Something terrible seems to be happening to the Chinese job market

Quanton Data shows that the number of job posting from large Chinese company is decreasing significantly almost all the sectors since November 15. Moreover, in January, China factory activity hit a three-year low. I'm curious that what bring on this phenomena. Behind this phenomena, what really happened in Chinese economy and how will it affect the economy in the future?


http://www.businessinsider.com/china-job-postings-declining-since-november-2016-2

Uber Drivers Up Against the App

Hundreds of Uber drivers in New York met in a park on Super Bowl Sunday to protest a 15% decrease in driving rates. Uber has been hiring drivers at a rate of 30,000 per week and many drivers feel neglected, even used.  The drivers argue that such steady growth would not have been possible without them: They, after all, supply the cars that keep the network liquid.  Uber is also quick to "deactivate" drivers, for little more than a subpar driver review because of the high supply of willing drivers.  This is not the first time Uber cut its prices.  in 2014, Uber cut driving rates by 20% and saw an increase in commission.  The new decrease along with other various neglect was the final straw that set off the rebellion.  Drivers have reached the point where they are starting to struggle to making a living to support their families.  Uber did not respond to the crisis well seeming to act as if it is all a joke.  The drivers are continuing to do everything they can to gain respect. Lawsuits have been filed against Uber, which seek to make the drivers full employees. If the suits are successful, they could cripple Uber’s business model.  Some drivers are even trying to create a rival app that they hope will be successful.  As of now nothing has been resolved and drivers claim that they have more strikes are being planned.


http://www.nytimes.com/2016/02/21/nyregion/uber-drivers-up-against-the-app.html?ref=technology

Brenna Thumler recently published an article in The New York Times entitled; "The Rich Can Learn From The Poor About How To Be More Frugal". The idea, blatantly conveyed in it's title, persuaded readers that they are too frequently concerned with the percentage of savings rather than the actual dollar amounts. This was explained through an example from acclaimed behavioral economist, Daniel Kahneman. Most consumers, when he presented the situation, would choose to save a larger percentage from a purchase of lower dollar amount than the inverse situation. However, he did find that those of less wealth do frequently target their savings based on dollar amount rather than percent amount. My one question for this pertained to whether that is because they truly have acquired the cognitive ability of frugality or whether that is because they simply make continually smaller purchases relative to price? Regardless, this, if applied could lead to an increase in domestic saving and help the overall economy

http://www.nytimes.com/2016/02/14/upshot/the-rich-can-learn-from-the-poor-in-how-to-be-frugal.html?ref=economy

Red-ink China; Some ways in which the Chinese economy might evolve

China scared economists when it was released that their debt has risen to over $500 billion. Not all of the "new debt" was new, some represented a move to local currency loans which helps reduce foreign-currency risk. Total debt in China is at 282% of GDP. This article discusses what the debt in China means for China and how they should adjust their policies. 

Eventually such high debt will need to be deleveraged, which will decrease demand growth and slow GDP growth. But, with monetary and fiscal policy like encouraging consumption and investing among “non-corporates”, and pushing loans on households. These changes are likely to begin QE and Zero interest rates, which would decrease the yuan. However the author of the article believes that this wouldn’t be a negative, since history has made it apparent that “demand-deficient, deleveraging economies depreciate their currencies and rely on external demand to support growth”, which means China would look to other countries to help stimulate their economy. However, the large trade surplus in China means that even with a large depreciation, demand wouldn’t increase by much, since importing would be more expensive.

However if China does not depreciate the yuan, the they do not “pressure deleveraging corporations”, or “squeeze Chinese consumers” since the value of the yuan wouldn't drop. If they don’t depreciate they will be forced to impose strict controls on capital, trade and investment, to maintain their reserves but this would equally hurt their GDP and international relationships. The Chinese government could also choose to provide aid with private debts.

China stands on unsure footing. There doesn’t seem to be one position or policy they could take that would end up being a positive for the country all across the spectrum. The author of this article argues that it is possible they find a policy “sweet spot”, but the likelihood that any of the policy options goes off without a hitch is slim to none. China will have to give in, in at least one area to help improve their economy in the long run. I believe they should just support the depreciation of the yuan, even if it will hurt their pride it seems like the far easier option than taking on citizen debt, corporate debt or imposing controls on capital, investment or trade. 

Red-ink China

Seattle's $15 Minimum Wage: Jobs Down, Unemployment Up. This Isn't Working, Is It?

Seattle brought in a staged rise to $15 an hour minimum wage, not really considering the downsides.  After being in this class for a few weeks, we could already predict the possible outcomes associated with this change.  Raising the wage we have learned leads to structural unemployment because there is a mismatch in the skills that workers in the economy can offer and the skills demanded of workers by employers (skills gap).  Thus, when there is a higher minimum wage, employers will only want to hire workers with a higher skill set leaving all the workers that don't match the higher skilled wages of $15 unemployed who may have been able to get hired when there was a lower minimum wage having lower skill sets.  The author of this article communicated these foreseen events.  However, he did disclose that by no means he expected the whole economy in Seattle to crash, but as it did, raise unemployment rates.  Since the $15 minimum wage raise went into effect, in only 11 months, the number of people employed in Seattle has dropped by almost  10,000.

http://www.forbes.com/sites/timworstall/2016/02/19/seattles-15-minimum-wage-jobs-down-unemployment-up-this-isnt-working-is-it/#6b6dfb0a3712

Wall St. falls with oil; CPI data stokes rate hike talk

I found this article to be interesting because i like to follow the price of oil and even though the price has been going up and down day to day the overall trend is that oil prices have been decreasing. Most Americans are loving the low oil prices because they are filling up there vehicles for less. companies are also enjoying low prices cause this allows them to keep there prices the same but getting more profit because the cost of transporting the good has decreased. How low will the stock market and oil prices fall until the government steps in to help put so that we don't feel the economic stress to much.

link: http://finance.yahoo.com/news/futures-lower-oil-rally-falters-123423527.html   

A Saudi Oil Accord: Another Doha merry-go-round

This article talks about the current oil situation that has caused the prices to be on a decline since a while now and how the oil producing countries have been trying to find solutions in increase the price of oil.This article translates how two of the biggest oil producing countries Saudi Arabia and Russia have made a pact to instantaneously seize oil productions at the current January levels. Explaining this through the model of demand and supply translates as a decrease in the supply of oil in the global market which in turn will cause the oil prices to rise. A decrease in supply of oil production accompanied by unchanged demand causes the price to rise. The article also highlights the importance for other oil producing countries to join in this pact so that there can be a substantial rise in price. Although there have been political tensions between both the countries but this deal is helpful to both these oil dependent countries. One downside of this agreement that the article talks about is that currently countries like saudi arabia are pumping oil at record levels and a stop right now although is positive but will do less in hiking the price up as there is oversupply of oil

Link: http://www.economist.com/news/finance-and-economics/21693244-potential-freeze-oil-output-will-do-little-buoy-prices-another-doha

Walmart just signaled a terrifying new reality for American retail

Walmart recently announced that they do not expect a significant increase in sales for the rest of the fiscal year. In October, they announced an expected 3-4% growth in sales for every year for the next three years. Walmart's CFO Brett Biggs stated that this could be caused by the number of store closures and the impact of a stronger US dollar. Over 250+ Walmart stores closed in January which resulted in thousands of employees being laid off. Walmart's issues do not have a good effect on their competitors either because of the quickly changing retail market. Similarly, Macy's announced they will be closing around 60 stores in early 2016. The retail business has shifted from in-store shopping to more online business from companies such as Amazon. This past week, Walmart announced a 12% increase in online sales over the past year. As a result, they are trying to obtain a larger share of the online retail market and will put much effort into increasing online sales further. This increase of attention to online shopping may result to more store closures in the future.


http://www.businessinsider.com/walmarts-struggles-signal-retail-shift-2016-2

Venezuela president raises fuel price by 6,000% and devalues bolivar to tackle crisis

Nicolas Maduro, the President of Venezuela, announced to the public that for the first time in 20 years the price of gasoline will increase approximately 6,000% to about 6 bolivars per gallon. He says this is a necessary action in order to fund social programs and in order to increase the minimum wage. Even with these increases, their price of oil is still considerably low compared to the global standard. However, according to analyst Luis Leon, these price increases aren't drastic enough and because of the hyperinflation within the country of Venezuela, the rise in oil price will make little to no differences. 

I found this article interesting because it relates to the topic of inflation we just finished discussing in class. The fact that they can increase their prices of oil that much, but make little to no difference in the actual situation of the country goes to show how imperative it is that inflation is managed and kept to a steady state. It was also interesting because it reminded me of the formula to compute government expenditure in our country(Tax-Expenditure), but this is different in socialist countries because the added profits from the risen gasoline prices more directly add to their government's budget than it would here in the U.S.

URL: http://www.theguardian.com/world/2016/feb/18/venezuela-president-raises-fuel-price-by-1300-and-devalues-bolivar-to-tackle-crisis

Cruz's Tax Plans Seen Aiding Wealthy, Costing $8.6 Trillion

Presidential candidate, Ted Cruz's new tax code proposition has a vision for lower overall corporate taxes, and eradication of tax brackets with a preference for a value added tax, which will decrease the taxes for the very rich and slightly increase taxes for America's lowest class taxpayers. Many economists believe that his plan will create a larger government deficit and deflate the economy in the long run. Tax revenue under his proposed system will be cut by about $12.2 trillion.

Corporate tax code will be overhauled and replaced with a flat corporate tax, with 35% as the top rate and a 16% value added tax on businesses. He also wants nonprofits and government organizations to lose tax exemption. To transition into this system, Cruz wants to apply a 10% tax on profit accumulated by foreign subsidiaries of US companies. Cruz emphasized that he is not proposing a value added tax on consumers but rather a value added tax on business profit.

On the income tax front, Cruz plans to collapse the income tax brackets into one flat 10% tax, about 1/4 of the current percentages.  He also looks to decrease medicare funding and social security benefits, emphasizing personal fiscal responsibility. His plan would not tax any savings less than $25000 which accounts for most tax payers, so savings would no longer be taxed. After his plan, the top fifth of tax payers will see an 11.3% rise in after tax income, The middle would get on average 3.2% and the bottom 20% will see only a .4% increase.

Link to Article

Central banks to blame for crisis?

Robert McTeer, former Dallas Federal Reserve President, believes that the central bank's aggressive monetary policies are to blame for today's economic struggles. McTeer highly criticized the Fed's ultra-loose monetary policy, noting that interest rates have been too low for too long. Many other economists agree with McTeer's views and believe that the FED waited too long to begin tightening things up. The cheap dollars flooding the market has only jaded to the downturn and has made the market "addicted to the liquidity." McTeer also believes that bad luck is partly to blame for our problems. China's slowing economy, which upset many of the global markets, prohibited the FED from tightening up. This delay also allowed other central banks to put in place negative interest rates, a policy that McTeer strongly disagrees with. Finally, McTeer believes that if the FED tries to implement negative rates, it would take years to "re-work" the system. It will be interesting to hear other viewpoints on this topic, as well as the Federal Reserve's response to this problem.

http://www.cnbc.com/2016/02/13/former-dallas-fed-president-calls-out-central-banks.html

Fed’s Kashkari: To Have ‘Actionable Plan’ for Breaking Up Big Banks by Year’s End

Minneapolis Federal Reserve Bank President Neel Kashkari, who on Tuesday pressed for a greater effort in breaking up big U.S. banks, said he hopes to garner input for a plan and submit it to the public by the end of the year.

Mr. Kashkari, in an interview Wednesday on CNBC, acknowledged progress in regulating big banks since the 2008 financial crisis, but questioned whether regulators would have used those new powers to deal with that crisis.

“If we had the tools then that we have now, would we have actually used them? Would we have actually haircut bondholders in a stressed economic environment, or a crisis environment? To me, the answer is no way. We never would have done it,” he said. Mr. Kashkari, a former Treasury Department official, reiterated his call made Tuesday at the Brookings Institution for policy options on how to break large U.S. banks into “smaller, less connected, less important entities.”

In his appearance on CNBC, Mr. Kashkari said various proposals floated over the years to further deal with big banks haven't been given “serious consideration, because they’re transformational. And that can scare people.”

Mr. Kashkari told the financial network that he would like to bring those experts together to debate their proposals. By end of the year the Minneapolis Fed would “use our judgment, put all of that together, and present to the public an actionable plan that we think can really address this once and for all,” he said.

Mr. Kashkari said smaller and midsize banks would be able to fill any void created by breaking up the larger banking institutions.

This is an interesting article because he doesn't mention much or anything about why he wants to breakup big banks. This is a major plan with very little insight on to what he hopes to achieve at the end of the year other to break them up. Who decides what banks will be split up, why will they be split up? It will be an interesting subject to follow as we go through the year on if we get any updates, or if this will be pure speculation as it has been over the pst few years?

Do Millennials Save?

This article discusses the spending habit of millennials and addresses the notion that millennial are over spenders and under savers.  Many articles regarding millennial spending habits are anecdotal, and not using data to backup their claim about millennials.  This particular article looks at millennials in Britain, and finds that they are actually saving just as much as older generations.  In fact, many millennials aren't to blame for their lack of wealth relative to their parents or grandparents generations.  The reality is relative wealth and financial stability isn't so great for them right now.  Many older generations can be critical of younger generations because they do things differently from  "the old ways" of doing things, but that doesn't mean young peoples decisions are necessarily going to leave them worse off.  For full article click below.




Click Here

Negative rate talk 'premature,' economy fine: Dudley

This is an interesting article about the recent talks of negative interest rates. Some say that it is premature and we should leave the interest rate unchanged. Others fear that we might be heading into a recession and want the fed to intervene. Key components of the U.S. economy remain healthy, and recent speculation about the Federal Reserve adopting negative interest rates is "extraordinarily premature," a top Fed official said Friday, amid mounting concerns about slowing growth. http://www.cnbc.com/2016/02/12/feds-dudley-key-us-sectors-in-good-shape-financial-system-clearly-stronger.html

Cruz tax plan would cost $8.6 trillion, second only to Trump

According to the report, the Republican Presidential candidate Ted Cruz plans to cut tax at least $8.6 trillion over a decade. He plans to impose a flat 10% tax on personal income and cut the corporate tax rate. According to the analysis, this would become the second most expensive tax proposal in the GOP presidential field.
As what we talked about in class, the big cut of tax could increase the deficit, causing the decreasing of national saving, increasing of real interest rate, and decreasing the level of investment. Also, if the tax decrease, government has to print money to fill the requirement of government spending, there would be potential risk of hyperinflation.

Her's the link:
https://www.washingtonpost.com/news/powerpost/wp/2016/02/16/cruz-tax-plan-would-cost-8-6-trillion-second-only-to-trump/

Oil prices give up gains as hopes of a big deal fade

Oil prices had soared 5% Tuesday, but gave up all those gains as hopes of a deal to cut production fizzled. Oil ministers from Saudi Arabia and Russia met Tuesday and agreed to a tentative deal to freeze production -- a small step that won't meaningfully impact the massive supply glut. Also participating in the meeting were representatives from Qatar and Venezuela, according to a source who attended the meeting. After trading above $31, the price of oil fell back below $30. Though there was little progress, some observers were still hopeful that key players were at least talking. Officials stressed that discussions would continue.

"We will start intensive communication almost straight away with other major producers, OPEC, non-OPEC, including Iran and Iraq," said the Qatari minister of energy and industry. Saudi Arabia's oil minister said: "We don't want significant gyrations in prices. We want to meet demand and we want a stable oil price." However, the Saudi minister added: "We don't want reduction in supply." World markets are still awash with oil because OPEC and Russia are pumping out barrels at a record rate, and U.S. shale production is falling only very slowly. At the same time, demand is faltering due to weaker global economic growth. OPEC members such as Nigeria and Venezuela have been leading the calls for a coordinated production cut to boost prices, but Saudi Arabia and other low cost producers in the Gulf have thus far refused to play ball. They worry that without a broader agreement including producers outside the cartel, and Russia in particular, OPEC would simply surrender more of its shrinking market share. Several rounds of exploratory talks have taken place in the past few months, fueling oil price volatility as traders bid up prices in the hope of a deal only to sell again when the effort falls flat. Tuesday's meeting brings together the global oil market's top two exporters. But there's no guarantee of a deal. Still, investors appear to be betting that the flurry of diplomacy is making progress -- oil prices jumped 12% alone on Friday, just a day after they plummeted to $26.05, the lowest level since May 2003.

Online article can be found at: http://money.cnn.com/2016/02/16/news/economy/oil-price-saudi-russia/index.html?iid=SF_LN

The Bank of Japan's negative interest rates came into effect on February 15. This new policy has truly highlighted the Asian nation's lack of option when it comes to encouraging economic growth. Japan has been notorious for monetary easing since Shinzo Abe was voted into power in 2012. Critics of this new policy say that the monetary easing will not be as effective as desired. Japanese markets have become even more unstable as international markets have dipped this year. The 10-year Japanese government bond rose this week to 0.09% This shows how investors are unable to estimate the fair value of these bonds. In addition, many of the Japanese banking systems are unable to deal with negative interest rates.

http://www.theguardian.com/business/2016/feb/16/bank-of-japan-launches-negative-interest-rates-yen-markets

Struggling Bank Stocks

While people may be alarmed by the struggling energy sector as oil hovers around its historically low prices, the financial sector is being overlooked as a market that has been struggling. Using something called the Financial Select Sector SPDR Trust, we see that the financial sector has in a bit of a hole. The exchange-traded fund tracks the financial stocks that are included in the S&P 500, and it tracked a 19% drop over the past year. Just this year, the average financial stock in the S&P 500 is down 17%. This numbers can be especially worrisome as the financial sector comprises 15% of the total value for the S&P 500.

Global financial instability is a big proponent of rising financial distress in the United States. Bank stocks are falling hard as a result of this, leaving investors worrying if we're going to slip up from our steady recovery from 2008. 2008 showed us that the losses incurred in the financial sector are not merely contained in those markets, but the effects permeate the larger financial health of the nation as a whole.

However, analysts still have confidence in the sector to bounce back, as there is still an estimate for financial sector profits to reach 5.7% in 2016, and an increase in the average financial stock of 31% within 18 months.

Link for the curious: http://www.usatoday.com/story/money/markets/2016/02/15/bank-stocks-take-investors-cleaners/80256146/

Consumer Spending is on the up?

After having a decline in consumption in by .3 percent in December, January has posed an increase in consumption of .6 percent. Paul Ashworth stated “The markets may have decided that the U.S. is headed for recession, but obviously no one told U.S. consumers,” which is undoubtedly a good thing since the largest component of our GDP is consumption. However, the article hints at quite a bit of future problems. Since global markets are starting to face turmoil, the U.S. dollar is quite strong at the moment leading to less exportation. Furthermore, the article suggest that investment is low stating “weak reports on inventories, factory orders and construction spending suggest the economy grew at about a 0.2 percent rate in the last three months of 2015.” In addition, the article also points out that the consumer sentiment index has fallen to 90.7. This indicates that consumers are actually becoming aware of the current economic predicament and possibly not going to spend at the same level as seen in January. Finally, since price of imports have been dropping the past 17 of the last 19 months, the Fed’s goal of 2 percent inflation will most likely be missed again.

http://www.nytimes.com/2016/02/13/business/economy/consumer-spending-gains-offset-recession-fears.html?mabReward=A7&moduleDetail=recommendations-2&action=click&contentCollection=DealBook&region=Footer&module=WhatsNext&version=WhatsNext&contentID=WhatsNext&src=recg&pgtype=article

The economics of romantic city-breaks

The article I found is related to the realistic side of a relationship about the cost of dating among different cities since today is Valentine's day. In the article, you will notice there is a table indicating the cost for dating of a night. The top one ranking is New York.


Link: http://www.economist.com/blogs/graphicdetail/2016/02/daily-chart-7

Free-Trade Deal in New Zealand

This article is about a new free-trade deal between 12 Pacific Rim countries including the U.S. and New Zealand.  The other countries in the deal are Japan, Canada, Mexico, Australia, Malaysia, Singapore, Peru, Chile, Vietnam, and Brunei.  The agreement will boost trade and eliminate most tariffs and other barriers.  Each country still has to vote on it and the decision in the U.S. is still being debated.  People that oppose this agreement say that it will give too much power to U.S. corporations.  Our U.S. trade representative, Michael Froman, said that he believes it will pass.  
http://www.beaumontenterprise.com/news/world/article/US-11-other-countries-sign-free-trade-deal-in-6805106.php