Can Main Street Catch Up with Wall Street?

The article, Can Main Street Catch Up with Wall Street? details the differences of how the economy is viewed between individuals on Wall Street and your average citizen on Main Street. Many economists feel that the recession may be nearing its end because the Dow Jones is above 10,000 and earnings of major corporations exceeded expectations. Investors note that it is easier for Wall Street to recover after a recession than the job market. However, unemployment has doubled in the past year and foreclosures are expected to top 3.5 million this year, up from 2.3 million in 2008.

The author Moira Herbst states that there are two different types of indicators regarding the economy. "Leading Indicators" like stock prices and the difference between short-term and long-term borrowing costs are examples of this because they tend to signal the status of the economy. "Lagging Indicators" like unemployment and consumer credit volumes tend to recover more slowly, hence the term "lagging." The belief by those on Wall Street is that the leading indicators are soaring ahead of the lagging indicators and that is one of the reasons why they sense that the economy is on the verge of a recovery.

Herbst states in the article Can Main Street Catch Up with Wall Street? that the difference in views on the economy is rather broad. The recession has crushed the job market and those on Main Street are feeling the pinch. The hope is that companies will realize how badly their cuts have hurt the economy and begin hiring again in the near future. At the same time, investors are beginning to question if they are overvaluing the stock market because of the diminished spending power and willingness to spend of consumers. In the end we will see who is right, Wall Street or Main Street.

Summary - Fed & Treasury Pitch Pay Rules, But Will They Work?

The article, Fed & Treasury Pitch Pay Rules, But Will They Work? details the new compensation rules for executives at banks and other financial institutions set forth by the Federal Reserve and Treasury. The new regulations by the Feds are broad so that they will affect every bank. The new proposals by the Treasury only affect the seven institutions that received large amounts of taxpayer aid. The Feds new rules are not "hard-and-fast" because every institution is different and they believe that the pay practices reflect that. The Feds also want to inform the bank holding companies how they plan to assess their pay practices. The Treasury's new rules is to police the pay for each firms top five executives and the next 20 highest-paid employees. While a better approach may be to adjust each executives pay to his or her duties, consultant Pearl Meyer believes this is a start.

Summary - The Economy: Beware the Bottlenecks

The article, The Economy: Beware the Bottlenecks discusses the different potential outcomes of deflation and inflation during an economic recession. According to Peter Coy, the author of the article, inflation is not a problem because sellers want to get rid of excess inventory. However, experts believe that more bottlenecks similar to this could form causing prices to increase and the Federal Reserve to increase interest rates before we can sustain a recovery. James B. Bullard, President of the Federal Reserve Bank of St. Louis has seen this before in the 1970s and doesn't want it to occur again. Bullard states that the Federal Reserve "overestimated the amount of unused productive capacity in the system" causing high inflation. Economists believe that the scarier thing would be deflation. Factories are closing at record pace and automakers have been reducing capacity at a pace not seen since World War II. In the end, the Fed must be prepared to counter both, inflation and deflation.

Can Apple Spoil Microsoft's Day?

http://www.businessweek.com/magazine/content/09_43/b4152000782247.htm?chan=rss_topStories_ssi_5

Peter Burrow's article Can Apple Spoil Microsoft's Day? discusses how Apple plans to try and lure PC users away from Microsoft beginning on October 22. October 22 is the official release date of the brand new Windows 7 OS. Apple is hoping to capitalize on Windows 7 in the next year because many consumers who purchase computers running the Windows Vista OS will recollect how poorly the OS was constructed and in turn, switch to the brand new Snow Leopard OS from Apple. As usual, Apple plans to advertise their machines as being virus-resistant, more current, etc.

PC makers are not too concerned with another attempt by Apple to steal customers. Analyst Stephen Baker of researcher PC Data points out that PC's are much cheaper than Apple's. PC makers will also be able to sell new products such as netbooks, etc. that are both cheap and run the new Windows 7 OS.

As a PC user myself, I find it hard to believe that Apple will have great success over the next year in taking customers away from Microsoft. I have been using the RTM version of Windows 7 Professional since it was released to certain groups in July and have absolutely loved it. While I agree that Vista was a mess, I do not anticipate a herd of PC users going to Macs over one poor OS. Only time will tell whether or not Apple will succeed in their latest venture.

Summary - Wal-Mart's Painful Lessons

The article Wal-Mart's Painful Lessons details the different struggles that Wal-Mart Stores (WMT) have had in achieving success around the globe. While Americans have embraced the low-cost goods and services it provides, other countries in the world have not. One reason Wal-Mart has not succeeded in Japan is that the Japanese equate low-cost products to being inferior products. Wal-Mart has struggled to make a dent in India's $350 billion retail sector due to their government restrictions and because India's predominant retail sector consists of small, family-run businesses. In Russia, Walmart has faced obstacles establishing due to the rampant corruption. Finally, in Chile consumers are resistant to foreign retailers. Wal-Mart is in the early stages of global expansion and it may take awhile to succeed.

Summary - Industrial Stocks: A Smokestack Comeback?

The article Industrial Stocks: A Smokestack Comeback? discusses the new economic data that may indicate that the current recession may be nearing its end. Data provider Capitol IQ reports that industrial stocks are up 27% in the past three months. Only the materials and financial sectors of the market had a better showing in the last quarter. The upcoming third quarter earning reports from the individual corporations may be a better indicator of the current status of the economy. According to Ben Steverman, one indication that investors should be optimistic about the recovery is the increase in freight traffic. Freight traffic is up 37.7% since March. Steverman also suggests that as a whole, the U.S. should export more than it imports due to the weakened state of the greenback. In the end, as long as the manufacturing demand increases, the end of this recession could be over.

Squeezing Every Dime from DVDs

http://www.businessweek.com/magazine/content/09_42/b4151059074777.htm

The article Squeezing Every Dime from DVDs by Ronald Grover and Tom Lowry discusses the different ways that the movie industry in Hollywood is trying to get a "bigger piece of the pie" in terms of DVD monies amid a poor economy. With the economy the way it is, DVD sales have been declining and DVD rentals have been increasing. Time Warner, owner of Warner Bros', states that they want "better economics" from their current deal with Netflix. Redbox, a cheap per day rental system with kiosks around the country is also beginning to feel the wrath of Hollywood. They are being pressured into sharing a higher percentage of rental fees, limiting the number of titles available in each kiosk, and having to wait 45 days before new releases can be rented.

Executives in Hollywood and the DVD industry believe that DVD sales will increase when the economy rebounds but are also preparing for a future without physical discs. The different movie companies have begun trying different ways to release their products in order to find a more profitable system of delivery. Industry analysts believe that by Christmas, the popular website YouTube may be able to offer digital movie rentals straight from their website.

As a movie lover, I do agree that the DVD industry may be hurting a bit due to the economy. At the same time, executives in Hollywood have to realize that your average American citizen is also hurting for the very same reason. Personally, I have always rented DVDs first and will only purchase a copy for myself if I enjoy the movie afterwards. I believe that if the movie industry is successful in their efforts against Netflix, Redbox, etc., they may irreparably harm their image with the public and then even fewer will purchase DVDs again once the economy reverses course.

Websites

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http://www.twelvehoursinacity.com/
*Not overly jumbled with ads, useless information, etc.
*A little bit on the long side (more of a blog website)
*Good layout
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Bad Website
http://www.miauk.com
*Cluttered
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*Poor choice of font
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Summary - Gary Vaynerchuk's Startup Advice

The article Gary Vaynerchuk's Startup Advice talks about the different necessary components to successfully create a business. Vaynerchuk says to pick something that you love first. Then you need to build your reputation as an expert, deliver content online, and begin to make money by selling advertising, niche products, or services like consulting or speaking. Because of Vaynerchuk's passion and dedication, he turned his family's small liquor store into a wine business that grosses $60 million per year while also becoming a popular speaker and signing a book deal with HarperCollins. Professor Scott Shane from Case Western Reserve University believes that passion goes hand-in-hand with hard work. Another different factor is to choose a favorable industry, such as software instead of restaurants. In the end, Vaynerchuk states that picking the motive of profit over passion can result in utter failure. "People are chasing cash, not happiness," he says. "When you chase money, you're going to lose. You're just going to. Even if you get the money, you're not going to be happy."

Summary - Washington Revives the Mortgage Cramdown

Theo Francis's article Washington Revives the Mortgage Cramdown discusses the notion that cramdowns (from the idea of cramming deals down lenders' throats) would be a good way for citizens to adjust their unpayable mortgages before bankruptcy proceedings reaches the courthouse. Democratic Senator Richard J. Durbin (IL) is leading the charge in favor of these cramdowns. If Durbin's bill were to pass in the Senate (it narrowly failed in the spring), it would allow a judge to reduce principal or interest rates on home loans and lengthen the time to pay back mortgage payments. Another possible result of this bill will be for homeowners to have their unaffordable debts wiped free. Lobbyists on behalf of the financial industry in Washington D.C. are preparing for battle because the vote was extremely close last time around. While cramdowns may be good for homeowners in foreclosure, the banks are certainly hoping to try and avoid this.

Detroit's Salvation: Higher Gas Taxes

http://www.businessweek.com/investor/content/oct2009/pi2009105_910211.htm?chan=investing_investing+index+page_top+stories

Chris Farrell's article Detroit's Salvation: Higher Gas Taxes states that higher gas taxes would increase the demand for smaller, fuel efficient automobiles thus helping out the United States auto industry. With the Cash for Clunkers trade in program completed, car sales have fallen in September because many people took advantage of the $3,500 or $4,500 government rebate to purchase newer, fuel efficient vehicles. As a result of that, experts believe that a significant increase in the gas tax will help to bailout the still-struggling auto industry.

As a result of the now defunct Cash for Clunkers program, experts believe that a significant increase in the gas tax will help to bailout the still-struggling auto industry. Currently, the federal gas tax sits at 18.4 cents per gallon. N. Gregory Mankiw, an economist at Harvard University and former chair of the White House Council of Economic Advisers under President George W. Bush, believes that the federal gas tax should increase from the current level by $1 per gallon. Mankiw suggests phasing the tax increase in 10 cent increments for 10 years. However, three unnamed economists suggested back in 2007 issue of the Journal of Economic Literature that the federal gas tax should be $2.10. However one looks at it, it is a significant increase for your average citizen.

As a car driving American citizen, I would vehemently argue against an increase the federal gas tax. I am a college student with very little money and a gas tax increase of any significant change would greatly harm my personal finances. This is also on top of the fact that I drive a new, fuel efficient vehicle (2009 Pontiac Vibe, 25 city/35 highway). Low-income individuals who work full time would also have a difficult time to find the extra needed money to support a gas tax increase. In whole, while an increase in the gas tax may appeal to those in Detroit and on Capitol Hill, it could potentially devastate your average American car driver.

Summary - Typical U.S. Worker Saw 401(k) Lose 24.3% in 2008

Lauren Young's article Typical U.S. Worker Saw 401(k) Lose 24.3% in 2008 discusses what happened to the money U.S. workers invested in and how much of a loss occurred between 2007 and 2008. The average balance in a workers 401(k) account at the end of 2007 was $114,337 and by the end of 2008, it was $86,513. According to a study by the Employee Benefits Research Institute and the Investment Company Institute, the average worker invested 56% of their assets in company stock compared to 41% in fixed-income securities. The stock market did not help the average workers 401(k) accounts in 2008.

Summary - The Coming Energy Revolution

Rachel King's article The Coming Energy Revolution discusses the benefits of smart-grid technology, the different costs associated with it, and how smart-grid technology is currently being used. Smart-grid technology is a new type of electrical grid in which a two way network is constructed where power and information flow freely between producer and customer. If the smart-grid is created properly it will reduce energy consumption, enable customers to choose what type of energy they are using, and to sell energy back to the producers. The Electric Power Research Institute estimates that it will cost approximately $165 billion to create the smart-grid. Currently, Cargill, a major food producer with a plant in Springdale, Arkansas, is depending on their smart-grid to lower their electrical costs. When peak energy costs become too expensive, a sensor remotely starts the companies generators in order to save the company money. Cargill hopes to save about $680,000 this year in energy costs because of the smart-grid technology.