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World Economy In Limbo

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World Economy In Limbo

The global market remains in a rut, with no significant recovery in sight. 

Larry Summers, the runner-up for the position of Federal Reserve Chair, wants to know what we are going to do about it.

Definitive Global Recovery Is Simply Not Happening

Deflation is no longer just for the Japanese, and interest rates remain low in many countries.

GDP Growth For The January-March Quarter:

  • In the U.S.: 0.5 percent
  • In the euro zone: 2.2 percent
  • In Japan: -1.1 percent

The reintroduction of the term “secular stagnation.”

Larry Summers brings it up and elaborates on it in print, in live speeches, and through online outlets.

The term comes from the Great Depression by way of Alvin Hansen—a Harvard economist—and refers to false, short-lived economic recoveries which cannot meaningfully lower unemployment.

Larry Summers believes that the world’s current economic state may, in fact, be the feared secular stagnation first conceived of during the Great Depression. 

He points out that after seven years the world is nowhere near real recovery

He suggests that interest rates as low as zero are currently too high for demand, and the world is in a kind of bipolar state made up of “bubble” highs followed by recessive lows.

He believes this condition—un-remedied—may last for many years more.

What Larry Summers Believes Is Fundamentally Wrong

Capitalism works when people pay for goods and services and money circulates.  There has been in recent years, however, a tendency for people to save rather than spend.

tradingeconomics.com

source: tradingeconomics.com

The situation is exacerbated by the wealth gap—much of the world’s money is in the hands of those who have so much that they literally could not spend it all if they tried. 

Instead, they hoard it, and it does nothing to fuel the economy. 

Their investment opportunities are dampened because popular business models like that of Uber require so little actual investment to start up and run.

He points out that large companies like Apple and Google are pushed into distributing their money to shareholders rather than investing in development.

Loans see less demand because people are saving instead.  Furthermore, consumers are simply more cautious about taking on debt in the current economic environment.  Both these factors contribute to very low interest rates, which Summers feels are a huge part of the economy’s failure to truly recover.

Furthermore, when people do invest, it is usually by way of taking on debt they cannot possibly pay back, leading to “bubbles” in the market.

What Larry Summers believes must be done about it

First, he is a big proponent of fiscal policy taking up its share of the responsibility. 

He supports large projects that force the U.S. Government to invest in infrastructure. 

Among his suggestions are government-funded improvements to roads and bridges, education, and programs to combat global warming.

He also wants to adjust the tax system so that lower and middle-class Americans get to keep—and then presumably spend—more of their money.

Lastly, he appeals to banks, who he feels worry too much about their independent problems and not enough about getting together to fix the big picture in America.

Larry Summers on his reception by the Federal Government

Summers does not believe that the Federal Government cares about the economy growing again and job numbers improving

He does believe that they are too conservative in their ways of thought. 

He feels that policy makers are making decisions that contribute to the continuation of secular stagnation.

He also treats the idea of the Federal Government raising interest rates without the demand to support them with mild disbelief, as though they are treating a symptom rather than the underlying disease.

Summers vs. Federal Reserve Chair Janet Yellen

Yellen prefers the patient approach of waiting it out and letting the economy heal itself while the Federal Reserve slowly raises interest rates. 

It has been suggested that she cannot afford to theorize the way Summers can while she has to maintain the mechanics of the Federal Open Market Committee without alienating politicians on either side of the aisle. 

She also has to worry about potentially spooking the stock market into a death spiral.

She is not calling for stimulus from Congress and has spoken about the idea of secular stagnation without lending it credence.

If Summers is right, we will have to change the way everyone views the economy and its recovery

At the heart of Summers’ argument is the idea that wealth is simply not circulating at the moment, and that this is slowly killing the world’s economy.  It’s true that the average citizen cannot force Congress to pass tax laws that favor the middle to lower classes. 

Nor can he or she effect a massive redistribution of wealth. 

But we can research the candidates we vote for, and we can spend an extra dollar here and there to get cash flow happening again.

Every little bit helps.

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1 Comment

1 Comment

  1. Avatar

    Larry B

    June 2, 2017 at 9:17 AM

    The big problem is not the economy. The wealthy 1% of the world population are tying up the world capital reserves. They think richer is better. They couldn’t be more wrong! When they tie up the capital it is no longer available for everyone else to use… I mean come on! How many billionaires are there in the world right now? 1,810 billionaires around the world with a total net worth of almost $6.5 trillion. How many millionaires are there? According to Forbes; There are 1826 billionaires as per Forbes 2015 list. They exclude the monarchs, mafia and illegally wealthy. There are almost 15 million millionaires in the world. U.S. and Canada has more than 5 million millionaires.

    THIS IS THE PROBLEM!

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Business

RetailMeNot’s Five to Buy in February

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RetailMeNot's Five to Buy in February
Image via Shutterstock

The wintry temps may make you cold, but February deals are sure to warm your heart. It’s not only a great time to shower your valentine with roses and gifts, but it’s a great time to make other smart and timely purchases as well.

The shopping and trends expert for RetailMeNot, Sara Skirboll, agrees. “With the biggest football game of the year, Valentine’s Day and Presidents Day on the horizon, retailers will offer tremendous savings on a variety of categories — from TVs and TV dinners to all of your Valentine’s Day needs.

1. Play Cupid

With Valentine’s Day this month, shoppers might be struggling to find the right present that symbolizes their love. You can never go wrong with a customized gift made especially for them. This month, shoppers looking to go the extra mile for their loved one will save an average of 40% on items like personalized photo albums, picture frames, wall art and more. You name it, they make it — and just because it’s customized doesn’t mean it will break the bank. Turn to retailers like Shutterfly who is offering a RetailMeNot exclusive for 28% off your regular priced purchase.

2. Ding-Dong Deals

While some might make dinner reservations at the fanciest restaurant in town, many will opt to eat at home. Those who do can take advantage of special promotions and discounts. In fact, diners can save an average of 30% off all month long, so be sure to search the food delivery deals from RetailMeNot. Right now, DoorDash is offering 25% off your first purchase and Postmates is offering $15 delivery credit for existing users.

3. Flower Power

Everything’s coming up roses! According to a recent RetailMeNot survey, 46% of shoppers plan to buy flowers for Valentine’s Day this year, up from 34% in 2019. Many florists will be offering promotions and discounts to help shoppers prepare for the holiday. This year, retailers like 1800Flowers are having up to 40% off flowers & gifts and FTD is offering a RetailMeNot exclusive offer for 20% off sitewide.

4. Get Your Game On

Attention sports fans: Discounts on electronics are not strictly reserved for Black Friday! In fact, February is the second-cheapest time of year to buy a new TV. With the big game right around the corner and March Madness close behind, manufacturers will use those big-time events to highlight big savings on big-screen sets. Another reason for the markdowns is that new models will be released next month, so retailers will be looking to make room for new inventory. Shoppers in the market for a new TV should head to Samsung where they can get 10% cash back with RetailMeNot, and Best Buy where they can find up to 64% off clearance items.

5. Meet Your (Price) Match

Life can easily get in the way of finding “the one,” but online dating sites and convenient mobile apps are here to help. Those looking for love are in luck: Dating sites can offer up to 75% off enrollment fees to encourage singles to put themselves out there. Dating sites like eHarmony are offering 35% off all subscriptions and OkCupid is offering free membership.

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Arts

Shutterstock Announced as Official Photographer of the 2020 EE British Academy Film Awards

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shutterstock 2020 EE British Academy Film Awards
Shutterstock Announced as Official Photographer of the 2020 EE British Academy Film Awards (Photo: PR Newswire)

Shutterstock, Inc., a leading global technology company offering a creative platform for high-quality content, tools and services, today announced that it has been renewed as the official photographer of the 2020 EE British Academy Film Awards, which recognizes the very best in film over the past year. As the official photographer of the show on Sunday, February 2nd, Shutterstock’s on-site entertainment photographers, editors and engineering team will deliver exclusive high-quality images from the event at the Royal Albert Hall in London to the world in less than one minute from the image being taken.

Shutterstock’s editorial team captures, edits and distributes celebrity portraits and candid images leveraging proprietary software optimized for speed to market. As the moments from the red carpet, inside the awards show, and at the after-parties are captured, Shutterstock’s team makes lightning-fast crops and edits and transmits them directly to the desks of photo editors, writers and media. This speed-to-market empowers Shutterstock’s editorial customers to keep up with today’s fast news cycle to quickly deliver their news stories.

“We are pleased to continue our long-standing relationship with BAFTA, an arts charity whose purpose of celebrating and supporting the best work and talent in film, games and television is closely aligned with Shutterstock’s,” said Candice Murray, Vice President of Editorial at Shutterstock. “As a company whose passion is rooted in creativity, it is always an honor to be selected to shoot and share these unique moments recognizing the industry’s top creatives from around the world at the BAFTAs.”

“Shutterstock is best equipped to provide the world’s media with high-quality images of our awards ceremonies and year-round program through their advanced creative platform,” said Claire Rees, Photography Director for British Academy of Film and Television Arts. “Our partnership has grown over the years and as Shutterstock’s technology and service continue to evolve, we continue to see greater results in amplifying the mission of BAFTA around the world.”

Shutterstock’s annual partnership with BAFTA, a world-leading independent arts charity, originated in 2013 and includes editorial photography coverage of the Television Craft Awards, Games Awards, Television Awards, Young Game Designers Competition, Scotland Awards, Cymru Awards and Children’s Awards.

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Business

Amazon Profits Surge as Investment in Faster Shipping Pays Off

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Amazon Profits Surge as Investment in Faster Shipping Pays Off
Image via Shutterstock
By Dominic Rushe

Amazon’s massive investment in faster shipping paid off for the tech company over the Christmas holidays with record sales and four times as many customers taking advantage of its free one-day shipping offer over the shopping season compared with last year.

Amazon is spending billions making one-day shipping the default for its Prime members and the gamble helped drive its revenues up over $87bn for the final quarter of 2019, or $29bn a month, compared with $72.4bn in the fourth quarter of 2018.

Profits increased to $3.3bn in the fourth quarter, up from $3bn in the same period last year, after a fall of 25% from July to September due to its costly shipping investments. Amazon’s shares shot up over 10% in after-hours trading.

“We’ve made Prime delivery faster – the number of items delivered to US customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year,” said Jeff Bezos, Amazon founder and CEO.

Amazon’s bumper Christmas – the best in its history – came as other retailers including Target, Macy’s and JC Penney have reported lower sales.

Amazon Web Services (AWS), its cloud computing business, reported revenues of $9.9bn for the quarter, up 34% from the year-ago period.

Amazon also gave an update on its number of Prime subscribers, who pay an annual fee for faster shipping and access to free content on its streaming media services. Bezos said the company now has over 150 million paid Prime members around the world, up from 100 million last April.

Amazon’s share price has lagged its tech giant peers in recent months as investors have worried about its spending. The latest results push the company back into the exclusive club of tech companies now valued at over $1tn including Apple, Alphabet and Microsoft.

Copyright © 2020 theguardian.com. All rights reserved.

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