Category Archives: Economy

Revisiting the Cuban Embargo: Fifty Years of No Cigars

Economy, History, , , , ,
Fidel Castro

The 50th anniversary of the start of the economic boycott on Cuba took place on Tuesday. Since February 7th, 1962 there has been a nearly hermetic seal on trade with communist-led Cuba.

Yes or No to Embargo

Supporters of the embargo say it is an appropriate response to a repressive government that has been a relentless “thorn in the side” of the Unites States for all these years. Opponents of the embargo say the policy is a failed one, which has hurt ordinary Cuban citizens, and not the government against which the embargo is directed.

Failed its Main Goal

Both sides agree, however, that the embargo failed in its most central goal, to oust Cuba’s leaders, Fidel and Raul Castro.

Wayne Smith, who was a young US diplomat in Havana, Cuba in 1961 when relations between the US and Cuba were cut. Smith returned to Cuba as the head American diplomat when relations were partially re-established under the administration of President Jimmy Carter.

“All this time has gone by, and yet we keep it (the embargo) in place,” Smith said.

“We talk to the Russians, we talk to the Chinese, we have normal relations even with Vietnam. We trade with all of them,” Smith added. “So why not with Cuba?”

President Kennedy announced the embargo on February 3rd, 1962, saying that “the subversive offensive of Sino-Soviet communism with which the government of Cuba is publicly aligned,” and it went into effect four days later.

Outdated Policy?

Those were the days when the cold war was at its height, but critics of the embargo say that many of the reasons the embargo was begun no longer exist, such as the struggle to halt the spread of Soviet influence and the exportation of communism by Fidel Castro to the rest of Latin America.

But supporters cite other justifications, such as the need to pressure Cuba to give more personal and political freedom to its citizens, and the confiscation of US property in Cuba.

“We have a hemispheric commitment to freedom and democracy and respect for human rights,” said Jose Cardenas, a former National Security Council staffer on Cuba under President George W. Bush. “I still think that those are worthy aspirations.”

Good News From Wall Street and Detroit

Automobile Industry, Economy, , , , ,
Paul Taylor Chief Economist for NADA

 

Nasdaq Sets Record

The Nasdaq rose to its highest point in eleven years as optimism is mounting that the US economy is well on its way to recovery. The good news that fueled the Nasdaq rally was last month’s surge in the number of people hired, paving the way for what many analysts believe is a clear road to economic stability and growth.

The Nasdaq rose by 1.60 percent, reaching 2,905.34 on an increase of 45.66 points. Standard & Poor’s 500 Index grew to 1,344.66 as it surged by 19.12 points, or 1.44 percent. The Dow Jones industrial average climbed by 153.49 points to 12,858.90, which represents an increase of 1.21 percent.

Improved Economy Brings Higher Car Prices

The National Automobile Dealers Association is predicting that consumers are ready to pay more for new and used cars this coming year as the economy shows definite signs of improvement.

Used Cars in Demand with Low Supply

The NADA forecasts a rise of 6 percent for the average car to $30,000. An even higher price increase of 8 percent is expected for used cars, especially for SUVs and pickup trucks. For small second hand cars the price rise will be significantly lower, climbing by only 1 percent to an average price of $9,475.

More People Ready to Splurge

Luxury cars will most likely be in greater demand than in previous years as the economy keeps pushing forward, allowing people the confidence to splurge on more expensive cars. Used cars are in tight supply now because so few people purchased new cars during the years of the recession.

Paul Taylor, NADA chief economist, believes that US car sales will go up by 9 percent to 13.9 million in the year ahead. Low interest rates and enticing new products will most likely boost sales, according to Taylor.

January Best Month Since October on Wall Street

Economy, Investments, , , ,

As January ended yesterday Wall Street celebrated what investors there are saying was their best month since October, 2011. The optimistic attitude was maintained despite the disappointing weaker-than-expected performance which was reported in Tuesday’s economic reports, which surprised investors after a receiving a series of positive data about the economy in recent months.

According to the most recent data available, the Dow Jones Industrial average closed the session at 12,633.89, down 19.83 points or 0.16 percent. The Standard & Poor’s 500 Index was also down by 0.55 points, 0.04 percent to close at 1,312.46. The Nasdaq Composite Index finished up, however, by 1.46 points, or 0.05 percent, at 2,813.40.

The month of January ended up, with the Dow up by 3.4 percent, the S&P 500 up by 4.4 percent, and the Nasdaq finished in the black by a cool 8 percent.

Obama Announces Expanded Refinancing Plan for Homeowners

Economy, Real Estate, , , ,
President Obama

In an attempt to help boost the sluggish economy’s growth President Obama announced a proposal which will allow all homeowners to refinance their mortgages at more attractive rates, even if what they owe on their mortgages is actually more than the worth of the house. This is a crucial issue in many states which are pivotal to Obama’s re-election.

Details

Obama wanted to outline more specific details of the proposal he only outlined in his State of the Union Address concerning finding a way for homeowners to cash in on the nation’s record low mortgage rates. It is estimated that the average homeowner could save about $3,000 a year by re-financing.

Will Congress Agree?

The proposal, however, will need to pass through Congress, which is not necessarily in favor of such a plan if it would allow homeowners to refinance even if they own more to the bank than the actual value of the house, a situation which many homeowners find themselves in today due to the housing slump.

Not As Popular as Predicted

The plan is an enlargement of an already existing program, the Home Affordable Refinance Program. This plan lets borrowers who have government affiliated mortgages from Fannie Mae and Freddie Mac to refinance at more affordable rates. A disappointing one million people have use the plan, much fewer than the 4 to 5 million the Obama administration was predicting. The new plan also expands to include “underwater” borrowers; those that own more than the value of their homes.

Economists in the private sector believe that if the plan is expanded to all borrowers, then about 10 million homeowners would be qualified to refinance, giving the economy a jumpstart not to be underestimated. The Federal Reserve has been more conservative in their assessment of the plan’s impact, saying closer to 2.5 million additional Americans would be eligible to refinance under the terms of the expanded program.

CoreLogic, a real estate data firm, notes that about 11 million Americans are “underwater,” about 1 out of 4 homeowners who have a mortgage.
 

Hotel Industry Optimistic About Coming Year

Economy, Investments, Real Estate, , ,
Arthur de Haast of Jones Lang LaSalle

Movers and shakers from the hotel industry were gathered together last week in Los Angeles for the Americas Lodging and Investment Summit, where they discussed the prospects for business this coming year.

Bracing for Better Business Climate

Real estate companies as well as hotel businesses are looking towards the coming year with hope despite the fears they have about the European economic situation and challenges finding debt financing.

The economic recovery has been business-led, which has given a boost to US hotel occupancy rates. Nevertheless development of new projects seems to still be stalled as credit conditions remain tight, making the building of new hotels difficult. Yet, the hoteliers remain optimistic.

“People are expecting 2012 to be a pretty positive year, with solid performance by the industry in terms of the demand for hotel accommodations and the ability to get deals done,”

Arthur de Haast, chairman of Jones Lang LaSalle Hotels, said at the summit.

Billion Dollar Industry

Jones Lang, a hotel investment services firm, predicts that hotel deals in the Americas will at least do as well as last year’s level, reaching about $15 billion in value.

Hotel deals increased in their activity in the first two quarters of 2011, but substantial slowing down occurred at the end of last year due to the economic troubles in Europe began to make headlines.

Even though Europe has by no means recovered from its woes, most people at the three-day hotel summit believed that a further recovery which includes room-rate rises, will make the hotel sector seductive for investment.

“There’s a lot of money on the sidelines waiting to pounce and find opportunities,”

said Christian Charre, president and chief executive of the Charre Group, a Florida-based hotel brokerage and consulting firm.