Bloomington office park draws new tenants

In the BLM complex near the Mall of America, the announcement of three new tenantse gave a positive outlook on this bleak economy. The space bought by these new tenants brought space filled to 90%, better than 85% space filled in nearby areas. Though this news lifted the hearts of many, the demand was still not great enough for more supply of space to be built. The economic downturn has shifted the equilibrium point to a decrease in GDP(space), and price level. Though demand is not great enough yet, there are plans occurring for a third building complex to be added once an upturn in the economy occurs.
In my opinion I think this shows that big name companies are starting to have a really positive outlook on the end of our current recession. Instead of saving their money, these companies are investing it into other places. This will eventually create more jobs, which will lead to a greater demand in the economy with new wages. Though the BLM complex is not filled up, it is filling at a very slow rate. Though the GDP fell 6.1%, overall our country's economy is still growing. I think that our current recession is going to end soon as banks will begin to lend soon, and let the supply of credit flow throughout the sectors of our economy.

http://www.startribune.com/business/43647352.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr

Swine flu name to change

The outbreak of a newly discovered "swine flu" has been sweeping the world the past couple of weeks. It all started in Mexico, and is now spreading to other countries across the world as tourist are returning to their native countries. Though the strands are part pig, people have been trying to change the name. Why? To protects the nearly $97 billion pork industry, as the name implies this virus is transferred through the consumption of meat. Some people agree, some others. Other countries have decided to stop the importation of pork from any suppliers.
From an economic perspective this is a very good thing to do. With less free trade, countries are going to have higher prices, less GDP, and an overall lower standard of living. Production possibility curves will shrink back to what they were before free trade. This does creates some winners, but many more losers. The losers will be all of the consumers of a country, spending much more money to keep their domestic producers in business because of the increased opportunity cost. The winners will be the domestic producers. This policy is known as protectionism.
In my opinion this is a very, very good thing to do. The costs weigh out the benefits, and most people are stuck with a lower standard of living. Medical studies even prove that you cannot contract this virus through the consumption of pork, and each country should continue trading with each other.

http://apnews.myway.com/article/20090501/D97T57SG1.html

Extraordinary Times call for Extraordinary Measures

Recently in the news was the interview of Ben Bernanke, his comments on our current economy, and of what the future economy will look like. He is currently in defense of the Fed's effort to try and contain the economic crisis and is devoted to do whatever it takes to get out of this "downward spiral". During the interview of Ben Bernanke at the National Press Club, the first time a Federal Reserve Chairman has ever spoken to journalists, he tried to lessen the concern of the dangers of printing all the money they had recently printed by backing the Fed's and expressing his trust in them to do a good job and said: “The Federal Reserve has done, and will continue to do, everything possible within the limits of its authority to assist in restoring our nation to financial stability,” (New York Times). He also focused on the rate of unemployment and how it would for sure rise this year (now at 8.1%, up from last months 7.6%). Even after these statement were said, the central bank gave a report on how the Federal Reserve "had become considerably more pessimistic" (New York Times) about our unemployment rate, which could be even higher than predicted. The Federal Reserve also came out with its predictions on economic growth for the next five years and said that it would rise about "2.5 to 2.7 percent anually" (New York Times). Another major issue Bernanke focused on was the government spending that has gone from $900 billion last September to approximately $2 trillion this year. This spending was issued to help the Financial System and improve the economy with new programs that it will issue and will hopefully not fuel inflation to rise or lose money from these risky loans.

My opinion on this matter is that Ben Bernanke has been hit with a hard and difficult crises and has a lot on his hands right now. I believe this economic crises will take a lot of work to overcome and will be a slow process to heal at best. I also think these economic recovery plans and programs will eventually work with a lot of the money being poured into them. With this government spending it will hopefully reduce unemployment and act as an Expansionary fiscal policy. This expansionary effect with a bit of luck will fuel our economy, lower taxes, and increase our demand. With the 3 basic tools our Fed uses, it would decrease the reserve requirement, decrease the discount rate, and buy more securities, so that the economy, with the increase in money supply, will soon decrease our interests rates and increase investment. Well, times call for extraordinary measures, and this is certainly one of them.


http://www.nytimes.com/2009/02/19/business/economy/19fed.html

The Fed's power over our economy

The Fed is a powerful department of our government, able to print limitless amount of money quickly and easily to help in times of trouble. Our country is currently in a deep recession, and the Fed is now going to print about 1 trillion dollars worth of money to buy "up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac". With the Fed's tool of open-market operations, they hope for money supply to increase, interest rate to decrease, and investment to increase, causing an overall expansionary effect on our economy. With easier credit lending, banks will feel safe lending to those in need, who will in turn use that money to buy consumer goods, or invest in the stock market. This will hopefully yield an escape from our recession, and bring us to the positive slope of the business cycle. The Fed is able to do this easily as they have instant speed and flexibility, as well as isolation from political pressure.

In my opinion, I think that this plan may work in the short run. Already in the past week the stock market has grown to mid 1700's, and even Fannie Mae, and Freddie Mac stocks have increased about a quarter of a dollar. Bank stock prices have also increased, which may lead them to begin lending again, just as the Fed is trying to do by employing their open-market operations tool. The big thing which I am concerned about is the fear of rapid inflation in the future. This may occur due to this massive printing of money, which may cause the Fed to sell securities. This will cause a decrease in money supply, increase in interest rate, and a decrease in investment. This may yield a displacement of 0, only prolonging the effects of our housing crisis.

http://finance.yahoo.com/news/Fed-to-buy-up-to-300B-apf-14679757.html

Recession or Depression???

Times are hard. But is the world economy turning into a Depression? My opinion, no. I believe what goes up must come down. Everything bounces back right? Stocks go up and down all the time. So why in this cartoon, are people worrying so much? One thing, misinterpretation. Everybody in the world misinterprets things all the time, but that's not just a bad thing, it could also be a good thing too. Why? Well, for one thing we learn from our mistakes all the time and learn to take caution towards those same issues in the future (well, currently not so much, our government can't learn to stop bailing out all these companies, especially AIG).
Now, back to the cartoon. It displays, mainly the stock market, and how the stock prices can rise and fall in an instant from careless thinking of CEO's to the little guy, the stockholder. The cartoon goes from a calm perspective when the stock market doing just fine, until someone brings up a fact that may or may not be harmful to the opinion of the of the shareholders keeping or selling their stocks. And when they are harmful the stocks could plumet or rise in value because of the buying or selling of their stocks. This could also turn into panic as seen with the last man on the right yelling "SELL! SELL!", but it's not very probable unless you have your entire life savings in stocks.
This cycle of ups and downs is commonly known as the Business Cycle. It operates and is controlled mainly by the levels of GDP, inflation, unemployment, and many other factors. Currently the US would be categorized as in a period of Recession, where the real GDP has been in decline for at least six months. Hopefully, as the DOW seems to be going up in the last few days, we'll overcome this Recession and hit the recovery stage of the business cycle and then the peak, to benefit the economy.

http://politicalhumor.about.com/od/economy/ig/Economic-Cartoons/Recession-to-Depression.04hO.htm

market economy

As any rookie investor has noticed in the past year, stock market prices have fallen considerably across the world. Trillions and trillions of dollars have been lost in world wealth, due to the housing crisis we are now experiencing. In the past 5 of 6 trading days, we have begun to see this process reverse. Housing companies are reporting positive gains in their stock prices, and even the major banks pouring out bad loan after badc loan have reported a positive gain in their stocks. Home building in February grew, and investors have rallied around this, creating a mini bull-market. The sign of home prices stabilizing has created a key economic stabilizer. With this stabilizer incomes will now correlate with home prices, and retail capitalists will follow suit, and soon the economy shall pick up. With this restored confidence, everyone will soon spend their money, creating huge increases in demand, which will in turn create many jobs to create the supply needed. The government may soon follow suit by de-privitizing major corporations which they have taken into their control. With less Keyseian economics, and greater classical markets, and global market may soon restore to their pre-housing crisis levels of wealth.

My opinion is that beginning signs are appearing towards a stable economy. We may not attain the levels of wealth we once experienced soon, but I believe if this momentum keeps going then we will have a favorable increase in our countries GDP on a year to year basis. We, as a world, have learned now to invest in stable long-term assets that will yield a profit to them, while creating a multiplier effect to create great wealth. I think we are in the trough region of the economic cycle, and soon will get to the growth period of the cycle.

http://www.startribune.com/business/41392437.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr

Unemployment and the Economy

Unemployment has become a big fear for everyone in the US this year as the economy worsens and big companies as well as small businesses have already begun to layoff some of their workers. Companies such as Target have let "go about 9 percent of its headquarters workforce, the deepest cuts in company history." (Star Tribune). Because of the recent factors in the economy, corporations like Target have had to let go several workers from their labor force to try and save their company from losing money and to cut costs to seek better profits. Even small businesses are being hurt also and many have been forced to go out of business and liquidate their products. In December 2008 a reported 524,000 jobs were lost and the number of unemployed workers is said to continue to rise to almost to 9% by 2010. Even some economists are more worried about the new economic stimulus plan Obama has created because "Obama claims his plan will 'create or save' 3 million jobs over the next two years. But the crisis is presently destroying over 500,000 jobs a month. Even if his plan is adopted and implemented in full, the jobs it creates will be overwhelmed by the ongoing contraction, leading to a further rise in the unemployment rate to double-digit levels" (wsws.org).

This crisis of unemployment rates relates heavily to what we are currently learning in the class room. For one, it shows how the economy can effect large and small businesses through the supply and demand of the world economy. While the economy has started to dwindle down less people are willing to pay for the goods they usually buy, like luxury items, and some have even been using substitutes to lessen the cost of their bills. While the demand for some products might be up, like basic goods such as milk or bread, others have gone down, such as companies who sell new cars, or homes, because of the recent housing market crisis. Also the Market System has been a major factor in the role of these companies, mainly because of competition. As we have seen, Target sales have gone down because of current incomes being reduced or slashed, while dollar stores have actually increased their profits.

My opinion is that our government should stop wasteful spending on luxuries for the cabinet members and start to get to work on the economy to stop the current rate of unemployment to rise. If we don't, I believe that the economy will get even worse and the sales of big corporations will fall do to the lack of money in these future jobless households. These companies will be forced to lower their prices and soon they'll probably brake even or worse on their luxury goods, since the demand would be low because of effect of lower incomes. Hopefully our unemployment rate will lower in the next year or two to balance out the economic downfall happening as we speak, but for right now this number of unemployed people will probably get higher and higher.


http://www.startribune.com/business/38457219.html?elr=KArks8c7PaP3E77K_3c::D3aDhUxWoW_oD:EaDUiacyKUnciatkEP7DhU
http://www.wsws.org/articles/2009/jan2009/jobs-j10.shtml