According to This article from Bloomberg, Pakistani military forces have been on a role recently, destroying a significant portion of Taliban fighters in the area. With all the negative news concerning the tide of the war in Afghanistan, its good to see that our Pakistani allies, whom I will admit, I was quite skeptical about, seem to be doing a pretty successful job at eliminating Taliban forces in Pakistan. According to the article, this fighting has taken part in a semi-autonomous zone within Pakistan, and I believe that it is a good sign that the Pakistani government has taken responsibility for the Taliban in the area.
At the same time, Gordon Brown has apparently blasted Pakistan for not yet finding Bin Laden, according to this article from the Sun(I know, I know, not exactly the most reputable website. I think Pakistan has done a remarkably better job than it has been doing previously, and that they are in a tough position, as they have to juggle siding with the "hated" US and Western Europe, and keeping their fundamental Islamic citizens happy. Pakistan has to balance relations with Western society and developing Islamic nations as well, and that is not a job I am jealous of.
In related news, according Barack Obama has, after months of indecision, decided to send 2 brigades, totaling 30,000 troops, to Afghanistan. I feel that this is a necessary and correct decision, even if I feel Obama took a little too long in making the decision. We cannot stand to lose the war in Afghanistan, and with all of the focus on Iraq, the Taliban has gained the upper hand. We need to ensure that the new government established in Afghanistan remains intact.
Monday, November 30, 2009
Wednesday, November 4, 2009
India dumps bllions of US dollars for gold
According to this link here India has dumped 6.7 billion US dollars it had in its reserve in exchange for 200 tons of gold. India bought the gold from the IMF, and stated how the European and United States' economies had "collapsed", and how this move proves how strong the Indian economy is. This clearly relates to some of the issues we have talked about in class, namely how many countries, especially developing ones in Asia are trying to move away from the dollar.
The value of gold has also skyrocketed to new heights. This makes me wonder if possibly that investments in gold may be the next bubble. I feel like people who invest in gold are fearful over the state of the economy, and thus, when fear subsides, the price of gold is going to drop significantly. I think that India is going to regret buying so much gold at such a high price.
I do think that this might actually be good for the economy in the long run, because the IMF was willing to accept those US dollars in exchange for their gold. I wonder if the IMF still has the 6.7 billion US dollars, or if it has been passed on elsewhere.
The value of gold has also skyrocketed to new heights. This makes me wonder if possibly that investments in gold may be the next bubble. I feel like people who invest in gold are fearful over the state of the economy, and thus, when fear subsides, the price of gold is going to drop significantly. I think that India is going to regret buying so much gold at such a high price.
I do think that this might actually be good for the economy in the long run, because the IMF was willing to accept those US dollars in exchange for their gold. I wonder if the IMF still has the 6.7 billion US dollars, or if it has been passed on elsewhere.
Monday, November 2, 2009
Paul Krugman’s book, The Return of Depression Economics and the Crisis of 2008 is a well-written and thoughtful book relating our current economic crisis to those of the past.
Krugman comments that our current economic crisis is “like everything we’ve seen before, all at once: a bursting real estate bubble comparable to what happened in Japan […] a wave of bank runs comparable to those of the early 1930s, a liquidity trap in the United States, again reminiscent of Japan; and, most recently, a disruption of international capital flows and a wave of currency crises all too reminiscent of what happened to Asia in the late 1990s” (165). I agree with his comments here, as it appears that we can in fact relate our current crisis to those that have befallen the world in the past. History, it is said, does repeat itself.
The Nobel Prize winning economist includes a flowchart in his book detailing what he refers to as “the vicious cycle of financial crisis” (Krugman 90). This chart has three separate sections that are dependent on each other. The first part is the loss of consumer confidence, which leads to the second part, a slumping economy and that culminates in financial problems for companies, banks and household, before leading back to additional loss of consumer confidence. I agree with Krugman’s assessment of said vicious cycle, but I think, more often than not, it does not start at the first part, the loss of consumer confidence, but rather at other parts of the cycle.
Krugman believes that a loss of consumer confidence is typically best displayed in an economic panic, or a sudden fear of economic downfall, which leads to falling stock prices and potential bank runs. According to Krugman, there are two types of economic panics; the first type of panic is “an irrational reaction on the part of investors that is not justified by the actual news” (Krugman 89), which Krugman feels is best emphasized by the temporary fall of the dollar in 1981 after President Ronald Reagan was wounded by a gunmen in an assassination attempt. Because the assassination attempt had nothing to do with the economic state of America, the dollar quickly stabilized. This kind of panic is not permanent, because it is unfounded and often has nothing to do with the real state of the economy.
According to Krugman, the other kind of financial panic is the kind that beset Thailand in 1997. This kind of panic becomes validated after it ensues because “the panic itself makes panic justified” (Krugman 89). It occurs when an initial panic drives an economy into a weaker state, thus ensuring more panicking. Such a panic fell upon Thailand because of the weakness of its neighboring nations; “the currency of its neighbor Malaysia had […] been battered, and the Indonesian rupiah had depreciated about 30%” (Krugman 92). Typically, investors figure that one nation starts to economically suffer; its neighboring countries will follow in its footsteps. “It did not matter that [the economies of Thailand and its neighbors] were only modestly linked in terms of physical flows of goods. They were linked in the minds of investors, who regarded the troubles of one Asian economy as bad news about the others; and when an economy is vulnerable to self-validating panic, believing makes it so” (Krugman 94).
While I agree with Krugman’s point that our current financial crisis is similar to others that have occurred in the past, as well as his belief in the vicious cycle of financial crisis, I disagree with his idea that there are only two types of financial panics, the irrational reaction, and the self-fulfilling panic. I think that the current economic panic is neither of those two. Sure, the panic may have been deepened by the earliest panicers, however, what really caused the panic, and the bursting of the bubble, was severe problems in the economic system. Buyers and sellers relied too much on credit, and when banks made too many bad loans, the unpaid loans amounted to large enough sums to kill banks and require government bailouts. It appears to me that the start of our current financial crisis was not poor consumer confidence, rather it was the third part of the vicious cycle, financial problems for companies, banks, and households, due in large part to both the credit crunch and the housing bubble, that led back to a lack of consumer confidence, and then towards the slumping economy, and then back to even more financial problems for companies, banks and household, thus continuing said vicious cycle.
Krugman recommends that we get credit flowing and that we prop up spending in order to ease the affects of the recession, and start to edge out of it. While I agree with Krugman, we must realize that flowing credit is what got us into this mess. It is not a simple case of unsubstantiated consumer fear; too many people took out far more credit than they should. We should only start to get more credit flowing if we can somehow ensure that people only spend as much on credit as they can pay back, or else we will enter another credit bubble. I also think that we must understand where we put our government spending. We should only put it into places that can help the economy the most, not just pork and unnecessary projects, such as what has been included in the stimulus bills passed by Congress. Krugman has some good ideas relating about how we got into our current financial mess, and how to get out of it, but we must take his ideas with a grain of salt, and apply reason to his remarks.
Krugman comments that our current economic crisis is “like everything we’ve seen before, all at once: a bursting real estate bubble comparable to what happened in Japan […] a wave of bank runs comparable to those of the early 1930s, a liquidity trap in the United States, again reminiscent of Japan; and, most recently, a disruption of international capital flows and a wave of currency crises all too reminiscent of what happened to Asia in the late 1990s” (165). I agree with his comments here, as it appears that we can in fact relate our current crisis to those that have befallen the world in the past. History, it is said, does repeat itself.
The Nobel Prize winning economist includes a flowchart in his book detailing what he refers to as “the vicious cycle of financial crisis” (Krugman 90). This chart has three separate sections that are dependent on each other. The first part is the loss of consumer confidence, which leads to the second part, a slumping economy and that culminates in financial problems for companies, banks and household, before leading back to additional loss of consumer confidence. I agree with Krugman’s assessment of said vicious cycle, but I think, more often than not, it does not start at the first part, the loss of consumer confidence, but rather at other parts of the cycle.
Krugman believes that a loss of consumer confidence is typically best displayed in an economic panic, or a sudden fear of economic downfall, which leads to falling stock prices and potential bank runs. According to Krugman, there are two types of economic panics; the first type of panic is “an irrational reaction on the part of investors that is not justified by the actual news” (Krugman 89), which Krugman feels is best emphasized by the temporary fall of the dollar in 1981 after President Ronald Reagan was wounded by a gunmen in an assassination attempt. Because the assassination attempt had nothing to do with the economic state of America, the dollar quickly stabilized. This kind of panic is not permanent, because it is unfounded and often has nothing to do with the real state of the economy.
According to Krugman, the other kind of financial panic is the kind that beset Thailand in 1997. This kind of panic becomes validated after it ensues because “the panic itself makes panic justified” (Krugman 89). It occurs when an initial panic drives an economy into a weaker state, thus ensuring more panicking. Such a panic fell upon Thailand because of the weakness of its neighboring nations; “the currency of its neighbor Malaysia had […] been battered, and the Indonesian rupiah had depreciated about 30%” (Krugman 92). Typically, investors figure that one nation starts to economically suffer; its neighboring countries will follow in its footsteps. “It did not matter that [the economies of Thailand and its neighbors] were only modestly linked in terms of physical flows of goods. They were linked in the minds of investors, who regarded the troubles of one Asian economy as bad news about the others; and when an economy is vulnerable to self-validating panic, believing makes it so” (Krugman 94).
While I agree with Krugman’s point that our current financial crisis is similar to others that have occurred in the past, as well as his belief in the vicious cycle of financial crisis, I disagree with his idea that there are only two types of financial panics, the irrational reaction, and the self-fulfilling panic. I think that the current economic panic is neither of those two. Sure, the panic may have been deepened by the earliest panicers, however, what really caused the panic, and the bursting of the bubble, was severe problems in the economic system. Buyers and sellers relied too much on credit, and when banks made too many bad loans, the unpaid loans amounted to large enough sums to kill banks and require government bailouts. It appears to me that the start of our current financial crisis was not poor consumer confidence, rather it was the third part of the vicious cycle, financial problems for companies, banks, and households, due in large part to both the credit crunch and the housing bubble, that led back to a lack of consumer confidence, and then towards the slumping economy, and then back to even more financial problems for companies, banks and household, thus continuing said vicious cycle.
Krugman recommends that we get credit flowing and that we prop up spending in order to ease the affects of the recession, and start to edge out of it. While I agree with Krugman, we must realize that flowing credit is what got us into this mess. It is not a simple case of unsubstantiated consumer fear; too many people took out far more credit than they should. We should only start to get more credit flowing if we can somehow ensure that people only spend as much on credit as they can pay back, or else we will enter another credit bubble. I also think that we must understand where we put our government spending. We should only put it into places that can help the economy the most, not just pork and unnecessary projects, such as what has been included in the stimulus bills passed by Congress. Krugman has some good ideas relating about how we got into our current financial mess, and how to get out of it, but we must take his ideas with a grain of salt, and apply reason to his remarks.
South Park takes on Japan and Greenpeace.
I found this quite fitting, as our class's G20 meeting is tomorrow, and I am representing Japan. Link
Monday, October 12, 2009
Swiss neutrality taking a hit?
The Wall Street Journal posted an interesting article here about what some would say are recent lapses in neutrality by the Swiss government.
The Swiss have had a tradition of neutrality for centuries, which is why all the Swiss banks, most notably the UBS, is so famous for its secrecy. However, it seems that President Obama and the US government are trying to through centuries of tradition of another nation down the toilet.
For the record, I have no illegal Swiss bank accounts, however, I still disagree with the US government's actions a couple months ago of in essence forcing the Swiss banks, notably UBS again, to hand over the names of the US citizens who had bank accounts there. It should be irrelevant that these Americans were breaking US law, they were not breaking Swiss law. And the US government's decision to force individual companies from other nations to comply with President Obama's demands seem to be a very ill-advised move.
President Obama criticized President Bush for taking too much of a go-at-it-alone approach, and his criticism has merit, however this forccing of the Swiss banks to reveal some of their accounts is just as much a brazen, "I'm bigger than you and dont care what you think" approach.
Switzerland's attempts to remain neutral, and act as a mediator between conflicting nations is rather admirable, but if Switzerland is seen as a lackey of America, its important role of mediator in the world would likely be diminished. The Swiss have a history of brokering peace, as the multiple Geneva Conventions point out, as well as the numerous pro-humanity organizations that call Geneva home. I feel that any attempts by America to use its influence to force the Swiss government to act in any certain way could have potential negative consequences for the world at large.
The Swiss have had a tradition of neutrality for centuries, which is why all the Swiss banks, most notably the UBS, is so famous for its secrecy. However, it seems that President Obama and the US government are trying to through centuries of tradition of another nation down the toilet.
For the record, I have no illegal Swiss bank accounts, however, I still disagree with the US government's actions a couple months ago of in essence forcing the Swiss banks, notably UBS again, to hand over the names of the US citizens who had bank accounts there. It should be irrelevant that these Americans were breaking US law, they were not breaking Swiss law. And the US government's decision to force individual companies from other nations to comply with President Obama's demands seem to be a very ill-advised move.
President Obama criticized President Bush for taking too much of a go-at-it-alone approach, and his criticism has merit, however this forccing of the Swiss banks to reveal some of their accounts is just as much a brazen, "I'm bigger than you and dont care what you think" approach.
Switzerland's attempts to remain neutral, and act as a mediator between conflicting nations is rather admirable, but if Switzerland is seen as a lackey of America, its important role of mediator in the world would likely be diminished. The Swiss have a history of brokering peace, as the multiple Geneva Conventions point out, as well as the numerous pro-humanity organizations that call Geneva home. I feel that any attempts by America to use its influence to force the Swiss government to act in any certain way could have potential negative consequences for the world at large.
Tuesday, September 29, 2009
This seems like an odd thing to do...
http://www.google.com/hostednews/afp/article/ALeqM5hUZamhqvPGVrYZpGq_clUpC7dAUg Apparently the Empire State Building will light up red and yellow in honor of the 60th anniversary of communist China. I'm a little confused as to why. Maybe we are trying to play nice after the whole "tariff on tires" thing.
Monday, September 28, 2009
Coup at UN?
I found this Onion video very hilarious. And,like all good satire, I believe that it highlights some very important points. The UN has become more-or-less irrelevant in today's world. I think that the most important step in this, is , as Singer pointed out in One World, when President Bush completely disregarded all UN rules and protocols and invaded Iraq. I was one of the people who thought the invasion of Iraq was a idea was good at the time, but looking back, I have, through some Monday-morning quarterbacking or course, come to re-evaluate my decision.
Anyway, I believe that organizations like the G20, with their recent meeting in Pittsburgh, and the G8 are taking over the power and authority that the UN lost. We will see how all this plays out in the future, but I do not think one international organization will hold the majority of the international law-making and protocol-issuing power, but that it will be split among different organizations such as the G20, G8, the World Bank, and the IMF, at least for the immediate future.
Anyway, I believe that organizations like the G20, with their recent meeting in Pittsburgh, and the G8 are taking over the power and authority that the UN lost. We will see how all this plays out in the future, but I do not think one international organization will hold the majority of the international law-making and protocol-issuing power, but that it will be split among different organizations such as the G20, G8, the World Bank, and the IMF, at least for the immediate future.
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