A Philosophy Lesson

A piece of art becomes beautiful not just because of what it is, but also because of what it is not. This article, based on Lao Tzu's proverb “To attain knowledge, add things every day. To attain wisdom, subtract things every day,” explores ways to add beauty to the corporate and economic world through the art of subtraction. May gives us examples of corporate companies that have applied this idea of subtraction-- Apple, Instagram, Toyota-- and shows us how they changed the world. 

I feel it is an interesting, thought provoking article that shows gives one important lesson-- that less is more, and that "removing just the right things in just the right way," makes good things happen. 

Japan's Economy

http://www.economist.com/news/finance-and-economics/21569435-can-fiscal-and-monetary-splurge-reboot-japans-recessionary-economy-keynes

This article basically discusses the kind of economic policy Japan’s Prime Minister Shinzo Abe is adopting. Some of the spending to improve the country’s ‘rusting’ infrastructure to prevent disasters such as the one on December 2^nd when a tunnel collapsed and crushed 9 motorists. Advocates of the increased public spending believe it will help the economy out of the recession while critics believe it’ll just add to Japan’s already huge debt. Another policy that has been adopting is increasing money supply by printing more money, which is also reducing the value of the currency increasing exports.            However, the current account still struggles because of the need for energy imports. If the public spending is successful, it could result in increased efficiency and higher tax revenues. Some call Abe’s policies ‘Abenomics’. 

Public versus Private: might not be the debate we are used to

http://www.nytimes.com/2013/01/16/business/when-privatization-works-and-why-it-doesnt-always.html?_r=0

This article in the New York Times business section suggests that perhaps it is not so much a debate as to privatize industries but rather incentivizing the correct areas to shepherd people and companies into doing what is best for all. An example emphasized is British Petroleum (BP) as it has been under both private and government hands within the last ten years. Neither system was efficient because the private sector overemphasized profits and the government overemphasized public benefit. Neither found a balance, and it hurt the company. Goals in a company need to be clear and measurable and pull people behind them rather than being ambiguous because standards skew people. It seems simply sociology but plays a big role in whether or not a company, a country or even the world is geared for success or failure.

From cliff to ceiling

http://www.economist.com/news/leaders/21569423-debt-ceiling-america-serves-no-useful-purpose-and-should-be-abolished-cliff

After narrowly avoiding the fiscal cliff, the government is facing another upcoming issue with the debt ceiling. In about 5 weeks, the Treasury Department will run out of authority to borrow money once the national debt reaches the debt ceiling. If they fail to increase the debt ceiling there could be dangerous economic ramifications such as the government defaulting on it's obligations.
The last time the debt ceiling was raised, the threat of default forced the president and the Democrats into deficit cutting deals prompted by the Republicans. Many ideas are floating around to fix the problem that the debt ceiling raises such as the minting of a trillion dollar coin, invoking the 14th amendment section about public debt, and have the Treasury make interest payments on the debt. Whatever the solution is to the debt ceiling it needs to come quick because the impact of default could send the economy back into a recession.

Apple Drops to 11-Month Low on Reports of IPhone Cutbacks

We all know Apple (AAPL) as the giant that has brought us sleek looking and innovative performing technology. However, Apple's famed iPhone has come to a stand still on sales and has been cutting orders from its manufacturers. Since over forecasting, Apple has seen a major decline in equity; record breaking 11-month low.

This article looks back at Apple's most recent actions and how it could have effected the equity drop-off.  One of many thoughts is Apple's shortening product cycle. As well as observing the harsh competition between Google (GOOG) and the slow come-back of Research In Motion, Inc (RIM).

Draghi drags his feet

This article tells how the European Central Bank decided after its policy meeting that from now on it will be the lender of last resort to the European Banks but not European Government. All this is being done to calm the markets down of possible Euro Banks failure hence regain investor confidence.
Any such development has positive impact on Dow Jones, S&P 500 and other indices hence help re boost the sluggish economy by regaining confidence. This also shows that although banks claim to have little exposure to European debt they actually have a lot of exposure and if big European banks fail, many American banks will be hit badly.

American Banks

This is a great article showing the effect of the European crisis on American Banks...

It tells us how much exposure each bank has to Europe and how it is safe to a certain extent.

Its great information and can help you invest in the bank based on your prediction of Europe

Too Big To Fail

The New York Times reviews the movie as being a very accurate portrayal of the events that occurred in 2008. The movie even stops to explain what credit default swaps were so that average people (people who are not taking NIBC class) can understand just exactly what was going on. I too was surprised that a movie portraying a recession could be rather thrilling and keep you wondering what was going to happen next, even though we are still living through the aftermath of the events.

Google Wallet and the Velocity of Money

Google has recently developed a new app called Google wallet, with which people can use their phone to shop with one touch of a button. Although Verizon Wireless declined to allow this application on their upcoming release of smartphones, this app could have a large effect on the macro economy. As discussed in class, an increase in the velocity of money would increase the supply of money and therefore shift the IS curve on our IS-LM model. How could this affect interest rate/output of the economy and how should the fed respond to this app if the velocity of money were to be increased?
Verizon Blocks Google Wallet

Italy’s Leader Unveils Radical Austerity Measures

The Prime Minister of Italy revealed yesterday new fiscal austerity measures that attempt to radically decrease the government deficit and increase long-term growth. Radical measures that would not be stomached in America, like closing of tax loopholes, increases in tax rates, and an increase in the retirement age, are being taken to help fix the ailing economy. Impressively, the Italian Prime Minister is claiming that these measures are needed because it is not the fault of the Eurozone, but Italy itself that has caused the current economic turmoil.

Although I am impressed by the Prime Minister's conviction in enacting these potentially unpopular measures, I am concerned about the short-term effect that this will enact. Cutting spending and raising taxes and retirement age may help in the long-run, but with the current state of the economy, it may not be the best option. It will cause a significant decrease in short-term aggregate demand, which at the moment may not be worth the benefit to the economy in the long-run.