Tackling the US deficit--A modest proposal

America is spending beyond its means, both parties and the president (not to mention pundits and protesters) have recognised.On Thursday Feburary 18th Barack Obama announced that he was forming such as commission, by executive order, to seek ways to tackle the deficit. The commission will be co-chaired by a long-time former Republican senator, Alan Simpson, and a Democratic former chief of staff to Bill Clinton, Erskine Bowles. The rest of the panel will include four more appointees from Mr Obama (one must be a non-Democrat), and three each for the Republican and Democratic leaders of both the House and the Senate. The best reason for optimism for the panel is that its remit is rather modest: to bring the budget deficit to balance (excluding interest payments) by 2015. This sounds like a long way to go, with the deficit projected to reach 10.6% of GDP this year. Yet there are reasons to be more pessimistic. The commission will merely offer advice. An earlier effort to create a panel that could make recommendations which Congress would be forced to vote on (without amendment) failed in the Senate in January. Only 53 of 100 senators voted in favour, not enough to clear a 60-vote procedural threshold. Many Democrats (fearing entitlement cuts), and most Republicans (who would not countenance any tax increases), voted against.

The Return of the Ski Bum

I accidentally repeated an article posted already, so here is another one!

A somewhat amusing article about the new ski bum that has arrived.

"Meet the newest wave of ski bums: stoked to be in the mountains, uncertain about the future, probably overqualified and, once again, American."

Less late payments on mortgages

In most years late payments on mortgages raises during the winter months increases however this year these late payments have slightly fallen. This is great news for America and especially good news for the Obama administration after they put a big focus on helping homeowners who face foreclosures. However the percentage of loans on foreclosures went up in the fourth quarter to 4.58%. The increase in foreclosures will push most home prices down which does hurt the homeowners but helps new homebuyers because they will have to pay less for a home due to the economic crisis in the housing industry.

A Small Price for a Large Benefit

To get away from the unemployment and foreign issues, I found this article interesting about global warming. The ideas of emotions and logic are unique presented in this article.

Economic outlook: Fed rise’s recovery signal

This article states that the Fed decided to raise the discount rate before the expected time. Seeing that the discount rate has increased came for a surprise to some, but also shows a very good sign in recovery within the financial system. The discount rates are expected to continue in the next couple of months seeing that policy makers are beginning to let go of the excess liquidity from the financial system. Bernake will take this to congress this upcoming week to explain that this will not change the monetary policy for the US economy. With an increase in the discount rate, this shows another sign of life for the US economy in its voyage to economic stabilization.

Millions of Unemployed Face Years Without Jobs

Economists fear that this recession we are experiencing won't be so forgiving for the unemployed currently. There is even a new term for people who are only reaping benefits of unemployment compensation.

"Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come."

The Fed's great rate debate

Federal Reserve Bank's decision to increase the interest rate has caused many arguments in policymakers. Since december 2008 the federal fund's rate was 0%, this was obviously done to encourage the bank's to borrow from the federal reserve. But the sudden move to increase the rate to 0.75% is still not justified. May be the decision was taken to show people that America is no longer in economic hard time and it is the time to move on. The effectiveness of the decision can't be judged until we see the effects. Hope people find this article useful in keeping track of the on going economic trend.

Millions of Unemployed Face Years Without Jobs

Even though the American economy shows signs of recovery, millions of people are still out of work, spending through their savings accounts and almost out of time for their unemployment benefits. These people are the "new poor" millions who were used to middle class life now relying on government benefits.

Russia Cuts Interest Rates

Russia's central bank has just cut their interest rates by one quarter of a percentage point. This move has been done to try to get the banks to start lending. The cut was also made to limit the foreign short term capital, and the government had concerns about the ruble future. Russia has one of the highest interest rates of the Group of Eight Leading Nations, so this effort to cut interest rates has seen its effect by making the ruble stronger which was a concern for the banks.

China Tightens Bank Lending Rules

Banking regulators in China are tightening their rules about lending money. The reason for this being that they don't want to get themselves in any financial problems because of excessive lending. Their central bank has avoided raising interest rates which will slow down growth, so they must control their lending.