Category Archives: Economics and Finance
The Chimerican Threat
The People’s Republic of China and the United States have experienced sharp disagreements in economic policies for some time, straining Sino-American relations. Among all, it is the pertinaciously undervalued Renminbi(i) that has drawn much criticism from the developed world. Due to this condition, it is generally believed that China’s economic policy is the main cause of global imbalances in current account positions and that its policy poses a great threat to global economic stability.
In response to the Great Crisis of 2008(ii), a “global saving glut”(iii) theory, postulated by Federal Reserve Chairman Ben Bernanke in 2005, emerged as the prominent narrative to explain the major causes of the crisis. The theory maintains that excessively high savings by some countries pushed their savings towards current account surpluses and away from Continue reading
New Age Equilibrium Wage
The study of economics has a tendency to assume consumers, producers, workers, and/or any other agent, has a mechanical nature about them. With regard to the issue of minimum wage, such an ideological distortion is definitely problematic. Why is it problematic? The answer is simple. Firms always look for, or are at least open to, ways to lower costs. One of those ways is to lower variable costs, which means slashing the compensation of the workers. There is obviously a flip side to this. No worker actually wants to receive lower wages because most if not all workers see themselves as worth more than they really are per hour. However, economics assumes that people will adapt to these market-driven changes in wages or pursue other value producing opportunities. That is clearly unrealistic, and hence, the existence of labor unions. Continue reading
On-Screen Interview with Chris Brown on Alternative Energy
The Lexington Universal Circuit interviews Chris Brown, a China energy consultant with Guymard Consulting, on the domestic and international future of alternative energy. More specifically, Mr. Brown delves into the obstacles that obstruct the global shift away from oil and other fossil fuels. A great deal of discussion is focused on the positions China and the United States of America’s have on this issue. Special thanks to the Bernard L. Schwartz Communication Institute for hosting the interview. Continue reading
Kinda Late to Help Haiti
As everyone now knows, on January 12th Haiti had been struck by a devastating earthquake that killed thousands of people. According to the United States Agency for International Development, the estimated death toll is 100,000, and nearly 3 million people have been affected. Clearly, this is a terrible tragedy.
So, what was the U.S. response to this catastrophe? Surprisingly, America had a better response time to supporting Haiti than it did its own city of New Orleans during the aftermath of Hurricane Katrina. Within a day, the U.S. sent over American soldiers, firefighters, paramedics, and humanitarian workers. In fact, President Barack Obama promised Haiti $100 million in hard earned taxpayer dollars, and has stated that much more aid is on the way. Continue reading
I Love the Game Google is Playing
The New York Times reported that Google plans to shut down all operations in China due to assaults from hackers, as well as, China’s attempts to limit free speech online [1]. Although this makes Google sound heroic, it hardly sounds like the truth in its totality. Google is a multinational corporation that has to cater to shareholders, so financial straits are most likely the real reason for the anticipated departure.Google has been cooperating with the Chinese government’s demands for internet censorship for years. In fact, Phillip Lenssen’s blog, blogoscoped, provides some shocking screenshots of how the censorship materializes itself on Google’s China based search engine [2]. After viewing Lenssen’s blog post, it is clear that search engine censorship is probably the least important reason why Google is planning to leave China. With over 1.3 billion people to capitalize off of, there is no reason why human rights trump the prospect of profit. Continue reading
China Plays Dominoes Well
History is marked by a series of conflicts – kinetic and potential; Chinese activities in Central Asia are exemplary of this. On December 14, 2009, Turkmenistan began its exportation of 40 billion cubic meters (bcm hereafter) of natural gas to the Chinese Xinjiang Province, with contributions of 10 bcm from both Uzbekistan and Kazakhstan over 30 years. Historically, Turkmenistan has exported gas through Russia en route to China yet this particular deal conveniently bypasses Russia. To complicate matters more, the European Union shares an interest in this region vis-à-vis their Nabucco gas line planned to run through southern Europe into Turkey. Needless to say that while much commotion is made over oil and gas bonanzas in the Middle East these days, nations like Turkmenistan and other central Asian countries have untapped oil and gas reserves and naturally stand as open targets as both potential trading partners and secondary allies for nations such as China, whose intentions are altogether unknown. As such, the benevolent guise of trade very easily becomes the hook by which nations such as China are able to rally seemingly insignificant states to their side. In essence, while the powerful nations of today are playing hard politics in the Middle East, China is playing soft politics in Central Asia as a precursor to the domino effect in that region with Turkmenistan as the battlefield for trading rights.
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Homeownership: Good for You, Better for Me
In the market-driven economy of today, quid-pro-quo is often (if not entirely) the modus operandi. Unfortunately, not all transactions are fair in that the “benefit” one party receives is in fact harmful to them either immediately or over time. In drafting and eventually passing the Community Reinvestment Act of 1977, the United States Congress set the American people on the fast-track to homeownership by strong-arming banks into offering home mortgages to minorities and low-income groups. Questions of legitimacy, a false sense of security and a dubious backhanded attempt at further controlling the American people come into question in addition to whether or not homeownership is a ‘right.’ Continue reading