Business and Economy

This is a great time for the US to increase its export. As the US Dollar falls in the world economy it becomes more feasible to export products. The world economy is adjusting. For the first time in years the US Dollar makes exports much more interesting. The euro is valued at over $1.50. As a result US pricing is more favorable for export. Selling products and services overseas now has greater possibilities since the US products are not as expensive as they were in the past, when the dollar was stronger. Selling into economies that are very strong is one strategy for selling products, goods and services that are specialties of the US. Providing innovation for third world markets may be a way for small business to afford doing business overseas. Americans are inventive. Americans always have been able to solve problems. Now it may be a good time to look at problem other markets may face to increase exports and help improve the national trade imbalance.

After you decide to expand your business overseas you may wish to learn about the world markets and how to do business in our chosen country.. The US is very strong in many industries, for instance in services for Outer Space travel such as Satellite Launches, Online Technologies, Software Services, and Entertainment. We will discuss companies and inventions who are thriving regardless of outside circumstances. We want to focus on Yankee ingenuity. If you know of a company that you find interesting please let us know. We are interested in learning what you think the best company in the Bay Area, in California, in the US, and in the world is and why? What is your favorite corporation?

 

Gold Prices are up and went over $1000. You can check the latest information on www.goldprice.org. This means gold is up 19% for the year to date. Some of the economies are still based on the Gold Standard and the US is not. Brad DeLong of U.C. Berkeley explained in 1996 that under a gold standard, a decline of the dollar would not be allowed: instead the Federal Reserve would raise interest rates considerably in order to keep the value of the dollar fixed at its gold parity, and a recession would probably follow. He stated that if the U.S. and a substantial number of other industrial economies adopted a gold standard, the U.S. would lose the ability to tune its economic policies to fit domestic conditions.

A gold enthusiast, James Turk claims that Central banks intervene in the gold market – just like they intervene in many other markets. The reason for their attempts to manage the gold price is that by keeping the gold price low, central banks make the dollar look better. With their interventions central banks are trying to make the dollar look worthy of being the world’s reserve currency when in fact it is not. He went on to say that in his opinion the gold price is a barometer that measures whether a national currency is being managed well (i.e., no inflation).

The Wall Street Journal stated in an article on March 14, 2008 that many investors believe comparatively lower inflation is a key reason why gold and silver have a lot of room to run. Gold is still less than half its inflation-adjusted peak on Jan. 21, 1980, of $2,239.67. Silver's nominal peak of $48.70 in January 1980 still isn't close to being breached and amounts to $132.13 when adjusted for inflation; it closed yesterday at $20.339 a troy ounce, up 42.8 cents, or 2.2%. The article explains that many investors are more pessimistic about the American currency, since the U.S. already may be in a recession and the Federal Reserve is one of the only major central banks cutting interest rates. Yesterday, the dollar fell below the psychologically key 100-yen mark in intraday trading for the first time since 1995. In other ways, today's economy is more benign. Inflation, for one, is far lower at this time.

Joshua Lipton explained in Forbes on February 4, 2008 that fear of a slowing U.S. economy tipping into recession has kept the market "nervous and sloppy". The Dow Jones industrial average has been all over the map, but dropped 4.5% for the month of January. The S&P 500 lost more than 5%, and the tech-heavy Nasdaq has fallen nearly 10%. Among our big-picture stock-watchers, there are now some clear winners and losers after the first four weeks of 2008 trading. Those favoring gold came up big, as investors have moved aggressively to the precious metal.

In Wirtschaftswoche Torsten Rieke wrote on March 14, 2008 that Wall Street is staggering.  Only with the help of the New York Federal Reserve are investment banks able to keep above water.  The fact that JP Morgan comes in as the ER doctor to provide a “liquidation injection” doesn't change the fact that they are saving one of the largest names on Wall Street from the inability to pay.  The last time something similar happened was the Hedge-fund LTCM crisis in 1998.  At that time the New York Fed also pushed Wall Street to an emergency intervention. The crisis of Bear Stearns shows that the financial market is panicking. Only two days ago Bear chief Alan Schwartz claimed that the gossip about their liquidity problems were taken out of thin air.  But within 24 hours the situation was so terrible that they had to be saved by a bail out. The run to the banks to get their money out before the market crashes further is a reaction to the massive losses on the bourse. The dollar went down, oil again went up, an ounce of Gold is over $1000.  All this is a sign of panic.  The gossip in the street is that Lehman Brothers will be next.  That is one of the firms that until recently had one of the most pristine reputations.  

How are the German's doing? Check at the Börse. This link provides the Deutsche Börse Overview. It was interesting to see that in 2007 it seems that US money has been flowing to the German Trade Market. Now 12.9% of the market is funded by US Dollars. http://deutsche-boerse.com/dbag/dispatch/en/kir/gdb_navigation/listing

The Economist wrote on February 28, 2008 that the Fed's own forecasts suggest that the short-term trade-off between growth and inflation is worsening. It recently revised up its inflation forecast for the fourth quarter of 2008 by 0.3 percentage points, even as it downgraded its GDP growth projection for this year, from 1.8-2.5% to 1.3-2%. In his twice-yearly testimony to Congress on February 27th Ben Bernanke, the Fed chairman, conceded that the risks to inflation had increased since these forecasts were finalised at the end of January, because of the run-up in commodity prices. Even so, Mr Bernanke did little to challenge the widespread belief that the Fed is primed to cut rates again soon. (Definition: GDP, Gross Domestic Product is a way to measure the productivity and how it is is valued by the world economy. GDP is defined as the total market value of all final goods and services produced within a given country)

That assumption combined with recent figures on America's economy and more encouraging signs of life in Europe has helped drive the euro above $1.50 for the first time. A weaker dollar will only compound the risks to inflation, which may have helped propel the price of gold, a traditional hedge against inflation and a falling currency, to a high of $965 per ounce this (that) week.

The ECB (European Central Bank) too is set to downgrade its GDP growth forecasts and to revise up its inflation projections. That is unwelcome for any central bank. But its policymakers can at least console themselves that their hair-shirt approach is gaining some admirers in the currency markets.

The Euro is now valued 1.5604 USD.

Or perhaps it may be a great time to buy real estate for long-term investments as prices are coming down sharply.

In March 2008 the Fed said it would lend $200 billion worth of Treasuries to a wide range of banks for 28 days in return for debt, including triple-A-rated mortgage bonds. This will allow banks to get rid of the illiquid securities that are dragging down their balance sheets in exchange for very liquid Treasuries that can be traded in for cash. On Friday, it raised the TAF to $100 billion from $60 billion. In December, the Fed was offering just $20 billion through the TAF. Also on Friday, the Fed announced a new type of repurchasing program, whereby it will lend banks $100 billion for 28 days at attractive rates in exchange for a broad range of collateral, including riskier mortgage securities.

There was a net loss of 63,000 jobs, which is the biggest decline since March 2003 and weaker than the revised 22,000 jobs lost in January 2008. Economists had forecast a gain of 25,000 jobs.The unemployment rate fell because of an increase of 450,000 people whom the government no longer counts as being part of the labor force for a variety of factors, such as that they supposedly are not currently looking for work. When someone doesn't find a job within six months the government doesn't assume that they couldn't find a job, rather it assumes that they were not looking for a job. Supposedly the unemployment rate dropped slightly, however opinions vary. Money.com states: That drop in the size of the labor force allowed for the modest decline in unemployment, even as the household survey showed 255,000 fewer Americans with jobs than in January. So what happened? Hall conceded in his testimony Friday that the labor market was weaker than suggested by the decline in the unemployment rate. He pointing to an increase of 637,000 workers over the past 12 months who have part-time jobs but would prefer to be working full time.

It is hard to pay for the mortgage on a part-time coffee barrister's salary. Perhaps we all should increase out tip. If someone earned $50 per hour with a 40 hour week job in the past he made about $8,000 per month when that changes to $10 job and he gets to work 20 hours he makes $200 per week or $800 per month. Claiming that the unemployment rate went down because people are taking employment at 10 cents on the dollar is really playing with the numbers.

Caffe Vita, a coffee shop and roastery, has a full-time trainer who teaches customers around the country “the science or physics of making good coffee,” he said.

When the training sessions started about 12 years ago, they were by appointment only, but about four years ago, they expanded to about three days a week and about two years ago increased the sessions to five days a week, Buckley said. MORE