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How Higher Oil Prices Will Hit Your Wallet
Tweet Share on Facebook February 28, 2011 Comment (2)At the end of 2010—when oil prices were around $90 per barrel—few of the economists making forecasts for 2011 predicted that unrest in the Middle East would send oil prices skyrocketing. Yet so far in 2011, turmoil in the Middle East has been the economic story of the year.
[See how Hosni Mubarak got filthy rich.]
The uprising in Libya is the first to directly affect the oil supply, with production in the African nation—which supplies about 2 percent of the world's petroleum—cut by an estimated 50 percent or so. The erupting civil war there suggests production could fall further. Bigger producers like Saudi Arabia and Iran aren't quaking yet, but the oil markets are suddenly more vulnerable than most forecasters guessed just a few months ago.
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How Arab Unrest Could Harm the World Economy
Tweet Share on Facebook February 18, 2011 Comment (2)For all the drama, the protests roiling Arab capitals have had little impact so far on the global economy. Since demonstrations began in Egypt in mid-January, for example, the S&P 500 has risen a healthy 4 percent or so. Oil prices briefly drifted above $90 per barrel, but have since settled back below $85. Global investors seem to have the news on, but the sound turned down.
[See how Hosni Mubarak got filthy rich.]
Instability in the Middle East is obviously nothing new, and while turmoil in nations such as Egypt, Bahrain, Iran, Libya, Algeria, and Yemen may set back those economies, a slowdown in regional growth is unlikely to spread elsewhere. The roughly two dozen countries that make up the Middle East and North Africa region—MENA, to economists—account for only about $2.5 trillion in GDP, combined. That's one-fifth the size of the U.S. economy and barely 3 percent of world output.
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3 Big Lies About Cutting the Deficit
Tweet Share on Facebook February 15, 2011 Comment (27)Maybe they're finally starting to get it in Washington. Just a couple months ago, politicians of both parties were lavishing a fresh round of tax cuts on practically every American. Now they're competing over who can take the most money away. President Obama's budget for the next fiscal year proposes $25 billion in spending cuts for 2012, plus a freeze on certain categories of spending that could save another $40 billion per year. Republicans say that's not enough, and they're aiming for $100 billion or more in cuts. Both sides are even targeting a few of their favorite projects, to prove how serious they are.
[See how to survive tax hikes and spending cuts.]
Okay, nice start. But if this is all there is, the budget deficit will remain far too big for the rest of history, and the swelling national debt will eventually crush the U.S. economy. Despite the most aggressive cuts proposed in decades, for example, the U.S. government under President Obama's budget would still spend 42 percent more than it brings in, borrowing the difference. That might be okay for a tech startup funded by Silicon Valley venture capitalists, but it's not okay for a mature industrialized nation hoping to stay ahead of China. If the Republicans got their way and wrangled a full $100 billion worth of spending cuts, they'd cut the amount Washington needs to borrow down to about 40 percent of total spending. That might forestall the day of reckoning by a month or two.
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Why Fannie and Freddie May Never Die
Tweet Share on Facebook February 15, 2011 Comment (1)Their failures are manifest, and politicians of every stripe seem to revile them. Fannie Mae and Freddie Mac have turned out to be the biggest catastrophes of the 2008 financial meltdown. The government has already spent more than $130 billion in taxpayer money to keep them alive, and the tally is still rising.
[See how to survive tax hikes and spending cuts.]
If they were in any way expendable, the two mortgage agencies would be gone by now. But the credit crunch of the last three years has left middle-class home buyers more dependent than ever on Fannie and Freddie. The two agencies' main role is to purchase mortgages from banks and roll them into marketable securities, which benefits home buyers by keeping rates relatively low and giving banks a stronger incentive to lend. One byproduct is the 30-year fixed-rate mortgage, which most banks wouldn't offer without the government's backing, because the odds of losing money would be higher. Fannie and Freddie effectively reduce the risk of lending, making more people eligible for loans and therefore, homeownership.
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How Hosni Mubarak Got Filthy Rich
Tweet Share on Facebook February 11, 2011 Comment (19)There are no Mubaraks on the Forbes list of the world's richest people, but there sure ought to be.
The mounting pressure from 18 days of historic protests finally drove Egyptian President Hosni Mubarak from office, after three decades as his nation's iron-fisted ruler. But over that time, Mubarak amassed a fortune that should finance a pretty comfortable retirement. The British Guardian newspaper cites Middle Eastern sources placing the wealth of Mubarak and his family at somewhere between $40 billion and $70 billion. That's a pretty good pension for government work. The world's richest man—Mexican business magnate Carlos Slim—is worth about $54 billion, by comparison. Bill Gates is close behind, with a net worth of about $53 billion.
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10 Ways to Multitask Better
Tweet Share on Facebook February 11, 2011 Comment (2)Don't send that tweet! It might impair your productivity, raise your anxiety levels, and even damage your health.
[See why you might be better off than you think.]
If you're feeling overwhelmed by digitalia, it turns out you've got some heady company. In its monthly newsletter, consulting firm McKinsey recently published an article, "Recovering From Information Overload," that validates many of the frustrations ordinary workers feel when trying to keep up with email, manage their Blackberries, download the latest apps, blog, evangelize, tweet, retweet, update, Webinate, Meetup, log in, LinkIn, Plax, and answer the phone—all while doing whatever their actual job is. "Multitasking is not heroic," authors Derek Dean and Caroline Webb insist, refreshingly. "It's counterproductive."
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How Buying a Home Is Likely to Change
Tweet Share on Facebook February 9, 2011 Comment (19)Last year's sweeping financial-reform law revamped much of the banking system. But there's one industry it didn't touch: housing finance. For good reason. Unlike the convalescing banking sector, the housing market is still a wreck, with any false move likely to destabilize things even further and cause fresh damage.
[See how to survive tax hikes and spending cuts.]
But the system can't continue the way it is either, so policymakers in Washington are gingerly starting to propose ways to fix the way we finance the purchase of homes and assure that there's never another housing bust like the one that began in 2006—and still isn't over.
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How Government Spending Skyrocketed
Tweet Share on Facebook February 9, 2011 Comment (24)Everybody's a budget-cutter these days, with competing plans in Washington for how to slash government spending and some websites even giving you the chance to balance the budget yourself, with nothing more than a few mouse clicks and a bit of resolve.
[See how to survive tax hikes and spending cuts.]
Hack away. But it might first be worth considering how government spending ballooned in the first place—and how that reflects the changing role of our government, along with what we expect from it.
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How Tough Times Are Helping Women Get Ahead
Tweet Share on Facebook February 4, 2011 Comment (14)Ten years ago, the unemployment rate for men and women was the same. At the end of 2007, when the recession began, the rate for men was two-tenths of a percentage point higher. Today, the unemployment rate for men is a full percentage point higher than it is for women.
[See why you might be better off than you think.]
The recession and its aftermath have been a setback for many, but women seem to be recovering far faster than men. And as jobs return in some industries but languish in others, women are poised to enjoy an outsized participation in the recovery.
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How To Survive Tax Hikes and Spending Cuts
Tweet Share on Facebook February 4, 2011 Comment (4)First there will be talk. Lots of it. Washington lawmakers will spend most of this year, and probably next, jawboning about how the federal government needs to cut spending, get its finances under control, and—you didn't hear this from me—raise taxes, eventually.
[See why you might be better off than you think.]
Often inside the Beltway, bluster is all there is. But not this time. The national debt has become so huge that action must follow. Conservatives want to slash government spending before considering a single penny in tax hikes. Liberals want to tax the rich, and tax them some more, before touching the money that goes to the needy. But neither approach alone will come close to solving the problem, and the vast majority of Americans who have enjoyed relatively low taxes for the last decade will have to pay the piper. "It's inevitable that some change will have to occur in both directions," says Clint Stretch, managing principal at Deloitte Tax. "That will impact people who think of themselves as middle class."
Rick Newman
The global economy is mysterious, even scary. Chief Business Correspondent Rick Newman connects the dots. In addition to his writing for U.S. News, Rick is the co-author of two books: Firefight: Inside the Battle to Save the Pentagon on 9/11, and Bury Us Upside Down: The Misty Pilots and the Secret Battle for the Ho Chi Minh Trail.
Read Rick's latest blog entries here.
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