These indicators show no threat of recession

http://finance.yahoo.com/news/rbc-s-jonathan-golub--positive-on-markets-121152467.html

I think we should be optimistic about the economy now. Not only because the point the news mentioned such as no inflation, no business excess but also because the low unemployment rate, the increasing number of jobs and the wage growth in US. The federal reserve forecasts that the GDP growth rate would be 3% next year which is higher than this year.

"Draghi Keeps Options Open to Fight Low Inflation"

Mario Draghi, President of the European Central Bank, suggested that easy money policies are a strong possibility at the ECB's next meeting in December. This statement was rebutted by Jens Weidmann, the head of Germany's central bank. He said that they should give their current policies more time to work. One of the stimulus policies he is keeping open is an increase in quantitative easing. The reason for doing this is their medium-term price stability goal of 2%. With the low inflation they already have, Draghi wants to increase quantitative easing to reach their price goals. Currently in the EU, the deposit rate is at -.2%. This means that banks have to pay to hold money in the central bank. Because of this, banks are more incentivized to lend to the private sector. This could weaken the exchange rate, boost exports, and boost inflation. In addition, the ECB is currently in the middle of a bond buying program of 60 million euros per month, but they are think up increasing the amount to 80 million euros per month to help increase inflation. Do you guys think that easy money policies are a good idea for the ECB to undergo?
http://www.wsj.com/articles/draghi-vows-to-use-all-instruments-if-price-stability-goal-at-risk-1448009389

China finds new way of generating electricity by cremating truckloads of banknotes worth billions

A city in east China is keeping its lights on at night using the power generated through burning truckloads of damaged banknotes.

This year alone over 1,800 tonnes of money with a value of almost 180 billion yuan ($28.2 billion) has been incinerated to generate electricity in Yancheng City, Jiangsu Province, according to The People's Daily online.

The money burnt is the old 100 Yuan ($15.66) red banknotes that are now being replaced nationwide with a new design.

According to the report, one truck of burnt currency can generate 30,000 kilowatt hours. 

Considering the average household in the city uses 100-kilowatt hours per month, this means the output of one truckload can supply one home with power for 25 years.

Compared to other biomass fuels like sawdust, these banknotes have a high caloric value (a weightless gas that passes in and out of pores in solids and liquids) and a low water content, which is suitable for biomass power generation.

Not only is the money turned into power, the remaining ash is made into bricks which ensures sustainable and harmless disposal.

 

China's middle class isn't what we thought it was

A lot of multinational companies have been anticipating the growth of the Chinese middle class for many years. With the slowdown of the Chinese economy, the growth of this middle class has been hindered. A study was done to examine the growth of the Chinese middle class by considering how much purchasing power they really have and how much access they have to the products companies want to sell.

Chinese consumers’ buying power does not compare well with that of the US consumers. Between 2010 and 2014, only 12% of the Chinese people reported a household income of more than $3200 a year. Their spending power is expected to rise from 44% of consumer spending to 60% by 2025 compared to $32000 in the US today. This spectacular growth, however, is coming from a relatively small per capita base and will arguably remain modest compared with most mature markets even by 2025. This projections mean only a very gradual movement toward consumption led-growth in China. It will be interesting to see how this group of consumers grow in the next few years owing to the economic slowdown in the country.

http://www.businessinsider.com/demand-report-on-chinas-middle-class-2015-11

Qualcomm’s China Struggles Continue as It Fails to Reach Patent Deals.

http://www.wsj.com/articles/qualcomms-china-struggles-continue-1446852072


The article discusses the problems with holding onto a Patent. Qualcomm Inc. is trying to make deals with two companies, and the large drop in shares shows the struggles that they are having. The company has shown large decreases in revenue and this is due to a decrease in sales and manufactures stopped making royalty payments due to the cease in the patent. The loss of the patent has caused significant losses for Qualcomm Inc. To try and make a comeback, Qualcomm made a large payment of 975 million dollars for antitrust problems, but it did not help due to the fact they weren’t able to collect licensing revenues. The company is now beginning to enforce stricter agreements in order to obtain their correct amount of royalty payments, as well as having better negotiations. They need to do this because the majority of their income comes from royalties, which exceeds over 6 billion dollars. The two manufactures that Qualcomm is having issues with are Lenovo and Xiaomi. If the patents were still in place, the royalty money these companies both owe are very large. Once an agreement is done by Qualcomm to fix the patents, the companies holding out will have to pay them. 

Mortgage Lending Gaining Strength in England

            Mortgage lending rates are at highest levels since before the 2008 financial crisis. Mortgage lending rose to 21.8 billion pounds in October, up nearly 20% from the year prior. Growth in mortgage lending is currently at its seven-year high according to the Council of Mortgage Lenders. It is expected that mortgage lending will beat forecasts and continue to increases. According to the Bank of England mortgage approval ratings showed mixed signals about the future of the housing market. House purchase approvals fell well below 70,000 in September while in the same month remortgages rose to 41,000. The CML believes that the weak level of housing transactions in recent months is troubling because the level of properties being offered for sale are extremely low.

            The UK economist from HIS Global Insight, Howard Archer, stated that mortgage lending was mainly utilized by people attempting to remortgage by locking in a low interest rate before they are expected to rise in 2017. He believes that house prices will see a steady increase because of lack of buyers and a shortage of properties to sell.

http://www.bbc.com/news/business-34865579

Adele Refuses to Stream New Album "25"

Famous pop artist Adele hasn't released an album since 2011, and a song since 2012, but she will be releasing her 3rd album "25" in a few days. A lot has changed in 4 years. For example, Spotify and other sites have emerged in the services of streaming music. In a very complicated and controversial contract, apps like Spotify are able to stream songs, which listeners can either listen to on their computers for free (with ads), or they can pay $5 (college student) or $10 a month to get no advertisements, as well as get songs on their phone. Essentially, this gives listeners the rights to owning songs without artists getting money for them. Taylor Swift is an artist that has also not allowed for streaming of her songs, since she believes musicians should make money off their hard work in their music. Adele doing this comes at no surprise, since she is one of the more popular artists alongside Swift in the modern era. With the demand of streaming exponentially increasing, less people are willing to buy songs off of iTunes and Google Play, since they can save a lot of money by just using and accessing Spotify. This, in turn, has caused companies like Apple to lose revenue in this sense, which caused them to create Apple Music, their own streaming site, to compete with Spotify and other sites like Pandora and Rhapsody. This also comes as no surprise, seeing that iTunes made CDs pretty much extinct, and streaming might be doing the same to electronically selling music. Alternatively, concert tickets are increasing so that artists can make back the money they lost in record sales. http://www.nytimes.com/2015/11/20/business/media/adele-music-album-25.html?ref=business&_r=0

Mac vs. PC cybersecurity

Microsoft has begun a $1 billion investment into their cybersecurity software to hopefully end some of the debate over whether Apple has better cybersecurity. Cybersecurity is only becoming increasingly more relevant as more and more high-profile attacks are occurring. Sony and J.P. Morgan Chase are two very relevant attacks that have put Microsoft in the spotlight for stepping up their cybersecurity software. They will be putting in more money to respond to threats faster and make sure customers feel as though their data is safe.

Apple has often advertised that their cybersecurity is much better, but many claim this is only because the majority of the computers in the world are PCs or run on Microsoft software. Windows 10 is the most recent operating system and their hoping that it is the most secure. One of the key features that it is had is providing cloud space for data, which is space that is much harder to get access to. Microsoft stresses that is important to work with the best technology of the industry and uses third-party companies to help with extra security.

http://www.bloomberg.com/news/articles/2015-11-17/microsoft-revamps-security-plan-as-part-of-1-billion-investment

Tunisia confronts corruption, the economy and Islamic State

During the Arab spring of 2011, Tunisia was the first to oust its dictator, Zine el-Abidine Ben Ali. While other Arab counties fell into violence and renewed authoritarianism, Tunisia remained on a peaceful democratic path. In 2014 the state held free and fair general and presidential elections and adopted a relatively liberal constitution.

Now, however, a rift in the dominant political party is threatening to destabilize the government, which was already struggling to get the economy off of the ground. Corruption, red tape, and two big terrorist attacks on tourists claimed by ISIS have made it difficult. Additionally, the Tunisian army has been fighting Islamist militants along its border with Algeria.

Nidaa Tounes, the leading political party, is made up of leftists, liberals, conservatives, trade unionists, and businessmen. They united under Nidaa Tounes and the leadership of Mr Essebsi to oppose Nahda, a moderate Islamist party that led the government from late 2011 to early 2014. There is no unifying ideology, political objectives, socioeconomic vision. There is also a power struggle between rival factions within the party, as one wing believes that Essebsi, the leader of the other wing, is trying to establish a family dynasty.

The government has done little to reform the inefficient economy, which still favors elites. The public sector is too large and continues to grow, and corruption is worse. Additionally, there is little development in the interior of the country despite promised aid from the United States. The lack of economic progress makes securing Tunisia even more difficult. It is believed that thousands of Tunisians have joined ISIS, while others are joining Islamic militants in the mountains in the western part of the country. There is fear that the security sector will attempt a power grab as the jihadist threat worsens.


http://www.economist.com/news/middle-east-and-africa/21678721-rift-ruling-party-may-be-least-tunisias-problems-tunisia-confronts

2,000% price hike for infant seizure drug called 'absurd'

   The price of drug prescribed to infants in Canada with a rare and potentially dangerous form of epilepsy has jumped by 2,000 per cent practically overnight. Infantile spasms, also called West syndrome, is a catastrophic and rare form of epilepsy. It's diagnosed in babies that encounter frequent and intermittent seizures. Half of the patients don't respond to initial treatment protocol, so doctors then turn to Synacthen Depot, a long-acting form of the drug that is injected into muscle.
   "The drug is long off patent" Dr. Carter Snead, a neurologist,  said"and  it works 90 per cent of the time"."The price of Synacthen Depot increased by more than 2,000 per cent from $33.05 per vial to $680 per vial," said Carolyn Ziegler, a spokeswoman for Alberta Health. When asked about the sudden increase in price, Mallinckrodt, a  global pharmaceutical company, responded by saying that it was told by the existing suppliers of the drug that they would cease production in early 2016. When Mallinckrodt acquired Questcor in 2014, Synacthen Depot was one of the products in the portfolio. It was losing money then and still is.
  This case closely resembles Turing Pharmecuticals', along with a myriad of other pharmaceutical companies' decisions to drastically increase the price of a medication. In this case, the company increased the price of the drug because it was losing money at its original price. Although we don't know the exact price at which it would equal the marginal cost of producing the good, it could reasonably be said that the increase is equal to or greater than the cost, and therefore would not incur a loss at the price of  $680. I think having the option of getting the medication at a higher price is better than the company electing to discontinue the product entirely because it is losing them money.

https://ca.news.yahoo.com/2-000-price-hike-infant-100000468.html

Debt Market Distortions Go Global as Nothing Makes Sense Anymore

http://www.bloomberg.com/news/articles/2015-11-15/debt-market-distortions-go-global-as-nothing-makes-sense-anymore

Across the world, the "swap spreads" (the difference between an interest rate swap and the rate of a treasury with the same maturity) are going negative. It has happened in the US and the UK and in Australia the spreads have shrunk to the smallest on record.

It's believed that this is mainly due to investors pushing up yields on Treasuries, as the Federal Reserve continues to indicate that interest rates could rise in the very near future. The issue with the rates being inverted is that it would signal that the government rates are less credit worthy than than the other assets. US government bonds are typically looked at as the most risk-less asset.

Traditional pricing mechanisms in the bond market are not effective and this will be a time for speculators and arbitrageurs alike to take advantage of the mainsprings in the market. This distortion in the market makes many investors nervous. It will be interesting to see how the spreads move as the Fed continues forward with their plan to raise rates.

Paris Moving Forward

The awful attacks on Paris this past weekend not only devastated the cities morale, but it could also pose potential losses in the financial sector for the country moving forward. The events that occurred in Paris could certainly have a significant negative impact on the confidence of consumers in the near future, primarily in France, but also elsewhere in Europe. Seeing as tourism is a major source of revenue for Paris (third most visited city in the world), the attacks could substantially affect the economy as the city suffers in the wakes of the attacks.

Despite all that happened this past weekend, the markets will open as normal at Euronext on Monday; however, at this point in time their priority is the safety of their staff, therefore there will be extra security in place in Paris on Monday. As of close on Friday, stocks trading on the Paris benchmark CAC were up 12.5%; however, it will be interesting to see where the French market heads, and how is responds to the events that took place this weekend.


http://money.cnn.com/2015/11/15/investing/paris-attacks-french-stocks/index.html?iid=hp-stack-dom

After the Paris Attacks: What they mean for Europe

      Details are still coming out about the terrorist attacks in Paris on Friday night that claimed 129 lives as of now. The Islamic State has claimed responsibility for these attacks that occurred in several locations across Paris including a sports stadium, a concert hall, and two restaurants. Paris has experienced many terrorist threats in the recent years including one attack on a journalism office in January of this year that claimed 16 lives. The issue then was freedom of speech but after the attack on Friday, the issue for governments across Europe is migration. How do these attacks affect the issue of migration and refugees that the EU is currently discussing? 

       Since Friday many politicians across Europe have already spoken about this. Horst Seehofer, the chairman of the CSU, the Bavarian sister party of Germany's governing Christian Democrat, has stated the attacks show there is a need for “stronger control of Europe's external borders, but also of national borders.” The prime minister of Slovakia, Robert Fico, noted that he had warned other European leaders of “enormous security risks linked to migration. Hopefully, some people will open their eyes now.” In a condolence message to the French President, Vladimir Putin called for international collaboration; “Fighting this evil requires the real unity of the forces of the whole international community.” Will stricter immigration policies prevent future terrorist attacks? Will a united EU help with security or will tighter national borders help?

http://www.economist.com/news/europe/21678511-how-europe-has-become-more-vulnerable-terrorist-attacks-what-parisu2019s-night-horror

http://www.economist.com/news/europe/21678514-je-suis-charlie-was-about-free-speech-time-issue-migrants-europe-sees-paris-attacks

The High Price of Delivery App Convenience

 There are apps out there for basically anything these days. This article took a closer look at the apps that deliver goods to consumers on demand. More specifically, how their pricing systems work, and what it's really going to cost you to have your groceries delivered instead of getting them yourself.

The services compared were InstaCart, Postmates, UberEats, and Amazon Prime Now. With InstaCart, which basically is just instant groceries, if the items you purchase are more expensive in their store than the actual store, you get charged the more expensive price, plus a standard delivery fee of $4 and tip to the courier, Postmatess will pick up and deliver just about anything, from groceries, to burritos, to paint. Their delivery fees are not standard. They are based on a algorithm that takes into account the distance the courier traveled and multiple other factors, not to mention you still tip them. They provide a tip percentage calculator that calculates a tip for you to give, but this isn't a tip on just what your goods cost, it take into account the cost of the goods, delivery fee, service fee, and tax. In some cases, a consumer may end up paying a markup of over 100%!! With UberEats, the consumer is about to pick from a select variety of foods that they want delivered to their residence. The upside to this service app is that there is basically no service or delivery fee, but the quality of product isn't very good since the foods are all pre-made earlier in the day and the drivers just haul the food around until someone orders it. Amazon Prime Now already shrinks their market audience by only allowing those with an Amazon Prime account to use the service (which is $99 a year) and going through this app, you will usually face almost a 50% markup on price, including the $8 delivery fee.

With all these extra charges, not to mention the human error factor, I just have to wonder if it really is worth the price you will pay to not leave your home to go get these things for yourself? However, seeing as how the population is rapidly moving in this direction, maybe more will enter this delivery service market, forcing the existing companies to lower their fees in order to stay competitive.

Link: http://www.nytimes.com/2015/11/05/technology/personaltech/the-high-price-of-delivery-app-convenience.html?ref=technology&_r=0

Drugs Pervade Sport in Russia, World Anti-Doping Agency Report Finds

Last year during the Olympic games, Russian secret service impersonated drug testing laboratory engineers, Russian athletes adopted fake identities, bribed anti-doping authorities, and top sports officials took bogus urine samples all in order to cover up the drugs being taken by the Russian Olympic athletes.  These allegations were among hundreds found in a report by the World Anti-Doping Agency.  323 pages lay out what could be the most extensive state-sponsored doping program since the East German Regime of the 1970's.

It was stated by Dick Pound, founding president of the World Anti-Doping Agency, "It's worse than we thought...This is an old attitude from Cold War days." Russia has responded to these allegations saying, "Whatever we do, everything is bad....if this whole system needs to shut down, we will shut it down gladly.  We will stop paying fees, stop funding the Russian anti-doping agency, the Moscow anti-doping laboratory.  We will only save money."

Through the report they are recommending a lifetime ban on 5 coaches and 5 athletes. In 2013 Russia had 225 or 12 percent of all violations globally, a fifth of these from track and field athletes, and this number only continues to rise.

The WADA foundation is the one investigating and facilitating these reports and will meet next week to discuss these punishments and the possible implementation of them.


http://www.nytimes.com/2015/11/10/sports/russian-athletes-part-of-state-sponsored-doping-program-report-finds.html?hp&clickSource=story-heading&WT.nav=top-news&_r=1&module=ArrowsNav&contentCollection=Sports&action=keypress&region=FixedLeft&pgtype=article

Oil Actually Responding to Supply and Demand

From Standard Oil in the late 1800s, through the Railroad Commission of Texas in 1930, and OPEC in modern times, oil - the world economy's most foundational commodity - has virtually never been priced via supply and demand. Monopoly or cartels have been able to control prices. However, it seems as if oil's price is actually indicative of market forces.

On the supply side, producers have cancelled over $150B in investments. In addition, OPEC has pretty much abandoned its quotas (that restrict oil output. On the demand side, consumption is up (as expected). However, oil consumed per unit of economic output is declining.

With prices hovering in the upper 40's, lower 50's, where do you expect them to go by 2020? (the article mentions two estimates, $50-60 and $80)

http://www.economist.com/news/finance/21678198-once-prices-are-responding-supply-and-demand-not-opec-why-market

A New Technique for Producing Diamonds

A new company called Diamond Foundry has recently made a breakthrough in discovering a way to manufacture high quality diamonds more quickly and cost effectively with existing technology. They have created a sustainable alternative in which they will buy solar power credits in order to reduce carbon footprints to zero. The technique of choice is "chemical vapor deposition", in which they grow diamonds by depositing layers of carbon atoms in a high energy plasma field. They alter the shape of the plasma field in order to create the diamonds more rapidly and efficiently in larger quantities. The plasma is so intense that they are able to create Type IIa diamonds at about 150 times the usual pace. The rate at which these diamonds are produced can be compared to the rate at which natural diamonds are mined. 

Diamond Foundry has been able to brand themselves off being ethically and environmentally concerned and has received solid financial backing due to this (including being endorsed by Leonardo DiCaprio). The company's plan is to launch an online website in which they can sell their diamonds, featuring well known jewelry designers. They will compete with competing jewelry stores by providing more affordable prices and marketing an environmentally friendly approach. The article confirms that the average consumer won't be able to tell the difference between a natural diamond and a manufactured diamond, as the distinction requires equipment and expertise. Furthermore, the new tactic of production will not negatively affect consumers' demand for the diamonds. 

Although the new technique of production sounds ideal for both a consumer's wallet and for the environment, it seems almost too good to be true. Do you think the fact that the diamonds aren't natural will ultimately affect consumer demand for the product?

http://www.nytimes.com/2015/11/12/science/borrowing-from-solar-and-chip-tech-to-make-diamonds-faster-and-cheaper.html?ref=business

US economic recovery has 4 more years to go, experts say

Investors who worry that the U.S. economy is speeding toward another inevitable recession can relax: The likelihood that the recovery will continue is actually pretty good. Because main street is could possibly outdo Wall street.

Since 1950, periods of expansion in developed markets have lasted an average of eight years—though the average in the U.S. over the same time has been around five years. And

Goldman has created a scatter plot of 255 expansions across 14 developed economies, depicted below. This implies that the current expansion, at six and 1/3 years old, will likely endure, Goldman says. The current expansion started in July 2009, according to the National Bureau of Economic Research, so we only have a couple more years to go. And the likely hood of a recession is minimal.

Link: http://www.msn.com/en-us/money/markets/us-economic-recovery-has-4-more-years-to-go-experts-say/ar-CCflwF

Chinese Taxi Driver Turned Billionaire Bought Modigliani Paiting

In one of the most expensive art sales ever, a Chinese art collector bought "Nu Coché" by Amedeo Modigliani. It is the sixth most expensive piece of art ever sold at auction.

The painting was expected to go for about $70.7 million, but Liu Yiqian purchased it for $107.4 million after fees. Yiqian and his wife plan to bring it to Shanghai where he owns two private art museums.

Yiqian was a taxi driver and sold smalls goods. However, during the major economic reform that happened in China, he was able to make his fortune through trading stocks in real estate and pharmaceuticals. He is worth approximately $1.5 billion.

I think this is a very interesting case. It shows how the opening and liberalization of China's economy has led to people being able to acquire mass amounts of wealth. It also shows how overvalued the art market is.

Do you think China will have a growing art market due to the increase in wealth? Will there be a bubble in the art market in general?

http://www.nytimes.com/2015/11/11/arts/international/liu-yiqian-modigliani-nu-couche.html?_r=0

Where did the miracle on 34th street go? Macy's reported a lag in sales for the third quarter

In a recent report released today, Wednesday, November 11th, the iconic renowned retailer Macy’s, owner of the Bloomingdale’s chain, reported third quarter sales down 5% from a year ago. With this report, Macy’s also stated that sales in the upcoming fourth quarter, typically the strongest of the year for the company, are anticipated to be lower than last year as well. The article then went on to state that this drop in sales could be attributed to “sluggish demand from American consumers and a continued slowdown in visits from foreign shoppers… [since the] strong dollar has caused many European and Asian tourists to stay home…” Due to this, Macy’s has also decided to no longer consider plans to spin off its real assents into a new company – further disappointing consumers – and driving down consumer demand even more…

           

            Why do you think this slowdown is the case when the American economy is stronger than ever? Is it solely due to the strong presence of the American dollar in the global marketplace? Other companies like Amazon, Walmart, and Kohl’s have also reported being hit hard this quarter due to concerns about increased competition. That being said, Macy is not the only one feeling the lose. So, what do you think the future holds for the upcoming holiday season? Will these companies be able to make up their loses or will the lack of consumer demand and high value of the American dollar continue to drive down sales?

            Link: http://money.cnn.com/2015/11/11/investing/macys-earnings/index.html?iid=SF_LN

The Changing Face of the Fed

http://graphics.wsj.com/fed-composition/

Above is a link for a very cool graph by the Wall Street Journal that shows the shifting background of Federal Reserve leadership.  Overtime the leadership of the Fed has moved from a majority of Bankers to now one mostly run by those with backgrounds in Academia and Research.  Yellen and Bernanke, the two most recent Chairs of the Fed have backgrounds in Academia.  A reason for this growing shift of more academic leadership, could be because of regulatory capture.  Those with a background in banking are more likely to return to banking or consulting after working at the Fed, than those with an academic background.  Look at Alan Greenspan, the former Chair of the Fed who had a background in banking and following his tenure as Chair of the Fed became a consultant to many investment firms and banks like Deutsche Bank.

Overall it's a pretty cool interactive graph that shows the changing nature of the Federal Reserve.

Taiwan Debates Its President’s Meeting With Xi Jinping of China

http://sinosphere.blogs.nytimes.com/2015/11/09/taiwan-china-xi-ma-meeting/?ref=asia

While Chinese commentary was resoundingly positive aboutSaturday’s meeting between President Xi Jinping of China and President Ma Ying-jeou of Taiwan, reactions in Taiwan to the historic encounter were decidedly mixed.

On his trip home, Mr. Ma told reporters accompanying him on the plane that he felt most of his goals for the encounter had been accomplished, with the biggest being the meeting itself, bringing together the leaders of the two sides for the first time since the end of China’s civil war in 1949. But he added that he was not satisfied with Mr. Xi’s assertion on Saturday that the Chinese missiles arrayed along the Taiwan Strait were not targeting the island.

The United States said that it welcomed the meeting of Mr. Ma and Mr. Xi. “The United States has a deep and abiding interest in peace and stability in the Taiwan Strait, and we encourage further progress by both sides toward building ties, reducing tensions, and promoting stability on the basis of dignity and respect,” John Kirby, a State Department spokesman, said in a written statement.

China considers Taiwan to be part of its territory that must eventually be unified and has threatened the use of force if Taiwan pursues formal independence.

China exports fall for fourth consecutive month

http://www.rttnews.com/2577614/china-s-exports-fall-for-fourth-month-imports-decline-more-than-forecast.aspx

The world economy is struggling at the moment and China is a big reason why. China's exports fell for the fourth consecutive month in October at the same time that imports declined due to weak domestic demand. On a year-by-year comparison, exports decreased by 6.9% in October, which is even greater than the 3.7% decrease in September. It is interesting that China's forecasts have been too high, yet their economic growth "eased" to 6.9% in the third quarter of this year. It just shows the size of their economy compared to that of the United States.

China to Announce Cap-and-Trade Program to Limit Emissions

Article: http://www.nytimes.com/2015/09/25/world/asia/xi-jinping-china-president-obama-summit.html?ref=international&_r=0

            President Xi Jinping of China will be making history by starting a national program in 2017 that will limit and put a price on greenhouse gas emissions in China. The program President Jinping is planning to implement is a called a cap-and-trade system. Cap-and-trade is a regulatory system that is meant to reduce certain kinds of emissions and pollution and to provide companies with a profit incentive to reduce their pollution levels faster than their peers. Under a cap-and-trade program, a limit on certain types of emissions or pollutions is set, and companies are permitted to sell the unused portion of their limits to other companies that are struggling to comply. This will greatly reduce the negative externalities that come with the high pollution emissions in China that has caused countless social issues across the country.

            Tension between the two nations is still heated caused by countless cyber-attacks over the past several weeks waged by China. But this program will bring about change and is the first step for China and America collaboration to achieve one ultimate goal of reducing pollution emissions in the two largest economies in the world. On the hand, the Chinese economy will be taking a bit hit when this program is implemented. China always strived on having high production output but with regulations in place, the expenses for various industries will increase and they will have no choice to reduce output. This might lead to a decrease in foreign investment and they will relocate to an area where there are fewer regulations.    

Best U.S. wage growth since 2009

http://money.cnn.com/2015/11/06/news/economy/best-wage-growth-in-years/index.html?iid=SF_LN

The United States economy added 271,000 jobs in October which helped lower the unemployment rate to 5%, its lowest level since 2008. This can largely be attributed to the fact that more part-time workers found full-time work. As we move on from the Great Recession, employers are starting to gain more confidence in the economy as a whole and its current direction which gives them greater confidence in adding more full-time workers.
Wages also grew 2.5% in October from a year ago, which is the best increase since July 2009. This is important as higher wages are the key to driving consumer spending, which is the largest portion of U.S. economic growth. The only negative aspect about the economy at this point is the fact that the global economy is not as healthy as the United States' economy. The current global slowdown is significantly hurting our trade and manufacturing.

December Interest Rate Increase Is ‘a Live Possibility,’ Janet Yellen Says

Fed chair Janet Yellen has again hinted at an interest rate hike, saying it's a real possibility in the month of December. She believes that, barring a decline in economic expectations, a rate hike is on the horizon. This caused a slight dip in stocks, as businesses brace for economic contraction. While inflation indicators remain low, a much better than expected October job report signals a possible tipping point in the economy.
People remain polarized on the issue. Many say that near zero interest rates are not sustainable, while others say that an interest rate hike would stall an economy is not ready for any contractionary policy. I personally believe that the rate hike is needed, but december may be too soon. While job reports are promising, peoples consumer confidence is still shaken by the recession. Near zero interest rates are too low to be sustained, but an interest rate hike may need to be saved for a later date.


http://www.nytimes.com/2015/11/05/business/economy/fed-yellen-congress-interest-rates.html?_r=0

Recapitalising Greek banks The damage The bill is cheaper than expected

Before the major Euro crisis Greek banks were one of the strong elements in the economy. However; as the years have progress this has not been the case. Unfulfilled monetary and fiscal policies have led them to be the cornerstone of Greece’s financial crisis. Since the radical party Syriza won the election last year it has been a dodgy year in Greek politics. Deposits in the economy have swiftly depleted which has given rise to concerns that Greece might revert to the Drachma and denounce the Euro. This act would have a very negative impact on depositors.

For Greek bank, their woes continued to grow when the ECB denied further liquidity which forced the government to shut them down for three weeks in the summer ( capital controls were also put in place). However; the Greek government was able to receive a bailout and stay in the Euro. Although this may have solved the issue at hand for a short period of time, but; in reality it had a massive impact on Greek banks. The main issue that they are dealing with as of right now is that local depositors have lost confidence.This means that Greek banks rely heavily on international investors, however; that in itself is an issue considering the shaky nature of Greece’s future in the Euro zone.

http://www.economist.com/news/finance-and-economics/21677646-bill-cheaper-expected-damage

Issue 3 Not Passing Was Not Because of Anti-Marijuana

A common misconception that has come up this week after Issue 3 not passing was that it was because of anti-marijuana views. Those, although frequent in Ohio, were not the reason Issue 3 was not passed. In fact, many marijuana activists did not want Issue 3 to be passed. The highest vote percentage was 42.9 % in Jefferson County in Eastern Ohio, which still isn't close at all to winning. The reason Issue 3 was not passed was simply because of its poor structure. It would've given power to an oligarchy of 10 sites in the state, and in the process market competition would be stifled, and it would limit consumer choice, particularly with medical use. Prices would be too high to the point that people wouldn't be able to afford it. And that's something that got the disapproval of a lot of pot users. Marijuana activists are looking for better ways to implement legalization in Ohio, which would not involve matters in an oligarchy setting. http://www.cleveland.com/datacentral/index.ssf/2015/11/how_the_marijuana_vote_lost_ev.html

Abenomics - An examination

Abenomics is the term popularly given to the economic revival that Japans current prime minister seeks to administer under an economic plan popularly dubbed Abenomics. Abenomics has to deal with a lot because japan not only needs to grow but it needs to grow at a point where it is able to hand its great public debt. He gave himself an end goal to raise the nominal GDP from 500 Trillion Yen to 600 Trillion Yen, a rise of 20 percent. While the Economy has been shifting in the right direction, it is still woefully far from where it needs to be. Recovery has been stopping and has in fact slumped in the second quarter of the year. Prices are yet again falling and the "new core" inflation index has remained short of the 2 percent inflation target. The Monetary policy seems to not be stabilizing in order to counter Japans sovereign debt which is 240 percent of its national debt.

Abe hoped that his nation would quickly return to rapid growth and thus prosperity would follow but it has not panned out that way. Japan needs to make tax revenues from somewhere in between 30-40 percent in order to stabilize its GDP debt and the fact that raising taxes from 5-8 pecent in consumption tax slowed down consumption rates is worrying. Japanese peopel have always tended to save more and at a time when the economy needs them to spend it is ever worrying that they choose toa ct more conservatively with their money 9as they have eery right to do so however). Japan needs to be careful at current growth rates because any offsets introduces by tax rises or cuts could mean plunging back into the recession Abenomics is trying so hard to cut off. Productivity is also an issue because even though output per worker is high, the problem with a shrinking working population is that it offsets higher productivity per worker.  Japan needs to increase its current inflation. Some options it could explore include

1. At current rate of bond purchases, the BOJ will own two thirds of government bonds by 2020. In effect, the govt will owe itself money in the form of seigniorage as debt payments made to the central bank will be returned to the govt itself.

2. Wait for a point where the government is pushed into a debt crisis of monetary madness which could potentiall spiral out of control or work either way...

Either way, Mr Abe has alot of work to do before he can say that his Abenomic policies can be called a definitive success.


http://www.economist.com/news/finance-and-economics/21677648-despite-shinzo-abes-best-efforts-japans-economic-future-will-be-leap

Fight Escalates Between Super 8 Franchise Owners and Their Franchisor

http://www.bloomberg.com/bw/stories/2010-01-18/fight-escalates-between-super-8-franchise-owners-and-their-franchisor

The franchisor of Super 8 hotels is the Wyndham Hotels group and the franchise owners are not very happy with them. The main reason that the franchisees are unhappy is because of the enforced upgrade of a property management system that will be very expensive. Franchisee owners believe the upgrade will create financial difficulties. It is true that the franchisor makes the decisions about the pricing, franchise fees, and maintenance needs, so the franchisees are subject to the decisions of the franchisors, but this does not mean that the franchisors can do whatever they want as is clear in the case of Super 8. The franchisees must be able to at least give their input to the franchisor. Being heard goes a long way. This allows the franchisor to keep the franchisees profit margins in mind. In theory, Wyndham Hotels Group has the ability to make a huge profit by narrowing the profit margin of their franchisees, but this is not practical because the franchisees will not want to renew their franchise agreements if they are not profiting from the arrangement. Wyndham Hotels Group must allow its franchisees to succeed if it is to succeed itself.