Pyongyang’s Hunger Games

The article talked about the financial priorities of the Kim's regime in North Korea. Undoubtedly, the first priority is their military, which took away $1.3 billion in year 2012. After that would be the leader's personal expense (probably there are other things that the article hasn't mentioned), which was counted for $646 million. The last in the list would be the North Korean people since according to the W.F.P and the United Nations Food and Agriculture Organization, 84% of North Korean households had "borderline" or "poor" levels of "food consumption" in 2013 (food only).

This is surely what we discuss in class about socialism system. There is a consistency of shortage, especially in the consumption sector. Does socialism really distribute an equality system regarding income, or it creates a system where top government can hoard cash and power into their own pocket and leave the rest in equally deeply poverty ? All Mr. Kim cares is power so don't even bother talk about human rights with him since to him, it doesn't exist. Actually the system looks a lot like slavery, where there is only one lord and slaves are the local.

The article also mentioned a different way that other countries can use to change what is happening in North Korea. In short, since the Kim Regime has to used American Banks (and other international banks) for their transactions, the foreign entities can prevent the account from spending on wrong purposes and limited to specific activities only like providing food, health care for people. This may work, and may not work since it is rather hard to supervise the use of the money even with regulations like that.

Link: http://www.nytimes.com/2014/03/08/opinion/pyongyangs-hunger-games.html?ref=opinion&_r=0

Closing the Gap: Unemployment in America

Although the unemployment rate has fallen drastically since the start of the recession, it is clear that there is still a lot of work to be done on the economy.  One of the reasons that the unemployment rate is so much lower is that the labor participation rate is lower as well.  This is not only because of people temporarily stopping their job searches but also because baby boomers are beginning to retire and some people have been unemployed so long that they have permanently stopped looking for jobs.  As workers are unemployed longer, recruiters stop looking to them as possible new hires.  However, paying attention the unemployment rate is still important.  Economists are now saying that the labor supply in America will never return to what it once was.  This means that our economy is operating much closer to its potential and that we are using more of the available labor and capital.  That being said, it is important to get long-term out of work employees back into the labor market.

http://www.economist.com/news/finance-and-economics/21596529-americas-labour-market-has-suffered-permanent-harm-closing-gap

Venezuela: A Country on the Road to Economic Change

Venezuela is a present day example of a country on the road to economy change and at this point it seems to be head toward the revolutionary version. A country divided, a government combining a democratic mandate with thuggery, and an opposition that is increasingly radicalized all support this line of thinking. Mr. Maduro, the current leader, is facing an economy that has been damaged by years of mismanagement of the oil market (much of the revenue from this market has been sucked up by corruption or diverted to unsustainable social programs and subsidies to allies) and a hostile private sector which is making basic goods, like toilet paper and cooking oil, scarce. It is not a surprise that the Venezuelan citizens have resorted to protest in the streets. And how does Maduro response? By taking a page out of the totalitarian handbook: armed activists on the streets, media blackouts and the arrest of opposition leader Leopoldo López on trumped-up charges.  This only provokes the protestors, causing further violence, and continues to weaken the economy.

Is there anything that Maduro can do to gain control? The article says that Maduro needs to realize that his strategy of dividing Venezuela is only deepening its misery. To rectify this situation he needs to unify his country. In addition, Maduro needs to get the armed gangs off the streets, allow the media to report what is going on, release Leopoldo López, and enter into proper dialogue with Henrique Capriles, another leader of the opposition. Without this his regime forfeits its claim to being democratic. Moreover, to calm the Venezuelan citizens he needs to come up with a plan to reverse the economic direction of the country or else even the poor will withdraw their support for Maduro. Is there still time left for Maduro to fix things and remain in power or is Venezuela already past the point of no return? 

http://www.economist.com/news/leaders/21597900-dialogue-not-repression-way-nicol-s-maduro-save-his-government-and-his

Ukraine's Financial Future

As hostility and confrontations between Russia and Ukraine continue to develop, the latter is put at greater risk of experiencing severe economic problems. Russia has promised to stop providing discounts for natural gas exports on April 1 and a 15 billion dollar loan to Ukraine has been indefinitely suspended. The European Union has pledged up to a 15 billion dollar (11 million euro) loan to the newly-formed government and John Kerry recently announced approval for the United States to loan up to 1 billion dollars in loan guarantees to Ukraine. However, Ukranian officials say that at least 35 billion dollars in loans and credits will be needed to ensure that the country does not default in the next two years.

As an emerging free market, Ukraine has struggled to create a corruption-free open market. The country's trade deficit is currently rooted in its dependence on natural gas imports from Russia, and the country's struggle to recover from the worldwide financial crisis in 2008 have resulted in low growth rates, inflation, and devaluation of the currency.

As a transition economy that is now undergoing new transitions, Ukraine is at risk of defaulting on previous and future loans from international creditors. Knowing this risk and the tenuous situation that Ukraine's economy is in at the moment, could Russia use their political and economic advantages against Ukraine by forcing further dependence on Russia's natural gas exports and economic credits? Or will international monetary organizations and other countries wield their own advantages and cover the deficits that Ukraine will face in the event that all economic and political ties are cut from Russia?

Article: http://www.nytimes.com/2014/03/06/world/europe/ukraine.html?hpw&rref=business&_r=0

Additional source: http://www.economist.com/blogs/freeexchange/2014/03/ukraine-and-russia

Russian markets plunge as Putin tightens Crimea grip

So for those living in a hole for the last week, Russian forces have invaded the Crimean Peninsula in the Ukraine.  Russian justifications were to protect the Crimean population from some unknown enemy (there was no violence on the level experienced in Kiev prior to the Russian invasion).  While the US and her allies are very unlikely to resort to military means, they will use economic threats to get Russia to pull out.  Seemingly as a result of the likelihood of economic pressures, the Russian ruble fell to historic lows when compared to the dollar.  Furthermore, four countries have suspended preparations to attend the G8 meeting in Sochi this year.  There have also been threats to expel Russia from the G8 and the World Trade Organization.  Things have slightly calmed down without a gun being fired.  For a country like Russia, economic sanctions will work, yet it is not going to be American sanctions that will bring Russia to its knees; the European countries must step up to the plate and put economic sanctions on Russia.  Russia has been more dependent on the EU for selling oil and gas, EU not so much.  They got by without Russian gas for almost half a century.  Only European sanctions can create the desired effect and force Russia to pull out of the Ukraine.
http://www.reuters.com/article/2014/03/03/us-ukraine-crisis-idUSBREA1Q1E820140303

The Urdu Rate of Growth

http://www.economist.com/news/asia/21596554-slowly-lights-may-be-coming-again-urdu-rate-growth

This article describes the current state of the economy of Pakistan. Electricity shortages, among other problems, is one issue that Nawaz Sharif, the Prime Minister of Pakistan, has promised to fix. The article says that the electricity shortages are caused by a "circular debt." In this circular debt, private power firms do not produce as much as they could because the state purchaser does not always pay the firms. The state purchaser does not always pay the private firms because electricity consumers do not always pay the state purchaser. The privatization minister of Pakistan suggests private investors being allowed to take over these state-run energy firms that are criticized for being overstaffed and poor financial control.

The article goes on to say that an even bigger problem for the Pakistani economy is the source of energy. As of now, Pakistan is heavily reliant on imports of oil and natural gas. Pakistan spends $14 billion a year on oil imports. The Pakistani government plans to bring in natural gas from Iran, but this plan will most likely not come into fruition if the U.S., the largest donor to Pakistan does not support the move. Is the U.S.'s ability to effectively prevent trade between Iran and Pakistan justifiable?

Inequality v. Growth

This article is largely about the relationship between inequality, growth, and redistribution. Although it is not easy to define this relationship, the author begins a discussion. As we have learned in class, lower inequality is often linked with generally higher growth rates, such as Sweden or Germany, for example. The author speculates the impacts of inequality in relation to growth. High levels of inequality could “impair growth if those with low incomes suffer poor health and low productivity as a result.” The author cites a recent paper finding that, “governments in more unequal countries redistribute more and rich economies do more than poor ones.” While this isn’t necessarily true for every economy, it is powerful to understand that, “differences in inequality across rich countries are mostly down to the generosity of redistribution.” Additionally, households with low income are less likely to invest in education, which further drags down such potential growth. It will be imperative for governments to find a balance between redistribution and inequality for future growth.

http://www.economist.com/news/finance-and-economics/21597931-up-point-redistributing-income-fight-inequality-can-lift-growth-inequality

Job Clubs for Millenials

Job clubs are increasing in the U.S. Jobs clubs are to help the unemployed with emotional and professional support while looking for jobs.  There are about 10,000 job clubs in the country.  These clubs used to be run by older people who had a decade of professional experience but now it seems like people in their 20s are making their own clubs. Job clubs have been specific for underemployed workers which is a big concern for post-college people.

http://america.aljazeera.com/watch/shows/real-money-with-alivelshi/Real-Money-Blog/2014/2/27/jobs-clubs-for-millennials.html

Largest Bitcoin Exchange files for Bankruptcy

The MtGox bitcoin exchange, formerly the worlds largest crypto currency exchange officially filed for bankruptcy protection on Thursday. This announcement comes only days after the exchange went offline due to technical troubles that prevented customers from making transfers. Some reports say that the site went down after a reported $350 million in bitcoins was stolen due to a security glitch.

This news has created downward price pressures on bitcoin to the extent that it's now trading for a little over half of its all time high of $1000 in November 2013. Only time will tell if bitcoin can hold up to these events.