Holding Back Half the Nation

http://www.economist.com/news/briefing/21599763-womens-lowly-status-japanese-workplace-has-barely-improved-decades-and-country

This article discusses the current situation in Japan concerning women and work. Women's lowly status in the Japanese workplace has barely improved in decades, and the country suffers as a result.

Shinzo Abe wants to change the way women are viewed in the workforce by making sure they are represented. The article states, "In April 2013 he announced that allowing women to “shine” in the economy was the most important part of his “Abenomics” growth strategy. Raising female labour participation to the level of men’s could add 8m people to Japan’s shrinking workforce, potentially increasing GDP by as much as 15%, according to Goldman Sachs, an investment bank."

What do you think about this article and do you think the situation of women in the workplace in Japan will improve in the years to come? 

Turkish Economic Mess: How did it get to this point?

Turkey's economy is slowing down, its currency is record low against the dollar and many firms are facing great foreign debts. So how did Turkey get into this economic mess? Turkey has grown substantially over the last decade, after the global financial crisis. This rapid economic growth was field by cheap credit pouring into the country. For many years, Turkey enjoyed this foreign funded construction boom.  This came to an end when the U.S. Federal Reserve announced a scale-back in its stimulus program last summer. Suddenly, Turkey had less cash to invest. With the U.S. economy gaining more security after the crisis, investors began pulling their money out from emerging markets.

Turkey's growth slowed to around two percent and inflation rose to 7.4%. The country's currency slumped even further in January. This forced Turkey's central bank to make an economic decision, by doubling interest rates from 7.7 to 12 percent. This is a clear indication of the banks determination to prevent foreign capital outflows.

http://www.businessweek.com/articles/2014-02-03/bill-gates-is-right-corruption-isnt-the-biggest-aid-problem

When we talk about why capital doesn't always flow from countries that are capital rich to countries that are capital poor, its often cited that a lack of infrastructure especially regarding legal systems, property rights, and corruption in general are all reasons why. Corruption can be looked at as a tax on aid and governmental transactions in general that makes aid and government less efficient. Many politicians express that corruption in third world countries is enemy number one and a serious problem that needs to be tackled.

However, Bill Gates has extensive knowledge in the area of aid and capital investment in capital poor countries with the Bill and Melinda Gates Foundation and he is able to paint a more realistic picture of what exactly needs to happen to help these countries. A survey was done by the World Bank to see what the major obstacles facing companies around the world are. They were given 15 choices and were asked to rank them. Overall, corruption was 8th out of the 15 and in less than 1% of countries was corruption the top answer.

Corruption is still a major concern, but its merely a symptom of a problem. Its a symptom that stems from poor governance and weak institutions. Its important that as the article says, "civil society groups and donors should push for greater transparency, for reduced regulation and capricious bureaucracy, and for better policing."

IMF Reaches Deal to Provide Up to $18 Billion to Ukraine

http://online.wsj.com/news/articles/SB10001424052702304418404579464712032792176?mod=WSJ_economy_LeftTopHighlights&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304418404579464712032792176.html%3Fmod%3DWSJ_economy_LeftTopHighlights


As of recently, the IMF has decided to lend approximately $18 billion to Ukraine in order for their economy to stay afloat. Of course, however, there are certain criteria to be met. Some of these include cuts in spending, increases in taxes, and more regulations to avoid corruption. While Ukraine is starting to meet some of these criteria, officials in the US are trying to get a $1 billion guaranteed loan approve. The European Commission has also agreed to give Ukraine a loan provided that they can meet the measures put in place by the IMF.

Currently, Ukraine has a very large budget deficit and diminishing foreign reserves. In addition, their currency has sharply fallen since floating the exchange rate, putting the country in very difficult economic times. This crisis has been called the worst since breaking away from the Soviet Union. However, loans from the EU and the US would help greatly. The country is also expected to get about $27 billion in loans within the next two years.

It is possible that this will help Ukraine's economy greatly. However, meeting the requirements will be more difficult around now. Elections are in May, and the some of the population may not be willing to comply. Some opposition as already begun to surface, and it is common knowledge that many people don't like increases in taxes. We will see if Ukraine is able to comply with the given conditions. If they can, the $27 billion will help them greatly.

10 fastest growing cities

http://money.cnn.com/gallery/real_estate/2014/03/27/fastest-growing-cities/index.html?iid=SF_E_River

This article lists the top 10 fastest growing cities in the US, according to data from the Census Bureau, between July 2012 and July 2013. Austin, Texas is rated 1^st with a 2.6% gain in growth due to its thriving university town - University of Texas has 50,000-plus enrollment -  and jobs. Falling to 4.7% rate unemployment, Austin has the lowest unemployment rate of any metro area with a population of one million or more. Houston, TX is second due to jobs in its energy sector and affordable homes. Jobs and hiring is a major indicator for the growth of each of the listed growing cities. The unemployment rate has dropped from 2012 in each of these cities. There are other indicators for growth in major cities, but it seems that increasing job opportunities and lowing the unemployment rate is the stem of growth in the current economic state that the US is in after the great recession. 

Flight 370 Could Poorly Impact Malaysian Economy

In case you do not know the details behind the mysterious disappearance of Flight 370, an airplane that started from Kuala Lumpur, Malaysia, and was supposed to land in Beijing, China. However, air traffic control lost connection with the flight, and it mysteriously disappeared, with most people believing it crashed in the Indian Ocean in between China, Indonesia, and Australia.

Many people have criticized the way the Malaysian government has handled the situation, due to revealing information very slowly, and sometimes falsely, as well as being defensive when they should've been accommodating. In addition, there were two passengers with stolen passports on Flight 370, and with the confusion of the plane's trajectory, the question now is how much has this crisis influenced the Malaysian economy.

According to a survey done by WSJ Asia, Flight 370 has influenced 77% of people on whether or not they'll visit Malaysia, with 18% saying they weren't influenced, and 5% saying they were not sure. This could be a huge blow to Malaysia, because tourism is the 6th largest contributor to the economy. The country was planning on increasing tourist numbers from 25.7 to 28 million during 2014, including a growth of Australian tourism from 500,000 to 620,000. The highly anticipated "Visit Malaysia 2014" has been cancelled by the country as well.

Tourism contributes approximately $15 billion (USD) to the country's gross domestic product, approximately 5.3% of the country's total GDP, improving from 4.7% in 2011. Tourism also provided 16.4 % of Malaysia's employment in 2012. With the effects of the disappearance of Flight 370, it could devastatingly not only impact Malaysia Airlines, but the country itself.

With less tourism, Malaysian companies would make less profit, and more people would become unemployed. Companies could be seen relocating to other countries where tourism thrives more. To make up for less profit, companies that stay in Malaysia would have to raise prices, which lowers the value of the dollar, causing inflation. Needless to say, a recession could be in the works in Malaysia, and it all started with the disappearance of Flight 370.

Unemployment was only 3.4% in Malaysia in 2012, which is low by global standards. However, this number has risen in recent months, due to the current administration not creating any "difficult, dirty, or dangerous" jobs in sectors like construction safe or more profitable, but instead importing workers to do the jobs instead. Flight 370 might exponentially increase unemployment for Malaysia in the next coming months, too. 

http://qz.com/192630/the-missing-malaysia-airlines-flight-threatens-a-crucial-engine-of-the-countrys-economy/

http://www.news.com.au/travel/travel-updates/how-the-fallout-from-missing-malaysia-airlines-flight-mh370-will-impact-on-the-whole-country/story-fnizu68q-1226866415896

10 Fastest Growing Citites

http://money.cnn.com/gallery/real_estate/2014/03/27/fastest-growing-cities/index.html?iid=SF_E_River

This is a fun article that goes through cities that have had a particular population growth and other variables that have boosted their growth recently. It gives background on the cities, their recent rises and falls within the cities, and future economic prospects. Its an interesting take on the growing cities here in America that have potential for new and innovative businesses.

A Long and Winding Road

http://www.economist.com/news/finance-and-economics/21599394-world-needs-more-infrastructure-how-will-it-pay-it-long-and-winding

The world needs more infrastructure now more then it ever did but the ability to pay for it is becoming harder and harder.  Investments in infrastructure are vital to our economy and yet financing Infrastructure is falling out of favor with the banks.  European lenders who used to invest in infrastructure are now steering away from them. The only banks willing to invest anymore are the Japanese banks which have stronger balance sheets and willing to put money to work.

Banks are not only less willing to give out long term loans they are less willing to take on as much risk as they previously could.  Before they would take on about 90% of the construction cost now they are only taking on about 70% causing the builders to come up with more money slowing the whole process down.

It is said to cost about 57 trillion dollars to build and maintain the world's roads, power plants and pipelines between now and 2030.  Infrastructure spending right now is currently at 2.7 trillion a year when really 3.7 trillion is needed.  This is creating a need and opportunity for new investors willing to take on long term loans in infrastructure.

The Downfall of Citigroup Bank and Others
http://www.economist.com/news/finance-and-economics/21599788-handful-banks-are-caught-short-feds-annual-stress-test-harsh-light

On March 26th the Federal Reserve released the results of its “comprehensive capital analysis and review.” This review highlights which of the country’s 30 largest banks potentially could increase their dividends and share buybacks. How well banks are doing financially is based off how quickly their return on capital is. Many banks were granted the go ahead of their finical plans. Citigroup and the American operations of HSBC, RBS Citizens and Santander plans were rejected by the federal reserve. It was a giant disappointment for share holders of Citi. According to the federal reserve Citi is unable to accurately evaluate risk and has poor management. This caused shares to fall 6% in after-market trading. Shortly after chief executive Michael Corbat stated, “We are deeply disappointed." Mr. Corbat was named chief executive after Citi had their first finical failure and may easily lose his title after this recent second financial failure.

The "comprehensive capital analysis and review " is made up of tests conducted by the federal reserve to determine financial health of banks. The first part of the test is based on numbers drawn from a hypothetical crisis such as a rapid drop in the stock-market, a drop in housing prices, and a sharp increase in unemployment. New parts of the test focus closely on operations of the banks. How well a bank is able to examine its own risk is highly correlated on how well the bank does financially. Another major part of the evaluation process is revenue projections. This data is important for financial planning but is squishy because it doesn't always mean anything. The results from the federal reserve evaluations usually have a large impact on what the bank needs to accomplish and what to pursue next.

Over Time Rules and Regulations Hurting Start Ups??

http://smallbusiness.foxbusiness.com/starting-a-business/2014/03/24/obama-overtime-law-could-mean-no-more-employees-for-startups/

The big issue in this instance is government regulation going to hurt small business? I would argue the answer is more often yes than no. In this example, new labor laws make it more difficult to hire employees without paying them overtime, or one may have to hire more employees all together. Is this fair? The people who are taking all the risk in the economy are told how to do what they are doing, and no this is not fair at all.

Entrepreneurs should not only get every advantage possible because they are single handledly investing in the US economy, but they usually have a problem being told how to run their own business. Main point, do not regulate labor too much, it hurts the people who support the american dream.

Online economy?

http://www.marketwatch.com/story/mirage-of-the-new-economy-2014-03-26?link=MW_home_latest_news



Online gaming and social network have been the major sources of the economy for china and numbers of countries. However it is true that productivity might not be achieved via gaming or social networking. They do not "produce" anything. However it is a great factor of boosting benefits or in general, for profit, since internet has been dominant and not only computers, but even mobiles have internet. Social networks such as Facebook has been phenomenal over the several years. However relying on these online economy is probably not a very wise idea, as they are somewhat a fad. For example, MSN was widely used before. Now, hotmail has ended its services. Since it may not be a permanent, or so to speak, a steady seller, reliance on online gaming and social network businesses is risky.

Markets: Crimea and punishment

It has been confirmed that equity markets are suffering their second Ukraine-related sell off within three trading days, as the western powers react to Russia's occupation of the Crimean peninsula. Also as a result, European stock-markets have fallen by 2%. There also has been a rise in traditional purchases of safe haven assets such as gold and treasury binds, indicating that consumer confidence is falling.

It appears that Russia is using the threat to minority populations as an excuse for military intervention in its surrounding smaller neighboring countries. As of this point, it seems highly unlikely that the west will respond to Russia's military action with force. Rather than a military based response, the west may pose economic sanctions as an alternative response to Russia's actions. This may be why the Russia stock market went down by more than 11% at the time that this article was published.

The Russians also have the potential to economically retaliate by hitting the value of western investments. This could include BP's holding in Rosneft, which has reported to have dropped in value by 1 billion overnight.

Investors have learned over the past 20 years that geopolitical storms tend to blow over quickly. There however are two speculative reasons as to why this case involving Russia may be different than others in the past. The first is that, western powers may have accepted that there is not much they can do to evict Russia from Crimea, however their attitude toward the Putin regime has indeed changed. Putin can be persuaded to co-operate with the west. Relations may be hostile for some time, similar to how they were in 1989. There still is a strong possibility for relations with Russia to improve, nothing is set in stone. Secondly, there are many other nations neighboring Russia that have a Russian minority as a result of previous Soviet occupation. This is the second Russian occupation in recent years (Georgia in 2008 being the first). This will bring nervousness to Baltic countries regarding the extension of Putin's doctrine, which will inevitability bring economic consequences.    


http://www.economist.com/blogs/buttonwood/2014/03/markets











 

         

Ukraine Crisis Said to Have Minimal Economic Impact

Jens Weidmann, a European Central Bank Governing Council member and head of Germany's Bundesbank, stated that the crisis in Ukraine, specifically Crimea, has little impact on the Eurozone and would not be anything that the Eurozone could not handle. He goes on to say that even Russia has minimal impact on the Eurozone because Russia accounts for very little trade with the Eurozone and will not have much of an effect. I do not believe that this will be as manageable as Mr. Weidmann thinks because Russia will have effects on other major countries that will in turn have an effect on the Eurozone. Although these sanctions are potentially a good way to get Russia to pull back on Ukraine, I think that Russia is ready to take the implications in order to keep Crimea and show their dominance over the Eastern European countries. Because of this, Russia's economy will continue to worsen and I believe this will hurt the Eurozone more than Mr. Weidmann and other optimists think it will. 

http://online.wsj.com/news/articles/SB10001424052702303949704579461522664866960?mod=WSJ_World_MIDDLENews&mg=reno64-wsj

U.S. Quarterly Trade Deficit

http://www.nytimes.com/2014/03/20/business/us-current-account-deficit-is-smallest-in-14-years.html?ref=economy

This article discuses how the trade deficit has fallen from 81.1 billion to 96.4 billion. This smaller trade deficit shows that U.S. companies are producing more to fit the demand domestically and overseas. Exports reached 405.4 billion because of increased overseas sales of petroleum and agricultural products. We also have received about 206.1 billion from overseas because of investments. Payments overseas were about 137.8 billion. Both of these factors allowed for the income surplus in the U.S. to be 64.4 billion. There are two reasons we saw a decrease in this gap. One reason was because of the production of oil and gas in the U.S. The second reason is because low interest rates have decreased payments to foreigners that have treasury bonds in the U.S. and the payments from investments that come from overseas has increased and this has caused the nations investment surplus.

Warily Leading Japan’s Nuclear Reawakening

Shinzo Abe is the Prime Minister of Japan and he has been campaigning around with the intention of reviving Japan’s nuclear capabilities.  However, before the government can proceed, they first need the approval of all of the surrounding towns affected by the 2011 crisis. Three years have passed since the Fukushima accident. In the power plant, three of the six nuclear reactors melted down and resulted in disastrous consequences. Although local journalists are optimistic that he will be able to gain the favor of the residents. The community around Fukushima has been enthusiastically supporting the return of nuclear power. Even though the clean up from the recent meltdown is estimated to take decades. The incident has resulted in a lower total factor productivity and a steep loss of capital and labor. These factors contributed to a sharp decline in total output. Because jobs have become scarcer, the local communities have fallen on hard times and are welcoming the potential jobs that will come with the plant’s reawakening.

http://www.nytimes.com/2014/03/21/world/asia/warily-leading-japans-nuclear-reawakening.html?ref=world

U.S and Russia Sanctions tit for tat Over Crimea Crisis

Mark Landler of the New York Times wrote the article I read on March 20^th.  In response to President Obama’s threat by posing economic sanctions on Russia, President Vladamir Putin responded by preventing nine high ranking American officials including speaker of the house John Boenher and Senator John McCain from entering the country. This comes at an inopportune time for the recent Olympic host.  Russia had just recently spotted a fifty billion dollar tab for the Winter Olympics. Obviously they were under the impression that their investment would be returned through a stimulated economy and through newly inspired tourists, but I find it hard to believe that Russia will enjoy either of the two. These sanctions are going to severely limit any potential economic growth that the aggressor was looking forward to.

http://www.nytimes.com/2014/03/21/us/politics/us-expanding-sanctions-against-russia-over-ukraine.html?ref=business&_r=0

Arizona may allow Tesla Sales

http://money.cnn.com/2014/03/23/autos/arizona-tesla-gigafactory/index.html?iid=SF_BN_LN

Many states have passed laws to not allow Tesla electric cars to be sold with many dealerships not wanting them to be around.  Arizona is bypassing the dealerships and going straight for the consumers to sell this new electric car.  They say that the location for a factory in Arizona would bring in around 6,500 jobs to the area, although the model is illegal in other states, could Tesla be the next big change in the car industry?

Stimulus: Not-Political, Not Efficient

~http://blogs.wsj.com/economics/2014/03/20/stimulus-in-2009-not-politically-driven-or-particularly-efficient/
~http://www.brookings.edu/about/projects/bpea/papers/2014/arra-political-economy-discretionary-spending#recent/

A postmortem on the 2009 Stimulus bill, which dispensed nearly $800 billion into the domestic economy, was released by researchers from economists Christopher Boone of Columbia University, Arindrajit Dube of the University of Massachusetts Amherst and Ethan Kaplan of the University of Maryland. 

They found that, thankfully, the money was not dispensed in any politically-advantageous way for the Democrats, then the majority party in the House of Representatives.  Perhaps more worrisome was the inefficiency of where the money was spent: “There was no significant or consistent relationship between the amount spent and a number of different measures of local unemployment, including the unemployment rate in January 2009, the change in the unemployment rate between 2007 and 2009.” Furthermore, “We find no relationship between extent of award and measures of the severity of the downturn in the local economy, or the pace at which funds were spent,” they write. “We do find more funds flowing to areas with more economic activity and a greater incidence of poverty.” Ironically, “The good news is that political constraints appear to have made fiscal policy more politically neutral; the bad news is those constraints may have also reduced the counter-cyclical efficacy.”

If you want, you can watch the brookings video to learn more about the study. Tell me what you think about the results you found. Are you surprised?

EU still stuck in the crisis

http://online.wsj.com/news/articles/SB10001424052702304026304579451554163000382?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304026304579451554163000382.html 

Recently Vladimir Putin, the president of Russia has decided to annex Crimea and it has been phenomenal to the EU, since this is a double-edge situation as of now. Either they deal with Russia, extremely aggressive at the moment. However the alternative still is costly as well, which is helping Ukraine with putting effort to block off Moscow. At the moment, the EU sanctioned 12 more appellations from access to visas and assets, in order to shake off Putin's influence. For now, the EU is pressing onto the alternative of supporting Ukraine and making it as a "success of the Europe". The cost will not be cheap, but this would make the country substantially independent from Russia, not only economically but in political perspective as well.

The higher interest rates are coming

http://www.washingtonpost.com/business/us-stock-market-looks-ready-to-inch-up/2014/03/19/7d65d90e-af69-11e3-b8b3-44b1d1cd4c1f_story.html


      The investors took messages away from the Federal Reserve on Wednesday that higher interest rates are coming and sooner than you think.
      As we already discussed in class, the higher interest rate will reduce the investment because it will raise the cost of company borrowing money. It will cut the consumption also. According to the news from WashingtonPost, "The Dow Jones industrial average lost 114.02 points, or 0.7 percent, to 16,222.17. The Standard & Poor’s 500 index dropped 11.48 points, or 0.6 percent, to 1,860.77 and the Nasdaq composite lost 25.71 points, or 0.6 percent, to 4,307.60."
      At the meanwhile, the higher interest rates also suggest the economy is getting better. The Fed is going to cut bond purchase from $65 billion to $55 billion. If the Fed keeps the interest rates low for a long time, it will cause overheat in U.S. economy and inflation.

Banks Urge Young Analysts to Do the Unthinkable: Take the Weekends Off

Lately, various banks on Wall Street have urged their young employees and interns to take more weekend days off each month as part of a new policy designed to relieve some of the stresses of the hectic Wall Street business world. This policy encourages the younger workers to endure their busy work lives when they first enter the job market rather than become overwhelmed to the point of stress-induced insanity. This sudden concern for the well-being (rather than just the production) of employees reflects an increasing appreciation for the morale of the employees, something that has not always been appreciated in the workplace. In turn, happier and less stressed employees are expected to be more efficient when they do work; a reduction of stress is simply another form of payment that is much cheaper for the business than a cash bonus.

"Sonia Marciano, a professor at the Stern School of Business at New York University, said her students expected more than big bonuses these days.
'My students, men and women, talk much more openly about an expectation of work-life balance,' said Ms. Marciano, who has been teaching for 20 years. 'It’s a shift that seems pretty real and substantial.'”

Candy Crush mania coming to Wall Street

http://money.cnn.com/2014/03/23/investing/king-candy-crush-ipo/index.html?iid=Lead

The producer of Candy Crush Saga, King Digital Entertainment, is going to sell 22 milion shares at $21-$23 per share, making its market value about 7$ billion. Some of King’s competitors such as Activision and Zynga, have a market value of $15 billion and $4 billion consecutively. Last year, King had an avenue of $1.9 billion and profit of $568 million. Many are concerned that King’s profit margins mostly came from only one game- Candy Crush Saga; but according to Tim Keating, chief executive in making pre-IPO investments, King has strong profit margins and a huge 1000% revenue growth in 2013.

Your workplace health insurance costs $1,200 more

Health premiums for workers have been increasing 19% on average since 2011, despite a slowing in the overall growth for health care spending, while company shares of premiums have increased 14% since 2011.  In addition, deductibles, co-pays, and co-insurance costs have been rising quickly.

One reason for this is a desire for more awareness by workers for the true cost of health care.  Employers believe that by having employees pay more of the cost themselves, they’d be more conservative and cost-conscious in making appointments and getting tests and procedures.

Another reason is a “Cadillac tax” coming in 2018 that would cause companies with health plans over certain designated amounts to pay a 40% tax on the excess of those amounts.  Increasing out of pocket expenses is a way for companies to decrease amounts calculated in that tax, as premiums are counted, out of pocket expenses are not counted.

Read article here: http://economy.money.cnn.com/2014/03/06/workplace-health-insurance/?iid=SF_E_River