33 States Reported Job Growth in March

This article is about the noticeable increase in jobs reported in many states last month. Maryland, Virginia and Pennsylvania recorded sizable gains in employment in March and were among 33 states posting increases. According to the Labor Department, Maryland led the country with a gain of 35,800 payroll jobs for the month of March. Virginia and Pennsylvania also posted increases that topped 20,000 in the month. There were also a lot of job losses reported in many states. Among these states, Michigan had the most losses. Nevada and Florida also had sizeable job losses. The national unemployment rate still remains at 9.7%.

Goldman Falls the Most in a Year, Pushing Banks Lower

Goldman Sachs stock tumbled 13% after the SEC charged the bank with fraud related to packaging and selling collateralized debt obligations linked to subprime mortgages. The most profitable firm on Wall Street erased its gain for 2010. The fraud charge against Goldman Sachs created a big uncertainty in the banking industry. First, after this incident all other financial insititutions on Wall Street would be closely scrutinized by the SEC. Second, as this lawsuit comes, president Obama is trying to pass the largest set of financial regulations since the Great Depression years. As Paul Miller, a former bank examiner at Fed said: "Regulatory risk just got a lot bigger". Basically, there is a lot of uncertainty going on in the banking industry, so watch out!!!

Who says the economy is rebounding?

This article is about why Warren Buffett, Jamie Dimon, and Jack Welch think the U.S. economy is recovering. Warren Buffett owns a number of different companies and he sees that there is a return in activity among his many businesses. Last year this time companies weren't hiring but now they are and people are beginning to spend money. Yet, despite these signs of recovery many people still worry that some other financial crisis my occur in the near future. In this article they say many people are suffering from what they call "post-traumatic financial crisis syndrome." Despite all this it's good to hear that even the top financial leaders are saying things are getting better.

Is The Fed Normalizing MS

An interesting concept as we head into the last weeks and discuss the great recession.

China Faces Broader Tariff Threat From EU Over Aid

There are currently many issues relating to China exports, one of which is the EU's probe into alleged subsidies in to Chinese industry, further highlighting concerns that the Yuan is undervalued. The investigation's goal is to figure out whether the Chinese Government grants aids to domestic paper manufacturers so that they can sell their products in Europe at prices below production costs (dumping). The case may result in the EU imposing an anti-dumping tariff on coated fine papers with Chinese origins to help Europe producers to compete against cheap imports.

It also emerges that China has come to a “consensus” on adjusting its exchange rate gradually and wants to avoid the impression of bowing to U.S. pressure by allowing appreciation.

After the Housing Bust, Construction Shows Life

According to this article, as the housing market is moving toward more normal conditions, the home building industry is experiencing a recovery from its near-death levels. To be specific, the Census Bureau reported that housing sector rose 1.6% in March to a seasonally adjusted rate of 626,000. This is also the third consecutive monthly increase, and better than analysts had been predicting. But this is only a small improvement compared to construction’s steep fall over the last few years. For example, at the height of boom, more than two million homes were built each year. An economist, Joshua Shapiro, estimated that a considerable amount of the recent activity were a result of the tax credit, which is speeding to the expiration with little likelihood of being renewed. Another reason for caution is that most increase in March was a multi-unit construction, which tends to be volatile. Single-family homes are actually felling slightly.

China's economy--On the rebound

This article is about China's economy growth and its effect on the neighbor economies. On April 15th China reported that its economy grew by 11.9% in the year to the first quarter, its fastest pace since 2007. The strong figure increased speculation that China would follow in Singapore’s footsteps, allowing its currency to strengthen, as America and other countries have been pressing it to do. The yuan has been pegged tight to the dollar since July 2008, much to the consternation of its trading partners. The promising economic condition in China may contribute to economic growth in other East Asian country. In the first quarter of this year Singapore’s economy performed a reverse bungy jump of its own. It grew at an annual pace of 32.1%, according to preliminary figures released on April 14th. Manufacturing shot up by 139%. The city-state’s authorities announced a “gradual” currency revaluation to reduce inflationary pressure. However, both countries are still facing with some problems. For China, the hottest issue now is about its currency policy. Opinion among China’s various state bodies is said to be divided over whether to free the currency: those arguing in favour now have a stronger case.

SEC accuses Goldman Sachs of civil fraud

SEC accuses Goldman Sachs of civil fraud

By Zachary A. Goldfarb
Washington Post Staff Writer
Friday, April 16, 2010; 2:36 PM

The Securities and Exchange Commission filed fraud charges Friday against Goldman Sachs, one of the most successful but vilified banks on Wall Street, for allegedly selling investors a financial product based on subprime mortgages that was secretly designed to lose value.

In filing the civil suit against Goldman Sachs, the agency is targeting one of the banks that largely escaped the wreckage of the financial crisis, and with the help of taxpayer bailouts, emerged stronger.

The SEC's suit strikes at a practice that was one of the main causes of the financial crisis: the creation of poisonous investments derived from home loans made to borrowers who couldn't afford the houses they were buying.

The suit also drags into a legal maelstrom Paulson & Co., the firm of legendary hedge fund manager John Paulson, who made billions of dollars by betting against the housing market in the years before it went bust. He and his firm have not been accused of wrongdoing.

Goldman Sachs denied the allegations. "The SEC's charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation," the bank said in a statement.

Paulson & Co. also had no immediate comment.

In this case, the SEC alleges that Goldman Sachs created and marketed a financial product known as a collateralized debt obligation, often referred to as a CDO, whose value was linked to that of home loans. The SEC says the bank failed to tell investors important information about the investment -- in particular that Paulson & Co. played a central role in helping Goldman assemble the CDO while the hedge fund at the same time placed bets that the CDO would lose value.

"The product was new and complex but the deception and conflicts are old and simple," said Robert Khuzami, director of the Division of Enforcement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party."

The suit, filed in federal court in Southern District of New York, alleges that Paulson & Co. paid Goldman Sachs to create a product which would allow the firm to bet against subprime mortgage securities it believed would lose value.

The bank created the CDO, which was known as ABACUS 2007-AC1, and began to market it to investors who wanted to bet that the housing and subprime mortgage would continue to boom.

But, according to the SEC, the bank didn't tell investors that Paulson & Co. had helped formulate the CDO by encouraging the purchase of subprime mortgages that would likely lose value.

The SEC alleges that a Goldman Sachs vice president, Fabrice Tourre, was principally responsible for putting together the CDO. He also faces civil charges.

According to the SEC, the CDO was created on April 26, 2007, just as the housing market began to falter. Paulson & Co. paid Goldman Sachs $15 million for structuring and marketing the CDO. Investors in the CDO lost more than $1 billion, according to the agency.

If the conduct alleged by the SEC went beyond this specific instance and was common on Wall Street, this could upend a popular notion about the causes of the financial crisis. It would mean bankers may have been intentionally creating toxic assets, only looking to generate fees for their employers and bonuses for themselves without worrying about whether it would cost their investors or clients or pose a risk to the nation's financial markets.

The prevailing view about the roots of the financial crisis has been that Wall Street's biggest banks, perhaps ignoring common sense, bought into the widespread notion that housing prices would continue to rise for the foreseeable future, and that these firms were as surprised as anyone at the sudden collapse in the housing market. Banks and other financial firms ended up in peril because of all the toxic mortgage-related assets on their books.

But according to the SEC, Goldman knew that it was creating a toxic investment.

Company Mergers

This article pertains to the large quantity of cash that large corporations are currently showing on their balance sheets. This large influx of cash will most likely be used for large corporate mergers. I see these mergers as great benefits to the current economic state. With these expansionary mergers I believe it is safe to assume that the progress in the Unemployment Rate will continue throughout the year providing that their are no sudden financial collapses on Wall Street. This job availability boost will definitely help these families around the country as well as the government deficit because of more taxable people.

Will the Fed's exit from the mortgage markets bring inflation?

This is a good article on the high reserve that banks are holding and how it could affect the money supply. It talks about if all banks were to suddenly start lending out money, at a ratio of 10:1, we could see the money supply rise by $12 trillion. Obviously the banks wont wake up one morning and decide to lend out $12 trillion, but it does demonstrate how much potential there is for high inflation.

Senate Extends Jobless Benefits

The Senate voted Thursday to push back the deadline to file for extended unemployment benefits until June 2. The measure would restore federal unemployment benefits to more than 200,000 jobless Americans who started losing them on April 5 after lawmakers let that deadline pass. Some 11.2 million Americans receive unemployment insurance, with 6 million of them collecting extended benefits. Congress must be wary of this situation, especially with 33 states out of money to fund jobless benefits.

Federal aid is forestalling only a fraction of foreclosures, report says

This article discusses the problems the government is running into with their foreclosure prevention efforts. The Making Homes Affordable program is only on tract to prevent only 1 million foreclosures. Throughout the last month 230,000 U.S. homeowners have secured loans under this program. With 150,000 already dropped from the program, many are still waiting for permanent mortgage relief. An interesting note, of the 230,000 that have secured loans, 14,000 are from the Washington area.

U.S. Must Start to Rein In Deficit, Fed Chief Says

The article mainly talks about the difficult choices the government should make to address its gaping deficits. According to Fed chairman Bernanke, a credible plan for reining in federal deficits could help long-term interest rate. To maintain the confidence of public and financial markets the policy makers have to make move decisively to set federal budget on a trajectory towards sustainable fiscal balance. He also said that a moderate recovery had begun, but it still takes time to restore 8.5 million jobs lost in the last two years. Inflation remains low and the personal consumption has been rising at an annual rate of 1.25%. He then addressed one politically heated issue of Chinese currency. To be specific, he pointed out that it would be good for Chinese to allow more flexibility in their exchange rate, because it helps to stimulate domestic demand and consumption.

Senators Unveil Bill Aimed at Airline Fees

Numerous Senator Democrats are taking aim at carry-on baggage fees in an effort to close a loophole they say give airlines preferential tax treatment for fees on services that are not deemed "reasonably necessary" for air transportation. Under current laws, airlines pay a 7.5% tax for every dollar they collect in fares, but no tax is imposed on fees collected for "non-essential" services, such as carry-on baggage. In essence, airlines do not get taxed for the money they receive for carry-on baggage fees. If passed, it would require that carry-on bags be considered essential and taxed at the same rate as fares. Hopefully this bill would encourage airlines to lower fees or abolish the fees all together.

Mortgage Deduction: America's Costliest Tax Break

This is a pretty interesting article discussing the numerous tax breaks that are the costliest to the U.S. government. The mortgage-interest deduction is America's favorite tax break. Between 2009 and 2013, the government will lose a whopping $600 billion because of it. The tax break enables individuals owning a first or second home to deduct the interest on up to $1 million in loans used to buy, build or improve the home. There are many proposals in place to simplify the income tax system, however, mortgage deduction is considered a sacred cow and deemed untouchable. While the deduction is seen as a big spur to housing sales, some think the generous deduction may have contributed to to an unstable rise in home prices.

Apple Postpones International iPad Sales

This article was about how apple has postponed its international sales of the iPad. The article claims that issues with supplies of components may have played a role in Apple's decision to delay their sales.

10 foreclosures for every home saved

We all know about the poor condition of the housing industry and the high number of foreclosures. This article sheds some light on how bad it really is. Obama's mortgage modification program is only helping a small portion of the people that are more than 60 days behind on their loans. There are over 6 million borrowers, but only about 169,000 have received long-term mortgage modifications. The plan will only likely assist 1million homeowners. For every borrower that lost their home, there was another 10 families that faced foreclosures last year.

China's Economy Grew 11.9 Percent in First Quarter: Sources

China's 11.9 percent growth in this years first quarter was the fastest annual pace in nearly 3 years and was above forecasts. China credited their fast pace growth to policy stimulus. This stronger then expected GDP growth resulted in a build-up of broad-based price pressures, even if inflation fell in March. China plans to respond with tightening up their policies, including higher bank reserve requirements, increasing the interest rate and placing restrictions on infrastructure spending. How might this effect the exchange rate with the US?

Banks Resist Plans to Reduce Mortgage Balances

Banks Resist Plans to Reduce Mortgage Balances
By DAVID STREITFELD

In a rebuff to the Obama administration, two big banks on Tuesday drew a line in the sand on cutting the mortgage balances of beleaguered homeowners, saying that the tool would be applied sparingly.

The idea of reducing loan principals last month became a centerpiece of the administration’s efforts to help seven million households threatened with foreclosure. But an official at one of the banks, David Lowman of JPMorgan Chase, said principal reduction could reward households for consuming more than they could afford, might punish future homeowners by raising the cost of borrowing and in any case was simply unworkable.

“We are concerned about large-scale broad-based principal reduction programs,” Mr. Lowman, the bank’s chief executive for home lending, testified during a hearing of the House Financial Services committee.

Mr. Lowman’s comments were briefly echoed in more restrained form by an executive from Wells Fargo. “Principal forgiveness is not an across-the-board solution,” said the executive, Mike Heid, co-president of Wells Fargo Home Mortgage. Two other bankers who testified, from Bank of America and Citigroup, largely avoided the issue.

A Treasury Department spokeswoman declined to comment on the hearing.

The government modification program has been under attack by lawmakers and community groups for doing too little too slowly. The Congressional Oversight Panel is issuing a report Wednesday that says, “Treasury’s response continues to lag well behind the pace of the crisis.”

In response, the Treasury Department said that its latest modification report, also to be released Wednesday, showed that the number of permanent modifications grew in March to 230,000 households, an increase of 35 percent from the previous month. The Treasury also stressed it was still introducing programs, including those aimed at reducing mortgage principal.

The testimony on Tuesday, however, offered the first public acknowledgment that these latest foreclosure prevention measures might encounter some resistance among banks, ultimately rendering them less effective than hoped.

One of the new government programs will require lenders to strongly consider reducing the mortgage balance for distressed borrowers who qualify for the government’s modification plan.

A more radical plan urges lenders to refinance loans for borrowers who may be solvent but who owe much more on their homes than they are worth. Many of these loans have been securitized into investment pools but are serviced by the big banks.

The investment pool would get the mortgage off its books for the current market value of the property — less than it is owed, perhaps, but more than it would receive if the house went into foreclosure. The borrower would receive a new government-insured loan at market value, presumably making him less likely to walk away.

It is this last program that seemed to irk JPMorgan Chase.

“If we rewrite the mortgage contract retroactively to restore equity to any mortgage borrower because the value of his or her home declined, what responsible lender will take the equity risk of financing mortgages in the future?” Mr. Lowman asked in his prepared comments.

In any case, he said, Chase cannot rewrite most of these deals. The bank’s contractual arrangements with the investors do not allow for principal reduction.

Furthermore, Mr. Lowman argued, the cost of reducing principal will be built into future loans, resulting in less access to credit and higher costs for consumers.

What Chase — one of the strongest of the big banks — might be really worried about is not the primary mortgages it services but the $133 billion in home equity loans and lines of credit it carries on its own books.

The question of what happens to these secondary loans in a mortgage modification was at the heart of the Congressional hearing on Tuesday.

Investors who own the primary loans argue that the others should be second in line, getting only the money that is left over after they have been satisfied. But banks like Chase, which own the majority of second loans, want a better deal. Since they have the power to disrupt any modification, the result so far has been a standoff.

Alan M. White, an assistant professor at Valparaiso University School of Law who has closely studied the various modification plans, said, “Chase and Wells are attacking a straw man. Nobody is arguing for across-the-board principal reduction. But I think that they feel a need to push back hard on any attempts to get them to write down the troubled second mortgages and home equity lines of credit in their portfolios.”

Mr. Lowman emphasized the moral side of the issue. Mandating write-downs in home equity loans would be a particularly bad idea, he said, because these loans were simply used to consume rather than pay for housing.

Plan Would Require Homeless to Work to Qualify for Rent Subsidies

Plan Would Require Homeless to Work to Qualify for Rent Subsidies
By JULIE BOSMAN

The Bloomberg administration is planning to require more homeless families to get jobs in order to qualify for rent subsidies, city officials said Tuesday.

For the last three years, the city had provided certain homeless families with vouchers good for one or two years of free or steeply discounted rent. Since the program began, more than 18,000 families, and some single adults, have received the so-called Advantage vouchers, more than 7,500 of them last year.

Most of those families qualified for the vouchers because they had already found work, and as a result were eligible to pay only $50 toward their rent each month for up to two years. But families who had become the subject of child welfare investigations were granted an even-more-generous voucher, good for up to two years of free rent — because of their vulnerability.

Now the Bloomberg administration is seeking to require that nearly all families have at least one member with a job before they receive a rent subsidy. Participants would also pay more toward their rent — rather than $50 a month, they would be required to pay 30 percent of their income during the first year of the subsidy. During the second year, they would pay 50 percent of the total rent.

The administration’s proposal is awaiting approval by the state, which pays half the cost. The city pays 37 percent and the federal government the rest.

“The goal here is to create a rental assistance program that helps people move out of shelter and provides an appropriate government subsidy,” said Linda I. Gibbs, the deputy mayor for health and human services. “Anybody who can work, is capable of working, and we should help them work.”

Ms. Gibbs added that the administration also planned to reinstate a requirement that homeless families who have income pay rent while they are in shelters.

There are more than 36,000 people in the city shelter system, including nearly 8,500 families with children.

Ms. Gibbs said it was unclear whether the change would save money in the $141.8 million plan, but she said she hoped that it would help more families find jobs and permanent homes. She added that New York has an “extraordinarily generous” shelter system and housing subsidy program.

But some of the organizations that run homeless shelters for the city said they were worried that the new rules might keep families in shelters even longer — particularly families with children who have been deemed to be at risk of neglect or abuse. Those families, monitored by the city’s child welfare office, would now be required to find jobs to qualify for a subsidy.

“In general, it may make moveouts slower because it’s difficult to find work out there,” said Colleen K. Jackson, the executive director of the West End Intergenerational Residence, a shelter for young mothers. “Jobs are not easy to come by.”

This is the second time in three years that the city has made significant changes to its rental assistance program. A previous and short-lived version, called Housing Stability Plus, required participants to be on welfare. The Advantage program, which began in 2007, has a stronger focus on work.

“From a family perspective, if a parent or caregiver is employed, the family is that much more likely to remain stable and stay in permanent housing,” said Gordon J. Campbell, president and chief executive of United Way of New York City, a former homeless services commissioner.

Some advocates for the homeless were quick to criticize the second change announced on Tuesday: the administration’s plans to revive the state-mandated requirement that working homeless families pay rent while they are in shelters. City officials said they expect to issue notices to families in September that they will be charged rent.

The plan was first attempted a year ago, but halted after only three weeks because of what a city official called “technical issues.” When it is revived again, the Human Resources Administration, instead of the shelter providers, will handle rent collection.

Steven Banks, the attorney in chief of the Legal Aid Society, who is a frequent critic of the administration, said its approach to the issue “seems to elevate ideology or philosophy over reality.”

“In the midst of an extraordinary economic downturn, to be going after families who are earning minimum wages to pay the cost of shelter instead of encouraging them to save their meager wages so they can move out, in the end, is going to cost more,” Mr. Banks said.

State Senator Daniel L. Squadron, a Democrat representing a Brooklyn and Manhattan district, said that he supported adding a provision to the state budget that would prevent the city from charging rent in shelters.

“The goal for homeless families is moving out of homelessness,” Mr. Squadron said. “Charging rent is beyond perverse.”

Ms. Gibbs described the rent requirements as modest. A family with an annual income of $10,000, for example, would pay $36 a month to live in a shelter; however, a family with $25,000 in annual income would pay $926 a month. Eighty percent of homeless families would be exempt from the requirement.

What to do with taxes?

This article talks about the huge budget deficit and how it wont get any better unless taxes are increased or government expenses decrease significantly. One of the things that could be done would be increasing taxes for the rich. If this isn't done then the country is left with to options, increase taxes for everyone or cut government spending significantly. Unfortunately cutting government spending at this very moment would involve more factors in the decision than only economy related ones. So the country is left with the question of what to do with taxes, who to tax, and how much.

U.S. Economy: Trade Gap Widens More Than Anticipated on Imports

This article provides information on the increased trade deficit in February. There was a 7.4 increase in the gap which translates to a $39.7 billion deficit which is up from $37 billion in the previous month. This article describes how Americans widening the gap between exports and imports by buying up foreign made products.

Jobless one step closer to regaining benefits

by Tami Luhby

A final vote will be taken later on this week by the Senate to determine the passage of a $9.2 billion deal that would give the unemployed the benefits they have enjoyed to date. Republicans delayed the vote on the bill, saying it needed to be paid for. This bill would effect over a million people, and they would stop receiving checks if the bill does not pass.

China’s Currency Reserves Jump, Showing Bets on Yuan

This article provides information on the currency situation in China. It provides information on the bullish trend the yuan has shown. The upward pressure is claimed to be in anticipation of an appreciation of the Chinese currency.

More than 200,000 jobless counting on an extension

More than 200,000 jobless Americans are anxiously waiting for the Senate to restore their extended unemployment insurance. Federal unemployment benefits, which last up to 73 weeks, kick in after state-funded 26 weeks of coverage expire. These federal benefits are divided into tiers, and the jobless must apply each time they move into a new tier. A million people could lose their unemployment benefits this month if the Senate doesn't act to extend it. To date, lawmakers have already approved two short-term extensions since December which extends the length of benefits. As around 11.2 million people now receive unemployment insurance, while 6 million are collecting extended benefits, consumer advocates have been urging lawmakers to quickly approve extending unemployment insurance as the unemployment rate remains stuck at 9.7% with the average duration of unemployment at 31.2 weeks.

Interest Rates Have Nowhere to Go but Up

This article examines the reasons why interest rate in US will go up. It is the outcome of the nation's ballooning debt and the renewed prospect of inflation as the economy recovers. Consumers, however, are about to face a new financial burden with a sustained period of rising interest rate.

The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.

Along with the sell-off in bonds, the Federal Reserve has halted its emergency $1.25 trillion program to buy mortgage debt, placing even more upward pressure on rates.

Stocks rise on more signs of growth; Dow tops 11K

This article touches on the positive signs that the economy is recovering. The recovery is shown by the high of 11,000 in which Dow finished on Friday at the close of the markets. Even though some analysts believe that the signs of the recovery are not sufficient, the optimism of the Greek finance minister has cause stocks to rise.

Steel Firms Feel Bite of U.S. Mine Disaster

Prices for metallurgical coal, a key input in steel production, jumped after the terrible explosion in the West Virginia mine forced Massey Energy Company to squeeze an already tight market for the commodity.

The Upper Big Branch mine disaster takes supply off the market at time of strong Asian demand for the higher-quality coal and a rebound in steel production in the U.S., Brazil and Europe.

Massey was scheduled to ship 1.6 million tons of metallurgical coal from the Upper Big Branch mine this year, which is about 3% of total U.S. production last year. Massey said it will increase production at other mines, but doubts it will be able to replace all of the lost production from Upper Big Branch this year. The company sis not positive when the mine might reopen.

Light At the End of the Bailout Tunnel

The government's rescue of companies and financial markets is beginning to look far less expensive than or long-lasting than once feared. The treasury Department officials say the tab will be about $89 billion, which includes the Troubled Asset Relief Program, capital injections into Fannie Mae and Freddie Mac, loan guarantees by the Federal Housing Administration and Federal Reserve moves such as buying mortgage-backed securities and propping up the commercial-paper market. It is optimistic that AIG will be on its own within a year. AIG is on track to repay its loan to the Fed through asset sales that will raise $51 billion.

The treasury is planning to sell its $32 billion stake in Citigroup. GM plans to repay its $6.7 billion government investment. Both companies may be free of government strings within the year.

It was only a year ago that the Congressional Budget Office and Office of Management and Budget estimated that the overall bailout would cost more than $250 billion dollars. Treasury Secretary Timothy Geithner said last month that the bailout will cost less than 1% of GDP. The $89 billion projection is less than the cost of the savings-and-loan crisis in the 1980s and early 1990s which amounted as much as $3.2 of GDP.

EU set to offer Greece 30 billion euros in aid

This is a follow up on what finally happened to Greece and EU agreement on the bail-out aid. EU has finally sactioned 30billion Euro's in aid a lot higher than of predicted 27.2 billion dollars. The interest rate has been set at 5% and additional 10 billion dollars might be given by IMF.
Greece today in such a situation as US had been a year ago. So it can be predicted that it will take a bit time to get the economy moving once again. But the good news is from now on there will be no falling down; the rise might be slow but it won't be worse.

Satire Article

So I may have a tendency to over post items from The Onion, but that is only because I think they are geniuses. This article pokes fun at the rather suspicious academic nature of some fringe brands of economics, that are looking at sociological and non traditional trends through economics lenses. A bit of humor in a rather gloomy time.

Long Run Well Being

When we try to describe the economy we usually forget about sustainability. Sustainability brings in a conflict of interests. Limiting carbon emissions does not maximize growth, so individual countries governments have to decide on how many emissions to allow. This leads to several problems because as described in this article there are accusations of false emission reports and also the issue of finding the efficient level of emission arises.

Second Mortgages Vex Borrowers

Banks are under increasing political pressure to write off or at least write down second-lien and other junior mortgages to prevent borrowers from loosing their homes and remove them from large debt. But banks are slow to give up such loans due to banks being afraid that they will never receive the total or even the partial amount of their money.

Myrtle Beach Bank Fails, Year's 42nd

The closing of Beach First National Bank of Myrtle Beach made the bank the 42nd U.S. lender to fail this year as well as the first South Carolina failure in more than a decade. Victory State Bank of Columbia was the last bank to close in South Carolina (March 26, 1999). The Bank of North Carolina will take over the seven branches.

The failing of the Myrtle Beach bank is expected to cost the FDIC's deposit insurance fund $130.3 million. 140 banks failed this year, twenty five in 2008, and only three in 2007. The number of banks on the FDIC's confidential "problem'' list rose to 702 in the fourth quarter from 552 three months earlier.

Geithner visits China as currency plan appears to take shape

this article talks about how china is planning to let their currency to gain value b 3 percent this year. this action is a direct response to economic analysts claiming that china currency is too under valued. the article also talks about how this will make chinese exports cheaper to the world markets and that the only problem now is preventing speculators from profiting on the planned appreciation.

Bernanke Says Central Bankers Must Act Strongly to Stem Crises

this article talks about how the fed's chairmen Ben Bernanke has been under a lot of criticism for the policies he implemented during our recent financial crisis. it also talked about how Bernanke still stands by these actions and he said that policy makers must respond forcefully in desperate times.

March jobs report shows growth

This article discusses the unemployment rate and where it's headed. March figures show around 160,000 new jobs. This is one of three months that have seen job growth since the recession began, and economists think it's real this time. Even though this number is inflated by the Census Bureau (which hired nearly 50,000 people) and is under the projected number of new jobs, economists are relieved. One very encouraging part of this figure is that 60% of industries saw job growth, indicating a resilient recovery not one fueled by a more rapid recovery by a single industry. The average workweek has also increased by .1 hours, showing that employees are slowly getting back what was cut due to the recession. The number of discouraged job seekers has also decreased by nearly 200,000 which means not only are employers feeling more confident, employees are too. We are working our way upwards and hopefully the new money being put into consumers hands will lead to more spending and further hiring.

Oil Prices Find a Sweet Spot for World Economy

This article discusses the trend in oil prices over the past year and a half, and as the article puts it remarkably, "they have barely budged." Oil prices have stayed very stable between $70 and $83 and this is allowing consumers to feel much more confident. No longer do the average people in America have to devote such a large portion of their income to keeping their automobiles running. Another beneficial aspect of this steady oil price is what it is doing for manufacturing and transportation businesses. A large percentage of manufacturing products are shipped by truck, and with oil prices at $147 two summers ago this because a huge cost of production. Hopefully oil prices can stay under $100 dollars for at least a few more quarters as our economy slowly makes its recovery.

A breath of fresh air

In this article, it is said that the lacking of competition in Britain’s personal-banking markets has long been a worried problem to consumer groups. Consumers have remained reluctant to switch their current accounts, since it will be very cumbersome even though they have become used to shopping around for other utilities. Therefore, based on this situation, the sale of recent rescued bank’s branches and several ambitious new entrants seeking to grab a significant share of the market might create a better choice for bank customers.

Moreover, it is said that the sale of 318 branches of the Royal Bank of Scotland (RBS) could be a first step to end the oligopoly enjoyed by Britain’s big four: RBS, HSBC, Barclays and Lloyds. The potential new competitors, who are ambitious to gain a significant share of the market, include Santander, a big Spanish bank; Sir Richard Branson’s Virgin Money; Metro Bank, backed by Vernon Hill, an American bank founder; and there are another two potential contenders are the Post Office and Tesco, Britain’s biggest retailer. And it is predicted that, the main challenge for the new contenders may be to persuade the customers to shop around, because the failure of Northern Rock demonstrated the dangers of banks relying on the wholesale markets for their funding. Therefore, they are now more interested in taking deposits from the public.

Obama Touts Tax Breaks

This article talks about the potential and likely change that Obama wants to increase taxes. He thinks that with the economy showing a little progress, that now would be a good time for a major overhaul in the american tax system. The republicans say that now it not the time because this will hurt a lot of small businesses who are starting to rehire, and that the government needs to control its spending as an alternative to raising taxes. With taxes due in 4 days, it will be interesting to see what changes come for future.

Japan's Debt-Ridden Economy: Crisis in Slow Motion

I found this article to be very interesting because it focuses on Japan's slow moving deflationary trap. When most people think of Japan they think of money, electronics, business, power, etc... but very few think about the actual status of the economy. Ironically enough, if it's neighboring country, China, were to allow the yuan to float in the exchange rate system, this would benefit the yen tremendously. However, thanks to the now privatized Japanese Postal Savings System, most Japanese men and women have been ingrained with the idea that most of their income should be saved (which is probably a good thing, given the sheer cost of education, housing, and transportation). However, this saving has far exceeded any kind of balanced level, hence the reason we see Japan in a deflationary cycle that is very slowly circling the economic drain. The country is operating at a level that is well below it's capability add to this the huge amounts of debt that the country has both domestically and internationally. The article says that Japan may be next for a Greece-like crisis. I don't know if this will actually be the case, but I do think that if something isn't done soon Japan will suffer in the coming decades.

European Nations Offer $40 Billion to Greece

This is a follow-up news report about the crisis of Greece. It is reported that European leaders decided to offer the Greece a one-year aid package of €30 billion at a very low interest rate compared with the interest rate which investors have been demanding; It is reported that countries in the euro zone would loan Greece money at 5 percent interest, which is much lower than the rate—7.5 percent--- the government paid on the bond markets last week. And the financial commitment has reached $40.5 billion, which is above market expectations. This would at least postpone the need for aid by reassuring investors and helping Greece to refinance their debt. Moreover, the amount the I.M.F, would lend to Greece has not yet to be decided. And, according to Mr. Rehn, the European monetary affairs commissioner, euro-zone countries might provide two-thirds of the final package, and the I.M.F would provide a further one-third funds, which would make a total package of €45 billion.

In summary, from this article, one can see most of the euro zone countries believe the that Greece will be a credible loaners, since they do not require any special change of Greece’s government policies.

China Reports Rare Monthly Trade Deficit

In midst of reports that U.S. and Chinese officials are close to striking a deal that would see a 2% to 3% rise in the Chinese yuan in an effort to make U.S. goods more competitive versus Chinese exports, China reported its first monthly trade deficit in six years. In March, China posted a $7.24 billion trade deficit, its first since April 2004 where they posted $2.26 billion deficit. However, this comes to no surprise as China's trade surplus has continued to diminish since 2010 began.

Generation Y Poised to Take Over Marketplace

As baby boomers move out of their prime earning and spending years, Generation Y, which is even larger, is poised to take the boomers' place as market movers. Generation Y is comprised of 84 million people, making up 22% of U.S. households. Their spending power has the potential of being even greater that their predecessors' once the economy recovers. It is noted that younger consumers are more concerned about living within their means, eclipsing the throw-away mindset of the past half-century.

Interest Rates must go up

According to the article, one percentage point in mortgage rates adds about 19 percent to the total cost of that home. With that the Mortgage Bankers Association predicts 30-year mortgage rates to go to around 5.5 percent by the time summer hits and close to 6 percent by the end of the year. Another interest rate that is predicted to go up is the interest on credit cards.

Myrtle Beach Bank Fails, Year's 42nd

The closing of Beach First National Bank of Myrtle Beach made the bank the 42nd U.S. lender to fail this year as well as the first South Carolina failure in more than a decade. Victory State Bank of Columbia was the last bank to close in South Carolina (March 26, 1999). The Bank of North Carolina will take over the seven branches.

Bernanke Says Central Bankers Must Act Strongly to Stem Crises

Federal Reserve chairman Ben Bernanke has urged policy makers to respond aggressively following the financial crisis. He is hoping to restore the flow of credit to American families and businesses and hopes to have increased regulation on the financial industry.

Obama showcases advantages of stimulus tax benefits

In this article, it speaks about how Obama's new stimulus package that he put into effect last year and how it is benefitting those who experienced the tax cuts. This stimulus package cost $787 Million dollars in hope to help the US economy recover from the current recession. The tax cuts have benefitted families and businesses which was funded with $160 million dollars. Those who have already filed their taxes this season will see an increase in tax re-fund (up to 10%) which is the highest it has ever been. In addition, people who have purchased a home and have filed their taxes, can see up to $8,000 in tax credit. This stimulus package is good for those who have low income, and for younger adults, but will effect those in the higher tax brackets.

Interest rate hikes to hit consumers

This article is about how interest rates are going to start rising and the effect it will have on consumer habits. The reason for an increase in interest rates is because of the large amounts of debt the U.S. has accumulated over the years. The first area that will be effected is in real estate, and as a interest rates go up it will reduce the gains in the housing market. Before this point in time rates have been declining for about 30 years. As a side note some other rates that will be affected are credit cards and car loans.

Ten Myths About China

The title says it all and for this article, I choose one myth that I found interesting.
I found myth #2 the most interesting:

Myth No. 2: China could surpass the U.S. as the largest economy in 10 years.

Truth: There is a reasonable chance that China will never surpass the U.S.

China will might never pass the U.S. if the government makes the right moves to cut the federal deficit, keeping steady interest rates, expand trade, and reduce government regulation, especially taxes. These policy reforms may prevent China from passing the US economy. Furthermore, some economists take a look at the past 30 years and assume the next 30 years will be the same in economic progress. This is a fundamental mistake in analysis of any economy. For example, the USSR relied on its population to support its industrial economy, which the USSR put considerable emphasis on. Thus, with the increased pollution and decline in life expectancy, the nation collapsed. China is in a similar situation.

Japan's debt problem Sleepwalking towards disaster

From class, Goran, on occasion, has discussed Japan and their current economic situation. As of now, we know that their debt to GDP ratio is at 190% and the public buys government bonds, thus Japan is O.K. This article discusses that the Japanese government needs to make radical changes to its current system and elect bolder policy makers. The author notes three problems with Japan's situation:
1. The Japanese are depleting all their savings on government bonds and not investing in businesses', also known as the crowd out effect. Eventually, Japan will need to rely on foreign investors to buy government bonds.
2. Japan is deflating its currency in order to stop inflation from occurring. However, this pushes the debt to GDP ratio inexorably higher. And prices will continue to stay the same or lower as the standard of living stays the same. Thus, deflation leads to less consumption by consumers.
3. In the contemporary global situation, the country cannot rely heavily on export to fuel their economic growth; instead they must rely on domestic growth to fuel GDP advancement.
These problems will be fixed by electing bolder policymakers who will create structural reforms to raise productivity, fiscal reforms to boost growth and a strong monetary stimulus, all at once, to shock the economy back to life.

U.S. Steps Up Probe Of Hiring In Tech

The Justice Department is stepping up its investigation into hiring practices at some of America's biggest companies, including Google Inc., Intel Corp., International Business Machines Corp., Apple Inc. and IAC/InterActiveCorp., people familiar with the matter said.The inquiry is focused on whether companies, particularly in the technology sector, have agreed not to recruit each others' employees in ways that violate antitrust law. Specifically, the probe is looking into whether the companies' hiring practices are costing skilled computer engineers and other workers opportunities to change jobs for higher pay or better benefits.But the leadership of the antitrust division hasn't yet decided whether—or how—to challenge the hiring practices, these people said. About a dozen companies are meeting with top antitrust officials at the Justice Department this week and next, some to defend their practices, others to provide information.Antitrust experts say the Justice Department could argue that an agreement between competitors that holds down labor costs is as much a violation of antitrust laws as an agreement to fix prices.

EU set to offer Greece 30 billion euros in aid

Finance chiefs said Greece could receive as much as $40 billion (30 billion euros) at a 5 percent interest rate. It hasn't been unanimously decided yet but ministers have made the terms of a potential deal public. The IMF, will also lend another 10 billion euros in addition. The Prime Minister of Greece says that the country has not asked for a bailout. The situation in Greece is very grim. The interest rates on Greek government bonds has risen substantially and Greece needs to borrow a large amount of money in order to pay down maturing bonds and finance its budget deficit.

Soros Says Pound Devaluation Is Option for Next U.K. Government

George Soros, a billionaire investor, said that U. K. government should consider a further devaluation of its currency to rebalance the economy and assist the recovery. The pound has already dropped 25% since 2007, making U.K. exports cheaper overseas. Soros says that U.K. faces a huge budget deficit, mainly, because government had to take the debt of banks that were in trouble. Now U.K. budget deficit is at around 12% of the GDP, and its debt constitutes to 60.3% of the GDP, but as Soros says U.K. is not at the limits of its borrowing capacity. “It’s a question now of, if you now cut the budget deficit and borrow less, you could probably keep the currency, raise the interest rate, you could keep the currency from going down,” he said. But history shows that U.K still has room to borrow more money to bolster its public finances.

Claims Rose From Jobless Last Week

This article discusses the recent rise in newly laid-off workers seeking unemployment benefits. Last week it reportedly rose by 18,000. Economists had estimated an amount that would drop to 435,000, but the actual reported amount of workers was 460,000. But the initial claims have dropped four out of the past six weeks, and many economists are claiming it should further decline as expected. Jobless claims spiked during the recession at 651,000 during March 2009. According to the labor department, the amount of people continuing to claim benefits for more than a week fell by 131,000 to 4.55 million. Unfortunately many are now receiving extended benefits for an additional 73 weeks after having used up the normal 26 week period for benefits. This article also states that just over 5.8 million people were receiving these extended benefits from data collected from March.

FDIC's Sheila Bair on Bank Failures and Too-Big-To-Fail

In this article, Sheila Bair (chairman of the Federal Deposit Insurance Corp) gives her perspective on the present state of banks and other financial institutions. She talks about how the small banks are equally important as the too-big-to-fail financial institutions. She says that the losses incurred by these large institutions should be shared upon by their shareholders and creditors rather than taxpayers.