Cities that have the longest way back from the recession

This is an interesting article that breaks down the top five cities that have the furthest track back from the recession. A large determinant of this study is based on the recovery of jobs in the areas. Many of these cities revolve around one particular industry in their area and due to the struggles of that product, the city and its citizens are suffering as well. Sitting at number five in order to number one is Flint, MI, Champaign-Urbana, IL, Santa Barbara-Santa Maria-Goleta, CA, Reno-Sparks, NV, and Carson City, NV. The manufacturing industry is very large in Flint and has continued to struggle with the recession and is the reason for a loss of several thousand job and they expect to only regain approximately 600 jobs by the end of 2012. At the top of the list, Carson City is still currently losing jobs and is not even projected to recover any by the end of the year. It is tragic to see these cities struggle so much through the recession and even more sad to think that many people there have no way of leaving or escaping the downfall. Poverty is becoming more and more normal in those cities which leads you to wonder if these cities will ever be able to recover from the losses.

Tax code to blame for US income inequality?

Tax code to blame for US income inequality?

This article is about Massachusetts Governor Mitt Romney's income (sort of). The governor and presidential hopeful will not tell his income but did say he gives fifteen percent of his income to the government for taxes.  Romney is a wealthy American who is part of the one percent, so is it fair for him to have to pay the same or less percentage of his income in taxes compared to a teacher or other Americans who make far less than he does?  Do you think tax breaks to the rich help the economy or is causing for a greater income inequality in America? 

Booming Mongolia: Mine, all mine

http://www.economist.com/node/21543113

“GOIN’ to OT?” drawls Andy, a burly tattooed man with that worldly air common to those who have done time in the American army. The gate at Incheon airport in South Korea is packed with travellers, mainly Mongolian expatriates on their way home, waiting to board a flight to Ulaanbaatar. Andy’s is a fair guess as to the destination of one of the few other Western passengers. “OT”—Oyu Tolgoi, or “Turquoise Hill”—is in the middle of nowhere, a desolate spot in the Gobi desert, another hour-and-a-half’s flight south of Ulaanbaatar (inevitably, “UB”). But it is the site of the biggest foreign-investment project in Mongolia, a copper-and-gold mine that is springing up at a remarkable speed and is expected, by 2020, to account for one-third of Mongolia’s GDP.

For Andy, who normally “does security” in places such as Afghanistan, Nigeria and Somalia, OT is a rest cure. Conditions are comfortable, the locals are a delight, and nobody tries to shoot him. And there are the transits through UB, a veritable Bangkok of the steppes—at least if your comparators are Kabul and Mogadishu. In the OT bus from UB airport into town, Andy is on tenterhooks waiting for the overnight hotel allocation. He is delighted with his billet—one where overnight guests are readily tolerated. The other news is less cheery: the airport bus will leave at four in the morning.

Can Venture Capital Save The World?

http://www.forbes.com/sites/helencoster/2011/11/30/novogratz/

We all know that foreign aid to poor countries especially to Pakistan has never really worked. Even if by some miracle the money does reach the people in need, it is usually a short term relief. The idea is to provide these poor people with a mechanism that will be permanent. Sort of similar to teaching them how to fish rather than giving the fish straight away. This article talks about this American woman who is using micro finance banking to relieve these poor people from the poverty trap they have lived in their entire lives.

Haiti Can Be Rich Again

http://www.nytimes.com/2012/01/09/opinion/haiti-can-be-rich-again.html?_r=1&scp=3&sq=Economic%20Systems%20Today&st=cse

Haiti used to be a country full of agricultural innovation, success, and productivity, but ever since the devastating earthquake that hit Haiti in 2010, the country has experienced many conflicts, pressures, and problems dealing with the success of their economy.

There have been many discussions about Haiti’s past system and the success that it provided for the country. This system included small farms and a decentralized economy, which provided Haitians with a better quality of life and additional trade, as well as pride and independence. Even though Haiti’s economy had some conflicts with control and power, the regional economies succeeded with their decentralized political and military system.

As discussed in the book, Comparing Economic Systems in the Twenty-First Century, the fundamental goal of comparative economic systems is to learn what economic systems work best and in what settings. This fundamental goal is currently what Haiti is realizing and how their past economic system could potentially be the reformed system they are looking for. With the help of non-governmental organizations providing for Haitian farmers, using a decentralized economy, and many more plans for the country, Haiti may already be heading in that direction. 

The visible hand--liberal capitalism vs. state capitalism?

http://www.economist.com/node/21542931

The crisis of Western liberal capitalism has coincided with the rise of a powerful new form of state capitalism in emerging markets, says Adrian Wooldridge

from the Economist print edition

BEATRICE WEBB grew up as a fervent believer in free markets and limited government. Her father was a self-made railway tycoon and her mother an ardent free-trader. One of her family’s closest friends was Herbert Spencer, the leading philosopher of Victorian liberalism. Spencer took a shine to young Beatrice and treated her to lectures on the magic of the market, the survival of the fittest and the evils of the state. But as Beatrice grew up she began to have doubts. Why should the state not intervene in the market to order children out of chimneys and into schools, or to provide sustenance for the hungry and unemployed or to rescue failing industries? In due course Beatrice became one of the leading architects of the welfare state—and a leading apologist for Soviet communism.

The argument about the relative merits of the state and the market that preoccupied young Beatrice has been raging ever since. Between 1900 and 1970 the pro-statists had the wind in their sails. Governments started off by weaving social safety nets and ended up by nationalising huge chunks of the economy. Yet between 1970 and 2000 the free-marketeers made a comeback. Ronald Reagan and Margaret Thatcher started a fashion across the West for privatising state-run industries and pruning the welfare state. The Soviet Union and its outriggers collapsed in ruins.

The era of free-market triumphalism has come to a juddering halt, and the crisis that destroyed Lehman Brothers in 2008 is now engulfing much of the rich world. The weakest countries, such as Greece, have already been plunged into chaos. Even the mighty United States has seen the income of the average worker contract every year for the past three years. The Fraser Institute, a Canadian think-tank, which has been measuring the progress of economic freedom for the past four decades, saw its worldwide “freedom index” rise relentlessly from 5.5 (out of 10) in 1980 to 6.7 in 2007. But then it started to move backwards.

The crisis of liberal capitalism has been rendered more serious by the rise of a potent alternative: state capitalism, which tries to meld the powers of the state with the powers of capitalism. It depends on government to pick winners and promote economic growth. But it also uses capitalist tools such as listing state-owned companies on the stockmarket and embracing globalisation. Elements of state capitalism have been seen in the past, for example in the rise of Japan in the 1950s and even of Germany in the 1870s, but never before has it operated on such a scale and with such sophisticated tools.

State capitalism can claim the world’s most successful big economy for its camp. Over the past 30 years China’s GDP has grown at an average rate of 9.5% a year and its international trade by 18% in volume terms. Over the past ten years its GDP has more than trebled to $11 trillion. China has taken over from Japan as the world’s second-biggest economy, and from America as the world’s biggest market for many consumer goods. The Chinese state is the biggest shareholder in the country’s 150 biggest companies and guides and goads thousands more. It shapes the overall market by managing its currency, directing money to favoured industries and working closely with Chinese companies abroad.

State capitalism can also claim some of the world’s most powerful companies. The 13 biggest oil firms, which between them have a grip on more than three-quarters of the world’s oil reserves, are all state-backed. So is the world’s biggest natural-gas company, Russia’s Gazprom. But successful state firms can be found in almost any industry. China Mobile is a mobile-phone goliath with 600m customers. Saudi Basic Industries Corporation is one of the world’s most profitable chemical companies. Russia’s Sberbank is Europe’s third-largest bank by market capitalisation. Dubai Ports is the world’s third-largest ports operator. The airline Emirates is growing at 20% a year.

State capitalism is on the march, overflowing with cash and emboldened by the crisis in the West. State companies make up 80% of the value of the stockmarket in China, 62% in Russia and 38% in Brazil (see chart). They accounted for one-third of the emerging world’s foreign direct investment between 2003 and 2010 and an even higher proportion of its most spectacular acquisitions, as well as a growing proportion of the very largest firms: three Chinese state-owned companies rank among the world’s ten biggest companies by revenue, against only two European ones (see chart). Add the exploits of sovereign-wealth funds to the ledger, and it begins to look as if liberal capitalism is in wholesale retreat: New York’s Chrysler Building (or 90% of it anyway) has fallen to Abu Dhabi and Manchester City football club to Qatar. The Chinese have a phrase for it: “The state advances while the private sector retreats.” This is now happening on a global scale.

This special report will focus on the new state capitalism of the emerging world rather than the old state capitalism in Europe, because it reflects the future rather than the past. The report will look mainly at China, Russia and Brazil. The recent protests in Russia against the rigging of parliamentary elections by Vladimir Putin, the prime minister, have raised questions about the country’s political stability and, by implication, the future of state capitalism there, but for the moment nothing much seems to have changed. India will not be considered in detail because, although it has some of the world’s biggest state-owned companies, they are more likely to be leftovers of the Licence Raj rather than thrusting new national champions.

Today’s state capitalism also represents a significant advance on its predecessors in several respects. First, it is developing on a much wider scale: China alone accounts for a fifth of the world’s population. Second, it is coming together much more quickly: China and Russia have developed their formula for state capitalism only in the past decade. And third, it has far more sophisticated tools at its disposal. The modern state is more powerful than anything that has gone before: for example, the Chinese Communist Party holds files on vast numbers of its citizens. It is also far better at using capitalist tools to achieve its desired ends. Instead of handing industries to bureaucrats or cronies, it turns them into companies run by professional managers.

The return of history

This special report will cast a sceptical eye on state capitalism. It will raise doubts about the system’s ability to capitalise on its successes when it wants to innovate rather than just catch up, and to correct itself if it takes a wrong turn. Managing the system’s contradictions when the economy is growing rapidly is one thing; doing so when it hits a rough patch quite another. And state capitalism is plagued by cronyism and corruption.

But the report will also argue that state capitalism is the most formidable foe that liberal capitalism has faced so far. State capitalists are wrong to claim that they combine the best of both worlds, but they have learned how to avoid some of the pitfalls of earlier state-sponsored growth. And they are flourishing in the dynamic markets of the emerging world, which have been growing at an average of 5.5% a year against the rich world’s 1.6% over the past few years and are likely to account for half the world’s GDP by 2020.

State capitalism increasingly looks like the coming trend. The Brazilian government has forced the departure of the boss of Vale, a mining giant, for being too independent-minded. The French government has set up a sovereign-wealth fund. The South African government is talking openly about nationalising companies and creating national champions. And young economists in the World Bank and other multilateral institutions have begun to discuss embracing a new industrial policy.

That raises some tricky questions about the global economic system. How can you ensure a fair trading system if some companies enjoy the support, overt or covert, of a national government? How can you prevent governments from using companies as instruments of military power? And how can you prevent legitimate worries about fairness from shading into xenophobia and protectionism? Some of the biggest trade rows in recent years—for example, over the China National Offshore Oil Corporation’s attempt to buy America’s Unocal in 2005, and over Dubai Ports’ purchase of several American ports—have involved state-owned enterprises. There are likely to be many more in the future.

The rise of state capitalism is also undoing many of the assumptions about the effects of globalisation. Kenichi Ohmae said the nation state was finished. Thomas Friedman argued that governments had to don the golden straitjacket of market discipline. Naomi Klein pointed out that the world’s biggest companies were bigger than many countries. And Francis Fukuyama asserted that history had ended with the triumph of democratic capitalism. Now across much of the world the state is trumping the market and autocracy is triumphing over democracy.

Ian Bremmer, the president of Eurasia Group, a political-risk consultancy, claims that this is “the end of the free market” in his excellent book of that title. He exaggerates. But he is right that a striking number of governments, particularly in the emerging world, are learning how to use the market to promote political ends. The invisible hand of the market is giving way to the visible, and often authoritarian, hand of state capitalism.

From the beginning, the Euro had inherent flaws as a currency model

The Euro was designed to increase the economic importance of the European continent and to create a trade-free zone. While the experiment got off to a promising start, recent years have highlighted flaws in the system that seem not to do solely with specific economic events, but also with flaws in the institutions that created the Euro.

One institution, the monetary system, was imposed on a collective group of sovereign nations. While all of the involved nations fell under the blanket term of 'capitalism', the specific policies and institutions all varied in very noticeable ways. As a collective, the Eurozone created institutions such as the European Central Bank, which was an attempt to create an institution at a higher level than those in individual countries. However, the actions of the European Central Bank were divisive and often clashed with decision-making in individual countries. Agreements made at the beginning of the pact were periodically ignored, making the pact weak and almost worthless, at a power level far below the leadership in individual countries. This shows the difficulty of creating effective institutions between sovereign nations, since the resulting higher-level institutions are only vehicles of compromise, and are often ignored by the leadership in the lower-level institutions and rendered useless.

Another inherent problem with the Euro was the fact that it tied many separate economies, many of which were operating on different levels. While the economies in Western Europe were robust, the economies in Eastern and Southern Europe often lagged behind. Putting them on the same currency prevented individual countries from controlling their own monetary policy, which is a basic and critical economic institution. Consequently, the Euro was valued too highly for the struggling economies and too lowly for the strong economies. It made the debt of struggling countries, including the countries currently in crisis of Greece, Spain, and Italy, look more attractive due to their presence in the Eurozone.

SOPA and PIPA postponed indefinitely after protests

The Senate had been scheduled to hold a proceedural vote next week on whether to take up the Protect IP Act (PIPA) -- a bill that once had widespread, bipartisan support. But on Friday, Senate Majority Leader Harry Reid said he was postponing the vote "in light of recent events."

The Secret Document That Transformed China

This story reported by NPR talked about the transformative principle of private property in the farming society of China and how it help push China to accept free market capitalist principles. Since 1978 the Chinese economy when under a transformational shift. It started with a small village when farmers came together to split up the land and allow each farmer to claim responsibility for there proportion of land. With this new ownership agreement the farmers were able to increase there output by five times, this massive increased was noticed by government officials. Luckily these officials held put there illegal actions a model for how China needs to shift there economy. To me this story directly links to the concepts of private property we have learned about in class and how it allows for economic growth and development.

World Bank warns of global growth slowdown

This article titled "World Bank warns of global growth slowdown," is a report from the associated press that reviews some comments made by the world bank earlier this week about the possibility of a slowdown in global economic growth. This article says that developing countries will be hit harder than developing countries, but it also says that no countries will be spared. It also says that every country may be hit just as hard as the 2008 recession, because most countries are in a much worse economic condition than 2008 and thus may not be able to take preventative measures if conditions do worsen. I find this to be an interesting report because most of the other things I have read lately and in talking to people it seems like we are slowly making improvements, not taking steps backwards.

Local currencies: 'In the U.S. we don't trust'

"Economic instability is on peoples' minds," said Gatch.

Now, even state governments are exploring the option. Lawmakers in more than 10 states, including Virginia, Georgia, South Carolina, Idaho and Tennessee, have been circulating proposals to introduce alternative currencies -- many of which would be issued in the form of gold or silver coins.

Canada's Third Party Gains Strength

In March the Canadian government collapsed giving chance to parties that have struggled to gain support and control an opportunity to emerge. One such party is the New Democrats who gain most of their economic views from a socialist stance. Recently this party has gained more control over the Liberals in Canada. What does this mean for Canada, will we see a significant or little economic change?

Japan's Leader Defends Handling of Crisis

"Japan’s embattled prime minister, Naoto Kan, defended his government’s handling of the nation’s nuclear crisis on Saturday, a day after an adviser resigned during a tearful news conference in which he charged that the government was not adequately protecting the population from radiation." As the opening paragraph for this article, one can see the importance it poses on the accountability the people are holding the Japanese government in dealing with the crisis responsibly and transparently.

As of now the Japanese Government is trying to deal with criticisms, as it figures out how to also deal with damaged soil and land and treating radioactive cases in the surrounding regions. One can understand how this is hard to do as they continue to push up the costs of repairs and damages. An increasing $300 Billion.

High Energy Costs Push Up Producer Prices

The article begins by stating how producer prices have risen .7 percent since March, as a result of high energy costs. The article then goes on by pointing out how consumers may see a price increase as well. Hauser finishes the article by mentioning the Federal Reserve and how its tactics to stimulate growth will not change because “there is sufficient room to allow prices to run." The most important sentence in the article comes at the end and states: “The economy can add a zillion jobs, but if wage growth is not coincident, aggregate purchasing power is likely to be constrained." Furthermore, it is safe to assume that as long producer prices continue to rise, as a result of high energy costs, then we are likely to see a rise in consumer prices over time.

Starbucks Targets Folks Who Shun Starbucks

Seattle’s Best coffee was acquired by Starbuck’s Coffee giant in 2001. Since then, Seattle’s Best hasn’t really been the best at anything. The small coffee company hasn’t really progressed in sales or market position since its acquisition by Starbucks. However, that’s all changing. Starbuck’s Chief Executive Officer Howard Schultz has charged brand manager and global strategy chief Michelle Gass to remake Seattle’s Best coffee and reach a billion dollars sales target. While that goal remains far away, Gass has made major progress in repositioning Seattle’s Best in the market. As the new President of Seattle’s Best, Gass markets her coffee to customers who hate Starbucks big corporate feel and would rather settle for a no name type of coffee. It seems to be working. Gass has put her coffee in 300 AMC cinemas, aboard Delta Air Lines planes, and in Subway, Burger King, and Royal Caribbean Cruises. It’s also being distributed in vending machines at offices, hospitals and college campuses worldwide. Gass’s prime targets to sell Seattle’s Best coffee to are mass retailers and convenience, drug, and grocery stores, as well as mom-and-pop businesses. Gass has also recreated the Seattle’s Best packaging scheme. The packaging design is now color-coded and numbered 1 through 5. 1 is the mildest coffee for casual drinkers while number 5 is a dark roast for more hardcore coffee drinkers. In order for Seattle’s Best to compete with their big sister Starbucks, Gass feels that she must scale up production and marketing. Gass says that “With our big sister upstairs who owns coffee, the only way we have a chance to get a piece of that is to be disruptive”. While Schultz’s 1 billion dollar revenue goal is still far away, Gass’s disruptive Seattle’s Best is starting to truly attract customers of the coffee industry

US Growth Takes a Hit

US growth is taking a small turn downwards. It is not entirely the US' fault, says the Economist. They claim that both weather and outside influences have slowed US growth from initial rates of 4% to as low as 1.0% or below. Harsh winter weather decreased consumer spending, and rising oil prices because of unrest in the Middle East and North Africa contributed as well. With the advent of the Saudi's 10% production cut, this is bad news for the United States, who was predicted to have a durable recovery in 2011 after a rocky but successful 2010. I think this has the potential to be motivation for real efforts to make alternative energy viable as a replacement for oil and/or coal. It could also simply result in a prolonged slowing of growth, decreasing America's economic influence in the world even more.

Rising Oil Prices Cause Inflation Concerns in China

This article deals with the rising inflation concerns China is currently attempting to fight. Oil prices worldwide have been consistently rising over the past few months, and this has led to speculation that inflation in China may accelerate. The concern over inflation has caused the Shanghai Composite Index to drop, and investors worry that the government will continue its tightening policy. Consumer prices are projected to rise as much as 5% in April, and the yearlong inflation has a goal of 4%, so this is a major concern. The central bank has increased interest rates four times to attempt to fight inflation, because prices have been increasing at their highest level since early 2008.

Dollar's Decline Speeds Up, With Risks for U.S.

The U.S. dollar continues to slide downward at an accelerating pace due to low interest rates that creates inflation concerns and the large federal budge deficit. The downward pressure on the dollar is expected to continue with no relief in sight for the dollar. For the second week in a row, the dollar has fell nearly 1% against a broad basket of currencies this week.The ICE U.S. Dollar Index closed at its lowest level since August 2008, right before the financial crisis worsened.

Additionally, Chinese government officials have hinted that they may diversify their $3 trillion of currency reserves away from U.S. dollars. Consequently it would chip away at what has been the important source of dollar-buying in recent years. Washington has been pushing Beijing to allow the yuan to continue to appreciate, to help reduce the U.S. trade deficit. But a continued decline in the value of the dollar is a double-edged sword for the U.S. economy.

China, Japan, South Korea seek trilateral trade pact

This article reports the news of China, Japan and South Korea seeking a trilateral trade pact between the three countries.  The minister of trade met in Tokyo and agreed to increase efforts in free trade agreement in order to promote free flow of trade and investment which is vital to sustaining economic growth. 
The recent financial crisis from key markets such as U.S. and Europe has decreased the demand as well as the disaster in Japan. The tsunami and the earthquake in Japan has disrupted the various supply chains that had big effects in both China and Korea's economies.  The trade ministers of China and Korea urged Japan to restore the supply lines as soon as possible and also emphasized the positive role of increased trade will have in Japan's recovery. 
 A Joint Study Committed between the three countries were set up in order to develop a trilateral free trade agreement.

Saudis Cut Oil Production

Saudis recently announced they would reduce oil production/extraction by 800,000 barrels a day. With the demand for oil on the rise, this move is interpreted by some to bolster prices, which is speculated to be used for funding promised social programs to protect themselves from political turmoil.

Saudi Arabia averaged 8.2 million barrels a day last year and claim to be able to produce as much as 15 million. Cutting 800,000 barrels from 8.2 million is an extremely large cutback, nearly 10%.

Colombia's rising fortune

Without a doubt, Colombia has come a long way over the past ten years. In the late 1990s and early 2000s, the country was suffering from widespread violence, a mortgage bust, and a budget crunch. Today, the security situation is much improved, foreign investment has increased, and commodity prices and oil output have risen. This recent good news does not, however, put them in the clear. For instance, they must take measures to deter a flood of foreign capital that could send the peso increasing at a rapid rate. Colombia's government is also under pressure to spend more money. Despite the military gains against the FARC guerrillas, many feel that more money still needs to be spent on security. Additionally, parts of the country desparately need better infrastructure. Finally, the country is suffering from high income inequality leading to pressure for social spending. Colombia is facing the demands of conflict and post conflict spending and it will be interesting to see how they respond in the years to come. So far they have slashed tax breaks and are presently trying to pass a Chilean-style fiscal rule to limit the deficit. Juan Carlos Echeverry, the finance minister, is confident that the government's economic plan will be able to handle their current situation.

Apple's Reliance on Japan for Components Put Sales at Risk

The Japanese earthquake that occurred this past March has affected not only Japan, but the entire world. The effects are especially felt in the business sector, as any companies who relied on Japan for goods and services have abruptly been caught off from Japanese suppliers. One such company is Apple. Apple's third quarter forecasts for sales, profit and gross margin will be affected significantly due to disrupted manufacturing and higher component prices. For example, flash memory is a key component in making up the memory databases in Apple's Iphone, Ipad and Macbook Air products. Higher flash drive prices mean higher production costs for Apple. Flash memory is not the only components Apple relies on Japan for. Batteries, touch-screen glass, and resin used to attach chips are all key components imported to Apple from Japan. Increasing demand for Apple products last quarter means that Apple must secure access to these parts quickly in order to fulfill the rising demand for Apple products. Even though the catastrophic earthquake in Japan has crippled many businesses, Apple is in far better position than most other companies. This fact is solidified by Apples 59.7 billion dollars in cash and investments. Apple should be able to handle the manufacturing disruptions and still meet the market's demands.

Gulf Tourism as Gauged by Flying Fish

The speed of the Gulf Coast tourist economy's recovery will face its next test this friday when fish fly at a state-straddling roadhouse. The Interstate Mullet Toss on the last weekend of April typically attracts huge crowds to the Flora-Bama bar in Pensacola, Florida, where participants try to throw a dead mullet fish as far as they can, from Florida across the sandy state border into Alabama.

Last year, thousands took part in the annual ritual with large parties and festivities while millions of barrels of oil were pouring into the Gulf. and large celebrations and partying—as millions of barrels of oil were leaking from the BP PLC's Macondo well miles away in Gulf waters. The mullet tossers paid it no mind. Following the event, gooey tar balls began to wash ashore leading to a terrible summer season all along the Gulf Coast.

Reservations for vacation rentals have been down in most beach towns and other Gulf communities and is uncertain if the typical number of summer tourists will return. There are signs of progress with the cleanup efforts and the increase tourism.

Area officials and locals believe this event will be a great beginning to the summer season and expect the return of thousands crowded along the beach watching the fish activities.

U.S. Growth Probably Slowed as Fuel Costs Rose

According to the article, our economy probably grew at a slower pace in the first quarter. The main reason is the jump in gasoline prices caused consumers to cut back.

Gross domestic product rose at a 1.9 percent annual pace after increasing at a 3.1 percent rate in the previous three months, according to the median estimate of 66 economists surveyed by Bloomberg News before an April 28 Commerce Department report. At the same time, other data show business investment remained a pillar of the economic rebound, while home prices fell.

Federal Reserve policy makers, when they meet this week, will likely say they’ll complete the second round of stimulus worth $600 billion, as scheduled, through the end of June to help sustain the recovery. Big corporations like GEs or Apple Inc are among those benefiting from gains in spending on equipment and software, while households are feeling the pinch of higher food and fuel prices.

The GDP estimate is the first of three for the quarter, with the other releases scheduled for May and June when more information becomes available

Beer Drinking and What It Says About China’s Economy

China has increased the amount of beer they drink each year, making it the largest market for beer. The article looks at research that says people will drink more beer until their income rises to about $22,000 a year.  After this they start drinking less beer and more wine, with an increase in income. This trend holds true for other emerging markets like Russia and Brazil.

It's an interesting article, because in the article it makes the comparison to what American's experience in their 20's. In college you aren't making much money so you don't have that many responsibilities and many opportunities. But as your income increases, so do your responsibilities and you have less opportunities to drink, and there are more potential costs. 

You've had a pleasant run

A year after the BP oil spill in the gulf the negative effects it had on the fishing industry are beginning to wear off. Consumers' concern over the the safety of the fish has fallen 15% to around 75% since last year. The amount of people avoiding gulf seafood has also fallen to 25% from around 60%.  Despite these upturns, the fisherman are still having a tough time competing with foreign imports due to high fuel costs, stricter regulations and catch limits.

Latin Lessons- Restructuring Greece's debt

The Greek economy has been faltering for a couple of years now and the situation isn't improving. The European Union is has not dealing decisively with this issue, which according to this article (in the Economist) is causing the situation to get worse as time passes.

The political landscape in Europe is such that German leaders are refusing to allow any debt restructuring because German banks hold majority of Greek debt. Allowing to do so would burden German tax payers. As Germany bears considerable clout in the EU, they usually get their way.

Politicians use such issue to benefit of their constituencies. This creates anger and makes the situation more difficult to fix.

This Economist article argues that lessons should be learned from past experiences of US banks and US foreign policy towards Latin American countries. Uruguay and Mexico are 2 examples mentioned. Even though the situation isn't identical to the Latin American examples, it can be strongly argued that debt restructuring is necessary. Expecting Greece to pay back the loans at the original interest rates and at the current deadlines would be extremely misguided and unfair.

Fed, Bernanke on Investors' Radar Next Week

As earnings results for the first quarter are coming in for high net worth firms in technology and energy industries next week, eyes are on the Fed and their policy response to the new information. Some speculators think due to favorable first quarter numbers, interest rates will rises. But on the other hand, some speculators believe there will be no interest rate changes by the Fed, rather a continuation of the "quantitative easing" policy under a new name since speculators have a negative connotation for that phrase. Either way, investors and speculators alike will be watching and listening to what Bernanke has to say in the upcoming week.

Japan draws up $50 billion emergency budget

To deal with the cleanup and rehabilitation of its country, Japan's cabinet has approved a 4.02 trillion yen (about $50 billion) emergency budget. This temporary budget still needs to be approved by parliament, but analysts say it will likely be approved and put in place by early May.

The main point of contention around the $50 billion is how exactly the budget will be financed. Japan's debt already accounts for around 200 percent of its GDP. The Japanese government has said that among other small adjustments, it will cut back on overseas aid to pay for the budget, re-instate tolls on certain stretches of road, and increase the country's sales tax.

Those moves will fund this $50 billion emergency budget, but Japan estimates overall reconstruction cost estimates are closer to $300 billion. How will this huge project be financed? Due to a rising debt, issuing government bonds was ruled out as a way to finance the current emergency budget, but it is likely that the government will have to resort to issuing bonds to pay for the second budget.

Americans agree: The rich should pay higher taxes

NEW YORK (CNNMoney) -- Hey, rich folks! The American people are putting you on notice. They want you to pay higher taxes.

Two new polls suggest there is broad support for raising taxes on households making more than $250,000 a year, and all in the name of deficit reduction.

Heck, even a majority of Republicans want the rich to pay more.

A full 72% of adults approve of increasing federal taxes on households making more than $250,000 starting in 2013, according to the latest New York Times/CBS News poll.

Fifty-five percent of Republicans want the tax hike, along with 74% of independents and 83% of Democrats.

This article is interesting. I believe that the rich should be taxed, it is reported that a percent increase in taxes for the rich would give the government a revenue of nearly a trillion dollars over 10 years. This move would be useful if the taxes were to be increased for the rich because it wouldn't affect the rich's spending on goods.

Hans Rosling's 200 Countries, 200 Years, 4 Minutes - The Joy of Stats - BBC Four

This is a very interesting short video from a section of 'The Joy of Stats' that tells the story of the world in 200 countries over 200 years using 120,000 numbers - in just four minutes. Plotting life expectancy against income for every country since 1810, the video shows how the world we live in is radically different from the world most of us imagine.

"Green" Fad Diminishes

The trend of "going green" has been popular the past few years. Many household cleaning companies introduced new products to satisfy consumer tastes and preferences in this category and despite the higher price tag, consumers bought the products. Now, however, with the recession recovery going slowly, the willingness to spend more on "green" products have vanished. Consumers' current concentration is on cost, not the environment. Trends change quickly, and firms are waiting to see when incurring expenses for such products will be worth their while.

Why gas is so expensive, when oil isn't

Gasoline prices have been rising for months. By April 20th, oil price reached $111 per barrel, while gas price reached $3.84 per gallon. The interesting thing is that compare to the price records in 2008, when oil reached $147 per barrel and gas was $4.11 per gallon, the current gas price is catching up with the 2008 record faster than oil price is. Specifically, gas price was 7% off the all time record price in 2008, while oil price was 24% off its record. Also, gas price usually rise slower than oil price.
The article explained that the the oil price reported was for a particular type of oil: West Texas Intermediate storing at Cushing, OK. There has been an increase in the oil supply from North Dakota, Montana, and Canada, while little more pipes have been built, keeping the oil price low. Gas price, however, reflects prices of many other types of oil, and those oil types have had greater increase in price: London's Brent crude was closer to $124 a barrel on Wednesday.
Still, the number doesn't really add up. Gas price is still much closer to its peak than oil price. This might be that there were more subsidies on gas price in 2008, when the government wasn't as vigorously cutting spending as now.

'Uneven' housing recovery continues

Although home sales have increased from the previous months, they are still down from a year ago. In the housing market, supply still far outweighs demand. Foreclosures are evident and the credit score to get a conventional mortgage has risen. First-time buyers purchased 33% of homes in March, down from 44% in March 2010.

Where's the growth?

This is a good article on the outlook of many US banks. Talks about increasing regulations, fines, prosecutions, and less activity that are all pushing down profits for banks. The future doesnt look good for these banks either with even more of the above mentioned factors coming just around the corner.

Baseball Takes Over Control of Los Angeles Dodgers

Baseball Commissioner Bud Selig said Wednesday that he would appoint someone to oversee all operations of the Los Angeles Dodgers because of his “deep concerns” about the state of the marquee franchise.

The reason for Selig wanting to sell the franchise is because Frank McCourt, LA Dodgers owner, has recently damaged the once renowned franchise for his own benefit. It is reported that McCourt has put the team in well over $400 million in debt, and has had disputes with his wife who he recently divorced. If Selig can obtain 3/4 approval vote from all the owners, then he can sell the team on McCourt's behalf.

I believe that this is the end for McCourt as the team looks to be sold on his behalf very soon. He has damaged the franchise and it's time for a change. Selig, as well as the other owners, will put an end to this chaos.

Government Debt Ceiling raised

Disagreements between the Democrats who run the senate and Republicans who run the House of Representatives lead to a late decision of a budget for the rest of the fiscal year. The budget cut is very small when considering the estimated budget deficit for 2011. We can expect the American people to be very disappointed with the results of the negotiations between representatives of the democrats and the house of representatives.

" The Democrats brought events to this pass by neglecting to pass a budget last year, when they had control of both the House and the Senate. The Republicans, for their part, refused to accept a Democratic offer to cut the very amount their own leaders had originally proposed back in February, $75 billion, and instead held out for $100 billion"

The approach of both sides was inefficient considering the goal is to lower the government deficit given that the congress will have to raise the government debt ceiling it imposes.

Japan’s Exports Fall a More-Than-Expected 2.2% After Quake

Japan's exports fell more than economists expected in March as shipments of automobiles tumbled, declines analysts said may worsen as companies struggle to restore facilities and output in the wake of a record earthquake.Overseas shipments declined 2.2 percent from a year earlier, the first drop since November 2009. The median estimate of 19 economists surveyed by Bloomberg News was for a 1.1 percent drop.Car exports fell 28 percent from a year earlier and shipments for electronic devices also slid as the disaster prevented companies from transporting goods. Automakers including Toyota Motor Corp. and Honda Motor Co. were forced to reduce production after the March 11 disaster.

The Assembly Line Is Rolling Again, Tenuously, at Honda in Japan

This article discusses the triumph for Honda in Japan. It has recently began to resume domestic production after the recent earthquake and tsunami that had devastated the automobile industry’s supply chains in Japan. This is great for the Japanese economy, as well as the world economy, for Honda has been one of the leading car manufacturing companies in the world in the last decade. However there are some crucial losses in inventory, which means there is a chance that they may have to shutdown there factories again. But, ultimately this is a good sign for Honda, and furthermore for Japan.

45% don't owe U.S. income tax

The statistics show that nearly half of U.S. households end up owing no federal income tax for tax year 2010. However, the stats is often misunderstood and misinterpreted, like this one. It does not mean 45% households end up paying no taxes at all--they still need to pay other taxes such as state and local income taxes, payroll taxes, and property and sales taxes. Membership to the non-payer group is not restricted to the poor, nearly 5 million households in the group make somewhere between $50,000 and more than $1 million. Very high-income households can fall into the non-payer group if they get their income from tax-exempt bonds or overseas sources for which they get foreign tax credits.

The ranks of those whose federal income tax burden nets out to zero,or less,have grown in recent years due to two reasons: 1). temporary tax breaks to mitigate the economic downturn; 2). The tax code is filled with tax breaks to encourage economic activities the government favors.