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Monday, September 3, 2012
Catch up with the Economic News
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It is Labor Day and the United States economy is still in trouble four years after the Great Recession left millions out of work. There are almost 13 million Americans unemployed as of July, making the jobless rate 8.3%. The rate for Hispanics is at 10.3%, teenagers are at 23.8%, and blacks are at 14.1% while the long-term unemployment is at 5.2 million. The concerns for jobs and our economy play a major role in the presidential election campaign, which leaves voters to decide which candidate can make better improvements in these areas. Romney has hopes to create more jobs and make new foreign trade agreements, as well as reduce taxes and regulations on businesses. He would also like to get rid of Obamacare. Then, we have Obama whose plan is to merely wait, “til next term or more of the same.” After four years of presidency without much improvement we will see how Obama does in the polls.
ReplyDeletehttp://www.mdjonline.com/pages/full_story/push?article-Labor+Day+finds+economy+still+in+trouble+four+years+after+crash%20&id=20012145
The Economy and the Election
ReplyDeleteAs the economy is always a huge topic in presidential elections, it is no surprise that economic policies seem to be taking precedence above all other issues as voters discuss the presidential candidates. Since voters have not seemed to notice major improvements in the economy, Republicans are hoping this will lead them to not reelect President Obama. Democrats, on the other hand, focus on the fact that “the election is not a referendum on his [Obama's] performance, but a choice between him and Romney”. Based on the current levels of joblessness alone, it seems unlikely for Obama to be reelected since no president has been reelected with such high unemployment rates since the Great Depression. The upcoming announcement of the latest unemployment figures this Friday has the potential to have a significant effect, one way or another, on Obama’s campaign.
http://www.google.com/hostednews/ap/article/ALeqM5jUMw0FQbNw-t7ZQvVssKH9xCun4Q?docId=8b6a5f9b026c4365b4494ef0e9a55e23
http://www.businessinsider.com/china8217s-difficult-choice-between-stimulating-the-economy-and-not-2012-9
ReplyDeleteWe are currently in a time when not only the United States but the entire world is in a very tough economic setting. In this time governments of all nations are forced to make some very important decisions. This article highlights China's government and their decision to either stimulate the economy or not. Because the Government has already given a huge stimulus during the 2008 crisis, regarded as a mistake, it is a tough decision whether to go down that road again or choose the path of austerity. If the government chooses austerity and does not interfere, the economy will short term be in terrible shape but in the long run would get back on track. If the government were to interfere immensely, the private sector could shrink and the state-owned sector would pick up the slack. State-owned companies can keep up production with no profi for the sake of jobs and can invest in infrastructure. Long-term production would slow down and the government would need to provide permanent support in this case. China's government will need to choose between these optons or a blend of the two in order to insure their economy will be up and expanding in the near future
http://www.businessweek.com/news/2012-09-06/china-approves-plan-to-build-new-roads-to-boost-economy
ReplyDeleteRecently China’s government approved the building of major infrastructures in order to boost their economy. Their economy has been lukewarm for the past three years. This project is to include over 1200 miles of roads, multiple water treatment plants, several new ports, a Disney theme park and 25 new subways that alone would be worth over 126 billon dollars. China has yet to release a budget for the approved building projects; however, they have already seen a growth in the economy. Multiple companies in the construction business have seen their stocks increase by as much as 8 percent. Clearly China is going in the right direction and will be able to turn their economy around within a few years.
The Role of Private Central Banking in the Euro Zone:
ReplyDeletehttp://www.economist.com/blogs/charlemagne/2012/09/ecb-and-euro
The European Central Bank, which consists of a council of private central bankers lead by Mario Draghi, has steamrolled over German resistance to buying risky bonds from countries such as Greece and Spain by majority vote. This means that insoluble and practically bankrupt countries such as Greece, and those teetering on the brink such as Spain, are being given what approximates a free lunch by the handful of soluble countries remaining in the Euro Zone. Moreover, the bankers of the EUC have been steadily increasing its power (It will possibly be an EU supervisor to over 6,000 banks next year), and dabbling in politics.
It is not only that the EUC has demanded strict monitoring of countries which request the purchase of bonds by EU institutions; Mr. Draghi, who attends every major European summit, has stated many times that the only long term solution to the current Euro Zone crisis is that members continue along the “historic process of European unification". Despite the drafts for a more "integrated" Euro Zone which he and his comrades are making, It is a wonder that anyone takes Draghi seriously. Private central banking has thus far proven itself utterly unable to cope with the crisis in the Euro Zone
http://online.wsj.com/article/SB10000872396390443686004577640330198582236.html?mod=googlenews_wsj
ReplyDeleteThis article explains how China's inflation is rising slowly per month. The Consumer Price Index has risen 2% from last august to this present one. Including food cost, which has risen 3.4%, which is a 1% increase from July. Economists predicted this due to the foresight of the upswing of global food pricing caused by the drought in the U.S. This article explains an upside to this inflation is that residential floor space has risen 13.3% from last year, which has encouraged developers to break ground on new developments, which previously, has been decreased by the government’s strict control on sales. For the first month since the end of 2011, new residential floor space under development has expanded, and at a whole 4.9%. “This sustained return to investment in China’s real-estate sector would encourage growth in the final moths of the year,” this article explains.
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ReplyDeletehttp://www.boston.com/business/news/2012/09/12/wholesale-stockpiles-july-but-sales-fell/6g368hjfcX60Qet1oA2gjM/story.html
ReplyDeleteThis article discusses how the U.S. wholesalers sales have fallen for the third straight month but did increase there stockpiles from the months June to July, the largest increase in five months. The sales fell only 0.1 percent. With sales slumping and stockpiles increasing this could lead to a major issue, which could lead to companies having to cut inventories in the near future. This could also bring cutbacks in production in factories because of the problem of clearing out their stockpiles. This issue is having an impact on the U.S exports, which is leading to a decline in the U.S. manufactures this year. With all these declines it also caused a decline in the amount of jobs by 45,000. The main issue is that with sales on the decline or even on a slight growth, economists foresee the U.S. being well short of making any type of dent in the unemployment rate.
http://www.nytimes.com/2012/09/13/technology/iphone-5-design-thrills-partners-but-will-cost-users.html?ref=business
ReplyDeleteBrian X. Chen's article, Design Thrills Apple Partners, But Will Cost Users, discusses the long awaited release of the Iphone 5 and the unexpected financial woes that arrived with the popular product. When Apple unveiled it's newest product earlier today consumers as well as Apple product producers were shocked to find that the familiar charging cable that once came equipped with every apple product had changed. This find meant that consumers would not be able to use cords that they had gathered over years of consuming Apple products. A new charging dock would mean new expenses for customers. The new change in the charging adapter not only called for consumers to purchase new charging cords but they would also have to consider the purchasing of new cases, radios, adapters, and even car chargers.
http://www.washingtonpost.com/world/africa/south-african-mine-strikes-could-damage-countrys-economy-analysts-say/2012/09/13/9f1e5ab8-fdc6-11e1-b153-218509a954e1_story.html
ReplyDeleteSouth Africa’s Mining Strike Could Have Dangerous Effects on the Nation’s Economy
South Africa’s economy is in a dangerous position as strikes on platinum and gold mines continue. The mining sector of South Africa’s economy employs around 500,000 people and thus is responsible for 5-8% of the country’s gross domestic product. There have been a series of mining strikes across the country since August 10th when workers at the Marikana mine complex went on strike against Lonmin, a London-based company. On August 16th a clash between police and the Marikana workers ensued which resulted in 34 worker deaths. Lonmin’s production has ceased at least for the next five weeks. These strikes have several disastrous effects on the economy. After Impala Platinum workers went on strike for six weeks, the economy contracted by 16.8%. Such turmoil is feared to affect other sectors of the economy as well. Until the turmoil and strikes end, the economy of South Africa will not be expanding at the rate it hoped to while still facing an unemployment rate of 25% and rampant poverty throughout the nation.
Fed Goes All In on Job Creation – Justin Lahart (Wall Street Journal) 09/14/2012
ReplyDeleteLooking into the economic forecast, the Federal Reserve looks like it will be spending a large chunk of change for a very long time. The Fed has placed the idea of improving the moribund job market as the most important objective. It targets to pay $40 billion in mortgage-backed securities every month, and the Fed promises to continue to do this until the job market is back on a healthy road again. To sustain a healthier job market, the banks’ governors and board members estimate that the unemployment rate should be between 5% and 6.3%, which is lower than the past month of August (8.1%). The Fed policy makers don’t see the unemployment rate getting below 7% until the end of 2014. Though the job market may improve sooner than it thinks, there will still be many headaches down the road.
http://money.msn.com/business-news/article.aspx?feed=AP&date=20120914&id=15561089
ReplyDeleteWe are living in a time where our economy is at one of its lowest points in many years and yet our stock market is on the rise. The Dow Jones is just 4 percent away from reaching its all-time highest level, which was set in October 9th 2007 at a level of 14, 164. One of the reasons for this gain in the Dow, a 260 point increase, just 600 points away from the record high, is because of the Fed. Ben Bernanke moved a new plan into action that will help to lower the interest rates which will help to encourage people to spend and stocks will hopefully increase. The plan is to spend 20 billion dollars a month buying mortgage bond thru 2015. These measures are called quantitative easing, which is the Fed’s third attempt in trying to stimulate the economy. Another reason that stocks are increasing is because corporate profits are expect to rise here in the fourth quarter. But the greatest fear in the economy is the possibility of a fiscal cliff, which would be a set of automatic tax increases and government spending cuts that take effect at the end of this year unless Congress acts. Hopefully these recent actions by the Fed will help to start the economy enough to get America back on its feet.
http://blogs.wsj.com/economics/2012/09/14/report-tax-cuts-for-wealthy-linked-to-income-inequality/?KEYWORDS=economics
ReplyDeleteThere has been alot of debate recently between the Republic and Democratic parties over the issue of taxes on higher income citizens. The parties hold fairly opposite views on how taxing them or reducing taxes will affect the economy. The Democratic argument says that tax cuts on the "rich" are unfair to the middle class. While the Republicans maintain that tax cuts on incomes over $250,000 maintain an honest incentive for entrepreneurship and will help boost the economy. The Congressional Research Service has found through their results that tax cuts on the rich may be connected with income inequality. However, they also said that the connection between higher income tax cuts and economic growth is "not a strong one" and the ebb and flow of the growth rate over the last 65 years may be due to many other factors. It will be interesting to see what happens to the tax, depending on the outcome of the Presidential election in November
http://www.businessweek.com/ap/2012-09-14/in-a-crummy-economy-why-are-stocks-soaring
ReplyDeleteOne of the most interesting aspects of this stock resurgence can be identified in this idea from Bernanke: “to pump money into the economy to push down interest rates,” hoping that it would result in more spending. This is distinguishable from the idea of printing more money, which leads to inflation. Likewise interesting is the way in which Wagner grasps a relationship particularly between opportunity costs and investments, the latter of which is made clear in her observation that “stocks are relatively cheap.” Buying stock is an investment in that it involves spending money with future output in mind. Opportunity costs aren’t a problem merely in investment, but they add to the riskiness of it. The economy being as it is, it is no wonder that such a move by the Fed is generating so much debate.
http://www.nytimes.com/2012/09/15/business/economy/fed-may-have-limited-effect-at-best-on-real-estate.html
ReplyDeleteIn this New York Times article on the housing market it is suggested that this market is finally beginning to recover from the housing market crash of 2006. The Federal Reserve has lowered interest rates incrementally, though not dramatically enough to see a real surge in the market, and many economists are doubtful that this will bring about any significant change. To complement the lowering of interest rates, the Federal Reserve has also pledged to purchase $40 billion worth of mortgage-backed securities a month as an incentive to sell these securities, and possibly lowering mortgage rates, which are already nearing record low prices.
ReplyDeleteBefore the APEC summit that will open on Vladivostok this upcoming weekend, Russian president Putin stresses on the importance of cooperation between its members against highly unstable world economy. Putin wants to strengthen the ties with Asian countries especially during this time of European Debt crisis. He portrayed Russia as a gateway to Europe for many Asian Investors, and also claimed that Russia will be a reliable energy supplier.Despite the fact that Russian gas monopoly Gazprom's conflict with EU over pricing policies and its reduction of supplies in the past, Putin still upholds that Russia could be reliable energy supplier for Asia. He believes that strong ties within Asian economy will serve as a great defense against highly volatile and risky world economy. He claimed that strong ties between Asian economies can only be brought up by "common understanding and with the mutual interests of…." Asian partners. As if he were to show his strong desire to work together with many Asian countries, Putin already made a step ahead to this commitment by putting money into building up an underdeveloped region, which will then attract many investors, tourists and gamblers. APEC members are also speculating the possibility of setting up an agreement on Trans Pacific Partnership, which will allow the free trade between member countries. China however said that she is not ready for it.
http://in.reuters.com/article/2012/09/07/apec-summit-putin-idINL6E8K752N20120907
As the election draws near, the campaign of Republican presidential candidate Mitt Romney has become increasingly more focused on the United States economy and jobs. Romney's campaign speeches now center around what he calls his five-point economic plan. The plan, Romney claims, would create 12 million jobs over the next four years. Romney's five points include North American energy independence, the improvement of education and job training,curtail unfair trade practices, cut the federal deficit by cutting federal spending, and champion small businesses by cutting taxes and regulations. Many sources, however, criticize Romney's plan calling it "vague" and "not tangible". Still Romney insists that all will be revealed.
ReplyDeletehttp://www.bbc.co.uk/news/business-19616946
ReplyDeleteIn this news article The Centre for Economics and Business Research (CEBR), says that United Kingdom households will see a rise in real income since the beginning of the financial crisis. According to the CEBR incomes in the UK are set to rise by about 0.5% in 2013. The income is said to fall by 0.2% this year, and the UK has been struggling with no or low wage rises and pretty high inflation rate. Furthermore, most households in the UK have seen wage freezes during the economic turmoil, and inflation had been rising between Sept "09 and Sept '11 and now is at 5.2%. Since 2011, the inflation has fallen to 2.6%, unemployment has risen from 1.61 million in 2008 to 2.59 million in July 2012. Experts say middle and low-income families will benefit the most from the income increasing and inflation decreases.
http://www.albawaba.com/business/palestine-economy-442324
ReplyDeleteThe Palestine economic is falling farther and farther away from any progress for many reasons. The Israeli drive of settlement expansion and subjugation is making any hope for a growth in the Palestine economy impossible. Israel also has the control on taxes levied on the Palestine people. Due to the pressure from Israel, the Palestine Authority (PA) has to place thirty percent of its dwindling budget into its security agencies. The Palestine economy has not only been under foreign oppression for decades but has been willing to foot the bill for their foreign oppressor. Unemployment, poverty and inflation constantly are adding enormous amounts of stress to the PA. There does not seem there are any signs of hope for the Palestine economy only a meltdown.
http://azdailysun.com/business/in-a-crummy-economy-why-are-stocks-soaring/article_7a062328-d084-5282-9ecb-8bb60371afae.html
ReplyDeleteThis article explains how the pitiful the economic growth is and unemployment topped 8 percent for 43 months, but the Dow Jones is just 4 percent shy of an all time record. Ben Bernanke, the Federal Reserve chairman, announced last week measures that are aimed at lifting the economy and boosting the prices of assets like stocks and houses. The market rose up all summer of anticipation of such a move. The Fed made a promise to purchase $40 billion a month in mortgage bonds and keep interest rates pretty low through 2015. This announcement made a two day rally that had the Dow up 260 points; it was just shy of its record of 14,164. There’s very good reason to think Bernanke’s idea will work for the stocks. His idea is to pump money into the economy to push interest rates go decline, this will encourage spending, and eventually drive up stocks. This will drive people out of investments based on interest rates, such as CDs and bond mutual funds, and into stocks. If stock prices rise up, investors will be richer and more likely to spend more; this is called the “wealth effect”.
This comment has been removed by the author.
Deletehttp://www.reuters.com/article/2012/09/16/iran-oil-prices-idUSL5E8KG2KF20120916
ReplyDeleteOil prices are fine where they are, says Mohammad Ali Khabiti, Iran's representative to OPEC. He says that “a few dollars either way” are within the nominal range for oil and are unlikely to actually harm Western economies. Khabiti seems to misunderstand the meaning of elasticity, implying that because America and other Western countries have been willing to pay so much for oil, it must not affect their economies. According to Khabiti's statement, the U.S. administration's attempts to pressure oil-producing companies into increasing production are an attempt to artificially drop prices. However, administration meetings with analysts in September could indicate an attempt to flood the U.S. market and drop prices by releasing government supplies of oil, despite the International Energy Agency's analysis that supply levels are stable. Furthermore, Iran seems to be fearful of its place in OPEC; its production has been steadily declining because of Western sanctions. Official OPEC figures place Iran now third behind Iraq, producing almost a million fewer barrels than Tehran's own official figures show. Other news articles indicate growing fears of Iran's nuclear capability, and so Khabiti's statements seem more interested in bolstering Iran's position than anything else.
http://www.mercurynews.com/breaking-news/ci_21538348/hurricane-isaac-sends-us-jobless-claims-up-382k
ReplyDeleteHurricane Isaac hit land as a category 1 hurricane then reduced to a tropical storm. In effects to the hurricane the unemployment rate went up more than usual. The hurricane disrupted work in nine states, which was a big reason for the unemployment rate being so high. The Federal is having a two-day meeting to talk about ways to lower the unemployment rate. The unemployment rate dropped but only because the number of people working or looking for work fell. Getting laid off isn’t as frequent anymore but the rate of hiring is not changing either. Growth isn’t likely to happen for the rest of year.
http://www.foxnews.com/world/2012/09/16/china-takes-aim-at-japan-economy-in-protests-over-island-ownership/
ReplyDeleteThis article is about a dispute over islands between China and Japan. The Chinese have chosen to strike Japan’s economy over the conflict. They have conducted angry protests, as well as boycotts against Japanese businesses. Some of these protests have included violent acts. Protesters torched a Panasonic factory and Toyota dealership in the eastern port of Qingdao, looted a Heiwado Co. department store in the southern city of Changsha and ransacked Japanese supermarkets in several cities. China’s government has also gotten involved by urging the use of economic pressure against Japan. China's National Tourism Administration ordered travel companies last week to cancel tours to Japan over the weekend.
http://www.necn.com/09/16/12/More-anti-Japan-protests-in-China-over-i/landing_nation.html?&apID=6107ef00ea4a43a4bfb8aac840a0f2d0
ReplyDeleteThis article shows how pathetic the world can be today. Even when two countries are technically at peace with each other they are still at war to some degree. China and japan are fighting over some islands and because they are technically at “peace”they cant physically attack each other they still try to hurt each other’s economy in order to get the upperhand. This article shows that a stable economy is very essential to its country thus making the country very vulnerable when its economy is unbalanced and as a result of this both countries are dealing with riots. Just as an economy can be bad for the individual but good for the country a countries economy can be good for itself and bad for the world. Japans and china economy is effecting all around them including the United States. In order for the economy to be balanced everybody needs to work together. But the fallen nature of humans doesn’t allow us to do this thus you are always going to have an unbalanced economy.
http://www2.tbo.com/news/breaking-news/2012/sep/15/2/ryan-hammers-obama-on-the-economy-during-oldsmar-s-ar-501706/
ReplyDeleteAt a rally in the influential swing state of Florida, Vice Presidential candidate Paul Ryan explains his view on important views. He tells citizens he and Mitt Romney would improve the economy, strengthen defense and preserve Medicare. They would work to remove suffocating restrictions that make it difficult for businesses to anything as the costs are so high. Ryan argues Obamacare is taking $700 billion from Medicare, a point that hits home with the Florida citizens. To achieve energy independence, our country needs to develop its own coal, gas and oil energy sources. We also must achieve peace through strength, Ryan states, that with a strong military our enemies will not test us and our allies will have more respect.
Ethiopia on the Rise?
ReplyDeleteIn the article titled “Frontier Mentality,” the author paints a picture of the current growth in Ethiopia’s economy. The growth is a result of investment of several major corporations in the country. Tiger Brands expanded to Ethiopia, Diageo and Heineken acquired former state breweries for $400m. The “icing on the cake” being when a $100m private equity fund was launched for the country.
The author continues to describe the many risks involved for these companies and firms investing in Ethiopia, including increased government borrowing, spending, and increasing inflation. 40% of the country’s GDP is agriculture while it accounts for 80% of employment. Ethiopia is described as a investment “frontier.”
The article wraps up by describing a fear, held by some Ethiopians, that the country will be slowly divided up among foreigners citing historical examples from Ethiopia.
http://www.economist.com/node/21554547
http://www.sfgate.com/business/bloomberg/article/Singh-Embarks-on-Biggest-Gamble-to-Revive-3870389.php
ReplyDeleteThe Prime Minister of India, Manmohan Singh, has pushed through policy changes opposed by members of his own coalition in trying to revive the economy and state of his party. Now in his second term, this is the biggest gamble Singh has made while in office. This attempt at economic recovery is being made to help increase the growth of the economy that has been growing at its slowest rate in three years. This is also an attempt by Singh to gain voters respect as the next election in 18 months away and he is expected to have heavy competition. Singh has finally made foreign investors happy by lowering diesel prices by 14%. This will lead to an acceleration of overseas flows into Indian shares before paring some gains after the central bank kept interest rates unchanged.
Global economy
ReplyDeletehttp://in.reuters.com/article/2012/09/16/economy-global-weekahead-idINL3E8KF0LE20120916
The global economy needs time to pay off its debt according to Stephen Cecchetti, the chief economist of the Bank for International Settlements. He says that Europe's markets are not competitive enough and that other market countries are showing signs of slow economic growth. According to surveys, Japan also is showing signs of lower economic growth for two months in a row. Andrew Cates, an economist with UBS in London believes that the 2013 GDP could be increased through lending to businesses and consumers. His models show that the euro zone could increase by 0.5 percentage point and this could result in U.S. output being raised by 0.3 percentage points. These would also lead to higher exports in the Chinese economy and thus boosting their economic growth as well.
http://www.economist.com/node/21562925
ReplyDeleteBanks are cutting back on their investment staff that once helped them reach sizeable profits. Barclays for example is cutting back their program that was responsible for half of its total profit by a fifth. There are two main reasons for this enormous cutback by the banks; one is that customers just dont do as much business through the banks anymore or even in general. The other is that banks are not making as much money on trading resulting to the cut backs of their programs and staff. Some banks believe that investment is doing very well right now, but majority of the larger banks do not. Another large factor in this is that London basically gave up on being the center of global finance, and now New York and Asia look like they will be the power houses of banking in the world.