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	<title>Business &#38; Money &#187; Michael Sivy &#124; TIME.com</title>
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		<title>Business &#38; Money &#187; Michael Sivy &#124; TIME.com</title>
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		<title>This Housing Upturn Looks Like the Real Thing</title>
		<link>http://business.time.com/2013/05/15/why-this-housing-upturn-looks-like-the-real-thing/</link>
		<comments>http://business.time.com/2013/05/15/why-this-housing-upturn-looks-like-the-real-thing/#comments</comments>
		<pubDate>Wed, 15 May 2013 09:45:32 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Construction]]></category>
		<category><![CDATA[Economic Indicators]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Finance]]></category>
		<category><![CDATA[Foreclosures]]></category>
		<category><![CDATA[Home-Equity Loans]]></category>
		<category><![CDATA[Jobs]]></category>
		<category><![CDATA[Mortgages]]></category>
		<category><![CDATA[Real Estate]]></category>
		<category><![CDATA[Real Estate & Homes]]></category>
		<category><![CDATA[Real Estate Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79982</guid>
		<description><![CDATA[Ever since the recovery began in 2009, a weak housing market has held back the U.S. economy. The first rebound in home prices was lackluster and after only a year was followed by another dip. But the recent upturn in home prices looks like the real thing. One clear sign of a turning point: In March, homeownership hit a 17-year low, while the 12-month gain in home prices was the biggest in seven years. Those two extremes suggest that the market has hit bottom. The people who are least well financed have been squeezed out, while demand is growing among people who can afford to pay higher home prices. If that trend continues – and there are good reasons to believe it will – a substantial burden will be lifted from the U.S. economy. The great surprise since the recession ended has been the weakness of the economic rebound, which has been particularly clear in the housing market. After falling 31% from 2006 to 2009, home prices rose almost 5% over the following year. But that recovery faltered, and during the next 20 months prices fell to a new low. Then the current recovery began, and barring another recession, all the evidence indicates that it will be sustainable: In the first quarter, home prices were higher (compared with a year earlier) in 133 of 150 metropolitan areas, according to the National Association of Realtors. On a national basis, the median home price gained 11.3%, the biggest yearly gain since 2005. (MORE: The Housing Mirage) The glut of homes for sale has diminished, down almost 17% compared with the previous year. In addition, the number of foreclosures in April (including bank repossessions and scheduled auctions) was 23% lower than a year earlier. Mortgage applications were up 7% in the most recent week, helped by low mortgage rates. Refinancings, which typically improve homeowners’ finances, have been generally rising in recent months and reached their highest level since December. And a Fannie Mae survey of consumer expectations for housing found that a majority of those surveyed in<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79982&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Real Estate &amp; Homes</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/real-estate-homes/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/03/600_ml_housing_03271.jpg?w=240</featured_image>
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			<media:title type="html">Housing</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Viewpoint: Ben Bernanke, Enabler of America&#8217;s Fiscal Dysfunction</title>
		<link>http://business.time.com/2013/05/08/viewpoint-ben-bernanke-enabler-of-americas-fiscal-dysfunction/</link>
		<comments>http://business.time.com/2013/05/08/viewpoint-ben-bernanke-enabler-of-americas-fiscal-dysfunction/#comments</comments>
		<pubDate>Wed, 08 May 2013 09:45:34 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
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		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
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		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Taxes]]></category>
		<category><![CDATA[Too-Big-To-Fail]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79402</guid>
		<description><![CDATA[Federal Reserve chairman Ben Bernanke doesn’t get much respect. PIMCO’s Bill Gross, who oversees some of the country’s biggest bond portfolios, has warned that Bernanke risks rousing inflationary dragons.  NYU professor Nouriel Roubini, who correctly anticipated the 2008 financial crisis, has argued that Bernanke’s policies are failing to help the economy and are instead fueling a stock market bubble that will end in a financial crisis. Even experts who are sympathetic have been cutting at times. New York Times columnist Paul Krugman has acknowledged that the Fed chairman is a fine economist.  But his long-running disputes with Bernanke – known in some quarters as the Battle of the Beards – have included charges that Bernanke was assimilated by the Fed Borg, a reference to Star Trek’s collective alien intelligence that overwhelms individuality and personal will. Renowned investor and business magnate Warren Buffett has described Bernanke as &#8220;a gutsy guy,&#8221; but he has also criticized the Fed&#8217;s policies as brutal toward retirees, who depend on interest payments from their investments. Indeed, Bernanke himself acknowledged as much in a 2011 press conference: &#8221;We are quite aware that very low interest rates, particularly for a protracted period, do have costs for a lot of people. They have costs for savers. We have complaints from banks that their net interest margins are affected by low interest rates. Pension funds will be affected if low interest rates for a protracted period require them to make larger contributions. So we are aware of those concerns, and we take them very seriously. I think the response is, though, that there is a greater good here, which is the health and recovery of the U.S. economy.&#8221; (MORE: How Silicon Valley is Hollowing out the Economy) It’s understandable that a public official would feel obliged to do whatever is best for the country at any given moment. If the lack of sound long-term fiscal policies is holding back growth, then up to a point the Fed can justify pumping large quantities of money into the banking system as additional stimulus. But there is a limit. In the long run, excessive money creation may engender<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79402&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Federal Reserve</primary_category><primary_category_link>http://business.time.com/category/economy-policy/federal-reserve-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/05/162795895.jpg?w=240</featured_image>
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			<media:title type="html">Ben S. Bernanke, chairman of the U.S. Federal Reserve, during a House Financial Services Committee hearing in Washington, D.C., on Feb. 27, 2013.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Is the Price of Gold Signaling an Economic Slowdown?</title>
		<link>http://business.time.com/2013/04/29/is-the-price-of-gold-signaling-an-economic-slowdown/</link>
		<comments>http://business.time.com/2013/04/29/is-the-price-of-gold-signaling-an-economic-slowdown/#comments</comments>
		<pubDate>Mon, 29 Apr 2013 09:45:40 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Economic Indicators]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Emerging Markets]]></category>
		<category><![CDATA[Energy]]></category>
		<category><![CDATA[Europe]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[New Energy]]></category>
		<category><![CDATA[Oil]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Wall Street]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>
		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78807</guid>
		<description><![CDATA[Friday’s GDP number was a disappointment. The consensus among economists was that growth for the first quarter would be at least 3% (at an annual rate adjusted for inflation). The actual number was only 2.5%. And even that wasn’t as good as it looked. Growth late last year was very weak, so part of the first-quarter gain was simply a short-term bounce back from the previous quarter. Nonetheless, those results appear to fit with conventional wisdom: A lethargic economy has managed to crank out minimal but steady growth for almost four years. And the outlook is slowly getting better rather than getting worse. Some contrarians challenge that view. They sees signs that the U.S. economy is losing momentum and is heading for another slowdown, if not another recession. The leading indicators of such a future downturn include price trends for important commodities, as well as for Treasury bonds. The most significant bellwether is the recent drop in the price of gold – the sharpest in 30 years. Since the U.S. abandoned the gold standard in the mid-1970s, consumer prices have quadrupled, but gold has risen more than ten-fold. The gold price hasn’t moved higher consistently – it was relatively flat during much of the 1980s and ’90s. But there have been only three periods in which gold prices suffered a significant and rapid decline. The first was from 1980 to ’82, when Federal Reserve chairman Paul Volcker raised interest rates to crush double-digit inflation and the U.S. economy experienced two closely spaced recessions. The second was in 2008, when the financial crisis caused a credit crunch and a worldwide recession. (MORE: A Nation of Renters: Should We Be Worried That Fewer Americans Own Homes?) The third period began in 2011, when gold peaked at $1,896 an ounce. Since then, the price has fallen to $1,440. Strikingly, this decline is occurring at a time when the Fed is pumping money into the banking system, interest rates are extremely low, and the U.S. economy has not had a negative quarter for nearly four years. Why<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78807&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/rtxymy9-copy.jpg?w=240</featured_image>
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			<media:title type="html">Watches and gold jewellery in a display case inside the Gold Standard jewellery store, specializing in purchasing raw gold and silver in New York City, on April 15, 2013.</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/b8875a12f713f52ecc28fe72efed7fd4?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">michaelsivy</media:title>
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		<title>Europeans Are Thinking the Unthinkable: That Debt Defaults Might Make Sense</title>
		<link>http://business.time.com/2013/04/23/europeans-are-thinking-the-unthinkable-that-debt-defaults-might-make-sense/</link>
		<comments>http://business.time.com/2013/04/23/europeans-are-thinking-the-unthinkable-that-debt-defaults-might-make-sense/#comments</comments>
		<pubDate>Tue, 23 Apr 2013 07:00:01 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Europe]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Labor]]></category>
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		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78185</guid>
		<description><![CDATA[The euro-zone crisis has slipped off the radar screen during the past couple of weeks as gun control and the Boston bombers have dominated U.S. news. But none of the euro zone’s problems have gone away. Political crises beset France, Italy and Spain. Smaller countries, from Portugal to Cyprus, face even more pressing financial troubles. Germany grows less and less willing to foot the bill for bailouts. And for the first time, serious public figures in Europe have begun openly discussing the pros and cons of allowing countries to default on their national debt. There is, in fact, a historical case for tolerating default. Argentina suffered a financial crisis in 1999 that led to a period of high unemployment. Over the next several years, it became harder and harder to maintain the value of currency. In 2002, the country defaulted on more than $100 billion in debt. Inflation soared, and workers&#8217; purchasing power plummeted. Savers lost a big chunk of their money. But a year later, growth bounced back to an 8% to 9% annual rate, and wages rose even faster. The same issues arose during the 2008 banking crisis. Ireland bailed out its banks, while Iceland couldn’t afford to and allowed a partial default. The results were that Ireland had no inflation, but unemployment topped 14% as growth ground almost to a halt. By contrast, in Iceland the currency lost almost half its value and inflation reached 5.4%. However, economic growth picked up slightly and unemployment didn’t rise much above 6%. (MORE: Why the Case for Austerity Took a Big Hit) In all these cases, policymakers had to choose whether working people or financial interests should be the ones to suffer most during a serious economic crisis. Default hurt affluent savers and financial institutions, but proved to be better for ordinary workers over the long term. What is happening now in Europe is that populations are resisting further austerity. In response, politicians and technocrats are beginning to question whether default might ultimately be less painful than doing what will be required to keep<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78185&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Europe</primary_category><primary_category_link>http://business.time.com/category/economy-policy/europe-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/biz-euro-default-130422.jpg?w=240</featured_image>
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			<media:title type="html">A man walks past a closed down business in Madrid</media:title>
		</media:content>

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			<media:title type="html">michaelsivy</media:title>
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		<title>What the Boston Bombing Means for the Economy and the Stock Market</title>
		<link>http://business.time.com/2013/04/16/what-the-boston-bombing-means-for-the-economy-and-the-stock-market/</link>
		<comments>http://business.time.com/2013/04/16/what-the-boston-bombing-means-for-the-economy-and-the-stock-market/#comments</comments>
		<pubDate>Tue, 16 Apr 2013 12:23:11 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Exchanges]]></category>
		<category><![CDATA[Investing]]></category>
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		<category><![CDATA[Mutual Funds]]></category>
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		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Tourism]]></category>
		<category><![CDATA[Travel]]></category>
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		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=77856</guid>
		<description><![CDATA[Terrorism poisons everything. The greatest damage, of course, results from the lives that are lost and the people who are injured. Nonetheless, it’s natural to wonder whether an event such as yesterday’s bombing at the Boston Marathon is likely to have a longer-term impact on the economy and the stock market. Anything that makes people more anxious and uncertain about the future has a negative effect on business and on stocks. The bombing occurred shortly before 3 p.m. E.T., and the Dow — which had earlier in the day started to rally from the day’s lows — fell another 120 points in the last hour of trading. Is that likely to be it? Or should investors expect further big losses over the coming days and even weeks? The attack on September 11, 2001, seems to suggest that the effects of a terrorist attack might be long lasting. Following that tragedy, the Dow dropped 1,400 points and needed more than two months to get back to even. However, it’s worth noting that at the time of the attack on the World Trade Center, the Dow was already down 1,500 points from the year’s high. And after the market made up its losses from 9/11, it went on to gain another 1,000 points in the first four months of 2002. So clearly there were other factors driving stock prices. Moreover, not all incidents have such a drastic impact. In fact, it’s possible to divide terrorist acts into four categories with dramatically different economic results: Attacks on individual companies. Terrorism that targets a specific company — such as the kidnapping of employees or the bombing of offices — has a damaging effect on the shares of the company targeted. In some cases, a stock can be hit hard and have a sizable loss. But overall, the effect tends not to be very great. A recent study found that in 75 incidents, the average stock-market loss was only 1% or 2%. Competitors were not affected one way or the other. Attacks on the energy sector.<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77856&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Wall Street &amp; Markets</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>The Real Significance of the Bitcoin Boom (and Bust)</title>
		<link>http://business.time.com/2013/04/12/the-real-significance-of-the-bitcoin-boom-and-bust/</link>
		<comments>http://business.time.com/2013/04/12/the-real-significance-of-the-bitcoin-boom-and-bust/#comments</comments>
		<pubDate>Fri, 12 Apr 2013 09:45:40 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Banking]]></category>
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		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=77371</guid>
		<description><![CDATA[The volatile rise-and-fall of Bitcoin has prompted lots of stories explaining why the online virtual currency is a classic bubble. Many compare it to tulip mania in 17th century Holland, where prices of rare tulip bulbs soared to absurd heights and then crashed, ruining the speculative investors who had bought them. But the Bitcoin phenomenon is more than a bubble. It says something important about the current and future state of the global economy. The scale of the recent boom-and-bust has been staggering indeed. At the start of the year, a Bitcoin was worth $13.51. Earlier this week, it traded as high as $266. And on Thursday, it plummeted to less than $100, as one of the exchanges where Bitcoins are traded closed temporarily. This would be comparable to the exchange rate for the British pound soaring from $1.62 (where it was on Jan. 1) to $31.90 and then falling back to $12. Such monumental appreciation and volatility are clearly the result of speculation — people buying the online currency just because they think its value will rise, not because they want to use it to purchase goods and services. But Bitcoins’ gains are not the result of speculation alone. They partly reflect the fact that the Bitcoin system is much better designed than previous online currencies. And more significantly, the run-up also reflects anxiety about the safety of the global banking system and the stability of major international currencies. (MORE: No Money, No Problems: Canada Considers Completely Digital Currency) The technicalities of the Bitcoin system are complex, but to make this online currency more successful than previous versions, the designers overcame two key challenges. First, to prevent counterfeiting, they attached a history of transactions to each currency unit — but allowed users to keep their transactions nearly anonymous. Counterfeiting is hard because fake Bitcoins would need an authenticated history to pass muster. Second, they strictly controlled the supply of Bitcoins outstanding — thereby saving it from the disastrous fate of, for example, the paper currency known as assignats that were issued during<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77371&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>World Finance</primary_category><primary_category_link>http://business.time.com/category/world-finance/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/biz-bitcoin-130412.jpg?w=240</featured_image>
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			<media:title type="html">Bitcoin Value Soars And Drops</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Is the Global Economy Slowly Falling Apart?</title>
		<link>http://business.time.com/2013/04/05/is-the-global-economy-slowly-falling-apart/</link>
		<comments>http://business.time.com/2013/04/05/is-the-global-economy-slowly-falling-apart/#comments</comments>
		<pubDate>Fri, 05 Apr 2013 12:00:39 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Bonds]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=76345</guid>
		<description><![CDATA[It’s conventional wisdom that the U.S. economy is steadily recovering from the recession, even if progress is slow and disappointing. But there’s also a widespread sense that long-term economic prospects are deteriorating all around the world. Young people can’t find jobs. Budgets keep being cut in both the public and the private sectors. And the projected increase in debt over the next decade figures to be a huge burden for the most highly developed economies. Political systems seem unable to cope with problems that ought to be fairly easy to solve, or at least contain. As the recent crisis in Cyprus demonstrates, a minor dislocation can become a threat to the entire global financial system overnight. The U.S. is deeply troubled too. Deficits remain enormous, and the checks and balances of the political system have turned into a logjam. In a new book, David Stockman, President Ronald Reagan’s budget director, chronicles the relentless downward spiral of America’s political and financial systems. He concludes: “The future is bleak &#8230; When the latest bubble pops, there will be nothing to stop the collapse.” This view may be extreme, but there’s hard evidence to substantiate the idea that the global economy is becoming more rickety. Although the developed world today is considerably richer overall than it was when Stockman worked in the Reagan Administration, creditworthiness has been steadily declining. The global supply of AAA-rated government bonds has shrunk by more than 60% since the financial crisis began. And while dozens of big U.S. corporations had top bond ratings 30 years ago, today that group has dwindled to four: Automatic Data Processing, Exxon Mobil, Johnson &#38; Johnson and Microsoft. How seriously should we take these bellwethers? Although there are real problems that need to be solved, the long-term picture doesn&#8217;t look entirely bleak. Four major trends will determine global economy stability in the long run: (MORE: Marx&#8217;s Revenge: How Class Struggle Is Shaping the World) Demographics Populations develop bulges because of changing birthrates. In the most simplistic terms, a bulge of high-spirited young people correlates with<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=76345&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Why Derivatives May Be the Biggest Risk for the Global Economy</title>
		<link>http://business.time.com/2013/03/27/why-derivatives-may-be-the-biggest-risk-for-the-global-economy/</link>
		<comments>http://business.time.com/2013/03/27/why-derivatives-may-be-the-biggest-risk-for-the-global-economy/#comments</comments>
		<pubDate>Wed, 27 Mar 2013 15:06:48 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
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		<category><![CDATA[Too-Big-To-Fail]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=75881</guid>
		<description><![CDATA[Four years after the U.S. recession ended, the global economy is still beset by problems. The present danger comes from Cyprus – where the sea foam once gave birth to the goddess Aphrodite but now only creates froth in panicky financial markets. The proposed bailout plan for troubled Cypriot banks would impose losses of up to 40% on the largest depositors. And that, in turn, could undermine confidence in the banks of other troubled euro zone countries. Cyprus is only the latest challenge for global financial stability, however. In the U.S., deteriorating urban finances – from Detroit to Stockton, Calif. – threaten municipal bond holders, public-sector workers, and taxpayers. In addition, a rise in long-term interest rates seems inevitable sooner or later, either because of inflation or because the Federal Reserve backs away from its easy-money policies. Higher interest rates would mean big losses for bond investors, and also for government-sponsored entities, such as Fannie Mae and Freddie Mac, that hold mortgage-backed assets. The greatest risk of all, however, may be one of the least visible – namely, the expanding, shadowy market for derivatives. These highly sophisticated investments have contributed to financial disasters from the 2008 bankruptcy of Lehman Brothers to J.P. Morgan’s 2012 trading losses in London, which totaled more than $6 billion. (MORE: The $600 Billion the IRS Can&#8217;t Collect) Basically, derivatives are financial contracts with values that are derived from the behavior of something else – interest rates, stock indexes, mortgages, commodities, or even the weather. Just as homebuyers make only a down payment when they buy a house with a mortgage, derivatives traders put down only a small amount of cash. Moreover, one derivative can be used to offset or serve as collateral for another. The result is that a massive edifice of derivatives can be supported by a relatively small amount of real money. Some derivatives, such as typical stock options, trade on exchanges. But many are simply private contracts between banks or other sophisticated investors. As a result, it’s hard to know the total<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=75881&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Can the U.S. Dollar Become Almighty Once Again?</title>
		<link>http://business.time.com/2013/03/20/can-the-u-s-dollar-become-almighty-once-again/</link>
		<comments>http://business.time.com/2013/03/20/can-the-u-s-dollar-become-almighty-once-again/#comments</comments>
		<pubDate>Wed, 20 Mar 2013 14:35:25 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=75257</guid>
		<description><![CDATA[Financial turmoil in Cyprus, where the parliament rejected a plan an eurozone bailout deal that would have taxed bank deposits, is prompting investors to shift cash from the euro zone to the U.S. That’s boosting the value of the dollar &#8212; and it’s just the latest installment in a story that has helped the dollar strengthen for more than a year. Despite gridlock in Washington and a string of economic mishaps, the dollar has risen by 7% since late 2011. That’s a striking turnaround for a currency that was in relentless decline for decades. If the upward trend continues – and there are good reasons to think it will – then the U.S. dollar could become almighty once again. The dollar’s decline over the past 30 years has been far greater than most Americans realize. It has lost almost half its value against other major currencies since 1985 and is down 33% in the past 11 years alone. Indeed, the value of the U.S. dollar is lower today than it was in 2009 when the recession ended. In part, this fall occurred because of government policies in Europe and Japan that kept the euro and the yen overvalued. A weak currency can bolster a country’s economy in the short run, by making goods cheaper for foreign buyers and thereby encouraging exports. But over the longer term, a robust economy is typically accompanied by a strong currency. A currency rises in value when more foreign money is flowing in than is flowing out. These inflows occur not only because of export sales but also because foreigners see investment opportunities or are seeking safe places to park their cash. As a result, a stronger dollar is a bellwether of an improving economy and a brighter outlook for U.S. stocks. And there are three reasons economists think the dollar’s rise could continue: (MORE: Cyprus: The E.U. &#8216;Rescue That Risks Backfiring) Other major countries are worse off economically. The U.S. economy may be sluggish, but it has grown for 14 straight quarters since the recession ended<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=75257&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>World Finance</primary_category><primary_category_link>http://business.time.com/category/world-finance/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>If There’s No Inflation, Why Are Prices Up So Much?</title>
		<link>http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/</link>
		<comments>http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/#comments</comments>
		<pubDate>Tue, 12 Mar 2013 09:45:03 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<category><![CDATA[Currency]]></category>
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		<category><![CDATA[Real Estate & Homes]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=74397</guid>
		<description><![CDATA[Last week, I ran out of ink for my printer and ordered some more online. My computer automatically pulled up the previous order, and I was shocked to see that the price of the ink cartridges I was buying had gone up 25%. To my mind, ink always seems overpriced. Manufacturers sell printers cheaply because they know that they can make lots of money on the ink. For the same reason, John D. Rockefeller’s Standard Oil is said to have sold millions of cheap kerosene lamps in order to make big profits selling kerosene. But since ink cartridges were already priced way above cost and official statistics show little general inflation, why had ink gone up 25% in less than a year? Price hikes for a particular item here or there don&#8217;t qualify as inflation. If one thing gets more expensive but something else gets cheaper, that’s what economists call a relative price change. Inflation is a simultaneous increase in prices across the board. Some measures of inflation, such as the GDP Deflator, track price changes that affect businesses as well as those that affect consumers. But the Consumer Price Index is supposed to focus on inflation at the consumer level. And the CPI has recorded minimal increases over the past four years. Since the recession ended, the 12-month change in consumer prices has averaged 2% and has never been as high as 4%. (MORE: Online &#8216;Predictions&#8217; Market Intrade Shuts Down Months After Federal Lawsuit) There are lots of other ways to gauge inflation, however, that give very different signals. Gold was $930 an ounce when the recession ended, and today it’s $1,583. So if you believe in the gold standard, prices have increased 70% in four years – or an annualized rate of 14.2%. Of course, many economists dismiss the gold price as an archaic indicator. So it may be more meaningful to look at price increases over a broad range of commodities. The Reuters CRB Commodity Index, which tracks the prices of coffee, cocoa, copper, and cotton, as well as<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=74397&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/01/inflation.jpg?w=240</featured_image>
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			<media:title type="html">inflation</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Why Many Americans Feel Like They&#8217;re Getting Poorer</title>
		<link>http://business.time.com/2013/03/05/why-many-americans-feel-like-theyre-getting-poorer/</link>
		<comments>http://business.time.com/2013/03/05/why-many-americans-feel-like-theyre-getting-poorer/#comments</comments>
		<pubDate>Tue, 05 Mar 2013 13:00:32 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Economics]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=73756</guid>
		<description><![CDATA[Data released by the Commerce Department last week showed that personal income fell 3.6% in January, the biggest decline in 20 years. The drop was even bigger when taxes and inflation are taken into account. Real personal disposable income fell by 4%, the biggest monthly drop in half a century. In part, this is a statistical blip. Companies accelerated certain payments – giving year-end bonuses in December rather than January, for example – so that employees could avoid higher taxes going into effect for 2013. But even if that blip is smoothed out, real aftertax income is lower than it was six months ago. What this means is that the U.S. economy is not merely recovering from the recession more slowly than one might like, but is actually getting worse for many Americans. Despite three-and-a-half years of uninterrupted growth in real GDP and a decline of more than two percentage points in the unemployment rate since 2009, the standard of living is falling for as much as half the population, particularly if you look beyond monthly numbers to longer-term trends. (PHOTOS: America Copes with a Stagnant Economy) Commentators assessing a recovery in progress naturally tend to focus on changes from one month or quarter to another. But what really matters is not how the economy compares with where it was in earlier time periods, but how it compares with where it would now be if it were fully utilizing all of its resources. Economists call this level &#8220;full capacity,&#8221; and it rises over time as the population grows, technology improves and facilities are upgraded. When a recession occurs, the economy&#8217;s actual output drops significantly below the full capacity level, creating what&#8217;s known as an &#8220;output gap.&#8221; Once the recession ends and a recovery begins, there&#8217;s normally a period of well-above average growth so that actual output regains the ground lost during the recession and comes back close to full capacity. But since the most recent recession ended, growth has never been fast enough to close the output gap – indeed, the gap has<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=73756&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/03/biz-poorer-0305.jpg?w=240</featured_image>
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			<media:title type="html">A homeless man looks from the window of a condemned house in Warren, Ohio, Oct. 28, 2012.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>What Happens When the Fed Really Does Run Out of Ammunition?</title>
		<link>http://business.time.com/2013/02/27/what-happens-when-the-fed-really-does-run-out-of-ammunition/</link>
		<comments>http://business.time.com/2013/02/27/what-happens-when-the-fed-really-does-run-out-of-ammunition/#comments</comments>
		<pubDate>Wed, 27 Feb 2013 10:45:01 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=72950</guid>
		<description><![CDATA[Stocks dropped sharply last week, with the Dow falling some 200 points, after the Federal Reserve released the minutes of its January Open Market Committee meeting. Although the minutes reaffirmed the Fed’s easy-money policy, they also showed that some members of the committee had voiced concerns. The dissenters cautioned that quantitative easing, the current program of massive bond buying, could not be continued indefinitely without serious risks. Loading the Fed up with bonds creates the danger of big losses for the central bank if interest rates rise (which causes bond prices to fall). In a worst-case scenario, those losses could total half a trillion dollars over three years, according to one estimate. As a result, the January minutes included a carefully worded caveat: “Evaluation of the efficacy, costs and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.” Fed Chairman Ben Bernanke remains undaunted, however. In his testimony before Congress on Tuesday he defended his easy-money policy, noting that it has &#8220;supported real growth in employment and kept inflation close to our target.&#8221; With consumer prices up only 1.6% over the past year, Bernanke declared: &#8220;My inflation record is the best of any Federal Reserve chairman in the postwar period — or at least one of the best.&#8221; (MORE: Italy&#8217;s Political Mess: Why the Euro Debt Crisis Never Ended) In addition he argued that worries about potential losses on the Fed&#8217;s ballooning bond holdings were overstated. Careful portfolio management, he said, would allow the central bank to absorb the losses over time by trying to hold bonds to maturity rather than selling at a loss. &#8220;We could exit without ever selling,&#8221; Bernanke said. This debate raises profound questions — probably not for the last time — about the effectiveness of the Fed&#8217;s easy-money policy. Why hasn&#8217;t it worked better? How long can it be continued? And, most important, what will happen when the Fed finally runs out of ammunition and quantitative easing comes to<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=72950&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/02/biz-ben-bernanke-130227.jpg?w=240</featured_image>
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			<media:title type="html">Federal Reserve Board Chairman Ben Bernanke testifies on Capitol Hill in Washington</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Is the World on the Brink of a Currency War?</title>
		<link>http://business.time.com/2013/02/21/is-the-world-on-the-brink-of-a-currency-war/</link>
		<comments>http://business.time.com/2013/02/21/is-the-world-on-the-brink-of-a-currency-war/#comments</comments>
		<pubDate>Thu, 21 Feb 2013 10:45:44 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economics]]></category>
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		<category><![CDATA[Economy]]></category>
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		<category><![CDATA[Federal Reserve]]></category>
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		<category><![CDATA[Retirement]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=72468</guid>
		<description><![CDATA[The latest hot topic among economic talking heads is the coming currency war. According to conventional wisdom, there’s a risk that major countries will – simultaneously – try to revive their sluggish economies by pushing down the value of their currencies. That strategy could backfire, according to this line of thought, stifling international trade, tipping economies back into recession, and possibly causing Depression-style hyperinflation to boot. Get ready to sell apples on the nearest street corner and buy your morning coffee with a wheelbarrow full of paper money. It all sounds very unpleasant. But the dogs of war are unlikely to slip their leash. In a classic currency war, a country prints money, holds interest rates down, or intervenes in foreign exchange markets in order to depress the value of its own currency. That makes the country&#8217;s exports cheaper and more attractive for foreign buyers. In theory, this can enable an economy to grow faster than would be possible on the basis of domestic demand alone. Only trouble is, if every country pursues a similar strategy, they all devalue their currencies at the same time and no country gains an advantage over its trading partners. It may look as though that’s what’s happening now, since many of the largest economies are following policies that could depress the value of their currencies. But they’re doing so for fundamentally different reasons – to address domestic economic problems rather than to boost exports. And while this creates some real risks, they aren’t the ones that the term &#8220;currency war&#8221; implies. (MORE: Why Can&#8217;t People with Student Loans Refinance at Better Rates?) Currency wars – and trade wars generally – have their origins in a 17th and 18th century economic theory known as mercantilism. The idea was that a country’s wealth comes from selling more than it buys. A colonial empire could achieve this positive balance of trade by acquiring cheap raw materials from its colonies and then ensuring that it exported more finished goods than it imported. This was usually accomplished with tariffs that made<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=72468&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/07/2100_ml_foreignmoney_0713.jpg?w=240</featured_image>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Why Can&#8217;t This Economy Really Get Going?</title>
		<link>http://business.time.com/2013/02/12/why-cant-this-economy-get-going/</link>
		<comments>http://business.time.com/2013/02/12/why-cant-this-economy-get-going/#comments</comments>
		<pubDate>Tue, 12 Feb 2013 13:00:18 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
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		<category><![CDATA[Financial Reform]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=70353</guid>
		<description><![CDATA[It’s no secret that the U.S. economy isn’t doing especially well. But there’s a cliché – one that I’ve repeated myself – that conditions are improving, even if progress is disappointingly slow. That notion was exploded two weeks ago when the Department of Commerce estimated that GDP actually declined in the fourth quarter of 2012. It’s true that the drop wasn’t very big and was offset to some extent by better-than-expected results earlier in the year. But when you average results for the past four quarters, overall growth last year amounted to only half the normal rate, and there’s not really any upward trend. Those results are even worse than they sound. After a recession ends, the economy typically enjoys a bit of a boom. And the deeper the slump, the more powerful the rebound usually is. For brief periods, GDP growth can get up as high as 9% (at an annual rate). And over several years, the economy can expand considerably faster than the historical average rate of 3.25%. In short, after a recession there’s typically a catch-up period, in which the economy makes up some of its lost ground. (MORE: 9 Easy Ways to Save Money on Your Next Vacation) So the problem is not just that business conditions are taking a long time getting back to normal. What’s a lot more disappointing is that there hasn’t been any real rebound at all. In fact, GDP growth hasn’t outpaced the historical average rate for two consecutive quarters since the recession ended. This chronic weakness isn’t result of any single problem. Instead, there are a host of factors that have combined to produce the entrenched stagnation we see today. Among them: The housing bust. Home prices have stopped falling and have turned up over the past year. But many American families still have not recovered from the 30% drop in prices between 2006 and 2009. By some estimates, a fifth of all the homes with mortgages are worth less than is owed on them. Not only does this prevent many homeowners<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=70353&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/02/rtr3dn1w.jpg?w=240</featured_image>
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			<media:title type="html">Traders work on the floor of the New York Stock Exchange after the opening bell Feb. 11, 2013.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Has the Banking Industry Really Been Fixed?</title>
		<link>http://business.time.com/2013/02/05/has-the-banking-industry-really-been-fixed/</link>
		<comments>http://business.time.com/2013/02/05/has-the-banking-industry-really-been-fixed/#comments</comments>
		<pubDate>Tue, 05 Feb 2013 13:00:45 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Banking]]></category>
		<category><![CDATA[Companies & Industries]]></category>
		<category><![CDATA[Economics & Policy]]></category>
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		<category><![CDATA[Investment Banking]]></category>
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		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Private Equity]]></category>
		<category><![CDATA[Real Estate & Homes]]></category>
		<category><![CDATA[Real Estate Markets]]></category>
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		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=69750</guid>
		<description><![CDATA[The biggest economic puzzle of the past few years is why the recovery has remained so weak. The underlying cause of the 2007-2009 recession was the bursting of the real estate bubble. But it was the banking crisis resulting from the drop in home prices that actually sent the U.S. tumbling into the worst economic downturn since the Great Depression. Continuing problems in the banking industry have been among the chief factors holding back the recovery. The key question now is whether the banks have finally tackled their problems, so that the economy can start to grow more robustly. It certainly seems as though the banking sector should be on the mend. Home prices have turned up after hitting bottom early last year. And other borrowers are in better shape, too. Corporate profits have rebounded powerfully, and consumers have got their household debt under control. So you might think that banks would be in a stronger position to finance economic growth. The reality, however, is more complicated. The losses banks suffered because of falling home prices exposed a host of fundamental problems in the industry. Here’s a look at what needs to be addressed to get the financial system back to full strength: (MORE: Misguided? Half of Adult Children Think Parents Made No Money Mistakes) Regulation. There are two key types of regulation. The first limits the amount of risk a bank can take. Only trouble is, it’s hard for regulators – or anyone else – to monitor the riskiness of bank portfolios. Indeed, the major credit-rating agencies have come under sharp criticism for failing to recognize the risk of some sophisticated investments. The second type of regulation separates aggressive forms of banking from more mundane lending for mortgages, businesses, and consumer finance. That prevents speculative losses from leading to a cutback in credit available for ordinary business activities. A provision known as the Volcker Rule restricts banks from making risky investments with the same capital that they use to make loans to clients. But the rule does not require the nearly complete separation<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=69750&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Banking</primary_category><primary_category_link>http://business.time.com/category/banking-2/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/02/rtxdamt.jpg?w=240</featured_image>
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			<media:title type="html">Traders stand outside the New York Stock Exchange on March 27, 2009.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>How a Century of Income Taxes Can Clarify Today&#8217;s Debates</title>
		<link>http://business.time.com/2013/02/01/how-a-century-of-income-taxes-can-clarify-todays-debates/</link>
		<comments>http://business.time.com/2013/02/01/how-a-century-of-income-taxes-can-clarify-todays-debates/#comments</comments>
		<pubDate>Fri, 01 Feb 2013 13:00:53 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Economics]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=69429</guid>
		<description><![CDATA[It’s hard for any American nowadays to imagine living in a country with no income tax. But up until 100 years ago – exactly 100 years ago this weekend, in fact – it wasn’t constitutional for the Federal Government to tax individual incomes. Indirect taxes, such as tariffs on imports and sales taxes on specific kinds of goods, were allowed by the Constitution as long as they were uniform throughout the country. But direct taxes had to be apportioned among the various states in proportion to population, which is impractical with income taxes. Once Delaware ratified the 16th Amendment on Feb. 3, 1913, however, those restrictions were eliminated and the income tax we know today came into existence. This tax has gone through all sorts of twists and turns over the past century. And a look back at these changes can actually throw light on the policy debates taking place today. Here are some notable facts about the first hundred years of the income tax, which now seems as American as apple pie: The income tax has always been hated – but so were the taxes it replaced. In Colonial America and the early U.S., taxes were typically on goods like sugar, tea, or whiskey (which triggered the Whiskey Rebellion in 1791). Other taxes were on land or were poll taxes (which was a flat amount per person and had nothing to do with voting). Later on, there were high custom duties on imports, which were one of the chief causes of the Civil War because they pushed up the prices of manufactured goods, helping the North but hurting the agrarian South. Real estate taxes were always extremely unpopular and still are. (MORE: How Spending More on Academics Can Actually Hurt College Enrollment) Raising taxes on the rich has been the strategy from the beginning. Income taxes were imposed twice before the 16th Amendment. The first time was to help pay for the Civil War. That tax began at 3% for incomes over $600 ($13,636 in today’s dollars) and 5% for incomes<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=69429&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Taxes</primary_category><primary_category_link>http://business.time.com/category/economy-policy/taxes-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/10/600_biz_tax_10151.jpg?w=240</featured_image>
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			<media:title type="html">Who Should Pay More in Tax</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>6 Reasons the Stock Market Could Do Surprisingly Well in 2013</title>
		<link>http://business.time.com/2013/01/22/6-reasons-the-stock-market-could-do-surprisingly-well-in-2013/</link>
		<comments>http://business.time.com/2013/01/22/6-reasons-the-stock-market-could-do-surprisingly-well-in-2013/#comments</comments>
		<pubDate>Tue, 22 Jan 2013 14:00:37 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Economics & Policy]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=67363</guid>
		<description><![CDATA[The S&#38;P 500 hit a five-year high last week, and now some experts are saying that stocks are overpriced and that the overall market is vulnerable to a 20% drop this year. There are certainly plenty of things to worry about, from a lousy economy and political gridlock in Washington to the possibility of a financial crisis in the euro zone. But there’s an equally compelling case that stocks could do quite well in 2013. Indeed, it wouldn’t be hard for the Dow to sail through its all-time high of 14,164 and go on to top 15,000 before the year is out – a gain of 10% or more from current levels. There’s no denying the economy’s current problems. Since the recession ended more than three years ago, growth has been consistently disappointing for a recovery. Moreover, the economy has actually been slowing down recently – from a 3.1% annualized growth rate in last year’s third quarter to less than 1.5% in the fourth quarter. In addition, analysts project that the fiscal cliff deal, combined with attempts to cut the deficit, will knock as much as a full percentage point off GDP growth in 2013. In short, this year’s economy figures to be just as sluggish as last year’s – and maybe worse. But the pessimists’ case for a bear market is based on more than a limping U.S. economy. They think the bull market – up more than 100% over the past three-and-a-half years – has run its course. They expect a global slowdown that will cause 2013 corporate profits to fall short of expectations. Finally, they think the Federal Reserve’s extreme easy-money policies will either lead to inflation, or that the Fed will have to raise interest rates. Either way, it would send the prices of Treasury bonds into a tailspin and unsettle the stock market as well. Whew! That’s a lot to worry about. But today’s bearish commentators are making one crucial incorrect assumption – that share prices move in lockstep with the economy. It’s true that over the long term, share prices follow<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=67363&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Markets</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/investing-wall-street-markets/markets/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>What the Current Economic Outlook Means for American Families</title>
		<link>http://business.time.com/2013/01/16/what-the-current-economic-outlook-means-for-american-families/</link>
		<comments>http://business.time.com/2013/01/16/what-the-current-economic-outlook-means-for-american-families/#comments</comments>
		<pubDate>Wed, 16 Jan 2013 13:00:01 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=66788</guid>
		<description><![CDATA[Now that the fiscal cliff fight is over and the debt ceiling debate hasn&#8217;t reached a fever pitch &#8212; not yet, anyway &#8212; it seems like a good time to take a step back, assess the economic outlook, and see what it means for American families. The good news is that the U.S. has enjoyed more than three years of uninterrupted economic growth and falling unemployment since the recession ended. The bad news is that this has been the weakest rebound since World War II. Economic growth has averaged less than 2.25% since the recovery began and is estimated to have slowed to less than 1% in the most recent quarter. Unemployment is still way above where it should be at this point. Budget problems remain the chief impediment to faster growth. The fiscal cliff deal did little to reduce the annual deficit, almost $1.1 trillion last year. Not all of that amount needs to be eliminated, though. Part of the current deficit is simply the normal result of a weak economy. Moreover, if the economy were growing at its historical average rate of 3.25% a year, the U.S. could afford to run a deficit of half a trillion dollars or so. Even so, the deficit still needs to be reduced by something like $300 billion a year. That means further spending cuts and tax hikes that will be a drag on the economy. Consensus estimates are for slightly slower growth this year – an estimated 1.8%, down from 2.2% in 2012. The most optimistic economists foresee a small improvement in growth this year, followed by 3% or more in 2014. While that would get the economy back to its long-term average growth rate, it would remain far short of the powerful rebound that normally follows a recession. (MORE: The Changing Business of Drugstores) To see what this outlook is likely to mean for typical American families, it helps to take a closer look at these factors: Unemployment. For the past three years, unemployment has been coming down slowly but steadily. The most recent report calculated that 155,000 jobs<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=66788&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Lots of Goodies Were Stuffed into the Fiscal Cliff Deal­</title>
		<link>http://business.time.com/2013/01/07/lots-of-goodies-were-stuffed-into-the-fiscal-cliff-deal%c2%ad/</link>
		<comments>http://business.time.com/2013/01/07/lots-of-goodies-were-stuffed-into-the-fiscal-cliff-deal%c2%ad/#comments</comments>
		<pubDate>Mon, 07 Jan 2013 15:00:01 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Agriculture]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=65939</guid>
		<description><![CDATA[You’d think that Congress would have kept the fiscal cliff negotiations as simple and tight as possible. The size of the deficit, the threat of automatic spending cuts, and the need for a last-minute tax deal deserved everyone’s full attention. And yet, the Congressional Budget Office breakdown of the bill shows that there were all sorts of goodies buried in the fine print, benefiting everyone from filmmakers to rum distillers. The problem is so-called “tax expenditures,” which are basically ways to subsidize various kinds of activities through tax breaks (as opposed to direct payments). The fiscal cliff deal consists of three parts – personal taxes, business taxes and energy taxes – and each includes its own giveaways. Many of these were simply increases or extensions of tax expenditures that already existed. And some of them may be perfectly reasonable public policy. Perhaps it’s worthwhile to spend an additional $9.7 billion over the next 10 years on additional subsidies for student loans or $5.6 billion for adoptions, although both those figures seem like a lot considering that employer-provided childcare is getting only $209 million. More money is at stake in subsidies for various businesses, $46 billion, and for alternative energy, $18 billion. But even when those tax expenditures are justifiable, they merit separate and thorough discussion, rather than being mixed into what is supposed to be a debate over personal income tax rates. Moreover, there are plenty of lesser tax expenditures that seem to deserve some skepticism. Indeed, Senator McCain criticized such tax benefits last week, saying that &#8220;special-interest giveaways,&#8221; including a $15 million subsidy for asparagus growers, would feed cynicism at a time when tough choices have to be made about the deficit. Here’s a quick look at where some of the other small bequests are going: Railroad tracks. A special 50% tax credit for maintaining tracks is projected to cost $331 million over the next two years. Racetracks. Tax benefits for certain motorsport racing track facilities will cost more than $100 million over the next seven years. Native Americans. Business property on Indian reservations will receive<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=65939&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link>
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		<title>Why the Fiscal Cliff Deal Should Have Included Social Security</title>
		<link>http://business.time.com/2013/01/02/why-the-fiscal-cliff-deal-should-have-included-social-security/</link>
		<comments>http://business.time.com/2013/01/02/why-the-fiscal-cliff-deal-should-have-included-social-security/#comments</comments>
		<pubDate>Wed, 02 Jan 2013 14:42:47 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=65424</guid>
		<description><![CDATA[Yesterday&#8217;s deal to avoid the fiscal cliff offers quick fixes for the country&#8217;s most urgent financial problems but will also add almost $4 trillion to the deficit over the next 10 years. Cuts in discretionary spending and entitlements have therefore become even more essential, but the fiscal cliff deal has postponed negotiations over spending for at least another couple of months. Moreover, one major government program is likely to be omitted from those discussions: Social Security. Although much attention has been paid to ending the temporary reduction in Social Security payroll taxes, little has been said about modifying the program&#8217;s benefits. Indeed, these are likely to be kept off the table entirely during future negotiations over spending cuts. This omission is usually justified on the grounds that Social Security does not contribute to the deficit. However, the program does add to the growth of the national debt. How can Social Security have no deficit and yet add to the national debt? Chalk that up to the Social Security Trust Fund. Money that workers pay into the system goes largely to fund benefits for people who have already retired. Any surplus goes into the Trust Fund – now more than $2.7 trillion – which invests in government bonds. In 2010, however, the amount that Social Security took in fell short of the amount needed to pay benefits. That gap is growing and is projected to surpass $100 billion a year before the end of the decade. (MORE: Four Misconceptions About Taxes and the Deficit) This shortfall can be covered by taking money out of the Trust Fund. But every time that&#8217;s done, the government has to redeem some of the bonds in the Fund for cash. It gets that money by selling other bonds to the public. And while bonds in the Fund represent money that the government owes to itself, and therefore don&#8217;t count toward the national debt, bonds sold to the public do add to the debt. Since Social Security will likely continue to pay out more in benefits than it takes in,<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=65424&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/01/capital.jpg?w=240</featured_image>
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