Haunted by Hyperinflation

At lot of people are looking to Germany, as a leader in the Eurozone, to get out of this European Debt Crisis. Recently, Germany has been criticized for being slow to act on account of its fears of inflation.

Yet, you can't entirely blame Germany for being slow to act. First, Germany has it comparably good right now and increasing inflation could change that. Germans also have an intense fear of inflation, which the article explains in detail. Germans remember or have been raised to fear the hyperinflation of the 1920s, which wiped out savings and devastated the economy. Because of that financial strength, security, and saving have been key, which has been good for Germany in the last couple of decades, but bad for the countries in trouble now. So, the question is, will Germany be able to get over its fear of inflation in time to act to help Greece and the others?

The Euro Crisis: One Problem, Two Visions

This makes one think that they keep talking about reform for the future, but what about the present? Greece is still on the verge of collapse and they still don't seem to have a plan of action for when the inevitable occurs. Are they just going to keep pumping money in these countries or what? I'm sure if they properly restructured the EU so that strict regulations were placed on worrisome states, the markets would be satisfied with that.

In contrast, as all of this is going on, Turkey must be happy that the EU rejected them. In retrospect, Turkey has been doing very well with its economy and the money they could have contributed to the EU would have been invaluable. Now they will watch from a distance while their role in the Middle East only grows...

Jobs growth nice. But show us the money!

We already had several piece of news talking about that the unemployment rate has decreased currently. But according to this new article, people now actually haven't enjoyed the benifit.

There are some signs of life showed in the job market. And that's of course a good thing. It's just too bad that people still aren't making enough money to keep up with the fact that the cost of almost everything is getting more expensive.

"Hourly wages fell in November. So much for consumers having more cash to spend this holiday season. And over the past 12 months, wages are up just 1.8%. Through October, the consumer price index rose 3.5%. That's a big problem. "As we know, the inflation rate is pretty low, but it still higher than the wage growth.

There are several reasons that the job market still stinks. Employers still hold all the cards. Many people who have been out of work for years and can get jobs are just happy to get back to work. They're not going to take a hard-line stance negotiating how much of a salary they will get.

Unemployment 8.6%

This article talks about the recent decrease in the unemployment rate to 8.6%. This serves are evidence to the gradual rectification of the economy. Another important part about this article is its reference to the idea that unemployment insurance that has been given out during this financial crisis should be a source from which the economy would benefit. They say that recipients of this money will spend it quickly which will boost the spending in the economy. This is interesting as it suggests another good side to the availability of unemployment insurance, while in class and in previous articles it was generally seen as an incentive to stay unemployed.

Big Banks get sued for unethical practices

This article talks about a recent lawsuit filed by the state of Massachusetts against JP Morgan, CitiGroup, and Bank of America for highly unethical foreclosure practices. The lawsuit claims that the banks seized many homes they had no legal right to seize since they did not own the mortgages on the properties. The lawsuit also accuses the banks of "robosigning" , which is when employees sign mortgage documents without even reading them, using false signatures, and /or not having proper witnesses present. Its amazing how unethical many of the leading banks' practices are, even after the housing crisis hit. It just makes you shake your head at the culture of greed that these banks have fostered at the detriment of their customers.

Inside Obama's Re-election Math

This article goes into the detail of which states are crucial to O'bama and his need for electoral votes. He has visited Pennsylvania eight times this year in order to get as much support as he can from the state that holds twenty electoral votes. Pennsylvania is not the only crucial state for O'bama and many feel that it will be a slim margin to whether or not he will be able to stay another term. O'bama's presidential game may be coming to an end soon.

Fears of U.S Safety Keep Investors in Europe

With everything going on in Europe, you would think that more and more money is coming from abroad into the U.S. Well, not so fast. Data shows that even though the turmoil in the eurozone is causing money to fly out of Europe, doesn't necessarily mean it is coming into the U.S. Europeans do not feel that the U.S is a safe haven. Europeans are suspicious of how the Fed is using quantitative easing and are unsure of how their money will do in this economy.

At Top Colleges, Anti-Wall St. Fervor Complicates Recruiting

Jobs in the Wall Street used to be a very popular job for recent graduates but with this current economic situation many student from ivy league universities refused to go into finance. With the recent occupy Wall Street movement there was a lot of protest on university campuses. The job in finance is not as prestige as before since they are laying off workers and the salary decreases. Some of the slogan in the protest against Wall Street said that " 25 percent is too much talent spent" "Take a stance, don't go into finance" "These are people who could be doing better things with their energy". The number of recent graduates who went into financial services decreases from 25% to 17%. Now recent graduates rather go into technology firms such as Google, Apple, and Facebook. After reading this article I'm excited to see whether the protest will impact more recent graduates or not. Some recent graduate are still determined to work in the finance industry but hoping to leave in after a few years.

Stocks Surge After Central Banks’ Action on Debt Crisis

After a long stretch of uncertainty about the European financial crisis, European central banks and the Federal Reserve have begun to take action on the matter. The central banks decreased by about half the rate at which foreign banks could borrow from their central banks. This would be akin to a decrease in the Federal Funds rate. This action was taken to increase liquidity in banks and make sure they had funds, relieving some of the mounting pressure. As a result, bond prices fell, commodity prices and financial shares increased. Stock markets rallied in response, with increases in the Dow, Bank of America shares, JPMorgan Chase, and Morgan Stanley prices. This article also mentions that interest rates are low and will remain low to stimulate investment, which is some of what we heard at the Economic Outlook Conference too.

Economists quoted in the article believe that although helpful, this action by Central Banks only targets a symptom of the Eurozone crisis, not a the root cause. I agree with this analysis. It will help relieve pressure for a small amount of time, but the crisis is much deeper than this. Eventually, European financial leaders will need to confront the Eurozone system as a whole, rather than targeting these smaller symptoms.

Is it finally getting better?

We all know how important the auto industry is to American commerce. Over the last two years you could describe that industry as sluggish at best. With competition being extremely high, automakers have been fighting for market share in a market with decreasing market size over the past few years. When the numbers come out for November they are expected to be the best in two years. I think this article is valuable to us because we can use the auto market as a litmus test of sorts for the rest of the economy. With this, we can look for consumption to continue to rise ( as we saw on cyber Monday and black Friday with record numbers) and hopefully unemployment to continue to creep in a downward direction.

The great leap online.

This article talks about how although right now America dominates E-Commerce sector, but in near future this domination will be shifted to China. China currently has 145m online shoppers compared to 170m American online customers. The rate of growth of online customers in China is immense and this could mean many of the companies shifting their factories to China from USA to avoid high transportation costs.However Chinese people still don't "fully" trust online market which could act as a hindrance in the growth of this market in China

Black Friday...... Well Here's Cyber Monday

After reading the posts on the success of Black Friday and also the mention of Cyber Monday I have come across an article which helps to highlight the major success of these two days. With sales being up this Black Friday than the past year the economy looks as though it will receive some much needed aid from this consumption. In addition to this Cyber Monday is apparently doing equally well with sales being more than last year’s more than $1 billion dollar figure. The idea of Cyber Monday, created to help the e-commerce companies left out by Black Friday, has been able to boost figures of sales for many companies. Online sales have seen increases as high as 42 percent for just this day alone.

The article sort of pokes fun at the idea of all these crazy days of big spending being developed but then one struck me as important. The article mentioned “Red Tuesday” where consumers would be going into debt because of Black Friday and Cyber Monday spending. This raises a serious issue, though consumers are spending is this spending more than they can themselves finance?

The 50-50 Solution

This article talks about the idea of investing in bonds during recessions and stock during economic booms. Specifically, it talks about re-arranging one's portfolio to sway in one way or another according to the current state of the economy (which technically, according to the article, isnt in a recession).

It then goes on to discuss an approach, proven by research, that keeping a balanced portfolio (50/50 bonds and stocks) is the best, regardless if it's during a recession or a progression, than changing the majority of one's portfolio according to the current economy.

"In other words, humility may bring the steadiest returns."

Online sales surge 26 percent on Black Friday

This year, Black Friday saw a large increase in e-commerce purchases at 26 percent greater than last year. Last year, sales were at $648 million where this Black Friday jumped to $816 million in sales. Overall, this November has been great for online sales as many have decided to skip the chaos that comes with midnight shopping at the local retail stores. The next big day is called Cyber Monday, a day when online retailers bring out their big promotions and deals.

I figured it would be only a matter of time until we saw this occurence. There will still be the large number of people who participate in the late night shopping on Black Friday, but as we can see, many have decided to skip the whole even and purchase from the convenience of their own homes. I for one have never participated in Black Friday and when the time comes, I believe I will be one of the millions that does my shopping at home.

US Health Care needs severe reforms

This article talks about how inefficient the US health care system is.
It is well-known that health care takes up a lot of government deficits and as it stands, the costs have not produced as efficiently as in other countries.
The author provides two solutions:
1.) Make the industry more competitive with a voucher system
2.) Make it government run.
The 1st would technically lead to a cheaper and more efficient health care system since higher competition would mean lower prices. However, there is always the risk, especially when lives are concerned, that without regulation, profit-seeking will override patient-saving.
The 2nd option will for sure lead to lower prices because the government will fix it, but many point out that we will have a much worse health care system since many smart minds will not go into medical schools anymore due to much lower incentives.
I prefer the 1st, since there is no guarantee that the government, so heavily influenced by the health care industry anyways through lobbying, will lead to a more patient-saving type of industry than a competitive voucher system.

The NBA

This is a nice article about how the NBA is now back. It talks about how the NBA affected a lot of people outside of the NBA. It talks about how all the parking attendants, concession stand workers and surrounding business are now going to be able to have their lives back. How local businesses are going to make more money than they have been. I think this is something that a lot of people don't think about. The NBA coming back means local economies will rebound and start to produce again. Especially with this coming around the holidays where people spend more anyway, it sure makes things easier on people. Now I'm ready to watch some basketball.

Call Centers - India and the Philippines

Recently there has been an increase in the number of call centers located in the Philippines, with some companies sending their call centers from India to the Philippines. The reason for this being that many customers are happier with the Philippines’ more American styled English as opposed to the “hard to understand” British English of India.

First off this is good for the Philippines as it helps raise the standard of living for the population, as the salary provided by the call centers is above the national average. This will help pump more capital into this economy. On the downside however, the call center industry in India is losing some of its business, though not too much for them to worry about as they remain strong in the information technology branch of call centers. Also to be taken into consideration is the value of the peso and rupee to the dollar. The rupee is currently on a downward decline which would make it cheaper to keep outsourcing calls to India. While the peso in the Philippines had recently seen a steady increase in value which the article mentions could hurt their position on the industry if the value strengthened to 35 pesos to the dollar. It is interesting to see how shifts in one countries economy could result in benefits or hindrance to another country.