suit behind Greece and Ireland, respectively, as the third EU member-state in dire need of economic assistance. Estimates suggest that the bailout would total approximately 75 billion euros, including an immediate influx of emergency aid totaling around 15 billion euros. The bailout comes after nearly a decade of economic hardship in Portugal, typified by annual growth rates of less than 1% and an unemployment rate that now stands at 11.1%. Hopefully, the EU bailout will pacify international markets that have been fearful about Portugal defaulting on its debts.

Could oil, housing, and spending cuts derail the economy

As the recovery is slowing, many economists are reducing their economic growth predictions. One economist, Bill Cheney, states that the slashing of his forecasts for economic growth is due to, "higher oil prices and higher odds of premature fiscal tightening". The steady rise in gasoline prices in recent months has acted like a tax on consumers and businesses, which has taken away from the amount of money that they can spend on other goods and services. In addition, many economists are worried about the weak housing market. Home prices are down 4.1% during the last 3 months of 2010. Robert Shiller claims that, "There's a substantial risk of home prices falling another 15%, 20% or 25% more".

Dish Network Wins Auction for Blockbuster

After a bankruptcy auction that extended into the early hours on Wednesday, Dish Network announced that it had emerged as the winner of Blockbuster’s assets, with a bid valued at $320 million.

The executive vice president believes that the purchase of Blockbuster provides a complement to their current video offerings as well as presenting cross-marketing and service extension opportunities.

Dish Network gains a large retail presence where they can potentially sell services. The highly recognizable brand and more than 1,700 stores locations provide great opportunities. I believe that this will help Dish Network compete in the satellite provider business more effectively as well as increase sales with more awareness in a very recognizable, and popular brand (Blockbuster).

Wen’s Inflation ‘Tiger’ May Find Cage Locked After Rate Rises

China's fourth interest-rate increase in less than six months signaled the government’s determination to “front-load” monetary tightening in an effort to defuse overheating risks. The People’s Bank of China yesterday boosted its benchmark one-year lending rate by a quarter point to 6.31 percent, making its announcement at the end of a three-day holiday.

Premier Wen Jiabao’s government acted ahead of a report forecast to show consumer prices climbed 5.2 percent last month from a year before, the fastest pace since 2008. He used stronger language at a meeting of lawmakers in Beijing last month, saying inflation is a “tiger” that once freed can be difficult to get back in its cage. He also said that “exorbitant” home-price increases in some cities were a top public concern and rising costs may undermine social stability.

Chinese officials may be on guard against increased inflows of “hot money,” or speculative capital, as yesterday’s move widens the differential with rates in developed economies. The nation may face “relatively large” risks from cross-border capital flows, according to Deng Xianhong, deputy director of the State Administration of Foreign Exchange

G.O.P. Budget Proposal Cuts $5.8 Trillion in Spending

House Republicans on Tuesday unveiled a far-reaching budget proposal that cuts $5.8 trillion from anticipated spending levels over the next decade and is likely to provide the framework for both the fiscal and political fights of the next two years.This proposal aims not only to limit federal spending and reconfigure major federal health programs, but also to rewrite the tax code, cutting the top tax rate for both individuals and corporations to 25 percent from 35 percent.

The introduction to the proposal said the spending blueprint disavowed what it called the “relentless government spending, borrowing and taxing that are leading America, right at this moment, toward a debt-fueled economic crisis and the demise of America’s exceptional promise.” 

Republicans say their proposal would reduce the size of the federal government to 20 percent of the overall economy by 2015 and 15 percent by 2050 while President Obama’s plan introduced this year would not hold the size of government below 23 percent of economic output.

Democrats, however, say the emerging proposal amounts to a conservative ideological manifesto showing that Republicans intend to cut benefits and programs for the nation’s retirees and neediest citizens while protecting corporate America and the wealthiest people from paying their share of taxes. They will be certain to challenge the budget plan and make its bold efforts to reshape the health care programs for older Americans and the poor — a theme of their political argument to regain control of the House and hold the White House in 2012.

Focus on Inflation

The article says that the Federal Reserve should focus on controlling inflation, not the high unemployment rate that has been plaguing the United States ever since the recession. By looking at the Fed's historical actions, one can see that the inflation rate has been the main focus until recently, when the issue of trying to get the country to full employment began to creep into the Fed's agenda. In fact, the actions needed to create new jobs may drive up the inflation rate. The article argues that by focusing on controlling inflation, job creation will follow as the economy and rates remain stable.

A Long, Slow Slog Back to Normal

This article discusses the data given that was last updated from March 2011, showing the added jobs each month in the US economy. The data showed that 216,000 jobs were added in March, which was good to see, however the author explained that this is not the pace of growth needed to get the country back to full employment soon. If the growth continues as it had in March, the US will not be back to full employment until January 2014, three years from now. However Rampell also displayed a graph that showed where the growth would be if the average growth per month was 472,000 jobs per month, and that if this was so, the country would be back to full employment by July 2012. This is unlikely, and it looks that it will be close to three years until we are back to full employment.