In Hard Economy for All Ages, Older Isn’t Better ... It’s Brutal

http://www.nytimes.com/2013/02/03/business/americans-closest-to-retirement-were-hardest-hit-by-recession.html?pagewanted=2&_r=0&ref=business

Everyone in all age groups is being punished on trying to be employed due to the economy.  The young graduates are in debt and those in their 30’s do not own their own homes because they cannot afford to buy a house. (Rampell)  It was the worst timing for the people that just retired because their “savings and home values fell sharply at the worst possible time: just before they needed to cash out.”   People who are in their 50s that have been laid off have been looking for work for years.   Arynit has been looking for a job for 5 years and the reason people like her are not rehired she says “because they think you’re a health risk.”  This is terrible only 1 of 6 were rehired and those that are still working have had to take pay cuts.  They cannot afford to go back to school so what are they supposed to do.  We are headed in wrong direction and if we keep it up we will just dig ourselves in a hole that just keeps getting deeper.

Jobless claims drop substantially

http://natmonitor.com/2013/01/26/jobless-claims-drop-to-five-year-low-is-it-a-victory-for-the-obama-administration/

Even though the unemployment rate has stayed at around 7.8%, the weekly applications for unemployment benefits have gone down by 5000 to their lowest levels since 2008. Democrats may be happy because of this but Republicans still maintain that Democrats are not allowing policies to be passed that would help in the reduction of unemployment.
Republicans want lower Government spending and greater tax breaks, but the present administration is still going hard when it comes to spending on various Government programs. This is adding to the deficit of the country.

Steady Job Growth but Unemployment Rises

http://www.nytimes.com/2013/02/02/business/economy/us-adds-157000-jobs-unemployment-rate-edges-up-to-7-9.html?pagewanted=1&_r=1&hp

This article offers an interesting analysis of the current unemployment situation in the United States. Despite the uncertainty in the economy due to the situation in Washington,  jobs grew by 157,000 and the stock market improved. However, despite this, the unemployment rose to 7.9%.

It appears as though job growth has been barely fast enough to keep up with the rate at which workers are added to the labor force. In addition, labor force participation rates are at a 30-year low. Based on this, it should be relatively easier to bring down the unemployment rate. This is an indicator that the recovery is perhaps not as fast as can be hoped. However, on the bright side, the number of jobs has been growing steadily - faster than expected, in fact and the stock market has been doing well. 

Research In Motion (RIMM) Revival with BB10? Could Be a Buy

Research In Motion (RIMM) has been cast aside the past few years. With no new innovations or stand-out products it has been forgotten about. The upcoming release of the new BlackBerry 10 operating system and new products such as the Z10 phone, has some analysts predicting a good outlook.

This afternoon, a Z10 phone was selling in an eBay (EBAY) auction for well over $1,000. It has been released in the UK earlier this morning. Over the next month there will be multiple releases; Canadian release on Feb. 5th and United Arabian Emirates release on Feb 10th. The release today sparked a surge in consumer demand in the UK, with signs of a demand contagion.Thorsten Heines, CEO of RIM, expressed the Z10 has been undergoing a large amount of testing before being released in the US. This is why there has yet to be an official release date. It is rather apparent that RIM is taking their time testing their new device and software, as to fix bugs and make for a successful release in the US. With this, as well as some innovative features in the software, I could see RIM's stock benefiting from these innovations over the next few months.

British businesses struggling to find funds

http://www.economist.com/news/britain/21569412-flow-credit-british-business-continues-dry-up-latest-policies-may-yet-open

Great Britain is seeing drastic economic struggles due tot he face that businesses are having a very tough time receiving capital to start new ventures. It is affecting both the small market sector and also the major markets, because even major companies are not going to risk extra debt during the extra tight times that their economy is facing. Part of the problem is the banks themselves due to the fact they are having a tough time gaining capital and assets making the interest rates remain high even though people are trying to save the economy. Many things such as the enterprise finance guarantee and also the "Project Merlin" stimulus packages that were trying to help make the economy work better and make it easier for businesses to gain loans. The latest attempt to try and stimulate loans is that businesses can get loans directly from the bank of England to make it much easier to try and get loans and at a better rate than before.

Dow hits 14,000 for 1st time since October 2007

http://finance.yahoo.com/news/dow-hits-14-000-1st-165029128.html

Today was a remarkable day on wall street. The Dow averaged 14,000 for a moment, but it was the first time in years in which this happened. The U.S. jobs report and auto sales helped achieve that. The last time the stock market was like this was right before it crashed in 2007 and back when firms like Lehman Brothers, Bear Stearns, Wachovia and Washington Mutual still existed. Its surprising how we accomplished this when our unemployment rate is 7.9% and back in 2007 it was 4.7 %, even though the U.S. did say that 157,000 jobs were created in January. American car companies reported double-digits this January also.  Today could be a memorable record-breaking day for the Dow, as it could beat its all time record of 14,164.53 if it continues to stay on its trend. If the Dow remains at above 14,000 when the stock market closes, it would be one of the rare moments that has only happened nine times before. The economy is showing signs of recovery in some parts of the world, stocks are slowly going up in Britain, Germany and France. Unfortunately it isn't the same story in the Netherlands and Greece with banks being bought by governments and workers going on strikes.

U.S. can afford $500 billion in (smart) defense cuts -- opinion

http://money.cnn.com/2013/02/01/news/economy/defense-cuts-sequestration/index.html?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29

There has been a lot of talk about government spending, one of the areas of government spending that has been criticized for spending too much is the defense budget. This article argues that cuts to defense spending can be good if they are done in an appropriate fashion. The original idea of starting the 50 billion dollar a year cuts in march would be damaging because the fiscal year would be almost half way done so the cuts would be to drastic and could damage the military. Overall, the idea of 50  billion dollars a year for 10 years is a good idea but should be phased in. Even with the cuts, the defense spending would still be at the same level it was in 2006 at the height of the war in Iraq. The cuts would only represent a 7% decrease in the defense budget, which is still the larger than the next 14 countries combined. If these cuts are applied in a smart way then the cuts could even benefit national security and decrease the budget deficit.  

Measure of Business Spending Improved 4.6% in December

http://www.nytimes.com/2013/01/29/business/economy/durable-goods-orders-exceed-estimates.html?ref=economy


This article discusses points around the recent promising increase in business spending that occurred last month. There was an increase of 4.6% on non-defense capital goods excluding aircrafts. I found this article to be relevant to our class discussions because we have been discussing business investment. With the current uncertainty about the economy that has been lingering, the data from this article provides a reassuring feeling that things will begin to get back to normal in the economy soon.

Consumer Spending Slows

http://www.nytimes.com/2013/02/01/business/growth-in-consumer-spending-slows.html?ref=business

Consumer's income grew by 2.6%, the largest amount in eight years, during December, but their spending slowed from a 0.4% increase in November to a 0.2% increase in December. Starting this month, consumers will receive less take-home pay to take home. This will cause a decrease in consumer spending throughout the year. This could be a major problem for the country, since consumer spending makes up seventy percent of economic activity. The Congress and White House were able to prevent an increase on income taxes for all but the wealthiest Americans but the temporary reductions in Social Security taxes were eliminated, which will cause households to have thousands less to spend. If consumer spending continues to slow, it could mean a decrease in demand for goods and services, which means a decrease in production as well. This could greatly hinder any progress the economy is making.

US Interest Rates on hold

http://www.bbc.co.uk/news/business-21266287

This article focuses on the fact that the Fed has maintained the same level of interest rates for a while now, not altering them above the 0.25% level. We know that the Federal Reserve uses monetary policy to obtain maximum employment, stable prices, and moderate long-term interest rates. The economy is recovering, but to be able to work towards maximum employment, the process has been slow and the unemployment rate remains high. The Open Market Committee have stated that they will maintain this level of an interest rate till the unemployment rate remains above 6.5%. It is important to take into consideration the impacts of this on the economy and the consequent behavior of firms and consumers, as we discussed in class. Pension funds are adversely being affected because they are suffering from underfunding, and the insurance industry have to increase their premiums as well to keep up but due to the fact that most policies are already in play, they can't raise the premiums for current policyholders, just the new ones- making them far less attractive.  

GDP Contraction Last Quarter

http://money.cnn.com/2013/01/30/news/economy/federal-reserve-policy/

For the first time in three years, the US economy contracted at the end of 2012. A .1% decrease in quarterly GDP marked the first negative quarter-to-quarter margin since the -5.3% margin in the first quarter of 2009. Many speculate as to whether or not this decrease will mark a downward turn in the economy for the upcoming year.

The negative margin, though, has been attributed to several factors. Hurricane Sandy, for example, has been held responsible for a $35.6 billion loss in private fixed assets. Outside factors like this can shock the economy, but are not necessarily a cause for alarm.

Military spending cuts may also be responsible for the drop in GDP. A dramatic drop in defense spending this last quarter will be followed by less dramatic cuts in the upcoming year, which should level out the GDP margin in the next few years.

The GDP declined last quarter; this isn't a detail to be overlooked. But there are very temporary factors which may be responsible for the decline, and I don't think there is any reason to sound the alarm.

Has Apple peaked?

If history has taught us anything, it certainly is that every great empire eventually falls. Apple, like google or Facebook, is no different. I find this article interesting in that it explores what may be the beginning of the end for Apple. It discusses how Apple lost its position as the world's premier company to Exxon over the previous year. Then it discusses sales data, and competitors Apple faces. 

I personally disagree with many things in the article and think it is a bit premature to declare Apple's demise. It's strength is to launch a ground-breaking product line every 4-5 years: the iMac, the iPod, the iPhone, the iPad, etc. The individual updates within each line are also excellent, but it is natural that they don't appear as innovative as the initial launch product. Demanding that Cook produced anoither paradygm shift right away is unrealistic. Give him some time - we don't know what's in the oven.

That said, I'm old enough to remember a time when Sony seemed unbeatable. A some point, a meaner predator might emerge to abate Apple. Apple perhaps will become the Sony of the new generation. 

India cuts interest rates for first time in nine months

This article talks about how India has lowered its interest rates from 8% to 7.75% for the first time in 9 months . It has also reduced the amount of money banks need to keep in reserve with the central bank which provides them with $3.4 Billion which could be given out in loans. All these measures have been done to help in reviving the economic growth which has been low for about three years now. Even though the economy grew by 5.3% the previous year in the quarter from July to September , it has grown at a very slow rate.We could also possibly see more cuts in interest rates to help in achieving a long term growth

http://www.bbc.co.uk/news/business-21241277

A Place That Makes New York Real Estate Look Cheap

http://economix.blogs.nytimes.com/2013/01/25/a-place-that-makes-new-york-real-estate-look-cheap/?ref=economy

Before reading this article I did not think there was any place that was more expensive to live than New York City. To my suprise, several cities in China are far more expensive to live in than NYC is. It is widley known that the savings rate in China is very high. Reasoning for their high savings rate are explained through this article. It expresses that since China has a closed door policy to foregien financial service companies there is more  limited space for Chinese to put their savings and so they have resorted to investing in a market such as real estate, which is a place where they expect big returns. I found this article to be relevant to the discussions that we have been having in class about saving and investing. It was also interesting to get a perpective of real-estate, saving and investing in a country such as China because they have such a vast population.

A light at the end of the tunnel for Greece?

http://www.bbc.co.uk/news/business-21240558

Six months after taking his new job as Finance Minister, Mr. Yannis Stournaras is now confident that the worst days of the crisis are gone now from Greece. Despite the fact that austerity measures caused much unrest in the country (in fact he has a bullet hole in his office window caused in recent protest against austerity measures) by depriving Greeks from higher wages, work benefits and caused a high increase in unemployment, homelessness and poverty, Mr Stournaras states that leading indicators that push the economy for growth are displaying a positive outlook in the economy, turning it around and pushing for growth. Deposits are coming back to banks, the government is paying its arrears to the private sector and there is a more positive atmosphere in the way the rest of Europe sees Greece. “We are two-thirds of the way towards our target. So people can have hope." The minister stated. However, this contrasts greatly with what is actually being felt on the city streets. Greece´s unemployment rate is now Europe´s highest, at 26.8%, its economy is expected to contract by an estimate of 4.5% in 2013 and current debts stands around 180% of GDP. Although Mr Stournaras criticizes the austerity-driven approaches since he believes they made “Greece cut too much too fast”, he should keep in mind that these measures were necessary for cutting shorter the effects of the crisis in Greece. On top of that, Mr Stournaras should welcome, but not expect, another relief package. People in Europe are also as tired of shouldering the burden of the crisis as Greeks are with austerity measure.

Corruption Kills

http://www.businessweek.com/articles/2013-01-28/in-china-corrupt-officials-and-worker-deaths#r=nav-f-story

In China, in the first nine and a half months of last year, 1,146 Chinese coal miners died in work-related accidents; in comparison, 17 American coal miners died in work-related accidents in 2011. Such alarming statistics caught the attention of Columbia University economist Ray Fisman and University of Southern California finance professor Yongxiang Wang who wondered if they could document the link between the nature of a firm’s management and its rate of worker fatalities. They studied 276 Chinese firms operating in hazardous industries like mining, smelting, construction, and chemical processing from 2008-2011.

Chinese firms that included managers who had previously held high-level government posts were defined as politically “connected.” The correlation they found was alarming - connected Chinese companies averaged FIVE TIMES more fatalities than similar unconnected companies. The new Chinese Communist Party leader pledged to make cleaning up corruption a priority, though many are skeptical about if he actually can do so.

Corruption has grown to more that just a monetary leakage, it’s now directly taking the lives of thousands of workers. 

Monetary Policy Conflict in Japan

http://www.economist.com/news/finance-and-economics/21570710-bank-japan-tests-limits-shinzo-abes-economic-power-win-some-lose

The above article is about new Japanese Prime Minister Shinzo Abe and his conflicts with the Bank of Japan. Specifically, he is trying to gain governmental control of the Bank of Japan to try increasing inflation, which has been historically negative for Japan. Some signs of the BoJ folding to his pressure is a target for 2% inflation in Japan. However, the BoJ clearly put the pressure on the government to come up with the money to push inflation to 2%.

An event to watch in the next couple months is the appointment of the new governor of the Bank of Japan. This person will likely be an Abe supporter that will be in favor of a permanent increase in the target inflation rate. However, the BoJ and Abe already see eye-to-eye on several issues (including Japan's new stimulus plan and deregulation) so perhaps the political battles won't be too intense in the future.

An exit for the EU out of the crisis?

The BBC article states that incoming governor of the Bank of England, Mark Carney, will tackle issues regarding “shadow banking” and “too big to fail” banks. The article emphasizes how “shadow banks”, companies that operate like banks but fall outside the current oversight, and big banks create a risk of relapse into a financial crisis by leaving “tail risks”. Over the counter derivatives, because they are unregulated (since they are privately negotiated between two parties) aggravated the 2008 financial crisis and could repeat the crisis if not addressed in the governor´s agenda. In order to address the problem, the ECB pursuit monetary policies such as Outright Monetary Transactions (OMTs) and      Long-Term Refinancing Operations (LTROs) to bring down yields on Eurozone. Through the OMT, the Eurozone's central bank can, henceforth, buy government-issued bonds that mature in 1 to 3 years, provided the bond issuing countries agree to certain domestic economic measures, and make it less expensive for governments to borrow on international markets and pay off interest rates. If these policies prove to be successful, and the countries that have been suffering with the aftermath of the European crisis keep up with the structural reforms, making sure that bank and unions keep pace with them, 2013 could surely be a better year than last one for the Eurozone.

S&P highest gains since 2007

http://www.forbes.com/sites/afontevecchia/2013/01/25/sp-500-tops-1500-for-the-first-time-since-2007-as-apple-loses-1-spot/

This article talks about the incredible growth that the S&P has made since the beginning of the recession.  After closing at 1,503, a .05% gain, the S&P has climbed past 1,500 for the first time in 5 years.  This incredible growth is marked through the entire stock market as the DOW is slowly increasing as well.  Despit e Apple falling in price, which normally is the highest price stock in the S&P, there was still gain, which is an incredible sign of how well stocks are doing as a whole.  Hopefully this will lead to more investor and consumer confidence and jumpstart the economy, not only in terms of numbers but also in terms of the average persons opinion

Concerns about the EU wane once more

Despite continuous fears about the European Union and it's economy, the factors indicate that a slow recovery in on the way. This is just one of the examples of such factors indicating an improving economic situation. This revelation by the European Central Bank led to a 10 month high of the Euro against the dollar and although this strengthening is based solely on this news, it predicts better times to come. This decision might also be a critical factor in the ongoing debate in England about its participation in the Eurozone. With its prime minister David Cameron calling for a vote to decide whether England would leave the European Union, this new economic report might detract his supporters from casting a vote in his favor.

Privatizing India's public transportation

                http://www.economist.com/news/finance-and-economics/21568397-indias-love-affair-public-private-partnerships-faces-stern-test-rippp

This article talks about a grim situation in India in which most of their public transportation is losing money quickly while public transportation owned by the private sector is still doing fine. It starts off by talking about how Delhi’s new train link that connects Delhi to its airport has been shut down for quite some time now due to engineering faults that have yet to be fixed. Also starting to fail is one of India’s newest and biggest power plants, the reason being that the cost of coal has been soaring as of lately. Some have been comparing it to the 19^th century railways boom in America where investors were enticed by the promise of incredible returns on their investments, but later received almost nothing. Between the years of 2007 and 2012, $225 billion was invested by private sector investors into the infrastructure which equated to almost 12% of the country’s GDP in 2012. However as of recently, and  fresh activity has been stalled. Vinayak Chatterjee is consultant at one of India’s largest consulting firms, he has compared the recent economy to a boa constrictor, very hungry and fast at first, but once its had its meal it slows down and sits idle for a very long time. That comparison is made because of the fact that after building a brand new pipeline, the value of that pipeline dropped 52% within one year. As far as anyone can see there is only one solution, to reduce the ricks projects face by removing red tape as well as any and all political affairs. This would help with cutting the cost of capital which in turn would see more cash from abroad coming into the country, creating one of the great investment opportunities of the century.

'Checkout fee' for using a credit card.

http://money.cnn.com/2013/01/27/pf/checkout-fee/index.html?iid=s_mpm

Visa, MasterCard and nine major banks agreed to a $7.25 billion deal to settle a 'checkout fee' for customers when they buy something with plastic. As part of the settlement credit card issuers would reduce these "swipe fees" - fees paid by merchants to issuers when cards are used - but only for eight months.This fee doesn't apply yo purchases made using debit cards though. 
Many stores from the nation's largest retailer down to small businesses have lamented the agreement. Walmart said it would cost consumers "tens of billions of dollars each year", while Target called the agreement "bad for both retailers and consumers."