Home sales hit highest rate in 3 years

In February, previously owned homes reached an annual rate of nearly 5 million, which is the strongest pace in over three years.  This is up 10% from last year, and is a positive force in the economy.  A decline in the unemployment rate, a drop in foreclosures, and low mortgage rates are causing this change.  The median sale price for homes as $173,600, which is up 12% from last year.  There was also an increase of homes put on the market, but the supply of homes is still tight.

http://money.cnn.com/2013/03/21/news/economy/home-sales/index.html

Jobless claims rise slightly

http://money.cnn.com/2013/03/28/news/economy/unemployment-benefits/index.html?iid=SF_E_River

According to the article, the government said 357,000 people filed for unemployment benefits last week, up from 341,000 the week prior. Economists were expecting a modest decrease in the number of people to have filed for unemployment benefits. However, we should not read too much into this, given the volatility in these figures, particularly around the Easter and Passover holidays. Besides, compared to the massive 660,000 weekly claims  for unemployment benefits during the height of the recession, 357,000 is still a heart-warming figure which can reassure many souls that we are on the right track to recovery.

U.S. economy climbs off the mat

http://money.cnn.com/2013/03/28/news/economy/gdp-report/index.html?iid=SF_E_River

According to the government's third and final report on the fourth quarter of 2012, the US economic growth was weak at the end of 212 but still better than previously expected. Many factors played a role in this surprising increase: stronger construction activity, stronger exports. However, on the flip side, due to the fear of the fiscal cliff cut back in the fourth quarter, businesses began to cut back on inventories of goods. And the government also reduced spending in defense (these two factors eliminated nearly 3 percentage points of growth from GDP). But anyway, the worst economic hit of the fiscal cliff was avoided. And growth appears to be fairly solid so far this year -- thanks to a strong housing recovery, improved hiring by businesses, and a pickup in car sales and consumer spending. Things finally are looking better now.

One in four U.S. firms in China report data theft

http://money.cnn.com/2013/03/29/news/china-data-theft/index.html?iid=SF_E_LN

According to the American Chamber of Commerce in the People's Republic of China, more than one in four US businesses operating in China have experienced a breach of proprietary data.  Over 40% of American businesses in China worry about data security and 53% say that the risk is static.  This report adds tension to the US and China over the issues of computer hacking and cyber-security.  At the end of last year it was reported that rising labor costs and slower economic growth in China were the greatest risks for foreign companies.  Recently an American company found a major group of computer hackers who were linked to the Chinese government.  The Chinese government denies this and claims to be the victim of many cyber attacks which originate from the US.   

Political Economy Analysis of Valve’s Management Model

As promised in class today, here is the link to the article about the company called VALVE and its cooperative style of management. Interesting for students of economic systems and history of economic thought.

The article is written by an in-house economist who is studying the system that Valve is practicing.

The High-Wire Act Called Conversion

This article published in The New York Times, discusses how real estate developers have learned to be cautious in evaluating and purchasing properties due to the downturn. One of the most recent headline purchases was the Carlton House in New York which has been purchased for $164 million. Extell development company is in the process of remodeling the interior and exterior. The penthouse will be listed at $65 million. However, the most popular units of the 64 available are the 2 bedrooms listed at $4-5 million. Roughly 40% on the units are in contract currently and I see this as a good sign of economic recovery since these lavish and expensive units are being spoken for so quickly.


http://www.nytimes.com/2013/03/31/realestate/the-high-wire-act-called-conversion.html?_r=0&adxnnl=1&pagewanted=all&adxnnlx=1364584113-bxaXTYiD/4Ve429fBxOphg

Major Insider Trading Arrest

The FBI arrested Michael Steinberg, a senior portfolio at SAC - the highly reputable and now highly controversial fund of billionaire Steven Cohen. This might be a major development in taking down Steven Cohen, who some say is the ultimate target of the SEC. The timing of the arrest comes right after Mr. Steinberg got back from a vacation in Florida with his family, who are still in Florida and were not present when arrested at his apartment in New York.

The article details Mr. Steinberg's affiliation with another SAC employee who was arrested for similar charges.

Link: http://dealbook.nytimes.com/2013/03/29/sac-capital-manager-arrested-on-insider-trading-charges/?ref=business

Cyprus video

This New York Times video offers insight into the financial crisis that is occurring in Cyprus right now. The video shows the long lines outside banks and bank ATMs and includes interviews of business owners, who detail the troubles that are occurring because of the tax on certain accounts. Also, the video portrays Russians and the affects of Russian money being hidden - for tax reasons - in Cyprus. The interviews illustrate the fear of a lot of citizens, the anger they have for how the EU is dealing with this crisis, the frustration of the wealthy Russians not taking more of the burden, and also inside views of how the crisis should really be handled. Supermarkets are full, lines in banks are long, and fear is a consistent in each citizen. Will this most recent debacle ruin the Euro, or at least make Cyprus leave the Union?

Link: http://www.nytimes.com/2013/03/29/business/global/cyprus-banks.html?ref=world

Bright Young Things

In an effort to expand their market, Victoria’s Secret has started a new line. This line aims at middle school aged girls and is named Bright Young Things. The models recruited for this brand are young girls and the phrases illustrated on the undergarments read: Call me and Kiss me.

These marketing strategies are assumed to be catchy for young teenage girls and are expected to further boost the sales of the 6 billion dollars business. This article quotes the Victoria’s Secret CFO saying that young girls want to look ‘cool’ like college girls and this is what their brand for schoolgirls called PINK caters to.

The new line called Bright Young Things has received a lot of criticism from parents who claim that young teens are being sexualized in the fashion industry.  

Link: http://www.thedailybeast.com/articles/2013/03/25/victoria-s-secret-launches-beachwear-line-for-teens.html

Equal Rights

As most of you have probably seen on Facebook, the issue of equal rights have swept across social media. Igniting debates on equal right profile pictures and statuses. The issue of equal rights and same-sex marriage has hit Supreme courts. Proposition 8, a constitutional amendment that banned gay marriage, is the debated issue. Pro and anti-Prop 8 groups have been debating each other non-stop. Personally, I have seen some Facebook posts hit up 50+ comments, all debating the issue of equal rights. According the article, support for equal rights is growing. However, what brought this article to my attention was how big of a "chess piece"  this has become for politicians. Many politicians, even President Barack Obama, have seen a greater support because of his pro-equal rights view. What do you all think of: 1) Equal rights? The article says we "youngsters" are the most liberal. 2) The ethics of using your stand on this issue for political power?

http://www.economist.com/blogs/democracyinamerica/2013/03/gay-marriage-and-supreme-court

Bringing Mod Cons to the Slums

The continent of Africa has the highest rate of urbanization, and the highest number of informal settlement residents. The UN predicts 1.2 billion people will live in these slums by 2050. Students from the University of Stellenbosch have created the iShack to give the high and growing amount of slum-dwellers safe, sustainable, environmentally friendly access to basic needs. The roof of the iShack (improved shack) is designed to collect rainwater, three indoor lights, a mobile phone charger and an outdoor light are powered by a solar panel on each shack, the windows allow better ventilation and air flow within the shack and sunlight heating, the walls are painted with fire-retardant paint (since most deadly fires are started with kerosene lanterns, the cheapest form of light), and bricks provide solid floors.
The house adds up to $300. This price doesn't seem much to us, but it could take years for slum residents to save up that much. The article goes on to explain the effort to find companies who are attracted to this challenge and encourage their participation in the housing market for the poor, as it is "a giant market."
What are some challenges you see in this iShack beyond its expensive price?

http://www.bbc.com/future/story/20130325-bringing-mod-cons-to-the-slums/1

FDIC vice chairman opposed to big, complex banks

The video below details how the vice chairman of the FDIC, Thomas Hoenig, is against big, complex banks. He explains at the point Bear Sterns was bailed out they were one of the top five biggest investment banks and the intricacies inside the bank were so complicated that it took a toll on the U.S. and world economy. Hoenig is not against big banks, but rather banks that are complex and so powerful that they can bring down an entire economy, like the crisis of 2007/2008.

Jamie Dimon, CEO and chairman of JPMorgan, believes that bigger banks are better for business.

Link: http://www.nytimes.com/video/2013/03/15/business/100000002119957/a-strong-voice-against-big-banks.html

Rescuing Cyprus's Economy

In this video talk by The Economist, a correspondent explains the deal to bail out Cyprus's economy. He outlines the restructuring that will occur in the banking sector, in which many uninsured large deposits will be lost. This will have a strong effect on businesses, who now do not know how much money they still have in the bank. Depositors in the eurozone as a whole will likely respond strongly because of these loses and uncertainty. Questions are raised about the idea of the euro, because with the instability of the economies of some countries means that a euro in countries such as Cyprus are not worth the same as a euro in places like Germany. It will be interesting to see how another bailout affects the reactions of eurozone countries that are bailing out countries, and how they will vote to change the economic rules and regulations of the region.

http://www.economist.com/multimedia?bclid=1242934274001&bctid=2252701826001

Solar power has record year despite bankruptcies

http://money.cnn.com/2013/03/14/news/economy/solar-power/index.html?iid=SF_E_Highlight

Last year there were 3.3 gigawatts of solar power installed, which can power about 500,000 homes.    This is an 76% increase from 2011.  This has been credited to the decrease in price of solar panels, stable tax incentive, and better financing options.  This industry currently employs 119,000 people which is a 13% increase from last year and the industry expects even more growth next year.  One of the main reasons for this decrease is that there have been major investments in manufacturing capacity, particularly by the Chinese.  As prices continue to fall, smaller and less efficient companies are being kicked out.  This is being compared to the beginning of the auto industry when there were dozens of companies and it was then narrowed to the Big Three.

Well Before Summer, Hamptons Luxury Real Estate Is Scorching

This article published in the New York Times discusses the revamped demand and increasing pricing of homes in the Hamptons. The author discusses the opportunities that real estate companies are facing in this area. Although home buyers/ renters are not as quick to jump on deals they are still wiling to shell out a large sum of money for their summer homes. Also, there are options available for those who are not multimillionaires and billionaires. In my opinion, I feel like this spending on summer homes is a good indicator that the wealthy are ready to come out of their cautious spending that the recession has laid on them.

http://www.nytimes.com/2013/03/24/realestate/another-pricey-summer-season-in-the-hamptons.html?_r=0&adxnnl=1&pagewanted=all&adxnnlx=1364255032-zyZHZfSwTh2gCgeYZFXarQ

Dell going private?

http://www.economist.com/blogs/schumpeter/2013/03/dell

In a recent turn of event Michael Dell has decided he is going to try and take the company Dell, for which his namesake states, is going to try and go private. They would be helped by a company named Silver Lake and also Microsoft to try and make the company private. This has come to the disgruntlement of shareholders and other firms trying to buy up the company such as Blackstone, and Carl Ichann. These groups are trying to keep the company public to try and appease the shareholders. It will be interesting to see what ends up happening in this situationand who gives in first.

Banking in Africa: Continent of dreams - Across Africa, banks are expanding. Their returns aren’t

Banks in Africa are expanding with the promise of increased interest rates, but the cost of building branches and investing in growth are keeping interest rates low.  The banking market in Africa is potentially vast, as almost half of the countries in Africa have less than 20% of the population holding an account at a formal financial institution.  Access to banks also varies vastly within countries.  Now there is a chance to reach out to poorer countries with banking opportunities due to technology such as prepaid cards and mobile banking which lower the level of GDP needed to make a profit.  African retail banks may be able to achieve a cost-to-income ratio of 30% whereas rich-country banks are usually happy to get a ratio of 50%.  The global financial crisis also contributed to the expansion of retail banking within Africa as opposed to international expansion.  As domestic and regional banks gain access to capital markets, will international banks like Goldman Sachs and Morgan Stanley who hold very little local presence be able to compete?  Some banks are now attempting to be an international presence while also offering retail- and corporate-banking services.  Do you guys think that this approach will work?

http://www.economist.com/news/finance-and-economics/21572768-across-africa-banks-are-expanding-their-returns-arent-continent-dreams

Health Care Report Card

This article the discusses the performance of the health care reform since its institution in 2010. The Republican party leaders have "vowed" to block money to carry it out or appeal it, however this is prior  to the institution of the largest part which will begin in January 1, 2014. The reform has expanded coverage, reined in healthcare costs, saved consumers money, and produced a better quality of care according to the article. I think that these signs are great for healthcare, but I hope they are sustainable through the implementation of the healthcare reform. I can only imagine that with the increase in patient care, standards will have to decrease to accommodate the sheer number of people that will begin receiving coverage. What do you think?

http://www.nytimes.com/2013/03/24/opinion/sunday/report-card-on-health-care-reform.html?src=me&ref=general

How Russia's Billionaire Oligarchs Got So Very Rich

http://www.businessinsider.com/what-is-a-russian-oligarch-2013-3

Modern Russia is infamous for being home to a slew of billionaire oligarchs, the majority of whom earned their wealth in the 1990s after the fall of the Soviet Union. This article details some of the recent history behind this small group of Russian businessmen. In the 1990s, the government implemented a program called 'loans for shares.' Companies provided loans to the Russian government in exchange for shares in state-owned firms. When the government defaulted on its debts, these companies kept their shares and were able to acquire many state-owned enterprises for incredibly cheap prices as the nation underwent massive privatization. One of Russia's most high-profile oligarchs, Boris Berezovsky, committed suicide this past week and much of his death has been centered around his dealings with fellow oligarchs.

It's pretty intriguing as to how certain people were able to take advantage of the swift and turbulent transition from a communist economy to market economy. In the ensuing chaos of the 1990s, traditional economic forces were replaced by sneaky financial transactions. Such a situation is unlikely to happen again in the near future. The Russian oligarchs were really in the right place at the right time.

Former Dictator returns to Pakistan

http://www.nydailynews.com/news/world/musharraf-returns-pakistan-elections-four-year-exile-article-1.1297757?localLinksEnabled=false

The former President of Pakistan, General Pervez Musharraf has returned to Pakistan to contest the upcoming Presidential elections. He came back to Pakistan after a period of 4 years. He left Pakistan in 2009 after losing the Presidential elections to the current President, Asif Ali Zardari.

Some background information: In 1999, the then General of the Pakistan Army, Pervez Musharraf, overthrew the democratically elected Government in a non-violent military coup. He declared himself the President and controlled the country till 2008. In 2008, Musharraf came under tremendous pressure to restore democracy and therefore, fair elections were supposed to take place. To contest the elections, Benazir Bhutto, the daughter of a former President, Zulfikar Bhutto, returned to Pakistan. However, she died during a bomb attack in one of her campaign rallies. Musharraf was accused of not providing her adequate security cover. Meanwhile, Benazir's husband, Asif Ali Zardari won the elections thanks to the sympathy factor.
Musharraf had several judicial probes, trials, etc.  pending against him in the courts of Pakistan. Surprisingly, the newly elected President Asif Zardari did not make Musharraf stand for trial but instead exiled him off to London. Some see this as a deal between the two but many disagree citing that Zardari did not want any internal conflicts to weaken the nation. Now that the Zardari government has become the first ever democratically elected government to complete a full term in office in the history of Pakistan, it is time for new elections.

Zardari still has the highest chances of winning, not because the people love him, but because the political opposition to the Government is very weak. Zardari has been accused of unfathomable amounts of corruption and is also accused of bad policies when it comes to the economy, national security, foreign relations, etc.  Despite this, the weak opposition may not manage to secure enough seats to win the election.

Musharraf's arrival may manage to change that setting, but not by a large extent. Though he may be looking at another stint at the President's office, his support has very visibly diminished over time.
Musharraf also faces extremely dangerous and high number of death threats from the Pakistani Taliban.

It would be interesting to see how the former Dictator's arrival changes the political landscape in the troubled nation of Pakistan.

OECD urges China to free markets, ease immigartion

The Organization for Economic Cooperation and Development urged China to make good on pledges to force state companies to compete in more open markets and ease movement of migrants into cities to keep its economic growth strong. Forecast growth is at 8.5 percent this year, while risks from inflation and government debt are low. However, because of Chinese government's intervention in subsidizing state companies, it creates an unfair market for foreign companies, especially in energy and finance. There were some reforms, but they have yet to decide whether or not they will address the monopoly problem and the issue of making it hard for workers to move into the city for higher-paid jobs. Failing to solve this problem can have serious political and economic consequences on China.

Source: http://news.yahoo.com/oecd-urges-china-free-markets-ease-migration-074335429--finance.html

Cyprus Battling to Meet EU Bailout Terms

Cyprus lawmakers met yesterday to try and work out the terms of a European bailout, which may include tapping bank accounts with deposits above 100,000 euros. Lawmakers rejected a initial levy to tax all bank accounts a few days ago. This article details a few potential plans, including tapping accounts at the biggest bank lender, the Bank of Cyprus. Yesterday lawmakers agreed to "wind down" Cyprus Popular Bank and put the losses on its depositors. Cyprus is the fifth euro-area nation to request a rescue; the problems in Cyprus stem from Greece's debt restructuring, which was a big area that Cyprus's banks invested in.

Link: http://www.bloomberg.com/news/2013-03-22/cyprus-approves-capital-controls-as-ministers-prepare-to-meet.html

Brother of Hedge Fund Executive Indicted

Rengan Rajaratnam, the brother of Raj Rajaratnam, who is in jail for insider trading, has been indicted for the similar allegations. He is accused of helping his brother use non-public material when trading two stocks in 2008. These insider tips and information helped Rengan make around $1.2 million, within a two day span. Raj is serving an 11-year prison term for conspiracy and securities fraud. This was a huge indictment for the US, the SEC, and the FBI - it is the biggest hedge fund executive to go to jail. Many people are angry that those accused for insider trading are only paying a (huge) fine and not usually sent to jail; this is a step in the right direction by having white collar criminals serve jail time. 

Link: http://www.bloomberg.com/news/2013-03-21/raj-rajaratnam-s-brother-charged-with-insider-trading.html

Russia-China gas deal is stuck

http://www.reuters.com/article/2013/03/22/us-russia-china-gas-idUSBRE92L10P20130322

In the article, the author talks about a deal between China and Russia for conventional gas, has been stuck at the talks level. The deal would possibly involve Russia selling gas from its new Eastern Siberian gas fields to China. The problem is that both sides are not agreeing on the price of the gas. Russia wants to get the same price that it does from its European buyers ($300 per 1000 cu. m.) but China is only willing to pay $250. China argues that $250 is the maximum price that it can offer without forcing its petroleum companies into losses. Also, above this price, China maintains, that its producers would lose their competitive advantage in the global markets.

The deal is important for Russia as it is looking for ways to finance more oil and gas projects, construct pipelines, etc. China, on the other hand, is expecting a shortfall in meeting its energy needs. China is the fastest growing energy consumer and therefore needs the deal to meet the demand for gas.

The deal needs to be finalized fast if Russia wants to enter the Asian markets. This is because there are many other suppliers such as Myanmar that are also willing to supply gas to China.

Obama Urges Israeli Public to Pursue Peace

President Barack Obama exhorted Israelis to come to terms with the Palestinians, following a visit to the West Bank on Thursday, in a public appeal for sacrifice in the name of peace.

"Given the march of technology, the only way to truly protect the Israeli people is through the absence of war," Mr. Obama told a large crowd of mostly young Israelis at the Jerusalem Convention Center. "Because no wall is high enough, and no Iron Dome is strong enough, to stop every enemy from inflicting harm."

The crowd repeatedly cheered Mr. Obama's calls for a Palestinian state and his observations that Palestinian and Israeli youth have the same dreams.

He described a meeting earlier in the day with a group of Palestinians between the ages of 15 and 22. "Talking to them, they weren't that different from my daughters," he said. "They weren't that different from your daughters or sons."

The purpose of his public address to Israelis became clear when he said that politicians must be pushed by constituents to seek peace.

March 21, 2013, 11:53 a.m. ET

Source: http://online.wsj.com/article/SB10001424127887324103504578373924113848596.html?mod=WSJ_hps_MIDDLENexttoWhatsNewsThird

Americans Guessing at Amount Needed for Retirement

http://www.washingtonpost.com/business/retirement-is-a-numbers-game/2013/03/19/b36ed882-90e0-11e2-9cfd-36d6c9b5d7ad_story.html

This article discusses the fact that most Americans are simply guessing at the amount of annual income they need to be saving in order to retire comfortably. When they calculate the actual amount that they should be saving, the gap is often large between what is necessary and what is actually being saved. Most Americans are solving this problem by planning on retiring at a much later age than intended. The EBRI says that this plan isn't always a good idea, just in case individuals aren't physically able to work as long as they want to. They advise trying to save a substantial amount by age 60. The key for many Americans to be able to retire comfortably is simply to stop consuming at an excessive rate and save rather than try to keep up with the Jones'. Americans also need to become informed of the percentages they will need to save at a younger age in order to reduce the need of having to save excessive amounts in their 40s and 50s. If Americans start saving responsibly they will be able to retire earlier, therefore opening up more jobs to younger individuals in need of work.

A Bear Market To Come?

In his latest post on Marketwatch entitled "10 signs your stocks are about to tumble", author and columnist Jeff Reeves paints grim picture on what he believes is to come in the market.
Lately in the news, all the problems seem to be brewing abroad while the domestic signs of a impending bear market and potential recession are staring us in the face.

To summarize a few of his points:

The market is over-bought. Cash in investors accounts is hitting dangerous lows,  and the current rally in the market is thought by many to be unsustainable. He goes into interesting detail about the "wedge" that prices have been showing. What this means is that momentum is slowing, and there looks to be no catalysts to propel it further. In fact, foreign troubles alone are causing a great amount of skepticism in the market.

He goes further to describe some more macroeconomic issues that we are all too familiar with such as high gas prices and unemployment. Overall a very interesting read and has lead me again to recommend getting out of equities.

If there are any who disagree with his prognosis, I would be very interested to hear about your views and maybe even why you think the market can still rise.


10 signs your stocks are about to tumble

Microfinance in India: Road to redemption

This is an article from the economist back in January discussing the problems with microfinance in India. Indian micro-lending banks were effective until they started making reckless loans and using "strong arm-collection tactics" which ruined the lives of many of the Indian poor. These tactics and loans are against Grameen principles where micro-lenders would often discuss the business plans with the poor as to avoid making bad loans. Also, they should not force loan collection as the purpose of microfinance apart from monetary profits are also social profits. Other successful microfinance banks have extend the repayment period or extended new loans in order for the poor to get back on their feet should they be unable to pay the old loan.

The Micro-lending in India has new national guidelines to draw a line between profit and profiteering such as creating a cap on interest rates and barring micro-lenders to lend to customers with more than one loan, which will hopefully improve microfinance in India.

Source: http://www.economist.com/news/finance-and-economics/21569447-industry-starting-revive-road-redemption

British inflation hits nine-month high, further rises likely

In February, consumer price inflation rose to 2.8 percent, after holding steady at 2.7 percent since October, and looks set to rise further. The number, however, would probably not reduce the chances that the Bank of England will sooner or later pump more money into the economy to stimulate the stagnant economy because they are more interested in growth than in inflation at the moment. High inflation has reduce British households' disposable income, and a further rise will be a concern to the government regarding the decreasing consumption. The Bank forecasts inflation will exceed 3 percent later this year due to upward pressure on the cost of imported goods and raw materials caused by sterling's near 7 percent slide against the dollar since the beginning of 2013 and higher utility bills. What could be expected from the Bank of England to help better the situation? The arrival of new Bank governor Mark Carney in July may bring some changes, but more importantly, stopping any further sterling fall would be necessary because of its damaging consequences on inflation.

Source: http://uk.reuters.com/article/2013/03/19/uk-britain-inflation-idUKBRE92I0AI20130319

British economies struggling to maintain spending

http://www.economist.com/news/britain/21573132-britains-squeezed-households-largely-explain-countrys-flatlining-economy-dropping-shopping

This article states that the British economy is starting to see less and less people care about spending due to low growth rates and high price fluctuation. With the average growth rate being 2 percent right now and the average price increase on goods is at 3 percent. Also with the average person having only about 15000 dollars in spending money per household after taxes and mortgage payments, leaving very little income. This is tough on the European economies and the recession has hit everyone including overseas.

Venezuelan opposition leader promises to cut subsidized oil to Cuba

http://www.reuters.com/article/2013/03/18/venezuela-election-idUSL1N0CA8MN20130318

Venezuela has elections on April 14 to decide the President after the death of Hugo Chavez. The two candidates are the current acting President Nicolas Maduro and the opposition candidate Henrique Capriles. Nicolas Maduro is seen as Chavez's successor.

Henrique Capriles has stated that he would end the export of highly subsidized oil to Cuba if he comes to power. Under Chavez, Venezuela was exporting large quantities of oil at extremely cheap prices to Cuba, a communist nation and a Venezuelan ally. This is a major burden on the Venezuelan economy, which is already suffering from low growth and high inflation. Stopping the export of a 100,000 barrels daily to Cuba would provide more resources for the domestic economy and would help reduce inflation. This would also allow foreign companies to access some oil reserves in Venezuela and sell them at a near market-price rate and not the state-decided price.

Maduro is expected to maintain Chavez's style of governance which would focus on nationalization and socialism. It would be interesting to see how Henrique Capriles would change Venezuelan economic policies if he comes to power

Federal worker pay freeze likely to be extended

http://money.cnn.com/2013/03/15/news/economy/federal-worker-pay-freeze/index.html?iid=SF_E_River

Many federal workers will suffer from a continuation of the two year pay freeze. This will extend the pay freeze to December 31st. This lack in pay raises will hurt many federal workers as they were expecting to see a .5% raise in pay by next month. On top of this, the budget cuts that were recently implemented are forcing many federal workers to take a 20% pay cut for five months. Plus many agencies have started hiring freezes, so this begs the question of is too much of the federal budget deficit problems being put on the backs of the federal employees?

What Does Cyprus Mean?

After reading about what is happening in Cyprus over the weekend, the question naturally arises: are they handling this the right way? Why the Bank of Cyprus? Will this be a trend across Europe? Will the run on The Bank of Cyprus be a damning blow to a recession recovery already stunted by a slightly strengthening Euro?

Over the weekend it was announced that a percentage of all deposits in The Bank of Cyprus will be taxed. This so far has caused an uproar, and a run on the bank. People were given the incentive to pull their money and find a new safe haven, however many were unable to get their money when they needed it. Michael Gayed recommends rotating out of equities at this point, and migrating to precious metals or bonds to weather this storm. If your investment strategy is aimed more towards "timing" the market, then this strategy is for you.

Is this the start of a long depressing trend in Europe?

http://www.marketwatch.com/story/if-cyprus-is-the-butterfly-is-gold-the-pesticide-2013-03-18

China Showing Symptoms of Financial Crisis: Report

This article suggests China may be headed for a financial crisis similar to the one experienced by the United States in 2007.  The article notes that China is currently experiencing similar symptoms to the ones the U.S. observed prior to the crisis as the country has been experiencing skyrocketing property prices, slowing growth and a large increase in leverage.  The article notes that property prices have swelled some 113% from 2004 to 2012, yet China's rate of growth in 2012, 7.8%, was its slowest in 13 years.  Also, leverage, as measured by domestic credit per gross domestic product, has increased 34% since 2007.  The more highly the country leverages itself, the more painful a deleveraging period could be.  Do you guys believe China is in for difficult times ahead?


http://www.cnbc.com/id/100562024

Europe financial sector is fragile, says IMF

The IMF feels like Europe has to support its banks more and try to create a banking union, which would protect the EU from future shocks. The IMF assessed the European banking and insurance sector and could see that a lot has been done in response to financial crisis, however a lot more was still needed, because the EU is still vulnerable since the growth could be lower than expected or the market could lose its confidence. The Eurozone is still highly affected by the financial crisis, its GDP is still not where it used to be, banks still have high debts and government are not able to create stability. However many measures have been taking in order to reestablish confidents European assets.  For example banks have been trying to raise new capital and the EU a single Eurozone regulator was created (controlled by the European Central Bank). But at the moment the banking sector is restricted and its bad debts negatively affect Europe’s economy.

 http://money.cnn.com/2013/03/15/news/economy/europe-banks-imf/index.html?iid=SF_E_Lead

Pound Sterling Sees a 3-Year Low

Following a 1.5% contraction in the United Kingdom's manufacturing sector in January, the pound sterling has fallen to $1.48. This is the lowest it has been since 2010. The slump has mainly been credited to a reduction in the production of pharmaceuticals and building materials, as well as North Sea oil and gas investments. Coupled with a contraction in growth, exports, and in national income, this has led to fears of a triple-dip recession– a common concern from the last two years. The hope is that the chancellor will implement varied and strong policies to boost growth post a budget debate, but the economy still faces many adversities. But given that the US, Japan, and Germany are slowly pulling out of the recession, and are supplemented by the growth of demand for UK goods in countries like Brazil, China, and India, there is some hope for a recovery.

http://www.guardian.co.uk/business/2013/mar/12/recession-manufacturing-slump

Booming Business of Border Control

This article talks about the growth in the homeland security market due to innovative technologies. This growth continues despite the sequester cuts that included the Department of Homeland Security which dominates 60 percent of the 31 billion dollar market. Some of the things that the technologies are doing are quite fascinating, but more importantly keeping those who work border control safe. However, because of the heavier reliance on technologies, it is quite directly removing jobs from the market. While the value of keeping hard-working individuals out of harm's way might exceed the utility for jobs, this is a prime example Marx's demise of capitalism. For those who may lose frontline jobs in this market due to being replaced by technology, where are they to seek future employment? We see similar similar trends in other industries as well with class sizes growing in education with the MOOCs and technological industrialization of manufacturing. These innovations give rise to new markets all the time, but what about the labor force that is not educated enough to pivot into these markets?

http://www.thefiscaltimes.com/Articles/2013/03/15/The-Booming-Business-of-High-Tech-Border-Security.aspx#page1

African Banking Profits A Distant Reality

Banks across Africa are finding it hard to produce significant profit despite the coutnry's largely untapped market. This article from the economist tells us that access to a financial institution varies greatly by country, and even intra-country access to banks is highly variable. Banks need to continue to build bank branches, which are very  costly to do. Until this need is met, many Africans will have relatively little access to a bank account, and banks will also not see profits, a lose- lose situation in the short term.

GOP Senator, in Reversal, Backs Gay Marriage

http://online.wsj.com/article/SB10001424127887324532004578361971252212296.html?mod=googlenews_wsj

Yesterday, Ohio Senator Rob Portman became the first among current Republican senators to support same-sex marriage. Portman disclosed in an opinion article he wrote in the Columbus dispatch that he has reversed his position on same-sex marriage, “I have come to believe that if two people are prepared to make a lifetime commitment to love and care for each other in good times and in bad, the government shouldn't deny them the opportunity to get married.” Portman said he changed his mind after his son Will, now 21 years old, told him two years ago he was gay. His announcement comes at an interesting time, when acceptance of same-sex marriage is growing incredibly quickly. Do any of you think this could be an opportunity for the Republican Party to move more toward the middle on same-sex marriage? 

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