Nigeria, Brazil Sign Agreement to Boost Trade, Investment

Petroleo Brasileiro is expanding it's oil production in Nigeria in an effort to increase it's presence in the African oil market. Petrobras has been producing oil in Nigeria for 14 years, and expects to increase production,” Brazilian President Dilma Rousseff said today during a speech in Abuja, Nigeria’s capital. “Petrobras expects to establish an ever-stronger presence here in Nigeria.”
Trade between Brazil, South America’s biggest economy, and Nigeria, Africa’s most populous country, is $9 billion a year. Nigerian President Goodluck Jonathan and Rousseff signed an agreement to boost cooperation on energy, aviation, agriculture, electricity, infrastructure development and defense.This seems like a sound idea to improve the economic well being of two different nations, as well as strengthening Petroleo as a company.

http://www.bloomberg.com/news/2013-02-23/nigeria-brazil-sign-agreement-to-boost-trade-investment.html

EU Says Euro Area to Shrink in 2013 as Unemployment Rises

http://www.bloomberg.com/news/2013-02-22/eu-says-euro-zone-to-shrink-in-2013-as-unemployment-rises.html

The Euro-area economy will shrink in back-to-back years for the first time. According to the Brussels-based commission report, the GDP in the EU region will contract 0.3 percent this year and the unemployment will climb to 12.2 percent. Germany will once again play an important role in the recovery. Due to a drop in euro-area demand, German economy is now predicted to grow only 0.5 percent comparing to 0.8 percent. This is not a good sign for the whole region. The domestic demand and investemnt are not expected to improve until 2014, but the prognosis for 2014 is promising. Until demand and investment become main drivers of economic growth EU authorities will be working on other plans of improving the situation in the region.

Shinzo Abe's another step

This March, Japanese Prime Minister Shinzo Abe are going to have take a big advancement in his plan toward a healthier Japanese Economy, as Bank of Japan's governor Masaaki Shirakawa decided to resign his position just earlier this month. His replacement will be appointed during the same day, with the three potential names all share the same mindset with the Prime Minister regarding monetary policies.
The three candidates for the positions are the head of the Japan Centre for Economic Research Kazusama Iwata, the head of Asian Development Bank Haruhiko Kuroda and the finance-ministry veteran Toshiro Mutoh, who is currently considered the favorite.

While each candidate has his own difference focuses and tactics, all three of them have the same mindsets that Mr.Abe requires for such position in his campaign. While the hope of the Prime Minister has been fulfilled sooner than he expected, the effects of his bold approach remains to be seen. Nevertheless, this event could very well be a big step ahead for the Japanese Economy in the future.

http://www.economist.com/news/finance-and-economics/21571464-accelerated-handover-may-bring-new-thinking-japans-central-bank-regime-change

The Weakening of the Yen

http://www.businessweek.com/articles/2013-01-24/the-surprising-upside-to-japans-currency-war

This article discusses Japan's continuing efforts to raise a reasonable level inflation in a country that is currently experiencing deflation. This, however, has the added effect of weakening the Yen - something Prime Minister Shinzo Abe is encouraging. He would like the Bank of Japan to go further and buy foreign bonds with Japanese Yen to weaken the currency.

This should ideally lead to a rise in Japan's exports and shrinking of their imports. However, since trade is a zero-sum game, when one country racks up high surpluses - the other country racks up deficits. This has led to people criticizing Japan for starting a 'currency war' that will spread to emerging economies. The actual effects of Japan's decisions are yet to be seen but they are definitely in Japan's national interest. 

The Debt Ceiling Explained: Why You Should Care

http://live.wsj.com/video/the-debt-ceiling-explained-why-you-should-care/40415F7F-C0EB-4048-9612-42A22EB77D66.html#!40415F7F-C0EB-4048-9612-42A22EB77D66

As we all know the United States is in the middle debt crisis. We currently 16.4 Trillion dollars in debt. Over the past four years we have spent 1 trillion dollars more per year than we have in the past. We make up for this debt by selling bonds and borrowing from other countries, which means most of our debt is owed to other countries such as Japan and China. Congress created the debt ceiling  so that when the federal debt "bumps up" to the ceiling congress then votes weather or not to raise the debt ceiling, which is where we are now. Congress needs to come to an agreement on taxes and spending to be able to slow this massive build up of debt that we have accumulated. If they don't there could be a huge issue in the Federal Government getting us out of this debt.

New Orleans area economy produced more in 2011, but didn't beat inflation

I found this article and it interested me because I was born and raised in Louisiana and as I read it, it showed me some stuff that we learned in class. It talks about how the economy produced more but in terms of real GDP the New Orleans economy had a slight decrease. This just shows how looking at nominal rates isn't always the best thing to do but looking at the "real" numbers is the best way to get an idea of how a certain economy is doing.

U.S. Trails Much of the World in Paid Family Leave

http://www.nytimes.com/2013/02/23/your-money/us-trails-much-of-the-world-in-providing-paid-family-leave.html?pagewanted=1&ref=business

The United States often is counted as having fewer benefits than other countries in the world. It is no surprise then, that even when employed, US employees have fewer family leave benefits. This may keep workers more productive but may not make them happier and may contribute to an eventual higher level of employee job separation due to dissatisfaction of employees.

Jobless claims rise

http://money.cnn.com/2013/02/21/news/economy/unemployment-benefits/index.html?iid=SF_E_River

A report from the Labor Department showed that there is an increase in the number of Americans filed for jobless benefits from 342,000 in the previous week to 362,000 in the latest week. However, taking into account the impact of short-term blips that can be caused by weather and other special events, economists suggest that we look at the four-week average figure. Having said that, the average number of people seeking help over the past four weeks totaled 360,750, up 8,000 from the four-week average the previous week. This is not necessarily bad, considering that these figures are lower than they were a year ago. What it is telling us is that the improvements in the economy have been very gradual and slow. As mentioned in the article, the figures have been hovering in the 350,000 to 400,000 range, which is consistent with the US economy's adding 180,000 jobs each month. However, that is simply not enough to keep up with the population growth and certainly not enough to impose a significant decrease in the the unemployment rate.

"Trickle-up Economics"

http://www.economist.com/news/united-states/21571894-president-proposes-hefty-increase-minimum-wage-trickle-up-economics

In this article in the economist details the current agenda of president Obama and his plan to increase the minimum wage.  The whole idea behind Obama's plan to increase the minimum wage is that first off it will bring us closer to income equality.  Also it will help bolster the current US economy by reducing the poverty level and increase the spending power of the poorest workers.  While it comes with great criticism by big business and Republicans to whom are saying that it would cost low skilled workers vital jobs.  This increase in minimum from $7.25 to $9.00 by 2015.  As opposed to traditional views that raising minimum wage will increase the number of the unemployed in recent studies the idea of raising minimum wage has secured those who have jobs due to costly turnovers and lay offs.  Not only does it show that it helps some keep their jobs it also the increase in minimum wage would give people to spend or consume more of what they earn for example the EPI last year claimed a minimum wage of $9.80 and said to have created 100,000 jobs.  The article also touched on the fact that this was not Obama's only move to boost the economy that with the purposed jobs lost to this increase he was talking about such as increasing infrastructure to early childhood education.

The end of cash?

http://www.bbc.co.uk/news/business-21427472

This article talks about how the world is steadily approaching a cash-free environment because of all the different payment options now available with the help of start ups. But really, it's hard to see a future without cash. Cash is important because of the convenience, anonymity and useful when the 'power goes out'. However, the new payment methods, especially those tailored to mobile phones have made making payments extremely extremely convenient. Most higher income earners shy away from cash while low income earners, for example those who spend about $2 a day really depend on cash and the cost of cash mostly falls on them. Increased access to a bank account, credit, insurance and all the tools necessary for economic stability and electronic money makes this all much easier. Those without access to such tools are usually the poor, and it makes it even harder for them to come out of poverty. 

Fed officials: Don't worry if we lose money

http://money.cnn.com/2013/02/22/news/economy/fed-future-losses/index.html?iid=SF_E_Lead

In this article, economists predict in a paper that was presented Friday at the U.S. Monetary Policy Forum, a New York conference organized by the University of Chicago Booth School of Business, that the Fed is likely to be saddled with losses starting in 2017 or 2018.

This is the scenario they think will play out: As the economy improves, the Fed will eventually tighten monetary policy. The central bank will stop buying mortgage-backed securities and Treasuries by the end of this year, they believe, and start raising interest rates in 2015. As interest rates rise, then long-term bonds lose value. Eventually, the Fed will have to start selling off the massive collection of bonds it acquired in its stimulus efforts. And when that time comes, even the Fed admits that it will probably incur losses.

Housing to drive economic growth (finally!)

http://money.cnn.com/2013/01/27/news/economy/housing-economic-growth/index.html?iid=SF_E_Highlight

According to the article, over half of the economists surveyed by CNNMoney identified a housing recovery as the primary driver of economic growth this year.

Home sales rebounded to the strongest level in five years in 2012, as home building bounced back to levels not seen since early in the recession. Near record low mortgage rates, rising home prices and a drop in foreclosures have combined to bring buyers back to the market. Moody's Analytics is forecasting a 50% rise  in home building both this year and next year, which it estimates will create more than 1 million new jobs!

Joseph LaVorgna, chief U.S. economist of Deutsche Bank said: "One of the most significant indirect effects from the housing recovery is the 'wealth effect' on consumers due to the recovery in home prices,". According to him, better home values can affect both consumer psychology on spending as well as their actual finances.

Housing to drive economic growth (finally!)

The bursting of the housing  bubble was the main thing that forced our economy into a recession, but today economists say it could be the greatest component that drives the growth of our economy in 2013.  The reason for the growth in the housing market is due to the record low mortgage rates, rising home prices, and a drop in foreclosures which has sparked the interest of buyers to start looking to build new houses.  Also, there will be approximately one million new housing projects started across the nation.  This will create over a million jobs for people involved in the construction and housing industries.  Home building is expected to rise over fifty percent this year which shows just how strong the housing market is bouncing back.  The demand for houses is far more than the supply of houses, this forces home builders to build new houses to sell.  This creates construction jobs, real estate agent jobs, manufacturing jobs to build products for the new houses which increases consumption overall. 

http://money.cnn.com/2013/01/27/news/economy/housing-economic-growth/index.html?iid=SF_E_Highlight

Detroit Tops 2013 List Of America's Most Miserable Cities

The article talks about how certain cities have become categorized as, "miserable" to live based on the city's economy and financial status.  There are nine factors that qualified cities as "miserable."  The factors consist of violent crime, unemployment rate, foreclosures, home prices and taxes.  Other factors that were considered were weather, commuting times, and quality of life.  At the top of the list was Detroit, and Chicago followed  as well as New York City.  Detroit is a case of particular intrigue as it has been in a state of decline for nearly four decades. The "snowball" effects of the multiple problems that plague this city make it difficult for Detroit to raise the fund necessary to start improving city conditions. The high violent crime rates coupled with high foreclosures are particularly worrying as they continuously erode the cities tax base and give the Detroit government less to work with. One of the most important factors that makes theses cities the most miserable cities to live in is the high unemployment rates in these metropolitan areas.

http://www.forbes.com/sites/kurtbadenhausen/2013/02/21/detroit-tops-2013-list-of-americas-most-miserable-cities/

CEO says MGM may sell parts of CityCenter in Vegas

http://finance.yahoo.com/news/ceo-says-mgm-may-sell-202627713.html

During these economic times even casinos in Vegas are struggling. The CityCenter has been the latest in the news due to the $1.85 billion debt MGM still has from its original $8.5 billion investment. The CityCenter consists of supermarkets, hotels/condos, casino, spa, restaurants, and nightlife all connected into one big complex. With all the things it has to offer, one can wonder why they are still in debt. During the recession nearly 3% of Vegas' tourism was lost, but now it's slow on the climb back up to where it once was. MGM is trying to deal with the debt by selling parts of its CityCenter project. It is considering to sell the Vdara, the condo-hotel that opened as the condo market in vegas was crashing. MGM shares the CityCenter ownership in a 50 - 50 partnership with Dubai World. The unemployment rate in Las Vegas still doesn't seem to look so good with a current rate of 10.8% which might be a reason why the CityCenter may be slow in making enough money to cover its debt. MGM will have to wait to see results, the economy is still recovering.

Fed's Rosengren: Fed Bond Buying of Great Value to Economy

I found this article interesting because it shows something we have learned in class occurring in the real world (the benefits of bonds to the economy). The Fed buying bonds is benefitting government borrowing because of the lower interest rates that are seen in this article. In the article they talk about how this one policy helped out with unemployment rates and inflation rates. It is cool seeing everything we are learning being brought together in the economy today.

Investor Einhorn shares plan for Apple's cash

As many of you already know, Apple is taking some heat for its ridiculously enormous cash hoard - 137 billion in cash. Recently, billionaire hedge fund manager David Einhorn publicly attacked Apple claiming they need to make that money work for their shareholders. During Apple's annual shareholder meeting, just a few days later, Tim Cook dismissed Einhorn's statements by referring to it as a silly sideshow. On Thursday Einhorn proposed an interesting plan he calls "iPrefs," a class of preferred stock with a value of $50 that yields an annual dividend of 4%, or $2. Einhorn will be meeting soon with Apple's board to discuss this plan. It will be very interesting to see what happens with this.
Would you be interested in purchasing iPrefs?

WalMart and the Economy Go Hand-in-Hand

http://www.npr.org/templates/story/story.php?storyId=172571064

This article proposes a very interesting idea, and one that is very relevant to what we've been discussing in class. Essentially, this article argues that WalMart, which is a primary supplier of household goods to the middle class, can be used to gauge the economy. It states that the grocery cart of the average WalMart shopper is the grocery cart of the average American, much like the concept of CPI.

In 2011, real income fell by 1.5 percent compared to 2010. WaMart's profits reflected this trend. The idea that a corporation tailored to the middle class can be used to gauge the economic well-being of the middle class is very interesting.

WalMart is coming off of a very successful holiday season, but the projections for this upcoming year look bleak. Will this mean further trouble for the middle class? We can only hope not.

UK Prime Minister Travels to India to Further Strengthen Ties

http://www.aljazeera.com/news/asia/2013/02/201321893858610152.html
The UK prime minister has gone to India with a delegation of a hundred CEOs and investors to make way for more economic ties between India and Britain. The PM called for the Indian government to ease up the rules of trade by removing the barriers of trade. India is  rising power in the world with many untapped markets for goods and services. Being the second most populated country in the world a, India is the prime market for foreign investors, despite a sharp slow down to the growth in the economy. The current laws restrict imports and this makes doing business in India harder. Britain's exports account for roughly thirty percent of their GDP

Corruption In Russia lead to Billions of dollars leaving the country Illegally

http://www.aljazeera.com/news/europe/2013/02/2013220143755785271.html
The outgoing Russian head of central bank Sergei Ignatyev announced that about 50 Billion dollars has left russia illegally in 2012. These Funds account for 2.5% of the Russian national income. 14% of the funds that has left the country is believed to be part of illicit trade operations and the rest left through cash schemes. The reasons behind the exit of these funds could be illegal drugs trade, Bribing, and tax evasion. The study done by the central bank shows sign of the money going through complex money trails.  Cyprus is the biggest source of investment into russia and much of the money being invested from there is believed to be Russian in origin. This is  classic case of illegal activities to flee tax and overcome obstacles that are set by the government to limit the flow of cash across borders.

Federal Reserve to review bond-buying program

http://www.usatoday.com/story/money/business/2013/02/20/january-fed-minutes/1933047/

In this article, the Federal Reserve policy makers are expressing growing concerns that its easy-money policies could stoke inflation, which made investors fear that there was going to be an end to the economic stimulus.  Currently, Fed policymakers are paying $85-billion a-month bond-buying program which is getting mixed reviews from the Fed policymakers.  On one side of the table, if the Fed keeps buying bonds then they fear that inflation and market instability will increase, while on the other side of the table, the Fed are buying these securities to hold down long-term interest rates and encourage the purchasing of investments.

Paul Edelstein says, "that its likely that the Fed won't begin to scale back the bond purchases until unemployment, now 7.9%, falls to 7.5% next year."  It is not exactly sure what will happen to the policy as there is still much groupthink to be had.

I believe the most important goal of the economy right now is to keep interest rates low, so the buying of homes, automobiles, and equipment will continue to increase and stimulate the economy.

A Mobile Future

This article basically talks about how mobile devices will be the technological future of our world. While there are certainly truths to it and I think it is an interesting article, I personally don't agree that this is what the future will be. Having a single theme define technology trends is a bit like saying that Beethoven's symphony 9 is only about violins. They are a major element, but it takes an orchestra to make the music. Big Data Analytics, Cloud Computing, social networking apps, 3D printing...there are so many major tunes yet to hit off in a big way. This article is deaf to them. 

Living in NYC could be out of reach to College Grads

We all have aspirations of leaving college and starting our professional careers in a fun, young city. Like many students I would love to work in one of the greatest cities in the world, New York City. Although this is many students goal they cannot ignore the price tag that comes with the life of living in the big apple.

The Council for Community and Economic research recently published its most recent cost of living report. The report revealed New York city as being the most expensive city to live in with the price of living in Manhattan 225.4% of that for the nation. A major factor aiding to the high price tag that comes with living in the city is the cost of housing. The organization's index of housing cost is 455.2 percent of the national average. Some examples given in the study were relative prices between the same good. But, one good was sold at the average price in Manhattan while the same good was sold at the national average price. The one that stood out to me the most was definitely veterinary costs in the city (~$99.50) versus veterinary costs in the average American town (~$45.53). Almost double!

Although this is a little disconcerting to those of you who aspire to one day live in Manhattan not all hope is losses. This study has its imperfections. A lot of the amenities of various cities are not captured by the price of individual goods. The example the article gives is New York keeps its restaurants open later and has more high end restaurants than the rest of the country. These amenities might push other prices such as rent higher. So in essence you are getting your moneys worth in a city like Manhattan.

Link:
http://economix.blogs.nytimes.com/2013/02/15/what-makes-manhattan-cost-so-much/?ref=economy

Eurozone still in trouble?

It's worth keeping in mind that it's not just the US that is recovering from the economic recession. In actual fact, as the article addresses, the Eurozone's recession deepened within the last remaining months of 2012, by about 0.6%. Germany is looking better in general, but France is a rising concern because its economy hardly grew in 2012 in comparison to the other 16 countries in the Eurozone. Considering most nations have stabilized over the past two years, substantially at least, it is a fear that France could potentially be entering a recession of its own in the very near future.

I think that it is very clear that the Eurozone is suffering for having 'loose' entry criteria for the Euro, and at the same time, slightly undermining the importance of the rules with regard to public debt. Now, there is obviously a need for huge debt transfers which the officials continued to assure would not be necessary when problems began to rise.

http://www.bbc.co.uk/news/business-21455423

Thailand economic recovery picks pace in fourth quarter

This article talks about the The Thai economy which is in good shape . Thailand's economy grew by 3.6% , its predicted GDP forecast was for 15% but it turned out to be at 18.9%. These data also support the fact that the central bank would not be lowering its interest rates any time soon.

Thai economy suffered a lot from the floods and the export levels fell . Exports are a main factor which the Thai economy depends on and seeing the fall in demand from the global markets , hit the Thai economy harder. As a result of this the government decided to bring the domestic demand up to cover for the falling exports to help the economy to keep on growing and the government also announced that it would spend around $65 billion on infrastructure to help build lost infrastructure. The only problem to look forward would be that of inflation.


http://www.bbc.co.uk/news/business-21495707

Investing in weed?

http://www.economist.com/news/finance-and-economics/21571898-fund-seeks-opportunity-weed-audacity-dope

This article talks about how many successful investors are starting to jump onto the weed bandwagon that seems to be spreading the nation. It talks about the new app that has been crated that tells people the reliability of dispensers and the potency of the products to the consumer and they had also calculated that this industry at its peak would generate about 50 billion dollars in revenue. The talks are in their early stages due tot he fact that this drug in many states is still not legal, making it kind of difficult to base an entire investment industry on it.

Minimum wage increase

http://online.wsj.com/article/SB10001424127887323478004578302510280314712.html?mod=hp_opinion

The decision to increase the minimum wage seems a very political one. It offers few if any advances in the overall level of welfare of the nation as a whole and seems to be rushed. The increases might be a welcome development in regions of the country where a boom is being experienced and where this executive order would help raise the nominal wage to be more in line with what the real wage should be. But, in the struggling areas where unemployment is still high and few workers are struggling for very few jobs, the proposed wage increases would only serve to hurt the populace.

ceteris paribus, if the current real wage earned is too little to attract workers which does not seem to be the case) then an  increase is needed and would help attract labor into the market and raise the GDP. If however, the current real wage has workers struggling to find jobs due to few positions available, then an increase in the wage rate would only lead to an increase in the unemployment rate and subsequent misery of the population.

As a political strategy this seems friendly to the voters but like every other political move not backed by economic analysis, this would backfire and lead to greater losses.

Nike's long list of tainted sponsorships

http://money.cnn.com/video/news/2013/02/14/n-nike-oscar-pistorius-sponsorship-homicide-shooting.cnnmoney/index.html?source=cnn_bin

This video pretty much just talks about the recent troubles that Nike has faced involving their sponsored athletes. Some of their recent troubles have been with Tiger woods and his extramarital affairs, Lance Armstrong and the doping scandal, and now the most recent with Oscar Pistorius and the alleged murder of his girlfriend. Besides the fact that these recent scandals are a public relations nightmare, they also cost Nike a lot of money and potential customers. Having to pull ads and cut off sponsorships can cost millions of dollars and there is also the potential that this could hurt Nike's fan base cutting demand for their products.