The EU and Greece--How to help

This article talks about how EU leaders come up with a plan to help Greece and to rescue Greece from a sovereign credit crunch.After joining the European single currency in 2001, the Greek government and people embarked on a borrowing and spending spree fuelled by the euro zone’s low interest rates, and cooked the books for years until the ghastly day last year when the incoming Socialist government announced that the country’s budget deficit was some 13%: twice as large as previously admitted.The mechanism agreed late on March 25th by the 16 countries that share the euro was harsh. At the insistence of Mrs Merkel, Greece will be able to tap into emergency help only if available market financing has been deemed “insufficient” by experts from the European Commission and European Central Bank. In a sign that something terribly serious had been agreed, the declaration used a Latin term, ultima ratio, to describe the last-ditch nature of the mechanism.IMF involvement is seen as a guarantee that financing would be subjected to tough conditions, but France strongly opposed the involving of IMF.The IMF is now part of the rescue mechanism, but a majority of the money in a rescue package would come from bilateral loans from the 15 other members of the euro zone. These would be offered at above average euro-area interest rates, to “set incentives” for recipients to “return to market financing as soon as possible”.

Washington to Run Student Loans

Congress recently passed a bill to boost need-based scholarships and cheap student loans. Starting on July 1, almost all federal backed student loans will come directly from the federal government. This prevents private lenders like Sallie Mae from making federally backed loans. This will save the federal budget $61 billion over 10 years. From that amount, about $36 billion will be put towards Pell grants to low-income students, and it is these low-income students that will benefit the most from this bill.

Housing Market's Recovery Appears at Risk

This article is about the sudden drop in the housing market in February after it had appeared to be recovering. Part of the reason for this is that the federal aid is beginning to slow down and will soon be gone. The Federal Reserve has been implementing a program to keep mortgage rates down, but that is supposed to end very soon. On a more positive note, Bank of America is the first lender to announce a plan to help some of their borrowers avoid forclosure.
One of the major concerns here is what this downturn will do to the construction business. If they cannot get new home contracts, then they will have to cut jobs, which will increase unemployment even more. It is very interesting how many different industries the housing market affects. Hopefully there will be better news in the future.

Google In China

This article discusses the decision made by Google to effectively withdraw from operations in China. Although it is a primarily political/sociological analysis of the issue, it does get briefly into the economics of the situation and it is a thorough analysis that I found very enlightening. This move by google obviously has huge implications for their future operations, and it also highlights the sometimes thin line between political and economic policy in China.

Why a $14/hour employee costs $20

This article talks about how a worker making about $14 an hour actually has a cost of about $19.63 an hour. This higher rate includes fixed expenses as well as soft costs like the costs of hiring a new worker. With that being said, it's hard to convince business owners to hire no matter what incentives the government offers to try to reduce the unemployment rate. Payroll for workers is extremely expensive. A new hire actually decreases sales in the short run as they learn the job.

A Bold U.S. Plan to Help Struggling Homeowners

This article discusses the recent plan announced by the financial policy makers at the White House to help people who are still struggling with the mortgage on their house. This plan focuses not only on the seven million people who are behind on their mortgage, but it also helps people who owe more than their house is worth. This plan is designed to help people make payments that they can afford, and it consciously aims to keep people out of debt. The problem with some of the previous plans is after a few months homeowners have ended up right back where they started. These plans also try to keep people in their houses instead of assisting them with selling their house and starting over. The plan is expected to cost 50 billion, but officials stressed that this money will come from funds already set aside for housing relief. None of this money is expected to come from additional tax payers dollars. I think this plan is more promising than some of the other previously proposed because it is more realistic in what it is trying to offer. It isn't thought as an instant fix to our problem, but it slowly and more efficiently assists troubled homeowners.

Not so fast: Slower economic growth ahead

The article discusses about the GDP growth of the US economy. Many economists forcasted that the GDP growth will slow down in the next few years. And according to the report released on friday by the commerce department provide the evidence of the slow growth. The GDP grew at 5.6% in the last quarter slower than the previous quarter in which it grew at 5.9%. So the assumption of slow economic growth is proving to be right. At this moment time is probably the best healer and we should wait until the time when the economy starts growing again.

Personal Income Drops Across the Country

This article talks about how 42 states have reported personal income drops of between 5 and one percent. Some states increased government benefits to off set the loss that there would be otherwise. However there is a light side to this news, personal income was in fact higher in the forth quarter for people in all 50 states then in the previous quarter.

Fed's emergency loans decline further

This article discusses the Fed's recent activity, including their interest rates and several housing programs. At the peak of the financial crisis emergency borrowing from the Fed averaged around $100 billion. Recently that number has dropped to around $11.5 billion and just this past weak it dropped almost 10% more to less than $11 billion, emphasizing how far we've come and that we are still making progress. Along these same lines, the Fed made a decision last week to keep the discount rate between 0 and .25%. The Fed has also decided to put an end to many programs formed during the height of the financial crisis, citing their balance sheet report for justification. Many of the programs have slowed to the point of not being worthwhile. Among the programs being shut down is purchase program for mortgage-backed securities. The Fed's plan to purchase more than $1 trillion of these securities has almost been realized. Many people speculate that the program needs to continue, and many think it has done its job. Just in case, though, the Fed has said that if the housing industry needs more help the program can be reopened.

Chinese Company to Buy Volvo

Ford Motor reached an agreement on Sunday to sell its Volvo subsidiary to a Chinese conglomerate, in the clearest confirmation yet of China’s global ambitions in the auto industry. The sale of one of Europe’s most storied brands shows how China has emerged not just as the world’s largest auto market in the past year, but also as a country determined to capture market share around the globe.