http://www.economist.com/news/21567388-new-generation-investors-betting-americas-housing-market-big-long
This article examines how investors are approaching America’s projected/future housing market and gives a little history on the collapse of ’07 and what investors are hoping for. Is it worth the investment?
A big topic in the news lately is the loss of jobs in the US that are going towards China and other countries with little regulation when it comes to cheap labor. It says a lot about a company that could be paying its workers $2.50 an hour in Shenzhen instead of $15 an hour in the US. Apple has decided to build a production plant for some of its products at the cost of about $100 million. That isn’t much money in relation to their yearly earnings, but it’s a small step in what could be a large scale effort to bring some jobs back from overseas.
Every four years The National Intelligence Council reports a 30 year strategic plan that outlines what it believes the world will look like based on current trends. It believes that China will eventually surpass the United States in economic power sometime before 2030 yet the United States will clearly play a major role in the future thanks to its eventual energy independence. This contrasts today where for many nations; their power is based off of their control of oil and other natural resources. The report forecasts that in the future the world will have a massive middle class that will be a driving force in the direction many countries take. What are currently less developed countries will soon become leading powers based on their economic development and infrastructure.
This a relativley short but interesting article explaining some of the reasons why Germany is a leading country in the world economy. While it may not be overly relevant to what we have been discussing latley in class, I have always wondered make Germany such strong economy. The article from Investopedia, explains how Germany has a complex economy (ranked # 2 in the world) and is mostly export driven with mroe than %50 percent of its GDP being a product of exports. The goods Germany produces and exports are some of the most complex in the world, and economists believe that the The strength of their infstructure allows them to move goods from place to place smoothly and efficently. However the interesting part is that Germany’s growth in GDP rarely goes above 3%, meaning it is now the flashiest country in terms of growth but it is very consisent and stable. I think this is an interesting read worth your time.
http://www.nytimes.com/2012/12/07/technology/apple-to-resume-us-manufacturing.html?ref=business
This article discusses an exciting prospect in the American job market, the return of a portion of Apple manufacturing to the United States. In 2013, Apple is expected to invest 100 million dollars in manufacturing in the United States. While this a small portion of Apple’s overall worth and output, this prospect of an increase in job for the future can be drawn from this movement. In the technology sector, an increase in demand for workers with those kinds of skills with most definitely be welcomed. Hopefully this is a positive sign for the future of America’s job and manufacturing markets.
The article above from The Economist is reporting on how a new generation of investors have learned from the mistakes of the previous decade. Instead of betting (unethically, of course) on home morgages that they knew were going to fail, investors these days are buying the homes themselves. They then proceed to fix up the houses themselves. In order to this investors such as Warren Buffet are buying/contracting property management companies to buy houses and fix them up to sell them at a higher value. Investors are seeing returns of 7% which as the article explains, isnt astronomical, but it is much better for the economy as a whole than the way lending was conducted in the middle of the last decade. There is also investment in morgages which are working almost like Tresury Bonds these days because most are gauranteed by the government. These can kick yields up to the 10% range according to the article. However if interest ever rise all value will be wiped out. So in conclusion it seems that investor are going with a lower yield (%7) but a safer approach, which is good for everyone if the housing maket is ever going to come back. Do you agree this is a good stategy?
With people lining up early to wait in line at the malls, people might think that this is good for the economy, but it is really not helping bring change to the economy. People only have so much money that they will spend in a year, so they may splurge and spend a lot during black Friday, but that just means they will spend less other times in the year. The economy needs more exports and investments rather than consumer spending. It is interesting that this is not helping because it seems like such an influx of money being spent would be a good thing for the economy. In this article it brings up the idea of a consumer tax to try and help solve the problem, but it mentions how that would not be favored.
http://www.nytimes.com/2012/12/02/your-money/a-holiday-shopping-stampede-but-maybe-no-economic-jolt.html?ref=business
This article not only adresses the fact that Hurricane Sandy caused damage to the US economy by tens of billions of dollars, but rather argues that the recovery in the future will pump money back into the economy. This will eventually help boost the economy, in a much needed time. The author however warns not to get too excited about the boost the reconstruction/ recovery will provide, as the effect from this will take years to flow through to sales. Although it is hard to estimate the dollar amount the recovery will provide the economy, the author uses the actions of insurers and bigger companies to estimate it to be around 80% of total economic loss.
http://www.nytimes.com/2012/11/18/us/marcellus-shale-county-aims-for-long-term-gain.html?ref=business
This article summarizes the issues many energy resource industries face when it comes to the long term benefits of energy exploration. It seems many cities only gain temporary benefits from the entry of new companies seeking the resources necessary in energy production. Citing Williamsport as an example of a city which received an economic boom recently which eventually trailed off as the natural gas reserves were depleted. The article offers alternatives and ways that cities can gain long term benefits from these energy companies moving in. Such as training local workers and students as well as setting up restaurants tailored towards the palettes of the workers moving with the company.
This article talks about the stable growth of Asian (predominantly South East Asian) economies that might be worrying some people in the West. I find this article amusing because the author said talked about the self-correcting market that does not exist in the East as it does in the West. I have never been so aware of it, but from my knowledge of Indonesia, I do see it being true. The government does not play puppet-master in the economy, but it does step in sometime to “fix” things here and there.
My grandfather, who has been involved in the Indonesian economy for as long as I’ve remembered, talked to me about this issue a few years ago. He spoke about how “Capitalism” is not a sustainable choice for the international market. I thought he was just being ridiculous because I thought I saw that statement as a very traditional one. Yet now I see it. Capitalism has proven itself in America: imbalanced economies and frightening job losses to compensate those who are “winners” in the economy. In Indonesia, we do see polarizing economic differences, but I feel that we see it less and less every time I notice it.
Is this a “capitalist vs. non-capitalist” issue, or is this change just one that the world is not quite ready to witness?