Not all predictions are accurate and we all know this. However, if these forecasts are backed by some accurate figures and realistic logic, it’s wise to consider them and be vigilant. Let’s see what experts have to predict for 2010. We will see S&P reaching 1300 anytime this year $500 billion stimulus fund is yet to be released and Senate trying to put in another $1 trillion. This will predictably cause dollar to be weak. Our government is talking about policies that will strengthen the dollar value, but they seem to be following a dollar-weakening policy. Moreover, there is constant dumping of dollars by China. Housing prices and employment rate to fall The first quarter GDP shows a sharp rise of 4.5%. However, the real estate market is still moribund and no major enlistment has been noticed in the labor market. Most of the companies are focusing on cost-cutting and right-sizing.  [...]

Though graphs today are screening gradual increase in U.S. deficit, there isn’t any serious concern among the treasury holders. The debt will not be defaulted. According to Moody’s, U.S. still holds the AAA ranking in the credit rating list. However, this definitely doesn’t mean that the world economy is perking up. Few countries around the world are constantly being hit by economic crises and debt deposition. Markit, a financial data analysis company, provides daily price of credit-default swaps. These are nothing but contracts between two parties that serves as an insurance against debts accumulated by government and major companies. Whenever, the price of a government credit-default swap surges very high, it indicates that the economic stability is risky and can be soon bankrupt. However, we cannot depend completely on the credit default swap cost because the healthiness of  [...]

Though the population in America thinks recession is on the verge of termination, it will take years to heal the scars blemished by the downturn. The reverberations are and will be seen throughout the decade because there seems to be a paradigm shift among consumers. People who have gone through lay off and downgrading are settling permanently at lower levels. Though many will improve their lifestyle with increased payment, habits will take time to transform. The modified consumer behavior is evident Cash is replacing credit. The early months of 2009 witnessed a sharp fall in the credit card usage. Though a couple of months in mid 2009 were a rise, it plunged again during the end. Banks have reported increase in repayment of debt by customers and lowering the credit limits. However, there isn’t much plunge in the overall spending graph. This evidently shows people have started shopping  [...]

Over 168-story tall, Burj Khalifa is now open for business since 4th January, 2010. It is taller than the former world’s tallest structures known as pyramids in Egypt. This is the first time that a tall (world’s tallest) structure has been erected in one of the Middle East countries. Along with the foundation of Burj Khalifa, Dubai hopes to strengthen its economic balance and expects international customers to invest in the edifice. This once strong economic foundation was shaken considerably, when Dubai announced in November that it might not able to repay the debt of $60 billion. With the introduction of Burj Khalifa, it intends to regain the lost prestige of being known as top-notch financial center. The giant structure was initially known as Burj Dubai. However, it was transformed to be Burj Khalifa to respect the president of Abu Dhabi, who helped the vicinity to be bailed  [...]

President Obama has come up with a new proposal to provide stimulus to the economy and create jobs for the economy. Basically an extension of existing stimulus program the new plan would be financed by the $200 billion which was saved in the TARP. Below is a broad outline of what Mr Obama plans to do. Small Business: There are plenty of proposed sops for small businesses. The final blueprint is not yet ready but overall Obama plans to suspend for one year capital gains taxes on new investments for the stock of small businesses which is more or less an extension of the current Recovery Act tax break. The tax breaks would also be extended in 2010 to certain capital investments in small business upto a limit of $250,000. Tax breaks would also be provided to small businesses for recruiting new employees. There would also be waiver of fees for loans made to small business through the Small Business  [...]

There are no estimates as to how many new jobs this program would create. But overall for $1 billion spent on infrastructure approximately 28,500 direct and indirect jobs are created. The proposed cash for claukers program is estimated to be approximately for $10 billion and hence can create as many as a quarter million jobs. Also the program is expected to be conducted from state offices, at least in New York and the 27 other states that have similar programs running. This will ensure that the money is distributed properly and jobs are created as these agencies already have protocols and distribution channels for such programs in place. However there is no incentive expected in the cash for claunkers program for do-it-yourselfers segment also called the DIY segment. Even in the New York plan homeowners were required to hire a contractor to qualify for the reimbursement which in a way  [...]

After the success of cash for clunkers program President Obama has now come up with Cash for Caulkers proposal to revive the economy. The proposal has almost all homeowners thinking as to what the program is all about. So here is a small preview of the program and what to expect from it. As of now the program is still being drafted and hence nothing definite can be said about the same. However experts feel that the program is more or less like the New York State’s home energy efficiency program. The program plans to incentivise homeowners to get new energy-efficient appliances, windows and other such items. New York Energy Efficiency program Since the program is more or less modelled on the New York energy Efficiency program lets see how the New York program worked. The first step in the New York program was to get an energy audit done by a licensed contractor. You can find the contractor  [...]

Increase government jobs One of the easiest ways to create jobs is by increasing government jobs. The success of this method can be seen from the federal Works Progress Administration (WPA) in the 1930s which employed more than 8 million people. The jobs created were majority project-based and in construction industry. But the question is whether we want the government to decide what jobs to be created in the economy. In a capitalist economy definitely not though in the short run it may definitely help. Bouncing back from recession is quite tricky. Companies are in a dilemma where they feel that it may be right time to start increasing production but with demand not fully recovered may not hire immediately. Well here comes the main problem. The demand in the U.S. is mainly consumer-driven and people need to have secure jobs to spend money resulting in a classic chicken-or-egg situation. Job  [...]

Target an Industry to Stimulate Demand (continued) These programs are definitely successful in doing what they are drafted to do which is to provide the required impetus to the targeted industry or sector. However intervention in such way does not expand the whole economy. These programs maximum end up reviving only a small portion of the economy. The proposed Cash for Caulkers program would definitely give building contractors a boost but construction industry represents only a small portion of the economy. Again to help another sector of the economy the government will have to work out a new program. Also all these program have an expiry date after which there is that inevitable fall in demand. After the end of cash for clunkers discounts car manufacturers registered a decline in demand. Economic incentives to Companies to Hire People Another way the government can create jobs at least  [...]

The Obama government is clear in its focus of creating jobs in the current economic scenario. The intentions are definitely good but the results so far don’t look so positive. Let us look at the facts. Last week the labour department announced a second month of 10% plus unemployment. Coinciding with this the White House called a meeting of prominent executives, labour leaders and academicians to discuss as to how the Federal Government can increase job growth. The president commented that his government is looking for fresh perspective and every good demonstrable idea is welcome. Definitely sounds promising but can the government really create jobs at such short notice. Economists feel that creating new jobs in short notice isn’t exactly the government’s cup of tea. In the long term however the government can definitely impact the health of the labour market. The tool kit that the  [...]