LyrArc Article Gist
Rates are increasing in the $4 trillion repurchase agreement market. The repurchase agreement market or repos market is the main source of short term funding for firms in the financial markets. Borrowers put up Treasury securities as collateral. The difference beween the value of the collateral and the cash loan amount is known as the "haircut." The current collateral requirement is $102 of Treasurys for $100 in cash loan. If the U.S. is downgraded to AA the collateral could go up to $103 or higher. This would lead to firms coming up with more Treasury securities for loans. The rate for overnight transactions also goes up. The rate was up form 0.01 % to 0.1% in the last week. The result could be dislocation in financial markets as firms have to come up with more collateral and pay higher repo rates, and some firms prefer to hold cash.

LyrArc Article Gist
Peter Coy of Bloomberg Business Week points out that the debt ceiling and proposed deficit reductions in the range of $4 trillion really obscure the real size of the problem which is much larger. The real problems hit when the U.S. faces a larger graying population by 2020 with sharply higher per capita health care spending; and at the same time workers from this generation retire and become beneficiaries of Social Security and Medicare with fewer younger workers to support the system with tax revenues. Another problem is that older Americans are likely as a voting bloc to vote themselves benefits that will cost the younger generation, benefits that the younger generation will not be able to enjoy. Even the Paul Ryan plan with its cuts to Medicare insulated todays seniors from the sharp cuts, as it becomes political necessity for both Republicans and Democrats to shy away from touching the current beneficiaries.

LyrArc Article Gist
Ford has lagged behind other car manufacturers in entering markets in India and China. Ford now plans to increase investments in India. Ford gets 3% of its total sales from India, compared to 10% for Brazil. The goal is to generate one third of its sales from Asia and Africa. As part of this effort Ford plans to build 2 new plants in India. The two plants will be built in Sanand, Gujarat, by 2014, employing 5,000 and with a capacity of 240,000 cars and 270,000 engines. Ford's existing plant is in the south, in Tamil Nadu, with 5000 workers in manufacturing, and 5000 other office employees. Ford cited advantages of Gujarat being the port facilities for exporting cars and the pro-business climate in Gujarat. Toyota which was also slow to enter the Indian market, plans to invest $220 million to double production capacity to 310,000 by 2013.