Health-Care Bill and Insurance

Gist: It has now been six-months since Obama signed the health-care bill. Changes are beginning to take effect. Naturally, these changes are effecting the health insurance industry. Historically, insurance companies have had a hard time selling to the under 30 crowd. With the new bill, people in that age range might find it cheaper to sign up on their parents plans than to purchase their own plan or, to not pay for insurance at all. Fewer sign-ups mean higher premiums. Insurance companies want people to see health insurance as a necessity, not as a luxury.

China controls the rare minerals mining

Due to diplomatic spats, China has cut exports of 17 rare minerals to Japan. These minerals are used in many high tech industries and are irreplaceable. Due to low income, mines around the world stopped mining these metals and now China controls ninety five percent of this market. China is using it as a leverage, limiting exports and demanding that companies that want the raw materials will move to china. Due to the high demand of these minerals investors want to reopen some of the closed mines around the world. Five publically traded mining companies went up fifty percent and more.

The small business jobs act to revive economy

Gist: On Thursday, the government passed the small business jobs act which expand loans to small businesses and give them tax breaks.
Heidi Moore think it will help to fix a mistake done in the first TARP stimulus to banks, where billions of dollars were given to big banks hoping that they will lend it to small businesses. The new thirty billion plan is creating a fund which will be given to banks in hope they will lend to small businesses. Small business owners said that it took too long and that this is not enough. Felix Salmon disagree. He believes that this money will be leveraged and will be translated into hundreds of billions of dollars in landings to small businesses.

The small business jobs act to revive economy

Gist: On Thursday, the government passed the small business jobs act which expand loans to small businesses and give them tax breaks.
Heidi Moore think it will help to fix a mistake done in the first TARP stimulus to banks, where billions of dollars were given to big banks hoping that they will lend it to small businesses. The new thirty billion plan is creating a fund which will be given to banks in hope they will lend to small businesses. Small business owners said that it took too long and that this is not enough. Felix Salmon disagree. He believes that this money will be leveraged and will be translated into hundreds of billions of dollars in landings to small businesses.

Brazil - top five oil suppliers in the world in five years.

An oil company in Brazil, Petro Brass, raised more than seventy billion dollars, a new world record. Big part of the money will go to deep water drilling. Investors are looking at the BP spill as a onetime incident and not as a proof that deep water drilling is unsafe.
Five years ago Brazil found one of the world's largest oil deposits along its coast. Analysts believe that in five years Brazil will become one of the top five oil suppliers in the world. Brazil hopes to use the money to fight poverty.

Unemployment Effects on the Elections

Gist: As the elections are nearing, many people who are unemployed are much less likely to get out and vote. As a result of this economic recession, the unemployed is a large group of people: 50,000 voters just in Ohio who are part of the working class. With the working class typically voting democrat, this is likely to effect the democrats at the polls.

(I would think that if you are unemployed you would be more motivated to vote.)

Wholesale credit union is taken over by the government

Gist: The government is stepping into help wholesale credit union. Credit union is one part of banking industry that will not do anything stupid with your money. However, it seems to be wrong now. The federal regulator took over three institutions that are wholesale credit union last week. Those credit unions took people’s money to bad investments. Now the credit union industry will pay for the cost of resolving those wholesale credit unions. However, the fact that mortgage-backed securities and toxic assets are still out there and banking industries are still working their way through financial system. The good news is the worst of the problem loans now seems to start stabilized.

Different expectation for job recovery

Gist: The job market seems not to recover as quickly as we think. Although there indeed is increasing job growth, the growth of working-age population is increasing.

The severe recession brought unemployment figure to two digits, unlike the mild ones before. Plus the population of high school and university grads, it takes a lot of time to overcome the jobless situation. Some employers start to utilize people as part-time hiring. They do not hire people as full-time employees instead of consultants. Many economists believe the financial rescue and stimulus spending of the past two years have helped. They say without them, the economy might still be losing jobs today.

What Motivates Investment by Big Companies Part 1

It is always interesting why companies do or don't invest in certain things.  In the case of oil vs. alternative fuels, it has been worthwhile for big oil companies to continue investing in "upstream" activities (i.e. exploration and drilling) due to market returns and tax breaks.  The former is mentioned in the following article and the latter is currently being debated by congress.  (Note:  "$200 oil" means per barrel).

Why don’t oil majors invest in biofuels at scale?

Commodity Prices Rising

Gist: Recently, commodities have soared in the markets. The demand has increased from China and India and the supply has decreased because of poor crop output from unfavorable weather conditions in recent years. With most of the stock market trending flat, the commodity market is one of the view trending in one direction. Likewise, it is drawing attention from investors.

(How long can this trend last?)

China Accused of Artificially Controlling Currency

Gist: In the foreign exchange markets, the U.S. is accusing China of keeping their currency, the Yuan, artificially low contributing to the $250 billion trade gap between the two countries.

What advantage does China get undervaluing their currency?  Say a widget costs $18 to make in the US and 100 Yuan (currently $15) to make in China.  The US firm will have a tough time selling in China, all things being equal.  But if the Yuan were suddenly stronger, say 100 Yuan will now buy $20, then the US firm will have an easier time selling in China.  It works the other way, too.  The US dollar is artificially strong, so our dollar buys more Chinese goods.  This creates a big trade gap (we buy more from them than they buy from us).  US jobs are lost--at least in the short term.

Don't Trust Economists

Gist: We cannot predict the future. The Economic conditions are not predictable by using some theory models or computer calculations. Commentator Justin Wolfers , the professor from Wharton School of Business at the University of Pennsylvania, believes that economists should not be trusted.

When the weather man is wrong, we just got wet. When economists are wrong, we got Great Recession. Macroeconomists, academic economists are often building models trying to predict the next step. They failed. Statisticians try to figure out something in a bunch of numbers and make some prediction. They failed, too. No one successfully predict the 2007 recession. Those complicate economic models all failed to recognize the real world.

Economy is history. We can learn lessons from the past experience. We can make rules to prevent some situation. However, the future is unpredictable because of the changing condition by time.

The Econonmic Behind The Figures of Construction

Gist: The Commerce Department said that the housing starts were up 10.5 % in August. However, the single family building market somehow doesn’t show very good figures. Builders suffered as the government's home buyer tax credit expired, and people curtailed house-hunting. They seem to be trickling back into the market now, but very slowly. Economist Chris Christopher at IHS Global Insight said that housing often leads the way out of a recession. In fact, construction jobs have actually fallen 10%. The remaining recession helps explain that why the apartment construction is up because there are many people move out their home and into rental apartment. People are not able to pay the property loan. In addition, construction of apartment can also satisfy the demand for young people who is looking for a job and the retiring personnel.

3 billion dollar marriage between equals

share holder finally approved the merger of United and continental airlines. The merger will eventually create the largest airline in the world. This 3 billion dollars merger is considered by most a good move. The airlines say that the union will save them hundreds of millions of dollars a year and will help them hold down their prices and stay competitive. Yet, some people foresee problems due to cultural differences and the strong unions in both airlines.

Food pantries to help low income students

The great recession changed a lot of things in our lives. Last week we found out that 40 million people fall below the official poverty line. There is also an increase in demand for food banks. In Utah valley University, enrolment is way up as people out of work are going back to school, but tuition is up too. To help students, the state school is teaming with a local food bank and will open a food pantry funded by private donations. Food pantries exist in other universities as well. A little assistance can make the difference if a student will finish his studies. Richard Knollenberg from the century foundation said that low income student need special support and he hopes the pantries will stay after the economy improves.

Apple Eases Off

Gist: Apple eased off on rules for developers who make apps for the iPhone and iPad. Developers are now allowed to use whatever tool they want to create the app. Before, Apple's business model was much more closed. Developers had to develop the apps according to Apple's rules. For instance, you could not use Adobe Flash.

A possible reason why Apple eased off was because Google's Android Mobile OS is cutting into their market share. By giving app developers more freedom like Google does, they hope to get some of that back. Also, Adobe file with the FTC against Apple for anti-competitive practices. This could be a way to fend that off.

Either way, software developers are thrilled.

(Could this have any effects on Apple's stock? Or perhaps a software development company's stock?)

Labor Market Turning Around?

Gist: The average number of new unemployment claims have been on the decline since mid-August, where it peaked.

Nigel Gault, Group Managing Director of the North American Macroeconomics Service of Global Insight, says that economists want a much larger decline in new unemployment claims to declare this as the economy recovering. Companies are still adding jobs slowly.

James Galbraith, American economist, says the economy lost over 8 million jobs in this recession. This is more than twice the number lost in the previous two recessions. The rate of job creation will have to increase dramatically to get us out of that hole.

With companies pursuing increased productivity so much it does not seem likely that they are looking to hire a lot of people.

(Why are companies so hesitant to hire more people? Labor too expensive? Not enough sales? What is the real cause of new unemployment claims?)

Effect on manufacturing in recession

Gist: The effect of recession does seriously on the employees in some manufacturing-focus town. When people in big cities buy a lot less than before, these manufacturers can clearly tell that the economic keeps going down.

When the recession started, people don’t want spend too much money on purchasing. The needs in the market go down, and the supply quantities definitely go down as well. These come with cutting in pay and lay off small percentage of employees. The big time of giving bonus in manufacturer is no longer seen anymore.

White space for Internet

Gist: Federal Communications Communication is considering that opening some unused airwaves, which is called “white space”, to the public would result in better and faster Internet.

In 1985, the FCC opened up the low-rent Baltic Avenue of the frequency spectrum. At the time, no companies wanted those waves that can barely penetrate walls. However, the whole Wi-Fi universe nowadays somehow is the consequence of opening this area of spectrum. The next area of spectrum which the FCC thinks about opening to public is the airwaves between TV channels. They can easily penetrate through walls and travel fast for a long distance. Once the area of spectrum opens, there will be more and more application and innovation coming out. Moreover, the rural area where is limited to Wi-Fi access would be benefit.