Marketers have made business trends look stress-free and without barriers considering the economic meltdowns that have been experienced worldwide by entrepreneurs. This scenario has been proven to be misleading by most researchers. According to the research done by Thomson Reuters and the University of Michigan, most Americans have become more concerned with the steps they take relating to financial matters. The recent 2008 global economic recession can be affirmed as a stressor to the economic potential of most people.

 Even though most marketers know of the risks involved consumers are unaware of looming economic crisis and continue to spend their money making the U.S retail sales rise up to 0.5% each month.Confusion in the market has made retailers and investors fail to understand the market trend.

The fluctuating economic depression and recession throughout the week has made matters worse and mentally exhausted investors who need time to recover from the fluctuating market.The U.S government has even announced through retail reports that the economy is still on the right track and no measures are needed to sustain its growth. Unemployment benefits also have had gradual fall during the time of the recession.

All this information being conveyed to the general American public is inconsistent and misleading as most people with savings at federal banks throughout the U.S. getting minute interests for the past few years even though the government claims that the economy is not under any stress. This difficulty in giving a comprehensive explanation to why the economy has made it difficult for both investors and retailers to come up with a clear plan and way forward in the market industry.

General Motors Getting Eaten Alive By a Free Lunch

A free lunch can be considered as the costliest worldwide food intake as evidenced by General Motors. This is due to the healthcare commitments and pension provided for employees in the past. The UAW (United Autoworkers) and GM (General Motors) signed profitable contracts yet this didn’t influence the wages. GM paid lower salaries which led to higher revenue that in turn led to rise of bonuses for executives as well as stock prices. On the other hand, commitments such as pensions had very little influence on GM’s revenue and did not even appear as an obligation on the balance. This made the company give the employees free lunch since it enjoyed good revenues.

At the moment GM is paying back for the free lunch since the pension and healthcare obligations are weighing them down. The problem began when GM started increasing costs such as pensions ignoring the huge risk that was involved. According to UAW, by 1973 GM was paying all the health bills for employees and retirees and granted employees full pension following 30 years of serving the company regardless of their age. GM fell in trouble when the rules for accounting changed and the pension obligations had to be included in the balance sheet. Besides, the costs are visible on the sheets and are heavy on the company’s budget. GM is having problems because drug prices exploded more than the company had expected which became a burden on the company. GM sold bonds at lower rates in order to settle the pension problem for good and was successful, but lost their borrowing power with a $3 billion surplus in pension. Unless GM is able to sell vehicles and make much more revenues, things are bound to get worse for the company.

A Blueprint for Obama on How to Fix the Economy

Congress’s hastiness regarding the economic choices they made during 2011 paved way for President Obama to pledge new economic initiatives. This called upon new ideas which can help reduce the high rate of unemployment throughout the United States with California leading with 11.9%. In addition to this Obama’s plans were considered insufficient and could not sustain or bring any difference to the American economy.

This inconsistency in the Obama administration regarding the welfare and infrastructure of the country led to the suggestion of the following ideas which could shape the economy. Firstly, there is a need to repair mortgage debts during recovery from economic recession. This proved to be a big challenge considering that household debts as of 2011 stand at $11.5 Trillion. With such hefty inconsistency in the household sector this meant that Obama administration had to make great changes in its budgetary allocation of funds. The passing of the legislation “right to rent” would also allow home owners come to terms with the banks instead of the hostility that has been there with banks closing properties when mortgages are unpaid in time.

Another step which the U.S government ought to take is the restructuring of infrastructure of the Bank which only offers $30 Billion. This is regarded as a poor long-term investment, although seen as a great start. More funds need to be allocated to this sector for fast and lasting economic sustainability. Besides this $300 billion, cut in the military expenditure would also boost the American economy.  The real issue here is that favourable allocation of funds throughout all sectors in the American economy would be the key factor in mitigating economic recovery.

Trouble with Trade

United States as an economic giant is now approaching the trading threshold by practicing industrial trade with less third world countries whose economy is still growing. This could be seen as an advantage for the developing country but as a huge economic barrier to the already developed country practicing it. American workers’ wages have dropped due to this form of trade.

Trade between two economically different countries tend to be challenging as it creates a huge class indifference of both practitioners that is the developed will continue developing while the undeveloped will continue struggling. Workers in the U.S. are the ones suffering from this form of free trade as they have insufficient room for expansion due to their education levels and increased labourers with the same level of skills as theirs.

This free trade has now posed to be dangerous to the General American economy due to its all-round import growth for developing countries which have experienced an increase of 3.5% since 1990. The alarming part is that very poor countries with low wages are the ones that have experienced the most significant import growth. Competition for jobs has grown due to this form of globalization which has opened doors for new workers who will work for much less wages doing the same job. Places like Hong Kong and Singapore which were once considered developing have significantly benefited from this practice. The problem with this trading practice is that it hurts the larger American population of skilled blue collar labourers while only few Intellects benefit.

The Global Economy Comes To the End of Its String

Columnist Steven Pearlsteinbegins the article by posing a question, Why is this happening?” He then answers it by criticizing the management plan of the U.S. Underlying structural problems were never fixed thereby causing the 2008 financial crisis. Due to this problem, the US economy began consuming more than it produced. The crisis was propagated by the build-up of dollar reserves and massive credit bubbles from the Asian economic boom. Also adding to the crisis was the single currency in Europe without a single matching economy. After the crisis, policy makers turned to monetary and fiscal stimulus. It involved states printing money and incorporating it to the financial market as well as ramping up deficit spending. This stabilized the global economy in the short run.

This system, however, did not create a virtuous cycle of growing sales, employment and profits. The escape velocity was not acquired and policies were exhausted. As a result, measures like eliminating jobs, closing companies, lowering incomes, reducing government services will have to be undertaken. This is happening globally in all countries. In order for governments to stabilize markets and provide some needed support under the economy, a few measures may be taken. Federal Reserve should take the opportunity of the high migration to the US to sell some of its enormous pile of T-bills in the market, while European Central Bank should shed its reluctance to print money and buy up some of those sovereign bonds that are being dumped on the market by anxious banks and investors. This measure should help the European market temporarily.

The US government should also suspend spending activities that may be applicable in a decade or so to cut spending. To help private investment in equipment and research, the government could allow companies of all sizes to deduct 100 % of such expenses made in the next three years. That incentive to invest now will increase the deficit in the short run, but will have little or no impact on the long-term deficit. These actions must be complemented by the people and not the government alone so as to achieve stability in future.

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City Agencies Are Told To Cut Costs By $2 Billion

The inconsistency of the present economy pushed the City Agencies in the whole of U.S. to reduce their local budget by 2% on the current 2011-2012 budget year and a further 6% on the following year. This would also be followed by other additional necessary cuts which could be determined by how the economy is coping. This could continue budgetary cuts mean that a total of $4.6 billion deficit on the next fiscal budget. This can be blamed towards the poor revenue policies and other unfavourable economic strategies.

Impromptu budget modification have since the recent past been the norm in the American City council Administrations. This stated with cuts on the education and other utility services which the council is mandated to offer. A good example is the practice of the year 2008 when $1.2 billion increase in property taxes had to be implemented so as to meet the fiscal terms of the set goals to be accomplished effectively. The ever fluctuating economy since the Global recession of 2008 has been a major escape goat for city council officials who often blame the economic inconsistency towards their budget adjustment.

Unemployment of civil servants has been building up with hostility crawling up between unions and city council officials each blaming one another for not keeping to their promises. Some departments such as the N.Y.P.D. have warned of any other form of income cuts after being underpaid for over 10 years. This calls for more assessment and evaluation of all sectors within the city agencies so as to come up with specific and effective budgetary reports.

With Debt Card Fee, Bank of America Reaches Deeper into Customer’s Pockets

New federal debit card rules are out and they limit the number of banks that can charge for debit card transactions. Banks are not supposed to charge above 21 cents per transaction hence the Bank of America announced a $5 monthly fee for debit card users as a precaution for the expected drop in revenue and was accepted by the Federal Reserve. Most banks will incur losses for example BoFA estimates a $2 billion loss every year. BoFA is not going to make losses with less revenue hence the introduction of the standard fee of $5 per month which will result to approximately $3 billion per year in terms of revenue. This is $1 billion more than the previous revenue.

            Other companies such as Wells Fargo and Chase are testing the market with a monthly fee of $3 per user in states like Georgia, New Mexico, and Washington among others. Some of the customers of the banks such as BoFA are feeling oppressed by the idea of the monthly fee and are accusing the bank management of being greedy.  Some of the people that would not mind the fee are the beneficiaries to the banks since they are exempted and the fee will not affect them. The bank won’t charge anything from those who have ATM fees and those who have their mortgage at BoFA or $20000 as savings in the bank but this is the minority. Many people do not have $20000 lying in the bank and will have to pay the fee. They thought that debit cards were a convenient way to access cash but it has turned out to be an expensive way. BoFA’s management declined to answer some questions such as how much it cost to process a debit card transaction, but insisted that they were open and transparent with customers about their fees. Until BoFA comes out clear on the processing fee of a transaction, customers will believe the rumours that they incur a penny or two due to a huge number of customers.

Bernanke Urges Obama and Congress to do more for Economy

An economic stimulus is any effort by the administration to pump money into collapsing economy through spending, tax cuts or interest rate reductions. By replacing money not being spent by businesses or consumers, a stimulus is meant to put a floor under a recession and pave the way for a return to growth. Since the 2007 economical meltdown, the Congress has approved about 3 stimulus bills. The bills are: $158 billion bipartisan package of tax cuts which was signed by President George W. Bush in early 2008, a $787 billion bill passed by President Obama in 2009 in the wake of the financial system’s breakup, a tax cut, and unemployment fund extension agreement between Mr. Obama and Congressional Republicans in December 2010. Although the republicans view the 2009 stimulus bill as a downfall, it helped to retain jobs and supported recovery. Using their majority votes in the House, in 2011the republicans helped in spending cuts as opposed to stimulus. However, with fresh threats of a bigger recession, Obama pushed for a $447 billion tax cuts package and new government spending. The package involves employee tax to be cut in half, tax holiday for hiring new employees and payroll tax cut for smaller businesses. The plan needs $400billion which would be paid for by tax changes that would limit itemized deductions. These include charitable contributions and other expenditures taken by individuals and families earning more than $200000 a year. The rest of the amount would come from provisions affecting hedge funds, oil and gas companies, and the owners of corporate jets. Democrats’ replacement of Obama’s tax changes by the “millionaires’ tax” was blocked by the republicans. All other efforts were blocked and lawmakers needed to act fast.

Nurses’ Prescription for Healing our Economy

To get a glimpse into how hard things have become economically due to the great recession, ask those practicing medicine particularly the nurses. They bear witness to an ever increasing number of ailing people the cause being financial hardship. This causes most people to forego treatments and taking medicine. A study reveals that suicide attempts owing to home foreclosures have become rampant. Medication and hospitalization for complicated diseases like anxiety, diabetes or hypertension have increased. With this in mind, it is quite understandable when nurses question Wall Street over economic hardships. The National Nurses United has recently undertaken a strategy to mobilize citizens through protests that advocate for an introduction of a financial-transactions tax. It’s a tax on stock trades, derivatives and the currencies market which would mitigate short-term speculation and increase revenue. The nurses have gone ahead to stage protests on Wall Street, the Chamber of Commerce and the Federal Reserve Bank. The nurses union is using its power to advocate for the overall welfare of the society rather than the usual negotiations for fair pay and acceptable working environment.

A Boston medical practitioner says that she experiences the effects of the financial crisis every day. At the NNU’s convention in San Francisco, the union was acknowledged by the film maker Michael Moore for its creativity and initiative in the bid to push for the introduction of the tax. In real terms, this noble idea needs to be realized as it holds great remedy to the current financial issues all over the country. Nobel laureate James Tobin, an economist, suggested this tax. It was meant to discourage short-term currency speculation hence the name “Tobin Tax”. Other persons like Bill Gates have also endorsed the idea with an aim of raising substantial resources for development spending. This idea has been embraced in Europe with Germany and France showing support.

Save a Down Payment before Trying To Buy a Home

Liz Weston, a columnist with the Los Angeles Times, runs a money talk column which helps to tackle most of the financial questions raised by different individuals. A middle-class, married man, earning an average of $40,000 a year, with no kids and average credit scores is planning to buy his first ever home. However, the couple has financial issues with its bank account together with the wife’s and is planning to switch to a credit union. The couple anticipates a bad report from their bank which is the main reason behind the switch. This poses the question whether their move is a good one. They have no savings and still want a home mortgage. Weston explains that without having saved a down payment, one is not ready to own a home. Owning a home can prove to be quite expensive as a lot of unforeseen expenses, minor or major, may pop up when least expected. The expenses require a person with some savings to clear them.

To own a home one not only needs to have a decent savings program but also requires living below one’s means. Weston advises the couple to take a year and make up some savings and a down payment as they will require a minimum 3.5% down payment to get a FHA loan and also improve on the credit scores to above average. In addition to better interest rates, larger down payments mean more and better loan options and a better pocket after home ownership. With that the couple also needs to clear things up with the bank as defaults or other evasions may cause damage to credit scores. Other problem resulting from this is the difficulty in opening new accounts in other financial institutions due to bad reports.

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