Senate Plan Could Increase Taxes on Some Middle-Class Workers

https://www.nytimes.com/2017/11/10/us/politics/senate-tax-bill.html

Mitch McConnell, the Senate Majority Leader, aforementioned that the middle class will not get a tax increase, but quickly revised his statement as false. According to McConnell, the Republican tax plan is aiming to adjust taxing depending on levels of income, hence regulating the amount of tax that should be paid for each taxpayer. They also outlined 2 main objectives: cutting taxes for middle and business classes, so the economic growth rises and wages could be increased. They would reduce taxation for every income level and corporate taxes from 35% to 20%.

It is definitely a good plan to reduce taxes in order to make people spend more and get paid more (wage increases). The concern is that if the government is reducing their income, how are they going to fill up their reserves? If the government gets on a higher amount of deficit, it will not bring about a positive impact. I agree that the Republican tax plan is magnificent, but I hope the congress comes out with a stable and effective plan to back up the loss of their income.

U.S. Finally Looking Into Bitcoin

Given Bitcoin’s newly found fame across the globe, President Trump’s Treasury Secretary, Steve Mnuchin, has officially confirmed that the U.S. government has been looking into the plausibility of cryptocurrency in America. While there has not a specific timetable released yet, Mnuchin has shared a few issues that the U.S. Treasury is debating on. The most pertinent issue lies within the currency’s role in illicit activities. The unregulated nature of the currency has made it easy for many to transfer large sums of money without any government having a direct influence or measures to monitor such transactions. As such, it is heavily implied by Mnuchin that there will eventually be government regulations put into place with regards to the use of cryptocurrency in America. It will be interesting to see just what kind of regulation will be adopted, and how that will affect just about every aspect of cryptocurrency usage in the U.S.

https://news.bitcoin.com/trumps-treasury-secretary-we-are-looking-very-carefully-and-will-continue-to-look-at-bitcoin/

A Coup in Saudi Arabia.

Crown Prince Mohammad bin Salman rounded up dozens of the country's business and political elites, including 11 of his fellow princes.  Officially he is doing this as an anti-corruption measure however many regard this merely as a political coup to eliminate all of those who would possibly oppose him from becoming king.    Many are unsure of what this could mean for the oil rich country.  Many believe that this could cause a less oil reliant Saudi economy in the future as this prince has seemingly been moderate in his tone.  Primarily as he has acted in this way before, sponsoring green energy projects, and allowing women to drive (which is considered progressive in Saudi Arabia).  To what extent this will have on oil prices, especially as OPEC tries to reign in production, will be very interesting.

   http://www.reuters.com/article/us-saudi-arrests-crownprince-insight/a-house-divided-how-saudi-crown-prince-purged-royal-family-rivals-idUSKBN1DA23M

America's Mortgage Subsidies

Article: https://www.economist.com/news/finance-and-economics/21731163-about-time-too-americas-republicans-take-aim-mortgage-subsidies

During the 1980's, both Ronald Reagan and Margaret Thatcher made efforts to expand home ownership. In America, Reagan expanded mortgage lending and deregulated financial markets. In Britain, Thatcher oversaw a hot sale of state-owned homes to tenants. Both countries provided mortgage-related tax breaks, so more people could afford homes. However, Britain abolished its mortgage subsidies as their housing boom turned to a bust. America, on the other hand, still subsidizes mortgages at about $64 billion a year, but a recent tax plan wants to limit this.

This is probably because evidence does not support the idea that mortgage-interest deductions (MID) boost home ownership. In fact, empirical evidence suggests it has no effect in rich countries, and it could even hurt economies by inflating housing bubbles. To be fair, however, the reduction of MID alone cannot prevent such a bubble.

With interest rates as low as they are, this could be the best time to end MID in total. If that were to be the case, estimates suggest housing prices could fall by 10-15%. Additionally, prices would stabilize as the building pace for houses would slow. For example. the Netherlands altered their subsidy in 2012 and saw a price decline of 10% for houses. However, their prices are now climbing again at a decent rate. 

Lebanon’s economy could slow down due to Prime Minister resigning

Economics and politics are often linked together and this is now playing out in Lebanon. The recent resignation of that country’s leader has made confidence in the economy fall. With Prime Minister Saad Hariri leaving, big projects to improve raods and electricity supply have been put on hold. Business investor confidence has plunged. 

The political and economic crisis in Lebanon got so bad that four other countries in the region including Saudi Arabia asked their citizens to leave Lebanon. This will no doubt further bruise business confidence in Lebanon. The worries are also building that Saudi Arabia will react by forcing Lebanese workers to leave that country, which will further hurt Lebanon’s economy because it depends on the money that those workers bring back to their families. In fact, these Lebanese workers send back as much as $2 billion a year, which is spent as private consumption on goods and services in Lebanon’s economy.

So all of these slowdown effects could end up having a big negative effect on Lebanon’s GDP growth in future. A further negative effect on growth is a very high government budget deficit that will get worse if businesses and trade slow and tax revenues then fall. All of these developments are a true shame for Lebanon, which has had an economy devastated by wars and other troubles in its past. 

 https://www.cnbc.com/2017/11/11/a-political-shock-throws-lebanons-economy-back-into-crisis.html

Wind and Solar Power Advance, but Carbon Refuses to Retreat

All but one of the world’s nations — the United States — have enlisted in the cause, making concrete commitments to reduce their reliance on fossil fuels. However, the price of wind turbines and solar panels is plummeting, putting renewable energy within the reach of meager budgets in the developing world. This should make things more optimistic for environmental reparations and use of clean energy right. Unfortunately the of CO₂ spewed into the air for each unit of energy consumed offers some bad news: It has not budged since the meeting in Kyoto 20 years ago. Even among the highly industrialized nations in the Organization for Economic Cooperation and Development, the carbon intensity of energy has declined by a paltry 4 percent since then, according to the International Energy Agency. Apparently our country would like to literally burn all the profits they can out of oil.


https://www.nytimes.com/2017/11/07/business/climate-carbon-renewables.html?rref=collection%2Fsectioncollection%2Fbusiness-economy&action=click&contentCollection=economy&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=sectionfront

Dubai gets sucked into Saudi corruption turmoil-"let the wonkery begin ladies and gentlemen"

"Some of the biggest names in Dubai real estate saw their shares slump this week as regional markets were hit by fallout from the Saudi anti-corruption purge at the weekend."

Over 40 notable townspeople were accused for corruption on Saturday. These accusations come at a time of terror for the country. Their stock market has been experiencing a rapid/consistent decrease since even before the "anti-purge" events. The uncertainty is not helping obviously, as people are reluctant to invest. The ongoing corruption has costed the country/region over billions of dollars and there is no signs of that number shrinking. What should they do to combat their corruption and recover from these unstable times? How can they increase consumer confidence?

-NB


http://money.cnn.com/2017/11/09/news/economy/dubai-shares-saudi/index.html?iid=SF_LN

261K jobs added in Oct. on rebound in hurricane zones

As the hurricane took away jobs and crippled the economy earlier this year, jobs are starting to come back to the affected states of Florida and Texas.  As more and more people get back to work the overall output of these areas will recover as well.  When people regain their income, consumption will increase and continue to improve the economies.  Although the net hiring in these two areas equals zero this could mean that there has not been a massive return of jobs but suggests that there was some growth.  

 Time will be the only healer for the economic and labor woes of these regions.  However, the question remains, will overall GDP, in real terms, return to where it was, or even surpass the old GDP?  New Orleans still has not returned to its pre-hurricane real GDP numbers of 76 billion dollars, and it has been 11 years since this happened.  What do you think?

https://www.usatoday.com/story/money/2017/11/03/261-k-jobs-added-oct-rebound-hurricane-zones/827666001/

https://fred.stlouisfed.org/series/RGMP35380

Trump strikes at the heart of the North Korean regime with speech

https://www.washingtonpost.com/world/trump-strikes-at-the-heart-of-the-north-korean-regime-with-speech/2017/11/08/8b1d6d48-c309-11e7-9922-4151f5ca6168_story.html


The US president Donald Trump visited South Korea to reiterate his stand on North Korea's constant missile tests, despite the warning. He did not use very derogatory terms, but talked more harshly about the North Korean situations. Trump's speech emphasized the inhumane treatments that happens in North Korea. The North Korean escapees who attended the speech was satisfied with what he said, since he addressed how terrible a situation is for the citizens of North Korea.

North Korea is probably not very stupid enough to start a war, since it is very less likely that they will be the victor. However if the war breaks out, the casualties will be large and South Korea, most of all, will have to suffer greatly due to the damages. The economy of South Korea is already receiving negative impacts due to rising tension between the two sides. Trump's firm reaction towards the issue is making war more likely to happen. If North Korea initiates the fight, the staggering South Korean economy will definitely face huge losses.

Confusion in India's economy

When India’s prime minister withdrew banknotes from circulation to wipe out counterfeit currency--without warning last year--he must not have had any idea it would affect India’s economy so terribly. This was seen as an alarming act by the public—since it ended up making 86% of the currency paper in circulation worthless overnight. This “demonetization” has actually cut back India’s GDP by 2%, according to the Financial Times.

In fact, economic growth continues to slow because of this decision and a goods and services tax introduced last year.  Because some businesses are afraid they’ll be monitored by the government implementing this tax, they have actually taken the extreme step of slowing business transactions. Many businesses find the new tax so complicated that they have had to greatly increase the money they spend on accounting fees.

Reduced business confidence following the demonetization decision and the business tax has caused private investment growth to slow.  Many small businesses have even had to shut down in this deteriorating economic climate.

One unusual exception is the mutual investment funds business.  Because people panicked last year looking for  a quick place to invest their soon to be worthless cash, investments in mutual funds skyrocketed. This also had the effect of pushing up stock market shares. In fact the Bombay Stock Exchange has become the second best performing stock market in Asia. But thinking about what has driven up the price of stock shares makes clear that this could all collapse just as quickly.

https://www.ft.com/content/63e05266-c3b5-11e7-b30e-a7c1c7c13aab

https://www.bloomberg.com/news/articles/2017-11-05/modi-s-big-economic-gamble-in-tatters-as-cash-remains-king

https://www.bloomberg.com/news/articles/2017-11-08/fear-of-the-taxman-blights-modi-s-quest-to-expand-formal-economy

https://www.bloomberg.com/news/articles/2017-11-07/year-after-cash-ban-there-s-no-sign-of-india-correction-chart

Overvalued Housing Market is Delaying Housing Purchases

Home prices rose substantially since September of 2016, which is impacting real estate agents and those searching for homes significantly. "As a result, 48 percent of America's top 50 housing markets are overvalued, up from 46 percent in August." This means that the average listed home prices are valued at least 10 percent higher than what they will be in the "long term, sustainable value." This is significant because the housing market is one of the backbones of the U.S GDP.

These increased prices are causing a large reduction in demand for new houses.This is also decreasing the supply of homes on the market as homeowners fear they will not be able to find a new home after the sale of their current property. These supply and demand changes are due to changes in expectations of those in the housing market. Both sellers and buyers are expecting a decrease in prices and are waiting until they are lower to sell and/or buy. Once rates settle closer to the long term sustainable value, we should see increased consumption and more action in the housing market. This will help bolster U.S GDP, as housing is so important to the health of our economy.


https://www.cnbc.com/2017/11/07/more-housing-markets-are-overvalued-and-consumers-feel-the-pain.html

Democrat's big electoral win

I saw a post going around a few weeks ago that reminded us that Democrats are very good at claiming moral victories, and much worse at claiming electoral victories, which is usually true. Last night they outperformed even the most optimistic predictions, sweeping the Virginia and New Jersey gubernatorial races as well as possibly claiming a majority in Virginia's House of Delegates (the race is so close they are relying on absentee and provisional ballots, which could take days to count), and picking up two state senate seats in rural Georgia.

There are a few reasons for this, and it would be impossible to talk about without mentioning the liberal backlash to President Trump's administration and the various policy-based, ethical, and moral failures of that administration. However, I think it's also important to talk about how Democratic candidates responded to demagogic attacks and campaigns from Republican candidates. The Virginia governorship is especially notable here - Ed Gillespie (the Republican candidate) ran a ton of ads attacking Ralph Northam saying that his immigration policies would bring Mexican gangs in and that sanctuary cities are havens of crime (never mind that there are currently no sanctuary cities in Virginia). Northam did an excellent job of making the campaign about economic issues, and pointing out that his opponent was relying so heavily on racial and cultural attacks because he didn't want to draw attention to the fact that Northam's election would improve the economy and healthcare, consistently ranked as the two most important issues for Virginians. It appears economic messaging worked for Northam.

https://www.politico.com/story/2017/11/07/democrats-virginia-new-jersey-election-results-244674

GOP tax bill's big losers: NFL, and other sports leagues

As republicans begin to push the tax reform forward, sports teams could be affected tremendously. The bill has two provisions that would cost teams, the first one eliminates the ability to deduct college donations made in exchange for tickets. The second, which is a lot more impactful is that professional sports teams would not be able to use tax-exempt municipal bonds to build stadiums. Interest payments from municipal bonds have been exempt from taxes since the early 1900's although they were not designed for the use of building stadiums. There were 36 stadiums built from 2000 to 2016, the total amount of tax exemptions for these stadiums was $13 billion which ultimately had to be payed for by taxpayers. The NFL is expected to take in $14 billion this season alone but still has taken almost $7 billion dollars from tax payers over the last 20 years. When it is explained in this way, this elimination of tax exempt bonds for the NFL seems like the right way to go but the NFL argues that "These sorts of infrastructure projects have a long history and the benefits of them are obvious in many of our communities around the country, so we will continue to make our opposition known on that."

It will be interesting to see as the tax reform moves forward the amount of push back that it gets from the NFL. I imagine with the amount of money in the NFL and other professional sports that these two provisions will be very hard to push through It is a little ridiculous that these teams and owners that have billions of dollars can't pay for their own stadiums. At the same time I understand that they feel like they are bringing a lot of jobs and stimulation to a community and want compensation (tax exemptions) for that.


http://www.foxbusiness.com/politics/2017/11/07/gop-tax-bills-big-losers-nfl-and-other-sports-leagues.html

There are two realities in this country

Billionaire entrepreneur and financier Ray Dalio says there are two very different economic realities in the United States right now. That divide is threatening the nation's stability, the Bridgewater Associates founder says, and it's only going to get worse as technology replaces workers.

"[T]here are two economies. We talk of 'the economy.' Recognize that you can't talk about the economy ... there are two economies," says Dalio, speaking to Recode executive editor Kara Swisher on her podcast, Recode Decode, published Monday.

There's the "top 40 percent" and "the bottom 60 percent," says Dalio. And for those at the bottom, life is hard without a lot of hope.

"If you look at the economy of the bottom 60 percent, it is a miserable economy. Not only hasn't it had growth and economic movement and so on, it has the highest rising death rates, it is the only place in the world where death rates are rising because of a combination of opiates, other drugs and suicides," Dalio says. (Indeed, Princeton Professors Anne Case and Angus Deaton found that drugs, alcohol and suicide are a major reason behind rising death rates among non-Hispanic whites in the U.S. with a high school diploma or less.)

https://www.cnbc.com/2017/11/07/billionaire-ray-dalio-for-many-in-the-us-its-a-miserable-economy.html

Why Ohio's Medical Community says vote no on issue 2

              With the general election day tomorrow in Ohio it is relevant to bring up the topic of Issue 2.  Issue 2 in a nutshell would make the pharmaceutical companies charge state agencies the same price  or a lower price for drugs as they charge the U.S. Department of Veteran Affairs.  This would decrease the profits of the drug companies.  This would benefit the people receiving drugs from the state by most likely lowering costs for them.  However, as talked about in class wages are sticky in a downward direction.  These drug companies would not want to see their profit margins fall for the reason just stated.  One way for these companies to regain what would be lost revenue is to up raise the prices of non-state buyers of drugs.  This would take money out of the pockets of consumers.  If this law passed another law might have to be passed to protect private consumers.

https://www.usatoday.com/story/sponsor-story/ohioans-against-deceptive-rx-issue/2017/10/30/why-ohios-medical-community-says-vote-no-issue-2/107166350/

Trump visits China: Here's what to expect

This Wednesday, November 8th President Donald Trump will be visiting Beijing, China to meet with one of China's most powerful leaders in decades, Xi Jinping. During the meeting, Trump will likely address the trade imbalance that the United States and China have. Many analysts are expecting the POTUS to announce a series of high value deals between the countries that will help narrow the trade imbalance. These deals will likely include the Chinese buying American energy, farm products, aircrafts and likely other heavy machinery items. In addition to these moves, it has been noted that reforms to Chinese financial sector could be seen as a result of delegations from Goldman Sachs CEO Lloyd Blankfein.

Although the deficit is a major issue for the U.S. economy, many leading businesses are hoping that Trump's fixation with the deficit doesn't distract him from dealing with other larger issues. An example of an issue that Trump may be overlooking is the US-Sino relations such as market access and competition in industries of the future.

Overall, the best case scenario from Trump's visit is described as , "proactive, reciprocal treatment" by William Zarit, the chairman of the American Chamber of Commerce in China. He describes his worst case scenario as reactive motion from the United States which would include limiting investment and limiting Chinese exports.

https://www.cnbc.com/2017/11/06/trump-visits-china-heres-what-to-expect.html

A Peek at Future Jobs Shows Growing Economic Divides

Forecasting jobs for the future is vital to economic and career planning. As technology evolves, more and more manufacturing jobs are lost to automated processing. Its cheaper, and more efficient despite the fact that it is putting Americans out of a job. As the world continues to evolve, jobs requiring at least a bachelors degree are expected to grow. In addition to this, "Jobs in health care and clean energy will continue to grow rapidly. Manufacturing jobs will shrink, as will occupations involving data entry or other tasks that are increasingly being done by machines or algorithms. Overall job growth will continue to be slow, partly as a result of the aging of the baby boom generation; by 2026, even the youngest boomers will be approaching retirement". I think it will be very interesting to see if these projections are accurate, because there have been instances where projections were wrong and young adults were lead in the wrong direction. When looking at potential career paths, did you consider the future job market before you made any major decisions? 

U.S. Jobs Grow 261,000 to Rebound From Hurricanes

According to the Washington Post, the United States has added 261,000 new jobs just in the month of October. As a result, the jobless rate is now down to 4.1, which is the lowest since the year 2000. There are many different things that may occur as a result of these job additions.

There are some positives involved in this growth, many more people are employed now. After the devastation of Hurricanes Irma and Harvey, thousands of people were unemployed due to the fact that their home and environment were destroyed. Through the month of October, though, it showed that the economy is slowly rising again. The result of many people finding jobs again could be a big reason as to why the economy is starting to grow again.

Although, with all of this growth also comes some controversy. The wages of workers in the month of October has fallen as a result of many people recovering their jobs. Looking at the numbers, it is only by a very small amount (just about 1 cent). Which is not a big amount and may not have a big impact. But, this amount will accumulate over time and may effect the salaries of workers nonetheless. The biggest industry that seems to be in high demand, especially in Texas, is construction workers. This is no surprise, as the state of Texas was impacted heavily by these two Hurricanes are are still feeling the devastation it left.

Overall, many economists are happy with this data. They are content with workers taking a lower wage to improve the economy as a whole. The biggest question now is can the economy continue to add more jobs at this rate, or will it eventually slow down this next month?

https://www.washingtonpost.com/news/wonk/wp/2017/11/03/after-hurricanes-economists-expect-return-to-steady-job-growth/?utm_term=.29b50c170471

Who wins and loses under the House GOP tax bill: Let the wonkery begin

The new proposed tax bill could impact people in different ways. Looking at the tax reform from in totality, every income group will benefit from a tax cut. However, it seems that people in the highest tax bracket will receive the greatest tax cut. The top 1% of people would have a 7.5% greater income, after tax, with the new system. On the other hand, the bottom 80% of people would experience an increase between 0.8%-2.4% of income, after tax.

The Tax Foundation performed a "dynamic analysis" of the new tax bill. Meaning, they examined how the House's GOP tax bill would impact economic growth, by looking at how people's behaviors would be influenced. The analysis results were not totally decisive, but they showed the new tax reform could create economic growth, increased wages, and close to a million new jobs. Of course, all of that sounds great, but some economists do not believe this will happen. The Tax Foundation estimated the new tax reform could result in a 3.9% higher GDP over the next 10 years, compared to if the current tax system was kept in place. The GDP growth is great, but economists see how cutting taxes by such a significant amount, could add close to a trillion dollars to the deficit. Therefore, the economy's GDP would be experiencing growth, but the deficit would continue to increase.

Obviously, there are always going to be positives and negatives to big government changes, like tax reform. However, it is important to look at who will be impacted the most. Is it a problem that the top 1% would benefit the most? Should the bottom 80% of people be upset if the new tax bill is put in place? Will there actually be economic growth?

http://money.cnn.com/2017/11/05/news/economy/tax-reform-bill-house-republicans/index.html?iid=SF_LN

Multiple people killed in shooting at Texas church

Twenty people have been killed due to a shooting in Sutherland Springs, Texas.  
The shooter is now dead after a brief chase, but it is unclear if the he was killed by police or took his own life.  It has also not been determined if it was a domestic or international act of terrorism.   A witness reported that they heard about 20 gun shots from a gas station across the street.  Sutherland Springs is in Wilson County, about 30 miles east of San Antonio.  A woman described the small town by saying, "there are two gas stations, a church, community center, post office, a Dollar General, a tire shop, and that's about it".
President Trump tweeted "May God be with the people of Sutherland Springs Texas".  He is currently in Japan for his first trip to Asia as president.  

How do you think the government to yet another horrific event? Will gun control laws become more strict?  How many more events will happen before the government notices there needs to be a change?

http://www.cnn.com/2017/11/05/us/texas-church-shooting/index.html