Dollar PanicPost a link to an article relating to the topics we're studying this unit. Include a short summary and analysis of how the article relates to the topics we're studying in class.
DrewVenkatraman: Oil spikes to record prices
Oil has soared to new inflationary prices. This supply shock would shift the whole phillips curve to the right, increasing both inflation and unemployment."Oil prices spiked to a record $117.40 a barrel after a Japanese oil tanker was hit by a rocket near Yemen and militants in Nigeria claimed two attacks on pipelines." This has severly affected the world market and the U.S. economy
Mina Song : Greek January unemployment at 8 pct, down from 8.9 pct in December
This article is exactly what we were studying through this chapter. In Greek, the umemployment rate increase. and its GDP increase but higher inflation, higher increase in interest rate causes the financial crisis.

Howard Jing: Gasoline sets a new record
Average gas prices have risen again to an average of $3.365 per gallon in the United States. They have increased 19.9% from last year, when it was$3.365 a gallon. Oil prices have reached a new high as well, now at $112 per gallon. Because of this, companies that rely on fuel and oil to produce their products are facing rising production costs (cost push inflation). This means that the government can either try to stimulate aggregate demand to boost production and face increasing inflation, or they can leave the economy alone and hope for nominal wages to fall back down to a low enough level to shift aggregate supply to its original location. A third option is to research alternative fuel sources and hope that it becomes efficient enough to serve as a substitute for oil.

Jonathan Lau: Dollar falls below 7 yuan for first time since 1993
The dollar slipped below 7 yuan for the first time in over a decade. The fast appreciation of the yuan is partly due to the weakness of the dollar and partly due to diplomatic pressure by China's major trading partners for faster appreciation to cut the huge Chinese trade surplus. The central bank of China declared for the first time that it would use the exchange rate actively to fight inflation, which hit an 11-year high of 8.7 percent. Yuan appreciation has become especially important to restrain inflation since the start of this year as the central bank has partially loosened domestic monetary policy. Yuan appreciation is expected to slow in the second half of the year as inflation eases.

Judy Chen: Deflation is worrying the Japanese authorities as much as inflation
Unlike most of countries in the world now, Japanese is worrying about deflation which is completely different from what United States and China is worrying now. Even the higher prices for energies, the Japanese hit its highest inflation of 1 percent in decades, which is still much lower than China and United States. Some companies even take advantages to rise products' prices while wages stay same.

Rebecca Sung: IMF head warns about food prices
This article talks about the inflamed food prices causing many dire consequences in developing countries. Inflation can also lead to imbalanced trade. Since "richer countries" are demanding a lot of biofuel, food prices are increasing rapidly which causes many people to not afford food in countries like Africa, where children are starving and malnourished. "Richer countries" are also cutting aid programs which is definitely not helping the situation. A proposition to help the situation was IMF reform by giving developing countries with rapidly growing economies like China more say in the operations of IMF. By doing this, the IMF head said it "will strengthen the fund's role in promoting financial stability and international monetary cooperation."

James Tsao: A Second Great Depression?
In this article from Forbes Magazine, Oxford Analytica examines the similarities of the current economy to the economy in the 1930s during the Great Depression. Factors include credit flows, asset prices, asset locus, and boom/bust cycles. Fortunately, the article also outlines certain weaknesses of the Fed's monetary policies that no longer exists today, in addtion to a couple of other distinct factors that draw differences between the U.S economy of the 1930s and the U.S economy nowadays.

Alex Goldman: World Finance Leaders Tackle Bank Reform
This article discusses how "world financial leaders facing the gravest economic crisis in at least a decade are pledging tighter control of banks and other financial institutions." They are doing this because of the severe credit crisis, which is predicted to cost over one trillion dollars by the tim eis it is over. The damage in US economic growth is being caused by the weak housing market, together with high energy prices and stress in financial markets. Although the credit issue is in America, many other coutnries are concerned because the U.S.'s economy affects theirs.


Angel Liu: The Bust Begins
Halifax, a part of Britain's HBOs revealed that British house price fell by 2.5%--the lowest since 1992. Previous downs in the housing market dragged economic growth to new low. In 2005, there wasa drop in house price and household spending rose only 1.5%--also a record low since 1992. Many Britains can also look oversea to the American economy, where the burst in the housing market led to the crumpling of the US economy. Today, the British economy might face similar fate as its brother.

Jack Lo: A Political Comeback - Supply Side Economics
A Political Comeback: Supply-Side EconomicsSince President Reagan's tax cuts in the 1980s, supply-side economics has become the "central tenet of Republican political and economic thinking". They argue that people will have more incentive to work if taxes are reduced. A spouse might pick up a new job, for example. As a result, tax revenue might actually INCREASE even though the tax rates are cut. According to Robert Solow, a Nobel laureate in economics who worked in the Kennedy administration, the supply side argument is mostly used to appeal to the upper-income level. "They are protrayed as the golden geese, and you don't want to discourage them from laying their eggs", he says, "but the Democrats are convinced they'll lay their eggs anyways, without tax cuts as an incentive."


Jo Lo: How Hunger Could Topple Regimes
Haiti is in flames as food riots have turned into; Egypt's authoritarian regime faces a mounting political threat over its inaba violent challenge to the vulnerable governmentility to maintain a steady supply of heavily subsidized bread to its impoverished citizens; Cote D'Ivoire, Cameroon, Mozambique, Uzbekistan, Yemen and Indonesia are among the countries that have recently seen violent food riots or demonstrations. World Bank president Robert Zoellick noted last week that world food prices had risen 80% over the past three years, and warned that at least 33 countries face social unrest as a result.

Jessica Ng: Sweet and Sour Pork
This article discusses whether the huge inflation in China is driven by the supply of meat or money, in other words, to what degree should monetary policies in China be tightened in order to combat inflation? Many believe that the inflation due to food prices will be tamed this year, thus there is no need for a serious in interest rates. Some policy makers argue that in fact, a contractionary monetary policy that results in higher interest rates will have a reverse effect. If China raised interest rates at the same time as America is cutting them, this would attract bigger capital inflows into China and the extra liquidity could actually worsen inflationary pressures. China already has an excess surplus of money; the money supply is out of control, and it is part of the blame for the rising inflation in China.

Jacques Zhang: World Fertilizer Prices Surge 200%
Energy prices soar, the oil resources are now low and diminishing still. Oil prices have hit record-highs, and the world is looking at alternative methods of producing energy to sustain our everyday lives. The world turns to corn and other crop-based energy, provided by farmers around the world. The increase in the demand for corn and other crops increases the demand for fertlizers, which have now hit a record-high in cost.

Jessica Chiang: Education May Not Be the Answer
As we all know, education and training increases productivity. Bush, along with the Chairman of the Fed, Greenspan, is enthusiastic about increasing education; he has even proposed to increase funding for community colleges across the nation. However, some economists argue that there are many educated Americans who still have low-paying jobs. Others have simply "given up" and say that maybe people should just learn to accept lower wage rates.

Kevin Huang: Analysts See 200,000 Banking Industry Layoffs
Wow.... And that is only in the banking industry. Think of the amount of unemployment there will be in according to analysts the next 12-18 months. This 200,000 is out of 2 million jobs in the banking industry and that is equivalent to an unemployment rate of about 10%. Amazing how powerful of an effect housing prices can be on other parts of the economy.

Michael Daily: Inflation Down in Venezuela
With so much going on in the news right now about the increasing inflation in the U.S., China, and many other countries in the world, I thought I would find a happier article. This article talks about how inflation in Venezuela is decreading while employment remains stable and the country is experiencing economic growth. The country has been successful in now experiencing 17 consecutive trimesters of growth, primarily in the private sector. The prime minister has worked hard to maintain a policywith the intention of stimulating investment and achieving full industrial capacity in the country.

Yun Qi Mok: Rights and wrongs
"THE story of global banking in the past year has been one of riches to rags." Interesting, considering how banking has always been a prestigious job, and where one can go from rags to riches. With the decline in the US economy, banking has become one of the industries more affected, because it relies on the faith of the people that the economy will not plummet. Once people panic and wish to withdraw their money, banks will collapse as they do not have the amount of liquid cash necessary. In fact, it is even debateable whether or not the intervention by the Fed with their direct injection of money into the system will be good or bad for the banks, since inflation might soar even higher. Read on to find out.

Elaine Lung: Middle East inflation soars
As most of us know, the value of the dollar has been declining for quite some time now. Currencies in the Middle East, dependent on the US dollar, originally enjoyed the benefits of being tied to the dollar -- relative stability, value, etc. -- but are now being hit hard by its instability and the subsequent rising prices. Not only has the cost of living increased twofold in the region, but the cost of food has also risen worldwide. While the US has the Federal Reserve Bank to help with inflation problems, the Middle East lacks such a body. The available options to deal with the inflation appear to be revaluation, which risks creating expectations for future revaluations and which could potentially lead to economic instability,and subsidies on staple goods.

Helen Chu: Inflation is Asia's Biggest Risk, Says ADB
This article analyzes the different types of inflation problems in Asian countries. In India (and most other South Asia countries), government subsidies are dampening the impact of inflation and now "inflationary pressures are grossly under the table". China's main problem is to rein in the high inflation while avoiding hampering the economy too much. The ADB (Asian Development Bank) concludes that Asian governments need introduce a "blend of monetary and fiscal tightening" in order to bring inflation under control.

Kristie Chung: 80,000 Jobs Lost. Unemployment Peaks.
The unemployment rate rises in the United States: it increased from 4.8% to 5.1% in February. In the Labor Department's report released recently, it showed that there is a net loss of 80,000 jobs in March. It was the third month in a row that jobs have decreased: In January and February, 76,000 jobs were lost in each of the two months. In total, the Labor Department estimates that the economy has lost 232,000 jobs within the first three months of 2008. Job losses were seen in different sectors: retail employment, business and professional services, manufacturing employment and construction sector. Economists believe that given the current problems in the economy, it is unlikely that jobs will be picked-up. Some even believe that the job losses will continue to increase.

Michael Chow: Rising inflation puts dent in consumer confidence
CHINA'S consumer confidence dropped in the first quarter of this year as higher inflation lowered people's expectations of continued economic growth. The Consumer Confidence Index hit 94.8 in the first three months of this year, down 1.7 points from the fourth quarter of last year, the National Bureau of Statistics said. The business confidence index remained in the ''prosperous'' category as it hit 140.6 in the first three months of this year. It was a rise from 139.6 in the previous three-month period.

Andy Xu: The Great American Showdown
This great artical discusses the view that while the foreshadowed U.S. recession may end quickly, its recovery will take longer. The author argues that unlike the brief recession in 2001, the one we may be currently experiencing involves a sharper decline the in aggregate demand of our economy. The weak demand for food, gasoline houses along with the recent credit crunch and unemployment rates suggests that recovery of this current recession may last longer than what we expect.

Kevin Yeh: Middle East inflation soars
The rapidly growing economies of the Middle East are experiencing demand pull inflation as the price of food and other day-to-day basis commodities are skyrocketing in price. In the US, often times the Fed (and central banks in other countries) uses contractionary monetary policy to reign in inflation, but in the Middle Eastern nations there is no such body. With the price of oil remaining high, it looks like the economy will remain strong, but there will continue to be no solution to the inflation problem

Conrad Liu: Lower Gas Prices...Oh Wait, Just Kidding!
Gas prices from way back when have been increasing at an alarming rate, as we all discussed numerous times in class. Just last month, oil prices have risen to a high $111.80 a barrel. However, retail gasoline prices have recently dropped from an all-time high of $3.339 to $3.331. Okay, so that doesn't seem like much, but it's a drop. This drop might just lull consumers into a false sense of security, as a new government forecast predicts that gas prices could rise again during the summer, to a whopping $4 a barrel. As we all know, because gas prices have been incredibly high lately, demand for vehicles dependent on gas have fallen since January, and the analysts expect demand to decrease by a further 0.4% during the summer months (I won't really notice though since SCHOOL WILL BE OVER). One of the main reasons why gas prices might skyrocket again? Other than the possibility of oil becoming even more costly per barrel, the power of the dollar will further decrease, because as the Federal Reserve Bank lowers the reserve ratio from 2.5% to 2.25%, the dollar bill becomes weaker.

Jeewon Oh: What job woes mean to you
Nearly a quarter-million jobs were lost so far this year, and the unemployment rate has increased. The weak labor market in the United States is leading to smaller wage increases for workers, as "employers get more conservative." The biggest problem is that the workers cannot keep up with inflation, since food and energy prices are soaring. Even when the wages are adjusted for inflation, "the modest gain in wages" reported for March will probably be wiped out by price gains when the Consumer Price Index is reported for the month. Inflation could also get worse if the Fed cuts rates in order to spur the economy.

Tim Chu: China raises 2007 growth figure
Found this on the Welker Universe site. pretty interesting stuff. The article is basically some facts and figures (like most econ articles are :D) on China's recently revised GDP of 2007 which was originally set at 11.4 but is now being raised t 11.9% As the article states, China is now overtaking Germany as the world's third largest economy! It also seems that China has finally succumbed to the pleads of other governments that China's currency is way too low for what it should be. Now, the currency is officially less that 7.0 RMB to 1 USD. Looks like China's headed for a bright future...if we fix the pollution that is :(

Chan Min Park: Rising cost of oil threatens vulnerable economy
This article was written in November 2007. It talks about rising oil prices and how this means a rise in resources costs. This will certainly shift the supply curve left. The article says that at this rate, continuously rising oil prices may actually put the US economy into a recession. There are certain efforts being madeto counter this recession, but as we can see, 6 months later, recession occured.

Alice Su: Hong Kongers Turn to Stronger Renminbi
This article discusses the impact of changes in the value of Chinese and foreign currency on "Hong Kongers." According to the article, Hong Kong citizens are increasingly opening bank accounts across the border in mainland China, turning their local HKD savings into RMB deposits. Part of the reason this is happening is that the Chinese RMB's value is rapidly rising, especially against the weakening U.S. dollar. At the same time, the Hong Kong dollar is pegged to the USD- while China raises interest ratest to counter inflation, Hong Kong is forced to follow the Federal Reserve in lowering interest rates as it fights the U.S. recession. As a result, interest rates right across the border in mainland China are far higher than those in Hong Kong banks, thus encouraging Cantonese citizens to save their money in China rather than in Hong Kong.

Dana Yeon: Pity the Pizza, in the Land of Nuggets
Cost push inflation is taking its toll in the American market. Drastic rises in prices of dough, eggs, and dairy products have recently led to less sales in pizza, and pizza restaurants are now in the red. Pizza Hut, Papa John's International, and Domino's Pizza have all reported decrease in sales. Not only that, the relative price of $10 pizzas to $3, $4 McDonalds meals are leading to even more heightened tension amongst fast food chains. As Andrew Martin, the author of the article, puts it, the pizza industry should either slash their prices (highly unlikely considering resource prices have increased) or they should "try to figure out a way to make pizzas out of bacon and lettuce."

Howard Lin: "Real Wages Fail to Match a Rise in Productivity",
This article is from The New York Times Online, August 28, 2006. Although the U.S. economy has enjoyed sustained economic growth since 2000, the situation has not resulted in higher real wages for American workers. This is the first period of strong and consistent growth since World War II that has not raised real wages for most workers. People are working harder but getting less!

Kevin Ma: Indian Economic Growth To Dip To 7.9 Percent: IMF
This article from News Post India talks about how the economic growth in India is going down to 7.9 percent due to weaker demand for indian export and higher financing costs. It also mentions that China's economic growht rate is going down to 9.3 percent. It also mentions that investment would be greatly hurt. India's inflation has risen 7.41 percent, thats just crazy.

Richard Tu: "Jobs % economic growth."
This article elaborates upon the topic of economic growth. The United States are encouraging business to invest more and to expand. For example, on April 7th President Bush met with small mid-sized business owners to discuss temporarily tax incentives in the economic growth package. "This growth package meets the criteria the President laid out in January – it amounts to more than $152 billion, or about one percent of GDP, provides tax rebates to more than 130 million American households, and offers temporary tax incentives for businesses to invest in their companies and create jobs this year." This article not only focuses on Bush's opinion but also other people, such as, the President of McCutcheon's Apple Products...etc, in order to gather their opinion towards the US recession. check it out!

Jennifer Choi: U.S. dollar facing imminent collapse?
Even as the stock market is hitting new record highs almost every day, the Federal Reserve and Treasury Department are quietly coordinating a devaluation of the dollar that the Bush administration hopes will be a slow decline rather than a dollar collapse. The conclusion of John Williams, an experienced professional econometrician, is that Bush administration wants to get China's cooperation in preventing a dollar collapse.

Kevin Chiu:U.S. Trade Deficit Unexpectedly Widened on Imports
This aritcle discusses an evidence of weakend aggregate demand in the United States as trade deficits are occuring; according to the article, there has been a jump in imported automobiles and machinery increasing the gap to 5.7%. However, some still remain optimistic because they believe the little economic growth in the US will weaken consumption and the weak dollar will increase the consumption of goods exported from the US.

Nicole Wong: New jobless claims fall back
Just 2 weeks ago, the U.S. labor department found had 410,000 applications for unemployment benefits. This article emphasizes the recession that the U.S. economy is currently going through, as hundreds of thousands of American citizens are now finding themselves unemployed. Perhaps a ray of hope is emitted from a decrease to 357,000 applications in the past week. However, is this "retreat" from a spike of applications going to last? Or are Americans going to increasingly find themselves unemployed?


Jinny Kwon Jobless Claims Soar to Highest Levels Since 2005

According to the Labor Department, new applications filing for unemployment insurance increased by 38,000 to 407,000 for the week of March 29. This increase in unemployment has been the highest since Hurricane Katrina in 2005. The unemployment rate resulted to be worse than what the economists had predicted and now, businesses are continuing to lay-off more workers due to economic uncertainty. As this continues, US is falling deeper into a recession. In order to tackle this situation, the main goal is to increase employment by either imposing an expansionary fiscal or monetary policy to boost aggregate demand. However, sharp increases in inflation should also be considered because it might cause side-effects if AD increases too much.

Claire Moon Dollar PAnic
The American Economy is facing the decreasing value of dollar recently, and this have been a pretty big issue.
The author questions Der Spiegel’s warning of an “economic Pearl Harbor.”Saying that "Willem Buiter, who I know well and is a perfectly reasonable guy, thinks we’re in big trouble." adding up to his disagreement, he also adds up another point of what he thinks might happen, He argues taht the imports only adds up 1.2 or so percentage points to inflation and he thinks the Fed would probably view this as a temporary non-"core"blip. He questions that whether it really feels compelled to defend the dollar, even at the cost of a serious recession