The January Effect is no arbitrary phenomenon. It’s been happening for some years now and you might be interested in knowing how it happened, when and why. But before that let’s see the expected impact of January Effect in 2010. The opinions oscillate with great amplitude. The skeptics believe that the January effect will not be all that significant this year, the reason being that whatever taxable losses had to occur they had already happened in the previous year and this year did not come specifically with any losses. Some feel that the January effect like so many other phenomena is following the natural process of evolution. The effect will either be a different one or totally null. Only people who had invested in stocks last year were the ones who took the losses. The long term investors were the ones who were affected by this. They are the ones who saw some benefits with their stocks in March last year, and did not want to sell off their stocks for  losses  smaller in comparison those of 2008.Some others are sanguine about the January effect this year.  They feel it’s actually going to help them. According to Globe Investor, the January effect is very much there and there are going to be 5 stocks that are really going to benefit from the January effect. As I said, the January effect is more psychological in nature. If there is a good influence on the stocks in January it will be considered a part of the January effect….even though it necessarily does not have any good effect the rest of the year.

The January Effect seems to be true in the case of two consecutive years for now, i.e. 2008 and 2009.  This was observed even years before in the early 19th centuries too and has been ruling the market psyche from then. The weak January of both these years showed a bad year. The morning shows the day and January shows the year!

People are mostly relocating to Texas where the cost of living appears to be lower than in other cities. The lower stratum of the socio-economic class is badly hit by the recession and they are the ones moving out. Unemployment is a big issue in most parts of the United States and people are relocating to areas where they expect to find work. People are finding it difficult to maintain their standard of living in places where they are used to staying. They are either compromising with a lower standard of living or relocating to a place with a lower cost of living for maintaining the same standard of living. As it’s easier to change the place of residence, rather than one’s lifestyle, people are readily opting for the latter.

New York and California are the cities from where the maximum migration is taking place. The cost of living in both is very high and people are finding it difficult to maintain their lifestyles. These are the cities where the economy is also worst hit during the past recession.

Maximum number of movers is from the lowest income level, i.e. those who make less than $9,999 per year. However the income level and percentage of migration does not bear a linear relationship. The graph shows more people of higher income groups also moving out than their relatively lower income counterparts. For example, the migrants earning $15 K -$ 24,999 are more in number than those earning $10 K – $ 14,999. Also the richest groups, those earning $75 K, are the ones who are migrating more than those earning $65k – $74,999. Search for good career and business opportunities might be the motives for their relocation.

If you go by the education level, college students constitute the maximum percentage of the migrants (29 %), lower than high school levels being the least (9%). College students obviously are the ones on the threshold of financial independence. They have to establish themselves in good professions and support themselves independently. It is rather imperative for them to move out to places where they can expect to have a sound financial and professional background. Staying in places which do not provide these opportunities can only give them immense hardships in life. 19% bachelor degree holders and 12% of graduate degree holders have migrated in recent times.

With Brazil, being known once for crime and corruption, you might be surprised that how it is being considered a land of opportunity and an emerging economical hub of the future. The GDP reports say that Brazil is now the richest South American country and despite the recession, is undergoing a speedy financial recovery. The prosperity is mainly being attributed to the reduced taxes on consumer goods.

Pocket Friendly Taxes Is an Attractive Feature

Brazil today, is not only, a place where the native Brazilian investor would be inclined to work in, but a place where even foreign investors are flocking in recent times for making business investments.  Low taxes, in comparison to other European nations, seem to be one of the most influential factors for this. Such encouraging environment for foreign investors is something that you don’t commonly get elsewhere. Taxes were cut in the household appliances, vehicles and construction supplies areas to increase internal consumption and also to improve the internal economy. This proves to be an advantageous feature for foreign investors too.

Fertile For Establishment and Development Of New Businesses

Apart from taxes, the land offers a lot of opportunities as well. The European countries are now saturated with different types of businesses and you may not find any new opportunity to explore or develop there. But Brazil still has a lot of business avenues that are unexplored. If you are endowed with business creativity, you might find yourself a new business that you might carve a niche for yourself in without much competition. The present day Brazilian government is very receptive towards foreign investors. A supportive business establishment and development environment is another positive feature of the country which you don’t come across easily.  The new formal business policies, a change from the old unstructured and informal ones are another contributory factor for global increased business interests in the country from investors across the globe.

Consumer electronics and automobile industries of the country seem to be growing despite the retarding effects of the recession. With the country setting up two million jobs in this year, the employment pastures look greener than ever there. So get a VISA to Brazil as soon as you can. There is so much for you to do and prosper.

Let us understand how and why inflation results in price rise and not vice versa. However, to understand this concept, it’s significant to comprehend relation between:

1. A product and its value
2. Supply and demand
3. Dollars and prices

As soon as you learn these relationships, understanding the impact of inflation on prices will be simpler.

Real Value of a Product or Service

Generally, the value of any product or service is ignored, while calculating the inflation rate considering the price. However, it’s important to understand that there is a difference between it’s cost price and value.

If the world, for instance, didn’t have money, how would you have valued oranges? It’s value would depend on the greatness or deliciousness of its taste, or maybe the nutritional value it facilitates. Quite similarly, the value of a gallon of gas would be measured by the miles you can drive after pouring a gallon in your car’s tank. If the gallon lasts for four days, the value is high. And if it lasts a couple of days, the value is low.

Here, it’s important to notice that the value is nowhere related to money. It’s possible that the value may be higher to someone and lower to somebody else. But, we can definitely value things without money.

Demand and Supply Relationship

It’s quite significant to understand the difference between inflation and price rise due to demand and supply imbalance.

If the crop of orange, for instance, is destructed by heavy frost, the cost price each orange will automatically shoot up. However, this temporary price rise cannot be termed as inflation. Yes, inflation does cause price to hike, but it isn’t the only factor. Prices of any commodity, product, or service can rise due to many factors. One of the most common ones is Demand Supply imbalance.

So, we can correctly say that the current method used by government to gauge inflation is not perfect. If the government reports a raise in Consumer Price Index (CPI), due to the price hike in the cost of oranges that was caused by demand supply imbalance, it isn’t inflation. But they say, higher CPI means inflation, which is a faulty equation.

Amount of Dollars and Its Effect on Prices

Lastly, it’s important to have a look at the relation between cost price of a product and dollars count in the country. All right, to make things simple, let’s us imagine that we are eating oranges in an isolated island with only hundred dollars circulating all around.

The orange is very tasty, and according to our first point, it will have a high value. To gauge the value, we can say that it’s 1/100th of the overall value derived from all the oranges on the island. Okay, I know the figure is unreasonable. But just consider it for a while. The money we have on this island is finite, 100 dollars to be precise.

So 1/100th of the total oranges, which is nothing but 1 orange will cost $1. However, after a couple of weeks, the government of our island brings in a stimulus package of additional $100.

So, now the island has $200, but the value derived from an orange is unchanged. It still provides the same taste and nutritional benefits. It is still 1/100th. But the price per orange increased to $2 from $1 because the government doubled the number of dollars prevailing in the market.

Simple, isn’t it? No, there is nothing else left to explain. Just assume the affect of stimulus package has on the inflation rate. Imagine the outcome of the huge bailout packages the US government is constantly coming up with.

Before moving on to my proposition, let’s understand what has led us in this economic crises and what are the existing measures introduced by the government to improvise the conditions.

To boost the economy, the end user was compelled to borrow more than required. I am not talking about anything in particular like mortgage or a credit card. It was for almost everything. And as expected, they defaulted which led is in this credit crunch.

Meanwhile, Obama was elected as the President of the US because he promised something that could change the current as well as future market conditions. Re-establishing the consumer spending capacity is what he felt the most important factor that could stimulate the economy. So, he allowed credit lender to provide loans at 0% interest. He introduced various tax rebates for first-time home buyers and other benefits for new buyers.

Isn’t it leading to another bubble that can burst within some years? I am not pretty sure about it and that’s why my first line says “I don’t know what would be the consequences.” And I don’t completely disagree with him because these steps are really useful to avoid the crises. But only for a temporary period. Remember the bubble?

Why is he propelling tax cuts as the only solution? What about government earnings then?

Here is what he could do along with the measures already implemented to correct the financial disorder.

Firstly, encourage more exports every quarter. This can be done by depreciating dollar’s value for a short period and increasing export finance. Easy availability of low interest finance to domestic traders, encourage foreign trade, and extend support to the countries that cannot afford importing US goods. This can definitely help to boost the economy.

Secondly, focusing on the country’s education is a must especially for the long run. A huge amount of yearly budget can be spent in improving the educational quality, literacy rate, and professional job training. Why education? A recent report shows that rate of unemployment among graduates is just over 4.5%. However, among people who were not able to complete high school diploma, it is 15.5%. Currently, a negligible amount is spent on education of the poor class due to which they are unable to obtain a secure job.

An appropriate government-supported educational system would ensure highly skilled resources for the future and diminishing unemployment rate which will lead to lesser defaulters every year.

Thirdly, it’s essential to spend a substantial amount in the areas of social importance that are not being focused at present due to improper and vague policies. Converting the current economy into a low-carbon based economy will generate enormous employment opportunity as well as help the US to develop as an industrial leader with sound but highly productive financial system.

The infrastructure is not as efficient as a country like US is able to build. An overhaul of the current infrastructural sluggishness is essential to optimize the use of available resources and to stabilize the economy to compete with other developed economies.

I am not aware about why these implications have not yet thought about and why is the Fed trying to build another bubble that could burst in short term, the effects of which we are not yet ready to sustain. Think about it. Am I not making sense at all?

You know about the improvement in our economy and rising GDP probably because you read it in the newspapers, on the internet, or news channels. Of course, I cannot expect you to keep a watch on the inflow and outflow of national funds or be present in the White House. But I can definitely expect you to be more alert, and cleverer.

Last week, a report by Commerce Department declared that the GDP (Gross Domestic Product) had increased by 2.8% in past 3 months. However, it was expected to rise by 3.5%. So what? I am cool with even 1% as far as it’s a positive movement.

I am not talking rubbish or being vague, but it’s important to define the GDP to prove my point. GDP is used to gauge the overall performance of the country. It is the sum of private consumption, gross investment, government spending and, (exports minus imports). In short, it depends on the production and sales of goods and services in a year.

It’s a very broad definition and seems to cover everything. It includes all kinds of goods and services like real estate, meals, TV’s, and what not. But what they don’t seem to (or want to) consider is the price hike of each of these goods and services.

This means even if the people are purchasing fewer things, the GDP will rise. How? For instance, if I used to purchase 3 cans of beer at $2 each last year, I spent $6 and the GDP was good last year. However, if the price of each can goes up to $6, and I purchase just 1 this year, the GDP is will do its calculation and show good figures.

So, even if people purchased less this quarter the GDP shows 2.8% rise. And I am sure the sales of goods this quarter is less than last quarter due to price rise. It used to cost me less than $2 for gasoline last year, which now costs nearly $2.75. Carton filled with eggs are sold at $1.5, which were just $0.99 previously. The cost of bread is now almost double than what it was last year. I am spending more and purchasing less. But the GDP is increasing.

If the GDP (or the overall economic condition) is improving, why aren’t any jobs available in the market? I lost my job 4 months ago and had to settle for job which pays much less than the previous one. Due to price hike and lesser pay, not only consumers but many industries are suffering. For example retail. If I (a consumer) cannot afford to spend more, how is the retail industry going to flourish. They are still hoping that the festive season will give some boost to their sales and hopefully they don’t have to hand over some more pink slips after Christmas.

The GDP is showing an upward trend but the real, practical economic conditions are as they were: miserable. Do you think the politicians and government are really unaware about it? They know this very well.

Then why is it that they want us to gulp down spurious conditions guided by impractical figures? Why don’t they want to see – or want us to see – the real face of economic conditions?

Ok. Here is another one. The Labor Department conducted some survey last and concluded that there were fewer unemployment claims this quarter. Of course, these ‘claims’ doesn’t include the number of people who are on the verge of being unemployed. And they never mentioned the percentage of unemployed population that was refused to receive any unemployment benefits. Who cares? The GDP is rising and the country is financially improving. That’s what they believe even after the report simultaneously mentioned that by next summer, the rate of unemployment will go up by 10.5%. Now, what the heck do they mean by ‘improvement?’

I am as nationalistic as any other citizen in the US, if any government employee is reading this. I want good news and improvement as badly as any unemployed citizen would wish for. But not an ambiguous report filled with some more ambiguous numerals.

The government is trying to publicize any upward trend as a sign of improvement even if it is, in no way, related to progress. Aren’t there still companies surviving on the bailout money received by the federal government? There are many. Some are on the threshold of winding up even after utilizing such funds. The unemployment rate is increasing gradually every month, credit card and other debts are rising, and the housing issue is yet to be corrected. Let us look at the real picture and face the reality. Let us try to detect the root causes putrefying our economy and solve it. It definitely takes time and efforts. We don’t want a quick progress which can lead to another depression.

Rather than spending precious time on preparing futile reports about negligible improvements, the government should find ways that can create employment and control the price hike. The reports on GDP are doing no good to the common man. I still have to buy bread for $3.20 that was 1.70 some time ago.

One of the foremost benefits that you can expect from this CFPA is that banking or credit card lending agencies cannot ask you for unfair payments. Unfair credit card terms and charges call for penalty under this law. Next time when you go to make an investment, make sure that you are disclosed all risks by the company in which you are investing. Also the company cannot get away with unclear terms of agreement which put you in  financial hassles later on. The company in which you wish to make investments is bound to give you complete information on the terms of agreement. So now you can make safe investments.

This recession is over, you need not bother about suffering this way in another if that really happens. The government is taking adequate measures to protect its citizens and tax payers from such situations with the CFPA coverage. You’ll no more be a victim of reckless and irresponsible financial practices by industry professionals which will adversely impact you.

The new reform bill aims to eliminate unfair practices. Especially credit card companies try to allure you to make purchase with attractive cost benefits and then change their rates. This will not be tolerated anymore. Credit card companies also cannot compel you to accept their benefits for any duration of time. The companies will not be allowed to raise their interest rates without informing you. They cannot use any strategies to extract late fees from you if you are not at fault. Many of these companies change their payment deadlines before informing you and charge late fees for that. Your credit card company can also stop your payment processing to clear big articles before small ones to escape overdraft charges.

Now you’ll have consolidation of seven independent financial agencies to monitor loopholes in business financing. All the faulty business practices can be identified by this method and eliminated then. These independent agencies had fault lines in them which were encashed by some companies.  The Federal Reserve rules on house loan mortgage could not cover the subprime mortgage sector. The government appointed officials will see to it that no unfairness is meted out to those the consumers as well as the government industry.

Rules are not only for the government or the industry alone, they’re applicable to the consumers as well. As a customer you should make responsible purchases. Don’t buy more than your maximum financial capacity. Also don’t make investments when you don’t have sufficient money for that. The agreement sheet of sale transactions should be written in simple plain English and not in any way in which it is difficult to understand.

Denying an Important Blood Test For A Meager $ 7 Debt

Larry Smith who suffered an intense heart attack was denied an essential blood test by Labcorp because he owed a $ 7 debt to the lab. How could the health care professionals be so inhuman? You can see the medical statement that Larry got from the laboratory here at Michael Moore’s resources.

High Copays Bring Tears to the Eyes of Prescription Drug Dependants

Robin Steinwand suffers from multiple sclerosis. She was on $ 20 copay program for the drug Copaxone that costed $1900 a month, but her insurance company hiked the copay price and she has to shell down anywhere between $325 -$ 3,900 for the drug. Tearfully the 53 year old says she does not have enough money to save up for holidays or for retirement. Read the story on the New York Times.

Huge Hospital Bills for The Uninsured

A man, who gave his name as Clinton, got operated because of a burst blood vessel. He left the hospital just 45 minutes of waking up after the operation because a $ 10,000 bill for a period of 60 days was being thrust upon him by the hospital authorities. He left because he felt he could not miss out even on a single day of work. Also he says he has   to set aside his dreams of buying a property or changing career because that would make it difficult for taking health care insurance. I can very well imagine the plight of the common American with the compulsory health care bill. Read the story on Barack Obama website.

Astronomical Costs for Life Saving Drugs

Robert W. Banning, a leukemia patient was prescribed Sprycel as substitute for the more painful chemotherapy, but a 90 day stock costs about $ 13,500. His insurance company asked him to pay up $4000 out of his personal pocket. That means he’ll have to pay up $ 16,000 a year permanently. That can be too burdensome for an average American. Read the story on Common Dreams.

Tier 4 Payment Plan Makes Breast Cancer Treatment Unaffordable

A Tier 4 payment necessitates that you pay a percentage of the drug costs rather than the $10, $20, or $30 that you used to pay before. But breast cancer victims like Julie Bass, who’s got to pay $ 3, 480 for the treatment which amounts to a third of the drug cost for 150 tablets which would last for 21 days, are horrified by this.

Of what use is the health care bill if it comes up with such inhuman effects? If it is made compulsory life will be hell-like for most of the Americans. This bill is not going to stay for long I guess.

Till now software developing companies have developed software based on their personal idea of how people budget and spend their finances. But by linking with a blogging network and financial website they’ll get to interact with thousands of users worldwide and get to hear their financial stories and that too in record time. With this they can get to know what people feel about their products and their competitors’ products as well. They get to hear it right from the users. Now isn’t that a big advantage?

Mint has a database of about a million people in need of financial services and advice. Intuit can get access to the spending patterns and other fiscal behavior of these people. Meeting so many people personally, collecting such detailed information about their financial assets and personalities is impossible in any other way. This will give the software company an edge over its competitors over user information which it can use to develop new products and services.

Since Intuit is moving online these days, with its Quicken Online and other software, collaborating with Mint will be highly beneficial for its online web services. Interacting with the online users of Mint will give it more publicity and understand the needs of the users better.

Mint, the thriving financial users’ online hub, has no problems in selling information about its members’ spending patterns officially to any third parties. If you are aware Mint allows you to link up with your personal savings, credit cards, investment accounts and any debt or mortgage accounts. All this information might be available to a third party now. Of course, this is an issue of concern amongst many of its members now. But it seems Mastercard has also been doing something like this before.

The Intuit –Mint teaming seems to benefit Mint too because apart from offering advice alone to people on financial matters, the latter can also provide online software solutions to its users. Earlier Intuit has developed Quicken Online as a competitor for Mint but it was no match for the sophisticated features of the latter. It was more about basic financial services. Now with this merger you never know if Quicken will be kept or turned into more sophisticated desktop software.

I don’t know how the Mint users will like this acquisition. Their data being accessed by a third party is not something that many users will appreciate. But on the other hand they’ll get to interact with software developers who’ll be able to come up with better products from their end. On the whole this acquisition is going to be a highly beneficial affair for Intuit.

Children

If you were a toddler you wouldn’t obviously know anything about the recession, because mom and dad have done all the background work of funding your food and other necessities. A school-going child might have heard that the country is not having money from his teachers, or that dad might lose his job, or mom should be more stringent with her spending. The recession has also taught schools to introduce financial literacy for children. A good financial literacy course for schoolchildren is the Jump$tart Coalition .

Adolescents

Adolescents are a carefree lot! This is the time you step into the world as an experimenting youngster. You’re not a grown up and neither are you a child. Your stormy mental state needs oodles of fun and happiness; but sadly enough, recession was not all that empathetic of your blossoming phase in life. Many teenage workers lost their jobs. According to Political Calculations blog reports, the recession had outgrown teenagers with the 16-19 age groups suffering the most. It seems in the coming days, the job scenario will improve for them. However, I was not ever an advocate of child labor. This recession might have given those poor teenagers some rest. But surviving without a job for the really needy can be very tough.

Young Adults

Those of you between 20-24 years of age have undergone the same hardships that the teenagers have faced because the fall in employment rates are the same. October 2008 to January 2009 saw the maximum dip and in February 2009 the figures rose. 20-24 year olds along with 16-19 year olds were least affected by the recession in comparison to their age-wise seniors because the automotive industry fallout had little impact on them.

If you’re a college student you’ll know how difficult it was for you to continue paying your fees and other college charges. On the other hand, 28 -29 year olds who confidently stepped out into the world to start their careers had to face a severe financial blow. There were maximum job losses from this age group. You can read the Pewreseach report here.  The New York Times and Cleveland Report provide important supplements.

Recession has hit young adults adversely.  What ‘s worse is that according to AFL-CIO Young Workers Report and blog even older adults i.e. those in their 30’s are still living with their parents as they are not having the financial resources to establish themselves independently !