A New Reason to Question the Official Unemployment Rate

http://www.nytimes.com/2014/08/26/upshot/a-new-reason-to-question-the-official-unemployment-rate.html?rref=upshot&abt=0002&abg=0&_r=0

This article calls into question the accuracy of the official unemployment rate and highlights some fundamental reasons why the report may not be as concrete as some would like to believe. For example, the United States has a vast population, but information regarding employment is demanded at a fairly fast pace. The author believes that the luxury of a timely report may be overshadowing the importance of accurate content.

This, the author claims, has become an even bigger problem within the past 20 years, as Americans are seemingly much less willing to partake in surveys. Skepticism regarding the authenticity of surveys has shot up over the last two decades, making it harder for the government to accurately report the unemployment rate. This all suggests the possibility that the unemployment rate is higher than it is reported in official statements.

EU and US Economic Sanctions on Russia

http://www.bbc.com/news/world-europe-28400218

The European Union and the United States have added more sanctions to Russian senior officials in a stronger response to the Ukrainian sovereignty. Since the unofficial annexation of Crimea in March, the EU and the US have chosen to respond the issue through economic measures. The increasing pressure and issues in Ukraine since March have done nothing but worsen the matter. The EU sanctions announced on 30 July have been the first time targets to directly disrupt Russia's state finances, energy and arms sectors. In addition to industries, many of President Putin's closest inner circle are subject to asset freezes and travel bans. These bans will make conducting business much more difficult.

Contrary to popular belief, the European Union is actually applying most of the bans. They have blacklist the heads of Russia's intelligence services. While many of the senior officials won't be affected by the travel bans, their assets have been frozen which doesn't allow them to sell or buy assets including property.

The EU and Russia conduct business on a much higher level than the United States. Germany is the main European trading partner especially for German autos. Germany and other countries rely on Russia for gas supplies which creates a large economic dilemma for decision makers. Another issue, is the embargo of food from Western countries which as elevated food prices in the country. At a time when Russia's economy is starting to seep into recession, Russia can't afford to sustain the majority of these sanctions.

The economic sanctions of the EU and the US on Russia have been effective to an extent. The economic sanctions can be potentially more devastating given more time to effect the average consumers. Russia is essence committing "economic suicide" by allowing it's pride and involvement in the Ukrainian crisis to consume it's own economy.

School-hopping alumni aren't giving back to colleges

"I had a really great first year at American," said Gunaseharan, who is 24. "But I've seen a very clear return as a result of my degree from Cornell. So I absolutely feel the tension about who to give to." Universities and colleges are feeling the pressure, too.

Today, nearly a quarter of students who earn degrees finish somewhere other than where they started, according to the National Student Clearinghouse. And as more students jump from school to school, colleges say it's getting harder to solicit all-important alumni donations. 

"What motivates alumni to give is a sense of loyalty, an indebtedness that 'I am who I am because of my education,'" said Shaun Keister, vice chancellor for alumni relations at the University of California, Davis. "What we don't know from this generation that jumps around a lot is: Are they ever going to have that warm and fuzzy feeling for the campus?"

While total contributions to colleges and universities were up last year, the percentage of alumni who are actually giving is shrinking, according to the nonprofit Council for Aid to Education. In 2003, 13% of alumni gave to their schools. Last year, just 9% did.

And that's what's keeping alumni directors up at night.

The participation rates keep falling "even though we have more sophisticated programs, bigger programs, more options" -- like social media -- to help encourage giving, said Brian Kish, senior vice president for central development at the University of Arizona Foundation.

Alumni executives and consultants say the transfer phenomenon is partly to blame.

"So let's say you went to three different places undergrad, and then to grad school — because we have more people going to grad school, too. Now you've been to four schools. Where's your love? Where's your affinity? Where's your passion?," asked Kish.

The problem isn't likely to affect elite universities and colleges, whose students almost always graduate on time, and rarely transfer, said Chris Marshall, vice president for alumni relations practice at the consulting firm Grenzebach Glier and Associates. But for mid- and lower-tier schools, where most of the transfers occur it's "going to be hard to engage if they don't have that four-year experience with some continuity," he said.

And alumni who do give seem to support the universities or colleges from which they ultimately graduate.

Another source of worry: Community colleges, where many students start their college careers these days, are also beginning to go after financial contributions from alumni.

"It's one more organization coming after the same pool of people," Keister said.

Yet, many university and college alumni offices have failed to reach out to students who transfer in from community colleges while they're still enrolled, as they often do with conventional freshmen.

Now more schools are beginning to do this, beginning at the orientations they require transfer students to attend.

"You have the undivided attention of students two times. Once during orientation and again at their graduation ceremony. Otherwise, good luck," said Keister.

Gunaseharan, meanwhile, is mulling the requests for money she's received from Cornell and American — which has another pull on her because her mother went there — but she is putting them aside while she plans to go to graduate school.

"I'm not really in a position to be giving loads to any of my alma maters," she said. "I'm still saving money for the next degree." 

I believe the issue here is the constant increase in the cost of college causing students to seek the best education possible at the lowest price.  This leads to students transferring different schools and never gaining a sense of home or school pride in the long run.  Hopefully the cost of college will decrease and students will stay in one place for 4 years, love it and then have the desire to give back to his or her alma mater. 

"Britain's GDP per capita lower than poorest US states"

http://www.presstv.ir/detail/2014/08/27/376736/britains-gdp-lower-than-poor-us-states/

According to Fraser Nelson, editor of The Spectator magazine, Britain would fall behind the poorest of US states in terms of GDP per US state, divided by population.  This figure is surprising considering the "financial preeminence" of London; the city was recently named by Forbes as "The World's Most Influential City" due to its multitude of foreign direct investment deals.

Perhaps the most interesting part of the article is a statistic that comes from a UK charity group.  The group reports that Britain's five richest families have a combined fortune of $46.9 billion in comparison to the $46.7 billion that is shared between the poorest 20 percent of the UK population.  In the past two decades, the richest .1 percent of the UK population has seen its wealth grow almost four times faster than the rest of the population.

Even more compelling is that food poverty in the UK has recently climbed, supported by a 19 percent increase in the number of citizens hospitalized for malnutrition over the past year.

I believe it will be interesting to see how Britain chooses to address the clear economic inequality, if they choose to address it at all.

Should there be a new Buffett Rule?

http://buzz.money.cnn.com/2014/08/26/buffett-taxes-burger-king/

In this article presented by CNN Money, it discusses Burger King's recent acquisition of Canadian coffee chain Tim Horton's, and how Warren Buffett's Berkshire Hathaway's involvement may be hypocritical to his own principles of tax inversion.
Buffett has been quoted saying that there should be a revised tax code for those who make millions of dollars annually, which would result in them paying a higher tax rate, which would alleviate the tax burden on the middle class. By relieving some of the tax on middle class America, it would allow for growth and the ability to financially stimulate the economy.

In Warren Buffett's case, his recent investment in Burger King, in order to help with the acquisition of Tim Horton's, has raised a lot of concern on whether or not his investment is really a way to escape corporate tax rates in America. Those who have inside knowledge on the investment claim that it actually shows no beneficiary for Berkshire Hathaway from a tax standpoint, because his dividend yield will be coming from a foreign corporation, ultimately causing him to have to pay a higher tax rate. Despite what seems to not serve as a tax beneficiary, it has caused a great deal of animosity with Obama because of Buffett's claim on how corporations that take advantage of this tax loophole, are going about it legally, despite the poor image it gives off.

This presents the question of whether or not Warren Buffett is saying that it is OK for corporations to receive unpopular tax breaks.

Justice for jocks America’s exploitative college sports system can be mended, not ended

http://www.economist.com/news/leaders/21612156-americas-exploitative-college-sports-system-can-be-mended-not-ended-justice-jocks

In the article, Justice for Jocks, the author discusses the possibility that college athletes may be paid in the future. During a federal court case last week it was ruled that the NCAA’s ban on paying athletes for their name, performance, and or image infringed upon antitrust laws. However, it is unclear which athletes may be getting paid and how much they would receive. Elite college athletes are worth far more than the scholarships they receive, but others may not be as valuable. Whether or not all athletes will make the same amount has not been decided upon. The ultimate ruling will have to take into account the sport, gender, and university revenue among other things.

Last year alone college sports produced nearly $11 billion in revenue, more than any single professional sports market. In fact, in the majority of states (39 of 50) the highest paid public official is the college sports coach. It is evident that college sports have become increasing entertaining and profitable over the years. However, only a fraction of college athletes make it professionally and many are left with serious injuries from their tenure. An even more serious question is whether or not college athletes are receiving the proper education during their time at school?

Only 44% of men’s basketball players at high profile schools graduated in six years, far below the national average. Some young stars are eligible for the NBA at the age of 19, but there are only a handful of them. Many athletes get recruited with little concern for their grades, and spend too much time with their sport that they cannot attend class.

Potential solutions to paying athletes and improving their academic performance include providing free education and or covering athletic medical expenses. This would help support the term student athlete and relieve much financial stress. Still, a lot has to be figured out, but the future is bright for college athletics and the athletes that play the games.

Closing The Gap

http://www.economist.com/news/finance-and-economics/21596529-americas-labour-market-has-suffered-permanent-harm-closing-gap

                  This article talks about how the American Labor market might have gone through permanent damage, regarding the labor supply. The chairman of the Federal reserve, Janet Yellen concluded that she would consider more than just the unemployment rate to consider whether or not the labor market is complete. She further added that the labor market is currently "far from complete".
                 The article further shows that from 2007 till 2009 the proportion of people with jobs declined from 63% to 59%. This just means that the output gap has not closed at all. However, if the unemployment rate of those years is looked at, it is at the "natural rate" of 5.5% suggesting that the output gap has disappeared and finally looking at those unemployed in the last six months of that time shows that the output gap has closed up completely. These are three different ways Nomura Securities, a bank used to calculate three different labor market indicators.
                  The article also suggests that the output gap might be overstated for the Fed's purposes mainly because of the fact that people unemployed for a long time do not get much attention from recruiters even though they might be actively searching for a job.

Near-Zero Interest Rate Policy

http://thehill.com/policy/finance/economy/215802-yellen-vague-on-rate-hike-plan

The Federal Funds Rate, the interest rate at which banks with balances at the Federal Reserve borrow from one another, is one of the most important interest markers in the U.S. economy. It serves as a point of reference for other interest rates and has profound influence upon overall economic activity, helping to both stimulate the economy and control inflationary pressures. When the Fed wishes to spur economic growth, it reduces interest rates, when it seeks to dampen economic activity, the inverse.

The current target for short-term interest rates is between 0% and 0.25% as set by the Federal Reserve. Responding to the 2008 financial crisis, the Fed swiftly pivoted to ratchet down the Federal Funds Rate to near zero, seeking to bring rates as low as possible to keep the economy afloat as well as to help banks earn a higher “spread” between borrowing and lending rates. Since 2008, the Fed has kept rates in this 0-0.25% range, believing the U.S. economy incapable of sustaining positive growth without continued central bank stimulus.

            In their article, Peter Schroeder and Vicki Needham suggest that the days of near-zero interest rates may soon be a thing of the past. Amid a recovering yet still complicated economy, Federal Reserve Chairwoman Janet Yellen must determine not if she should raise interest rates, but rather when. On one hand, we can see that the economy has clearly improved: more jobs have been created than were lost in the recession and unemployment rates have dropped from nearly 10% to 6.2%. It should be cautiously noted, however, that it took five years to reach this point and that the labor market is still not fully recovered.

            When it does finally decide to raise interest rates, the Fed will likely take a slow, deliberate approach. Most economists predict the initial increase to occur mid-2015, with a 30-month window between the first and last rate hike. I believe that a near-zero interest rate policy should be judiciously implemented in times of economic hardship. If the Fed considers the economy to be fully recovered, I believe it should raise the interest rate as soon as possible. I am interested in the various pros and cons associated with the speed at which interest rates are raised, why the Fed will likely take a slower approach and the reasoning behind it. 

McDonald's faces 'millennial' challenge

http://finance.yahoo.com/news/mcdonalds-faces-millennial-challenge-010500618.html

McDonald's sales have been stagnating for the past few years in many of its global locations. Its share of customers between 19 to 37 has drastically been decreasing. It is likely that those customers have switched to the "fast-casual restaurants" such as Chipotle or Panera Bread.

 A strategy for McDonald's to include the younger generations into its regular consumer base while not alienating many of its current customers is essential for it to continue to compete. As of now, McDonald's hopes to reach out to the younger customers by revamping its public image. Many ideas are being considered by the company, including purchasing a growing "fast-casual" chain, but nothing is certain yet.

Government Spending

http://blogs.wsj.com/economics/2014/07/30/one-big-factor-in-the-economic-uptick-government-spending/


        In the article One Big Factor in the Economic Uptick: Government Spending, Josh Zumbrum talks about and illustrates the government spending being it federal or state and how the total spending has gone down forcing budget cuts in the necessary fields. One may think that government spending decreasing is a positive because we are in so much debt but in reality it lows the GDP and our economy can't keep growing.

The spending between state and government needs to be overlooked in a way where they aren't spending money on unnecessary items, and they don't spend too little so our GDP can keep growing and