Facebook defends CISPA while pledging not to share more data

A new bill has hit Washington. According to the article, CISPA will restrict legal barriers from obtaining information online. It will no longer require a warrant to access information published in social media sites. The Vice President of U.S. public policy for Facebook claims the bill will assist against cyber threats.

Why Germany Should Leave the Euro Zone

http://business.time.com/2012/04/12/why-germany-should-leave-the-eurozone/

We have all been hearing about the Euro crisis for a while now. Several people have suggested that the weaker  countries like Greece need to leave the Euro Zone as their domestic problems like their budget deficit are affecting the entire zone. However leaving the Euro Zone will leave them in a very harsh state from which recovery would be quite lengthy. The reason being their new local currencies will be devalued dramatically against the Euro making it even harder for them to repay their debts. This article proposes a different solution by saying that Germany should leave the Euro Zone. As the strongest economy in the Euro Zone, its new local currency will be higher in value to the Euro. This relatively lower value of the Euro will make it less difficult for the weaker countries to pay their debts.

Justice Dept. Sues Apple and Publishers Over E-Book Pricing; 3 Publishers Settle

http://mediadecoder.blogs.nytimes.com/2012/04/11/justice-files-suit-against-apple-and-publishers-over-e-book-pricing/?scp=4&sq=ebook%20amazon&st=Search

This is an amazing example of the government's role in intervention. The court suits Apple and publishers for price-fixing, which is a deliberate attempts to use oligopoly power to influence the price.The result of their action is a market failure and a higher price for consumers.

However, as the government intervenes and potentially lowers the price, publishers have least incentive to produce. In the battle with book pirates, publishers already loses much of their intellectual property rights and has much less profit than before. That being said, another punch from the government to knock off the price may negatively impact the production of books in the U.S.

Millionaires Can Rest Easy, Buffett Rule Still Has Loopholes To Exploit

http://www.huffingtonpost.com/2012/04/13/buffett-rule-loopholes_n_1423547.html?icid=maing-grid7%7Caim%7Cdl11%7Csec1_lnk3%26pLid%3D152117

This article focuses on the "Buffet Rule," President Obama's attempt to erase loopholes in current tax laws that allow the ultra-wealthy to pay lower rates than they are supposed to. Warren Buffet's statement that these loopholes "allow[ed] him to pay taxes at a lower rate than his secretary" is partially responsible for the reform. Unfortunately, however, Bloomberg has pointed out the fact that the Buffet Rule still needs to be significantly improved - that is, there are still numerous loopholes that will allow those affected to evade this reform. (http://www.bloomberg.com/news/2012-04-13/top-earners-can-find-ways-around-buffett-rule-minimum-tax-rate.html) The act is aimed toward people who earn more than $1 million annually with tax rates below 30 percent. Though their tax rates will be increased, they will still have the opportunity to invest their money in tax-free investments, such as employer-based health insurance. President Obama plans to generate over $40 billion from this increase in taxes, but if these millionaires continue to find loopholes (which they inevitably will), he may need to find other ways to shrink the steadily increasing deficit gap. Furthermore, it may have unexpected negative effects. Although it is a sad fact that some of the extremely wealthy are able to evade taxes in various ways, it is also important that we continue encourage investment and fuel the business cycle. The money for this investment comes from those who can afford to invest even in times of crisis - that is, people who are extremely wealthy. Raising taxes for this bracket, therefore, may not be the most prudent course of action in the first place - before we even take into account that rich people will avoid these reforms anyway.

Could Falling Prices Make Natural Gas the U.S.’s Primary Energy Form?

This is a good article that shows that in order for markets to work, we always need to be learning about and developing that market. For years, the US's primary fuel source was coal. Now our primary fuel source is oil. But with raising oil prices and Iran's threat to close the Straight of Hormuz, the US market for energy fuel is changing. Falling natural gas prices are going to change how consumers and producers across the nation use energy.

Worst Week For Stocks in 2012

http://money.cnn.com/2012/04/13/markets/stocks/index.htm?iid=HP_LN

This week was the worst for stock growth in 2012.  The NASDAQ dropped 2.3%.  The Dow dropped 1.6%.  S&P 500 dropped 2%.  The reasons behind the drop in prices include a poor March jobs report and the slowing of China's economy in the first quarter this year.  China's shrink in growth is not a concern to economists at World Bank, who claim 2012 will be a down year for China but 2013 promises to be much better.
China optimists point to China's easing of old monetary policies for hope in the future.  China pessimists point to a growing housing bubble that could burst like the bubbles in the US and Europe. 
The article indirectly deals with what we've been talking about in class.  China (the optimists hope) will experience more growth by changing away from old socialist monetary policies.  We have a clear cut example of China still being in a transition phase from Socialism to Capitalism.

Gene Munster Says Apple Is Going to $1,000

http://www.businessweek.com/articles/2012-04-12/gene-munster-says-apple-is-going-to-1-000

This article details the variety of reason why he believes the company's stocks will continue to climb at an alarming pace in the future.  A truly interesting article because this guy is an investor who literally loves Apple to death and has been able to properly predict everything in the past.

Consumer Prices Head Higher; Gasoline Costs Climb 0.9%

U.S. consumer prices rose modestly in March as falling electricity costs countered higher gasoline prices, boosting the view the U.S. Federal Reserve has room to provide more support for the economy if needed. 

The Labor Department said on Friday its Consumer Price Index  increased 0.3 percent after advancing 0.4 percent in February. That was in line with economists' expectations. 

The U.S. Federal Reserve has said it will probably hold interest rates super low into 2014 to help the economy, which is limping back from the 2007-2009 recession.

Amid recent signs of weakness in the labor market, investors are betting the Fed could unleash further monetary stimulus to boost growth, although comments by Fed officials this week suggested the central bank is on hold as it waits to see whether the recovery gains traction.

Should ideas be owned by their founders or the institution that funds them?

While we have previously in class discussed the importance of incentives for innovation, and touched on the specific mechanisms in place to distribute these incentives, we have not touched on the Bayh-Dole Act of 1980, which is an American law allowing universities to maintain patents of discoveries made by their faculty and researchers. This very system is currently under attack by the Kauffman Foundation, which seeks to move the patent into the hands of the inventor themselves.

I am inclined to agree with the author in this case, who supports Bayh-Dole and opposes the Kauffman foundation. Although there may be more incentives for the individual inventor if they are given control of the patent, they already have a significant incentive in additional proceeds they receive from the patent. On the other hand, if the university or company no longer has a financial interest in the patent, they will not have any motivation to provide researchers with the means to innovate. If the resources provided by the schools are not necessary for a certain innovation, the inventor may invent it outside the premises of the school and receive full financial reward for their labor. To keep the capital investment flowing, the institution must maintain some right to the finished patent.

Chinese Economy Loses Momentum

http://money.cnn.com/2012/04/12/news/economy/china-gdp/index.htm?iid=SF_E_River

The National Bureau of Statistics said Friday that the Chinese economy grew at a pace of 8.1% for the first quarter of this year. This rate was a decrease from last quarter, 8.9%. This is considered low for China because they have been around 10% growth for the past three decades. Economist fear that a slow down in China could affect the global economic growth. Chinese officials have increased the money supply and new loans to boost economic growth. One of the sectors that has slowed down is the manufacturing sector which may be a cause of a slow growth rate in the United States and the "shrinking eurozone economy."

Global Crisis and it's impact on India

This article discusses the global crisis that occurred in 2007 and what impact it had on the financial sector. The implications of the crisis was felt at an extreme level. The article details the elements that led to such a huge impact on India and the globe, as well as why the period of great moderation came to an end. 

http://www.bis.org/review/r120322b.pdf

The question of extractive elites Bankers and the public sector may both be enemies of growth

Buttonwood

The question of extractive elites

Bankers and the public sector may both be enemies of growth

Apr 14th 2012 | from the print edition

THE developed world has a growth problem. Of 34 advanced economies, 28 had lower GDP per head in 2011 than they did in 2007. Forecasts for growth in the current year are anaemic. This sluggishness is generally perceived to be a hangover from the financial crisis of 2007 and 2008. But might the problem be structural rather than cyclical?

In their new book, “Why Nations Fail: The Origins of Power, Prosperity and Poverty”, Daron Acemoglu and James Robinson, a pair of economists, suggest that many countries are bedevilled by economic institutions that “are structured to extract resources from the many by the few and that fail to protect property rights or provide incentives for economic activity.” In contrast, “inclusive” economies distribute power more widely, establish law and order, and have secure property rights and free-market systems.

In an extractive economy, such as the Belgian Congo and its successor state, Zaire, a narrow elite seizes power and uses its control of resources to prevent social change. Such economies can achieve growth for a while, particularly when (as with the Soviet Union in the mid-20th century and, the authors argue, China today) resources are being transferred from the unproductive agricultural sector into manufacturing. But they run out of steam eventually.

The authors place the developed world in the “inclusive” category since they have, by definition, achieved economic success. But their description of extractive economies should ring one or two alarm bells in the minds of Western readers. “Because elites dominating extractive institutions fear creative destruction”, the authors write, “they will resist it, and any growth that germinates under extractive institutions will be ultimately short-lived.”

There are two potential candidates for extractive elites in Western economies. The first is the banking sector. The wealth of the financial industry gives it enormous lobbying power, including as contributors to American presidential campaigns or to Britain’s ruling parties. By making themselves “too big to fail”, banks ensured that they had to be rescued in 2008.

Much of current economic policy seems to be driven by the need to prop up banks, whether it is record-low interest rates across the developed world or the recent provision of virtually unlimited liquidity by the once-staid European Central Bank. The long-term effects of these policies, which may be hard to reverse, are difficult to assess.

It is tougher to argue that the financial sector has inhibited growth in other areas of the economy. Indeed, both banks and venture-capital groups play a vital role in supporting new companies. Nevertheless, it is possible that the extremely high rewards in the financial industry might have diverted talented people away from other activities that could have helped rich economies to grow more sustainably. Furthermore, those high rewards could derive from “rent-seeking” by the financial sector, in the form of fees, charges and spreads, that have acted as a tax on the rest of the economy.

A second candidate for the extractive-elite category is the public sector. In some countries, such as Greece, there has been a clear policy of “clientelism” in which political parties have rewarded their supporters with jobs and benefits that have been funded by the general taxpayer. In the Anglo-Saxon world, public-sector employees now have more generous pension rights than the majority of private-sector workers.

An obvious objection to this line of reasoning is that there are too many public-sector employees for them to be regarded as an elite. Indeed, if you include the many recipients of social benefits, those dependent on the public purse comprise a majority of most rich-country populations. Such social policies are part of the inclusive model that Mr Acemoglu and Mr Robinson favour.

But it does seem likely that a high level of public-sector employment reduces the extent to which creative destruction occurs and new industries develop. Workers may prefer the security of government jobs to the riskiness of joining new businesses. As European governments are discovering, public-sector unions are often the most vocal in opposing the kind of labour-market reforms needed to reduce structural unemployment.

Just as a ship’s hull acquires barnacles, a government naturally attracts all kinds of supplicants and subsidy-seekers. If such behaviour is unchecked, then eventually the system may grind to a halt.

Investment Dependency

This short article and graph talks about how heavily some of the rich countries of the world invest. They had invested heavily when times were good, but once the financial crisis hit, they have seen little to no return on their money for obvious reasons. I just found this interesting because these countries were borrowing heavily overseas from other nations, and it in turn got them in trouble as the excess supply of cheap credit fueled their mass spending sprees, which later collapsed in the financial crisis.

http://www.economist.com/blogs/graphicdetail/2012/03/focus-2

Cut Public Debt Levels to 50% of GDP: OECD

The OECD said research suggests that changes in the functioning of the economy occur around debt levels of 70 percent to 80 percent of GDP.

“Interest rate effects of debt seem to become more pronounced, discretionary fiscal policy becomes less effective because offsetting private saving responses become stronger and trend growth seems to suffer,” it said.

As a result, for a standard country, “building in a safety margin to avoid exceeding the 70 to 80 percent levels in a downturn suggests aiming for a 50 percent or even lower long-term debt target during normal times,” the report said.

http://www.cnbc.com/id/47026928

Slow Down Forecast for Developing Asian Countries

http://www.nytimes.com/2012/04/12/business/global/slowdown-forecast-for-developing-asian-economies.html?_r=1&ref=business

The Asian Development Bank has announced that the countries will be slowing their growth somewhat this year however it will still be higher than Japan, the U.S., and Europe. Like most countries, those in Asia are still bouncing back from the recession, however their growth rates are expected to be around 6.9% this year while all other developed countries are estimated at 1.7%. The bank feels very optimistic because China and the demand for their goods has continued to stay strong. These countries have remained out of deep trouble by avoiding most of the U.S. housing crisis and the debt crisis in the euro zone. Europe is still struggling and there are possibilities that downfalls in Europe could affect Asia so they aren't in the clear yet.

US interest in Brazil, and its trade, on the rise

http://www.economist.com/blogs/democracyinamerica/2012/04/dilma-rousseffs-visit-america

 How many Americans know about the economic successes of our South American neighbor during our economic troubles?  Very few, though there are downsides mentioned in the article.  Working with this nation would begin improving America's standing in Latin America and give a profitable place for American businessmen to invest, something they have not done much of here.  Getting money following again is one key step to an American recovery, and goodwill is something America needs now.

U.S., China, Japan lead world in economic growth

This article discusses a recent report from today that discusses economies that are leading the world. According to the report, the economies that are currently leading the world are the United States, Japan and China. The U.S. economy has grow the most out of the three, growing for the past five months; and Japan and China are both following closely growing for the past four months. The article discusses how growth in manufacturing and in spending have been the main contributors to China's expansion. The question that was left up in the air was whether China's economy will have a hard or a soft landing on the way back down from this substantial period of growth?

http://money.cnn.com/2012/04/10/news/international/oecd/index.htm?iid=HP_LN

Obama to Visit Swing State to Push His Millionaire Tax

Tax is a topic that is relatively new in human history. It only became a part of society with the rise of mercantilism. However, it has become one of the biggest issues in the economy. Should it be a tool to redistribute wealth? or should it be a tool for revenue for the government to provide the public goods, such as defense? it is quite difficult to answer. However, I believe that you can't tax the one without money, you can only tax those that have the capabilities to pay tax. President Obama is doing just that. He is pushing for an increase in tax on those who can pay the tax. But this would require not just a higher rate, but overhaul in tax system. Overall, we still have to wait and see who is going to be the next president. This is only a proposal.

Obama names surprise World Bank candidate Jim Yong Kim

Reported by BBC news, on 23th March, President Obama nominated Jim Yong Kim as the candidate of the next president of the World Bank.

This nomination is obviously surprising because he was not mentioned in any analysis about possible candidates in the past weeks. Jim Yong Kim, a Korean American, was born in Seoul. He majored in medical, and he's an expert on health in developing countries. He was a co-founded Partner in Health, providing health programmes for the poor people, also a student at Harvard University. He is now the president of Dartmouth College, one of the United States’ most prestigious academic institutions. As a former official at the World Health Organization, which is a very important area of World Bank, Dr. Kim is no wonder a fitting candidate, even though also surprising.

This development expert seems to be a nice fit and he indeed has got much praise from people in different areas. But at the same time, he still has two other strong competitors: Mrs Okonjo-Iweala, the Nigerian finance minister and a former high level executive at the World Bank, nominated by three African countries - Angola, Nigeria and South Africa; and Jose Antonio Ocampo, the former finance minister of Colombia and currently an academic at Columbia University. Both of these two candidates have rich experience in developing countries and development issues.

Even though the three candidates seem to have a very balanced capacity and experiences, the nomination of Dr. Jo Yong Kim is actually a formality. Like what we have learned in class, the election of the president of World Bank is bases on the organization’s board, which is made up of 25 representatives of the member countries. The votes are weighted by financial contribution. The US has almost 16% of the vote. Although European Union countries have a bigger 29%, but “in order to preserve the long-standing informal deal which has seen the World Bank run by an American and the IMF by a European”, it is almost for sure that the European Union will respect the opinion of the United States. It is clearly that the election will only follow the wish of the United States.