Jessica Chiang: Paulson, Bernanke: Slow growth ahead
Bernanke is saying that there will be slow growth ahead instaed of a recession. Hmmm...I'm not sure that I agree with that. Apparently, he thinks the Fiscal Stimulus package passed recently will actually help. Others compare the fiscal package to "pouring a cup of water in the ocean and assuming it will help." Interest rates have also been cut, which hopes to increase investment and aggregate demand.

Drew Venkatraman: Fed primed to cut Interest rate. This article talks about the new future plans of the Fed. As if the governments stimulus plan wasn’t enough, the fed has now decided to “ aggressively lower interest rates again Tuesday in its intensified battle against the credit crisis and spreading economic weakness. The question is whether all of the effort will turn the tide.” It is hard to say if this will work out and in fact cure the horrible economic “sickness” that is currently affecting America but one thing is sure, people are going to start to spend like crazy now with this lower r, and therefore the AD will shift right and prices could possibly rise L. Unfortunate.

Howard Jing: Crisis of Confidence in the Markets
Even though the Fed offered "an unprecedented credit line" to investment bankers because it was revealed that that one of the biggest of them, Bear Sterns, was essentially out of money, US currency traders still engaged in a "furious sell-off" of the dollar fearing that US bank failures may be on the horizon. President Bush claims to be "on top of the situation", but critics claim that he is bailing out large Wall Street firms while ignoring the average homeowner. The fear of bank failures comes from the fact that banks have only a fraction of the amount of money that customers have invested in them. This means that in the event of a panic where everybody withdraws their money, the banks will not be able to give back everyone's money.

Jonathan Lau: China stocks rebound after volatile day
The US economy is affecting other countries, especially China. China's main stock index fell to its lowest level in 9 months amid worries about a possible US recession, and it is not expected to rebound either. Chinese stocks have languished in recent weeks as billions of new shares have flooded into the market following the expiry of lockup periods for initial public offerings and shareholding reforms. In addition, international currencies are continuing to gain and surpass the dollar in value because of this recent recession.

Judy Chen: China to keep tight monetary policy, inflation controls
China government has decided to keep tight monetary policy in order to reduce the 11 years high inflation- 7.1%. To use tight monetary policy, the China government needs to sells bonds, to decrease money supply, increase interest rate and to decrease the aggregate demand and price level. However, China is not only facing the inflation but also the excessive growth of investment and other problems. Therefore, China government needs to resolve problems "step by step".
Jennifer Choi:House and Senate Pass Budget Plans
The House passed a $3 trillion Democratic spending plan Thursday, and the Senate followed suit early Friday as Congress engaged in a day of budget theater that had as much to do with the political bottom line as federal fiscal policy. Representative John M. Spratt Jr, Democrat of South Carolina and chairman of the Budget Committee, said "This budget charts a new direction for America," . "In returning to balance and funding critical priorities, it strengthens our economy and makes America safer."
Angel Liu:European Govt Bonds Rally as US Banking Crisis Worsens
Last Friday US securities firm Bear Stearns collapsed and was bought by JP Morgan with the help from the Fed. At the same time, the Fed cut discount rate hoping to increase commercial banks' loaning ability and stimulate investment to push the economy out of recession. However, a heavy discount rate confirmed investors' fears that the US is facing an economic crisis.
Global Markets Plunge on Rate Fears
Mina Song: British Budget Riases Taxes and Borrowing
This article is about the what we learned in macro unit3. The British government is using tax and government spending to control the inflation rate. Present, the Brisheh government is in inflation that, according to what we learned, British government should lower that tax and increase the government spending, but what British government do is different. According to their decision, the inflation should last little longer therefore, the government decide to increase the tax rate and expecially to the people who live in Britain, but who are not British. But they also borrows some money to spread and control the inflation rate.

Helen Chu: Bipartisan Spirit Falters in Fights on Debt Relief
After a bipartisan agreement on an economic stimulus plan, the Democrats and the Republicans split again and dive back into their partisan conflict when new data shows that the economy may be even weaker than they had previously expected. The split is especially intense on the issue of the increasing damage of the housing crisis. The Republicans are blocking Democratic efforts to stabilize home prices, prevent foreclosures, and even bail out desperate lenders, while sticking loyally to their tax cuts. This is a clear illustration of the small government vs. big government struggle in the political side of fiscal policy. The Democrats are advocating an increase in government intervention to relieve the crisis, while the Republicans are extremely wary about acting beyond tax cuts.

Jacques Zhang: Central banks' latest moves to increase liquidity will ease but not solve the credit crunch
The credit crunch, we all know about it. It's in the news, it's famous, or infamous, rather. This article talks about the Fed using monetary policy to remedy the problem in America by increasing the amounts of loans. However, this has had a recent side-effect, causing the price of gold to increase to a record-high amount and the price of the dollar decreasing to below 100 yen per dollar, an astonishing figure. Read more about it in the link. More about how the US is going to recede any moment now.

Yun Qi Mok: Federal Reserve acts to ease credit crisis
The federal reserve is the head of all monetary policy, which seems to be more effective than fiscal policies that the government can implement. According to this article, the Federal Reserve is aiming to pump more than $100 billion in its "repurchase aggrements" into the financial and banking system in order to aid the slumping economy hurt by the mortgage crisis and tightening of credit. The central bank also aims to proide short-term loans to banks in hopes that they will keep lending. Loans, as we know, creates new money.

Kevin Huang: Bush's Fiscal Policies are Jabbed At
"I look at what Bush has done over the last seven years, plus what he intends to propose tonight (at the State of the Union address), making sure the rich get richer, the profits of the biggest corporations keep going up while working people and the middle class and low-income families are literally having a terrible time just surviving," Edwards said. Interesting political debate over economic fiscal policies that Bush has established.

Jack: US ready to act on markets again
US Treasury Secretary Henry Paulson has agreed to help bail out the collapsing investment bank Bear Stearns, stating that the US government will "do what it takes" to stablize the nation's financial system. The Fed will lend out emergency money to Bear Stearns. The Fed has also agreed to cut interest rates (currently at 3%) to anywhere from half a percentage point to a full percentage point lower. There were moral issues raised about a government bailout of a private corporation. Paulson defended the Fed's decision to save Bear Stearns, claiming that the financial system is "more fragile than they would like right now".

James Tsao: Rising Interest Rate on Loans to Cushion Bank Losses
Banks can create money by loaning money or buying government bonds, but when they make bad loans that go into default, the cycle breaks down. Instead of earning profit from the use of its excess reserves, banks are losing money because of their bad 'investment' on loaners. To make up for these losses, banks, like all other profit-seeking businesses, have to increase their revenue, and they are doing so by increasing interest rates. Is this good for the economy? No. Investment and spending goes down in return to the higher interest rates. A lower quantity demanded for loans means a lowered money supply as banks now made less loans. This chan reaction create an ultimate effect: decrease in spending and recession.

Dana Yeon: The Market's Echo Chamber
In this article, the famous ex-Princeton economics professor, Cramer, argues that the Federal Reserve Bank and its leader, Bernanke is managing the American economy horribly. Cramer even argues,
"He's (Bernanke's) the General Sherman of monetary policy. He's waging total war against the American economy." This extreme remark underlines Cramer's belief that the Federal Reserves Bank is only focusing on short term economy, not the long term economy. In short, the Federal Reserve Bank is taking measures that will not necessarily lead to a brighter future. Just this Tuesday, the Federal Reserve Bank cut its Federal Funds Rate from 4.25% to 3.5%, decreasing it dramatically. The incentive behind this decision was fueled by the uneding economic critics' remarks on how bad the recession is, and slanders by many other forms of press. Carmer argues that the Federal Reserves Bank should not be so volatile and so influenced: it should remain steadfast to employ measures that will help U.S. get out of recession in the most stable manner.

Conrad Liu: Retail Sales Plunge; Time to Eject Money Into Circulation?
According to the article, retail sales have fell by 0.6 percent from last month, a much lower decrease than the expected 0.2. As the prospect of a recession seems inevitable--or perhaps it has already begun--both output and prices decrease. This is a good time for the Federal Reserve to implement expansionary monetary policy. In other words, a good time for the Feds to start buying bonds from both commercial banks and the general public. The hopeful outcome? More money in circulation within the United States' economy, which should lead to higher interest rates, more loans, more consumption, and finally, a shift in the AD curve.

Chan Min Park: Fed takes rare path to aid Bear Stearns
US investment bank Bear Stearns is getting an emergecny loan from the Federal Reserve and JPMorgan Chase. The liquidity of Bear Stearns has deteriorated and therefore the Federal Reserve along with JP Morgan Chase are providing emergency funds for the investment bank up to a period of 28 days. The Federal Reserve is allowing JP Morgan Chase to borrow from the Fed's discount window to obtain direct loans. JP Morgan Chase is acting as a conduit for the loans. The article says that this is a method that has not been used since the Great Depression era. The Fed is trying to inject liquid money into the economy as it is also cutting interest rates and suppyling up to $200 billion in loans. It seems that by going through JP Morgan Chase a bank, the Fed can help supply emergency funds for Bear Stearns while also creating money in the process.

Richard Tu: US economy crisis
In this article, they simply elaborate on the idea of debt. They compare the differences of internally owed debt and externally owed debt. As we have learned, internally owed debt by the country's citizen can be paid off with taxes. However, externally owed debt, the foreigners can buy products with it and increase their assets, making their country richer. Throughout this article, not only do they talk about the differnece, they also emphasized on the idea of public and private debt and how it has reached unstoppable levels; the dollar has grown fragile from decades of abuse. It is a severe issue in the United States now. Why? to find out more, read the article.

Elaine Lung: Recession could be best medicine
It's fairly obvious by now that the US is on its way to -- if not already in -- a recession. How should this be combatted? The simple answer would be by an expansionary monetary policy. It follows that the Fed would try to get the US out of its recession by slashing interest rates; lower rates means more money in the hands of the people, more buying power to increase AD. The problem? Inflation, and as one member of the Fed says -- a Richard Fisher of Dallas -- further rate cuts risk worsened inflation. Some are even going as far as to say that any cuts the Fed makes now will be too late. The recession isn't being driven by high interest rates; rather, it's being driven by a lack of confidence. Others are even saying that a recession, with all its business failures and pain, will be necessary in preventing an asset bubble like in the1990s tech stocks.

Kevin Chiu: Gates, Mundie: Congress must make trade-offs to propel tech's future
As we've criticized about the Fiscal Stimulus Package employed by the Congress to pull America out of recession, we haven't exactly come to a possible altenrative solution (or maybe I wasn't paying attention..). In this article, Microsoft founder/CEO Bill Gates presents his brief view on how to "propel" the US economy through investing in techonology to create a technological boom, much like the one in the 90s, that may cause an economic growth to put away US defciets. Gates recommends investing in the right capital, and rising visa caps, among other tools, to enhance progress of technology.

Jeewon Oh: U.S. Congress in Bush budget fight
The U.S. Democratic-led Senate passed plans in order to balance the budget by 2012. However, this challenges President Bush's fiscal policy that was to make tax cuts permanent and reduce government spending. The two parties are very different in their proposals on fiscal policies, as the Democrats claim that the tax cuts are unfair to ordinary people, and by its repeal it would enable the government to increase spending on health, education, and the environment. Still, the parties reached a consensus to extend tax cuts for the middle class. The Republican John McCain is backing President Bush to make tax cuts to help the weakening economy.

Andy Xu: How bad is the mortgage crisis going to get?
"If there is any word that captures the mood in the economy right now, it's uncertainty, along with shadings of bafflement and distrust." This article summaries the current mortage crisis the United States is currently experiencing. By year-end, 15 million Americans could have mortgages worth more than the value of their homes. The Princeton economist Paul Krugman in his interview indicated a predicted 25% drop in housing prices overall - and up to 50% in some places like Miami and Los Angeles. All in all, the devaluing of houses in America is not a good thing, especially for those with heavy mortgages.

Kristie Chung: Federal Reserve Cuts Lending Rates
The Federal Reserve cuts lending rates for loans to financial institutions to 3.25%, and creates a new lending facility for big investment banks to attain short-term loans. This is the central bank's recent effort to prevent a credit crisis from collapsing the U.S. economy. Bernanke believes that the steps that the Federal Reserve has taken would give more assurance of access to funds to financial institutions. The new lending facility providing investment banks with short-term loans on a regular basis would be in place for at least six months, and may even be extended if seen necessary. Although this discont rate cut only applies to short-term loans that financial institutions directly receive from the Federal Reserve, it is expected that a big cut to interest rate t hat affects many more peoples and businesses would be ordered. The Federal Reserve Bank are doing everything they can to prevent a serious financial market collapse.

Katherine Yang:Global Markets Plunge on Rate Fears
"Concerns over increasing inflation, higher interest rates, and slowing growth have been rattling world markets." Globally, investors are becoming increasingly worried the US Federal Reserve may raise interest rates further. The article gives global examples of investors dumping stocks in preparation for recession; South Korean shares dropped by 2.9%, Hong Kong by 2.5%, London by 1.8% and so on. Head of the US equities board, Richard Hunter says the US economic data coming later on will be key information for the world markets to decide their next move.

Michael Chow: JPMorgan to Buy Bear for $2 a Share
The financial industry wants to know exactly how badly Bear Stearns bet on mortgage-backed investments. Unwinding the nation's fifth-biggest investment houses should provide some insight into what other financial institutions might have on their books. JPMorgan's acquisition of Bear Stearns for the shockingly low price of $2 per share, or $236.2 million, occurred Sunday night, in a deal that was fast-tracked by the federal government to avoid a bankruptcy.

Claire Moon:Fed Chief Shifts Path, Inventing Policy in Crisis
As chairman of the Federal Reserve, Ben S, Bernake has long argued that a central bank should base its policies as much as possible on consistent principles rather than seat-of-the-pants judgment. Beyond trying to lower borrowing costs by reducing the federal funds rate, which banks charge one another for overnight loans, the Fed has adopted a widening array of unconventional tools to infuse money into the banking system. The Fed stunned investors by refusing to lower interest rates and even refusing to change its view that rising inflation posed a bigger risk than slowing growth...

Serena Tu:Greatest danger lies in consumer recession
And it is likely that the economic show will not be put back on the road without the more expansionary fiscal policy that is now under discussion in the US. The difficulty is to ensure that any fiscal package is both timely and aimed at those who are most likely to spend rather than save. Also to ensure that the fiscal position is not irreparably weakened.

Taka Ono: More Unequal than Others
Britain is now facing a bigger rich and poor gap as Britain's fiscal policy left some of its citizens in the dark. Although Gordon Brown initiated the minimum wage and tax credits to help lift people out of poverty, there is still a large proportion of unemployed citizens which face poor health and despair. Not to mention the budget cuts for the public sector which caused much frustration amongst the public workers. Also increasing prices in housing and private education attracted the wealthy to congregate in London. This led to a dent in middle-class self-esteem because the once affordable houses and education in London are now dominated by the rich and the middle-class are not able to afford them anymore. Despite the new policies to fix these grieviences, it could propose a harm to Gordon Brown's position as prime minister.

Kevin Yeh: Fed Acts to Rescue Financial Markets
To try to save the nation from growing recession, the Fed has announced a plan to lend money to investment banks in order to stimulate the economy. Furthermore, it has declared itself to be buying government securities. According to Ben Bernanke, the Federal Reserve is hoping to create a liquid and well-functioning financial market by providing money to institutions in need in order to stimulate growth in a slumping economy.

Julie Lin: China to Take `Forceful' Steps on Inflation, Wen Says.
This article talks about how Wen strives to achieve a 4.8 percent inflation goal by the year of 2008. Which is highly difficult. it talks about how china's battle against inflation will be a slow and hard task and how a slowing of Chinese economy wont be good for its neighbouring countries. (other asian countries.) The Federal Reserve may later today lower its overnight lending rate by a full percentage point to prevent a meltdown in financial markets as subprime woes breed widening losses among banks and securities firms. Pretty interesting.

Michael Daily: Does it Matter if Bernanke is Republican?
This article examines the role the Federal Reserve Bank chair plays in U.S. economic affairs compared with the President and Congress. It concludes that Macroeconomic policy can never be devoid of politics: it involves fundamental trade-offs- unemployment harms workers, while the lower interest rates needed to generate more jobs may lead to higher inflation, which especially harms those with nominal assets whose value is eroded. Such fundamental issues cannot be relegated to technocrats, particularly when those technocrats place the interests of one segment of society above others. Therefore, it is stating that party does not necessarily matter in regards to economic policy.

Nicole Wong: Chinese central bank to raise reserve requirement ratio by 50 basis points
Two months ago, the Chinese version of the Fed, the People's Bank of China, decided to raise its reserve ratio by 0.5%. The reserve ratio has been altered more than 10 times over the past year in order to control the inflation that China is experiencing as its GDP is rapidly growing. The increase in reserve ratio is also an attempt to decrease the excess liquidity at banks in China. Now that Chinese commercial banks' excess reserves are limited, fewer loans are made and the "Fed" hopes that spending will decrease so that chaos (that accompanies inflation) will not occur. Is China's rapidly growing economy a blessing after all?

Howard Lin: Inflation up, government down
In a country where about half the population lives on less than a dollar (BDT 69) a day, it is safe to assume that the common Bangladeshi cares more about being able to earn enough to survive than about who is sitting in the prime minister’s office, or how she got there. Which is kind of contradictiong with whats happening in Taiwan right now. Here are some ways government respons to inflation.

Tim Chu: Food Prices force up China's inflation
I found this article online (obviously) about how the prices of food are causing China's inflation to rise. Apparently, the increase in income of local Chinese has also caused an increase in wants for luxury foods (goods). As a result, the prices of pork and other meats have all risen. Another reason for China's inflation is attributed to the snow storms that raged across China recently as well as rises in prices of other things such as energy and labor.

Kevin Ma:China central bank says monetary policy will be based on China's needs
This article talks about how China is formulating a monetary policy based on the needs of China economical situation, dispite the US federal reserve cutting discount rate. China argued that the successive Fed easings limit the room for China to raise interests rates in its battle against inflation.

Annie Sung: Beijing's inflation talk rattles stock investors
Scanning over the previous news entries, it seems like inflation is going around the world like an infection. China's recent inflation problem and a dip in the Shanghai Stock Exchange on Tuesday down 40 percent since its peak last October has pushed the government to sit down and evaluate the situation. Effective next Tuesday, China's central bank issued a new reserve ratio of 15.5 percent, an upward trend since 7 percent in 2004. Even if China isn't hurt by inflation, it has been mentioned that weakened US-demand for Chinese goods may damange China's economy in the future.

Cassy Chang: China Increases Bank Reserve Ratio to Cool Inflation
China decided to “tackle soaring prices,” inflation in other words, by implementing the monetary policy of raising reserve ratio. Chinese economists have adjusted the reserve ratio numerous times since the RMB started growing in value. “The exchange rate is now 7.0815 RMB per dollar.” And the reserve ratio is now at 15.5 percent, which is “an 11-year high.”


Kai Lin Fu: IMF sees steady Serbian growth, credits fiscal policy A report from the International Monetary Fund states that Serbia’s economy may be expected to grow about 6 percent due to their tight fiscal policy. But according to the IMF executive board there are dangers to the expansion of fiscal policies: "Imbalances have increased, the current account deficit has widened, private external debt has rapidly accumulated, and vulnerabilities have risen".