Troubled Homeowners Recieve Help

Assistance is coming for those hit hardest by the housing crisis. 5 states are to recieve money from the new program to help borrowers Michigan, Arizona, Nevada California and Florida. These states were selected because of the issues they are facing with foreclosures and high levels of individuals who owe more money than the value of their own homes. "President Obama announced Friday a $1.5 billion program to help borrowers in the five states hit hardest by the housing crisis."


After watching the House of Cards video in class last week it is interesting to see that the problems that were discussed in the film are still around several years later. Although this is definately a sign that something needs to be done about this issue if it is still as big a problem as it was years ago, it is nice to see that some effort is being made to remedy the situation. The article at cnn.com shows that there are mixed views about whether or not the initiative will be successful. What are your own opinions on the issue? Do you believe that Obama's new program will be a success?

http://money.cnn.com/2010/02/19/real_estate/housing_help_unemployed/index.htm

Major Global Sporting Events Helping Other Countries Who Need It

South Africa’s economy is to grow 2.3% in 2010.

It seems like big sporting events such as The World Cup and the Summer Olympics in 2016 are helping countires that have been underdeveloped compared to the previous countries that hosted these events and are giving their economies a great boost. As I suspected, Brazil’s economy has risen since they were chosen to host the 2016 Olympics in Rio and so has South Africa’s economy when they will be hosting the World Cup.

The South African government expects the country's economy to grow by 2.3% this year, helped by the football World Cup in the summer.

The prediction of a return to economic expansion after last year's recession was given by Finance Minister Pravin Gordhan as he delivered the budget.

He expects the World Cup to add 0.5% to the country's 2010 economic growth, led by visiting football fans' spending.

Mr Gordhan added there would be a new effort to boost youth employment.

The budget comes as South Africa is mired in an overall unemployment rate of about 25%, and an increasing gap between the rich and poor.

Mr Gordham said the government aimed to reduce its budget deficit in the medium term, but its immediate focus was on helping the continuing economic recovery.

He also pledged to maintain a grip on inflation, and said there would be no moves to fix the price of the rand.

Dollar Rises In Value

After declining in value compared to other world currencies as the recession hit the dollars is making a comeback. It's good to see the value of U.S. currency rising again after the economic difficulties the the nation has been facing over the past few years. An article on Marketwatch.com opened with a statment on the subject, "The dollar rose to a five-week high against the yen and to a fresh nine-month high against the euro early in Asia on Friday, after the U.S. Federal Reserve raised its discount rate in a fresh sign the Fed thinks financial markets are gradually returning to normal."

Although these increases in the monetary value of the dollar are a good sign, as the Fed pointed out. There are other issues which must be taken care of to create a sustained rise in dollar. According to the article, "A sustained dollar rally may only come if jobs and other data improve, laying the groundwork for a hike to the Fed's key policy rate, traders said."

Do you think that continued growth of the dollar is likely at this time? Given Greece's current debt problems, how much of the dollar's rally against the Euro do you believe is attributable to actual improvement of economic policy vs. a decline in the value of the Euro because of Greek debt issues?

http://www.marketwatch.com/story/world-forex-dollar-surges-vs-yen-euro-on-fed-discount-rate-hike-2010-02-18

Did the stimulus work or not?

sorry Caleb...the old post with your comment was deleted by accident...sorry about that...would you mind to do it again...?

A year after Congress passed President Barack Obama's huge economic revival plan, the results are mixed — and hardly final.
Despite Obama's bold promises, unemployment remains stubbornly high. But job losses have slowed dramatically.

And the nation's recent economic growth is real, even though the government has spent just one-third of the massive stimulus plan. The program_ originally estimated at $787 billion but now priced at $862 billion — is to continue pumping federal money into the economy into 2011.

Job creation became the administration's mantra. And the White House said the program would be held accountable with an unprecedented public report of every job linked to the stimulus.

Indeed, the jobs were documented one by one on a new government Web site, and the administration proudly pointed to more than 640,000 linked to the stimulus in the early months. It was the best evidence to prove that the stimulus was well on its way to fulfilling Obama's promise of 3.5 million jobs saved or created by the program.

But those counts were seriously flawed, including greatly exaggerated job claims, positions included that had nothing to do with the stimulus, and spending that had nothing to do with saving or creating jobs.

When Obama signed the stimulus law, the nation's unemployment rate was 7.7 percent. His administration had promised the program would stop the jobless rate from passing 8 percent. But weeks after the stimulus became law, that threshold was broken.

Have you heard about the stimulus before? Do you think the stimulus worked? Or do you agree with the statement from this post which said including greatly exaggerated job claims, positions included that had nothing to do with the stimulus, and spending that had nothing to do with saving or creating jobs.

http://news.yahoo.com/s/ap/20100218/ap_on_bi_ge/us_obama_stimulus_fact_check

Charity in Economy

Today in class we talked about the "catch-up principle", and while I'm no economist, the "Send a Cow" project makes a lot of sense to me. Providing and impoverished community with a means by which to obtain a clean drink and earn money is essentially handing them a way to sustain life. While this lifestyle that is promoted is not that of a developed nation, it is much more functional than what was had before.

Is this "catch-up principle" how charity fits into an economy? Granted, giving a cow is different than sending money. Send a Cow collects charitable donations a gives out cows which allow a village or small community to sustain healthier living. But what about just giving money? Of course there are sensible reasons not too - the most obvious being: money can go in so many directions... so many useless and unproductive directions.

CNN's website has a posted article about the top corporate donors to third world nation Haiti. The top 8 organizations that have given to Haiti so far have been:

1. Teva Pharmaceuticals (the world's largest maker of generic drugs),
2. Jefferies & Co.,
3. Becton,
4. Dickinson and Co.,
5. Carnival (Cruise Lines),
6. General Electric,
7. Deutsche Bank AG,
8. Abbott Labs (a Chicago-based pharmaceutical company),
9. Digicel (a mobile telecom provider in the Caribbean and Central America)

The contributions made by these companies have been ranked by their monetary value, though money is not what they provided.

When a country is in need of assistance, money is not the best thing to give them. To be stable in any way, even economically, a community has to have a sustainable way of, not only surviving, but as mentioned in class today, providing its members choices. Better-off countries should provide assistance in the form of goods and/or services. I think sometimes, people forget that the most important things aren't measured by money, and can't be. Man-power, for instance, or materials for homes or a school. I apologize if this seems rant-ish, but I'm still trying to grasp myself, how we can attempt to predict economic trends without taking into account a human factor.

World Cup Crime fear dismissed.

If you have any respect for the beautiful game football, or to you American’s, soccer, you’ll be happy yet sad to know that the ticket sales for this summers events have been less the expected due to the “exaggerated” fear of the crime level in South Africa.

So for someone like me or my family this is great because we love soccer and are from Africa and getting these tickets would be great, and since people are scared of the "supposed" rising crime rate they are selling the tickets left over on a first come first serve basis, which is great. If you want them, they are at a lowered price due to the low sales.

The chief executive of the Johannesburg Development Agency, Lael Bethlehem, admitted that crime was one of her city's biggest problems.

But she insisted that there was an "unrealistic notion" of the level of the threat around the football event.

Ms Bethlehem was speaking four months before the tournament kicks off.

Ticket sales

The opening match between the host nation and Mexico on 11 June is one of 15 games in the city's two stadiums Soccer City and Ellis Park, which includes the World Cup final.

However, tickets for the opening game are still available.

Tickets sales for the tournament have not reached the levels of recent previous events, and about one million of the three million tickets issued are still available. Another round of sales began this week on a "first come first served basis".

"People do worry about safety and security, but there has been a great deal of preparation - we're very determined," said Ms Bethlehem, who was in London at a Chatham House conference on the Future of Cities.

"Crime is one of the big problems for us in Johannesburg and it's a problem we're very engaged with all the time, but particularly for this event.

"But having said that I think people sometimes have a very exaggerated idea of the kind of problems that we have and an unrealistic notion of it."

She added that the world football governing body, Fifa, was monitoring plans it had in place to deal with problems ranging from hooliganism to the potential influx of sex workers.

'More fun'

South Africa's location, which makes it a long and potentially expensive journey for anyone not living in Africa, was another important reason why tickets were still available, Ms Bethlehem said.

Most hotels in the city are fully booked, with would-be visitors now being directed towards accredited home-stay and bed-and-breakfast accommodation.

"In some ways it can be much more fun to be in a home-stay, say in Soweto, than in a fancy hotel," she said.

Ms Bethlehem said that while stadium improvements were welcome, developments in infrastructure would be of long-term benefit to Johannesburg, whose population includes about 100,000 people living in slum-like conditions.

Developments include a new bus transit service and a high-speed rail link around Johannesburg and Pretoria, though this is not expected to be fully completed by the time the tournament begins.

People living near the stadiums would also benefit from improvements to those parts of the city, she added.

"I can say to any country hosting an international event, to try and boost long-term infrastructure.," she said.

"The stadia are great but not really long-term investment whereas public transport and hosting this World Cup has given investment a real boost."

'Developing country'

Like other World Cup nations, South Africa hosted Fifa's Confederations Cup last year, which Ms Bethlehem said had acted as a "trial run for the city".

"We had some transport challenges and that's where we've had to put the most emphasis in the last year in making sure we can get everyone to the stadium," she said.

"We want to be able to share out culture and show our competence. We want to be able to demonstrate that our cities are interesting, modern fun, places to be.

"But we are a developing country - our level of infrastructure is not like that of Germany and the efficiency of our transport is nowhere near what it is in London or Munich.

"However, I believe we will have sufficient transport and other kinds of infrastructure to give people a really exciting visit."

Japan Holding on as Number Two Economy

After the United States, Japan has the world's second largest economy but China is rapidly moving to overtake Japan. Although I am not surprised by China's economic growth, I was very surprised to see just how fast their economic expansion is taking place. While Japan's economy grew by "4.6% for the year" making the total value of Japan's GDP $5.273 Trillion, China has been growing at an annual rate twice as fast; between 8-10% each year. China's economy currently has a GDP valued at $4.906 trillion dollars and is expected to pass Japan sometime this year. "The United States remains the world's largest economy, with a value of about $14 trillion. "

Do you believe that China will pass the United States as well? How long do you think it might take?


http://money.cnn.com/2010/02/15/news/international/japan_gdp.cnnw/index.htm

Ohhh...education again

Schools face cash crunch as stimulus runs out

‘These cuts hurt some of our poorest and neediest kids’

The nation's public schools are falling under severe financial stress as states slash education spending and drain federal stimulus money that staved off deep classroom cuts and widespread job losses.
School districts have already suffered big budget cuts since the recession began two years ago, but experts say the cash crunch will get a lot worse as states run out of stimulus dollars.

The result in many hard-hit districts: more teacher layoffs, larger class sizes, smaller paychecks, fewer electives and extracurricular activities, and decimated summer school programs.

"I'm worried they're not going to have the quality education that's going to make them competitive in a global society," said Parker, who has three kids in district elementary schools.

Around the country, state governments are cutting money for schools as they grapple with huge budget gaps triggered by high unemployment, sluggish retail sales and falling real estate prices. A recent report by the Center on Budget and Policy Priorities found that 41 states face midyear budget shortfalls totaling $35 billion.

The Obama administration's $787 billion federal stimulus package provided roughly $100 billion for education, including $54 billion to stabilize state budgets. In October the White House said the stimulus created or saved 250,000 education jobs.

But many states have used most of their stimulus money, leaving little to cushion budget cuts in the coming fiscal year.

The unemployed rate and job losses effected the education quality, how do you think about this issue? Or what are the local government should do to keep the education quality during the recession? Or any suggestions for the public school? How can they find out the effective way to "survive"?

Africa and China

Living in this K College bubble, I knew close to nothing about China's interest and involvement in Africa. I found an article online, published by the Heritage Foundation that helped me get a feel for what exactly is happening across the world, and why the US is concerned.

In recent years, Beijing has identified the African continent as an area of significant economic and strategic interest. America and its allies and friends are finding that their vision of a prosperous Africa governed by democracies that respect human rights and the rule of law and that embrace free markets is being challenged by the escalating Chinese influence in Africa.

The People’s Republic of China (PRC) aids and abets oppressive and destitute African dictatorships by legitimizing their misguided policies and praising their development models as suited to individual national conditions. Beijing holds out China’s unique develop ment model—significant economic growth overseen by a disciplined, one-party totalitarian state with full authority, if not control, over all aspects of economic activity—as an example for others to emulate.

taken from http://www.heritage.org/Research/AsiaandthePacific/bg1916.cfm

Economist magazine's webpage hosts an on-going debate about the China's involvement in Africa.

This house believes that China's growing involvement in Africa is to be welcomed.

58%

voted yes

42%

voted no

taken from http://www.economist.com/debate/overview/165?source=most_commented

The debate page also provides two opposing points of view on the argument. The comments are given by American Professors with close ties to Africa, biologically and professionally.

China feels it has great incentive to support Africa, politically and financially. But how much can and will the Chinese help African nations, and what are the economic implications of these interactions for the United States? This is exactly what the debate now is going on about.

Heritage.org goes concludes it's article stating:

U.S. national interests lie in effectively counter ing these developments in Africa by deftly encour aging democratic processes, economic freedom, and respect for human rights across the African continent.

China has succeeded in becoming a world power, despite its resistance to becoming a democratic nation. Yet, as self sufficient as China seems, even today the country faces challenges from advocates of free speech and human rights.

African nations have long been considered still part of the developing world, and have suffered from political and economic instability. Who is best suited to lend sincere and promising aid to African nations?

Top Sports events 'boost economy'

Hosting major sports events, such as the Winter Olympics or football World Cup, can help boost a city's economy and global image, a new report says.

Social development also benefits, says the Deloitte Touche Tohmatsu report.

It says hosting an event allows a city or country to move quickly on a wide range of issues and activities that might otherwise not get under way.

Winter Olympic host Vancouver has used the games to build a convention centre, rapid transit rail line, and motorway.

"Emerging countries and cities are seeking to distinguish themselves in the new economy by hosting major events to put themselves front and centre on the global stage," says the report's co-author Greg Pellegrino, of DTT.

'Critical role'

He said the rigid deadlines associated with international sports events could help accelerate economic development.

Mr Pellegrino said major sports events could boost tourism, improve infrastructure and provide an opportunity to elevate the host's stature among the top global brands.

The report, A Lasting Legacy, also looks at how hosting such international tournaments can foster collaboration among the public and private sector.

But host countries and cities must increase their investments in security measures.

"A critical role for the government is keeping people safe," says Mr Pellegrino.

"Aspiring hosts need to do what is necessary to address these challenges. With time, money and effort, overall security can have a positive and lasting impact on the athletes, spectators, international organisations and the host itself, long after the event finishes."

EU Tells Greece to Downsize

I was able to find an article in The Economic Times which was closely related to the issues we discussed today in class about Greece's serious economic issues. As we talked about earlier Greece is either going to need a bailout, which will be costly for other European nations, or it is going to have to massively cut its deficit. It currently looks like Greece is going to pursue the later of the two options and has already cut wages.

A bailout for Greece by the other members of the EU is still an option but Austrian Finance Minister Josef Proell that Athens would have to handle themselves first but the EU stood behind them. Also saying that, should it be necessary, "Germany, France and others -- there (would) be a group of countries who can give this money to Greece to stabilize the country and also the euro zone."

March 16th stands as the deadline for Greece to demonstrate that its economic plan is being carried out. Following this deadline Greece will also have to report in May and every three months afterward in order to make sure that progress is being made.

Given Greece's current economic situation do you believe this course of action by the EU is the best one, or is there another alternative? Do you believe that Greece will be able to refinance the two lots of debt they owe (estimated at of 8 Billion Euros each) before their time is up?

http://economictimes.indiatimes.com/News/International-Business/EU-tells-Greece-more-deficit-cuts-may-be-needed/articleshow/5582137.cms?curpg=2

Fast Car, Fast Technology, Slow People?

I stumbled across an article from the Wall Street Journal titled: "Can Drivers Handle High-Tech Cars?" It was an article discussing the recent Toyota recall, and the advancement of technology on the automobile.

Producers are always striving to be the first to come up with new technology and get it out to the public, but the liability of coming up with the next cutting edge car seems huge. While I'm sure safety measures are always considered, the idea of rushing to release a product like an automobile seems to discourage the necessary thoroughness. Not only that but in the article another element is provided. Just how technology savvy are the drivers of these cars going to need to be?

It states:

"...in cars with push-button keyless ignition systems, including some Toyota and Lexus models, turning off the thing requires the driver to "push and hold" the dashboard-mounted start button—the opposite of the process many drivers have mapped into their brains, says Paul Green, who studies how drivers interact with vehicle technology at the University of Michigan Transportation Research Institute...

Airline pilots get retrained and certified every time they move from one type of plane to another so that they can safely operate the sophisticated electronic controls in modern aircraft. Motorists expect to jump in and out of cars with minimal instruction and a cursory skim of the owner's manual."

Although technology is meant to be something the advances markets, if it significantly endangers consumer lives, than it seems to be more harmful to the industry. What if people are too "slow" to be driving these high-tech, high-speed vehicles? How is being a consumer of automobiles going to change in the next few years?

Foreign Demand Drops by Record Amount

Japan now holds most Treasuries; China cuts holdings of U.S. Treasuries

The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.
The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits.
The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.The big drop in China's holdings meant that it lost the top spot in terms of foreign ownership of U.S. Treasuries, dropping to second place behind Japan.
For all of 2009, foreign holdings of U.S. Treasuries dipped by $500 million. In 2008, foreigners had increased their holdings of U.S. Treasuries by $456 billion as a global financial crisis triggered a flight to the safety of U.S. government debt.

That flight to safety had driven down the interest rates that the government was having to pay on its debt to record lows with rates on some short-term securities dipping into negative territory for brief periods.

Still, the data showed the United States attracted overall net inflows of $60.9 billion. Treasuries of all maturities saw a net inflow of $69.9 billion, and net inflows into stocks rose to $20.1 billion from $9.6 billion in November. But U.S. corporate debt suffered a net outflow.Win Thin, a currency strategist at Brown Brothers Harriman in New York, called the data "a cause for modest concern that bears watching," but added, "we do not think the big global reserve managers are dumping U.S. dollar assets on a sustained basis."

this also mentioned me about what we talked about in the class today,about Greece, euro assets are not an attractive alternative with markets worried that Greece may not be able to make the spending cuts necessary to get its swollen debt under control.European Union ministers have offered Greece a pledge of support but stressed that Athens may need to commit to even more drastic spending and wage cuts.

what do you think about foreign countries holding U.S. Treasuries? Will this situation benefit for both U.S. and the foreign countries ?

Inflation accelerates to 3.5% in the U.K.

The UK inflation rate rose to 3.5% in January - the fastest annual pace for 14 months - from 2.9% the month before, official figures have shown.

Consumer Prices Index (CPI) inflation was driven up by VAT returning to 17.5% and higher petrol prices.

Retail Prices Index (RPI) inflation which includes housing costs, rose up to 3.7% in January, up from 2.4%.

Bank of England governor Mervyn King has had to write a letter of explanation to the chancellor.

A letter from the bank's governor is required if inflation is more than one percentage point above or below the government's 2% target.

In it, the governor said the inflation rise was "temporary".

Mr Darling responded, saying the inflation outlook was "subject to some uncertainty" as the world emerges from the "deepest downturn in modern times".

Food factor

The CPI inflation rate is the measure targeted by the Bank of England's interest-rate setters, while the RPI rate is often used as a benchmark in wage negotiations.

And January's VAT rise was the biggest factor raising the CPI to 3.5%, according to the Office for National Statistics.

The government had reduced VAT to 15% for the previous 13 months, to try to boost consumer spending.

Higher fuel and transport costs also pushed the CPI up, and last month's cold weather increased some vegetable prices, with the cost of cauliflowers rising by the highest amount since 1996.

The Bank of England had warned inflation could rise to 3.5% this year but predicts it will fall back below the 2% target later in 2010.

This is because the economy remains relatively weak as it continues to recover from the recession that ended in the last quarter of 2009.

Price fears overdone?

Most economists expect the Bank to hold off from raising interest rates to try to bring inflation back down sooner.

UK interest rates have been at the record low level of 0.5% for 11 consecutive months, as the Bank seeks to aid the economic recovery.

However, earlier this month the Bank decided against further quantitative easing (QE), the policy designed to stimulate growth in the UK economy.

Under QE, the Bank has pumped £200bn of new money into the economy by buying assets such as government bonds, as a way to boost lending by commercial banks.

A number of analysts said concerns about the current high rate of inflation was likely a factor in the Bank choosing not to extend QE.

However, former monetary policy committee member Professor David Blanchflower told the BBC that a spell of higher inflation would benefit the UK economy, suggesting that 4% would be a "pretty good starting point".

"You would actually end up inflating some of the debt away, but also if we get into a position where house prices were to fall further we are going to have a large number of people in negative equity, and if you have a few years of inflation that actually will deal with that problem."

Higher inflation would help to keep interest rates low, he added.

However, the combination of higher prices and lower rates is seen as punishing those who have put money aside, as the value of their savings is eroded while the returns they make on them declines.

Chinese Involvement In African Markets

The Economist magazine is currently hosting an online debate over China's increasing involvement in the African economy and whether or not it will be benefitial or detrimental to African nations. Compelling arguements are made for both sides of the arguement, here are just a few of the points made by each side.

Pro

• China's rising demand for Africa's natural resources helped to re-establish Africa as a source of valuable commodities for the global market. But it also helped to focus Africa's political attention on why, despite its vast resources, the continent still remains poor. This has recently been captured by Malawi's president, Bingu wa Mutharika, who recently told the African Union, "Africa is not a poor continent; but the people of Africa are poor."
• China's economic rapid economic growth also offers specific lessons that Africa is learning from. For example, China has in recent decades made massive investments in infrastructure as a foundation for economic renewal. Africa is benefiting from this in two ways. First, it is learning from China about the importance of infrastructure. Second, China is providing infrastructure support to Africa.
• China has not only increased its admission of African students in its universities, but it is also focused on strengthening the continent's scientific infrastructure. More recently, China launched a postdoctoral programme for Africans. The candidates will understudy China's science parks, but each will also return home with scientific equipment worth $22,000. No other country in the world has offered such support to African scientists and engineers.

Con

• "There is mounting objection to China's deepening forays into Africa" said News Africa (March 2007). The former president of South Africa, Thabo Mbeki, warned against allowing China's push for raw materials to become a "new form of neo-colonialist adventure" with African raw materials exchanged for shoddy manufactured imports and little attention to developing an impoverished continent.
• Most alarming, the deals are opaque and on barter terms dictated by China. For example, in exchange for oil exploration slots, China will rebuild Nigeria's dilapidated railway system. But China will supply nearly all the equipment and technical personnel at prices determined by itself. There is no protection against overcharging or cost overruns. As with other projects in Africa, China will supply most of the workers. The potential for exploitation and plunder of Africa's resources is enormous in such contracts, leading irate African commentators to denounce what they see as "chopsticks mercantilism". With chopsticks dexterity, China can pick off mineral dumplings with relish in Africa, all to its advantage.
• The claim that China's intentions in Africa are noble is fatuous. Its real intentions are well known: to elbow out all foreign companies and gain access to Africa's resources at cheap prices; canvas for African votes at the UN in its quest for global hegemony; isolate Taiwan; and seek new markets for Chinese manufactures as European markets become saturated with Chinese goods. Less well known is its quest for African land to dump its surplus population. As a condition for Chinese aid, African states must accept large numbers of Chinese experts and workers as part of their investment packages. Chinese communes are springing up across Africa. In Namibia, the number of Chinese expatriates has reached 40,000, with 100,000 in Zambia and 120,000 in Nigeria. China even has a secret plan, called the ChongqingExperiment, to resettle 12m of its farmers in Africa.

What are your own positions on this issue? Do you agree or disagree with any of the arguements made by either side?

To see the whole debate go to http://www.economist.com/debate/days/view/465.

Back to the Basics.....I Mean Budget

What happened to Pay as you go? This article i read from the Brookings Institute shows that by simply paying for the tax cuts with reduced benefits or by letting the bush era tax cuts expire like there supposed to (or even extending them to help economic recovery by one or two years) would help to balance the budget entirely but 2020 instead of finding ourselves with a continued 1 trillion dollar deficit. In particular i noticed that this out come may happen whether its wanted by the public or not, if congress stays as paralyzed as it is now then the tax cuts would expire and would begin to work towards the black anyways. I found that to be a slightly funny; who though a paralytic useless government could actually do good? heres the full article:

Let's Get Real on Tax Cuts

Taxes, Budget Deficit, Tax Cuts, U.S. Economy, Federal Budget

Isabel V. Sawhill, Senior Fellow, Economic Studies

Washington Post

President Obama's recent budget depressed most everyone. It showed unprecedented annual deficits of $1.3 trillion not just for the current year but for a decade out. The president made some proposals that would reduce the deficit to $1 trillion in 2020, but that's disappointing progress.

How could we do better? There are many paths out of the fiscal swamp, but one in particular should be considered: paying for tax cuts.

From 2001 to 2003, Congress reduced taxes for just about everyone. Most of these changes were temporary and are slated to expire at the end of 2010, as is the indexing of the alternative minimum tax and various other temporary tax provisions. Why not simply allow these provisions to expire as planned (or extend them for only another year or two if needed to support the economic recovery)? Alternatively, we could make any permanent extension conditional on the public and their elected representatives accepting much deeper spending cuts or offsetting revenue increases to make the tax cuts affordable. In other words, applying pay-as-you-go rules in a more serious way than the weakened form in which they were recently enacted. The message to the public would be simple: If you want to keep taxes low, you have to forgo some benefits. As my parents used to say, no dessert without the spinach.

Allowing the tax cuts to expire or paying for them would bring the federal budget very close to balance by 2020. And posing the choice this way creates the imperative for Congress to find the offsetting cuts.

Yes, in today's political environment such disciplined action by Congress is unlikely. But if Congress is paralyzed, taxes will revert to their former levels. That's actually not a bad outcome -- those tax levels were associated with rapid growth and plentiful jobs in the 1990s, along with surpluses in the federal budget. Will Democrats get blamed for "raising taxes" if this happens? Not if they are clear that they favor lower taxes, but only if Republicans suggest and support specific spending cuts sufficient to pay for the tax cuts. As the party of smaller government, the GOP should take some responsibility for actually cutting spending, something Republicans failed to do even when they controlled the White House and Congress in recent years.

Decisions about a possible temporary extension of existing tax cuts to aid the recovery and about how to pay for any permanent extension may take a lot of negotiation, but it's key to retain the principle that any extension must be paid for. Whatever the budgetary outcome - and it might be some combination of tax extensions and spending cuts - giving up on pay-go is fiscally irresponsible.

Loan Shark U.

When the president proposed his education budget, there was a lot for both the poor and the upper-middle class to like. For low-income students, the budget includes a substantial increase in Pell grants (government money for college). For the upper-middle class, it's even better, with a $2,500-a-year tax credit for students or parents paying for college.

One thing, however, was conspicuously missing from the education plan: an increase in the amount of money students can borrow via federally subsidized loans.

Now, maybe students aren’t in the mood to borrow more — aren’t college graduates already terrifically overburdened with enormous loan payments?

Stories about the travails of students who find themselves hopelessly in debt obscure a truly stunning fact: The amount that students can borrow in federally subsidized loans has remained almost unchanged for more than 15 years.

How much has the cost of college gone up since then? In the 1993-1994 academic year, according to the College Board, the average tuition at a four-year private college at the time was $11,007. It is now $26,273. Four-year public colleges? Same story: up from $2,535 to $7,020. You can do the precise math yourself, but here's the bottom line: The money that students have available from subsidized loans has stayed almost constant, while the cost of college has risen more than 150 percent.

one of the solutions to student loan debt is ... yes, more student loan debt. At lower, government-subsidized rates. One legitimate concern about this — expressed in this discussion from the New America Foundation — is that for-profit and trade schools will just raise their tuition levels to take advantage of this.
What do you think of the this, how private banks gave student loans a bad name? also related to the unemployed rate...would you mind to give some suggestions?what should the lower-income families do during the recession to pay for the big amount of the higher education?

Constricting the pet supply

BOA CONSTRICTORS, pythons and corn snakes decorated sellers’ tables at the Reptile Show in White Plains, New York, last month. Awestricken visitors peered at them with delight. Experts examined them under the light and scrutinised their colouration. The breeding of snakes is serious business in America. Revenue from the sale of boas and pythons amounts to around $1.6 billion-1.8 billion each year.

Americans own more than 2.5m snakes, according to the Pet Industry Joint Advisory Council, a trade association. The snake industry has grown dramatically over the past decade because of frenzied competition to create new “morphs”, the industry term for new colours of snakes. Rare morphs can fetch astonishingly high prices, sometimes more than $20,000.

The recession, however, has hurt what used to be a lucrative hobby. Fewer people want to splurge on snakes that cost thousands, if not tens of thousands, of dollars. According to Brian Barczyk, a snake-breeder, demand for “pet-grade” snakes, which cost under $50, has sunk even more than demand for “investment-grade” ones, because the average person is hesitant to buy a new pet.

The snake industry’s most dangerous predator, however, is not the economy but the government. Ken Salazar, the secretary of the interior, wants to add nine types of large constrictor, including the Burmese python (pictured), to a list of “injurious” species regulated by the federal government. This would make it illegal to import or transport these types of snakes across state lines. Congress may also consider a bill that would do the same.

The spread of Burmese pythons in the Florida Everglades is responsible for sparking this wave of herpetophobia. Burmese pythons are thought to have found their way into the wild because pet-owners released them, and now thousands are slithering around there. They are eating some endangered species, like the Key Largo woodrat.

Breeders are up in arms at the prospect of the ban. Some opponents speculate that if snake-owners are unable to transport or sell some of their snakes beyond state lines, they may just release them into the wild. The federal government may have to consider offering “amnesty days”, as Florida does, when snake owners can turn in their foreign pets. Florida has also started giving people permits to kill Burmese pythons. Some may say this is cruel. But that depends on whether you side with the pythons or the woodrats.

I didn't know the snake industry in America was that big, considering the figures provided above. Small markets like these even feel the impact of the down economy. It seems like government regulation might have some effect on this industry because of the restrictions as well. Should the government ban certain types of snakes for good, or have certain regulations on the requirements to own one? Instead of banning these snakes, maybe the government should create a program to try and make some money off the people who want to own one.

Transforming the Motor City, to Rail City

We all remember the discussions over urban farming and Detroit, but here is an entirely different idea, that would allow people to continue using what they've specialized in for years. Instead of converting the land into farms, how about a $420 million light rail transit system to help spark a renaissance.

"Transit in Detroit has kind of been a joke," says Matt Cullen, CEO of M1 Rail, a private consortium heading the development effort. "We've been a victim of vulcanized politics and other efforts. But now we have a plan in place. We'll get it done, and we feel it will have a huge impact on this region."

It's the only project of its kind in the U.S., and the donor list reads like a Who's Who of area megamillionaires: Compuware (CPWR) CEO Peter Karmanos, Quicken Loans founder Dan Gilbert, Penske Corporation CEO Roger Penske and Red Wings owner Mike Ilitch are among those ponying up $125 million to cover the project's entire phase-one price tag.

You're probably asking yourself where the rest of the money is coming from if only $125 million of the $420 million project has been donated by private backers. The private backers are key in this investment, because in order to qualify for federal match funding Detroit had to come up with a large chunk of the cost. However, with Detroit facing a $300 million annual budget deficit the money definitely wasn't going to be coming from city money. The light rail system is set to run past Comerica, Ford Field and Detroit's entertainment district with construction of this private financed section to begin by the end of this year.

I think this is a great idea for the city of Detroit to try and bring more consumers and business owners into the city. With more customers and business owners coming into the city, Detroit's economy would boom and hopefully kill the thoughts that Detroit is little more than a crime infested city.

The People Mover doesn't even compare to this project which would allow people to get out of the heart of the city. With people not worrying about which street they're on and the traffic, they will have more time to look around and possibly see something new. This train could transform Detroit into more of a nighttime city as well. People could go from a performance at the Fox to dinner at the Whitney without moving the car. This is a great prospect and I think would revitalize the city.

What are your thoughts on this light rail system? Could this railway be the saving grace for Detroit?

Full Article

http://money.cnn.com/2010/02/15/smallbusiness/detroit_m1_light_rail/index.htm

Economist See Slower Growth Toward Year-End

Private-sector economists see the economy growing more quickly than previously forecast in the first three quarters of 2010, but growth would be slower than expected toward the end of the year, a Federal Reserve Bank of Philadelphia survey said on Friday.

For the full year 2010, economists raised growth estimates for annualized real gross domestic product (GDP) to 3 percent from their earlier projections of 2.4 percent.

They said job growth would be greater than expected for the next two quarters, but downwardly revised estimates for after that. While jobs are now expected to grow by 600 a month in the first quarter and 117,600 a month in the second quarter, they are forecast to grow on average by 96,000 in the second half of 2010.

Unemployment, Foreclosures, and Income Interactive Map

I found this interactive map and thought it was very interesting, but in the same sense appalling. Some of the numbers that are popping up on this map are unreal. 

Check out the map on the this link .

What types of trends do you see in these maps? Are certain areas more hard hit then other for a reason? What numbers are really surprising to you?