Lehman Brother's Shady Dealinngs

An interesting article from "The Economist" about some of the irresponsible practices used by the Lehman Brothers that helped precipitate their collapse. The article does a nice job of outlining the moral and financial gray area in which Lehman's was operating, although the terminology got a little bit technical for my understanding at points.

A Hopeful Economic Sign: February Retail Sales Jump

This article talks about how retail sales have risen during the month of February which is a positive sign that the economy is slowing recovering. However there are some people who think that it would take quite a while for the economy to recover. They talk about how the change in consumers' spending pattern is permanent and that people have learned to live within their means.

Volcker Says Too Soon to Cut U.S. Monetary, Fiscal Stimulus

This article talks about how it is still too early to undo the emergency policies that have been put in place to help our struggling economy. one of these policies is how the fed has kept interest rates near zero to encourage spending. One reason that the white house thinks that is is still to early to undo policies like this is because the unemployment rate is still too high. This also talks about how the budget deficit is now at around 1.6 trillion which is means that there is still a lot of trouble ahead in our economy.

Jobless Claims in U.S. Fell to 469,000 Last Week

This article talks about how at the end of february jobless applications fell by 29,000, and how companies are trying to make payroll cuts instead of job cuts. These cuts in people's income may hurt consumer spending, which is the last thing we need to see in our economy. the article also talks about how unemployment insurance fell to its lowest point of the year while others received more extended benefits for being unemployed.

Dissent may mark FOMC's next meeting on rates: analysts debate over near-zero interest rates is showing signs of heating up

By Greg Robb, MarketWatch March 3, 2010

Recently Federal Reserve officials have begun to disagree on the decision to keep interest rates low for an ‘extended period of time’. In the upcoming Fed meeting scheduled for March 16 there is likely to be some disagreement. Thomas Hoenig president of the federal bank of Kansas City has stated that he disagrees with holding policy steady and will most likely oppose the policy at the upcoming meeting. Hoenig believes that the Fed should prepare to raise interest rates, despite the fact that the nation’s unemployment rate remains high. Eric Rosengren the president of the Federal Reserve Bank in Boston believes that the current low interest rates are appropriate due to the slow recovery. Both members have openly expressed their opposing views to the public, clearly showing that there is uncertainty ahead.

“‘Despite the Fed's aggressive use of both traditional and non-traditional policy tools, the economy is experiencing a slow recovery from a very severe recession,’ said Rosengren, a leading dove on the FOMC, in a speech to a conference sponsored by the Global Interdependence Center in Philadelphia.”

Since both Rosengren and Hoenig are both voting members on the FOMC this year, there is likely to be some debate over the issue of interest rates. The debate over interest rates is fueled by the issue of an asset bubble that could be the result of keeping interest rates low for an extended time period. Hoenig believes that keeping interest rates low will create future problems. The effect this has on monetary policy will be seen in the upcoming weeks.

A Farewell to Europe? Not So Fast

From the analysis of this article, it is still a worthy investment to put one’s money in Europe’s stock market. First, although recently the stock market of Europe is in a bear state caused by the crisis of Greece, yet Europe’s stock market is a big chunk of the world that it represents more than a quarter of global stock market value. Therefore, it would be a big mistake to jettison Europe market. Furthermore, investing in Europe can help investors mix up the way they earn their money; after all, European stocks are paying more than 3 percent interest---among the highest yields in the world. Additionally, according to Ben Inker, director of asset allocation at GMO, a money management firm in Boston, says that “ you need Europe is that the valuation cycles are different.” That is, the stocks of European and equities of America are considered cheap at different times.

Pimco's El-Erian Interview on U.S. Economy

This is a video interview with Pimco's El-Erian about how the U.S. economy will experience a "bumpy" road to recovery in the near future. He claims that the recovery will be characterized by credit markets becoming "unclogged" and spending begins to increase. El-Erian also speaks about how it is a difficult time for policy makers because there is so much being asked of them at this time.

China Bank Chief Says Currency Is Unlikely To Change

This New York Times article discusses the strong exchange rate China's currency has over the other country's currency's around the world. The U.S. and other country's that trade with China are pleading for China to let its currency appreciate towards the dollar. The western economies are asking this of China because an artificially weak renmibni makes it expensive for other countries to buy Chinese exports.

Getting Older Without Getting Old

This article focuses on analyzing the fate of Facebook. It points out that Facebook would not be forgotten or out of date because of its property. The mainly advantage of Facebook is that this communicational tool not only a chat tools between friends, but also Fcaebbok helps people maintain their “weak-ties” with people they knew, but not that familiar. Which enrich people’s social circle. Also, this article emphasizes that the users of Facebook is not only teenagers or young-adults, but also there is a considerable number of adults who make use of Facebook to contact with others.

Moreover, in this article, “network effect” is mentioned as an important influence generated by Facebook, and other internet tools, which closely relates to the business world, since those net tools are good platforms of advertising and connecting.

Greeks Back Papandreou Even After Austerity Moves, Poll Shows

As we have discussed in class, exercising budgets cut either by raising tax or reducing government purchases is not an easy thing for the government to do as it is usually not favored by the public. Although the contractionary fiscal policy has prompted several walkouts from the labor union, a majority of Greeks still support Prime Minister George Papandreou even after he has announced 4.8 billion euros ($6.5 billion) in new budget cuts, a poll shows. Perhaps the fact that there are tons of articles around describing the difficulties faced by Greece and what the country has to do to obtain external financial assistance helps the public to understand the reasons behind such policies.

China’s Bank Chief Says Currency Is Unlikely to Rise

Lately there has been a lot of debate over China’s currency. Many have complained that because China isn’t allowing their currency to appreciate against the dollar, goods are artificially cheap, allowing China’s exports to explode and making it difficult for other countries to compete. Despite this fact, the Chinese government announced Saturday that they would continue to peg the renminbi to the dollar.