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.