The current situation of the Japanese economy

http://www.economist.com/blogs/banyan/2014/02/japans-economy?zid=306&ah=1b164dbd43b0cb27ba0d4c3b12a5e227


After Shinzo Abe's new policy has been announced, the Japanese government put the economy of their country into a worse situation. The consumption tax will be increased from 5% to 8%, which is not a favorable decision in the middle of the recovery state. The consumer spending and confidence will decline, negatively affecting the entire condition, which is already in a terrible status, "bruised" by numerous problems that occurred since 1997.

Moreover the real GDP in the 4th quarter of 2013, was only 1%, which was way below 2.8%, which was the percentage the economists had anticipated. The growth rate was only 1.1% when it was observed during the 3rd quarter of 2013, which simply pointed out the end of the positive sign of the Japanese government until early 2013. Most people consider the reason for this was the poor exports, as trade surplus subtracted 1.8% from the boosted domestic demand and government spending - 3 percent. In addition, the shutdown of nuclear power plants made Japan more reliable on other types of energy, thus they had to import energy from foreign countries, which also contributed to the decrease in trade surplus.

Since the whole event is not going too well, Abe's policy will be even more critically judged by how well it has been done, in means of restoration of the Japanese government.

Economy in U.S. Expands More Than Previously Estimated

http://www.bloomberg.com/news/2014-03-27/economy-in-u-s-expands-at-faster-pace-than-previously-estimated.html

The U.S. economy grew rapidly in the fourth quarter, more than was expected. GDP grew at about 2.6%. While retail stores have not been having a great year, the health care sector grew contributing to the rise in GDP. The number of unemployment claims have also dropped to 311,000 from 321,000. Consumer purchases grew by 3.3%.

Many economists claim the slowing in the economy can be blamed on the extremely harsh winter the U.S. has faced, one of the worst since 1966. The warm weather will hopefully continue to boost the economy.

Staying unconventional

http://www.economist.com/news/finance-and-economics/21599355-new-research-suggests-central-bankers-should-be-bolder-and-more-innovative-staying

The Federal Reserve announced on March 19 that it would cut bond purchases by $10 billion to $55 billion next week. This latest announcement prompted increased interest in a set of papers on monetary policy that argue the "unconventional" policy of bond purchases when interest rates are low may not be as unconventional as we once thought. 

Much of the concern over QE stems from the mid-2000's when interest rates were so low that banks and life insurance companies took on more risk in order to hit their yield targets. The first paper, by Gabriel Chodorow-Reich of Harvard University contends that this is not an appropriate reason to slow down QE.

The second paper, by Joshua Hausman of the University of Michigan and Johannes Wieland of the University of California, San Diego argues that Japan’s latest round of monetary policy has “big upside.” They believe that as much as one percent of Japan’s GDP growth is a direct result of monetary policy.

The final paper, Kevin Sheedy of the London School of Economics urges central banks to consider replacing their inflation target with a nominal-GDP target. The author believes that debt, as a percentage of income is an important metric in determining the strength of the household balance sheet. As debt ratios have increased over the past few decades we should focus on an NGDP target in order to keep debt to GDP stable.

GM Recalls Another 824,000 Cars Over Faulty Ignition Switch

The total amount of vehicles that GM has recalled has now reached 2.6 million.  In recent events, GM decided to recall another 824,000 vehicles, which mostly includes the 2008-2010 models of the Cobalt, Saturn Ion and Sky, Pontiac G5, and the Solstice.  This also includes 150,000 recalls that are not within the United States.  The reason for these recalls has been mostly due to the faulty ignition switch, which has caused the engines of these vehicles to shut down when working.  This problem has been linked to twelve people being killed, which has caused a federal investigation into the situation.  This problem has not been good for the sales of GM, and this additional recall could persuade consumers to not buy vehicles form GM.

Holding Back Half the Nation

http://www.economist.com/news/briefing/21599763-womens-lowly-status-japanese-workplace-has-barely-improved-decades-and-country

This article discusses the current situation in Japan concerning women and work. Women's lowly status in the Japanese workplace has barely improved in decades, and the country suffers as a result.

Shinzo Abe wants to change the way women are viewed in the workforce by making sure they are represented. The article states, "In April 2013 he announced that allowing women to “shine” in the economy was the most important part of his “Abenomics” growth strategy. Raising female labour participation to the level of men’s could add 8m people to Japan’s shrinking workforce, potentially increasing GDP by as much as 15%, according to Goldman Sachs, an investment bank."

What do you think about this article and do you think the situation of women in the workplace in Japan will improve in the years to come? 

Turkish Economic Mess: How did it get to this point?

Turkey's economy is slowing down, its currency is record low against the dollar and many firms are facing great foreign debts. So how did Turkey get into this economic mess? Turkey has grown substantially over the last decade, after the global financial crisis. This rapid economic growth was field by cheap credit pouring into the country. For many years, Turkey enjoyed this foreign funded construction boom.  This came to an end when the U.S. Federal Reserve announced a scale-back in its stimulus program last summer. Suddenly, Turkey had less cash to invest. With the U.S. economy gaining more security after the crisis, investors began pulling their money out from emerging markets.

Turkey's growth slowed to around two percent and inflation rose to 7.4%. The country's currency slumped even further in January. This forced Turkey's central bank to make an economic decision, by doubling interest rates from 7.7 to 12 percent. This is a clear indication of the banks determination to prevent foreign capital outflows.

http://www.businessweek.com/articles/2014-02-03/bill-gates-is-right-corruption-isnt-the-biggest-aid-problem

When we talk about why capital doesn't always flow from countries that are capital rich to countries that are capital poor, its often cited that a lack of infrastructure especially regarding legal systems, property rights, and corruption in general are all reasons why. Corruption can be looked at as a tax on aid and governmental transactions in general that makes aid and government less efficient. Many politicians express that corruption in third world countries is enemy number one and a serious problem that needs to be tackled.

However, Bill Gates has extensive knowledge in the area of aid and capital investment in capital poor countries with the Bill and Melinda Gates Foundation and he is able to paint a more realistic picture of what exactly needs to happen to help these countries. A survey was done by the World Bank to see what the major obstacles facing companies around the world are. They were given 15 choices and were asked to rank them. Overall, corruption was 8th out of the 15 and in less than 1% of countries was corruption the top answer.

Corruption is still a major concern, but its merely a symptom of a problem. Its a symptom that stems from poor governance and weak institutions. Its important that as the article says, "civil society groups and donors should push for greater transparency, for reduced regulation and capricious bureaucracy, and for better policing."

IMF Reaches Deal to Provide Up to $18 Billion to Ukraine

http://online.wsj.com/news/articles/SB10001424052702304418404579464712032792176?mod=WSJ_economy_LeftTopHighlights&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304418404579464712032792176.html%3Fmod%3DWSJ_economy_LeftTopHighlights


As of recently, the IMF has decided to lend approximately $18 billion to Ukraine in order for their economy to stay afloat. Of course, however, there are certain criteria to be met. Some of these include cuts in spending, increases in taxes, and more regulations to avoid corruption. While Ukraine is starting to meet some of these criteria, officials in the US are trying to get a $1 billion guaranteed loan approve. The European Commission has also agreed to give Ukraine a loan provided that they can meet the measures put in place by the IMF.

Currently, Ukraine has a very large budget deficit and diminishing foreign reserves. In addition, their currency has sharply fallen since floating the exchange rate, putting the country in very difficult economic times. This crisis has been called the worst since breaking away from the Soviet Union. However, loans from the EU and the US would help greatly. The country is also expected to get about $27 billion in loans within the next two years.

It is possible that this will help Ukraine's economy greatly. However, meeting the requirements will be more difficult around now. Elections are in May, and the some of the population may not be willing to comply. Some opposition as already begun to surface, and it is common knowledge that many people don't like increases in taxes. We will see if Ukraine is able to comply with the given conditions. If they can, the $27 billion will help them greatly.

10 fastest growing cities

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

This article lists the top 10 fastest growing cities in the US, according to data from the Census Bureau, between July 2012 and July 2013. Austin, Texas is rated 1^st with a 2.6% gain in growth due to its thriving university town - University of Texas has 50,000-plus enrollment -  and jobs. Falling to 4.7% rate unemployment, Austin has the lowest unemployment rate of any metro area with a population of one million or more. Houston, TX is second due to jobs in its energy sector and affordable homes. Jobs and hiring is a major indicator for the growth of each of the listed growing cities. The unemployment rate has dropped from 2012 in each of these cities. There are other indicators for growth in major cities, but it seems that increasing job opportunities and lowing the unemployment rate is the stem of growth in the current economic state that the US is in after the great recession. 

Flight 370 Could Poorly Impact Malaysian Economy

In case you do not know the details behind the mysterious disappearance of Flight 370, an airplane that started from Kuala Lumpur, Malaysia, and was supposed to land in Beijing, China. However, air traffic control lost connection with the flight, and it mysteriously disappeared, with most people believing it crashed in the Indian Ocean in between China, Indonesia, and Australia.

Many people have criticized the way the Malaysian government has handled the situation, due to revealing information very slowly, and sometimes falsely, as well as being defensive when they should've been accommodating. In addition, there were two passengers with stolen passports on Flight 370, and with the confusion of the plane's trajectory, the question now is how much has this crisis influenced the Malaysian economy.

According to a survey done by WSJ Asia, Flight 370 has influenced 77% of people on whether or not they'll visit Malaysia, with 18% saying they weren't influenced, and 5% saying they were not sure. This could be a huge blow to Malaysia, because tourism is the 6th largest contributor to the economy. The country was planning on increasing tourist numbers from 25.7 to 28 million during 2014, including a growth of Australian tourism from 500,000 to 620,000. The highly anticipated "Visit Malaysia 2014" has been cancelled by the country as well.

Tourism contributes approximately $15 billion (USD) to the country's gross domestic product, approximately 5.3% of the country's total GDP, improving from 4.7% in 2011. Tourism also provided 16.4 % of Malaysia's employment in 2012. With the effects of the disappearance of Flight 370, it could devastatingly not only impact Malaysia Airlines, but the country itself.

With less tourism, Malaysian companies would make less profit, and more people would become unemployed. Companies could be seen relocating to other countries where tourism thrives more. To make up for less profit, companies that stay in Malaysia would have to raise prices, which lowers the value of the dollar, causing inflation. Needless to say, a recession could be in the works in Malaysia, and it all started with the disappearance of Flight 370.

Unemployment was only 3.4% in Malaysia in 2012, which is low by global standards. However, this number has risen in recent months, due to the current administration not creating any "difficult, dirty, or dangerous" jobs in sectors like construction safe or more profitable, but instead importing workers to do the jobs instead. Flight 370 might exponentially increase unemployment for Malaysia in the next coming months, too. 

http://qz.com/192630/the-missing-malaysia-airlines-flight-threatens-a-crucial-engine-of-the-countrys-economy/

http://www.news.com.au/travel/travel-updates/how-the-fallout-from-missing-malaysia-airlines-flight-mh370-will-impact-on-the-whole-country/story-fnizu68q-1226866415896