Unemployment falls in 40 US states; China's global ambitions; No funds for meddling; Tumblr's Karp: High school dropout to billionaire

1 Unemployment falls in 40 US states (Christopher S Rugaber in San Francisco Chronicle) Solid hiring helped lower unemployment rates in 40 US states last month, the most since November. The declines show the job market is improving throughout most of the country. The Labour Department said unemployment rates increased in only three states: Louisiana, Tennessee and North Dakota. Rates were unchanged in seven states.

California, New York and South Carolina all reported the largest unemployment rate declines in April. Each state's rate fell by 0.4 percentage points. The report said 30 states added jobs in April, while 18 reported fewer jobs. Nationwide, employers added 165,000 jobs in April and the unemployment rate fell to a four-year low of 7.5%. Unemployment is declining in many states because the housing industry is creating jobs again. Rates have also declined because many of the unemployed have stopped looking for work. The government counts people as unemployed only if they are actively seeking jobs.

2 China’s global ambitions (Linda Yueh on BBC) Thanks to its export success, China is the world's largest holder of foreign exchange reserves. Those reserves are growing all the time and currently stand at a record $3.44 trillion. That's $3,440,000,000,000 if you want all the zeros, or basically the size of the entire German economy. What's in the reserves is a state secret, but a report in the China Securities Journal a few years ago revealed that 65% was held in dollars, 26% in euros, 5% in pounds and 3% in yen.

The Chinese are the largest holder of US government debt after the US central bank, the Federal Reserve. They also own European government debt, but perhaps not as many bonds from those troubled countries on the periphery as the eurozone governments would like to see. You might think that a trade surplus the size of China's would be good news. But according to People's Bank of China officials such as Deputy Governor Yi Gang, it's actually posing problems because of the fixed exchange rate. 

When a central bank accumulates reserves, it prints cash (yuan) to buy the dollars, euros, pounds and yen that it adds to its reserves. To prevent that cash from generating inflation (imagine if China added $3.4tn of cash to its $8tn economy), the central bank "sterilises" its actions by withdrawing the equivalent amount of cash from the economy. It does this by paying interest on money that commercial banks deposit back at the central bank, so encouraging them to leave their cash there.

Compounding the problem is the worry that the central bank may not be earning a great return on those reserves, as the yields (or interest rates) on US and European government bonds are low. So, instead, China is using its reserves to finance overseas investment. China wants to buy real assets - like ports, utilities, natural resources, technology and financial companies. 

Chances are, China won't be running the large trade surpluses of the past. Last year, the surplus fell to less than 3% of GDP from the over 10% reached before the 2008 global financial crisis. What is clear that we will see Chinese companies increasingly on the global stage. Their success will matter not only for the companies, but also for the country's continuing growth.

3 No funds for meddling (Johannesburg Times) If South Africa is expected to meddle in the affairs and military adventures of other countries under the auspices of organisations such as the African Union, United Nations and so on, such activities should be funded by these organisations, not the South African taxpayer.

4 Tumblr’s Karp: High school dropout to billionaire (Megan Levy in Sydney Morning Herald) Five years ago, tech prodigy David Karp was determined that the business he founded in his mother's small New York apartment would not be absorbed by a multinational firm. "We would really rather not be gobbled up by a big media company," then 21-year-old Karp, the creator of the blogging platform Tumblr, said in an interview. But what if someone was throwing $US1.1 billion cash at you?

Karp, 26, now looks set to become the latest tech billionaire with reports that Yahoo's board has approved a deal to purchase Tumblr for $1.1 billion in cash. It's a mind-boggling amount of money for anyone, let alone a once socially awkward teenager who dropped out of high school at the age of 15. Remarkably it was Karp's mother, teacher Barbara Ackerman, who suggested her son drop out of high school at the age of 15 so he could be home-schooled and continue an internship at an animation production company, Frederator Studios.

Karp's mother recognised that, while her son was not particularly engaged with his classes or his fellow students, he seemed to thrive at the internship where he could talk easily with the company's coders and engineers. Karp's mother said she could feel the sense of relief through her hand on her son's shoulder when she floated the idea to him.

Soon his career was taking off. Karp said that initially he would lie about his age when dealing with clients. He then became fascinated by a new short-form of blogging called a “tumblelog". He said he “kept waiting” for one of the established blog platform players to set up a platform for tumblelogging and, when that didn't happen, he did it himself. Karp founded Tumblr in 2007 at age 21 from the bedroom of his mother's apartment in New York. 

Tumblr lets its users curate pictures, videos and text in one place online. The site gained 75,000 users in the first fortnight. Tumblr now says it has more than 108 million blogs, 50 billion postings in 12 languages and 175 employees. The website ranking site Alexa lists Tumblr as number 32 in terms of global popularity, and this year Karp made the Forbes 30 Under 30 list in the media category. But despite his success, Karp prefers not to live an opulent life.