U.S. Ekes 0.1% Growth

http://www.bloomberg.com/news/2013-02-28/economy-in-u-s-eked-out-gain-to-end-2012-as-trade-gap-shrank.html

Earlier, it was suspected that the US economy contracted in the last quarter but after additional information came in, it appears that the economy grew by about 0.1%. Most of this gain was established through a shrinking of the trade deficit. The growth rate is, however, still very low and the federal reserve is likely to maintain its expansionary monetary policy in the hopes of further stimulating the economy.

On the bright side for the US economy, jobless claims have been dropping - hopefully this is because of increased employment opportunities rather than a growth in discouraged workers. Consumer purchases have been rising and the housing market is also improving. Consumer confidence is doing well and it is hoped that the economy will weather the coming spending cuts without too much trouble.

Sentiment Rallies Above Estimates

I have done an article like this before about a month ago talking about the U of Michigan Consumer Sentiment Index; it continues to rise. In the last article it suggested the rise of housing prices as a factor to this increase. In this article, they note over 150K jobs were added in January with job-less claims on the decline. As well, household spending increased by .2% in January.

Take a look and create your own opinion as to how the economy is really doing. Noting inflation expectations at 3%, while income has decreased around 3%, are we truly in a good place? How can we TRULY explain this rise in consumer sentiment?

Eurozone unemployment hits 11.9%

This article talks about the rise in unemployment levels of the the 17 countries that use the euro rose to 11.9%. The highest unemployment level that have been reported in January show Spain at 26.2 % and Portugal at 17.6%. Greece's most recent unemployment level release was in  November which was at 27% and the lowest being in Austria at 4.9 %. Three years of crisis have driven Major euro zone economies like Spain and Italy into a crunching recession making it hard for business to get any finances to expand and the consumers earnings have fallen , this has reduced their confidence to spend.

The inflation levels in the euro zone have fallen on 1.8% in February , meeting the European Central Banks target. All this data points in one way that the ECB would cut its interest rate in the coming months , Currently it stands at 0.75%.

http://www.bbc.co.uk/news/business-21627623

Oil Falls to 2013 Low on Slowing Manufacturing, Spending

Due to manufacturing slowing down this has followed a positive relationship in oil prices falling. As well, other commodity futures has fallen as a result. This article discusses how Chinese manufacturing fell to 50.1, from 50.4 last month, and how UK manufacturing has remained unchanged, marking a 19 month trend of contraction. The price of oil has also been offset due to Libya increasing the supply of oil by 130K barrels.

It is interesting how production around the world has a positive relationship with the price of oil. So the real question is will this trend of low oil prices continue, or will we be seeing an upward trend in oil commodity futures as we progress into the year 2013?

Indiana reverses plan to halt federal unemployment benefits

http://money.cnn.com/2013/02/27/news/economy/unemployment-benefits/index.html?iid=SF_E_River


This article discuses the  $85 billion budget cuts that are set to start on Friday. The first area to be hit will be the unemployment benefits that are currently being paid to the unemployed. The state of Indiana was planning on cutting these benefits already but instead decided to hold off. Once this budget cut is in affect it is likely that unemployment benefits will be the first area to be affected. The decrease in unemployment benefits will give an incentive to the unemployed to find jobs more quickly since there will no longer be a check coming to them from unemployment benefits. As this incentive takes affect we will most likely see an decrease in the unemployment rate as more of the unemployed workers find jobs.

Apple's shareholders not happy with declining share prices

http://www.zdnet.com/cook-doesnt-like-apples-share-price-but-urges-patience-7000011950/

Apple's CEO, Tim Cook had a meeting with shareholders who were concerned about the steep fall in the share prices. At the annual shareholders' meeting, Cook assured shareholders that in the long term, Apple stock is certain to rise in value. Though he did not share his strategy for assuring this rise in stock prices, it is expected that Apple is going to launch several products in the coming period which are most probably going to increase its share price.

However, another issue raised at the meeting was Apple's reluctance to share its cash holdings and securities with the shareholders. Shareholders are understandably not pleased with the fact that Apple has around $130 billion in Cash and Securities and is unwilling to distribute some of that among shareholders, even in times of falling share prices

Life on the edges of America’s financial mainstream

http://www.economist.com/news/finance-and-economics/21571882-life-edges-americas-financial-mainstream-margin-calls

One of the most interesting and surprising facts of this whole article is that 1 in 12 American house holds (or 17 million people) within the United States do not bank. A good majority but not all of the 17 million includes the poor. The people who are "unbanked" currently have no alternative to making transactions besides using cash. This is interesting because in the article that I had posted last week was about how we will soon be entering into a cashless society. With 17 million people not banking what alternatives are they going to have to using cash if they are not with a bank? Walmart and American Express have gotten together and created the Bluebird card. It pretty much is a prepaid card that has a lot of the same features of credit cards provided by banks. You can even deposit a check from your smartphone onto the card. Many of these prepaid cards are going to be what arise with a cashless society and are going to be essential to the people who do not bank, especially the poor. Especially when businesses begin to give incentives for not using cash. The big issue that is highlighted in this article are the big fees that are going to come with these prepaid cards and the bigger fees that come from taking out loans from a payday source. While banks hesitate to offer more basic accounts to those who do not bank (due to the lack of profit and high risk) there is and will continue to be a high demand for these more basic accounts especially as we more toward a more cashless society.

India issues optimistic economic growth forecast

This article talks about the possible rise of the Indian growth rate after a two year slowdown.The Indian economy is predicted to have a growth rate between 6.1% to 6.7 % in 2013-2014 according to a forecast by the finance ministry. This is good to hear after the growth rate fell to 5% in 2012-2013.

There were many factors that were at blame to the recent slow growth of the Indian economy , despite the slowdown the service sector has shown more resilience to worsening external conditions than agriculture and industry.The recent government reforms that allow foreign investment into the country has sparked a lot of opposition , this lead to a two day strike by all the major trade unions . This coasted millions of dollars of loss for the Indian economy but the Prime Minister assures that there reforms would help generate employment and also help strengthen the growth process of the country.

http://www.bbc.co.uk/news/world-asia-india-21598743

Changing Economics of Hollywood

This article basically talks about how hollywood is in danger because of changing dynamics like streaming and all that jazz. However, I would argue and disagree that while there is truth to these claims, they sound somewhat exageratted. This is because streaming isn't as promising as this article makes it out to be. According to the FCC's "Eighth Broadband Progress Report" (8/12), some 19 million Americans live in areas where no broadband options exist, and another 100 million who live in areas where it does still do not have it or have direct access to it. A third of the country can't quickly stream movies. moreover, the big distribution companies don't have any incentive to invest in expensive copper wires and fiber optics. The current infrastructure can't handle the type of bandwidth this article talks about. Technology may eventually, scratch that, probably will eventually catch up to where this distribution system would be feasible, but not in the near to mid term.

Chase bank cutting more jobs

After employing about 260, 000 people last year, JP Morgan Chase bank may end up cutting approximately 20,000 jobs by the end of the following year due to an objective of reducing general expenditure. They want to reduce their expenses by nearly one billion US dollars but they state that they are not directly cutting jobs, but reducing the number of employees in each branch of their bank instead.
They insist its due to business objectives that they are planning this expenditure reduction, but I think it's also likely that they are trying to eliminate the opportunities for any further fraud being conducted by employees in the future, based on the fact that the bank lost billions of dollars in trade through the 'London Whale' (an employee called Bruno Iksil).

http://www.bbc.co.uk/news/business-21591486

Defense Cuts: The Enemy Within

http://www.economist.com/news/united-states/21572190-ships-lie-uselessly-anchor-and-lay-offs-loom-deep-congress-imposed-spending-cuts-look

We have the "sequester" upon us. The sequester is a set of budget cuts to the federal budget set to take effect on March 1st unless congress steps in. The cuts were made to be extensive so lawmakers would have to deem it necessary to come up with an alternative, but with Congress currently on break it does not seem as if anything is going to be done. If nothing is done it is projected that the defense budget will be cut by 8% and non-military programs by 5%, this is a substantial amount in both categories. The largest portions of the federal budget, social security, medicare, medicaid, military pay and service for veterans are exempt from spending cuts. It will be interesting to see what congress comes up with over the next few days and how/if the sequester will play out. 

Arsenal half year profits dip to £17.8m

Arsenal Football Club has seen a drop in half years profit to £17.8 Million , this happened despite selling their star striker to Manchester United FC for  £24 Million. Arsenal made  £50 Million last year during the same time period. The profit from selling players was £23.2m much lower than when compared to last years £46.1.

Arsenal has raised its tickets prices which are among the highest in world football , this money that was contributed by fans should be put to good use like investing in the team and purchasing some really good talent which would help arsenal win some trophies which they haven't done since 2005. Winning trophies would certainly help boosting the teams morale , which would make sure that star players don't leave the club and also help them financially because winning trophies would attract more sponsors.

http://www.bbc.co.uk/news/business-21581496.

Markets brace for crucial Italian election test

http://finance.yahoo.com/news/markets-brace-crucial-italy-election-230203665.html

In this article, the author talks about a potentially volatile political environment in Italy and its effect on the bonds market. Investors are waiting to see what happens in the election before they determine the value of Italian debt, and the elections could drastically affect the interest rate on bonds. This would have a major impact on the Italian economy and the Eurozone as a whole. Subsequently, it could affect our net capital outflows if the price of loanable funds in Italy changes.

Japanese Trade Woes

http://www.bbc.co.uk/news/business-21515024

This article outlines Japan's current trade issues and the fact that the Yen is on the decline and the trade deficit they are running hit a record high in January of this year.  These facts were due in part to the fact that Japan is increased its imports mainly on LPG, liquid petroleum gas, because most of Japan's nuclear reactors have remained closed.  This coupled with the fact that Eurozone in its current shape during its debt crisis, Japan's biggest exporter has significantly reduced their demand for  Japanese goods.  Thus, increasing the imports and decreasing the exports and causing the net exports to decrease and run a trade deficit.  Even though Japan is currently in a trade deficit and the current value for the Yen is so cheap, there seems to be a light at the end of the tunnel, the decline in the demand for goods being exported to the Eurozone has slowed this month, Japan's exports to China have raised 3%, and the exports to US have jumped up 10.9%.  With these factors in mind there is hope in this mainly exporting economy that the Yen will stay relatively weak and exports will increase for Japan and get them out of this current rut and revamp the powerhouse that is Japan's exports.

Positive outlook for US economy

http://www.bloomberg.com/news/2013-01-28/orders-for-durable-goods-in-u-s-rose-4-6-ex-transport-up-1-3-.html


A recent surge in durable goods has bolstered the GDP by about .3%.  Sales of durable good climbed 4.6% in the last three years, which has far exceeded predictions by economist.  Estimates from over 75 economist ranged from a 2% decrease to a 4.5% increase.  A large part of this increase came from a 56% increase in orders for military planes, as well as increases in orders for computers, engines, and communication equipment. The Automobile industry has had a strong performance and is at the highest sales numbers since 2008.  Does a rise in durable goods show stability and strong recovery of the US economy?

Middle-Income Claptrap


This article discusses the so called "claptrap that many middle-income countries face.  It talks about how they are not prosperous enough to compete with advanced countries, but that it is also hard for them to compete with low income poverty stricken ones as well.  It states that poor countries make quick progress then loose their way.  The article further discusses that this may not always be true and that other factors may be involved in the progress of countries.  Also that certain countries may not follow the pattern of this theory.


http://www.economist.com/news/finance-and-economics/21571863-do-countries-get-trapped-between-poverty-and-prosperity-middle-income-claptrap

India's growing love for Chocolates

http://money.cnn.com/2013/02/22/smallbusiness/india-chocolate/index.html?iid=HP_River

The middle and upper classes of India are developing a taste for luxury chocolates, giving U.S. chocolate companies a chance to break away from the U.S. market and stake a claim in an emerging Indian market. Chocolate sales have more than doubled since 2008 making India the fastest growing market for luxury chocolates. However, the market still has plenty of room to grow which is why the U.S. is trying to build a presence in the country and reap the benefits of establishing a product name when the market gets huge in 5 to 10 years. U.S. chocolatiers still have some problems to contend with, such as high import taxes, lack of supermarkets, and a distribution system that still needs a lot of work. Also, Indians still favor traditional sweets instead of chocolate when it comes to large cultural events. The Indian culture has an emphasis on sweets and the market for chocolate is predicted to get substantially bigger in the future. We can expect to see many more U.S. chocolatiers moving some of their product over to India as well.

US Debt Level

http://www.forbes.com/sites/modeledbehavior/2013/02/23/how-risky-is-the-us-debt-level/

This article discusses the risk that we should associate with our increasing national debt. More specifically, it identifies one way in which people likely under-assess the level of risk, and one way in which people are likely exaggerating the risk. First, the author points out that even though we may still have the ability to borrow, even as the debt continues to increase, our government's willingness to borrow is diminishing. As this continues to happen, the author warns, we may find ourselves in a situation where we are in dire need of a spending increase, but we are not in a position to do so.
     On a positive note, however, the author points out that the United States is ranked as the most desirable destination for immigrants worldwide. He then proposes the idea to let more immigrants into the country-meaning more taxpayers- and also charge an immigration fee that would go towards reducing the debt. To me, this is an interesting idea, however it seems almost unimaginable that we would all of a sudden let 150 million immigrants into the country; I do not believe that this type of action could ever make it through congress. In addition, this may help reduce our debt problem, but what about the countless other effects such a large increase in the labor force would have on our economy?

Split Screens

Split Screens

With the Oscars on tonight, it is interesting to take a look at the economics of Hollywood; both film and television. The market for movies is adapting to our changing culture and the model for film is drastically changing. The movie industry is declining, and growing slower than television, mostly due to advertising and fees from cable providers, which film cannot do. This leads to a stable and profitable business, the opposite of what the film industry relies on. The main reason for this decline is the way people view media and entertainment. They don't even have to leave their homes to have it anymore. The rising cost of films and declining sales are caused by new businesses like Redbox and Netflix that cut into DVD and Bluray sales. Flops have become scarier due to rising costs because of more effects and less content. This trend has really hit the businesses in film hard, and have caused them to consider skipping the release of films into cinemas all-together, instead releasing them straight to a streaming service. The Oscars are a huge event that garners a lot of attention, but it is interesting to note that this industry is declining and is not as successful as it appears.

Questions About Spending Cuts

http://economix.blogs.nytimes.com/2013/02/22/americans-want-to-cut-spending-they-just-dont-know-what-to-cut/?ref=economy

As the amount of time before the sequester decreases, the talk of spending cuts has been the center of attention for many heated political and economic debates.  Although spending cuts seems to be the most logical and popular way to get the country's debt under control, Americans cannot decide which programs should be cut or reduced.  In recent Pew Research Center Poll conducted in February 2013, the category that received the most votes for decreasing was the "aid to the worlds needy" coming in with 48% of the voters agreeing with reducing it.  However, the other 18 categories did not receive nearly the amount of support as would have hoped to give law makers a key understanding of what the people want.

A ‘Responsible’ Fed Could Hurt the Recovery

http://www.blogger.com/blogger.g?blogID=4089341017201808385#editor

This article discusses how Fed is currently operating in a way that many think is "un-responsible." This "un-responsible act" is really just an aggressive and perhaps slightly risky initiative to stimulate the economy. The Fed has kept short-term interests rates low, and has bought trillions of dollars in securities to help keep long term rates down. This policy has upset some critics. The article also warns that stopping stimulas programs too soon could cause the economy to sink again which would be devastating.

7 Spending Cuts You Will Really Feel

http://money.cnn.com/2013/02/21/news/economy/federal-budget-cuts/index.html?iid=HP_LN


As of March 1st the United States will be making drastic budget cuts, 2.1 million federal workers could be spending up to 22 business days at home without pay on a furlough. This isn't the only drastic changes that could be occurring on March 1st others include: shrinking unemployment benefits, beef and chicken to cost more and even face a shortage, cuts to meals on wheels program, enrollment in pre-school will be decreased, National parks closing campgrounds or changing hours, airports lines will grow due to worker furloughs, and hurricane repairs will come to a stop. All these cuts will cause people of the United States to change the way they live. These budget cuts come at the hands of our growing deficit. There is much speculation about our growing deficit and how the government is trying to make drastic changes to cut it. How will these budget cuts effect our every day life?

Economics of the NFL Combine

NFL Combine Economics

Economics is everywhere you look. The NFL combine, to most, is a process where they get to see how players test in different activities physically, emotionally, and mentally. But if you think about it from an economics stand point there are so many different transactions going on leading up to the event as well as during and shortly after the event. Trainers make money from the players, under armour makes money for sponsoring, and the television companies make money off of airing these things. It is incredible to think about the incomes of these different entities just for players being tested by teams to figure out who they want to draft.

The Enemy Within

This article talks about an enemy within the United States that could potentially hamper the progress made since The Great Recession. The enemy is known as "the sequester." This refers to a bundle of cuts that will be made to the federal budget on March 1. In August of 2011 Congress adopted the sequester in an attempt  to get a deal done to reduce the deficit. Many people believe that if Congress does not strike a deal before March 1 and the cuts go through it could put the economy is reverse. The huge problem with the sequester is that Congress took a recess and it comes to end just four days before the deadline. Experts do not believe that a deal will get done in those four days and the cuts will go into effect. When the cuts go through there will have to be a 8% drop in defense spending. This means that there could potentially be 1.4 million jobs lost due to the cuts. Of course, Democrats refuse to cut social programs and Republicans refuse to accept tax increases. This means that a deal getting done is highly unlikely and once again Congress will let America suffer in the name of ideology.

http://www.economist.com/news/united-states/21572190-ships-lie-uselessly-anchor-and-lay-offs-loom-deep-congress-imposed-spending-cuts-look

7 large impacts of federal budget cuts.

Millions of American families are addressing the forced budget cuts that could start on March 1.
 If they happen, there are seven cuts that will be really felt by many Americans.
1. Shrinking unemployment benefits. On average, it would mean a cut of $400 over the period between March and September.
2. Food to cost more and even face a shortage, particularly chicken, eggs, pork and beef. There will be less food available, by as much as 2 billion pounds of meat, 3 billion pounds of chicken, 200 million pounds of eggs.
3. Cuts to Meals on Wheels programs. More than 4 million home-bound and disabled seniors may have to go without supper this year because of this.
4. At least $400 million cuts to Head Start programs. 70,000 children from lower income families will not be able to enroll for pre-schools and daycare centers.
5. National parks will close campgrounds or open late. The National Park Service will lose $110 million from its annual budget.
6. Longer lines at the airport.Worker furloughs will increase the time to check passengers, leading to one extra hour for domestic travelers and four for international passengers.
7. Roofs blown off by Hurricane Sandy won't get repaired. About $3 million has been cut from a supplemental bill for Hurricane Sandy victims.

Major Banks Aid in Payday Loans Banned by States

Major banks have been aligning themselves with internet payday loan companies, some of which charge interest rates of 500% on a single loan. With 15 states banning payday loans, a growing number of the lenders have set up online operations in more hospitable states or far-flung locales like Belize, Malta and the West Indies to more easily evade statewide caps on interest rates. While the banks, which include giants like JPMorgan Chase, Bank of America and Wells Fargo, do not make the loans, they are a critical link for the lenders, enabling the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely. The banking industry says it is simply serving customers who have authorized the lenders to withdraw money from their accounts. “The industry is not in a position to monitor customer accounts to see where their payments are going,” said Virginia O’Neill, senior counsel with the American Bankers Association. This makes the state bans practically void, unless banks decide to stop cooperating with payday lenders. While I agree with O'Neil that banks don't have the right to monitor accounts, it is clear that payday loans are generally more harmful than helpful. It will be interesting to see if the government steps in and halts the banks cooperation with these lenders.

http://www.nytimes.com/2013/02/24/business/major-banks-aid-in-payday-loans-banned-by-states.html?pagewanted=all&_r=0

The Impact of Budget Cuts in DC

http://www.washingtonpost.com/local/how-automatic-budget-cuts-could-affect-district-of-columbia/2013/02/24/ad8a988a-7ee7-11e2-a671-0307392de8de_story.html

This article explains the impacts of the budget cuts, cutting about $85 billion. The cuts impact areas like education, environment, military readiness and law enforcement, employment assistance aid, and public health. Something that we could connect to, is the education factor. DC would lose around $533,000 for funding primary and secondary education, along with $925,000 for teachers, aides, and staff assisting with disabled children. A lot of these cuts are cuts in areas that need improvement and funding.

A Tax That May Change the Trading Game

 http://www.nytimes.com/2013/02/22/business/a-tax-that-could-change-the-trading-game.html?pagewanted=1&_r=0&ref=economy

Europe wants to start taxing financial trading next year, one way that this helps “is to reorient the financial system back to financing the real economy” says Algirdas Semeta.  We got to think about the negative effects from this idea as well because financiers claimed a tax would hurt economic growth and raise the cost of capital for companies (Norris).  This could change up trading in countries and due to the new expenses that companies have to pay they will have to layoff workers, increasing unemployment and decreasing revenue for companies which leads to less investment.  This could provide a positive impact to our economy but also there are many risks to suffer.  The government should wait and collect more evidence to better understand if it is going to be a positive outcome than a negative effect.

Raising the Minimum Wage

This article discussed the continued opposition to Obama's decision in raising the minimum wage rate over the next year. The article references the beginning of minimum wage laws from the time of President Roosevelt during the Great Depression and how wage restrictions helped to stimulate our economy. Current debate centers around the argument that minimum wage is good for most business, but not all small businesses. Small industries may not benefit or be able to support all their employees and have to face cuts and lay offs. Some conservative economists argue that instead of improving living standards, a rise in the minimum wage could actually lower the standards and the economy as a whole could hit a record low. Following Obama's State of the Union address, representatives and conservative media groups have tagged the raise in minimum wage as a "job killer." Lobby unions have also considered pulling away from expected donations and threatening other areas of involvement as a way of showing their strong beliefs and taking significant action during President Obama's upcoming term.

http://www.huffingtonpost.com/peter-dreier/raising-the-minimum-wage-_b_2750336.html?utm_hp_ref=business&ir=Business

China's Economy - A Discussion of Industry and Services

http://www.economist.com/news/finance-and-economics/21572236-services-are-poised-become-countrys-biggest-sector-served-china

     This article discusses China's economy . They are known for their industry, which accounted for 45.3% of its GDP in 2012. In fact, the article said, "...Manufacturing’s share of China’s GDP was more than 18 percentage points above the global norm in 2005. Services, in contrast, were almost eight points below." It also mentioned, comparing the U.S. to China, only 20% of our GDP is that of manufacturing. We are a much more service based economy.
     The article suggests that 2013 may be the year for China to start shifting a bit more towards services, its share in GDP being less than one percentage point smaller than manufacturing's share in 2012. It says services are growing faster.
     The article concludes in saying, "The strength of services may reflect the ongoing rebalancing of Chinese demand away from exports and towards consumption." This could be very good for the chinese economy in that because services are more "labour-intensive," job creation, wages, and household spending could increase.
     What I am interested to see is how this change in the Chinese economy could affect the world economy.

Ben Bernake Congressional Testimony's impact on the Dollar

http://online.wsj.com/article/SB10001424127887324048904578320553435165458.html?mod=googlenews_wsj

In the article, the effect of Bernake's two-day testimony to the Congress on the currencies and exchange rates have been discussed. Investors want to know whether the Federal Reserve will reduce purchase of assets. 

Ben Bernake is the Chairman of the Federal Reserve. His Congressional testimony may affect the markets and the USD exchange rate. A reduction in quantitative easing would increase interest rates and might have create trouble in the financial market at a time when there are some signs of recovery from the recession. 

Any change in Fed's policies would also affect the value of the dollar. When the Fed buys bonds, it actually floods money in the economy. Therefore, value of each dollar is low. When the Fed reduces its purchases, there are less number of dollars in the system and therefore the value of each dollar is high. So, an announcement in reduction of asset purchases might increase the value of the USD. 

Therefore, high speculation and interest is associated with this testimony. 

Time is Money

http://www.economist.com/news/business/21571943-industry-ripe-shake-up-time-money

This article explains how the Swiss watch industry is surviving in this economy. The average Swiss watch costs $685, a Chinese one costs around $2 and tells the time just as well, but exports of watches made in Switzerland have grown by 32% by value over the past two years, to SFr21.4 billion ($23.3 billion). The Swatch Group’s stable of brands generated watch and jewellery sales of SFr7.3 billion in 2012. That is up by 15.6% over the previous year and accounts for one-third of all sales of Swiss watches. It's hard to believe how this company is thriving during these hard times even though their watches are so expensive. This article also shows how the prices of these watches might even increase which is hard to believe. 

Margin Calls: Life on the Edges of America's Financial Mainstream

http://www.economist.com/news/finance-and-economics/21571882-life-edges-americas-financial-mainstream-margin-calls

        The FDIC released a survey that showed some 17 million adults are "unbanked" or in other words do not have a bank account. Additionally, one in every five American households is "underbanked", meaning that they do have a bank account but also rely heavily on alternative services like payday loans, cheque-cashing services, non-bank money orders or pawn shops. The trend also shows that the households without bank account are much higher among low-income households.
        Lawmakers are looking at ways to decrease the amount of payday loans but the problem is that recent legislative acts made it harder for retail banks to serve low-income Americans. Banks lose on 37 percent of their accounts and therefore do not want to extend loans to those low-income households with no credit history. This is a problem that causes people seek alternative services like payday loans.
       The problem was addressed by the officials and a few steps were already taken to decrease unbanked population. One of them is the use of a broader range of data to determine the credit history of borrowers. Another solution is presented through the pre-paid cards like the Bluebird card offered by Walmart and American Express. The share of unbanked households with pre-paid cards is predicted to grow at the rate of 21 percent over the next couple years.
       Banks have to look for other ways to lower the number of unbanked or underbanked Americans. Lawmakers have to consider benefits and disadvantages of alternative services and construct policies that will benefit consumers.

Spending Cuts Threaten Economy

In this article, Governors expressed their views on how the impending budget cuts will more than likely stall the economic gains made from the recession. At the National Governors Association meeting, Republican and Democrats discussed their pessimism that neither side could find a way to avoid the spending cuts set to begin soon. They discussed the crisis between the White House and Congress and how this does not allow them to construct state spending plans and how this ultimately leads to local businesses refusing to hire new workers. The dispute comes after many states are planning on a financial comeback after the recession set in back in 2008 and 2009. An estimated $693 billion in revenues is expected for the 2013 budget year, which is almost a 4 percent increase since 2012. The cuts would trim about $85 billion in domestic and defense spending, causing hundreds of thousands of workers to be laid off and Defense Secretary Leon Panetta claims the cuts would harm the readiness of U.S. fighting forces. The cuts were never supposed to happen but were installed to force both sides to come together and come up with a better plan that both Republicans and Democrats can agree on. I feel both sides need to finally come together and focus the spending cuts while discussing the proposed tax increases in a way both sides would see benefits.




http://www.washingtonpost.com/business/as-automatic-budget-cuts-loom-nations-governors-urge-federal-officials-to-take-action/2013/02/23/86f0c3ba-7d94-11e2-9073-e9dda4ac6a66_story.html

British Credit Problem

The United States recession of 2007 effected the entire world. Through a globalized economy, all countries share in the good times and equally in the bad. The recession hurt many aspects of the economy, especially the banking and finance sector. This is discussed in an article published in the economist, "Plumbing Problems;The Flow of Credit to British Businesses Continues to Dry Up. But the Latest Policies May Yet Open the Tap." With shaky economic conditions and haunted by the terrible loan practices of the past, banks in the US and in Europe tightened lending practices after 2007. This has led to credit shortage in Britain. With many banks not receiving a good return on loans made before 2007, they have been hesitant to make new ones. This has shifted the supply of loanable funds in Britain to the left, further encouraging a "catch-22", where banks will not lend funds to businesses because the economy is bad, and businesses not able to reinvest, hire new employees, and grow because they cannot receive loans from the banks. While there has been many attempts through legislation to fix this problem, none have yet been successful. The article also highlights how the United States economy was able to rebound loans after its recession; by encouraging banks borrowing practices to return to normal, soon after lending practices rebound, which helps to grow the economy. Britain hopes to try something similar to this through the newly passed "Funding for Lending Scheme" legislation. Hopefully this will correct the problem before it is too late for the British economy.

Nigeria, Brazil Sign Agreement to Boost Trade, Investment

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

Petroleo Brasileiro SA is expecting to expand oil production in Nigeria as the Rio de Janeiro-based company looks to strengthen its presence in Africa's oil production.
Trade between Brazil and Nigeria is $9 billion a year and is expected increase with the greater investment in oil industry. Two presidents signed an agreement to boost cooperation in energy, aviation, agriculture, electricity, infrastructure development and defense. This agreement is supposed to benefit both countries in establishing stronger trade ties.
This is an important move that could potentially lead to a greater cooperation between two continents and it could cause an increase in other trade agreements in both regions.

Video games on the out?

http://www.economist.com/news/business/21572249-sonys-newest-console-launches-suffering-industry-all-play

With the recent buzz surrounding the new announcements by Sony and Microsoft respectively for the new PlayStation 4 and the Xbox 720 the industry itself has got some new players. This new influx of interest is much needed due to the fact that last year in the united stats the demand for consoles dropped by 20 percent       partly due to the fact that there has not been a new system by either in 6 years. Also people could be looking to cheaper, more readily accessible phone games, which more people may be able to use. 

Honda moves U.S. head from California to Ohio

Honda announced Saturday it will be moving its top North American executive, along with 50 other salaried workers, from California to Ohio. Honda has been manufacturing cars in Marysville since 1982. They supply over 13,000 jobs in Ohio. According to the report, Honda expects this move to ensure better decision-making and more efficient operations. Tetsuo Iwamura will add the title Chief Operating Officer of automobiles. They expect this move to provide the best foundation to manufacture new, exciting, and affordable automobile products.  It is good to see more jobs being moved to Ohio. I think Honda is a great company and it is good to see they are increasing their mark in Ohio.

South Korea's Hottest Import: Foreign Workers

Article: http://www.businessweek.com/articles/2013-02-21/south-koreas-hottest-import-foreign-workers#r=nav-r-story

With the bulk South Korea's workforce becoming elderly, South Korea is in need of foreign workers to fill the holes left by domestic workers leaving the workforce. Instead of the problems we have discussed in class where the structure of the market causes unemployment (through either frictional unemployment due to problems finding or accessing jobs or through structural unemployment caused by policies such as minimum wage), the current situation in South Korea is resulting in the demand for workers being higher than the country's supply of workers. To remedy this Korea has been bringing in workers from other countries where they can earn approximately 20 to 25 times what their wage would be in their home country. Much like immigrant workers in the USA, these workers are sending a majority of their paycheck back home to their family so that they can live easier lives. However, the key difference here is that people are more accepting of immigrant work as opposed to those in the USA that want to construct barriers to keep workers out.

China's property market heats up

       Property prices in China jumped in 54 of the 70 cities tracked by the government in January and the average price change was an increase of 0.6%, the first year-on-year acceleration in 11 months. The resulting growth was so red-hot that many analysts feared a bubble was developing. Recent rise in property prices pressure the government to tighten policies. Indeed, the government is signaling some action.China's State Council said that cities where prices have increased too fast will be asked to have some measures to change. And in a bid to maintain supply, the council said it would guarantee land supplies for housing projects at no less than last year's level. In my opinion, these measures might make it harder for poor people to find affordable housing. Moreover, people with multiple houses will want to sell their houses because they could profit off the houses they have purchased.

http://money.cnn.com/2013/02/22/news/economy/china-property-prices/index.html

Time is money

http://www.economist.com/news/business/21571943-industry-ripe-shake-up-time-money

While smartphones and electronic innovation have severely handicapped certain industries that were once flourishing, for example Kodak and the camera industry, watchmaking still seems to be thriving. Telling the time is exactly the same from a ten dollar watch as it is on a thousand dollar watch, but that seems to be irrelevant to the Swiss watchmaking market, as the demand for their products are primarily due to the image these watches portray. Extravagance and social status seem to have a positive relationship in today's world and Swiss watch brands are benefiting significantly from that. This article talks about how they have managed to perform well in the market and, more specifically, the dominance of Swatch which owns several well-performing watch companies like Blancpain and Omega. Not only is Swatch doing well on its own, but a majority of watchmaking companies rely on it for components. Bulgari, TAG Heuer, and Piaget are only some major names that are using Swatch components. What is interesting to see is how providing parts for direct competitors is affecting the market share of each of these companies. The article states that Swatch will reduce its sale of components to competitors and it makes one wonder what the outcome of this could be. Will this increase the market share of Swatch by a lot or will the increase, if there is any, be insignificant and just cause a loss in revenue from selling components.  

UK looking up during tough times

http://www.bbc.co.uk/news/business-21517854


In this article it shows that in the past year the UK's economy during this recession has been looking much better in ways of jobs.  Current jobless total in the UK fell by 14,000 between October and December to a total of 2.5 million.  Even though the number of workers has increase by 154,000 and more then 580,000 people are employed than last year, the real wage has gone down.  This is because the inflation being experienced right now in this current recession is higher than the pay increases.  Therefore even though more people are being employed they are on average taking a 1,200 pound pay cut to keep their jobs or find new ones.  This may seem like a bad thing but the average weekly pay without bonuses and before taxes is up 6 pounds to 445.  In the end these numbers detailed in the article are startlingly great, but in the current state the economy is in these numbers are much better than they could be.  Also, the pay cuts that people are taking are according to the fact that there far more workers in the UK economy but it still producing the relatively same amount of output which this article calls "falling productivity."

Housing Driving Economic Growth

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

According to this article, housing is a large part of the economic growth in 2013, among consumer spending, an increase in domestic energy production, and stimulus from the Fed. As stated by a chief economist of Nuveen Asset Management, the home building activity will be the strongest component of our economy this year. Since in the past couple of years there have been an excess supply of houses, the demand has caught up and they are much more balanced. In this rebound, there are record low mortgage rates, rising home prices, and a decrease in foreclosures, which have together brought buyers back into this specific market. In the end, this is estimated to create more than 1 million new jobs.

Gold Slumps to Seven-Month Low as Economic Concern Ease

Gold futures slumped to a seven- month low as signs of economic optimism eroded demand for the precious metal as a haven. This is mainly due to the increase in confidence of the German economy, which is currently riding a 10 month high. As a result, the US plans to wind down their monetary economic stimulus in an effort to curb the 3 week long gold slump. According to a senior marketing analyst in Chicago, this is a good sign. "The economy is no longer falling apart, and gold is no longer indispensible. The fact that the US is talking about ending the stimulus means the economy is doing relatively better."

Gold futures for April delivery fell 0.4 percent to close at $1,572.80 an ounce at 1:50 p.m. on the Comex in New York, the lowest settlement since July 18. The metal, down 2.3 percent this week, has dropped 11 percent in the past 12 months. 

http://www.bloomberg.com/news/2013-02-22/gold-poised-for-weekly-loss-as-haven-allure-fades-dollar-jumps.html