While the unemployment rate of Spain and Greece roaring extremely high these days and economies in the European Union rest down in the trough, good news has finally arrived from the Office of National Statistics. Recent statistics showed that the United Kingdom's economy grew 0.3% during the first quarter of 2013, which relieves the fear of the British economy falling into a triple-dip recession. Is this a sign that United Kingdom is getting itself out of the European Financial Crisis?
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globalEDGE Blog - By Tag: financial-crisis
The global sovereign debt crisis has impacted our world economically almost like a 3rd world war. And because money was thrown out with rabid fury, it is boomeranging back with a vengeance. In his quintessential narrative-style nonfiction book, Boomerang, Michael Lewis presents to the reader four case studies: Iceland, Greece, Ireland, and Germany. Lewis travels the world examining how each of these countries dealt with the collective problem of debt and how their cultural characteristics impacted the citizens.
Charlie LeDuff’s Detroit: An American Autopsy is brutally honest. In a story filled with corruption, anger, and even laughter, LeDuff goes into detail about the crumbling of an American city, and what is left of it. After leaving a job with the New York Times, LeDuff comes to find what was once a city that represented the American Dream, now rotting and broken.
The European Union gave a €10 billion rescue to Cyprus, a small island country in the European Union. It is the fourth of seventeen Eurozone states to receive a bailout by the European Union and the International Monetary Fund. In order to gain more time to convince parliament to back a new tax on deposits, Cyprus said that they would not open up their banks until Thursday the 21st of March. This controversial tax is on bank deposits and in order for it to come into effect they must have the support of parliament. Investors reacted poorly to the news as shares fell, and there was a run on cash machines over the past couple days.
While the majority of European countries are experiencing the “nightmare” debt crisis, Germany is actually in an optimistic mood and is pleasant about its extraordinary trade surplus. Although Germany was hit hard initially by the global financial crisis, its exports helped the country's economy recover the by dropping unemployment to 3 million in 2012, the lowest level seen in 20 years. Its fast economy rebound left the rest of the European world in envy, and therefore triggered an argument on its role in the European Union (EU).
Economic turmoil in Europe has many concerned for the future of the Eurozone and the stability of its individual members. In need of some reform, European Union leaders congregated to enact a single banking supervisor for the union. The leaders agreed that the European Central Bank will be considered supervisor-in-chief, and this bank has intervention power over all 6,000 Eurozone banks. The plan is to have the banking union functional by the first of January so the Eurozone’s rescue fund, the European Stability Mechanism, can begin with a bang at the start of the New Year. The Stability Mechanism is essentially a firewall system for the EU, and it focuses on dealing solely with bailout applications, leaving transfer and monitoring to other European stabilizing facilities. The initial concerns of the banking union and the European Central Bank will be to rescue failing Spanish banks, and then deal with the pending Greek debt crisis. But of course, European leaders are facing opposition in regard to the new banking union decision.
As most of Europe still feels the fiscal repercussion’s from the debt crisis, some companies are leveraging this to target the fiscally conservative consumer. Consumer spending power has declined which means companies are pressed to find ways to squeeze every penny out of the consumer. Many companies are changing the packaging of products to accomplish this.
In the midst of the European Debt Crisis that has has toppled governments and pushed a number of countries into a second recession, Ireland has drafted a new plan to save their housing market and keep families in their homes. With house prices on the emerald isle being 50 percent below their peak value, more than half of Irish mortgages worth less than the outstanding debt, and about 39% of homes in default, the Irish government has been forced to take steps that many economists would deem as far too risky to enact. The government is expected to sign a law that would encourage banks to substantially lower the amount that borrowers owe on their mortgages, which could prevent mass-scale foreclosures, and also a blueprint for other nations seeking to resolve their housing dilemmas.
The economic growth outlook for developed countries has gotten much worse in the past few months. With the amount of globalization in the business world today, economic concerns abroad can have profound impacts at home. A lot of experts in the field are beginning to wonder: will these events lead to another global recession?
Two weeks ago, the European Central Bank (ECB) raised its benchmark interest rate from 1 percent to 1.25 percent, putting it at odds with its counterparts in the United States and Britain. This move has sparked a debate as to whether the ECB jumped the gun with the interest rate hike.
Just two years ago the second worst depression in history hit us. Recently we have started pulling ourselves out of it, albeit slowly. Looking around at the depression’s results, the question is almost begging to be asked, did we learn anything from the first one?
Following the recent financial crisis, many people are blaming the large banks almost solely for the collapse. Many feel that the banks must split their commercial banking divisions from their investment banking ones. People think that the banks should not be allowed to use the money they hold for customers in speculative investments for the bank's potential profit. Do these concerns sound familiar?
In the recent recession, many companies slashed jobs, some by more than 20 percent. When a corporation slashes their workforce by more than 20 percent, this is called extreme downsizing. But companies that have made these deep job cuts may suffer in the longer term.
Recently a study released by Ernst and Young, looks in detail to how leading global companies have dealt with the recession and are looking ahead. The report compiles conversations that over 500 of the firms senior partners had with clients around the world.
A group of twenty finance ministers and central bank governors, nicknamed the G-20, will be meeting in London this weekend to discuss the future of the global economy. Australian treasurer Wayne Swan provides an overview of some of the proposed directions the G-20 wants to take the global economy in.
A recent Businessweek Ranking listed Hong Kong as No. 9 of the "World’s Gloomiest Countries" with respect to economic outlook, with exports, profitability margins, investments, turnovers, and selling margins all expected to fall in a negative manner. Despite the hard hits that Hong Kong and the other Asian markets have taken in the financial crisis, Hong Kong can and will bounce back.
It is a fact that the world is in a financial crisis. It is a fact that many are losing jobs; that many have lost money; and many more will find themselves having to pay back loans that they do not have the money for. Every one knows that, but what are we doing about it? It is time for the world to look into some positives about the financial crisis because pointing out the negatives is not helping out anyone.
The world is still in a financial crisis and it is highly unlikely that it will be over soon. Many nations still blame the problem on CEOs in the United States. After the government bailed many banks out, people ask what is happening to that money. Is it really put into good use or do banks keep on lending more? Everyone knows that the problem is that consumers and businesses are facing huge debts, but it doesn’t seem that CEOs are taking any responsibility.
The terms depression and recession were not even around until after the Great Depression. However, they have been used plenty of times lately. It has been months since the American government has declared the economy to be in a recession and it seems that the world thinks that a depression for the
Over two million people crowded the streets of Paris on Thursday, in protest of President Nicolas Sarkozy’s recent inaction in light of increasing unemployment. Job loss in France, according to the Telegraph, was the final straw in a string of incidents that have decreased Sarkozy’s popularity exponentially in recent months. Critics, including dissenters within his own party, are calling for his removal. In a nation where people depend largely on the “welfare state” to take action, little is being done.
When the economy is bad, it is the time for economists to shine! During the annual meeting of American Economic Association this year, economic recovery and market restructuring became the central topics among the attendees, among whom included five Nobel economic laureates.
Traditionally, Iceland has been one of Europe’s priciest vacation destinations. However, following the recent financial collapse, vacationing in Iceland has become much more affordable. Since the financial crisis, the Icelandic króna is worth less than half its value a year ago, which, as economics tells us, increases the value of other currencies being used in that country. Some multi-night deals are starting at $400, a sign of both the depressed Icelandic economy as well as the desire of attracting foreign currency in order to help jump-start the economy.
Some people thought that Asia, with high growth rates, huge trade surpluses and substantial foreign reserves could be less affected by the economic storm which originated in the West. Yet, a number of economic indicators show us that Asia in fact could not avoid being hit by such a global disaster because of the fact that it heavily depends on West to fuel it's own economy. For example, exports contribute 45% of Asian countries’ economy and out of these exports, western consumers count for a half of it.Western investors are also the major players in the Asian markets. The depreciation of Asian currencies caused a huge loss on currency-hedging products. Even so, Asia - the source of one third of global GDP - can play a crucial role in bringing the economy back to the prosperity.
Reports are beginning to show up all over the internet of another facet of the financial crisis: the damage done to the agriculture industry. If you check out the agriculture page in the Industries section of globalEDGE, you’ll get an idea of how large the consequences are for relevant businesses. The US alone produces almost $68 billion dollars in agricultural exports yearly. The Netherlands follow with roughly $38 billion, preceded by Argentina, France, and Brazil. It’s no surprise that as consumers try and spend less, the greater agricultural industry would be bearing the brunt of the losses.
Only a few short months ago, national security still appeared to be headline news. News paper articles, news feeds online, and television reports about threats of terrorism, weapons testing, illegal immigration, etc. were inescapable. It seemed strange to think that at some point we would have to pay attention to news about the global economy with the same sort of concern.
The globalEDGE website is run by MSU-CIBER, which is one of 31 CIBERs across the U.S. CIBER stands for Center for International Business Education and Research. Another CIBER at George Washingon University in D.C. recently held a discussion on the origins and implications of the current global financial crisis. It was a very interesting panel discussion with some extremely bright individuals offering a unique perspective not influenced by the mass-media. There is a video you can watch here: http://business.gwu.edu/financialcrisis/. Be sure to check it out!
Football, or soccer as the Americans call it, especially in England is the second most important thing after family in life; it is like a religion. Europeans follow it closely because it is part of their lifestyle. But what happens when t-shirt sponsors go bankrupt? When team sponsors suffer huge financial setbacks because they hold stakes in Icelandic banks?