a) I think the most applicable thing I learned in this class is that the entire world is connected economically. A rise in the value of one country's currency can mean a decrease in another. Just knowing that how the way one country conducts businesses can directly cause another country to alter their policy to fit better changes the scope of how all economics should be viewed. It has caused me to look at all economic actions for a more global perspective than from the narrow United States view and I think that new outlook will benefit me especially while I am abroad.
b) I think I would like to learn more about the currency market. It is so subject to fluctuation and it is effected by so many things that I would enjoy studying all things that effect it so I could make smart financial decisions when I am outside the U.S..
c) Some advice I would give to a future student is to let yourself enjoy the course. Everything you learn in this course is valuable and interesting information and the class turns out to be quite enjoyable if you fully turn yourself over to it.
Wednesday, May 30, 2012
Tuesday, May 29, 2012
German Business Confidence Fell In May On Greek Concern
http://www.bloomberg.com/news/2012-05-24/german-business-confidence-fell-in-may-on-greek-concern.html
The Ifo Institute released its business climate index last week. It dropped from 106.9 to 109.9 in April. This drop arose as a result of Greece's cloudy future. Pundits aren't sure whether Greece will be able to remain in the euro zone. That doubt is weighing down the business prospects of the other members of the euro zone. On a positive note, the German economy continued to grow and it is a source of pride for the euro zone.
In class we've talked a lot about currency and its value in the international market. If Greece continues you to falter, the value of the euro would likely fall which could lead to a multitude of both GDP and inflation problems.
The Ifo Institute released its business climate index last week. It dropped from 106.9 to 109.9 in April. This drop arose as a result of Greece's cloudy future. Pundits aren't sure whether Greece will be able to remain in the euro zone. That doubt is weighing down the business prospects of the other members of the euro zone. On a positive note, the German economy continued to grow and it is a source of pride for the euro zone.
In class we've talked a lot about currency and its value in the international market. If Greece continues you to falter, the value of the euro would likely fall which could lead to a multitude of both GDP and inflation problems.
Tuesday, May 22, 2012
Beware of Greeks Bearing Bonds
a) pg. 4
"For most of the 1980s and 1990s, Greek interest rates had run a full 10 percent higher than German ones, as Greeks were regarded as far less likely to repay a loan. There was no consumer credit in Greece: Greeks didn’t have credit cards. Greeks didn’t usually have mortgage loans either. Of course, Greece wanted to be treated, by the financial markets, like a properly functioning Northern European country. In the late 1990s they saw their chance: get rid of their own currency and adopt the euro. To do this they needed to meet certain national targets, to prove that they were capable of good European citizenship—that they would not, in the end, run up debts that other countries in the euro area would be forced to repay. In particular they needed to show budget deficits under 3 percent of their gross domestic product, and inflation running at roughly German levels. In 2000, after a flurry of statistical manipulation, Greece hit the targets. To lower the budget deficit the Greek government moved all sorts of expenses (pensions, defense expenditures) off the books. To lower Greek inflation the government did things like freeze prices for electricity and water and other government-supplied goods, and cut taxes on gas, alcohol, and tobacco. Greek-government statisticians did things like remove (high-priced) tomatoes from the consumer price index on the day inflation was measured."
-I found this passage to be very interesting because it gave a concise description of one of the major reasons that the Greek financial system is falling to pieces. Greece wanted to be treated like a properly functioning economy, but their actions were everything a functioning company shouldn't do. This also reflects badly on the Euro zone because they did not have anybody keeping up with the Greek finances as they went along. If they had done that then Greece might never have started their poor financial practices.
b) Greece has a debt of $1.2 trillion. That is a third of Germany's, the richest European economy, GDP. That debt is four times greater than the annual GDP of Greece. That makes it impossible for Greece to ever pay off her debt. The debt then falls upon the Euro zone members to pay off. Greece's debt along with that of Spain and Italy will lower the value of the Euro in the international market and it could lead to even greater debt in the other parts of Europe.
c) GDP=Consumption + Investment + Government Spending + Exports - Imports
Cuts in government spending would directly lower the GDP and increases in taxes would decrease the amount of spending cash held by the Greek public. Lower spending cash would decrease the levels of consumption which would further lower the GDP.
Sunday, May 20, 2012
Euro zone row gets fat pay raise for German workers
http://www.reuters.com/article/2012/05/20/germany-wages-idUSL5E8GK41Z20120520
The largest industrial union in Germany, IG Metall, has negotiated a deal that will raise the wages for its members by 4.3 percent. This is the largest wage increase in the industrial arena since 1992. The wage increase comes to combat the imbalances in the euro zone that have lead to increased sovereign debt. Analysts hope that this wage increase will offset the rapidly falling wages in countries like Greece. By offsetting them it may allow Greece to remain a member of the euro zone because the euro will maintain its strength.
This is very important economically. Higher wages will mean larger consumption which will hep to increase the GDP of Germany. Also in class on Friday we talked about currencies and exchange rates and how it is beneficial to a country to have a currency with high value. Since the euro is shared by most of Europe, Germany balancing it against Greece will benefit all the countries that use the Euro.
Wednesday, May 16, 2012
How Walmart is Changing China
http://www.theatlantic.com/magazine/archive/2011/12/how-walmart-is-changing-china/8709/?single_page=true
a) "Each is not only unelected, but also anointed with quasi-cultish Big Leader status to reign over a fundamentally authoritarian organization held together by an elaborate belief system or ideology bordering on the religious. And each presides over an enormous and complex apparat staffed by a professionalized core of operatives—namely, Party leaders and cadres in China, and senior executives and mid-level managers at Walmart."
-I thought that this package was very interesting because it shows how similar large companies can be to countries. The similarity arises because companies can command massive funds, have an ideological mission, and provide support for millions of people. I think this passage illustrates how leading such a company can lead to iconic status, similar to how Steve Jobs is viewed by some groups of people.
b) -There are 30,000 factories in china that produce goods for Walmart. This is bringing in money from other countries which will lead to an increased GDP for China thus driving the economy.
-Walmart and China both had desires to become greener. They helped work together to increase sustainability and to move both of their cultures towards protecting the earth more.
c) Multinational firms can cause wide spread change in both cultures and economies. The large amounts of money that one firm handles can be enough to sway the overall GDP of a country by driving up consumption and investment. They also influence culture by creating trends and fads. Nike alone has revolutionized the type of shoes worn by the youth of the United States and it continues to dictate what people where through using famous athletes as spokespeople. Apple revolutionized the American economy and culture when they introduced the IPod which shifted music from cd format to digital and it allowed everyone to listen to music on the go.
a) "Each is not only unelected, but also anointed with quasi-cultish Big Leader status to reign over a fundamentally authoritarian organization held together by an elaborate belief system or ideology bordering on the religious. And each presides over an enormous and complex apparat staffed by a professionalized core of operatives—namely, Party leaders and cadres in China, and senior executives and mid-level managers at Walmart."
-I thought that this package was very interesting because it shows how similar large companies can be to countries. The similarity arises because companies can command massive funds, have an ideological mission, and provide support for millions of people. I think this passage illustrates how leading such a company can lead to iconic status, similar to how Steve Jobs is viewed by some groups of people.
b) -There are 30,000 factories in china that produce goods for Walmart. This is bringing in money from other countries which will lead to an increased GDP for China thus driving the economy.
-Walmart and China both had desires to become greener. They helped work together to increase sustainability and to move both of their cultures towards protecting the earth more.
c) Multinational firms can cause wide spread change in both cultures and economies. The large amounts of money that one firm handles can be enough to sway the overall GDP of a country by driving up consumption and investment. They also influence culture by creating trends and fads. Nike alone has revolutionized the type of shoes worn by the youth of the United States and it continues to dictate what people where through using famous athletes as spokespeople. Apple revolutionized the American economy and culture when they introduced the IPod which shifted music from cd format to digital and it allowed everyone to listen to music on the go.
Sunday, May 13, 2012
German Economy Driving European Growth in Business Services
http://www.sacbee.com/2012/05/13/4486644/german-economy-driving-european.html
German-speaking markets for business services still manage to grow despite the global market dropping over 20 percent in the first quarter of this year. This may be partly because in this time of uncertainty for the European economy investors are looking for a safe place for their money and Germany seems to be providing that. German industry is still growing and that is driving up the number of lucrative investment opportunities.
In class we talked a lot about GDP. Investment is a large part of the gross domestic product and the German economy is providing plenty of opportunity for that which will grow the GDP while the GDP's of the rest of Europe continue to falter.
German-speaking markets for business services still manage to grow despite the global market dropping over 20 percent in the first quarter of this year. This may be partly because in this time of uncertainty for the European economy investors are looking for a safe place for their money and Germany seems to be providing that. German industry is still growing and that is driving up the number of lucrative investment opportunities.
In class we talked a lot about GDP. Investment is a large part of the gross domestic product and the German economy is providing plenty of opportunity for that which will grow the GDP while the GDP's of the rest of Europe continue to falter.
Friday, May 11, 2012
German auto sales
Germany would be an ideal country to sell both the sedans and limousines in. However, the income is too high to make scooters a desirable product. Germany has a lot of paved roads and a large amount of drivers that would provide a good market for the sedans. Germany is also home to many CNN 500 companies and it his the home country of many millionaires and billionaires that could buy lots of limousines for personal and business use. Germany also has a good existing import infrastructure that is ready for the extra containers being brought in. They would most likely enter into the Port of Hamburg and then would be shipped via train to the destinations. As far as setting up the business, the rules and process in Germany would be very friendly to new businesses and there should not be much trouble. Germany is a good choice.
Wednesday, May 9, 2012
Reinventing the Bazaar
a) p.44 "Two kinds of market frictions arise from the uneven supply of information. There are search costs: the time, effort, and money spent learning what is available where for how much. And there are evaluation costs, arising from the difficulties buyers have in assessing quality. A successful market has mechanisms that hold down the costs of transacting that come from the dispersion of information."
-I really liked this passage, especially retrospectively because it gave a good summary of the main point of the readings. It takes a very general explanation of why the bazaars don't act to benefit the consumer without actually mentioning the bazaar.
b) Transaction costs refer the extra costs that can't be seen in the purchase price. Things like search costs and traveling costs that can't be directly seen in the actual purchase price.
-You hear about a store 50 miles from home that's selling a t.v. for $150. Your local store that's one mile away sells the same t.v. for $175. You decide to take two hours off of work from your job where you make $15 an hour to get the distant t.v.. It costs you $10 in gasoline. So you have $40 in transaction costs to save $25, but those $40 are not seen in the cost of the t.v. because they are transaction costs.
c) Imperfect information will lead to prices that are different from from the equilibrium price. Uninformed sellers might not realize that customers are willing to pay $10 for something they sell at $5. It could also benefit them by allowing customers to buy their item for $5 while others sell it for $1. It could hurt customers in the same way, lack of information raises transaction costs for customers and it could cause them to overpay for goods because they don't know where the lowest prices are.
-I really liked this passage, especially retrospectively because it gave a good summary of the main point of the readings. It takes a very general explanation of why the bazaars don't act to benefit the consumer without actually mentioning the bazaar.
b) Transaction costs refer the extra costs that can't be seen in the purchase price. Things like search costs and traveling costs that can't be directly seen in the actual purchase price.
-You hear about a store 50 miles from home that's selling a t.v. for $150. Your local store that's one mile away sells the same t.v. for $175. You decide to take two hours off of work from your job where you make $15 an hour to get the distant t.v.. It costs you $10 in gasoline. So you have $40 in transaction costs to save $25, but those $40 are not seen in the cost of the t.v. because they are transaction costs.
c) Imperfect information will lead to prices that are different from from the equilibrium price. Uninformed sellers might not realize that customers are willing to pay $10 for something they sell at $5. It could also benefit them by allowing customers to buy their item for $5 while others sell it for $1. It could hurt customers in the same way, lack of information raises transaction costs for customers and it could cause them to overpay for goods because they don't know where the lowest prices are.
Friday, May 4, 2012
A Fez of the Heart
a) pg. 11
"Not that you would have guessed by the 1990s, when Pomegranate had traveled so far toward a European ideal, modern and liberal, that the old names had fallen away, such associations with the past no longer sustainable, terminally broken by the sheer weight of Naf-Naf and fried squit."
-I chose this passage because to me this was most representative of the reading. It concisely describes the transition experienced by Pomegranate, from traditional Muslim to modern European chic. You can tell just from this one sentence that the modern Pomegranate holds no similarity to the Pomegranate of the past and that alteration is due to new economic and cultural influx.
b)
-when tourists first began going to Pomegranate, people tended to let them stay in their homes for free because hospitality was just part of their way of life, but people soon realized that they could make money by charging the tourists for things and the tourists didn't mind paying. Thus the traditional hospitality made way for modern economic opportunity
-the residents of Pomegranate stoned people that dared wear bikinis inside town because that was against traditional Muslim rules, but when the residents realized the economic girth of these scantily-clad Europeans they became more than willing to accept the sight of their skin and even encourage it
-the restaurant host as forced to wear a fez because it was good for business. They were making a mockery of the old Turkish garb, despite its lack of legality, for the chance to increase their profit margin
c)
-The leading tourist destination in Germany is Berlin. People go to Berlin because it is the largest city in Germany and has been such an important site in German history and is still considered one of the nicest and most modern cities in the world.
-Another destination for tourists is the Auschwitz Concentration Camp, people tend to go there to honor those who were unjustly murdered there and to help remember what can happen if the wrong people are in power.
-Another major destination is Dresden. It is called the "Florence on the Elbe" due to its sheer beauty. It is widely considered to be the most beautiful city in Central Europe and that's despite being almost entirely destroyed during World War II.
"Not that you would have guessed by the 1990s, when Pomegranate had traveled so far toward a European ideal, modern and liberal, that the old names had fallen away, such associations with the past no longer sustainable, terminally broken by the sheer weight of Naf-Naf and fried squit."
-I chose this passage because to me this was most representative of the reading. It concisely describes the transition experienced by Pomegranate, from traditional Muslim to modern European chic. You can tell just from this one sentence that the modern Pomegranate holds no similarity to the Pomegranate of the past and that alteration is due to new economic and cultural influx.
b)
-when tourists first began going to Pomegranate, people tended to let them stay in their homes for free because hospitality was just part of their way of life, but people soon realized that they could make money by charging the tourists for things and the tourists didn't mind paying. Thus the traditional hospitality made way for modern economic opportunity
-the residents of Pomegranate stoned people that dared wear bikinis inside town because that was against traditional Muslim rules, but when the residents realized the economic girth of these scantily-clad Europeans they became more than willing to accept the sight of their skin and even encourage it
-the restaurant host as forced to wear a fez because it was good for business. They were making a mockery of the old Turkish garb, despite its lack of legality, for the chance to increase their profit margin
c)
-The leading tourist destination in Germany is Berlin. People go to Berlin because it is the largest city in Germany and has been such an important site in German history and is still considered one of the nicest and most modern cities in the world.
-Another destination for tourists is the Auschwitz Concentration Camp, people tend to go there to honor those who were unjustly murdered there and to help remember what can happen if the wrong people are in power.
-Another major destination is Dresden. It is called the "Florence on the Elbe" due to its sheer beauty. It is widely considered to be the most beautiful city in Central Europe and that's despite being almost entirely destroyed during World War II.
Wednesday, May 2, 2012
German unemployment falls
http://www.seattlepi.com/business/article/German-unemployment-down-to-7-percent-3526574.php
German unemployment has reached its lowest April number in the past 20 years. It dropped .2% from the March figure of 7.2% to 7%. The German labor agency claims that the credit for this wonderful employment spike can be given to the traditional springtime job spurt and the overall strength of the German national economy. This unemployment rate means that there is now less than 3 million unemployed Germans. Germany has had the strongest economy in the Eurozone and has experienced economic growth in the past two years. The unemployment rate is an indicator of Germany's economic strength relative to the Eurozone, Germany's 7% compared to the Eurozone's 10.9%. The German labor agency has calculated that with the burgeoning German economy, unemployment levels will continue to fall.
Lowering unemployment can be very beneficial to a country's GDP. In the traditional GDP = Consumption + Investment + Gov't Spending + Exports - Imports, lower unemployment means that more people are collecting money and there will be increased levels of consumption which will drive up the GDP
German unemployment has reached its lowest April number in the past 20 years. It dropped .2% from the March figure of 7.2% to 7%. The German labor agency claims that the credit for this wonderful employment spike can be given to the traditional springtime job spurt and the overall strength of the German national economy. This unemployment rate means that there is now less than 3 million unemployed Germans. Germany has had the strongest economy in the Eurozone and has experienced economic growth in the past two years. The unemployment rate is an indicator of Germany's economic strength relative to the Eurozone, Germany's 7% compared to the Eurozone's 10.9%. The German labor agency has calculated that with the burgeoning German economy, unemployment levels will continue to fall.
Lowering unemployment can be very beneficial to a country's GDP. In the traditional GDP = Consumption + Investment + Gov't Spending + Exports - Imports, lower unemployment means that more people are collecting money and there will be increased levels of consumption which will drive up the GDP
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