10 Fastest Growing Citites

http://money.cnn.com/gallery/real_estate/2014/03/27/fastest-growing-cities/index.html?iid=SF_E_River

This is a fun article that goes through cities that have had a particular population growth and other variables that have boosted their growth recently. It gives background on the cities, their recent rises and falls within the cities, and future economic prospects. Its an interesting take on the growing cities here in America that have potential for new and innovative businesses.

A Long and Winding Road

http://www.economist.com/news/finance-and-economics/21599394-world-needs-more-infrastructure-how-will-it-pay-it-long-and-winding

The world needs more infrastructure now more then it ever did but the ability to pay for it is becoming harder and harder.  Investments in infrastructure are vital to our economy and yet financing Infrastructure is falling out of favor with the banks.  European lenders who used to invest in infrastructure are now steering away from them. The only banks willing to invest anymore are the Japanese banks which have stronger balance sheets and willing to put money to work.

Banks are not only less willing to give out long term loans they are less willing to take on as much risk as they previously could.  Before they would take on about 90% of the construction cost now they are only taking on about 70% causing the builders to come up with more money slowing the whole process down.

It is said to cost about 57 trillion dollars to build and maintain the world's roads, power plants and pipelines between now and 2030.  Infrastructure spending right now is currently at 2.7 trillion a year when really 3.7 trillion is needed.  This is creating a need and opportunity for new investors willing to take on long term loans in infrastructure.

The Downfall of Citigroup Bank and Others
http://www.economist.com/news/finance-and-economics/21599788-handful-banks-are-caught-short-feds-annual-stress-test-harsh-light

On March 26th the Federal Reserve released the results of its “comprehensive capital analysis and review.” This review highlights which of the country’s 30 largest banks potentially could increase their dividends and share buybacks. How well banks are doing financially is based off how quickly their return on capital is. Many banks were granted the go ahead of their finical plans. Citigroup and the American operations of HSBC, RBS Citizens and Santander plans were rejected by the federal reserve. It was a giant disappointment for share holders of Citi. According to the federal reserve Citi is unable to accurately evaluate risk and has poor management. This caused shares to fall 6% in after-market trading. Shortly after chief executive Michael Corbat stated, “We are deeply disappointed." Mr. Corbat was named chief executive after Citi had their first finical failure and may easily lose his title after this recent second financial failure.

The "comprehensive capital analysis and review " is made up of tests conducted by the federal reserve to determine financial health of banks. The first part of the test is based on numbers drawn from a hypothetical crisis such as a rapid drop in the stock-market, a drop in housing prices, and a sharp increase in unemployment. New parts of the test focus closely on operations of the banks. How well a bank is able to examine its own risk is highly correlated on how well the bank does financially. Another major part of the evaluation process is revenue projections. This data is important for financial planning but is squishy because it doesn't always mean anything. The results from the federal reserve evaluations usually have a large impact on what the bank needs to accomplish and what to pursue next.

Over Time Rules and Regulations Hurting Start Ups??

http://smallbusiness.foxbusiness.com/starting-a-business/2014/03/24/obama-overtime-law-could-mean-no-more-employees-for-startups/

The big issue in this instance is government regulation going to hurt small business? I would argue the answer is more often yes than no. In this example, new labor laws make it more difficult to hire employees without paying them overtime, or one may have to hire more employees all together. Is this fair? The people who are taking all the risk in the economy are told how to do what they are doing, and no this is not fair at all.

Entrepreneurs should not only get every advantage possible because they are single handledly investing in the US economy, but they usually have a problem being told how to run their own business. Main point, do not regulate labor too much, it hurts the people who support the american dream.

Online economy?

http://www.marketwatch.com/story/mirage-of-the-new-economy-2014-03-26?link=MW_home_latest_news



Online gaming and social network have been the major sources of the economy for china and numbers of countries. However it is true that productivity might not be achieved via gaming or social networking. They do not "produce" anything. However it is a great factor of boosting benefits or in general, for profit, since internet has been dominant and not only computers, but even mobiles have internet. Social networks such as Facebook has been phenomenal over the several years. However relying on these online economy is probably not a very wise idea, as they are somewhat a fad. For example, MSN was widely used before. Now, hotmail has ended its services. Since it may not be a permanent, or so to speak, a steady seller, reliance on online gaming and social network businesses is risky.

Markets: Crimea and punishment

It has been confirmed that equity markets are suffering their second Ukraine-related sell off within three trading days, as the western powers react to Russia's occupation of the Crimean peninsula. Also as a result, European stock-markets have fallen by 2%. There also has been a rise in traditional purchases of safe haven assets such as gold and treasury binds, indicating that consumer confidence is falling.

It appears that Russia is using the threat to minority populations as an excuse for military intervention in its surrounding smaller neighboring countries. As of this point, it seems highly unlikely that the west will respond to Russia's military action with force. Rather than a military based response, the west may pose economic sanctions as an alternative response to Russia's actions. This may be why the Russia stock market went down by more than 11% at the time that this article was published.

The Russians also have the potential to economically retaliate by hitting the value of western investments. This could include BP's holding in Rosneft, which has reported to have dropped in value by 1 billion overnight.

Investors have learned over the past 20 years that geopolitical storms tend to blow over quickly. There however are two speculative reasons as to why this case involving Russia may be different than others in the past. The first is that, western powers may have accepted that there is not much they can do to evict Russia from Crimea, however their attitude toward the Putin regime has indeed changed. Putin can be persuaded to co-operate with the west. Relations may be hostile for some time, similar to how they were in 1989. There still is a strong possibility for relations with Russia to improve, nothing is set in stone. Secondly, there are many other nations neighboring Russia that have a Russian minority as a result of previous Soviet occupation. This is the second Russian occupation in recent years (Georgia in 2008 being the first). This will bring nervousness to Baltic countries regarding the extension of Putin's doctrine, which will inevitability bring economic consequences.    


http://www.economist.com/blogs/buttonwood/2014/03/markets











 

         

Ukraine Crisis Said to Have Minimal Economic Impact

Jens Weidmann, a European Central Bank Governing Council member and head of Germany's Bundesbank, stated that the crisis in Ukraine, specifically Crimea, has little impact on the Eurozone and would not be anything that the Eurozone could not handle. He goes on to say that even Russia has minimal impact on the Eurozone because Russia accounts for very little trade with the Eurozone and will not have much of an effect. I do not believe that this will be as manageable as Mr. Weidmann thinks because Russia will have effects on other major countries that will in turn have an effect on the Eurozone. Although these sanctions are potentially a good way to get Russia to pull back on Ukraine, I think that Russia is ready to take the implications in order to keep Crimea and show their dominance over the Eastern European countries. Because of this, Russia's economy will continue to worsen and I believe this will hurt the Eurozone more than Mr. Weidmann and other optimists think it will. 

http://online.wsj.com/news/articles/SB10001424052702303949704579461522664866960?mod=WSJ_World_MIDDLENews&mg=reno64-wsj

U.S. Quarterly Trade Deficit

http://www.nytimes.com/2014/03/20/business/us-current-account-deficit-is-smallest-in-14-years.html?ref=economy

This article discuses how the trade deficit has fallen from 81.1 billion to 96.4 billion. This smaller trade deficit shows that U.S. companies are producing more to fit the demand domestically and overseas. Exports reached 405.4 billion because of increased overseas sales of petroleum and agricultural products. We also have received about 206.1 billion from overseas because of investments. Payments overseas were about 137.8 billion. Both of these factors allowed for the income surplus in the U.S. to be 64.4 billion. There are two reasons we saw a decrease in this gap. One reason was because of the production of oil and gas in the U.S. The second reason is because low interest rates have decreased payments to foreigners that have treasury bonds in the U.S. and the payments from investments that come from overseas has increased and this has caused the nations investment surplus.

Warily Leading Japan’s Nuclear Reawakening

Shinzo Abe is the Prime Minister of Japan and he has been campaigning around with the intention of reviving Japan’s nuclear capabilities.  However, before the government can proceed, they first need the approval of all of the surrounding towns affected by the 2011 crisis. Three years have passed since the Fukushima accident. In the power plant, three of the six nuclear reactors melted down and resulted in disastrous consequences. Although local journalists are optimistic that he will be able to gain the favor of the residents. The community around Fukushima has been enthusiastically supporting the return of nuclear power. Even though the clean up from the recent meltdown is estimated to take decades. The incident has resulted in a lower total factor productivity and a steep loss of capital and labor. These factors contributed to a sharp decline in total output. Because jobs have become scarcer, the local communities have fallen on hard times and are welcoming the potential jobs that will come with the plant’s reawakening.

http://www.nytimes.com/2014/03/21/world/asia/warily-leading-japans-nuclear-reawakening.html?ref=world

U.S and Russia Sanctions tit for tat Over Crimea Crisis

Mark Landler of the New York Times wrote the article I read on March 20^th.  In response to President Obama’s threat by posing economic sanctions on Russia, President Vladamir Putin responded by preventing nine high ranking American officials including speaker of the house John Boenher and Senator John McCain from entering the country. This comes at an inopportune time for the recent Olympic host.  Russia had just recently spotted a fifty billion dollar tab for the Winter Olympics. Obviously they were under the impression that their investment would be returned through a stimulated economy and through newly inspired tourists, but I find it hard to believe that Russia will enjoy either of the two. These sanctions are going to severely limit any potential economic growth that the aggressor was looking forward to.

http://www.nytimes.com/2014/03/21/us/politics/us-expanding-sanctions-against-russia-over-ukraine.html?ref=business&_r=0