The Role of Technology...

Exactly what kind of economic driver is technology? You can always go back to the basics, it increases production, it increases efficiency, blah blah blah.... But where else do you find technology in the Markets? An interesting answer I found was in this article, was on consumer shelfs. We have not really taken time as a class to look into consumer behavior, we've touched on the subject, and describe our behavior in terms of broader concepts, but never in its own focus.

I have a favorite section at MSCBC.com its under the technology category and is labeled Innovation by the publishers. Every time I flip through its content when something new pops up it is often related to consumer attitudes. This one in particular caught my eye, it involved the genetic selection for the modification of flower aromas. In it they talk of how accidentally scientist discovered genes producing the oils that create smells in plants and goes on to say how they modified a petunia to smell like a rose and how at later dates could get them to smell strongly of wintergreen or even the smells that make up root-beer.

But it amazed me how they did not delve into the specifics of how they did it but instead went straight onto when this technology could be commercialized and would hit shelves. I piqued my interest, that new technologies and discoveries are so easily thought of in terms of money, i wondered what other kinds of interesting innovations and inventions the rest of the class has found that have been immediately commercialized maybe before their full potential was realized?

Custom-scented flowers may be on the way

Scientists ID genes that determine plants smell, can create new aromas

Root beer-scented roses could soon be available at your local florist, according to scientists from Florida who are developing newly fragrant flowers.

The research could lead to custom-designed flower fragrances and even to better-smelling, and better-tasting, fruits and vegetables.

"We are very excited about the idea of putting these flowers in front of consumers and figuring out which fragrance excites people the most," said David Clark, a scientist at the University ofFlorida in Gainesville developing the new flowers. "Then we can use that information to assist breeders in developing flowers that people want to smell more, or even breed fruits that smell and taste better."

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Clark says the research is proof of concept. Years, and perhaps Food and Drug Administration approval in the case of any genetically engineered plants, are required before these blooms open their petals.

And when they do, you can expect to pay a premium for nature's fragrance; Clark estimates an extra fragrant flower will cost an extra 10 cents.

"We solved the quantity issue with the baby boomers," said Clark. "Now people are going back and asking, what about the quality?"

Forget The Fed. Watch China Instead

According to an article I read at CNNMoney.com, the central bank of greatest concern to investors and U.S. businesses right now isn't the Federal Reserve. It's the People's Bank of China. The Chinese Central Bank tightened credit Friday by requiring banks in China to increase their reserves for the second time this year. This move rattled markets around the world once again. By contrast, the exit strategy that Federal Reserve Chairman Ben Bernanke laid out Wednesday showing how he expected the Fed to start tightening U.S. credit caused barely anything to happen. According to David Wyss, chief economist for Standard & Poor's explained that, "It's a global economy and its becoming more and more global. You have to pay attention to what's happening in the world's No. 2 economy." The article goes on to say that:

"Kurt Karl, chief U.S. economist for Swiss Re, said the 8.7% economic growth in China last year is a major part of the reason the global recession likely ended in the middle of 2009.

Concerns about the fragility of that recovery, especially in light of debt problems dogging Europe right now, makes any slowing of Chinese growth a reason for concern everywhere.
China has become a big part of the engine of growth. It's stabilized the global economy through this downturn," said Karl.
But Karl and Wyss both believe the markets overreacted a bit to Friday's tightening in China.
Karl said that even with these steps and more moves expected later this year to slow the Chinese economy and keep prices in check, his firm recently raised its GDP forecast to growth of 9.4% this year. By contrast, most economists are forecasting only about 3% growth in the United States this year.
Karl said Friday's sell-off is due more to the uncertainty about Chinese policy than worries about an actual slowdown there.
"What the Fed is doing is built into the market. They've been fairly transparent," said Karl. "But the Chinese are so opaque that whenever they make a move, the timing is a surprise."
Slower U.S. exports ahead. Wyss said the biggest impact of a slowdown in China on U.S. businesses would come from reduced demand for U.S. goods.

China bought nearly $70 billion of U.S. goods in 2009, making it the No. 3 destination for U.S. exports, behind only Canada and Mexico."

So my question to you is, should the greatest concern for U.S. businesses and investors be the stability of the economy and central bank of China? If not, what should it be? Has China really become more important to the U.S. then the Federal Reserve?

Wall Street Helped Greece Mask Debt.

Clearly Wall Street didn't learn from the mess they helped make in the American housing market so they decided to go overseas with their strategies.

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts. Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.

Greed kept Wall Street going even though they knew what loomed on the horizon but it hasn't gone unnoticed in Europe. Wall Street's handiwork has been criticized overseas for quite some time now. Although Wall Street didn't create the problem, they exacerbated the problem by allowing Greece and others to borrow beyond their means.

I feel as though Wall Street will never learn the lesson that they need to regulate how they trade. If they don't, Wall Street will continue to ruthlessly give money and force countries into greater debt, then moving onto a new country and repeating the process there. It looks as though it's a never ending cycle.

Should the government regulate Wall Street more strictly or allow it to function the way it has been? Can you think of a situation where Wall Street will learn it's lesson and stop loaning sums of money the borrowing countries can't afford?

Full Article

http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=1&ref=business

Maybe We Arn't The Bottom of The Barrel??

I saw this article and i wonder what all of you think about it? Do you all believe that this is one man who's taking advantage of the current events that are bringing down the rest of the world, or do you really think that the rest of the world really is beginning to find themselves at a disadvantage to the United States again? It may seem to be a broad question but: do you think we have the right socio-economic formula?

Daniel Gross

Proud(ish) to Be American

Maybe we aren't doing so badly.

Published Feb 11, 2010

From the magazine issue dated Feb 22, 2010

When I visited Toyota's Tsutsumi plant in Toyota City last summer, it was as if I'd entered a bizarro auto world. Back then, America's carmakers were effectively wards of the state, technological laggards operating at a fraction of capacity. Yet here was a solvent, fully automated factory running three shifts, churning out Priuses—some equipped with solar panels in the roof. The welding shop looked like a scene from The Terminator.

But these icons of Japan's superior manufacturing practices have turned out to be clunkers. In a development that has brought much distress to pockets of America (like Cambridge, Mass., and San Francisco), Toyota has recalled Priuses to fix malfunctioning brakes—just after an image-marring recall for faulty accelerators on other models. The only thing more shattering to the bien-pensant world view would be news that Chez Panisse in Berkeley uses Crisco.

In the past couple of years, Americans have been down on themselves for having failed at the practices they're supposed to be really good at: creating jobs, innovating, growing, getting things done. In 2008 and 2009, America's competitive advantage seemed to melt away, and our loss was other countries' gain. London was eating New York's lunch in financial services. China was assuming global economic leadership. We came in third—third!—in the 2009 World Baseball Classic tournament.

But recent events suggest the cleat is on the other foot. Japan was supposed to have a huge competitive advantage in high-quality manufacturing. Well, not so much. The biggest beneficiary of the Prius debacle is likely to be Ford, the last truly independent U.S. automaker, which has already been taking market share from busted domestic rivals.

In the same vein, much of Prius-driving America believed Europe had a competitive advantage over the U.S. because of its greater social cohesion and careful coordination—at both the national and transnational levels. The Old World's safety net provides health care to all, and doesn't leave those down on their financial luck to fend for themselves. As a result, Europe weathered the economic downturn without suffering the mass bankruptcies, foreclosures, and rising hunger the U.S. has experienced.

But now the bonds that tie Europe together are coming asunder due to the travails of its less economically robust members. As Greece struggles to cope with high debt and a dysfunctional political system, it is threatening to drive a stake into the heart of the European monetary union. In theory, Europe's modus operandi—a single monetary policy for the 16 countries that use the euro—was supposed to help weaker members and allow for swift coordinated action in times of stress. But in practice, it's precisely the opposite. "The monetary union allowed Greece to push the solution to problems much further out in the future," says Daniel Gros, director of the Centre for European Policy Studies (no relation). "It turned out to be a fair-weather construction."

And when the clouds over Europe turned dark, the response was tough love, not aid and comfort. Europe's central powers have essentially told member countries that run into trouble—first Ireland, now Greece, and Portugal and Spain—to forget about bailouts. They must slash budgets, cut wages, reduce pensions, and generally stop sitting around in cafés watching soccer. Once again, the U.S., having taken its medicine quickly, looks better by comparison. Partly as a result of the most widely watched Greek drama since Euripides, the dollar has rallied strongly against the euro in the past three months.

There's more. London's goal of surpassing New York as a financial center crumbled in the fall of 2008; the U.K.'s financial sector is arguably in worse shape than America's. Two years ago Dubai was going to be the next Las Vegas/New York/Miami rolled into one, all because it was proving more adept at diversifying its economy from energy into tourism, services, and financial services. Now it's looking like the next Scranton.

Meanwhile, despite all the hand-wringing over unemployment and Washington's pathetic inability to deal with health care, the U.S. economy grew at a 5.7 percent annual rate in the fourth quarter. In the same quarter, productivity grew at a 6.2 percent annual rate—about three times the historical average. These numbers show America still has a competitive advantage in the disciplines that matter most right now: restructuring, adapting, and recovering.

ARTICLE LINK

Doing The Math On Coupons

According to an article at yahoo.finance.com, an hour spent cutting and clipping coupons can yield about 100 dollars in savings. Coupons are making a come back, thanks to the recession. The article goes on to say that in America last year, 3.3 billion coupons were redeemed last year. This was a 27 percent increase from 2008, and the first increase from year to year in 17 years. The article also explains how coupons went out of style, seen here:

"At first blush you can see why coupons fell out of fashion for so long -- and why so many consumers still ignore them.

You have to make time to visit a coupon Web site or collect the flyers from your mailbox, the supermarket or newspaper inserts. You need to sort through to find the ones you want, cut them out, stick them in your purse or wallet -- and remember to use them when you are at the cash register and you are trying to remember whether you bought everything on your shopping list and where you parked the car.

Average saving per coupon: Just $1.44, according to the Inmar report.

But let's treat this low finance topic for a moment the way we treat high finance. Let's subject it to the same math.

How long does it actually take to clip and use a coupon? Certainly the more you use, the less overall time you will spend per coupon, because so many of the costs -- getting flyers, sorting coupons and so on -- are generalized. Let's assume you spend a minute per coupon.

Saving $1.44 for a minute's effort is the equivalent of saving $14.40 for 10 minutes'.

Hourly rate: $86.40.

Maybe this would be as good a time as any to point out that the typical American working stiff -- those lucky enough to have jobs right now -- climbs out of bed each morning, goes through the miseries of commuting and endures the daily grind at the workplace for about $20 an hour.

Furthermore, money saved comes with an additional benefit. Unlike the money you earn at work, it is tax free. No payroll taxes. No federal or state income tax.

If your marginal tax rate were, say, 20 percent, you would have to earn $108 before tax to take home $86.40. If your marginal tax rate were 30 percent, you'd have to earn $123.

Very few of us ever do this kind of math, because we tend to treat low finance differently from high finance, and small sums differently from big ones. No wonder, even today, 99 percent of coupons are thrown away unused.

Yet finance isn't a separate topic from the rest of our personal lives. For all of us, our scarcest resource is time. Putting the right value on it, and putting it to the most productive use, is a financial challenge, as well as a personal one."

So my question to you is, would you or do you clip coupons? Do you think it is worth your time to use them? Also, is it a good idea for more Americans to use them?

Snowmageddon Could White Out Jobs too

We've all been watching the news and reading the reports online about the blizzard termed "Snowmageddon". With snow blanketing 49 states Friday, it may also mean snow days for 150,000 jobs in February.

Economists estimate that between 90,000 and 150,000 jobs could be lost in February, as the snow kept people home from work and stalled hiring during the month. Analysts had been expecting good news on the jobs front, forecasting that payrolls would expand. Instead, both people who have jobs and those who were set to start new positions couldn't get to work because of the weather. As a result, they'll file for unemployment benefits.

These jobs will be mostly from retail, manufacturing, construction and transportation. This could break the trend of improving jobs data. However, economists are maintaining their positive outlooks and saying that the storm's negative impact is only a temporary blip.

When I first heard of Snowmageddon, I didn't think about the economic problems it could bring, I was simply in awe of the amount of snow. I know driving in snow can slow the morning commute but I figured road crews would be up and at it clearing the roadways. It really makes me realize how important road crews are when it comes to winter travel. Supply and demand will be effected in both positive and negative ways as well. Positive impacts will come for a greater demand for snow clearing supplies such as shovel, snow blowers and salt while negative impacts will occur on luxuries such as movie theaters and restaurants. This will hurt our GDP as well, since consumption will decrease.

What are your thoughts on Snowmageddon and the jobs lost? Do you think Snowmageddon will have any effect on other economic areas?

Full article:

http://money.cnn.com/2010/02/11/news/economy/snow_buries_payrolls/index.htm

The next crisis: Commercial real estate

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WASHINGTON (CNNMoney.com) -- A congressional watchdog panel warned on Thursday that mounting commercial real estate losses could endanger the banking system and thwart economic recovery.

A total of $1.4 trillion in commercial real estate loans will require refinancing in the next four years, the Congressional Oversight Panel said in a report. More than half of those loans are underwater, written for properties whose value has dropped like a rock.

The expected losses when loans go bad could hit between $200 billion to $300 billion and threaten 3,000 small and mid-size banks with a disproportionate share of commercial real estate assets on their books, according to the panel.

The report is intended to "wave a red flag" to the White House and Congress that the commercial real estate loan market is going to get a lot worse before it gets better.

Elizabeth Warren, the oversight panel's chairwoman, said "When commercial properties fail, the result is a downward spiral of economic contraction, as these are the same small banks that create jobs and boost economic activity."

Possible solutions mentioned....

The Treasury department should "stress test" banks that are concentrated in commercial loans. Also, putting capital into these small banks is another solution that was mentioned. Bank regulators could also simply allow banks to extend underwater loans rather than requiring them to recognize losses, but the panel worries that such a move could delay a rebound in bank lending. But the panel also worries that massive writedowns throughout the banking system could stymie lending and create a "negative bubble." Keeping a close eye on these small banks is the main idea though. 

What are the ripple effects on this commercial real estate crisis on the economy? What do you think the best solution to this potential problem? 

Where's Housing Heading? Follow Rents

What's the newest way to value your house? According to CNN money, the cost of rent is a viable measure.

In recent reports, Deutsche Bank demonstrates how steady or even falling rents have pulled down housing prices, to the point where in many markets it costs about the same amount to own as to lease. That's a golden mean that America hasn't seen in almost a decade. The DB research also offers convincing evidence that the wrenching adjustment in housing prices is finished for much of the nation, with a bit more pain to come in selected areas.

Before the housing downturn, people weren't wiling to pay much less to lease a house than to own it. With renting, you aren't paying the mortgage and taxes but you're still getting the same rooms to enjoy. However, rents are continuing to fall so housing will most likely follow suit. The article says that housing prices should stabilize and possibly increase by the end of 2010.

This is a pretty bright outlook on the housing market. It's good to see that prices will soon stabilize and possibly raise. People who were trying to get out of their homes but couldn't will have to wait longer for prices to get around where they once were so they won't take a huge loss if they were to sell now. I also like the use of rent as a measure of how the housing market is doing. While home prices were booming, rent was moving along it's normal pace. Therefore, rent is a better measure than home prices because home prices increased so rapidly.

Do you think rent is a good measure of the housing market? If not, what would be a better measure of the market in your opinion?

Full article

http://money.cnn.com/2010/02/12/real_estate/housing_prices_rents.fortune/index.htm

Do You Want A Piece of Buffett?

According to the Wall Street Journal, for the first time Americans will be able to own a piece of Warren Buffett. Buffett's Berkshire Hathaway Inc., whose multi-thousand-dollar share price made it a thinly traded luxury of wealthy investors and institutions, is going mainstream as it joins the the Standard & Poor's 500-stock index. More than 1 trillion dollars of investor money directly tracks this index. This is resulting in a scramble for Berkshire shares by index funds that, by one estimate, will reach 14 billion dollars of buying. Small-time investors, meanwhile, will finally be getting a piece of Buffett just as uncertainty about the future of of his 178 billion dollar conglomerate continues to rise. Buffet is 79 years old, and is entering the latter part of his career, and little is known about his succession plans, other than that he has placed the name of his replacement in an envelope he keeps in his office. The article in the Wall Street Journal goes on to say:

"Yet small investors are likely soon to have billions of dollars more in Berkshire stock, thanks both to its entry into the index and to a recent stock split.

Berkshire has long had two classes of stock. It split the lower-priced of these, known as the B shares, 50 to 1, making them affordable to more individual investors.

Joel Nath, a 25-year-old accountant who participates in an investment club called "Scratch & Win," always wanted to buy some Berkshire. The late-January split put the B shares, commonly known as Baby B's, within his reach. He bought nine at $73 each. (They closed Thursday at $76.69.)

Mr. Nath, who lives and works in Omaha, Neb., where Berkshire is based, was turned on to investing at a young age by his grandmother, Marlene Matney. While baby-sitting for him and his two brothers, Ms. Matney, now 78, taught them to look at ticker symbols on television when they were learning the alphabet.

More recently, Ms. Matney was disappointed when she wasn't allowed to join "Scratch & Win," because the investment club didn't want two members from the same family. But she still has an edge. In the aftermath of the stock split, Mr. Nath and his brothers all bought shares for more than $70 each, Ms. Matney said, "but they didn't know that I waited until it went down." She bought hers for $68.

Sensing opportunity in Berkshire's move to the S&P 500 index, hedge-fund manager Jonathan Carmel has already made his move to play the stock."

So my question to you is, would you be willing to invest in Buffett's company Berkshire, even though he is 79 and there is uncertainty of who is going to take over the company for him?

Unemployment taxes slam businesses

Full article link

NEW YORK (CNNMoney.com) -- Employers are getting hit with a massive tax hike at a time when they can least afford it.

Cmpanies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies.

The median increase will be 27.5%. And employers in places such as Hawaii and Florida could see levies skyrocket more than ten-fold.

Many of these hikes happened automatically as prolonged joblessness triggered state laws governing their unemployment insurance systems. But at least seven states voted to raise their taxable wage bases, the level of income subject to unemployment tax. And another 10 are looking at upping the wage bases or tax rates.

The states are scrambling to restore their unemployment insurance trust funds, which cover claims.

State trust funds have been decimated by the Great Recession, forcing a record 26 states to borrow a total of more than $30 billion from the federal government. The numbers are expected to grow to 40 states borrowing $90 billion by 2012, said George Wentworth, policy analyst at the National Employment Law Project.

"States are going to be facing higher unemployment tax rates for some period of time," Wentworth said.

In addition, employers pay federal unemployment taxes. If states don't repay their federal loans, businesses could see their federal tax go up as well in coming years, said Rich Hobbie, executive director of the National Association of State Workforce Agencies.

Higher taxes, however, dampen employers' ability to hire new workers, crimping any nascent economic recovery. Companies pay taxes on each employee on the payroll.

"There's no doubt it discourages hiring," said Douglas Holmes, president of UWC-Strategic Services on Unemployment and Workers' Compensation, an employers' trade group. "In fact, it leads to increased unemployment."

Cognizant of this, some states are looking to soften the blow through legislation that would delay the hikes.

The article then goes on to talk about what states are being hurt the most and some of the consequences. Is there a way of hiring people and not rising taxes? What are possible solutions to this unemployment tax problem? Is there a way for the government to create more jobs to reduce unemployment? What are your thoughts?

Jealous Much...

India's performance over the last decade, has been one that broke a barrier. It was viewed that only Asian countries with authoritarian control could flourish, India was the first country to break this mold. After reforms in the 1990s, the country has been allowed to raise 1 billion people into moderately better living conditions; and all this was done in the opposite manner as China. Regulations that had been in place over the 40 years preceding the 90's were thrown to the wind and phenomenal growth has been discovered:

" 6 percent in the 1990s and early 2000s and then jumped to 8.5 percent between 2003-04 and 2008-09. Alongside, poverty has declined as well. The proportion of those living below the poverty line fell from 36 percent in 1993-94 to 27.5 percent in 2004-05."

"One other important indicator reinforces these observations: the spread of telephones. As late as the end of March 1999, India had a total of just 23 million phones, translating into 2.3 telephones per hundred individuals. Within 10.5 years, at the end of September 2009, the two indicators had climbed up to 509 million and 43.5, respectively. Even in rural India, on the average, there now exists one phone per household. Bihar, the poorest state in India, can boast of 23 telephones per 100 individuals."

It makes me wonder what kind of tools and reforms were used in India, and how we could perhaps learn from our largest Democratic cousin.

Article Link

Update on Euro Crisis and International Debt

I was reading the news today and came across this article about the European Union and international debt's impact on the US economy. http://www.npr.org/templates/story/story.php?storyId=123603449

One way America will be affected, Stiglitz says, is that the crisis is putting more pressure on countries all over the world to engage in deficit reduction. That means lower aggregate demand for goods and services of all kinds, including American goods and services, he says.

"One of the things we've been counting on to help our recovery is exports," Stiglitz says, and the crisis could affect exports in another way as well. If the euro weakens in relation to the dollar, U.S. goods will become far more expensive for Europeans, who likely will buy less.

Citi To Let Distressed Homeowners Stay For 6 Months

After watching the video on the housing market in class today, I came an across an article about what hurting financial giant Citigroup Inc. is doing for struggling homeowners today. Citigroup plans on letting homeowners on the verge of foreclosure stay in their homes for six months, if they turn over the deed of their property. Citi says it is launching what they call the pilot program, named "Foreclosure Alternatives," this week in six states, which includes Michigan. Initially about 1,000 homeowners are expected to participate. If successful, Citi may expand the program nationwide. The article at news.yahoo.com goes on to state the specifics of how the program works, seen here:

"In a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi's program, like other "deed in lieu of foreclosure" efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower's credit score.

The policy is an attempt to deal with what lenders see as a growing phenomenon: borrowers who choose to default on their mortgages. Close to one in every three U.S. homeowners owe more on their mortgages than their homes are worth, according to Moody's Economy.com.

Many housing analysts say these borrowers — particularly those who owe at least 20 percent more than their home's current value — are choosing to walk away because they see little chance that home prices will come back.

Also, many states have lengthened the time it takes to complete a foreclosure, making the process more time-consuming and expensive for the lending industry.

"Why should we all go through the foreclosure process and evict people?" said Sanjiv Das, Citi's top mortgage executive. Avoiding foreclosure, Das said, is "less painful for our borrowers as well as for us."

To me, this seems like it may be a better method of foreclosure for both the lender and borrower. It won't affect the borrower's credit score as much, making it easier for them to get a loan in the future, and it is also shines the lenders in a better light, not showing them as simply kicking out the borrowers from their homes because they can't pay their mortgages. But tell me what you think. Do you believe this is a good foreclosure program? Does it benefit the borrower's and lender's? Does it benefit one more than the other?

Home energy retrofits: The bottom line

Everyone is trying to save money these days. Energy efficiency in a home will not only save money, but will also help the environment. A main problem though is some energy retrofits may not add value to the home. Energy efficiency in households is being pursed by congress and will hopefully provide around $11 billion toward energy efficient homes as well as new job openings. The government is looking to provide tax credits to though who have energy efficient homes. Another problem is that the cost of installing something that might be more energy efficient may take up to 10 years to gain back. Also, sellers argue that home appraisers need to take in consideration the value of a energy efficient home and not just base the home on square footage. 

Investing to make your home more energy efficient may lower the bills, but it may not boost its price, partly because these investments aren't fully valued by appraisers.

"Everyone is talking about return on investment, it's the first thing customers want to know," said Jeff Geoghan, a Coldwell Banker realtor in Lancaster, Penn. "But the appraisal industry is not up to speed on this at all." Nearly everyone agrees that performing an energy retrofit will make your place more comfortable and save a lot on bills. But if the retrofits don't add value to the home's price, will homeowners make the improvements, regardless of whether or not the government decides to pick up half the tab, as they are considering? Details have yet to be ironed out and passage is not a sure thing, but it's thought a new jobs initiative being pursued by Democrats in Congress may funnel some $11 billion towards home energy efficiency.

It's designed primarily to put contractors back to work, doing things like adding insulation, caulking windows and doors, and upgrading heating units, air conditioners, hot water heaters and other appliances.But it would also cut down on pollution, and the monthly savings for homeowners could be substantial. If passed, homeowners may be eligible for a tax credit worth up to $12,000, or half the cost of the retrofits, which ever is lower. If a homeowner spends $24,000 and cuts its energy use in half - probably the most ambitions reduction that can reasonably be achieved - it would save the average homeowner $100 a month on their utility bills, said Lane Burt, manager of building energy policy at Natural Resources Defense Council. If they get $12,000 reimbursed from the government, then payback time would be 10 years. But if people spend that much and sell the house before 10 years, they may be out some money. Many homeowners would likely opt to spend less, going for the cheapest options that save the most energy. Contractors who perform energy retrofits say most people spend around $6,000 or $7,000, and the payback time is around 5 years.

But assuming the full amount is spent and the savings are $100 a month, that should result in a substantial increase in home's valuation. After all, an extra $100 a month one could put towards a mortgage means an increase of $20,000 on the purchase price for a home, according to a calculation done on a purchase price calculator. Yet that extra $20,000 does not show up on a home's appraisal.

'It sounds good on paper, but it's just not how the American consumer makes choices," said Geoghan, the realtor. 'If you're buying a house, and you see a furnace has a 95% efficiency rating, are you really going to make your decision based on that?"

Another realtor agreed. "How much can you really raise the value, maybe few thousand dollars," said Laurie Hassey of the Long Reality Company in Tucson, Ariz. "It's still all based on square footage." Part of the problem is that many real estate appraisers aren't trained to look for energy efficiency upgrades.

"There are appraisers out there that have extremely minimal education," said Leslie Sellers, president of the the industry association the Appraisal Institute. Sellers said that about a quarter of all appraisers only have the most basic of qualifications - a level known as a "licensed appraiser." Up until 2008, when the standards were tightened, that meant all they needed was a high school diploma and half a semester of course work.Sellers said the institute is currently running green certification programs that will teach appraisers how to better value upgrades like efficiency improvements.Sellers also suggested going with a better trained appraiser - a "certified appraiser" - when getting a home evaluated, even if they cost more money. 

http://money.cnn.com/2010/02/04/news/economy/energy_retrofits/index.htm 

What are you thoughts on more energy efficient homes? Are they a good investment? should the government be involved? 

Make Room for China.

CNN money reported today that China will likely overtake Japan as the second largest economy in the world.

China is likely to soon overtake Japan to become the world's second largest economy, a milestone that will only fuel growing fears about the economic might of the world's largest country. China's economy grew by 8.7% in 2009, even in the face of a global economic slowdown. Japan, which will report its full-year numbers on Feb. 14, is expected to slip behind China due to the steep decline in its economy in the first half of last year.

Economists are saying that it is probable that the Chinese economy will eventually overtake the U.S economy in 20 to 30 years. However, in the 1980's, Japan was once thought to be an unstoppable economic force but has suffered and is currently in what is being called the "Lost Decade." Although there are differences between Japan of the 80's and China of today many similarities are seen.

There are signs of a developing asset bubble in China's housing and equity markets. China's banking system has been dogged by questions about its transparency. There is also a dependence on exports that are supported by the government's manipulation of the currency and limits on population growth.

The last year shows one of the problems with a country whose economy is greatly export driven. When the global recession hit, China's exports were not spared, and it took about $586 billion in government spending, to fill the gap.

I think China is setting up for a economic downturn similar to the current U.S one unless something is done. The asset bubble makes me think immediately of the video today and how a similar bubble spelled disaster for the U.S market. Also, with the government spending $586 billion to fill the export gap this trend of economic growth can't continue for much longer. China needs to look at the U.S and learn from our mistakes.

What could China do to keep themselves out of an economic downturn? Could lessons learned from the U.S downturn be applied and used in China?

Full Article

http://money.cnn.com/2010/02/11/news/international/china_japan/index.htm?hpt=T2

Copenhagen...

I came across this article and read a few more at the same web site regarding Global Climate change, and how its been working out so far. As a new-comer to the field ( I have little previous knowledge built up, in fact I'm not even convinced about the severity of the problem that is broadcast in o-so many ways: Ill receive some scathing remarks for that one im sure, but i digress) it seems to me that current efforts to jump start international co-operations are such ridiculous FAILS, that there seems to be no point in continuing these ridiculous conferences.

"By most assessments, the Kyoto Protocol has been a failure. Emissions have risen substantially over the past five years even in parties to the Protocol and in many EU countries expressing great commitment to reducing their own emissions. Four of the world’s top five emitters (the U.S., China, India and Russia) are not included in the treaty, have not ratified it, or are not subject to substantial limitations. Finally, the Kyoto Protocol attempted to establish a system of monetized assets (emissions quotas) and distribute them across countries without any ability to enforce the rules. "

From this Article

or to draw our attention to the 45,000 individuals who gathered in Copenhagen,

"The Copenhagen Accord certainly does not manifest earlier hopes that this meeting would see a grand agreement covering emissions commitments for 2020 by the major emitting economies. It does not set a goal for global emissions reductions by the year 2050. It does not give details on international carbon market mechanisms, such as much-needed reform for the Clean Development Mechanism, beyond 2012. It is completely vague on technology transfer. It does not specify procedures for reducing deforestation in tropical countries. Finally, it does not even set out a timeline for concluding a larger treaty. Some of these areas were by most accounts close to consensus even before the Copenhagen conference began, so the lack of language on these initiatives could be seen as a step backward. Moreover, the “Accord” does not even represent a consensus document for the many countries gathered here; rather, it was assembled on the last day of the conference when the heads of state of the U.S., China, Brazil, India and a few others realized that the conference delegates had not made enough progress to conclude a larger deal. The other 185 or so country delegations merely conducted a cursory vote acknowledging this much narrower agreement."

I can hardly believe that all the energy expended in getting all those people to the conference will be balanced by the results, in fact the only product is see is a little economic boost for Denmark. Why continue these useless conferences, which include gatherings before our time i.e:1972 Stockholm Conference,1992 Rio Conference, 1987 Montreal Protocol. The international community needs to find a new method if they want to achieve anything, to be honest i don't see anything getting done anytime soon. We'll hit an analogous disaster the size of our "great recession" were pulling ourselves out of and decide its time to get down to business.

45,000 people produced three pages in Copenhagen. Does anybody see any positives in these Conferences? Has there been results I've over looked? Or am i totally correct in assuming that the Climate Change community simply doesn't have anything together??? The forces their going up against are too strong to be dealt with at the current level.

Europe's Woes Could Infect U.S. Recovery

After talking about Europe's debt crisis on Monday, I came across this article about how their problems may hurt, and also delay America's strides to recover from the recession. The article, which can be read at the bottom of the post, explains how dangerously high debt levels in Greece and some other European countries could cause a wave of national defaults, undermining revival in Europe and probably in the U.S. as well. It goes on to say that:

"China's recent steps to cool its economy also complicate President Barack Obama's plan to attack high unemployment here by increasing U.S. exports. Financial markets have been whipsawed over concerns that debt problems in Greece -- and perhaps also in high-debt Spain, Portugal, Ireland and even Italy -- might infect stronger European neighbors.

A strike by civil servants to protest wage cuts shut schools and grounded flights across Greece on Wednesday. European Union leaders plan to discuss the crisis -- and the feasibility of rescue attempts -- during a summit Thursday in Brussels, Belgium.
Euro zone countries are key U.S. trading partners, and the United States can't meet Obama's goal of doubling exports in five years -- or reap the benefits in new jobs -- if debt default contagion spreads throughout Europe."

With European Union leaders feeling a sense of embarrassment if they go to the International Monetary Fund, Europe could be facing a long-term debt problem. This looks like it may hurt the U.S. trading wise, but also in the job creation department as well. European countries are one of the main U.S. trading partners, and with European leaders that as of now, would like to enter years of debt instead of borrow from the IMF, the ramifications of this could really affect the U.S. So my question to you is, if European leaders do not decide to go to the monetary fund, will their debt negatively affect the U.S.? If so, how severe of an impact will this have on America's efforts to recover from the recession?

http://finance.yahoo.com/news/Debt-woes-in-Europe-could-apf-3731211478.html?x=0

Taking Matters Into Your Own Hands

Why wait for the government to reduce the size of banks? Countless Americans are taking matters into their own hands and switching accounts from large national banks to local banks and credit unions.

"I basically figured if Congress wasn't going to take action to reduce the size of banks or at least regulate the activities they were involved in, I'd remove my part of the money they [Bank of America] controlled," Collins said.

The general public anger over taxpayer bailouts and big bonuses for bankers is one reason. There's also growing resentment about how many big banks are nickel-and-diming customers in tough economic times.

The article goes on to say that smaller banks are also luring customers away from the bigger banks with attractive rates that the bigger banks can't match. Although the impact isn't very large since consumer deposits make up only a fraction of the bank's overall deposit base. Businesses are where the real money is and even those are starting to consider making a switch.

Two months ago, John Andersen said he became so fed up with some of the practices of the big banks that he decided to close the KeyBank checking account he used for his Portland, Ore.-based carpet cleaning business The Lindey Company.

I think that if more people were to switch to local banks, local economies would be better off. It's just another way of supporting local businesses. These types of banks are trying to gain customers so the attractive rates and no fees are beneficial for both parties. At big banks, they have the market power to make you pay the hidden fees since most people won't do anything about it. If local businesses also switched to local banks the larger banks would have to take notice and possibly start offering better rates as well.

Do you think switching banks is a viable way to reduce the size of banks or regulate the activities they are involved in? If not, what is another alternative to switching banks that would allow your voice to be heard by larger banks?

Full article available at

http://money.cnn.com/2010/02/10/news/companies/banks_consumers_switch/index.htm

New Credit Card Regulations

Starting on February 22nd, 2010 there will be a new set credit card regulations. These regulations are mostly set to protect the cardholders, including a 45 day notice of any rate increase, and the bill be sent 21 days before it is due. A big topic about this new regulation has to do with college students (like us) or people under 21 (assuming most of us in the class are under 21). Basically it will be much harder for underaged adults to get a credit card without having a cosigner or a way of paying the debt independently. Check out some of the write up below.

Soon, college students will find it much tougher to get a new credit card. Later this month, a new law goes into effect that puts limits on how students can obtain new credit cards. Under the new law, those under 21 must have a parent or other adult cosign for the card if they do not make enough money to pay off any debt they may charge independently.

The Credit Card Accountability Responsibility and Disclosure Act of 2009, starting on February 22, 2010 is aimed at providing new protections for cardholders, including 45 days notice of any rate hike, and the requirement that all bills be sent 21 days before the due date. With change in the air, credit experts say it's a good time to form a new habit reading your statement closely. "It doesn't matter how big, bright, bold or better-positioned the now less-than-fine, more-easily-understandable print will be if you don't read it," says Adam Levin of credit. com.

The new law will also bring some big changes for college students. Consumers who are under age 21 must either have an adult cosigner, or have independent means of repaying the debt. Financial aid officers at UW-Eau Claire say the act is intended to protect students who may use a credit card to live beyond their means. "They've used that credit card to sometimes maintain a lifestyle that isn't in line with what they can afford to maintain as a student then we kind of have a combination of frank discussions with people," said Kathy Sahlhoff, director of Financial Aid.

A 2009 survey by student loan giant Sallie Mae, showed that 84 percent of college students have at least one credit card. Only 17 percent of those students said they paid their cards off each month. Even more troubling, the average student leaves college with over $4,000 of credit card debt. "Usually anything you can eat, wear or drink is not an emergency. And that's a good rule of thumb, not using your credit card for any of those kinds of purchases," commented Sahlhoff.

It's important to note, the rules regarding college students apply only to new credit cards, not existing ones. So college students who already have a credit card will not be affected, unless they sign up for a new credit card. (some say to apply before the 22nd while you can still get a credit card on your own with little hassle)

Based on the statistics above, I can see that a good handful of college students may have a hard time paying their credit card bills. Even though this regulation is intended to protect underaged adults, this regulation does not seem fair to some people that do a good job on keeping up on their bills. Some young adults need a credit card in a case of an emergency. What do you think about this new regulation overall? Will it protect us or put a burden on us? Would having difficult access to a credit card be a money saver?