Category: News

As populations age, western governments are racing against time to deal with the budgetary challenges the rising median age poses according to Moody’s. Even as questions are being asked about the manner in which western economies are bouncing back from the global economic meltdown, Moody’s said that major sovereign bond issuers, among which are the United States of America, the UK, France and Germany, are in a position of strength and can retain their much-coveted AAA credit ratings. But with this note of positivity came a caveat; as western nations averted the worst of the economic meltdown by diverting funds towards it, it has left itself open to the threats posed by an impending increase in costs it will have to incur The financial meltdown may have been insulated and perhaps its advances even checked, but it has come at a price. There are long-term challenges to be faced up  [...]

Fed paper reports sinking economy and predicts another recession in next couple of years. Travis Berge, Fed scholar and professor at University of California, used data from Leading Economic index produced by the Conference Board, and prepared a paper that predicts another recession for the US in next couple of years. Most economists and researchers, by looking at the report, agree on the point that chances of another recession are rising, and if the administration neglects these indicators, impending economic downturn is inevitable. These researchers tried three experiments, making use of leading indicators like index components and other elements, mentioned in the data. However, this test didn’t include bullish current indicator. The spread of Treasury bond interest rate and fed fund rate is quite steep, which is a strong indicator of economic expansion. They believe the Fed  [...]

After the release of private sector hiring statistics, investors reacted positively by pouring in money into the market. Stocks, on Wednesday, closed on a higher quote. Dow Jones Industrial Average increased by 44 points or 0.4%. S&P 500 index also gained 0.6 % by climbing 7 points. And NASDAQ added 0.9% or 20 points. The major reason of rise was surprising improvement in private sector payroll statistics. People are now awaiting a major report to be released by Labor Department on Friday. Besides, the industry report says there has been growth in the service sector for the seventh month in a row now. The pace of employment and recovery is modest. However, we are sure of one thing: at least the pace is being maintained. Corporate companies have been showing a decent profit for two months, and it is helping the economy to relocate its position to a better place. However, weak  [...]

Congress needs to have a concrete plan to tackle slower growth, rising unemployment rate, and deficit increment as inaction from their part may slower the economic growth further, a board of economists told officials on Tuesday. The same group of economists testified at the Senate Budget Committee. They say the economic growth in 2011 would be gloomy, and the annual GDP would range anywhere between 3% and 4%. Most economists believe it’s a very slow economic recovery. ‘It’s probably one of the slowest recoveries we have had since World War II’ said Simon Johnson, lecturer at Technology’s Sloan School of Management. However, Joel Naroff, founder and president of Naroff Economic Advisors, is not very sure about the mediocre growth. He believes, if Washington doesn’t act quickly and fail to make major changes in monetary policy and fiscal policy, the economic growth would  [...]

Quarterly results of most of the companies in the US seem to be quite fascinating. However, shrinking economic numbers of the nation is still a concern. All major indicators are pointing towards an economy that’s falling apart. Here are some of the reasons why we might face another recession soon: Economists expected rise in US orders of durable goods by 1%. However, it fell by 1% in June. Apart from volatile transportation goods’ figures, overall shipments fell by over 1.3%. The quantity of inventories lying in warehouses is increasing, which indicates goods are being manufactured but not purchased by consumers. Chinese industrial output fell by more than 2.8% last month, major reason being weakening global economic conditions. According to the data revealed by Economic Cycle Research Institute (ECRI), the weekly indicator index fell significantly, reaching as low as -10.5.  [...]

It’s seems that problems for BP are far from over. Apart from loss caused due to wastage of oil, clean up costs, and compensation for the disaster, it now has to pay fine to the US government for violating the Clean Water Act. The US government has decided to charge $300 per barrel spilled into the water. The fine is a bit on the higher side simply because the Justice Department feels BP was negligent in causing the disaster. However, no one has an accurate idea of how much oil has spilled into the water. Initially, when the oil started leaking, The Coast Guard said it was 1,000 barrels per day. Now the count is somewhere between 35,000 and 60,000 barrels per day. Let us, for a while, say it was 60,000 barrels per day. Consequently, BP would have to pay over $18 billion as fine to the US government. This is after deducting the 800,000 barrels of oil captured by BP. The fine  [...]

Economists are debating on whether our not the US will experience a double-dip recession. The prediction, however, may prove to be a bit optimistic. Most said we are on the path of recovery. However, falling unemployment rates, decreased consumer spending, dropping house rates, and unstable global cues are, unfortunately, not signs of recovery. Some economists, who have realized the graveness of this situation, have termed it as ‘Lost Decade’, which means a prolonged period of weak growth. An economist and professor at Cal State University Channel Islands, Sung Won Sohn, predict the probability of having a lost decade is much higher than a double dip recession. According to him, major engines that push growth of an economy like consumer spending, housing, and exports, are all down. For the next few years, our country might not even grow at 3%. However, if something like Lost  [...]

Many economists claim we are on the path on recovery, and the GDP will soon be high. The unemployment rate, however, is not dropping a bit. If it would have been recovery, most companies should have started hiring, at least the ones who were downsized. But the daunting trend seems to continue. Wells Fargo is about to cut 3,800 jobs and close down 638 stores in the financial division; the company announced on Wednesday. In fact, if this happens, the company may close down its consumer finance division, which offered non-prime loans to homebuyers. They will downsize around 2,800 employees in next couple of months, and the other 1,000 jobs would be cut within next 12 months. The need for separate financial division was eliminated when the company merged with Wachovia in 2008. However, they aren't doing too well since they have had their own division. The President of Well Fargo Financial,  [...]

There are probably many reasons to hate BP, but we missed the most important one. No, I am not talking about spoiled beaches, death of birds, environmental damage, or wastage of natural resources. I am talking about the way we have been used to overreacting due to the spill. How much, I wonder, we would react when we realize that we have to import more oil that the actual spill. Why? To maintain our economic budget and repay our deficits, we have borrowed enough capital from other economies. Besides, we aren't producing half the amount of oil needed by our country. So, watching our money gushing to oil importers faster than oil gushing into the Gulf would be certainly over reactive. If you are not aware about updates on world's environmental conditions, let me tell you, every year, oil more than the BP spill, gushes into the water of Nigeria. If that's a part of our earth, why aren't  [...]

House of Representatives finally passed the health care bill (219/212 votes) and I am sure this news will occupy most pages of our newspapers for next few days. Honestly, I didn’t have much idea about the bill nor did I bother to think about it until this morning. It, however, needed president’s signature. Hence, I thought it’s something I should know about. At least the particulars of the bill. According to Medicaid, this bill will revolutionize health care system in US as it promises to cover the uninsured population of the country, majority of them denied to be covered by insurance companies due to their health problems and diseases. And the number of such uninsured people extends up to 32 million. It sound great until you read a companion bill that includes dozens of loopholes. I didn’t really feel the urge to read it. The cost to execute this bill for next ten years  [...]