Market Economy - Business Exchange
Speachless
Wednesday, April 7, 2010
Wednesday, March 31, 2010
How Globalization affects Countries & Markets
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This is ongoing - updated article/blog reflecting ever changing Global Marketplace and some individual countries' economies
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While the markets are becoming more globalized and productivity is being propelled by ever improving high technologies, some economies as Chinese and Indian are growing rapidly thus becoming real powers in industrial production, however the old "science" of Western Economics is changing very slowly not being able to conceptualize these undergoing changes. The "old" system of Economics firmly believes that:
"The main motivations for the rapid expansion of multinational activity are as follows:
- Higher profits and a stronger position and market access in global markets
- Reduced technological barriers to movement of goods, services and factors of production
- Cost considerations – a desire to shift production to countries with lower unit labour costs
- Forward vertical integration (e.g. establishing production platforms in low cost countries where intermediate products can be made into finished products at lower cost)
- Avoidance of transportation costs and avoidance of tariff and non-tariff barriers
- Extending product life-cycles by producing and marketing products in new countries
- The urge to merge – the financial incentives created by the global deregulation of capital markets is making it easier to achieve acquisitions and mergers and thereby encouraging the external growth of a business"
Though neither Environmental concerns nor the ever exhausting resources, nor the poor Wealth Distribution and Redistribution of a deregulated Capitalism proved feasible to get any country out of the Last Global Recession.
It (the last Global Recession) showed to anyone that if Governments of the Most Developed Nations of US and EU did not intervene by expanding Monetary Quantities (through accumulation of high deficit), pouring capital into Financial Institutions (such as Fannie Mae, Freddy Mac, and AIG) and even financing Individual Businesses (such as GM) their Economies and even the Global Economy could have collapsed under the pressure of the bust after huge Real Estate over-capitalization succeeded in "Trickle-down" Capitalism's freedom of speculations of deregulated business and financial structures, the inadequate system of wealth distribution unable to sustain and raise "demand".
Other reason and not the least important for the deadly Global Recession of 2008-2009 could be considered the exodus of Industrial Production and related Capital Investment from the Most Developed Countries and Markets such as US and EU into China and India.
In the past Social expenses where contra productive for maintaining Economic growth thus Economies of most socialized countries such as of these of the Eastern Block and then China and India (of the Early and Mid Nineties) were not able to keep up enough “supply” to balance the “demand” for goods and services, however with the ongoing Globalization and rising Productivity, supported with huge Capital the system of Social Wealth Distribution is becoming more economically adequate as the economies of China, France, Germany, and in its own ways Japan have showed. These countries were able to overcome the Global Recession by having better then US Social Systems for Wealth Distribution.
After the fall of the Eastern Block and the China’s entering into WTO the Globalization stepped on to establish economic conditions for incredibly fast industrialization of China and now of India; very accessible and easy movable highly technologically advanced industrial equipment for manufacturing combined with already highly capitalized US financial markets leering for ROI found prospective on vastly populated Chinese marketplace (of educated and skilled labor) to move industrial production, outsource and invest huge capital into industrial production and related technologies.
In the Sixties and Seventies a similar to the Chinese and Indian industrialization was experienced by Germany and Japan, however the vastness of the Chinese and Indian Economies and Marketplaces were not remotely matched by German and Japanese Economies and Marketplaces therefore to suggest that most recent Globalization and Industrialization was ever historically experienced is not feasible.
What really changed in the 21st Century is a first time experience when Vast Marketplaces of China and India's Economies are joining US, Germany and Japan into a Global industrial production, but because China and India are vast and with educated inexpensive labor-force, and most important with a very practical Confucian system of Economics mixing Capitalism, Socialism and even Communism systems of Economics (however comes: whatever goes) these countries are manipulating markets to maintain sustained development and they are succeeding on an unimaginable scale. China has discovered that globalization and international competition work in its favour.
Great expectations "China overtakes Germany to become the biggest exporter of all" "CHINA’S rise has long appeared inexorable. Despite a decline in total world trade, China has seen its exports fall less than those of other big powers. A new report by the World Trade Organization calculates that the total value of merchandise exports fell by a staggering 23% in 2009. Among the top ten exporters, Japan’s shipments were worst affected (falling by 26%). Although China's exports also fell (by 16%), the contraction was less painful than in Germany (down by 22%). As a result China is now the single largest exporter. The global downturn has helped to reduce global imbalances; the leading three exporters accounted for 26.7% of total world exports in 2009 down from a third of the total in 2008. The WTO expects trade to rebound by nearly 10% this year."
Great expectations "China overtakes Germany to become the biggest exporter of all" "CHINA’S rise has long appeared inexorable. Despite a decline in total world trade, China has seen its exports fall less than those of other big powers. A new report by the World Trade Organization calculates that the total value of merchandise exports fell by a staggering 23% in 2009. Among the top ten exporters, Japan’s shipments were worst affected (falling by 26%). Although China's exports also fell (by 16%), the contraction was less painful than in Germany (down by 22%). As a result China is now the single largest exporter. The global downturn has helped to reduce global imbalances; the leading three exporters accounted for 26.7% of total world exports in 2009 down from a third of the total in 2008. The WTO expects trade to rebound by nearly 10% this year."
The problem of the Rest of the World is the ideological almost blind following of Marks “Das Capital” financial system controlled by the rules of “trickle-down” Capitalism that happen to be quite impractical even when this system built North Americas, Great Brittain, France and Germany: Great Powers envied by anyone in the World, however looking in History things sometime have to change; it happened to Rome, Persia, Victorian Empires, and etc., thus change could be considered as ongoing now affecting different countries and markets in different ways but the trend is quite similar ( In Worlds short term history: once mostly agriculturally driven GDP changed into mostly industrial production driven GDP, now to change into mostly “artificially” balanced “Demand-to-Supply” Market Economics GDP).
(For “parameters” see my research “Philosophy of the Economy”)
If these new developments of Globalization have harmful affect on the Most Developed Countries of North America, France, Germany and Japan to the rest of the World their affect is deadly: rising deficit or genuine poverty are everywhere: Latin Americas, Central Americas, Africa, Eastern Europe, and elsewhere;
Greece, Spain, and Bulgaria are among many economically struggling to couple with ever lack of Fiscal and Monetary quantities countries: to maintain the rising productivity of Germany, Japan and China or to industrialize themselves is just futile so they are cursed to high National Debt like Greece, Portugal and Spain or to high Poverty like Bulgaria whose Government was "hired" by the World Bank and IMF to maintain strict financial order, however neither of these two approaches happen to bring "prosperity" to these countries: "high deficit" or "financial austerity"both are not going to make Spain, Greece or Bulgaria "industrial powers" thus they could cover their ever arising Social Expenses and Infrastructural Deterioration.
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- G20 sounds warning note over new bank rules "One of the lessons of the crisis is that facing global challenges we need to have global answers," IMF Managing Director Dominique Strauss-Kahn told the Romanian parliament during a flying visit to Bucharest. "This lesson is about to be lost," he said. The IMF chief said individual countries were working on new regulations and creating new supervisory bodies. "The only problem is, they don't fit together," he added. The G20's steering countries said in a letter to all group members that governments must recommit and deliver on reforms they agreed to in Pittsburgh."We all have a mutual responsibility to deliver on all our commitments to address the weaknesses that led to the financial crisis," the letter said."This will require that we maintain our vigilance to address the required reforms and guard against complacency as our economies recover," it added. Bank of England director of financial stability Andrew Haldane said it is possible that no amount of capital or liquidity will be enough to totally shield taxpayers as profit incentives may place risk one step beyond regulation. "That means banking reform may need to look beyond regulation to the underlying structure of finance if we are not to risk another sparrow toppling the dominos," Haldane said. PAY RULES PATCHY But G20 leaders said there can be no let-up on efforts to agree a new set of bank capital and liquidity rules -- dubbed Basel III -- for implementation by the end of 2012. They singled out the need to still include a leverage ratio or cap in Basel III as some countries like France have expressed concerns about its impact. The letter also said all countries must have adopted the existing Basel II bank capital framework by 2011, a reminder to the United States which has yet to implement it in full. They also reiterated the need to regulate over-the-counter derivatives by the end of 2012 and implement the G20's principles aimed at curbing big bonuses for excessive risk- taking at banks. The Financial Stability Board, tasked by the G20 to implement its regulatory pledges, said several countries have yet to fully apply the remuneration principles. They were agreed in part to help quell public outrage at the return of big bonuses in a sector that had to be shored up by taxpayers during the financial crisis. "Firms will need to maintain momentum toward reforming their compensation practices through 2010 and beyond," FSB Chairman Mario Draghi said. Many of the major financial centers like the United States, Britain, Germany, France, Japan and Hong Kong have taken the regulatory or supervisory steps needed to implement the code. Argentina, Brazil, Singapore, India, Indonesia, Mexico, Russia and Turkey lag, the FSB said.
- Sarkozy urges new world finance rules in US speech "Sarkozy wants the United States to champion firm regulations of financial systems, from tax havens to hedge funds. His ideas were shared by many in the immediate wake of the financial crisis but momentum for dramatic changes has since slowed. "We should invent a new global monetary order," he said Monday, insisting that new regulations would "save capitalism."
Impossibility for many countries to industrialize joined by constant lack of capital means “no solution” under the control of the World Lenders (World Bank. IMF, WTO) that “control” their borrowers tightly. Could not be denied that some of these less developed countries might have corruption, improper bureaucracy, insufficient markets, and etc. but whatever WB and IMF could present as reasonable for lack of development: the ongoing processes of Fiscal shortages for these and many other countries are to be unavoidable: and because most of the World economies are 80%+ based on consumption these countries lower life standards prompt weak market demand boomeranging back to the Most Developed Industrial Countries’ export and so it goes on and on.
Unless in the Past, these new conditions of decreasing industrial production, following consumption and demand affects US, many countries in EU, and the rest of the World in a very harmful ways seen at the Last Global Recession.
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- U.S. rebound on good footing: Fed's Fisher (Reuters) - The U.S. economic recovery is gathering speed as business activity picks up pace, despite lingering weakness in employment, Dallas Federal Reserve Bank President Richard Fisher said on Tuesday.
· I'm Sure Glad The Recession Ended
"It's a good thing the recession ended. Otherwise, key economic charts might look something like this.
"It's a good thing the recession ended. Otherwise, key economic charts might look something like this.
- Alternatives to appreciating the Chinese yuan
"Recent debate has focused on how to increase US exports and savings and increase Chinese imports and consumption in order to correct the trade imbalance between the US and China. In America in particular, focus has been placed on Chinese exchange rate policy. American leaders would like the RMB to appreciate significantly and quickly. They hope that this would lead to an increase in US exports and employment."
- H-man - Thursday March 04, 2010 08:06AM EST "I was a manufacturing executive for the past 30 years. I directly observed our manufacturing base disassembled and outsourced. The pace only increased and unfortunately continues unabated. The manufacturing jobs sent out of the country were much better paying than the service jobs that replaced them. The bottom line is now Americans can no longer just "BUY AMERICAN" and don't have the $ to do so anyway. Greed (Corporate, Political, Individual) has killed the Amercian Dream.
- The New Poor "Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed. Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives -- potentially for years to come."
· America tied-up by Record Debt "Smoothing out the economy's ups and downs, however, has a cost which is now tying America's hands. At this time when fears of a double-dip recession are rising, it's an obvious moment for the government to apply more stimulus spending as it has in the past. But the U.S. finds itself more leveraged than ever before, limiting its options."
· Small businesses need a disaster plan — and plan B(AP) — NEW YORK - Small business owners in the Upper Midwest have just gone through a disaster preparation drill as the Red River rose and threatened to repeat last year's catastrophic flooding. The region dodged a bullet this time, but more floods may well come, and other parts of the country could see tornadoes and hurricanes. Disaster preparation is one of those tasks that many small business owners say they'll get around to, soon. But it often gets pushed down the priority list, especially when a company is focused on bringing in new business or improving cash flow.
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President Obama is doing a lot of positive economic actions in attempt to revive US economy: currently signed in laws Health Reform, support for homeowners mortgage defaults, financing SMB and helping Student Financing are moves into a good direction. In regard Wealth Distribution by following the last Global Recession facts are showing indiscriminate link between using Social and Infrastructural Expenses as Economic tools for balancing "demand-to-supply" ratios. Such trend could be changed by using an enhanced Stock and Commodities Exchanges regulated structures that would be sufficiently allowing Small to Medium Investors to invest Globally and to be able to profit from thus going Global growth: the ROI (return on investment) such SMI (small and medium investors) could become Market driven ways for Wealth Distribution; Other Market related ways for such Wealth Distribution could be by imposing common Global Markets' regulations (for making SMB equally competitive to the Large International Corporations) , enhancing Business Contracts and Bonding Laws, enhancing Intellectual Properties laws and Risk Management Personal Liability laws to prompt SMB Global expansion.
Monetary and Fiscal Policies are to adjust to the Globalization and rising Productivity by Global Centralized Banking System
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EU
- Ireland hits banks with hefty penalty, to inject billions (Reuters) - Ireland hit its banks with a hefty penalty to take loans off their hands and said they needed at least 22 billion euros ($30 billion) in extra funds to recover from a property collapse that was worse than feared.
- U.S. Stocks Retreat as Iceland, Greece Temper Economic Data March 30 (Bloomberg) -- U.S. stocks retreated as concern that deteriorating government finances will derail the global economic recovery overshadowed better-than-estimated reports on American consumer confidence and home prices. Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. lost more than 1.6 percent as Standard & Poor’s cut Iceland’s credit rating and Greece failed to sell half the 12-year bonds it offered. Exxon Mobil Corp. and Chevron Corp. retreated as oil declined after yesterday’s 2.7 percent rally. Stocks also fell after London-based Gartmore Group Ltd. suspended the manager of its two biggest hedge funds amid an investigation.
- Ten Years of Pension Reform in Bulgaria: Achievements and Challenges These are difficult times for Bulgaria, Europe and the world. For more than ten years the World Bank in Bulgaria has been a steady partner, supporting reforms in the area of social security and pensions, both in terms of investing in the modernization of the social security administration and in terms of analytical support to ensure fiscal sustainability of the pension system – and we are delighted to respond to the Minister’s request for continued support and work with all partners towards an effective, just and sustainable pension system.
- Government aims to boost sluggish export growth " The Economy Minister rejected recent criticism of Germany's export boom voiced by his French counterpart Christine Lagarde. Last week Lagarde argued that Germany's huge trade surpluses with countries in Europe had created imbalances that were partly responsible for the budget problems in Greece and other EU nations."Such criticism is unfounded," Bruederle said. "Germany's exports are increasingly becoming a motor for the economies of other European Union countries to overcome the crisis."
- Greece: It's a Deal France and Germany have brokered an emergency financing mechanism to help Greece, following extensive bilateral negotiations between the two sides earlier on Thursday (25 March). Under the deal, approved by eurozone leaders after late evening talks, a funding package will be created, made up of voluntary contributions from euro area countries and cash from the International Monetary Fund.
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· (Reuters) - Euro zone leaders won muted approval from financial markets on Friday for a "band aid" agreement to create a safety net for debt-ridden Greece, but a row over the IMF's role flared up just as it had seemed settled. Central bankers played down the likelihood that Athens, which is struggling to cut a giant budget deficit, would ever need hard cash from European governments and the International Monetary Fund to avoid defaulting on its debt. But the day after the leaders hammered out their deal in Brussels, the plan remained short on details and the IMF made no direct comment on its role, which Berlin had demanded due to public hostility in Germany to bailing out Athens.
· The Pain in Spain: An Economy in Crisis “JesusManson323 Spain is a leech economy.
Much of its "new economy" is just Bernie Madoff-style banking sucking blood out of Latin America.
It really says something that Spain did NOT start Europe's Industrial Revolution, despite being an early colonial power that imported massive amounts of gold and silver from North/South America.”
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- Some Latin Currencies May Be Too Strong "That will be a big challenge, because right now the region gets only 2 percent of the world's overall investments in research and development, compared with 28 percent received by Asian countries, according to RICYT, a region-wide science and technology research network. While China invests 1.4 percent of its gross domestic product in research and development, Brazil is investing 1 percent, Argentina 0.6 percent, Mexico 0.4 percent and Colombia and Peru 0.1 percent, respectively, RICYT says. Even more worrisome, the bulk of Latin America's investments in research and development are state-funded projects on theoretical issues of no commercial value. Consider this: While South Korea registered 80,000 patents worldwide last year, Brazil registered only 580, Mexico 330, and Argentina 80, according to the World Intellectual Property Organization.
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Industrial Production moved to the Fast Developing Vast Countries as China and India
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- India, China to Reap Reward of Global Power Shift, "Roubini SaysThe size of the emerging markets is going to become larger and larger, and it’s going to become greater than the GDP of the United States,” Roubini said. “It may take 20 to 30 years, depending on relative economic growth, but the process will occur” and “we should get used to it.”As the U.S., Europe and Japan struggle to recover from the worst recession since World War II, India’s main stock-market index has soared over the last 12 months and its economy may grow 8.2 percent in the year starting April 1, the fastest in two years, the Finance Ministry said in February. Chinese gross domestic product grew 10.7 percent in the three months through December, the quickest pace since the fourth quarter of 2007.“China has been a hare and India a tortoise but growth is accelerating in India,” Roubini said. Emerging markets are set for a V-shaped recovery, even as India still has a “massive” need for human and financial capital as well as economic-policy changes to achieve double-digit growth like China, he said.
- China Q1 GDP to Rise 12%: Gov't Researcher"The latest industrial output data showed robust 20.7 percent year-on-year growth for January and February, although China's industry minister Li Yizhong said that the pace of growth, fed by a stimulus package in late 2008 that had nearly run its course, could not be maintained."
· How to think about the RMB, 'currency manipulation,' and trade war “In specific, what I have seen in Chinese factories makes me doubt that changing the value of the Chinese RMB would make any noticeable difference in "bringing jobs back to America." The wage differences between the country are so enormous, and the productive and exporting infrastructure in China is so well advanced, that you could double the RMB's value against the dollar and still make it more attractive to produce somewhere in China than in the Midwest. That is why I think typical American complaints about "currency manipulation" are ill-founded. They imagine that a cheap currency is what has built China's industrial empire. That's a factor, but a secondary one.
· It’s China’s World We’re Just Living in It "It's easy to forget that big international bodies like the IMF and the World Bank were created by just a few nations, led by the United States. These economic organizations have global reach, but that globe used to be dominated by the American superpower, and their policies were suffused with U.S. values. When Beijing was a small-stakes player its leaders didn't always like the setup, but they lived with it, even facing down fierce grassroots opposition to join the World Trade Organization. But now China has more worldwide clout, and public opinion at home has taken on a combative (and sometimes downright jingoistic) tone. So with one eye on China's national interests and the other on domestic critics accusing the regime of "coddling" the West, Beijing has begun to push harder to reshape international systems to make them more China-friendly (and, in the process, to raise the regime's chances of survival)."
· China Exports Soar 45% Growth"
CHINA reported Wednesday exports soared for the third straight month in February. The fastest pace in three years as most analysts believe it could leave Beijing more open to a stronger yuan. Overseas shipments grew 45.7 % on-year last month to US$94.5 billion, the China customs bureau announced. The consistent data cements a turnaround that began in December when a year-long”
CHINA reported Wednesday exports soared for the third straight month in February. The fastest pace in three years as most analysts believe it could leave Beijing more open to a stronger yuan. Overseas shipments grew 45.7 % on-year last month to US$94.5 billion, the China customs bureau announced. The consistent data cements a turnaround that began in December when a year-long”
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The success of China and India is not because of the cheap labor only: such cheap labor could be found around the Globe, neither it is because of the vast population only: as a whole South America counts about 400M but could not succeed consistent economic growth, nor because of "right time in history": for the last 20 years number of recessions have plagued the World Economy (1999,2008 deadliest ), hence, why these countries succeeded in economic growth even when recessions were ongoing?
Countries with very strong Social policies and Wealth distribution and redistribution? - Maybe just because in the modern Capitalism the biggest problem is Wealth distribution and redistribution, maybe because they ignored following the taboos of "trickle-down" economics and used flexible economic policies "as it comes as it goes", maybe because the Great Industrial Nations of US, Japan and some in EU were not flexible enough in adjusting their Economic policies to succeed Economics growth, maybe because the Big Internationals and Big Inverstors moved to China and India as a better choice: ther consistent at the same time flexible economic policies, social stability, vast population, work ethics and discipline, or finally, may be because China and India pretty much ignored the Parish Club, the World Bank and the IMF in the ways they conducted their Economic Policies: supported by strong foreign investments they changed the rules of the economic game "as it comes: as it goes": example is the devaluation of the Chinese Currency, the strong business and financial law against Corporate Risk Management fraud, and etc.
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'Extension of interest subvention for garment sector by April'Namrata Kath Hazarika | 30 Mar, 2010
The extension of two percent interest subvention to the garment sector should be given by April 2010 Read more.... » Many of the govt. schemes for MSMEs are irrelevant: Anil Bhardwaj » Budget allocation would address the additional needs of SMEs: H.P.Kumar » 'Increase in rural demand will accelerate growth of SMEs' » 'Hardware + Tools exhibition a solid platform for industry players' » Consolidation need of the hour for SMEs in textile industry
- 'Indo-Canada trade standing at USD 4 bn annually'"He also mentioned that India stands out in the world, as an emerging market with a strong democratic base, fully functional in English – the worldwide accepted business language, as a country where the rule of law pervades and as a country that survived the economic recession. During the interactive session with Canadian business associations – Canadian Council of Chief Executives and Canada-India Business Council, organized by CII, it was widely recognized that India's growing middle class and nation wide policies for inclusive growth present tremendous opportunity for participation by Canadian companies.
- Govt. clears 23 foreign direct investment proposals "Among the approved proposals were Tikona Digital Network's Rs. 1,142.21 crore offer for rasing the FDI to 74 percent by issue of compulsorily convertible debentures and Pune-based Bharat Forge's plan to issue warrants worth Rs.576 crore. Opto Circuits India's proposal to issue convertible warrants worth Rs.376.27 crore and a request by Intel Capital -- the Mauritius-based investment arm of the computer chip major Intel -- to acquire equity in the Multi Commodity Exchange of India for Rs.66 lakh also received the nod. The government put off decision on several proposals, including the offer of Gurgaon-based S Tel Private Ltd, a joint venture between Chennai-based Shiva Group and Bahrain Telecom, to issue fully paid-up fresh equity shares to undertake the business of providing telecom services in India.
· 'Indo-African trade to grow by 22 pc in next two years' “The bilateral trade between India and Africa is likely to grow by 22 percent in next two years, according to an ASSOCHAM paper released in the capital on Friday.
"It is projected that bilateral trade between India and Africa could be around USD 55 billion in 2012 from the current levels of close to USD 45 billion," said Arun Agarwal, chairman of ASSOCHAM's Africa Committee.”
"It is projected that bilateral trade between India and Africa could be around USD 55 billion in 2012 from the current levels of close to USD 45 billion," said Arun Agarwal, chairman of ASSOCHAM's Africa Committee.”
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The exodus of Capital from North America and E.U. had a deadly effect on their Fiscal Quantities (GDP of any country in the World and the most of Developed Industrialized Nations is based mostly on Industrial Production and Return On Investment ROI mostly from Industrial Production).
Japan, Germany and France succeeded in retaining some of their High Tech Industrial Production but both Japan and Germany among others were overrun by China: Japan as the Biggest World Economy and Germany as the Biggest Industrial Exporter, however Germany, France and Japan have balanced their internal demand by strong Social and Infrastructural Policies much better then many other countries have done it.
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Applications for employment adjustment subsidies fall in Feb The government grants subsidies to companies which have opted to maintain employment instead of dismissing workers by shortening the hours they work, for example. The subsidies are to make up for a wage decrease resulting from shorter working hours. The number of workers for whom subsidies were applied came to 1,608,149, down 119,066 from January, the ministry said.
- The Global Debt Bomb: "Today Japan can borrow all it wants from its own citizens. Over the decades they have dutifully (if mechanically) piled up a $7.7 trillion cache of savings they keep mostly in low-yielding bank deposits. Those savings equal two-thirds of the total household wealth of Germany, France and the U.K. combined, says John Richards, North American head of strategy at RBS"
Japan's consumer prices continue to fall
By Roland Buerk BBC News, Tokyo |
Japanese exports are rising, but deflation at home is cause for concern |
Japan has been in deflation for 12 straight months, figures released by the government show.
Prices fell by 1.2% in February from a year earlier, threatening the country's recovery from recession.
Japan's economy has been periodically plagued by deflation since the "lost decade" of the 1990s, which led to years of stagnation.
The prospect that goods will become cheaper in the future makes consumers reluctant to buy today.
This leads to a vicious circle of falling company profits and wages.
Downward trend The latest figures - where the core consumer price index fell by 1.2% - is not as bad as in previous months.
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Germany
· Euro zone deal points to a more German Europe (Reuters) - The masks have fallen. From now on, we will all be living in a more German Europe, with economic policy driven by Berlin's hair-shirt export-or-die model. That is the lesson of a deal among euro zone leaders on a financial safety net for debt-stricken Greece, adopted largely on German conditions on Thursday after months of wrangling that battered confidence in the single European currency." The politics of the EU are undergoing a fundamental change at present, with Germany becoming increasingly willing to cast off the shackles of the past and make its voice heard," said RBS analyst Timothy Ash in a research note.
· China And Germany Unite To Impose Global Deflation “Chindia, invented by Jairam Ramesh, an Indian politician, to describe the composite new Asian giant. Let me introduce you to Chermany, a composite of the world’s biggest net exporters: China, with a forecast current account surplus of $291bn this year and Germany, with a forecast surplus of $187bn (see chart).”
Audios and videos on the topic
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- Sarkozy ready to trigger EU 'crisis' to protect farm subsidies "President Nicolas Sarkozy addressed the nation Wednesday for the first time since his party's defeat in regional elections. He vowed to push on with reforms and said that he is ready to provoke a "crisis" in the EU to defend French farm subsidies."
Slight upturn for Paris region but no new jobs yet
“2010 will be a slightly better year than 2009 for industry and service sector companies in the Ile-de-France region which includes Paris and the surrounding area. According to the Bank of France's annual report - based on a survey of some 2,000 companies - 2009 was a year of stark decline in both sectors. But for 2010, companies are expecting business volume to rise again - slowly but surely.
“The Ile-de-France region is particularly dependent on big companies which have a high degree of international exposure, and it has suffered” from the global crisis, the Bank of France says in its report.”
Change in performance per sector (2009) |
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But it expects the region's industrial activity to see an upsurge of some three per cent in 2010. The companies rely on consumer borrowing to individual households, which has remained stable.
But there was a sharp decline in investment in 2009. Rejecting claims this might hinder growth this year, the bank's regional director Bernard Tedesco said, “If we’re dealing with full order books, growth can happen quickly. Investment activities have simply been postponed. And never have conditions been as favourable for companies as now, with interest rates at a historic low.“
But the outlook for employment remains grim, according to the report.
In 2009 companies in the region laid off 4.5 per cent of their staff, and another 1.4 per cent are likely to lose their jobs this year.
“Low profits mean that the CEOs are cautious. The job sector will be the last one to grow,” says the report.
Industry and service sector performance (2009 and 2010) |
A survey among industry and service sector companies in Ile-de-France |
The study was conducted among 1,022 companies from the industrial sector (producers of industrial or electronic machines, textile, automobile, consumer goods), as well as among 947 service sector companies (transport, merchandising, computer engineering, temporary work). In the Ile-de-France region, more than 300,000 people are employed in these two sectors. Industry:
Service sector:
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The information and links provided above are to prove that the new trend in Economics differs from the “trickle-down” Capitalism: just because there is not trickle-down of capital to the US market but only trickle-up and trickle-down capital to the Chinese market, also to prove that all tools of economics are to be randomly used “as it comes as: as it goes” as these are used in China and India instead of ideologically used as in US. Pragmatism is about to rule the Science of Economics to the rest of this Century.
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Production Economics and Marketism©
Production based economics is a reasonable philosophical conception defined very precisely by Karl Marx in his “Capital-Critique-Political-Economy” and clearly very precisely explains dialectic cyclically self adjustable periods of an economy of Capitalism, which economy in different proportions applys to the economies of Social Capitalism and Communism and overall to any system of economics taught ever after by any educational institution from East to West; when even in Communist economics throughout nationalization of industrial tools of production the people as owners of industries are sharing the profit “equally” instead of big fat capitalists smoking cigars taking the profit, they the people (whatever in reality it means) were reinvesting ROI and enhancing their standard of life ( in reality blah, blah , blah), but still the economics of Communism is a production based economics;
Has the production based economics really worked?
Most definitely: yeas, it worked even by experiencing difficulties such as the Great Depression the production based economics and its following financing and controlling practices were in the foundations of any most developed and developed country and market in the world: from the USA and Germany to Japan, all of these countries and their economies were developed by the system of production based economics: that how they avoided economic crashes, inflation and deflation, that’s how they enhanced their standard of life reaching far better life conditions compare anybody else’s; for any poor country these guys reached the sky…. And they did, but
What new happen that makes production based economics inflexible and inadequate?
Actually, what happen were mostly products and achievements of production based economics:
- Eastern Block Communist countries change their totalitarian systems and embraced Freedom (which wasn’t a political act but a consequence of inadequate economics: these were the most sensitive to the new developments in a Globalizing marked with constantly rising productivity in the rest of the world: lock of competitiveness knock them off)
- Almost any country in the world started pushing toward normalizing international relationship and opened their markets
- China become a member of WTO, open Her economy for investment and private enterprises
- European Union started expanding East and Southeast following aggressive ante-corruption policies in any member country and establishing number of low interest and subsidiary funds for development and promotion of environmentally friendly projects
- In the USA productivity was raising wild when risk-management and intellectual properties were becoming most powerful weapons to ?!? getting into China market. Capital was concentrating into smallest and smallest percentage of the population, and middleclass income growth after 2000 came to a hold
- High technologies and concentration of capital were making industrial production and farming much easier to export: start up, expand and enhance very quickly elsewhere in a short time limits
- Internet allowed people from elsewhere to exchange information and ideas thus making the world a small place; access to self education and new inventions, new marketing strategies and new media approaches
- Etc
All of the above and many others were the new events and developments brought by the new Globalization some of which (events and developments) are totally experienced for first time, but the most important are the Environmental issues consequence of long years of indiscriminate pollution by most developed and developed countries industrial revolutions. Environmental issues of Global worming are not just concerns but scientifically proven facts that effect anyone living on Earth; production based economics is based on industrial production profit driven therefore high technologies for generation of renewable energies, technologies for cleaning emission of manufacturing plants are very expensive preposition in a highly competitive world: for US practically implementing Environmentally friendly technologies would make for many businesses difficult to compete to China, Russia and India when even without such burthen competition is fierce. Not the least is the widespread poverty around the world in where countries and markets are barely having enough production to feed their populations then to seriously consider adapting expensive Environmentally friendly technologies and working toward better environment.
Production based economics does not use economic tools to deal with most of these new developments:
- Not all countries in a Globalizing market could become industrial: first, because they cannot compete countries like Germany, US, China and Japan that basically are capable to flood this Global market with manufactured goods; second, if all these countries go through industrial revolutions to become industrialized the pollution would be unbearable to the Earth environment
- Even very developing countries like China and India should not go throughout industrial revolutions in the old known ways themselves that they could destroy the world easily
- In the existing financial system of lending no country but the lenders could subsidize their economies if needed to reduce emissions and improve environment (when even these countries as explained could not do it on a large scale to not becoming uncompetitive)
- Last Global recession showed that deregulated production based “trickle-down” Capitalism did not establish “release valves” for handling over-capitalization neither "preventive regulatory policies" to avoid it: the wild-wild-west trickle-down theory of economics did not estimate that instead to trickle-down the capital went oversees being invested in more stable markets, or just was not invested in man-engaging industries in the US particularly when in there these were not competitive and less profit generating)
What kind of economics could enhance production based economics to address above issues, and make ongoing Globalization possible?
Changes in Western economies are naturally ongoing: governments are financing lending institution and insurance conglomerates, buying shares in manufacturers and subsidizing agricultures…. Governments in most developed countries are doing what they can to save their economies from total collapses and this process will continue in the future in and out, but:
Is this kind of Governmental interferences in markets most helpful to these markets approaches to handle world recessions and are there better ways?
The change of production based economics could be changed possibly by an economics of Marketism based on parameters and economic tools to accumulate over-capitalization, and deal with inflation by using “artificial methods” to avoid recessions, using central banking with allowance to issue capital and lend under low interest rates to a World with better security
Quantum leap must be done by developing and undeveloped countries and markets in order industrial revolutions to be avoided thus Earth Environment be protected from consequential for industrial revolutions pollution.
Quantum leap is possible if economics of Marketism is implemented; the new developments in the world are empowering this new economics by the Rising Productivity and Globalizing Markets because of the free trade and high industrial capabilities of most developed countries and markets inflation is avoidable even when production based economics is not used but free entrepreneurship is not replaced by nightmarish governmental bureaucratization which will be probably unavoidable in future recessions if the old system of economics remains.
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Is any solution for the mounting debt
Philosophy of Market EconomicsThe Global financing system at the moment represented and executed by the World Bank, IMF and WTO should act as a controller that balances Global supply-to-demand ratios to avoid Global recessions consequential of such (supply-to-demand) serious imbalance;instead this system works as a stubborn lender that controls their(usually small, less developed countries) borrowers' budgets: monetary and fiscal policies. Obviously the Global financial system did not perform that well in Europe: Greece, Spain, Portugal and etc. where governments were and still are equilibrating between ever rising social and infrastructural expenses and not so fast rising production of their economies: when their neighbors like France and Germany are enjoying high social and infrastructural budgets and which citizens are living in stable and secure environment; less developed countries of Greece, Spain, Portugal are strangling to maintain the European dreams of such prosperity and security however these less developed countries could not compete in anyhow to their well developed big "brothers" by establishing industrial production in levels corresponding to their rising expenses.
Some countries like Bulgaria choose to maintain relatively lower deficit which policies happen to result in even bigger then national debt disastrous consequences because of not being able to raise their standard of life to establish internal consumption or in other words these second category countries which followed the requirements of the Global financial system are in very poor condition (see:http://sites.google.com/site/businesslendingbulgsria2009/)for example 50% of Bulgarians monthly income levels 200 USD which makes Bulgarian market inadequate for development: industrial production, and especially when the Global demand shrank for the last number of years and export is getting harder; whoever even without current Global recession all of these countries (the first category with high debt and the second with limited debt) would never be able to compete in industrial production to their big brothers in Europe, North America and Asia, therefor their balancing social and infrastructural development with growing GDP's - mostly contributed by industrial production is just futile as it could be!
In this currently used economics: to expand Monetary Quantities and cover ever expanding budgets countries must expand their production by growth based economies and business activities thus and only thus these countries will be able to expand their social and infrastructural expanses or even maintain their current levels of expenditures. Global Monetary System and consequential Global supply-to-demand balance imposed and enforced by the WB, IMF and WTO however does not anymore accounts for Inflationary-Deflationary processes on the Marketplace but more like a stubborn lender only interested in collecting its assets;
National debt has skyrocketed for many countries small and large: Greece and Spain in Europe, United States and Brazil in the Americas, Japan in the Far-East are growing their public debt by running deficit in attempt to overcome shortages in their Fiscal budgets, save their financial sectors in case of the US, or just maintain their preexisting levels of social expenditures as Greece and Spain; or shortages of monetary quantities as Japan.
Most known economists are predicting “doom-and-bust” for these accumulating debt countries and overall for the Global financial system that in someway has to take on the setback of these countries default or even possibilities of default on debt payments or issued papers devaluation payments:
Seems most recent times do not differ from that when currencies lost their gold reserve backups and even farther when farming was replaced by industrial production as a main employer and GNP source: in both cases then economists were predicting “doom-and-bust” and the end of the world; but alike then neither inflation nor deflation are coming too dangerous for the economy levels therefor the World from monetary stand point will be probably still standing and what is going to change is the Global Central Financing System that instead of being only a lender collecting "paper" assets will start acting as a controller and a regulator balancing "demand-to-supply" ratios and avoiding Global crisis: but for this thing to materialize most recent industrial production based economics must change too: how so? – just as simple as it could be the ongoing Globalization (best represented by China and India) supported by rapid rising Productivity and Over-capitalization have prompted a world of difficulties for less developed countries and markets to develop or continue maintaining competitiveness to China, US, Germany and Japan' capacities for industrial production and competativeness. When Monetary Quantities for a country are directly related to this country industrial production the dead heat of the ongoing competition does not work in any help to any less developed country, therefore the struggle for such a country to maintain social and infrastructural expenses in such short of Monetary Quantities is becoming futile; The Global Recession particularly accelerated these new processes of financial turmoil for less developed countries and markets. Very good examples are Greece, Spain, Bulgaria, and etc. At the same time in a consumption driven economics as we are at with reducing consumption comes e diminishing production that consequently hits back to the industrial developing and most developed countries and markets, and so… on and on.
But is the “doom-and-bust” time unavoidable when the mounting debt of US and Japan reduce Global financial system to nothing?
May be so?...... but it is not going to happen, and how so?
The Global financial system of tighten to mostly industrial production Monetary Quantities is about to change in the ways last two exampled changes (of gold backed currencies to the current industrial production based and agricultural dominance to industrial production) it will change to a market driven Monetary Quantities basically tighten to most current market possibilities to avoid inflation or deflation (see: Quantum Economics-Philosophy of the Economy). The Global Central Banking System must be allowed issuing "capital" thus individual countries debt could be offset by low interest loans and subsidies: when such financing would not create dis-balance to "demand-to-supply" ratios.
Through low interest rates and subsidies to less developed countries and markets, and through development of Environmentally friendly technologies subject of these low rates and subsidies many countries and markets will be able to maintain some social expenses and infrastructure without becoming industrialized: organic production and renewable energies, environmental tourism and landscape protection, could be well enhanced and will become sources of growth, too.
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© Joshua Konov,2010
Quantum Economics-Philosophy of the Economy-Quantum Leap in Market Economics
In market economics economic tools (quantum economics: parameters) are used indiscriminately (not politically motivated but statistically formulated) to maintain balance (quantum economics: grid or quantum quantities) demand-to-supply ratios; Compare to currently used production (based economics that should be using self-adjusting dialectic economics of trickle-down approaches for development.
Because, economic tools (parameters) are “artificially” applied to limit over-capitalization or under-capitalization effect on real economies and markets, these (economic tools, parameters) may well be used to increase or decrease different parts of economies, markets by artificially accelerating or slowing business activities.
In modern times ecological issues are becoming extremely relevant to Earth survival: developing and less developed countries’ industrialization (considered by the standards of production economics only ways for development) will destroy Earth either by polluting the environment to point of no return or by exhausting Earth resourses to point of no return: both scenarios Earth will not survive such mass industrialization; In third scenario if developing and less developed countries and markets are pressed to stay as these are by using financial means and these (developing and less developed countries and markets) remain in such underdeveloped condition these still are growing in population and gradually polluting Earth and destroying Earth resources in much higher then most developed countries and markets rates; also in deregulated global market environment when environmental rules and regulations are obeyed by most developed countries and markets but not obeyed by other markets then industrial production will move to deregulated areas thus pollution is unavoidable in current production profit (only) based economics.
Quantum Economics Leap or Quantum Leap is ‘controlled’ economic jump executed by pointed use of financial means (low rate business loans and subsidies) to different areas of real economies and markets {particularly less developed countries, markets or parts of markets (in this category: parts of most developed countries and markets’ underdeveloped areas could be considered)}
Predominantly, development of less developed countries and markets, or parts of markets should be directed toward environmentally friendly technologies: renewable energy sources, organic farming, environmental tourism and etc. In economics of Marketism countries and markets should not necessary become industrialized to raise their life standards and development is not (only) related to industrial production:
Question:
Where industrial good will come from to bring needed supply to such growing demand from non-industrial development?
Answer:
It will come from globalizing rapidly expanding production of countries and markets of US, Japan, China, India, etc.
Globalization of industrial production and rapidly rising productivity could provide needed industrial and high tech “supply” to growing by quantum leaps consumers “demand”; to prevent from imbalances of demand-to-supply ratios central banking system should be established that uses formulas for monetary quantities and fiscal quantities and precisely applies economic tools (parameters) to limit economic recessions (quantum economics: energy buildups and consequential big waves). (See: Quantum Economics-Philosophy of the Economy-Monetary Quantities Formulas and etc related articles).
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Joshua Konov Chicago, United States In the University my most powerful discipline was Philosophy and ever since I have been writing in. Thus 33 years has passed. View my complete profile
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