More Bang for your Buck

Article Source:

http://money.cnn.com/2015/07/13/investing/greece-bailout-deal-dollar-euro-bonds/index.html

 Issue:
Evening out the rate of exchange between the U.S. dollar and the euro. Waiting for news on the federal reserve's actions. Watching for decisions from Greece.

Argument:
The value of the U.S. dollar should be raised, and the European Central Bank should maintain their current rates in order to improve American profit in foreign exchange. 

What the Article has to Say:

      As of right now, the euro is worth about one dollar and ten cents in American money. Greece seems to be staying put in the euro-zone, so many spectators believe that the value of the euro will be raised under the circumstances. But depending on our federal reserve's next steps, that may not be true. Watchers have said that if Greece left the euro-zone, then the federal reserve might want to wait on their plan of putting into effect an interest hike in September. However, according to Steven Englander,  a September rate increase is still highly possible at the moment. One other sign of an imminent rate hike is the prosperity of the 10-year Treasury. So far this year it has hit 2.45% which is very close to its highest percentage levels. If the federal reserve does go through with its interest-raising plans in September, then our U.S. dollar will proceed to gain value, and the European Central Bank will not raise their own rates. This news is very good for American companies, consumers, and travelers.

What does this Mean for Us?

      For American consumers, the balancing in value of the U.S. dollar and the euro means that imported goods would be more affordable to buy. Therefore, those consumers' marginal utilities would be able to stretch further when purchasing imported items, and the quantity they bought would increase. Of course, this would only be possible because of the benefits that U.S. companies would receive. They would be able to buy and sell with European companies for a larger profit. After that, their cost for input would dramatically decrease which would either allow them to obtain more resources, or further expand their businesses. Then, because of the money saved on resources, they would be able to charge less money to their American buyers, individuals would be more prosperous, and the overall economy would in turn be boosted. For now, it all depends on how and when the federal reserve will decide to act.

More Work, Less Pay

Article Source:
http://money.cnn.com/2015/07/09/news/economy/americans-work-bush/index.html

Issue:
Americans are working more, and with longer hours, but their incomes remain the same.

Argument:
With more hours of work, Americans should be paid accordingly.

      In the past few years, more Americans have been moving from part time to full time jobs.This should mean that their incomes are climbing, but in reality, the average income has not changed much. They work longer, but they aren't gaining money for it.

What the Article has to Say:

         Americans have been proven to work longer hours than citizens of other countries. Full time workers in our country take on an average of 47 hours a week, which is close to 1.5 hours more than the average from ten years ago. Americans also do not receive as many vacation days as people in other countries. While Europeans get roughly 28 days off, Americans get about 19, and many do not utilize them in order to stay on top of their work. There used to be many part timers in America who took up two jobs just to maintain a liveable income, but that number dropped as everyone began racing to full time employment, hoping to gain more than just enough money to live off of. Where does the money go if these people work more but don't receive higher wages? The profit has mostly gone towards corporations. Rather than having good wages for their long hours, their hard earned money is being used by businesses.

How does this Affect Us?

      While the amount of labor and human capital increases in America, our citizens' wages should increase with them. However, it is completely up to the companies to set their employees' wages because of our economics system. So even though it isn't fair to work longer and receive the same amount of money as if you were working shorter hours, it is perfectly legal. After a while, our human resources will be even higher than they are at this point in time, but how will wages compare? If the wages decrease, then no one will be earning enough money for marginal utility. Then, they will either turn to low cheaper items, or they will just buy less of what they bought before. After that, businesses could suffer, and thus be forced to pay employees even less. Eventually, the trend will throw the whole economy out of balance, and it will just continue to cycle in this way.

Are We Nearing a Financial Crisis?

Article Source:
http://money.cnn.com/2015/06/28/investing/stocks-market-lookahead-mergers-acquisitions/index.html

Issue:
M&A is becoming increasingly popular this year. For the investors, this is good news. However, rapid merger and acquisition growth may be coming on too fast, and could possibly end in turmoil.

Argument:
Most companies find these deals to be positive additions to their trade due to their ability to cut the costs of resources. Because of this, many see M&A growth to be a valuable opportunity.

      From the perspective of the companies involved, these deals are great for combining costs and resources. However, this may get rid of competition and raise prices for consumers. As a result, demand may go down for the products involved.

 

What the Article has to Say:

     

      All around the world, companies are making M&A (merger and acquisition) deals. The M&A value is so high this year that it is just under the record from 2007. They are especially growing in the U.S.. The main reason for this growth in activity if the continually decrease in sales growth. These are great opportunities for investors because the costs for production go down, while market shares expand. Companies also gain much more bargaining power with these mergers. Many expect this trend to continue well into 2016. Healthcare leads the trend with $342 billion as of this year. The mission to find cures strengthens the want for mergers within this field. Health insurance companies are close to considering mergers as well. The only problem with all this activity is that it is very similar to what was happening right before the financial crisis. There are some differences though. in 2006 and 2007, the amount of M&A deals made up much more of the financial happenings than they are this year. Because of these facts, the possibility of another crisis is not as imminent.

 

 

 How does this Affect Us?

 

      I think that companies should be wary because we've seen this kind of rapid growth right before a financial crisis, and history has a way of repeating itself. If too many companies combine, won't prices rise due to lack of competition? That is what I have gathered from my limited study of economics. So if that is the case, then the markets would actually decrease in size, leaving consumers with no choice but to pay for more expensive goods. In the long run, the consequences won't be just for consumers. Businesses will suffer because their consumers are no longer able to pay for the same quantity of goods, and it may put the whole economy in a tailspin. For now, I would tell companies to merge with caution.