Archive for the ‘economics’ tag
Just in Time Employment
There is a paradox in the American economic recovery. GDP is expanding at incredible rates, and yet the economy keeps shedding jobs. While the official unemployment figure stands around 10 percent, including worker who are underemployed pushes “the full measure of slack in the labor market closer to 20 percent“. While economists and policy analysts are mixed as to what this means, one certainty is that there will be few gains in employment for the foreseeable future.
Is the problem that there just too much supply in the US labor market, or is there a fundamental change in the way the U.S. handles employment?
European Commission Imposes €1.06 billion Fine on Intel
The European Commission (EC) today imposed a €1.06 billion fine on the Intel Corporation for “abuse of a dominant market position . . . by engaging in illegal anticompetitive practices to exclue competitors from the market for computer chips called x86 central processing units.” The Commission futher ordered Intel “to cease the anticompetitive practices to the extent that they are still ongoing.”
According to the Commission, Intel engaged in a practice of providing substantial rebates to PC manufacturers who either used exclusively or predominantly Intel processors. The rebates themselves were not the basis for the fine, but “the conditions Intel attached to those rebates.”
The Commission also found that Intel made direct payments to manufacturers to delay the launch of products containing processors from rival AMD. This “pay-for-delay” scheme, the Commission finds, was directly aimed at preventing AMD from selling its product on the open market and thus violative of EU Law.
Market Freefall
The Dow, as of this posting, is below 9000 points. I think it would be in everyone’s best interest if the markets took a day off. I know Columbus day is Monday, but a four-day weekend would do everyone wonders.
On the plus side, there’s a three-day weekend coming.
UPDATE: The Dow ended up losing 679 points today, closing at 8579. Good grief.
Is Universal Healthcare Possible?
PBS’s FRONTLINE program, which always achieves an incredible level of journalism, recently ran a program on healthcare systems around the world. The premise of the program is whether the U.S. could learn anything from other modern, post-industrial, capitalist societies. The answer, of course, is “yes, the U.S. has a lot to learn.”
Profiting from their own incompetence
Former Countrywide executives are forming a new company that will restructure sub-prime mortgage debt (at their discretion) by buying it from banks (at a discount) and profiting on the new loan.
Why is no one else complaining that the executives who created this mess are not only allowed to profit both from the creation of the problem and cleaning up their mess?
Not “entirely dictated by market expectations’”?
The Federal Open Market Committee (FOMC) cut the federal funds rate by 75 basis points today, on continuing concerns that the US economy is going down the tubes fast. With inflation on the rise, the dollar on the slide, and more and more jobs simply ceasing to exist, it’s hard to argue.
According to the BBC, the Bank of New York is quoted as saying that “By cutting 75 points rather than 100 points, the Fed sought to restore leadership over the market and indicate that its actions would not be entirely dictated by market expectations.”
How exactly is this not giving in to “market expectations” entirely? Its as if the Fed said to the (stock) market: “Okay. We’ll bake you a cake. We’ll ice the cake for you. We’ll even put candles on the cake. But you better believe we’re not going to light the candles for you. You can’t tell us what to do.”
From [BBC NEWS | Business | Federal Reserve slashes US rates]
Transnational Securities Regulation
Between studying for the bar exam and sleeping, I find a few moments out of my day to read the newspapers. In particular, I like to read the French newspapers to help develop my language skills.
Today, I encountered an article in Le Monde stating that the SEC is investigating possible securities fraud in connection with the Société générale fiasco.
While the news of a “rogue trader” who gambled more than 50 billion € ($74 billion) and is reported to have lost at least 7 billion € has not had much press in the US, it is a major story in France.
What I find interesting is the possibility that the SEC will be able to have a direct regulatory impact on a French bank. Such transnational regulation is becoming more commonplace; see, for example, my discussion of the European Commission’s merger control investigation of Google’s DoubleClick acquisition.
(Update: forgot some zeros on M. Kerveil’s fraud. Should be 7 billion Euros, not 7 million).
Signs the economy is going to get worse
The world economy is going into recession. The US is sinking fast, and the world markets are being dragged down with us.
I know that for most policy makers, the US stock market is the amorphous “market”, but there is something extremely dangerous about the
The interest rates will fail for two reasons. First, the problems with the economy are more systemic than the Fed is wiling to admit. The solution is much like applying a simple bandage to someone who’s already lost a leg.
Secondly, the purpose for an interest rate cut is to increase the supply of money, but the current woes of the global economy are about a lack of available credit in the first place. With most major banks reporting losses of several billion dollars each, it is unlikely that there is much more money that can go into the economy.
Thirdly, there is the looming problem of inflation. With oil and food prices rising substantially, there are already inflationary pressures that threaten to dismantle the economic engine, no matter what the Fed decides to do.
While it may hurt, we need to take more of a Paul Volker approach to the economy. Instead of giving short-term interest rate cuts, we need to keep steady or even raise interest rates in order, painful though it is, to defeat inflation allow the economy to fully correct itself.
[From Fed Cuts Key Interest Rate as Asian Markets Drop for Second Day]
