The Economy

[Anthrax]

I hope no one minds if a foreigner gets his 2 cents in.


I just find it funny how the subject of the gas price is running all over the american shows. I saw Jay Leno make a joke about it a few weeks ago.

Just want to put this into perspective.

The gas price at this moment has reached a record over here.
It has passed the 13kr/liter-mark. 13 swedish kr are about 2.10 USD, and a gallon is 3.785411784 liters.

We pay a 25% tax om all the stuff we buy, including the gasprice.

And all of politicians are talking about how we must fight the clobal pollution. And I´m all for that. But for the love of God, don´t assrape us in the process.

We have a state minister say that no one has complained about the gasprice.

Well, then someone should get fired, because there is a list of names (Including mine) that around 170000 people have signed (Remember that our population is somewhere around 9 million or so.), demanding that the 25% tax on gas should be lowered to 6% instead.



What it comes down to I guess, is that it doesn´t matter where we live or who we elect. We always get screwed in the end.

[rwh11385]

When there is one leader country it can be.

If you have one country with lots of growth and needing to curb inflation,
and another member country with recession and high unemployment...

a single interest rate will not help both.

By Mundell's criteria the European Union does not constitute an Optimal Currency Area and therefore the euro should be a suboptimum union of currencies.

http://www-econ.stanford.edu/faculty/workp/swp00009.pdf

In addition to stationary expectations, Mundell (1961) posited that labor mobility was restricted to fairly small national, or even regional, domains, as in Western Europe or across developing countries. And these smallish domains could well experience macroeconomic shocks differentially, i.e., “asymmetrically” in the jargon of the current literature, from their neighbors. In these special circumstances, Mundell illustrated the advantages of exchange rate flexibility in what has now become the standard textbook paradigm:

Consider a simple model of two entities (regions or countries), initially in full
employment and balance of payments equilibrium, and see what happens when the equilibrium is disturbed by a shift in demand from the goods in entity B to the goods in entity A. Assume that money wages and prices cannot be reduced in the short run without causing unemployment, and that monetary authorities act to prevent inflation......

The existence of more than one (optimum) currency area in the world implies
variable exchange rates..... If demand shifts from the products of country B to the products of Country A, a depreciation by country B or an appreciation by country A would correct the external imbalance and also relieve unemployment in country B and restrain inflation in country A. This is the most favorable case for flexible exchange rates based on national currencies.

[Robert Mundell, 1961. pp. 510-11]

Eichengreen and Bayoumi (1993) had used an elaborate econometric analysis to show this asymmetry. “A strong distinction emerges between the supply shocks affecting the countries at the center of the European Community—Germany, France, the Netherlands, and Denmark—and the very different supply shocks affecting other EC members—the United Kingdom, Italy, Spain, Portugal, Ireland and Greece.”

On the basis of such apparently powerful argumentation, the British press and many economists still argue today that a one-size-fits-all monetary policy run from Frankfurt can’t be optimal for both continental Europe and Britain. After all, aren’t business cycle conditions in Britain sufficiently different to warrant a separate counter-cyclical response from an independent Bank of England? But whether sophisticated or not, writers in this vein—most recently Martin Feldstein [2000] in “Europe Can’t Handle the Euro”—are definitely in thrall to the earlier Mundell.

May 1, 2008
http://www.iht.com/articles/2008/05/...WT.mc_ev=click
Euro nears milestone, but faces north-south divide

a north that is growing decently but is concerned about inflation, and so prefers higher interest rates and is willing to live with a strong currency; a south that is worried about stagnating, and prefers lower rates and a weaker currency.

When leaders and laggards use the same money but have opposite problems, tensions are bound to surface.

Take Italy, perhaps Europe's shakiest economy. Facing high labor costs, slumping exports and a gaping public debt, its old remedy for hard times would have been to devalue the lira. Now, chained to the mighty euro, it cannot do that. Instead, it will probably have to endure a recession and rising unemployment, something no politician — but especially not one just elected, like Silvio Berlusconi — wants to face.

Berlusconi has already said he wants the European Central Bank to weigh more than inflation when setting monetary policy. In other words, the bank should lower interest rates, which would probably deflate the euro somewhat and make it easier for Italy to sell its wine and shoes overseas.

Still, the rigors of life under the euro may keep this club from growing. Poland, Hungary, the Czech Republic and other Eastern European countries once hoped to adopt the currency fairly soon after joining the European Union. Now, with a deeper awareness of its cost, most will wait until after 2012.

Europe's monetary union may be lasting, but it is not widely loved.

told ya so?

[rwh11385]

An article talking about the real question being raised:
"WILL THE USD REMAIN THE WORLD’S RESERVE CURRENCY?"

The United States has the largest, most structured
and most liquid financial markets, from which result
low transaction costs.Besides this, the majority of
the largest commodity exchanges operate in the
USA, which means that most commodities traded on
world exchanges are officially traded and priced in
USD.Probably not one of these factors will change
in the foreseeable future so as to cast doubt over the
hegemony of the American dollar and force Asian
central institutes to reduce the balance of their
reserves denominated in USD in favour of assets
denominated in EUR.

A medium of exchange
The American dollar will long remain for the Asian
banks the most efficient medium of exchange, meaning
that it is the best (and most available) source for
the needs of intervention

[gstuning]

When there is one leader country it can be. What
they are doing is create a joined trade market.

Yes the $ is used, it is for instance used in ALL cross country credit card actions.
where you buy $ from the currency rate of the country you are in , and that the get´s converted to the currency of your credit cards origin. Obviously you suffer now matter how it´s calculated(i.e the non american using their card)



That´s 4.5years.

http://images.google.co.uk/images?hl=en&client=firefox-a&channel=s&rls=org.mozilla:en-US:official&hs=EGq&q=dollar%20vs.%20euro%20trend&um=1&ie=UTF-8&sa=N&tab=wi

I´m not posting any fiction here.
Only thing promising to the non $ countries is that if they had debt in $´s then their debt´s have gone down considerably.
But if your are in a "euro" country you wouldn´t dare borrow in $´s as they might keep dropping meaning your loans in euros will simply rise,
For instance over the last four years about 25%.

[rwh11385]

Gunni,

1) One currency for multiple countries won't work in the long run.

2) The US is still used in many transactions in the world.

nice tags you fags

[gstuning]

To continue.
If India, Japan and Chine join together to form it´s own currency, that will leave about 3.3 billion people having the same currency. Europe only has 728million people.
America about 300million.

That leaves about 4billion+ people not having anything to do with $$$$´s
The global population is right now about 6.8billion
That´s more then 60% of the global economy who couldn´t care less about the $$.
because in their own financial system it´s not needed..

The sole reason for the american govt. has been trying to get into the oil countries nicely and not so nice, is to gain the control of oil and keep it in $$ instead of euros to try and stop this whole mess from happening.
And that isn´t exactly happening at the moment.

[rwh11385]

I just can't wait until the European Currency Board runs into asymmetric shocks again (oh wait, that is happening!), and people realize a uniform dollar across different countries isn't all what people think it is. Maybe it'll fail. A minority support it.

Just look back to 1992 when the UK stepped away from the ECB/EMU, and what are the hesitations to step back into the Euro.

http://news.bbc.co.uk/1/low/business/1383201.stm

http://www.europeanfoundation.org/do...20for%20me.pdf

With a national bank, decisions are taken in the national interest. Governments can
redistribute tax to smooth out regional differences afterwards. The ECB cannot do
this because no country is willing to see its taxes used to support other nations.
During a recession, or whenever there is a tough decision on interest rates, European
Central Bankers are unlikely to vote in favour of interest rate policies that have a bad
effect on their home countries' economy. Price stability (low inflation) may no longer
be the priority of the majority of the ECB when Europe goes into recession. The
Bankers would be under tremendous political pressure from home. The larger EMU
becomes, the more diverse it is, and the more likely there will be differences of
opinion.

http://web.mit.edu/krugman/www/euronote.html

http://www.aeaweb.org/annual_mtg_papers/2006/0106_1015_1503.pdf

The role of the Euro as a reserve currency in central bank and private portfolios is still evolving. A number of Asian Central Banks as well as the Russian Central Bank have suggested that they will diversify out of dollars and into Euros, though there is little evidence that this has yet occurred. The share of the euro in official foreign exchange reserves went from 18.7% of total reserves in 2001 (compared to 64.5% for the U.S. dollar) to 19.7% in 2003 (mainly due to the appreciation of the Euro relative to the dollar). The dollar remains the dominant intervention currency for non-US central banks, though the Euro is increasingly being used in countries neighboring the EU.

Foreign exchange trading in Euros as a percentage of global trade has not increased compared to the share of the combined EMS currencies that existed prior to the Euro (Rey (2001)). In 1998, the dollar was present 87% of the time at one end of a transaction in the foreign exchange market while the EMS currencies were present 53% of the time (shares add to 200% to take into account both sides of a transaction). In 2003, the share of the dollar was 90 % and the share of the euro was 37%, virtually unchanged from 2001. Global euro trading is mainly against the U.S. dollar

The greatest increase in the use of Euros has come in the stock of international debt denominated in euros (excluding home-country issuance), which rose from below 20% at the end of 1998 to just above 30% at the beginning of 2003. Most of the (non-EMU) countries issuing euro-denominated bonds, lending in euros, and creating euro deposits, are neighbors of the Euro area (for example, UK residents own almost 40% of all non-EMU-resident euro-denominated deposits). Lenders and borrowers in Asia, Latin American and the Middle East continue primarily to use the dollar, and the share of Euros in cross border lending and deposit activity conducted outside the Euro area is small (around 5 to 6%)

Paper from 2005

http://www.csmonitor.com/2007/0108/p25s01-woeu.html

January 08, 2007

Now, as it emerges as a global medium of exchange to rival the dollar, public support for the euro is lower than at any point since its induction in 2002.

[It's great for travelers...]
But try telling that to Germany's 4 million unemployed, who blame the one-size-fits-all interest rate for their plight, or to Greeks, who must be adept at multiplying by 340 to get a sense of an equivalent cost in their former currency, the drachma.

While that dissatisfaction may wear off as the continent's economy rebounds from several years of stagnation, it's unlikely that the euro will replace the dollar as the preeminent global currency anytime soon, say experts.

"The euro has some way to go yet because of the still relatively undeveloped capital markets [in Europe] compared to the US," says Adam Cole, senior currency strategist at RBC Capital Markets, an international investment bank. "Looking at the broad range of assets, the US still leads the way in terms of equity markets, derivative markets. The US is still some way ahead. The eurozone is catching up."

Complicating the euro's standing vis-à-vis the dollar is the fact that although the eurozone comprises around the same number of people as the US - 300 million, give or take - its economy remains far smaller. More disadvantageous still, the eurozone is, unlike America, a collection of economies all moving at different speeds and different cycles - but with only one interest rate to service the system.

At times, the eurozone creaks under the strain of this "one-size-fits-all" interest rate. At one moment it appears too punitive for struggling economies; this was particularly true of Germany in the early years of the euro when unemployment soared. At other times, rates appear too lax to rein in overheating economies like Ireland and Spain. The Organization for Economic Cooperation and Development (OECD) said last week that the euro had delivered less economic integration than expected.

"There is this problem for sure," says Tito Boeri, an economist from Italy, which has struggled more than most. "Italy has not been in sync with rest of [the] euro area. It is lagging behind in many respects. Its economy stagnated for four years."

[DCColegrove]

It seems nobody has read the report I posted yet...

I'm sorry, I did miss it. some truth in there for sure.

[gstuning]

It seems nobody has read the report I posted yet.
Otherswise none of the current responses would have been posted.

People need to grasp the bigger picture. It´s not about the oil, the people or the money,
The world is heading into a WWWIII where global finance is the weapon of choice.

Here it comes in capital letters so you can be sure to see it.
YOUR DOLLAR IS LOOSING VALUE BECAUSE YOUR GOVERMENT HAS CREATED A LOOP OF CONTROL WHICH HAS NOW SPIRALED OUT OF THEIR CONTROL, WHAT ONCE WAS THE BIGGEST GLOBAL FINANCIAL EMPIRE IS RUNNING FAR BEHIND THE LEADERS NOW,
IF YOU DON´T KNOW WHO THAT IS IT´S UNITED STATES OF AMERICA THE FIX ISN´T COMING ANY TIME SOON AND MIGHT NOT EVEN COME AT ALL.

Instead of the cold war and nuclear "piece" , global debt "piece" is settling in, nobody want´s to start selling their USA bonds just yet, as it will be them to will turn on the wave of countries selling the USA bonds and further killing the dollar.

Don´t you guys understand it, the future of your and the global economy is absolutely not in your hands. It would be a setback cutting america out of the circuit but europe and east asia would bounce back as the markets there are getting stronger, if nobody wants to deal in dollars or sell to america........................................... ......

The american goverment is loosing it´s grips on it´s own future, it´s going to be in the hands of other countries.

Here is something your not going to like either.
European countries as well as the rest of the world could cut off everything to america, money, resources, oil, food supplies and so on, and the bad part is that financially it wouldn´t even hurt them all that bad.

If you where selling to two people and one pays 25% higher why would you even bother selling to the other guy?????????'

It´s bad, it´s real bad.
I personally don´t like the way things are headed.

[DCColegrove]

Hmmm, This thread has taken on a life that by far surpassed my expectations.

The answers are to be found in history and sociology.

The question is "Qui Bono" (who benefits). Think about this, there are good reasons to devalue currency...just not good for the average Joe.

[z31maniac]

What I got in the mail said it was not going to be considered taxable income next year like a normal return.

I don't think anyone has said it, you know - the big bad scary word "SF". I haven't herd what the latest growth numbers are, but if the economy is shrinking printing a bunch of money is the worst thing the government could do.

How many here know what Stagflation is without googling it though.

[jflip2002]

Also - if you want to increase inflation, the best way to do it is to print money. That is basically what the government is doing - if everyone is suddenly $600 richer, did anyone gain? no, because the value of the dollar just went down proportionately - there isn't an infinite amount of stuff to buy, but now there are more dollars chasing after limited resources.

That makes perfect sense. But the $600 are going to be paid back on 2009's returns, for the year of 2008. They wont be able to collect all the money back, but they'll try. Thats why it wasnt necessarily a "rebate", rather a "stimulus". What you said makes perfect sense. Being that the best thing to do is NOT spend the money.... meaning the stimulus was still a crock of shit. I knew it was a crock, but just for the wrong reason

[nando]

As for this government check, its a fucking crock. Everyone I know says they are saving the $600 just incase the economy keeps heading the way it is. So this $600 thats supposed to help speed up the economy has done nothing but lost billions of dollars, which are being stashed away. Why not go and spend the $600 on something? Treat yourself? It doesnt have to be American, I dont care. As long as an American merchant touches it, and makes some money off of it, it seems like the $600 stimulus would be doing what it was meant for.

actually, saving it is the best thing people could do - especially with our abysmal savings rate here. I mean, do you think we'd be this fucked if people saved more than 1% a year?

Also - if you want to increase inflation, the best way to do it is to print money. That is basically what the government is doing - if everyone is suddenly $600 richer, did anyone gain? no, because the value of the dollar just went down proportionately - there isn't an infinite amount of stuff to buy, but now there are more dollars chasing after limited resources.

I don't think anyone has said it, you know - the big bad scary word "SF". I haven't herd what the latest growth numbers are, but if the economy is shrinking printing a bunch of money is the worst thing the government could do.

[rwh11385]

Look at that information. We're helping to develop the Iraqi security force so they can take care of themselves and deaths are down.

More importantly, think about the views of the United States if we don't finish what we started. We came in under questionable pretenses uninvited, fucked shit up, and then just want to pull out and wash our hands? Negative on that being a good idea. Americans need to get their heads straight about what they want to magically happen and what is the proper course that should be done.

If we establish order of their own and gradually withdraw our forces as is prudent, not desired by people who have no idea what is going on, then we should be in good shape. We can show that at least we stuck it out and help the nation instead of just being scared they could have had WMD and invaded. If we have a positive impact overall, then the world should be more accepting of our action in the end.

[jflip2002]

But will there be stability ever? There are many countries where there hasnt been stability for decades. Also, what is our job over there? To put another president/minister into power? I mean we all know what happened the last time we did that.... Im not up with the war at all. So Im not trying to make it into a debate. You very well could be 100% correct with your beliefs. Its just my personal belief.

I do think though that if we are just there because we've already been there for long, and we've already lost so many lives, its the wrong reason. Its like a gambler not stopping at the black jack table, after hes lost his months rent. Just because in his mind he thinks hes already lost so far, it HAS to turn around. Thats kind of the sense that I get from your comments. Again, thats just my uneducated view on this.