http://money.cnn.com/2017/04/04/news/economy/euro-banknote-50-secure/index.html?iid=Lead
A new 50 euro note went into circulation Tuesday and it includes a number of new security features, including a "secret window." The new bill shows a portrait of Europa, a figure in Greek mythology, when held up to the light. The interesting part about the new bills is that they are printed on pure cotton fiber paper rather than tallow, a substance that comes from animal flat. The UK faced criticism from vegan and religious groups when they introduced a new 5 euro note last November, and a petition against the bill reached 130,000 signatures. This forced the Bank of England to review the note and they instead decided to go with palm oil in the future.
The 50 euro note currently makes up 45% of all banknotes, with over 9 billion in circulation it is more than the 5, 10 and 20 note put together. The 50 euro banknote is also the number one choice for counterfeiters, which is why it has enhanced security features. Along with the portrait of Europa on the bill, are features that disappear when viewed under UV light allowing for easy authentication. The 50 euro note is the 4th new note to be introduced in the second generation of Euro banknotes, after the 5, 10 and 20.
It will be interesting to see how this new bank note will affect the economy and whether or not it will stop counterfeiters. The pound and euro are currently the first and third most counterfeited currencies in the world. 1 in 30 British sterling pounds were found to be fake, while every 1 in 23,000 was also found to be fake. Maybe these new security features will help decrease the amount of counterfeits in circulation and can be something that the United States adopts. The United States has a counterfeit rate of 1 in every 10,000 dollars ranking 2nd in the world. I also find it interesting that the notes used to be made with animal fats and that Canada and Australia also have currency containing animal fat.
Tuesday, April 4, 2017
Monday, April 3, 2017
Greece crisis bites as £3.4BN pulled from banks and manufacturing output WORST in eurozone
Consumers in Greece are cutting back their spending
and half of Greeks are only purchase the “absolute necessities.” Data from the
Marketing Laboratory of Athens University Economics and business shows that
monthly household expenditure in Greece dropped from €310 in 2016 to €274 in 2016. The country manufacturing
sector is also experiencing contraction. Greece has the worst PMI performance
for manufacturing sector in Europe.
Trump's Push on China to Aid with North Korea's Nuclear Programme Through Possible Trade Reforms
Recently, North Korea's nuclear programme has been a topic of great debate amongst the United States and China. Both nations have been discussing on ways to prevent, or lessen, nuclear activities under Kim Jong-un's control. This week, President Trump has claimed that the US will not rely on China to assist them in the issue, regardless of whether they choose to do it or not.
""If China is not going to solve North Korea, we will. That is all I am telling you," he said in an interview with the Financial Times.
The United States sees China's support in the case as being of crucial importance, since China has great "influence over North Korea", due to its oil exports to the country, as well as the Chinese banks, which are "intermediaries that keep North Korea moving".
Making such statement prior to a scheduled visit from China's president Xi Jinping, one of the ways Mr. Trump sees fit to deal with the country is to tackle trade issues. Currently under a trade deficit, China is the largest source of this deficit, making up $347bi out of a total of $502bi, which concludes that both parties undergo intense international economic transactions. President Trump stated that trade issues will be used as "leverage" on the case, serving as an incentive to have China's cooperation in place. However, the US President has not provided any details on how to deal with this issue nor information on the application of tariffs.
In the end, we can see how trade can impact a whole nation's position on any matter for economic growth is desired by any country and, given the dependencies on attaining cheap resources from other world partners in order to become more efficient in terms of production.
Source:
http://www.bbc.com/news/world-us-canada-39475178
""If China is not going to solve North Korea, we will. That is all I am telling you," he said in an interview with the Financial Times.
The United States sees China's support in the case as being of crucial importance, since China has great "influence over North Korea", due to its oil exports to the country, as well as the Chinese banks, which are "intermediaries that keep North Korea moving".
Making such statement prior to a scheduled visit from China's president Xi Jinping, one of the ways Mr. Trump sees fit to deal with the country is to tackle trade issues. Currently under a trade deficit, China is the largest source of this deficit, making up $347bi out of a total of $502bi, which concludes that both parties undergo intense international economic transactions. President Trump stated that trade issues will be used as "leverage" on the case, serving as an incentive to have China's cooperation in place. However, the US President has not provided any details on how to deal with this issue nor information on the application of tariffs.
In the end, we can see how trade can impact a whole nation's position on any matter for economic growth is desired by any country and, given the dependencies on attaining cheap resources from other world partners in order to become more efficient in terms of production.
Source:
http://www.bbc.com/news/world-us-canada-39475178
Populism Prevails over Policy
Ray Dalio, billionaire founder of the world's largest hedge fund Bridgewater, posted an 81 page report titled "Daily Observations" detailing the rise of populism and its potential impact on markets.
The report proclaims that it is an examination of populism, the phenomenon -- how it typically germinates, grows and runs its course. The article notes that populism is at an 80 year high and justifies it using a proprietary "Developed World Populism Index".
“We believe that populism’s role in shaping economic conditions will probably be more powerful than classic monetary and fiscal policies,” Dalio and three Bridgewater Associates colleagues wrote in a “Daily Observations” report obtained by Bloomberg.
It has been interesting to watch Dalio's view on the market shift from the time of Trump's election, where he predicted that Trump would ignite "animal spirits" to a level that resulted in substantial growth. Dalio now seems to have changed his tone and likely his portfolio to match in light of the populism that seems to be moving forward as a counter force to globalization.
https://www.bloomberg.com/news/articles/2017-03-22/dalio-says-populism-may-be-stronger-than-fiscal-monetary-policy
Trump prepares for critical week of diplomacy
This week,Mr Trump is going to meet Chinese President Xi Jinping at his Mar-a-Lago resort in Florida on Friday. This meeting is critical not only because it is the first meeting between Mr Xi and Mr Trump after the US president raised tensions with comments over Taiwan, trade and the South China Sea, but also it will reflect sharp changes of direction he has already wrought in US foreign policy
“The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits and job losses,” Mr Trump said in a Tweet. It would be interesting to see how he’d react to those words. And Trump, a new president who needs to show results soon, could chalk up a rare win.
http://www.cnn.com/2017/04/03/politics/trump-foreign-policy/index.html
Trump Talks Tough on U.S.-China Trade but Delays Real Action
This article talks about how President Trump has been calling for stricter enforcement of tariffs imposed in anti-dumping and anti-subsidy trading, but with no real actions. It seems like all the talks on twitter is just a way for giving the administration officials more time to come up with a trade policy that works. President Trump believes that the trade deficit between the U.S. and China "was fed by Chinese currency manipulation, government subsidies to exporters and other directives". However, his executive order doesn't really address the problems. President Trump wants to ensure to collect the tariffs imposed in anti-dumping and anti-subsidy. Then the article discusses border-adjusted tax which is a tax essentially imposed on goods from other countries. It's interesting to see if the Trump administration will set the main priority on trade be a border-adjusted tax as part of tax reform or the priority be a "long series of narrow, industry-specific trade disputes". I personally think that the U.S. will have more success in improving the competitiveness of companies overseas by supporting worker training, encouraging industrial upgrading, and investing in research and development.
Link to article: https://www.nytimes.com/2017/03/31/business/trump-trade-executive-orders.html?ref=business&_r=0
Link to article: https://www.nytimes.com/2017/03/31/business/trump-trade-executive-orders.html?ref=business&_r=0
Trudeau Ramps Up Courtship of Xi Amid China Free-Trade Talk
In this Bloomberg article, Wingrove discusses the possibility of trade ties between China and Canada growing stronger. While the Canadian public is skeptical of softening relations between the two states given China's human rights record, it seems like Canadian officials are keen to improve trade agreements with the East Asian country.
While the Trans-Pacific Partnership (TPP) was not discussed in the article, one wonders if Canada's urgency to improve ties is a result of the trade deal failing. One of Trump's first moves as president was to cut the deal which would create an economic bloc, similar to the EU, that would comprise a significant portion of global trade. The 12 countries involved comprise 40% of the global GDP with China left out of the agreement.
In response to the US bailing on this deal, China has proposed their own deal to replace the TPP. The Regional Comprehensive Economic Partnership (RCEP) aims to create a trade bloc between China, India, Japan, South Korea, Australia and several other East Asian and South East Asian countries. If the RCEP passes the agreement aims to comprise 30% of global GDP. While Canada is not a part of this deal, it is quite possible to speculate that they were relying on the TPP as an alternative to freer trade with China. However, with the TPP out of the equation and with Trump's continued support for protectionist polices, we might see China attempting to cement itself as the leader of liberalized trade in the world.
China has already publicly declared these goals. The president of China, Xi Jinping, has spoken critically of the president's protectionist polices. At the World Economic Forum in January, Xi stated that "pursuing protectionism is like locking yourself in a dark room, which would seem to escape the wind and rain, but also block out the sunshine and air." These are words which we unfortunately must hear from the president of China and not the president of America.
The TPP was speculated to create thousands upon thousands of jobs in the next 10 years and beyond. Instead of this, our president is tirelessly trying to his best to save jobs in America which will most likely be gone (once again) in the next 10 years. We now see some of our most important trading partners looking towards China for more prosperous opportunity.
Link: https://www.bloomberg.com/politics/articles/2017-04-02/trudeau-ramps-up-courtship-of-xi-amid-china-free-trade-talk
While the Trans-Pacific Partnership (TPP) was not discussed in the article, one wonders if Canada's urgency to improve ties is a result of the trade deal failing. One of Trump's first moves as president was to cut the deal which would create an economic bloc, similar to the EU, that would comprise a significant portion of global trade. The 12 countries involved comprise 40% of the global GDP with China left out of the agreement.
In response to the US bailing on this deal, China has proposed their own deal to replace the TPP. The Regional Comprehensive Economic Partnership (RCEP) aims to create a trade bloc between China, India, Japan, South Korea, Australia and several other East Asian and South East Asian countries. If the RCEP passes the agreement aims to comprise 30% of global GDP. While Canada is not a part of this deal, it is quite possible to speculate that they were relying on the TPP as an alternative to freer trade with China. However, with the TPP out of the equation and with Trump's continued support for protectionist polices, we might see China attempting to cement itself as the leader of liberalized trade in the world.
China has already publicly declared these goals. The president of China, Xi Jinping, has spoken critically of the president's protectionist polices. At the World Economic Forum in January, Xi stated that "pursuing protectionism is like locking yourself in a dark room, which would seem to escape the wind and rain, but also block out the sunshine and air." These are words which we unfortunately must hear from the president of China and not the president of America.
The TPP was speculated to create thousands upon thousands of jobs in the next 10 years and beyond. Instead of this, our president is tirelessly trying to his best to save jobs in America which will most likely be gone (once again) in the next 10 years. We now see some of our most important trading partners looking towards China for more prosperous opportunity.
Link: https://www.bloomberg.com/politics/articles/2017-04-02/trudeau-ramps-up-courtship-of-xi-amid-china-free-trade-talk
Iceland lifts capital controls
The article talks about Iceland finally relinquishing the heavy capital controls that were placed in the aftermath of the 2007-08 financial crisis. The three banks Kaupthing, Landsbanki and Glitnir who had assets worth 14 times the GDP were at the core of the crisis. Since then Iceland had enacted restrictions on capital outflows and froze all offshore krona-denominated assets (40% of the GDP) to avoid any outwards money flow. The krona had fallen by 70% and their GDP fell by 10% during those years, and they had to apply for an IMF loan.
Now, Iceland is doing significantly better after the heavy restrictions placed in the years before. Their recent growth rate stands at 7.2%. The problem, however, is that they have a very high domestic interest rate at 5% which is deterring foreign investments in the country. And that combined with the block on capital outflow led to high inflation in the domestic markets.
The restrictions on capital outflow made sense at the time of the meltdown since it was meant to prevent issues with foreign banks arising in the near future, and the high domestic interest rates were placed to further keep investment in the domestic realms. But given that their situation is much better now, it might be time for Iceland to liberate the economy a little, but a little precaution is clearly not bad.
Now, Iceland is doing significantly better after the heavy restrictions placed in the years before. Their recent growth rate stands at 7.2%. The problem, however, is that they have a very high domestic interest rate at 5% which is deterring foreign investments in the country. And that combined with the block on capital outflow led to high inflation in the domestic markets.
The restrictions on capital outflow made sense at the time of the meltdown since it was meant to prevent issues with foreign banks arising in the near future, and the high domestic interest rates were placed to further keep investment in the domestic realms. But given that their situation is much better now, it might be time for Iceland to liberate the economy a little, but a little precaution is clearly not bad.
Sunday, April 2, 2017
Trump’s Climate Rollback Will Hurt the Economy, Not Help It
A few days ago President Trump signed an executive order that undid Obama's policies on climate change. The article states that the Trump administration believes this will help the economy in particular coal workers. However, these "backward-looking" policies will hurt the economy as opposed to helping it. The White House has outdated views and honestly not much knowledge about the subject itself to predict such an optimistic view about the economy. The technology industry is one of our main industries in terms of jobs and economic profit. Undoing climate change progress will take away jobs from a large population who work for clean energy systems. According to the author of the article, those in the coal industry itself don't see an optimist future for it. There are no risks from climate change and affiliated relations and policies. However, the cost of not protecting the climate is far greater. It will be interesting to see how corporations react to this and the backlash that the Trump administration will receive from clean energy corporations who have made progress with Obama's climate change regulations.
https://hbr.org/2017/03/trumps-climate-rollback-will-hurt-the-economy-not-help-it
https://hbr.org/2017/03/trumps-climate-rollback-will-hurt-the-economy-not-help-it
The Economist: The world has made great progress in eradicating extreme poverty
The world has definitely improved on poverty on a holistic scale. "In 1981 some 42% of the world's population were extremely poor, according to the World Bank... at best, they barely had enough money to eat and pay for necessities like clothes. At worst, they starved." Britain eradicated poverty levels to drop below 10% in a century, while countries such as Japan started later and with higher poverty levels and almost eradicated them. This article argues that because we have had such a huge hit on poverty, that the levels of poverty will soon flatline to a point where it is almost impossible to make any more progress because there will always be poverty in a pocket of the world, and the pockets will usually grow. In some areas, such as the sub-Saharan Africa, the poverty rate is declining slowly because the total population is growing at a somewhat large rate. 36 of the governments in Africa are also consider "flimsy" which indicates that they don't have a lot of power and control over how the poor people of their country would be taken care of.
Ultimately, the world is trying to combat the slowing rate of decrease in poverty, but it will be difficult to do so because there is less poverty.
http://www.economist.com/news/international/21719790-going-will-be-much-harder-now-world-has-made-great-progress
http://www.economist.com/news/international/21719790-going-will-be-much-harder-now-world-has-made-great-progress
H-1B visa applications open up next
http://money.cnn.com/2017/03/29/technology/h1b-visa-premium-processing/index.html
Starting on April 3, people will be able to submit H-1B visa petitions for the new fiscal year. These visas are in high demand last years cap of 85,000 visas was reached within the first week of opening. Last year also saw over 200,000 petitions filled out in the first week. These visas are highly coveted by tech firms as it seen as a "pathway for skilled workers to work in the U.S." This years application process will be rather stressful due to the current political attitudes toward immigration.
Applicants can pay a fee of $1,225 in order to ensure that their application is reviewed in the first 15 days, if selected in the lottery. 59% of all applications last year paid for the premium fee, but it was announced that this option would not be included in 2017. Applications that did not include the premium fee can take up to 8 months to be reviewed and this freeze on premium fees is said to speed up the overall process.
It will be interesting to see how the current political climate regarding immigration will affect applicants attempting to enter the U.S, and whether or not this has an impact on U.S firms attempting to acquire workers from other countries. Trump's views and polices towards immigration will certainly not help the process and will add more stress to the application process.
Starting on April 3, people will be able to submit H-1B visa petitions for the new fiscal year. These visas are in high demand last years cap of 85,000 visas was reached within the first week of opening. Last year also saw over 200,000 petitions filled out in the first week. These visas are highly coveted by tech firms as it seen as a "pathway for skilled workers to work in the U.S." This years application process will be rather stressful due to the current political attitudes toward immigration.
Applicants can pay a fee of $1,225 in order to ensure that their application is reviewed in the first 15 days, if selected in the lottery. 59% of all applications last year paid for the premium fee, but it was announced that this option would not be included in 2017. Applications that did not include the premium fee can take up to 8 months to be reviewed and this freeze on premium fees is said to speed up the overall process.
It will be interesting to see how the current political climate regarding immigration will affect applicants attempting to enter the U.S, and whether or not this has an impact on U.S firms attempting to acquire workers from other countries. Trump's views and polices towards immigration will certainly not help the process and will add more stress to the application process.
How to Beat the Robots
This article talks about different
ways that humans can beat the recent increase in robots. The increase in robots have caused many to
lose their jobs, and those whose jobs have been automated are having trouble
finding new ones. Economists came up
with some polices that they think could help.
One idea is people need to learn new
skills to work in the new economy. To
accomplish this, we need to see an increase in college enrollment and
graduation rates. More and more jobs
require a college degree and the unemployment rate for those who stopped their
education after high school is 6% higher than those who graduated from
college. A solution for those who do not
have the ability, the time, money, or drive to go to college could be
vocational training, where they would learn on the job. One problem could be
that these jobs might be next in line to be automated. This would set these
people back even further.
Another idea is to create new and
better jobs, jobs that cannot be automated easily. Jobs that provide services, like health care,
child care, elder care, and education are growing, which jobs in manufacturing
and warehousing are disappearing. The
government could subsidize private employment or even volunteer jobs. The public sector needs to create jobs if the
private sector is failing to do so.
Jobs in manufacturing are not going
to return and more will be lost as jobs continue to be automated. The automation of jobs will eventually crease
new, better jobs, or it will put many out of work. It will be interesting to see how this
situation is handled and how long it will take.
Study: Racial Segregation Is Costing The Country
Chandelis R. Duster examines a new study on the economic and social costs of segregation between Blacks, Hispanics, and Whites in the United States in the article, "Study: Racial Segregation is Costing the Country". Racial segregation affects incomes and safety for all. Desegregating cities would lead to an increase in incomes for black Americans, a decrease in homicide rates, and an increase in college graduates. This is especially important for cities like Chicago, that have extremely high crime rates. Desegregation would help improve the economy and cultural ties. If more people had higher incomes, they would be able to contribute more to the economy. Higher degrees of education and lower crime rates would do the same. I think it is important economically and socially to enact policies that would encourage less segregation between all Americans. We need to pressure our representatives and other politicians to pursue such policies.
http://www.nbcnews.com/news/nbcblk/study-racial-segregation-costing-country-n741306
http://www.nbcnews.com/news/nbcblk/study-racial-segregation-costing-country-n741306
President’s Growing Trade Gap: A Gulf Between Talk and Action
This article highlights the growing gap between the rhetoric of the Trump administration and the actual actions being taken by the administration. Trump glided into the White House claiming that he could make America's economy great again by renegotiating NAFTA and our trade relations with China. However, we have seen almost no changes to our trade relations, at least not positively. And we have yet to see significant economic gains. Only time will tell if Trump will be able to pull through on any of his economic promises.
https://www.nytimes.com/2017/03/31/us/politics/trump-trade-agreements-actions.html?ref=business&_r=0
https://www.nytimes.com/2017/03/31/us/politics/trump-trade-agreements-actions.html?ref=business&_r=0
Evidence That Robots Are Winning the Race for American Jobs
It seems like robots
are winning the race for jobs and the industry most affected by this is the
manufacturing industry. The article states that for every robot per thousand
workers, up to six workers lose their jobs. As well as wages fell by as much as
three-fourths of a percent. Although the manufacturing industry is being
affected negatively by this is actually benefiting software developers and data
analysts. Technology has become an essential part of industries in order to
reduce their cost since they will not have to spend much money on labor. They
also stated that robots are to be blamed for up to 670,000 lost manufacturing
jobs between the 1990 and 2007. However, this number is to increase since
robots in the manufacturing industry are expected to quadruple.
Even though there are
statistics that prove this, there are some skeptics like the Treasury secretary,
Steve Mnuchin. He said that the displacement of human jobs is not “on our radar”
and it should not be until 50 to 100 more years that we should begin to worry. I believe that we do not have to wait another 50
years in order to see robots taking over the manufacturing jobs, this will
happen in the next 10 years minimum.
Link here.
The Life and Times of an Italian non-performing loan
The Italian banking system has had a large presence of bad or non-performing loans. Bad or "deteriorating" loans accounted for €331 billion and non performing loans accounted for €197 billion of the total deteriorating loans. This accounts for 21.4% of the total gross loans in Italy. The Economist argues that questionable lending practices, inefficient courts and long recessions account for the high amount of debt and bad loans.
The government has tried to curb the problem of bad loans by setting up securities and rescue funds to help however, these programs have not worked as well as the government wanted. Now, the European Central Bank is getting involved and wanting the Italian Banks to curb bad loans and get a plan together to fix this issue.
While the ECB has stated that to fix this issue it is going to take time, some banks themselves are also instituting some reforms. They increased staff members, upgraded technological IT systems and instituted performance pay and saw collections increase by 92%.
This problem is not going away anytime soon but it is good to see that banks and the ECB are being more proactive before a breakdown in the financial banks and institutions. Similarly, instituting reforms on the requirements for getting loans might go a long way in curbing over borrowing.
https://www.economist.com/news/finance-and-economics/21719815-deep-roots-italys-bad-debt-problems-life-and-times-italian
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