Obama Says Tax Breaks Shouldn't Reward Companies for Creating Jobs Abroad

President Obama criticized the Republican Party for rewarding billion-dollar tax cuts to major US corporations who created jobs abroad, while saying that US tax dollars should be supporting companies who create jobs in the United States.
Just last month the president signed a legislation that helped small businesses by increasing credit help and slashing taxes. According to the statistics, the legislation has helped many business owners.
In order to prevent doubts that could potentially hurt the economy, US Representative Mike Pence from Indiana recommended that Congress extend current income-tax rates, referring to the Bush administration’s tax cuts that are to expire at the year’s end. Although the Republicans and Democrats support the extension of low tax rates for households making more then $250,000 per year, the Republican Party is going to oppose the upcoming tax increase in January.
The incentive to create jobs in the US may look appealing but I don’t suspect this to be enough to sway corporate America who currently out-source.

The X Factor of Economics: People

The latest evidence came last week, in the form of the minutes of the latest meeting of the Federal Open Market Committee, the brain trust that establishes monetary policy. The committee, we learned, is divided on a seemingly straightforward question: Should the Fed take action to goose the economy now, or wait, watch and perhaps goose later?

Income Inequality: Too Big to Ignore

During the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair. Most troubling, all significant income growth has been concentrated at the top of the scale. The share of total income going to the top 1 percent of earners, which stood at 8.9 percent in 1976, rose to 23.5 percent by 2007, but during the same period, the average inflation-adjusted hourly wage declined by more than 7 percent.

Yet many economists are reluctant to confront rising income inequality directly, saying that whether this trend is good or bad requires a value judgment that is best left to philosophers. But that disclaimer rings hollow. Economics, after all, was founded by moral philosophers, and links between the disciplines remain strong. So economists are well positioned to address this question, and the answer is very clear.

`Liquidity Trap' Plagues U.S., More Stimulus Is Required, Fed's Evans Says

According to this article, the US needs much more monetary accommodation in the face og high unemployment and inflation that's too low. The regional bank chief of Chicago, Charles Evans also advocated targeting a path for the price level as a way to stop the inflation rate from falling.

Central bankers, seeking ways to boost flagging growth after lowering interest rates almost to zero and buying $1.7 trillion of securities, are weighing strategies for raising inflation expectations as well as expanding the balance sheet by purchasing Treasuries, according to minutes of the Fed’s Sept. 21 meeting released this week.

Inflation Looks Tame, and Shoppers Take Heart

The economy still show little inflation during September, but consumers provided a glimmer of hope for the retail sector.
The Labor Department said that excluding volatile energy and food prices, the core index was flat in September, the same as in August. And it had been running at 0.9 percent for five consecutive months, its lowest level in more than 50 years. Economists suggest that growth would remain slow for the rest of the year, given the slowdown in jobs and output. The bottom line for the recovery still remains pinned on job growth, but it is not easy. What is more, the trade deficit widened to 46.3 billion in August, which will be a drag on growth.
Separately, according to Reuters, consumer sentiment in the US declined in early October to its weakest level since July. On October 15th, new statistics for retail sales provided a growth for consumer spending, which is a cornerstone of economic growth. This upward revision to the retail sales does offer a glimmer of hope.

Recent DOW and stock trends show mixed results

The banking sector was weak, but the technology sector was impressive. Overall, the DOW dropped 32 points, mostly due to housing markets and recent foreclosure trends. Google, though, posted substantial gains as shares of the tech company increased 11 percent. Remarks made by FED chief Ben Bernanke impacted many investors and financial analysts. Bernanke alluded, not very subtly, that the FED is now less concerned with inflation and will act to ensure that interest rates stay low in the US economy. According to the article, this means 'quantitative easing', as the FED will soon begin to buy US treasuries to pump more money into the economy. Analysts are remarking that there is no doubt the FED will do this, but that the only question regards the magnitude of the FED's purchases.

Trade Deficit Widens By 8.7 Percent; Imports Grow Faster Than Exports

In August, the trade deficit widened considerably, increasing 8.7 percent to a monthly pace of $46.3 billion. The increase in the trade gap comes after a large drop in July of 14.5 percent. Though volatile in recent months, the trade deficit began to accelerate following the Greek debt crisis last spring, which put a damper on exports. This drop in net-exports was a major drag on Q2 GDP growth. Though Q3 will likely not see a large drag on growth from net-exports, it will likely not be an area of strength either.

Over the month, exports grew 0.3 percent. At the same time, imports rose 2.1 percent, following an equally sized drop in July. From a year prior, exports were up 18.6 percent, while imports were up 25.0 percent.

PPI: Headline Up 0.4 Percent; Core Prices Up 0.1 Percent

In September, the Producer Price Index for finished goods rose 0.4 percent for the second straight month. This was the third continuous months of rises in the index. Recent moves in producer prices have largely been dominated be swings in energy prices. Energy product prices rose 1.2 percent in September. Also notable was a significant rise in food prices, particularly meat products which jumped 5.4 percent.

The core index, which does not include energy or food product prices, rose by a lesser 0.1 percent. From a year ago, the core index was up 1.5 percent. Though this is still quite modest producer price inflation, it ties the highest year-over-year increase since September 2009. The top line index, including all finished products, was 4.0 percent higher from a year prior.

Retail Sales in U.S. Climbed More Than Forecast in September

According to the article, the retail sales in the US climbed more than forecast in September, easing concern that unemployment still stuck at a really high percent.

The purchase was larger than previously estimated and according to Commerce Department. In addition, there is a concern that inflation is too low and too many Americans are still out of job and it would be needed another monetary stimulus.

The consumer and the economy are still in need of support, as private job creation is insufficient to cause a material improvement in the unemployment rate and in consumer confidence

Stocks: Banks under pressure, techs rise

Is The Dollar Toast?

The dollar has depreciated considerably over the past few weeks. The weak dollar is indeed good news for firms like IBM, Coca-Cola, and McDonalds because it indicates a future rise in net exports. However, continuous decrease in the value of US currency might have a negative impact on the dollar's status.

Who Caused the Currency Wars?

There's a large degree of tension regarding exchange rates which has been building up for a number of years now. The issue is that since this has been ongoing for such a long period of time, there's fears that this issue will begin to negatively influence world trade policy. Many nations are pointing their fingers at each other but there seems to be many fingers being pointed at China as one of the major culprits.



China certainly bears some responsibility. Partly by design and partly by chance, about a decade ago China found itself consistently accumulating large amounts of foreign reserves by running a trade surplus. Generally this would cause a large degree of inflation to occur however, since China's financial system is so tight, this effect hasn't occured. Although, technically a lot of the blame can be placed on the International Monetary Fund for not controlling this better and limiting the amount of trade surplus China was accumulating.

Although much effort has been put into analyzing this current "currency war", as the author of the article concluded, "The “currency wars” themselves are merely a skirmish. The big problem is that the core of the world’s financial system has become unstable, and reckless risk-taking will once again lead to great collateral damage."

How Democrats and Republicans can break our foreign oil addiction overnight

The expert from Seeds of Destruction explains how America can never truly reach its full economic growth rate until we cut down on foreign oil dependence. Our nation only constitutes 4.5 percent of the world's population, however we manage to consume almost 25 percent of annual world oil production. Some reasons as to why we are so dependent include: Oil prices are not set by the forces of supply and demand, but rather by a cartel (OPEC); world oil demand is increasing due to the rapid growth in China and India; America's oil addiction results in a loss of purchasing power, reduction in output and places a downward pressuer on wages.

Ways in which we can buck the trend stem from bi-partisan policies - Democrates and Republicans take different paths but the best path would be to walk in the middle. In otherwords, Democrates believe in energy conservation and a greater reliance on solar and wind renewables. Whereas the Republicans believe in drilling for more oil and developing more domestic natural gas to close the gap of increased coal and nuclear power use.

I believe an action needs to be taken to close the gap, but we all know that the "smart path" (the path in which both parties implement their strategies) will be the path less traveled, or avoided altogether for that matter.

How to stop a currency war

IN RECENT weeks the world economy has been on a war footing, at least rhetorically. Ever since Brazil’s finance minister, Guido Mantega, declared on September 27th that an “international currency war” had broken out, the global economic debate has been recast in battlefield terms, not just by excitable headline-writers, but by officials themselves. Gone is the fuzzy rhetoric about co-operation to boost global growth. A more combative tone has taken hold (see article). Countries blame each other for distorting global demand, with weapons that range from quantitative easing (printing money to buy bonds) to currency intervention and capital controls.

Behind all the smoke and fury, there are in fact three battles. The biggest one is over China’s unwillingness to allow the yuan to rise more quickly. American and European officials have sounded tougher about the “damaging dynamic” caused by China’s undervalued currency. Last month the House of Representatives passed a law allowing firms to seek tariff protection against countries with undervalued currencies, with a huge bipartisan majority. China’s “unfair” trade practices have become a hot topic in the mid-term elections.

A second flashpoint is the rich world’s monetary policy, particularly the prospect that central banks may soon restart printing money to buy government bonds. The dollar has fallen as financial markets expect the Federal Reserve to act fastest and most boldly. The euro has soared as officials at the European Central Bank show least enthusiasm for such a shift. In China’s eyes (and, sotto voce, those of many other emerging-market governments), quantitative easing creates a gross distortion in the world economy as investors rush elsewhere, especially into emerging economies, in search of higher yields.

A third area of contention comes from how the developing countries respond to these capital flows. Rather than let their exchange rates soar, many governments have intervened to buy foreign currency, or imposed taxes on foreign capital inflows. Brazil recently doubled a tax on foreign purchases of its domestic debt. This week Thailand announced a new 15% withholding tax for foreign investors in its bonds.

Unemployment Applications Grow

More people applied for unemployment benefits last week, the first rise in three weeks and evidence that companies are reluctant to hire in a slow economy.

Initial claims for unemployment aid rose by 13,000 to a seasonally adjusted 462,000, the Labor Department said Thursday. It was only the second rise in two months. Jobless claims have been stuck near 450,000 all year. Few employers see much reason to create many jobs, and some are still laying off workers. Rail operator CSX Corp., for example, said Wednesday that it can lengthen its trains to handle rising shipments, reducing its need to hire more employees. The data illustrate a weak economy that is slowly recuperating more than a year after the recession officially ended. Businesses are unable to raise prices because of high unemployment that is not expected to ease for months, perhaps years.

The initial claims figure, while volatile, is considered a real-time snapshot of the job market. It is also a measure of the pace of layoffs and an indication of companies' willingness to hire. The four-week average of claims, a less volatile measure, rose by 2,250 to 459,000 — the first increase after six consecutive declines.

This seems to tell me that the recession really isn't over even though people are saying that it is. If it's over, why is unemployment still on the rise?

Currency and gold trading was again a dominant driver of global markets. Traders sent the dollar lower because of expectations the Federal Reserve would start buying government bonds to try to stimulate the sluggish economy. Buying bonds would drive down interest rates from already low levels. That makes gold and other currencies, where interest rates are higher, more attractive than the dollar.

Gold hit another record high, while the dollar fell to a 15-year low against the yen and touched its lowest level against the euro since January.

On Wall Street equity markets, shares hesitated after the government said first-time claims for unemployment benefits rose last week for the first time in three weeks. Claims remain stuck at levels that signal employers are not ramping up hiring. High unemployment remains an obstacle to a stronger economy and any Fed action would be partially aimed at reviving job growth.

Low inflation is also a concern for the Fed. At its meeting last month, the Fed hinted that future bond purchases would help get inflation back to more historically normal levels. The lower interest rates are also aimed at sparking new borrowing and spending by companies and consumers. More spending would drive prices for goods higher.

New option: Don't tax the rich. Tax the really rich

The Obama mantra. Tax cuts will not be extended for the rich sector of the country. Here he states exactly the threshold for "richness," $250,000. This is certainly a reasonable number to decide upon. If a certain household was making 250 grand or more, I do not think they have much to worry about, when it comes to relieving tax cuts. Those who are being vocal about raising the threshold to 500,000 or even 1 million dollars, are being stupid, plain and simple. Those Democrats who are calling for a temporary extension for everyone, especially those running for reelection who want extra funds for campaigning, are imbeciles. It is time to tax the rich! On paper, a reported "income" of 250 grand is more likely to be an actual physical income of 350,000. Enough bull. Move onwards.

Social Security: No 2011 increase expected

Another year, another dollar. This will most likely not be true for those receiving social security payments. Both the Congressional Budget Office and the economics blog Calculated Risk have decided, after proceeding through the necessary calculations, that no cost of living adjustment will be necessary for the 2010 fiscal year. I agree with this decision, although I do not have the skills to sift through all of the calculations. Simply put, if inflation is not high enough, then there is not a justification for increasing S.S. payments. We need to be more accurate and cautious when it comes to such decisions. Social Security will not be around long, so we must preserve it for as long as we can. And like the closing sentences say, S.S. payments are not decreased when deflation occurs.

Currency Wars

With the announcement by the Fed that more Dollars are going to be injected into the economy, the Dollar has slid to monthly lows. The Dollar is now at a 15 - year low compared to the Yen and an eight month low against the Euro.

"With economic recovery painfully slow, recent weeks have seen nations from Japan to Colombia intervene to stop their currencies from rising to levels that would make exports prohibitively expensive, sparking talk of a currency war.

South Korea on Monday warned that failure to settle disputes about currency policy could fuel protectionism and damage the world economic recovery."

This comes at the heels of Russia mulling options to sell Euro bonds.

Wal-Mart overhauls 1.4 million workers' benefits

Unlike its previous retirement plan, where the company would put 4% of its profits into employees' retirement plan, WalMart's new retirement plan requires a certain percentage of contribution on behalf of the employees. Consequently, WalMart will match this percentage and double it.
How Smart Is That?

Why the jobless gender gap persists

The latest reports on unemployment show that the trend of a gender gap in unemployment continues to exist, as male-dominated industries are cutting back more than female-dominated industries. This is not new news, as a similar gap existed in our last recession as well. The gap has narrowed since the summer but unemployment among women still sits around 2% less than men.

This cutback in male-dominated jobs has pushed many women back into the workforce. You see women taking off less time, mostly because households cannot afford for them to stay off work for extended periods. Unfortunately, the recession still makes it hard for women trying to reenter the workforce and over 20% of women attempting to enter the workforce admit they are having difficulty finding a job.

The return of women to the workforce has its "ups" for retail shops such as Ann Taylor who have seen a rise of overall sales, accumulated mostly from purchases of dresses and suits.

Overall, this report shows that the rate of job separations for men exceeds that of women and that the rate of job findings for men exceeds that of findings for men, leading to higher rates of unemployment for men. This type of unemployment would be considered frictional, with the change in the demand amongst industries representing a sectoral shift away from male-dominated jobs like construction toward female-dominated jobs such as health care and education.

temporary and part time jobs on the rise

This recession has been very weird indeed. Every time companies add more people on their payroll as part timers or temps, it is an indication of economic expansion to come. This economic expansion generally comes very quickly. However in the current recession we see that despite the fact that companies are hiring more part timers and temps than ever, the economy has not expanded. The number of part timers have surged up from 6.2 Million to 9.5 Million from last year- a combination of workers who saw their hours cut back and those who were unable to find a full time position. This alludes to a growing trend in the market of hiring more temporary workers as businesses are still moving cautiously. This reflects the uncertainty about the strength of the economic recovery and shows us that we are still a long way from the light at the end of the tunnel.

America's $4.6 trillion retirement hole

Retirement. This word brings back memories of all of those commercials offering a safe, effective plan for settling down and living your golden years happily. As the demographic pyramid becomes top heavy, this promise is no longer valid. The Employee Benefit Research Institute estimates an extra 48 grand is needed to keep that promise, when individuals retire at the ripe old age of 65. That's a fairly large number! They even included an estimate for the time period when Social Security inevitably collapses: $89,000!!! It's probably time to start having more children...

Why the Jobless Gender Gap Exists

The latest unemployment report shows that the women continue to maintain a more stable unemployment rate than men. As the economy recovers, they may continue to dominate.

It's no secret that women fared better than men during the latest recession. More men found themselves unemployed than women as male-dominated industries such as construction and manufacturing shed far more jobs than areas like education and health care, which typically employ more women.

And as the latest jobless report released today shows, the unemployment gender gap continues through the economic recovery. Though it has narrowed some since its peak in August 2009, the gap persists -- unemployment among men hovers near 10% versus 8% for women.

The overall jobless rate for September was unchanged from August at 9.6%, underscoring concerns from some Federal Reserve policymakers that the economic rebound has been moving much too slow and may need an extra jolt through easier monetary policy. The economy lost 95,000 non-farm jobs, driven mostly by layoffs in local governments and of temporary Census workers.

The financial strains of the so-called "Mancession" have pushed more women who previously took time off from their careers to search for jobs. It's a development that's been hard for economists to quantify, but recent studies and anecdotes offer a snapshot.

The Week Ahead for Oil and Gold

This short video discusses how oil and gold will be on the rise again this week for the ninth straight week, presumably coming to the strike price of around $1500 and oil will also see significant gains in all markets. The video also discusses how grain futures are slowly becoming more and more popular among traders as a more food producers are looking to make healthier products using whole grains.