Today we were speaking about the risks associated with a fall in price levels (and the ensuing deflation) due either to a decrease in aggregate demand or an increase in short-run aggregate supply. Take a look at the following article from the New York Times;
http://www.nytimes.com/2009/04/21/business/global/21deflate.html

Retailers and other firms (including restaurants, supermarkets, etc.) in Spain are cutting retail prices to boost demand for their products. Obviously these falling price levels are a result of the global financial crisis; particularly, a decline in consumer and business expectations has led to a sizeable decline in aggregate demand. At the new macroeconomic equilibrium, we have lower price levels at a lower level of output. Because of the new lower level of output, unemployment is on the rise. As the article states, the unemployment rate is already a relatively large 15.5% and is increasing. In the short run, employers will be able to lower their prices and increase the quantity demanded for their goods, but this is by no means a long-term solution.

What do you think the Spanish government can do to prevent the economy from getting caught in this downward spiral? The article also mentions other nations reporting similar phenomena, with price levels falling; do you think this deflation will spread to other parts of Europe as well?

 out of  found this valuable. Do you find this valuable?    

Show Last Reply

The richest people in the world have gotten poorer, just like the rest of us. This year the world's billionaires have an average net worth of $3 billion, down 23% in 12 months. The world now has 793 billionaires, down from 1,125 a year ago.

After slipping in recent years, the U.S. is regaining its dominance as a repository of wealth. Americans account for 44% of the money and 45% of the list's slots, up seven and three percentage points from last year, respectively. Bill Gates lost $18 billion but regained his title as the world's richest man. Warren Buffett, last year's No. 1, saw his fortune decline $25 billion as shares of Berkshire Hathaway fell nearly 50% in 12 months. Mexican telecom titan Carlos Slim Helú maintains his spot in the top three but lost $25 billion.

 out of  found this valuable. Do you find this valuable?    

Show Last Reply

See this: http://finance.yahoo.com/loans/article/106824/10-Countries-10-Solutions

In the current situation, there is nowhere to hide for any country. I have spotted another good article online,
it is talking about how 10 different countries are trying to avoid chaos in the current economic recession. I am surprised that Maxico are dealing so well in the situation; although they may not be directly involved in the situation, every country is involved. What about you, which countries have surprised/ interested you in the way they are dealing with the current situation?

 out of  found this valuable. Do you find this valuable?    

Well as the number of unemployed is about to hit an estimated 2 million in the UK alone, the GDP is also predicted to shrink by 6% in mid 09. This is not all, they say that the soones we are likely to recover from this trough is 2010, which is not that far away, try telling that to the unemployed mothers and fathers trying to support families... The recovery plan is britain it looking good, and the outlook is better than it was just months ago; but I still find it difficult to believe that bailing out Banks who have made risky decisions is a smart thing to do. I know that the alternative results in millions of innocent people loosing money and jobs but is there not a midway point? Can we punish the foolish decision makers without hurting the investors?

 out of  found this valuable. Do you find this valuable?    

The Obama administration wanted information on many of the American customers who have money in the Swiss Bank Account UBS. UBS is known for its safe and secret banking, and is a huge part of the economy. UBS has refused access to these accounts. Do you think the American government should be able to obtain the information?

 out of  found this valuable. Do you find this valuable?    

Show Last Reply

Federal prosecutors are seeking the forfeiture of Bernard Madoff's four homes and the bulk of his assets, following Madoff's guilty plea last Thursday to operating a massive investment fraud.

The targeted assets, many of which are held by Madoff's wife, Ruth, include: a Manhattan condominium on East 64th Street where Madoff was under house arrest for three months prior to his guilty plea, valued at $7 million; homes in Montauk, New York, Palm Beach, Florida and Cap d'Antibes, France, as well as "all insured and readily salable personal property" contained in the homes; a yacht named Bull, docked in France; three other boats; four automobiles, including two Mercedes, one BMW and one Volkswagen; a Steinway piano valued at $39,000; a silverware set valued at $65,000; $17 million deposited at Wachovia Bank; $45 million in securities held at COHMAD Securities; and Madoff's interest in COHMAD Securities.
Do you think that it is necessary that he gets all of his assets taken away or should he have the right to keep some of them?

 out of  found this valuable. Do you find this valuable?    

Show Last Reply

Prime Minister Gordon Brown has given a lukewarm response to proposals for minimum prices for alcohol. The proposals were unveiled by Sir Liam Donaldson, the Chief Medical Officer for England, on Monday. Sir Liam wants a minimum price of 50p for each unit of alcohol. This movement would lead to 3,400 fewer deaths and 100,000 fewer hospital admissions a year.
http://news.bbc.co.uk/2/hi/health/7945357.stm
Is this movement effective to price this considered negative externality? Should we price all our externalities like this such as cigarettes? Is this effective? Wasn't the same promised if the government highered the prices and negatively advertising?
Is this the right approach?

 out of  found this valuable. Do you find this valuable?    

Show Last Reply

"Last Sunday as Obama walked through Wurzelbacher’s Holland, Ohio, neighborhood, Wurzelbacher asked him whether his plan to increase taxes on those earning more than $250,000 a year would impede his ability to buy the plumbing company where he works. Obama replied that those making over $250,000 would be taxed more but that money would be returned to the middle-class through tax cuts. “I think when you spread the wealth around, it’s good for everybody,” Obama said" (from "JapanToday")

Today in class we talked about how Barack Obama promises to America to cut down the taxes for the poor citizens and how he wants to improve the medical care system.
So I was wondering if this is a fair promise, if he can promise that to the poor people even though America is in the financial crises and nobody knows how America will stabilize and where to get the money from to do that. To improve the medical care system he needs tons of money and that is missing at the moment, so why can he make such a promise to the poor people, even though America needs money everywhere at the moment?

1  out of 1 found this valuable. Do you find this valuable? Do you?    

Show Last Reply

Have any governments ever went from market to command economies. If so when and why?

 out of  found this valuable. Do you find this valuable?    

Show Last Reply

I found an article about the effect of the financial crisis on the football market.
http://business.smh.com.au/business/financial-crisis-hits-soccer-market-20090204-7x6h.html

What do you think, can the financial crisis really affect such a large industry? What do you think the effects of the crisis can be?

 out of  found this valuable. Do you find this valuable?    

Show Last Reply