economy

Apr
8
2011

Written by:
Jostten Sackitey

What GE’s Tax Bill (or lack thereof) Actually Means

A few weeks ago, the New York Times reported that General Electric, despite earning $14.2 billion in profits worldwide in 2010, would not pay any US taxes – and that GE even claimed a tax benefit of $3.2 billion. Not surprisingly, the article generated unfavorable public opinion as many citizens are currently preparing their taxes for the April 18th deadline. The fact that the United States, at 35%, has the highest corporate tax rate in the world does not help GE win over sympathizers either. Besides the issues of fairness surrounding General Electric’s tax bill and the complexities of the US tax code, the story subtly suggests that we may need to be concerned with the future of America’s role in the increasingly globalized marketplace.

Dec
8
2010

Written by:
Shali Zhu

Employment Prospects Not So Promising for New Grads

Although the U.S. economy is on the road to recovery, the job market is still far from upbeat, especially for college students who are graduating this school year. In a survey conducted by the Collegiate Employment Research Institute at Michigan State University, 36 percent of companies that hired new graduates last year are either uncertain whether they will hire again this academic year or are sure that they will not hire at all. Moreover, the figure for companies that said they will not hire or are not sure is more than twice as high, at 76 percent, among firms that did not hire last year. These firms are not a small minority; nearly a third of the firms surveyed did not hire college students in the previous academic year, states a recent Wall Street Journal article.

Nov
29
2010

Written by:
Kanwar Anand

Will Washington take Deficit Panel’s recommendation seriously?

The Bowles-Simpson Deficit Commission surprised everyone with its draft version of proposals to reduce our budget deficit and balance the budget. The bipartisan commission was established by President Obama by issuing an executive order on February 18, 2010. The commission has been tasked to come up with recommendations to the Congress and the White House by December 1, 2010. In addition, the recommendation report needs to be voted by 14 out of the 18 members on the panel.

Nov
17
2010

Written by:
Shali Zhu

Small Investors and the Big Stock Market Rally

After the Federal Reserve’s announcement of a new quantitative easing program and the midterm elections, the S&P 500 Index rose 1.9% to 1221, a 23-point increase that brought the index to its highest close in over two years. And with interest rates at an all-time low and expected to remain in that position for the coming months, investors are likely to boost their returns by taking on additional risk and purchasing stocks, according to an article on the Wall Street Journal. That implies higher stock prices, and individual investors have been taking notice. In a recent report from TrimTabs Investment Research, private investors had poured $759 million into U.S. equity funds in the week leading up to the Fed’s announcement, the first time in six months that they have put more money into the U.S. market than they have taken out.

Nov
5
2010

Written by:
sachin

Reinventing America New credit options that aren't death traps

If the 2008 proved anything to anyone, it proved to America that credit, the main lubricant in the engine, can’t be taken for granted. Everything, from a car loan to business credit, has the ability to be tight. The mortgage documents scam now sweeping the country’s courts has hardly helped. That’s not exactly convenient or helpful for a nation which has funded generations on borrowing.

The micro loan approach

The micro loan is an unusual creature in the world of finance. It’s designed specifically to meet workable budgets, and it’s geared to help people fund businesses. Unlike the rectangular ulcer with the PIN numbers, the loan is also targeted to a function, like buying business assets. Micro loans are designed to build capital, not destroy it or provide a series of death traps for borrowers.

Oct
25
2010

Written by:
Shali Zhu

A Look at Past Currency Turmoil

Normally, college students don’t need to worry about currency exchange rates; we use money to buy everyday goods and services, not to trade in global markets. A currency war, however, would be a different issue. From hyperinflation to protectionism to global economic crisis, the possible consequences of a race to devalue would be felt close to home. With all the recent upheaval surrounding the yuan, the official currency of China, it is worth taking a look back at the currency turmoil of the past and gaining some perspective about how those concerns were dealt with on an international level.

Oct
20
2010

Written by:
Kanwar Anand

Is QE leading to an Asset Bubble in the Emerging Markets?

The global economy is steadily recovering. Unlike previous recessions, emerging market economies including China, Brazil, Russia, India and other major economies such as Australia, South Korea and Germany have led the way and strengthened the pace of the recovery. Some critics have expressed their opposition to an emerging asset bubble in these countries. The critics attribute this reasoning to the increased inflows of investment and the inflationary pressures on these countries. This article seeks to explain the impact of the financial crisis and how Quantitative Easing in the developed world may have impacted these countries.

Oct
10
2010

Written by:
Shali Zhu

Is There a Bond Bubble? Two Experts Weigh In

Ever since the recent economic downturn, investors, hoping to seek shelter from the excessive volatility in the stock market, have been flocking to seemingly safe fixed income investments. According to a recent article by Smart Money, the amount invested in bond funds in the first ten months of 2009 increased by $313 billion. Moreover, investors poured $88 billion into bonds in that October alone, an especially staggering amount when you consider the fact that this translates into investing nearly $2 million every minute. Overall, a Wall Street Journal article reports that retail investors have plowed more than $375 billion into bond funds last year and $230 billion more this year. Are these the signs of a growing bubble in the bond market?

Oct
7
2010

Written by:
Federico Bennett

Looking for change: preferably rapid, transcendence is a must

“This is a business that has been shrinking to stay alive... you cannot do that forever”
--British Airways CEO Willie Walsh, CNN Money interview, May 25th, 2010.

Given the general socioeconomic state of the last couple of years, the above phrase could have been quoted from a vast number of executives from various industries, but if we take a look at the events that have hit the airline industry in the past 10 years it fits perfectly. Terrorism, war, disease, volcanoes are some of them. It is safe to say that the airline industry is, and has been for quite some time, a very tough business. So much that in the past 3 years the global airline industry has yet to see profit. It is interesting that the words of British Airwaysʼ CEO clearly mark a distinction between past and future, the results of past decisions and policies, and what is needed from today onwards: change.

Sep
26
2010

Written by:
Shali Zhu

Deleveraging U.S. Borrowers

As the U.S. economy struggles to recover from a deep recession, many are looking for any hints that the economic situation is improving, closely watching everything from unemployment figures to productivity reports to consumer confidence. If overall debt levels can serve as an indicator of the American economic condition, however, they don’t appear to be very promising. A recent article by the Huffington Post reported that during the first two quarters of this year alone, total non-financial debt rose from an annual rate of 4.5 percent to an annual rate of 4.8 percent. At the same time, annual GDP growth is inching along at a rate of only 1.6 percent, insinuating that U.S. debt is ballooning in terms of its size as a percentage of GDP.