I'm sure that most of us are aware of the trafficking exists all over the world, because there is such a large market for prostitution. What's the point of this article, if trafficking is a worldwide phenomena?
Spain has increasingly become a destination for sex tourism, because the laws are rarely enforced and enslaved women who are tricked into this business are not considered illegal immigrants, again due to lax laws. From what we learned in Economic Systems, slaves exist because there is a need humans in an area that lacks adequate human resources. There is no black market in Spain and the costs of these services are lower than in France where a black market does exist and prices are higher. It is also important to note that the younger generation are interested in this market and creating more short term and long demand for prostitution.
http://www.nytimes.com/2012/04/07/world/europe/young-men-flock-to-spain-for-sex-with-trafficked-prostitutes.html?_r=2
Saturday, April 7, 2012
Friday, April 6, 2012
France's Future: A Country in Denial
This article is about France's future, and the upcoming presidential election that they are having. Regardless of who the candidates are, the point of the article is how all of the candidates are not truly acknowledging or tackling the major issues that France has coming up, such as high taxes-- the candidates are merely making 'promises' of what they're going to do. Some of France's major problems is that their public debt is at 90% (haven't balanced their books since 1974), unemployment is high (hasn't fallen below 7% in 30 years), the banks are undercapitalized, and more. The harsh reality is that France cannot ignore the ugly truth and that they must face reality. I find it interesting to see how the lack of realism that the French have will affect their future.
http://www.economist.com/node/21551478
http://www.economist.com/node/21551478
March jobs report: Hiring slows, Unemployment falls
The March job report showed that hiring has slowed, as the 120,000 jobs added during the month fell short of economists' expectations. In February, the economy added 240,000 jobs. Unemployment fell to 8.2%, as 164,000 workers left the market, which mostly included white women. Part of the slowdown may have been attributed to the unseasonably warm winter months in January and February. The retail industry was hit the hardest, with almost 34,000 workers losing their jobs. On the other hand, restaurant and bars created almost 37,000 jobs. Of the 8.8 million jobs lost during the financial crisis, only about 3.6 million have been added back, so we are still not out of the dark. On another positive note, the underemployment rate fell to 14.5%, the lowest it has been in 3 years. Yet Republicans are reacting to the job report by slamming Obama's record.
Europs pain is coming Americas Way
This article tackles the debate of the enormous deficit that the United States is currently building. A deficit that according to the article that is about 10% of GDP and a debt that is roughly 100% of GDP. The question at hand is who will have to bear the tough times ahead, adults or their kids. This article attacks this question with some humor by referring to a young dutch boy who won a prize for entering a plan for getting the Greek economy back on its feet. This article points out three major factors, deficits do matter and sooner or later will have to be cut, trying to cut deficits in the middle of a recession only makes it worse, and when in fact the cutting starts it will cause massive social and political upheaval as well as pain. Comparison of the United States and Europe is important to recognize because Europe is feeling the pain that many feel will spread to the United States. So the question is, wait to attack the issue later and let future generations suffer the consequences or start to handle the situation now and help ease the pain of future generations by taking some of pain now. The issue is no one ever wants to suffer economically so, taking the cynical view, we will in fact pass it on to future generations since no one will step up and do the right thing.
Thursday, April 5, 2012
In China, Following in Footsteps of Reform
In China, Following in Footsteps of Reform
The article discusses the biggest political challenge in decades that is occurring in China. This political challenge includes changes in the top leadership position, hidden forces in the party, and military and economy battles over China’s future. One of the country’s leading scholars, Yu Jianrong, has dropped a detailed proposal for political reform that begins in October this year and ends a decade later, in September 2022. His political reform includes political machinations, an ambitious program for change, and an autocratic state. Additionally, a political scientist at Tsingshua University, Liu Yu, has focused on how China is rooted in shifting attitudes across society, which is a move linked to technology and globalization. This however is “unrealistic” and a broad debate is needed. She stated that “a good plan should involve the whole society” and that “there should be a big debate on where the country should be going.” Therefore, these ideas and reforms can bring change to the country and they can open people’s minds and raise awareness on the challenges occurring in China.
The article discusses the biggest political challenge in decades that is occurring in China. This political challenge includes changes in the top leadership position, hidden forces in the party, and military and economy battles over China’s future. One of the country’s leading scholars, Yu Jianrong, has dropped a detailed proposal for political reform that begins in October this year and ends a decade later, in September 2022. His political reform includes political machinations, an ambitious program for change, and an autocratic state. Additionally, a political scientist at Tsingshua University, Liu Yu, has focused on how China is rooted in shifting attitudes across society, which is a move linked to technology and globalization. This however is “unrealistic” and a broad debate is needed. She stated that “a good plan should involve the whole society” and that “there should be a big debate on where the country should be going.” Therefore, these ideas and reforms can bring change to the country and they can open people’s minds and raise awareness on the challenges occurring in China.
Wednesday, April 4, 2012
Next Great Depression? MIT researchers predict ‘global economic collapse’ by 2030
Most of the computer scenarios found population and economic growth continuing at a steady rate until about 2030. But without "drastic measures for environmental protection," the scenarios predict the likelihood of a population and economic crash.
However, the study said "unlimited economic growth" is still possible if world governments enact policies and invest in green technologies that help limit the expansion of our ecological footprint.
However, the study said "unlimited economic growth" is still possible if world governments enact policies and invest in green technologies that help limit the expansion of our ecological footprint.
Markets tailspin on new Greek bank woes
After the head of the European Central Bank suggested some of Greece's banks would collapse, stocks and commodities plummeted on Wednesday.
The aid given to Greece will only save its most viable banks and will weed out the weak ones.
France, Germany, Britain, Russia, and the US's stock markets were also pulled down.
The price of gold and oil also fell but medium and long-term US Treasuries went up in price.
The situation in Greece is leaving many uncertainties in the world economy.
The aid given to Greece will only save its most viable banks and will weed out the weak ones.
France, Germany, Britain, Russia, and the US's stock markets were also pulled down.
The price of gold and oil also fell but medium and long-term US Treasuries went up in price.
The situation in Greece is leaving many uncertainties in the world economy.
Creativity in the Classroom, Innovation in the Workplace
Current education systems are no longer compatible with 21st century economic systems. Developed in the 18th and 19th centuries, most national education systems were designed to support the industrial economy. Their purpose was conformity, not creativity. However, as we move to a more service dominate economy, businesses are looking for new ideas to adapt to a constantly changing world. Could an education system that emphasizes creativity and collaboration give us the upper-hand in economics? Is it the government's responsibility to help education systems evolve to support evolving economic systems?
http://www.principalvoices.com/voices/ken-robinson-white-paper.html
http://www.principalvoices.com/voices/ken-robinson-white-paper.html
Monday, April 2, 2012
Public Worker Pensions Find Riskier Funds Fail to Pay Off
http://www.nytimes.com/2012/04/02/business/pension-funds-making-alternative-bets-struggle-to-keep-up.html?_r=1&hp
The article details how public workers’ pension funds across the country are increasingly turning to riskier investments in private equity, real estate and hedge funds. However, this decision has turned out to be poor as they are being outperformed by the more basic stocks and bonds.
This is bad news for many people that are counting on these funds to perform in hopes of retiring and/or being able to lean on during the tough economic times.
The article details how public workers’ pension funds across the country are increasingly turning to riskier investments in private equity, real estate and hedge funds. However, this decision has turned out to be poor as they are being outperformed by the more basic stocks and bonds.
This is bad news for many people that are counting on these funds to perform in hopes of retiring and/or being able to lean on during the tough economic times.
Why Growth is not Always Growth
http://www.nytimes.com/2012/04/01/opinion/sunday/friedman-why-nations-fail.html?_r=2&hp
In this article, Thomas Friedman writes about a book titled "Why Nations Fail." This book discusses the importance of inclusive economic and political institutions. It argues that the growing income inequality in America is leading to a concentration of power in political institutions, which may lead to the failure of the nation as a democracy. Additionally, the book argues that the situation in China is not as rosy as many would paint it, because there is a lack of respect for institutions like property rights. Instead, the authors argue that the Chinese system leads to an unsustainable extraction of power and economic force by the few, from the many. The book also discusses ways in which foreign aid to middle eastern nations could work harder for good, if it went towards supporting political institutions like schools and hospitals. Supporting these institutions helps foment democratic leanings, eventually leading to improved economic and political situations. Although many of the concepts mentioned in this article are fairly basic, it is still a good message, that more people should heed.
In this article, Thomas Friedman writes about a book titled "Why Nations Fail." This book discusses the importance of inclusive economic and political institutions. It argues that the growing income inequality in America is leading to a concentration of power in political institutions, which may lead to the failure of the nation as a democracy. Additionally, the book argues that the situation in China is not as rosy as many would paint it, because there is a lack of respect for institutions like property rights. Instead, the authors argue that the Chinese system leads to an unsustainable extraction of power and economic force by the few, from the many. The book also discusses ways in which foreign aid to middle eastern nations could work harder for good, if it went towards supporting political institutions like schools and hospitals. Supporting these institutions helps foment democratic leanings, eventually leading to improved economic and political situations. Although many of the concepts mentioned in this article are fairly basic, it is still a good message, that more people should heed.
Consumer Spending Rose, Income Lagged Last Month
US consumers boosted their spending and their has been continual job growth but what we have no seen an increase is in their income. There has been a decrease in the savings rate which is due to the increase in spending. Is this a sign of a start of a recovery? At the very least it could mean that consumer confidence is regaining strength. However, this may be short lived because there is still a high price for gasoline which could cause people to start substituting gas for other goods and products they would have bought with that money.
http://www.npr.org/2012/03/30/149680235/consumer-spending-rose-last-month-but-income-lagged
http://www.npr.org/2012/03/30/149680235/consumer-spending-rose-last-month-but-income-lagged
Consumer Budgeting Around the World
This article gives a graph that compares the spending habits of consumers in the United States, Canada, Britain, and Japan. Consumers in the United States spend a higher percent on housing than those in the other countries, but a lower percent on food at home. Another interesting thing that the article points out is that Americans spend more on health care than those of the other countries. It says that it may seem that the percent is only greater since Americans pay more out of pocket for healthcare. However, the article then presents a graph of the total expenditure of health care per capita in many different countries. The United States spends more than $1500 more than the next highest of the countries presented, which is Norway.
Sunday, April 1, 2012
Economy shifts with recent elections in Myanmar
This article discusses the political and economic implications of the recent elections in Myanmar. Aung San Suu Kyi of the NLD was previously under house arrest and barred from running for political office. Now, it appears she will receive a parliamentary seat with the most recent elections. The article says there could be a variety of economic consequences, including Europeans lifting sanctions, foreign investors returning and the government floating the currency. The article goes on to suggest that the agreements made between Suu Kyi and the current president will have an effect on the political and economic situation of the country.
I think it's important to realize that the election of Suu Kyi to office could overshadow economic measures of the government such as floating the currency. Her case, while absolutely important and a long-time coming, has risen to such a degree that other political and economic issues may be downplayed as a result. This could have either negative or postive implications for the economy, depending on what the outside world decides to do with the reforms in Myanmar.
Russian Economy Slow to Recover, World Bank Says
This article describes the reasons why Russia's economy has been and may continue to be slow to recover from the global recession. The author believes that an aging population, unproductive workers and low capital investment in particular are risks and problems for the Russian economy as it tries to bounce back. The country's economy has not lived up to economists' expectations for the coming years, however it has still done better than many of its European neighbors. What other factors do you see as a problem for the country in the coming months? Would policy be needed or what techniques could help fix the issues?
http://www.nytimes.com/2012/03/28/business/global/russian-economy-slow-to-recover-world-bank-says.html?_r=1
http://www.nytimes.com/2012/03/28/business/global/russian-economy-slow-to-recover-world-bank-says.html?_r=1
Spain budget: Cuts to total 27bn euros this year
http://www.bbc.co.uk/news/business-17557172
New update on the old issue. Spain government decides to tighten its public administration cost in order to prevent itself from the debt crisis. This decision is apparently not popular with the younger population. The country already boast the highest unemployment rate for under 25 years old youth among European countries, at well over 24%. The new austerity measure will mean further benefit cut and many strikes have been going on in big cities (Madrid and Barcelona). At the least, they seem to be things better than their neighbor Italy whose government struggle to reach any meaningful agreement recently.
New update on the old issue. Spain government decides to tighten its public administration cost in order to prevent itself from the debt crisis. This decision is apparently not popular with the younger population. The country already boast the highest unemployment rate for under 25 years old youth among European countries, at well over 24%. The new austerity measure will mean further benefit cut and many strikes have been going on in big cities (Madrid and Barcelona). At the least, they seem to be things better than their neighbor Italy whose government struggle to reach any meaningful agreement recently.
Why China Will Have an Economic Crisis
http://business.time.com/2012/02/27/why-china-will-have-an-economic-crisis/?iid=biz-main-editpicks
This article argues in favor of why it is likely that China could face an economic crisis in the future. It says that China's "state capitalism" has created an artificial environment under which the economy is thriving. This however is not good in the long run where the economy should be running on free markets and reacting to price signals. It says that China could end up facing a similar fate as Japan and Korea.
This article argues in favor of why it is likely that China could face an economic crisis in the future. It says that China's "state capitalism" has created an artificial environment under which the economy is thriving. This however is not good in the long run where the economy should be running on free markets and reacting to price signals. It says that China could end up facing a similar fate as Japan and Korea.
Analysis: Resistance to austerity stirs in southern Europe
This article covers a recent strike in Spain, and the reactions of southern European countries' citizens to their future economic projections. Politician of Spain,Mariano Rajoy and Italy's Mario Monti may face a deeper recession in their countries, possibly resulting from cuts intended to reduce debt. Greece and Portugal also face similar problems possibly from providing exceptional workers benefits under a multinational currency.
Lawrence Solomon: A world awash in oil
http://opinion.financialpost.com/2012/03/30/lawrence-solomon-a-world-awash-in-oil/
This is an opinion article about the future of oil production and the Middle East. Essentially it posits that new methods for obtaining oil will allow the United States to produce so much more oil that it will no longer need to depend on other countries. In much the same way that fracking has allowed us to go from importing to exporting natural gas, the article reasons that with advances in oil gathering techniques we can export oil.
As a result of this, the article argues that countries which now depend on exporting oil, such as Saudi Arabia, will lose a huge portion of their national income. It further concludes that this could cause countries like Saudi Arabia to break apart and be ruled "along tribal lines". However, it also says that the western world would be significantly less concerned about this because it would no longer be a major oil supplier.
While I do agree that we will probably be able to more efficiently produce oil ourselves, I don't think it will have the effect the author of this article does. For one thing, only a small portion of the oil we import comes from the Middle East - Canada is our largest supplier. I also doubt that Saudi Arabia will simply fall apart as the world looks on apathetically, and to say that it will be ruled along "tribal lines" is a gross oversimplification. Still, it is an interesting idea that maybe our oil isn't running out as we thought.
This is an opinion article about the future of oil production and the Middle East. Essentially it posits that new methods for obtaining oil will allow the United States to produce so much more oil that it will no longer need to depend on other countries. In much the same way that fracking has allowed us to go from importing to exporting natural gas, the article reasons that with advances in oil gathering techniques we can export oil.
As a result of this, the article argues that countries which now depend on exporting oil, such as Saudi Arabia, will lose a huge portion of their national income. It further concludes that this could cause countries like Saudi Arabia to break apart and be ruled "along tribal lines". However, it also says that the western world would be significantly less concerned about this because it would no longer be a major oil supplier.
While I do agree that we will probably be able to more efficiently produce oil ourselves, I don't think it will have the effect the author of this article does. For one thing, only a small portion of the oil we import comes from the Middle East - Canada is our largest supplier. I also doubt that Saudi Arabia will simply fall apart as the world looks on apathetically, and to say that it will be ruled along "tribal lines" is a gross oversimplification. Still, it is an interesting idea that maybe our oil isn't running out as we thought.
Age and happiness Pay, peers and pride: How older workers can find happiness
This article starts by explaining some of the effects on workers that come from increasing the wages of a select few. The obvious effect of seeing co-workers get higher salaries is a negative one; it lowers self esteem and can cause frustration. The other effect that is not quite so obvious is know as the "tunnel" effect. This can be a positive effect for the whole firm because the tunnel effect gives employees a sense of hope that someday they too can get a raise if they work their hardest. A German survey shows that there are many people who get more joy from seeing other peoples income increase over their own. The article also points out that early retirement can decrease peoples happiness levels and in some cases lead to lower life expectancies. Do you think that the same results would occur in the US if citizens started retiring at a later age?
http://www.economist.com/node/21551479
http://www.economist.com/node/21551479
Japanese Manufacturing - From Summit to Plummet
http://www.economist.com/node/21547815
This article details the failure of many companies in the Japanese technology sector to remain profitable or competitive on the international market. All of the big electronics firms in Japan, like NEC and Sony, have lost massive percentages of their value since 2000, and are having huge difficulty recovering in the market. Some of the reasons cited for the failures of these companies are that Japanese Industry is not diversified enough and that many companies, like NEC, failed to innovate following the liberalization of trade policies within the country.
These companies have been staying in fields they can no longer compete in, using funds from other sectors to bankroll their failures. This leads to massive waste in capital and is hurting them severely in the long run. These Japanese countries will need to take serious steps soon if they want to avoid being run out of business in the future.
This article details the failure of many companies in the Japanese technology sector to remain profitable or competitive on the international market. All of the big electronics firms in Japan, like NEC and Sony, have lost massive percentages of their value since 2000, and are having huge difficulty recovering in the market. Some of the reasons cited for the failures of these companies are that Japanese Industry is not diversified enough and that many companies, like NEC, failed to innovate following the liberalization of trade policies within the country.
These companies have been staying in fields they can no longer compete in, using funds from other sectors to bankroll their failures. This leads to massive waste in capital and is hurting them severely in the long run. These Japanese countries will need to take serious steps soon if they want to avoid being run out of business in the future.
New graduates see an improving job market
Job openings have been increasing this year and those graduating now are seeing far more openings than were available just a year or two ago. According to National Association of Colleges and Employers, the 2012 hiring is expected to increase to 10.2 percent which is considerably better than the 9.5 percent a year ago. GE, Amazon, and Apple are some of the current companies who have increased the number they are hiring and newer have job openings. There is a reoccurring pattern these days for many college students where they are often receiving call-backs for several jobs which was quite rare in recent years. Also, undergraduate business majors full-time job offers have risen nearly ten percent. These are all signs that we are seeing a recovery in the economy.
This is great news for us graduating seniors as in the past this has been a very frustrating time. It gives us a great deal of hope seeing these figures that we will not have too difficult of a time landing a positing upon graduation. It is great to see the ten percent increase for business majors because I'm sure several in the class are looking to pursue a career in this field.
Apple’s share price -- iRational?
http://www.economist.com/node/21551065
This article analyzes Apple's condition and perspective. The author doubts that maybe there is irrationality in investing in Apple. The article says, "Even if bubble talk is over the top, a higher share price is justified only if Apple continues to meet earnings expectations. That usually gets harder. The stocks of market-leading companies historically underperform once they have reached the top slot, since they are less nimble and more vulnerable to attacks by regulators and the press. It is harder to continue impressive earnings growth on a large base. Even a modest earnings miss could have a big effect on the share price, since more of Apple’s shareholders today are fickle traders."
I kind of agree with the article that Apple is overvalued, and the high share price reflects people's wish to technology companies. But the post-Jobs Apple has already exposed some problems, for example, the weird name of the new generation of iPad.
This article analyzes Apple's condition and perspective. The author doubts that maybe there is irrationality in investing in Apple. The article says, "Even if bubble talk is over the top, a higher share price is justified only if Apple continues to meet earnings expectations. That usually gets harder. The stocks of market-leading companies historically underperform once they have reached the top slot, since they are less nimble and more vulnerable to attacks by regulators and the press. It is harder to continue impressive earnings growth on a large base. Even a modest earnings miss could have a big effect on the share price, since more of Apple’s shareholders today are fickle traders."
I kind of agree with the article that Apple is overvalued, and the high share price reflects people's wish to technology companies. But the post-Jobs Apple has already exposed some problems, for example, the weird name of the new generation of iPad.
Sweden moves towards cashless society
http://news.yahoo.com/sweden-cash-king-no-more-082544562.html
Sweden was the first country to introduce the bank note in 1661, now it will be one of the first countries to take them away. Banks have begun conducting all money transactions electronically and rarely handle cash. The positive is that there is more transparency when looking at public and private finances, which makes it harder to avoid paying taxes and participate in the shadow economy. The negatives are cybercrime which is a very real and dangerous threat to using an entirely electronic monetary system.
What do you guys think of this? Is this a global trend, will other countries like the US do the same?
Sweden was the first country to introduce the bank note in 1661, now it will be one of the first countries to take them away. Banks have begun conducting all money transactions electronically and rarely handle cash. The positive is that there is more transparency when looking at public and private finances, which makes it harder to avoid paying taxes and participate in the shadow economy. The negatives are cybercrime which is a very real and dangerous threat to using an entirely electronic monetary system.
What do you guys think of this? Is this a global trend, will other countries like the US do the same?
Uncuffing Capitalism
http://www.economist.com/node/21551481
This article discusses the JOBS act recently passed in Congress on March 27th. The act aims to loosen regulations on firms seeking an increase in capital, especially small businesses that often have trouble doing so. Over the last 10 years, initial public offerings from small businesses in the United States have fallen from just under 300 in 2001 to less than 50 in 2011. As the author notes, there are other ways for firms to acquire capital in the U.S., but public markets allow investors to get in and get out and provide the firms with quick cash. Because of the financial crisis, extremely strict accounting, communication, and other regulations have been put into place to ensure stability of the market and boost investor confidence. The problem, however, is that these regulations have become so extensive that it is actually disincentivizing capital investment. The JOBS act would loosen some auditing and communications regulations, thereby making it easier for firms to go public. Since this is a time in which we need public markets to help us recover from the last crash, deregulatory acts like these should be welcomed by consumers and investors alike.
This article discusses the JOBS act recently passed in Congress on March 27th. The act aims to loosen regulations on firms seeking an increase in capital, especially small businesses that often have trouble doing so. Over the last 10 years, initial public offerings from small businesses in the United States have fallen from just under 300 in 2001 to less than 50 in 2011. As the author notes, there are other ways for firms to acquire capital in the U.S., but public markets allow investors to get in and get out and provide the firms with quick cash. Because of the financial crisis, extremely strict accounting, communication, and other regulations have been put into place to ensure stability of the market and boost investor confidence. The problem, however, is that these regulations have become so extensive that it is actually disincentivizing capital investment. The JOBS act would loosen some auditing and communications regulations, thereby making it easier for firms to go public. Since this is a time in which we need public markets to help us recover from the last crash, deregulatory acts like these should be welcomed by consumers and investors alike.
Gas..Answer to Prices
This was an interesting article where Mr. Thaler is speaking on the topic that everyone talks about. Everyone always says "why does our president not just lower the price of gas?" Well it isn't economically smart, Mr. Thaler says that if we can just set a price for gasoline why would we not price set for other products as well. To lower our consumption of oil the government is speaking on the idea of imposing a tax on gasoline to give people who have fuel-efficient cars an incentive.
Leung Victory in Hong Kong Poll Turns Focus to Democracy
Leung Chun-ying became Hong Kong's next chief executive. He pledged to address Hong-Kong's wealth gap and demands for universal suffrage. It was interesting that in Hong-Kong, at least for this election, only one in 5,900 people could have voted. The city's 7.1 million people couldn't vote. This selective vote led Leung 17 perventage points ahead of his main rival, Henry Tang.
The article says that Leung is supported by Chinese government. China's leaders want a prosperous Hong-Kong because the city have a fully convertible currency, that is used as a way to internationalize the yuan.
However, many protesters claims that Leung is part of the communist party and he will be a voice for the party and not for the Hong Kong people.
Leung advocates closer ties with mainland China to boost growth and promised to build more public housing, increase land supply and provide residents with tax-breaks to help them buy homes.
As Hong Kong is one of the best countries to do business, closer tie with mainland China in the future will be interesting to see..
http://www.bloomberg.com/news/2012-03-25/leung-projected-to-defeat-tang-in-hong-kong-chief-executive-race.html
The article says that Leung is supported by Chinese government. China's leaders want a prosperous Hong-Kong because the city have a fully convertible currency, that is used as a way to internationalize the yuan.
However, many protesters claims that Leung is part of the communist party and he will be a voice for the party and not for the Hong Kong people.
Leung advocates closer ties with mainland China to boost growth and promised to build more public housing, increase land supply and provide residents with tax-breaks to help them buy homes.
As Hong Kong is one of the best countries to do business, closer tie with mainland China in the future will be interesting to see..
http://www.bloomberg.com/news/2012-03-25/leung-projected-to-defeat-tang-in-hong-kong-chief-executive-race.html
What is under a President's control?
A psychologist might call this an attribution error, an error in attributing responsibility for a persons success or failure in a given situation. An economist can explain why in our system the President does not have the ability to significantly impact the price of gas. To me this is in an interesting example of one of the more interesting points of contention in Economic Systems. The stability vs. efficiency question, if the U.S. president had greater influence the price would probably not have risen as much but the market would be less efficient. Furthermore in a market system as a resource grows more scarce and/or demand increases the price mechanism naturally encourages research into alternative resources. That being said while we are waiting for the market to achieve equilibrium people are suffering. Therefore there is a compromise that must be made and one which we have (sort of) made. We have for example strategic oil and gas reserves which could in a moment of crisis be distributed to those most in need. This is obviously a somewhat limited response, a more long term solution for smoothing out price spike would be international agreements that limit speculation.
Stocks rally as euro countries boost bailout fund
In socialist fashion, the euro zone countries have recently agreed to "increase the amount of money available for any future financial bailouts." Looking to stop its own debt crisis, the countries in the euro zone have decided to increase the resources they have no in order to plan for a future crisis. This looks good for collaboration attempts within the euro zone, as some countries will have to be propped up and paid for by other, more prosperous countries.
http://www.businessweek.com/ap/2012-03/D9TQTF2O1.htm
http://www.businessweek.com/ap/2012-03/D9TQTF2O1.htm
France's Future: A country in denial
France
is facing its next presidential election in several weeks. Recent debates have
included security issues, halal meat, and immigration. However, candidates are
remaining relatively silent about a real problem in the country – its economy.
France is dealing with numerous problems, most notably rising unemployment,
severe debt, and loans to struggling economies such as Greece, Italy, and
Portugal. French voters tend to see globalization as a threatening force and
the market as a risky, cruel reality that can be avoided with some government
intervention. Although France is hardly the country most at risk in the European
Debt Crisis, its foundation for the Euro Zone (along with Germany) brings it to
international attention. The article forecasts hard times for France in the
future, despite the election results. To what extent do you think the
government’s role will be able to limit the economic problems?
China Tests Financial Relaxation in Wenzhou
There are a lot of underground borrowing and lending in China, as smaller companies have long complained they have starved for funds because China's giant state-owned banks favor other state-owned enterprises, whose ability to repay is considered guaranteed by the cash-rich Chinese government. Recently, China approved a broad package of financial reforms in Wenzhou, a city known for entrepreneurship and underground lending, in what may be a prelude to a national effort to liberalize China's creaking financial system.
The move by the State Council, China's cabinet, represents an important symbolic step toward overhauling a system long seen as a barrier to developing a more substantial and sustainable growth model for the world's second-largest economy. The key test will be whether the Wenzhou reforms are rolled out in other parts of the country. Other promised reform efforts in recent years have failed to materialize, and the government's tendency toward overregulation could squelch innovation and keep its important but shadowy informal lending system underground. It is unclear how big China's underground lending might be. In October UBS estimated it could be between two trillion yuan and four trillion yuan in total, or $316 billion to $632 billion. The process of legitimizing informal finance could involve giving existing underground lenders a license to operate as small-loan companies while imposing deposit collection requirements, experts say.
The move by the State Council, China's cabinet, represents an important symbolic step toward overhauling a system long seen as a barrier to developing a more substantial and sustainable growth model for the world's second-largest economy. The key test will be whether the Wenzhou reforms are rolled out in other parts of the country. Other promised reform efforts in recent years have failed to materialize, and the government's tendency toward overregulation could squelch innovation and keep its important but shadowy informal lending system underground. It is unclear how big China's underground lending might be. In October UBS estimated it could be between two trillion yuan and four trillion yuan in total, or $316 billion to $632 billion. The process of legitimizing informal finance could involve giving existing underground lenders a license to operate as small-loan companies while imposing deposit collection requirements, experts say.
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