Why is America so rich?

This article presents some possible factors that explain why America remains the world richest large country.

However, it is American Exceptionalism bias.First we need to point out that US GDP per capita is only 8th in the world and 6 of the top 7 are European countries. UK, France and Germany are BIG economies but they ARE NOT the richest. We can't dismiss countries such as Norway because it's filled with oil. That's nonsense. Also, for the top 10 countries from the HDI list, the US is the only large country with a big population.

common law: this only is applicable to half of the top 10 nations in the HDI list and therefor not a desisive factor

massive immigration: only applicable to 3 nations of the top 10 in that list

scientific exodus: for no other country more applicable then Germany (that LOST most of it's scientists!) and look where that country is now? Arguably the best nation for machinery and tools in the world.

What makes a nation rich compared with others:
1 having a cultural heritage from north-west europe (social structures and work ethics etc)
2 be small (US being the odd one out)
3 having an open economy
4 having rule of law and a system where contracts can be enforced

America is certainly a country that is doing well economically but this continuous chest beating how great and SPECIAL it is, is becoming a nuisance.

Post Office posts $8.5 billion loss for last year

The United States postal service posted on Friday that it has an $8.5 Billion lost from last year, even though it cut almost 100,00 jobs. They only estimated that they would end up loosing about $6 billion. The sharp decline in mail use is really hurting the postal service. Most of the people are taking advantage of the internet and alternate ways of getting stuff to other places. Mail volume totaled 170.6 billion pieces, compared with 176.7 billion in 2009, a decline of 3.5 percent. This is not good for the post office and the management teams are trying there best to innovate the mail system and make it more attractive, I just do not seeing that happen though. The next option is to reduce the mailing system to only five days a week and to eliminate the annual health payments for future retiree health benefits. So, it sounds like things are not going well for the postal services, and most of the mail will be sent using the web. This is good in a way, because it will cut down on paper usage at least.

Taxpayers Provide More Than 25 Percent of NPR's Funding, Analyst Says

This article doesn't have the importance of other articles but is still interesting never the less. This talks about how NPR(National Public Radio) get 25% of its 165 million dollar budget from us the Tax Payers. I don't know about you but I feel like roughly 43 million could be spent elsewhere in the economy other then on a radio station, I'm not saying cut them all together but in these tough times do you really think spending that much for a radio station is a good allocation of tax payers money?

QE2 Just Won't Do

It has been a few weeks since the Fed announced its $600B purchase of government bonds. However, a lot of people are still skeptical of how this will work out. The interviewee in this article, who is successful currency trader, believes that the real culprit is the undervaluation of Chinese currency, and fixing that would be more beneficial than pouring such an amount of money in the economy. China's efforts to prevent its currency from appreciating tip the scale in its favor, leading to millions of job losses in the U.S. He does make a point, but we need to take into account the fact that he is a currency trader.

Top Earners May Face Big Hit

Citizens who itemize their deductions need to worry. A new tax plan will eliminate certain tax deductions and investment breaks in order to generate moretax revenue. Mortgage interest rates and capital gains rate may be altered for higher tax revenue. If this plan becomes a reality, the overall tax revenue will increase by $751 Billion by 2020. The plan's most basic purpose is to eliminate tax expenditures, the accumulation of deductions, credits and other tax benefits that Congress had adopted over the years for individuals as well as companies. Maybe this plan is not the best plan to introduce especially before elections.

U.S. Hit by Trade Setback

This article talks about the failed talks between the US President and the South Korea President at the G20 Summit. There were many issues which were unresolved and critics fear that this will severely imapct the export industry of US . However, a lot of exporters in US are backing Obama's decision as they believe that the deal would have been bad for the US workers. But how well will this go down with the rest of the country is hard to tell.

China selloff leaves stocks reeling

After the G-20 meeting, the trade war between the U.S. and China continues to heat up as China refuses to revalue its currency. To make it worse though, according to this article, China is starting to sell off the U.S. currency futures. This has resulted in the Shanghai composite to slump down by 5%. The effect is anticipated to be similar in the US market as the war between the US and China leads to an increasing economic uncertainty. Do you think that the US vs. China trade war will also trigger the currency war?

Double tax amount on gasoline

A committee organized to bring in the US debt has made a proposal to increase the tax on a gallon of gas by nearly double. Currently, regular gasoline tax is 18.4 cents per gallon, and 24.4 cents per gallon for diesel fuel. The tax would add 15 cents more to each of those. It seems like an awful idea for consumers, but does have some merit I think. It would bring in extra revenue, decrease unnecessary driving more, and increase incentives to innovate new ways of transportation, and/or new ways to bring in revenue for the government.

The laboratory of the world

In this interesting article, the author is suggesting that Britain's fiscal policies could play a part in determining who would be the next occupant of White House. To reduce trade deficits, Britain is considering cutting government's spending. According to the analysis, reductions in the bloated levels of government spending and fiscal deficits will do much more to stimulate the longer-term growth of the British economy, mainly by encouraging private investment and innovation. And based on the results of actions from Britain, Republicans will have a powerful case for themselves.

China buys up the world

The article illustrates an already standing issue of China's economy coming to gain power in the global economy. "Chinese firms own just 6% of global investment in international business. Historically, top dogs have had a far bigger share than that. Both Britain and America peaked with a share of about 50%, in 1914 and 1967 respectively." For every economy it is necessary for them to engage in international trade and production. Therefore China has started to depend on other countries for two sectors which they still craved for bettering their production "to acquire raw materials, get technical know-how and gain access to foreign markets." China has great potential in foreign markets, however they will have to adapt to foreign consumers to deal with the changes. Will China be able to over take the already developed marketing systems in the West?

Mortgage rates fall to fresh lows this week

This week fixed mortgage rates dropped to the lowest they've been in decades. Just recently the FED revealing a economic stimulus bond-buying program and it helped instantly seeing the rates drop from 4.24% to 4.17%, the lowest its been since 1971. Mortgage rates tend to follow lower yields for investors and they will occur when the FED purchases the $105 billion in Treasurys over the next month. Do you think there is any other reasons why the mortgage rates dropped to this all time low?

Seoul summit

A major issue confronting the G-20 is how to craft a new global economic order to replace one centered on the U.S. running huge trade deficits while countries such as China, Germany and Japan accumulate vast surpluses. The U.S. runs a trade deficit because it consumes more foreign products than it sells to others.

Government Debt: In The Red

Governments have been indebted for centuries, running ongoing Ponzi schemes involving tax-payers, investors and future generations. But data sets on debt levels over time are rare (the most comprehensive ones only begin in the 1970s). A new paper from the IMF seeks to resolve this. Data gathered from a number of different sources allow the fund to give a historical perspective on today's mounting debt. The maps in this article compare debt levels in 1932 and 2009. Most countries have become more indebted in the intervening years. In 1932 US debt amounted to 33% of GDP, compared with 84% in 2009. What has been the cause of this?

Street life, street death

"Forcing prostitution underground is hampering the fight to curb the spread of AIDS" This Economist article outlines the new program which the United Nations is establishing to spread sexual awareness to predominately South-east Asia countries in an effort to prevent the spread of HIV and other STDs. As over 350,000 new infections of HIV are reported in Asia alone it is a critical area which the UN is basing their efforts in the help to prevent this disease. The best strategy in dealing with prevention of STDs is to, "involve sex workers themselves. As a Chinese delegate put it, given the chance they do a far better job of educating and helping peers than do the UN or government. Myanmar, not normally cited as an outpost of progressive policy, has an HIV-prevention scheme seen as a model. Population Services International, an international NGO, has set up a “peer-to-peer” network with 18 drop-in centres around the country. There, 350 staff, mostly former or present sex workers themselves, dispense advice, discounted condoms and treatment for sexually transmitted infections. HIV prevalence among sex workers dropped from over 30% in 2000-06 to 18% in 2008." Hopefully, a lasting cure will be found for the disease or a way to eliminate HIV will be found as the demand for paying for sexual activities does not seem to have diminished since the dawn of man. I know this is not the usual economic article, but since prostitution was the second profession known to man I thought it might be something to consider.

Venezuela Nationalizing

This article isn't totally economics related but since we have been talking about socialist economies I thought it was interesting... The article says that at the end of October Hugo Chavez announced the nationalization of the American owned bottle manufacturing company Owens Illinois without following the required procedures. Chavez is quoted enforcing his declaration of "the elimination of capitalism" but the article also says that the public is against his nationalist reforms. I wonder how long Chavez will be able to maintain power if his constituents disagree with him, as well as the international community...

Business in the developing world

In this Economist article Mexico is said to be one of the easiest places to do business in Latin America, even above Brazil. These results are based on a World Bank survey that pointed out factors of decreasing bureaucracy that should make Mexico an attractive place to start a business, especially as the only Latin American country where you can pay your taxes online. However, the World Bank survey neglects to take into account corruption which the article points out by citing a business owner who recommends paying in cash unless you want to pay twice. This just proves some of the problems of starting/running a business in a country without firmly established institutions, you never really know what you're gonna get.

Singh of India endorses 'Quantitative Easing'

During President Obama's trip to India, he unsurprisingly offered support to the FED's recent decision to engage in quantitative easing to help the still ailing US economy. But, to many people and many countries' surprise, Manmohan Singh - the Prime Minister of India - also offered support for the move. Singh said that it is in the best interest of the world to have an American economy that is robust and growing, and that quantitative easing is a move towards that goal. This comes at a time when other countries, like China and Brazil, have criticized the move as a way of 'artificially' devaluing the dollar in an unfair trade practice. Both the President's and the Prime Minister's comments came at an economic meeting in which the Obama Administration aims to open up more trade opportunities between the two countries.

Daily Show: President Obama Interview

President Obama explains that he understands voter frustrations with unemployment, but that 18 months in office hasn't been enough time for the 8 million jobs that were lost to catch up with the economic recovery that businesses are experiencing. Obama points out that he has saved the country from a second Great Depression, stabilized the economy, and overseen 9 months of consecutive private sector job growth (though not fast enough). The economy is recovering, it's just that Obama is suffering politically from the natural tendency for unemployment to be a lagging indicator of recovery.

Geithner Says India Sets Example With Flexible Exchange Rate

U.S. Treasury Secretary Timothy Geithner said India is demonstrating economic “dynamism” that comes from promoting internal growth while allowing currency flexibility, even as he reiterated the need for “key emerging economies” to move to market-determined exchange rates. According to Geithner, fast-growing developing nations need to reduce their dependence on exports to help the world economy strengthen. According to Geithner, growth is the #1 priority of the United States currently - “The most significant risk to the global economy today is that the world’s largest economies underachieve on growth." Should growth be the main goal of world economies right now?

Is there a better way to organise the world’s currencies?

There have been a lot of complaints about the dollar being the main reserve currency because it makes all other countries dependent on America's monetary policies. So, there have been proposals about how to change the world's monetary system. In this article, the author examines the lessons from history about the attempts to alter the world's currencies and their impact.

Australia Faces Lower Tax Revenue After Currency Surge

Australia's currency is surging and is one of the best performing currencies against the green back. The government will announce their economic report today, and investors are looking for an increase in interest rates. Since commodities are sold in USD in Australia, the strong aussie dollar means less revenue. The government is expected to reveal a surplus even though, they face lower tax revenues.

Obama surprised by political cost of health law

This article talks about a recent press conference with President Barack Obama in which he says the political cost of overhauling the health care system turned out to be higher than he had expected. And he admits that he gets discouraged at times when dealing with the economy. Further he says in reference to the health care plan, "I think that there are times where we said let's just get it done instead of worrying about how we're getting it done, and I think that's a problem. Do you think "forcing" the bill through was a good idea considering the current condition of our economy?

Just in time for holidays: Bigger paychecks

Nov 5: Longer hours and a pick-up in hiring is pumping more income into economy at just the right time. There was a gain of 151,000 jobs in the October report, which was the best hiring by businesses in six months. A bigger economic impact, than the addition of jobs may come from the extra wages spread across the 90% of workers who already had jobs. "Average weekly wages improved by the biggest percentage in October than at any time since the start of the Great Recession -- up 3.5% compared to a year ago." Do you think the actions explained in the article are a result of Christmas coming up or do you think the effects will be permanent and last past the Holidays?

US President Barack Obama announces $10bn India deals

President Obama is currently in the process of a 10 day tour around Asia in the hopes of promoting exports and job growth. Some of the deals that are currently in progress include the sale of 30 Boeing airplanes, 10 military planes and sales of GE gas and steam turbines. President Obama also mentioned that other companies like GE Transportation, Electro-Motive Diesel and Caterpillar Inc. were vying for a deal to build railways in India. According to President Obama, these deals, if successful will bring in around $10Bn and over 54,000 jobs.
While these projects sound great on paper some might speculate how quickly these programs can be activated in order to meet the current unemployment problems. Many of these projects are still in the negotiation phase and as a result may take time to develop into fruition.

Bernanke defends new Fed plan to boost economy

Ben Bernake defended the FED's move for its new 600 billion dollar program to help boost the economy. The market response however, was not particularly positive as markets remained relatively unchanged as they closed on Friday. Worries of inflation are particularly high and investors fear that more injected money into the system will cause artificial prices in the markets especially in commodities. The FED is buying 600 billion dollars in government funds in order to help encourage lending and spending by consumers.

"The economy hasn't been growing fast enough to reduce unemployment, which has been stuck at a high of 9.6 percent for three straight months. The Fed worries that high unemployment, lackluster wage gains and still-weak home values will weigh on consumer spending, a major drive of overall economic activity"

Do you think the FED's reasons are just? Would you expect inflation to increase to higher than ever levels?

In India, Obama Pushes US Jobs

President Obama has unveiled a $10 billion plan to create new contacts for US exports to India. Obama claimed that India was the market of the future and this move was a "job strategy". This is an especially difficult move with the hug number of unemployed in the US. Obama ensure that this is the best move for the American and Indian people. The new contracts will create jobs and increase the standard of living for both nations. Republicans are in support but are skeptical of the Presidents actions due to failed plans to increase trade with South Korea, Columbia, and Panama.Can we really "Export Our Way to Stability" as Obama suggests in his New York Times Op-Ed?

I spent a gazillion dollars and still lost the race

This article talks about how former CEO and California governor nominee, Meg Whitman, spent more in her campaign than any other governor candidate in history. Her total spending amounted to nearly $50 per vote, and yet she still did not win. I found this article to be eye opening as to how much candidates are spending in their campaigns. It seems today that the more you spend on your campaign, the better chance you have of winning, which should not be the case. Hopefully the example in this article will help show others that nominees need more than just money to get elected.

China’s exchange rate has risen faster than you think

China has been the subject of criticism from many countries, especially the U.S because of the country's attempt to peg the yuan so it could gain some competitive edges. This year, the Fed has persistently demanded China to let its currency float freely, but the result hasn't been what they expect. However, in this article the author argues that the real yuan-dollar exchange rate has risen more than we think. "A real exchange rate takes account of price movements in each country. If prices rise faster in China than in America, China’s real exchange rate goes up, even if its nominal exchange rate stays the same. That’s because higher prices at home make China’s firms less competitive abroad, just as if their currency had gone up."
So it is probably not too bad after all?

October jobs report: Hiring picks up

The United States still is struggling to get back on its feet as unemployment is still high. However, there might be a turn around for those who have been recently laid off as the CNN article mentions how the labor market had just added jobs this past month (October, 2010). This is great news for many as, "The economy added 151,000 jobs in October, the Labor Department reported Friday, an improvement over September, when the economy lost 41,000 jobs. That was much better than the 68,000 gain that economistssurveyed by CNNMoney.com were expecting, and the best overall number since May." Some people are not getting their hopes up as this gain of jobs seems rather insignificant when the unemployment when the national unemployment rate remained at 9.6%. there are still 1.2 million workers who have been unemployed and have been discouraged from finding a job. So even in this small light showing at the end of the tunnel, can some of the people who have been unemployed over six or more months survive until then, and when is then exactly?

UNDP releases 2010 Human Development Report

Today the United Nations Development Programme launched the 2010 Human Development Report including the 2010 Human Development Index. This report, and those before it, are meant to emphasize that "development is primarily and fundamentally about people". The 2010 report states that many people today are healthier, live longer, are better educated and have better access to goods and services, even in countries facing adverse economic conditions. However, there is still growing inequality and unsustainable patterns of production and consumption and several regions of the world have regressed in areas such as health. This report issues three new measures to the Human Development Index: the Inequality-adjusted HDI; the Gender Inequality Index; and the Multidimensional Poverty Index. These are designed to stimulate public debate beyond the traditional discussions of aggregates. Once again countries such as Norway, Australia and the US top the list while African countries such as Zimbabwe, Congo and Niger are at the bottom. How much do these rankings reflect the economic systems and policies of each country? Do you feel that these factors play a large role in something such as human development?

Oil slicks and slick lawyers

The article lists the aftermath, but yet still going on, of the BP oil spill in the gulf. The list of costs BP has to face seems to pile up endlessly as, BP had taken a charge of $32.2 billion to cover the $20 billion it was paying into an escrow account to deal with claims against it, and to account for costs associated with shutting down the well, cleaning up after it and making some forms of recompense. This quarter the company took another $7.7 billion charge, bringing the total to about $40 billion." In addition to that BP as also violated the Clean Water Act which will lead to even more fines for BP in the future. Of course, BP is trying to only take some of the responsibility of the accident as they, "[believe] that they are liable for 35% of the costs of the accident."

BP is paying now for cutting corners and getting caught doing so. It is a lesson which should have been learned earlier as there were protocols in place that they did not follow which got them into this mess in the first place. The negative externalities are spread across the board as BP now has to pay, the environment has to pay as well as the people leaving in the areas affected. The question remains, how will BP hold up after more fines and restrictions are placed upon them until they can no longer keep up with the payments due?

QE2: Fed pulls the trigger

The Fed will be buying $600 billion, instead of the expected $500 billion, in LT Treasuries over the next 8 months through the quantitative easing policy. This will cause a higher than expected inflation which the market will rapidly adjust.
Ever since the Fed has signaled the second coming of the QE policy, the market has been under great speculation. The speculation, however, is about to come to an end, it would be interesting to see how the stock market would fair under the normal market conditions.

Dollar Slides as Fed Says it Will Buy Bonds

The dollar is sliding after the Fed announced it will buy hundreds of billions of dollars of U.S. government bonds from consumers this year in an effort to further stimulate the economy.The euro has jumped to $1.4101 from $1.4036 late Tuesday, while the British pound is rising to $1.6111 from $1.6024.The dollar has lost earlier gains against the Japanese currency, trading at 81 yen versus 80.68 yen late Tuesday, after being worth as much as 81.52 earlier Wednesday. The dollar has been under heavy selling pressure in the past two months because investors expected the Fed's move. By buying bonds, the Fed would drive down interest rates and trigger more borrowing and spending. But the prospect of lower interest rates makes a currency less attractive to investors. What kind of impact do we think this will have on U.S. trading? and Can it stimulate the economy at the same time?

Income tax on the wealthiest in Washington state?

The election is the most talked about thing on TV right now, but aside from the fighting by the candidates and parties is an initiative that could generate more than $11B in the next five years. How? By proposing an income tax (WA doesn't have an income tax now) on people earning more than $200,000 (5%) and more than $500,000 (9%). Bill Gates has come out in support of this tax, but many are against it. It will be interesting to see how the vote plays out.

Yemen on the verge of collapse?

Yemen's finance minister talks about how the country is in dire need of financial aid, all the way up to $50B. He says that the country is not inevitably failed, but that with the recent discoveries of planned bomb attacks on planes, and the knowledge that Yemen is a breeding ground for terrorism, namely al-Qaeda, he says that without jobs and in bad times (no water, food, electricity, inadequate shelter, etc.) people get upset and have a lot of time on their hands to do something about it. The question now becomes, how to help (if at all), to what extent do foreign actors aid, and where does the money come from?

India's Crisis in Micro-lending?

This article elaborates further on the micro-lending concept which was established in India to help the poor. Although, micro-lending helped millions of people out of poverty, this new report suggests that borrowers are angry with the ever increasing and fluctuating interest rates and have stopped paying back in order to retaliate, despite having the money to payback. The major complain is that lenders have been changing interest rates constantly which makes it very difficult for borrowers.

Mexico's Economy

Mexican exports to the United States have been steadily increasing since the global recession hit. NAFTA allows Mexican exports to compete with China. Tariffs and the increase in the labor price in China makes its goods more expensive in the United States. The problem for Mexico lies in its ability to capitalize on the export dollar. The article says that this is due to "inefficient oligopolies" and recommends that Mexican government do a better job creating competition by enforcing competition regulations, attracting foreign suppliers, and increasing lending to domestic suppliers that are up and coming. However, I think the article might understate some of the problems that Mexico is facing as far as instability, especially after being hit by the recession.

How Immigrants Create More Jobs

This article talks about a study arguing that the easier it is to find cheap labor domestically, the less likely the jobs will be sent offshore. Immigrants, therefore, may be competing more will offshore workers than other workers in the U.S.
The study also argues that there may be a trend called in-shoring, where goods produced overseas, like Apple computers, help American businesses expand.
Overall, the authors of the study find no viable evidence of a connection between offshoring and the net creation of American jobs, and find that the problems with unemployment are "usually rooted in macroeconomic conditions, not in immigration or offshoring."
This article's author says that immigration not only increases jobs, but increases tax revenue, helps finance Social Security, and increases home owners and improves the business environment.

Consumer Spending Up, but Can Fast Growth Last?

In this article it talks about how economic output grew 2 percent in the third quarter largely due to consumer spending. This can be looked at as rather good news that consumers are feeling more confident in the market. It was the fastest consumption growth rate since the 4th quarter of 2006. However with Americans having trouble finding jobs; this growth is likely to be short since consumption depends on people's income. Job growth has been weak to nonexistent in the past few months and consumers are still buried in debt. Do you think this fast growth in consumption will continue or will we be likely to see it decrease over the next quarter?

Entitlement Nation: More are living off tax revenues, and fewer are providing them

"Near half of all Americans live in a household in which someone receives government benefits." This number is at a all time high. This article discusses problems with a culture that is becoming increasingly dependent on the public sector. Are American citizens really going to continue this dependency on the government?? I think it will take time but as a country we can become more independent by helping our communities and supporting local businesses.