After Foreclosure, a Focus on Title Insurance

When home buyers and people refinancing their mortgages first see the itemized estimate for all the closing costs and fees, the largest number is often for title insurance.

Title insurance covers you in case people turn up months or years after you buy your home saying that they, in fact, are the rightful owners of the house or the land, or at least had a stake in the transaction.

The insurance companies or their agents begin any transaction by running a title search, sifting through government filings related to the property. They do this before you buy a home or refinance your mortgage to help sort out any problems ahead of time and to reduce the risk of your filing a claim later.

But sometimes they miss things, and new issues can arise later.

When Troubled Assets Are the Attraction

Troubled assets and mutual funds are terms that aren’t often yoked together, at least not in marketing campaigns. Yet three new closed-end mutual funds have made investing in such assets a selling point.

The funds — two from Nuveen Investments and one from Legg Mason — are the primary retail participants in a federal government program started last year to bolster the market for distressed mortgage -backed securities. As far as that broad goal goes, the effort has been relatively successful. The commercial mortgage-backed securities component of the Barclays Capital U.S. Aggregate Bond Index, a gauge of the market, rose 19.3 percent this year through Sept. 30.

Unemployement 12.9%

Unemployment is up to 12.9%, contradicting what is circulating to be 9.6%, accroding to Parker Spitzer. Overall unemployment is high ,which is quite depressing for unskilled workers, especially for those with less than a college degree.

5.9 millions workers were discouraged, and if these workers were actively searching for jobs, the figure would shoot higher.

Government borrowing and spending are suggested at this moment since businesses don't want to invest, and consumers don't want to consume. Even though it is encouraged that this is the time to spend, it is most likely that consumers might not have the stimulation to do so since many are in deep debts.

2010 deficit near $1.3 trillion

Well, if the morbid jobs report and the weak dollar were not bad enough, the Congressional Budget Office added their estimate of the budget deficit as of September. A whopping 1.3 trillion certainly does not alleviate the headaches in the minds of Americans. Overall, the money spent by the government actually declined. Yet, as evidenced by the jobs report, a substantial amount of people are still out of work. Thus, transfer payments for the unemployed rose a large 34%. We certainly need to reduce unemployment benefits and welfare payments. In fact, all transfer payments need to be examined closely for sheer excessiveness. Although this will never happen..

Dollar crunched again

Unemployment was constant, the dollar fell to its lowest point since January, GAP changes it's logo today was not a remarkable day for the economy except for the breaking of the 11, 0000 point barrier by the Dow Jones. "The U.S. currency fell to 81.8 yen, its lowest since April 1995, and was trading at $1.39 against the euro. The dollar index tumbled to 77.2, matching a low last seen in January." One economist noted that these recent statistics are looking more and more indicative of a double-dip recession. The Fed is looking to buy Treasury bonds to alleviate the situation and lower interest rates, if only partially. These coupled with the possibility of inflation is a potent mix for expected thoughts and behaviors by consumers.

Bank of America halts foreclosures in 50 states

Bank of America is the first bank to stop tens of thousands of foreclosed homes in all 50 states. This decision was made in reaction to pressure from public officials inquiring about the accuracy of foreclosure documents. A company spokesman insists that past foreclosures are accurate. Banking and housing analysts, however, "fear the foreclosure document problems could prolong the housing bust, and hundreds of thousands of inevitable foreclosures will be pushed off into some legal limbo for years."

"If you are looking at the key in this country to economic stability, it's the housing industry," said banking analyst Nancy Bush of NAB Research. "This is a huge mess that helps nothing."

According to a document obtained by the Associate Press, a banking official admitted to signing thousands of foreclosure statements a month without reading many of them.

Senate Majority Leader Harry Reid, D-Nev encouraged banks in Nevada to suspend foreclosures until they are sure homes are not wrongly assigned to foreclosure status.

PNC also announced that it is halting foreclosures and evictions in 23 states so it can review all documents to ensure they were properly completed. PNC is the fourth bank to halt some foreclosures due to evidence that lawyers and employees signed documents without verifying them.

I am shocked by this announcement. Our economy is already in so much trouble and this situation can only prolong the housing crisis we are facing. The irresponsibility of banks got us into the mess and the continued irresponsibility will keep us here.

Unemployment stays at 9.6% as schools, governments slash jobs

While 95,000 jobs were lost last month, the unemployment rate has remained steady at 9.6 percent, according to today's report. Movements in the labor market include an increase in private jobs and a decrease in government jobs, mostly in public schools. The increase in private jobs comes mostly from temporary employment and employment at food and drink establishments.

This poor report increases the likelihood that the Fed will purchase more treasuring bonds to stimulate the economy. This encouraged investors and pushed the Dow Jones industrial average above 11,000 on Friday for the first time since May.

Another bleak report has some worried that our recovery is in jeopardy. It is especially alarming to see how badly the education sector was hit last month. "It's huge. We're cutting one of the key things related to future productivity growth," said Heidi Shierholz, an economist at the Economic Policy Institute.

The author argues that unemployment continues to rise because of weak sales and the uncertainty about future taxes and policies. Businesses are just too worried to invest. While the Fed continues to attempt its fixes, the government also needs to work on gaining the public's support. Nothing will get fixed if people don't have faith in the economy.

Ready For Some Inflation?

The Fed, after seeing the somewhat anemic growth rate in the summer, is mulling the idea of starting inflation to combat the threat of deflation.

"The rationale is that getting inflation up even temporarily would push "real" interest rates—nominal rates minus inflation—down, encouraging consumers and businesses to save less and to spend or invest more."

"Others warn that pushing inflation higher than the target could create public confusion and risk fueling financial bubbles and market instability. They say Fed policy already is weakening the dollar and as a result prompting a gold and commodity boom. "The Fed is treading upon a mine-laden path that has never been tip-toed through in this country," said Andrew Busch, a currency strategist at BMO Capital Markets

So is it time to start spending to beat the expected interest rate?

2nd UPDATE: Australia Employment Soars, Pushes Currency To 2-Year Highs

Unlike many other developed and developing nations that are suffering majorly from this current recession, Australia seems to be doing just fine. Reports state that the country's employment levels are on the rise and have been for the past 12 months!
In September itself they added around 50,000 jobs which sent the Australian dollar to 2 year highs, putting pressure on the central bank to tighten its policies.
"The sterling jobs numbers, released Thursday, underscore Australia's position as one of the world's strongest developed economies, with a pressing need to contain demand at a time when many of its peers are toying with extending emergency stimulus measures to kick-start growth".
This is a very positive sign for job seekers as more people are now finding jobs and getting them too!
Furthermore, "Currency strategists say the Australian dollar is now en route to parity with the U.S. dollar for the first time since it floated in 1983, with little resistance expected around its post-float high at US$0.9850".
Why do you think Australia is doing much better than the rest of the world? Should we follow their model?

Fed's $2 trillion May Not Go Far

The Fed plans to purchase a second round of U.S Treasuries next year in yet another attempt to stimulate the economy. The purchase will range from $500 billion to $2 trillion based upon what The Fed decides in the coming months. However, many top economists are contending that the amount the The Fed decides to purchase will have little difference between $500 billion --> $2 trillion and that furthermore, the purchase itself will do little if anything to begin with in the first place. Referring to the proposed purchase by The Fed, chief U.S. economist at IHS Global Insight, Nigel Gault said, “This is not a game changer for the economic outlook”.
Gault's models show that $500 billion of purchases would boost growth 0.1 percentage point in 2011 and leave the unemployment rate at 9 percent or above for the next two years. This leaves this student questioning; If it isn't going to do anything, then why do it in the first place?

Google's next giant revenue stream

Google's second magic bullet- THE ANDROID!

After years of research and development, Google has finally come up with one of the world's biggest players in smartphones. Google does not earn anything by licensing Android. But its plan is to drive users to use the pre-installed apps to make searches.

How the Japanese does it

from The Economist.com- just think this is interesting to know!

JAPAN'S economy has long been ailing. But it now also has to contend with a strong yen, thanks in part to loose monetary policy in the rich world. That alone gave the Bank of Japan (BoJ) reason to act on October 5. So too did criticism that it has not done enough to spur the economy, which has inspired Japanese politicians to suggest legislation to weaken the central bank's independence.

Whatever its primary motivation, the BoJ took three modest but symbolic steps today. First, it lowered the policy rate from 0.1% to a range between 0% and 0.1%. That signals to the market, and to angry politicians, that the BoJ cares. Second, the BoJ stated that it would maintain the virtual zero-rate policy until there was "medium- to long-term price stability". Until deflationary Japan sees consumer prices rise between 0% and 2% (with an unofficial aim of 1%), the near-zero policy rate will remain (as it has done for ages).

Third, the central bank said that it will consider establishing a programme to buy public- and private-sector assets from banks—including commercial paper, corporate bonds and even exchange-traded funds (ETFs) and Japan real-estate investment trusts (J-REITs). Since the recent financial crisis, Japan has continued to accept financial instruments as collateral in order to pump money into the system, but hasn't bought the assets. The effect would be to restart the policy of quantitative easing that Japan used to claw out of its banking crisis between 2002 and 2006. The initial amount under consideration is about ¥5 trillion (¥3.5 trillion of which is for public-sector debt), which adds to a sum of ¥30 trillion already budgeted for BoJ loans to banks.

The market had expected some form of monetary easing but hadn't imagined a whittling of interest rates, even if merely symbolic. The Nikkei Stock Average closed 1.5% higher. The yen, which has been strengthening in recent days and months, fell initially against the dollar and euro.

From a political standpoint, too, the moves were a success. The finance minister, Yoshihiko Noda, said he expects the actions to weaken the yen and improve the economy. "Very timely", gushed the economics minister, Banri Kaieda. "I think it met Prime Minister Naoto Kan's expectations", he added.

Will the BoJ's actions have any impact on the economy? The policy-rate change doesn't change much in practice—it merely reinforces the message that low rates are here to stay for a while. The asset-purchase programme is as yet too small to matter. A new round of quantitative easing by America's Federal Reserve this autumn will not help the yen, which rebounded against the dollar later in the day. But the moves do suggest the BoJ is willing to respond to a worsening economic climate and to be sensitive to political pressure. The psychological boost that represents should not be discounted.

Geithner: Currency Problems Risk Global Growth

WASHINGTON (CNNMoney.com) -- Treasury Secretary Timothy Geithner -- in remarks that appeared aimed toward China -- took a sharper tone on the issue of currency Wednesday, saying global economic growth could be at risk unless developing nations are more flexible about undervalued currencies.

Without mentioning China by name, Geithner said tight controls on currency risk "either causing inflation and asset bubbles in emerging economies, or else depressing consumption growth and intensifying short-term distortions in favor of exports," in a speech at the Brookings Institution in Washington.

Geithner said that a main U.S. goal going into International Monetary Fund meetings in coming days is to "convince" those nations controlling their currencies to be more flexible.

"It is not good for the world for the burden of solving this problem to rest on the shoulders of the United States," the Treasury secretary said. "It's better for it to come from a multilateral context."

However, Geithner wouldn't say whether he would be willing to talk to other countries about coordinated action forcing nations that are being less flexible with their currency to move forward.

Geithner said the most important policy challenge all global nations face, including the U.S., is figuring out how to improve economic growth.

"Most of us still have the capacity to take additional actions that would improve both short-run and long-run growth prospects," Geithner said.

He suggested that the U.S. policymakers also have more they could do but warned a big U.S. challenge is a lack of political will, implying that the problem lies with Congress.

"The most important thing we can do now is to make sure this recovery is self-sustaining," he said. "Then we'll be in a much better position to address fiscal challenge," like growing budget deficits.

Geithner said that the U.S. economy is "absolutely healing," in spite of sluggish economic reports this summer. He acknowledged continued weakness in real estate and construction but pointed to strength in the exports and the technology sector.

"It's healing more quickly than any of us thought," Geithner said

Krugman: "We're worse of than Japan"

This is a very interesting article that discusses the opinions that economists have on the current economic situation. First, they state their opinion that they believe it is going to be more than just a few years before unemployment drops. Some have predicted that the unemployment will grow before it decreases. This looks like a very possible scenario due to the fact that unemployment has increased to 9.7% from 9.6% after the month of September. It is evident that these economists are disappointed in the policymakers ability to stimulate the economy. These economists suggestions for policymakers consist of the Fed buying a large amount of Treasurys and significant tax cuts before the year is over. The Fed buying back government debts would put more money into the economy and decrease interest rates while tax cuts would encourage spending by consumers which would hopefully stimulate the economy. These are both very good suggestions, but if they are not done on a large enough scale then they might not have much of an impact.

Spend/Not Spend so much on Health Care?

As much as Americans spend on health care, we do not get much better care than countries that spend much less on health care. We don't live as long as people that have cheap health care, like Canada, Japan, and most of Western Europe. Misdiagnosis and medical error is most common in the U.S. than many other countries.

In choosing their health reform plan, President Obama and the Democrats eschewed radical changes and tried to minimize the disruptions to the current system. Mr. Obama went so far as to suggest there would be no disruptions, saying that people could keep their current plan if they liked it. But that’s not quite right. It is not possible to change a system as huge, and as hugely flawed, as ours without some disruptions.

For example, many fast food workers are underinsured. McDonald’s offers its hourly workers two different health care plans, which are known as “mini-med” plans. In one, workers can pay about $730 a year for benefits of up to $2,000. In the other, they can pay about $1,660 a year for benefits of up to $10,000, The Journal reported.In a memo to federal regulators, McDonald’s executives argued that their version of health insurance “positively impacts” the almost 30,000 workers who are covered. And that’s true. A plan with a $2,000 or $10,000 cap can cover some modest health problems and is better than being uninsured. Is it worth it?

Bernake Flies with Deficit Hawks

Bernanke flies with deficit hawks

By Ben Rooney, staff reporterOctober 5, 2010: 11:52 AM ET

NEW YORK (CNNMoney.com) -- Ben Bernanke, chairman of the Federal Reserve, warned Monday that the United States faces serious long-term fiscal challenges that could threaten the nation's economic future.

In prepared remarks from a speech to policy analysts in Rhode Island, the central bank chief said the U.S. budget deficit should narrow over the next few years as the financial markets improve. But he said policymakers will need to make some difficult choices now to put the nation back on a path toward long-term fiscal sustainability.

"An improving economy should reduce near-term deficits," said Bernanke, the nation's top monetary policymaker. "But our public finances are nevertheless on an unsustainable path in the longer term, reflecting in large part our aging population and the continual rise in health-care costs."

Bernanke acknowledged that the current deficit, which is at its highest level since World War II when measured as a percentage of the national income, is largely a result of the financial crisis and the economic recession it spawned in 2008-20

But the economy remains too weak to reduce the deficit significantly over the next year or two, he said. "Indeed, premature fiscal tightening could put the recovery at risk."

And he became the latest Fed official to suggest the central bank is leaning toward more asset purchases in an effort to jump start the sputtering U.S. economy.

He said previous purchases of nearly $2 trillion in mortgages and long-term Treasurys by the Fed had been an "effective program" and when asked about the possiblity of additional purchases, he responded "I do think they have the ability to ease financial conditions."

As to the questions about the future of the federal deficit, he stressed that the bigger problem now is how to fund entitlement programs such as Medicaid and Social Security as the Baby Boom generation reaches retirement age.

"Our fiscal challenges are especially daunting because they are mostly the product of powerful underlying trends, not short-term or temporary factors," he said.

Death to deficits by 'a thousand cuts'

While he said these issues will eventually be resolved, Bernanke warned that failing to address them could expose the nation to "serious economic costs and risks."

The Fed chairman called on fiscal policymakers to quickly put in place "a credible plan" for bringing down the deficit over the medium term. "Opportunities for both taxing and spending reforms are ample," he said.

In addition, he called for overhauling the nation's tax code and making existing government programs more efficient.

Bernanke also discussed fiscal rules, such as the pay-as-you-go policy Congress adopted in the 1990s. He said fiscal rules, including deficit targets and mandated caps on spending, have had varying degrees of success in other countries.

"Well-designed fiscal rules cannot substitute for the political will to take difficult decisions, but U.S. and international experience suggests that they can be helpful to legislators in certain circumstances," he said

Is the Fed playing with fire?

Since the recession began in September of 2008, the FED has pumped about $2 trillion into the economy through the purchasing of long-term assets like mortgages and treasury bonds, in an effort to lower interest rates and encourage spending. As the election draws near, it is becoming ever so clear that the FED will prepare to continue its trend - more purchases may be on the way. Ben Bernanke commented on Monday on the possibility of future purchases, "I do think they have the ability to ease financial conditions."
This continued action comes with great risk, the greatest one being that the cost does not outweight the gain. Many economists, and I agree, believe that little to nothing will change in the current state of the economy. Capital has become cheap, and even with the near zero interest rates, banks are still not loaning out any money. Lowering rates even further will do nothing to change the current mindset; consumers are concerned about paying down debt while employers and banks are holding onto their cash. The FED's policy could lead to high inflation down the road with little to no trade off in unemployment.

Treasury Prices Fall While Service Sector Expands

U.S. service-oriented companies grew slightly faster in September as customer demand improved. This is the ninth month in a row of service sector expansion. Investors sold Treasurys on Tuesday after a report showed that the service sector expanded again. The selling is more profit-taking than an overall change in investor’s outlook for the economy. Investors are also putting their money into stocks. Traders have pushed Treasury yields lower in recent weeks because they expect the Federal Reserve will try to lower long-term interest rates to spur borrowing and spending.

Buffett says cut taxes for all but the rich

Fortune.com

Tax cuts below 20% for the high income individuals seem to not please everyone.

Buffet suggests that tax should go up back to its normal rate for the upper bracket families since the federal government needs more public saving, and this composite of the economy can definitely afford that without much tears and sweats.

This time, he suggests that tax cut should be given to people outside the upper bracket, since this will help boost consumption in the economy. Buffet didn't say anything about it before, saying that "nobody asked him." The implication of this question in this article is unclear, but sympathizes with people of the lower class? Maybe.

Anyway, this seems to be a good idea, doesn't it?

The "Easy Way Out"

"The world's wealthiest people have responded to economic worries by buying gold by the bar — and sometimes by the ton — and by moving assets out of the financial system, bankers catering to the very rich said on Monday.

Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.

"They don't only buy ETFs or futures; they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest.

UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,314.50 an ounce on Monday, near the record level reached last week."

I look at this from the alternative viewpoint of the run-of-the-mill everyday investor, who may not have $50 million in cash to put into gold or precious metals, but rather must turn to other high-yield stock choices that has nowhere near the security that putting money into physical metals. Although signs point to a double-dip recession, it seems only those who are super-wealthy are those who are safe.

Call for new global currencies deal

The Institute of International Finance is urging countries to agree on a new currency pact to help balance the economy. The institution is concerned that a failure to develop a coordinated plan could lead to increased protectionism. Guido Mantega, Brazil’s finance minister warns that a currency war could be the result of each country’s efforts to prevent currency appreciation. While the World Bank President, Robert Zoellick, says a currency war in unlikely, it is clear that tensions are rising.

During financial uncertainty, I believe it is easy for countries to worry about their own economies rather than develop multilateral policies. In the case of small open economies that is not a problem. Large open economies, however, have a much greater responsibility to work with other large open economies. I agree that if this unilateral approach continues we may face a unique set of challenges.

Racial Predatory Loans Fuel Housing Crisis: Study

"Predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis, according to a new study published in the American Sociological Review.

Predatory lending typically refers to loans that carry unreasonable fees, interest rates and payment requirements.

Poorer minority areas became a focus of these practices in the 1990s with the growth of mortgage-backed securities, which enabled lenders to pool low- and high-risk loans to sell on the secondary market, Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University and PhD candidate Jacob Rugh, said in their study.

The financial institutions likely to be found in minority areas tended to be predatory -- pawn shops, payday lenders and check cashing services that "charge high fees and usurious rates of interest," they said in the study.

"By definition, segregation creates minority dominant neighborhoods, which, given the legacy of redlining and institutional discrimination, continue to be underserved by mainstream financial institutions," the study says."

The Future Is Now: A Balanced Plan to Stabilize Public Debt and Promote Economic Growth

President Obama recently released his budget plans for the coming year under which the budget deficit would account for only 5.2 percent of the budget deficit. The issue with this is that allocating such a small amount of money at combatting the deficit will not help and furthermore will cause it to grow at an alarming rate. Under the proposed budget, the public debt to GDP ratio would reach 70 percent by 2011, 90 percent by 2020, and would break the World War II record of 109 percent just a few years after.
Some don't see any large issue with a large deficit and in fact think that such a deficit can be healthy and help us out of this time of crisis. The author however points out some crucial issues that disprove this theory.

1. As the economy recovers, excessive public debt competes with private sector demands for capital, raising interest rates for all borrowers, including the government, and leading to slower economic growth.
2. As debt accumulates and interest rates rise back to historical levels (or beyond), interest payments on the federal debt will soar, competing with other important priorities.
3. Because so much U.S. public debt is held by non-American individuals and institutions, interest payments on that debt represent a substantial transfer of income and wealth out of the American economy.
4. Excessively high debt levels lead to increased risk of a fiscal crisis in which investor concerns lead to abrupt spikes in interest rates and a vicious debt spiral. By the same token, such debt levels reduce the federal government’s ability to respond fully and flexibly to severe crises.

I concur with the author and feel that tackling our ever growing deficit should be a priority at trying to face this recession head on and defeating it.

Unemployment: A Morale Problem

The article discusses the interesting effect morale has on the labor market. The main focus of the article dwells upon the interesting effect a recession has on unemployment. Unemployment and real wage is different than raw materials and other costs to a company in a recession because inanimate objects don't possess morale like humans do. The quote, "UNEMPLOYMENT, in this context, is like battlefield triage, leaving some severely injured soldiers to die so that medics can keep as many as possible in fighting condition," left a lasting impression on me. I know that the labor market has been described as a battlefield before, however when put in context like this, it shows the perspective of a CEO in a company. When times are tough, the company is forced to make difficult decisions the same way a family in a recession is forced to do. In the case of a company, they try to keep the core group of their productive, loyal workers, and their job security is proven at the expense of the lower level employees. Unfortunately this mass layoff is having a negative effect on the atmosphere of the company. Everyone in the workforce, as a result, have lower morales. While most accept living in fear is extremely difficult... why would working in fear be any different? The notion of an unstable workforce threatens everyone, and unfortunately workers productivity is affected by their morale.

India's surprising economic miracle

Despite the example set by India's poor management and hosting of the 2010 Commonwealth games this month, all signs point to the country as a burgeoning economic powerhouse that will soon outpace China. Two main reasons are cited as inherent Indian advantages that will propel the country into success. The first is demographics, the fact that India's young population will consistently fuel the labor force for years and years to come, as opposed to China's ageing population and detrimental one-child policy. The second is India's position as a democracy, allowing the free exchange and cultivation of ideas proposed by private businesses. This article is basically a comparison of India's economic future versus China's economic future. And from the ideas written in this piece, I am pretty convinced that India has superior potential.

A tax cut both parties should love -- but don't

An alternative to extending the bush-tax cuts - granting a payroll tax holiday for the upcoming year. With fears looming of a double dip recession, some economists believe a payroll tax cut (specifically on the 6.2% shelled out for social security) would be a much more effective stimulus method, as opposed to an income tax cut. The nonpartisan Congressional Budget Office estimated that eliminating payroll taxes would be roughly two to four times more effective in spurring economic activity than a reduction in income taxes. The proposition seems logical, since payroll taxes are highly regressive, increasing income for the poor and working class will call for increased consumption. Also, instead of employees waiting around for a tax refund they only have to wait on the next paycheck to reap the benefits.

In addition to an increase in short term consumption, employers would have an incentive to take on more employment (since payroll taxes are, essentially, a tax on hiring). As is the case with every election season, neither side is showing any support for such a drastic policy change, no matter how much sense it may make.

Companies borrow at low rates, but don't spend

Ever since the collapse of the economy in 2008, big corporations have not invested or spent any of they're money. All of these corporations can borrow money at very low interests rates, but have not hired new workers or anything. They are saving and waiting for the economy to go back up before they start spending it again. But the problem is that the economy may not go back up if these corporations are not spending any money. The monetary policy that the federal reserve is intended for them to start spending, but these corporations are not. Some estimate that these corporations are sitting on 1.6 trillion dollars combined, about 6 percent of they're assets. These corporations need to start hiring and investing to help the economy grow, and if the economy is growing, it will be better for the corporations in the end. But the question is when will corporations start spending money on hiring new workers? If corporations sit tight the way they have been doing, how long will it take for this economy to be prosperous again? Whatever the case may be corporations need to start spending money now.

Asian Stocks Advance on Commodity Prices, Weaker Yen; BHP Gains

Asian stocks rose, led by mining companies and Japanese exporters, after commodity prices increased and the yen weakened against the dollar.

BHP Billiton Ltd., the world’s No. 1 mining company, increased 1.4 percent in Sydney on speculation commodity demand will rise after U.S. consumer spending increased. Hyundai Motor Co., South Korea’s largest automaker, climbed 2.6 percent in Seoul after its U.S. sales rose to a record for September. Honda Motor Co., which receives 46 percent of its sales from North America, rose 1.3 percent.

The MSCI Asia Pacific Index gained 0.5 percent to 127.64 as of 10:53 a.m. in Tokyo, with about twice as many stocks advancing as declining. Japan’s Nikkei 225 Stock Average climbed 1.1 percent. Australia’s S&P/ASX 200 Index rose 1 percent, and South Korea’s Kospi index increased 0.7 percent.

Hong Kong stocks may move after China’s premier said the nation will stabilize its economy by increasing domestic demand. Hong Kong’s market was closed on Oct. 1 for a holiday. Chinese markets are shut this week.

Fed Funds Rate Kept Constant; Fed Uses More Aggressive Language

The Federal Open Market Committee voted to keep the Federal Funds Target in a range between 0 and 25 basis points. The Fed’s language was generally more accommodating then its prior statement. Though the Fed changed its language to suggest that the bank lending environment is beginning to improve, it made multiple language additions that suggest that when considering the balance between price stability and full employment, the Fed is clearly more worried about the latter. In a departure from the norm, the Fed explicitly stated that inflation is below the normal long term trend:

"Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability."

[the Fed] "is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate."

This kind of explicit language is a departure from the usual more neutral “Fed Speak” of providing “price stability.” The Federal Open Market Committee seems to have the desire to send a message today that it is prepared to be more aggressive in the face of a slowing recovery, and that inflation is of little concern in the short run.

Fed Bond Buying’s Unintended Consequences May Mean Higher Rates

A second round of bond purchases by the Federal Reserve may have the unintended consequences of pushing borrowing costs higher, say a growing number of U.S. government securities dealers, strategists and economists.

Yields on 10-year Treasury notes, a benchmark for everything from home mortgages to corporate bonds, rose last month for the first time since March even as the central bank hinted that it may conduct more so-called quantitative easing to bolster the economy. The median forecast of more than 60 estimates in a survey by Bloomberg News is for yields to keep rising the rest of this year and through 2011.

Based on what the Fed bought in 2009, yields are trading as if it has already acquired an additional $315 billion to $670 billion of securities, according to Deutsche Bank AG, one of the 18 primary dealers that trade with the central bank. Policy makers will announce plans buy $100 billion to $1 trillion in Treasuries before the year is out, a survey of 12 of the 18 dealers show. Three don’t expect the Fed to buy additional debt.

Consumer Pessimism is Plumbing New Depths

Pessimism was higher during the Great Recession than it's been in the past 45 years. Consumer confidence fell, and it was due to lower expectations than what actually happened. Expectations about business conditions, job amounts, and income were more negative than positive. This was the first time since July 2009 that there were more negative than positive responses. This recession caused pessimism about people's own specific incomes, not just the economy as a whole. Pessimism has been above 15 percent for the past 2 years, when it hasn't been even near 15% before the recession. Most of the pessimism was caused by the large increase in unemployment.

Getting Tough on China

In an effort to equalize the trade balance between the United States and China the government has begun implementing tariffs on Chinese goods to force the Chinese government to strengthen its currency. For some time the U.S. has been accusing teh Chinese governemnt of intentially keeping its currency weak so it would have a trading advantage on the United States so it would be more appealing for U.S. consumers and businesses to import Chinese goods.

Stocks: Bracing for a rocky October

Surprisingly enough, stocks closed out last week at the best they have in over 7o years for the month of September. Optimism should be slow to ensue however because such results are not expected to continue. Yet an upward trend in the stocks is likely--just at a slower pace. The 8-point rise can be attributed to economic readings that exceeded expectations; readings that aren't where we would like but are much better than they have been. This article rose an interesting point about the upcoming midterm elections: what will the new members do with policies and regulations? This question is just one of many keeping overall expectations for further improvement relatively low for now.

The Survival of the Safest

This article suggested a very interesting analogy: a battlefield triage in war compared to a business manager in recession. A little harsh but seemingly true. Just like a triage would have to decide who to help for the good of the unit, a business manager has to decide who to keep and who to layoff in troubling times. Managers will typically make layoffs in higher numbers than necessary initially to ensure that they won't have to make a scene more than once (to keep morale up) and they keep only those who are most loyal and effective to try and minimize loss to the company. During these rough economic times layoffs seem better then keeping all employees and cutting everyone's pay by a percentage. This can create tension in the work places for those employees left and to a pessimistic attitude toward the workplace for those laid off and for those whom they influence. This tension and pessimism leads to a lack of creativity and innovation in the workplace because people are too scared to try new things because they might lose their job or cut into potential benefits--in turn this is contributing to the market recovering so slowly because new opportunities are not being created as often.

Manufacturing Growth Slows

Growth in manufacturing failed to meet expectations in September due to a variety of reasons. The measurement used in the article to measure the growth is the "Institute for Supply Management." The target for manufacturing was 54.8, and the actual number was 54.4, and dropped from 56.3 in August. This means that there was growth in manufacturing it did not meet economic expectations. This is not terrible however, as a reading of 54.4 is consistent with the expected reading that coincides with a 3% growth in GDP. The slowdown is caused by a decrease in key factors like new orders, production, and supplier deliveries. The slowdown in manufacturing is troubling because it could create a domino effect that could send the economy back into a recession. however, their is still growth which is a positive sign and the slowdown could be a natural event.

WORLD MARKETS GLOBAL ECONOMY WEEKAHEAD-Currency war fears tinge IMF meetings

None of the world economic powers want strong currency. The weaker currency gives a strong competitive advantage. In the past month, the Japanese yen has decreased and other countries are planning on following. The US is planning on printing as much 1 trillion dollars to weaken the dollar. The current currency war is actually hurting emerging markets such as Brazil.

Interesting Take on the Current Unemployment Rate...

This article from the New York Times is a perfect example why models and other things we'll learn in school, can't explain everything that happens out there in the real world. Theoretically, economic models would suggest that in order for us to solve this unemployment issue, businesses simply need to drop wages in order to clear the market. However, what isn't taken into consideration is the fact that businesses are run by people not economic robots. The men and women that run these companies have morales and emotions. It's unfortunate but there is some benefits to being the boss's "pet", that being that you'll be able to keep your job and not see pay decreases. Simulataneously, millions of others who don't carry emotional connections with their manager are being laid off in the millions so that those few who are preferred by their bosses can keep their current rate of pay.
This is a frustrating finding/conclusion made by the author of this article however, atleast in my mind, it made the seeming difficulty at eradicating this unemployment rate make a lot more sense in my mind.

Currency War: Fighting To Be Weaker

Currently there is high competition among the larger economies to have a weaker currency during these hard times. A weaker currency allows for cheaper goods in other countries. In a way having a weaker monetary value is an informal tariff, which acts as security blanket. This allows for more taxable goods and acts as an advantage for the importer. Furthermore, it also works in the favor of exporters, guaranteeing them more business.
Take China as an example, China purposefully manipulates their currency through printing Yuan, which causes inflation. This is specific to countries such as China, Taiwan and Korea whose economies rely heavily on exporting. Countries who rely heavily on imports include the US, UK, Germany and others.
At the moment the US is trying to sway China into allowing their currency to rise. From what is seems China’s lower currency isn’t helping the unemployment rate in the US. The result of high exports could mean few jobs for Americans.

Wal-Mart Sees Increase in Midnight Shopping Runs

It is not new information that millions of Americans still struggle two years after the recession took hold. Many live pay check to pay check, but Wal-Mart Stores Inc. have noticed this phenomenon in its most literal sense as those with financial strains show up in Wal-Mart parking lots across the U.S. at midnight on the first of every month to load up on necessities like groceries and diapers. As of June 2010, just over 41 million people participate in the federal food-stamp program, which is over 1.5 times the amount of people who were in the program in 2007, just three short years ago. The average amount of monthly assistance is $133.36 and when the government replenishes the electronic benefit accounts at midnight on the first of the month, families shop as soon as that money is available. The surge of shoppers between 11 p.m. and 2 a.m. can be explained by the sole fact that these families are in dire need. “Low-income families are stretching the limits of the “pay-check” cycle.” Money is not lasting the entire month, so as soon as it is available, people take advantage of it and refill their pantries with the necessities to live, even if it means shopping in the early hours of the morning. This surge in midnight shopping helps bring to light just how needy Americans are in these troubled times and how important economic recovery is to the United States.

The recovery can't generate enough jobs.

The jobless rate may rose for a second month since the recovery failed to generate enough jobs while the labor force is growing bigger everyday. Although companies added 77,000 workers to payrolls, the unemployment rate still climb from 9.6 percent in August to 9.7 percent in September.

The result has somewhat lead to the restraining consumer spending and underscores. Add to that, the Fed concerned the rebound from the worst recession since the 1930s has been to slow to develop. The economists surveyed by bloomberg project unemployment will stay around 9% through 2011.

The forecast gain in payrolls excluding government agencies would follow an increase of 67,000 in August. Companies had created an average of 200,000 a month in March and April before growth weakened. The world’s largest economy grew at a 1.7 percent annual pace in the second quarter compared with 3.7 percent in the first three months of the year and 5 percent at the end of 2009, according to Commerce Department data.

Recovery.gov a model for transparency

Recently, the US Government put forth $18 million to create a website that will track government spending in hopes that the economic recovery will be a little easier to accomplish. Programs like Recovery.gov have been put into effect before; however, the office of federal financial management had trouble collecting spending information on a regular basis. There was confusion among corporations on what to report, and how detailed they needed to be. Recovery.gov solves this problem by limiting the spending reports to two levels. For instance. if funds are allocated to states and then redistributed to cities, there's no information on who received the money in the cities.

Troubled Asset Relief Program

When the government created the bailout fund, that was set at $700 billion and was lowered to $475 billion by the Dodd-Frank Act in July, the program has expired and many problems in the economy still remained unresolved. There are still about $200 billion remaining unpaid by about 100 companies. This article shows the money committed, projected final cost to government, and the program status of the banks, AIG, automakers, housing, and lending.

Personal income is up, and so is spending

Personal income rose 0.5% in August, the largest increase this year, while spending by individuals remained steady, according to a government report released Friday.

Personal income increased $59.3 billion, or 0.5% last month, the Commerce Department said. That's more than the 0.3% rise economists expected.

White House Plans Job Training Partnership

In order to combat the high unemployment, President Obama is planning a public-private partnership to help retrain workers for jobs in high demand. "This new initiative is intended to help better align community college curriculums with the demands of local companies." Austin Goolsbee chairman of the Presidents Council of Economic Advisers said "'the goal is to encourage community colleges and other training providers to work in close partnership with employers, to design a curriculum where they want to hire the people coming out of these programs right away.'" The program is called Skills for Americas Future and is being partnered with Gap Inc, Accenture, United Technologies, P.G. & E., and McDonald's.

Education minister calls for more skilled immigrants

Germany is considering the immigration of skilled labor as a means of increasing MPL and consequently, making its industries more productive. The German Minister of Education and Research believes that selective immigration is a possible remedy to the problem of severe shortage of skilled workers faced by her country’s expanding economy.
Germany currently has 80,000 migrant workers who have established businesses, with a total of about 350,000 employees. The number of business owners is predicted to reach 130,000, providing jobs for about 750,000 people by 2020.
According to the Cologne Institute for Economic Research, if Germany relaxes its skilled worker immigration laws, its GDP will increase by up to 100 billion euros in 10 years.