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.
Monday, September 21, 2009
Israel and Iran
I just read this article on the bbc website: http://news.bbc.co.uk/2/hi/middle_east/8267189.stm , and it really struck me. I truly hope that Israel does not take any military action against Iran. As we all were made aware of this summer, the vast majority of the Iranian population is under the age of 30, and many of them are not happy with their government.
True change in Iran must come from within the country. The Iranian/Persian people have a long and proud history of open and non-repressive regimes, and I hope and believe that the past 30-odd years of this totalitarian Islamic regime is a fad. This summer the world watched as everyday Iranian men and women sacrificed their bodies and their lives in their desire to make their lives better. True, the oppressive regime did not collapse, but I belief that its pillars were shaken. True democracies are not formed instantaneously, but rather through years of strife and pain. That is why it would be a terrible idea for any military intervention from an outside force, and that is why I believe that President Obama did the right thing when he took a hesitant position towards the revolution in Iran.
The worst thing for the revolutionaries would be for America, "the great Satan," to support their movement. Any citizens of Iran who had not yet made up their mind on whom to support would be scared away from supporting the reformers.
I believe that Iran will someday very soon become a much more democratic, non-oppressive society, but that change must come from within. As I read news articles and watched reports on tv about the reform movements in Iran, I was enthralled. The base of the movement were college students. Kids my own age whom were being beaten and killed by the oppressive police force for daring to question the legitimacy of their election.
I have come to realize just how much globalization has allowed me to truly identify with these college kids on the other side of the planet. They go to college just like me, use facebook just like me, use youtube just like me, and use tweeter just as millions of Americans do. These students, who some day will become the face of the nation, are, thanks to the ever shrinking world, using the same tools and discovering the same things about life as myself. As their government tries to oppress them and restrict their usage of technology, they just find internet proxys to get around.
I firmly believe that Iran should be left alone from outside military intervention, because the current regime cannot hold itself together much longer. The populous, younger generation is able to access the rest of the world through the internet, and are able to plan opposition movements and let the world know of the injustices being done. This younger generation is more tech-savvy than their elders and can get their internet firewalls, and many of them want to be more free like America and the West. If Israel, or any other nation, decides to use military force against Iran, I believe that reform in Iran would be pushed back by years. There is change afoot in Iran, and this change should be allowed to occur naturally.
True change in Iran must come from within the country. The Iranian/Persian people have a long and proud history of open and non-repressive regimes, and I hope and believe that the past 30-odd years of this totalitarian Islamic regime is a fad. This summer the world watched as everyday Iranian men and women sacrificed their bodies and their lives in their desire to make their lives better. True, the oppressive regime did not collapse, but I belief that its pillars were shaken. True democracies are not formed instantaneously, but rather through years of strife and pain. That is why it would be a terrible idea for any military intervention from an outside force, and that is why I believe that President Obama did the right thing when he took a hesitant position towards the revolution in Iran.
The worst thing for the revolutionaries would be for America, "the great Satan," to support their movement. Any citizens of Iran who had not yet made up their mind on whom to support would be scared away from supporting the reformers.
I believe that Iran will someday very soon become a much more democratic, non-oppressive society, but that change must come from within. As I read news articles and watched reports on tv about the reform movements in Iran, I was enthralled. The base of the movement were college students. Kids my own age whom were being beaten and killed by the oppressive police force for daring to question the legitimacy of their election.
I have come to realize just how much globalization has allowed me to truly identify with these college kids on the other side of the planet. They go to college just like me, use facebook just like me, use youtube just like me, and use tweeter just as millions of Americans do. These students, who some day will become the face of the nation, are, thanks to the ever shrinking world, using the same tools and discovering the same things about life as myself. As their government tries to oppress them and restrict their usage of technology, they just find internet proxys to get around.
I firmly believe that Iran should be left alone from outside military intervention, because the current regime cannot hold itself together much longer. The populous, younger generation is able to access the rest of the world through the internet, and are able to plan opposition movements and let the world know of the injustices being done. This younger generation is more tech-savvy than their elders and can get their internet firewalls, and many of them want to be more free like America and the West. If Israel, or any other nation, decides to use military force against Iran, I believe that reform in Iran would be pushed back by years. There is change afoot in Iran, and this change should be allowed to occur naturally.
Sunday, September 13, 2009
Tire Tariffs
I am very intrigued by the new tariff issued by the United States on tire imports from China. According to the Financial Times, Barack Obama issued a new order creating a 35 per cent tariff on tire imports. Obviously this economic decision, which was issued in an attempt to spark US economic growth, specifically in the automobile industry, has far reaching political ramifications.
China’s minister of commerce, Chen Deming, stated that the tariff “send a wrong signal to the world,” and he believes that China and America should work together to combat the current world-wide economic problems. I actually agree with Deming. Even if the current increase in the number of Chinese-made tires have led to a decrease in thousands of job losses in the US auto sector, I believe that the world’s two greatest economic powers should work together to combat the current economic crisis.
I believe that this poor decision on President Obama’s part could lead to retaliation from China. The Peoples Republic of China has already stated that it would “investigate imports of US poultry and vehicles,” and if China decides to issue retaliatory economic sanctions, we could enter an economic war with America’s greatest trading partner. China has already decried the tariff as a “serious act of trade protectionism,” according to the Wall Street Journal.
The Obama administration bases the tariff on the United States International Trade Commission’s, or ITC’s findings that the Chinese export surge in the tire market is unfair, and does not follow WTO regulations, according to the Wall Street Journal. The Journal also comments how Obama’s reaction is in “stark contrast” to the way George W. Bush handled the ITC findings and recommendations, while Obama listened to the report, Bush rejected four separate calls for increase in tariffs.
I think that this tariff may help the American economy initially, and may even increase some jobs, but I think that the political ramifications may eventually harm the American political and economic scene. We do not want to get into an economic war with China, especially during a period of time when the US economy is not at its strongest, and with the dollar plunging against other currencies. Even if the tariff would give a temporary boost to the auto industry sector of the economy, personally, I do not feel that it would be worth the risk. The potential negatives from the tariff far outweigh the potential positives.
The biggest callers for the tariff were different American Trade Unions, which illustrates the view I already hold for much current day Union activity, that these Unions, rightly or wrongly, only look out for their own good, and not the good of the American economy as a whole.
I hope that this misguided tariff does not do more harm than good for the US economy, although I feel that this may be the case. Even if the surplus of low cost Chinese tires entering the market is unfair and goes against WTO regulations, I feel it would be a much better move to discuss that grievance during either the upcoming G20 meetings, or Barack Obama’s upcoming visit to China. I feel that this direct and sudden economic action will negatively affect America’s political and economic relationship with China, at a time when it would be very unfortunate to do so.
http://online.wsj.com/article/SB125283952859406521.html#mod=WSJ_hpp_MIDDLTopStories
http://www.ft.com/cms/s/0/f67c6fe6-a024-11de-b9ef-00144feabdc0.html
China’s minister of commerce, Chen Deming, stated that the tariff “send a wrong signal to the world,” and he believes that China and America should work together to combat the current world-wide economic problems. I actually agree with Deming. Even if the current increase in the number of Chinese-made tires have led to a decrease in thousands of job losses in the US auto sector, I believe that the world’s two greatest economic powers should work together to combat the current economic crisis.
I believe that this poor decision on President Obama’s part could lead to retaliation from China. The Peoples Republic of China has already stated that it would “investigate imports of US poultry and vehicles,” and if China decides to issue retaliatory economic sanctions, we could enter an economic war with America’s greatest trading partner. China has already decried the tariff as a “serious act of trade protectionism,” according to the Wall Street Journal.
The Obama administration bases the tariff on the United States International Trade Commission’s, or ITC’s findings that the Chinese export surge in the tire market is unfair, and does not follow WTO regulations, according to the Wall Street Journal. The Journal also comments how Obama’s reaction is in “stark contrast” to the way George W. Bush handled the ITC findings and recommendations, while Obama listened to the report, Bush rejected four separate calls for increase in tariffs.
I think that this tariff may help the American economy initially, and may even increase some jobs, but I think that the political ramifications may eventually harm the American political and economic scene. We do not want to get into an economic war with China, especially during a period of time when the US economy is not at its strongest, and with the dollar plunging against other currencies. Even if the tariff would give a temporary boost to the auto industry sector of the economy, personally, I do not feel that it would be worth the risk. The potential negatives from the tariff far outweigh the potential positives.
The biggest callers for the tariff were different American Trade Unions, which illustrates the view I already hold for much current day Union activity, that these Unions, rightly or wrongly, only look out for their own good, and not the good of the American economy as a whole.
I hope that this misguided tariff does not do more harm than good for the US economy, although I feel that this may be the case. Even if the surplus of low cost Chinese tires entering the market is unfair and goes against WTO regulations, I feel it would be a much better move to discuss that grievance during either the upcoming G20 meetings, or Barack Obama’s upcoming visit to China. I feel that this direct and sudden economic action will negatively affect America’s political and economic relationship with China, at a time when it would be very unfortunate to do so.
http://online.wsj.com/article/SB125283952859406521.html#mod=WSJ_hpp_MIDDLTopStories
http://www.ft.com/cms/s/0/f67c6fe6-a024-11de-b9ef-00144feabdc0.html
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