Despite its sucess in China, Apple has been received some lashes from Chinese media recently. Reason for the repeated attacks against the American giant seemed to be questionable, and various theories are flying around but nothing has been clear at this point. One common theory seems to be that the attack is from some rivaling firms that would thrive in Apple's hardship. Another theory suggests that Apple was simply a whipping bag for the officials of Beijing in retaliation to the recent attacks toward Chinese firms from foreign power. Alternatively, this might be a test of different approach toward foreign firms by China bureaucracy. The truth might only be known within the official cycle, but whatever the explanation seems to be, this recent attack on Apple might prove to be unfavorable toward the whole android market as a whole in the long run because China is currently Apple's second largest market.
http://www.economist.com/blogs/analects/2013/03/apple-china
Saturday, March 30, 2013
Solar power has record year despite bankruptcies
http://money.cnn.com/2013/03/14/news/economy/solar-power/index.html?iid=SF_E_Highlight
According to the article, 2012 was a record year for the solar power industry in spite of bankruptcies and consolidation. One of the main reasons is because of the decline in the price of solar panels, stable tax incentives and better financing options. The price of solar panels has decreased about 60% since the beginning of 2011 due to low prices in silicon (a main ingredient in the panels) and massive manufacturing capacity. This is also the reason that drove many firms in the industry to bankruptcy over the past couple of years. However, it's nothing to worry about because the exact same thing happened to the auto industry in the beginning, when dozens of car makers were driven out of the market due to inefficiency.
It is without any doubt that the solar power industry will keep rising. This is a good sign as we are becoming more and more environmental friendly. One thing to note though is that the cost of solar power is only competitive at the moment when subsidies are generous and the price of electricity is high. However, if we take away those subsidies, the cost for new solar electricity nationwide is still more than twice that of the nation's cheapest power source -- natural gas. So solar power might not be a cheap power alternative after all.
According to the article, 2012 was a record year for the solar power industry in spite of bankruptcies and consolidation. One of the main reasons is because of the decline in the price of solar panels, stable tax incentives and better financing options. The price of solar panels has decreased about 60% since the beginning of 2011 due to low prices in silicon (a main ingredient in the panels) and massive manufacturing capacity. This is also the reason that drove many firms in the industry to bankruptcy over the past couple of years. However, it's nothing to worry about because the exact same thing happened to the auto industry in the beginning, when dozens of car makers were driven out of the market due to inefficiency.
It is without any doubt that the solar power industry will keep rising. This is a good sign as we are becoming more and more environmental friendly. One thing to note though is that the cost of solar power is only competitive at the moment when subsidies are generous and the price of electricity is high. However, if we take away those subsidies, the cost for new solar electricity nationwide is still more than twice that of the nation's cheapest power source -- natural gas. So solar power might not be a cheap power alternative after all.
More Americans Work in the Underground Economy
http://www.businessweek.com/articles/2013-03-28/more-americans-work-in-the-underground-economy#r=nav-fst
4.8 Million Americans have been out of work for more than 27
weeks. This is nearly 40% of the total number of Americans that are currently
unemployed. Many of these people have turned to the underground economy to find
way to bring in any income. The underground economy includes things such as drug
trafficking, and prostitution, but also includes things that are not seen as
“wrong” such as babysitting, selling material property, or mowing lawns for
money. Most Americans enter the underground economy doing tasks of the latter
sorts.
Economists
are now estimating that 18-19 percent of national income is not reported, and
therefor would be considered in the underground economy. This would total to
about $2 trillion in unreported income. If this income was reported economists
estimate that it would generate around $500 billion in tax revenue.
If the
underground economy is becoming this large, we would see and increase in cash
liquidity as more money in cash dollars would be needed to obtain these
services. As expected, the Fed has reported such a growth. Today $1.18 trillion
bills are out on the street, greatly increased from the $803 billion in 2007.
All indications say that the underground economy is growing. The question that
needs to be asked is how we can move this underground revenue to the surface to
help our real economy.
Incomes bounce back in February
http://money.cnn.com/2013/03/29/news/economy/personal-income-spending/index.html?iid=SF_E_Lead
According to a recent government data release, personal incomes rose 1.1% in February after a drastic drop in January. The Commerce Department also said spending rose 0.7%.Both of these figures are surprisingly better than expected. There was a consensus among the economists that incomes would only rise 0.8% while spending would increase 0.6%. One thing does not seem to add up is that despite suffering from higher payroll taxes, personal incomes continued to increase. However, one plausible explanation is that it the effects of increased payroll taxes have yet to be seen meaning it might be just a matter of time until personal incomes take a big bit.
According to a recent government data release, personal incomes rose 1.1% in February after a drastic drop in January. The Commerce Department also said spending rose 0.7%.Both of these figures are surprisingly better than expected. There was a consensus among the economists that incomes would only rise 0.8% while spending would increase 0.6%. One thing does not seem to add up is that despite suffering from higher payroll taxes, personal incomes continued to increase. However, one plausible explanation is that it the effects of increased payroll taxes have yet to be seen meaning it might be just a matter of time until personal incomes take a big bit.
Up in Smoke
http://www.economist.com/news/finance-and-economics/21574498-bill-comes-investors-bankrupt-cajas-up-smoke
This article discusses how people who bought shares or subordinated debt in Spain’s dodgiest cajas, or savings banks, have either been all but wiped out or forced to take hefty losses. Many of the 350,000 retail customers who bought Bankia shares in its 3.1 billion flotation in 2011 have already seen their money go up in smoke. Retail investors spent an average of 6,000 each buying stock at a price of 3.75. Within a year Bankia needed a 19 billion bail-out; within 18 months it had a negative value of more than 4 billion. The shares are now trading at around 15 cents, a 96% fall on the issue price. If I were one of the people who bought shares, I would be furious and demanding my money back. I feel bad for everyone who is involved in this.
This article discusses how people who bought shares or subordinated debt in Spain’s dodgiest cajas, or savings banks, have either been all but wiped out or forced to take hefty losses. Many of the 350,000 retail customers who bought Bankia shares in its 3.1 billion flotation in 2011 have already seen their money go up in smoke. Retail investors spent an average of 6,000 each buying stock at a price of 3.75. Within a year Bankia needed a 19 billion bail-out; within 18 months it had a negative value of more than 4 billion. The shares are now trading at around 15 cents, a 96% fall on the issue price. If I were one of the people who bought shares, I would be furious and demanding my money back. I feel bad for everyone who is involved in this.
Nike shares jump as earnings beat forecasts
http://www.bbc.co.uk/news/business-21889880
Nike is one of the biggest shoe and clothing companies in the world, if not the biggest in today's shoe and clothing markets. Due to the recent economic improvements Nike's shares have been climbing higher every day. Profits of the company have surpassed the expected forecasts from the analysts. The cost of the material has gone down to produce the products which helped Nike's sales to increase as well as the United States recovery from the recession has helped contribute to this success. Nike recorded a nine percent increase in revenue which amounts to $6.2 billion. If Nike wants to continue to be successful and to improve in the long run, they need to take advantage of the Chinese market as well as emerging markets around the world.
Nike is one of the biggest shoe and clothing companies in the world, if not the biggest in today's shoe and clothing markets. Due to the recent economic improvements Nike's shares have been climbing higher every day. Profits of the company have surpassed the expected forecasts from the analysts. The cost of the material has gone down to produce the products which helped Nike's sales to increase as well as the United States recovery from the recession has helped contribute to this success. Nike recorded a nine percent increase in revenue which amounts to $6.2 billion. If Nike wants to continue to be successful and to improve in the long run, they need to take advantage of the Chinese market as well as emerging markets around the world.
Cyprus details heavy losses for major bank customers
http://finance.yahoo.com/news/big-depositors-cyprus-lose-far-012924065.html
Cyprus' economy has been getting hit hard with losing large quantities of money from the bailout. There will most likely be a loss of 60 percent of savings in Cyprus banks. The European banks are struggling to keep up with it, but it's a small price to pay to save the island. The locals of Cyprus point fingers at Europe for turning their paradise into hell. The price tag on this bailout was set at about $13 billion which will take the Cypriots awhile to pay back. Cyprus seems to have handled the situation better than Greece with the frequent violent outbreaks on streets, instead they have peaceful protests by the students and bank workers. Cyprus has also limited the amount money locals and foreigners can take out of Cyprus to 1000 euros only. Cyprus is going to have long and possibly painful time of recovery.
US probes mining firm over bribery charges
http://www.aljazeera.com/news/americas/2013/03/201331310164135717.html
US government is investigating BHP Billiton for bribery charges in the 2008 olympic sponsorships. US Department of Justice and the Australian Federal Police are investigating allegations that BHP provided inducements, hospitality and gifts to Chinese and other foreign officials. The US government is conducting proceedings involving BHP, which supplied the materials for gold, silver and bronze medals used in Beijing.
US government is investigating BHP Billiton for bribery charges in the 2008 olympic sponsorships. US Department of Justice and the Australian Federal Police are investigating allegations that BHP provided inducements, hospitality and gifts to Chinese and other foreign officials. The US government is conducting proceedings involving BHP, which supplied the materials for gold, silver and bronze medals used in Beijing.
Freddie mac sues a dozen banks for colluding
http://www.aljazeera.com/news/americas/2013/03/201332014211634185.html
Freddie mac is suing a dozen banks on grounds of colluding to hide financial troubles and boosting profit. The mortgage giant filed a complaint on march 14th on more than a dozen banks including bank of america, JP morgan Chase, UBS AG and Credit Suisse Group AG. the colluding allegedly took place from 2007 to 2010. Freddie mac and Fannie mae have been said to lose $30 billion due to the colluding. Freddie mac also discovered fraud in britain's barclays which paid $453 million in fines to US and UK authorities. UBS and Royal Bank of Ireland were also fined in december for fiddling with interest rates. Collusion and fraud are nonstop problems in financial world because the profits are far greater than the fines.
Freddie mac is suing a dozen banks on grounds of colluding to hide financial troubles and boosting profit. The mortgage giant filed a complaint on march 14th on more than a dozen banks including bank of america, JP morgan Chase, UBS AG and Credit Suisse Group AG. the colluding allegedly took place from 2007 to 2010. Freddie mac and Fannie mae have been said to lose $30 billion due to the colluding. Freddie mac also discovered fraud in britain's barclays which paid $453 million in fines to US and UK authorities. UBS and Royal Bank of Ireland were also fined in december for fiddling with interest rates. Collusion and fraud are nonstop problems in financial world because the profits are far greater than the fines.
Cyprus deposits could lose up to 60 percent
http://www.aljazeera.com/news/europe/2013/03/201333015222675305.html
Cyprus bank deposits could lose up to 60 percent of their savings of over 100,000. bank would give depositors shares worth 37.5 percent of savings and a further 22.5 percent will be held until authorities know what satisfies the terms of the bailout. The country is in deep debt and the authorities are going to great lengths to get money to satisfy a bailout plan offer from European banks.
Cyprus bank deposits could lose up to 60 percent of their savings of over 100,000. bank would give depositors shares worth 37.5 percent of savings and a further 22.5 percent will be held until authorities know what satisfies the terms of the bailout. The country is in deep debt and the authorities are going to great lengths to get money to satisfy a bailout plan offer from European banks.
S&P 500 index reaches record high
http://www.bbc.co.uk/news/business-21972496
S&P 500 index reached record high of 1569, a new record since the previous all time high of 1565. The market has risen because of a great performance in the quarter despite the slow US economy. The new record is great news for the economy but we don't know how long it will last since the market performance is not reflecting the economy's performance at the moment.
International approaches of banking market in Africa
Many Africa's lenders are promising spectacular returns as they expand
across the continent. Their ambitions have created a group of home-grown
regional powerhouses. Yet the costs of building networks of branches
and of investing in growth mean that such returns remain in the distant
future.
African banking market attracts investors because it is potentially vast and virtually untapped. However, the market's differences between banks are huge. I think international banks need to be really careful when trying to approach market in each country, and need to understand that the results will not be the same. The use of new technology and the expansion of firms are giving a big boost to domestic and regional banks that would previously have been outclassed by international rivals. The financial crisis also prompted some of the region’s banks to focus on expanding in Africa rather than going abroad. Another approach that some international banks try is helping governments to sell bonds and offering banking services to the biggest companies in each country. I think that in order for these models to be sustained, banks also have to watch out for specialist rivals. International banks should also make customer service smoother to make banks more user friendly and attract more customers.
http://www.economist.com/news/finance-and-economics/21572768-across-africa-banks-are-expanding-their-returns-arent-continent-dreams
African banking market attracts investors because it is potentially vast and virtually untapped. However, the market's differences between banks are huge. I think international banks need to be really careful when trying to approach market in each country, and need to understand that the results will not be the same. The use of new technology and the expansion of firms are giving a big boost to domestic and regional banks that would previously have been outclassed by international rivals. The financial crisis also prompted some of the region’s banks to focus on expanding in Africa rather than going abroad. Another approach that some international banks try is helping governments to sell bonds and offering banking services to the biggest companies in each country. I think that in order for these models to be sustained, banks also have to watch out for specialist rivals. International banks should also make customer service smoother to make banks more user friendly and attract more customers.
http://www.economist.com/news/finance-and-economics/21572768-across-africa-banks-are-expanding-their-returns-arent-continent-dreams
Friday, March 29, 2013
China and Brazil sign $30bn currency swap agreement
http://www.bbc.co.uk/news/business-21949615
The article talks about how China and Brazil agreed for their central banks to exchange up to thirty billion dollars of the local currencies. This is supposed to facilitate trade between the two countries and prevent any problems that were to arise. For a long time now, China has always been a trading partner with Brazil. Over the past decade the trade between the two countries has grown enormously. In 2003 the trade volume was roughly seven billion dollars, now the trade volume is nearly seventy-five billion dollars. Some key components that cause this drastic growth are that the Chinese have a really have high demand for Brazilian resources such as iron ore and soy products. Also, Brazil has become a key country to export to for Chinese manufactured goods. The reason for this is that China wants to promote the Chinese yuan as an alternative currency for a global reserve currency.
The article talks about how China and Brazil agreed for their central banks to exchange up to thirty billion dollars of the local currencies. This is supposed to facilitate trade between the two countries and prevent any problems that were to arise. For a long time now, China has always been a trading partner with Brazil. Over the past decade the trade between the two countries has grown enormously. In 2003 the trade volume was roughly seven billion dollars, now the trade volume is nearly seventy-five billion dollars. Some key components that cause this drastic growth are that the Chinese have a really have high demand for Brazilian resources such as iron ore and soy products. Also, Brazil has become a key country to export to for Chinese manufactured goods. The reason for this is that China wants to promote the Chinese yuan as an alternative currency for a global reserve currency.
How to Stop the Panic of Cyprus
This article is trying so hard to be optimistic But, really now, did we expect anything other than a political problem from the bailout that happened in Cyprus? Everyone is in a tizzy now. People are worried about their deposits in the Eurozone, what is going to happen financially and how much control the government has over their money. Frankly, it is terrifying and I would be pulling my money out of the bank too if this happened in the United States. But bailout seems to be the only way to get things done and no other solution is coming to the table. Let's just hope the panic is contained this time though knowing history, it probably won't be.
Growth faster than expected in top economies.
The Organization for Economic cooperation and Development (OECD) has claimed that there has been stronger growth for Japan, the US and Germany in the first quarter of 2012. As the economic recovery continues, there still is worry about the Eurozone coming out of recession. OECD estimated an average annual growth of 2.4% for the 7 largest economies in the world which is a better figure as opposed to the last quarter of 2012's 0.5% growth.
Europe however shows contrasting levels of progress, where Germany seems to be growing really well and France and Italy are having trouble come out of the recession, especially Italy.
The growth figures are good however according to the OECD the road to recovery is far from over and economies shouldn't contemplate ending expansionary policies that cause growth.
China and Brazil sign on new currency swap agreement
http://www.bbc.co.uk/news/business-21949615
China and Brazil have signed on a currency pact that will allow their
central banks to swap local currencies worth up to $30bn dollars, which would
ensure smooth bilateral trade, safeguarded against future global financial
crisis. With the new pact, in the case of a credit shortage in the financial
market, Brazil would be able to still have credit from its trading partner and
consequently no interruption of trade.
China´s increasing demand for Brazil´s resources, such as iron ore and
soy products, and Brazil having become a key export market for Chinese goods
played an important role in increasing volume of trades and diplomatic
relationship, so there is obviously an interest in safeguarding a trade
relationship that has been beneficial for both parties. The pact allows for
$30bn that would normalize trade relations for up to 8 months in the case of a
global crisis.
Nevertheless, there are still some political interests behind the push
for this trade agreement, as Chinese leadership has been pushing for a more
internationalization of the Yuan as an alternative to US dollar as a global
reserve currency, which would allow firms to settle trade in local currencies
rather than the US dollar. The new pact comes after another series of
propositions for currency swap to countries like England, Australia, Hong Kong
and Japan.
Establishment of a BRICS-led new development bank
Leaders of the BRICS nations
(Brazil, Russia, India, China and South Africa) meeting in Durban have been
discussing the formation of a new development bank to “help the Brics economies
to co-operate with other markets and developing countries in the future”. These
nations have concluded that the formation of such international organization is
feasible and have started negotiating to establish the Brics-led new
development bank. The bank, however, would perform activities similar to the
World Bank, such as provision of loans for investment in infrastructure and
other long term development projects, and under the rule of rapidly-growing and
influential economies (such as Russia and China), frictions between these IOs
could possibly arise.
Russian President Vladimir
Putin highlighted the economic success of each Nation, contrasting the Brics-nation´s
common annual economic growth rate of 4% in 2012, compared to the 0.7% of the
biggest seven financial countries. The Russian President also emphasized the
economic potential of the group and called for creation of incentives for
business, so to increase the volumes of mutual trade, investment, and broadening industrial and
technological co-operation.
The creation of a new development bank, however,
involves several issues that may arise in both markets, and the international
setting. The creation of an international financial institution could possibly
increase dissent among organizations with similar roles, undermining the
authority of one of the parties in the case of a trade dispute between
countries “protected” by the new development bank and those that are not. That,
however, may also not hold true at all since the creation of such institution
has suggested the importance that Brics states assign in growing closer ties.
How Gay Marriage Affects the Economy
This week, the Supreme Court of the United States discussed and debated the ban on same sex marriage, and decided not to overturn it.
Moral and personal values aside, there are some very concrete economic implications of legalizing same sex marriage to consider. It's estimated that legalization of gay marriage would spark a $9.5 billion boost in the wedding and divorce industries. Municipalities would also see a boom in revenue, as applications for marriage licenses in many areas would skyrocket.
After hearing so much about this debate from a moral standpoint, it's refreshing to see it from an economic standpoint. Personal beliefs aside, there's no denying that a lift on the same-sex marriage ban would be a positive action for the American economy.
Moral and personal values aside, there are some very concrete economic implications of legalizing same sex marriage to consider. It's estimated that legalization of gay marriage would spark a $9.5 billion boost in the wedding and divorce industries. Municipalities would also see a boom in revenue, as applications for marriage licenses in many areas would skyrocket.
After hearing so much about this debate from a moral standpoint, it's refreshing to see it from an economic standpoint. Personal beliefs aside, there's no denying that a lift on the same-sex marriage ban would be a positive action for the American economy.
Violence in Myanmar
http://www.economist.com/news/asia/21574506-sectarian-violence-was-not-supposed-be-part-myanmars-bright-new-direction-when-lid-blows
Religious conflicts in Myanmar are gaining heat and recently it has broken down into several incidents of great violence and political stability seems to be in jeopardy.Not to forget, the violent protests and actions are a serious bummer to the Myanmar Economy.
Religious conflicts in Myanmar are gaining heat and recently it has broken down into several incidents of great violence and political stability seems to be in jeopardy.Not to forget, the violent protests and actions are a serious bummer to the Myanmar Economy.
Wednesday, March 27, 2013
BRICS Vs. IMF/World Bank
http://www.businessweek.com/articles/2013-03-27/can-the-brics-have-their-own-world-bank#r=glo-s
The article discusses the BRICS economies, Brazil, Russia, India, China, South Africa, and the possibility of creating their own development bank and crisis fund. These economies combined have 43% of the world's population, and a total of $4.4 trillion in currency reserves. The Presidents of the BRICS came together at a summit in South Africa with the idea of "feasible and viable," but of course, this was easier said than done as they failed to reach an agreement on key factors. Furthermore, these economies are all very different, and a common goal just isn't so commonly found on such a big stage. The idea behind this dialogue is important. I guess it's the thought that counts.
The article discusses the BRICS economies, Brazil, Russia, India, China, South Africa, and the possibility of creating their own development bank and crisis fund. These economies combined have 43% of the world's population, and a total of $4.4 trillion in currency reserves. The Presidents of the BRICS came together at a summit in South Africa with the idea of "feasible and viable," but of course, this was easier said than done as they failed to reach an agreement on key factors. Furthermore, these economies are all very different, and a common goal just isn't so commonly found on such a big stage. The idea behind this dialogue is important. I guess it's the thought that counts.
Avoiding Amazon Meat
http://www.bbc.co.uk/news/world-latin-america-21934025
This article basically is about how different representative groups in Brazil and how they've decided not to continue the sales of cattle meat that have been raised in the rainforest. In theory, I do think it is a good move. I eat meat, but we all have a responsibility to ensure we eat food from sustainable and well treated sources - be it meat or non-meat - and to pay a fair price for it. That said - is deforestation really just Brazil's problem? I suspect many many nations have contributed to this issue, and so it shouldn't be just Brazilians who pay the price. It's also imperative to consider the fact that the Amazon Soil becomes infertile in a short period of time. So the farmers choice comes to spend money enriching existing fields - or make another field for another short term gain. The rainforest is not retaking the infertile areas - so Brazil may see a major climate change unless they put a lot of money into rebuilding what was lost.
Office supplies, grocery stores among government cuts
http://money.cnn.com/2013/03/21/news/economy/government-cuts/index.html?iid=SF_E_River
This article discusses the $85 billion in forced budget cuts that began on March 1st. These budget cuts have also been reffered to as "the sequester". A result of the sequester, that is focused on heavily in this article, is the forced closing of government run grocery stores on military bases. The stores will be forced to close one day each week, but it will not begin to be enforced until May. This closing will cause a small decrease in consumption.
This article discusses the $85 billion in forced budget cuts that began on March 1st. These budget cuts have also been reffered to as "the sequester". A result of the sequester, that is focused on heavily in this article, is the forced closing of government run grocery stores on military bases. The stores will be forced to close one day each week, but it will not begin to be enforced until May. This closing will cause a small decrease in consumption.
Tuesday, March 26, 2013
Electronic Cigarettes
http://www.economist.com/news/business/21573985-challenge-big-tobacco-vape-em-if-you-got-em
Electronic Cigarettes were never really considered a serious threat to major tobacco (cigarette) producers. Innovations in electronic cigarettes like vaporizing tobacco,etc are now attracting people's concerns and they can definitely be seen as a threat to cigarette producing giants. Advertisement about comparatively less harmful product is at its peak and since they are taxed lower compared to cigarettes, in the coming years cigarette production can be expected to be stunt.
US Housing prices increase
http://www.reuters.com/article/2013/03/26/usa-economy-homes-index-idUSL2N0CI0IG20130326
The prices US homes have been growing steadily and this year had the biggest annual gain in 6 years.
This increase in prices shows that the recovery of the housing market is on track and also confirms many opinions that the US is recovering pretty fast from the recession.
The prices US homes have been growing steadily and this year had the biggest annual gain in 6 years.
This increase in prices shows that the recovery of the housing market is on track and also confirms many opinions that the US is recovering pretty fast from the recession.
When Cars Become Extinct
This article is a fascinating read because it talks about how the "automobile era" is coming to an end. Cohen and Badger examine our shift in modes of travel over-time, and how they were prompted by socio-economic conditions; they say that there is always a gradual shift towards something new, as exhibited by our shift from horses to cars, but we don't know when the change is occurring. They say that the end is already happening because of the rising gas prices, environment protection groups etc.
I found it interesting because it asks us to recalibrate how we think about technology over time. Although I don't agree with this, they say that the US has lost its ability to imagine its future:
"...that in the U.S., we’ve lost our 'cultural capacity to envision alternative futures,' to envision the Futurama of the next century. More often, when we do picture the future, it looks either like a reproduced version of the present or like some apocalyptic landscape. "
I found it interesting because it asks us to recalibrate how we think about technology over time. Although I don't agree with this, they say that the US has lost its ability to imagine its future:
"...that in the U.S., we’ve lost our 'cultural capacity to envision alternative futures,' to envision the Futurama of the next century. More often, when we do picture the future, it looks either like a reproduced version of the present or like some apocalyptic landscape. "
I found it an interesting read and thought I'd share.
Monday, March 25, 2013
UK banks see 2012 profits wiped out
The five major banks of the UK saw a nearly 40% increase in profits in the past year, however financial reports display this gain was almost completely wiped out as a result of regulation fees and a few administrative mistakes. Therefore, in actuality, profits actually declined after having to pay off the debts. While 2012 was a year of improvement in core performance from the banks, it is also crucial that the banks restore customer trust. Customer trust is something that is developed and then lasts for many generations so the banks need to make a sincere effort to communicate their devotion to customers and make it known that they are going to follow regulations and hopefully not be fined again for sloppy mistakes. I found this article to be especially interesting because I was abroad in the UK last semester. The British lifestyle is very well off and there is a feeling of wealth and class in the air, not debt or paybacks. As compared to the US recession where you could feel the economy crumbling, the UK economy was quite well off and people were economically active.
http://www.bbc.co.uk/news/business-21916653
http://www.bbc.co.uk/news/business-21916653
Bernanke Says Easing by Advanced Nations Helps World Economy
This article talks about a lot of the things we have learned about when it comes to interest rates, trade deficits, unemployment, growth and more. Bernanke talks about his plans domestically and how the interest rates here will remain this low as long as unemployment rate is above 6.5% although they are lowering and the outlook on inflation is below 2.5%. In the article it talks about how other countries are taking the low interest rate approach as their goal is growth as well and they are using growth as a focus rather that using it to focus on trade exchange rates. But, overall, Bernanke sees this approach as a benefit to the world economy.
China's largest solar energy provider bankrupt
http://www.economist.com/blogs/schumpeter/2013/03/suntechs-bankruptcy
The Chinese company Suntech, the worlds largest provider of solar power has just declared bankruptcy this week. The company in 2005 was one of the quickest rising companies in the world with its Shi Zhengrong was the wealthiest man in china for a short period of time. But after the subsidies stopped and the economy faded for solar power production the world was left with a glut of solar technology without having a market for it. In the past year as many as 1 in 30 plants had been closed or declared bankruptcy meaning the market for solar energy is slowly fading.
The Chinese company Suntech, the worlds largest provider of solar power has just declared bankruptcy this week. The company in 2005 was one of the quickest rising companies in the world with its Shi Zhengrong was the wealthiest man in china for a short period of time. But after the subsidies stopped and the economy faded for solar power production the world was left with a glut of solar technology without having a market for it. In the past year as many as 1 in 30 plants had been closed or declared bankruptcy meaning the market for solar energy is slowly fading.
The Hedge Fund Manager Immigration
As we watch the European debit crisis continue, US hedge funds are snagging top talent across the pond. US funds are capitalizing on firms overseas firing and layoff untapped talent in the banking and finance sectors. The hope is to add to an already successful team of traders and mangers to drive fund returns even during this downturn in the economy.
So far some professionals overseas, such as Pierre-Henri Flamand formerly at Goldman Sachs, have since liquidated funds to pay off investors, and then headed to the US for positions at top hedge funds. This trend is also happening at smaller firms in the UK who have seen significant losses. John Purcell, CEO of his own London-based executive-search firm, said “If they lose assets, they really struggle to raise them again -- that’s the risk of going to a smaller firm."
How can this overseas job trend help or hurt the job market for hedge fund managers?
Can this economically benefit the US with an increase of top talent in the financial sector?
So far some professionals overseas, such as Pierre-Henri Flamand formerly at Goldman Sachs, have since liquidated funds to pay off investors, and then headed to the US for positions at top hedge funds. This trend is also happening at smaller firms in the UK who have seen significant losses. John Purcell, CEO of his own London-based executive-search firm, said “If they lose assets, they really struggle to raise them again -- that’s the risk of going to a smaller firm."
How can this overseas job trend help or hurt the job market for hedge fund managers?
Can this economically benefit the US with an increase of top talent in the financial sector?
Spanish Bank Downgraded to BB-
We should, by now, be familiar with the Spanish banking system. Names such as Bankia and Santander have been thrown around after bailout requests were made. Well, Bankia is back in headlines.
As of this morning, S&P analysts have downgraded the long-term debt rating of Bankia to a BB-, or three levels below investment grade. This rating change was exercised due to last year's 22 Billion Euro asset transfer to a bad bank, resulting in a 21.2 Billion Euro after-tax loss.
What affect do you see for long-term lending in the EU as a whole?
As of this morning, S&P analysts have downgraded the long-term debt rating of Bankia to a BB-, or three levels below investment grade. This rating change was exercised due to last year's 22 Billion Euro asset transfer to a bad bank, resulting in a 21.2 Billion Euro after-tax loss.
What affect do you see for long-term lending in the EU as a whole?
Cyprus Banking Crisis
As we ave seen the past few days, Cyprus is scrambling to make deals with the Russians and other investors. Their pleas were not well heard and no deals were finalized. Their last resort has been to tax the bank accounts of its citizens. With limited withdrawals allowed, Cypriots are scrambling to buy necessities and salvage what cash they have left.
Do you feel a government should be allowed to dip their hands into the accounts of its citizens to pay off debt they themselves have accumulated?
What are the consequences for not only Cyprus, but the rest of the financial world?
Do you feel a government should be allowed to dip their hands into the accounts of its citizens to pay off debt they themselves have accumulated?
What are the consequences for not only Cyprus, but the rest of the financial world?
Cyprus bailout: Deal reached in Eurogroup talks
This article talks about an agreement being made by the euro zone finance ministers on a 10 bn euro bailout for Cyprus. This would prevent the collapse of the Cyprus banking system and also keep the country in the euro zone.
This deal is a good news for all depositors who have under 100,000 euros as all their deposits would be untouched while the deposits more than 100,000 will face big losses. The percentage to be levied on these large accounts are still unknown and would be solved in the coming weeks. This decision is going to hurt the Russians as they have large scale financial investments in the country and could damage their financial sector as well.
Laiki Bank which is the country's second largest bank would be split into good and bad banks and the good assets would be merged with the bank of Cyprus. The banks are still closed and the talks of when the banks would be open would be discussed on Monday by the Cypriot government and troika. The banks have lowered their daily limits on withdrawals from ATM machines to 120 euros by the Bank of Cyprus and 100 euros by Laiki.
http://www.bbc.co.uk/news/world-europe-21916102
This deal is a good news for all depositors who have under 100,000 euros as all their deposits would be untouched while the deposits more than 100,000 will face big losses. The percentage to be levied on these large accounts are still unknown and would be solved in the coming weeks. This decision is going to hurt the Russians as they have large scale financial investments in the country and could damage their financial sector as well.
Laiki Bank which is the country's second largest bank would be split into good and bad banks and the good assets would be merged with the bank of Cyprus. The banks are still closed and the talks of when the banks would be open would be discussed on Monday by the Cypriot government and troika. The banks have lowered their daily limits on withdrawals from ATM machines to 120 euros by the Bank of Cyprus and 100 euros by Laiki.
http://www.bbc.co.uk/news/world-europe-21916102
Sunday, March 24, 2013
Living Standards in the UK
http://www.bbc.co.uk/news/business-20138393
This article argues that the quality of life will be no greater by the end of 2020 than it was in 2000. There are several reasons that living standards will remain stagnant. As the UK is pulling out of another recession, the economy's output is still not growing. High unemployment continues to depress wages while administrative and manufacturing jobs continue to decrease. However, there are several possible solutions to this problem. Boosting low pay, raising skills, and increasing female employment could help many UK families. To prevent this recovery from only benefitting the wealthier half of the population, the Resolution Foundation recommends more subsidies for cheap childcare and cutting national insurance contributions for certain workers. If the government takes action, the UK may soon see an increase in the standard of living.
This article argues that the quality of life will be no greater by the end of 2020 than it was in 2000. There are several reasons that living standards will remain stagnant. As the UK is pulling out of another recession, the economy's output is still not growing. High unemployment continues to depress wages while administrative and manufacturing jobs continue to decrease. However, there are several possible solutions to this problem. Boosting low pay, raising skills, and increasing female employment could help many UK families. To prevent this recovery from only benefitting the wealthier half of the population, the Resolution Foundation recommends more subsidies for cheap childcare and cutting national insurance contributions for certain workers. If the government takes action, the UK may soon see an increase in the standard of living.
Cyprus told: take bank levy or leave euro
http://www.guardian.co.uk/world/2013/mar/24/cyprus-bank-levy-leave-euro
Cyprus, which earlier rejected a proposed bank levy on deposits to raise the money required, may now be forced to accept that same bank levy as options are quickly running out. The country's financial sector is already in chaos with withdrawal limits being imposed as people are desperate to get their money out of the banks.
A lot of people with money is Cyprus, particularly Russians, stand to lose a lot of money with the imposition of a levy that could range from 5% to 25%. While it initially appeared that this option would not have to be embraced - there seems to be little choice now. The Eurozone has offered Cyprus an ultimatum - to raise the required sum or leave the Eurozone. And they have few options other than the harsh levy. This situation also serves to stress that the Eurozone is far from entirely stable and is not yet out of troubled waters.
Cyprus, which earlier rejected a proposed bank levy on deposits to raise the money required, may now be forced to accept that same bank levy as options are quickly running out. The country's financial sector is already in chaos with withdrawal limits being imposed as people are desperate to get their money out of the banks.
A lot of people with money is Cyprus, particularly Russians, stand to lose a lot of money with the imposition of a levy that could range from 5% to 25%. While it initially appeared that this option would not have to be embraced - there seems to be little choice now. The Eurozone has offered Cyprus an ultimatum - to raise the required sum or leave the Eurozone. And they have few options other than the harsh levy. This situation also serves to stress that the Eurozone is far from entirely stable and is not yet out of troubled waters.
The Falling Cyprus Economy
http://www.nbcbayarea.com/news/national-international/NATL-Cyprus-Economy-on-the-Brink-Says-Its-Biggest-Bank-199467331.html
Cypriot officials met Thursday to discuss a plan of action for its largest bank, which is currently plummeting. As these discussions commenced, the Cyprus public rushed to ATMs to retrieve their money, even as bank workers did their best to protest.
The EU and IMF announced that Cyprus needs to raise 5.8 billion Euros by this week in order to receive a 10 billion Euro bailout from its European allies. If Cyprus is unable to raise these funds, its banks will be allowed to collapse and the nation will fall into financial crisis.
Here, the EU presents an interesting scenario. On one hand, the economic ties between European nations serve to create a more stable economic network. On the other hand, though, the fact that the EU has proposed an ultimatum serves to show that even allies have a price.
Cypriot officials met Thursday to discuss a plan of action for its largest bank, which is currently plummeting. As these discussions commenced, the Cyprus public rushed to ATMs to retrieve their money, even as bank workers did their best to protest.
The EU and IMF announced that Cyprus needs to raise 5.8 billion Euros by this week in order to receive a 10 billion Euro bailout from its European allies. If Cyprus is unable to raise these funds, its banks will be allowed to collapse and the nation will fall into financial crisis.
Here, the EU presents an interesting scenario. On one hand, the economic ties between European nations serve to create a more stable economic network. On the other hand, though, the fact that the EU has proposed an ultimatum serves to show that even allies have a price.
The Seven States Running out of Water
http://247wallst.com/2013/03/21/the-seven-states-running-out-of-water/
According to this article, the US is in one of the worst droughts since the 1980's. Over half of the lower 48 states were recorded to have abnormally dry conditions and are suffering from as least moderate drought. When the drought began in 2012, the worst conditions were those states in the corn belt; like Ohio, Indiana, and Michigan. This year the drought is continuing westward to states like Nebraska, Kansas, Colorado, and Oklahoma. The seven states that are in avery poor condition of water are; Oklahoma, Wyoming, South Dakota, Colorado, New Mexico, Kansas, and lastly Nebraska. This growing drought is causing feed shortages, which is driving up prices in livestock. The increasing price of livestock is also driving up the price of wheat. There is worry that this drought will have a large effect on the winter wheat crop, which is one of the largest crops grown in the US. This could cause huge profit losses for those effected. The drought is just one indicator of the important movement towards an awareness for renewable water.
According to this article, the US is in one of the worst droughts since the 1980's. Over half of the lower 48 states were recorded to have abnormally dry conditions and are suffering from as least moderate drought. When the drought began in 2012, the worst conditions were those states in the corn belt; like Ohio, Indiana, and Michigan. This year the drought is continuing westward to states like Nebraska, Kansas, Colorado, and Oklahoma. The seven states that are in avery poor condition of water are; Oklahoma, Wyoming, South Dakota, Colorado, New Mexico, Kansas, and lastly Nebraska. This growing drought is causing feed shortages, which is driving up prices in livestock. The increasing price of livestock is also driving up the price of wheat. There is worry that this drought will have a large effect on the winter wheat crop, which is one of the largest crops grown in the US. This could cause huge profit losses for those effected. The drought is just one indicator of the important movement towards an awareness for renewable water.
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