It's A Black Day For The Irish

Well, Ireland has formally approached the European Financial Stability Fund for a bailout.

"The provisional estimate for EFSF loans is believed to lie between 60bn and 80bn euros ($82-110bn; £51-68bn).

Dublin says there are no talks on an application for emergency EU funding.

A spokesman for Ireland's department of finance said the country was funded until the middle of 2011, the public-service RTE broadcaster reported."

"Since 2008, Ireland has suffered the worst property collapse of all developed economies, with house values falling between 50% and 60%.

Our correspondent says the Irish government has also all but nationalised the country's banking system, which had lent recklessly at an estimated cost of 40bn to 50bn euros.

The country has promised the EU it will bring its underlying deficit down from 12% of economic output to 3% by 2014. Its current deficit is an unprecedented 32% of gross domestic product, if the one-off cost of bad debts in the Irish banking system is included."

A sad sight to see.

Fisher Says Fed Doesn’t Want to See Value of U.S. Dollar Eroded

Dallas Fed President, Richard Fisher, argues that the central bank’s decision to undertake a second round of large-scale Treasury purchases may have been the wrong decision. While he agrees that we need to ensure that US currency isn’t losing its purchasing power he also argues “we don’t want inflation” and is concerned about “protectionist impulses out there.” He hopes that the Congress and Senate will start incentivizing businesses and gaining fiscal control. While I don’t completely agree that we don’t want to see inflation, I do agree with Fisher’s argument that we need to start incentivizing businesses and improving fiscal policy. Even at the EMF conference, the panelists said that we need good fiscal policy with monetary policy to make a real impact. Monetary policy alone won’t cut it. I agree and I hope to start seeing more fiscal policies introduced.

U.S. Trade Gap Narrows; New Jobless Claims Drop

The United States trade gap narrowed in September, with American exports at their highest level in the last two years. The deficit with China remained the largest, although it shrank slightly.
Concerns have been rising within the Obama administration about China's trade dominance and its effect on the global economic recovery. Although China has been pressing to allow its currency to appreciate, which would make American exports more competitive, China only increased slightly, because officials say they have to worry first about job creation and stability.
New figures showed that the overall deficit was pushed down by fewer imports of consumer goods, autos and automobile parts, and an increase in American exports.
Nigel Gault, the chief United States economist for IHS Global Insight, said "the narrower deficit means that trade will not be as big of a drag on third-quarter growth as first estimated, meaning that GDP growth estimates could be revised up to 2.3 percent from 2 percent. And exports could accelerate, helped by growth in emerging markets with a weaker dollar."

The Double-Edged Rupee

We are all aware by now that an open economy's currency appreciation has negative effects on its Net Exports (NX). And the current appreciation of the Indian currency, Rupee, is a perfect real life example for this phenomenon. The Indian currency rose up by 9 % against the dollar in the last few months, while its Exports fell by 6.4% .

This is not a new scenario in the global market, but what is to be noticed is that unlike some other economies who are trying hard to fight currency appreciation, India is willing to let its currency appreciate. Reasons, India is trying to absorb as much influx of money as possible from foreign investors to help support its modern consumer economy approach. This has not only led a surge in foreign investors investing in India, but has helped the Indian economy grow of which 9% comes from capital inflows.

If India, as one of the Emerging Markets, is boosting its consumer economy through currency appreciation, do you think other Emerging Market Economy such as China should be doing the same?

Hong Kong economy grows 0.7 percent in 3Q

Hong Kong’s economy continues to expand for the sixth consecutive quarter. The .7 percent growth in the third quarter was boosted by strong exports to China and elsewhere in Asia. The uncertainty in industrialized economies, however, continues to pose a threat to Hong Kong. The Chinese territory, which has a separate political and economic system from the mainland, also saw a decrease in unemployment from 4.6 percent in the second quarter to 4.2 percent in the third quarter. It seems to me that third quarter results from many countries are showing growth. It appears the optimism shared at the Economic Outlook Conference may be accurate and that many countries are starting to see some light at the end of the tunnel.

Population growth? How will effect the poverty rates.

As we learned in class, population growth has an effect on the overall growth per worker output of an economy. If a country growths to fast in population and does not have the capital to support it, there will be a drop off in income of everyone in the total economy. That is why the Philippine government is taking steps to curb population growth by making there citizen's aware of family planning methods. From the article we read we learn that it is very controversial for government action like this in a conservative society. But do you think this is necessary for the overall benefit of the country?

China's stimulus spending causes inflation. Has China government lost control on there economy?

China made a 2009 stimulus program spending over 1.1 trillion dollars to combat the possibility of a financial crisis. Which many government officials feared in 2008 and 2009 as banks in the China loaned over 10 trillion dollars fueling economy growth. The government wanted to see banks pull back on lending and they hoped the stimulus who help do just that But with many banks already exceeded projections 2010 loaning many government officials worst fear has arrived and that is a growing inflation rate . Over the next year it is clear that that inflation will be a major concern of government officials and they will try to take steps to lower inflation and regain control of the economy.

U.S. Trade Deficit Narrows

The U.S. trade deficit shrank in September, and the number of new claims for unemployment insurance fell to their lowest level in two years, both signs that the nation's economic recovery is gaining strength.

Change In Economic Power

As the developed economies struggle to regain the growth rate before the economic downturn, China, Russia, India and Brazil's growth rate continue to be very high.

"The United States is struggling to hit 2.7% growth for the year, while emerging economies, which also include smaller countries mostly in Asia and Latin America, are collectively on track for 7.1% growth for the year."

This has led to unease weather or not the United States will retain the number one ranking as economic superpower.

"China has already surpassed Japan to become the world's second largest economy, and could overtake the United States for the no. 1 position in 10 to 15 years. If that happens, it will mark the first change in the leadership position, since the U.S. overtook Great Britain in 1894."

However, the growth is not without draw backs.

"And growing too fast can pose other dangers too. For example, China's overheating real estate market is a looming danger, as breakneck growth-- on track for 10.5% in 2010 -- has pushed property prices sky high. A bursting real estate bubble in China could bring on another economic meltdown that could spread to the rest of the world."

Looks like China et. al have to be very careful of managing their growth rates.

Random Economics

I came across this article and thought it was very interesting in many aspects of economics that we wouldn't even think of. It shows the development index of 2010 and which countries are doing the most to help out the poor countries, the idea of a market in biological terms, new york calls, marijuana and the market, a market in turning red lights into green lights, and the global backlash against the Federal Reserve's recent monetary stimulus announcement.

In this link it talks about the G-20 summit that begins Wednesday night in Seoul is shaping up as a showdown between exporting powers, such as Germany and China, and nations such as the U.S. that are struggling to emerge from recession and high unemployment. Major countries that rely on exports from the U.S., like Germany are struggling to agree with U.S. Treasury Secretary Timothy Geithner and his trade regime.

Is the U.S. living up to its responsibility as a main issuer of a global reserve currency? Is the decision to use expansionary monetary policy the right one?

GM Rebound

Looks like car companies in general are making a comeback. GM has now announced a $2bn net profit as domestic and international sales rise.

"US automotive giant General Motors (GM) has returned to third quarter profitability, fuelled by a rise in sales both in the US and overseas.

The carmaker made a net profit of $2bn (£1.2bn) in the three months to 30 September, compared with a loss a year earlier.

Revenues at the firm, which last week unveiled plans for a $13bn share sale, totalled $34.1bn.

GM's third quarter profit was higher than rival Ford's $1.7bn."

Is this the turn around that the economy needs?

How Bernanke-bashing is good news

Dr. Ben Bernanke has received his fair share of criticism from many types of people. This article argues that this is a good thing. As Bernanke is criticized by those who hold doctorates, "average Joes," and everyone in between, it shows that he is being creative. The FED has specific goals that it is designed to meet. Obviously it cannot please everyone, but it must satisfy these goals to ensure a healthy economy.

What is currency manipulation, anyhow?

"Several industrialized nations, including the U.S., think China's explosive growth is unsustainable, and bad for the global economy. They fear its rapid inflation could ripple through the rest of the world, driving up the price on goods at a time when other economies are still struggling to get back on their feet."

What is currency manipulation, anyhow?

Currency manipulation could be the next international skirmish, if the G-20 cannot resolve the issue. China has long been known as the emperors of devalued currencies. This gives them a substantial advantage in the trade market, as their goods will be cheaper internationally. The main problem is that many developed countries believe that China's current 10.5% growth will fade maybe too quickly for the balance of the world economy. Yet, some people the United States in particular is being hypocritical. The FED's recent investment in the U.S. economy totaling $600 billion is a direct method of decreasing the dollar. China and Britain are responding to China's tactics by devaluing their respective currency as well. There will be trouble afoot at the G-20 meetings.

The great global belt-tightening

"In the past, workers in the developed world could have confidence that their own economic conditions would always improve, that they could expect a secure retirement and that their children would have a better life than they did. But that confident view of the future is now in question.
Will the world's superpowers ever return to their former glory? Before developed nations can get back on a path to strong growth, they face a variety of obstacles."

Google to Give Staff 10% Raise

In an effort to keep employee morale high, Google has announced a 10% hike in all employee's salaries and wages effective January. The decision has been made after Google made profits in the third quarter. Many of their employees are being poached by competitors such as Facebook Inc. and other Silicon Valley companies which makes the company have to do this.
According to a survey conducted, salaries made more of a difference to employees rather than other kinds of benefits which is why the raise is on salaries. Further, "He added the company was moving a portion of employees' bonuses into their base salaries, so they would receive some of it in every paycheck".
"The company also began testing a mathematical formula to try to predict which employees are most likely to leave, based on factors like employee reviews".
This is not the first time that the company has had to do this. In the past they have repriced millions of employees stock options as the value had been wiped out.

Obama says US has Stake in Indonesian Democracy, Prosperity

President Barack Obama said the U.S. has a stake in Indonesia’s continued growth as a market for American goods and as an ally in spreading democracy.

In a speech to an audience of about 6,000 people at the University of Indonesia in Jakarta, Obama said Indonesia’s “extraordinary democratic transformation” and its religious tolerance stand as examples to other emerging economies.

“America has a stake in an Indonesia that is growing, with prosperity that is broadly shared among the Indonesian people,” Obama said, “because a rising middle class here means new markets for our goods, just as America is a market for yours.”

Is this true proof that our economy has recovered that we are now showing higher production and export levels, and are even assisting in the growth of foreign markets?

Challenges await US at G 20 meeting

The article talks about the US's weak negotiation position in the G 20 summit this year. It alludes to the fact that the fed's decision to pump 600 Billion Dollars into the US economy has startled many other countries. The Chinese state credit agency recently downgraded The US's credit rating. Although this wont have a huge effect on the US monetarily, since most other countries see it as an acceptable credit risk, the symbolic value of this move is felt by many others. The move openly challenges the US's role as the leader of the global economy. The emerging markets also view this move with suspicion since this will depreciate the dollar exchange rate and undercut their own competitiveness. They're are even talks about taxing the incoming capital from the US to protect the emerging markets from asset busts similar to the housing bust in the US. Even Germany stated earlier that Americas problem was the dependence on debt and the lack of competitiveness in their industries, something that is being overlooked by it. Hence, the US is going to have to do some tough bargaining in this summit because in the current scenario every country is for itself, something that is not very apparent at G20 meetings, where countries usually act to better the global economy.

For the Petrolheads

The seemingly "British" icons in motoring, the Jaguar and the Range Rover, are actually owned by Tata Motors, an India based automotive company. Recently, the sales of the Range Rover and the Jaguar brands have improved, raising the share price of Tata Motors.

"Last month Tata reversed a decision to close one of its manufacturing plants in the UK because of the pick-up in sales.

It is also planning to hire new workers in Britain to deal with the surge in demand for cars from its Jaguar Land Rover division."

This reminds me of when Chrysler, an "American" brand was once owned by Diamler-Benz a German based company. It shows that companies these days are all that "national" as they once were.

oil rises to $90/barrel

The weakening value of the dollar makes the Fed give out $600 billion dollars in stimulus. Experts say the currency value will depreciate even more since there is more money circulating in the economy. This makes the cost of energy even higher for consumers.

Rising in oil price means that consumers have to pay more more gas and heating devices.

""The big issue is about consumer confidence. What you pay for gas is a very prominent cost. If oil goes over $100, you could see more concerns about consumer spending," Karl said.

If oil price goes higher, it could induce consumers to conserve cash even more. Matt Lloyd, chief investment strategist at AAM, concedes that it is good, however, since it can put a cap on how much the oil can be.

The Fed's 'tax on the consumer'

In August, Ben Bernanke pledged that the Fed would take “unconventional measures” to keep the economy afloat. Since then, the U.S. dollar index has dropped 7 percent. Speculation claims that Bernanke is hinting toward more long-term asset purchases to lower interest rates. Multiple problems are brewing with such a policy, leaving some economists baffled. First, the immediate result of QE2 will be increasing prices – a tax on the consumer; gas prices and consumer goods are sure to see a spike. Secondly, consumers are still drowning in debt. Even if the interest rate is 0 percent, companies won’t be encouraged to purchase additional fixed assets. Where is the revenue going to come from if companies are struggling to sell their product or service? Additionally, job security is suffering and prospective homebuyers are feeling the pressure in the workplace. So, there is much to be questioned with the “unconventional” monetary policy on the horizon as many doubt the same trick will work twice this time.

Although not directly related to federal income taxes, the article shows how taxes can sometimes be implicit as they don’t always have to appear in the Internal Revenue Code to hurt consumption and investment. The policy being tossed around by the Fed is supposed to stimulate the economy. However, a policy gone bad can have the opposite effect – what some economists might call a “tax”.

Trade deal with South Korea re-examined

In 2007, President George W. Bush negotiated a trade deal with South Korea that was widely lauded by Republicans but was opposed in Congress by Democrats and by union representatives. The deal would open up access for both countries' products, say the deal's supporters. They also point to the likelihood that it will create jobs in the US through more revenue opportunities for American cars and beef in Korea. President Obama has said that he would like to complete the deal by the end of the year, but some Democrats and union leaders are still apprehensive because of the perceived restrictions and unfair regulations that South Korea has on American goods. To the deal's proponents, the deal would not only open up trade and revenue gains in the short-run, but it will make an impact on the long term national security goals of South Korea and of East Asia as a whole.

Bernake's Road to Hell

Was Ben Bernanke lying then, or is he lying now?

Bernanke, the Federal Reserve chief, drew headlines this weekend with his impassioned defense of the Fed's Nov. 3 decision to buy $600 billion of Treasury securities over eight months in its second go at so-called quantitative easing. The mild-mannered Bernanke evidently was so exasperated by criticism of the Fed's plans that he resorted to a mild profanity.

"There's a sense out there that, quote, quantitative easing, or asset purchases, is some completely foreign, new, strange kind of thing, we have no idea what the hell is going to happen, and it's an unanticipated and unpredictable policy," Bernanke said at an Atlanta Fed conference in Jekyll Island, Ga. "Quite the contrary: this is just monetary policy. Monetary policy involves the swapping of assets — essentially, the acquisition of Treasuries and swapping those for other kinds of assets."

McDonald's Shares Fall, Healthy Lifestyles Ahead?

"McDonald's reported a weaker-than-expected rise in October sales at U.S. established restaurants as high unemployment keeps plaguing the world's largest hamburger chain's key domestic market.

McDonald's said sales at restaurants open at least 13 months were up 5.6 percent in the U.S.

October sales at restaurants open at least 13 months were up 5.6 percent in the United States, but missed some analysts' estimates. Oppenheimer's Matthew DiFrisco, who had expected a 7.1 percent rise, said analysts on average had expected a 6 percent increase.

"They slightly stumbled in the U.S.," DiFrisco said, but added: "I don't think anyone is significantly changing their investment thesis on this number from one month.""

Is this trend that the McDonald's Corporation is experiencing a result of an increase in demand for healthier, organic foods? Or is it really the opposite of the accepted idea that fast food is consumed by the lower middle-class and below because of it's low production value and cheap price?

A Recovery Did Begin

Non-Farm employment moved from the negatives into the positives this past September. In the second half of 2009, the monthly job losses were finally slowing down and in the first months in 2010, job gains also accelerated. The European debt crisis, the slowing of the federal stimulus, the pickup in local government cuts got in the way of all the acceleration occurring.

The early months in 2010 look like a recovery occurred, yet the second half looks like there was no improvement.

Battle Looms Over Tax Breaks, Spending Cuts

With the Republican party regaining many seats after this past weeks elections, it has set up a conflict between what the Democratic president hopes to accomplish and what the House's intentions are. The Republican's wish to cut taxes, while Obama is continuing to push large government spending to get the country out of this recession.

Irish Debt Woes Revive Concern About Europe

Interest rates on Irish government bonds rose sharply after the government announced a couple days ago that it would double its spending cuts and limit tax breaks in order to fix its huge budget defect.
The rate rose to 7.6% from about 2.5%.
Borrowing rates in the other trouble EU countries also rose sharply.
Because of the high rate, Europeans are simply not buying the bonds. Ireland has enough cash to keep going until June but then what ? Some experts credit the volatility of the Irish market to the fluctuations caused by one trade because the market is so small - as in there is just not that much trading going on .

Now in Power, G.O.P. Vows Cuts in State Budgets

In the article posted below mine about the Daily Show they mentioned how the president is struggling to keep firefighters, policemen, and teachers from being fired. Here in this article the Republican newly elected officials are vowing to do just that.
The article quoted many politicians saying that they will reduce state spending but "among them proposals to reduce public workers’ benefits in Wisconsin, scale back social services in Maine and sell off state liquor stores in Pennsylvania".
Although I will not argue that the states have huge deficits that need to be addressed and they need a new plan for their finances especially with the stimulus money drying up, but firing teachers, policemen, etc. is definitely not the way to go. Isn't the GOP worried about what the general public will think of them after they do that? Saying that we must simply "live with our means" is fulfilling the stereotype that republicans are rich white men who are not in tune with the problems of the general public.

Shares hit two-year highs after US Fed move

The newest round of federal stimulus is already impacting global stock exchanges. The major stock exchanges in Britain and the US have increased to levels that are close to those present before the crash. This is seen as a positive sign by some and a negative by others. While no one is arguing that the impact on the stock market is negative, some are questioning the rationale behind the second round of stimulus by the fed. Economists in European countries are criticizing the fed for not changing its strategy in the second round of stimulus. The actions by the fed have already had an effect on the dollar. With the current fed plan to buy bonds the price of the dollar against major world currencies has fallen as expected. This will help to make American exports more attractive, and hopefully provide a strong boost to the economic recovery.

Daily Show: Austan Goolsbee

President Obama's chief economic advisor explains how Senate Republicans thwarted Obama's attempts to decrease unemployment by blocking a bill originally drafted by members of their own party to provide more tax cuts for small businesses. Goolsbee defends the stimulus by explaining that according to the independent Congressional Budget Office, the stimulus provided millions of jobs to people who would have been unemployed otherwise. He claims that the banks bailed out by our tax dollars will pay back the money the government gave them.

As Global Economy Shifts, Companies Rethink, Retool

This article outlines the goals of an upcoming conference, which is attempting to revamp the ways teh economies of the world are balanced. For several years, world economies have been reliant on American consumers, however many economists believe it may be beneficial to move away from that idea and attempt to focus more on the Chinese and German economies.

Congress Faces Gridlock in Tackling Unemployment

With Republicans taking back control of the House and Democrats retaining control of the Senate, two philosophies on tackling unemployment will go head to head. Republican lawmakers suggest cutting spending arguing that economic stimulus does not work. On the other hand, Obama stands firm on his belief that increasing the amount of spending and money in the system is the answer. Either the two parties will have to work together or they won't get anything done. Obama is utilizing the Clinton “triangulation” strategy to appeal to both sides or have bipartisan support. Ideas include, a proposed pay roll tax day and making the research and development tax credit permanent. One major difference between Clinton’s triangulation strategy and Obama’s is the state of the economy. In the 1990s, the Democrats and the Republicans had the luxury of an improving economy. The same cannot be said this time around and is a major concern in combating slow growth and high unemployment. Many economists believe the key is more spending, but Greg Mankiw, a top economic advisor to George W. Bush, thinks differently. Mankiw says there are two problems that need to be addressed in terms of the economy, the short term and the long term. Incentivizing businesses to invest is an ideal short- term solution, but the long-term solution is not so easily defined. Making choices will not be easy, as one side or the other will dislike any decision. For example, raising taxes would upset the Republicans, while cutting spending from government transfer programs like Social Security would be unpopular with the Democrats. Either way, Obama has a tough job ahead of him.

Asian stock markets mixed despite jump in US jobs

TOKYO (AP) -- Asian stock markets were mixed Monday as investors took a pause after last week's big gains with losses tempered by a surprise jump in U.S. employment.

Global stocks and commodities rallied last week after the U.S. Federal Reserve on Wednesday announced it would sink $600 billion into buying Treasurys over the next eight months to stimulate the sluggish economy by lowering long-term interest rates.

It seems the unemployment rate has been stabilized, at least for now. Is this global stock market mixed news a sign of pessimism after the news of the Fed's plan of pumping 600 billion dollars?

Construction Spending Up 0.4 Percent, Entirely Due to Public Spending

In August, new construction spending rose 0.4 percent, following a large decline of 1.4 percent in July. The month’s increase was entirely due to a 2.5 percent rise in public construction spending. Housing construction continued to decline in the wake of the expired home buyer tax credit, falling 0.3 percent ( this was the smallest decline since April). Private non-residential spending fell 1.4 percent, following an increase of 0.2 percent, which at the time was the first increase since March 2009.

On a year-ago basis, total construction spending was 10.0 percent lower. Private residential spending was down 1.7 percent, and private non-residential spending was down 24.2 percent. Public sector spending was down 1.0 percent from a year earlier.

Personal Income Up 0.5 Percent, Consumption Up 0.4 Percent; Savings Rate Up to 5.8 Percent

In August, personal income grew at a brisk pace of 0.5 percent. The increase was boosted by an increase in government transfer payments associated with extending unemployment checks. Even so, wages still had a solid showing, growing 0.3 percent. From a year-prior, personal incomes were 3.3 percent higher.

Personal consumption rose 0.4 percent in August for the second straight month. Spending growth was primarily due to increased expenditures on non-durable goods. Big ticket item expenditures fell 0.1 percent, while services added modestly to growth. Consumption was 2.7 percent higher than a year prior.

The slightly slowest pace of consumption growth relative to incomes caused the savings rate to rise slightly by 0.1 percent to 5.8 percent. The savings rate has remained near this level since April.

As measured by the PCE deflator, prices increased 0.2 percent over the month. From a year prior, the PCE deflator was 1.5 percent higher, the third consecutive month below 2.0 percent. The core PCE deflator, which excludes energy and food prices, was up 0.1 percent over the month and was 1.4 percent higher from the year prior.

Cost of trapping green power makes projects a tougher sell

During this economy, America is looking to save a few bucks rather than do the right thing. Over the last decade or so, there has been a lot of talk and opinions about trying to conserve energy and stop pollution on the earth. Unfortunately, we have taken a few steps back in terms of trying to go green. Going green sometimes means spending more green, as some of these more energy friendly companies and programs are more expensive. For example, wind farms are more expensive than natural gas, so in these times the government is not willing to let people spend more on their bills at the end of the month. There is no doubt that today, clean energy is more expensive, but looking into the future it may continue to become cheaper as fossil fuels begin to become scarce. As of now though, this country is moving forward without clean energy.

Businesses still downsizing plans for holiday parties

AP is reporting that businesses are still downsizing holiday parties, or not even having them at all. Many companies are hesitant on whether to spend a lot of money on fancy parties at upscale restaurants. As a result, many small businesses are moving these parties to the office and tightening the budget a little. Could this be an economic indicator of how well the economy is doing? I believe it can be an indicator. It's not just a coincidence that companies are reducing these parties during the bad economic times. Some of these companies believe that some of this money will be useful going somewhere else, instead of entertaining employees. Also, some people do not think its right to be spending money, when others don't have money to spend. So all in all, signs point to this being an indicator to how our economy is really doing.

Economic Stimulus (Jobs Bills)

This article taken from the New York Times, was very straight forward and discussed the stimulus plan President Obama put into place. The final bill that congress approved was worth 787 billion dollars. Many people feared that this bill was running a large deficit that we would not be able to get out of. After a few months most people agreed that the stimulus plan was sloppy but might actually be working. However, unemployment continued to rise all the way up to 10% and the government realized they had under estimated the size of this recession. This called for the proposal of more stimulus plans, some that passed and others turned down.

The Fed's big announcement: Down the Slipway.

The article describes a situation that closely resonates our current lectures - short term fluctuations.

After the first QE (quantitative Easing) round where the Fed bought $1.75 trillion of debt between early 2009 and early 2010, now the Fed will be buying more bonds: $600 billion of Treasuries between now and next June.

After a while since the last QE, there has been some results. Dollars is depreciating against other major currencies. Real yield on ten-years inflation indexed Treasuries bonds falls 0.5 %. And share prices has been up by 14 %. All of these are signs of successes with respect to what the QE is supposed to do. Several channels described above, including increase spending through greater wealth of households, increase trade balance through lowered price of the dollars, can translate this success of QE into real activities of the economy - a question that is still open to be answered.

Foreclosure Lawyers Put Second Mortgage on Client's Homes

In order to fight foreclosures that have stemmed from not being able to pay their mortgages, many people have had to resort to hiring foreclosure lawyers who cost so much that the clients are being forced to take out second mortgages just to pay the lawyers. However, this new mortgage only goes into effect if they do get the foreclosure dismissed and the debt to the bank lowered. While this is a good strategy for the lawyer to get paid, it doesn't necessarily help out the clients a ton. It reduces the first debt to the bank and lifts the foreclosure, but it creates a new debt and the client will have to pay back a second mortgage too. This is negative because being in foreclosure means you're most likely broke.

What Grows An Economy?

This article taken from Forbes.com discusses what it takes to grow an economy. The article discusses that from 2008 to 2009 to 2010 we actually saw flat GDP numbers. The numbers from 2008-2010 were 14.3 trillion, 14.2 trillion and 14.6 trillion. As you can see the number from 2009 to 2010 was actually a bit of economic growth. The author continues to explain that that Americans have grown accustomed to growth in the economy and that is why these flat times feel like bad economic times. The economy needs economic growth to balance out population growth. The article also states that America must experience 3.3% growth or higher to get back to the good economic times. The author argues that start-up companies are the best way to gain this growth.

Democrats Divided on Tax Cut Strategy

The Obama administration and Congressional Democrats are struggling for a strategy to deal with the soon-to-expire Bush-era tax cuts, each side uncertain whether the other is up for a fight with Republicans in the wake of the Democrats’ election trouncing — or whether they could win, in any event.

That has both parties betting that the most likely outcomes could be either a truce that extends the tax cuts for all income levels for perhaps a year past their scheduled Dec. 31 expiration, or a stalemate that lets them expire temporarily, in either case delaying the battle until 2011.

Bernanke Attempts to Soothe Doubters

In attempts to keep us from having deflation, Ben Bernanke announced that the Fed would be pumping $600 billion into the economy by min 2011. Critics fear that that this will cause dangerous inflation down the road and hurt us by weakening our dollar. Bernanke said “our purpose is to provide some additional stimulus to help the economy recover and to avoid, potentially, additional disinflation.” Former president of the New York Fed does not agree and feels uneasy about this decision. “Thus there is a risk, however small, that once that nudge takes hold, it may not be easy to cap inflation and inflationary expectations at levels that are still broadly compatible with price stability.” Bernanke said that this approach “will work, or not work, in much the same way that monetary policy — ordinary, more conventional, familiar monetary policy — will work.”

The Power Of Investing In Global Literacy

The author of this article discusses her personal experiences in international business while living in Vietnam. In the mid 90's she says foreign direct investment in Vietnam was booming; however, it was difficult for her to find capable people to hire. While there was some access to education, literacy rates were still too low. The author goes onto explain the advantages that increased literacy rates would have on not only international business, but also the standards of living globally.

Obama Says Vote Turned on Economy

President Obama said in an interview broadcast Sunday night that he views last week’s mid-term Congressional elections as “a referendum on the economy” rather than a referendum on him, his policies or the Democratic Party.

While he said he should be held accountable for the economy as the nation’s leader, he did not accept the suggestion that he pursued the wrong agenda over the last two years, and he focused blame on his failure to build public support for what he was doing or to change the way Washington works.

Just in time for the holidays: Bigger paychecks

Things are looking up for the labor force. CNN reported that October saw 151,000 new jobs created, higher rates of job findings then have occurred in over six months, and to top it off there was a noticeable increase in the wages of those who already have jobs. Weekly wages increased more than any month since the Recession began which can be explained in an increase in average hours worked, which shows the largest year-over-year gain in over 25 years.

Hopefully this rise in wages will help induce consumers to start spending more, something that is already expected in the upcoming holiday season, but that could be improved upon nonetheless. If retail sees a good return for the holidays it could be a sign of more good to come.

While these are all optimistic indicators for employment, it is said that even greater rates of job higherings and wage increases will have to occur to pull us out of the Recession. But it is a move in the right direction.

Wall Street Responds Positively to Federal Reserve Plan

The Fed’s decision to resort to quantitative easing for promoting investment and boosting the economy has sparked both positive and negative responses. According to this article, the policy has already engendered a drop in the U.S dollar against major currencies.
With a divided government now in place, it might be harder to stimulate the economy on a fiscal level but for now, the proposed monetary policy is already bringing some positive changes which may or may not be beneficial in the long run, because of fears that it might eventually trigger high inflation rates.
On the other hand, G20 member countries such as France, Brazil and Germany are against quantitative easing. Even if they want a strong U.S economy, they are afraid that a drop in the U.S dollar will be detrimental to their respective economy and they are concerned about the prospect that it might eventually cause high inflation rates.

Doctors to Congress: Don't cut our pay!

The thought of doctors not accepting Medicare patients is a frightening one for 43 MILLION individuals. Yet, that could be the new reality if a new bill is passed that would cut Medicare reimbursements by 23%. The new Republican regime will have to make a lot of decisions rather quickly. They have the Bush tax cuts to deal with, issues concerning the extent of unemployment insurance, and this on top of all that. We will see if they are up to the challenge.

Just in time for holidays: Bigger paychecks

It's about time for some good news. Both wages and the number of people employed have increased. 151,000 jobs were created as noted in the October jobs report. As for wages, weekly wages have increased 3.5% from a year ago. This is not due to raises, but to an increase in the hours worked per individual. This increase in income should hopefully lead to greater consumption and likely economic growth. This is the start of optimism and this period may be looked at as the turning point of this mess.