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Posts Tagged ‘Economy’

Nine Reasons Why This Economy Feels So Bad

Posted by Ram Kumar Shrestha on August 8, 2012

The recent slump has been unusually painful, and the feeble recovery has been disappointing. But today’s economy seems even worse than it actually is.
Man holding empty wallet


Recent U.S. economic troubles are often referred to as the Great Recession, implicitly equating them with conditions during the Great Depression. Yet by many measures the economic deterioration of the past few years is not as serious as in some earlier downturns. The drop in GDP from peak to trough for the 2007-09 recession was indeed severe, 4.7% compared with 3.2% for the 1973-75 recession. Still, it doesn’t begin to compare with the 26% decline of the early 1930s, the 18% of the 1937-38 recession or even the 12% of the often-overlooked 1945 slump. And peak unemployment was higher not only during the Great Depression, but also during the recession of the early 1980s.

Moreover, if you look beyond the national averages, several past recessions have been more destructive in certain specific regions. Rust Belt manufacturing was badly battered in the 1970s – indeed, Detroit and the U.S. auto industry have never fully recovered. And the Oil & Gas business, especially in Texas, needed a long time to bounce back from the 1980s. All things considered, the recent recession may have been worse than average, but it was hardly unprecedented – and nowhere near comparable to what happened in the 1930s. So why do today’s economic troubles seem even worse than they are? Here are nine reasons:

The recovery has been hugely disappointing. Compared with today’s feeble gains, the rebounds that followed the deep recessions of 1973-75 and the early 1980s were robust. Within 18 months, real GDP growth touched 9% and remained well above average for several years. By contrast, the current recovery has failed to get much beyond 4% at best and has averaged less than  2.25% over the three years since the official end of the recession. Read the rest of this entry »

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Defying Gravity: Is Asia’s Economic Miracle About to Stall?

Posted by Ram Kumar Shrestha on August 5, 2012

Even in Asia, where gains in wealth have been unparalleled, policymakers are finding it harder and harder to improve the welfare of the common man.
Nelson Ching / Bloomberg via Getty Images

Pedestrians cross an intersection during the morning commute in the central business district of Beijing, China, on May 28, 2012

As the West struggles to recover from the 2008 financial crisis, it is only natural that many have looked to Asia with envy. While Americans contend with a housing bust and joblessness, and Europeans suffer through their debt crisis, much of Asia (except Japan) seems to gain economic power, wealth and competitiveness year after year. The East looks like it is eating the West’s lunch.

Much of that storyline is true. The rise of Asia is the single most important economic trend of the past half century. But at the same time, looks can be deceiving. Asia has its own share of economic troubles, which threaten to derail its heralded economic miracle.

(MORE: China’s Economic Slowdown: Why Stimulus Is a Bad Idea)

We can see that in the current slowdown in the region. Despite Asia’s burgeoning wealth, its economies are still to a great degree dependent on the advanced economies of the West, and as the recovery there sags, so have Asian exports, manufacturing output and GDP growth. China is likely to post its worst economic performance in 13 years in 2012. South Korea notched its slowest growth rate in nearly three years in the second quarter. Growth in India has fallen precipitously as well. The IMF predicts the economies of developing Asia will expand by 7.1% in 2012 – not bad, of course, but a sharp drop from the 9.7% recorded in 2010. Clearly, there is a limit to how much Asia can defy the gravity of the global economy. Read the rest of this entry »

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China’s Economic Slowdown: Why Stimulus Is a Bad Idea

Posted by Ram Kumar Shrestha on July 30, 2012

What Beijing needs to spur growth is not greater spending or easy money, but fundamental reform
Soo Hoo Zheyang / Reuters

A flour vendor naps as he waits for customers in front of his stall at a wholesale market in Beijing on May 11, 2012

Anyone who thought China was impervious to either the perilous state of the global recovery or the laws of basic economics should take a look at the data streaming out of the country in recent months. GDP growth in the second  quarter slipped to 7.6%, the slowest clip in three years. Manufacturing output and exports have been weak and the property sector has stalled. The IMF recently lowered its forecast for China’s growth in 2012 to 8% — which would be the economy’s worst performance since 1999. And with the sagging data have come louder and louder cries for greater government stimulus to pump up growth, as Beijing’s policymakers did successfully after the 2008 financial crisis. “There’s lots more the government can do to ratchet things up,” HSBC said in a recent report.

That’s exactly what China doesn’t need, however. Government policies to greatly boost growth will only exacerbate the percolating dangers within the Chinese economy — dangers that could even result in an economic crisis. Instead, the current slowdown shows how badly China needs a new growth model, and the reform necessary to build one.

(MORE: Why China Should Slow Down)

For several years now, economists have been warning that China’s growth is unbalanced and, therefore, unsustainable. The economy is too dependent on investment and exports to drive growth, they argue, and to fix that problem, Beijing has to do more to encourage domestic consumption as another pillar of development. Not much has really been done to “rebalance” the economy, however, and sometimes it seemed that didn’t much matter. As the economists babbled, the economy continued to grow. Read the rest of this entry »

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The Real Battle in 2012 and Beyond (Video)

Posted by Ram Kumar Shrestha on July 13, 2012

By Rober Reich, Chancellor’s Professor of Public Policy, University of California at Berkeley; Author, ‘Beyond Outrage’


It’s not merely Republicans versus Democrats, or conservatives versus liberals. The larger battle is between regressives and progressives.

Regressives want to take this nation backward — to before Social Security, unemployment insurance, and Medicare; before civil rights and voting rights; before regulations designed to protect the environment, workers, consumers, and investors. They want to sabotage much of what this nation has achieved over the last century. And they’re out to do it by making the rich far richer, turning Americans against one another in competition for a smaller and smaller slice of the pie, substituting private morality for public morality, and opening the floodgates to big money in politics. Read the rest of this entry »

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George W. Bush Blamed For Economic Troubles More Than Barack Obama, Poll Finds

Posted by Ram Kumar Shrestha on June 15, 2012

Comment: We can blame anybody, however; we can bring change only when we start to blame ourselves

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Obama Bush Economy

Although the struggling economy under President Barack Obama’s leadership will likely define the outcome of this year’s general election, more Americans continue to hold former President George W. Bush accountable for the nation’s economic problems, according to a new poll.

The poll, released by Gallup Thursday, showed that 68 percent of Americans place either a great deal or moderate amount of economic blame on Bush, whereas 52 percent blame Obama. Republicans more universally ascribe the bad economy to the incumbent president, with 83 percent holding Obama responsible and 49 percent attributing the same level of blame to Bush. An overwhelming 90 percent of Democrats still blame Bush for the nation’s economic problems, as opposed to only 19 percent who place blame on Obama, showing that Republicans are far more willing to hold Bush responsible than Democrats are willing to blame Obama.

The results of the survey come as Obama takes the stage in Ohio for a major economic speech, following a dismal May jobs report and repeated attacks from his Republican opponents for remarking that the private sector is “doing fine”. Presumptive Republican presidential nominee Mitt Romney has made the country’s ongoing economic woes under Obama’s stewardship the focal point of his campaign, while the Obama campaign has worked to attribute the slow recovery to the problems created by Obama’s predecessor and Congress’ unwillingness to act on any of the president’s proposals. Read the rest of this entry »

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Americans impoverished back to 1992

Posted by Ram Kumar Shrestha on June 12, 2012

Families wait in line to receive aid from Feed The Children in Hoffman Estates, Illinois (Scott Olson/Getty Images/AFP)

Families wait in line to receive aid from Feed The Children in Hoffman Estates, Illinois (Scott Olson/Getty Images/AFP)

An average American family’s income has fallen to the level of Bush Sr. presidency, the Survey of Consumer Finances published on Monday. America’s middle class has been affected the most, losing 12.1 per cent of income in just three years.

The Fed reports that if in 2007 the wealth of American middle class family exceeded $126,000, but by 2010 the figure had dropped to $77,300, the minimum index since 1992. The survey notes that the wealth of the poorest families has fallen by 7.7 per cent, whereas the wealth of the richest has dropped only 1.4 per cent.

One of the reasons the wealth has dropped so significantly is that the median housing prices dropped to $75,000 in 2010 from $110,000 in 2007. And this is no secret that home equity has scarcely recovered since then.

The richest 10 per cent of American households in 2010 still earned an average of $349,000 a year. These families still had an average net worth of $2.9 million in 2010. Read the rest of this entry »

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China’s Antiquated Financial System: The Creaking Grows Louder

Posted by Ram Kumar Shrestha on June 6, 2012

Nelson Ching / Bloomberg via Getty Images

Pedestrians walk past the People’s Bank of China in Beijing, China, Dec. 23, 2011.

In April, Chinese Premier Wen Jiabao took aim at China’s powerful state-owned banks. According to Reuters, he said at a discussion with local businesses: “Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital. That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

Wen’s attack on China’s big banks, followed two weeks later by the Chinese central bank’s move to widen the renminbi-to-dollar trading range from 0.5% to 1%, raises the question of whether China is about to accelerate bank and financial system reforms. Against the backdrop of the spectacular fall of Chongqing Communist Party boss Bo Xilai, who upheld the heavy hand of the state-owned enterprises in the economy, and the dramatic escape of political prisoner Chen Guangcheng, are liberal reformers now gaining momentum as China undergoes its next leadership transition this fall?

Experts say further financial liberalization is in the cards, as both domestic and external pressures mount. “The fall of Bo Xilai pushes up reform forces in the Chinese party, government and society, and that’s a good sign,” says Hoest Loechel, professor at Frankfurt School of Finance and Management in Germany and a visiting professor at the China Europe International Business School (CEIBS) in Shanghai. Pieter Bottelier, senior adjunct professor at the Johns Hopkins University School of Advanced International Studies (SAIS) and former World Bank chief of resident mission in Beijing, predicts: “Liberalization of bank interest rates could come very soon, by the end of the year, linked to further internationalization of the renminbi (RMB).” He notes that the People’s Bank of China (PBOC) says the time is right for China to open its capital account in phases, starting over the next three years, transitioning to full financial liberalization in five to 10 years.

(MORE: China’s Yesterday’s News. Who are the Next High-growth Superstars?) Read the rest of this entry »

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Does the World Believe America Will Pay Its Debts?

Posted by Ram Kumar Shrestha on April 7, 2012


If you spend any time reading about economics on the internet, you’re aware of the many virtual pamphleteers who loudly portend the impending downfall of the American government and global financial system in general. It’s become somewhat fashionable to proclaim America a banana republic, arguing that she is financing her debt with central bank purchases of government bonds, a strategy that is unsustainable and often ends in a blaze of hyperinflation and economic collapse.

No serious observer really believes that the U.S. faces this fate in the near term. Perhaps much of this hyperbolic rhetoric is merely an effort to get the U.S. to reign in its debt – something, long term, it certainly needs to do. But a strand of this thinking has made its way into the mainstream and is distorting the debate about the federal government’s attempts to steer the economy out of a recession.

(SPECIAL: Turning Point for the Global Recession?)

Lawrence Goodman opined in the Wall Street Journal last week that, “Demand for U.S. Debt Is Not Limitless.”  In the piece, Goodman takes aim at those who have argued that demand for U.S. debt is strong, and that regardless of what the rating agencies say, the marketplace believes the U.S. will pay its bills. In particular, he highlights the “stunning” fact that in 2011 the Fed purchased 61% of the debt issued by the Treasury, up from negligible amounts prior to the 2008 financial crisis. This, he added, “not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.” Read the rest of this entry »

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The Happiest Countries Are in Northern Europe

Posted by Ram Kumar Shrestha on March 31, 2012

By John Halliwell, Richard Layard and Jefferey Sachs

Is it possible to measure the happiness of the world’s population? Remarkably it is, and the first World Happiness Report published today does just that.

Even more remarkable is next Monday’s United Nations conference on happiness, for which the report was prepared. Last July the UN General Assembly invited all member governments to give more importance to happiness as a goal of public policy and mandated this conference as part of the process.

This means that there is now high world-level support for the demand that governments pay more attention to the happiness of their peoples when they form their policies. This is not, we emphasize, a matter of following the whims, fads, and consumer urges of the population. These do not, according to the evidence, lead to happiness. It is, rather, a matter of helping societies to find a path to what really matters more deeply and lastingly for well-being.

So what does matter in determining the happiness or life satisfaction in a nation? Income of course matters to everyone, especially the poorest. As the report shows, the richest countries are a lot happier than the poorest. The four happiest are all in Northern Europe (Denmark, Norway, Finland and the Netherlands) and the four least happy are in Sub-Saharan Africa. On a 0-10 scale, the average life evaluation score is 7.6 in the first four countries and only 3.4 in the last four. Read the rest of this entry »

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CLIMATE CHANGE: A three-degree warmer world by 2050?

Posted by Ram Kumar Shrestha on March 30, 2012

JOHANNESBURG, 27 March 2012 (IRIN) – The apocalyptic vision presented on cinema screens of a world devoid of food (Hunger Games) or with too much water (Waterworld) as a result of climate change, is not as far-fetched as some may think. 

The results of a new study by the world’s biggest climate modelling system show that not only could global temperatures cross the two degrees Celsius barrier, but may warm by three degrees Celsius by 2050 if we emit atmosphere-warming gases at the current rate. 

The study, led by Oxford University’s Dan Rowlands posits a substantial increase in global temperatures within little more than a generation. Most recent warnings, including those by the UN Environment Programme (UNEP), are more ambiguous, saying a two-degree hike is almost certain “by the turn of the century”.  Read the rest of this entry »

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Why Portugal May Be the Next Greece

Posted by Ram Kumar Shrestha on March 28, 2012

The worst is over for the euro zone, the experts say. But Greece isn’t really fixed and Portugal could become a second big problem before year-end
Getty Images


When Greece celebrated its Independence Day on Sunday, there were scattered protests over the harsh austerity program aimed at stabilizing the country’s finances. The government reportedly removed low-hanging fruit from bitter-orange trees along the parade route, so it couldn’t be thrown by protesters. But, basically, the most recent bailout appears to be successful. As a result, worries about the European financial crisis have diminished somewhat. Indeed, European Central Bank president Mario Draghi has said that the worst is over for the euro-currency zone.

Such optimism may be premature, however. Not only does Greece remain a long-term financial concern, but in addition Portugal is on track to become a second big problem.

The dangers Greece still poses are clear. Higher taxes and government-spending cuts may reduce new borrowing, but such austerity policies also undermine a country’s ability to pay the interest on its existing debt. Unless accompanied by progrowth policies, austerity can become the financial equivalent of a medieval doctor trying to cure patients by bleeding them. In addition, the bailout plan for Greece consisted of marking down the value of much of the country’s debt held by banks and other private lenders. That means entities such as the European Central Bank now hold most of Greece’s remaining debt. And so, in the event of a default, important international institutions would suffer the greatest damage.

(MORE: Is Germany’s Euro-Crisis Strategy Actually Working?)

The net result has been to postpone the Greek financial crisis for months or even a couple of years, while raising the stakes if things go wrong. That could be seen as a considerable achievement, if you believe Greece is a unique case and that the problem has been successfully contained. The trouble is that other countries — and especially Portugal — seem to be heading down the same path. Here’s why forecasters are worried: Read the rest of this entry »

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Can Asian-Style Capitalism Save the West?

Posted by Ram Kumar Shrestha on March 26, 2012

Getty Images


As you can imagine, the people out in Asia are feeling pretty good about themselves these days. And why shouldn’t they? While the U.S. and Europe struggle with debt, unemployment and sagging competitiveness, most of Asia seems to jump from strength to strength, its economies powering through the downturn with apparent ease, its companies becoming more and more prominent on the world stage. So it’s no wonder that many Asians have come to believe that their economic systems are superior to those of the U.S. and Europe — and that policymakers in Washington, London and Berlin should finally sit up and pay attention. For decades, Asia had been schooled in the wonders of free capitalism by the West, and benefited tremendously. Now, many out there believe, the time has come for the West to learn from Asia.

Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, made this argument outright in a recent blog post on the Financial Times website, in which he argued that Asian-style capitalism is the solution to the West’s woes:

The time may have come for Asians to reciprocate the generosity of the west in sharing capitalism with Asia. Western policymakers and thought leaders should be invited to visit the industrial complexes and service industries of Japan and Korea, Taiwan and China, Hong Kong and Singapore. There may be a few valuable lessons to be learnt.

What are those lessons? Can they really turn around the economic fortunes of the West? Despite Mahbubani’s confidence, those questions are not so easy to answer.

(MORE: Are China’s Big State Companies a Big Problem for the Global Economy?) Read the rest of this entry »

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Buddhism, Cosmology and Evolution

Posted by Ram Kumar Shrestha on March 5, 2012


By John Stanley & David Loy 

Even with all these profound scientific theories of the origin of the universe, I am left with serious questions: What existed before the big bang? Where did the big bang come from? What caused it? Why has our planet evolved to support life? What is the relationship between the cosmos and the beings that have evolved within it? Scientists may dismiss these questions as nonsensical, or they may acknowledge their importance but deny that they belong to the domain of scientific inquiry. However, both these approaches will have the consequence of acknowledging definite limits to our scientific knowledge of the origin of our cosmos. I am not subject to the professional or ideological constraints of a radically materialistic worldview. – The Dalai Lama

There is grandeur in this view of life, with its several powers, having been originally breathed into a few forms or into one; and that, whilst this planet has gone cycling on according to the fixed law of gravity, from so simple a beginning endless forms most beautiful and most wonderful have been, and are being, evolved. – Charles Darwin

For traditional Buddhist cosmology, the life cycle of a universe is cyclical. There is a period of its formation, a period where it endures, a period where it disintegrates and a period of void before a new universe forms from the luminous space that remains. That space, according to theKalachakra Tantra (Wheel of Time) is inseparable from beginningless, universal consciousness.

The constraints of scientific materialism

A very different perspective is offered by mechanistic science. From its European origins in the 17th century to its final triumph in the 19th, it has insisted that matter is non-conscious stuff interacting in dead space. And these premises are not merely intellectual abstractions. They have become beliefs about reality, shared by a globalizing human culture. The structure of our subjective experience is inevitably influenced by the notion that we too are mechanisms located in a non-conscious mechanical universe. Read the rest of this entry »

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Athens burns, buildings on fire as chaos, riots flare up (VIDEO, PHOTOS)

Posted by Ram Kumar Shrestha on February 13, 2012

The worst riot damage in years has struck Athens as MPs pass harsh new austerity measures. Dozens of historic buildings were set ablaze after riots turned chaotic overnight in Greek capital with protesters looting shops and clashing with riot police. Read the rest of this entry »

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Obama’s new fairytale: Peace and prosperity for war-bent US

Posted by Ram Kumar Shrestha on January 25, 2012

As the US presidential race picks up pace ahead of November’s vote, Barack Obama is trying to ratchet up support for re-election. In his third State of the Union speech, he pledged another program for change.

President Obama’s Tuesday night address to Congress was his final State of the Union speech before he runs for re-election. It was crafted by the White House to set the tone for the 2012 congressional session, and for the re-election campaign. Obama’s goal was to highlight his achievements, and lay out his promises.

The president started his address praising those who fought in Iraq, “generation of heroes” who “have made the United States safer and more respected around the world.”

Indeed, the speech was full of success stories.

“For the first time in nine years, there are no Americans fighting in Iraq. For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al-Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home,” the president said.  Read the rest of this entry »

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