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.

The Dark Side of the Productivity Surge

According to the Bureau of Labor Statistics, even though the economy is declining in the US, non-farm sector's productivity grew at 9.5% annual rate in the July-September Quarter followed by 6.9% in the second quarter. Is this a good thing for economy? The author says it wasn't because of clever efficiency measures or the purchase of wonderful tools that help people get their jobs done faster. Such improvements take years, not mere months. Rather, it was because companies cut jobs and work hours drastically. Work hours fell at a 5% annual rate even as output increased at a 4% rate, the government said. So people working shorter hours had to do the same amount of work as before, or more. People who kept their jobs had to pick up the work of ex-colleagues. Many workers probably put in extra hours that weren't counted in the statistics in order to get all their work done. That would exaggerate the output-per-hour gain. I think this phenomenon can explain the current situation why GDP is recovering in recent months, but unemployment rate is still rising in the United States.

A Globe Redrawn

The following article talk about Russia after the Soviet collapse. The author points out to the huge inflation, the result of the repressed inflation of the central planning era. Additionally, he describes how wrong incentives aimed at continuous industrialization led producers to make tonnes of steel or cement, or tanks and rockets that no one wanted, "while shops were empty of the things they craved." The author states that "producing goods worth less in real terms than the materials used to make them could not go on for ever." "Meanwhile, shortages created a crime-ridden black economy that, by some estimates, was worth as much as 30% of the real one, perhaps more." Thus,when the Soviet Union collapsed, and the government chose to opt for the "shock therapy" in the transition to a free market economy, there was no mechanism in place to support it.

House Moves Toward Vote on Health Bill

In this Wall Street Journal article, the health bill and its progress is discussed. This is an interesting article that describes what is happening with the bill and how it is expected to turn out in the different political houses. Although it seems that total amount of money going to be dished out for this bill increases daily, the total as of today is $1.055 trillion. According to the article, "The bill would extend insurance coverage to 96% of nonelderly Americans, setting up exchanges where they could choose between private plans and a government-run insurance option. Funding would come in part from a new surtax on wealthy Americans." 

India Cleans Up Its Act

This article provides an interesting look into the environmental changes that India is under going in an effort to reposition its self as a world leader. India is making changes that will effect the global economy.

US jobless rate rises to over 10%

In October the unemployment rate in the US rose to 10.2% highest rate since 1983. 190,000 jobs were lost in the month. President Obama is willing to sign a extended unemployment benefit. Most job losses were in construction, manufacture and retail. People who had been out of work for at least six months rose to a record 5.6 million and accounting for 35.6% of the jobless total.

How Many Jobs Has Stimulus Created

This information is not in article form, but as a map. There are two different ways to view it - one is how many jobs (per state) stimulus has created, and the other is current unemployment percentages. It is possible to scroll on each state to view the information for each. The range of jobs created is 960-110,185 and the range of unemployment is 4.2%-15.3%.

The Berlin Wall - So much gained, so much to lose

This is a reflection on the Berlin Wall collapse 20 years ago. It's collapse not only brought political freedom from Communism, but also economic freedom from an inefficient, crumbling socialist system. The author noted that many East Berliners flocked to the West to buy fridges, jeans and Coke.

Comparing that event to today, the author laments how the pursuit of economic and political freedom have become disjoint. Countries like China and Russia are still governed by oppressive regimes while the world turns a blind eye because of the economic success of such nations. The idea of globalization has overtook the concern for social justice and welfare. However, things will change, whether it is an economically motivated reform that changes the political system, or, a political push that will likely destroy an economy. Both seem plausible.

Stocks Rally on Jobless-Claims Report

A report was released yesterday that announced that jobless claims were down 20,000 last week to only 512,000 - the lowest since January of this year. Combined with this was the report that came out stating that workers are being more productive, and the productivity rate was quite high for this quarter. Because of this, stocks have been increasing. The article also further discusses jobless claims, as well as retail sales in October.

Nestle: The unrepentant chocolatier

Doubling R&D expenditure during a recession is not a route chosen by many firms. Nestle, however, is doing just that in its attempt to transform its image. Today, Nestle is known primarily for its chocolate and other sweets. Execs, however, are working to make it the world's leading health, nutrition, and wellness firm. Nestle is currently working on developing "functional foods," which claim health benefits.

Nestle's reasons are fairly clear--they want to move away from low-margin products which have been a victim to consumers' switch to private labels, to high-margin products and services. However, this move is not without risk--research costs are huge, consumers are unpredictable, and Nestle's image in other products could be damaged, just to name a few potential problems. Will this really work, or is it just a marketing gimmick? Only time will tell.

Berkshire Buys Burlington in Buffett’s Biggest Deal

Warren Buffett’s Berkshire Hathaway agreed to purchase Burlington Northern Santa Fe Corp for $26 billion, which will be the largest purchase for Berkshire. Basically, Warren took advantage of the soft market when competitive bids were relatively low. Burlington Northern would be Berkshire’s second- largest operating unit by sales. Buffett will use $16 billion in cash for the deal, half of which is being borrowed from banks and will be paid back in three annual installments.

U.S. Economy: Factories Expand More Than Forecast

Manufacturing in the U.S expanded faster than anticipated in October and exceeded every estimate of the 70 economists surveyed by Bloomberg. The news of the expansion eases concern that signs of recovery are strictly due to goverment stimulus. Our recovery is greatly linked to both the manufacturing and housing sector. The number of construction contracts unexpectedly rose again in September. First time home buyers are trying beat the November 30 deadline to qualify for the $8,000 tax credit. The economy still has many challenges ahead but gains in manufacturing and housing are a good sign.

Buffer Warren

This article discusses the repercussions of the recent recession on banks in America. It is no secret that banks in America have an inherent problem with cashflow, and that only accounting is used for measuring performance. As a result of this, there is a furious push by many regulators to force banks to have bigger equity buffers. Banks, however, argue that this is too expensive and will increase the cost of credit, hurting the economy.

Something must be done because with the promise of unlimited liquidity provision from governments, banks (unlike normal companies) do not have to worry much if they have loads of other short-term debt that constantly needs to be refinanced. Banks have too soft of budget constraints, which inevitably hurts consumers when bailouts need to be financed by taxes. The major issue moving forward is making banks more safe by increasing their equity.

US consumer spending falls

US consumer spending fell for the first time in five months in September. Household spending lowered by $47bn last month which is also due to decrease in income of the US citizens. This news came out after the news of US economic output grew by 3.5%. The growth happened due to the increase in the GDP and pulled the US out of its worst recession. The stimulus packagae helped the economy and there will another federal fiscal stimulus package coming up next spring to help the slow recovery of the economy.

Fish out of water

We've all heard the dismal unemployment statistics--10% in the US and nearing 20% in Europe. The outlook is even worse for people our age.

This article suggests that policymakers may have been approaching the problem from the wrong angle all along; instead of saving yesterday's jobs, perhaps the goal should be to create tomorrow's. What does this mean? Entrepreneurship, innovation, and venture capital.

Entrepreneurship has been a key to growth in both America and around the world. In many of these cases, from Silicon Valley to Israel, government intervention has played an important role. However, many problems can result. Two common ones are the temptation to spread the wealth around to everyone and a suspicion of foreign investors.

This shift in focus could mean an increase in entrepreneurship opportunities for our generation. It certainly beats unemployment!

Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash

Although the economy has been showing signs of improvement over the past few months, there are negative signs out there which might make us think otherwise. One of the biggest reasons for the poor economic situation that the country is facing was the housing market crash. That slump in the housing market has inevitably extended itself into the commercial property market as well, as pointed out by a well known investor, Wilbur Ross. Wilbur Ross said that the US. is in the beginning of a huge crash in commercial real estate.

Wilbur Ross is one of the nine money managers participating in a government program to remove toxic or dangerous assets from bank balance sheets. So a statement coming from a man like this seems to be giving all the wrong directions for the US economy which was expected to come back to life soon enough. However, property prices and commercial rent continues to rise putting further pressure on the economy as a whole.

Another well renowned investor, George Soros believes that gone are the days when the US consumer would drive the world economy. Although Ross does believe in self-correcting markets, he is of the opinion that it will take some time for the economy and the commercial estate market to correct itself. Although right now things just seem to be going the wrong way. Just to elaborate my point, I am attaching a little excerpt from the article:
"U.S. office vacancies hit a five-year high of almost 17 percent in the third quarter, while shopping center vacancies climbed to their highest since 1992, according to the property research firm Reis Inc."

Geithner: Economy Growing, Jobs Lag

WASHINGTON -- Treasury Secretary Timothy Geithner acknowledges the federal budget deficit is too high, but that the priorities now are economic growth and job creation.

Asked repeatedly on NBC's "Meet the Press" whether this means taxes will rise, Mr. Geithner avoided giving specifics. He did say President Barack Obama is committed to dealing with deficit in a way that will not add to the tax burden of people making less than $250,000 a year.

The White House has not decided how to reduce the red ink, Mr. Geithner said in an interview broadcast Sunday. "Right now we're focused on getting growth back on track," he said. "And we're not at the point yet where we have to decide exactly what it's going to take."

He acknowledged that the economic recovery, while showing positive movement, has been shaky and uneven.

Gulf monetary council 'on track'

Kuwait, Saudi Arabia, Qatar, and Bahrain signed an accord in June to create a joint monetary union council as a precursor to a Gulf central bank. Oman and the UAE are still questioning the idea of joining and creation of the council. The UAE wants to keep it own dirhams (currency) which will remain pegged to the dollar whereas Oman is not ready to follow the preconditions of joining the council.