The Very Long View

The article is examining the long run of the economy compared to the short run. Strikingly, the recent year-end trough in this inflation-adjusted index, in 2008, was only fractionally higher than the peak in 1968. Investors had made no capital gains in real terms over 40 years. Although, they had enjoyed the benefits of a dividend income throughout this period. But this long drought was far from unique. When markets are booming, however, commentators tend to look back at the performance of stocks and extrapolate an even rosier future. The obvious parallel is with house prices. Analysts were convinced that American house prices might suffer regional busts but would not fall at the national level. The idea of housing as a one-way bet fuelled the boom in subprime lending and pushed prices up to a peak from which they could only fall. Robert Shiller of Yale University has pointed out that, in real terms, an index of American house prices rose from 100 in 1890 to 110 by the end of the 20th century. By the end of 2006, at the top of the housing boom, the index had reached 199. The key “saving age” is the cohort of 35-54 year-olds. As they prepare for retirement. This article shows that we may be in trouble now but hopefully in the very long run we will be out of this recession, and see better days.

East or famine

Goran read this article, its good stuff. Mentions everything from exchange rates to PPP. Talking about how different measures of GDP under/overstate the growth of Asian economies compared to the western economies. It also gives a good explanation for the reasoning in using PPP to measure GDP in Asian economies.

Wall Street bonuses jumped 17 percent last year

I find it somewhat difficult to judge the structure of these large financial institutions and their compensation methods because what people tend to forget is that the bonuses these top paying executives earn, as ludicrous and extravagant an amount as they are, are promised to them contractually and thus they are receiving what they are owed for having returned their company to profitability. I understand the social stigma and dissatisfaction associated with these compensations however the amount rose compared to 2008 because the economy was still in the middle of the recession during that time. I take this news to be more encouraging rather than upsetting because it shows that the large financial institutions are regaining stability and profitability. Unfortunately this is only a reminder to the public that financial institutions are designed to earn maximum profit, not to ensure the stability or protect the state of the economy as a whole.

Toyota's "Full Responsibility"

This article illustrates how Toyota plans to take full responsibility for the recall that was issued for Toyota's cars.

“We will work 24/7 at N.H.T.S.A. to make sure that Toyotas are safe to drive,” Mr. LaHood said. In addition, he said, the agency was adding 66 employees to the safety agency.

Olympic hockey tix trump the Super Bowl

In the spirit of the Olympic Winter Games, here is quite an interesting article discussing ticket prices for the many Olympic events. Almost all events have been sold out, but if one were looking for tickets your best bet is to look at "scalping" websites. However, be prepared to fork out some money because tickets to the hottest Olympic event this year, the men's hockey gold medal game, are averaging about $3,250. That is more than the ticket prices for this years Super Bowl, World Series and almost double the price for NHL's Stanley Cup. Some ticket prices are inflated as much as 2,603%, compared to their face value. If you are desperate to attend the games, don't fear, women's curling qualifiers are an easy $25.

Banking Compensation Around The World

This chart put together by Reuters' shows some large differences between the pay among CEO's of the worlds top banks. It is far from an even distribution, and the contrast between the Bank of China and JPMorgan is fairly large.

Toyota faces US criminal probe, Japan govt eyes impact

New U.S. documents showed on Monday how the company beat back U.S. safety regulators' efforts for a wider probe in 2007 and disclosure of a U.S. Securities and Exchange Commission request for documents. [ID:nN22203240] [ID:nN22198413]

It all comes as Toyota's top executive prepared for a hearing on Capitol Hill over unintended acceleration problems that have been linked to at least five U.S. deaths, with 29 other fatality reports being examined.

In a gesture it said was intended to reassure customers, Toyota said it would install brake-override systems on three more models of vehicles already on U.S. roads: the Tacoma truck going back to 2005 model year, the Venza crossover from 2009 and the Sequoia SUV.

Shares of Toyota fell 0.5 percent to 3,325 yen on Tuesday in Tokyo, matching the Nikkei 225's .N225 fall, suggesting little investor reaction to news of the criminal investigation and the plan for an additional brake override upgrade.

"Investors are not worried about such one-time costs. Instead they welcome Toyota's efforts to restore confidence in its products and its relations with the U.S. government regardless of the costs," said Yoshihiko Tabei, analyst at Kazaka Securities.

He said the earnings forecast Toyota gave on Feb. 4 for the year ending next month will likely be unaffected by the costs of the recalls and voluntary upgrades, while investors are more worried whether Toyota can revamp its brand and avoid a sales slump next business year.

A Japanese government official expressed concern about the effect Toyota's problems could have on Japan's exports.

"Strong growth in Asia-bound exports seems to be slowing, and we also have to consider Toyota's recalls, so we've given a cautious judgment on exports," Keisuke Tsumura, a parliamentary secretary on economic affairs, said as the government issued a report on the economy. [ID:nTOE61M003]

Toyota has recalled more than 8.5 million vehicles globally in recent months for problems including sticky accelerators, accelerators that can be pinned down by loose floor mats and a braking glitch affecting its hybrid models.

It is also investigating reports of steering problems in the Corolla, its second most popular U.S. model.

Toyota's extra installation of the brake-override systems extends the scope and cost of a recall that had already targeted five models including the top-selling Camry. Toyota said it would have the same safety technology on most new models sold in the United States by the end of 2010.

PRELUDE TO TESTIMONY

Akio Toyoda, who took the helm at the world No. 1 automaker last June, is scheduled to testify before the U.S. House Oversight and Government Reform Committee on Wednesday.

In a preview of the line he could take in his testimony, Toyoda said in a statement published in the Wall Street Journal that he was committed to making sure that Toyota learned from the crisis and changed its ways.

"It is clear to me that in recent years we didn't listen as carefully as we should -- or respond as quickly as we must -- to our customers' concerns," Toyoda said. "While we investigated malfunctions in good faith, we focused too narrowly on technical issues without taking full account of how our customers use our vehicles."

The extended apology from Toyoda, a grandson of the company's founder, came hours after Toyota said it had received a federal grand jury subpoena from the U.S. attorney's office in Manhattan on Feb. 8.

The automaker also said the SEC had asked for documents related to unintended acceleration of Toyota vehicles and the company's disclosure policies.

Toyota said it would cooperate with the investigations. (Reporting by Yumiko Nishitani; Editing by Hugh Lawson)

States short $1 trillion to fund retiree benefits

By Tami Luhby

States and localities are now facing a $1 trillion deficit in public employees' retirement benefit funds. This comes out to an $8,800 deficit per household. This started when states failed to make annual contributions while also increasing benefits. This new finding doesn't even take into account the economic struggles we had in 2008; the average pension plan fell 25% in 2008. This comes at a bad time for the states, as they are dealing with a $180 billion budget gap for fiscal policy in 2011.

Bernanke Outlines Exit Strategy

FEBRUARY 10, 2010
Bernanke Outlines Exit Strategy
By LUCA DI LEO
Federal Reserve Chairman Ben Bernanke outlined the likely path the Fed would take to tighten credit once the economy has recovered enough. In another step toward unwinding its crisis-lending programs, he said Wednesday the Fed could soon begin raising its discount rate, charging more for emergency loans it makes directly to banks.
In testimony prepared for a House Financial Services Committee hearing that was called off because of a blizzard in Washington, Mr. Bernanke said that another interest rate might for a time replace the federal-funds rate as the main policy tool. That's the rate the Fed pays to banks on excess reserves they leave at the central bank.
Mr. Bernanke said that though the economy needed support from monetary policy, the Fed would "at some point" increase short-term rates and drain some of the money it had pumped into the economy during the recession. He gave no hint that such a move was imminent.
Fed Chairman Ben Bernanke outlines a plan to pull back policies that have been propping up the economy. Dow Jones Newswires' Neal Lipschutz and WSJ's Sudeep Reddy join Kelsey Hubbard in the News Hub with more.
As part of its plans to wind down emergency liquidity measures, the Fed may "before long" increase the difference between the discount rate and the federal-funds rate, a Fed-influenced rate at which banks lend to each other overnight, he said. The spread between the rates is a quarter percentage point; before the crisis, it was a full point.
Mr. Bernanke's speech was designed to outline the Fed's strategy for withdrawing its extraordinary support for the economy, which has brought the federal-funds rate near zero and led the Fed to buy more than $1 trillion worth of U.S. Treasury and mortgage-backed securities. He said the sequencing and tools the Fed would use to tighten policy would depend on how the economic recovery develops.
The Fed chairman said he didn't currently anticipate the Fed would sell any of its holdings of long-term U.S. Treasurys or mortgage-backed securities "in the near term," and probably not "until after policy tightening has gotten under way and the economy is clearly in a sustainable recovery." But over time, he said, "the Federal Reserve anticipates that its balance sheet will shrink toward more historically normal levels and that most or all of its security holdings will be Treasury securities."
A focus on the interest rate for excess reserves—now at 0.25%—would present markets with a new signal to follow when the Fed begins tightening credit. "It is possible that the Federal Reserve could for a time use the interest rate paid on reserves, in combination with targets for reserve quantities, as a guide to its policy stance," Mr. Bernanke said, adding no final decision had yet been made.
Raising the excess-reserves rate would give banks an incentive to park more funds at the Fed instead of lending them out to companies or households. In this way, the Fed would be able to restrain an economy that risks overheating and sparking inflation. Moving this rate would pull up other short-term rates, including the federal-funds rate, long the Fed's main tool for steering the economy.
While other major central banks, such as the European Central Bank, have been using interest on excess bank reserves for a while, it's a new tool for the Fed. Congress gave the central bank authority to use it in October 2008.
Mr. Bernanke says the Fed expects "it will eventually return to an operating framework with much lower reserve balances than at present and with the federal-funds rate as the operating target for policy."

One million could lose jobless benefits in March

The jobless could soon lose their unemployment insurance if Congress doesn't act fast. More than 1 million people could lose their jobless benefits and health insurance subsidy. The Senate will have one week to extend the deadlines to apply for federal unemployment benefits and the COBRA health insurance subsidy, where the current deadline for the jobless to sign up is Feb. 28. With no extension of the benefits, people who currently receive state jobless benefits won't be able to apply for additional federally pain unemployment insurance, and people whom are already receiving these checks could be cut off. While legislation was in place to extend the deadlines to May 31 in the form of $25 billion over 10 years, Senate Majority Leader Harry Reid has offered a trimmed job creation package that did not include the condition.

As unemployment benefits now run as long as 99 weeks, with an estimated 11.5 million people currently depending on jobless benefits, the average unemployment period lasts a record 30.2 weeks, the jobless will have to be more eager to re-enter the workforce to meet their needs. Many use their unemployment insurance to help pay for their roof over their heads. If a policy or action is taken in the Senate, hundreds of thousands of people will have an earlier than expected expiry date of their unemployment insurance. Hence, if unemployment insurance is not extended, will increase the opportunity cost of being unemployed and increase the urgency of finding work, thus increase "f" or the rate of job findings.

Networks Wary as Apple Pushes for 99-Cent TV Shows on iTunes

Apple wants to increase TV show sales, especially as it prepares to introduce the iPad tablet computer next month. Apple may cut the price of each TV episode in half from $1.99 to 99 cents. This idea in price cuts has created some skepticism from the major networks.

With the iTunes pricing debate, the television industry is facing the same question that music labels and publishers are: just how much is our content worth in a digital world?

iTunes remains, predominately, a music store. Consumers have downloaded nearly 10 billion songs and about 375 million TV episodes.

Analysts say the TV revenue from iTunes has been marginal for producers and distributors.

China's stock market

It is the second time in a month's period that the People's Bank of China has changed the reserve requirement for banks. Many analysts were surprised with the updated requirement but many thought this was to help improve the inflation in China. The index was down .1 due to the tighter lending for the banks in China but came off by the end of the day.

China losing appetite for U.S. debt

Foreign demand for US Treasury securities fell by a record amount in Decemver as China purged some of its holdings of government debt. China sold $34.2bn in US Treasury securities during the month. The US Treasury said on Tuesday, leaving Japan as the biggest holder of US government debt with $768.8bn. China overtook Japan as the largest holder i September 2008.

The shift in demand comes as countries retreat from the "flight to safety" strategy they embarked on upon during the worst of the global economic crisis and could mean the US will have to pay more to service its debt interest.

For China, the shedding of US debt marks a reversal that it signalled last year when it said it would begin to reduce some of its holdings. Any changes in its behavior are politically sensitive because it is the biggest US trade partner and has helped to finance US deficits.

Unemployment

This is a very interesting article about unemployment and the man who initially created surveying to try to figure out the rate of unemployment. In 1878 Carroll Wright began to try to count the number of unemployment in Massachusetts. Wright wanted to try to show that the number of unemployed in their state was much less than what people thought. One interesting point about how Wright formulated this rate is how he understood that he had to exclude people who weren't looking for jobs. This article talks about how there are more and more people who are falling into the category of being unemployed, but are not actively looking for a job and do not fall into the governments definition of unemployment. This article makes the point that the more people who are unemployed but are not actively looking only adds to the unemployment rate becoming a less powerful indicator of economic wealth.

Under 21? Getting a credit card just got tougher

New laws will take effect Monday that will make it harder for college students to get a credit card. The average student credit card balance is now over $3000. Students may need to provide proof of solid income or other assets in order to apply for a new credit card. Items used to tempt students at tables on college campuses to apply for credit cards will be prohibited under the new law.

Obama to Urge Oversight of Insurers’ Rate Increases

President Obama will propose giving federal government new power to stop excessive rate increases charged by health insurance companies as a part of his legislation to imrpove health care system. This is a response to a recent premium increase of up to 39% by one of California's insurance companies, and also a democrats' move to protect americans from profeteering insurers. The new legislature was views by Congretional Republicans as an attempt of democrats to take over the health care system.

Will Airlines and Passengers Call a Truce?

In the recent weeks of sof winter storms across the country, airlines have been giving their customers a chance to take advantage of the ability to chance their itineraries ahead of the bad weather, a waiver that is rare in air travel; a service from the airlines without paying for it. In the last 18 months, the idea of a plane ticket has been transformed from an all-inclusive purchase to a pay-as-you-go plan, creating a poor relationship between airlines and customers.

Airlines say their inability to make money, and consumers' resistance to higher ticket prices, as their reason for thinking up new ways to make customers pay extra. The International Air Transport Association stated that the airlines had lost $55 billion in the last decade.

Robin Hayes, an executive vice president and chief commercial officer at JetBlue Airways had to say this about the charges, "on the whole, for the last 10 years, the industry has done a really rotten job of looking after passengers."

Mark Bergsrud, the senior vice president for marketing at Continental Airlines believes that passengers who are having having the toughest time accepting the changes are those who fly only a few times a year. While business travelers are having an easier time in part due to the miles they are earn that allow an exemption from many of the charges.

Fed raises emergency funding rate

In this news, it reports that the Federal Reserve raised the emergency funding rate from 0.25% to 0.75%. It analyzes that the move is largely symbolic, since banks do little borrowing at the discount window. Nevertheless, it points out that rising the discount rate allows Bernanke to take another step toward normal monetary policy. It also reports that the Fed shortened the term of some discount window loans and raised the minimum bid in the term auction in order to supply overnight funds to banks. To conclude, this move is one of the steps that Bernanke takes in order to prevent the excess reserves from fueling inflation, including the payment of interest on reserves and the sale of Fed assets.

Global Crisis Leads I.M.F. Experts to Rethink Long-Held Ideas

The International Monetary Fund has always advocated to keep inflation low and allow money to flow freely across international boundaries. But some economists are now arguing that slightly higher inflation and restrictions on capital flows can sometimes help buffer countries from financial turmoil. The papers that the economists reported suggest that the International Monetary Fund should re-examine some of its long-established orthodoxies and that higher rates would have helped in the current crisis. Mr. Blachard and two other authors wrote this, "higher average inflation, and thus higher nominal interest rates to start with, would have made it possible to cut interest rates more, thereby probably reducing the drop in output and the deterioration of fiscal positions."

Mix Message

This article talks about what the best economic future we can hope for is and what policies we can use to get there. The next economic expansion we experience should not be one "where prosperity was built on a housing bubble and financial speculation," but rather one where growth is accompanied by increases in exports, savings and investment.

Saving has decreased from 10% of income in the 1980s to around 1% in the present. Obama hopes to bring saving back by making retirement plans more readily available and helping employers to increase employee contributions. This increase in saving will be accompanied by an increase in investment which will be better fueled by technological advances. These advances, however, will not change the rate at which they appear. Therefore, the Obama administration is pushing for a faster patent process and less uncertainty in R&D tax credit (which currently must be renewed by congress each year). As savings increase there will be less demand for foreign savings, and alongside this shift other nations will shift to domestic consumption and investment (to rebalance their own economies).

Fast-food breakfast sales decline as fewer head to work

This article is about how the high unemployment rate is reducing fast-food breakfast sales around America. Stating that more people are more inclined to skip breakfast or eat at their homes in an effort to save money. Breakfast companies also link low sales to the lack of morning rush hour to work.

US consumer prices rise 0.2% in January

In this news, it reports that, according to the Labor Department, the US consumer prices rose by 0.2% last month. Compared with the expectation of 0.3%, this is a buoyed result to investors, because the current low inflation means there is little pressure to raise interest rates. It also points out that this news demonstrates that, after a few reports showing higher inflation trends, the problem of high inflation has not been trickled down to the consumer level.

Additionally, it points that the rise was largely driven by energy prices, which rose for the ninth consecutive month. Further, according to Jennifer Lee at BMO Capital Markets, the price pressures are mainly caused by the food and energy categories.

States short $1 trillion to fund retiree benefits

States short $1 trillion to fund retiree benefits

http://money.cnn.com/2010/02/18/news/economy/public_pension_gap/index.htm

This article talks about the fact that states and localities now must deal with a $1 trillion deficit (which averages $8,800 for every household in US.) in public employees' retirement benefits' funds.
This deficit is partly caused by states' failure to make annual contributions while enhancing benefits. To make up for this gap, states usually ask the residents to make it up by imposing property tax or income tax. So the taxpayers may face higher taxes with less benefits.
Althought, according to the article, "the bill isn't due at once and no state is in danger of default", it's still better to address the default and work on it as soon as possible.

Indian economy 'to grow 7.2%'

The Indian economy is expected to grow 7.2% this year. This raises the possibility that state support will cut back.
The state has put into place fiscal strategies to maintain growth during the economic downturn.
There has been strong growth in the manufacturing sector of India to make up for a fall in agricultural output.
Now there is talk of raising interest rates before expected and possibilities of government composing some exit strategies.
Concentration is shifting from economic growth, to inflation.
I think it's important for the Indian government to step back now that growth is steady and put more concentration on their growing inflation. It's incredible to see how much this nation has grown during these years of economic crisis.

The New Poor

This article from the New York Times discusses the idea of the new poor. This refers to the people that WERE in the middle class and never needed assistance from the government until the most recent recession. The majority of the people who are having the most problems are those people who are older (50) and have a high school education. So unless Obama and his administration decide to extend the short term unemployment again these people are facing a grim future.

Greece not looking for bailout

It appears that despite the huge debt Greece has amounted (more than 100% of their GDP), Greece is not looking for a bailout from the European Union.
Greek Prime Minister, George Papandreou, says that what Greece needs now is political support, not financial support.
He blames the previous administration for the current debt level, calling them "reckless and corrupt".
He plans to decrease the country's defecit by almost 10%.
All Papandreou asks for is time and support.

Is the mortgage market starting to heal?

I thought this article was pretty interesting, especially after going to the Economic Outlook Conference this past week. The article points out that the percentage rate of late mortgage payment loans in the fourth quarter has decreased. Although a small decrease (9.64% to 9.47%), any change is good change.There hasn't been a positive change like this since 2006. According to Jay Brinkmann, the chief economist of the MBA, this change might be a sign that the "end is in sight." Brinkmann also points out that the ending months of the year is usually when payments are postponed due to various spendings that build up over the year. For example, christmas and holiday spending. With that said, the decrease in the number of missed payments in the fourth quarter is a positive sign.

Can low-paying garment industry save Haiti?

This article proposes that exporting labor for the garment industry may assist in boosting the Haitian economy following the natural devastation they recently faced. The earthquake that wiped out Haiti's capital and substantial amount of the labor force means that the Haitian economy must rebuild from scratch and both the UN and US have agreed to support Haiti in its efforts. US Congress passed Haiti Hemispheric Opportunity through Partnership Encouragement Act, or "HOPE II" that allows Haiti to export textiles duty-free to the US for a decade. However picking up the Haitian economy still remains to be a difficult ordeal and this Act is merely a stepping stone to Haiti's development.

President Obama Tries to Bring Down the Deficit

On Thursday president Obama announced that he is forming a commission to try to bring down the budget deficit. Targeting the budget deficit is something that had to happen at some point during Obama's first few years. Realistically the only way that this can be done succesfully is through a unanimous increase in taxes. Even though Obama promissed not to raise taxes for the middle class, that would have to happen in order for the budget deficit to significantly decrease. In my opinion this has to be done in a way that the disposable overall income doesn't decrease and that can be done seeing as nominal wages sometimes decrease without affecting the real wages.

UK Jobless Rate Would Be Almost Double in Euro

This article is about the positives for the United Kingdom that have come from not joining the European Union. Their unemployment rate is only 7.8%, which is lower than that of the US and European Union. Since the EU keeps interest rates low, countries in the union over borrowed and got themselves into a hole.

The interesting thing about this is how the countries in the European Union all work with the same central economic rates and laws, but all have different strengths and weaknesses in their own economies. The UK may have come out stronger by not joining, but some of the other countries may have done worse by not joining.

Tackling the US deficit--A modest proposal

America is spending beyond its means, both parties and the president (not to mention pundits and protesters) have recognised.On Thursday Feburary 18th Barack Obama announced that he was forming such as commission, by executive order, to seek ways to tackle the deficit. The commission will be co-chaired by a long-time former Republican senator, Alan Simpson, and a Democratic former chief of staff to Bill Clinton, Erskine Bowles. The rest of the panel will include four more appointees from Mr Obama (one must be a non-Democrat), and three each for the Republican and Democratic leaders of both the House and the Senate. The best reason for optimism for the panel is that its remit is rather modest: to bring the budget deficit to balance (excluding interest payments) by 2015. This sounds like a long way to go, with the deficit projected to reach 10.6% of GDP this year. Yet there are reasons to be more pessimistic. The commission will merely offer advice. An earlier effort to create a panel that could make recommendations which Congress would be forced to vote on (without amendment) failed in the Senate in January. Only 53 of 100 senators voted in favour, not enough to clear a 60-vote procedural threshold. Many Democrats (fearing entitlement cuts), and most Republicans (who would not countenance any tax increases), voted against.

The Return of the Ski Bum

I accidentally repeated an article posted already, so here is another one!

A somewhat amusing article about the new ski bum that has arrived.

"Meet the newest wave of ski bums: stoked to be in the mountains, uncertain about the future, probably overqualified and, once again, American."

Less late payments on mortgages

In most years late payments on mortgages raises during the winter months increases however this year these late payments have slightly fallen. This is great news for America and especially good news for the Obama administration after they put a big focus on helping homeowners who face foreclosures. However the percentage of loans on foreclosures went up in the fourth quarter to 4.58%. The increase in foreclosures will push most home prices down which does hurt the homeowners but helps new homebuyers because they will have to pay less for a home due to the economic crisis in the housing industry.

A Small Price for a Large Benefit

To get away from the unemployment and foreign issues, I found this article interesting about global warming. The ideas of emotions and logic are unique presented in this article.

Economic outlook: Fed rise’s recovery signal

This article states that the Fed decided to raise the discount rate before the expected time. Seeing that the discount rate has increased came for a surprise to some, but also shows a very good sign in recovery within the financial system. The discount rates are expected to continue in the next couple of months seeing that policy makers are beginning to let go of the excess liquidity from the financial system. Bernake will take this to congress this upcoming week to explain that this will not change the monetary policy for the US economy. With an increase in the discount rate, this shows another sign of life for the US economy in its voyage to economic stabilization.

Millions of Unemployed Face Years Without Jobs

Economists fear that this recession we are experiencing won't be so forgiving for the unemployed currently. There is even a new term for people who are only reaping benefits of unemployment compensation.

"Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come."

The Fed's great rate debate

Federal Reserve Bank's decision to increase the interest rate has caused many arguments in policymakers. Since december 2008 the federal fund's rate was 0%, this was obviously done to encourage the bank's to borrow from the federal reserve. But the sudden move to increase the rate to 0.75% is still not justified. May be the decision was taken to show people that America is no longer in economic hard time and it is the time to move on. The effectiveness of the decision can't be judged until we see the effects. Hope people find this article useful in keeping track of the on going economic trend.

Millions of Unemployed Face Years Without Jobs

Even though the American economy shows signs of recovery, millions of people are still out of work, spending through their savings accounts and almost out of time for their unemployment benefits. These people are the "new poor" millions who were used to middle class life now relying on government benefits.

Russia Cuts Interest Rates

Russia's central bank has just cut their interest rates by one quarter of a percentage point. This move has been done to try to get the banks to start lending. The cut was also made to limit the foreign short term capital, and the government had concerns about the ruble future. Russia has one of the highest interest rates of the Group of Eight Leading Nations, so this effort to cut interest rates has seen its effect by making the ruble stronger which was a concern for the banks.

China Tightens Bank Lending Rules

Banking regulators in China are tightening their rules about lending money. The reason for this being that they don't want to get themselves in any financial problems because of excessive lending. Their central bank has avoided raising interest rates which will slow down growth, so they must control their lending.