by Collin Barr
In this article Ben Bernanke explains the current economic state and the moves the fed plans to take. According to Bernanke, the economy is recovering, but we are a long way away for where we need to be. Unemployment is a major issue, and he doesn't expect it to be solved quickly but over a gradual time table. Bank lending still seems to be weak, so the Fed expects to keep short-term interest rates near 0%. He also wonders whether the still weak property markets will continue to damper consumers and the economy.
Wednesday, April 7, 2010
3 reasons investors love this week's new $82 billion in Treasury debt
This is a good article about how the government is issuing a record number of bonds to finance its debt, but there is also a record level of demand. Most people would think that demand could not meet the huge supply of treasuries, but there is actually more demand than supply. The article goes into various reasons for this high demand.
Markets Fall on Comments About Higher Interest Rates
Growth of unpaid internships may be illegal
With the amount of job opportunities for young people decreasing, the amount of unpaid internships has been growing. The question is if these employers are taking advantage of the students by not paying them. Federal and state regulators are convinced that many unpaid internships violate minimum wage laws and are investigating many employers. “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” said Nancy J. Leppink, the acting director of the department’s wage and hour division.
Tuesday, April 6, 2010
Fed: Recovery may lose steam
Despite recent moderate signs of improvement to the economy, Federal Reserve policymakers are worried that the economic recovery may lose steam moving forward. The Fed believes some sectors of the economy may suppress overall growth. However, in an effort to fuel the economic recovery, Fed policymakers may decide to raise rates and move away from the central bank's policy of exceptionally low rates. Even though most economic data, with the exception of the housing market, have met or exceeded the Fed's expectations, a number of policymakers pointed out that the economic recovery could not be sustained without a substantial a substantial pickup in job creation.
Economist's cry: Break up the banks!
Simon Johnson talks about his new book 13 Bankers. The Wall Street Takeover and the Next Financial Meltdown and some predictions for financial crises in the future. Also, which banks he trusts with his money.
Geithner: Differences? What Differences?
Geithner: Differences? What Differences?
“Although we start from different positions,” U.S. Treasury Secretary Timothy Geithner said at his Delhi press conference today, “we face some problems in common.”
With his counterpart Finance Minister Pranab Mukherjee sitting nearby, Geithner went on to list how to extend financial services to people outside the banking system and how to finance infrastructure needs as two of them. He later referred to the U.S. and India as “two of the world’s largest economies.”
However much Geithner might have been trying to stress the commonalities between the world’s richest and largest democracies, the key phrase in all this was really, “we start from different positions.”
One can hardly compare the size of the economies or per capita income. The CIA World Fact Book ranks the U.S. as 11 and India as 164 in its GDP (per capita) index. Yes, much of the U.S.’s infrastructure is in need of an upgrade but can anyone really compare America’s needs with India’s when it comes to, say, building hard-topped roads or a national highway system? And, yes, there are people in the U.S. outside the banking system just as there are outside the insured healthcare system, but still….
The Treasury Secretary and Finance Minister clearly felt the need to stress what they shared not what divided them: The purpose of the event at the Taj Palace hotel was to “launch” an economic and financial partnership between the two nations.
But the pervasive sense was one of distance. When a Pakistani delegation visited Washington recently, much was made of the fact that the seating arrangement interspersed officials from both sides. Here, the Indian delegation sat primly on one side of the room, the U.S. on the other.
There was even confusion over whether the economic and financial partnership already existed – some said it was actually launched when Prime Minister Manmohan Singh visited the White House in November, so this was really a launch of an “expanded” partnership. Whether it’s new or not, it chiefly appears to consist of a few high-level meetings in coming years.
And when it came to the biggest area of cooperation that was on people’s minds – whether Geithner tried to enlist India’s help in pressuring China to let the yuan appreciate – there was no evidence of common purpose at all. Geithner managed to answer a question about the yuan without uttering the words “China” or “yuan,” in fact. Later, in an interview with NDTV, he did manage to say that it was China’s choice and judgment whether it adopted a more flexible exchange rate.
Meanwhile, India on the same day was making its own diplomatic overtures about shared common purpose with none other than the Great Neighbor to the North. On an official visit to Beijing, Foreign Minister S.M. Krishna said the world’s two most populous nations need to stop viewing each other as competitors and start working together to influence global issues such as climate change and trade, according to the Associated Press.
“India and China have only begun to impact seriously on the world,” Krishna told a think-tank in Beijing.
“Although we start from different positions,” U.S. Treasury Secretary Timothy Geithner said at his Delhi press conference today, “we face some problems in common.”
With his counterpart Finance Minister Pranab Mukherjee sitting nearby, Geithner went on to list how to extend financial services to people outside the banking system and how to finance infrastructure needs as two of them. He later referred to the U.S. and India as “two of the world’s largest economies.”
However much Geithner might have been trying to stress the commonalities between the world’s richest and largest democracies, the key phrase in all this was really, “we start from different positions.”
One can hardly compare the size of the economies or per capita income. The CIA World Fact Book ranks the U.S. as 11 and India as 164 in its GDP (per capita) index. Yes, much of the U.S.’s infrastructure is in need of an upgrade but can anyone really compare America’s needs with India’s when it comes to, say, building hard-topped roads or a national highway system? And, yes, there are people in the U.S. outside the banking system just as there are outside the insured healthcare system, but still….
The Treasury Secretary and Finance Minister clearly felt the need to stress what they shared not what divided them: The purpose of the event at the Taj Palace hotel was to “launch” an economic and financial partnership between the two nations.
But the pervasive sense was one of distance. When a Pakistani delegation visited Washington recently, much was made of the fact that the seating arrangement interspersed officials from both sides. Here, the Indian delegation sat primly on one side of the room, the U.S. on the other.
There was even confusion over whether the economic and financial partnership already existed – some said it was actually launched when Prime Minister Manmohan Singh visited the White House in November, so this was really a launch of an “expanded” partnership. Whether it’s new or not, it chiefly appears to consist of a few high-level meetings in coming years.
And when it came to the biggest area of cooperation that was on people’s minds – whether Geithner tried to enlist India’s help in pressuring China to let the yuan appreciate – there was no evidence of common purpose at all. Geithner managed to answer a question about the yuan without uttering the words “China” or “yuan,” in fact. Later, in an interview with NDTV, he did manage to say that it was China’s choice and judgment whether it adopted a more flexible exchange rate.
Meanwhile, India on the same day was making its own diplomatic overtures about shared common purpose with none other than the Great Neighbor to the North. On an official visit to Beijing, Foreign Minister S.M. Krishna said the world’s two most populous nations need to stop viewing each other as competitors and start working together to influence global issues such as climate change and trade, according to the Associated Press.
“India and China have only begun to impact seriously on the world,” Krishna told a think-tank in Beijing.
Oil prices hit new 18-month high
Oil prices hit new 18-month high
The price of oil reached a fresh 18-month high on Tuesday on growing hopes of a US-led global economic recovery.
One-month futures for US light crude hit $86.97 a barrel in New York trading, before falling back slightly.
The UK benchmark, Brent crude, peaked at $86.63 a barrel on Tuesday - also an 18-month high.
Investors have also signalled their confidence in the US economy with the strengthening of the dollar against both the pound and the euro.
The US dollar was up by more than a cent against the euro, with a dollar worth 74.8 euro cents.
It was also up more than half a penny against the pound, with a dollar worth 65.9 pence.
Recovery hopes
Investors are buying dollars in the wake of positive economic data from the US.
On Monday, the Institute for Supply Management said the US services sector grew at its fastest in nearly four years in March.
At the same time, the National Association of Realtors said pending home sales rose by an unexpectedly strong 8.2% in February.
Last week, the US Labor Department said employers had created 162,000 new jobs in March, the highest monthly number since March 2007.
However, the country's unemployment rate remained at 9.7% for the third month in a row.
The oil price has been gaining steadily since mid-February when it stood at $72 a barrel, amid hopes of strong economic growth in both Asia and the US.
But oil prices are still a long way from the record highs above $147 a barrel that they reached in July 2008.
Investors will be watching for US crude inventory statistics due on Tuesday and on Wednesday.
Fuel fears
The rising oil price means that there is likely to be more pain at the petrol pump for UK drivers.
Motorists are already suffering from a weak pound, which has pushed up the price of oil in that currency, because it is priced in US dollars.
Another factor increasing petrol prices is the implementation of the extra duty of 1p a litre added on 1 April and a further 1p to be added in October.
The combination of tax and oil price rises has pushed the average price of unleaded petrol up to 119.46p a litre - close to the record 119.7p seen in July 2008.
The price of oil reached a fresh 18-month high on Tuesday on growing hopes of a US-led global economic recovery.
One-month futures for US light crude hit $86.97 a barrel in New York trading, before falling back slightly.
The UK benchmark, Brent crude, peaked at $86.63 a barrel on Tuesday - also an 18-month high.
Investors have also signalled their confidence in the US economy with the strengthening of the dollar against both the pound and the euro.
The US dollar was up by more than a cent against the euro, with a dollar worth 74.8 euro cents.
It was also up more than half a penny against the pound, with a dollar worth 65.9 pence.
Recovery hopes
Investors are buying dollars in the wake of positive economic data from the US.
On Monday, the Institute for Supply Management said the US services sector grew at its fastest in nearly four years in March.
At the same time, the National Association of Realtors said pending home sales rose by an unexpectedly strong 8.2% in February.
Last week, the US Labor Department said employers had created 162,000 new jobs in March, the highest monthly number since March 2007.
However, the country's unemployment rate remained at 9.7% for the third month in a row.
The oil price has been gaining steadily since mid-February when it stood at $72 a barrel, amid hopes of strong economic growth in both Asia and the US.
But oil prices are still a long way from the record highs above $147 a barrel that they reached in July 2008.
Investors will be watching for US crude inventory statistics due on Tuesday and on Wednesday.
Fuel fears
The rising oil price means that there is likely to be more pain at the petrol pump for UK drivers.
Motorists are already suffering from a weak pound, which has pushed up the price of oil in that currency, because it is priced in US dollars.
Another factor increasing petrol prices is the implementation of the extra duty of 1p a litre added on 1 April and a further 1p to be added in October.
The combination of tax and oil price rises has pushed the average price of unleaded petrol up to 119.46p a litre - close to the record 119.7p seen in July 2008.
Geithner Sees ‘Huge Opportunities’ in U.S.-India Ties
US Treasury Secretary Tim Geithner said that the new partnership between the US and India will help both economies recover and grow. Geithner highlights India's surprisingly quick recovery from the recession, particularly global economic conditions, financial market stability and investment opportunities in infrastructure present there.
The relationship is further compared to the Strategic Economic Dialogue started in 2006 between the US and China. The United States is hoping to tap into the second most populated nation in the world to ramp up production and reduce waste.
Unemployment holding economy back
While there has been significant changes in consumer spending and overall output, the high unemployment rate remains a big problem holding back the economy. Unemployment has to be tackled in a more aggressive way at this point. I think that the adequate way of coming about this problem would be to continue with expansionary policy bringing the real wages down and then also shorten unemployment insurance. These two things done at the same time will bring down unemployment faster and will allow the economy to grow faster without any hold ups.
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