For extra credit. Summarize an article from The New York Times and add in how it relates to our readings. Be sure to say which page(s) the article applies to the readings in Mankiw.
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Economics for the School of Journalism 
According to the New York Time’s article, “Microsoft Deal Adds to E-book Battle” Microsoft invested hundreds of millions of dollars into the Nook, a device by Barnes and Noble’s for digital reading on Monday. Amazon.com dominated the e-book market owning 90% but Microsoft along with Apple and Google are trying to compete against Amazon in the fast growing e-book market. With the new investment, Microsoft’s stock is close to a 12-month high and hopes to continue to see growth in the future.
This article applies to our readings in class because with the new competition and mergers a competitive market equilibrium (78) is beginning to be created with the new companies like Barnes and Noble, Google and Apple creating technology and their own ebooks that are catching up with the sales of Amazon.com.
According to New York Times article, “Virginia’s Feast on U.S. Fund Nears and End”, Northern Virginia may experience the largest economic hit of any region due to the automatic spending cuts President Obama put into place, known as the sequestration. The cuts are spread across the nation unevenly, so most have not expected a large overall impact. However, in Virginia, many people may have a lot to be worried about. The article explains how Virginia has experienced a federal spending boom in the last decade that has lured them into a false sense of security. Now, many families living in Arlington will have to make as many cuts as possible just to may their mortgages and bills.
This article deals with issues of unemployment and inflation and the effects of the sequester on macroeconomics (16-17) as a whole. Overall, the effects of the sequester seem to be relatively small. Since it only lops 2.4 percent of the 3 trillion dollar budget, most people around the nation don’t seem to be worried. In addition to the sequester’s effects on macroeconomics, this article goes in detail about its effect on the microeconomics (16) of Virginia, and how quite a few Virginians will have to deal with intense trade-offs (8), and use the little money they will still earn on the things they need. Because of this sequester, some Americans will have to reevaluate the choices they make with their money.
Alex Leininger
14157368
In the article “Losing a Step, Nike Seeks to Regain its Edge,” published by the New York Times, the problems that Nike is having with advertising are described. On page one of the article the author discusses how Nike has recently had trouble standing out in the market for sports clothing. Because Nike is a firm that competes in a monopolistically competitive market, brand management and advertising are two key components in keeping their firm profitable. Monopolistically competitive industries have low barriers to entry, provide differentiated products, and have many buyers and sellers. So, product differentiation is extremely important in attracting consumers to the firm.
On the second page of the article, Nike’s early advertising strategies were discussed. These included the new feature of the Nike ID, in which you can create your own pair of Nike’s. This feature helped to distinguish Nike from other firms to attract consumer’s with specific tastes. However, when features like these are created they can be easily copied, so firms must keep innovating.
Innovation is rolled into the term brand management. Whoever is running Nike at the time will need to continue to differentiate their product so as to make profits in the long run. However, referring to page two of the article, this was not the case with NIke, as it allowed other firms time to catch up. For example, Nike’s marketing style that the author describes as “irreverent” and “assertive” while starting out as specific to their company, has now been copied by other firms. A smart brand manager would have continued on with differentiating the product, rather than allowing other firms time to catch up.
In order for Nike to regain its place in the sports clothing industry it will need to find a new way to differentiate its product. Because there are so many firms competing in this market it is hard to keep profits in the long run for an extended period of time because new firms will enter when they see that the industry is profitable. Again, they are able to do this because their are low barriers to entry in a monopolistically competitive market. Time will tell if Nike will be able to introduce a new feature to its brand that will attract consumers and allow the firms to once again become profitable.
PawPrint: JED275
Alex Leininger
amlv35
The New York Times article “Down Payment Rules Are at Heart of Mortgage Debate” discusses the issue of the cost of down payments on homes. After the housing collapse, initial reform proposals recommended that home buyers put down a large down payment in order to prevent foreclosure. At the time, a lot of the mortgages that went bad included small down payments. However, after reconsideration and reassessment, many lawmakers and lenders are now warning about the dangers of large down payments. They argue that if a rule is made that puts a price floors on down payments for homes, lower-income borrowers simply won’t have the money to put down. This debate has a huge impact on the mortgage market.
This article talks about the mortgage defaults that had a big part of the 2007 recession. It discusses how borrowers would often be able to hide their poor credit scores, which led to a lot of money being defaulted. The article brought up two different opinions. One opinion believed that price floors (109-110) should be set up for down payments, while the other opinion thought that a price floor would leave out many people unable to meet the minimum price on a down payment.
The government has found some alarming news about JPMorgan Chase. JPMorgan is being accused for collecting credit card debt wrongly, lying while under oath, and failing to mention suspicions about Bernard L. Madoff.
JPMorgan was doing very well in profits and now is under investigation by about eight federal agencies. Top managers have left the bank because of the scrutiny it is receiving. Specific people are being targeted within the company for knowingly taking part in these crimes.
Some of the accusations JPMorgan received were “relying on faulty documents” when dealing with lawsuits and dealing with home foreclosures without accuracy. JPMorgan is responding by saying all their trading and documents were done legally.
This article relates to our text because it talks about how one bad action can put a negative name to your company for the rest of its duration. It also shows how being a part of a company who does things illegally or incorrectly can give you a bad name as an individual as well. Any action made within a company affects the company as a whole.
Link: http://dealbook.nytimes.com/2013/05/02/jpmorgan-caught-in-swirl-of-regulatory-woes/?hp
Ashlan Fiester
pawprint: amfr56
student number: 14138108
Many people feared that there would not be enough jobs for the unemployed. In April that all changed when about 165,000 jobs were created. The unemployment rate is now at its lowest level since 2008.
The report in March showed that only 88,000 jobs would be created, causing fear and worry to set in. They found that the numbers given were too low for the number of jobs created in February and March. In February, about 332,000 jobs were generated and about 138,000 in March.
They found that most of the jobs discovered were in lower paying jobs such as retail and food service. Hiring temporary positions also helped with the raise in available jobs. These raises in job has raised the stocks, lowered the unemployment rate, and increased the labor force.
This article relates to our text in many ways. It talks about the increase in labor force and the decrease in unemployment rates being related to the increase in the number of jobs. It also shows how even low paying jobs provide opportunity for economic growth.
Link: http://www.nytimes.com/2013/05/04/business/economy/us-adds-165000-jobs-in-april.html?hp&_r=0
Ashlan Fiester
pawprint: amfr56
student number: 14138108
pawprint: ajbrkb
The New York Times article “Life Is O.K., if You Went to College” compares unemployed college graduates to unemployed people who did not attend college. The article mentions that the unemployment rate for college graduates was about four percent lower than that for everyone else. A graph points out that, as expected, unemployment is highest for those with less than a high school education, followed relatively closely by high school graduates with no college background. At 0% change in employment since the start of the recession sits those with some college but no B.A. while college graduates have the highest change in employment.
This research also found that even young college students are finding jobs, according to data collected in 2011. However, it appears that employers are hiring college graduates to perform jobs that do not actually require a degree, such as receptionists, file clerks and waitresses. Most of the jobs created in the last couple years have required low skill level and given out low wages.
Although college-educated workers are not receiving the jobs they went to school for, this article seems hopeful that as the economy improves, college graduates will be better situated to find higher paying jobs. However, because college graduates are taking jobs that involve such simple tasks, these graduates are pushing high school kids out of a job.
Link: http://economix.blogs.nytimes.com/2013/05/03/life-is-o-k-if-you-went-to-college/?ref=economy
In The New York Times article, “Comast Hopes to Promote TV Shows in Twitter Deal,” Comast has a feature with Twitter in which Comcast users can access TV shows through Twitter.
The feature is called See It and will be posted on Twitter posts published by Comcast-owned TV channels, such as NBC. When NBC publishes a Twitter post about one of its shows, such as The Voice, a See It button will appear at the bottom of the post. Comcast users can then click that button and log in with their Comcast account to watch The Voice live.
This is an example of technological change. A positive change in production is occurring because Comcast is using Twitter as an input, which will increase the amount of people who use Comcast in order to watch TV. Comcast will be able to reach a broader population by using technology, or Twitter.
Sarah Jackson
Pawprint: skjcp2
Chelsea Surmanek
14156163
This New York Times article talks about how the Golden Gate Bridge switched over to completely electronic toll takers on Wednesday, March 27, which eliminated the full-time jobs of 27 toll takers. This project is expected to save the Golden Gate Transportation District $8 million over the next 8 years.
This article touches on many topics we have covered in Econ 1051. First, it covers the topic of unemployment. Although this new project will save money, it will cost many people their full-time jobs that they used to support themselves, and probably a family and more. If these toll takers have been working on the bridge for many years, it will be hard for them to find new employment, either because they are discouraged or they are not qualified for other jobs.
Secondly, this article touches on the topic of cost and profit. The Golden Gate Transportation District relies on customers (people who drive over the bridge) in order to make money. They had to pay the toll takers a salary, but now since they switched to electronic tolling, it saves them about $1 million per year. The company wants to maximize their profit and minimize their cost, which they will do by switching to electronic tolling. The toll takers salary was a private cost, because the producer (the company) ended up paying for the roll takers salary. The bridge toll will not increase, and this private cost will be eliminated. The company is thinking in the long run, by decreasing one of its input costs.
This article revolved around economics. Although the toll takers have been on the Golden Gate Bridge since opening 76 years ago, the Golden Gate Transportation District had to make an economic decision in order to be able to continue operations beneficial to both themselves and the consumers.
Chelsea Surmanek
14156163
This New York Times article talks about how the Golden Gate Bridge switched over to completely electronic toll takers on Wednesday, March 27, which eliminated the full-time jobs of 27 toll takers. This project is expected to save the Golden Gate Transportation District $8 million over the next 8 years.
This article touches on many topics we have covered in Econ 1051. First, it covers the topic of unemployment (p. 640). Although this new project will save money, it will cost many people their full-time jobs that they used to support themselves, and probably a family and more. If these toll takers have been working on the bridge for many years, it will be hard for them to find new employment, either because they are discouraged or they are not qualified for other jobs.
Secondly, this article touches on the topic of cost and profit (p. 371). The Golden Gate Transportation District relies on customers (people who drive over the bridge) in order to make money. They had to pay the toll takers a salary, but now since they switched to electronic tolling, it saves them about $1 million per year. The company wants to maximize their profit and minimize their cost, which they will do by switching to electronic tolling. The toll takers salary was a private cost, because the producer (the company) ended up paying for the roll takers salary. The bridge toll will not increase, and this private cost will be eliminated. The company is thinking in the long run, by decreasing one of its input costs.
This article revolved around economics. Although the toll takers have been on the Golden Gate Bridge since opening 76 years ago, the Golden Gate Transportation District had to make an economic decision in order to be able to continue operations beneficial to both themselves and the consumers.
Chelsea Surmanek
Student ID: 14156163
PawPrint: cms28b
This New York Times article talks about how the Golden Gate Bridge switched over to completely electronic toll takers on Wednesday, March 27, which eliminated the full-time jobs of 27 toll takers. This project is expected to save the Golden Gate Transportation District $8 million over the next 8 years.
This article touches on many topics we have covered in Econ 1051. First, it covers the topic of unemployment (p. 640). Although this new project will save money, it will cost many people their full-time jobs that they used to support themselves, and probably a family and more. If these toll takers have been working on the bridge for many years, it will be hard for them to find new employment, either because they are discouraged or they are not qualified for other jobs.
Secondly, this article touches on the topic of cost and profit (p. 371). The Golden Gate Transportation District relies on customers (people who drive over the bridge) in order to make money. They had to pay the toll takers a salary, but now since they switched to electronic tolling, it saves them about $1 million per year. The company wants to maximize their profit and minimize their cost, which they will do by switching to electronic tolling. The toll takers salary was a private cost, because the producer (the company) ended up paying for the roll takers salary. The bridge toll will not increase, and this private cost will be eliminated. The company is thinking in the long run, by decreasing one of its input costs.
This article revolved around economics. Although the toll takers have been on the Golden Gate Bridge since opening 76 years ago, the Golden Gate Transportation District had to make an economic decision in order to be able to continue operations beneficial to both themselves and the consumers.
Maiya Putman
Mjp5f5
14157198
Unemployment Rate can be found on pages 654-656 of textbook
“Jobs Data Ease Fears of Economic Slowdown in U.S.”
Unemployment is the lowest that it has been since 2008 thanks to the private sector. There have been 200,000 jobs created per month since the beginning of the year. This increase in the private sector is countered by the still slow shed of jobs in the public division. The estimations and new found optimism regarding the future of our economy are surprisingly positive. This also caused the stock market to soar.
This all being said, the drag from the government sector is still affecting to overall economy. In the second quarter, the advances will be slowed by the government cuts and fiscal tightening. If it weren’t for the Fed and other private sectors, the unemployment rate would still be in a declining state. The government recognized the report on the improvement of the economy with the help of the private sector but pointed out that excessive spending by the government would not help the problem.
We talked about unemployment rate and how it is affected by the economy in chapter 20. Some unemployment is a direct result of the business cycle, the unemployment rate also is an indicator of the current state of a country’s economy.
Chelsea Surmanek
Student ID: 14156163
PawPrint: cms28b
This New York Times article discussed the (large) possibility that Facebook will partner with HTC to create the first ever Facebook phone. This phone is rumored to have new features that allow users to use their Facebook friends to search for restaurants, retail shops, and many other network-generated suggestions.
This article focuses on the economic idea of an oligopoly (p. 432). Apple and Samsung dominate the current cell phone industry, so if Facebook created a phone, it could gain considerable consumers in this market. Facebook has made its name known in the social networking world, but this would be an entirely new industry for them.
For an oligopoly such as the cell phone industry, the barriers to entry are very high (p. 433). Although Facebook has already created a name for itself, it would be interesting to see how they would succeed as beginners in this industry. Not many companies can push through the walls to enter in an oligopoly market, but Facebook is confident that it would be able to do so.
This article focuses on the economic idea of oligopolies, and the components of market structures (p. 433). Facebook could gain a significant part of the smart phone market if its phone includes features that consumers want. Although not many companies have the power to come into an oligopoly market, it will be interesting to see how Facebook will succeed.
In the article “Stocks lower on economic report from China,” from USA Today, it is apparent that China’s growth rate is slowing. The economic growth rate is determined by productivity in a country. In saying that China’s long run economic growth rate is slowing, one can determine that the firms are having trouble either, expanding their operations, buying more equipment, training workers, and coming up with new technologies to advance their products.
The article discusses how stock prices for gold and oil are dropping on the Dow Jones. This is important to China’s overall growth because firms, in order to expand operations, or develop new technologies, must acquire funds though financial markets and financial intermediaries. So, when the stock prices of gold and oil are falling, people are less likely to invest money into the markets and firms will not be able to attain as much money through financial markets. This in turn will decrease the amount of long run economic growth.
In regards to the price of gold, since the stock prices are falling this will lead investors to avoid investing in this market. Since stock prices are falling, this tells the firm’s managers that they do not want to increase production at this time. Stock prices represent the firm attempting to innovate its product, or advances in the industry. Because the stock prices for gold are decreasing it means that consumers are not optimistic about the profits the company is likely to make.
http://www.usatoday.com/story/money/markets/2013/04/15/stocks-monday-4-15/2083473/
PawPrint: JED275
http://www.nytimes.com/aponline/2013/04/25/business/ap-us-earns-ups.html?ref=business&_r=0
amlv35
According to the New York Times article “U.P.S. Profit Up 7 Percent in Quarter,” first quarter profits for U.P.S. were up 7 percent to 1.04 billion, which exceeded analysts expectations by a wide margin. This profit bodes well for the economy as a whole, because companies like U.P.S. are generally very representative of the whole economy, with the wide variety products that they ship. There has been a trend over the last few years in which spending continues past Christmas, peaking in January. This phenomenon is most likely due to consumers searching for post-holiday deals and people returning gifts.
This article talks about consumer spending, which is a component of GDP (620-621). With the profits of U.P.S. acting as a representative of the whole economy, the article also relates to economic growth (616) and the profits (632) of a corporation. All of this deals with the ability of households to spend after the 2007 economic recession.
amlv35
The New York Times article “Racial Wealth Gap Widened Since Recession” talks about the outcomes of the economic recession, some of which are still getting worse. Obviously an enormous number of Americans suffered a loss of wealth during and after the recession, but this article shows that the loss has been even worse for black and Hispanic families than it has been for white families. Housing downturns hit black and Hispanic families harder than it hit white households, and housing constituted a much higher percentage of wealth for black and Hispanic families. These factors contributed to the growing racial gap.
This article discusses many things that we talked about in class. The 2007 recession had a big impact on households’ wealth and assets (238), especially with minority communities. This includes issues of spending and saving (688-689), and the differences between households of doing such.
14156065
In the article, “Shares Push Higher as Fed Maintains Stimulus Program” in the USA Today describes, there was a concern that an economic crisis in Cyprus would hurt the U.S. economy. This is not true. Cyprus’s banks could fall and with it its economy fi it does not get support from other international leaders, but this is not affecting the U.S. economy.
Despite the financial scare in Cyprus, the U.S. has not been affected. The Dow was up 44 points and then 91 points after the Fed announced the U.S. would not be affected. Ben Bernack, the chairman of the Federal Reserve said that stocks would still be traded heavily to stimulate the economy.
The Dow has been at its highest since the recession. Unemployment has decreased and interest rates have increased. Even though this is all good, the economy will not fully recover for a while. The Fed needs support fro m the central bank and will continue to buy bonds to stimulate the economy.
This article relates directly to what we are learning about in class. It deals with macroeconomics and the study of the economy as a whole. The economy of Cyprus was even a topic of one of our journalism articles for class (Chapter 25). The economy of Cyprus seemed like a treat to the U.S. economy because it effects the world economy, but the U.S. economy is steadily increasing. Because of the economic recession of 2007-2009 that we talked about it class, the stock market fell and unemployment rose. In chapter 25 we talked about the Troubled Relief Asset Program that was designed by the government to provide funds to bank in exchange for stock. This article deals with the success of this program. Now though, the U.S. economy is in a period of expansion and the stimulus package that the government has provided is making the Dow hit the highest it has in a while. All of these topics were covered in class and play directly into the news about our economy.
Erin Spong
Ems3t4
“In California, Desalination of Seawater as a Test Case” New York Times
The $320 million desalination plant approved by San Diego’s regional water authorities was used as a test case for whether such a large project can meet its goals while safeguarding it Pacific environment. The plant was built near Carlsbad, north of San Diego, and was the first large-scale desalination operations on the West Coast and the largest in the hemisphere. Environmentalists have battled the project in lawsuits, with concerns about the amount of fish that will be killed by the pumping process. They were also concerned with the potential change to the aquatic ecosystem when leftover brine is returned to the sea, but never won.
The plant will filter 100 million gallons of seawater daily. Although environmentalists are concerned about the ecosystem, Poseidon Resources give up that opportunity cost to provide water to nine municipal water agencies in northern San Diego County, filling 10 percent of the county’s drinking water needs.
This article discusses the possible opportunity costs to pursuing the large desalination. Poseidon Resources feels the opportunity cost to pursuing this project is less than the opportunity cost of producing less drinking water. In economics we studied opportunity cost and the relationship between two choices.
Berkshire Hathaway’s Annul Meeting: Extra Credit Econ
Warren Buffett. This seems to have become a household name in the past several years. Mr. Buffett is said to be among the world’s wealthiest people and his wealth can be attributed to fact that he is the chief executive of the holding company, Berkshire Hathaway. This upcoming weekend, Berkshire
Hathaway is holding their annual shareholder’s meeting in Omaha, Nebraska.
According to the article in the Wall Street Journal, Berkshire shares have risen approximately 33 percent since the last annual meeting, which was made possible by the housing recovery and the improving economy. Also the company will announce it’s annual earnings at this event. Each year this meeting has continued to grow, starting with only 12 attendees in the year 1981 and skyrocketing to 35,000 people in 2012.
Now what exactly is a holding company? A holding company is a company that doesn’t have any operations or activities, but instead it owns assets, such a shares in stocks of other corporations or bonds. As we learned in class, a stock is ownership in a corporation, and it signifies a claim on part of the company’s earnings. A bond is a financial security that represents a promise to repay a fixed amount of funds. In the case of Berkshire Hathaway, the company completely owns GEICO, BNSF, Dairy Queen, Fruit of the Loom, Lubizol, NetJets, and Helzberg Diamonds, and has partial ownership in a variety of other companies.
Now how exactly do bonds and stocks work? When a company or individual sells a bond, it promises to pay the purchaser an interest payment each year for however long the term is for that bond. It will also be responsible for paying a final payment, or principle, at the end of the term. Companies sell bonds when they need a large sum of money at a given point in time, and hopefully this investment would allow them to pay off the bond over time. Stocks on the other hand are simply described as part ownership in a company. Firms sell stock to increase their financial capital, and purchasers of stocks do so because they are then entitled to a portion of the corporation’s profits. However, corporations often keep some of the profits, called retained earnings. So how is the stock market measured? The three most valued stock indexes are the Dow Jones Industrial Average(which measures stock prices of 30 large corporations in the U.S.), the S&P 500(which measures the stock prices of 500 large U.S. firms), and the NASDAQ(which includes the stock prices of over 4,000 firms).
Berkshire Hathaway continues to boom, and we will soon get a sum of this year’s success at the annual meeting this weekend.
Link to the website: http://online.wsj.com/article/SB10001424127887324766604578461072014524476.html?mod=WSJ_Markets_LEFTopStories
Pawprint: rasg24
Student Number: 14164965
Erin Spong
Ems3t4
“Sales of New Homes Increase 1.5%” New York Times
According to the New York Times article written April 23, 2013, sales of new homes rose 1.5 percent in March to a seasonally adjusted rate of 417,000. This adds to the evidence of a sustained housing recovery at the start of the spring buying season. Sales of new homes exceeded February’s pace of 411,000, said the Commerce Department. But they were below January’s 445,000- the fastest rate since July 2008.
700,000 pace is considered healthy by most economists but the rate has increased 18.5 percent from 352,000 a year ago. Most economists believe to see more gains in the future, as housing is likely to remain a driver of the economy consistently. More Americans are inclined to buy houses now that there is a steady job creation and near-record low mortgage rates.
The realty market dropped drastically during the great recession of 2007-2009 but has been making a healthy comeback and is expected to continue rising in the future. This article goes along with our discussion of the great recession of 2007-2009.
Peter Montesantos
PawPrint: PJMZ95
ID #: 14166756
Link to article: http://www.nytimes.com/2013/04/18/world/europe/more-children-in-greece-start-to-go-hungry.html?hep
I found an article in the New York Times published about two weeks ago about my home country of Greece and its beyond broken economy. While countries like the United States are now in periods of the business cycle known as Contraction, Greece can only watch with despair. According to the article “More Children in Greece are Going Hungry”, the country “shrunk by 20% in the past five years”.
The main focus of the article is a family of whom both parents lost their jobs, couldn’t find a job for over a year, and has no savings left. This family corresponds with the rest of the Greek population, as the unemployment rate in Greece is currently greater than 27%. Some families are forced to live on rations of pasta and ketchup in order to survive.
On page 653 of the textbook, the term “cyclical unemployment” comes up. This is defined as “unemployment that is caused by a business cycle recession”. This is happening in Greece currently because there have been so many jobs lost in the factory business, that all of the unemployed ex-factory workers now cannot find jobs because there simply aren’t enough for everyone.
This recessionary stage of Greece’s business cycle is resulting in severe starvation in the Greek population. Also, Greece does not have the government funds to install programs in schools to feed children. They are simply too busy trying to bail themselves out of other situations.
Peter Montesantos
PJMZ95
While scrolling through the New York Times Articles to find one that I would be interested in reading, I landed on “Facebook is Expected to Introduce Its Phone”. I did not choose this article because I am a Facebook addict, rather because the rumor is that Facebook will partner with HTC to create the first ever Facebook phone, and I have an HTC smart phone, and wouldn’t mind upgrading to this new phone. According to the article written earlier this month by Somini Sengupta, this new phone would give you “ways to communicate, find answers to questions, shop and be entertained.”
The article is closely related to topics on pages 432 and 433 of our textbook. This has to do with oligopolies, and barriers to entry. An oligopoly currently exists in the cell phone industry, and the main figures in this oligopoly are Samsung and Apple. The sheer number of Facebook users may frighten Apple and Samsung share holders because a Facebook cell phone has the potential of stealing many consumers in this particular market.
The barriers to entry often stand in businesses way while trying to enter into already existing oligopolies. Facebook is determined that they will in fact flourish in the new industry of “smart phones” and that it will be able to pass the barriers of entry and become a contender in the cell phone world.
Obviously it takes time for these types of things to actually happen, so I anxiously await the final outcome of all of this, and I wish Mark Zuckerberg the best of luck in getting me the new Facebook Smart Phone powered by HTC.
Link to article: http://www.nytimes.com/2013/04/04/technology/facebook-is-expected-to-introduce-its-phone.html?ref=business&_r=0
Peter Montesantos
PawPrint: PJMZ95
ID #: 14166756
According to the story “Truck Sales Led a Strong April for U.S. Automakers,” Bill Vlasic writes about how the last month saw a steady and significant increase in automotive sales for U.S. companies. The companies included: Ford, General Motors, Chrysler, Dodge and Jeep. They all saw a gain this year. Ford, alone, reported selling 212,000 vehicles during this April, which was an 18 percent increase from last year. But it was Ford’s F-Series pick-up that contributed tremendously: The sales increased 24 percent in April to 59,000 vehicles.
Why was this April the best performance since 2007 for the American car industry? Well, according to the American automakers: “Because of a revival in the housing market and increased demand from the oil and gas industry.” No one is complaining. And once again, the increase in truck sales is doing wonders. The articles stated that more than 15 million vehicles could be sold this year.
This article relates to our readings because now that the economy is turning around—more specifically, the auto industry—the supply for commodities, including cars, is increasing. When the demand for cars stays put and the supply increases, the price for cars is going down. This is the same thing for the housing industry. And both correlate with each other. Usually one does well, the other follows suit.
The recent month of April is showing good signs of improvement in the auto industry—and more specifically, the American auto industry. It stated that international powerhouses like Toyota, Japan’s largest auto company, fell 1.1 percent in April. That might not seem like a big drop. But Toyota this year has been mainly in positive numbers. Even VW called April a “challenging month.” For the most part, the American companies are back the rise, at least for now.
JEN8T2
New Job Data is Better than Expected: Extra Credit Paper
The latest job figures from the Department of Labor are out for the month of April, and they are much better than was predicted by other recent data. Economists had been warning people of a “spring swoon,” which has occurred the past couple of years, according to the New York Time’s Catherine Rampell. Rampell states that the so-called “spring swoon” is when the year starts out strong, but then starts to fall apart as time goes on. However, despite the disappointments of previous years, the United States Economy has created about 165,000 jobs this past month. The economy is finally starting to slowly recover from the recession that hit this country so hard between 2007 and 2009.
As discussed in class, the recession occurred largely because of home mortgages and the burst of the housing bubble. A housing bubble occurs when the housing prices go up usually because of a shift to the right in the demand curve, or an increase in demand. However, at some point, the demand decreases, and the prices therefore drop, resulting in a “bursting” of the bubble. This occurred in 2007 and led to the recession that took place thereafter. So why exactly did the housing bubble burst? Loans were being given out to people who didn’t actually qualify for conventional loans. U.S. homeownership jumped up to 69.2 percent, and housing prices started to rise because they were in such high demand. In addition, mortgages were being bundled into mortgage-backed securities and sold to investors who would receive regular interest payments from the original loan. Because of the riding housing prices, and the fact that a lot of people couldn’t even afford to pay off their loans in the first place, the housing bubble burst, houses were foreclosed, and housing prices fall.
So now the economy is recovering. It is an economic principle that the economy moves in cycles known as expansion and recession. This is just the natural flow of things, and we call these business cycles. We measure theses cycles using real GDP because it is the best measure of economic activity. Right now our economy is in what’s known as mid-expansion, which means that employment, production, and income are all increasing, and it will continue to rise until it hits its peak and begins to fall once again. When the recession ended in June of 2009, our economy started to expand, but at a much slower rate than is typical. This has caused quite a bit of concern, but the fact that this last month has produced 165,000 new jobs is a positive sign.
The unemployment rate fell by 0.1 percent point in February, 7.5 percent in March, and 7.6 percent in April. Steve Blitz, the chief economist at ITG states, “It’s back to normal for this cycle.” Even though the jobs created are not necessarily high paying jobs, it is still progress. Apparently it has greatly affected the stock market as well with the Dow Jones industrial average going up over 150 points, or just a little bit over 1 percent. In addition, the overall labor force has increased and unemployment has dropped by 83,000. This is just one small but promising step in the recovery of our economy.
Here is the link to the article: http://www.nytimes.com/2013/05/04/business/economy/us-adds-165000-jobs-in-april.html?ref=business
Pawprint: rasg24
Panqian Yang
14174164
pytx5
According to a April 22 article in The New York Times, Netflix’s stock soared and passed $200 a share in after-hours trading for the first time since 2011, mainly due to the success of its first original series, “House of Cards.” It also announced a new subscription option that allows four simultaneous streams for $11.99. Comparing to current service (which costs $7.99 a month, limits subscribers to two simultaneous streams), this would be meant for big families. By one measure Netflix now has more subscribers than HBO in the United States.
We have learned in Chapter 13 that in order to survive in a monopolistic competition, a firm has to differentiate its products to appeal to its consumers.
Netflix had some advantages, including a national system of warehouses and streaming movies. But the level of entering this market is not so hard. Many other firms were entering, or had already entered, the business of streaming movies, including Apple, Google, and Amazon. Diverting its service is a way of differentiating products.
Both the new subscription and the original series are methods of trying to stand out among the others. As Ted Sarandos, the chief content officer for Netflix, said, “the goal is to become HBO faster than HBO can become us.”
Kodak is Falling: Extra Credit Econ
Kodak, the once huge blue-chip organization, declared bankruptcy almost a year ago, and the process is almost coming to an end. Although people will still be able to purchase cameras with the Kodak label, Kodak will no longer own these. Kodak is currently in Chapter 11 reorganization, which Antonio M. Perez, Kodak’s chief executive believes will give the company a “clear path forward.”
One big reason behind Kodak’s struggles have to do with the laws of supply and demand. For years, Kodak made their profits selling film, however as time has gone on, and the world has become increasingly digitized, Kodak has failed to keep up in the way that they should. George T. Conboy compares Kodak to a cow. “The company made a big mistake of riding the cash cow, film, to the point that there was simply no more milk coming from it. “
Let us start out by looking at the law of supply. According to this law, the supply curve should be upward sloping and increases in the price cause increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied. But this is only holding everything else constant, which is important to remember. The law of demand states that holding everything else constant, when the price of a product decreases, the quantity demanded will increase and vice versa.
Kodak was still in the business for film, even as the demand for film was going down. According to the supply and demand curves, since the demand for film is low, there would be a surplus in the market, leaving Kodak at a loss.
Another way that Kodak has failed to recover, is their misjudgment of one plan that they had anticipated would get them back on track: selling a package of 1,100 digital imaging patents. As we learned in class, a patent is the exclusive right to a product for a period of 20 years. Kodak had anticipated that these patents would go for approximately 2.6 billion, but instead they went for only about 527 million, once again leaving Kodak at a loss.
Although Kodak seems to remain optimistic because they have a plan, it seems like it is going to be a difficult journey for the company.
Link to the Article: http://dealbook.nytimes.com/2013/05/03/after-bankruptcy-a-leaner-kodak-faces-an-uphill-battle/?ref=business
Pawprint: rasg24
Student Number: 14164965
Under Ground Economy
In this article it talks about China and how they mostly deal in cash for their purchases. Its common in China to pay for everything, even very large purchases in cash. Even for their new superhighways and high-speed rail networks the country pays for it in cash. They do not pirnt larger denominations so they don’t have inflations but they also don’t want it because it could cause corruption. Even though China seems to have flourished economically, the interior of the country is still poor, so even the poor want to do business in cash. The rich do so that they can hide their money in an underground economy so that the government won’t know what they are spending. China tries to stop illegal cash transfers with cross-border money transfer restrictions and limits on foreign currency exchange.
This relates to page 625 in the book because it talks about many developing countries having an underground economy. They talk about how an underground economy affects the GDP of a country. That is what is happening in China. The GDP is affected causing the interior of the country to remain poor.
Dominique Chutich
14128922
nytimes.com/2012/09/14/opinion/krugman-the-iphone-stimulus.html
According to the New York Times article, Michael Feroli the chief US economist at JPMorgan Chase previously calculated that the iPhone 5 release was going to add 1/4-1/2 of a percentage point to the GDP growth rate in the US. Although there are certain factors that coulfd have proved this wrong, this is still significant for one company to achieve.
This relates to our book because specifically when it introduced GDP it used Apple as an example, but it uses the iPad not the iPhone. Everybody receives wages, so if you add up the value of the good and service sold it contributes to the GDP like Michael Feroli said.
Dominique Chutich
dmc279
14128922
http://www.nytimes.com/reuters/2013/05/01/business/01reuters-usa-economy.html?ref=economy&_r=0
Maya Garnaat
meg266
18050333
According to the New York Times article “Companies Hired Less and Manufacturing Growth Slowed in April,” the nation’s economy has been declining. The fiscal policy is being tightened and payroll taxes have been increased. This has caused businesses to higher fewer employees in the month of April than in the last seven months. The economy had been growing rapidly during the beginning of the year, but the growth rate, job growth rate, and the U.S. Manufacturing Purchasing Managers Index all dropped for the spring. The article shows that the manufacturing, construction, and car sales industries have all seen a decline in progress.
The article relates to chapter 21 of our text book. This chapter discusses economic growth and the business cycle. The book gives the equation to calculate growth rate, and the article provides a growth rate of the economy of about 2 percent (679-680). The book also talks about how labor productivity affects growth, something that the article focused on. Businesses have hired less and in turn have seen less growth. Furthermore, the business cycle discussed in the book is a topic in the article. The economy is barely in an expansion phase–when production, employment, and income are increasing–according to the article (691).
Jayne Andrews
14162876
JDA3N7
The article “Accessories No Longer Tethered to Apple” discusses the fact that many hotels and stores are no longer having accessories, like alarm clocks for example, that can only work with Iphones or apple products. Apple had a very aggressive control over accessories for its products and this has helped to add success to other mobile device companies.
Companies have begun to make alarm clocks and other accessories that will work with all different types of phones, not Iphones exclusively. The article even points out that Apple was helping competitors by changing the way that their products connect to other devices because consumers were frustrated. Apple has had to begin to produce accessories that work with many different devices to be successful.
This article relates to economics because earlier in the semester, we focused a lot on competition and perfectly competitive markets. We also talked about substitute goods and complement goods. Substitutes are goods and services that can be used for the same purpose. Compliments are goods and services that are used together. All of these terms have to do with this article.
Other mobile devices instead of the Iphone can be considered substitutes. Smart phones can even be considered substitutes for ipods. However, with so many accessories as compliments to apple products, other mobile devices were set back. However now that more accessories are made to fit all kinds of smart phones, Apple has much more competition.
Student ID: 14152154
PawPrint: KPK535
An April 22 New York Times article explained how Netflix stock soared due to the success of Netflix original series, “House of Cards.” Netflix, whose quarterly earnings had been struggling, added a new money-making dynamic by offering an $11.99 subscription for four-at-a-time viewing.
This “money-making” tactic expresses the economic concept that every once in awhile, a firm MUST differentiate its products in order to gain revenue. If the most successful companies constantly sold the same product, they would no longer be the most successful companies. Netflix, already a popular company, is gaining more popularity by introducing new services that are beneficial to both the consumer and the company.
Product differentiation is vital to the health of a company. In Netflix’s case, there are consumer alternatives such as HULU or HBOgo, a site in which the article addresses. Since there are other companies that provide similar services, Netflix is NOT a monopoly and therefore must differentiate its products from other sites. The article outlines how Netflix has recently been ahead of the game in product differentiation.
Competition is encouraged in Economics–there will constantly be an emerging leader in a market niche. In Netflix’s case, the company happens to be taking the lead. However, competing companies will undoubtedly take notice of Netflix’s initiatives and further increase competition.
The two biggest changes–The original series and advanced subscriptions proved to be very successful for the company. However, this came after many trials and tribulations. Prior to these developments, Netflix struggled with a fading consumer base and relatively high subscription costs. To put a real world perspective on Netflix’s business ventures, a majority of my friends use the site, explaining the fact that the company goes for $200 per share
Student ID: 14152154
PawPrint: KPK535
An April 22 New York Times article explained how Netflix stock soared due to the success of Netflix original series, “House of Cards.” Netflix, whose quarterly earnings had been struggling, added a new money-making dynamic by offering an $11.99 subscription for four-at-a-time viewing.
This “money-making” tactic expresses the economic concept that every once in awhile, a firm MUST differentiate its products in order to gain revenue. If the most successful companies constantly sold the same product, they would no longer be the most successful companies. Netflix, already a popular company, is gaining more popularity by introducing new services that are beneficial to both the consumer and the company.
Product differentiation is vital to the health of a company. In Netflix’s case, there are consumer alternatives such as HULU or HBOgo, a site in which the article addresses. Since there are other companies that provide similar services, Netflix is NOT a monopoly and therefore must differentiate its products from other sites. The article outlines how Netflix has recently been ahead of the game in product differentiation.
Competition is encouraged in Economics–there will constantly be an emerging leader in a market niche. In Netflix’s case, the company happens to be taking the lead. However, competing companies will undoubtedly take notice of Netflix’s initiatives and further increase competition.
The two biggest changes–The original series and advanced subscriptions proved to be very successful for the company. However, this came after many trials and tribulations. Prior to these developments, Netflix struggled with a fading consumer base and relatively high subscription costs. To put a real world perspective on Netflix’s business ventures, a majority of my friends use the site, explaining the fact that the company goes for $200 per share
Samantha Rohn
smrkdb, 114137705
http://economix.blogs.nytimes.com/2013/05/03/comparing-jobs-in-recessions-and-recoveries-2/?ref=economy
In the New York Times article “Comparing Jobs in Recession and Recoveries”, jobs have been continuously added to the job market in the last 31st consecutive months- 165,000 to be exact. And while this number is pleasingly high compared to the economic state since the beginning of the recession, we still have a long way to go.
The chart presented in the article demonstrates the changes in recessions and recoveries since the mid 1970’s. The line representing the currency recovery since the 2007 recession looks extremely similar to the lines representing the recessions of 1990-1993 and 2001-2005. This stands as a glimmer of hope- because of the similarities in the slopes of the lines, as well as looking at the outcomes of the two previous recessions, it looks as though we are heading in the right direction towards an end of the recession.
Catherine Rampell of the New York Times writes, “…if the economy were healthy there should be more jobs today than there were before the recession”. Due to the upward slope in jobs that has been increasing at a steady rate for the last 31 months, it looks as though this goal that seemed unattainable at the beginning of the recession will in fact be within reach within the near future.
“To get there within seven years” writes Rampell referring to returning to precession employment levels, “we need job creation averaging 208,000 jobs per month, which was the average monthly rate for the best year of job growth in the 2000s”. While this seems like an unreachable goal because of the discouraging affects of the recession, the fact that this number of jobs per month has in fact been a reality within the past 13 years, there is a glimpse of hope that we can reach this goal yet again.
In class, we talked extensively about the Business Cycle (694). It begins with the “expansion cycle” in which production, employment, and income increases. The end of this expansion, what is known as the business cycle peak, leads to a downward spiral of decreasing production, employment, and income. This is better known as a recession. But there is in fact a time when recessions come to an end, what is known as the business cycle trough. If our country keeps following the pattern of the last few recessions as it has been, there is hope that we will work our way out of this recession and return to a stable economic state once again.
I made a mistake on my student number- 14137705
Samantha Rohn
smrkdb, 14137705
http://economix.blogs.nytimes.com/2013/05/03/the-big-problem-is-long-term-unemployment/
In the New York Times article “The Big Problem is Long-Term Unemployment”, Floyd Norris uses diagrams and statistics to demonstrate the detrimental affects of short, medium, and long term unemployment. He begins the comparions for each term in 2007, the beginning of the most recent recession.
Norris begins by demonstrating that Short-Term unemployment “has fallen below where it was in late 2007, before the Great Recession began”. It showed the percentage of labor force unemployed for less than 5 weeks; a statistic given by the Bureau of Labor Statistics. He went on to demonstrate the Medium-Term unemployment, which has not changed severely.
Then the Long-Term unemployment comes into play. He explains that whlie it remains high, the current figure has dropped below the percentage after World War II by a whopping .1% from the 4.2% after World War to the current 4.1%. Norris explains that, “More than half of the unemployed workers have been out of work for at least 15 weeks”. And while the number of unemployed is continuously dropping, recently from 6.7 million to 4.4 million, it is still high and in need of help.
In class, we discussed the affects of unemployment (654). We discussed in class what is means for an individual to be considered unemployed: a person who did not work in the previous week of the survey but were available for work and had actively looked for work at some time during the past four weeks. The article touched on the statistics of the unemployment rates, stating that the stats were taken based on individuals who had been unemployed for less than 5 weeks. We discussed how to calculate the unemployment rate, as well as the detrimental affects of long-term unemployment. If the issue of long-term unemployment is not address and action is not taken, it can lead to a downward spiral for the economic state of the country in which we have not seen before.
Katherine Garrett
KEGZB8
14137171
One store is seeking to change up the advertising world in order to gain a bigger audience. Destination XL escapes the norm of featuring plus size male models as football players, to their ‘beer drinking fans’. Destination XL has spent an estimated $12 million on advertising with the hopes of reaching a bigger audience and drawing in the ‘average’ american.
This article relates to advertising and brand management. With a new commercial Destination XL is stepping outside of the box in order to differentiate their product from the competition. They are hoping that with the major advertising campaign, their product will seem more desirable.
Jazmin Burrell
16068527
JMB998
A Call for New Blood on the JPMorgan Board
This article tells us about the corporate structure and concern for the JP Morgan company. A lead advisory company has advised investors to not vote for three directors who are under surveillance by the company.
The advisory company rarely does this unless under “extraordinary circumstances”. The advisory board believes that the company needs more experienced and seasoned professionals to serve on the board of the risk policy committee.
The advisory board believes this could lead to a conflict of interest with the investors.
JP Morgan is also undergoing reconstruction of their image since the company loss last year. They advisory board doesn’t want any internal conflict to jeopardize the rebuilding of the company.
On page 241 of our book, it tells us about the structure of a corporation and the principal-agent problem. The advisory board wants to avoid any presence of a principal-agent problem where the agent could pursue their own interest and not that of the principal who invests in the corporation.
Samantha Rohn
smrkdb, 14137705
In the New York Times article, “Accessories No Longer Tethered to Apple”, Nick Wingfield and Brian X. Chen discuss Apple product’s decreasing popularity in the market. With its business already showing a shaky slow-down in the last few months, investors worry about the tethering Apple product popularity.
This rivalry between Apple and other competing companies is not a shocker, as other businesses are making their products more affordable and accommodating for its users. While Apple is sitting on its high horse of their popularity and successful business, other companies are working their tails off to better their products to appeal to the public.
If Apple looked into what we learned in class to be horizontal merging (477), they could remove competition by buying out competitors and eliminate fear that their business could go belly-up. This would increase Apple’s market power immensely. Doing so would also expand the consumer market as well as the product production, making their product the only option for consumers. It would also strengthen the company as a whole, as competition would be limited, or even potentially non existent.
In the New York Times article, “2 Companies In Web Video Are Expected to Merge” on Oct. 8, 2013, Alloy Digital and Break Media are expected announce that they will merge. The new company will be called Defy Media and hopes to target people ages 12-34 with its entertainment (Kaufman).
The merger is a 50-50 merger, which means the two companies will merge without exchanging money and authority will be split evenly. The CEO of Alloy Digital, Matt Diamond, will become CEO of Defy Media. The CEO of Break Media, Keith Richman, will become president of Defy Media.
This article reflects a partnership through corporate governance we have learned about in class. Defy Media is a partnership because it is owned by two people, Matt Diamond and Keith Richman. It also represents corporate governance because Defy Media’s business decisions will now be affected by the structure of two people under one large company.
The article says that Defy Media as a larger company would help Diamond and Richman strengthen their own shows through promotions and will allow them to not have to share revenues with youtube (Kaufman). This shows how the partnership is acting through corporate governance.
Sarah Jackson
pawprint: skjcp2
The NYT article, “Barnes & Noble to Release Upgraded Version of Black-and-White Nook E-Reader, represents and oligopoly as well as technological change.
Barnes & Noble is an oligopoly because it is among the top five companies who sell E-Books. These are Barnes & Noble, Apple, Amazon, Sony, and Google. In order to to be in an oligopoly, firms must have identical or differentiated products. The article talks about how Barnes & Noble is releasing a new Nook that is black-and-white. By doing this they are differentiating their Nook from the iPads and Kindles that Apple and Amazon sell, respectively.
Releasing the new Nook also represents technological change. In class we learned that technological change is change in the ability of a firm to produce a given output with a given number of inputs. An example we learned about in class is eBooks. The new Nook has a backlit screen, sharper display, and is lighter weight. By making these changes, Barnes & Noble is hoping to produce a lot of these for the holiday season with their given number of workers.
Sarah Jackson
skjcp2
The article is in the Business Day section of the Oct. 30th paper of The New York Times.
The New York Times article, “Staten Island Property Puts a Nascar Failure Behind It” talks about an old dumping ground that was going to be used to build a nascar racetrack and is now going to be part of the Staten Island Marine Development.
The development will ultimately be a marine port and a logistics center, with warehouses to store goods. This is an example of the long run because the marine development will vary its inputs once it builds the physical port and logistics center and it will adopt new technology.
This also represents physical capital because building the port and logistics center is physical capital. There is also a terminal next the the site which is physical capital because they could use the terminal to store goods.
This new development will also have human capital because it will have to hire workers who have the knowledge, skills, and training to run the marine port and logistics center.
Sarah Jackson
skjcp2
This holiday season marks the long-awaited release of two sought after gifts, the Xbox One and Playstation 4. These two consoles are the first console releases by Microsoft and Sony in eight and seven years, respectively. But there is speculation among the gaming industry regarding how much success these new products will have among an industry that has recently become saturated with tablets and smartphones. Thus, the economic matter in question is whether popular new technology will overrun an oligopoly that has been dominant throughout the 21st century.
Microsoft, Sony, and Nintendo are the big three when it comes to video game platform development, which makes the gaming industry an oligopoly since it is largely controlled by only a few firms. However the article states that, “Already, there is evidence that mobile devices have chipped away at the sales of traditional game systems, and console game sales have declined for several years.” In an economic sense, the new mobile technology seeping into this narrow market lowers the demand for traditional gaming technology. Mobile games are starting to become substitute goods in this regard because they can be used for the same purpose. In addition, the more mobile device sales increase, the more console sales decrease. However, there are certain features that these firms are introducing in order to keep their products fresh and relevant. These include visual identity recognition voice-activated channel surfing on the Xbox One, for example.
But while there is uncertainty among economists about how the new consoles will sell, there is also a lingering suspicion about the quantity of units that these firms will produce upon the release of a new console. It is speculated that often times they will produce limited numbers so that the demand increases due to the “novelty” of the item. In this case the demand curve would shift to the right because as the taste for the good increases, more and more consumers will be willing to buy it, despite a $400 price tag. The manufacturers deny this marketing plan however, and are confident that their consoles will be success, in part because of the allure of mobile games that ultimately get people hooked on gaming culture.
According to The New York Times article “Why Is Turkey Cheaper When Demand Is Higher?”, frozen whole-turkey prices drop significantly every November. In class, we learned and read about supply-and-demand curves and the idea that when the demand curve shifts outward, prices should rise; however, the price of frozen whole-turkey defies this logic by taking a “nosedive right as demand is at its highest.”
Economists disagree about why the price falls when the demand rises. Some economists argue that frozen whole-turkey supplies are selling “loss leaders”. In other words, supermarkets sell frozen whole-turkeys at low prices to entice customers into the store in the hopes that they will buy other food items at regular – or even higher – prices, thereby making up for the low price for the turkey.
Other economists argue that the decrease in price is a result of changing consumer preferences. According to the article “consumers might get more price-sensitive during periods of peak demand and do more comparison-shopping, so stores have to drop their prices if they want to capture sales.”
Yet another explanation offered is that consumers are less picky when cooking for a large amount of people. In the article, Judith Chevalier – an economics professor at the Yale School of Management – perfectly sums up this theory, saying, “Let’s say I prefer Coke over Pepsi. If I’m buying for myself, I’ll probably buy Coke even if it’s more expensive. But if I’m buying soda for a party, I have no reason to think everyone else also prefers Coke, so I’ll go with whichever brand is cheaper.”
Lisa Conley
LNC5GD
“Fed Looks for Other Ways to Aid Economy”
At the most recent Federal Reserve meeting in October, officials showed no intent of altering the current economic stimulus plan, according to the account of the meeting published Wednesday, 11/20. The plan includes cutting back financial security purchases, while keeping borrowing costs low for firms and other consumers. Eventually the Fed hopes to cease financial security purchases altogether. However, it will not be until the labor market’s unemployment rate dips below 6.5 percent when increases in borrowing rates will be permitted to occur.
A security usually takes the form of a stock or a bond, and is bought and sold in a financial market. In this instance, the Fed would hold off on purchasing them due to the high unemployment rate (currently 7.3 percent). Too many unemployed persons make it more unlikely that those unemployed persons who take them out will pay them back in a timely manner. When the Fed purchases these securities, it does so from banks, which is an example of a primary market setting. The secondary market is where the Fed then resells them to firms and other private entities.
Although there was no explicit opposition to the Fed’s proposal, it will not likely take effect just yet. The idea “certainly is a possibility,” said Janet Yellen, Chairman of the Fed. By keeping the interest rates of reserves above zero, there exists an incentive for banks to borrow from money market funds and keep that money with the Fed. At the same time though, they are low enough to encourage the buying of stocks and bonds so that economic stimulus can be achieved.
An interest rate is a cost of borrowing a fund. With the economy in the condition it is, there is a decreased demand to borrow these funds. As part of its stimulus plan, the Fed is aiming to keep the rates low enough so that banks still want to keep their money with the Fed, but above zero so that the money-market function is not impaired. If the rates were at zero, then stock and bond activity would increase, but the Fed would have less power because of the decrease in money under its control.
Timoshanae Wellmaker- tvwrp6- 14166088
In the article “Wage Strikes Planned at Fast-Food Outlets in 100 Cities” by Steven Greenhouse workers of fast food restaurants, including some of my favorites, such as McDonald’s and Wendy’s are planning a strike that will occur in three days fro today in order to pressure the companies for higher wages. The strikes are planned to take place in at least 100 cities and maybe even more will participate. A strike such as the one currently planned has taken place before but on a much smaller scale in November 2012 with only 200 fast-food workers participating in the one-day strike in New York City. The article then goes into great detail about different union that are trying to help the workers out.
This article relates to issues of employment and labor unions. Labor unions are organizations of workers that bargain with employers for higher wages and better working conditions for their members (656). The workers mentioned above want to go on a strike in order to draw attention the the idea that they are being underpaid. This is where the labor unions come into the picture. The unions job is to find a way to satisfy the wants of the workers while also keeping the companies in good shape. The unions mentioned in the article include the Service Employers International Union, Fast Food Forward, and Fight for 15.
In order for the workers to really make a difference more must be done. The article explains how the one day strike is more so for publicity than for actual progress. But it is something for the workers who want and feel they deserve higher wages to start off of. A bigger issue that goes along with this is the issue of higher wages. The book states that many firms already pay higher-than-market wages not because of government regulations but because they believe it will increase their profits (656). By paying workers higher the firms believe that worker productivity will increase. The problem with paying workers even more is because if firms are already paying them more than market requires, paying even more than that could actually do more damage then benefits.
The New York Time’s article, “That ‘Made in U.S.A.’ Premium” explores the cost benefit of products made in the U.S.A. Consumers are looking for cheaper goods and the manufactures are going overseas to satisfy consumers’ wants. Retailers are focusing on the quality when trying to justify the higher cost of American goods. There are some limitations but retailers like Walmart is pushing suppliers on cost.
The article applies to supply and demand. Also, it relates to opportunity cost, the highest valued alternative that must be given up to engage in an activity (41). There is opportunity cost in retailers investing in products made in the U.S.A. and not going abroad for cheaper labor costs.
According to the New York Time’s article, “Increased Global Demand Aids India’s Mild Recovery,” India’s economy is slowly recovering. Its gross domestic product increased. Due to good monsoon season, its agriculture sector grew, along with all the other sectors. However, there are still some challenges. The service sector has not been up to par.
This article ties back onto the part we talked about the gross domestic product and the component of GDP (620). In the article, an economist commented, “We continue to believe that real G.D.P. growth during financial year 2014 as a whole is likely to range between 4.5 to 5 percent owing to near-term challenges in the macro environment, mainly from subdued domestic demand, fiscal constraints and the muted investment outlook.”
Tommy Walzer, TMWD5D
Inflation rates in America are becoming curiously low, and have led some economists to oppose the probable tapering of bond purchases by the Fed. This is highlighted by the scant change in the personal consumption expenditures deflator. The government reported that the CPI, which is similar to the deflator, has risen only .9 percent in the 12 months through September. With the unemployment rate at 7.3 percent in October, Fed officials had not been expecting the PCE to fall this low.
Since 7.3 percent is relatively low as far as the unemployment rate goes, there is much uncertainty as to why consumer prices remain so low as well. The CPI is an average of the prices of goods and services purchased by a typical family. So if the unemployment rate seems to be lowering at a gradual rate, it is confusing as to why people are spending less. Surprisingly, this trend is not only an American one; countries such as Britain and France have recently reported for-year lows in inflation rates.
One factor in the low inflation equation is lower oil prices, however the core inflation rate combats this explanation. The core inflation rate excludes volatile energy from the equation, and has only been at 1.2 percent over the past year. Yet another possible explanation may be the prices of durable goods. Durable goods are goods that do not expire quickly, such as cars or home appliances, and the prices of these have been falling.
If this inflation trend continues, there would be a decreased incentive for the Fed to taper interest rates because of the lackluster stimulation. The government will usually try and lower interest rates if they wish to improve consumption. But as the inflation rates exhibit, consumption is actually decreasing, so that plan may end up being a lost cause.
http://dealbook.nytimes.com/2012/04/30/coke-denies-it-is-in-talks-to-buy-monster-beverage/?ref=business
In the New York Times article, “Coke Denies It Is in Talks to Buy Monster Beverage” Michael J. De La Merced covers the rumor that Coca-Cola Company may be buying Monster Beverage Corporation. In response to this rumor, Monster’s shares increased as much as 26 percent before falling by the end of the day. Analysts and investors in the article discussed the hefty price tag that would come along with such a merger. This deal would have surpassed the biggest brand takeover to date, which was Energy Brands (maker of Vitaminwater drinks). Although the companies want to “continue the best ways to maximize the value of our relationship” there is actually no discussion in actual negotiations or partnership in the near future, most likely because of the cost.
If Coca-Cola Company did in fact buy Monster Beverage Corporation, a horizontal merger would occur. A horizontal merger is a merger between firms in the same industry (p. 477). Horizontal mergers are more likely to increase market power and would benefit both companies in establishing more of a powerhouse in the beverage distribution industry. Coca-Cola’s biggest rival in the industry, and the one preventing it from becoming a monopoly, would be Pepsi. A horizontal merger such as one between Coca-Cola and Monster would expand the consumer market and product production as well as strengthen the company as a whole in its competition with other brands such as Pepsi.
Allison Schnitker
14131999
Chelsea Fricker
Student Number: 14131809
Article: http://www.nytimes.com/2012/05/01/business/delta-air-lines-to-buy-refinery.html?_r=1&ref=economy
This article is about how Delta Airlines has agreed to buy an oil refinery near Philadelphia to help with their annual spending on jet fuel. Delta is reportedly spending $150 million on the purchase of the refinery and then an additional $100 million more to refurbish the plant. The article goes on the criticize Delta’s big spending but it does acknowledge that it will cut spending by a little bit. When it comes to spending on jet fuel, even saving a little bit is still a massive amount. Last year Delta spent $12 billion on jet fuel, with the purchase of the refinery they suspect that they will save about $300 million. The author of the article goes on to question the purchase, saying that $300 million compared to $12 billion isn’t actually that big of a dent, especially to get involved in something as risky and dangerous as oil refining.
Delta’s decision to buy the refinery from the company ConocoPhillips is a good example of what we learned about earlier this semester, vertical mergers (p.477). Yes, Delta isn’t merging with the whole company of ConocoPhillips but if their plan to save on jet fuel is a success it could lead to a merger in the future. Delta’s buying of the refinery could be considered a vertical merger because they are buying a part of a company that is a stage in the production of their product.
Celeste Ellis
14110667
http://dealbook.nytimes.com/2012/04/30/coke-denies-it-is-in-talks-to-buy-monster-beverage/?ref=business
In the New York Times article, “Coke Denies It Is in Talks to Buy Monster Beverage” Michael J. De La Merced discusses the buzz about Coca-Cola “being in talks” to buy the Monster Beverage Corporation. In response to this rumor, Monster Energy Drink shares rose 26 percent. Coca-Cola denied the rumor and they day concluded 53 cents down to 65$ a share. This rumor was big new instantly because of the potential results of such a powerhouse merger. Coca-Cola’s biggest brand takeover was its 4.2 billion purchase of Energy Brands (the maker of Vitamin water drinks). If Monster and Coca-Cola were to merge the deal could cost well over 13 billion dollars. “While the two companies had held very preliminary talks about a possible union some time ago, Coca-Cola and Monster were never engaged in formal merger discussions.” However Coca-Cola said, “We continue to review the best ways to maximize the value of our relationship.” If this merger were to go through, it is understandable that this could be a monopolistic situation (A firm that is the only seller of a good or service that does not have a close substitute p.462). However, that is unlikely because Pepsi still brings about competition and qualifies as a close substitute. If Coca-Cola and Monster were to join forces it would be a horizontal merger (a merger between firms in the same industry p.477). This may allow for the newly merged firm to be more efficient and have lower costs. Each firm would be much stronger as a pair and it would be good for competitive purposes of close substitutes.
Celeste Ellis
14110667
The New York Times article “Not Wanting Jobs” discusses how many Americans want to require people seeking unemployment insurance to volunteer or take drug tests. The article discusses the austerity strategy, which includes “cutting taxes for high earners and cutting subsidies for low earners.” This argument places blame on Obama for his forms of public assistance and is accepted by those who feel like they are paying for those who are too lazy to seek employment. Although many Americans believe those who cannot pay their bills and seek unemployment are lazy, this article brings up the fact that many adult unemployed workers are seeking educational programs and want jobs but America doesn’t seem to be helping them. We also have to keep in mind with unemployment benefits is that job growth has slowed and unemployment (640) is at a normal of 8%.
Link:
http://economix.blogs.nytimes.com/2012/04/30/not-wanting-jobs/?ref=economy#
http://economix.blogs.nytimes.com/2011/07/08/discouraged-workers-especially-at-city-hall/
In the “New York Times” article, “Discouraged Workers, Especially at City Hall,” reporter Floyd Norris discusses the importance of evaluating not only the unemployment rate, but also what percentage of the population feels optimistic enough to enter the labor force and look for jobs. In chapter 20 of the book, it discussed how the percentage of discouraged workers affects the unemployment rate. Discouraged workers, who are members of the labor force who have not looked for a job in four weeks are not included in the unemployment rate. Therefore, it is not wise to look solely at the unemployment rate when evaluating jobs. Even if the unemployment rate gets lower, it does not necessarily mean more people are getting jobs, it can also mean that people are becoming discouraged and leaving the labor force. The article states that April of 2010, the participation rate, which is the proportion of people looking for jobs or with jobs rose to 65.1 percent. The article evaluates the importance of understanding how many discouraged workers are present in the labor force rather than solely looking at the unemployment rate. Norris looks at the presence of people entering and leaving the labor force as a way to measure the optimism of American workers. He uses that as a way to evaluate the success of the economy and its ability to stimulate workers and encourage them to continue to look for jobs.
In the article by Eduardo Porter titled “China’s Vanishing Trade Imbalance”, the issue of China’s currency having a better advantage over the dollar is addressed by Senators Charles E. Schumer and Lindsey Graham. They argued that because the Yuan is lower compared to the dollars exchange rate, this gives them the upper hand in having the advantage in exporting to other countries. This affects Americans and the employment decreasing. The three factors in the text cause the shift in demand and supply curves in the foreign exchange rate: change in demand for U.S. produced goods and services and change in demand for foreign produced goods and services; changes in the desire to invest in the U.S. or foreign countries; and changes in the expectations of currency traders about either the foreign currency or the dollar.
Recently, China has been dealing with issues of its own in which their imports and exports are coming into equilibrium narrowing its surplus. The IMF has estimated that it will decline 2.3 percent. Senators are starting to blame China for its current account deficit shrinking. Mitt Romney has talked about declaring China “guilty of currency manipulation”. This would help Americans deal with our own deficit and not let China get away with their economic strategies. China’s appreciation in its currency may be greater causing higher inflation. The IMG estimates that the surplus will shrink and will cause a recession. To fix their issues, China should raise their wages and incomes for workers. This could help the consumers get a return of their savings and be willing to spend more boosting the economy. With these reforms, China could be on its way to higher economic growth while American senators could blame someone else for America’s trade deficit and economic problems.
Erica Tello
etqk7@mail.missouri.edu
Student Number: 14120944
Link: http://www.nytimes.com/2012/05/02/business/economy/chinas-vanishing-trade-imbalance.html?pagewanted=2&_r=1&ref=business
http://dealbook.nytimes.com/2013/03/12/hostess-picks-apollo-led-group-as-new-owner-of-twinkies/?ref=business
Catherine Rice
14151437
cardm6
In 2012, Hostess announced that the company will discontinue producing its famous Twinkies and other iconic convenient store items. However, according to Michael J. De La Merced and Peter Lattman’s Article, “Hostess Sells Brand to Investment Firms”, Hostess will sell their snack brands for $410 million to two investment firms that have a history of an economic turnaround. The firms have stated that they will create five new factories, sell the snacks at multiple types of stores, and include healthier options such as 100-calorie packs. Before the selling of the company, Hostess overproduced their sugary snacks and did not make a profit because their wasn’t as high as a demand for the treats. The company clearly faulted in having their total revenue be less than the total cost of producing their products. Therefore, Hostess became bankrupt because of the lack of selling their product.
According to the New York Times article, “Office Supply Retailers Weigh a Merger”, office supply companies OfficeMax and Office Depot are thinking about merging their two companies in order to increase profitability. The two companies have been struggling to compete in the market alongside online stores and stores that are cheaper. For example, OfficeMax and Office Depot combined made a profit of $4.4 billion in a quarter of a year, while Staples made $6.4 billion. Office depot has been receiving pressure from shareholders (people who own stock in the company) to offer more businesses, like printing. Even with this trouble, stocks in both companies have risen, but many speculate this is due to the talk of the two merging.
If these two companies do follow through, they would be merging horizontally, because both firms are in the same industry. A horizontal merge would be beneficial to them because it can increase their size, and hopefully therefore their power. Having more power would allow them to compete alongside brands like Staples, who they have not been competing well against. Office Depot’s shareholders, who have partial ownership in the firm because of their stock (245), are putting pressure on the company most likely because investors get a capital gain when the firm’s revenue increases (245). Since a consumer’s decision to buy a product is made when they can get the highest quality product possible for the lowest cost possible (9), consumers have not been choosing OfficeMax or Office Depot, who do not undercut their prices like companies such as Costco.
Juliana Reuter
14152457
Matthew Raymond 14157777
According to the New York Times article, “U.S Will Place Tariff’s on Chinese Solar Panels”, Chinese Solar Panel companies control two-thirds of the solar panel industry. Apparently, they have been selling their panels for less than the cost of production, a process known as dumping. The U.S government was debating this for some time and finally agreed upon a tariff. However, a loophole exists that doesn’t prohibit Chinese manufacturers from producing their panels in other countries. Many people are worried that this tariff will have no effect unless the International Trade Commission closes this loophole.
Wholesale prices have fell by nearly three-quarters since 2008, mostly due to Chinese manufacturers supplying more than what is demanded. Diane Cardwell and Keith Bradshew write, “But Chinese companies have driven costs down mainly through greater economies of scale from building ever-larger factories to produce conventional solar panels.” About a dozen of panel makers in the United States and Europe have gone bankrupt because of this. The EU has issued the worlds largest antidumping case. Opponents of the tariff have argued that American families will now spend more money and American manufacturers worry that the Chinese will issue a tariff on their goods. The Chinese government has begun an investigation of polysilicon, the major ingredient in the panels. They believe the South Korean’s and the American’s may be practicing dumping.
This article fits best with chapter 14. The government is imposing a barrier (462). By issuing this tariff, they are trying to protect American manufacturers from bankruptcy. The Chinese manufacturers are able to undercut the other manufacturers because of their size. The “economies of scale (461)” is a situation when a firm’s average total cost falls as the firm increases output. The Chinese are using their large firms to achieve this and in turn put other companies out of business, which, they seem to have accomplished. As they produce more, they sell more products and make more money. With this money, they can continue to grow and kick out the competition. This can be a major problem in an oligopolistic market.
Name: Megan Brillos
Student Number: 18085554
Source: http://economix.blogs.nytimes.com/2013/02/01/college-is-still-worth-it-2/?ref=economy
Title: College Is (Still) Worth It, New York Times
This article from the New York Times Business section discusses the economics of college and whether or not it is worth the investment. It appeared on the Business section of the New York Times on February first of 2013. The article, written by Catherine Rampell, is very recent and also very relevant to current-day United States; in particular, this article is very relevant to U.S. youth and their parents.
This article can be related to Econ 1051 in many ways, but specifically, it can be used to illustrate opportunity cost. The opportunity cost of attending college is up to thousands of dollars for yearly tuition. According to the article, in January of 2013, the unemployment rates for those with a bachelor’s degree was around four percent, only four percent lower than the average unemployment rate of those with only a high school diploma. Deciding to attend college, and how much to invest in college, is relatable to a Production Possibilities Frontier- the student must estimate how much each college degree will cost, and whether or not a prospective job will match the opportunity costs. If not, the student likely sees the match up of a College-Salary PPF as “inefficient.” Students must estimate the comparative advantage of this investment and decide whether or not the benefits outweigh the risks.
Not only can one relate this article to opportunity costs, but it can also be related to supply and demand. The Law of Demand states that when the price of this service (college) increases, the demand will decrease, but if the price decreases the demand should increase. This being said, if Mizzou suddenly dropped its tuition to $50 a semester, a lot more students would likely be attracted to applying. Likewise, if Mizzou started charging $50,000 a semester, most students would decide that their investment would turn out “inefficient” on a PPF and that the trade-off was too risky.
The Law of Supply states that increasing in prices causes increase in quantity supplied, and decrease in prices causes decrease in quantity supplied. This relates to the article because if colleges raise their prices, they are more likely to offer tuition to a larger amount of students who can afford the given price, and vice versa. Between the students and the designated college there must be an equilibrium, or a price that the students are willing to pay and the college will accept, which is of course unique to each particular college and plays a large role in the students who are chosen to attend the college. The article from Rampell summarizes that a college degree is definitely a worthwhile trade-off, but that each individual must decide for themselves what equilibrium price is most likely to give them the largest comparative advantage in the future.
pawprint mnb8bd
http://economix.blogs.nytimes.com/2013/03/15/what-hospitals-charge-the-uninsured/?ref=economy
student number: 18085554
name: Megan Brillos
Article: What hospitals charge the uninsured
This article is about how many readers of Time Magazine were very provoked when the magazine quoted a man saying that the health care industry in the U.S. is “very profitable.” As easily illustrated by graphs in our own Economics book, the United States spends more money per person on health care than any other first world country. Our health care system is neither profitable nor efficient, especially when compared to other world leaders. This article, by Uwe E. Reinhardt- New York Times reporter, points out that, in fact, that under pervasive price discrimination (which is “hallmark of United States health care”) the numerical amount of profit margin earned by any given hospital is a huge mix of numbers that is very complicated to decode. He shows readers that because of this confusion, certain big payers like Medicare and Medicaid programs can get away with paying below what it actually costs for hospitals to perform medical procedures. To make up for this, hospitals suck more money out of private insurers who have little bargaining power. Mr. Reinhardt asks, in response to Mr. Brill of the Times’s comments, “Even if one grants that American hospitals must juggle their financing in the midst of a sea of price discrimination, should uninsured, sick, middle-class Americans serve as the proper tax base from which to recoup the negative margins imposed on them by some payers, notably by public payers?” He spends the rest of his article explaining why his answer to his own question is no. He shares similar opinions with about half of educated Americans. As we learned in chapter six of our economics textbook, many Americans have long-awaited President Obama’s Patient Protection and Affordable Care Act, which aims to make the health care economy much more efficient. The health care act supports Medicare, but reduces the power of Medicaid, and requires every US citizen (with few exceptions) to have some kind of health care plan. Many complain the act still did not do enough, while others hoped for the former capitalism-esque system to work itself out.
mnb8bd
According to the New York Times article “Coffee’s Economics, Rewritten by Farmers” by Nicole LaPorte, coffee farmers are trying to find new ways to increase profits. Many farmers sell their beans at a fair trade price, but often don’t see more of the final sale price. With fair trade, farmers receive a guaranteed minimum price, yet still are not given the additional value that comes with later processes of production. Under an “improved” system that is being developed by South American growers, farmers would be paid after their coffee has been exported, packaged and sold, which is a much higher price. While this model would be more costly to farmers, they net more money than under fair trade. However, farmers may wait up to a year to receive payment under this system.
This relates to the reading because on page 102 of the Hubbard and O’Brien text, a price floor is defined as a legally determined minimum price that sellers may receive. In the article, Paul Rice, president and C.E.O. of Fair Trade USA stated that the fair trade price “is a floor, not a cap.” Fair trade farmers are receiving a minimum guaranteed price, regardless if the current commodity market price is less than that. This article also relates to page 4 of the text because it relates to economic models. The new system being developed by South American growers is a simplified model that is now being employed in the real world. According to the model, farmers will net about four times as much as they would through fair trade.
source: http://www.nytimes.com/2013/03/17/business/coffees-economics-rewritten-by-farmers.html?pagewanted=1&_r=0
Article Link: http://economix.blogs.nytimes.com/2013/03/14/big-banks-have-a-big-problem/?ref=economy
Matt Cressionnie
mlchg5
14137845
According to this blog post by Simon Johnson, some of the major banks in the U.S. banking system are in trouble due to facing some constraints put on them by the government. Johnson suggests that there are three main positions which can appeal to these banks which are the Old Wall Street View, the New View, and the New New View. Johnson says that the Old Wall Street View is that the banks know what they are doing and don’t need to be regulated by government at all. The New View means that there is “no too-big-to-fail subsidy” which means that no subsidy can measure up to not fail the economy. The New New View is that “too-big-to-fail” exists but that it will be overcome in the end.
This article associates with the idea of a mixed economy with an emphasis on market economy at times. The economy of the U.S. is mixed, but this post about the 6 big banks on Wall Street shows how important our market economy can be as well. In this market economy, banks reign king and should not be forced to follow regulations from government and dig themselves out of the holes that they created for themselves.
Jonathan Blazejewski
student number: 14131231
For the last decade, the Government spending budget has been a key issue in every presidential election. The issue has gone long unsettled. In this article, Speaker of The House John A. Boehner discusses his stance on the government spending budget, a long with his interactions with president Obama regarding this matter.
The main issue, according to this article, seems to be differential Republican and Democratic stances on the medicare budget. Further, how both parties are attempting to reduce government spending, while still providing American citizens with proper health care. Specifically, Republicans will try to balance the budget by cutting measures from President Obamas first time, such as his expansion of Medicaid, while still generating tax revenue by maintaining the level of taxation for the wealthiest americans, as per the deal from this past January. Further, Republicans hope to reduce the amount of money spend on public welfare programs. This act would increase the poverty percentage, and, for some families, take away much needed funding.
The attempt to balance the budget I found most interesting was Nancy Pelosi’s idea to deal with economic inflation by changing the way the government calculates economic inflation. I’m not sure how a change in calculation would change how much the American currency fluctuates.
This article relates to our text and to our lecture in the manner it deals with government budget, and the way it affects economic fluctuation and inflation. Without Republican and Democratic agreement on spending and economic regulation, debt, inflation, and the price of living will continue to rise along with the poverty rate.
The article titled “Europe’s Budget Crisis Hits Universities,” talks about the budget cuts that have been made in the universities in schools in Dublin, Ireland and all of the affects that have come along with those cuts. The government hopes to merge between teaching colleges and universities as part of a plan to allow for the Irish high education system to educate a larger amount of people with less money. With a smaller amount of resources available, the government feels this is the only solution.
Because of these cost-cutting trends and redistribution of money, many students and members of the community have grown angry and therefore protested all across European countries. The protesters are fighting for higher education systems that are affordable and free of budget constraints. While E.U. representatives have attempted to make education qualifications and standards compatible across all national borders, it is harder for them to completely reconstruct and hash out a seven-year budget. It is also difficult for the government to fix all of the university systems seeing as they all differ greatly across the continent.
11 European countries in particular have felt the affects of the decrease in spending including Greece, Iceland, Italy, Portugal, and Spain. These countries have suffered a decrease of more than 10% in higher-education funding during this crisis. Britain has felt the biggest impact in cuts, causing British universities to become the most expensive in the world right after the U.S and South Korea.
These higher fees, however, are not the only concern, some are also worried about funding being directed to only certain types of research rather than less substantial aspects of education such as the quality of good teachers. According to one Mr.Bryne, “The word in the system is doing more with less.”
This article relates to the idea of budget constraints covered in chapter 12.
Budget constraints involve the challenge that consumers face when deciding how to best spend their money with limited incomes. Consumers must decide where they would like to spend more money and where to cut back on spending which requires them to make trade-offs and decide what is most important in their budget. In the case of this article, the E.U representatives must decide how to cut back the budget to save money while still providing a good education to students. They have a limited income of which to spend on education and therefore must allocate the areas in education such as “certain types of research” that are most important rather than spending the same amount of money in all fields of education.
In the article titled “U.S. V. Microsoft; Excerpts from the Governments Lawsuit filed against Microsoft,” it talks about the high barriers to entry that PC operating systems face against other systems that are used for Microsoft’s “Windows.”Because there are no “commercially reasonable alternatives” to Microsoft operating systems that are used for the PC’s, other firms wanting to sell alternative operating systems.
One of the main barriers to entry that the article covers is the barrier created by the “number of software applications that must run on an operating system in order to make the operating system attractive to end users.” End users prefer the maximum number of applications available, but most applications in today’s world are solely run through Microsoft and therefore limit other companies to the ability to enter into the market for personal computer operating systems. It is very time-consuming, challenging and costly to create an alternative operating system that runs the programs that run on Windows and therefore causes new firms to deal with high barriers of being successful after entry into the market.
The biggest threat to Microsoft’s operating system monopoly does not come directly from new operating or already existing operating systems but rather from new software products that want to support or become alternative platforms to applications that can be written and that can be used with several other operating systems that may or may not include Windows.
This article relates to Chapter 14’s section regarding “Barriers to Entry.” An oligopoly is a market type that involves a small number of dependent firms compete to earn the biggest profit. These oligopolies exist because new firms are trying to enter industries in which firms that are already earning economic profits exist. New firms often have problems entering an oligopoly because of things called barriers to entry, which is anything that prevents a new firm from entering an industry.
There are 3 types of barriers that consist of economies of scale, ownership of key input, and government imposed barriers. The barrier presented in this article is the barrier, ownership of key input. This barrier occurs when a good requires a particular input, which in this case is the ability of the operating system to use many different software applications. It is hard for alternative firms to enter the industry without using Microsoft as part of their operating system.
Ian Joyce (irj432, 1415459)
In his article, “Mixing Freedoms in a 32-Ounce Soda”, Robert H. Frank discusses a recent ruling that overturned New York Mayor Michael Bloomberg’s ban on large sodas and sugary drinks. Frank shows that the ban was both introduced, and opposed on philosophical grounds. Bloomberg and his supporters introduced the ban as a way to “protect parent’s freedom to raise healthy children.” Bloomberg also wanted to ensure that drinking large, unhealthy drinks wouldn’t become so immensely popular that there would be little to no chance of a child not drinking them regularly (An example of this, Frank points out, was in the 1950’s and 1960’s, when smoking was so popular it was almost impossible for a young child to grow up and not become a smoker). The ban was also opposed on philosophical grounds. Opponents argued that they had the right to buy whatever sized soda they wanted, and they also argued that children are not as affected by others choices, as Bloomberg and his supporters made it seem.
After Frank discusses the philosophical ideas surrounding the soda debate, he begins to discuss economic solutions. He correctly points out that two rights are opposing one another (the right to raise healthy children, and the right to drink as much as you desire). He goes on to state that with the proper amount of taxation, there wouldn’t even be an argument at all. Frank points to smoking. He argues that because smoking produced a negative externality (second hand smoke), the city correctly passed a tax on cigarettes and banned smoking in many areas. This led to a heavy decrease in smoking (the article states that the national smoking rate has been cut by more than half since 1965 thanks in large part to anti-smoking policies). Frank argues that because the dangers of smoking were so obvious, it was easy to pass such policies. However, he points out that the dangers of drinking sugary drinks may appear obvious (obesity), it is not as easy to prove that other people are influenced by and individuals decision to drink a large soda. Because of that, Frank argues, it is impossible to believe that even if a ban on 32 ounce sodas passed, it would be successful. Frank himself points out that it is easy enough to buy two 16 ounce sodas instead of one 32 ounce. Frank concludes his article by stating that the only way to control consumption of large amounts of sugary drinks is to tax them, in fact, he proposes a “penny per ounce” tax on sodas as a way to curb consumption.
This article, although laden with economic ideas, is mostly discussing negative externalities and command and control approaches (specifically Pigovian taxes), both of which are found in chapter 5. Smoking produces clear negative externalities, as Frank showed. Not only does second hand smoke lead to health problems in non-smokers, the hospital costs that smokers incur raise the social cost of smoking over the private cost. Because of this the government taxes smoking. The same should be done for soda. Parents cannot raise their children to be healthy in a world where sugary drinks and unhealthy snacks are everywhere. Just like it was nearly impossible to avoid smoking in the 1950’s it is almost impossible to avoid large unhealthy drinks today. These drinks lead to massive health problems that create a social cost that is larger than the private cost of producing the drinks. Because of that, according to Arthur Pigou, the market for sugary drinks is not efficient and the government should tax the drinks. The tax would cut the over consumption of sugary drinks and bring the market back to equilibrium.
A ban on 32 ounce soda is completely absurd, however. People who regularly buy large sugary drinks (and by doing so raise the social cost of producing soda) well just buy two 16 ounce cups. A straight ban would accomplish next to nothing, except perhaps raise the production in 16 ounce cups. However, a tax would actually deter people from buying more soda, and raise revenue for the government at the same time. It is clear that drinking a large amount of sugary drinks produces a negative externality, and because of that the government must tax it.
In the New York Times article “A Profit, Though Slim, for Blackberry” details the continued struggle that Blackberry has faced as a result of competing in a monopolistic market. The article reports that although a small profit was made after introducing a new line of phones, the company still “recorded a net loss of $646 for entire fiscal year.” The most obvious reason for declining business is due to competition from other wireless phone providers.
Chapter 13 from our textbook explains that a monopolistic firm creates a good or service that is different from what other firms are selling, while a perfectly competitive firm sells a food or service that is identical to what other firms are creating (pg. 444). Therefore, an example of a perfectly competitive firm is a carrot farm, because all carrot farmers only produce carrots. Blackberry is a great example of a monopolistic firm because other phone companies such as Apple and Samsung also produce cell phones, but each company may provide different services on that phone.
The reason why Blackberry is falling behind is because other companies are offering a good that is better than their own. The key to a successful monopolistic firm is to produce the good that is most wanted, or else you risk failure. The new Z10 that Blackberry just released has helped gain attention and consumption, however, as the article notes, the company is in major trouble as “annual revenue fell to $11 billion from $18.4 billion the year before.”
Sydney A. Watkins
14168108
New York Times’ article “A Safety First Message at Getting more Youths Behind the Wheel” discusses the new change in the youths attitudes towards automobiles. The article discusses how different automobile companies are coming up with different ways to draw the youths interest toward sedans instead of technology. The change in technology is drawing the attention of Americas youth rather than new automobiles and them receiving their drivers license. Two companies were deciding through additions to apply to their cars for the interest of teenagers. Of those was Audi and Toyota. Audi spoke of using LED lights and using social media as “communication tools”. Toyota wants to use Teen Vogue as advertisement which will obviously be seen by a number of teenagers.Though Toyota uses a good source of advertisement Audi uses a good source of “brand management”
On page 446 of Chapter 13 it speaks of brand management meaning a way a firm differentiates a product and maintains that over time. Audi is definitely using this with its LED lights. It already introduced its powerfully unique head lights. An even powerful form of light maintains the difference from other firms products. In the middle of this section on page 446 it speaks of Advertisement.
When Audi speaks of using social networks as a form of communication with the youth this is a form of advertisement simply because it is using social networks to market its product. In the end Audi would probably gain more profit with the interest of the youth generally because it does a good job with brand management as well as advertisement.
In U.S. Health Care Prices Are the Elephant in the Room by Uwe. E. Reinhardt he talks about the continually rising health care prices in the United States. Americans pay extraordinarily high prices for health care. But what seems to go unnoticed in discussions about health care is the amount of health care that is actually used by Americans. It is noted that higher health spending along with lower use of health services adds up to much of the higher prices in the US more than any other member nation of the Organization for Economic Cooperation and Development.
It turns out, Americans actually use less health care than do residents of other industrialized countries. In the United States, prices for health goods and services are negotiated between individual health insurers and physicians, hospitals or drug companies. That does not happen in most other countries. Prices are instrad set up by the government or negotiated between associations of insurers and providers of care, on a regional, state or national basis.
By contrast, in the United States there is quite a range of prices for the identical good or service. The opacity of these prices can explain, in most part, the high variance of health care prices in the U.S.
This article goes along with chapter 7, which is all about health care and the PPACA. Chapter 7 talks about how the United States spends more on health care than any other country. The PPACA enacts 6 provisions for the United States health care as well. There are two sides to the debate over PPACA, those who believe we should move towards a system more like Europe, Canada or Japan. And then there are those who believe it should move towards a market-based system.
Erin Spong
ems3t4
as for the previous article:
sawg3c
I know we really haven’t covered bailouts yet, but I really thought “I.M.F. and E.U. Set Conditions for Cyprus Bailout” by James Kanter was extremely interesting.
Basically, Cyprus is going through some fiscal problems and the International Monetary Fund said it would contribute €1 billion or about 10% of the bailout package if Cyprus promised to make some economic changes.
Christine Lagarde said that, “This is a challenging program that will require great efforts from the Cypriot population”
The goal of this was to help restore financial stability, fiscal sustainability and growth to the country and its people. The European bank negotiated with the IMF and they decided on a €10 billion or $13 billion bailout.
I am really excited to connect this bailout with our economics class, you always seem to hear about them in the news, but I’ve never been really too sure on what they do, so I hope that I will continue to learn from this class, and I hope that this is one of the things I learn about.
Jonathan Blazejewski
jab8gd
14131231
In this article, Annie Lowrey discusses Treasury Secretary Jacob Lew’s trip to Europe to meet with Treasury Prime Ministers in Germany, France, and Spain.
What I first found interesting about this article, was the deep significance of the economic relationship between the United States and European Zone economy. During the 4th quarter of 2012, four of Europe’s largest economies, Germany, France, Spain, and Italy all shrank. This contraction all occurring immediately following a 4 year shrink and stagnation of the European economy. Because those four economies account for roughly 1/3 of the entire European zone, it is crucial for them to grow and redevelop. Further, this shrinkage caused global economic levels to shrink by 3/10 of a percent.
Thus, Secretary Lew’s trip is intended to persuade the treasury prime ministers of the European zone to reverse their economic growth. Lew attempted to persuade german officials to engage in stimulus spending in order to alleviate some of the economic strain. However, much like the officials of their neighboring nations, German officials are reluctant to follow American advice, feeling that their own economic downturn was caused by the American recession.
Luckily for American economies private sector, American corporations have recently been protecting themselves from any possible negative ties with the European economy. Which means that while trade with European economies is still a major part of the U.S. market, it is less significant than it was previously. Interestingly, this is represented by Lew’s first destination on his European tour, which was not to France or Germany, but was to Beijing.
This article deals with the Topic of promoting long-term growth, and Economic sustainability, coming up in chapters 21 and 22. It discusses the promoting of long-term economic health via trade with foreign markets. I feel that one of the best ways to continuously assure economic health is to pursue resources in foreign markets. While the article does mention that the U.S. economy is becoming self-sustaining because of regrowth in the housing markets, it does put an emphasis on the importance of trade with the European zone in regards to the overall growth and health of not only the U.S. economy, but also the global economy.
Megan Schaff
mes994
“As fears recede, Dow industrials hit a milestone”
This article discusses the Dow Jones, Wall Street’s oldest and most popular market, reaching its highest closing level since the recession hit in 2007, closing at 14,253.77 after gaining 125.95 points on March 5. This is a huge milestone for the market, which signifies that American corporations are doing their job to ensure the market recovers as best it can.
Although this is a huge gain for Wall Street investors, celebration was limited. Recovery from the great recession has been long, slow, and difficult, and American companies are slow to celebrate success. Investors are afraid to over-exaggerate the importance of this gain, only to find that it does not lead to a long-term upward economic trend.
This relates to our study of the stock market, the financial crisis of 2007-2009, and the business cycle. It seems that we are currently going through a period of economic expansion after the most crippling recession in United States history. The financial crisis of 2007-2009 was mainly due to a problem in the market for home mortgages, however, it had a crippling effect on Wall Street as well. The market is just now starting to recover and investors are just now starting to put money back in stocks. According to the Times, it seems like now is the time to start believing again.
Megan Schaff
mes994
http://dealbook.nytimes.com/2013/04/08/g-e-to-buy-lufkin-industries-for-3-3-billion/
“G.E. to buy Lufkin Industries for $3.3 billion”
This article describes the merger between General Electric (a conglomerate that focuses on energy, technology infrastructure, capital finance, and consumer products) and Lufkin Industries (an oil manufacturing company). G.E. has reportedly offered $88.50 per share in cash for Lufkin’s Friday closing price.
As a huge conglomerate, General Electric has many divisions and many different products to focus on. Lufkin will contribute to their oil and natural gas unit, one of their fastest-growing parts. G.E. also purchased a well services business in 2011, and the Lufkin merger is meant to compliment that deal as well. General Electric has said that Lufkin is already one of their premier suppliers, and that the deal will allow them to service oil and gas wells at any stage of production.
This article relates to our study of mergers and acquisitions. As we learned in class, mergers are often the trade off between market power and efficiency. Two companies merge because Company A has products or technologies that can be of use to Company B, and Company B has the means to purchase them. While mergers often increase production, this can actually be a problem if the newly merged firm is more efficient than the two firms were individually.
However, this is only a problem with horizontal mergers, and the G.E. merger is a vertical merger. This is because it is a merger between firms at different stages of production. The FTC and the Justice Department will review G.E.’s proposed plan and is expected to approve the business deal in the second half of 2013.
Juliana Reuter
14152457
This 4/8/13 article, Gap Widens for Faculty Pay at Colleges, talks about how public university professors make much less than private university professors due to a lag of support for public schools, which is leading to lower tenure in public schools as well. This causes other problems, like part-time professors who students can’t get ahold of. All of these problems arise from full-time faculty pay falling way behind the inflation rate and this year’s increase of 1.7% kept up with consumer prices, just not their salaries.
The article shows a correlation between the inflation rate, or change in price level from one year to the next, and income, which we learned about in Chapter 20. The fact that the public universities did not expect or plan for the inflation and therefore did not raise the professor’s pay to match it shows it was unanticipated inflation.
The article also talks about how there increase in inflation, as well as consumer prices. The rise in consumer prices means the cost of living has risen and would be expressed by the Consumer Price Index which measures the inflation rate.
The unanticipated, or unplanned for, rise in inflation is affecting everyone negatively, even the students who cannot rely on a full-time and available teacher because the universities are trying to cut costs by hiring part-time ones instead. The professors might also have less of an incentive, spoken of in Chapter 1, to continue to teach at a public university or to teach at all if they are being paid less for the amount of schooling they go through and cannot keep up with the price level of consumer goods. This has the negative externality (Chapter 5) of keeping students’ education at a minimal and overall affecting the skills of the labor force.
Darby Klos – dcky9f
On February 11, 2013 Catherine Rampell wrote an article titled “Job Growth Steady, but Unemployment Rises to 7.9%”.
This article discusses how despite the economy started picking up at the end of 2012, the unemployment rate continues to increase. Specifically, 157,000 payroll positions were added, but the unemployment rate reached 7.9%. This job growth is considered modest in comparison to previous economic recoveries.
According to Rampell, there are still 12.3 million unemployed workers. The average unemployed person has been looking for work for about 35 weeks. The labor force participation rate is only 63.6%, a 30-year low.
In the beginning of this article, Rampell mentions “fiscal policy.” In Chapter 24, the book defines fiscal policy as changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.
Chapter 20 discusses unemployment. They define unemployment rate as the percentage of the labor force that is unemployed. The book also defines labor force as the sum of employed and unemployed workers in the economy.
Darby Klos – dcky9f
On March 28, 2013, the Associated Press wrote an article titled “Economy Grows Despite Tax Rise and Spending Cuts”.
The article states that the United States economy grew much faster than projected at the end of 2012 and it might have accelerated in the beginning of 2013. In the October – December quarter, gross domestic product grew 0.4%. Analysts are expecting the the economy to grow 2.5%.
The recession ended in the middle of 2009 and the economy has grown at very slow rates, 2013 is supposed to be the best year yet. Companies have been adding 200,000 jobs a month since January. This has helped the unemployment rate of February drop to 7.7 percent. As well as the unemployment rate dropping, the people collecting unemployment aid dropped as well.
This article discusses gross domestic production, our book does too. In Chapter 19, GDP is defined as the market value of all final goods and services produced in a country during a period of time, typically one year. Unemployment rate is discussed in chapter 20. Chapter 21 discusses unemployment aid, or unemployment insurance. These provide government payments to workers who lose their jobs.
http://blogs.wsj.com/economics/2013/04/12/fed-may-have-to-tolerate-inflation-to-fix-labor-problem/
Rachel Jelinek
14154931
rejhgb
This article published in the Wall Street Journal says “Fed May Have to Tolerate Inflation to Fix Labor Problem.” The reason the Federal Reserve may have to do this because there has been a decline in the amount of people seeking jobs. This ties into chapter 20 of the textbook, which focuses on the unemployment rate, the labor force participation rate, and the discouraged worker.
The article says how baffled economists are to see that there are still too many people not seeking employment even though the unemployment rate is decreasing. I think that is due to the feelings of discouraged workers. The textbook defines discouraged workers as “people who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available to them.” The way I see it, people are still discouraged to seek employment.
According to the article, they believe the solution to this is to push the unemployment rate to the point where inflation is generated. Due to the recent retirement of those coined the “baby boomers,” the labor force participation rate is declining. This makes sense since the labor force participation rate measures the percentage of the working-age population that is in the labor force. Since a large chunk of the working-age population comes from the baby boomers, then it’s obvious that it would drop.
The article then discusses the solution: that the Fed should allow the unemployment rate to overshoot the natural rate. Furthermore, they can ask those who have left the labor force to return, or in other words, come out of retirement.
Rachel Jelinek
14154931
rejhgb
This article is titled “Settlement to Benefit Borrowers” was published today in the New York Times. It focuses on the whole idea of a force or lender places insurance. In class today we learned how high interest rates are bad news for borrowers. High interest rates are caused by an increase in the budget deficit, which ultimately reduces public saving and total savings. Because there was such a large budget deficit due to the Great Recession, this article is could be a positive step for borrowers.
According to the article, high prices for borrowers have also been caused by heavy competition. Companies are actually snaking their way through the competition by giving lenders commission. This results in premiums going up, which is bad news for the consumers. In order to stop this, the Federal Housing Finance Agency has decided to ban the payment of commissions to lenders, since homeowners have been the ones to suffer lately from these insurance companies wrong doings.
The article relays that only those who were charged for force-placed policy, superfluous high coverage limit, and those who defaulted in foreclosure due to the policy may be eligible for refunds.
To me, this sounds a lot like adverse selection. Even though this dealt with health insurance, I think it can apply well to the insurers of homeowners. In the textbook, adverse selection is defined as the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. This is exactly what the insurance companies are doing. Consequently, homeowners were really suffering during the foreclosure crisis, since they could not pay back the big bills they were unaware they had from their insurance companies. Hopefully those who suffered because of this will receive their refunds.
Hayden Lewis
hrl2pd
14157177
The article “When Shareholder Democracy Is Sham Democracy” by James B. Stewart was published on April 12, 2013 in The New York Times. Referring to one of his earlier columns, Stewart leads by mentioning his previously argued position that Hewlett Packard bears perhaps the most compelling case for ousting corporate directors, due to the corporation’s serial managerial issues in recent years.
However, Stewart explains, there are 41 other corporations where directors lost their shareholder elections last year, yet still remained at their posts. The column focuses in on Cablevision, a cable and media company which is a chief offender in the realm of bad corporate governance. Three of Cablevision’s directors have lost shareholder elections twice in the last three years, but still remain on the company’s board of directors.
Stewart goes on to document more cases of corporate directors who remain serving on the company board, despite solid votes of no confidence from shareholders. The problem, Stewart identifies, is that many companies function under a plurality voting system, wherein directors run unopposed and just a single vote is enough to get them elected. What’s more, even companies that require a majority vote may refuse to accept a director’s resignation.
Additionally, the column expounds upon the fact that more than half of United States companies are incorporated in Delaware, where State law controls board governance, the corporate franchise tax contributes disproportionately to the state’s revenue, and plurality voting has long been tolerated.
This article directly relates to Chapter eight in dealing with corporate governance, particularly the separation of ownership from control. Separation of ownership from control is defined on page 241 as being “a situation in a corporation in which the top management, rather than the shareholders, control day-to-day operations”, which is a theme the foregoing article centers around, since the shareholders have been so far separated from control as to be removed from the entire process of electing directors.
Hayden Lewis
hrl2pd
14157177
The article “Obama Sees Insurers; Health Law Is Subject” by Jackie Calmes was published on April 12, 2013 in The New York Times. Covering a meeting that took place at the White House earlier in the day, Calmes’ reported that President Obama and some of his cabinet members met with representatives from the health insurance industry to discuss issues relating to Obama’s signature Affordable Care Act of 2010.
In attendance from the industry side of the isle was Karen M. Ignagni, head of a trade association for the insurance industry, alongside representatives from CareFirst BlueCross BlueShield; Cigna Corporation; and Wellpoint, among others. From the president’s cabinet, Obama’s chief of staff, Denis R. McDonough, and his health and human services secretary, Kathleen Sebelius were in attendance. The meeting lasted an hour, and chief among topics discussed at the meeting was the coordinating the introduction of the new insurance marketplaces at the heart of the national health care law, which are due to begin accepting enrollment on Oct. 1 of this year.
Also, there was the issue of a potential rate shock as the new law took effect, wherein many Americans would be subject to higher premiums as a result of policies sold under the new law’s requirements being more comprehensive than those Americans have currently. President Obama, however, dismissed the fears of rate shock as being exaggerated, further explaining that consumers will be able to move from expensive health care plans to more efficient, affordable policies.
Additionally, the President claimed those who focus on premiums do not take into account other sections of the law that limit how much consumers will spend out of pocket for health care. In the end, each side of the meeting shared information about how it was planning to publicize the insurance exchanges and enrollment centers, particularly to young people.
This article directly relates to Chapter Seven in dealing with health insurance and the Patient Protection and Affordable Care Act (PPACA). On page 209, health insurance is defined as “a contract under which a buyer agrees to make payments, or premiums, in exchange for the provider’s agreeing to pay some or all of the buyer’s medical bills,” and on page 224, PPACA is defined as “health care reform legislation passed by Congress and signed by President Barack Obama in 2010.” These two terms pertain to the foregoing article because the entire article is centered on the changes in the health insurance market as a result of the PPACA’s policies.
Matty Raymond 14157777
Mjr7dd
The New York Times Article, “Somalia’s Pirates Flourish in Lawless Nation” proves why developing countries have trouble experiencing growth. This article is about Somali pirates taking over cities and robbing ships that pass through cities, such as, Boosaaso. It has proven to be an extremely lucrative business for the pirate but not for the government. Pirates hijack ships by climbing up the sides with weapons. Then they hold the ship and the crew hostage until ransom is paid, usually the ransom is from one to two million dollars. The city is seeing growth, but this growth is tax-free. Our book explains why developing countries like Somalia experience trouble when trying to grow (page 731). There are four key problems for these countries; failure to enforce the rule of law, wars and revolutions, poor public health and education, and low rates of saving and investment.
The Somali government has an extremely hard time enforcing the law. Jeffrey Gettleman writes, “But one particular line of work — piracy — seems to be benefiting quite openly from all this lawlessness and desperation. This year, Somali officials say, pirate profits are on track to reach a record $50 million, all of it tax free.” The Somali government is not collecting any taxes on this trade. Also, they are having a hard time enforcing property rights; the rights individuals or firms have to the exclusive use of their property. When the government cannot protect its ports from their citizens, then many of the ships will not use that port anymore, this takes much needed money away from the ports revenue and tax revenues. Somalia has a hard time enforcing the rule of law; the ability of a government to enforce the laws of a nation. Pirates are seen as heroes and men who give back to the community, meanwhile all they are doing is hurting the nations economic growth.
Somalia is a country that has seen its fair share of wars and revolutions. This might be a cause for the piracy. This fact usually hurts a nations GDP per capita and overall health or education standards. Somalia’s not highly educated and people are starving in the streets. Gettleman writes, “The country is in chaos, countless children are starving and people are killing one another in the streets of Mogadishu, the capital, for a handful of grain.” This is not going to spark an industrial revolution.
The banking system is very weak in Somalia. Firms do not want to invest in a country that is under siege from pirates. Therefore, the countries inflation rates have skyrocketed, causing unemployment. Gettleman states, “The shipping problems have contributed to food shortages, skyrocketing inflation and less work.” The people of Somalia are in a bad way and their famous pirates are not helping.
Megan Bedford –MMBHW9
http://dealbook.nytimes.com/2012/12/17/changing-chinas-growth-model/
The article titled “Changing China’s Growth Model” covers the uprising disapproval of China’s Economic Model and the disbelief that China will change their model for the better. After the 18th Party Congress, reports concluded that China will be moving to a more sustainable growth model by focusing on the quality and efficiency of economic growth in 2013 in order to deepen economic reforms, further urbanization, and maintain strict property controls. While this is a strong claim to be made, it is not a very promising one, and many have reason to believe that these changes will cease to be made. Recently the China Academy of Social Sciences has published a report that warns of the economic imbalance that has grown worse over the past 10 years. While the Chinese government is aware of these exceeding problems and claims time and again that they will be resolved, they never do.
This failure to do something regarding the failing economic model leaves people questioning whether monopolies will be split up or weakened. It also brings up the issues of opportunities being given to the private sector and whether gaps will be narrowed between different industries and state-owned and private companies. According to the Wall Street Journal a plan has been set into place by Mr.Wen although most of the drafts that he has set into place have been demolished due to opposition from state-owned firms. The plan to redistribute wealth has not been a successful one. While Wen hopes to begin this income distribution reform plan, it is thought that some of his successors, such as Mr. Xi and Li Keqiang plan to introduce their own plans for income distribution in 2013.
This article has to do what we’re learning in Econ 1051 because it covers the idea of the economic growth modelwhich is a model that explains growth rates in real GDP per capita over the long run. The improvement of the economic growth model depends on many factors such as, better machinery and equipment, increases in human capital, and better means of organizing and managing production.
For the second half of the article, it relates to the distribution of wealth which relates to the section that we are covering in Econ titled “The Rich Get Richer”. This section describes how the world’s economies can be divided into two groups: the high-income countries or the industrial countries and the poorer countries or the developing countries. Included in the high-income countries are Western Europe, Australia, Canada, Japan, New Zealand, and the United States. While the poorer regions include Africa, Asia, and Latin America. Many economists argue that until the incomes of the very poor increase significantly in the developing countries, they will be unable to attain a higher standard of living. Economists and policymakers have concluded that the standard of living in countries such as China have been largely unchanged for many years.
Grace Holaday – gah6y9
In the New York Times Article ‘Economy Grows Despite Tax Rise and Spending Cuts’ they talk about how the America economy was growing faster than anticipated at the end of last year even with the taxes rising, the growth spurt didn’t last long but it hasn’t really declined at all. Analysts think our economy is growing at about 2.5 this quarter and since our unemployment rate hasn’t increased and jobs have been accessible then it’s keeping our citizens spending money and investing in the economy. Even though our economy is slowly growing it’s still about subpar due to the huge spikes in prices of gas and taxes, but at least we’re still coming back from the recession in 2009.
This article has to do with our reading about GDP and the unemployment rates in chapter 19 when we were talking about the GDP of our country and what it was and that it was going up (630). I think it applies because the whole article was about our GDP and this tells us how to calculate it and figure it out and when we were discussing in class we talked about how it is going up here in Ame
http://dealbook.nytimes.com/2013/04/17/efforts-to-revive-the-economy-lead-to-worries-of-a-bubble/?ref=business
bkb99d
The article “Efforts to Revive the Economy Lead to Worries of a Bubble” discusses several issues facing the U.S. economy in its current expansion that could ultimately lead to a bubble. This would mean the current rate at which the economy is growing would lead to an influx in prices that do not represent their actual worth, and the bubble would burst leading to an unwanted crash.
One of the major problems is that, while the U.S. economy is in the expansion phase of the business cycle, economic growth is still slow. This is largely due to a weaker labor force which is the result of fewer individuals of the working-age population contributing to it. Also, there is the issue of high unemployment rates, wages remaining at current levels and lack of use of America’s factories. This last issue is largely due to outsourcing to foreign countries where production and wages are cheaper.
However, the economy is expanding at record levels. According to the article, stocks have reached prices at the 1906, 1936 and 1968 levels. Houses in areas such as Phoenix are rising in value quickly- up 23 % from last year. The prices are too high to be concurrent with the economy’s actual growth. This indicates that speculation may be the cause of such speedy expansion.
According to the Times article, several factors contribute to this. The Federal Reserve is reducing interest rates on loans to encourage investing in the present rather than later. More mortgage backed securities are being issued for auto loans. This same type of security is what contributed to the U.S. Financial Crisis of 2007-2009, in which mortgage backed securities were being issued to subprime borrowers. Moreover, corporations and the wealthy are a major source of the increase in wealth in the economy. Therefore, the wealthiest individuals and firms are reaping the benefits; not the economy as a whole. This makes sense why employment rates and wages do not reflect the current level of growth.
While there is debate whether there is, in fact, an economic bubble occurring, experts say the best plan of action is to pay close attention. The economy seems to be in an upward swing, but with too much expansion too quickly, a bubble could form that is likely to burst.
Bridget Brady
bkb99d
Dove’s latest advertisement has taken the world by storm. As reported by the New York Times, the company has released a video advertisement – in three- and six-minute versions – titled “Dove Real Beauty Sketches,” which has gained a total of 8.5 million views in five days.
In the video, an artist draws women based on descriptions alone – one given by the woman herself, another given by someone who had met her briefly beforehand. Afterwards, the two sketches are displayed side-by-side to the woman. Without fail, the sketch of the woman described by another is more flattering than the sketch where the woman described herself.
This advertisement, with its tagline, “You’re More Beautiful Than You Think,” is just the latest in Dove’s “Real Beauty” campaign, launched by the company in 2005.
Dove’s video advertisement reminded me of the idea of brand differentiation used by monopolistically competitive firms. There usually is not much difference between different body washes or deodorants, but with this campaign, Dove is differentiating their brand as one that promotes “real beauty,” which would hopefully drive consumers to pick their product over similar competitors’ products. By using this campaign, Dove is attempting to set itself apart from its competitors as discussed in class.
Celia Doherty
Pawprint: cmdbz7
According to the New York Times Article: “A laptop screen with tablet ambitions,” many companies are creating touch screen computers that operate with Windows 8. These models, though, are solely for tablet use and do not have enough power to be doubled as a PC laptop. Microsoft’s SurfacePro, a tablet/laptop, seems to have enough power to be both successfully, but the issues are more battery life, memory, etc… The SurfacePro is competing with the Samsung tablet model. This model has a leg up with the keyboard and bigger screen. It also allows for more storage. The issue with the Samsung model is its price. You would be paying more than if you were to buy Microsoft’s SurfacePro, and you are in turn receiving a model that is actually heavier and bulkier.
For either model, though, you are paying a seemingly combined tablet/laptop price when the actual product is not very effective at being either one. No company has been truly successful in creating a combined laptop/tablet product. There always seems to be a problem with size, weight, affectivity, or price. As a result these products are not selling well most likely because consumers are not interested in paying an expensive price for something that isn’t actually beneficial compared to what they may already own.
It seems that both Microsoft and Samsung saw that firms such as Apple were making profits with tablets in the market so these firms decided to enter the market and create their own tablet/laptop as they saw it could be profitable. This did not turn out to be true for Microsoft or Samsung, though, because the consumers were not as excited about their products as the firms thought they would be. Whether a firm actually makes a profit at the level of output where marginal revenue equals marginal cost depends on the relationship of price to average total cost. These firms most likely experienced a loss because the total cost to make the product was greater than its price.
The tablet/laptop industry is an oligopoly because there are only a few firms that produce this product and it is relatively hard to enter the market. A firm’s ability to differentiate its product and to produce it at a lower average cost than competing firms creates value for its customers. While the SurfacePro model was produced at a lower price, but there weren’t necessarily aspects of the model that differentiated it from the Samsung model, which was necessary for it to be successful.
Piper Salvator
pawprint: pms4k8
The New York Time’s article, “As Las Vegas Evolves, Boutique Hotels Gain Status” explains the changing demographics in Las Vegas, and as a result the popping up of “boutique” hotels versus massive chains. Many younger people are starting to flock to Las Vegas, and this age is more interested in the nightclub, bar, and pool scene rather than gambling. The boutique hotels have focused on making access to those a crucial part of their business. The start of this occurred in February with Nobu Hotel.
Many hotels are trying to do both. For example, Mandalay Bay Resort is trying to appeal to boutique customers as well as conventioneers, but to many this task is near impossible. Also because of the major economic downturn, smaller hotels are a logical alternative for Vegas vacations. As a result of the poor economy, many large hotels are simply being “recycled” into boutique hotels because it is too costly to build them from the ground up.
This article relates to class because it shows that in order for a firm to succeed in monopolistically competitive market, the firm must differentiate. Because the hotel industry in Las Vegas is so big, and there are so many hotels, they all must strive to be different and to offer something that consumers will find valuable. When consumers see something valuable that other firms do not offer they will be willing to spend more amounts of money on that service. That is why many of the hotels have started to create a boutique appeal. In order for these hotels to be able to create a profit in the long run they must be able to show their consumers what they are looking for: pools, bars, access to clubs; instead of just a giant structure with thousands of rooms. It is hard for these firms to gain a profit in the long run because as soon as firms see that they are profitable, other firms will enter the market. They are able to do this because of the low barriers of entry in a monopolistically competitive market.
Piper Salvator
pawprint: pms4k8
Even though Microsoft’s sales on personal computers were weakening, its profit in the third quarter rose 19 percent. This appears to be the result of the sales of is windows and office software products. These rising profits as well as revenue exceeded Wall Street’s expectations; the company reported $6.06 billion in net income for its third quarter, which ended at the end of March.
Revenue grew 18 percent, a little below analyst’s forecasts, but sill above the forecasts for 68 cents a share. Revenue from its windows division rose 23 percent, which included the revenue from the latest version of the Windows 8 operating system. It seems without the sales from Windows 8, Microsoft would not have experienced such high sales.
Profit is the difference between a firm’s revenue and total cost. The prices of the Microsoft’s products, especially Windows 8, must have exceeded Microsoft’s average total costs for them to make a profit. In order for Microsoft to maximize its profit its marginal revenue should equal its marginal cost.
Many analysts can get estimates off in the stock market because stock prices fluctuate so much. This fluctuation is because stocks are measured by the stock market index, which uses a base year to calculate the current stock price of a firm. The stock indexes intend to show the movements in prices from year to year instead of the actual dollar amounts of the stocks, the base year is simply insignificant. This may have happened when analysts were calculating stocks for Microsoft.
Piper Salvator
pawprint: pms4k8
Entrepreneurs start small businesses, which account for 40% of new jobs created each year, and some of these entrepreneurs are college dropouts. Some more familiar names of college dropout success stories are Mark Zuckerburg, Steve Jobs, and Bill Gates. However, what about entrepreneurs that are high school dropouts? According to the Kauffman Index of Entrepreneurial Activity as assessed by education, entrepreneurs who drop out of high school are currently the country’s most frequent founders of new businesses.
Data from the Labor Department’s Current Population Survey show a percentage of individuals who don’t own a business in the first survey month, but do in the second month. The rate of those who are high school dropouts is .52% while all other education levels comes out to a rate of .32%. Experts think the increase might be due to necessity in the job market.
While the rate is surprising, the educated still have more jobs available, and higher-paying jobs than do the uneducated entrepreneurs. The survey also noted that men are more likely to create new businesses than are women. The construction industry currently has the highest rate of entrepreneurial activity.
This article is relates to what we have learned in the text because I know how the data was taken, based on how the BLS measures unemployment. (Not actively in the process of searching for a job in the past 4 weeks). The article noted that the high rate might be due to necessity of a job. This could be a sign that discouraged workers are fed up of looking for jobs and instead prefer to create their own. Furthermore, it discusses economic growth in the short run, since small businesses founded by entrepreneurs will undoubtedly begin with one or more variables limited.
Michael Sojka
mjs67d@mail.missouri.edu
15162957
http://economix.blogs.nytimes.com/2013/04/19/americas-biggest-entrepreneurs-high-school-dropouts/?ref=economy
Bridget Brady
14153547
bkb99d@mail.missouri.edu
This article relates to pages 463-464 in the textbook.
The New York Times article, “Game Theory: Jane Austen Had It First,” analyzes how the economic principle of game theory is present in Austen’s work, according to Michael Chwe, a professor from UCLA. Game theory, according to the textbook, is “the study of how people make decisions in which attaining their goals depends on their interactions with others” (463). Connecting the strategies of the actions carried out by Austen’s characters to key concepts in game theory, Chwe argues that Austen is an “unacknowledged founder of the discipline itself.”
One example cited is one of Elizabeth’s actions from “Pride and Prejudice.” Pursuing a dominant strategy (the best strategy for an individual regardless of the actions of others), Elizabeth refuses to promise not to marry Mr. Darcy. While Lady Catherine uses this statement to try to show Mr. Darcy Elizabeth’s audacity in her own dominant strategy to ruin their chances of having a relationship, it actually serves Elizabeth’s dominant strategy to convey her interest to Mr. Darcy. Both characters are acting in their own self-interest to try to achieve their goals; therefore, they are both practicing the economic principle of dominant strategy (464).
Chwe goes on to explain that strategic thinking is constantly present in Austen’s work. In the economic realm, this translates to business strategies developed by firms to reach goals such as making the largest profit (463). The goal is to achieve the best payoff; for Austen’s characters, this is the outcome they most prefer. In economics, this is the profit a firm earns due to business strategies and other firms’ actions.
Chwe’s analysis is just one study of Austen’s work that connects it to game theory/economics. There are many other professors and social scientists who believe what is literature should remain literature- it is not representative of economics. Still, the similarities in strategic thinking portrayed through Austen’s work to game theory are an interesting connection linking the two subjects.
The New York Times article “As Profit Slips, Apple looks to Reward Shareholders.”
On Tuesday, the technology giant announced that it planned to more than double its program to return cash to shareholders through stock buybacks and a higher dividend, spending $100 billion on the effort through the end of 2015. Apple said it planned to borrow cash as part of its plan to return cash to shareholders. Even though Apple has far more capital than it needs in its coffers, much of it is held overseas and would be subject to taxes if the company were to bring it back to the United States. Apple can also help increase its earnings per share by lowering its outstanding share count through stock purchases.
This article relates to chapter 8 in the book where it talks about firms, the stock market and corporate governance. Stocks are financial securities that represent partial ownership of a firm. In the book it states “When you buy stock issued by a firm, you are actually buying part ownership of the firm”(245). In this article it talks about Apple trying to give back to the shareholders, those people with stocks in the company, even though Apple has had profit slips. Apple is trying to rekindle its relationships with investors.
Stocks have a chance of slipping and growing and sometimes stockholders loose money, sometimes you just get lucky with a company you choose. But Apple is really trying to put itself back out there and get some growth for it’s future. Like it mentions above about buybacks on page 245 it mentions “most of the buying and selling of stocks and bonds that takes place each day involves investors reselling existing stocks and bonds to each other rather than corporations selling new stocks and bonds to investors.” This part relates exactly to the article. In the article it says “Apple has found a big investor that still has faith in its future:Itself.”
Chelsea Burgard. cebp86@mail.missouri.edu
14143133
jem8c4
18072242
The New York Times article, “Galaxy S4 Puts More Features Into the Same Package,” written by David Pogue, describes improvements made my Samsung in their latest version of the Galaxy. The article sets the stage by touching briefly on the lack of chances Apple has been taking with the iPhone, allowing Samsung optimal opportunity to go for gold, incorporating features such as “Smart Scroll” that enables the phone to recognize the user’s eyes for a number of different features such as diming the screen to save battery and pausing a video when the owner looks away (Pogue 14). Also included in the updates is the “Air View” feature, which allows the phone to work without actually touching the screen (Pogue 16). Samsung was able to implement these improvements without changing the size or weight of the phone.
The article touches on a number of Econ 1051 concepts beginning with “Game Theory” (p.463). In our book, Game Theory is described as “The study of how people make decisions in situations in which attaining their goals depends on their interactions with others.” There are three parts to Game Theory: rules, strategies, and payoffs. In the case of Samsung, the rules are not obviously states in the article but may include regulations set by the company to ensure top products. Strategies on the other hand occupy the majority of the article. First, the article states that because of the lull in Apple’s thirst for improvement in the iPhone, Samsung was able to capitalize in the market with some daring updates. This can be describes as a “Business Strategy, actions that a firm takes to achieve a goal, such as maximizing profits,” (p.463).
Finally, the payoff for Samsung, as described in the article, is the profit increase Samsung will receive for output of the new and improved Galaxy, which was stated to be sold upfront for a price of $640 (Pogue 6). In conclusion, because Samsung created and updated version of the Galaxy, Apple, in order to compete in the market, must in turn produce an even more technologically advanced phone. This is a prime example of how firms in an oligopoly, “a market structure in which a small number of independent firms compete,” (p. 461), interact with one another in order to stay competitive.
In the New York Times article “Down Payments Rules at Heart of Mortgage Debate” it talks about the housing market and mortgage backed bonds.home prices rise and mortgage-backed bonds return. But After the housing collapse, initial reform proposals emphasized the need for buyers to put down a large chunk of money. The reasons seemed sensible and obvious. Many of the mortgages that went bad involved tiny down payments — if any at all — and studies have shown that borrowers with a larger amount of equity in their homes are less likely to default.revival may not gain full steam until regulators sort out one of the thorniest problems: the appropriate size of a down payment on a house.
In chapter 8 it talks about the housing boom of the mid 2000s and how some financial firms issued mortgage-backed bonds, which relates to the topic of this article. The housing market is beginning to show life and that these bonds are being returned. But the revival may not gain full steam until regulators sort out one of the thorniest problems: the appropriate size of a down payment on a house.
The article also talks about the government’s involvement in mortgages. “Traditionally when a bank made a residential mortgage loan to a household to buy a home or made a commercial loan to a business, the bank would keep the loan and collect the payments until the loan was paid off”(848).The proposed rules require banks to hold a slice of the mortgage-backed bonds they sell to investors. Banks do not like those types of restrictions.
Throughout the article they talk about different proposals and what needs to happen so the housing market can get in to full growth once again. In a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer default on paying the mortgage.
Cebp86@mail.missouri.edu
Chelsea Burgard 14143133
http://dealbook.nytimes.com/2013/04/24/down-payment-rules-are-at-heart-of-mortgage-debate/?hp
Bridget Brady
bkb99d
The New York Times article “A Health Provider Strives to Keep Hospital Beds Empty” talks about how Advocate, a not-for-profit healthcare provider based in Oak Brook, Ill., is implementing a new model called “accountable care.”
Simply put, this model means that they are giving doctors and hospitals incentives to shift from the traditional fee-for-service model (in which doctors are paid for every service provided) to decrease unnecessary hospital admissions and services in order to cut costs (p. 210).
Effectively, this aims to reduce the principle-agent problem that often occurs in the healthcare market. Agents, who are doctors in this case, often have incentives to act in their own self interests under the fee-for-service model to increase their profits (p. 215). With the accountable care model, hospitals reduce the risk of this problem by shifting the focus to the patient’s benefit rather than monetary gain.
So far, hospital admissions for Advocate have decreased by 6 percent. The typical length of a stay in the hospital has also decreased. Advocate is trying to cut costs to patients without reducing the quality of services provided. The article argues that, in some senses, accountable care is similar to health maintenance organizations (HMOs), which require doctors to be paid a standard fee for each patient (p.210).
Obstacles for Advocate and other like-minded health providers include the difficulty in shifting healthcare provision from a fee-for-service based market to a “value-based care system,” as the article calls it. Nonetheless, Advocate has caught on to something that could virtually change U.S. healthcare to better provide coverage to individuals under the Patient Protection and Affordable Care Act (“Obama Care”), that expands the coverage and requirement of healthcare to individuals in the United States (p. 224).
Student Number: 14153547
Kamila Jambulatova
Student number: 141 722 73
Pawprint: kjb7d
In order to prevent a zero economic profit in a long run companies need to differentiate their product and introduce new technology. Amazon is great example of a firm that constantly finds new ways to attract customers. Article talks about how Amazon is now developing a television set-top box. Amazon is not going to be the first to the set-top boxes’ market, because Apple’s Apple TV device has been on out there for a while. Same as Samsung, Acer and other firms entered the market for tablets after a great success of Ipad, Amazon is now working towards entering the set-top box market. When a firm introduces a new technology, competing firms will eventually be able to duplicate new technology. According to the article, Amazon was an early entrant to the e-readers market with Kindle, but late to the market for set-top boxes. In order to make profit and be successful Amazon will work on differentiating its product from competing firms. Promoting product to the customer and having a great marketing strategy will allow Amazon to make profit. The fact that Amazon is a top-shopping destination will help it to promote new device and attract new customers. Amazon offers much broader library of video content that also differentiates it from others. According to Michael Pachter, an analyst at Wedbush Securities, one approach that could make sense was for Amazon to sell the device for $100 or less, about what Internet set-top boxes cost today, and to include a free year of its subscription video service. Cheaper prices and good deals will always attract more buyers. Whether Amazon is going to sell their set-top boxes in the near future is not determined, but either way Amazon has a great chance of promoting it right and making good profit.
Kamila Jambulatova
Student number: 141 722 73
Pawprint: kjb7d
In order to prevent a zero economic profit in a long run companies need to differentiate their product and introduce new technology. Amazon is great example of a firm that constantly finds new ways to attract customers. Article talks about how Amazon is now developing a television set-top box. Amazon is not going to be the first to the set-top boxes’ market, because Apple’s Apple TV device has been on out there for a while. Same as Samsung, Acer and other firms entered the market for tablets after a great success of Ipad, Amazon is now working towards entering the set-top box market. When a firm introduces a new technology, competing firms will eventually be able to duplicate new technology. According to the article, Amazon was an early entrant to the e-readers market with Kindle, but late to the market for set-top boxes. In order to make profit and be successful Amazon will work on differentiating its product from competing firms. Promoting product to the customer and having a great marketing strategy will allow Amazon to make profit. The fact that Amazon is a top-shopping destination will help it to promote new device and attract new customers. Amazon offers much broader library of video content that also differentiates it from others. According to Michael Pachter, an analyst at Wedbush Securities, one approach that could make sense was for Amazon to sell the device for $100 or less, about what Internet set-top boxes cost today, and to include a free year of its subscription video service. Cheaper prices and good deals will always attract more buyers. Whether Amazon is going to sell their set-top boxes in the near future is not determined, but either way Amazon has a great chance of promoting it right and making good profit. This article relates to pages 441 in our book.
A recent New York Times article entitled, “Why the Rent is So High in New York” details the battle with housing in one of the greatest cities in the world. The article explains that as crime rates have fallen over the years and other amenities such as transportation systems have improved, more and more people are choosing New York City as a place to work and live. Unfortunately, space is very limited here and construction prices are great, causing a shortage in housing.
One passage of the article relates directly back to something we’ve already covered in this class: price ceilings. The author of the article writes, “Right now, nearly half of the rental housing stock in New York City over all (as well as in Manhattan specifically) is rent-regulated, meaning the apartments are either rent-controlled or rent-stabilized.” As we learned in class, a price ceiling is a legally determined maximum price that sellers may charge.
Price ceilings have pros and cons. They benefit for people who have been living in New York City for decades and still pay the same price as they did when they moved in. However, they hurt people who are just moving to the city and are forced to pay a higher price for any available space.
Overall, New York City is one of the most expensive places to live because of everything that it has to offer. From entertainment to dining options, this city is full of opportunities and adventure. In addition, people are paid more in New York than other cities so price of living is greater as well.
http://economix.blogs.nytimes.com/2013/04/26/why-the-rent-is-so-high-in-new-york/?ref=business
Katie Link- 14128200
Warren Buffet is the richest man in America. How did he become so rich? Stocks. The article entitled “Warren Buffet checks in on his Coke investment” by USA Today, shares how some of his wisdom has led to his great success. As we learned in class, a stock is a financial security that represents partial ownership of a firm. In class we discussed how buyers and sellers of stocks and bonds together make up the stock and bond markets.
Buffet recently spoke with Coca-Cola’s CEO Muhtar Kent at a meeting on April 24 about the secrets to staying successful. He gave him advice and suggested that his company strive to stay ahead of the competition. He said, “I like to study failure. We want to see what has caused businesses to go bad, and the biggest thing that kills them is complacency.”
Coca-Cola has succeeded in staying ahead of competition as their stock has experienced a worldwide growth of 4%. Additionally, shares of the company have risen 16.8% year-to-date and has grown more than 57% in the last three years.
Buffet has made his fortune by investing in companies he believes in. For example, the article discusses that Buffet’s company currently has 400 million shares of Coca-Cola, which exceeds the amount of shares he owns of IBM or American Express.
http://www.usatoday.com/story/money/business/2013/04/27/wall-st-cheat-sheet-warren-buffett-coca-cola-ceo/2116309/
Katie Link-14128200
kjlzpd
Paying for college is something that most people dread. It is a hugely expensive investment that will hopefully bring about great rates of return later in life with a prosperous career. The article entitled, “Measuring College Prestige vs. Cost of Enrollment” was published in the New York Times on April 19 by Paul Sullivan. In the article, Sullivan weighs the pros and cons of choosing a more prestigious college for an undergrad degree.
Unfortunately, choosing the college with the most prestige, also means it comes with the highest price ticket. As explained in the article, people choose to go to these expensive schools because they feel like their options would be limited otherwise. An interview from the story says, “It’s not just the sticker price and the net costs,” said Sarah Turner, professor of economics and education at the University of Virginia. She added, “How likely is it that you will get into medical school or law school or have some other opportunities.”
It is becoming more and more common that students take out loans to help pay for these outrageous college bills. As we have discussed a lot in class recently, loans can be taken out by an individual with a promise to pay them back with a certain interest rate. An interest rate is the cost of borrowing funds, expressed as a percentage of the amount borrowed.
Unfortunately these loans and interest rates are subject to inflation, which means the loan would be worth more than it was originally. As we learned in class, the real interest rate provides a better measure of the true cost of borrowing and the true return from lending than does the nominal interest rate. However a student decides to pay for college, the article urges parents and students to sit down and look at what is practical for them. Student loans are dangerous and could be unpredictable in the wrong market.
Katie Link-14128200
kjlzpd
Mary Lorenzo
MMLPQF
14152748
This article talks about how the wages for most workers have remained pretty constant over the years. However, this trend isn’t true when discussing low-wage workers, because these jobs haven’t been compensating for inflation. As a result, the gap between social classes is increasing.
When adjusting the salaries of low-wage jobs, payroll has actually decreased over the years. The issue is that wages (across occupations) have been sticky, and therefore haven’t been keeping up with inflation over the years. The inflation has been changing by various percentages, but wages have been held constant and therefore don’t compensate for the increased price of living.
According to the article, higher-paid jobs are having their wages held pretty constant as well. However, they’re much less impacted by the inflation because their salaries are already much higher than the percentage of inflation increase. They have the funds to support the inflation, so their class standing can stay the same. But the low-wage workers don’t have that option; as inflation increases, their salaries remain constant, which is actually less than the price of living.
In effect, less money is being spent in the economy. In times where money is slight, people have an instinct to save rather than spend. While higher-paid employees may be spending, low-wage workers may not be. The key to maintaining a healthy economy is through the circulation of money.
This relates directly to what we’ve been discussing in class because we’ve been learning about inflation and how to calculate it. We’ve also been learning how to maintain a healthy economy, in which spending is key.
The New York Times article “Students of the Great Recession” discusses the changes in students due to the great depression and the difference in college students who were involved in the great recession. The article began stating that the great depression made students smarter, because there was nothing else to do but attend school. By attending school the students were able to start some very successful companies.
The article states that when the most current recession ended, things were thought to be the same with the students of this generation. The number of students enrolled in college raised to 8 percent in the fall of 2010. Although the enrolled have increased, drop out rates also increased. Creating the college dropout boom.
The article states that the recession decreases the opportunity cost of attending college. Students are less likely lose the chance of having a high paying job by obtaining a degree. So more students are enrolling in college.
This relates to the text definition of “opportunity cost” is the highest valued alternative that must be given up to engage in an activity. This is an opportunity cost because the students are giving up going straight into careers to go to college and obtain a degree. For example, The opportunity cost of getting a degree is missing out on going straight into a career that you could excel in. The opportunity cost of going straight into the workforce would be giving up that degree she could have.
Brea Love
BJLHN9
16076446
Ida Sophie Winter
Student Number: 14160135
Pawprint: ISW2N8
In the opinion piece “The 1 Percent’s Solution” (New York Times April 25, 2013) columnist Paul Krugman discusses the virtues of Keynesian versus austerian solutions to the U.S.’s current economic problems. Krugman defines Keynesians as advocates of “sustaining and… increasing government spending in a depression”, while austerians “demand immediate spending cuts”. Austerian theory is popular in the United States, but Krugman criticizes its merits. According to Krugman, austerian doctrine is supported by evidence “riddled with errors, omissions and dubious statistics”, while economic predictions have “failed completely”. Among other examples, he cites the stagnation of Ireland’s economy, which practiced austerity, and decreasing interest rates in the U.S. against the prediction of a fiscal cliff, as evidence of the failure of austerian theory.
Krugman cites morality, class and inequality as major factors in the popularity among the elite of austerity. He believes that many in the U.S. want “to see economics as a morality play, to make it a tale of excess and its consequences”. Austerians want to paint economic problems as a consequence for spending too much in the past. Krugman believes, though, that issues like mass unemployment are a result of our spending too little now instead of overspending in the past.
Class and inequality also play a part in the popularity of austerity. According to Krugman, the wealthy “regard deficits as the most important problem we face… [and] favor cutting federal spending on…’entitlements’” such as health care and social security. Krugman believes that the wealthiest one percent personally dislike deficits and have created a theory around this preference.
This article is relevant to Econ 1051 as it debates the virtues of saving versus spending for economic growth (Hubbard and O’Brien 690), mentions the effect of falling interest rates on spending (Hubbard and O’Brien 829-856) and challenges popular austerian doctrine by arguing that austerians are trying to impose morality on the market, which is amoral.
Caitlin Christopher
Pawprint: CJCBRD
Student number: 14136654
Though many countries are recovering from the economic crisis, Greece’s citizens are still suffering. This article describes school children going hungry because their parents have been unemployed for months.
In the last year, the country has lost many factory jobs. The unemployment rate in Greece is greater than 27 percent. Families are living off the cheapest foods they can buy, with little nutritional value. Though they are searching for jobs, many citizens have been out of a job for more than a year, and their savings are gone.
This crisis occurring in Greece is a form of cyclical unemployment. Cyclical unemployment is “unemployment caused by a business cycle recession” (p 653). Because the factory jobs have closed or moved due to the recession, Greeks are in search of new employment, but there is little to be found.
In an economies business cycle, a country will go through periods of recession and expansion (p 694). This particular recession in Greece is causing many citizens to suffer severely. The description of hunger in this article illustrates how dire the situation is. One man in this article had virtually stopped eating to sacrifice his own health for his family, but yet his family is still going hungry.
The government has little funds. Greece must pay back its bailouts, leaving little left to fund a food program in schools. Until a solution is found, Greece’s children and citizens will continue to go without food.
Ryan Cross
racn88
14159861
Article: http://www.nytimes.com/2013/04/22/business/energy-environment/europes-carbon-market-is-sputtering-as-prices-dive.html?ref=business&_r=0
This article, titled: “In Europe, Paid Permits for Pollution Are Fizzling” discusses the Up and down fluctuating market of carbon allowances in Europe. The carbon market is the attempt to use the market to regulate emissions. Which is having a lot of trouble staying stable this year. However, the price of carbon allowances crept up to 3 euros on April 21, 2013. Good news for a market that had reached record lows just two days earlier.
This piece analyzes Europe’s current carbon market, which has been very volatile causing the prices of carbon credits; called E. U. A.s (European Union Allowances) to fluctuate from up to 40 to more recently nearly zero for emitting one ton of carbon dioxide. These fluctuations have affected the value and legitimacy of this market policy. Which in turn has caused other countries to question the effectiveness of this method.
Background information is given about the start of the emissions trading system in Europe, which began in 2005. It’s goal to create global model that would cut greenhouse gas emissions and push firms to use clean energy methods to power their production. Unfortunately as the article puts it, when emitting one ton of carbon dioxide costs less than a hamburger, it does not do much to cut greenhouse gases.
We can relate this to the Economics text because this is a perfect example of the Cap and Trade system. (Pgs. 152-153) Which is a regulatory system used to reduce certain kinds of pollution and provide companies with incentive to reduce their pollution levels fast. A cap (limit) is placed on certain types pollutions, and companies can sell unused portions of their limits to other companies. Which in theory, would set an limit to overall carbon emissions in a certain area. (country)
This is the opposite of another term mentioned in the text, known as command and control system. Which the book defines as “an approach that involves the government imposing quantitative limits on the amount of pollution firms are allowed to emit or requiring firms to install specific pollution control devices.” Instead of setting an overall cap and allowing firms to trade freely within the emissions market, there is direct action taken from the government to reduce emissions. Which is an arguably more expensive and less effective approach.
Amber Smith
Student #: 18074047
Pawprint: ars7d8
This article talks about the economic troubles in Europe and how it is negatively affecting Volkswagen. Volkswagen is a United States company and it is interesting how the economy in other countries can influence goods in America.
While Volkswagen is still producing in the United States, there had always been a high demand in European countries. However, as they face economic trouble, the demand for the good decreases. This decrease in demand is having a very negative impact on the sales of Volkswagens.
The way that Volkswagen is dealing with this major decrease in demand is by decreasing the supply of Volkswagens and looking at what is actually selling well in today’s market. Since Audi’s have been in very high demand and have been bringing in a lot of profit for the company, they have instead increased their supply of Audi’s.
Brooke Schwab
bmsd45
14140853
As Jobs Lag, Fed Is Viewed as Unlikely to Do More
This article is about the Federal Reserve are how it is making slow progress in reducing the unemployment rate. The article seems to be complaining about the progress that it is almost at a standstill. “The share of American adults with jobs has hovered around 58.5 percent for more than three years, roughly five percentage points below its prerecession peak.”
This article relates to how we’re learning about the Federal Reserve(page 832) and the unemployment rate(page 642). In our lecture, we are learning about how the Federal Reserve is the central bank of the United States. The Federal Reserve manages the money supply with the three monetary policy tools. The unemployment rate can be affected by the money supply being changed by the Federal Reserve.
Peter Montesantos
PawPrint: PJMZ95
ID #: 14166756
Link: http://www.nytimes.com/2013/04/20/your-money/measuring-college-prestige-vs-price.html?ref=your-money&_r=1&
This article written by Paul Sullivan on April 19th of this year titles “Measuring College Prestige vs. Cost of Enrollment” carries a lot of weight for me as I transfer from Mizzou and look ahead at either the University of Illinois or the University of Wisconsin in Madison. Sullivan discusses whether it’s more beneficial to go to a more prestigious school and carry heavy debt or settle for a lesser quality school and receive merit and scholarship money.
High school graduates and their families are taking out more loans then ever recently for colleges. Loans, as we’ve discussed in class, and in the text is an agreement through a firm that you will pay them back plus an additional interest rate, which is defined as a percentage of the amount borrowed building up over time.
James Conroy of New Trier high school, which is my neighboring school, said that is comes down to “the values of the family”. Families although have skewed angles while looking at college according to the article. It says that many parents think they need to send their child to the best university or they will not get a good job. Whether this is true or not the article mentions to keep it realistic and within the budget of your family.
Student loans are always a risk and that is why I wanted to read this article. Wherever I go, I will need to take out loans, as I did this first year at Mizzou. Whichever school gives me more financial aid will most likely be the one I attend next year. With inflation, and interest rates, I don’t want to be walking out of college in massive debt.
http://dealbook.nytimes.com/2013/04/30/apple-raises-17-billion-in-record-debt-sale/?ref=business
According to the New York Times article “To Satisfy Its Investors, Cash-Rich Apple Borrows Money,” Apple raised 17 billion dollars in buying bonds on Tuesday. The move seems unnecessary, considering that Apple has a “145 billion [dollar] cash hoard. However, the article explained that Apple had several rather savvy reasons to borrow when it wasn’t necessarily required.
As we reviewed in chapter 21, financial markets are subject to changes in the overall state of the economy. Because aggregate demand is low across the board, interest rates on borrowing are also low – meaning that Apple is able to borrow at rates lower than those seen in decades.
With respect to why Apple would want to borrow in the first place, the article noted that firm’s stock price has dropped 300 dollars, from approximately 700 to 400 in the last month. As is discussed in chapter 8, because Apple is traded publically, they must appease investors in order for money to continue flowing in to the company. This was not necessarily due to any wrongdoing by the firm, but rather a general market consensus that Apple was currently overvalued and that with slowing growth, the investment in the company was no longer as profitable as it seemed before.
Because of this, Apple is using the bonds to partially finance a 100 billion dollar payout to shareholders, in order to coax them into keeping their faith in the company. In response to the move, Apple’s stock shot up 10% on the day the dividends were announced.
dqrb75
14164305
Hailey Yeakle
HMYHX5
http://www.nytimes.com/reuters/2013/05/01/business/01reuters-usa-economy.html?ref=business
In the story, “Companies Hired Less and Manufacturing Growth Slowed in April,” appearing in The New York Times, it was reported that fewer employees were hired in April than in the past seven months and that this decline in hiring could be because of the fiscal policy introduced and the increase in payroll taxes as supposed by Mark Zandi, chief economist at Moody’s Analytics. This trend has not only affected large companies, but also smaller ones.
It was predicted by economists that there would be an increase of 150,000 jobs. However, only 119,000 were added. This was the smallest increase since September of last year. Reports showed that employment slowed in April even as manufacturing growth lingered as well. This trend of slowed development in this part of the year has been called a “spring swoon” and is something economists would like to avoid.
This swoon is due in part to the “fiscal tightening” discussed in the article. It is suggested that this tightening is preventing a recovery from happening quickly. It is keeping recovery at a moderate pace. Meanwhile, construction spending fell and bond prices rose. Yet, in brighter news, US automakers reported optimistic sales.
Fiscal policy is defined in our textbook as: “Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives” (Hubbard, O’Brien 796). If the fiscal policy is being “tightened”, that would suggest that either the government is not making as many purchases or they are increasing taxes. They can also do both. The increase in payroll taxes means that more money is being withheld from a worker’s paycheck meaning that he or she brings less money home.
Works Cited
Hubbard, Glenn R. and Anthony Patrick O’Brien. Economics. New Jersey: Pearson Education, Inc. 2013. Print.
“Companies Hired Less and Manufacturing Growth Slowed in April.” The New York Times 1 May 2013. Web.
Feifei Lei
Pawprint: FL639
Student number: 14174641
The S.B.A. Wants to Encourage More Small Loans
http://boss.blogs.nytimes.com/2013/04/18/the-s-b-a-wants-to-encourage-more-small-loans/
This article suggest that the Small Business Administration is seeking a possible solution to increase small loans so funds can be more accessible to small business. Banks are more willing to offer loans to big companies because they have higher predictive ability to pay the debt. The S.B.A.’s solution to the small-loan drought is to waive the fees it charges banks for guaranteeing these small loans — both the one-time fee it charges at the time of the loan and the annual fee of .55 percent of the guaranteed portion of the loan.
According to Chapter 8, there are three ways for small business to raise funds. The first is to reinvest the profits. Profits that are reinvested in a firm rather than taken out of a firm and paid to the firm’s owners are retained earnings. The second is to recruit additional owners to invest in the firm. This arrangement would increase the firm’s financial capital. The third is to borrow the funds from relatives, friends, or a bank.
Big companies go back to prerecession levels, because they have global footprint and have markets in strong growth places like China and India. That’s why they face low risk. Also, they are more capable to raise funds. However, small businesses have relative limited abilities to raise funds when being compared with big companies. Small business owners have kept struggling recession. They feel difficult to expanding and invest in expensive capital equipment because the higher risk (unlimited personal liability). Banks can turn small business away because the high risk. It sounds like a vicious circle. Loans were hard to come by and consumers weren’t shopping. And the new tax just made things even worse. They are also less diversified than big firms and less overseas’ market and as a result more tied to domestic economy. They are more sensitive to taxes or government requirements.
S.B.A.’s solution may help small business to raise more funds and as a result it will do good to the whole nation’s economy.
Despite new leadership and a price raise last year, Sirius XM experienced a 15% gain in earnings last quarter. This includes a 12% increase in revenue, and a 15% increase net income, which is measured as revenue minus operating expenses and taxes paid, and is also known as the accounting profit of a firm. Additionally, their subscriber growth also increased as more people subscribed to Sirius over the course of the last year. This leaves Sirius XM with a lot of optimism for their economic future as well as their future growth as a company.
One reason for Sirius XM’s major rise over the last couple of years is because of a lack of competition in the market for satellite radio. Sirius and XM merged in 2008 (vertical merger because they are in the same market). Sirius and XM were originally each other’s biggest competition in the satellite radio market. Once they merged, there was even less competition and the two capitalized to gain subscribers and increase revenue and earnings. While the market for satellite radio may not be considered a monopoly, it should at least be considered an oligopoly.
Since Sirius XM does not have much competition and very few competitors sell similar or equal products, they get most of the satellite radio customers, which increases their revenue and subscribers. They do face competition with the market for regular radio, but Sirius XM excels because they found a way to differentiate their product from other satellite and regular radio companies. While it is more expensive, there are fewer or no commercials on Sirius XM and a larger variety of stations and genres. These differences in product allow Sirius XM to get a leg up on their competition and charge a higher price for a better good or service, which is why they have gained so much in the last couple of years. They are on their way to a monopoly in satellite radio.
Elizabeth Eisterhold
ID: 14154449
EMAIL: ece5m5
According to the New York Times article, “ In Hacking, A.P. Twitter Feed Sends False Report of Explosions,” a tweet from the official Associated Press twitter account caused the stock markets to crash momentarily. Hackers hijacked the account leaving a false message reporting an attack at the White House causing President Obama to be injured. Before the account was suspended and an announcement denying the erroneous tweet could be made the Dow Jones Industrial Average had already plummeted more than 150 points.
Citizens of the United States feared that the economy would crash and hit an all time rock bottom. Once the hacked tweet was released people sold whatever shares and stocks they had invested in in attempts to leave the stock market all together. Stock prices fluctuate depending on how well the economy is doing. If the economy is expending and profits are high, the stock value will increase. The expectation is the exact opposite when the economy falls. This is why we saw the performance of the U.S. stock market decline in the midst of this hacked account, because people panicked and wanted to leave before the economy turned to shit.
http://thecaucus.blogs.nytimes.com/2013/04/23/hacked-a-p-twitter-feed-sends-erroneous-message-about-explosions-at-white-house/
Elizabeth Eisterhold
14154449
According to the New York Times article, “Technology Start-Ups Take Root in Berlin,” it is becoming easier and cheaper to be an entrepreneur in Germany. The German capital is starting to become one of the fasting-growing start-up communities, due to technological change. Rent and start-up in Berlin are very cheap causing technology companies to crowd the area to gain global audiences and international backing. “The cheap rent in Berlin buys you time, and time is everything,” said Lorenz Aschoff in the article. Entrepreneurs and investors alike are hoping as start-ups in Berlin become more established more money will flow into their pockets. It is still very new in the city of Berlin as more and more businesses begin their innovative ideas there.
http://dealbook.nytimes.com/2013/04/29/technology-start-ups-take-root-in-berlin/?ref=technology
Jack Howland
May 2, 2013
Jchbq2
It’s often company insiders that get named to the highly sought-after CEO position. In the May 2 New York Times article entitled “Intel Names Insider As Chief Executive,” this notion is made painstakingly clear. It’s reported that Brian M. Krzanich, an employee of Intel since 1982, will take over the high-ranking position on May 16. He will run the company’s day-to-day operations, and likely implement significant changes to push Intel into the 21st century.
He’s taking over at a time of great technological change within the computer industry. Producing computer products is becoming more of a tactful science, and it’s cheaper than ever to make the goods in bulk. And while there’s not many groundbreaking inventions in the market, there’s a shocking amount of innovation. Products are getting sleeker, faster and sexier. Krzanich, who’s been with the company since computers were 15 pounds, has his work cut out for him.
But it must be noted that getting to that CEO position is no easy task. The corporate governance structure enacted by most institutions ensures that it will be a struggle for an employee to climb their way to the top. Shareholders, who technically own companies, appoint a board of directors, who then make decisions regarding top-ranking managers. The article points out that Krzanich beat out three other candidates for the job, all who had immense experience in the industry.
Now, Krzanich is in a tough position. Yes, he gets the glory that comes with the gig and he may even rub it in the face of his co-workers. But he’s also taking over Intel at a time when the market for computers is shifting. The demand for innovative new products – like the popular tablet – is booming, while demand for older models is rapidly sinking. Hopefully this longtime Intel Insider can keep up with the times.
^Link for the New York Times article: http://www.nytimes.com/2013/05/03/technology/intel-names-brian-krzanich-as-chief-executive.html?ref=business&_r=0
Sara Naatz
sknyrd
According to “Income Guarantee Swells Crop Insurance,” farmers received record payouts to pay them back for a portion of their projected revenue after the worst drought in 50 years. The article explains how these payouts have become support for the farmers’ incomes rather than a system to protect the farmers from weather-related damages and losses, and in turn the cost of the program goes up. In fact, farmers bought more coverage the the United States government spent about twice as much as it would have without the subsidies.
Lawmakers are currently working on a bill that would change this by focusing on crop insurance rather than subsidizing farmers for their projected incomes. The current law has drawn much criticism because the amount of money being spent, and new laws are generally made every five years, anyway. In addition, the president is currently proposing a cut to crop insurance subsidies.
This relates to our readings in our textbook because of the emphasis on subsidies to farmers in this article. Subsidies are a market-based approach for when a good is under-produced and gives people the incentive to make (or in this case grow) more of a good so that more will hopefully be produced. This can be found on pages 149-151 of our textbook.
Subsidies increase distribution, which is currently necessary in the farming economy because the drought was so bad that there was an extreme shortage in many crops. Right now, the quantity demanded exceeds the quantity produced. And currently, crop insurance subsidies are set to cost more than $94 billion over the next 10 years, according to the Congressional Budget Office. The government wants to lower the cost of the subsidies without affecting the output of crops.
According to this article in the New York Times, the Federal Reserve’s main objective is to create more jobs. We’ve learned in class that the Federal Reserve System has the ability to help banks and overall help the economy. They pretty much manage the money supply in our nation. The Fed is currently increasing its efforts to tackle existing problems that have not grown over the past three years. In doing so, the Fed said it would continue monthly purchases of $85 billion in Treasury securities and mortgage-backed securities until the job market conditions improve.
The Fed is control by the seven members of the Board of Governors. The chair of boards that serves for four years is currently Ben Bernanke. Bernanke said the Federal Reserve should reach its goal of 6.5% unemployment and the current inflation rate by 2015. The inflation rate is currently below 2%, which the Fed considers the healthy rate. The Fed’s purchases are intended to make investors accept lower interest rates. In result, they are forced to pay up front a larger share of the money they are entitled to receive as the bond matures. The main effect is that this will lower borrower’s costs.
When a firm uses a small amount of their money, but a lot of borrowed money to make an investment, the firm’s potential profits and losses increase immensely. It creates a risk of large losses but also the benefit of large gains. (849) The true cause of the financial crisis between 2007 and 2009 was the housing market. When housing prices began to fall, borrowers started to default on their mortgages. This caused mortgage-backed securities to lose value. Actions such as the Troubled Asset Relief Program (TARP) were put into place to stabilize the banking system.
The Fed decided in September that it would expand holding of mortgage-backed securities by around $40 billion. They then decided not to increase purchases in order not to get involved with the private market. The Fed forecasts that the economy will improve 2.3 percent to 3 percent. They have repeatedly miscalculated the health of the economy and the speed of the recovery. They are very optimistic that the White House and Congress will eventually reach a deal to stay away from tax increases and spending cuts. However, if this does not happen the economy might return to recession.
Ashley Page
pawprint: ampgf3
Zach Foor
zsf3md
In the article “It’s the Aggregate Demand Stupid,” it’s states the government hopes to create jobs and stimulate growth. Of course, any government would hope to do this, but the writer makes it clear that our government is trying to do this on its own, perhaps not realizing that the whole reason the economy is in the slumps, though on the rise, now, is because of the aggregate demand, the ultimate spending. This includes citizens and households.
The article does on to say that the government is obsessing over the national debt to such an extent, that it won’t take the time to look elsewhere. The government would appear to have reason to fear, as it appears that inflation could be on the horizon. However, the article states that the government should not sweat over this issue because a small session of inflation would not do the country harm because it would raise spending by consumers and business. Or, in other words, the aggregate demand.
This relates directly back to what we discussed in chapter 24 of our textbook. We discussed how the price level affects the GDP of the United States when the aggregate demand and aggregate demand intersect graph-wise, in the short term.
Link for article: http://economix.blogs.nytimes.com/2011/08/16/its-the-aggregate-demand-stupid/
In the article, “Bernanke’s Credibility on ‘Too Big Too Fail’, it’s stated that while at the Senate Banking Committee, Federal Reserve Official Ben Bernanke told the committee that it should not worry about very large banks caving in because they are “too big too fail.” This was quite the bold statement, and his reasoning was that implicit creditor protection from the government would place the large banks as a top priority, regardless of the situation. He believes the market is wrong, and that there will be no bailouts necessary.
However, it is felt that Bernanke’s statement will be recanted as soon as another recession of any sort returns, and that he will promptly request some sort of financial security to get the bank through the turmoil. The article said that the fact that the bank is big will not save it. Yes, many other countries need the American economy (i.e. Britain), but, in the end, each nation has to look out for itself, and the fact that our central banking is in such a hole does not look very inviting to other countries, especially when they have less than we do, which is ironic.
Bernanke’s promise of the Federal Reserve ties into what we discussed in chapter 25. We covered the Federal Reserve and its establishment, as well as discount loans and discount rates. The Federal Reserve often found itself giving out loans to other agencies, now, it finds itself in a hole of receiving too many loans itself. Perhaps a lot more “reserving” should be going on.
Zach Foor
zsf3md
Link to article: http://economix.blogs.nytimes.com/2013/02/28/bernankes-credibility-on-too-big-to-fail/?ref=federalreservebankofnewyork
Matthew Zuzolo
Mjz445/14136969
This article discusses the ousting of JC Penny’s CEO. After 17-months and many difficulties with JC Penny’s business, the company board used their power to oust the CEO (pg. 241). After struggling to revive JC Penny’s business, the company is rapidly losing business to competition such as Macy’s and Kohl’s. While the CEO’s time in the position was short, it seems that Johnson was unable to successfully differentiate its product in such a competitive market.
As we discussed in class, JC Penny’s status as a publically traded company allows the company board to oust C-level executives if their performance is not satisfactory. JC Penny is currently in a difficult situation, and desperately needs to fix its business models if it wants to continue.
In addition to the ousting of the CEO, JC Penny made several changes in order to distinguish itself in a market system where its competitors are similar (pg. 444). It did by trying to exclusive deals with designers, redesigning the brand and changing the way people shop.
Ultimately, this article is about failures to succeed in a market with other competitors. JCP was unable to gain market share based on their business model. The result was the ousting of the CEO by the board of directors in an attempt to find a successful replacement that will please shareholders.
Sean Nelson
SMN4ZF
14175729
In this article, A Band Battles Ticketmaster on Sales Fees, the New York Times discusses a demonstration by the popular rock band, the String Cheese incident against the ticketing giant, Ticketmaster. Ticketmaster is widely known for its outrageous fees, and in most cases, unavoidable participation as a profiting middle man in many concerts across the United States.
Ticketmaster has a contract with many theaters and venues across the United states which makes the the only provider of tickets to many major concerts across the country. Ticketmaster involvement, and the inherent cost to customers “…by ticket fees, which can add 30 or 40 percent to the cost of an order” is frustrating for many people who want to enjoy music, and for many musicians, and others involved, who want to see their tickets sold for a more reasonable, and competitive price.
This story about Ticketmaster is relevant to our class because Ticketmaster is a small scale, but interesting depiction of a monopoly, which was heavily discussed in class, and can be found on page 488. A monopoly is a firm that is the only seller of a good or service that does not have a close substitute. Ticketmaster serves as a perfect example of a monopoly, in many perspectives.
Let’s look at, for example, the specific concert that the band and fans took a stand over. The good or service provided by Ticketmaster, and through contracts and negotiations, was solely available through their firm is access to the concert at the Greek Theater at the specific July show. That means if a fan from Los Angeles wanted to see the String Cheese Incident at the Greek Theater, the only available option of purchase is through Ticketmaster. The decision to purchase from Ticketmaster would grossly inflate the cost of the good. Ticketmaster is a exemplifies monopolistic practice, and harms consumers, as most monopolies do, and will.
Sean Nelson
SMN4ZF
14175729
The article “Wall St. Redux: Arcane Names Hiding Big Risk” discusses the dangerous practices that investment banks are using to make huge profits, and the risk this puts the economy in. It emphasizes the resurfacing of many practices which catalyzed the United State’s most recent recession.
The same banks that created risky securitized mortagages, which were a major contributor to the development of the recession and collapse of the real estate market, seem to be bypassing the new regulations to prevent these actions, and highly profiting of doing so. “It’s not risky immediately, but it puts us on the path to additional systemic risk,” Brian Reynolds said in the article. Securitized mortgages are risky loans that are pooled together by the bank, and then sold to investors.
In the financial crisis of 2007-2009, the securitized loans that were sold as investments were often bundles of loans that should not have been given in the first place. These loans are called sub-prime loans, and this means that the person receiving the loan is not very likely to be able to repay the funds which are borrowed. The excess of sub prime loans led to a collapse of the real estate market, and in turn harmed banks and investors financially.
This article relates to our class in a few ways. We discussed securitization of mortgages in class, and information on securitization is on page 848. We also spoke about how this exactly affected the United States economy, and eventually led to a recession. These practices are often done by investment banks which we went over in class, and in the book on page 253.
This article makes an interesting, but frightening point to the readers. Should we allow, or fear the continuation of practices in financial markets that severely impacted our economy in the past? Should these type of practices be stopped? I believe that investors should not reserve the right to play with the economy so loosely, and with little risk to themselves. Especially after receiving aid when they had failed to accurately assign loans in the past.
Sean Nelson
SMN4ZF
14175729
The article titled “Students of the Great Recession” examines the economic changes, and the subsequent effects on the mindset and pursuits of the American population, specifically people of age to be a traditional student. The Great Recession severely changed the perceptions of young Americans, who have a less positive perspective on the future of their economy than their parents did at their age.
Despite the increase of the pay gap between college graduates, and non-college graduates, there was a startling decrease in the amount of Americans that were graduating from college, only about 30%, which is unusually low. This economically implies that the demand for college graduates is high, so the cost is also higher.
This article reflects upon opportunity cost, which we discussed towards the beginning of the year, and used in discussion page 49 of the textbook. Opportunity cost is defined as the loss of potential gain from other alternatives when one alternative is chosen. This article reasons that the recession reduced the opportunity cost of attending college, because there were less promising opportunities elsewise.
Another aspect which reflects what we learned in class is the idea of supply and demand. This idea was discussed relentlessly through all parts of the semester. It was first introduced very early on textbook page 70, discussed through Chapter 3. The need for college graduates was increasing at this point, and the pay of a college graduate was very high. This is a perfect example of supply and demand. There were too little college graduates in the economy, this means that the demand is high. Since the demand was high, the pay was also very high. The pay of the graduate was the cost of their labor. When supply is low, the demand is high, so the cost, in turn, raises.
Bill Vlasic’s New York Times article “Truck Sales Led a Strong April for U.S. Automakers,” describes the increased sales of pick up trucks during the past month. According to the article such increased stemmed from a recent improvement in the housing market. Of those who experienced such increases, Ford Motor was said to have seen the largest jump in sales during April, maxing out at an 18% gain from the previous year. With such extensions in sales companies such as Ford have expressed ideas for expansion to keep up with the growing demand.
This article directly correlates with chapter 14 in our textbook, “Oligopoly: Firms in Less Competitive Markets” (460). The automobile industry as stated in our books is part of an oligopoly industry, in which only a few firms are competing with similar products (460). First, the author lays out the top four automobile manufactures who benefited from the recent sales boom. These firms clearly represent the “four-firm concentration ratio” that economist use to delegate whether or not an industry is an oligopoly (406). Since the automobile industry’s top four firms receive greater than 40% of the industry’s revenue, the auto industry is considered an oligopoly.
Secondly the article illustrates the shift in the demand curve in the automobile industry in April 2013. Since Ford and other top auto manufacturers experienced an increase in demand for their products, the demand cure for those companies in April shifted to the right (72). Since this rightward shift resulted from a change in a variable unrelated to the price of the product, in this case a revamp in the housing market, the shift caused a cause solely in the demand, not to be confused with quantity demand where changes are caused by a change in price of the product (76).
Finally, the article addresses Ford’s plan to expand production by adding 2,000 jobs in Kansas City. This action by Ford to expand the job force pertains to a number of concepts listed in chapter 20 of our book. Primarily the jobs made available by ford will help decrease structural unemployment, “unemployment that arises from persistent mismatch between the skills and attributions of workers and the requirements of jobs” (653) as well as frictional unemployment, “short-term unemployment that arises from the process of matching workers with jobs.” (652). In order to decrease these two types of unemployment Ford must employ two different categories of workers.
Ford stated the plan for filling these employment opportunities is to first fill half of the new jobs with union workers previously laid off due to the recession. These workers are classified as structurally unemployed currently because their skills are unique to the auto manufacturing industry. Such workers were left option less when the auto industry downsized because their skills left them option less, therefore deemed structurally unemployed and increasing the percentage of structural unemployment in the U.S. However, this percentage will fall when Ford begins hiring back those workers.
Once Ford fulfills it’s need of union workers, it will work to decrease the second form of unemployment mentioned above, frictional. As I mentioned before frictional unemployment is a short-term unemployment often occupied by recent college graduates who possess the necessary skills for a job they have yet to land. As stated in the article Ford has promised half of the new jobs to entry-level employees, for example those fresh out of college, and as a result these jobs obtained by newly trained workers will decrease the amount of frictional unemployment in the U.S.
18072242
Janey Marion
jem8c4
Steven Greenhouse’s New York Times article “Bangladesh Fears and Exodus of Apparel Firms”, tells the story of a recent tragedy in a Bangladesh manufacturing building that resulted in the innocent lives of those who work there. As a result of the accident Walt Disney Company, one of the many Western apparel companies producing through the company, has announced it’s termination of production through this particular manufacturing company. It was noted in the article that the accident in the building that took the lives of the factory workers could have been prevented with the correct funding and inspections. This reality is what sparked Disney’s decision to cease production with this particular manufacturer in Bangladesh.
Two issues were highlighted in the article one pertaining to the economy of Bangladesh and the other to that of the U.S. When Disney announced it’s decision to terminate production in Bangladesh, it sparked a wave of terror to those who live and work there, and rightfully so. Foreign apparel production industry in Bangladesh is responsible for providing for fourteen million families. Any sort of reduction in the business Bangladesh receives will not only result in job loses, but decrease the country’s GDP, gross domestic product or total production (617). Although Disney’s business only made up less than a fifth of the Western business brought in by Bangladesh manufacturing companies, the move opened the door for other Western companies to leave as well.
If a large enough number of Western apparel companies follow Disney’s example and pull their business from the unsafe factories, Bangladesh will face economic hardships paired with general health issues stemming from the decrease in economic prosperity. According to chapter 21 in our book, economic success effects more than the financial state of a country (680). Therefore Economic failure can lead to decreases in the health of the general population as a direct result of the country’s ability to provide adequate resources to it’s citizens with limited funds. A decrease in Western business entering the country would also create obvious economic hardships such as high unemployment, increased poverty, and an economic recession.
Aside from the economic fears felt by the citizens of Bangladesh, the article also notes the hesitation of other large Western apparel companies to remove their production from Bangladesh despite obviously dangerous working conditions. As an economic student, I have inferred this hesitation is rooted in the economic incentive for Western companies to produce their products in Bangladesh. Although the article does not clearly state the advantages of Western companies foreign production, using the three economic ideas we learned in chapter one, I can fabricate an education reasoning behind their decision to maintain production in Bangladesh.
People are rational (4). Economic idea number one, states that economists, in this case myself, assume firms use all available information as they act to achieve their goals. In the case of Western apparel production, I will assume that when the Western firms moved their production to Bangladesh, they had favorable reasons for doing so. Secondly, using the people respond to economic incentive, I will assume that that decision to move production outside the U.S provides the firms with a greater economic incentive than they would have received through production in the U.S. Lastly, with our final economic idea that states optimal decisions are made at the margin, I, as an educated economist, will infer that the marginal, or extra, benefit the firm receives from both the available information the firm has gathered about production in Bangladesh paired with the economic incentive, whatever that may be, exceeds the cost of potentially endangering the factory workers.
In conclusion the article dwells on two very real issues dealing with the economies of each country involved. Without the business of the Western apparel companies, Bangladesh faces the possibility of economic downturn, rising unemployment, and harshening health conditions. However with the Western business the factory workers face the reality of working in dangerous conditions. As for the West, until the apparel companies face a situation in which it is no longer economically beneficial for the firm to produce their goods in Bangladesh, the economist in me can predict that Bangladesh will continue to occupy the business of Western apparel companies.
Janey Marion
18072242
jem8c4
This article from the New York Times talks about the European Central Bank’s (E.C.B.) meting in Bratislava last Thursday (April 25, 2013). This meeting centered on the decision to cut interest rates to 0.5% from 0.75%. To some, this seemed like a show, put on by the bank and its president, to give the impression that they weren’t sitting idly by while economies in Europe were failing. In addition to the interest rate cut, the E.C.B. has established that it will continue letting banks borrow as much as needed (up to the benchmark) for as long as necessary, or until mid-2014.
The E.C.B. is also exploring new ways to increase the supply of credit, such as using the E.C.B. to stimulate demand for asset-backed securities. However, the details of how the E.C.B. would accomplish this were not determined. It was determined that the E.C.B. itself would not buy the securities, differing from the United State’s and Bank of England’s attempts to ease the stimulus.
Even though it seems that the E.C.B. and its president are willing to do anything to stimulate the European economy, it is still unwilling to disregard certain policies in fear of upsetting Germany. The main roadblock is the fact that the E.C.B. does not have a central treasury, like the U.S. Fed has the Treasury, causing it to be more cautious when it comes to taking risks. Despite this, Mr. Draghi is insistent that these cuts will stimulate growth, helping the euro zone economies.
Link to article: http://www.nytimes.com/2013/05/03/business/global/03iht-euro03.html?ref=business
maw496
http://economix.blogs.nytimes.com/2013/05/03/keeping-up-not-getting-ahead/?ref=business
The NYT article “Keeping up, not getting ahead” referenced above speaks on the stagnant rate of labor force participation since the beginning of the recession. The piece displays a graph of labor force participation in American males since 2007, showing that labor force participation percentage dropped from approximately 63.3% in January, 2007, to 58.5% by July of 2009 – just two and a half years later.
The article then analyzes that the labor force participation rate has since stayed at 58.5% because discouraged workers have simply left the labor force. This is an important distinction because unemployment is not necessarily an accurage reflection of the amount of jobless able bodied workers in an economy. As was referenced in class, even though the unemployment rate may drop, it may not be because of actual increases in employment, but rather a decline of Americans actively searching for work.
Another possible reason for the decline in labor force participation is the aging of the baby boomer generation, according to the article. Just as the book states, the labor force exists between a range of ages, from the lower spectrum of younger workers to the upper area of retiring laborers. Currently, as the baby boomer generation ages, many workers are also retiring at once, making it difficult to fill their spots or increase the total labor force participation rate.
Finally, the article contrasts the aging baby boomer labor dropout issue by stating that those still remaining in the labor force are actually working for longer than before the recession, especially over the age of 55. This is an example of structural unemployment, as the economy is still 10 million jobs short of the level of employment before the recession.
dqrb75
14164305
Erin Mikel
EEMY32
Michael Kelly owns a small military contractor business. As government continues to cut spending Mr. Kelly has to continue to let go of more and more employees. This is the only company felling the hurt; According to the New York Times Article, The government reported weekly unemployment claims were at a five-year low. Some economist say the problem is that companies have not been hiring either.
The increase in payroll tax is also a big factor in why companies are hiring along with the government cut spending. People are wondering why the economy is not recovering from the recession yet. Ms. Swonk blames the government. So the US government now has vowed to continue to buy tens of billion of dollars in bonds to stimulate growth. This has helped the stock market but has yet to help the unemployment rate like they predicted. Other world center banks, like japan, are doing stimulus programs as well.
Michael Kelly sadly now has to sell his company. He says the technology the was working on is the next generation for the military, and now its coming to an end.
This article relate to our reading because it talk about unemployment and government spending. On page 640 of our reading it discusses Bank of American has to lay of 30,000 workings. It also talks about how the recession has end but we have not fully recover like said in the New York Time Article. Page 646 also talks about tends in the labor force which was talked about in the article.
Devin McCallum
djmq57
14163046
Eastman Kodak company will be emerging from bankruptcy this summer or fall. However, the company that will now exist again will be very much downsized and have very drastic changes in their products and business ventures. Kodak will now represent a company much more commercially oriented that will create the film for large printing companies and movie reels. Although, this famous yellow film brand will still be available to the public on digital cameras and drugstore printing kiosks, it will be owned by separate companies.
However, Kodak’s audience in this venture is skeptical, as the commercial field they are entering into is a highly competitive one and one that has been showing a growing decline in business. Critics also argue that Kodak’s refusal to accept that some of it’s products are now longer favored is part of it’s downfall. They continue to bank on the business of film, even when our world is becoming increasingly digitized. Last year the company admitted some defeat by selling its rights to make digital cameras and photo frames and online printing to multiple companies including Shutterfly for $23.8 million. However, the bankruptcy process was not all smooth sailing, when they failed to sell their digital imaging patents – which many would consider to be their greatest former asset – for even close to what they expected. The cash cow that was anticipated to bring in a sum of about $2.6 billion only brought in $527 million. Many critics claim that this was a common probably that hurt them a lot when they thought that their products were worth much more on the market than they really were.
Although the film business has hit somewhat of a decline it is still believed that a focus on commercial was probably the best alternative for the company’s pension. However, as far as their digital print company for large businesses, they say the market for this is very competitive and Kodak’s share is very small, making it a difficult comeback path. In the end, economists agree that the face of Kodak will never be the same as the go from the being a huge corporate player to a very small piece in the game of commercial printing and film.
This refers to our text on pages 460-462 because it talks about the competition Kodak faces in its new market and also the value that they believed their patents hold. Patents on an item like Kodak’s digital technology would usually go for a greater price because they create a government barrier for other companies as they cannot create a similar technology while Kodak has a patent. However, what the company did not forsee is the fact that these technologies may not be as valuable to the companies as they thought they would be. The market may not be as demanded and they may not need the patent to be lifted as much as Kodak believes.
^^^ http://dealbook.nytimes.com/2013/05/03/after-bankruptcy-a-leaner-kodak-faces-an-uphill-battle/?ref=business
In the New York Times article “College graduates fare well in jobs market even through recession,” it is stated that despite continuous issues with structural unemployment, college graduates in the United States are still entering the workforce with a leg up on their competition.
As was referenced in the book, college graduates will earn approximately one million more dollars of income during their lifetime than their high school graduate counterparts. However, it seems even an undergraduate degree call keep college graduates from the grips of increased structural unemployment. During the lowest point of unemployment in November 2010, college graduates saw their unemployment rise to only 5.1%, as opposed to the 10% seen by the American labor force across the board.
Unfortunately for high school graduated or G.E.D. holders, the jobs they used to hold are now being given to workers holding bachelor’s degrees. This indicates that unemployment isn’t necessarily an accurate example of all facets of employment in an economy, considering that it doesn’t factor in underemployment that is occurring with those holding bachelor’s degrees.
dqrb75
14164305
Devin McCallum
djmq57
14163046
The private sector has made extensive progress recently in the fight against unemployment. They have been creating nearly 200,000 jobs a month making the unemployment rate the lowest it’s been since 2008. This progress is evident in the Labor Department’s recent data which reported 268,000 workers added to the payroll.
This news had a very positive impact on the stock market, with indexes closing up 1% for the day. However, the raise is still not high enough to make the Federal Reserve consider raising interest rates, claiming that it should be much higher for how far we are along in economic recovery. However, the Fed predicts that counterfailing events in the next few months make another drop in the unemployment rate likely.
Despite the fear of another drop in the economy, experts admit that the country’s job creation recently has been very steady. Though there are ups and downs economists say that we are still well on our way to recovery after the largest recession since the Great Depression.
This relates to the text on page 651 which discusses the economy’s effect on job creation and destruction. Our economy is rapidly changing and this fall in unemployment is do to the fact that firm’s are constantly being created and current ones are constantly expanding. This creates the rise and fall of jobs that is now rising as we recover from the recession.
^^^ http://www.nytimes.com/2013/05/04/business/economy/us-adds-165000-jobs-in-april.html?ref=business&_r=0
http://dealbook.nytimes.com/2013/05/03/fed-governor-pushes-for-measure-aimed-at-strengthening-large-banks/?ref=business
In the article “Fed governor pushes for measure aimed at strengthening large banks,” the New York Times references the bailouts of major banks during the 2008 recession. The main rational behind the article is that banks must be shrunk in size so that they are no longer considered too big to fail, and thus costly for the Federal Reserve to bail out of financial straits. It is generally considered that the primary banking institutions in the United States currently (J.P. Morgan Chase, Citigroup, Bank of America, etc.) are now so large that their failing would have an extremely destructive impact on the entire global economy.
The Federal Reserve’s bailing out of major banking institutions in 2008 relates to the book’s content of the Fed being created as an institution to provide Americans with a degree of faith in their currency – discouraging bank panics by promising to loan funds to banks that need them to cover mass withdraws. In this case though, the Federal Reserve would rather not back such massive banks, especially when their impact on the economy is so great that they have no choice but to loan them massive sums when they make risky financial decisions.
Another portion of the article referenced in the book is the Dodd-Frank Act, an act of congressed passed in 2010 that ensures more scrutiny of financial institutions as well as effective oversight on their banking decisions. However, a contributor to the article, Daniel K. Tarullo, said he believes that acts like Dodd Frank are not doing enough to protect against the damaging effects of mass bank runs. Instead, he proposes that reserve requirements be raised, not across the board but rather independent to the bank. Banks would be judged on the efficiency and responsibility of their balance sheet, and then have their reserve requirement determined by the Fed. Naturally, more efficient and responsible banks would be allowed lower requirements.
Changing the reserve requirements would obviously allow the banks to loan out less of their funds. This would of course shrink the money multiplier, but it would have another indirect effect that Tarullo intended in the beginning of the article: it would shrink the banks. By not being able to loan out as much money, they would protect themselves from bank panics by having more reserves that would be liquidated at a moment’s notice. Regulatory agencies also like this idea because it shrinks the overall size of the banks, ensuring that their impact on the economy can never again be so great that the Fed has no other option than to bail them out during a time of financial crisis.
dqrb75
14164305
Zach Foor
zsf3md
In the article “Not Enough Inflation”, the Federal Reserve hopes to expand its economic stimulus campaign in order to bring the national inflation rate to what it considers to be a healthy two percent. The article says that the Federal Reserve underestimated the inflation rate over the past two years and this is why it as staggered below the two percent mark recently. Over the past 12 months, ending in January, the inflation rate has bee at 1.2 percent.
Although there was a large boost in the inflation rate, according to the graph provided by the Federal Reserve in the article, recently, the rates have fallen again. The Fed’s vice chairwoman, Janet Yellen, said “In effect there has been a significant shortfall in the overall amount of monetary policy stimulus since early 2009.” As we continue, we hope to see the rates rise, but not even the fed purchasing assets, along with other procedures, have been a significant to stabilizing the rate to the desired norm.
This article relates to inflation rates that we discussed in Chapter 25 of our book. In the book, we talked about the quantity theory helping us understand the reasons for high inflation, hyperinflation, and the like. With these things, people begin to use paper money more, and it loses its significance. Usually, when we suffer from high inflation, we also suffer from slow growth.
Link to article: http://economix.blogs.nytimes.com/2013/03/01/not-enough-inflation/
Kamila Jambulatova
PawPrint: kjb7d
Student number: 141 722 73
According to the New York Times’ article having a college degree is an investment that returns 15.2 % a year. If you were not sure whether college degree is worth it, evidence proves that it does. According the Labor department report, the unemployment rate for college graduates in April was 3.9 %, comparing to 7.5 % for the work force as a whole. If we look at unemployment rates in different groups in September, 2011 college graduates had more then 2 times lower rate comparing to high school graduates or 3 times lower then high school dropouts. (Page 647)
Article states that among all segments of workers sorted by educational attainment, college graduates are the only group that has more people employed today than when the recession started. The problem right now is that not all college graduates has “good” jobs. More and more people get college degree and more and more they are getting hired to jobs that do not require college-level skills. “High-skilled people can take the jobs of middle-skilled people, and middle-skilled people can take jobs of low-skilled people,” said Justin Wolfers, a professor of public policy and economics at the University of Michigan. “And low-skilled people are out of luck.”
Every year millions of jobs are created and destroyed in the U.S. New firms are being started, existing firms are expanding, some existing firms are contracting, and some firms are going out of business. (Page 651) The bulk of the jobs created in the last few years have been low wage and low-skilled, according to a report last August from the National Employment Law Project, a liberal research and advocacy group. Today nearly one in 13 jobs is in food services, for example, a record share.
More low skilled jobs are created as well as more people are graduating from college now, so now more firms can hire a college graduate fro a low-skilled job. That leaves people with no college degree with less and less jobs.
Seth Klamann
SCKP7C
The New York Times published an article about the growing interest of America in the economies of Latin and South America. Despite the rampant issues with drug trafficking and political instability, particularly in South America, President Obama urged ‘American’ governments to focus on economic growth. While insisting that it remains very clear on the threats posed by the drug problem, the Obama administration feels that is it time to step back and let the Mexican (the country mentioned specifically in the article) take control of their internal issues.
I think this applies to some of the stuff we’ve talked about in class because it involves the global economy. The entire world, and for the US the Americas, are interconnected through this idea of globalization. So Obama is concerned about economic issues in Central and South America, despite the growing economy in Brazil.
Additionally, this also speaks to the concern raised after the global economic crisis several years ago. I think President Obama realizes that it is imperative that nations work together to keep the economy healthy and stable, another concept we discussed in class. Because the tanking of one or two major economies (like Brazil’s) can have a serious detrimental affect on the world at large, Obama is seeking more focus on that sort of issue.
Article: http://www.nytimes.com/2013/05/05/world/americas/in-latin-america-us-shifts-focus-from-drug-war-to-economy.html?hp&_r=0
Seth Klamann
SCKP7C
The NY Times published another article about the recent unemployment statistics and what it means for our economy. March created nearly 140,000 jobs, while April outstripped that total with 165,000. However, the article states that this sort of growth would require five years (assuming the same rate of job creation) to finally get the unemployment rate down to around 5%. But the article doesn’t think that the rate will remain the same, that fewer jobs will be created as a result of the sequester.
Furthermore, the article discusses over 250,000 workers who dropped from full-time employment seekers to part-time seekers, which can fall under the category of “underemployed,” a concept we discussed in class as a drawback to our calculation of the unemployment rate. Many of those now employed which helped lower the unemployment rate fall into this ‘underemployed’ category, which makes the growth seem somewhat less inspiring.
These are all concepts we discussed in class and can be found in our textbook. George talked at length (and one of our exam two questions involved) the idea of the unemployment rate and how it can be manipulated. Many will leave the job force after an extended period of unemployment, which can lower the unemployment rate. Still more will accept underemployment, while others who have been unemployed for over 6 months are put on an even level as those unemployed for four weeks. As George pointed out in class, these are all drawbacks to the current method of calculating the unemployment rate. The article similarly stipulates that while the numbers are promising, they are short-term and somewhat misleading.
Article link: http://www.nytimes.com/2013/05/04/opinion/jobs-wages-and-the-sequester.html?hp
Seth Klamann
SCKP7C
While the article I just posted was an editorial calling for very cautious (even cynical) optimism regarding the recent unemployment statistics, a second article on the NYTimes website was more hopeful. I gave all of the statistics in the previous entry, so I won’t waste space on that again. This article pointed out that as a result of the increasing employment (dubiously calculated or not) stocks are soaring and general public optimism is growing.
The article also cited the Fed’s promise to not raise the interest rate until the unemployment rate fell farther still, as it hopes that low rates will increase spending and employment. Unlike the previous article which seemed to predict a sharp downturn in employment growth, this article predicts further consistency, citing a consistent growth over the past months and even years.
The article wasn’t completely optimistic; it cited experts who predicted a slowdown because of government cuts, which will slow (if not cease) hirings in the public sector, placing all of the emphasis on the private sector to create jobs, which will certainly slow the rate (over the last three years, job growth per month has been about 165,000).
Again, I discussed the amount of time we spent in class covering the unemployment rate and the workforce arguments against said rate calculation. But this article also goes into the idea of interest rates being used and manipulated by the Fed to help spark growth creation, a concept covered in class as well. The article also covered the idea of the stock market growing directly proportional to the job market, as people feel more secure investing after seeing that meaningful economic statistic grow. This idea of security in investments was similarly discussed in class.
Article: http://www.nytimes.com/2013/05/04/business/economy/us-adds-165000-jobs-in-april.html?ref=business
“Unemployment makes people unhappy, according to economic research,” claims the New York Times article “Inflation is Miserable. Unemployment is Worse.”, by Binyamin Appelbaum, published April 12, 2013. A new paper claims that unemployment makes people about four times as unhappy as inflation. This is potentially consequential for central banks that have focused on reversing inflation over unemployment.
The paper, presented by David Blanchflower of Dartmouth, shows that the impact of a period of unemployment is significantly worse than that of a period of inflation based on samples of well being of Europeans between 1975 and 2012. Appelbaum goes on to discuss the Fed’s attitude toward inflation over unemployment and their tactics on combatting it.
Unemployment and inflation are both significant macroeconomic issues, possibly the most discussed on the whole. They are also very relative to political campaigns and are closely watched and analyzed by citizens, economists, and politicians (640).
Although we can measure unemployment rates, CPI, and inflation rates, a more accurate depiction of the success and well being of an economy is expressed through real GDP. So, although we are even able to measure which of these issues affect citizens’ happiness the most, unemployment and inflation are not the most effective ways to measure the success of the country (Ch. 21).
KEFR5B
14152913
While some have been led to question the value of a college degree through the recession, evidence still suggests that college graduates are better off than most. The unemployment rate for recent college graduates is significantly lower than for the total work force. There are even more graduates with jobs now than there were before the recession.
All of that being said, not all college graduates have the jobs they would like to have. Many firms are hiring college-educated workers for jobs such as receptionists and waitressing. This is especially bad news for low-skilled workers, from whom these college graduates are taking jobs.
So while the total unemployment rate has decreased over the last few years, people with college degrees have taken a significant number of those new jobs, whether that job required a degree previously or not.
As pointed out by this article, the marginal benefit of finishing college is clearly higher than the marginal cost of obtaining a degree, as the unemployed segment of the work force seems to be those without college degrees.
Article: http://www.nytimes.com/2013/05/04/business/college-graduates-fare-well-in-jobs-market-even-through-recession.html?ref=business
med4k4
14155637
“College Graduates Fare Well in Jobs Market, Even Through Recession”
New York Times
14165303
egt4kd
This article gives a look at the recession and the unemployment rates for workers who have recently graduated from college. The results of this article were very surprising, but not for the reasons I though they would be. New research shows that the unemployment rate for those just out of college is 3.9%, compared to the national average of 7.5%.
I think this is very surprising, because I think that many of us have heard that the job market is hard for everyone, and it may be especially hard for college students to enter it with no previous professional work experience. This is good news for students who are currently in college, because the article says that “among all segments of workers sorted by educational attainment, college graduates are the only group that has more people employed today than when the recession started.”
The article gives a few reasons for this shift and success in employment for the younger generation. One of the primary reasons it says that post-grads are getting jobs is because they are taking low-wage or low-skill jobs that they might not have taken before. Coming just out of college, young adults are usually desperate for a job if they have college loans to pay back, and at some point they may settle for one that does not require the degree they have earned. The degree, however, makes them even more qualified for a low-wage job, especially compared to someone who may only have a high school diploma, and college graduates are being hired over these low-skilled workers.
Some other low-skill jobs are also requiring a college-degree when it is not necessary, because they know that post-grads in need of money will take a job if they have to. At the end of the article, there are also a few statistics about the salaries of both college grads and those who did not attend college. College grads on average make 79% more money than those who only have a high school diploma.
This article relates to our text because it talks about the unemployment rate, and how it is now lower for the younger demographic of Americans.
“Job Data Ease Fears of Economic Slowdown in U.S”
New York Times
14165303
egt4kd
This articles talks about the new jobs report at the beginning of the money. In April, 165,000 jobs were added in the U.S., and the unemployment rate dipped .1%, form 7.6% to 7.5%.
The article also said that these job creation reports make the stock market “soaring to new highs, with major stock market indexes closing up 1 percent for the day.” This is good news for Americans who been struggled during the recession, because it means that, as our book talked about, we are now in an expansion, because the economy is growing.
While this report is good news for the job industry, the Federal Reserve said the unemployment rate was still a percentage point higher than it needed to be for them to consider raising the interest rates. Currently, they are near zero, to encourage Americans to borrow money, which would get the economy back on the right track again.
There are warnings, though, that this economic growth may slow during the second quarter, in large part due to the government tightening its fiscal budget. There have been many spending cuts that will begin to hit the economy soon, and the government’s cuts in employment may also have an effect on the economy’s ability to recover.
This article is an opinion piece dealing with how higher taxes on investment gains are influencing the decisions investors are making. Investment tax rates have increased significantly in the last year, which has a tendency to affect investment behavior.
Financial advisers encourage investors to not let taxes be the biggest influence in investing, as they will have to pay taxes if they gain profit, but otherwise they wouldn’t have gained any profit.
There are different tax risks associated with different types of investments, according to the article. And avoiding those taxes can mean that some types of investments are smarter for people in different circumstances.
This article was interesting because it dealt with some of the other factors that play into making investment decisions in the real world. As pointed out by the article, it’s not only whether an investor thinks an investment will gain profit and what risks are associated with that profit, but also the other outside influences on that investment.
Article: http://www.nytimes.com/2013/05/04/your-money/taxes/taxes-influence-investment-strategy-and-not-always-for-the-better.html?ref=business&_r=0
med4k4
14155637
“U.S. Trade Deficit Narrowed in March”
New York Times
14165303
egt4kd
This article contains information about the U.S.’s trade with foreign countries. It is reported in this article that the U.S.’s trade deficit, the difference between exports and imports, has narrowed. On Thursday, the Commerce Department reported that the deficit fell 11%.
Trade with China has hit an all-time low, imports have fallen 2.8%, and exports have also fallen .9%. One of the biggest industries that we are decreasing our imports in is the oil industry, and the number of barrels of crude oil that we are importing is the lowest since March 1996.
The article attributes these improvements to the trade deficit two many things. First, they said that American companies are making more profits from overseas sales. Second, American consumers are spending less on foreign goods and services. The combination of these two factors means that the difference between imports and exports is decreasing.
At the end of this article, it says that the Labor Department stated that the productivity of American workers has barely grew in the past few months, and that because of this, companies and firms may have to hire more workers for their business, if consumers in the U.S. continue to increase spending (in the bigger picture, if the economy continues to grow has it has been).
While those working in the public sector are dealing with losses, the private sector has created nearly 200,000 jobs per month since the beginning of the year. When this news was released at the beginning of the month, it also caused increases in major stock market indexes.
However, the unemployment rate is still higher than anyone would like it to be and the Federal Reserve won’t increase interest rates until the unemployment rate drops by another percentage point.
While the private sector is gaining jobs, the loss of jobs and cutbacks in the public sector means that the economy is not accelerating at the rate many people would like it to be at this point in the recovery process. Even with job growth, inflation rates are higher than some would like.
This article is interesting because it takes so many of the topics discussed in class and puts them into the real-world scenario of what is currently happening in our economy.
Article: http://www.nytimes.com/2013/05/04/business/economy/us-adds-165000-jobs-in-april.html?pagewanted=2&adxnnl=1&ref=business&adxnnlx=1367690405-2ZNMOIROm6i59kV4oOKiCA
med4k4
14155637
There is an article in the New York Times that leads it’s readers to believe that the job market for college graduates is not as bleak as everyone thinks. They argue that the unemployment rate for college graduates was very low at only 3.1 percent and the number of college graduates with jobs has risen 9.1 percent since November 2012.
However, I believe these encouraging statistics to be misleading. Though college educated people are getting jobs, the New York Times goes on to point out that high-skilled people have moved down to take the jobs of moderately skilled people, and moderately skilled people have moved down to take the jobs low-skilled people once had. If you are low-skilled, you are simply out of luck.
The ability for a college educated to find a job with relative ease is fantastic, however they are not able to acquire the jobs for which they have the skills for. These people are becoming things like waitresses, receptionists, etc. People with skills have to take lower jobs than what they are skilled for, and are pushing the lowest skilled people out of positions they are qualified for.
This likely affects the labor force participation rate, as mentioned in the textbook. There is an increase in work force participation by desperate college graduates, which causes a sharp decrease in participation by low skilled people. This all means that though the workforce participation has risen, there is still a heavy issue with unemployment and job placement.
Sarah Dettmer
14133586
Sorry!
My pawprint is sedxw3
As Apple goes to borrow more money, some economists are asking questions about Apple’s balance sheets, which show the company sitting on plenty of cash and marketable securities. As it turns out, their balance sheets are accurate, but the company has found a legal way to avoid paying taxes.
The article suggests that this situation might incite anger from the public about the inequitable corporate tax system. Some companies actually pay close to the 35 percent, but companies that own a lot of intellectual property, like Apple, often pay significantly less.
There has been some public outrage about companies using these strategies to avoid high tax rates in Britain. Multinational corporations often direct their profits to low-tax jurisdictions, whether or not they have operations in those locations.
As we have studied the inner workings of large corporations and the structure of corporate America, it is interesting to see how firms use these strategies in the real world to continue increasing their profits.
Article: http://www.nytimes.com/2013/05/03/business/how-apple-and-other-corporations-move-profit-to-avoid-taxes.html?ref=technology&_r=0
med4k4
14155637
The New York Times has recently posted an article about the increased probability of children born in the United States having allergies. According to their study, kids who were born outside of the US or have foreign parents were 48% less likely to have allergies. This is an extremely high probability, and researchers currently aren’t sure what is causing this phenomenon.
So, how does this connect with economics and our text? In the section on healthcare, there are concerns expressed by economists about the repercussions of establishing universal healthcare. One of these concerns is that people will be more likely to go to the doctor for minor issues than they would without free healthcare because they won’t have to pay for it, as well as doctors more willing to prescribe medication and screenings.
If US born children are already more prone to allergies, they are more likely to spend a lot of time at the doctor’s getting allergy tests/screenings done and trying out new medications to treat their issues. If healthcare is free, they are more likely to go the hospital route rather than buy medications over the counter. This perfectly highlights an issue that will come with Universal Healthcare.
Sarah Dettmer
sedxw3
14133586
“How Apple and Other Corporations Move Profit to Avoid Taxes”
New York Times
This article is about a $17 billion loan that Apple has just taken out. It says that on March 30, Apple’s balance sheet showed $185 billion in cash and marketable securities, but now, Apple is taking out $17 billion in addition to this to avoid taxes.
Instead of distributed the cash it has right now to its owners, who would then have to pay taxes, the company decided to borrow money to buy stock shares and increase its stock dividend. In addition to this, the interest rates on the money are extremely low, and will be tax-deductable.
The article states that the U.S. taxes companies on their global profits, but these taxes are deferred until the profits come back to the U.S.
One economist who is quoted in the article said that it is very difficult to tax companies who have global entities, such as Apple, especially when it is hard to track where incomes are coming from. The end of the article has some solutions that past presidents or economists have suggested to solve this tax problem.
“College Graduates Fare Well in Jobs Market, Even Through Recession”
New York Times
The New York Times released an article that discusses the increasing popular topic of the job market and college graduates. As the number of people who are college graduates rises, the number of jobs available to these graduates has appeared to fall. However, the article states that this is not true. While unemployment is still an issue due to the recession that began in 2007, the ratio of unemployed non-college graduates to unemployed college graduates is still in favor of the graduates. As we discussed in class, the recession of 2007 was and continued to be the worst economic recession that the US had experienced since the 1920s Great Depression. Yet, college graduates have suffered the least during the recession. Although they may not be able to attain high-skilled level work, they are able to take middle-skilled level work, which leaves middle-skilled workers to take low-skilled work and as a result low-skilled workers are left without jobs.
According to the article, attending college is still a great investment in your future. The price that you pay to attend college gives you an advantage in the job market. College graduates continue to be hired more than any other applicants. However, non-college graduates are often left unemployed due to structural unemployment. The lack of college education and the lack of jobs in the job market cause there to be a persistent mismatch between their skills and the requirements of the job.
Overall, the New York Times believes that college graduates are much better off than non-college graduates. While the job market may seem tough, it is not as bad as many Americans are lead to believe.
pawprint: aghw9
Emily Bathe
Embfh8
5/4/13
This article is about how a four-year college degree still has value and a high return on investment, despite some people’s concerns. Employers consider those with a college education more ambitious or capable, hence why employment for college graduates has increased over the past few years. However, people’s skills aren’t necessarily being used in the best way possible and they are ending up in debt.
The article states, “The unemployment rate for college graduates in April was a mere 3.9 percent.” As we learned in class, the unemployment rate is the percentage of the labor force that is without a job but has been actively looking for one in the past four weeks (unemployed). The type of unemployment discussed is cyclical, in other words, unemployment caused by a business cycle recession.
Recession is when production, income, and employment decline. This article refers to the recession of 2007 to 2009. We learned about this financial crisis in class as a time that resulted in mortgage-backed securities and an expanded securitization process. The effects of this recession also made employment for those without a Bachelor’s degree decrease, as explained in the article.
College students will be more likely to be promoted that use their skills better and provide better wages during the current economic expansion. This is when production, employment, and income are increasing.
Pawprint: ENT6H6
New York Times “Signs of Easier Money for Mortgages”
The article talks about how easy it used to be to get mortgages. When Phillip Ratliff went to get his first mortgages it was not difficult, even with a down payment of only 5 percent. After the housing burst, borrowers had a very hard time securing mortgages. Now, it has gotten easier.
Some banks and credit unions are finding other ways to give people loans. For instance, the piggyback loan is becoming more common. It is when borrowers take out two mortgages at the same time so they can “avoid private mortgage insurance required on traditional mortgages for more than 80 percent of the home’s value.”
Now the loans are being made to borrowers who can afford to pay their loans back. In certain circumstances, lenders are beginning to be more accepting of average loan candidates. Also, private insurers are becoming more flexible.
This article relates to the financial crisis of 2007-2009, which we learned about in chapter 8. Mortgages were given to subprime borrowers and “Alt-A” borrowers (people who did not have enough income). This led people to default on their mortgages. As a result of this, getting a loan became really difficult. But according to this article, things are getting easier.
Pawprint: ENT6H6
NY Times “Governor of Tennessee Joins Peers Refusing Medicaid Plan”
This article is about Gov. Bill Haslam of Tennessee who said that his state would not expand Medicaid. He is joining the other 18 Republican governors who have rejected the expansion. He said instead he wants to use the money to buy private insurance for as many as 175,000 low-income residents of his state.
With this law, President Obama wants to make Medicaid available to those earning up to 138 percent of the federal poverty level. Currently up to $15,856 a year for an individual.
For states that adopt this bill, the federal government will cover the costs from 2014-2016 and then the state will pay for a small percentage, 10 percent by 2020.
This relates to our lectures in class because we talked about health care and Obama’s new plans. However, it seems that this expansion is controversial and Republicans do not want to partake in it. This goes along with the idea that everyone has to have health insurance and businesses need to help provide it.
http://www.nytimes.com/2013/03/28/health/tennessee-govenor-balks-at-medicaid-expansion.html
Emily Pawlak Extra Credit Article
EMPRK6
16108805
The New York Times article, “U.S. Spending Cuts Seen as Key in Slowing Growth”, begins by describing the job cuts at Nanocerox and how they will probably increase if government spending cuts increase. It continues explaining how the economy may be growing more slowly, but weekly unemployment rates were at a 5-year low. Companies haven’t been hiring and sales and manufacturing have also been low. Higher payroll taxes and spending cuts mean less growth which is expected to be at 2.5 percent instead of the 4 percent it would be without federal cuts and increased taxes. The economy is not expected to fall into a recession; growth is just slower than it was expected to be. The article continues saying that unemployment is expected to remain at 7.6 even though it should be lower this far into recovery from the recession. 40 percent of the 12 million unemployed Americans have been so for more than 6 months. The article says that the Federal Reserve will continue to buy bonds to help stimulate growth as long as the unemployment rate remains above 6.5 percent.
Julia Coronado, chief North American economist at BNP Paribas said orders for defense-related goods has slowed and this fact highlights the difficult nature of this recovery. Nanocerox has had to react quickly to the decrease in demand from the Pentagon since the Pentagon and other agencies have been cutting back. The European Central Bank and the Bank of Japan are also intervening to restore growth.
This article applies to multiple topics we have covered in Econ 1051. Much of the article talks about unemployment (p. 642). The article says 40 percent of the 12 million unemployed have been unemployed for over 6 months. Our book says the severity of unemployment during and after the 2007-2009 was not expected, nor was the unemployment rate expected to decline as slowly as it has (p. 648). The article brings up the point of this slow growth of the economy and the continuing high unemployment rate. The type of unemployment described in this article is cyclical unemployment because many people were unemployed due to the recession (p 653).
The Federal Reserve and other central banks’ actions to help stimulate growth are also mentioned in the article. The Fed is buying bonds, the European Central Bank cut rates, and the bank of Japan started a stimulus effort. In our text, we learned that these central banks use open market operations such as the previously mentioned actions to conduct monetary policy (p. 847). Monetary policy is the way the Fed manages the money supply.
According to the New York Times article “The Big Problem is Long-Term Unemployment”, the reason the recovery from the last recession has been slow is long-term unemployment. Short-term unemployment is lower than it was in late 2007 before the recession, and medium-term unemployment is approximately the same level now as it was in 2007. However, long-term unemployment is still staggeringly high at 4.1%. More than half of the unemployed workers have been without a job for at least 15 weeks, and 4.4 million workers have been unemployed for more than 6 months. Federal policy is not set up to handle long-term unemployment well, and it does not look like fiscal policy will be used any time soon.
This article relates to class because we learned all about the different types of unemployment and the factors that affect each one. We also learned about the last recession and the fact that we are now in a recovery. Fed policy (and fiscal policy) were also recently discussed in class.
http://economix.blogs.nytimes.com/2013/05/03/the-big-problem-is-long-term-unemployment/?ref=economy
Name:Ryan Kohn
ID: rak427
Pawprint: ENT6H6
“Are we in danger of a beer monopoly?”
This article talks about about the Justice Department fearing that Anheuser-Busch InBev, the conglomerate that owns Bud, might be on the cusp of becoming a monopoly. Last January, the Justice Department sued AB InBev to precent it from buying the rest of Mexico’s Grupo Modelo, a company that is already holds 50 percent stake.
The article says that the Justice Department’s economists are able to predict what an even bigger AB InBev would do. They used game theory and complex forecasting models.
They argue that Anheauer-Busch has a “trigger strategy” where they signal to their competitors that if they lower their prices, it will start a vicious retail war. This strategy is legal. It says that airlines, cell phones and a lot of other companies use this method to keep prices inflated.
This is very similar to the lectures we had in class about monopolies, game theory, and oligopolies. Anheuser-Busch has used their dominant strategy in order to gain more control of their market. They are getting big to the point that the government is watching them because they could be a monopoly. It also mentioned that oligopolies use the same technique they use, which is similar to what we learned about price changes.
pawprint: ENT6H6
“U.S. Trade Deficit Falls as Exports Rise Sharply”
This article said that after the nation’s trade deficit unexpectedly narrowed in February exports climbed near a record and the volume of imported crude oil fell to the lowest in 17 years.The gap between exports and imports shrank to $43 billion in February.
It was down 3.4 percent from $44.5 billion in January. Exports rose to .8 percent, to $186 billion. Stronger exports of energy products and autos offset declines in sales of airplanes and farm equipment.
Imports were at $228.9 billion. The deficit with China shrank to $23.4 billion, the lowest in 11 months. Exports to the European Union were down .9 percent in February, compared with January.
This all has to do with the GDP we learned about in chapter 19. Exports-imports is our net exports. We learned in class that this number is usually negative because we take in more than we give out. I found this article interesting because it was saying that our exports were increasing and our imports were decreasing.
The New York Times article, “Silicon Valley’s Start-Up Machine” tells the story of Mountain View investors in California. Mountain View is a private company that has been backing start-ups that otherwise would not have been successful. In the first story, Michelle Crosby was having trouble getting loans. After she was approved for the loan, the banks were stalling her payments. As we discussed in Chapter 25, it has become difficult to receive a loan in today’s economy due to the required reserves banks have due to the recession. Banks are less likely to make a commercial loan to a start-up if they do not believe the business will be able to succeed.
Just when she was at her wits end, she received a call from the private investors at Mountain View investors. They were intrigued by her business proposal and wanted to invest $100,000 in exchange for seven percent of her company. They made this same offer to three men, Haisha Chen, Teng Bao, and Dafeng Guo, who created a software program that allows Internet users to create and design websites from their mobile devises in 15 minutes. Seven percent of a company does not sound like much, but as we talked about in Chapter eight, that seven percent can become very profitable for Mountain View investors if the companies they invest in become successful.
Mountain View investors are partners of Y Combinator, an organization that specializes in start-up companies. As we discussed in chapter eight, a partnership is a firm owned jointly be two or more persons and not organized as a corporation. The benefits to being a partnership are that the firms have the ability to share work and risks. The disadvantages to being a partnership are that there is unlimited personal liability, and the limited ability to raise funds.
Y. Combinator looks for potential investments on Demo Day. Demo Day is when a representative from each start-up company gets up and gives a two-and-a-half minute pitch to 450 investors and about 24 journalists. Investors look for companies that have the potential to be great. They also look for those that are differentiated from all other products. As we discussed in chapter 13, it is very important for a product to be differentiated from others like it so as to generate a profit.
The National Bureau of Economic Research announced in November of 2001 that the economy had officially been in a recession since March of that year. “The Name of Recession,” published in November of 2001 explains the feelings of Americans who had felt the strain of the economy and had just heard the official diagnosis, comparing the situation to a doctor’s visit to confirm that flu symptoms are, in fact, a nasty case of the flu.
The article mentions the tens of thousands of job losses that had recently occurred, making the official news of the recession equal parts unsurprising and disheartening. The recession was one of eleven since World War II, but was more impactful because the country was falling from such a high. This cycle, according to the article, was partially attributed to the events of September 11 of that year. The effects of the attack may have been enough to push the economy over the edge and down a slippery slope.
The article concludes that previous recessions have typically lasted less than a year and ends on an optimistic note that the process is normal and likely inevitable.
Indeed, the occurrence of a recession is disheartening and difficult for individuals, firms, and households under the influence of the economy. However, the business cycle is simply described as alternating periods of expansion and recession – it is a natural and predictable process. Lengths and effects of the recessions and expansions in the business cycle are more unpredictable, and considering the possible cause of this particular recession, the economy may have looked much differently than a recession of the past (694).
Production, employment, and income decline during a recession, causing a drop in the country’s real GDP. The period of recession follows a business cycle peak, which basically marks the end of an expansion (691).
KEFR5B
Many Americans are questioning the value of a college degree according to “College Graduates Fare Well in the Job Market, Even Through Recession,” by Catherine Rampell. In a bleak time of recession, jobless college graduates seemed to be plentiful and we naturally began to question the costly degrees that weren’t helping us out much at the time. However, the value of higher education seems to have survived the recession as only 3.9% of college graduates are unemployed compared to the 7.5% of the labor force that is unemployed.
So graduates have jobs, but they may not have great jobs, claims Rampell. Many employers are now being blessed with well-educated workers who will take jobs way below their skill level. Our economy has shifted to a point where we now need 4-year degrees to do jobs that employers would have previously filled with a high-school graduate.
The market, from the perspective of graduates, is gloomy as of now. However, economists say that they will be better situated in the future for promotions and higher wages once the economy improves. The cost of a degree may seem invaluable now, but it is a long-run investment that will pay of almost definitely.
The typical decline in production, employment, and income are a natural part of the business cycle (691) and while many college graduates have yet to reap the benefits of their hard work, the economy will soon return to a rewarding state. With the end of the recession began an expansion, which will cause increases in employment among other factors.
KEFR5B
Celia Doherty
cmdbz7
The New York Times article “A Start-Up’s Dilemma – A Lack of Capital, or Lack of Control” explains the situation that Jacqui Rosshandler found herself in after creating a breath-freshening product. After some initial success with individual retail buyers and online sales, demand for the product decreased to the point where Rosshandler could not afford to produce anymore.
In comes Arthur T. Shorin, a former executive of the Topps Company, hoping to invest in Rosshandler’s product. His generous offer – a quarter million in capital and valuable contacts – came with strings attached, however, as he insisted that he gain control of 75% of the business with the ability for Rosshandler to earn back up to 40%.
The main question of the article is: what should Rosshandler choose? Should she keep the floundering business for herself and hope to gain success while still retaining 100% of the company? Or should she agree to Shorin’s deal and give up the majority control of her company to him?
This article relates to our economics text in several ways. The article discusses one of the struggles of small business owners, along with utilizing different facets of business such as ‘capital,’ ‘investors,’ and the idea of having a majority control of a company, something which is usually reserved for larger companies with investors and stock holders.
cmdbz7
forgot the link: http://www.nytimes.com/2013/01/03/business/smallbusiness/a-start-ups-dilemma-a-lack-of-capital-or-lack-of-control.html?ref=smallbusiness
Catherine Cojocaru
cacz85
According to Floyd Harris’s article, “The Big Problem Is Long-Term Unemployment,” short-term unemployment in the United States has decreased to levels lower than when the Great Recession began. In addition, medium-term unemployment has also decreased significantly in recent years. However, an ongoing problem is the fact that long-term unemployment is staying at high levels.
In fact, the long-term unemployment rate is still at 4.1% – compared to the 4.2% long-term unemployment rate high that happened in 1983. There are still millions of people out of work, and 4.4 million have been out of work for six months or more.
Floyd says that fiscal policy can help change this alarming trend, but asserts that the Fed is not going to do anything about this any time soon.
This relates to what we learned about unemployment in Chapter [ ] because we discussed each type of unemployment, how our current level of unemployment compares to that of the Great Recession and the Great Depression and what actions the government could take to reverse this trend. We learned that even though things are improving for our country, there are still people in need – and the data in this article proves that point.
http://economix.blogs.nytimes.com/2013/05/03/the-big-problem-is-long-term-unemployment/?ref=economy
John Howland
14159549
jchbq2
There always seems to be technological change in the smartphone market. No longer can companies get away with a product that just makes calls, nor can they make millions off of one that lacks a touch screen. As our text points out, most corporations always look to innovate, and the market for smartphones is no different. Smartphone companies often look to the competition, as well as consumer demands, and make something better.
But now, Google has taken the extra step and introduced something completely new into the market. In the New York Times article entitled “More Tech Magic, If You Can Afford It,” a technology columnist revels in her recent trial run with the new Google Glass. She praises the groundbreaking product, and fawns over all of the minor details. It’s like something out of a science fiction movie, she says.
The new product is sleek and inventive. It’s sexy and cutting edge. But Google Glass, which promises to be both exhilarating and expensive, isn’t your everyday smartphone – it’s a pair of glasses. These specs give people the ability to check out Apps, take videos and make calls, all while the product rests over their eyes. Science fiction movie actually sounds about right.
But while Google Glass is an incredible technological feat, it’s also a testament to Google’s ability to innovate products and please its customers, which is an important concept throughout our text. In the tricky smartphone market, consumers continue to demand more. They want slicker phones. They want better apps. But with Google Glass, Google is proving it can keep up with the smartphone market – even if their new product isn’t really a smartphone at all.
Catherine Cojocaru
cacz85
In Michael Winerip’s article “My Happy Inflation Days,” he asserts that the inflation rate has a different impact on people of different ages. He says that back in 1980 when the inflation rate was over 14%, it was easier for him to earn and save enough money to buy a home. He consistently made more money and the increasing rate of inflation assured him more money to come. He implies that a higher inflation rate is more favorable for young people, as their incomes are likely to increase for the rest of their lives.
On the other hand, higher inflation can be detrimental to people of the baby-boomer generation. Their incomes and salaries have likely stabilized, if they haven’t stopped working already. And as inflation rates rise, the income they have amassed will be worth less and less.
Another difference between the impact inflation has on 20-somethings and baby-boomers is what they are doing with their money. As Winerip recalls, as a 20-something during a time of high inflation, he was mostly saving his money for the future. On the contrary, most baby boomers are now consuming more than saving, because they have spent most of their lives saving their income. But as inflation rises, they will be unable to consume as much as they need or want. One who needs to consume things is more affected by fluctuations in the inflation rate than one who is more focused on saving.
This relates to our class discussion about inflation. We talked about the fact that when inflation rises, the cost of living becomes higher. For those baby boomers Winerip talks about in his article, a higher cost of living can majorly affect how and what they consume. But if one is saving, like Winerip was in the 1980s, a higher cost of everything can mean more money to save.
Jack Suntrup
Jsswd9
18073262
Jobs Report Illustrates Fiscal and Monetary Struggle to Spur Growth
In a summary of the monthly jobs report, published on May 3 by Nelson D. Schwartz, Schwartz writes about the pitfalls of measuring the unemployment data and offers a glimpse into the actions of the government and the actions of the Federal Reserve. The jobs numbers for April offered better-than-expected news, he writes: the economy added a total of 176,000 jobs in April, lowering the unemployment rate from 7.6 percent to 7.5 percent.
A common problem with measuring the unemployment rate, as the textbook illustrates, is that the BLS measure does not include those who are available to work but have stopped searching for employment. Those people, officially, have left the labor force, artificially lowering the unemployment rate. The April report stated that the labor force actually increased as the unemployment rate decreased, which is welcome news, according to the article.
The article also highlighted how fiscal policy by the government can undercut the monetary policy of the Fed. While the government chooses to spend less, stunting job growth, the Fed is taking actions to boost growth. Gregory Deco, a senior principal economist at HIS Global Insight, said in the article that without increased payroll taxes and more spending cuts the report would have been even stronger.
On the fiscal side, the Fed has lowered interest rates, hoping to spur investment. It has worked, Deco said, and the rates will continue to stay low until the unemployment rate drops another percentage point, according to the Fed.
Also relating to our textbook is the Fed’s action regarding purchasing bonds. When the Fed buys bonds from sellers, this allows those sellers to increase their reserves. As a result, those sellers, typically banks, are able to lend more. This allows businesses to increase investment. The increase in the money supply so far has not caused inflation to rise above 1 percent, so the article states that the Fed will continue its monthly $85 billion bond purchase.
Earlier this week, the New York Times published an article regarding the current efforts of the Federal Reserve’s attempt to continue stimulating the economy. Once again, the pace and recovery in this spring semester isn’t as large as in the winter. As a result, the Fed has stated that it’s willing to do anything in order to revive the growing economy. The Fed’s chairman, Ben S. Bernacke, has stated publicly that he isn’t stopping the stimulus procedures.
First and foremost, the article discussed the Fed engaging in open market operations. Open market operations is one of the few ways the Fed manipulates monetary policy to manage the money supply. The Fed buys and sells liquid Treasury securities in order to stimulate the economy. Currently, the Fed is purchasing $85 million in Treasury and mortgage-backed securities.
Secondly, the article discussed how a factor keeping the economy down is a decrease in government spending. When the government spends less money on government consumption expenditures, the GDP does down. This change shifts the aggregate demand to the left.
Lastly, the Fed continues its plan to boost the economy. Lowered interest rates will continue to stay. A decrease in interest rates keeps the money supply active while consumers spend more money according to the wealth effect.
Karim Howard – KJHGFC
The Idle Young Americans
The NY Times article titled, “The Idle Young Americans,” discusses the percentage of young Americans without jobs. It states that the United States has gone from having the largest portion of employed 25 to 34 year olds, to one of the lowest portions. According to the United States Labor Department, in 2011, 26.2 percent of Americans ages 25 to 34 were unemployed, and those with jobs are seeing lower wages.
The article states that even though the unemployment rate in the United States is declining, companies are able to function with fewer workers. They are not adding jobs at the rate they once did, and therefore, there are fewer jobs available for these young workers. Despite this, polls show that younger workers remain optimistic about the economic future of the country.
The textbook talks about the labor force and unemployment rate in chapter 20, on page 642. The labor force is the sum of employed and unemployed workers; however, the labor force does not include those who have not searched for work in the past for weeks. The unemployment rate is the percentage of the labor force that is currently unemployed. It is expressed as the number of unemployed divided by the labor force; this number is then multiplied by 100 in order to be expressed as a percentage. There are some problems with the precision of the unemployment rate; it can underestimate the number of people without jobs. People with part-time jobs who want full-time employment are counted as being employed, and those who stop actively looking for a job are not counted as unemployed.
The unemployment rate is slowly declining as companies hire more workers, however there is a fear that many businesses will not return to their original sizes.
Madalyne Bird
14132155
mpbyt7
The article “Europe Warns of Harder Economic Times to Come” talks about a crumbling economic system in the European Union. This is in contrast to the United State’s economy that has rebounded since its most recent financial crisis and has unemployment down to the lowest its been in the last four years.
This economic downturn in the European Union, according to Olli Rehn, European commissioner for monetary and economic affairs means that unemployment is predicted to rise to 11.1 percent within the next year. Economic analysts are having a difficult time working up solutions to this growing problem. Either these countries need to come up with uniform economic policies (a highly unlikely occurrence) or Germany needs to drop their argument against the European Central Bank to directly lend money to small and midsize companies.
A big problem in Europe is that lending money is so dependent on banks. Countries like Spain, Greece and Portugal are suffering incredibly high unemployment rates. Debt amongst these countries and other countries are continuing to rise. Italy’s debt is expected to reach 132.2 percent for the next year. For now, the commissioner is allowing the Netherlands, Poland, Spain and Slovenia more time to reach their budget targets, but there needs to be some serious economics reform amongst these countries.
According to the text, a recession is a period of the business cycle when total production and total employment are increasing (616). This happened to the US in 2009 and now the European Union is experiencing the same symptoms and panic.
Madalyne Bird
14132155
mpbyt7
The article “Job Data Ease Fears of Economic Slowdown in US” talks about the latest piece of information coming out of the US job industry saying that the unemployment rate in April was the lowest it has been since 2008. The American private sector has helped to create almost 200,000 new jobs a month. Because of this there was a spike in the stock market. The economy and job market is far from fixed, but this data is giving hope to people that it is beginning to rebound slightly.
Even though the private sector seems to be thriving, government unemployment and cutbacks continue. Even though the employment rate seems to be up, the number of hours worked by those employed are down. The data still points that the group of people suffering with highest unemployment are un-educated workers.
Even though this is positive news, experts are warning Americans to be wary of this piece of data. Even though it shed good light on the economy, it doesn’t mean that the light will continue to shine.
Unemployment rate is an issue that relates to macroeconomics, according to the text. We are constantly in a business cycle (616) which means an alternating period of economic expansion and economic recession, which this article refers to. It like many of the articles talks about recession, or when total production and total employment decrease (616), while also talking about some expansion in the private sector. Expansion is when total employment and total production are increasing (616).
Madalyne Bird
14132155
mpbyt7
The article “Business Investment Rebounds Even as Recovery Drags” discusses the difference between the recession’s recovery period since 2009 for consumers and for businesses. For consumers, the recovery hasn’t been that great, but for businesses it has been one of the best recoveries in decades. Last week’s GDP estimated 8.3 percent increase in the economy since 2009. According to the article, this partially because business has made “an impressive bounceback”.
The article goes on to blame the subpar performance of the economy’s comeback on two of the three pillars of economy. These two pillars are consumers and the government. The third pillar is business, which the article praises for its resilience. Corporations are also doing well, according to the article.
In 2009 recession, like past recessions there was not an explosion of consumer spending like there was in the early 2000s and 1980s. This time major parts of the economy like construction and real estate took and hit—and still haven’t quite rebounded.
The text talked about GDP or Gross Domestic Product on page 617. According to the text GDP is the market value of all final goods and services produced in a country during a period of, usually one year. However, the GDP that was measured was between the years 2009-2013. GDP is a very important piece of information to consumers, policymakers and government officials.
Besides a current fear of our economy falling back into a slight recession, economists are worried about inflation rates. In order for the Fed to exercise monetary policy to stimulate the faulty economy, they have printed more to contain the effects of the recession. Usually economists would be worried about an excess in the flowing money supply, but recently the Federal Reserve is worried that inflation rates are too low.
First, the article explains that the Feds have purchased more than two trillion dollars worth of bonds and debts paid for by the crediting reserves of private banks. This should have caused inflation, but instead a liquidity trap.
Second, the article discusses the damaging effects of low inflation. Low inflation can cause borrowers to be discouraged and cash detainment. Currently, the economy’s “enemy” is a lack of demand.
But inflation is still falling. This is because worker’s don’t ask for higher wages and forces businesses to cut prices. Low inflation rates make it harder to pay back debts.
Jayne Andrews
14162876
JDA3N7
The article entitled “Where Do Old Cellphones Go to Die?” discusses the issues that are caused because what we’re doing with our old electronics. Our old electronics often end up in impoverished countries, like Ghana and India. Citizens of these countries have made an industry out of burning, smashing, and melting old electronics in order to extract important metals. This has been proven to be dangerous, especially for women and children. Not only does it cause problems in these third world countries but also in the U.S. where prisoners process our e-wastes.
Congress and the European Union are working to solve this issue. They have made treaties and acts to prevent the waste from going to poor countries. But manufacturers can play a part in this too by selling their products while having a prearranged recycling service and routine. Consumers can also play a roll in this by holding onto our electronics for longer and trying to repair them rather than just buying a brand new one.
This relates to economics because this situation contains a positive externality and a negative externality. The positive externality is that third world countries are being given an industry to work in and to extract valuable metals from. This is a positive externality because they are not directly buying the cellphones but are able to gain an industry, money, and metals because of it.
The negative externality in the situation is that these countries are being negatively affected by the industry because of the dangerous things that come with the e-waste. Some citizens may not be directly involved in the industry but it is hurting their environment and citizens.
Vivien Tran (:
PawPrint: vtr25
We’ve discussed in class how the unemployment rate has remained for the last two years. In this article, it addresses the efforts to make the the unemployment rate go down by creating nearly 200,000 jobs a month since April of this year. Even though there is a slight drop in the unemployment rate, it’s still at its highest. Although the unemployment rate provides useful information on the job economy, it is far from the exact measurement of the joblessness in the economy.
In this article, it addresses the growing fear of the United States of the economic slowdown. Even though there is strong efforts to lower the unemployment rate, it is not reducing fast enough. Payroll taxes have increased and spending cuts will be expected shortly. There will be a constant strain on the economy as the government keeps spending at the rate its been going. The economy has been showing signs of weakness as of late.
In class, the unemployment has resulted in different ways like frictional, structural, and cyclical. Cyclical unemployment is unemployment resulting in the business cycle recession. This is the kind of unemployment that the economy has been facing for quite some time, and it keeps adding on. The more effort we put it, the more overwhelming the numbers get. With satisfying jobs for the economy, creating jobs, and spending, the economy is facing with a lot of weakness as of late.
In the May 3 article, “The Big Problem is Long-Term Unemployment,” by Floyd Norris, the author explains why long-term unemployment is still high in the U.S., despite the fall in short-term unemployment. Norris explained that short-term unemployment has fallen to the pre-recession levels of late 2007. In addition, medium-term unemployment is only a bit higher than the pre-recession level.
What economists still worry about is long-term unemployment, according to Norris. The current long-term unemployment rate is 4.1 percent, and more than half of unemployed workers have been without a job for more than 15 weeks. Also, 4.4 million workers have been unemployed for at least months. These numbers would be even higher if they included people who have given up looking for work.
Norris asserts that Fed policy (monetary policy) is not an effective way to handle unemployment. However, he also doubts that fiscal policy—which he deems the more suitable option—will be used anytime soon.
This article relates to our textbook because it discusses unemployment rate, which is the percent of the labor force that is unemployed. In particular, it relates to cyclical unemployment, which is caused by a business cycle recession like the recession the U.S. experienced in 2007-2009. It also discusses discouraged workers, whom are workers that have stopped looking for work because they believe there are no jobs available for them.
Link: http://economix.blogs.nytimes.com/2013/05/03/the-big-problem-is-long-term-unemployment/?ref=economy
Chanelle Koehn
Pawprint: CJK9R3
In the article that I read form the New York Times, it discussed how this week the Dow Touched 15,000 for the first time in a long time, while the economy still is suffering. It recognizes that it has been four years since the Recession that The US experienced and since the gdp has been rising slowly, while labor productivity has been low and the unemployment rate has been at an all time high.
As we learned in class, Labor productivity is the quantity of goods and services that can be produced by one worker or by one hour of work. So while the productivity stays low so does the unemployment rate because less people are being hired for jobs. While these two areas are lacking the financial markets, which are the New York Stock exchange as well as financial intermediaries are starting to soar reaching an all time high. The question that is faced is how is this occurring while the economy is still suffering.
We learned in class also about the federal reserve which is the central bank of the United States. Because this was created it has allowed the bond markets to remain strong while the economy rather has not.
The article also discusses how the GDP which is the gross domestic product or the market value of all final goods and services produced in a country during a period of time, typically a year. The article talks about how the gdp is only at 2.5 percent but should continue to grow as the stock market continues to flourish and allows firms to attract investors.
In the May 5 article, “Accessories No Longer Tethered to Apple” by Nick Wingfield and Brian Chen, it is predicted that Apple will soon lose its hold over devices and accessories tailor-made to the iPhone and iPad. Apple has long had control over the electronic industry in this field. The article describes how several hotel rooms have alarm clocks that connect exclusively to iPhones and iPads to play music. Retail stores were also full of gadgets only to be used with Apple products.
However, Apple’s grip on this industry is starting to loosen, which could potentially cause the company to lose some of the royalties it earns from accessory makers. They could also lose their market to consumers attracted to rival products. Apple’s decrease in control is majorly attributed to an increase in devices that can connect to devices through Bluetooth. With a Bluetooth connection, consumers can connect devices to their phone or tablet, even if it isn’t an Apple product.
The article also discusses controversy surrounding Apple’s new Lightning cable, which can only connect to new Apple products such as the iPhone 5. The new connector replaces the traditional 30-pin cable that Apple produced to work with older products. The new connector is smaller and more versatile than the old 30-pin connector. But the new cable angered several accessory makers who didn’t anticipate the change. The article notes that Apple typically keeps its new developments secret from the rest of the electronic industry until the new product is released.
This article relates to our textbook’s discussion of monopolistic competition (p432). Firms in monopolistic competition compete with several other firms selling similar products. Therefore, they must utilize technological change to stay ahead of competitors with new products that appear more attractive to consumers. It is important for the firm with the advanced product to try to keep its developments secret for as long as possible (like Apple), because as soon as other firms figure out how to replicate the new technology, it will become produced by several other firms.
Link: http://www.nytimes.com/2013/05/06/technology/apples-rivals-see-an-edge-in-using-wireless-accessories.html?ref=business
Chanelle Koehn
Pawprint: CJK9R3
Sara Higginbotham
SJHHGB
In an article “Jobs Data Ease Fears of Economic Slowdown in U.S.”, Nelson D. Schwartz talks about how the unemployed can find hope in the private sector. The private sector is creating about 200,000 jobs a month in order to decrease the unemployment rate. The public sector continues to shed workers, but looking to the private sector people are able to find and secure jobs. This created a significant increase for the stock market.
The unemployment rate is currently 7.5%, down from last month’s 7.6%, but this is still high for the point in the business cycle the economy is currently in. People are fearing a double-dip recession, meaning a new recession could be approaching after the recent 2007-2009 recession, but the number of jobs being created by the public sector is eliminating this fear. Job creation has been slow, but this is better than no job creation at all.
According to the article, The Fed is “prepared to increase or reduce the pace of its purchases,” depending on what happens within the coming weeks with the labor market and inflation levels. On the bright side, the size of the labor force has increased and the number of unemployed Americans has dropped significantly, showing that the economy may be on the rise. We can only hope for more job creation in the days to come.
This article relates to the Economics 1051 book in a few ways. We talked a lot about unemployment in class and how that is affecting households across the country. We also talked about the labor market and what determines the size of it. The business cycle was a topic that was referred to in class, and we talked in depth about recessions. Overall, the article related well to the class.
Link: http://www.nytimes.com/2013/05/04/business/economy/us-adds-165000-jobs-in-april.html?pagewanted=2&_r=0&ref=economy
Sara Higginbotham
SJHHGB
In the article, “Life Is O.K., if You Went to College” Catherine Rampell talks about unemployment rate in the terms of college graduates. Many people question whether college is worth the more often than not expensive tuition and four years of term papers and lecture halls.
In April of 2013, the unemployment rate for college graduates was 3.9 percent. The overall employment rate was 7.5 percent. The group formed of college graduates is the only one that has a lower unemployment rate today than when the recession began. Impressively enough, the number of people with college degrees that have jobs has risen by 9.1 percent since the recession began. There are now more employed college graduates than the combination of employed high school graduates and high school dropouts.
Even recent college graduates are having luck finding jobs, according to a chart that is part of the article. However, just because these people have jobs does not mean that they are good or “high paying” jobs. Many of the jobs created in the past few years have been low-waged and low-skilled jobs, which means recent grads are picking those up. Many include jobs such as receptionists, file clerks, car rental agents, and waitresses. These jobs are not ones that require a college eduation, or ones that pay enough to cover those college loans.
This article relates to Economics 1051 because it talks about unemployment rates. We talked about the different categories of people that are unemployed and about which people are the most likely to be hired. We also talked about the benefits that attending college can have for future job security.
http://economix.blogs.nytimes.com/2013/05/03/life-is-o-k-if-you-went-to-college/?ref=economy
Jayne Andrews
14162876
JDA3N7
The article “Accessories No Longer Tethered to Apple” discusses the fact that many hotels and stores are no longer having accessories, like alarm clocks for example, that can only work with Iphones or apple products. Apple had a very aggressive control over accessories for its products and this has helped to add success to other mobile device companies.
Companies have begun to make alarm clocks and other accessories that will work with all different types of phones, not Iphones exclusively. The article even points out that Apple was helping competitors by changing the way that their products connect to other devices because consumers were frustrated. Apple has had to begin to produce accessories that work with many different devices to be successful.
This article relates to economics because earlier in the semester, we focused a lot on competition and perfectly competitive markets. We also talked about substitute goods and complement goods. Substitutes are goods and services that can be used for the same purpose. Compliments are goods and services that are used together. All of these terms have to do with this article.
Other mobile devices instead of the Iphone can be considered substitutes. Smart phones can even be considered substitutes for ipods. However, with so many accessories as compliments to apple products, other mobile devices were set back. However now that more accessories are made to fit all kinds of smart phones, Apple has much more competition.
Sara Higginbotham
SJHHGB
In the article, “Burger King Earnings Soar as Expenses Fall” the Associated Press discusses how Burger King has been managing their earnings and budget over the past few months. For the fast food chain, revenue fell, but but their earnings more than doubled. Sales have declined 1.4 percent in the past month. Revenue has increased for a few reasons, such as the $1.29 Whooper Jr. A great price for a relatively big burger.
The company wants to create more deals like the Whooper Jr. one in order to increase their revenue even more. Such deals are appealing to customers and often generate extra buzz about the restaurant, encouraging people to come in and spend less than they were before. Wendy’s has done something similar, and McDonald’s has as well by adding items to their Dollar Menu.
These changes have been occurring with Burger King since 3G Capital took over the company and made it private in 2010. The first quarter caused a decrease in revenue, but the franchise continued to make additonal revenue after the change. So the move has been a success in some ways but a bust in others.
This article relates to Economics 1051 because we talked many times about budgets, revenue, and earning of firms. We talked about how firms make money and what they can do when they are suffering a loss. We also talked about how some companies are owned privately and how others are cooperations, meaning they have more than one owner in the way they are organized. As for Burger King, they will continue to experience increased revenue if they add more deals to their menu. Large fry for a dollar, anyone?
Link: http://www.nytimes.com/aponline/2013/04/26/business/ap-us-earns-burger-king.html?ref=economy&_r=0
“Why The Rent Is So High in New York” in the New York Times, Catherine Rampell talks about how goods and services are cheaper for high-income people in New York. This is because there is such a high concentration of high-income people in the state. However, housing in New York is incredibly expensive for low-income and high-income people alike. Reasons for this include New York being a very attractive place to live and work, the supply of housing not keeping up with the growing demand (what with occasional visitors in addition to full-time residents), and that amenities that come with living in New York are included in the price of the residence.
New York is an attractive place to live and work because crime has fallen and amenities have improved. Property in New York is also a good investment, because New York is one of the most desired places for the “global super rich” to be. There’s close proximity to world-class restaurants and entertainment, and if you invest in New York property, there’s a good chance your money’s going to be safe.
A reason that New York can’t keep up with the growing demand for housing is that there is limited land available, and that land is restricted with building and zoning laws. Most housing stock is also rent-regulated, and a lot of housing that isn’t is public or subsidized.
Amenities like bars, restaurants, and theaters are the third reason housing in New York is so expensive. There are more high-end goods available in New York, and that is built into the price of housing. If you value these amenities, the price is no problem, but for lower-income people, it’s not a valuable asset and isn’t worth the additional cost.
This is relevant to our text in two ways. First, we talked in chapter three about how baby boomers are going to affect the housing market. Older people wanting to downsize are going to move from large homes to smaller condominiums and apartments, increasing the demand for smaller homes and apartments. This has been clear in the New York housing market. Second, we talked in class about change in supply and change in demand, which is the situation in New York in this article.
http://economix.blogs.nytimes.com/2013/04/26/why-the-rent-is-so-high-in-new-york/?ref=economy
Rachel Swinney
14128802
rmst42
“Accessories No Longer Tethered to Apple”
The New York Times article “Accessories No Longer Tethered to Apple” discusses competition in the electronic market. Apple products have had an advantage over other electronic companies for several years now. The article states that retail stores had significantly more products that supported Apple products than products that supported any other rival company. Hotels were even catering to Apple products, their alarm clocks were designed for Apple connectivity. However, recently retailers have begun to level the playing field. Retailers are now offering more products that support other devices, which helped other companies to succeed. Many customers found substitutes for Apple products because retailers expanded their products to include accessories/complements for other devices.
Customers were also looking for substitutes to Apple products following the discovery that Apple was changing their connector on their new products. The old 30-pin connector is no longer compatible with Apple’s newest products. The lack of compatibility is seen not only in chargers, but also in the Apple supported products that the aforementioned retailers had sold in the past.
According to the article, it would seem that Apple is in a competitive market. They are in competition with other firms selling similar products. However, Apple constantly tries to differentiate themselves from the other firms.
pawprint: aghw9
According to the NYT article “Jobs Data Ease Fears of Economic Slowdown in U.S.”, the private sector has created 200,000 per month on average since the beginning of 2013. This new data has relieved some of the fear that this lastest recession has caused. The stock market responded positively to the data, closing up 1%. The unemployment rate is also the lowest it has been since 2008.
Although a substantial drop in unemployment is still unlikely, most experts expect the economy to be buffeted by business activity and the Fed providing a healthy level of support for growth.Over the last three years, the economy has added an average of 162,000 jobs a month, within a hairbreadth of April’s pace, at least as initially estimated, of 165,000 new jobs.
Some Republicans are hesitant to put too much stock into the new data, as they think the Obama camp will try anything to spin data in their favor. The least-educated workers continue to bear the brunt of elevated joblessness, with the unemployment rate for workers who failed to graduate from high school rising to 11.6 percent from 11.1 percent in March.
This article relates to class because we have previously discussed unemployment and the job cycle, as well as the recession/recovery and what factors affect all of those things. We have also discussed the stock market and the different aspects of it.
Article: http://www.nytimes.com/2013/05/04/business/economy/us-adds-165000-jobs-in-april.html?pagewanted=2&ref=economy
Pawprint: rak427
Empire State Realty Trust inches closer to fruition after a State Supreme Court ruling in Manhattan shuts down a challenge made by an investor group.
Last week, Peter L. Malkin and his son Anthony E. Malkin, who currently control the Empire State Building, made progress in attempting to merge the 102 story tower with 19 other properties to establish a $5.2 billion company called Empire State Realty Trust that would offer shares to the public. On Tuesday, Justice O. Peter Sherwood in State Supreme Court in Manhattan rejected an investor group’s challenge to the initial public offering. These recent development represent a milestone in the legal and financial history of the Empire State Building since its construction in 1930.
The article outlines all the major clashing points from the past 80 years, up to when the Malkin’s assumed ownership. The current firm is attempting to make a massive expansion. Although the State Supreme Court decision could be appealed, as the lawyer representing the investment group has already stated he will attempt an appeal, the Malkin’s only need 80 percent approval from their current investors. They maintain approximately 75 percent approval at the moment.
In reference to the Malkin’s firm, the real estate market is recovering slightly and this article highlights an example of a firm operating in a less competitive market, or an oligopoly. (p 458-461 in the textbook).
Nick Schwartz
14136936
LaRhonda Mays
LDMYT3
The article “Where Do Old Cellphones Go To Die?” explains that as we upgrade our phones every two years or so, the phones that we end up getting rid of end up in impoverished countries such as India, Ghana, and China, and how children burn them in attempt to attain the metals to make a few dollars.
This article mentions how the Congress and The European Union are trying to find ways to deter situations from occurring, and what they have stated in the article basically revolves around the manufacturers. The article states that manufacturers should have predetermined recycling centers, or use recyclable materials to keep from sending waste/materials to impoverished countries and to keep everyone safe from the fumes that burning the materials cause.
This is related to Econ 1051 because this can be seen as an an externality. There is a positive externality that these countries use our wastes to try to make a living, but also a negative externality because of the fact that their health is being negatively impacted.
Another article by Catherine Rampell, “Life is O.K., if You Went to College,” talks about how the unemployment rate for college graduates is half that of everyone else. In April, the college graduate unemployment rate was 3.9 percent, whereas the regular unemployment rate was 7.5 percent. She goes on to note that the number of workers with college degrees with jobs has risen since the recession by 9.1 percent. Employment is down 9 percent for those without a college degree, and 14.1 percent for those without a high school degree.
In 2011, the unemployment rate for college graduates in their 20s was 5.7 percent. This means that even people who are straight out of college are having a lot of success in finding jobs. The same demographic holding only a high school diploma or a G.E.D. has an unemployment rate of 16.2 percent.
Rampell makes sure to mention that, although it’s clear that college graduates are finding jobs, this doesn’t necessarily mean they’re finding good jobs. Many of the employed graduates are performing jobs that don’t require the degrees they hold. Examples include secretaries, waitresses, and car rental agents. So even though they’re beating unemployment, they may not necessarily be working in their desired field or putting their degree to good use, not to mention paying off all those college loans.
We discussed unemployment at length in class, seeing as there was an entire chapter about it. The high unemployment rate for people without college degrees may be due to the fact that people with college degrees are taking up jobs that don’t even require the degrees that they hold. This may lead to what we talked about in class as discourages workers who are available for work but don’t believe they will find it. We also talked about structural, cyclical, and frictional unemployment in class. The most relevant to this article would probably be structural unemployment, since there don’t seem to be enough jobs for people without college degrees.
http://economix.blogs.nytimes.com/2013/05/03/life-is-o-k-if-you-went-to-college/?ref=economy
Rachel Swinney
14128802
rmst42
Job Data Ease Fears of Economic Slowdown in U.S.
In Washington the private sector is still going helping create almost 200,000 plus jobs a month since the beginning of the year and forcing the overall unemployment rate in April to the lowest level since the end of 2008.
As private employers added 176,000 people to their payrolls even as the public sector shed an additional 11,000 workers. The overall economy had been expected as the government revised its estimate for job creation in the previous couple of months. The economy created 332,000 jobs in February, and not the 268,000 jobs that was originally reported. The news sent the stock market rising to super new heights with major stock market indexes closing up 1 percent for the day.
Most experts expect the economy to continue to be pummeled by the months ahead. With the way business activity is and the Fed providing a healthy measure of support for growth Washington makes an obvious drop in the unemployment rate is unlikely. There are fears of a double-dip recession, and a scared economy. But most experts have been provided the information that the economy and job creation are likely to slow in the second quarter. Payroll taxes increased, and more is being taken away from working citizens. Even though job growth looks good now, there are continuous strains in the economy that show inflation over the last 12 months and says that people should always be prepared.
This relates back to our text because we learned a lot about unemployment. In the textbook from last semester pages. 648-665 Unemployment and Inflation are discussed it shows the many types of unemployment including frictional, structural, and cyclical. This article makes me want to compare it to cyclical unemployment. Cyclical unemployment is caused by a business cycle recession. As production slows down or falls workers start to get laid off. In this case the government is trying to overcome debts and pay off by increasing the the amount of taxes taken out on some people leaving them not as well off. This whole system is a push pull system and there is no way both parties will be completely satisfied so sometimes there has to be risks. If one loses their job these days it is extremely difficult to find one and get the same pay as before. This relates to economics completely by incentives, unemployment rates, job loses and the ripple affect it causes to everyone through out the world.
Raven Brown
rtbr34
Taylor Marie Esler
14152529
In this NYTimes article, James Ewing writes about the Eurozone economy and the efforts the central bank is making to pull it out of recession. The European Central Bank (ECB) essentially has the same duties of the Federal Reserve in the United States; is in charge of regulating the money supply through open market operations. However, the ECB doesn’t have as much flexibility and power as the FED or other central banks around the world. The ECB is obligated to maintaining price stability above all else and is forbidden from providing financing to governments.
This European economic slump that has afflicted Spain and Italy for more than a year is now spreading north to countries like Germany, Austria and Finland. The German economy, the powerhouse of the European Union, is slowing down. Big German companies like BMW predict they will turn less profits this fiscal year because of the weak European market.
European banks say they don’t have the power to boost the economy back to a period of growth. The President of the Central Bank, Mario Draghi, who holds the same powers as Bernanke, is doing his best to create changes that will make an impact. The ECB is reducing its interest rate to 0.5 percent from 0.75 percent. Draghi thinks this will make an impact, but economists are skeptical. Ewing mentions that the ECB may be just keeping up appearances that they are trying to fix the economy, when there is little else they can do. Draghi however is optimistic that the interest rates will make a difference. He sees the economy healing in the big gains in the Italian and Spanish stock markets and lower market interest rates on their government bond.
The ECB is avoiding using methods such as shock therapy, which Japan has used, and quantitative easing, which the Bank of England and the FED have used to stimulate their economies. Shock therapy is the release of price and currency control. Quantitative easing is when the central bank buys financial assets from commercial banks and other institutions, which increases the money supply. The ECB may be more hesitant to use these sorts of methods because there is no central treasury that could provide financial securities or reserves if the central banks investments failed.
The ECB also said that they would continue to provide as many loans to banks as they are needed throughout 2014. The ECB is trying to as possible. Draghi even mentioned installing an Negative rate, which would punish banks for keeping reserves rather than making loans, which would eventually increase the money supply. There are some possible faults in using a negative rate however. With negative rates, Banks might store huge amounts of paper bills as a low-risk alternative to central bank vaults, which would decrease the amount of reserves the ECB could loan to banks.
Another worry is the possibility of deflation in Europe. This past year the Eurozone’s inflation rate was only at 1.2% rather than the ECB’s target 2%. Economists are even more worried about the possibility of a price spiral than the plague of run away inflation. However, Draghi didn’t mention any concern that the Eurozone was nearing deflation.
Matt Gannon
mrgxtd
In the NYT article “The Old vs. the Young” by Eduardo Porter, the employment rate of the elderly versus young Americans is discussed.
In the age group of 16 to 24, young Americans have experienced the biggest drop in employment between 2008 and 2010 compared to other groups in the labor market. About 45 percent of people in this age group currently have jobs, according to the graphs placed throughout the article.
However, a different story is written for the elderly. 18 percent of Americans aged 65 and older have jobs. This is the typical age for retirement, so these people are ones that would not necessarily be working if they did not need the money. This is the highest employment rate since 1965, which is when Medicare was enacted.
Today, the elderly are in a greater need of money than they used to be. Many of them need it to pay house bills and loans of the past. In the future, employment rates of the elderly are expected to increase. This is due to the increasing stinginess of the Social Security program. The employment of the elderly may be a good thing for the nation’s economy in the long run as the nation’s sustainable growth rate may increase. Many older folk will continue to work rather than reap the benefits of a long career.
This article relates to our economics class because we discussed unemployment at great length. We also talked about the kinds of people and age groups that are in the labor market. These things are both very important to the health of the economy and vital for our futures as working citizens after college.
Link: http://economix.blogs.nytimes.com/2013/05/03/the-old-vs-the-young/
A strain of avian influenza has infected people in China, with a death toll of more than 25 as of late last week.
This article covers several important economic factors when dealing with health care. There is a possibility that this particular avian influenza strain could adapt and become more easily transferrable from human to human. The author references the HIV/AIDS pandemic that hit the United States, citing that the Government was ill-suited to combat or even address such a serious communicable, deadly virus.
Basic scientific research is imperative for assuming preventative measures against know and potentially unknown contagions. Government grants and tax incentives can spur private pharmaceutical firms to increase funding for basic scientific research. Here, the law of supply and demand is referenced.
The article touches on the definition of a public good and how healthcare falls under a gray area. There is an entire chapter in our textbook devoted solely to the question of whether or not health care should be privately operated or under government control entirely (Chapter 7, p 204). The author argues that protection against a communicable disease is a core example of a public good (p 154).
Nick Schwartz
14136936
“Accessories No Longer Tethered to Apple” by Nick Wingfield and Brian Chen talks about how Apple is slowly losing its monopoly on digital accessories. The article mentions that in the past, you could see Apple’s success in the fact that hotel rooms and retail stores always had alarm clocks and speaker systems that worked with Apple products. However, these businesses are starting to carry other adaptors, which may give consumers more freedom to switch to other products. That’s not good for Apple.
Other companies saw how “aggressive” Apple was about controlling accessories for its products, and chose to go another way with accessories for theirs. Bluetooth will work with almost any device, and Samsung and Amazon products are far more adaptable than Apple, making them, in that aspect, more appealing. When Apple switched over from it’s original port to the new Lightning port, even loyal Apple customers were irritated, leaving even more space for the competition to swoop in and steal business. Apple didn’t even tell accessory makers about the new adapter ahead of time, which was bad business for everyone involved.
Customers are now really into wireless adapters, which is why iHome (super affiliated with Apple) is now making a bunch of products with Bluetooth technology. It’s what the people want! Voxx stopped making products with Apple connectors in them even though they use Airplay for wireless connection (an Apple technology). Apple makes a lot of money from the royalties they require accessory makers to pay for using their connectors. Which wasn’t great news when the Lightning adapter rolled around, because it was even more expensive to license.
The new competition with other connectors is “a harsh reminder that the 30-pin was not a standard, it was an Apple monopoly,” said Matthew Paprocki. This relates to our text because we talked a lot about monopolies in our class. You know, we had that whole chapter. This particular monopoly was a combination of having important network externalities and having a large economy of scale. Apple ran the show for a while when it came to smartphones. They weren’t the leader of the pack, they were the pack. So for a while, they were unbeatable. But now that other companies have caught on and sniffed out some of their weaknesses, they’re losing their edge and falling behind.
Rachel Swinney
14128802
rmst42
pawprint: ajbrkb
The New York Times article “Immigrants Are Transforming a New York Town” chronicles a Mexican immigrant operating on a black market of sorts. This immigrant Moises, owns two restaurants, employs five workers, and even has gained supporters on Yelp.com. However, Moises does not have American citizenship or even a green card. He can not get a driver’s license, bank loans, or credit cards even though he is allowed to have zoning permits.
While most people commonly think of immigrant workers having jobs such as gardeners and dishwashers, they have recently been increasing in numbers as far as owning businesses are concerned. The newly proposed immigration bill introduced by senators has a feature that makes it easier for businesses to opened by illegal immigrants in the United States.
Experts in this article think that permitting more immigrants would bring the United States more economic gains. However, economists on the opposing side say that immigration would decrease wages for workers in competition with the new flood of immigrants. Both sides can agree, though, that a more open flow of people from different nations would promote national growth.
In Port Chester, a swell of legal and illegal immigrants like Moises has helped the economy of the city boom. In the twenty years spanning from 1990 to 2010, Port Chester’s population increased by 17 percent. Many restaurants and stores owned by these immigrants line the town. The prevalence of Spanish-speaking customers in this area has led to businesses hiring Hispanic workers in order to improve communication and lure other Hispanic customers.
link: http://www.nytimes.com/2013/05/06/business/port-chester-ny-is-transformed-by-immigration.html?ref=economy
According to a New York Times article, After reaccelerating in the first quarter,economic growth slowed in the second quarter because of an increase in payroll taxes at the beginning of the year and $85 billion government spending cuts that took effect across the board in March.
Companies hired the fewest employees in seven months in April. Although economists expected 150,000 new jobs, only 119,000 new employees were hired in April, according to the ADP National Employment Report. Additionally, manufacturing slowed.
Due to the slow recovery, the Federal Reserve was buying bonds with the hopes of spurring the economy. The Fed is buying $85 billion a month in bonds and due to recent fiscal tightening, the Fed is considering lifting the pace of its asset purchases.
This buying of bonds to spur the economy is one of the many strategies the Federal Reserve uses to manage the money supply called an open market operations. An open market operation is when the Fed buys treasury securities from the banking securities. The Fed credits banks’ accounts with reserves, which jump starts multiple deposit creation and the money supply expands.
http://www.nytimes.com/reuters/2013/05/01/business/01reuters-usa-economy.html?ref=economy
Beatriz Costa-Lima
14165278
brc3nc
Vivien Tran (:
PawPrint: vtr25
#: 14158542
The Federal Reserve are doing everything it can to stimulate the economy. It has announced that it was ready to increase or decrease its effort to stimulate the economy and reduce unemployment. It is taking a more balanced approach than it took earlier in the year. This was the first time that the Federal Reserve mentioned of the possibility to do more. Could there actually be hope for this economy?
In this article, it addresses to the optimistic outlook the Federal Reserve has been having. This time it’s different because it is the first time that the Federal Reserve mentioned explicitly about the effort to do more. Throughout the years of recession, the Federal Reserve has been throwing broad phrases that haven’t really informed the audience of the state of the economy nor the process of expanding the economy.
In class, we discuss the policies of the Federal Reserve. We’ve discussed the history of our recession and the efforts or lack of effort that the Federal Reserve has given. We have gone over the policies that the Federal Reserve has put in effect. We’ve discussed about the slow process, but from this article, it might give the economy hope that the government isn’t out to get us.
According to New York Times article, “Obama Backs New F.D.A Limits on Morning After Pill” Obama is okay with the new decision by the Food and Drug Administration to let the morning after pill be sold over the counter to girls as young as 15 years old. In 2011, Kathleen Sebelius who is the secretary of health and Human services was against the selling of the morning after pill to girls under the age of 17. She was saying that there was not enough scientific evidence to prove that the pill was safe for all young girls.
The issues on this contraceptive pill is putting Obama in a sticky situation between Anti-abortion campaigners and abortion rights advocates. President Obama still backs this new decision, and made sure to let everybody know at his press conference on Thursday that he believes that young girls should have option and the access to contraceptives. “I think it’s very important that women have control over their health care choices” he said. ” We want to make sure that they have access to contraception”. The abortion right advocates are more at ease after his statement on Thursday.
This article applies to what we are doing in class because in Chapter 7 we talked about Health Care in the United States and different programs available to us as Americans. We also talked about the improvement of the health of the people of the United States. The morning after pill is an improvement in our health care because usually you have to pay with this pill with a insurance card and the citizens who do not have insurance are left paying full price for this pill.
LaRhonda Mays
LDMYT3
14133811
http://economix.blogs.nytimes.com/2013/05/03/life-is-o-k-if-you-went-to-college/?ref=economy
“Life is O.K., if You Went to College” discusses how college graduates have triumphed through the recession with rather astounding results. The article states that out of everyone, the group of college graduates is the only group that has more people employed today than when the recession started.
The number of college educated workers has risen 9.1% since the beginning of the recession, but there is evidence that employers have been hiring college graduates for jobs that actually do not require a college level degree, which is making the statistics higher than what they would normally be otherwise.
This is related to Econ from when we learned about employment, and the different ways to decipher and calculate who and how many people are in the labor force.
According to a New York Times article, despite a fall in revenue, Burger King’s first quarter earning more than doubled. This happened because the company got rid of several expenses. For example, the company has been selling more restaurants to franchisees, a move that lowers overhead costs. The company which owns Burger King, 3G Capital, also slashed costs, signed international expansion deals and changed the U.S. menu to appeal to a wider audience. Total restaurant expenses, which include things like food costs and payroll expenses, fell nearly 70 percent in the quarter to $108.1 million.The company’s selling, general and administrative expenses also fell about 30 percent to $66.7 million in the quarter.
Burger King was able to increase it’s earnings despite revenue falls because of its efforts to revamp their brand and cut production costs. Burger King is in an industry with monopolistic competition, in which barriers to entry are low and many firms, such as McDonalds and Wendy’s, compete by selling similar but not identical products. A firm’s ability to differentiate its product and to produce it at a lower average cost than competing firms creates value for it’s customers and thus makes it more successful in an industry with monopolistic competition. That is exactly what Burger King is attempting to do by cutting costs and rebranding it’s menu. The article also discusses how other fast-food chains try to differentiate their products. For example, it cites how McDonald’s has been extensively advertising its Dollar Menu t at a time when the restaurant industry is barely growing and how Wendy’s has also recently overhauled its value menu.
http://www.nytimes.com/aponline/2013/04/26/business/ap-us-earns-burger-king.html?ref=economy
Beatriz Costa-Lima
14165278
brc3nc
pawprint: ajbrkb
“Apple’s Move Keeps Profit Out of Reach of Taxes” discusses why the Apple company, with billions of dollars in the bank, would decide to borrow billions more. It appears that Apple is using thought-out tactics to avoid paying taxes, like borrowing money to buy back shares and increase its stock dividend. Because the borrowings were at extremely low interest rates, the payments will be tax deductible.
Apple, however, is not the only business that has been avoiding paying taxes. Anger at these sneaky ways has been consuming a large part of Europe, especially in Britain. Late last year, Starbucks promised to pay an extra £10 million, which is above what it would normally have had to pay in British income taxes. Just as Starbucks could get away with paying little to no taxes in Britain, Apple might be able to get away with paying little in the United States compared to its profits.
It has been increasingly more difficult for countries to monitor prices on things considered intellectual property, like patents and copyrights. Challenging a company’s pricing is hard when it is unlikely that there is an actual market for intellectual property information, especially from one country to another.
This relates to our Economics class because it deals primarily with taxes and intellectual property rights, such as patents and copyrights. It also is concerned with bank loans and stocks.
link: http://www.nytimes.com/2013/05/03/business/how-apple-and-other-corporations-move-profit-to-avoid-taxes.html?_r=0&adxnnl=1&ref=economy&pagewanted=2&adxnnlx=1367813641-YyLV9fOx4EY8QzUYrTXUcA
Matt Gannon
MRGXTD
In the NYT article, “The Big Problem Is Long-Term Unemployment”, Floyd Norris discusses the different types of unemployment.
As for short-term unemployment, the rate has fallen below where it was in 2007 before the recession. Medium-unemployment has not changed much. The problem comes with long-term unemployment. It is very high and is refusing to come down, no matter what the circumstances. The long-term unemployment rate is currently at 4.1 percent, which is the lowest it has been since 1983, post World War II.
4.4 million workers have been unemployed for the last six months. The peak was 6.7 million, but this number is still high. Federal policy is not dealing with the issue, and fiscal policy, which could help, is not going to any time soon.
This article relates to our economics class because it talks about unemployment, which we discussed extensively. We also talked about the types of unemployment, long-term being that in which workers do not find jobs for sixth months or more, and that this does not include people who have given up looking for work. Unemployment is a topic that is relevant in our society, and it will continue to be something that is important as long as the American economy endures.
http://economix.blogs.nytimes.com/2013/05/03/the-big-problem-is-long-term-unemployment/?ref=economy
Cymonne New Pawprint: cnn446
This article was published on May, 1rst 2013 and is titled “Medicaid Access Increases Use of Care, Study Finds”
Healthcare, healthcare, healthcare. According to this article, beginning in January “millions of low-income adults will gain health insurance coverage through Medicaid in one of the farthest-reaching provisions of the Obama health care law.” This article addressed the issue we discussed in class of safe people who don’t need coverage so health provisions want them to sign oppose to the high risk individuals who need it badly so health care does not want to support.
The article wrote about how it was found those who gained Medicaid vocerage on average spent more money on health car. They made more visits to doctor appointments and more trips to the hospital. This suggested, according to the article, that Medicaid coverage did not make these adults healthier, just made them more financially secure.
This deals with pages 209 of our text book and how America runs health insurance in comparison to the rest of the world. With this new addition to our system, we are changing our ways and trying to have a more universal system to insure health care. Not exactly like the one Japan is using but similar, I feel.
pawprint: ajbrkb
The New York Times article “Is This the Best Education Money Can Buy?” follows the food that kids are eating at schools, particularly Avenues: The World School in Chelsea. Since the $85 million for-profit start-up began in September, food was the focus of discussion. Avenues was founded with the idea that parents were partners in helping build a new community, and within the first week of school, parents had emailed them their concerns about their children not eating enough “worldly” snacks.
Avenues’ chief administrative officer assured parents that the food given to students was organic and local, as well as healthful. All the food was researched and given intentionally, just like all the other minute details at the school. Language immersion begins in nursery school, with the options of Mandarin or Spanish. Kindergarteners receive iPads.
The school gives out around $3 million in scholarships as well as forbids donations from parents. It encourages parents to contribute in more meaningful ways. The school promotes risk-taking because Avenues took risks to start up. To begin, they raised $85 million through private firms and investors.
This article relates to class because it discusses a want for food grown in the United States as opposed to imported goods. This article focuses primarily on the city of Manhattan, where it points out the infusion of wealth in its inhabitants. This school hopes to create the entrepreneurs of the future.
link: http://www.nytimes.com/2013/05/05/magazine/is-avenues-the-best-education-money-can-buy.html?pagewanted=4&_r=0&ref=general&src=me
Karim Howard – KJHGFC
A Call for New Blood on the JPMorgan Board
http://dealbook.nytimes.com/2013/05/05/a-call-for-new-blood-on-the-jpmorgan-board/
This New York Times article discusses how, shareholder advisory firm, International Shareholder Services has recommended that JP Morgan shareholders not elect three board members back for another term. The article says that there were some oversights and profit losses at JP Morgan last year.
In the textbook we discussed the principle agent problem. At large firms shareholders elect officials, such as a chief operating officer, to run the day to day operation of the company. Shareholders have faith that those they elect will act in the best interest of the company, however this is not always the case. The principle agent problem happens when board members pursue their personal goals and interests instead of goals that will aid in long-term success for the company. The principle agent problem can be detrimental to the economic health of a firm. Executives will line their pockets will short-term gains, and neglect to think about the long-term health of the company.
Just as the article states, when shareholders feel as officials are not pursuing the best interests of the company they will not be reelected. Even though shareholders do not run the company, they are where the true power lies because in the end, they control the company.
According to the New York Time article “Jobs Data Ease Fears of Economic Slowdown in U.S.” April’s overall unemployment rate is down to its lowest level since the end of 2008. Since the beginning of the year the private sector has helped create almost 200,000 jobs a month. Even with 176,000 new people being added to private employers payroll’s the economy is nowhere near where it should be after being how far along in economic depression as the U.S. is.
T
he creation of so many new jobs has positive and negatives aspects. One positive thing about this is that the size of the labor has increased. The total number of unemployed Americans has dropped by 83,000. The negative point of this is that the least-educated workers still are unemployed, and unemployment rates for this group have only risen by 0.1 percentage point to 3.9 percent.
It is predicted that within the next few months this surplus of new jobs will soon come to an end. The Fed predicts that counter failing events will occur and once again cause the unemployment rate to drop. According to the article, lately the economy has been showing signs of weakness. Several indicators have predicted not only slow growth with unemployment rates but even retail sales to manufacturing.
This article relates to our class and correlates with Chapter 20of our textbook , specially page 651. This particular section of the book is about the economy’s effect on job creation and destruction. With the US coming out of one of the biggest recessions we’ve had since the Great Depression it will take awhile for the economy to bounce back, as well as the unemployment rate in the United States.
Today, the New York Times published an article in regards to JP Morgan, and in amidst the election of officials, Institutional Shareholder Services insists that shareholders do not re-elect three previous board members. David M. Cote, James S. Crown and Ellen V. Futter, are all current directors serving on the board’s risk policy committee.
The three board directors all served during the 2007-2009 financial crisis, and though each helped to navigate the company through the crisis, there was criticism of their backgrounds in risk management. The I.S.S. has stated that JP Morgan board is in search of more qualified directors educated in financial and risk expertise. However, regardless of the I.S.S.’s claim and criticism of the three board directors, the company still continues to endorse them.
Back in Chapter 8 of Econ 1051, we discussed the make up of corporations and the sources of power from each faction. Because corporations like JP Morgan are so large, the company is owned by shareholders who elect a board of directors to serve in their interests and this board appoints CEO/CFO/top management to run day to day operations. The shareholders all believe that those who they elect are, in fact, serving in their best interests, but as discussed in this article, this isn’t always the case. The principle-agent problem occurs when an agent is pursing their own self interests than the interests of the shareholders who elected them. Thankfully, shareholders have a voice in the matter and have the ability to re-elect and not re-elect boards of directors.
Brooke Schwab
14140853
bmsd45
http://economix.blogs.nytimes.com/2013/05/03/the-big-problem-is-long-term-unemployment/
This NYT article explains, and shows with graphs, how the unemployment has changed in recent times. The article shows how long-term unemployment is a lot worse than other kinds of unemployment. “But long-term unemployment remains stubbornly high, although the current figure, 4.1 percent, at least has dipped below what had been (before the Great Recession) the post World War II high of 4.2 percent reached in early 1983. More than half of the unemployed workers have been out of work for at least 15 weeks.”
This relates to what we learned in class about unemployment. The short-term unemployment is a lot lower than the long-term and the article states that “Short-term unemployment in the United States has fallen below where it was in late 2007, before the Great Recession began.” This could be an example of frictional unemployment, which is short-term unemployment that arises from the process of matching workers with jobs.
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In my opinion, highly problematic foods like wheat, dairy and sugar should continue to be restricted from a child’s diet until his immune system is fully developed after the onset of puberty. And this is easy to spot, because almost every other paragraph is full of scientific ‘weasel words’ and na. When leaky gut syndrome goes undiagnosed, there is an increase in both food and environmental allergies or intolerances as well as other unfavorable health conditions.
“Weak Sales of Cereals Lead Kellogg to Cut Costs”
This NYT article talked about how kellogg sales had fallen about 2.2 percent in the last quarter. To compensate for this fall, the company planned to cut about 7 percent of its work force by 2017. These job cuts have become a part of a four year plan to cost cut. Including consolidating factories, moving closer to the regional hubs and eliminating excess capacity (not just cutting total head count).
This relates to what we are discussing in class because as a corporation Kellogg is in a recession by losing profits. To deal with this they are starting with layoffs putting these previous employers into a cyclical unemployment which occurs by a business cycle recession, resulting in a slow down of the economy.
Kellogg “has been battling stiff competition from General Mills and private-label cereal brands” this is monopolistic competition, with many firms, slightly differentiated products, and great ease of entry. This means in making their business strategy they must think about how it will affect them and competing firms.
pawprint: CAU356
“Macy’s Splurges on a Makeover on 34th Street”
Summary and analysis by Emma VanDelinder (eev728)
Nov. 6, 2013
The Macy’s store in downtown New York has decided to renovate its 111-year-old Herald Square store to increase sales and attract additional luxury shoppers. The famous department store is adding 47,000 square feet of new marble and 300 additional dressing rooms to make a total of 1.2 million square feet of retail space. Executives of Macy’s announced that their expansion was to promote financial growth by increasing their products and adding new brands.
It is a difficult time for department stores as they compete for online shoppers, but with their prime placement in the center of Manhattan Macy’s is “getting a pretty good deal” for the $400 million they are spending on expansion, according to Paul Swinand, an equity analyst who cover’s Macy’s for Morningstar Investment Services.
Executives are excited about the changes. In addition to what Macy’s claims as the world’s largest shoe department, the sixth floor provides a fine-dining restaurant, Stella 34 Trattoria, that adds to the rich ambiance of the newly renovated building. These are attractions that will bring in more customers, and increase Macy’s profits. While many are excitedly anticipating the completion of the renovations, some are disappointed that the composition of the building, what has for so long been a tourist attraction for its historical beauty, has been replaced with modern architecture.
This article relates to our text because it is a great example of retained earnings—the profits that Macy’s brings in have been saved since before 2009, when the idea of renovation was approved, and have been funneled back into the business in order to increase financial growth and expand profits. The building was made to be not only larger, but also plainer so that consumers could be more focused on the additional nondurable merchandise and brands newly added to Macy’s collection. By expanding physical floor space and types of goods, Macy’s hopes to increase their profits for more than they invested in the expansion, which is not unlikely considering their location and popularity.
Annndd… my link!
Internet Kills the Video Store
Summary and analysis by Emma VanDelinder (eev728)
Nov. 6, 2013
Blockbuster has finally decided to shut down the few hundred video-rental stores that it has left over the next two months. The company had more than 9,000 retail stores across the U.S. less than a decade ago, but its online competitors quickly drove the company out of business. When Blockbuster filed bankruptcy in 2011, Dish bought it up and held on to a few stores and the brand name, which chief executive of Dish, Joseph P. Clayton, still believes holds value.
The announcement is a surrender to their online competitors—Disk recognized that the consumer interest was focused on online and easy-access distribution of video entertainment. While physical stores will be shut down, Mr. Clayton says “we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.” The company has a “Blockbuster @Home” service for satellite television subscribers and a “Blockbuster On Demand” service and competitor to the iTunes Store.
With around 300 Blockbuster stores left and small distribution centers that support the DVD-by-mail service, a number of employees will be laid off. Dish declined to comment on the number of cutbacks they are having to make. In two months when the locations will be shut down, there will only remain 50 stores that are owned by third-party franchisees that are not affected by the shutdown, but are affected by the same business pressures.
This article relates to our text in that it covers a company’s decision to shut down; the company recognized it’s economic losses—realized that it’s profits were no longer covering the costs of business, and reached a shutdown point to which they could no longer drag out. Despite the loss of consumer’s who have flocked to substitute products due to technological advancements (the advancement of the internet, in particular), the current owners of Blockbuster see value in the brand, and will continue to market the company.
Profits at 21st Century Fox Hampered by TV Investments
Summary and analysis by Emma VanDelinder (eev728)
Nov. 6, 2013
21st Century Fox’s total revenues have exceeded analysts’ expectations, however their net income came in slightly under expectations. The decline in profit is due to the expansion of the company’s services; 21st Century Fox created Fox Sports 1, which they hope to expand large enough to rival ESPN. In addition, the company created a twist to FX, their entertainment channel, in creating their newest channel, FXX, which began in September.
Rupert Murdoch, chief executive of the company, said that the investments “will drive future sustained growth toward our stated 2016 target of $9 billion of Oibda and beyond.” Oibda—operating income before depreciation and amortization— is a measure of profit.
On the distribution side of the media business DirecTV reported a gain of 139,000 television subscribers in the U.S. in the third quarter of the year, which exceeded analysts expectations. This increase could be caused by the August blackout of CBS and Showtime in Time Warner Cable homes caused subscribers to switch to satellite providers instead.
This article relates to our text by describing both retained earnings and product substitutes. The article begins by describing the success 21st Century Fox has had in its new business position, and also how it has decided to retain its earnings to spend on newer channels which will attract audience members who might be looking for substitute products, such as Fox Sports 1. The second part of the article dives into the TV provider market and studies the relationship between substitutes, like Time Warner Cable and satellite providers. Because of a flaw in the service, many consumers switched to the alternative or “substitute” product in hopes that such flaws will not occur again.
In the times of advanced technology and a generation pushing the “Go Green!” mantra, it is no surprise that Wall Street has approved an entirely new bond–one that is backed by solar electricity payments. The security will be managed by Credit Suisse, and the finances raised will help go toward expansion of the solar panel company SolarCity.
Standard & Poor’s has given approval of the offering, but analysts are somewhat skeptical to the new bond. SolarCity is seen as a trial run, hopefully giving way for other developers to enter the bond market as well. Theoretically, solar electricity contracts “offer steady and reliable income,” but when put into practice, “are a challenge to pull off.”
Although there are many positive aspects involved in the environmentally-friendly idea of the solar electricity bonds, the concern is that because the technology is indeed new and evolving, in the near future more “attractive systems” will make their way onto the market and either push SolarCity aside, or decrease the guaranteed value of the security.
This article is a simple relation to a crucial topic in our book: bonds and the bond market. With SolarCity selling bonds to private investors and indiviudual residences or business, they are promising to pay back the money that has been lended to them. Since there are questions being raised as far as the long-run success of the company and its bonds, it has a higher default risk which, in turn, leads to a higher interest rate. The company was given a BBB+ grade, so as of now, it has “good credit quality.”
PAW Print: JCMXD6
Information from the book founded on pages 243-244
With Thanksgiving getting closer and closer this New York Times article was sure to spark readers’ attention, especially since it’s about turkey and its price. “Why is Turkey Cheaper When Demand Is Higher?” is the name of this article and that statement could confuse anyone who has taken an Econ class because it goes against Econ 101. When we think of demand going up, we think of that good or service becoming more scarce, which results in prices going on. However, government data shows that the prices of frozen-whole turkeys drop significantly every November. So, why does this Econ principle not apply to turkey?
One explanation of this is that retailers are simply drawing in their customers with the most common, attention-grabbing products so while they are there getting their turkey for a cheaper price, they don’t forget to get their potatoes, cranberries, and pies which may be at regular or even jacked up prices. Many stores do this on Black Friday as well; offer incredible door busters on TV’s to persuade their customers to come into the store and then entice them with various displays of their clothes, shoes and the rest of the products the stores have to offer.
While that explanation can account for the supply side, it does not provide any insight on the demand side. Some economists argue that consumers might get more price-sensitive during these holiday times which forces stores to lower their prices in order to capture those sales. Consumers are likely to be cooking not just for immediate family, but extended family as well, which means more food and more money.
Although this price drop and demand increase applies to turkey and other seasonal goods, it does not apply to all of them. Think about roses, for example. The prices of roses are much high during the month of February. The strategy of drawing consumers in to entice with them other items only works for multi product retailers, which, unfortunately, doesn’t apply to florists since they only sell flowers. So, while you’re buying your turkey this year keep in mind the tactics of the retailers drawing you in and watch the prices of your other key products to ensure you’re getting the best deal.
skgkw4
Carolin Lehmann
Pawprint: cldt2
Link: http://www.nytimes.com/2013/11/27/business/economy/home-construction-permits-rise-to-highest-level-in-years.html?ref=economy
The New York Times article “Housing Data Shows Big Gains” discusses how the run-up in mortgage interest rates hasn’t derailed the housing recovery. Permits for home construction rose to there highest in five years in October. This is a sign of strength in the recovering economy and that the housing recovery is on track.
The article states that while permits aren’t counted in gross domestic product, they are a major indicator of economic activity. There was concern before that the housing market recovery was stalling, but there were gains in September and October, easing these concerns. Specifically, the increases in permits are strong in the West and the South.
The Great Recession and the housing bubble are discussed on page 814 of the text. The text says the increase in spending on housing in the early 2000’s was partially the result of actions the Federal Reserve had taken to lower interest rates during and after the recession of 2001. Eventually, falling house prices lead to an increased number of borrowers defaulting on their mortgage loans. This caused banks and some financial institutions of suffer heavy losses.
In 2008 the US Department of the Treasury and the Federal Reserve intervened to save several large financial institutions from bankruptcy. According to page 815 of the text, real GDP fell between 2007 and 2008, and as a result unemplyment rose. The inflation rate for 2008 was only 2.3 percent.
The New York Times article, “Airlines Clear Final Merger Obstacle”, discusses how American Airlines’ has recently been cleared to exit from bankruptcy in order to merge with US Airways. American Airlines’ has been seeking court protection to reorganize its business and remove debt while rewriting labor agreements. The two-year battle over the merger was brought on by a challenge from the Justice Department on the fact that the merger between the two major companies would hurt competition and lead to higher airfares for consumers. The airline has stated that the merger to close on December 9 and the last day of trading for all outstanding securities would be on December 6. Once the merger occurs, the company will be renamed American Airlines Group and listed on the Nasdaq under the ticker symbol AAL for the NYSE.
Airline mergers are usually very complicated with tons of reservation problems and computer glitches. Due to the new larger carrier, American will have to work to convince consumers that they can offer better and friendlier service. The last of the legacy airlines to file for bankruptcy, American, fell from its place as the nation’s top carrier after Delta and United reorganized their businesses and expanded through their own mergers. The new merged company will have 6,700 daily flights, 1,500 airplanes and around 100,000 employees with combined revenue estimated to reach around $38 billion. The combined airline will be based in the Dallas-Fort Worth region.
Led by US Airways’ W. Douglas Parker, the renewed management team will have to instill a new morale in a company that has been gripped by labor tensions. After American filed for bankruptcy, Parker saw the opportunity to go after a merger despite opposition from managers. Initially, American’s chief executive, Thomas W. Horton, outlined a plan for the airline to emerge from bankruptcy as an independent carrier but was forced into the merger once the creditors supported it. The merger is still being criticized and federal regulators have requested that the airline sell some takeoff and landing rights to various airports as a condition for dropping their objections.
This article relates to the text in a few different ways. First and foremost it relates to the topics of competitive markets and government regulations. The government is involved with the merger in order to make sure that a monopolistic market is not formed and that competition can be protected in the market. In order to do this the government has hosted a series of trials and negations with the company and will continue to watch the companies new build up in order to protect consumers. Furthermore it relates to the text through the effect on creditors and the NYSE. Due to the merger, shareholders will have a specific amount of time to sell and trade before the two companies become one. This will impact the stock exchange and shareholders.
Amanda Byler
Pawprint: akbggb
Name: Reema Nimkar
Pawprint: rsn7d8
Student ID #: 14163325
Link: http://www.nytimes.com/2013/10/15/sports/international/globalization-sweeps-away-misgivings-about-foreign-teammates.html
When most people think about globalization, they think about economic globalization. They think about goods and services being exported to different countries. However, this New York Times article describes a globalization among something else – sports leagues.
This article discusses how many foreign athletes from all of the world are trying their luck at making an American sports league rather than one from their own country. This has led to an increase of international scouting and recruitment in American leagues for all sports – basketball, ice hockey, baseball, you name it. While this gives many teams foreign talent, it also gives them something else – fans from around the world.
Because sports teams in American are recruiting players from all around the world, American sports jersey sales have rose in foreign countries. More and more people around the world are interested in watching American sports teams. A major example of this trend is the NBA. Last year’s NBA finals was available for viewing in 215 different countries. Additionally, in order to gain more fans around the world, many teams in the NBA are scheduling games outside of their home country – in countries including China, Brazil, Turkey, Taiwan, and more. Many foreign players – including Tony Parker from France – have become big names for NBA basketball.
While we see a trend in foreign countries being interested in American sports leagues, we also see the same thing happening in the United States. Many of the world’s top soccer teams – the English premier league – sell out American arenas. Additionally, stations like NBC fight for rights to cover tournaments. This has led to foreign investors being interested in investing in sports teams, despite the country that they come from.
In the New York Times article, “Hold the Pecans on the Thanksgiving Pie”, a holiday classic has been threatened. A combination of rain, marauding animals and a growing relationship witht eh Chinese middle class and the pecan has resulted in the worst supply in recent memory. Due to these circumstances, grocery store prices for pecans have skyrocketed about thrity percent. This has caused Thanksgiving and holiday bakers to think twice about their traditional dish. One shopper in Manhattan wanted to show her friends her Texan roots by baking a pecan pie but was forced to bring other dishes instead due to a pound of shelled pecans costing $15.99.
The number of pecans produced this year could drop by as much as thrity five percent according to industry officials. The problem began when pollination became difficult and the increased moisture encouraged disease. Due to harvesting being sporadic, the supply was left wide open for wild pigs and squirrels. In addition to domestic problems with the crop, China has become to consume more than a third of the American pecan crop, a result of the country’s inclusion in the World Trade Organization in 2001. They are sold by the bagful and are popular around the Chinese New Year.
This has alleviated the pain for many farmers because the price is well over three dollars a pound at the wholesale level. The great pecan crisis is playing out very differently in very different parts of the nation. While pumpkin pie has apparently been the most searched-for pie according to data analysis from Google, many people have grown up eating the alternative holiday classic.
This article relates to the text in one main area: supply and demand. The result of outside forces has caused the supply of pecans to be affected which in turn affects the supply. The decrease in supply has caused a decrease in demand due to the increased price level. This situation displays one of the most fundamental economic principles.
Amanda Byler
Pawprint: akbggb
Isabella Jacobs
Pawprint – imj998
Student # -14156944
1. http://bits.blogs.nytimes.com/2013/11/27/a-rise-in-attention-and-price-for-crypto-currencies/?ref=business
2. http://www.npr.org/blogs/money/2013/11/22/246611393/a-bitcoin-insider-on-crime-congress-and-satoshi-nakamoto
According to The New York Times, the value of cyrptocurrencies, including Bitcoins is rapidly increasing. Statistics have shown that Bitcoin’s market capitalization has grown to $11 billion. The rise in popularity is directly attributed to Bitcoin attention online. Google News has referenced Bitcoin 1.6 million times.
Economists worry that Bitcoin’s value is ambiguous and its legality is in question. Bitcoin’s value is based on its user’s faith and the concern is that if its user’s faith plummets, so could its value.
Other articles including NPR’s “What is Bitcoin?” address the issue that Bitcoin has been used in the underground drug market on the site “Silk Road”, which has been shut down recently by the federal government. Despite Bitcoin’s use in underground markets, federal officials accept its legitimacy, stating that, “virtual currencies in and of themselves are not illegal; we’ve all recognized that innovation is important.”
Some economists worry that Bitcoin’s success will lead either to its failure or its takeover by the government.
According to this article in the New York Times, there will be the greatest pecan shortage in recent history this holiday season. Pecans are one of the staples of Thanksgiving for many Americans, and thanks to pigs, rain, and the Chinese middle class, pecan prices will be soaring. Grocery store prices are up by 30 percent leaving a pound of shelled pecans at about $15.99. In 2012, the nation’s pecan orchards produced 302 million pounds of pecans. This year that number dropped by 35 percent, according to industry officials. In some place like South Caroline, the pecan orchards succumbed completely.
It all began with the record rainfall during last spring and summer. Pollination became difficult and moisture encouraged disease. Pecan farmers sprayed their fields but it wasn’t enough to fight off a disease called scab. In the South it was the summer drought that hurt the trees. When the autumn rain came it made the ground too wet to support the heavy machinery needed to shake the nuts off the trees. As a result, the harvesting was sporadic and the pecan supply was left wide open for feral pigs that devoured them. Pecans have also become popular among the Chinese middle class and are eaten around the Chinese New Year and sold year around.
This article relates to the supply and demand chapter of our book. Because the supply decreased, the price increased substantially. Because the price increased, the demand decreased because not as many people were willing to pay that much money for pecans. Instead they saw the opportunity cost and decided to find a cheaper alternative.
KMHQP4
14154929
1. http://www.nytimes.com/2013/11/28/world/europe/merkel-and-rivals-strike-deal-on-new-german-government.html?ref=business&_r=0
This article, published in the New York Times, was published yesterday. According to the article, Germany is going through a major economic overhaul. While the article focuses heavily on the politics of the decision, there are a few very important economic concepts within.
Conservatives and Social Democrats disagree on the program for a coalition government. The author describes the proposal, “The 185-page document calls for establishing a national minimum wage — a first for the country — as well as increased pensions for some recipients and early retirement eligibility for others. It would offer dual citizenship to Turks and other foreigners who are born and raised in Germany, and it promises a new law by next summer to revitalize plans for renewable energy.” This proposal suggests a few prevalent economic concepts, the most obvious being a price floor.
By proposing a minimum wage, the government is purposing a price floor. Price floors are mentioned in our book on pages 109-110. A price floor is a mandated minimum on a product or service. Some of the effects of price floors are alluded to in the article. Businesses expressed their concern for a minimum wage because it will increase input cost. Businesses will have to pay more to their workers, thus causing the production cost to rise, which inevitably makes the product cost increase. The other option or the business is to retain less employees. Either choice is affecting their business. The purposed minimum wage is equivalent $11.54, which is higher than the U.S average minimum wage.
The article, while does not directly mention price floors, coincides directly with the lessons on them because minimum wage is a great example of such. Our book also describes the effects of price floors. Minimum wage presents business with the problem of how to pay all their workers and continue to provide an affordable product. Should Germany pass this, businesses will be faced with these challenges.
pawprint: crtc5f
1. http://www.nytimes.com/2013/11/30/business/young-bored-and-looking-for-a-deal.html?ref=business&_r=0
Black Friday is now one of the highest grossing days of the year. Millions of shoppers nation wide wait days to grab crazy deals from large department stores. This article discusses some of the things that go on one of the craziest days of the year for businesses.
Looking at the economics of Black Friday you can see some great examples of supply and demand and trade offs. Supply and demand is discussed in chapter one as well as trade offs are discussed on page 8. The article chronicles a few shoppers experiences and thoughts about Black Friday. Some customers experienced negative experience because of rude, and sometimes violent people.
These negative experiences highlight the economic concept of ‘trade off’ and ‘opportunity cost.’ Because these shoppers chose to brave the hectic department stores, they gave up time, comfort, sleep, and many more things. They were forced to give up some things to obtain a certain product.
Supply and demand is not expressly spoke about in the article, but Black Friday is a day of great demand. By lowering prices, the stores increase demand and but not necessarily supply. However, many stores chose not to increase their supply, causing urgency for shoppers. This concept, in addition to the monstrous sales, bring shoppers out early Thanksgiving day to nab the best deals.
Black Friday highlights trade offs and supply and demand because of the behavior of shoppers. Shoppers, or consumers, affect the market heavily. Black Friday is a good case study of how consumers affects the market.
pawprint: crtc5f
1. http://www.nytimes.com/2013/11/30/us/politics/health-care-site-rushing-to-make-fixes-by-sunday.html
In the article, the authors discuss the rush to work out the kinks of the new health care website. Healthcare.gov is meant to provide a resource to buy health insurance. The website crashed during its opening run. The Obama administration is working on improving the site.
The Affordable Care Act, or Obamacare, was signed in 2010. The goal was to improve quality and affordability of health care. The law also requires insurance companies to cover all applicants and offer the same rates despite pre-existing conditions.
On page 209, health insurance is defined as “a contract under which a buyer agrees to make payments, or premiums, in exchange for the provider’s agreeing to pay some or all of the buyer’s medical bills.” Our book discusses both traditional health care, and the Affordable Care Act. Many Americans are waiting for a functioning site to be able to decide if they should stick with their current plan or find a new one.
Controversy surrounds health care. The argument surrounds the difference of privately or publicly owned health care. Chapter seven discusses this in our book. Currently our health insurance is privately owned, but many argue that it should be publicly owned because it is a public good. Public goods can be provided by the government.
The article exposes the hurdles that Healthcare.gov is experiencing. To fully reach the intended purpose, the website will have to be improved, which the article says that could take weeks. Healthcare is a prevalent topic of discussion during this overhaul of our system, as well as an important part of our economic system.
pawprint: crtc5f
Reema Nimkar
Pawprint: rsn7d8
Student ID #: 14163325
Link: http://www.nytimes.com/2013/11/27/business/daily-stock-market-activity.html
This article mainly discusses NASDAQ. For the first time in 13 years, NASDAQ closes above 4,000. The Dow and S.&P. ended up finishing flat. The last time NASDAQ closed above the 4,000 point level was September 7, 2000.
Homebuilder shares were among the top gainers in the market and building permits rose in October to their highest point in five and a half years. Also, among the stocks leading NASDAQ were Facebook and Apple. On the other hand, the Dow Jones average ended at 16,072.80, while the S.&P. average ended at 1,802.75.
Among other companies, Barnes and Noble fell at 6 percent. Jos. A Bank rose at 11.25 percent. Homel foods rose at 5.91 percent. This analysis does not include Black Friday sales which actually contribute as much as account for as much as 40 percent of the retail industry’s annual sales.
In the bond market, interest rates slipped modestly. Yield on the treasury’s 10 year notes went down to 2.71 percent while it’s price rose to 6 and 3/2.
In the New York Times article, “That ‘Made in U.S.A.’ Premium”, the competition between manufacturing clothes in the United States versus overseas production was discussed. The article focused on different knitting companies in the United States’ struggle to maintain relationships with American stores because of how expensive American production is. Many stores severed ties to American designers and producers because they didn’t have enough money to pay for their services.
Keff NYC, a major knitting company in New York, completely went under after the recession. Stores like Urban Outfitters and J.C.Penney told them they would be taking their business overseas. The article stressed how only the higher end companies, like L.L. Bean, were able to afford American production. Getting clothes produced in the United States means higher production costs because supplies cost more here and there are higher wages, for workers, here in America than in places like China. Most stores cared about their costs than having clothes made domestically.
This was discussed in class when we talked about production costs, opportunity costs, and trade offs in the beginning of chapter 2. In the book it was explained how companies act to lower their costs and make more of a profit than, and doing that may mean making trade-offs or having others do the production for us.
pawprint:msw8h3
Where Factory Apprenticeship is Latest Model from Germany
By Nelson D. Schwartz
(Via The New York Times)
Hubbard / Obrien pp. 651-653
Chapter 20, Unemployment and Inflation
Programs like Apprenticeship Carolina may be a key component to reducing the amount of structural unemployment in the United States, according to Schwartz’s story. He wrote about Joerg Klisch, a German factory owner who, after he was unable to find more qualified workers, decided to train them himself through an apprenticeship program akin to those in Germany, Austria and Switzerland.
According to experts, the American manufacturing job market may not survive without programs that create qualified workers for jobs that require more specific skills that may not have been emphasized in formal education. And, according to the secretary of labor, Thomas E. Perez, the United States has devalued apprenticeships and skill training throughout the past few decades.
By turning to apprenticeship programs, structural unemployment could decrease dramatically as workers are trained in firms and hands-on positions, where they would learn the specific skills for the job.
Programs in many European countries have resulted in low rates of unemployment and have given blue-collar jobs integrity and value, quite a different situation than in the United States.
But these programs may not be fully integrated into the United States education system for years, due to the fear of allowing private companies to control education curriculums. According to Mr. Klisch, “there seems to be a perception that apprenticeships mean unions. It doesn’t.”
This article is related to the textbook section dealing with structural unemployment, which is unemployment that happens when there is a consistent mismatch between the skills and attributes of workers and the requirements of jobs. Apprenticeship programs could potentially be a great aid in lowering the overall unemployment rate by having more workers training on the job, where they can learn skills they might not have learned if they had followed a more traditional educational trajectory.
bjkwdf
Jaime Kedrowski
ID #14153292
Econ 1051 Fall 2013
Article: http://www.nytimes.com/2013/12/01/business/how-to-gauge-the-price-of-danger.html?ref=business&_r=0
The article from the New York Times titled, “How To Gauge the Price of Danger,” revolves around the idea that context within the economy matters. Context in the sense that a poor economy allows and enforces certain regulations and a rich economy allows and enforces a further extent of those regulations. Economist Richard Layard explains it as such, “In a poor country a man proves to his wife that he loves her by giving her a rose, but in a rich country he must give a dozen roses.”
The article explains that the same concept can also be applied to work safety and globalization. “Consider the familiar trade-off between wages and workplace safety. Because safety devices are expensive, additional safety means lower wages.” Theories within the article explain that well-informed workers will risk less safety in the work place for higher pay if the satisfaction from additional buying power outweighs the risks in reduced safety.
This article directly relates to our discussions on globalization, foreign direct investment, and work place safety. Page 738 from our readings explains, “We have seen that allowing foreign direct investment is an important way in which low-income countries can gain access to the latest technology. Some people, however, see multinational firms that locate in low-income countries as unethical because they claim the firms are paying very low wages and are failing to follow the same safety and environmental regulations they are required to follow in high-income countries.” The argument with buying, selling, and producing products in other countries is understanding that although there may be loose regulations and broken systems of production, in some circumstances those rules are preferred by the employees in return for a higher pay.
The article and the class discussions correspond because they both argue the relationships and risks between higher wages and work safety and the advantages and disadvantages of foreign direct investment, as well as , production in other countries. Globalization is a key component to advancing the economy and has its distinctions, limitations, incentives, and disadvantages, just as foreign direct investment, and workplace safety do.
Jillian Mullin
Pawprint: jamzq7
Student #: 14180647
According to the New York Times article, “Fed Looks For Other Ways to Aid Economy,” Federal Reserve officials debated how to support our economy. The officials decided to continue with the current campaign for the time being, but said a change in policy could come soon. The article stated that in order to aid the economy, the Fed plans to decrease then delay its monthly purchases of Treasury and mortgage-backed securities and keep borrowing costs for both businesses and consumers as low as possible. In their most recent meeting, the Federal Open Market Committee also discussed how they would decide how quickly to raise rates. As long as unemployment stays above 6.5%, the committee promises to keep interest rates near zero.
Chairman Ben Bernanke said the Fed would discuss timing of a rate increase once unemployment approached 6.5%. When it does reach that point, the Fed will most likely not immediately increase the federal funds rate. He said as long as inflation stays in control, the Fed can patiently seek assurance that the labor market is strong enough before increasing the federal funds rate.
Despite the large debate about fiscal policy that closed the government last month, Fed officials have been optimistic about economic growth and said disruptions did not alter their good expectations for growth. Though the Fed expanded its bond holdings each month of 2013 by $85 billion, Bernanke said in June that the Fed planned to pull back before the end of the year. Fed officials have not ruled out this change, and president of the Federal Reserve Bank of St. Louis, James Bullard, said the decision could depend on job growth in November. According to the account of the October meeting, most officials were willing to reduce the interest rate on funds that banks keep on deposit with the central bank to encourage bank lending. Currently, the Fed pays .25% annual interest on bank reserves. According to officials, these payments keep inflation under control.
President Obama’s nominee to lead the Fed, Janet Yellen, said the idea is “certainly a possibility.” While some officials have expressed concern that a cut in interest rate could disrupt financial markets, they also disagree about the potential benefits of a cut. As of now, officials hesitate to replace the 6.5% maximum because it could challenge their credibility with investors.
On page 846 of the text, we learned about the role of the Federal Open Market Committee (FOMC). Just like the NY Times article describes, the text says the committee meets in Washington D.C. to discuss monetary policy and manage the money supply. It also describes the relationship between changes in the money supply and changes in the price level, or inflation, a relationship directly illustrated in the article. Though it has been removed from the text, professor Chikhladze discussed in class on November 11 how the Fed can manipulate the federal funds rate to influence the economy. He said by injecting reserves (open market purchase) in the banking system, Fed can lower the federal funds rates, and vice versa. By taking out reserves (open market sale) from the banking system, Fed makes these funds scarce, thereby increasing federal funds rate. He even talked about how recently, the Fed lowered Federal funds rate close to zero (0.08%) starting in 2008 when the economy went into recession. The direct application of our class lectures to this NY Times article shows how valuable economic knowledge is to our everyday lives.
Article Link: http://www.nytimes.com/2013/11/21/business/economy/fed-officials-considered-new-support-for-economy-minutes-show.html?pagewanted=1&_r=0
In the New York Times article, “Around the World, Inflation Is Falling to Levels Not Seen for Years”, discusses how inflation has decreased of the years. American inflation appears to be falling to levels lower than any other seen in recent years becoming similar to declines in many European countries. This decline is most watched by the Federal Reserve in order to provide a reason to delay the expected tapering of bond purchases. The Fed stated that their ease on monetary policy is justified because of the weakness of labor markets and the decline in consumer price inflation.
Inflation has also been falling in Europe. Britain reported that its annual inflation rate fell to a four-year low of 2.2 percent. The exception to the current trend is Japan who has been plagued by deflation for years. The latest reports show no change in consumer prices over the last year which is good news to the Japanese government. Oil prices have played a key role in keeping inflation down this year, and the sector of durable goods has also aided in keeping inflation down.
The most shocking part of the American inflation report was that the cost of health care services in the third quarter was only 1.1 percent above the level reported a year earlier. If health care costs were to rise less than expected it would relieve the budget pressure increased by Medicare. Central banks now target inflation at two percent.
This article relates to the class by discussing how various factors affect inflation. It also relates through the discussion of the Fed and their role on regulating the economy.
Amanda Byler
Pawprint: akbggb
Lucy Wynn– LLWRG7
14154656
This article relates to our discussion in class because it refers to inflation, the Fed, and economies all over the world.
This article is interesting because inflation levels in the United States and around the world are falling. This is incredible as inflation is something many Americans and the Fed worry about. The causes of this decline are unknown, but the writer says that two contributing factors are lower oil prices and the falling prices of durable goods.
Another surprising part of the latest American inflation report is that the cost of health care services in the third quarter was just a little over 1% of its level last year. This was incredible because it was the smallest annual increase in health care costs since 1962, and people have expected it to go up greatly as they expect Medicare costs to rise.
Finally, one exception to the decline in inflation is that of Japan, a country that has struggled with deflation for years. This is a “welcome sign” to the Japanese government to try to turn the nation’s economy around.
In the New York Times article, “Thanksgiving Openings Take Sales From Black Friday” it is talking about Thanksgiving weekend sales and how they differed from years past. This year many stores opened on Thanksgiving day, and were open for much longer hours. This slowed sales on Black Friday and accounted for the smaller crowds seen around the US.
The article discusses how Black Friday is usually the biggest shopping day of the year, but this year sales dropped 13.2%. The holiday season accounts for 20-40% of all retail sales throughout the year so this drop is pretty significant to retail stores. In addition to this people started shopping for Christmas presents much earlier than usual. Due to Thanksgiving being so late this year stores urged customers to start shopping earlier by offering deals earlier in November. This also affected the smaller crowds on Black Friday this year.
Despite Black Friday not having as great of a sales day, online shopping has been on the rise. Online sales were up nearly 20% from last year. Online sales from Target, and Walmart were among their highest ever on Friday. Even though online sales have spiked they still only represent a small proportion of sales. Less than 10% of sales occur online.
This article relates a lot to class. It is discussing not only supply and demand but also showing the value of opportunity costs. Typically demand is very high for certain products during Black Friday but this year with earlier sales in November their was less demand on Black Friday itself. The stores supplied the products earlier. Black Friday this year also showed a great opportunity cost. Seeing that many stores opened on Thanksgiving day many shoppers had to decide what was more important, spending time with their families or getting that TV for only $300.
Mandy Corken
alc5fd
An article from the New York Times entitled, How To Gauge The Price Of Danger, talk about the concept that perception of reality and every day relations is important in an economy. A person’s perception of the economic standing of his or her peers’ affects the decisions they make with their money. A poor economy allows for regulations that are less extensive than those of a richer economy. Richard Layard stated it this way, “IN a poor country, a man proves to his wife that he loves her by giving her a rose, but in a rich country he must give her a dozen roses.” This is an example of how the economic standing of a country affects the value of goods and services.
The relationship between work safety and higher wages is the main similarity between this article and the readings and discussions along with foreign direct investment. These concepts are just as important as Globalization, which is crucial in an advancing economy.
Ideas similar to work safety and globalization can be found expressed in the article. There is a trade-off, when a firm has safer conditions its wages will be lower as a result because of the additional expenses. The article outlines the idea that worker will trade perfectly safe conditions for a more lucrative wage.
This article relates to the lectures on foreign direct investment, and globalization. It also pertains to the readings on our book from page 738 to 740 that discuss foreign direct investment to low-income countries and how low-income countries are following the same regulations that high-income countries follow but in these low-income countries, sometimes higher pay is an acceptable exchange for nonspecific regulations of production.
Robert Shutt
rnsxb2/14173240
At the annual dinner for the National Economics Club, Federal Reserve Chairman Ben Bernanke spoke on the Federal Reserves views on the past, present and future economy. Bernanke stated that since 2008, the Federal Reserve has coherently, consistently and successfully revived the economy. Despite the recent “scrambled economic data,” the Federal Reserve still believes that the United States economy is gaining strength. Bernanke also confirmed the Federal Reserve’s “intention to start pulling back soon from its stimulus campaign.
Bernanke emphasized that while the Federal Reserve will be retreating, “it will still maintain the bulk of the campaign for years to come.” He did not mention a timetable for the Fed’s retreat, but previous remarks imply that policy changes as soon as December. Bernanke also stated that the FOMC “still expects…that inflation will move toward the 2 percent objective over the medium term.”
Bernanke and the Federal Reserve are attempting to shift policy that is proving to be difficult. “The Fed is holding short-term interest rates near zero to reduce borrowing costs for businesses and consumers, its primary means of stimulating the economy. It is also buying $85 billion a month of Treasury and mortgage-backed securities to further reduce borrowing costs, which officials view as a temporary supplement,” according to this New York Times article. Policy makers with the Federal Reserve hope to decrease bond buying and keep interest rates low while decreasing purchases. Last year the Federal Reserve said that it would keep interest rates low as long as the unemployment rate was over 6.5 percent. At the National Economic Club dinner, Bernanke stated that going below 6.5 percent would result in the Federal Reserves “internal debate” on whether to lower or raise interest rates.
This article and the topics it covers relate to the textbook in several ways. In Chapter 25, specifically pages 846-848, the textbook discusses how the Federal Reserve manages money supply. As stated above, the Fed is currently buying Treasury securities from banks and injecting money into the banking systems. These are open market purchases. The article also discusses inflation, which is discussed in Chapter 19 on page 616 and several other times throughout the textbook.
“Citing Fed’s Efforts, Bernanke Says U.S. Economy Is Growing Stronger”
By Binyamin Applebaum
(http://www.nytimes.com/2013/11/20/business/economy/citing-feds-efforts-bernanke-says-us-economy-is-growing-stronger.html?ref=economy&_r=0)
Makenzie Koch
mek535
In an article entitled, “Thanksgiving Openings Take Sales From Black Friday”, featured in the New York Times, examines the changes in revenues from Black Friday last year compared to this year. There was an unusual change this year, some stores decided to be open on Thanksgiving Day, which caused sales and crowds to be severely lessened on Black Friday. This can be seen as a positive outcome by some and vice versa.
It continues to state that sales on Black Friday dropped by 13.2% this year and that Christmas shopping provides about 20-40% of all retail revenues in an average year. Some suggest that a growing mentality against feverish consumerism may be to blame while others suggest that people are simply choosing to wait and avoid the crowds. Most believe that sales on Black Friday dropped because stores began having sales before Thanksgiving this year.
Opportunity costs and the laws of supply and demand are very much a factor in the content of this article. If a store is open on Thanksgiving that means a consumer has to choose between relationships with close family or saving money on goods. On Black Friday, demand for low priced goods spikes and this year that spike was much less intense. Since the supply came earlier on, the demand was not so dire on Black Friday.
While in store purchases are falling, online purchases are increasing. The article states that online purchases have increased 20% but these sales are not enough to make up for the decrease in revenue as online purchases only account for about 10% total revenues.
Robert Shutt
rnsxb2/14173240
Lucy Wynn–LLWRG7
14154656
This article is relevant because it deals with many economic ideas like the laws of supply & demand, opportunity costs, and advertising.
The article describes the challenges businesses face in the days leading to Black Friday–specifically getting consumers to travel to their stores and make purchases. As more shopping is done online, fewer people left their homes to shop last Friday. Also, getting great deals on Black Friday is the norm, so businesses must be quite keen when advertising and encouraging consumers to make purchases…trying to beat other producers and convince customers to buy their products.
Another problem businesses must consider is the short time between Black Friday and Christmas. They must weigh the costs of advertising before and after Black Friday and decide if they want consumers to go shopping–the day directly after midnight–or closer to Christmas.
In the New York Times article, “Caught in a Revolving Door of Unemployment,” the life of an unemployed woman, Jenner Barrington-Ward, is discussed. Barrington-Ward has been unemployed for five years now. A college graduate, she was once living a comfortable middle class life. She worked consistently for thirty years. Last year, she made approximately $5,000 in income. “She is now broke and homeless,” New York Times reporter, Annie Lowry, states.
Barrington-Ward states that in 2008 she was employed at Massachusetts Institute of Technology, making approximately $50,000 a year. That same year she was laid off. Just after the federal government reopened in October, “Barrington-Ward headed into court in Boston to declare bankruptcy.” The recession prompted employers to lay off hundreds of thousands of employees, and the unemployment rate stretched to the double digits. Barrington-Ward doubled the number of applications she filled out and still never got a job. One company even told her “they don’t hire the unemployed.”
Barrington-Ward sees her joblessness as “an impediment to finding a job,” and economists agree. Many say that unemployment “lasting more than six months is a major factor preventing people from getting rehired.” Economists are now wondering if the improving economy will hire enough unemployed to “prevent long-term economic damage. Unemployment rate has lowered to 7.3 percent since the 10 percent it was four years ago. 7.6 million jobs have been added by private businesses, yet the number of long-term unemployed has increased by 213 percent.
The textbook discusses the labor force, unemployment and the unemployment rate in Chapter 20, specifically on pages 642-643. It also discusses how long people are typically unemployed on page 647. The textbook states, “ The longer a person is unemployed, the greater the hardship,” confirming one of the main ideas of the article. It also discusses how unemployment rates change during a recession.
“Caught in a Revolving Door of Unemployment” by Annie Lowry
(http://www.nytimes.com/2013/11/17/business/caught-in-unemployments-revolving-door.html?ref=economy)
Makenzie Koch
mek535
In the New York Times article, “Putting Military Pay on the Table,” it explains expensive military weapons such as aircraft carriers, fighter jets, and tanks may be victim to spending cuts by the Pentagon in order to satisfy the mandatory budget reductions known as the sequester. It also argues that military personnel compensation may be a part of this reduction as well. Compensation includes pay, retirement benefits, health care and housing allowances; these benefits make up almost half of the military budget and it is increasing. But weapons costs are increasing as well. Weapon procurement saw a 88% increase from 2001-2012.
Defense Secretary Chuck Hagel said, “we risk becoming an unbalanced force, one that is well compensated but poorly trained and equipped, with limited readiness and capability.” Meanwhile, Gen. Ray Odierno, the Army chief of staff argued, “The cost of a solider has doubled since 2001; it’s going to almost double again by 2025. We can’t go on like this, so we have to come up with [new] compensation packages.” This demonstrates that whatever decision that is made to reduce the budget, there is going to be some sort of trade-off. Trade-offs are explained in greater detail in pages 8-9 of the textbook.
This article focuses on the dilemma the Pentagon faces with their its budget cuts. It must find a balance that would be best for both sides of the issue.
“Putting Military Pay on the Table” – NY Times
Logan McKee
lmmmn2
In the New York Times article, “Around the World, Inflation is Falling to Levels Not Seen for Years,” the world-wind trend of inflation is examined and discussed. The article suggests that the Federal Reserve may be delaying the tapering of bond purchases because of the decline of inflation. It was reported that the price index had only risen 0.9% over the last 12 months.
In Europe, the European Central Bank cut interest rates in response to the consumer prices in the euro zone only rising 0.77 through July. Many European countries have seen inflation rates as low as they have been in years. The article explains that lower oil prices have been a major factor in keeping the inflation rate down this year. The most surprising part of the newest American inflation report was that the cost health care in the third quarter was only 1.1% higher than the level last year. This marks the smallest annual increase in 50 years. If this became a trend, it would bring much relief to the budget.
This article centers around inflation, which is discussed more in Chapter 19, pages 616-617 of our textbook. It also references the Federal Reserve System and its role in the inflation rate in the world. Our textbook elaborates more on the Fed in Chapter 25, page 845 of the textbook.
“Around the World, Inflation Is Falling to Levels Not Seen for Years” – Floyd Norris
Logan McKee
lmmmn2
Timoshanae Wellmaker- tvwrp6- 14166088
The New York Times article and video, ” Creating Skilled Workers” by Mac William Bishop addresses the issue the United States is having with the amount of knowledge and skills workers currently have or lack. Many manufacturers agree to there being a serious shortage of trained workers in the work field of the United States. The article mentions a high-tech manufacturing plant who has been forced to bring in someone to give the boys who plan to work at the company training through a German style apprenticeships to South Carolina. Many of the workers here are high school seniors.
This article directly relate to human capital. Human capital is the accumulated knowledge and skills that workers acquire from education and training or from their life experiences (682). The book mentions how college-educated workers generally have more skills and are more productive than workers who have only high school degrees (18). In the case the article talks about the boys do not have college degrees and it is actually acceptable in this case since the boys are expecting to go into the manufacturing business after graduating high school.
Unemployment is also something that is addressed in this article. The unemployment rate is the percentage of the labor force that is unemployed (642). It is stated that the nationwide the unemployment rate for workers with just a high school diploma is nearly twice that for college graduates. This matches to what the book states about ho college graduates are more likely to have attained more human capital than high school graduates.
The article addresses scarcity also. Scarcity is A situation in which unlimited wants exceed the limited resources available to fulfill those wants (40). In this case in South Carolina the resource is jobs. While this is sad enough, it is even worse that the wage here is also lower than the national average. Overall this means that the citizens in South Carolina not only have a hard time finding a job but also that even the ones who do manage to find a job are paid less than many other citizens of the United States.
In the New York Times article, “That ‘Made in U.S.A.’ Premium,” it discusses the pros and cons of producing goods overseas or in the United States. But the article also analyzes how the consumers think. It argues that customers place a premium on goods manufactured in the U.S.
The article opens with an example of a woman who manufactures clothing in New York, rather than overseas where the manufacture cost is cheaper. The advantage of producing in the U.S. is because consumers place a premium on American-made goods. For example, Brooks Brothers’ American-made sport coats sell for $1,395, while comparable imported ones go for $1,098. This is a very common pattern. 2/3 of Americans admit to checking labels when shipping to see if they are buying American goods. Some say they would pay from $5-$20 extra for goods manufactured in America. The articles states that companies that produce goods in America try to instill the thought into consumers’ heads that they are buying quality when they are buying American.
Two key terms from our textbook that directly relate to this article are production efficiency and allocative efficiency. Producing goods overseas because it is cheaper would be an example of production efficiency. Producing goods in America would be an example of allocative efficiency because it the production location is in accordance to consumer preference.
In the New York Times article, “Wage Strikes Planned at Fast-Food Outlets,”
In the New York Times article, “Around the World, Inflation is Falling to Levels Not Seen for Years,” reporter Floyd Norris writes that inflation in the United States seems “to be falling to levels lower than any seen in recent years.” This decline has also been seen in several European nations. Central banks typically desire an inflation rate of 2 percent, and see these figures as alarming.
“Last week the government reported that the price index had risen only 0.9 percent over the 12 months through September,” Norris writes. The decline in inflation could prompt the Federal Reserve to postpone its expected decrease in bond purchases. Inflation has also decreased in Europe. The European Central Bank recently cut interest rates due to an increase of just 0.7 percent in consumer prices in the year through July. Britain also reported that their inflation rate fell to a four-year-low of 2.2 percent while France’s inflation rate was only 0.6 percent, also a four-year-low.
The article states that durable goods are continuing to fall in price, holding down inflation rates. Norris also notes that, surprisingly, “the cost of health care services in the third quarter was just 1.1 percent above the level of a year earlier.” This is the smallest increase since 1962. “If health care costs were to rise less than expected over the next few years, that would do a lot to relieve the budget pressure brought on by expected increases in Medicare costs,” Norris says.
This article relates to our textbook through its discussion of inflation, the Federal Reserve’s monetary policy, and health care. Inflation is first brought up in Chapter 19, page 616 of the textbook as it discusses economic growth. A large section of Chapter 20, beginning on page 656, is also dedicated to discussing inflation and the Consumer Price Index. How the Federal Reserve manages the money supply and performs monetary policy is discussed in Chapter 25, beginning on page 846. On page 847, the textbook discusses open market operations, which is mainly what the Federal Reserve is doing now to improve the economy. Health care is brought up in Chapter 7, beginning on page 206. On pages 220 and 221, the textbook specifically talks about the rising cost of health care.
“Around the World, Inflation is Falling to Levels Not Seen for Years” by Floyd Norris
(http://www.nytimes.com/2013/11/16/business/economy/around-the-world-inflation-is-hitting-lows-not-seen-for-years.html?ref=economy)
Makenzie Koch
mek535
Signs Point to Coming Scarcity of iPad Minis http://bits.blogs.nytimes.com/2013/10/30/signs-point-to-coming-scarcity-of-ipad-minis/?_r=0
Rachel Lira
rml3k9
14151740
This article, published on Oct. 30 near the release of the iPad Mini, point out supply problems with the device, one being that there appears to be a shortage of screens which would yield a lag in production. Timothy Cook, of Apple, also came out and said it would be unclear if there’d be enough iPad Minis for the quarter, although the demand before they were released was unclear.
At this point, Apple had not set a release date for the device. This makes sense, because of multiple factors that were unclear about production. Retina displays and their creation are a long process. The Chinese New Year also would stand in the way of production at the end of January.
IHS, a research firm, has a tablet research department that knows all about the supply and shipment of tablets. They estimated that 3 million new iPads would be supplied and sold in the quarter, which is a tighter number than normal. Last year, they sold 3 million in the first weekend the new iPads were released.
In chapter 2 on page 40, we learned about scarcity. The book says that scarcity occurs because we have unlimited wants and limited resources to fill those wants. This is the case with the iPad Minis, and that’s why Apple was being careful about their release date. There likely would be a large demand for the iPad Minis because there likely is a huge demand for new Apple products. But the retina displays are limited and dragging down the supply for the iPad minis.
Alexa Barton
abbppf
“For Long-Term Jobless, a Stubborn Trend”
This New York Times article talks about the current unemployment trends in the United States. In 2006, the rate at which workers were laid off was at a low 15.5 percent, but after the economic crisis, the rate of firings significantly increased to about 20 percent. Currently, the rate of firings is at an all-time low of 14.8 percent, according to the article.
Usually this would be a sign of good economic health, but when you look at other factors the economy might not be as healthy as supposed. The hiring rate is down and the number of people who have experienced long-term unemployment (more than 15 weeks) has been higher than the number of people who experience short-term unemployment. According to the article, job mobility fell during the recession and has yet to improve.
The long-term unemployment rate is higher than it ever was before the recession, but could be due to the lack of skills had by the unemployed.
Unemployment is discussed on page 642 in our textbook.
This article from the New York Times, “Life on $7.25 an hour” discusses the problems with minimum wage and specifically the fast food industry. The start of the article talks about a man named, Eduardo Shoy who works two low wage jobs in order to pay for food, clothes, and other necessities. Shoy is one of many to enter the fast food workforce at an older age.
Shoy is not the only adult experiencing difficulties in the workforce. Forty percent of fast food workers are now over 25 years old, and 26% of fast food workers have families to support. A fast food worker makes an average of $8.25 an hour. The article compared the C.E.O.’s of McDonalds income, saying it would take a worker a century to earn what he makes in just a year. Unfortunately, the fast food industry says that these low paying jobs were not created for someone to live off of. They were created for a person with low-skills just entering the workforce. But with high numbers of unemployment it is forcing older adults to take these jobs in order to make a living.
This relates to our class because it is talking about price floors. Right now most fast food restaurants pay their employees minimum wage when they are first starting out. Minimum wage is a price floor set by the government. This article talks about how minimum wage is becoming a problem because many people who need jobs with higher pay aren’t able to find them and are forced to work at minimum wage.
Mandy Corken
alc5fd
In the New York Times article, “Wage Strikes Planned at Fast-Food Outlets,” it explains the growing tension between fast-food employees and fast-food outlets. Organizers of the movement are planning on sponsoring one-day strikes in 100 cities this Thursday with other protest activities in100 other cities. These efforts are all aimed at raising the minimum hourly-wage to $15 per hour.
Although with these strong efforts, the National Restaurant Association have said that these one-day strikes are only publicity stunts. They argue that increasing pay to $15 an hour with the current federal minimum is at $7.25 an hour would cause restaurants to lean more towards automation rather than people, resulting in less employment. This is a trade-off that the protesting workers will not like to see take place. Officials say only a small percentage of workers earn the minimum wage and that those jobs are mostly entry-level positions held by workers under 25. But studies show the average of fast-food workers are 29 and 1/4 have children.
Minimum wage is discussed in our textbook in Chapter 4, pages 111-112. Also, trade-offs are talked about in greater detail in pages 8-9 of the text
“Wage Strikes Planned at Fast-Food Outlets” – NY Times
Logan McKee
lmmmn2
Nicole Kottmann
Nmk99d
14151805
October unemployment rates fall in 28 states
http://www.usatoday.com/story/money/business/2013/11/22/october-state-unemployment-rates/3673397/
This USA TODAY article is about the October unemployment rate report released by the U.S. Bureau for Labor Statistics and how they reported that, in 28 different states, unemployment fell while non-farm payroll employment increased in 34 states. Most importantly, the states that have had both the highest and lowest unemployment rates as of recent all improved last month.
In one of our Wednesday lectures, we defined unemployment rate (see page 642 in the book) as the percentage of the labor force that is unemployed. We discussed the meaning of “labor force” (which is the sum of employed and unemployed workers in the country) and learned that there are numerous different types of unemployment (seasonal, frictional, structural, cyclical, etc.).
This article uses some generalizations so it is unclear exactly which form of unemployment they’re referring to, but it can be inferred that they’re referring to cyclical unemployment, which is what we call unemployment that arises due to a business cycle recession. As we know, the Great Recession caused unemployment to skyrocket around 2007/2008, and it’s been a struggle for our nation ever since.
We also learned a great deal about how unemployment arises and how long it can last, and one thing I found interesting on page 647 in our book is when it talks about how the average period of unemployment in April of 2007 was only 17 weeks but it shot up to 41 weeks in September 2011. This shows how long lasting the after effects of the recent recession were, and how exciting it is that this article is showing that there is improvement and we might finally be recovering long term.
Gerald Richardson
Pawprint: glrd5d
14158337
Link: http://www.nytimes.com/2013/11/30/business/international/moderate-recovery-is-forecast-for-india.html?ref=world&_r=0
In government figures, which were released on Friday, India’s economy has showed signs of some economic recovery as its’ GDP increased at an annual rate of 4.8%. This increase was measured in the three months that ended in September. This was greater growth than what analysts predicted the rate would be at 4.6%.
The signs of recovery in the September quarter are attributed to a good monsoon season that helped the agriculture sector. In addition, there was a 2% rise in industrial output and the demand for Indian exports also rose 13.5% because of the depreciation of the rupee.
With this said, an economist who works for the Mumbai brokerage firm said that they expect real GDP growth during 2014 to be around the 5% mark. This comes after a high in 2010 of 9% growth. India has a lot of potential but with issues like rising inflation analysts do not foresee the high growth numbers from 2010 returning in the short term.
This entire concept of India’s growth pattern relates perfectly to long-run economic growth. I am sure that looking at a graph of India’s growth it would show a steep increase during the late 2000’s but have an overall upward trend. With this upward economic trend India is probably seeing some major increases in standard of living which as this increases could lead to a very strong economy since people will be producing more if they are happy.
Ebony Holmon
14155462
The NYTiimes article “A Surge in Value for Bitcoin and Currencies Similar to It” is about the Bitcon currency. There is a type a currency, still fairly new, that is made strictly to online shopping. The currency, Biotin, is becoming more, and more popular because of its U.S dollar amount worth. Originally, it was worth $615 U.S dollars. As of last Wednesday, 1 Biotin is equal to $1000. Bitcoins total capitalization is now up to $11,000,000. That rate is pretty high on the count of this currency basically came out of nowhere.
The article says that the reason that the price of Bitcoin has increased may be due to the rising attention that it’s getting. More news programs, and networks have referenced Bitcoin. This passed week alone, there have been the most references in 1 week, at the record highest level. At the same time, there are some negative views on the new currency. The article says “Bitcoin exemplifies some of the problems of private money: Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith,” (NY Times pg B3)
This article directly relates to our textbook. A major topic, and vocabulary word we discussed is Nominal Exchange Rate (989). The Nominal Exchange Rate is the value of one country’s currency in terms of another country’s country. For example, yen is the currency in Japan. For every 100 yen, you can have $1 in America. In order to use the different currencies in different places, you’d have to convert the money form the currency of one country to the next.
Bitcoin is the currency for the Internet. So, if we think of the Internet as a country, then the example in the article fits almost exactly to our definition in the text. The book also talks about the demand rate for different currencies on (991) just as the article does about Bitcon.
http://bits.blogs.nytimes.com/2013/11/27/a-rise-in-attention-and-price-for-crypto-currencies/?ref=technology
Haley Reed
14161712
hprfh3
The New York Times article “Out of Print, Maybe, but Not Out of Mind” discusses the revolution of the book over the past century as technological advances have changed society. The article states that even though print materials are becoming a thing of the past due to the Internet, physical books are rooted very deeply into society. Although many changes are taking place as to how books are published, companies that publish e-books are still incorporating functions of physical books into online versions such as pages that are “virtually indistinguishable from a physical book” and the bookshelves that e-books download to on chosen devices.
The article also discusses the limitations and constraints of physical books. Besides having little ability to create unique designs outside of the cover, physical books require a large time commitment to receive the desired content for the fast-paced nature of today’s society. The article discusses several entrepreneurial companies with innovative approaches to revolutionize the way readers’ are able to consume information. Several companies are featured in this article such as Safari Flow and Inkling, which allow readers’ to purchase portions of their desired text for a lesser cost, rather than paying more money for an entire book or manual. Citia, a start-up company, and its tactic of reorganizing books onto cards where readers can analyze and comment are also discussed. These new methods of how to present information to readers are completely changing the way society tells stories, and what the concepts of books, authoring, and reading are.
The changes this article discusses are examples of technological change. The shift from physical books to e-books allows much more efficiency and number of readers’ that can receive information. The changes in the way information is divided and consolidated by new, innovative entrepreneurial companies is a technological change that will better society in the long run.
Gerald Richardson
Pawprint: glrd5d
14158337
Link: http://www.nytimes.com/2013/12/02/business/economy/wage-strikes-planned-at-fast-food-outlets-in-100-cities.html?ref=business&_r=0
Fast food workers are planning a movement demanding an increase in minimum wage to $15 an hour. In addition they will be sponsoring one day strikes in 100 cities on Thursday. This is not a recent development, protests have been going on since November of 2012 and have started really gaining momentum according to Kendall Fells who is one of the main organizers.
This movement is part of a union-backed effort that tries to shed light on what groups have to say about inadequate wages. The effort is backed by the Service Employees International Union. Restaurants have countered that $15 an hour wages would cause them to rely more on automation and hire fewer workers.
The backers of the workers argue that the average age of fast food workers is 29 and that over a forth are parents who are raising children. Many groups including USAction and United Students against Sweatshops will join in this week’s strikes.
We have discussed minimum wage in class but it also relates to price floors. Minimum wage is a price floor that the government sets, but at its current level people who earn minimum wage are not able to have a high quality of life.
Paw Print: JCMXD6
Article link: http://www.nytimes.com/2013/03/03/magazine/beer-mergers.html
This article discusses the beer giant, Budweiser, and particularly the company, Anheiser-Busch, as a whole and how it practices a sort of “trigger-strategy.” The corporation tries to keep its prices inflated, which threatens the revenue of other, smaller beer companies. Anheiser-Busch ultimately controls the price market for American beers, which the other companies agree to comply with in order to keep peace between them.
One may not think that the market for beer is one of pure monopolistic competition, but it is. As stated, the one giant company of Anheiser-Busch is who controls everything regarding American beer, but most importantly, the prices. Years ago when the Miller and Coors corporations tried to cut prices on their own, they were lashed by the president of Anheiser-Busch who stated:
“We don’t want to start a blood bath, but whatever the competition wants to do, we’ll do.”
Upon the statement, Miller and Coors quickly abandoned their price cuts and complied to the ceilings set by Anheiser-Busch.
This scenario is an example of monopolies and monopolistic competition, as introduced on page 396 of our Econ 1051 book. The definition of a monopoly does not state that only one firm is involved, but that only one firm is in control of the majority of prices. However, sales of Budweiser have dropped consecutively for 25 years, and as of now, there is a new, small-scale brewery popping up almost every day in America, according to the publisher, Adam Davidson.
If Anheiser-Busch continues in its monopolistic ways of running its business, its sales will continue to drop. But, if Anheiser-Busch begins to allow some leeway between other corporations, Anheiser-Busch as well as the other companies can all be profitable. Since beer connoisseurs are always looking for new beers and because beer is becoming even more popular than in the past, Anheiser-Busch needs to reevaluate its market and consumers.
Ebony Holmon
14155462
The NYTimes article the unemployment rate at full employment: how low can you go? by Jared Bernstein and Ean Baker has a lot of good points relating to real world unemployment. The article starts of by bringing up the two major questions, which are the subjects of the article. The first question is what is the unemployment rate consistent with full employment, and where is this. The second major question the article asks is “why does this matter now when the jobless rate is still highly elevated and only slowly coming down?”
The second half of the article talks more about inflation in the United States. The article covers information about “the asymmetry between the gain from lower unemployment, and risks of higher inflation” The article explains the relationship between inflation, and the unemployment rate. It told how in the mid 1990’s, the inflation rate continued to rise, and how the federal government would need to take steps to raise the unemployment rate. It the inflation rate continued to rise because of a below Nairu-level of unemployment, then higher inflation would become a major problem.
In our text book, Unemployment Rate, and Inflation, are two terms that we have learned about, and become very familiar with in the first, and second units. According to the textbook, Unemployment Rate is the percentage of the labor force that is unemployed (642). Inflation Rate is the percentage increase in the price level from one year to the next (616). We learned in the book that as with employment inflation is effected with the business cycle, and by other long–run factors.
By taking all the concepts, and Ideas we learned in the textbook, we can better understand the article. Knowing that the Department of Labor Force constructs consensus to find the unemployment rate, and that the labor for is a sum of the employed, and unemployed, are key ways to apply text book to reality, This NY Times helps us do that through real life unemployment, and inflation research.
http://economix.blogs.nytimes.com/2013/11/20/the-unemployment-rate-at-full-employment-how-low-can-you-go/
TAH6GC
Tori Heppermann
After reading “Wage Strikes Planned at Fast-Food Outlets in 100 Cities” from the New York Times, the first issue that came to mind was inflation. Fast-food workers are starting a movement to bump wages up to $15 an hour. Workers claim that it is not possible for them to survive on the minimum wage without government assistance.
The main concern of economists is the chance of inflation if the wages were to rise. Inflation happens when there is an increase in price and a decrease in the value of money. The inflation rate is calculated by the increase in price level from one year to the next (pg. 616).
Raising the minimum wage to $15 an hour sounds good to some people, but where would all of the money come from in order to pay these employees such a wage? It would come from the customers buying from the business. The business would then have to raise the price of their goods. This would result in inflation.
On the other hand, it is possible for the raise to stimulate economic growth. Economic growth occurs when the economy can increase the production of goods and services (pg. 46) If low-wage workers are being paid more, they are forced to spend it on things that they need. Resulting in more consumer spending, therefore boosting demand and economic growth.
Arias Limuel
*Pawprint/Student ID: ASL275 or 14176889
*Link: http://www.nytimes.com/2013/11/29/business/daily-stock-market-activity.html
In the NYTimes Article, “Japan Shares Soar, Driven by Fallen Yen”, it discusses the elements of depreciation in currency and how it effects the stocks/bonds system.
The american dollar is slowly, but surely, appreciating, causing other currency to not cost as much. Not every country’s currency exchange rate is lower than ours, however the US has recently had a stronger dollar. Japan, in particular had a recent downfall of their Yen, causing their services/goods to be cheaper to the US.
In class we discussed how low prices can spark higher demand. Also, how the stronger one country’s currency is, the easier it is to buy products from the other country. On Thanksgiving, 1 dollar= 102.38 Yen. Because of this, Japans stock index rose at an all time high during thanksgiving and caused the US, as well as other countries, to purchase many of it’s stocks. Also, the decline of the Yen has caused the US to import more foreign products from Japan, including Cars and Electronics, because they can more with their dollar than they did before.
This increase in Japan’s stock index is the highest it has been in six years, and is a blessing and a curse. Japan is receiving more money because of their increase of their exports and stocks, but along the way their currency is worth less than usual. This is causing more of their goods and services easier to access for other countries, and but making it harder for them to gain access to goods and services from other countries.
PawPrint: JMK44F
Article Link: http://www.nytimes.com/2013/12/01/business/that-made-in-usa-premium.html?ref=business&_r=0
The NYTimes article, “That ‘Made in U.S.A.’ Premium”, acknowledges the difficulties facing a U.S. clothing manufacturer. The video, an interview with the owner of a New York based clothing manufacturer, reminded me of our discussion of specialization and comparative advantage in chapter 2.
Basically, the article identifies a high demand for clothing ‘Made in the U.S.A.’ but shows how contradictory shopping patterns are to that high demand. Americans don’t buy American. That is because the price is so much higher for clothes made in the U.S. than for clothes made in places like Taiwan or China.
The U.S. certainly does not have a comparative advantage in this market. The ‘price floor’ for wages in the U.S. is much higher or at least better enforced in the U.S. That and other similar factors involving health, safety, benefits, etc. make the price of manufacturing in the U.S. immensely greater than that of other countries.
The U.S. has depended on imported textiles for many years. It would not have been a good decision for the U.S. to attempt to specialize in textile manufacturing and therefore, it became rather dependent on other countries. Today, Americans want to buy American-made products as a display of patriotism or in support of our own economy but in reality, it is beneficial to our economy to continue importing the majority of our textiles. Unfortunately, unless there were a dramatic change in the amount of American clothing manufacturers (either an increase or decrease), those manufacturers will continue to struggle to keep their prices reasonable.
Black Friday comes along once a year every year, and people tend to go crazy over it. Personally, when i think of Black Friday, I think of long lines, pushy and lots and lots of pushy, impatient people. People often tend to campout outside of stores, fights occasionally break out, and in the past we’ve even seen fatal injuries as a result of the anxiousness of others. However, this year seemed to turn out a little differently than years past.
Lots and lots of people, long lines, and many hours spent waiting in those lines seems to have become old for people. In fact, this years Black Friday weekend $1.7 billion less was spent than last year over the same weekend. This could be due to the fact that many sales started weeks before Thanksgiving and to avoid missing time with their family’s and being trampled by other people determined to find a good sale. This, also, could be a result of people trying to be a little more conservative with their budgets due to economic struggles.
In order to tempt shoppers early with their enticing sales, retailers seemed to advertise many pre-Thanksgiving sales, both in stores and online. In fact, in the first week of November 53.8 percent of surveyed shoppers had already started their holiday shopping. These sales weeks before Thanksgiving, as well as the many sales and promotions the day before, may have taken away a portion of those usual Black Friday shoppers.
Not only did these much earlier sales and promotions take away a good percentage of those Black Friday shoppers, but online sales seems to have also converted those in store goers. Actually, online sales grew not only on Black Friday this year, but also on Thanksgiving. In fact, online sales accounted for nearly 26 percent of sales on Thursday and about 22 percent of sales on Friday. This increase in online sales be for many reasons, from wanting to stay home and be with the family, to avoiding the big crowds, or even just because it’s simply easier to make these sales from the comfort of their own homes. Whatever the case, things are clearly changing, and this may mean retailers need to create a new way to get those holiday sales they are wanting.
skgkw4
Emily Dunne
Fall Econ 1051
Student Number: 14155187
PawPrint: erd5y7
In the New York Times article “The Minimum We Can Do” by Arindrajit Dube, Dube discusses the fairness of minimum wage in America. He starts off the article explaining how the price floor that is minimum wage has changed drastically over the past millennium and is not nearly as practical and useful as it used to be. Dube talks about the fairness of the minimum wage claims and how majority of those being paid minimum wage these days are people with at least some college experience, not mostly teenagers who don’t support themselves. Dube also brings up that the 60-70% of American citizens support raising the minimum wage to 9 or 10 dollars an hour. Dube explains that in 1968, the minimum wage was 55 percent of the median full-time wage while now it’s less that 38 percent of the full-time wage. If we were to continue with this principla of having minimum wage be 55 percent of full-time wage our minimum wage should be raised to $10.78 per hour.
Later on in the article Dube shows how low our minimum wage is compared to other countries in the world. He also describes that in our economy minimum wage increases haven’t effected jobs as much as they would have liked. There was still a significant job loss that some economists argued was because of the increase in minimum wage.
This pertains to our curriculum because we discuss the effects of price floors and price ceilings on citizens of America heavily in the first exam material. Having a price floor like minimum wage can be extremely useful but it can also be detrimental to members of the working class. A price floor is defined as a legally determined minimum price that sellers receive. Therefore the minimum wage is the minimum price that a worker can receive. What Dube is trying to explain is that the price floor should be heightened rather than lowered.
http://opinionator.blogs.nytimes.com/2013/11/30/the-minimum-we-can-do/
Link to article: http://www.nytimes.com/2013/11/30/business/economy/for-long-term-jobless-a-stubborn-trend.html?ref=economy
The article I read in the New York Times was called “For Long-Term Jobless, a Stubborn Trend”
In this article it talked about how less people are getting fired nowadays.
While that may be good the percentage of the long term unemployment rate is higher than that of the short term unemployment rate. This is a problem because until mid-2009 the long term rate was never higher than the short term rate. Some of the things that come to mind are Unemployment rate which is the percentage of the labor force that is unemployed.
One of the main reasons they said in the article is job mobility where lots of people have to move around for their jobs and in turn technically takes a job away from a state so the percentage can be skewed.
But there is another underlying reason why unemployment is still high and that is workers are lacking the skills that are needed for these jobs.
There are also lots of workers who are willing to remain unemployed instead of finding a job that is a step below their degree.
PawPrint: JMK44F
Article Link: http://www.nytimes.com/2013/11/29/business/mortgages-without-risk-at-least-for-the-banks.html?ref=economy
This article caught my eye as it relates directly to our in-class discussion of the financial crisis of 2007-2009. In chapter 8 we discussed issues of securitization, “subprime” borrowers, and “Alt-A” borrowers.
“There was no single cause of the financial crisis, but a chief one was surely the way mortgage loans were made by people who believed they had no reason to care if the loan was repaid.”
The article involves the Dodd-Frank financial overhaul law. The law included risk retention, also called “skin in the game” as one of its major reforms because so many were concerned about influencing another financial crisis.
However, it seems like the risk retention part of the law may become irrelevant. Multiple regulators are giving in to pressure from an odd coalition to consider almost every mortgage as exempt from the risk retention law.
The coalition includes large parts of the banking industry, which seems to have no desire to stand behind its loans, as well as consumer advocates and the housing industry. The consumer advocates and housing industry groups say they are worried that poorer people will be unable to obtain loans if all loans cannot be securitized.
PawPrint: JMK44F
Article Link: http://www.nytimes.com/2013/11/30/business/economy/for-long-term-jobless-a-stubborn-trend.html?ref=economy&_r=0
This article talks about unemployment trends in the United States. In 2006, the rate at which the unemployment rate was increasing was low at 15.5 percent. After the economic crisis, the rate increased to about 20 percent. Currently, the rate is at an all-time low of 14.8 percent. This relates to our discussion of unemployment, labor force, and the unemployment rate in chapter 20.
Usually this low rate would be a sign of economic improvement. Considering other factors, we can see that this doesn’t necessarily mean there is improvement and should not be considered a great sign or measure of the economy’s state.
Basically, the rate of hiring is low and the number of people who have experienced long-term unemployment has been higher than the number of people who experience short-term unemployment.
Job mobility fell during the recession and has yet to improve.
The article also acknowledges that the low rate of hiring could be attributed to a lack of skilled workers among other possible factors.
John Becker
Fall Econ1051
jcb5y7
This article talks about how inflation rates are the highest in many recent years not only in the US but around the whole world. Ever since the Federal Reserve started to buy government securities in large amounts, it has caused conservative economists to worry. The Feds have gone on to say they are going to try to implement their ultra-easy monetary policy. And the Feds justify this because of the weak labor markets and the declining consumer price inflation.
The unemployment rate was 7.3 percent in October, and the Feds have expressed that if the unemployment rate falls to 6.5 percent they will be in no rush to tighten policy if inflation remains too low. This policy consists of the Feds buying a lot of bonds as they are, then buying less as time goes on. How quickly they buy less will depend on incoming economic data the Feds receive.
This connects to our reading in a couple different ways. It talks about how inflation, which is when the overall average rate of the price of goods or services gets larger or makes a dollar able to buy less of the good or service. Inflation is what is causing the Feds to buy more government securities and force their monetary policy on the states. The article also talks about how the unemployment rate effects the Federal Reserve’s decision on how long it will carry out it’s monetary policy. The unemployment rate is the Unemployed Workers / Total Labor Force * 100.
Claire Wright
Pawprint : chwb8d
http://krugman.blogs.nytimes.com/2013/11/27/the-trouble-with-economics-is-economists/?_r=0
This opinion piece touches on how the trouble with economics is not necessarily politicians and their policies but instead economists. There is textbook economics, which would be the economics we learn in our textbook and then there is going against textbook economics.
It is often easy for most people to blame textbook economics as the root of our economic problems but instead the refusal to follow textbook economics has shown a lack of success for many economists. Paul Krugman states “many prestigious economists were all too eager to turn their backs on standard macro, even when it was working very well, on behalf of their political leanings.”
For some reason, many of today’s economists feel the need to do everything opposite of textbook economics. They are going against the norm but it seems that this new style of economics is not the best idea. Krugman supports the idea that “We don’t seem to need different economics as much as we need different economists”. They are becoming too caught up in what they think is right instead of going with what the textbook says. Yes it is okay to change their theories up if they feel they may need to tweak them but going against everything the book says is not the smartest idea.
What I find most interesting is that there are new models that “justify doing the opposite of what Econ 101 says”. Although change is good I think it is important to also keep some theories and strategies traditional and the same. Economists need to reinvent but also stay true to what economics is all about. Going against everything economics claims not to do can turn out to be a major disaster for all of us. Krugman made the perfect point when he said, “We don’t seem to need different economics as much as we need different economists”.
article: “Mortgages Without Risk, at Least for the Banks”
By FLOYD NORRIS
This article is about one of the causes of the financial crisis, a chief one being the way mortgage loans were made by people who believed they had no reason to care if the loan was repaid or not.
They bring up the rules on qualified mortgages and how they are meant to assure that consumers can afford them, but that these requirements are rather low. leading to the regulations in place not upholding as sufficient to exclude those unworthy of these mortgages.
This relates to our class discussion about the financial crisis of 2007-2009 we said that Beginning in 2007, firms in the shadow banking system were quite vulnerable to runs as housing prices fell and borrowers defaulted on their mortgages. causing Mortgage backed securities to lose value and their investors to suffer heavy losses.
Mortgages again being a chief cause of financial causes, see that if we paid attention in the past (to previous faliures) we could have further prevented the crisis of today.
In the New York Times Article, “Gloomy Numbers for Holiday Shopping’s Big Weekend” the reporter discusses this holiday season’s lower than usual sales numbers. Black Friday is viewed by most Americans as the beginning of the holiday shopping season. But with the economy moving along at a slow pace, and this year’s shorter-than-usual window of time between Thanksgiving and Christmas, most stores’ sales and promotions began weeks before the end of November. This diffusing this, normally huge, sales weekend. Black Friday itself, yielded much less than what is usually projected.
Over the holiday shopping weekend, consumers spent over $1 billion less on holiday shopping than they did last year. More than 141 million people shopped online or in stores between Thursday and Sunday, an increase of about 1%. And the average amount each consumer spent, went down. Total spending for the weekend this year was a decrease of nearly 3% from last year’s $59.1 billion.
The holiday season generally accounts for 20% – 40% of a retailer’s annual sales, and Thanksgiving weekend alone typically represents about 15% of those holiday sales.
But because of the small amount of time between the two major holidays (Thanksgiving and Christmas) many retailers pushed holiday promotions to the beginning of November. .
Online sales grew substantially on both Thanksgiving and Black Friday this year, up nearly 20%.
But to some, two days in a row of Black Friday-style shopping just isn’t worth it.
This article relates to class because it discusses the impact of our economy coming out of a deep recession, the unemployment that resulted, and the how these two factors affected the period that retailers depend on to make the most of their annual sales.
Pawprint: ncyvg9
Student Number: 16051065
Tori Heppermann
TAH6GC
After reading the article “That ‘Made in U.S.A.’ Premium”, my eyes were opened to a whole different side of textile and apparel management. Having clothing produced in foreign countries is something citizens of the United States are accustomed to. Seeing “Made in China” on the tag of your sweater is nothing new. Lately, controversy has arisen over the topic.
Lower-wage workers are producing more and more clothing at a cheap price overseas. There are workers being paid less and working in dangerous working conditions. Even child labor is involved in some companies. This is hurting American clothing companies because they are not getting as much business. Big businesses, such as JCPenney, cannot afford to have Ms. Lepore make their line of clothing in New York. It is cheaper for them to produce overseas.
This takes me back to Chapter 22. Why isn’t the whole world rich? The economic growth model predicts that poor countries will grow faster than rich countries. If this is correct, countries should catch-up. Catch-up is the prediction that the level of GDP per capita in poor countries will grow faster than in rich countries (pg. 726). In conclusion, if we replaced a thread and needle with a fast sewing machine in a factory in a poor country, it would pay off more than if we replaced one in the United States.
If poor countries could catch-up, there would not be as big of a controversy with the production overseas.
John Becker
Fall 1051
jcb5y7
In the article, “Thanksgiving Openings Take Sales From Black Friday,“ it talks about the Black Friday sales this year, and how they aren’t as high as they have been in the years past because some stores opened Thanksgiving night for the sales instead of waiting until early Friday morning to open. Earlier sales and earlier openings made the population on Black Friday less, but overall (Thursday night and Friday) there were 2.3 percent more people shopping.
There may have been more people, but there were less bought with 13. 2 percent less sales. According to the National Retail Federation, the holiday season accounts for 20 to 40 percent of a retailer’s annual sales and thanksgiving time generates 10-15 percent of the sales. With the short window between Thanksgiving and Christmas, many retail stores encouraged consumers to shop earlier and baiting them with early sales.
Online shopping grew a lot this year over Thursday night to Black Friday. The business went up nearly 20 percent over last year, according to IBM Digital Analytics Benchmark, c company that tracks retail websites. Mobil sales also saw substantial growth seeing a 26 percent increase. This shows as a country, the US is still consuming a lot, it is just switching up where consumers buy.
This relates to class by showing the supply and demand of goods around the holiday times, and how the stores adjust to those needs. Another thing from class it showed was opportunity cost, all consumers would have to decide if they wanted to spend more time with family on Thanksgiving and get deals in the morning, or if they wanted to wait outside a store for hours before it opened to get the hottest new electronic device for a largely discounted price.
As we have recently learned, economics is the study of the choices people make to attain their goals given the scarce resources. By studying the economy, we learn about others and ourselves; the decisions we make as a country all contribute to the state of the economy and the state of various markets, like housing and labor. Knowing three key ideas about people and their decisions help explain the decision they make, which are reflected in our society. These three key ideas are: people are rational, people respond to incentives, people make decisions at margins. A recent article in the New York Times assesses the rate of growth and decline in America, which fits nicely with what we have started discussing in class.
Our economy is often referred to as “mixed”; meaning it is mostly a market economy, where consumers make decisions regarding production, pricing, trade, etc., but it also contains aspects of a centrally planned economy. Therefore, citizens do make most decisions, but the government regulates and involves itself in the market. Some find this system problematic when the economy is not thriving. The Times article reported government information, saying companies slowed their expansion rate in December and have not hired workers at such a slow pace in the past three years. In this case, jobs are scarce; more people seek employment opportunities than actual opportunities exist. Several economists offered solutions but again, since our economy primarily relies on citizens, it is up to these citizens to work with each other and the government if necessary to fix the current problems.
The article included an economic model showing the U.S. unemployment rate by month over three years. Cited economists and other reputable commentators explained their opinions on the cause of unemployment fluctuation, but though there may be correlations, there was not one sole factor functioning as the causation for lower unemployment over the specified time. Exemplified in the book was opportunity cost of bakery, while the article examined factors contributing to the variation of American unemployment. Despite the differences in types of graphs, both are used to analyze information and create hypotheses about people’s choices regarding the graphed information.
People in the book’s examples and in everyday life encounter trade-offs due to scarcity. Perhaps companies were not as productive in the month of November, so in December they faced a tough decision: lay off workers and consolidate in efforts to cut costs and increase net profit, or attempt to increase worker productivity and boost sales so revenue compensates for additional salaries. In the textbook examples, factors such as time and supplies limited the number of goods one person could produce. Each scenario involved marginal analysis to determine the most profitable option.
After studying economics, reading articles like the one I found in the New York Times make more sense and appear somewhat predictable. A trend in a particular economic area is discovered, which in this case is unemployment, and economists analyze possible factors in order to explain the “why’s” behind the particular trend. Factors of production are taken into consideration and the impact on consumers is estimated. In the example of the article, more unemployment means less available jobs, which generally means less people spend money. The less money spent on the economy means company’s sales decrease, leading to firing workers and more unemployment. It is a cycle frequently involving normative analysis and incentives. One particular incentive the article included was a stimulus program, which includes various types of intervention the government believes will help economic growth. An aspect of the article I found particularly interesting was the demographic effect of lower unemployment rates.
Learning about economics helps explain the world around us and leads individuals to better decision making. For the full article I read and analyzed, visit http://nyti.ms/1dYTe6E.
In a recent New York Times article, “Save for Retirement First, the Children’s Education Second”, Ann Carrnes argues that for parents it is, “crucial to fund retirement first before contributing to an education fund.” In today’s society there is a growing challenge for many families to find a balance between saving money for retirement and a college education fund at the same time.
Financial planners warn that shortchanging yourself to pay for your child’s education can and in most cases will backfire. While most agree that student debt is a major problem in the United States, what many parents don’t realize is that if they don’t save for their own retirement, they are actually increasing the likelihood that their own children will have to support them later on in life. According to a study conducted by the MetLife Mature Market Institute, on average “the cost of leaving the workforce to care for an elderly parent can top $300,000.” And the cost of paying for outside help such as in-home nurses, and other professional caregiving organizations such as nursing homes to do the job is nearly double that amount.
In addition to saving for retirement, Carrnes also urges parents to find other ways to be proactive about their child’s college education. For instance, the first mistake Carrnes says many parents make, is taking their children to visit or tour schools without knowing if they can really afford them or not. Cheryl A. Costa, a parent interviewed for the purpose of the article, told Carrnes that, “We all know which one they’ll like best,” inferring that it is the parent’s job to do their homework before visiting a school outside of their budget.
The contents and advice provided in this article directly illustrate many of the concepts we have been discussing and learning about in Economics 1051. For instance, Economics itself is the study of the choices firms and individuals make due to a lack of resources (scarcity). As discussed, in economics households and firms have been known to value or make decisions based on incentives. Carrnes article as a whole is an example describing positive economic incentives, rewards intended to influence our behavior. (Pages 4-5, Chapter 1)
Carrnes argues that the economic incentive for saving for retirement over your child’s college education, is in fact one of preserving long-term livelihood of yourself AND your child (see paragraph 2). However in a society fixated on the issues of student debts and higher education it is unlikely that many parents will choose this incentive right away. Financial planner and advisor, Derek T. Kennedy hopes that with time priorities might shift and that perhaps parents “might aim to save for 50 to 75 percent of college costs and pay for the rest out of current income at the time, or with some contributions from the child’s own employment.” Only time will tell if this incentive for a shift in financial planning among American households will have an impact or not.
Megan Strait
ID: 14159107
PawPrint: mfs6x2
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