Teacher, leave them kids alone: Financial education has had disappointing results in the past

Source: http://www.economist.com/news/finance-and-economics/21571883-financial-education-has-had-disappointing-results-past-teacher-leave-them?fsrc=scn/fb/wl/pe/teachleavethemkidsalone

A survey by the Cleveland Fed and a few other sources indicate that Americans have extremely low financial literacy. One survey found that Americans who have taken basic courses in finance such as personal finance or money management were no more financially literate than they were prior to taking the courses. A student survey also found that those who had not taken a finance course are more likely to pay their full credit by the end of the month and avoid the fees. Many Americans are simply uninterested as free online courses are offered to struggling credit card borrowers, yet only .4% accessed the website and .03% completed the course. The Cleveland Fed researchers concluded that there should be additions and improvements to financial education in the United States similar to how the Brits shifted their curriculum. However, many questions are raised from such conclusion.

Who would pay for these educational programs?
Will consumers even budge with the courses (since many Americans would rather seek financial advice than making their own)?
How will we change financial education? Perhaps strengthening mathematics standards at least?
How will we make financial education work? (as the article discussed the lack of effectiveness)

Airline Mergers Mean More Lost Luggage and Flight Delays

It is expected that US Airways and American Airlines are going to merge in the near future, and this article highlights the challenges that are to be expected based on past airline merges. The article states that merging airlines is like merging two different cultures. This can be difficult because one culture is used to going about things one way, and the other culture has their own, different routine. An example of this is integrating the computer systems the airlines use to book and arrange flights. "This can take years to straighten out,"which probably means there are going to be some glitches resulting in lost luggage and decreasing customer satisfaction. In addition, employees are nervous about their job security with a big merge on the rise, which will effect their overall happiness with the new and changing management. If the pilots and staff are unhappy, there will be more of them calling in sick, delaying or canceling flights, according to two past significant airline merges. In addition, fares are likely to increase due to reduced competition.

http://money.cnn.com/2013/02/13/news/companies/airline-merger-problems/index.html?iid=SF_E_River

The Stockholm Syndrome

Here are the funny videos on Sweden that I was unable so show in class. Hope you enjoy it

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Consumer sentiment improves in February

The Thomson Reuters/ University of Michigan's preliminary reading on the overall index of consumer sentiment rose to 76.3 from 73.8 in January. The barometer of current economic conditions rose to 88 from 85, while the gauge of consumer expectations rose to 68.7 from 66.6.  Households with incomes below $75000 were among the most optimistic. There were different views about this data. Overall, they think the reading was a nice surprise. Given the increase in gas prices and payroll taxes, the increase in consumer confidence and expectation reflects the fact that consumers were getting over their smaller paychecks and housing prices and the stock market have been recovering. However, Cary Leahey, senior advisor of Decision Economics, New York, commented that families' perceptions of current condition were not really problem. The real problem was expectations remained low at 68.7, 10 points below the recent highs in October, 2012. Households were obviously concerned about the impact of the upcoming budget cuts and the recent increases in tax rates (the termination of the 2 percent payroll tax credit in December). To me, the small increase reading, even though it looks optimistic, didn't confirm anything yet. To be more certain, the economy needs to observe the change in the reading for a little bit more.
Source: http://news.yahoo.com/instant-view-consumer-sentiment-improves-february-150501716--business.html

On minimum wage, US lags many rivals

http://money.cnn.com/2013/02/13/news/economy/minimum-wage-countries/index.html?iid=SF_E_River
President Obama wants to increase the minimum wage to $9 an hour, up from the $7.25 that it is at now.  However, there are nine other industrialized nations that are already above this.  Australian workers get $16.91 an hour while the French get $12.68 an hour.  Also, not every country has minimum wage, such as Italy and Germany.  Additionally, other countries are paid a minimum wage per month, rather than per hour.  Workers in the Shenzhen province of China are the highest paid in the nation at $240.49 a month.  I think this article relates to what we talked about in class about how the values of the country influence the economic structure.  

French Economic Policy

This article from the Economist reviews the confusing economic policy of France's new president François Hollande. Hollande is a socialist and not surprisingly his first few actions as president were to lower pension ages, increase family benefits, and even capped petrol prices. But Hollande is now faced with a dire situation. France's economic growth is near zero, its public spending as a share of GDP is 56%, and the high cost of french workers is making many french firms uncompetitive. It seems Hollande has recongnized the situation and the need for spending reform but the socialist party in France is opposed to many of the necessary reforms. The drawback of the French model is in full view. While good for reducing the impact of  recessions the model also retards growth.

http://www.economist.com/news/europe/21571900-elected-left-frances-president-seems-be-veering-towards-centre-which-way-mr

Personal Income Tax Rates across the world

I came across a nice resource if anyone is doing research or writing a paper on the personal income tax rates across different countries. Countries that belong to the nordic economic system, which we are studying in the next few days, rank among countries with the highest rates.

Former Blackberry C.E.O. Sells All Shares

http://bits.blogs.nytimes.com/2013/02/14/former-blackberry-c-e-o-sold-all-company-shares/?ref=business

Jim Balsillie, the former co-chief-executive officer of Blackberry, has been reported to have sold all of his shares of the company as of February 14. This is a bold move for Balsillie, considering the fact that Blackberry is set to release its new line of phones shortly and he will not benefit at all if they happen to do well. Blackberry has been criticized for not stepping up to the competition from other smart phones. Their new line of phones is not thought to increase the company's declining market share. Blackberry used to dominate the smartphone industry but I don't see the company lasting much longer, especially if former C.E.O.s are not even willing to own any shares in the company. 

Recovery Sign: More People Are Quitting Their Jobs

This article offered some encouraging facts about the current state of the economy.  The writer believes consumer confidence and job growth are on the rebound based on some positive data that was released this week.  In the month of December, according to government data, the fewest lay-offs occurred since the government began tracking the data in 2000.  This shows that firms are retaining a larger number of their workers and are clearly not trying to shrink their businesses, a positive sign as we look to move out of the recession.  Also, the most people quit their jobs in the month of December since June of 2008, indicating people are more confident about their chances of obtaining a better job and their economic status in general as people are unlikely to quit a job they have if they are concerned about these issues.  The article goes on to discuss how if a deal to address our debt issues can be reached we could see major acceleration in economic growth.  I agree that the economy is suffering from major fiscal drag, as businesses remain cautious in their actions as they wait to see if a deal can be reached and what that deal would mean for their respective operations.  Therefore, I am optimistic about the current data that has been released but I believe we will not see major economic improvements without a fiscal deal.

http://www.cnbc.com/id/100457099

Bond Markets Soar in European Countries

Government bonds in European countries are lower than they have been in a while and the rate on some countries' debts are lower as well. Furthermore, some banks are even beginning to pay back the European Central Bank. With the rising demand for bonds and the lowering debt rates, the European economy appears to be slowly but surely mending. The incentive to saving the Euro by doing anything possible is part of the reason why the demand for bonds has gone up. Also, in order to keep the interest rates lower, investors are still selling bonds even though they are getting cheaper. The European economy and the Euro might actually be on the mend after all.

China and Equality

http://www.economist.com/news/china/21571460-chinas-government-unveils-sprawling-plan-fight-inequality-house-divided

Despite being a "communist nation", supposed dedicated to complete equality, there is a lot of income inequality in modern day China. This is not a new problem for China, as they have been struggling with really serious consequences that stem from income inequality recently. In order to combat this, China recently instituted a sweeping plan of reforms.
The plan targets typical Chinese state spending, with focuses on Education, Social Security, Public Housing, and Health Care. This plan is relatively late in addressing this issue, but economists say that late is better then never in this case. Lastly, there are serious doubts about the actual implementation of this plan, as many of the main policy makers would be personally negatively affected by the changes.

Big financial impact from the weekend blizzard

http://money.cnn.com/2013/02/10/news/snowstorm-economic-impact/index.html?iid=SF_E_LN

Many businesses are still suffering from the economic effects of October’s storm- Sandy. This weekends blizzard which affected many areas of the Northeast made this situation even worse. More than 5000 flights were cancelled, nearly 700,000 people were out of power, rail transportation wasn’t working and in some states the US Postal service did not deliver. Snowstorms affect the flow of supplies, communication, they kill off livestock, hourly workers lose wages because everything closes down and a lot of money has to be spent on snow removal and reparation of damages. In 2010, more than $2 billion were just in insurance-related damages. According to the Labor-Department, workers are more likely to skip work because of bad weather in winter than in the summer. This is also because the storms in winter usually affect broader geographic areas than the disasters in the summer. 

HP Strides in Standards For Outsourced LAbor

HP has demanded more stringent regulations for its factories responsible for manufacturing its products in China. Outsourced labor has always been criticized for lack of regulations and "under-the-table" dealings for underage workers. However, there has been a movement among leading producers in the tech industry such as Apple and HP to require better standards overseas. Underage workers are often recruited by agencies on the basis of internships and temporary assignments. However, it is common practice that documents are forged and not permitted to leave on their own accord. Now, HP is demanding that suppliers must allow students to leave whenever they want, student employment will be limited, and all Chinese labor regulations will be followed. The real question is why this wasn't the case before. But for what it's worth, I think it is important for Apple and HP to be paving the way for other companies and industries as well. With these new regulations and future regulations, will more companies consider production domestically?

http://money.cnn.com/2013/02/08/technology/hp-china-student-labor/index.html?iid=SF_E_River

North Korea: Rumblings from Below

Article found here


The increasing flow of information into North Korea is beginning to bring about massive changes in the nation's economic structure. As people become more aware of the world outside North Korea, demand for contraband products (such as DVDs, mobile phones, and computer equipment) from China has skyrocketed. It's interesting to see how North Korea's burgeoning black market is affecting not only economic development but gender politics as well. Women who hawk their wares in the underground economy are increasingly becoming the main sources of income for their families, while more and more men are staying at home or trapped slaving away for meager wages in lowly government jobs.

Despite the nation's spiraling inflation, some North Koreans living in the showcase capital city of Pyongyang have managed to become extremely wealthy (by North Korean standards, anyway) by taking advantage of the growing black market. With "luxury" products like apples and bananas costing as much as a month's worth of official wages, it's easy to see why more and more North Koreans are willing to risk their lives smuggling contraband into the country.

It will be interesting to see how the regime responds to the emergence of a "nouveaux riche" class of North Koreans who have made their money almost entirely illegally. For now, it looks like most authorities are turning a blind eye to black market traders as long as they receive a cut of the profits, but I don't think this can continue on for much longer before the regime starts to feel threatened. Perhaps North Korea, like China, will implement a crackdown on these "rogue capitalists."

Obamacare putting people in jeopardy?

http://www.economist.com/news/business/21570756-will-obamacare-spur-firms-drop-workers-health-cover-insured-and-unsure

Many of the provisions of Obamacare start to be initiated in 2014 meaning that a lot of companies are looking to get rid of many necessary insurance based incentives. As many as 30 percent of companies are looking to get rid of healthcare provisions due to the fact alot of these incentives will be covered by the new obamacare laws, making it more profitable for companies to take the subsidies that these laws will provide. This will push america more towards a socialist nation with the universal healthcare, but we will still be a much more liberal nation than most of the nations in the world

Muang Thai Life anxious to expand abroad

This article discusses the plan of Muang Thai Life Assurance Plc to expand into the Asean economic community.

The Asean economic community is an attempt to integrate the economic region of Southeast Asia. Although the goal of the community is for integration in 2015, firms such as Muang Thai Life Assurance Plc, a rapidly growing company, is studying the opportunities of the near future to expand particularly into nearby ASEAN nations, Laos, Cambodia, and Vietnam. The region will most likely benefit from the integrated economy as the cooperation involves development in multiple areas such as infrastructure and human capital, which the region is lacking. Some expected results would be free movement of goods, services, investment, skilled labor, and free flow of capital.

http://www.bangkokpost.com/business/economics/335298/muang-thai-life-anxious-to-expand-abroad

Azerbaijan, Post-Soviet and Possibly the Next Dubai

This article focuses on Ibrahim Ibrahimov and his plans to build a large complex of islands, with many luxury attractions and dwellings (think Dubai but in the Caspian sea). MORE importantly, it talks of the troubles facing a post-soviet Azerbaijan, it’s economic struggles, and how far it has come since becoming truly independent.

After the dissolution of the USSR in the early 90’s, Azerbaijan gained it’s independence in 1991. Since then, they have experienced tremendous growth and greater economic freedom from the transition of a command to a market economy. Compared to other ex-soviet countries in the area, Azerbaijan is particularly well-off considering it sits atop large oil reserves. Primarily an oil-based economy, Azerbaijan is looking to diversify. And with the help of some of its most wealthy and ambitious citizens this is a possibility.

 

http://www.nytimes.com/2013/02/10/magazine/azerbaijan-is-rich-now-it-wants-to-be-famous.html?pagewanted=1&ref=global&_r=0

India's Private Sector Facing a Challenge

http://www.economist.com/news/finance-and-economics/21568397-indias-love-affair-public-private-partnerships-faces-stern-test-rippp

When it came to creating new infrastructure in India, the private sector took the lead over the public sector. But the recent trends show otherwise.

Nothing illustrates this better than the troubles faced by several trophy public-private partnerships in India. These partnerships are mainly deals ‘for private firms to build or run public infrastructure that fall short of outright privatization.’

Many private sector run infrastructure projects are losing money and many government run projects are blooming. An example is that of the fancy airport in the capital city of India, Delhi. The airport is facing huge losses and the metro in the same city, that is government run, is blooming. The saddest part is that in the past five years, there has been massive investment by the private sector in the infrastructure business and most of it is going down the hill.

The problem lies in the gap between the expectations of the investors and the unpredictability of the outcomes of these ventures.

Barnes and Nobel shutting down some stores

A couple of years ago the famous bookstore, Borders ran out business. Barnes and Noble took the lead when it came to bookstores providing a good variety of books to their customers across the nation. 

Sadly, Barnes and Noble is been talked about as being the next one in line in running out of business. This article explains that the Nook sales have been weaker than before and due to this reason, Barnes and Noble is shutting down some of it stores including their high profile outlet in DC’s Union Station.

The author highlights in the article, that closing stores is a good way to save money and it is largely due to the fact that all customers are turning to Amazon to buy books. This is due to two reasons. First being, they can buy used books for half the price and the second that they don’t have to go anywhere physically. Just by sitting on their couches, sipping their tea they can order books online, that too for half the price.

The only sector in which Barnes and Noble is making money is through their college bookstores business.

http://www.thedailybeast.com/articles/2013/02/06/why-is-barnes-and-noble-getting-out-of-the-bookstore-business.html

I'd Rather Hire a Foreigner

I found this article to be very interesting. The article talks about Ola Ayeni and his start up business. He believes that hiring foreign workers  will result in a better choice and provide more results than hiring an american worker because of work ethic. Ayeni says, "instead of settling for second-tier American candidates…Ayeni would prefer better access to Class-A foreigners." He believes that foreigners have a better and stronger work ethic and will strive to get the job done, opposite their american co-workers. What do you guys think?

http://money.cnn.com/2013/02/07/smallbusiness/hire-foreigner/index.html

Are Wages About to Start Rising?

This article discusses the trend in rising wages in the computer technology, accounting, and engineering fields. Weber comments on how Wages rose 3.4% from 2011 to 2012 for full-time workers in computer and mathematical occupations, 5.1% for accountants and auditors, 7.5% for electrical engineers, and 4.4% for mechanical engineers.  Weber further discusses how we need to start looking at increases in wages to determine what fields of work will have the best return. 

http://blogs.wsj.com/atwork/2013/02/08/are-wages-about-to-start-rising/

GLOBAL ECONOMY-G20 to skirt potholes and follow growth signposts

http://www.reuters.com/article/2013/02/10/economy-global-weekahead-idUSL4N0B90RP20130210

It is good to see that the global economy is on an upward rise, even it may be a slow growth. A more interesting part of the article is the last part, which cites currency wars as a primary reason for concern among many countries. However, with the G20 summit, it seems that these countries are willing to work together for the betterment of all countries and that they have an incentive to continue to do so.
It is also interesting that China is still continuing its high growth. Although it is a capitalist economy, it still retains some measure of central-planning. However, for whatever reason, their model has been working extremely well. Most likely China is still not producing at the Production Possibility Frontier and it seems likely that their growth will stave off just like it had for all other countries, but the consistent high growth they have been able to accomplish cannot be underestimated.

Columbia B-school's Glenn Hubbard: Is an MBA worth it?

http://management.fortune.cnn.com/2013/02/08/glenn-hubbard-columbia/?iid=HP_LN
In this article, Hubbard discusses the reality of getting an MBA today.  Last year Columbia's MBA program decreased in applications by 19%.  Hubbard explains this because of the high opportunity cost of getting an MBA.  He also says that it is only worth going to business school if you are going to the top four or five business schools.  The problem with that is the high tuition of those schools.  While Harvard gives a comparatively large amount of financial aid, Columbia and other schools do not. Hubbard also said that Columbia is trying to make more teaching more informal in order to be compatible with learning today.  Additionally, they want to make tools classes (stats, microeconomics, etc.) online in order to give every student the same preparation and to make the time with the professor more worthwhile.  I thought it was interesting that he would only recommend the top 4-5 schools even though those are more expensive.  This really makes students decide how important the name of a school is in comparison to the amount of money they are willing to spend on tuition.  

It’s Time to Make Vague Software Patents More Clear

 An interesting take on where the USPTO should go with software patent laws. The article says that current laws don't encourage innovation and gives several suggestions on how we could improve that.

http://www.wired.com/opinion/2013/02/its-time-to-make-vague-software-patents-more-clear/

UN Economic, Social, and Cultural Rights Complaint Tool

The article announces that the UN has issued a tool enabling individual complaints on social, cultural, and economic rights. This "human rights" instrument will allow victims to file their claims on the international level. Within these violations are inadequate access to food, work, and housing. The idea behind the project is that those most affected by these economic problems are usually those that are most isolated and powerless in making the world aware of their situation. The article states that the entry of information and complaints into the Protocol will allow for a better understanding of the scope of economic problems and remedies. It also makes a statement of the UN's recognition of the need to strengthen the protection of economic rights. However, the article does not explain exactly how the protocol is to work, or how the complaints will be organized and formed into responses. Personally, it seems unlikely that this information will be formed into economic reforms; however, it's existence can only help.

http://www.un.org/apps/news/story.asp?NewsID=44081&Cr=cultural&Cr1=rights#.URbE26XqMVn

Unconventional gas in Europe: Frack to the future

View the article here.

The recent expansion of the fracking industry in the U.S. is leading us to energy self-sufficiency and giving our economy a nice boost. Now it seems Europe wants in on the benefits. It is estimated that Europe's shale-gas deposits might match those found in the U.S. however regulations on fracking are much more strict. These environmental regulations (and outright bans) often make it uneconomic for gas companies to drill in many European countries. France, in particular, is adamantly against fracking. However, some European countries, seeing its promise in the U.S., have begun to deregulate fracking. Most recently Ukraine made a deal with Shell to start probing for unconventional gas sources.

If the fracking industry were to expand in Europe it could bring some much needed jobs, revenues, and energy independence. Russia voiced its disapproval of this new deal, since it exports to many European countries. Experts estimate that it may take up to 5 years to determine if shale gas exists in Europe in commercial quantities, but rolling out the welcome mat is the first step.

Higher Gas Prices?

We have all become accustomed to hearing the words, "expect gas prices to rise...". They are often plastered all over the news, articles, and newspapers. In a Marketwatch article by Myra Saefong, we begin to see her reasoning behind why she agrees. In one week, the average price per gallon of gasoline has jumped 17 cents, the highest weekly jump in two years. Also, during this time many refineries are typically switching to their summer blend which is more environmentally friendly. During this transition supply is temporarily cut, and the price is naturally driven upwards. Speculators and investors have anticipated this, which has already forced the price up. Price peaks for 2013 vary anywhere from about 3.70/gallon to over 4.00/gallon for high traffic areas. The only glimmer of good news for WTI (West Texas Intermediate) is that increased production of shale oil production in North Dakota and Texas should help with countering the volatility that is expected.

Read More

The American Deficit

The deficit has been a topic highly discussed and debated in all of my years at OWU. We have talked about it in multiple classes here in Corns, listened to guest speakers, etc. This article from the Economist states that on February 5th, the Congressional Budget Office (CBO) forecast that for the fiscal year ending September 30th the deficit will clock in at $845 billion, or 5.3% of GDP.  This is significant because this figure will be the lowest since 2008 and in addition, it will be down nearly half from its peak of 10.1% in President Obama's first year in office, 2009. The deficit will obviously be a huge issue for President Obama in his second term. Let me state that the project is assuming President Obama and Congress do not override planned spending cuts and tax rises, most importantly the "sequester." President Obama has also stated that he is prepared to both cut entitlements and raise taxes as part of a broader deal. He and John Boehner were the topic of media attention in December but a deal never went through. Now, the problem is, if any changes occur to the already proposed plan or if the two parties don't find a common ground/compromise, then the long-term debt problem may never be addressed. So when is it too late for the American government to really understand the consequences of pushing off this further? They obviously are concerned about the issue, but the constant changes in both parties' requests have hindered the issue even further. 

Here is the link for the Economist Article

The New Capitalists

This article is in today's addition of The Economist.  It is talking about how North Korea, an example of a socialist economy, in some respects, is moving toward being a capitalist market.  This is not a political move, but instead is an economic move by the people.  It encourages people to give to the radio station that streams into N. Korea so that the people there are more informed that their current system is not free.  This is interesting to me because one of the few examples of a planned economy is appearing to change a bit.

Check out the article HERE!

The Next Supermodel

Since we have been talking about different markets in class, I read an article that discusses a few countries that are doing well using their private sectors as well as government intervention.  The Nordic countries, especially Norway, are currently in an economic boom with satisfied citizens.  They have found many ways to improve their society.  Their taxes have been lowered, corporate income tax is only at 22%, but they have been able to employ and spend enough government money to keep their economy growing.  While the US struggles with a deficit that is about 7% of our GDP, Norway only has a 0.3% deficit.  Their government is not having to deal with the financial burden that we are here.  At the end, the article declares that these countries are not perfect but that they are models that can be studied since it's actually reality and not just theory.

The Next Supermodel 

India to cut some subsidies in order for greater Food Security

http://www.business-standard.com/article/economy-policy/cut-energy-fertiliser-subsidies-to-make-up-for-food-security-montek-113020600706_1.html

The Planning Commission of India is a body comprised of top economists and headed by the Prime Minister in order to decide on the nation's economic issues. It is a powerful body and controls the levels of subsidies, Government involvement, etc.

Essentially, the deputy chairman of the planning commission makes most of the decisions as the Prime Minster almost always listens to him without question. Presently, Mr. Montek Ahluwalia is the Deputy Chairman. He was educated at Oxford, was the president of the Oxford Union, has served in the World Bank, and, in my opinion, is a complete idiot. The person has no idea about the indian grass-roots society and is making decisions that affect the lives of many.

In the article, you all can see another such instance of his foolishness. He wants to cut energy and fertilizer subsidies at a time when they are of utmost importance. Cutting fertilizer subsidies will raise the price of food and the middle-class, already depressed because of drastic increase in price levels in a short-period of time, would again bear the brunt.

Similarly, reduction in energy subsidies would cause the prices of everything to go up. Mr. Ahluwalia fancies himself as a reformist. However, he needs to realize that in order to reduce Government involvement in the private sector, one needs to make sure that the country's population would have employment. In a country where still about 40% of the population (more than the entire population of the United States) lives below the poverty line, one cannot reduce subsidies at a time when the economy is not growing, people are finding it hard to get jobs, and the middle-class is reeling under high prices.

Also note that Mr. Ahluwalia wishes to reduce these subsidies in order to accommodate the Food Security Bill. This bill was actually the brainchild of the President of India's biggest political party. The president's name is Sonia Gandhi and she currently holds no political position. However, she is the most powerful person in India as the Government was formed by her party. She herself could not become the PM because she was born in Italy and became a citizen of India only after her marriage to an Indian. Under her, nepotism runs wild. The prime minister, cabinet ministers, and even the deputy chairman of the Planning Commission are all her lackeys. And therefore, they would rather reduce subsidies and hurt the citizens than not implement her brainchild bill (Food security) and annoy Mrs. Gandhi.

French Taxation

In the second supplemental reading listed for Friday, “So much to do, so little time” the author references François Hollande’s plan to impose new taxes on companies and the rich, including a 75% top tax rate on incomes above $1.3 million.

Mr. Hollande contends that the tax increases are a “symbolic” measure, “never pretending that the rate increases would raise much cash.” Nevertheless, in late December France’s top court ruled that the 75% millionaire-tax is unconstitutional because it fails to guarantee taxpayer equality.

Although the 75% tax rate has been avoided for now, increased taxes on companies, capital gains, wealth and income have made negative impacts on many. The author argues that it is the combined influence of these taxes that have driven celebrities to leave the country and entrepreneurs to criticize the government for encumbering wealth creation.

http://www.economist.com/news/europe/21569068-françois-hollande-remains-intent-introducing-punishing-top-income-tax-à-bas-les-riches

Barclays to Cut Jobs in New York

 February 6, 2013, 6:15 p.m. ET

Dozens of bankers, traders and support staff who survived the collapse of Lehman Brothers Holdings Inc. will face layoffs in the latest round of Wall Street cutbacks.

Barclays BARC.LN +0.07% PLC plans to cut 275 New York employees in three locations around the city, including the former Lehman Brothers headquarters at 745 Seventh Ave. in Midtown Manhattan, the company said in a filing Wednesday with the New York State Labor Department. The company wouldn't say how many cuts will come at each building.

The cuts are part of a broad strategic overhaul set to be presented by Chief Executive Antony Jenkins next Tuesday. The Wall Street Journal has reported the firm could cut as many as 2,000 jobs in its investment bank.

Barclays had 23,300 employees in its investment bank as of June 30. The firm doesn't disclose its headcount for the Americas.

Lehman Brothers collapsed in September 2008 in the biggest-ever U.S. bankruptcy filing, leaving thousands of workers unemployed. Barclays later acquired the company's U.S. investment-banking and capital-markets operations.

Barclays, like its competitors, has been struggling with clients' diminished appetite for dealmaking and weaker trading volume. The company also has been damaged by scandals including a settlement of a rate-rigging probe that has now netted two other giant global banks.

http://online.wsj.com/article/SB10001424127887323452204578288332951705680.html?mod=WSJ_Markets_LEFTTopStories

China Signals Faster Push to Tackle Income Gap

February 6, 2013, 2:33 p.m. ET

BEIJING—The breadth of a plan to narrow the gap between rich and poor, and the fact that it came out at all, heightened the sentiment that China's leaders may be ready to take on powerful interests quickly rather than laboriously trying to reach a broad consensus first.

China's state planners have debated income inequality plans for eight years, and come up with at least a half-dozen drafts, but hadn't managed to win final approval, largely because of opposition of state-owned firms and other powerful actors that could be on the losing end of an income-redistribution scheme.

Premier Wen Jiabao set a final deadline of the end of 2012—and that one was missed as well.

http://online.wsj.com/article/SB10001424127887324906004578287614272457212.html?mod=WSJ_business_AsiaNewsBucket

High oil prices drive Greeks to burn wood

In Greece, the coalition government has pushed the price of heating oil to about 1.50 euros per litre by raising the tax on heating oil by 40 percent. That has caused a drop of a reported 80 percent in demand and forced many Greeks to move away from buying oil and find other means to keep warm. Some are even chopping down trees in the woods and city parks. The concern is to cut back on expenses, households are turning from oil to wood to heat their homes, but in turn are filling the night air with potentially hazardous pollutants. Burning wood in the home releases 30 times more air pollution than using a well-maintained heating oil or gas-burning boiler, resulting in an increase in air pollution which can lead to respiratory problems as well as aggravating allergies and disturb the neurological and reproductive systems. The problem has become so bad that the wood smog has been detected outside the main cities, including the western city of Patras and in northern suburbs of Athens. The wood smog phenomenon emphasizes the needs to move away from both oil and wood as fuel and heat sources, but then do they have other choices?

Source: http://www.setimes.com/cocoon/setimes/xhtml/en_GB/features/setimes/features/2013/01/18/feature-03

Taking Europe's Pulse

This article from the Economist gives a nice info graphic view of various European countries and certain features of their economy. One of the more interesting pictures is the public debt as a percent of GDP map. Looking at this map you can see which countries are in control of their public debt and which countries are not.

BP Still Suffering Effects of 2010 Oil Spill

Following the oil spill in April 2010, BP is now faced with a fresh lawsuit for economic damages. Parties interested in getting compensation are many state and local governments in the South, with a demanded compensation of $34 billion.

BP representatives say that the company has set aside $42.2 billion so far and call the calculation method of these fresh claims "flawed." The company faces its final civil trial this month and are still hopeful for an out-of-court settlement. The latest financials show a 20% drop in profit for BP this quarter ($5 billion to $4 billion) due to a necessary sale of assets to pay damages ensuing from the disaster. CEO Bob Dudley remains optimistic about possible new ventures.

The company has already settled charged with the US Department of Justices and are yet to pay damages as ascertained by the Clean Water Act as well as the unquanitified natural resource damages.




http://www.guardian.co.uk/business/2013/feb/05/bp-deepwater-horizon-charge-rises

Brazil's Nightclub Fire

http://www.economist.com/news/americas/21571149-better-fire-prevention-should-be-memorial-night-hell

During a concert at a club in Brazil, a member of the band set off a street flare on stage, which caught the building on fire and led to the deaths of 235 people.  Another 100 are injured, many of which are in critical condition.  A majority of these people were students.  In an effort to collect tabs and not yet seeing the fire, bouncers first blocked people in attendance from leaving.  This surely increased the number of deaths and injuries seen as a result of the incident.  The club was also over capacity by over 300 people.  The club also had an expired public-health license and fire safety plan.  

In Brazil, each state sets its own laws.  A proposal to set minimum national standards went to Congress in 2007, but has yet to be pushed through.  Enforcement will be needed to render any new laws effective, but lining up enforcement is the job of mayors in Brazil.  Many clubs run without licenses because of the long wait and high amounts of paperwork needed to get the proper registration.

 

What type of government policies could prevent events like this from happening in the future?  Could one form of government control these tragedies better than another?   

Dell Closer to Buyout as Price Talks Narrow: Source

It appears a deal to take Dell, the world's third largest computer maker, private is set to go through.  The buyout is being done by a consortium led by former founder, Michael Dell.  Currently the buyout price has been narrowed from $13.50 to up to $13.75 per share.  This would give Dell a market value of up to $23.9 billion and make this the largest buyout since the financial crisis.  While even the $13.50 valuation is an improvement from the $11 the stock traded at before news of the potential buyout surfaced, it is a far cry from the $17.80 the firm traded at the previous year.  This rapid devaluation of the firm's stock reflects the loss of market share Dell has suffered to competitors like Lenovo Group and indicates the decline the company has been experiencing.  Michael Dell and his partners will hope to re-ignite growth in the firm if they are able to acquire it.  As for the economy as a whole, the fact that large-scale leveraged buyouts are beginning to occur again is a huge sign that the economy is recovering and that institutions are regaining an appetite for risk.

http://www.cnbc.com/id/100433280

Because Green Goes With Everything

In this article by the New York Times, Ron Shiffman an urban planner is interviewed. Ron has spent over 50 years trying to make New York City more livable and sustainable. In the interview, Ron states that going green is not a "fad" but it's a necessity. The city has done many things to improve their sustainability. I believe Ron is right that going green is a necessity, not only for New York City, but also for other heavily populated areas. I think there are many positive externalities that people can enjoy that go along with building and renovating communities to become more sustainable and environmentally friendly.  Although the initial cost may be higher to build more efficient buildings and better public transit systems, in the long run the energy savings alone should compensate for the initial investment. Not only will the citizens pay substantially less for energy (estimated 20-70%), but they will also have access to an outstanding public transit system that will help keep traffic in the densely populated area less as well. There is also the health side of the debate. Who can put a price tag on your own health? According to the article, New York City has rerouted delivery trucks, cleaned up rivers, landscaped medians, and planted tree pits in order to capture water. All of these measures help clean up the air and the greenery helps lower cooling cost in the summer. I think these steps taken in New York City will be taken into consideration by other urban planners and I hope to see continued improvements in NYC.

http://www.nytimes.com/2013/02/03/realestate/debriefing-because-green-goes-with-everything.html?pagewanted=2&_r=0