Buying a home now is a no-brainer

This article explains why this is the ideal time to buy a new home if you can afford one. Back in January home prices had dropped 28% from their peak. More important, interest rates were at historical lows. By locking in a mortgage for 15 or 30 years on a value-priced home, you were getting an incredible deal, even if home prices decreased.

Even Dem foes of tax cut plan see it passing soon

Income tax increases are going to increase for everyone january 1st if the bill does not pass. Even with a test vote in the senate, democrats who control the house will not let obamas proposal even be discussed with out it being scaled back.

"We believe that when it comes back to the House, that we will get a vote, and that we'll prevail there, because at the end of the day, no one wants to see taxes go up on 150 million Americans" on New Year's Day, Axelrod said. "No one wants to see 2 million people lose their unemployment insurance and everybody understands what it would mean for the economy if we don't get this done."

What does this mean for the US economic system?

Collapse of Minnesota metrodome

In Minnesota 17.1 inches of snowfall caused the Vikings stadium to collapse under the weight of snow. Workers were unable to clear snow off of the dome because of the longevity of the blizzard. The collapse has forced this Sundays game against the Giants to be changed to Monday and played in Detroit. The game will only be played to New York and Minnesota markets as well as Direct Tv and NFL subscribers. The metrodome cost $68 million dollars to built and is estimated to cost a couple million to repair.

Proposal for tax cuts in the public sector

When elected, Obama spoke of letting tax cuts for the wealthy expire while increasing tax cuts for those in the middle and lower class. However, in his new proposal taxes will increase for those working in the public sector. Instead of paying social security, many workers in the public sector pay into a public pension and this plan will change this. At the same time it keep a $900 million dollar tax cut package to those in the top 1 %. Therefore, taxes will increase for mainly middle class workers, but not for the most wealthy.

More Protests Against U.K Austerity Measures

As the British government continues announcing cuts in government spending, social strife continues to rise. In protests similar to those against Thatcherism, students have already been protesting massive cuts in education spending which will result in a tripling of tuition. Now the government has announced it will end "education maintenance allowances" which were paid to encourage low-income students to stay in college. In response to this latest announcement, protests are expected at about 100 British colleges.

As China Rolls Ahead, Fear Follows

For the last two years China's economy has been growing at a substantial rate. This is somewhat due to the government issued stimulus program and aggressive lending by state-run banks. However now economists are arguing that China may be headed in the wrong direction. Some reasons include high inflation, large amounts of government debt, and asset bubbles. The problem with this is that if China experiences an economic slowdown, this will then greatly affect the U.S.'s economy as China is a major holder of United States Treasury debt and a major destination for American investment in recent years. So if China does in fact begin to slowdown in their economic growth it could have large impacts on many other countries including ours... Any Opinions?

Ireland's financial crisis

The 85 billion euro bailout of the Anglo Irish Bank has increased taxes, reduced incomes, and overall decreased living standards of the Irish people. This is a result of a tightened government budget aimed to increase foreign investment and recover the economy. It is still unclear if the 85 billion dollars will be enough to tie the countries banks over until they recover, but government officials and economist are hopeful that it will be. To fix their crisis there have been ideas to either sell troubled loans to foreign banks and investors or sell Irish banks to foreign bidders. The government, however, is still unsure of what method it will employ.

Decrease in Trade Deficit

In October, the US trade deficit was lower than it has been since January, which leads economists to be hopeful that our economy will show growth in the fourth quarter. There are now estimates of a 2.5 % annual growth rate in the fourth quarter. The trade deficit is at 38.7 billion which is down from 44.6 billion in September. US exports increased mainly increased to Asia, in particular China, and also to Mexico. US recovery in this recession is built around export growth and capital investment so this lower than expected trade deficit makes economists very hopeful that the economy is on the right path to recovery.

Be afraid

As everyone has heard, the new establishment of Wikileaks has governments worried. Yet they are not the only ones who are becoming nervous with the new development of the whistle-blowing website. As the Economist article goes into detail about how, "businesses were struck by an alarming thought: even if this threat proves empty, commercial secrets are no longer safe." Coorperate transactions have already been listed on the site including the post which was, a " leaked internal report from Trafigura, a commodities giant, discussing a hazardous waste spill in Côte d’Ivoire." Another instance which effected companies was, "In January 2008 the site released stolen documents from Julius Baer, a Swiss bank, including bank records of about 1,600 clients with accounts at a subsidiary in the Cayman Islands. The bank sued to stop WikiLeaks publishing the documents, but then dropped the suit."

With companies now having their secrets brought forth, how will they be able to operate when their main operations are now open for public display.

PIIGS to become less-developed is a threat

This article from Forbes is interesting and ties into many of the things we have talked about in class, especially recently. It suggests that the PIIGS must be especially careful, as well as S Korea, because although they are developed markets, there are threats that could ultimately shrink their economy, including war in S Korea. Moving from a developed market to an emerging/developing market is not very common, but has been seen and is possible. Again tying into class, the article uses Argentina as an example of moving backward in the development process, saying that they had a top-five economy 100 years ago, and have since fallen.

Home sales to increase?

This article from Fortune shows that mortgage rates have hit the highest level in 6 months. Though this doesn't sound like it would increase buying of homes because people will be more able to be financed, it gives the argument that home-buyers are assuming that the housing market has hit it's lowest point already, and are on the way back up. This means that housing prices are (on average) at the lowest point and that the time is now to buy. This, in turn, would increase the number of houses bought, and also the prices.

We all want to be liked: Facebook's narcissist effect

Almost all college students have and use Facebook daily. It is the easiest way to update what the person has been doing or to check out other people's status. However, Facebook has become more than a mere individual updates! It also has a psychological narcissistic effect in which people want others to comment or "like" their status. Facebook, therefore, is just the latest product to recognize that basic human desire and successfully exploit it.

Socrates Says Portugal Does Not Need IMF Aid

The Prime Minister of Portugal, Jose Socrates, said that Portugal's government has the ability to deal with its budgetary problems and they do not need help from the IMF. Furthermore, the IMF has not pressured Portugal to request aid. In my opinion, this is because Portugal doesn't have anything of value capable of being exported cheaply through premature privatization (like mineral extraction in Latin American countries).

Microfinance - Leave Well Alone

As we heard from Scott Bellows, the use of microfinance as a poverty-alleviating tool has grown rapidly in many countries, but many criticize some of the for-profit microlenders, saying they exploit the borrowers through high interest rates. The Economist explains that microfinance institutions (even the for-profit ones) have small margins due to the high costs of dealing with many small borrowers; the high interest rates account for this added cost. When interest rates are capped (like in Bangladesh), the ability of microfinance institutions to attract capital and grow is diminished. Also, interest rate caps would cause impoverished people to take out more loans with informal loan-sharks, whose loans are usually more expensive.

The last idealists

The integration of currencies in Europe, aka the Euro has been having many positive impact on overall economy of the continent. However, with some countries in Europe being in crisis, questions have been raised about what would happen if there were default. In this article, the author mentions the fact that European banks are built on a single currency zone, and put forth answers about the consequences if parts of it default or leave.

Chinese inflation spikes on food costs

High food costs are likely the cause of high inflation in China. In one year, the consumer prices have increased 5.1% and food prices have increased 11.7%. To make matters worse, China's trade surplus has decreased 16% over a month. In order to prevent run-away inflation the People's Bank of China may move to increase interest rates.

Obama Tax Cut Deal More Expensive Than Stimulus: CBO

In an interview of Barack Obama last Friday, he stated that despite a rebellion by many Democrats against his tax deal, it will pass because "nobody – Democrat or Republican – wants to see people's paychecks smaller on Jan. 1 because Congress didn't act." The deal is supposed to extend cuts to income tax rates for all earners that would otherwise expire in January. "The Wall Street Journal" reports that an estimate from the nonpartisan Congressional Budget Office pegs the cost of the tax cut deal at $858 billion, a figure that would make the deal more expensive than the 2009 stimulus, which cost $787 billion. Any opinions?

A Gentle Nudge About the Deficit

Looking at the recent deal to extend tax cuts, cut payroll taxes and extend unemployment benefits, it may seem like Washington does not care about the nation's deficit. Higher taxes and and fewer government services are unpopular however this may be a way to reduce the deficit in which the economy's is facing. The Congressional Budget Office, whose mission is to keep tabs on the long-term fiscal picture, sent out a gentle nudge today though and stated that by waiting to put fiscal policy on a sustainable course will be costly in multiple ways such as: higher debt would make it harder for policymakers to respond to unexpected problems, such as financial crises, recessions, and wars, and it would reduce the amount of U.S. savings devoted to productive capital and therefore would result in lower incomes than would otherwise occur, making future generations worse off. Any opinions?

November federal budget deficit highest on record

The federal budged deficit has reached an all time high! The budget rose 150 billion dollars this past month marking the highest monthly increase. This is only going to get higher especially if congress passes a tax cut plan that will cost 855 billion over the next two years. However it is poised to raise growth as well.

How do you think that this will impact the US economy?

November federal budget deficit highest on record

This article is talking about how the United States deficit had largest gap increase ever in the month of November. It is going to raise even higher with Obama's tax breaks for the next two years. The deficit ended up raising $150.4 billion in November and the two year tax cut plan is said to be worth $855 billion. This article makes you wonder if the tax breaks are a good idea at this time where the U.S. is in such a hole and we are just digging ourselves deeper and deeper. It is something that really needs to be looked at and we need to get out of this deficit and stop spending money that we do not have.

The state of Russia: Frost at the core

This article coincides with the video we watched in class on the Russian oligarchs, picking up where the video left off. Russian oligarch Mikhail Khodorkovsky's jail sentence expires next year and the Russian government has now charged him with stealing money in order to keep him in jail. Once the symbol of the "injustice and inequality of the 1990's" he is now the "symbol of the injustices perpetrated by corrupt bureaucracies and members of the security service." The article talks about how under Putin, and now Medevdev, a new breed of "bureaucrat-entreprenurs" came to power. They have privatized the Russian state, a "asset that was under-capitalised and weak." State corruption in Russia is now estimated at $300 billion, 20% of GDP, mostly in the form of contracts awarded to bureaucrats and their companies. This comes in a time of decreased economic growth causing an increasing feeling of injustice, even among oligarchs. The system no longer works and the economy is starting stagnate. According to the article, much of the elite have come to realize the system is ineffective and are no longer willing to support it and when "the ordinary people come to share this view, the system is in grave danger." The article brings about the question: what will the future of the Russian state be? Will corruption and economic stagnation become too much for the people to bear and eventually cause a regime change?

Cuba to be insolvent within 2-3 years

I found this article to be very interesting and relevant to our discussions in class. Cuba, one of only two communist nations left, is predicted to be insolvent as early as late 2011. This provides further evidence that communism in practice is not a viable economic system and Cuba will be going through a transition economy in the near future. What are you thoughts regarding the Cuba's solvency issues?

Politics gets in the way of progress

President Obama has worked with Republicans to pass a new tax deal that will set tax rates on the wealthiest, something that Democrats are not happy with. This is playing into the thought that there are things going wrong and unsmoothly between the Democratic party. Republicans seem to be in favor of the new deal, and Obama, working on progress through bipartisanship seems to be less productive than before- and its within his own party that he is getting stuck.

Push for tax reform grows, but politics will still be tough - Dec. 10, 2010

Push for tax reform grows, but politics will still be tough - Dec. 10, 2010

Sparked by comments from Chairman Bernanke on "60 Minutes" this week, CNNMoney explores tax reform. Although much talk about closing loopholes and therefore lowering overall rates has occurred in the recent months, Bernanke's comments sparked a new debate on the topic.

President Obama seemed to also support some sort of tax reform, although he was less clear about the specifics of a plan. He simply maintains that he is in favor of tax reform sometime before the expiration of current tax cuts in two years.

CNNMoney maintains that tax reform has significant support from both sides of the political aisle. Although the odds of tax reformation occurring within the next few years are improving, it's "still a long shot."

Trade gap in U.S. narrows. So does China's trade surplus - Dec. 10, 2010

Trade gap in U.S. narrows. So does China's trade surplus - Dec. 10, 2010

The U.S. trade balance now stands at $38.7 billion, representing a decrease of approximately 13% from September's level of $44.6 billion. This decline was fueled by a 3.2% increase in exports and a slight decrease in imports.

Additionally, China's trade surplus decreased from $27.2bn to $22.9bn.

What implications will this have on the U.S.-China Joint Commission on Commerce and Trade meeting next week?

Censors’ sensibilities

India has enjoyed the freedom to speak and criticize, much like many western countries. However, in this pretty interesting article, the author suggests that the freedom is not as good as it is cracked up to be. Many scandals are unfolding in the country; however journalists there seem still pretty hesitant in challenging the authority and in some cases can be easily bribed. Also, censors are getting increasingly intense as well. What do you think are some reasons for this unwanted change?

We Have Lift-Off

For the first time ever, a space shuttle capsule has been launched into outer space and orbited by a privately run firm. Without anyone actually in the ship, SpaceX wanted to prove that it's product, the Dragon, could make trips to the International Space Station and back. Earlier this year there was a battle amongst Congress arguing over a private firms right to launch something into outer space. Ironically, it was the Democrats who called for private firms and Republicans who wanted government only launches. Is this an area where the U.S. government should be allowed to make decisions? What is the future of private and government run space launches? And there's a video..

Would you pay a bribe to get something done?

An interesting report on corruption both in developing and developed world and when businesses pay bribes to be able to conduct business. An interesting point is raised toward the end of the report when corruption in India and China is compared and the one of the reporter claims that corruption in China is more efficient.

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In this article written by former UK prime minister, Gordon Brown, he discusses the upcoming challanges to getting western European and the American economy back on track. He believes the key to future growth is accommodating the inevitably high demand of an emerging Eastern Asian middle class for high tech and luxury goods. I believe Mr. Brown has hit the nail right on the head with his assessment. It is very hard to deny that economic globalization is constantly growing. With that being said, it is very prudent for the aforementioned nations to start looking globally instead of domestically for a solution to the current economic slump

Fewer Americans file for unemployment insurance

According to the Labor Department, the number of Americans filing for unemployment benefits fell last week indicating a minuscule improvement in the employment sector. Claims fell from 438,000 from the week before to 421,000 (a 17,000 drop). While the numbers indicate that there is SOME improvement, it is not sufficient enough to illustrate a change in the economy. According to certain economists, in order for there to be a positive trend in the economy, unemployment claims need to go below 400,000 per week. Moreover, employers are still hesitant to hire more employees as consumer forecasts for the next year are still hazy at best.

Happy International Anti-Corruption Day

December 9 is the International Anti-Corruption Day. It's role is to raise awareness of corruption and of the role the UN Convention against Corruption.

Can you think of a more appropriate day than today to issue an arrest warrant for a former PM of Croatia for corruption? (Croatian Lawmakers Strip Immunity of Sanader, Who Left Country)

Number of Journalists in Jail Is Highest Since 1996, Group Says

The number of journalists in jail (145) is at its highest since 1996. This has been fueled by a small group of countries, including predominantly Iran and China. In China, for instance, the rate rise has been from detaining Tibetan journalists who try to voice out their opinions. Is there anyway we can help out?

No Signs OPEC Must Adjust Quotas, Qatar Minister Says

Oil futures are at a 2-year high ($90 a barrel), but Qatar's oil minister, Al-Attiyah, says the price spike has nothing to do with supply and demand. Oil inventories (supply) are actually the highest they have ever been, according to Al-Attiyah. OPEC has not adjusted oil production quotas in 2 years. Al-Attiyah says that oil is currently oversupplied and that demand for oil is not increasing that much - this should cause a price decrease but prices are at a 2-year high. Al-Attiyah offers no insight into why this has happened. Any ideas?

Security in Brazil

Brazil has for a longtime been a city of poverty and crime. In the past two(ish) decades Brazil has been able to stabilize its economy. The benefits of that now are being put towards many social programs (Brazil is recognized for its Bolsa Familia program). Winning the Olympic bid made it that much more important for Brazil to make headway on fixing its social problems and increasing infrastructure. Despite leftist presidents, Brazil has undertaken conservative macroeconomic policies in hopes of attracting foreign investment, especially into the port area. With the recent discovery of offshore oil the future for Brazil looks only brighter. However, the areas known as favelas, especially those in Rio de Janeiro where the olympics will be held pose a big security problem. Drug trafficking gangs control the slums with violence, where most people survive on an informal economy and pirate their electricity, "living life outside the law." The city government is trying to reduce this violence so that the state can regulate this economy. They have only had some success as they still need to win over the faith of the poor.

India's Economy Expands

During this time of global financial crisis, India's economy recently expanded by 8.9% due to the impacting output from farming and manufacturing. The farming sector grew by 4.4% while the manufacturing sector rose by 9.8% due to the heavy emphasis for domestic demand in manufacturing within India. Private spending and investments also increased during the last fiscal quarter which all contributed to an increase in GDP. This growth in overall GDP comes at a peculiar time due to increasing interest rates set by the Central bank of India. Governor Subbarao believes that there will be a decrease in policy rates as a way to ease inflation within the country as the world economy is still very fragile and unstable. In fact unless the growth in the nation increases again, the central bank is very unlikely to increase policy rates during this fiscal year to ease the growing inflation.

Enterprise to Blame for Bad U.S. Economy?

Henry Mintzberg, a professor at McGill University believes that the United States declining economic performance should not be blamed on faulty macroeconomic policies, but on the big business corporations and enterprises that place their own self-interest ahead of the market. Many CEO's of big corporations have been exploiting the system as a way to increase prices of stocks. They do so by depreciating their brand, cut investments in research and development, and altering prices by raising prices of stocks at a high enough level for the high-end executives can cash in on bonuses. Along with this, the massive lay-offs by these corporations were seen as a way to increase productivity, but according to Mintzberg it actually decreases productivity because of the lack of middle-management within these corporations and enterprises. Mintzberg also compares America's productivity to that of Canada's which in his eyes has been performing better over the last few years. He ends his piece by stating that it is not the individual, or the economy, but the economic analyst and corporate executives that are at the core of the problem. Should the United States try to reform the economy in a way that sees less power going to the big Wall Street CEO's and elites?

The Economic Incompetence Of The Political Class

This article makes a compelling point about the greed and irresponsibility of unchecked government spending. From cities to states to federal government, politicians are borrowing money and leveraging debt at unhealthy levels, which can be seen with the current debt crisis in Europe. With nations spending more than 100 percent of their GDP, it seems it is time for more scrutiny and accountability for the way politicians spend money.

In Entrepreneurship We Trust

In this article, the author stresses the importance of entrepreneurship in creating growth in the U.S. and other world economies. He sites statistics that state small businesses accounted for nearly one trillion dollars of earnings in 2009. Also small business start-ups grew steadily during the recession. It seems that the small businesses are going to play a large part in bringing the world out of the current economic sluggishness.

New $100 bill flaw, $110 billion Fed headache

More than 1.1 billion new $100 bills recently printed by the Federal Reserve are now in quarantine due to a flaw in the printing. These bills were designed to combat counterfeiting by including a new 3D ribbon, however creasing during the printing process has rendered the majority of these bills unusable. These quarantined notes represent $110 billion in US currency, however the Fed has already ordered the printing of the current design to compensate for their loss. Fortunately the flawed bills were not yet in circulation but this mistake still comes at a tough time for the Fed with the current recession since, as a similar article pointed out, "You can't stimulate the economy via the money supply...if you can't print the money correctly."

How Long Will Google's Magic Last?

In just 12 years, Google has grown from a start up to a business worth $180 billion. But Google faces some problems. First, Google faces charges of abusing market power by manipulating search results to give an unfair advantage to its own services. Second, Google is having trouble finding a new source of growth - beyond search-based advertising. Investors fear Google will become like Microsoft and fail to find a new source of funding for aging growth sources. Also, Facebook (which now has more online traffic in the US than Google) offers a new way to search for information. Will Google be able to adequately respond to its new competition and problems?