Category Archives: Business/Economics

Business/Economics, U.S.

Federal Reserve admits inflation is a problem, new jobs could make it worse

Despite years of denial, the Federal Reserve ( a privately run bank) is now saying inflation is a concern: “If we are going to have success in creating a long-run sustainable recovery with lots of job growth, we have to keep inflation under control.”-Ben Bernanke, Federal Reserve Chairman

The problem is so bad that the Federal Reserve is worried that job growth could actually make things worse: “It is not clear that we can get substantial improvements in payrolls without some additional inflation risk.”

Federal Reserve chairman Bernanke had been saying for months that inflation isn’t that much of a problem.  Now Bernanke is saying that the best way to create jobs is to keep prices down.  In other words, fighting inflation is now the main focus, jobs will come later.  As part of the fight on inflation, the Federal Reserve has decided to keep the interest rates it charges financial institutions low/unchanged.

Business/Economics, U.S.

Unemployment up, spending way down, blame it on the inflation the government denies is happening

Job analysts were shocked Thursday, April 28, when the weekly first time unemployment claims jumped by 25,000.

“This is a major disappointment because it’s another move in the wrong direction. This is more than just a misstep for the job market. It’s a signal that the robust job growth we’ve seen recently is poised to lose momentum.”-Tim Quinlan, Wells Fargo

Total number of initial jobless claims jumped to 429,000 in the week ended April 23, analysts were expecting it to drop to 390,000.

The government is reporting that overall unemployment numbers show a drop in unemployment, but, more and more analyst think that’s because unemployed people have simply exhausted the time limit for unemployment benefits, NOT because they found work.

“We can’t be certain it’s a positive trend yet. The Labor Department doesn’t specify whether these people are rolling off their benefits or if they’ve found jobs.”–Tim Quinlan, Wells Fargo

Another factor is that each state has its own limits on unemployment benefits, so the federal reporting is not accurate state by state. For healthy improvement in the job market  the economy needs to add between 150,000 and 200,000 jobs every month, which it has not been doing.

Add to the jobs loss shock, the GDP shock.  The U.S. Commerce Department reported Thursday, April 28, that Gross Domestic Product percentages fell to 1.8% (it’s funny, some media reports are calling it an increase, maybe compared to last April).  At the end of 2010 GDP was at 3.1%, so April’s numbers are definitely a drop.

The Department of Commerce is blaming the drop on decreased consumer spending, due to, guess what, inflation.  The drop shocked analyst who were expecting GDP to hit 4.3%.

“Undoubtedly, consumers are cutting discretionary spending to compensate for rising food and energy prices.”-Jim Baird, Plante Moran Financial Advisors

Retail prices were up 3.8% from a year earlier.  Add to that the slow housing market, decreasing government domestic spending (even though the government continues to spend money outside the country), and even bad weather are taking a toll on any “recovery”.

 

 

Business/Economics, U.S.

WalMart says; What Economic Recovery?

“Purchases are really dropping off by the end of the month even more than last year. This end-of-month [purchases] cycle is growing to be a concern.”-Mike Duke, CEO WalMart

WalMart executives are doubting claims of an economic recovery, because their sales are down.

Most WalMart shoppers are low income workers who live paycheck to paycheck.  CEO Mike Duke said because of inflation (which official government agencies deny is happening) their customers are running out of money, faster than ever.

Duke admitted that WalMart had to raise prices on produce, but tried to compensate by lowering prices on electronics, but you can’t eat electronics.

WalMart officials are now going to try to lower all their prices, in the hopes it might boost their falling sales.

 

Business/Economics, International, Technology

Warning for PlayStation users, 77 million accounts hacked

Sony is warning PlayStation users to monitor their credit card accounts, after a hacker got into 77 million accounts.  Sony says it ”cannot rule out the possibility” that credit card data was hacked.

The incident also includes the music and video service Qriocity.  This could be the worst case of information leaks in Sony’s history.  Sony wants all users of PlayStation and Qriocity to change their passwords and user IDs.

 

 

 

Business/Economics, International

Bolivia about to pass historic law, multi-national corporations won’t like it

The Law of Mother Earth.  If it passes, it will be historic.  Bolivia’s legislature is debating the new bill, which many believe will be passed.

The proposed law states: “Mother Earth is a living dynamic system made up of the undivided community of all living beings, who are all interconnected, interdependent and complementary, sharing a common destiny.”
It is based on Sumaj Kawsay, a native phrase for living in harmony.
Basically the law requires a transition from non-renewable to renewable energy; to  assess the ecological impact of all economic activity; ecological audits of all private and state companies;  reduce greenhouse gas emissions;  policies of food and renewable energy sovereignty; require all companies and individuals to be accountable for environmental contamination.
Of course there is opposition to the proposed law, mainly from large corporate mining and farming operations.  Corporate soy farmers say the law “will make the productive sector inviable.”
Even government agencies say the law would not be enforceable because it would be a logistical nightmare.
Supporters say something has to be done about the exploitation by multi-national corporations: “We need to pull together peoples, researchers, and communities to develop real concrete alternatives so that the dominant systems of exploitation don’t just continue by default. This is not an easy task, but I believe with international solidarity, we can and must succeed.”-Raul Prada, adviser to Pacto de Unidad

Business/Economics, International

Venezuela quits Andean Community, wants to join MERCOSUR

Venezuela has officially quite the economic union “Andean Community”.  It’s made up of Bolivia, Colombia, Ecuador and Peru.

Venezuela said it quite the trade group because of free-trade agreements signed with the United States and Andean pact members Peru and Colombia.

Venezuela now hopes to join MERCOSUR, a trade group made up of Brazil, Argentina, Paraguay and Uruguay.

Business/Economics, International

Ford closing more plants, “just in time” global economic supply system continues to strike

Ford is temporarily closing plants in Taiwan, China, and South Africa.  The Taiwan plant will be closed for about two weeks.  The plants in China and south Africa will be closed for one week.

Ford did not say whether the lost production would be made up later, or if it would adjust its global output forecast for 2011.  The current global economy is not only a threat to the average worker, but the disaster on March 11, in Japan (the “just in time” supply center of the global economy),  showed that is bad for big businesses as well.

Business/Economics, International

Toyota on its way down to number 3, Volkswagen up, blame “just in time” house of cards

Toyota has already lost its number 1 ranking, no thanks to the March 11 disasters in Japan.  Now its heading down to number 3.

General Motors is now the number 1 world producer of cars, not just because of what happened in Japan, but because GM’s sales are taking off in China.  Who’s about to become number 2?  Volkswagen.

VW is expected to produce 7 million cars by the end of 2011, right behind GM.

Japan is now rethinking its “just in time” supply system.  The March 11 disasters reveled the inherent flaw in the system, especially without any back up systems in place.  A “just in time” system is a house of cards, just pull one or two, and the whole house comes down.