invite you to

The Prophetic Imagination for Poverty Alleviation luncheon

The luncheon is free for everyone but you must RSVP by March 23rd to attend. For those registered with the Prophetic Imagination conference, there will be a sign-up sheet for this specific lunch during registration that you must sign.

For all others you must register on-line here. 

Outline of Luncheon

Lunch: From 12:00pm to 12:30pm

served in the Fermanian School of Business Board Room
    Bread bowls with homemade soups and salad
    
 Panel Discussion: 12:30pm to 1:30pm

located in the Fermanian Conference Room

    Nazarene Compassionate Ministries – Larry Bollinger, Kelly Tirrill*
    World Relief – Stephan Bauman, Wendy Wellamn*
    Mama Mellace’s– Mike Mellace, Adam Roark*
    * PLNU alumni

Discussion will be moderated by Rob Gailey and Randy Ataide

By Lynn Reaser

The latest polling of the nation’s leading business economists shows they generally believe that monetary and fiscal policies are appropriate now but that a pullback in stimulus and belt-tightening will become increasingly important to sustain the economic recovery.

Looking at monetary policy, a survey of members of the National Association for Business Economics (NABE) indicates that a majority thinks that the Federal Reserve both should and will boost interest rates during the next six months.  How much?  Most believe the rise will be a modest one-quarter to one-half a percentage point in terms of the federal funds rate, which currently stands close to zero.

With respect to fiscal policy, the economists believe that the economic stimulus package enacted last year has helped the economy to recover but that another stimulus package is not necessary.  They are also gravely concerned about the outlook indicating a sizable growth in the nation’s federal debt over the next decade.

How to fix the deficit problem?  From the tax side, the economists would like to see a major simplification of the tax system, with the closing of the numerous loopholes now in existence.  On the spending side, they advocate slowing the growth of social security spending, such as by extending the retirement age.  Queried about health care reform, they express concern that the current proposals before Congress do not tackle the critical cost problem.

Addressing the federal budget deficit in an election year may not be politically feasible, but kicking the can down the road can only go on so long.

Last week, the Federal Reserve raised the interest rate it charges banks borrowing from its discount window from 0.50% to 0.75%.  Investors initially expressed surprise and alarm that a new cycle of monetary policy tightening and higher interest rates had begun.

Federal Reserve officials immediately worked to assure financial markets that this was not the case.  The discount rate had been lowered dramatically to help banks stressed for funding in the middle of the financial crisis.  As lending markets have thawed, banks have found alternative sources of funds and no longer were lining up at the Fed’s emergency window.  The special subsidy of an exceptionally low discount rate was no longer required.

The discount rate hike is part of other actions the Federal Reserve is taking to unwind some of the extraordinary measures it had implemented to rescue financial markets from collapse.  The next most important step will be the halting of its program to purchase mortgage bonds issued and backed by the housing agencies, Fannie Mae and Freddie Mac, at the end of March.

Federal Reserve officials continue to debate when they will deploy the tools to be used as their primary monetary policy levers.  These will include paying higher interest rates on the excess reserves banks hold, actively draining reserves from the banking system, and raising the target on the federal funds rate.  While some monetary policymakers are arguing for a quicker response, the general view from the Fed is that explicit tightening is still a number of months off.

The fact that the Fed is pulling back on various emergency programs does indicate greater confidence in the economy’s recovery prospects.  By the second half of this year, Fed actions are likely to indeed mean higher interest rates.

By Lynn Reaser

While concerns persist about the number of houses in the neighborhood that will default, financial markets have focused their primary concerns on whole nations that could abrogate their responsibility to honor their debts.  Last year Dubai unnerved investors; today it is Greece.

Other countries have defaulted in fairly recent memory:  Argentina, Mexico, and Russia.  The implosion of financial markets during the past two years has, however, heightened the angst of investors to any new major credit problem.  The Greek government today has debt securities amounting to a total of nearly $400 billion, far exceeding the $155 billion owed bondholders by Lehman Brothers at the time of its collapse.

A default by Greece could trigger concerns that Portugal, Spain, and, possibly, also Ireland could follow.  The exposure of European and U.S. banks to security write-downs and losses could be sizable and precipitate another massive drop in asset prices throughout the world.

The potential for another credit meltdown reduces the likelihood that Greece will be allowed to default.  While some might recommend that Greece be jettisoned from the Eurozone, the organization takes pride in its unity and can be expected to protect its integrity.

The political choices ahead will be difficult.  The finance ministers of the Eurozone have given Greece thirty days (until March 16^th) to craft a credible deficit reduction plan.  If that plan is not delivered, specific measures, such as a tax on luxury goods, will be recommended.  Look for Greek citizens, especially those affiliated with labor unions, to stage major protests.  But, fiscal austerity will be required.  The opposition of German taxpayers to any “bailout” of Greece is intense.

Eurozone leaders hope that Greece will develop a fiscal plan that will convince investors that it is serious about restoring financial prudence.  While a tightening of fiscal policy could slow economic growth, the recent softening of the Euro is helping Greek and other European goods be more competitive in export markets.  Failure to develop a believable budget plan could jeopardize growth even more by raising interest rates through higher risk premiums.

The next thirty days will be critical.  Stay tuned.

(San Diego, Calif. – February 10, 2010) – Harvard Business School and the Harvard Kennedy School are the destination for six business students who will be attending the 2010 Social Enterprise Conference on February 27-28, 2010. More than 1,000 professionals, students and academic and policy leaders from around the world gather annually at Harvard for the conference, which is unique in that it is a wholly student run and led conference. Funding for the trip was accomplished through collaboration between PLNU’s Fermanian Business & Economic Institute (FBEI) and the Center for International Development (CID).

Carrie Stewart, Maxwell Trczinski, Danielle Lawson, Luke Harmon, Brennan Hartich and Tim Houck will all attend after completing an application process, which focused on how the conference would influence their potential personal, spiritual and professional development.

Dr. Rob Gailey, director of the CID said, “We were very pleased by the enthusiasm and thoughtfulness of each of the applicants. We believe that this group will be a great representation of the quality of students at PLNU. ”

Originally, it was envisioned that funding would be provided for two students; however, the quality of the applications led to a change of plans.

“Once we started to review the applications, it was obvious to us that it would be extremely difficult to select only two attendees. We needed to find a way to try to send the entire group,” said Prof. Randy M. Ataide, executive director of the FBEI.  Additional funding from an anonymous donor was obtained, which was added to the amount that Gailey and Ataide had earmarked for the trip.

A series of panels and events are on the schedule and the students will also be staying at Eastern Nazarene College, which is easily accessible to Harvard and provides low cost lodging for the group. Upon their return, the Fermanian School of Business will provide an opportunity for the students to share their experience with a broader campus and community group.

The dissertation, entitled “Social Capital and Economic Empowerment: A Longitudinal Analysis of the Relationship between Changes in the Value of Accumulated Assets and Measures of Social Capital among Rural South African Women” was very well received, and Dr. Gailey had a full audience, including members of the Fermanian School of Business and his family, as well as fellow students and committee members.

Dr. Gailey, we’re very proud of you, and from the entire staff at the FBEI our sincerest congratulations!!!

Dr. Gailey with the Dissertation Committee

Dr. Gailey celebrating with his family

By Dr. Lynn Reaser

Last year ended with a strong display of economic growth, with U.S. real GDP (gross national product) rising at an annualized rate of 5.7%.  This measure of the total value of goods and services produced in the U.S., adjusted for inflation, recorded its fastest rate of gain in six years, providing further evidence that the recession is over.

Many analysts dismissed this report as being largely due to temporary factors, led by inventory building.  During much of the past two years, companies slashed production because they could serve customers with goods already on the shelf.  As 2009 came to an end, while many firms continued to pare stockpiles of goods, others finally began to increase production to fill incoming orders.  This even included auto manufacturers.

The inventory cycle should not be discounted as insignificant.  As companies switch from liquidating inventories to rebuilding them during the coming year, the economy will benefit from production and job gains. 

Meanwhile, other parts of the economy participated in last quarter’s gain.  Consumers pitched in with higher spending for furniture, electronics, apparel, and other goods.  Companies boosted their spending on equipment and software, indicating a note of greater confidence as well as profitability.  The support of the rest of the world was also evident in a strong rise in exports.

While growth rates in 2010 will not emulate last quarter’s stellar performance in the face of financing constraints and policy uncertainty, the economy appears to be gaining momentum.  Many problems persist, but the U.S. economic recovery is underway.

IS BIOTECH SAN DIEGO’S NEW FRONTIER?

RSVP HERE

Panelists
Ted DeFrank
President, Active Motif

Zach Johnson
CEO, ZBizInc.com

Jeff Lucero Riley
Venture Partner
Queensland BioCapital Funds

**Dinner will be served
**Attire is Business Casual