RS Regulators 1

RS Regulators 1 “Commanding Heights”

            As a child growing up I was always intrigued by history, specifically the American wars and diplomacies of the past century. When it comes to history I have so many “whys”. Why is there war? Why is the world the way it is? Why is money different around the world? Why do we have a global economy? Back then I never thought about the wages of war, such things never cross my mind. At the time I was young and all I that stuck with me were the words and picture that were black and white. Everything was black and white to me until I watched the PBS documentary, “Commanding Heights: Episode One”. This documentary brought color to my mind. It helped me develop a new perception of politics, war, and terrorism in the sense of economics. Financially speaking, I grasped a better understanding of political decisions since the turn of the century and the economic theories that stimulated the outcome. Each significant global event of the past 100 years are valuable fragments that were forged by the resilient works of economist molding the global economy as we know it today. The everlasting debate amongst economists and politics decipher whether it is better to have more government control yielding a foolproof economic system or let the cards play out to let free markets fix themselves overtime?

In a condensed overview the documentary defines globalization as periods where free markets predominate, and countries place few if any limits on imports, exports, immigration and exchanges of information. Overall, they see globalization as a positive movement that improves the standard of living for all the people connected to it, from the richest to poorest.

Globalization has come about in stages of economists. The legends John Meynard Keynes and Friederich Hayek were the first to steer this world in a positive direction at the time of the Great Depression, notably one the world’s worst economic disasters. Keynes affirmatively implemented his idea that in times of economic disparity the government should spend money to create debt in order to stimulate the economy because eventually the economy will turn around and follow with a surplus or a boom. Many governments and people took this theory into consideration as did President Theodore Roosevelt with his New Deal package creating government agencies to generate new jobs for the unemployed. This is just a broad outlook on Keynesian economics but his strategies carried over to World War II as jobs that were needed on the home front to support the war effort. Positively, the United States was able to pull out of the Depression. This wasn’t the end of Keynes’ political influence as this economic policy spread globally to Eastern Europe, South America and Africa adopting the idea of socialism. On the other hand, Hayek was a firm believer in a free market economy. He described that an economy is to be similar to how a river works. In his own words Hayek illustrates “to survive the free market must be allowed to have its ebbs and flows”.  His metaphoric interpretation is that the free market flow like a river; there will be ups and downs twists and bends but in the end economy will work itself out to a stable momentum. Hayek believed that government regulation on the market would lead to government control and would ruin the economy. Both these men were not wrong with either of their policies because each economic tactic were successful but encountered flaws that stand to be corrected by future economists and analysts.

At the time of World War II, there was a worldwide depression and everyone was looking for a way out. As most of the world economies accepted either Keynesian economics or Hayek’s free market theory, two men did not. Not a surprise that Adolf Hitler along with Joseph Stalin despised this idea of capitalism and socialism because they faithfully trusted the philosophies of Carl Marx and Lenin. Hitler and Stalin shared this vision of one day globalizing the world, and forming a communist society with their own hands. These men dictated powerful countries, with powerful militaries which they used to their advantage as they were set out to destroy all capitalistic systems. This battle to fight against communism became a worldwide dilemma lasting for nearly 50 years. Countries were up in a toss and began forming diverse economies which eventually led to a crash in Europe because that was the dictator’s first targets.

 It was until the late 1970s, with Keynesian theory peaking and communism spreading like wildfire, when Margaret Thatcher was crowned the United Kingdom Prime Minister and Ronald Reagan was sworn in as President of the United States. Both of which took Keynesian economics and threw the policies out the window. Ironically they take Hayek’s free market ideas into consideration and begin to implement them into our government. Regan went a little off track with Hayek’s free market idea and decided it would be best to raise taxes and cut government spending in order to stable the market because we were spending too much for too long. This is not a bad idea on his part because he reinforces the monetary value of the US dollar decreasing volatility in the currency. Government control is necessary if needed but both believe it should not influence the free market economy because it can disrupt it because it is fragile in a sense.

          

             I cannot hold back how ecstatic I feel about this documentary because it is amongst the most informational videos I have yet to come across in which I recommend to any interested in the history of politics and business. In addition it was thought-provoking as I discovered how money and economics played such a vital role for the evolving inexperienced market driven global society. It is something new in history to consider the world to be globalized and market driven but it is clear why it has come about. Economics is all around us in every aspect of life but from this I learned it is how we go about to plan, foresee, stimulate, and regulate an economy to determine its present success as well as it potential for the future. 

"War used to be something you could stand on the nearby hill and watch. Now we have total war; everybody's in it. We have total economics as well. Everything affects everybody. The Malaysian currency shakes, and people around the world are seriously affected"- Salman Rushdie

RS REGULATORS 2

RS Regulators 2: “The Warning”



Greenspan, Summers, and Rubin (right to left)

            This blog post reports the American economy with regards to the build up towards the financial crisis which took place in 2008. PBS’s documentary, “The Warning” gives great insight to the series of events and decisions which impacted America’s economies. PBS targeted prestigious American Economists; Arthur Levitt, SEC Chairman, Lawrence Summers, Undersecretary for International Affairs (Clinton Administration), Robert Rubin, Secretary of United States Treasury (Clinton Administration), Alan Greenspan, Chairman of the Federal Reserve of the United States from 1987 to 2006, and most importantly Brooksly Born, chairperson of the Commodity Futures Trading Commission (CFTC).

 

            “The Warning” was generally focused around Alan Greenspan and Brooksly Born, and their perspectives of the American economies stability during the booming financial period of the Clinton presidency (1993-1999). The United States Federal Government reached out to these elite economists for understanding and future preparation to maintain a successful/stable market economy in which endures government policies. It may have been a gender issue at the time, but while these 4 men debated Brooklyn Born’s outlook on Over the Counter Derivatives (OTC) her opinion did not matter what so ever (even though she was right). From Born’s standpoint it was like trying to draw blood from a stone because she was righteously determined to fight for regulation to fix the flaws within OTC derivatives. I personally believe that Brooksly was fighting for all the Americans that were steered the wrong way by the banks through loans and contracts, while the rest of the governing body realized the problem at hand but they [the upper-class/lobbyist] would benefit by shunning her tactics to increase OTC derivative government regulation.

           

            You may be wondering what exactly was “the warning” Brooksly Born was trying to provide our government with. In basic terms Born was trying to warn the government that we do not have a clue what was going on financially within our nation because there was no transparency, meaning there was no documentation or disclosure, of OTC derivatives. So what is an Over the Counter derivative? Well those in government as well as bankers claimed OTC’s to be to complicated to understand but simplistically it was a loop hole for the rich to get richer through stocks, bonds and exchanges. Investopedia.com provides a definition for OTC’s : “A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange. It also refers to debt securities and other financial instruments such as derivatives, which are traded through a dealer network.” As you can see these trades were not being regulated and transactions were considered to be put in a dark room, metaphorically implicating these transaction were not and should not be governed even if fraud were to take place. This is madness because Greenspan hold strong to his policies and his main policy in agreement to Rubin was to let the market fix itself, even though they were sitting back on their asses profiting from this economic defect in addition to lobbying with the executive branch to bring down Brooksly. It was fight between those with morals and those with greed because all of these economists whom was on the Treasury Board knew they were wrong but they did not want to risk their assets or more importantly their social title as the most exclusive economists. This is what America is based on…GREED, and it has lingered our government for centuries to benefit them [the upper-class] as a whole to preserve the power they presumed.

Brooksly Born

 

            Brooksley Born is the type of women that woman today should look up to and admire. I thoroughly enjoyed watching this show and found it extremely informative and insightful. I have seen some on here who said that we should not blame Greenspan because the overall economy in the 90's was great. While that may be true, we have known for quite some time that we need to regulate and deregulation is not the key even though we continue to assume it will work. This proves that unregulated free markets do not correct themselves and goes to show regulation is top priority that should not be deferred. I always like to leave off my readers with a little food for thought by ending with a quote:

"We are trying to protect the money of the American People." -Brooksly Born

RS 6: What is Bit-Coin

What exactly is Bit-Coin? It is a universal currency that is on the rise and growing rapidly. Majority of the people around the world either doubt the value/trust of bit-coin or just do not know about currency; but for those that have invested in Bit-Coin it has been nothing but a gold mine. NPR’s podcast offered great insight on this new currency.

      The general concept behind Bit-Coin, is that it provides a universal digital/online currency naturally eliminating banks. This meaning that there is no longer governing bodies besides its own users behind this currency influencing the value bases of its pear-to-pear system. In addition, the goal for Bit-Coin is to take the bank out of the equation eliminating fees as well as tracking making this an untraceable currency. This may scare many, because most think that this is illegal but indeed it is not. Bit-Coin can be used to purchase your every day items, but a large factor is the black market as you can imagine since this currency is as I noted before UNTRACABLE. Furthermore, Bit-Coin retains some value because of the economic concept of scarcity; there is only a limited amount of Bit-Coins available for purchase and the more they are purchased the less there are giving them more value because they are gaining demand in the universal market.

      Why choose Bit-Coin? Well if you are part of the mob, or drug trafficking I would recommend Bit-Coin because the fact that it is untraceable (which most actually do). But speaking in real terms, Bit-Coin is a currency that cannot be counterfeited in addition to the fact that it cannot be compared to any object of value, take for example gold. It is given its value based of the economy of the world, which has given great value to the Bit-Coin as it has grown swiftly in value. A main contributor was the Silk Road, and online black market. Even after the collapse of the Silk Road many thought there would be a crash in the value of Bit-coin but rather it grew in even more value. Why? Economically speaking there is a complement product that took its place as another website similar to the Silk Road came about, but legally speaking people now gained trust in the currency and realized the beneficial aspect of the universal exchange.

      Where is Bit-Coin heading? At this point in time, it is on the rise and will continue to rise until it is capped out, but where will it go from there? The only fear with Bit-Coin is its illegal use, and in my opinion the only factor that will potentially shut down Bit-Coin. In 10 years from now I can see a mass increase of Bit-Coin users because there is the fact that is a universal currency but even further it is already expanding. There are Bit-Coin ATM’s popping up in Europe, there are colleges in America accepting them as a payment for tuition, and your average deli shop is even accepting them. Where can this currency go wrong? I am a Bit-Coin user myself and I am very satisfied with the currency as a whole and I would hate to see such a progressive project to form a universal currency collapse.

RS 5: Sick Around the World

                This blog post is in reference to PBS’s frontline report, “Sick Around the World”, which touches upon T.R. Reid’s experiences in the United Kingdom, Japan , Germany, Taiwan and Switzerland. His goal is to explore these countries health systems with correspondence to their success and failures within each system. The United States healthcare system is more or less a market rather than a healthcare provider, ranking 37^th around the world. It is obvious that we need to take action, and reform our healthcare. Much information to benefit our own healthcare can be taken from these five countries. I am going to briefly summarize each countries healthcare system i, and prepare my own evaluation for what the American health system should adopt from these other countries.

 

United Kingdom Health System:

                This health system is owned by the government, employing doctors with salary based positions. The UK system is known as the National Health Service (NHS), which provides all citizens with medical coverage. Not one person has to ever pay a medical bill, and yet there still is no medical bankruptcy because the British taxes are higher in order to cover the nation’s medical expenses. The hospitals compete with each other to survive because their patients must be places on waiting lists and without patients they do not receive government funding.

 

Japan’s Health System:

                Japan is a capitalistic economy with no natural resources and yet still spends half as much as US healthcare. They have the longest life expectancy and lowest infant mortality rate and yet government covers all citizens; any place, at any time, at a cheap price. Nearly 80% of hospitals are private, but yet the government regulates a manual for pricing all medical expenses (Wounds, surgery, MRI...Etc.). The fact of the matter is they provide these services at such a cheap price, the cost benefit is that the people are healthy but in the long run 50% of Japan’s hospitals are in financial deficit because they are too cheap!

 

Germany Health Service:

                Germany is the 3rd richest economy in the world and is the most comparable country to the US besides their healthcare system. They provide a Bismarck model which offers healthcare to all citizens covering all expenses where they only have to pay premiums (average 15 Euros) based on income to private insurers (240+). In addition to this Pregnant women do not have to pay anything. Germany’s system wants sickness funds to grow to cut administrative costs even though all doctors are salary based compared to UK.  Therefore the side effect is that doctors do not feel they are paid enough for their services. Even though doctors are not paid as much, their medical school did not cost anything and their overhead is just a fraction the cost compared to American doctors making it much cheaper to be a doctor in the long run.

 

Taiwan healthcare system:

                The Taiwan healthcare system is unique in the sense they base their values on the concept that they must follow the tracks of successful healthcare systems and correct the mistakes made by previous healthcare systems. When creating their healthcare system they looked at 10-15 other countries creating this analogy, “The Taiwan healthcare system is a car with foreign parts, manufactured domestically.” In the end, the Taiwan system includes everyone and is similar to Japans besides the part where Taiwan has only one government insurance to collect all the money which covers nearly any medical practice, no waiting time either. This government insurance system consists of all medical history recorded on an Identification card, and all medical bills are directly sent to government insurance agency. The idea to provide to everyone at a low cost eventually leads to the realization they spend too little on healthcare, and do not have enough money to pay for medical expenses which they must increase in order to prevent future government debts.

 

Switzerland healthcare system:

                Switzerland provides Universal healthcare coverage which once resembled America’s healthcare system in 1994. With a few provisions their system guarantees that all citizens covered by any insurance will be entitled to basic medical care and that doctors cannot profit off basic care, but can from advance care (surgery, acupuncture ETC.) They believe it is the basic human right to be entitled to healthcare and so do their insurance providers because there is extreme competition for services and prices between insurance companies trying to pay faster than other companies and lower premium coverage to build and sustain clients.

  
 

                Overall, the United States is considered to be a horrible provider for healthcare view upon as a market rather than a provider. Our constitution states our rights as a human but never once mentions the basic human right to healthcare. I believe the best approach to fix our healthcare system is to provide to everyone at a standard price for all health services nationwide. Like other systems the wealthy have an opportunity to back out of the system. They should only cover basic necessities, and should lower premium rates so that the insurance companies are not the ones benefiting rather it be the patients. In the end both with benefit and see success within the system but we should never take away the right to healthcare from anyone, rich or poor. This report was very informing and made me thing about how we go about our healthcare system, and how we are being ripped off and stripped of our human rights.

RS 4: "The Pot Republic"

                Eco-cronics…oops I mean economics within the marijuana industry is a growing concern to the American economy. This blog post is my economic opinion about “The Pot Republic”, a PBS video that explains the economic effects from the legalization of marijuana in California. The legalization did not just have an impact on potheads across the country; rather it provided new age medicine to patients in need and gave birth to a new market of grossing revenue.

                When people mention California today the first thing they associate it with is Marijuana. It has become so popular that California is now known as a “green” state rather than a blue (democratic) or red (republican). Weed has taken over the state and ironically it has a positive upshot for their economy. The cost-benefit that comes with medical marijuana are saving towns money by laying off police officers and allowing marijuana to be grown. This means the secondary effect will generate even more jobs because the demand for growers, distributors, regulators, and dispensaries opening up a gate way to gross millions of dollars in revenue from this plant. The market is there, the demand is high and the supply, the weed, is much needed.

                It sounds too good to be true that the west coast economy has boomed since this plant/weed has been legalized for medical purpose but there is even more money to be made potentially across the nation. Marijuana is still considered a narcotic at the federal level making it completely illegal for sales or possession. That is the gimmick in this situation, because the government frowns upon the idea to sell medical marijuana to patients in need because the laws are too grey confusing the general public for whom qualifies for a prescription. Legally or illegally, marijuana is still the highest profitable drug; even more than cocaine, ecstasy, heroine etc. Personally, I do not see why the government is restricting this window of opportunity to steer our economy in a positive direction by fully legalizing marijuana. It helps us as a country grow economically as a whole potentially erasing some of our national debts and increasing our medical knowledge for future expectations.

                I do not know if everyone agrees with me on this but there have been pot heads in America forever. From the 20’s the 50’s we all know the 70’s and especially today. I do not think any time soon the world is going to put down the ganja because it doesn't even kill anyone unlike alcohol and cigarettes. With that said, the future expectations for this market reflect an industry that is going to grow like wildfire. California once impacted America’s economy during the time of the gold rush, but economists now respect California to be “the new green rush”. This is the place to sell green to make green and I can see this coming to the east coast before we know it.

                 I personally have been following the effect marijuana has on the economy and this help me comprehend an even better understanding. Medbox, a marijuana dispensary company recently entered the NYSE, with an IPO worth pennies. The company sells marijuana out of dispensaries across the nation, as well as vending machines located in a large number of public places. When the medical marijuana laws passed in over 16 states across the country this stock went from being worth pennies now up to $240.00 dollars. It was shocking to me and I was hooked ever since I saw this. The future marijuana holds for this country are prosperous nevertheless is highly dependably upon our government. I cannot pass the laws for marijuana but I think they should be highly evaluated because this video proves this plant has no harm for anyone, and will benefit all parties in the long run.     

RS-3 Whats Your Major

                Throughout life we are all faced with economic decisions, whether it be a mortgage payment or preparing for retirement securing a 401k. Either way these decisions are not the most important. According to Money Planet’s podcast “What’s Your Major”, the biggest economic decision in our lives is the decision of your major in college. This blog highlights my opinions after listening to this podcast about economically analyzing the majors median earning and their variation between the focus of studies; i.e. math, science, liberal arts etc.

                When you are a child we always think of scientists and the mathematicians as these men in white coats earning the big bucks; on the other hand writers and performers are looked down upon as tree huggers that don’t earn much at all. Well this podcast justifies our child hood perceptions because a national survey about undergraduate college majors reveals, petroleum engineering has the highest earnings per year at $120,000 while a psychology major is at the bottom earning a median of $30,000 per year. At the same time, it is not a surprise petroleum engineering earns so much money. When measuring the supply and demand of majors there are only 15,000 persons in the field of petroleum engineering in comparison to the 1.3 million persons that majored in psychology. Therefore the scarcity of petroleum engineers yields an economic trade-off for a salary increase. Money is always our concern in life, and it is always an influence in decision making.

                The podcast asked the question, “Would your potential median earning salaries influence your decision about your major?” I would answer this question as yes, but other factors must be included in this decision rather than just potential earnings. I would make a decision at the margin weighing out the costs and benefits. In my case, I have always been proficient in the field of math and I have always been involved with leadership. I thought that it would be in my best interest to major in accounting because I enjoy doing these things and I saw accounting as a growing field with lots of potential. Also I have been influenced by many professors here at Sacred Heart University preaching that “the work put in to become an accountant pays itself off with the fact you’re almost guaranteed a job once graduating with a promising high salary.” I though this decision to become an accountant would benefit much more than the cost of my time and dedication to become one. In contrast, there are people out there who would much rather live by the expression “Do what makes you happy”, this meaning that they would much rather major in something of their interest and not worry about a salary. They compare this benefit of happiness to the cost they would suffer if they were to major in something not of their interest.

"Plato"

                Overall, I would recommend any college student to listen to this podcast, Episode 485: What's Your Major? : Planet Money : NPR, before making any informed decision. It could change your value for education, and provide awareness for the costly decisions yet to come in the future. I would like to leave my readers with a quote to reflect upon:

"Do not train children in learning by force and harshness, but direct them to it by what amuses their minds, so that you may be better able to discover with accuracy the peculiar bent of the genius of each."

 - Plato

               

RS2: Plant Money's "Top of the Charts"

       This blog post is about Money Planets podcast, “Episode 473: Top Off the Charts”, which generally concerned the transformation of the music industry with correlation between new economic strategies of record labels/artists and their rise to the top of the Billboard 100 charts. Billboard has equations to rank the “Top 40”; data is based upon demographics, requests, plays, YouTube views, reputations, previous songs etc. These formulas no longer represent the “Classic Road to the top” because it is now much easier for artist to economize their marketability and recognition.

                This podcast could not have said better what the music industry is going through right now. They described it as a “fractured industry” that has no rules when it comes to who is at the top of the charts. Until about 2010 the music industry was stable but now it is over flowing with artist that have one hit wonders and songs that became popular years later after it was released. The podcast explains that traditional rules of the “Top 40” states that on average it takes around 3-4 months to hit the top of charts. Now it can take up to years for a song to hit the top but it hits the top because it is being recycled. I look at this to be economization within the industry because the way these artists are “recycling” their songs is by starting off featuring the song on television, commercials, and movies to give a large crowd a hint of their song. They keep replaying this song amongst this scheme until recognized. Icona Pop's song “I Don’t Care” of 2012 is a prime example where they featured the song on T.V. commercials and on a T.V. show with Snookie but still was unsuccessful; it was featured on an HBO series and an attractive character danced for a minute straight to this song, and then BANG! It became a top 3 hit over night in the month of July, 2013. I am not going to lie I love to jam out to that song but it beats me to me how songs by no name artists can linger for so long and then suddenly become recognized as one of the best.  

                The music industry is hurting because promotion and marketing must be timed carefully. Justin Timberlake is an expert within the music industry for over a decade and is precise with his timing. Back when he was with N-SYNC he sold 2.4 million CD’s in as little as one week, which is the most ever! Obviously this is much harder to do, but Justin provides a great economic outlook because he is a marginal thinker that hires sync experts whose job is to dissect his music into a science, engineering a song that is nearly guaranteed to be a hit. He spends money on this beneficial tool because the marginal benefit of nearly guaranteeing a hit that will generate the most sales in the end is much greater than the outcome of sales without this sync expert. It can also support the idea that information is costly because to access have to such benefits such as marketing and sync experts you must be willing to pay the price because they have been successful in the past generated more revenue in the long run.

                Overall, I agree with this podcast respecting that fact the “Top 40” music chart is “fractured” or in better words a mess because the music of this decade is unpredictable and without a meaning. Personally I do not have much respect for these no name artists because they must earn their recognition for years.  I do not mean that literally but I believe it is only fair if they are initiated by taking on the long climb to the top just like every successful well respected artist had to do in the past before their taste of the top. If I could have it my way I would still consider Led Zeppelin and the Rolling Stones the best because their songs have been around for more than 30 years and still going strong. I understand you have to past down the title of #1 eventually but atleast put it in good hands; not to up and coming musicians like Macklemore who do not know how to control the crown.