Blog Post 10

Stabilizing a Stabilizer

http://www.economist.com/world/international/displaystory.cfm?story_id=12725914

After the surging price of oil last year, the debate has recently turned to the huge decrease in the price of oil.  Now below $50 a barrel, oil producers are trying to cut down production 1.5 million barrels a day.  This cut is not happening fast enough however, because economies around the world are demanding so much less.  America, for example, is using 5% less oil than last year.  This is causing huge decreases in income for OPEC.  The oil producing countries are aiming for $75 a barrel, which many assume is reasonable, but the struggle comes from every country do there share, and in doing so losing there share.  

 

To bail or not to bail?

http://www.economist.com/world/europe/displaystory.cfm?story_id=13062174

The once admired euro is becoming more and more less attractive with its countries barely making it through the economic crisis.  Almost a year ago, Britain (who is not on the euro) was struggling the most and was criticized for not adopting the euro.  Now Britain is looking better than most of the Euro countries.   With Greece, Ireland, Portugal, Spain, and Italy all having massive debts, the future is looking very unstable.  Almost $2 trillion dollars of public debt has to be raised this year.  People who made a 10-year note investment in the government, are now ready to cash the investment but in doing so, may very well bankrupt their countries.  If the consumer realizes that the government may not be able to pay them back, then there would be a massive bail-out, and everyone would start to demand their money back.  People would lose confidence and trust in the government.

 

 

Raise is Expected for IMF

http://www.forbes.com/2009/04/21/imf-europe-banks-markets-equity-recession.html

The number crunchers at the IMF are expecting $4.1 trillion dollars in loss of assets by the world’s banks and stating that in order to fix it billions of dollars will have to be given back for the banks to be able and confident to make additional loans. The IMF is expecting to give US banks over $250 billion dollars to get the economy back to pre-crises levels, not to mention the $375 billion it is planning to give the European banks. They are also considering giving specific countries, such as England, an additional $100 billion to jump start individual nations. All in all, the IMF is planning on contributing over $600 billion dollars to Europe. That is a lot of money.

9th Blog Post

Bosnia to get IMF rescue loan if it starts saving

http://www.cnbc.com/id/30595497/for/cnbc/

Officials say Bosnia will have to cut spending to get a euro1.2 billion loan from the International Monetary Fund. The three-year standby arrangement should help the country overcome the impact of the global crisis. Bosnia's Prime Minister Nikola Spiric told media Wednesday that the talks with the IMF have been concluded and that the country can count on the financial injection if it decreases budget spending by June and revises its various budgets by August.  If the saving measures are implemented, the IMF executive board will approve the loan and the first euro200 million would reach Bosnia's Central Bank in July.

 

IMF: Latam recovery quicker than advanced economies

http://www.cnbc.com/id/30598619/site/14081545/for/cnbc/

The Latin American and Caribbean region will recover more quickly from the global crisis than advanced economies because they are less exposed to systematic banking problems and have more flexibility regarding policies to spur growth, the IMF said on Wednesday. In a report on the hemisphere's outlook, the International Monetary Fund said it expected Latin American and Caribbean growth to rebound around 1.5 percent by 2010 while prices of the region's commodity exports should recover 3 percent next year.

 

World Bank Sees Bleak Prospects For Asia

http://www.forbes.com/2009/04/07/asia-world-bank-markets-economy-forecast.html

Excluding China, Asia’s financial crisis has not bottomed out yet and is expected to get worst in the rest of 2009.  This is very interesting to America because we are perceived as a country that has already bottomed out of its recession and is expected to start growing again.  This Asia problem, will only hurt the US economy in the long run and there will be an balancing act that will have to take place over the next couple of years.  America will also hurt by the lack of imports and exports that occur on an unprecedented level between the two countries.

Blog Post- May 1

No pot of gold at the end of the IMF rainbow

http://www.undispatch.com/node/8148

The world’s economic leaders are getting frustrated with the International Monetary Fund. An organization that was once established to stabilize interest rates that has evolved into a relief fund, has not been delivering on its promises. The UN Millennium Goals poverty, hunger, education, equality, disease and infant mortality, are in jeopardy. The leaders are now asking themselves, why they should continue to fund a global cartel that is not doing what it was intended to do. The developing countries around the world need the aid now more than ever, but it can be a hard request when every country is struggling on the home front.

World Bank ready to raise funding for swine flu
http://www.reuters.com/article/internal_ReutersNewsRoom_ExclusivesAndWins_MOLT/idUSTRE53Q7FH20090427
The United States is prepared to give the World Bank more money to give to developing countries to help with the recent swine flu outbreaks. The US has already established a funding facility a few years ago to help with a different type of flu, but health officials are fairly certain that this plan is flexible enough to bring an end to the swine strand. The World Bank announced that it would need $25 million in immediate funding for Mexico and an additional $180 million in future loans. As tight as budgets are now, this price is very cheap compared to the potential expenses of this epidemic. This flu could quickly be taken care of and quarantined, or it could vastly expand and endanger thousands of lives. At times like these, the cost of money is nothing compared to lives.

The IMF: Economic Shepherd or Black Sheep?
http://www.npr.org/templates/story/story.php?storyId=103560947
The IMF has a lack of capital and is no longer capable of performing the goal it was created for. The 1997 Asian financial crisis put a strain on the IMF that lowered its capital loan availability. Now with an even greater crisis, the money that has been loaned is greatly needed. Industrialized countries, like the United States, have pledged to give the IMF a credit line of $850 billion dollars to help with the depletion of assets. Middle developers like, Brazil, pledged to give resources in the form of bought IMF bonds. In the long run however, it is these countries that are probably going to need more than the more industrialized countries. The goal is that these new funds create a stimulus to rejuvenate the fund and hopefully pick up the global economic confidence.

Banking on the Fund
http://www.economist.com/opinion/displaystory.cfm?story_id=13446763
Many of the Worlds developing countries are in serious need of additional money to help bail their country of its recession. Not every state has a financial system advanced as the United States that can get the economy out of a recession simply by lowering interest rates. The question comes from where the money comes from when nearly every country in the world is experiencing that same recession. The G20 has promised to give more backing to this fund, but with problems of their own it can be hard for the different countries to give in “charity”. In recent years, we have seen the world’s leading nations try to bulk up the fund by giving more to it, not when it is needed the most, we have the opposite happen by a decrease in amounts given.

IMF: Banks Need Billions More
http://www.forbes.com/2009/04/21/imf-europe-banks-markets-equity-recession.html
The number crunchers at the IMF are expecting $4.1 trillion dollars in loss of assets by the world’s banks and stating that in order to fix it billions of dollars will have to be given back for the banks to be able and confident to make additional loans. The IMF is expecting to give US banks over $250 billion dollars to get the economy back to pre-crises levels, not to mention the $375 billion it is planning to give the European banks. They are also considering giving specific countries, such as England, an additional $100 billion to jump start individual nations. All in all, the IMF is planning on contributing over $600 billion dollars to Europe. That is a lot of money.

A Developing World Bailout?
http://www.forbes.com/2009/03/10/bailout-g20-banks-business-washington-global.html
World leaders from the world’s most developed countries recently met to discuss the possibility of bailing the world out? The World Bank will need major donations from every country to essentially help every country. Not only are the countries bailing themselves out, but now they are considering bailing out each other. This is putting tremendous pressure on the more developed countries, such as the US who just spent $800 billion, and are now getting ready to send additional billions of dollars to foreign aid. The bank is expecting the United States to be the leader in this role and contribute over 4% of its annual GDP to the bailout. The final vote has not taken place yet, and many countries are still on the fence, but one thing is certain, change has come!

Model UN Simulation

My favorite part of the Model UN International Simulation was the meetings.  The meetings with other countries gave me a first hand use knowledge that I gained while studying and reviewing the material I learned.  It also gave me the opportunity to fully participate in the experience and to engage to a fully participate in the group experience. 

I also really liked trying to convince Hezbollah to attack Israel.  When we were trying to start a war it made it easier to be engaged and kept everyone busier than when we were just responding to the crazy news reports that were coming out.  It gave us a way to control our environment rather than just become a victim to it.  For example, we had to try numerous plans to try and get nukes before it actually happened, and then it took forever for the plan to actually happen.  But, creating other plans and carrying out other missions helped create a busier and more active Iran.

I wish that instead of a movie, we had a whole week of preparing on the Middle Eastern conflict.  The movie did help, but there is so much that occurs in the Middle East, that I would have liked to cover more of the history and more of the conflicts that have and are occurring there. 

Well, the first proud accomplishment our group had was receiving nuclear capabilities.  The staff would not accept any of our original plans, so we had to redo/make new plans for about 2 hours.  We spent most of the first day talking about nukes, and never gained access to them until the end of the second day. 

I was also proud of the deal that we made with China.  We allowed them to establish a Security Base near the gulf in return for 300,000 barrels of oil a day.  This fixed our trade deficit and gave our country extra money, which as the Minister of the Economy was the main objective of mine.  It also established an alliance with China that was proven to the rest of the world.  It was a very good deal that was made.

Iraq was a constant source of frustration for me.  From the very start, they were provoking Iran.  It all started with the problem over sharing water.  They wanted more access that we were not willing to give them.  Then they reached out to other countries to form an alliance against Iran.  When we finally did share more water, they claimed that we poisoned the water and that they were having an E coli outbreak. 

If there was anything that I wish we had done differently, I wish we had spent more time embracing Iraq.  I wish that we had received Nukes faster, and then bombed Iraq.  Maybe not even completely, but just enough to cause them to leave us alone.

The overall experience is very rewarding in how much you learn.  It causes you to think about International Relations from the role of the leaders and future plans, rather than just what happened in the past.

Blog Post 3

IMF: World Economy will Contract in 2009

http://www.cnbc.com/id/29618247/site/14081545/for/cnbc/

Late on Monday, the International Monetary Fun warned against the slowing global growth.  This slowing of growth has started over the past few years, as is expected this year to actually drop below zero and start to contract.  The IMF also said that this is probably the world’s worst depression that we have seen in any of our life times.  Decreasing consumer and business confidence, as well as a drastic decrease in international trade has caused this.  This is one of the first times ever that not only is the global economy in a recession, but also every single country is expected to be in a recession.  All of this information posses the question of whether the standard of living will rise for the next generation?

 

IMF Says Bad Loans Stall Global Growth

http://www.forbes.com/2009/01/28/imf-economic-growth-markets-equity-0128_markets40.html

This article digs a little deeper into the predictions made by the IMF.  First, it says that advanced countries will be hit the hardest from this depression.  Explaining, that since people have gotten used to living off credit, they will have to not only clear debt, but also get used to buying with cash.  Emerging markets, are also going to take a big upset in growth.  Since the consumers are demanding fewer goods, economic trade between countries is being lessened.  The IMF’s Blanchard, blamed the US for this crisis, saying that it is not doing enough to relieve banks of the bad loans they have accumulated.

 

Plumbing the Depths

http://www.economist.com/world/international/displaystory.cfm?story_id=12725914

After the surging price of oil last year, the debate has recently turned to the huge decrease in the price of oil.  Now below $50 a barrel, oil producers are trying to cut down production 1.5 million barrels a day.  This cut is not happening fast enough however, because economies around the world are demanding so much less.  America, for example, is using 5% less oil than last year.  This is causing huge decreases in income for OPEC.  The oil producing countries are aiming for $75 a barrel, which many assume is reasonable, but the struggle comes from every country do there share, and in doing so losing there share.  

Iran

Iran

Iran is noted as the 18^th largest country in the world in terms of landmass.  It was formerly known as Persia.  The country is located in the Middle East and has huge reserves in gas and petroleum.  This makes Iran a regional threat due to geographic location in the area and the partial monopoly it has over the energy sector.

Iran is the home to some of the world’s oldest and continuous civilizations dating to back to around 7000BC.  The territory used to be very important in trading, from people who were traveling from Asia to Europe to Africa.  This helped establish its culture.  Currently, the nation has a Islamic republic and its authority lies in the hands of the Supreme Leader.

Iran has access to water through the Caspian Sea.  It helps with imports and exports, mainly oil.  Other landscape includes rigorous mountains and plateaus.   Dense rain forests in the north and vast deserts in the east divide the state.  The differences in geography provide for very diverse climate. In the north where it gets below freezing at times, compared to the south where it easily gets above 100 in the summer.

The capital of Iran is Tehran.  It is also the largest city in the state, both by geographic size and population.  After the state, there are 30 princes, which are then sub-divided into counties.  Tehran is like most urban cities, experiencing severe air pollution, and a hub of transportation networks. 

The country is rapidly improving its economy. By 2030 the UN predicts that 80% of the population will be urban, compared to the 60% in 2002.  Islam is the official religion of the country, and they are also required to travel to Iran’s second largest city every year to visit the shrine.  This helps create both a state of society, and increases the economy of Iran.

            Because of its old past, Iran has preserved much of its history.  The also adds to the tourism of the country.  The state has many old churches and artifacts from 1000s of years ago.

            Iran’s relationship with America has deteriorated rapidly from the 1970’s when Iranians took control of a US embassy.  Since then, there have been three wars fought between the two countries. One of which was secretly helping them stop the invading USSR from moving troops into the borders.  The other two wars have been against them and terrorism. 

            With as much history as Iran has, it has not been able to be a major technological innovator that other countries have.  It has always remained on the outskirts of big countries, but never falling behind like other countries do.  Most Iranians are struggling to remove to terrorist stereotype, get a good education, a good job, and improve their standard of living.

World Economies 3

The Whiff of Contagion

http://www.economist.com/world/europe/displaystory.cfm?story_id=13184594

With the world markets in a decline that they are in right now, Eastern Europe is having unique solutions to the problems facing the rest of the world.  Countries such as Latvia are selling shirts with sayings on them that do not make sense.  One saying is “Nasing Spesal” and are starting to be a lighter note to an increasing country deficit and make some people feel a little better about what is going on.  The government is now trying to cut spending in numerous ways, the biggest cut being in social programs.  This drastic change is causing the public to riot.  Some just simply do not understand that the government is just trying to do what is best for the country.

 

Domino Theory

http://www.economist.com/finance/displaystory.cfm?story_id=13184631

For decades people have bought and sold bank bonds, with the thought “if you can’t trust the government, whom can you trust?”  This way of thinking quickly spread from one government to the next when people started to buy bonds in foreign markets.  Governments started to run huge deficits on the basis of bond sales.  The question is now, what if governments can’t pay them back?  With the most risky Dubai the question may become reality.  Not having enough capital to pay back loans could not only affect that country but also many others, from the lost income that foreign investors could have had.

 

The bill that could break up Europe

http://www.economist.com/opinion/displaystory.cfm?story_id=13184655

Combining the previous two articles, a problem has sent in with Western Europe investing in the spend-fast Eastern Europe.  The eastern countries may not be capable to pay back the loans, and the first to feel the effects would be their western counterparts.  Some predict that this fall of even one country could trigger effects that make the entire European Union fall.  Unfortunately, the IMF will have to step in and help pay some of the countries debts, so hopefully a great World economic disaster is dodged.  Since there is also a central currency between these countries, the western states must be concerned with what the failing foreign markets could do to their countries markets.  It is pretty well understood that the first thing that should be done is to stop the currency from collapsing and ensure that banks have enough money (from the IMF) to ensure that people can continue to function in their daily lives.

Blog Post 2

Britain’s Fallen Star

http://www.economist.com/world/britain/displaystory.cfm?story_id=13110366

Britain, a once growing economy, has lost its momentum and is projected to have the worst decline in GDP growth in 2009.  Stores like Poundland (their equivalent to the dollar store) are starting to get more and more customers as people are losing jobs.  The housing market is not any better, as new home construction has nearly come to a complete halt and subsidies are starting to be given for the unsold new homes.   They also have a huge deficit that is not helping the problem any better; this also causes a huge imbalance with the inflation that is currently happening.  Some, however, think that some of the forecasts mad are too severe, thinking that GDP will not drop as much as expected, and the battling monetary policies that have been put in place will take care of it.

 

Back to the Future

http://www.economist.com/business/displaystory.cfm?story_id=13101637

Britain’s problem with the labor markets is hurting much more than just Britain’s economy.  Currently the striking construction workers are finding jobs in countries all over Europe’s continent and sending money back home.  With the world economy in the state that it is in, countries cannot afford to be losing jobs (and money) to foreign countries.  The once conservative view of not getting involved is starting to be overtaken by a more Keynesian approach.  Not only does the British government need to get involved, but also is being forced to by the European Union and the Trades Union Congress.

 

World Bank: China Needs Balanced Development

http://www.forbes.com/2008/11/25/world-bank-china-markets-econ-cx_twdd_1125markets03.html

China’s recently passed stimulus package has done good things for the economy, but many warn against doing too much and overheating the economy.  Much of the change has not come from a decrease in GDP but merely a decrease in GDP growth.  The policies that should be implemented should however change.  A safety net should be set up with lower price caps on inelastic goods, to make sure that the stimulus continues to have its intended effects, rather than go beyond it.  The government deficit became 2.9% of GDP, but is expected to be manageable.  Even though a slowdown is not desirable, it is a necessity to make sure that the economy can develop in a healthy manner.  

World Economies 1

Supersizing the Fund

http://www.economist.com/finance/displaystory.cfm?story_id=13062102

During this current state of economic affliction, the International Monetary Fund is needed now more than ever to help the developing countries it was created for.  The IMF is funded mostly by Europe and America, and is now debated to allow more say from other countries.  Since most of the countries are struggling on the domestic front, it can be hard to expect them to pay to help out other countries.  In 2007 contributions to the IMF were at $929 billion, but are expected to be as low as $165 billion in 2009.  Some economist are arguing that the since the IMF was created to help developing countries in time of need, it is becoming ineffective and would need over $1 trillion in order to make the IMF work again.  Other debate is stemming from the idea of raising the credit rate of the IMF, but smaller countries are arguing for the richer countries to pick up the tab.

 

A Tricky Balancing Act

http://www.economist.com/world/europe/displaystory.cfm?story_id=13062174

The once admired euro is becoming more and more less attractive with its countries barely making it through the economic crisis.  Almost a year ago, Britain (who is not on the euro) was struggling the most and was criticized for not adopting the euro.  Now Britain is looking better than most of the Euro countries.   With Greece, Ireland, Portugal, Spain, and Italy all having massive debts, the future is looking very unstable.  Almost $2 trillion dollars of public debt has to be raised this year.  People who made a 10-year note investment in the government, are now ready to cash the investment but in doing so, may very well bankrupt their countries.  If the consumer realizes that the government may not be able to pay them back, then there would be a massive bail-out, and everyone would start to demand their money back.  People would lose confidence and trust in the government.

 

Up and Away

http://www.economist.com/finance/displaystory.cfm?story_id=13062202

Japan’s industries are starting to worry about the future of its currency.  Its inflation rate is not what is worrying businesses though, it’s the exchange rate.  Earlier in the decade, the Japanese government decided that their products are more inelastic than most people think and that if exchanged rates hiked, Americans would still buy their products.  Quite the opposite is true, with exchange rates as high as 65% to the “tumbling pound.”   Some of the increase is due to Hedge Funds making a profit on swapping the currencies with higher yielding ones.  Not only is this a concern for new production, but also for current inventories since the Japanese products are much more elastic than thought.