Trade barriers are set in place for a reason, to stifle economic trade, and to help out their own economy. Back in March, 17 countries of the 20 countries in global trade, violated their trade agreements to not use protectionist policies. Protectionist policies are basically the restraining of trading between two countries because of prices or other factors. Originally, all the countries vowed to not let this happen, but it did, and it could affect the global economy drastically.
Trade wars are not unusual, but highly not liked because it freezes the trade in those countries and decreases their real GDP. According to the Washington Post, many countries, including the U.S., have started to take measures to find ways to make a bigger profit, even if it is violating the NAFTA and WTO rules. An example of this would be, China and India because of the recent tax subsidies that were raised for domestic exporters. This means that these subsidies will help those domestic exporters lower their prices, because of the supply of their money they just received, and initiating a competitive advantage to the exporters, because they can now sell for less and still make a big profit.
This of course relates to the classroom work we have been doing because we weigh the cost and benefits of trade with trade barriers, tariffs and quotas. Basically, if we were to use a price and quantity graph, of demand and supply, for my example in the last paragraph, the total supply with a subsidy curve would be shifted to the right from the equilibrium supply, thus having quantity of the product increase and the price decrease. This in simple terms means that they can now sell more of a certain product for a lower price because of a government subsidy.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/17/AR2009031703218.html
Thursday, April 30, 2009
The Currency of Zimbabwe By Shane Tully
Just recently, Zimbabwe has gone into hyperinflation. The hyperinflation is sure not a good word their economy and was caused by excessive printing of money by their current president Robert Mugabe. He,being the leader since the country became independent from Great Britain in 1980, is now 85 years old and has recently joined the opposition government, controlled by Morgan Tsvangirai, that it will no longer use the Zimbabwe's currency for a whole year. This was mostly out of fear that there country's currency could soon turn into worthless paper.
The country of Zimbabwe is currently in hyperinflation mode because of the 230 million, that's right, million percent increase in inflation. The obvious consequences to this economic environment certainly has put a detrimental effect on their prices of goods and services. This continued for months and has recently fallen again to even lower consumer prices.
Some suspicion has arose about the ways Mugabe is running the country though. Recently critics have said that he "has destroyed one of Africa's most promising economies through controversial policies, including the seizure of white-owned commercial farms for redistribution to inexperienced black farmers" (Zimbabwe shelves), but Mugabe denies the charges and says that it's the enemies of his that oppose his nationalistic policies.
This most certainly relates to what we are doing in the class room right now. For one thing we just reviewed foreign currency exchanges and how they depreciate and appreciate. In this case, of course we have a vast supply of Zimbabwe's currency out in the country. The problem is though that since there is way too much, the demand for it has skyrocketed downward. Basically if we were going to compare it to the U.S., we would be able to buy a lot more for our money, and I mean a lot more. This would also mean that we would import more, which is what were not doing right now since they don't make various different goods that we need and because of the unemployment rate there is higher than 90%, which obviously means there not getting much done to distribute any products.
http://www.reuters.com/article/worldNews/idUSTRE53B0SF20090412
The country of Zimbabwe is currently in hyperinflation mode because of the 230 million, that's right, million percent increase in inflation. The obvious consequences to this economic environment certainly has put a detrimental effect on their prices of goods and services. This continued for months and has recently fallen again to even lower consumer prices.
Some suspicion has arose about the ways Mugabe is running the country though. Recently critics have said that he "has destroyed one of Africa's most promising economies through controversial policies, including the seizure of white-owned commercial farms for redistribution to inexperienced black farmers" (Zimbabwe shelves), but Mugabe denies the charges and says that it's the enemies of his that oppose his nationalistic policies.
This most certainly relates to what we are doing in the class room right now. For one thing we just reviewed foreign currency exchanges and how they depreciate and appreciate. In this case, of course we have a vast supply of Zimbabwe's currency out in the country. The problem is though that since there is way too much, the demand for it has skyrocketed downward. Basically if we were going to compare it to the U.S., we would be able to buy a lot more for our money, and I mean a lot more. This would also mean that we would import more, which is what were not doing right now since they don't make various different goods that we need and because of the unemployment rate there is higher than 90%, which obviously means there not getting much done to distribute any products.
http://www.reuters.com/article/worldNews/idUSTRE53B0SF20090412
Katy Prairie Houston Texas By Shane Tully
With the recent stimulus plans President Obama has put into place, there is a lot of spending to do. With the billions of dollars in stimulus, the government has left about $27.5 billion to the states to spend on transportation. The conflict in mind in this article is about the recent activity in the Katy Prairie region in Houston, Texas. The States wants to build a new highway with its new money, but environmentalists are not too happy with this plan. Environmentalists have lately been trying to oppose the plan and have even filed a lawsuit to have the project stopped, so someone can first do an environmental review of the prairie. President Obama has also commented on the issue and says that the project would use renewable energy, energy efficient buildings, and that the stimulus plan gives tax credits to people who own hybrid vehicles.
The current times in our economy have been bad, and President Obama has gone through a whole lot of mess that former President Bush has left behind. Obama’s views on this economic issue are geared towards more government spending and stimulus. His fiscal policy would be best described as an expansionary effort, but its not looking that way so far.
In this article, the author shows the ways of how the current state of Texas is dealing with their spending money on transportation. Many people have gotten involved on this issue, including environmentalists, governors, and other government officials. The conflict is that the Katy Prairie reserve is located just outside of a large city, Houston. Government officials from this state have set out a plan to build a highway right through this prairie for future use, as the state grows in population. But, environmentalists see this as a threat to the wildlife that lives there and have been trying to block this road from being built. On the other hand, Houston is becoming a larger and larger city everyday and some government officials see this as an opportunity to get ahead on the population boom, other than just letting it happen.
Because this stimulus bill gives full control to the states they can consider this a key issue to use the money for. In the article as well, it points out that under the Recovery Act this, according to Mr. Shapiro, “creates jobs by investing in immediate projects such as highways, bridges and tunnels — and within limitations to prevent waste, fraud, and ‘highways to nowhere’ — grants the states and their citizens broad discretion to choose which highway projects get funding,” (New York Times 2). Although, this is an opinion oriented article and there seem to be many good possibilities to make their decision based on any of them.
This article relates to what we are doing in class because it shows the various monetary and fiscal policies our government is trying to use by implementing the stimulus plan. Another thing is that it closely relates to how we are learning about the federal reserve and how they produce and give the money to the government to spend on things that will help the bad economy we are in now.
http://www.nytimes.com/2009/03/23/us/23sprawl.html?_r=1&pagewanted=2&ref=todayspaper
The current times in our economy have been bad, and President Obama has gone through a whole lot of mess that former President Bush has left behind. Obama’s views on this economic issue are geared towards more government spending and stimulus. His fiscal policy would be best described as an expansionary effort, but its not looking that way so far.
In this article, the author shows the ways of how the current state of Texas is dealing with their spending money on transportation. Many people have gotten involved on this issue, including environmentalists, governors, and other government officials. The conflict is that the Katy Prairie reserve is located just outside of a large city, Houston. Government officials from this state have set out a plan to build a highway right through this prairie for future use, as the state grows in population. But, environmentalists see this as a threat to the wildlife that lives there and have been trying to block this road from being built. On the other hand, Houston is becoming a larger and larger city everyday and some government officials see this as an opportunity to get ahead on the population boom, other than just letting it happen.
Because this stimulus bill gives full control to the states they can consider this a key issue to use the money for. In the article as well, it points out that under the Recovery Act this, according to Mr. Shapiro, “creates jobs by investing in immediate projects such as highways, bridges and tunnels — and within limitations to prevent waste, fraud, and ‘highways to nowhere’ — grants the states and their citizens broad discretion to choose which highway projects get funding,” (New York Times 2). Although, this is an opinion oriented article and there seem to be many good possibilities to make their decision based on any of them.
This article relates to what we are doing in class because it shows the various monetary and fiscal policies our government is trying to use by implementing the stimulus plan. Another thing is that it closely relates to how we are learning about the federal reserve and how they produce and give the money to the government to spend on things that will help the bad economy we are in now.
http://www.nytimes.com/2009/03/23/us/23sprawl.html?_r=1&pagewanted=2&ref=todayspaper
Monday, April 27, 2009
GM to cut 21,000 jobs and shed Pontiac as part of restructuring
Under General Motors newly revised restructuring plan 21,000 US jobs will be cut, as well as cutting out Pontiac. GM is trying everything to fight for its life in the worst auto climate in 27 years. If this plan does not satisfy the government by June 1, it will go into bankruptcy. Gm is also offering stock to pay for benefits for its retirees. Though there are fears of a government run company, the Treasury says they want no part in running GM. If plans with the UAW don't workout, stocks will crash to little or nothing. GM plans to cut these jobs through the closing of several factories, as well as reductions in wages.
I think that the government should stop giving any taxpayer money to GM, a private business. When our government was established there were strong sentiment from British government rule, and so the Framers believed private and public sectors should never interact. 230 years later though, the government is taking control of a private company with taxpayer money. So what if GM goes out of business. When the dot.com boom produced thousands of busts, you didn't see anyone complaining for bailout money. GM is only a business that has too many expenses, and not enough revenue. How is it that other companies are able to make so much profit in the same quarter that GM lost tons of money. Even if GM is bankrupt, the factories will be bought by other companies that will make efficient, low costs products for consumers to buy. Maybe GM should take from lessons from other car companies, and learn how to make enough revenue to cover expenses.
http://www.startribune.com/business/43762462.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
I think that the government should stop giving any taxpayer money to GM, a private business. When our government was established there were strong sentiment from British government rule, and so the Framers believed private and public sectors should never interact. 230 years later though, the government is taking control of a private company with taxpayer money. So what if GM goes out of business. When the dot.com boom produced thousands of busts, you didn't see anyone complaining for bailout money. GM is only a business that has too many expenses, and not enough revenue. How is it that other companies are able to make so much profit in the same quarter that GM lost tons of money. Even if GM is bankrupt, the factories will be bought by other companies that will make efficient, low costs products for consumers to buy. Maybe GM should take from lessons from other car companies, and learn how to make enough revenue to cover expenses.
http://www.startribune.com/business/43762462.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
Bloomington office park draws new tenants
In the BLM complex near the Mall of America, the announcement of three new tenantse gave a positive outlook on this bleak economy. The space bought by these new tenants brought space filled to 90%, better than 85% space filled in nearby areas. Though this news lifted the hearts of many, the demand was still not great enough for more supply of space to be built. The economic downturn has shifted the equilibrium point to a decrease in GDP(space), and price level. Though demand is not great enough yet, there are plans occurring for a third building complex to be added once an upturn in the economy occurs.
In my opinion I think this shows that big name companies are starting to have a really positive outlook on the end of our current recession. Instead of saving their money, these companies are investing it into other places. This will eventually create more jobs, which will lead to a greater demand in the economy with new wages. Though the BLM complex is not filled up, it is filling at a very slow rate. Though the GDP fell 6.1%, overall our country's economy is still growing. I think that our current recession is going to end soon as banks will begin to lend soon, and let the supply of credit flow throughout the sectors of our economy.
http://www.startribune.com/business/43647352.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
In my opinion I think this shows that big name companies are starting to have a really positive outlook on the end of our current recession. Instead of saving their money, these companies are investing it into other places. This will eventually create more jobs, which will lead to a greater demand in the economy with new wages. Though the BLM complex is not filled up, it is filling at a very slow rate. Though the GDP fell 6.1%, overall our country's economy is still growing. I think that our current recession is going to end soon as banks will begin to lend soon, and let the supply of credit flow throughout the sectors of our economy.
http://www.startribune.com/business/43647352.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
Friday, April 24, 2009
Swine flu name to change
The outbreak of a newly discovered "swine flu" has been sweeping the world the past couple of weeks. It all started in Mexico, and is now spreading to other countries across the world as tourist are returning to their native countries. Though the strands are part pig, people have been trying to change the name. Why? To protects the nearly $97 billion pork industry, as the name implies this virus is transferred through the consumption of meat. Some people agree, some others. Other countries have decided to stop the importation of pork from any suppliers.
From an economic perspective this is a very good thing to do. With less free trade, countries are going to have higher prices, less GDP, and an overall lower standard of living. Production possibility curves will shrink back to what they were before free trade. This does creates some winners, but many more losers. The losers will be all of the consumers of a country, spending much more money to keep their domestic producers in business because of the increased opportunity cost. The winners will be the domestic producers. This policy is known as protectionism.
In my opinion this is a very, very good thing to do. The costs weigh out the benefits, and most people are stuck with a lower standard of living. Medical studies even prove that you cannot contract this virus through the consumption of pork, and each country should continue trading with each other.
http://apnews.myway.com/article/20090501/D97T57SG1.html
From an economic perspective this is a very good thing to do. With less free trade, countries are going to have higher prices, less GDP, and an overall lower standard of living. Production possibility curves will shrink back to what they were before free trade. This does creates some winners, but many more losers. The losers will be all of the consumers of a country, spending much more money to keep their domestic producers in business because of the increased opportunity cost. The winners will be the domestic producers. This policy is known as protectionism.
In my opinion this is a very, very good thing to do. The costs weigh out the benefits, and most people are stuck with a lower standard of living. Medical studies even prove that you cannot contract this virus through the consumption of pork, and each country should continue trading with each other.
http://apnews.myway.com/article/20090501/D97T57SG1.html
Thursday, March 19, 2009
Extraordinary Times call for Extraordinary Measures
Recently in the news was the interview of Ben Bernanke, his comments on our current economy, and of what the future economy will look like. He is currently in defense of the Fed's effort to try and contain the economic crisis and is devoted to do whatever it takes to get out of this "downward spiral". During the interview of Ben Bernanke at the National Press Club, the first time a Federal Reserve Chairman has ever spoken to journalists, he tried to lessen the concern of the dangers of printing all the money they had recently printed by backing the Fed's and expressing his trust in them to do a good job and said: “The Federal Reserve has done, and will continue to do, everything possible within the limits of its authority to assist in restoring our nation to financial stability,” (New York Times). He also focused on the rate of unemployment and how it would for sure rise this year (now at 8.1%, up from last months 7.6%). Even after these statement were said, the central bank gave a report on how the Federal Reserve "had become considerably more pessimistic" (New York Times) about our unemployment rate, which could be even higher than predicted. The Federal Reserve also came out with its predictions on economic growth for the next five years and said that it would rise about "2.5 to 2.7 percent anually" (New York Times). Another major issue Bernanke focused on was the government spending that has gone from $900 billion last September to approximately $2 trillion this year. This spending was issued to help the Financial System and improve the economy with new programs that it will issue and will hopefully not fuel inflation to rise or lose money from these risky loans.
My opinion on this matter is that Ben Bernanke has been hit with a hard and difficult crises and has a lot on his hands right now. I believe this economic crises will take a lot of work to overcome and will be a slow process to heal at best. I also think these economic recovery plans and programs will eventually work with a lot of the money being poured into them. With this government spending it will hopefully reduce unemployment and act as an Expansionary fiscal policy. This expansionary effect with a bit of luck will fuel our economy, lower taxes, and increase our demand. With the 3 basic tools our Fed uses, it would decrease the reserve requirement, decrease the discount rate, and buy more securities, so that the economy, with the increase in money supply, will soon decrease our interests rates and increase investment. Well, times call for extraordinary measures, and this is certainly one of them.
http://www.nytimes.com/2009/02/19/business/economy/19fed.html
My opinion on this matter is that Ben Bernanke has been hit with a hard and difficult crises and has a lot on his hands right now. I believe this economic crises will take a lot of work to overcome and will be a slow process to heal at best. I also think these economic recovery plans and programs will eventually work with a lot of the money being poured into them. With this government spending it will hopefully reduce unemployment and act as an Expansionary fiscal policy. This expansionary effect with a bit of luck will fuel our economy, lower taxes, and increase our demand. With the 3 basic tools our Fed uses, it would decrease the reserve requirement, decrease the discount rate, and buy more securities, so that the economy, with the increase in money supply, will soon decrease our interests rates and increase investment. Well, times call for extraordinary measures, and this is certainly one of them.
http://www.nytimes.com/2009/02/19/business/economy/19fed.html
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