Greek Debt is the fiscal tragedy of the times, and of the banks

In the article, Beware of Greeks Bearing Bonds, by Michael Lewis, a passage I found interesting was,“The Greek people never learned to pay their taxes .... because no one is ever punished. It’s like a gentleman not opening a door for a lady”. This passage shows how important law enforcement is to a country's well being. In order for a country to function, the laws put into place must be enforced, if not, anyone and everyone will take advantage of the system. This is shown in Greece when the author describes how everyone evades taxes, if the laws in place were enforced, all of the doctors in the country would go to prison. This lack of enforcing the laws lead to a society where fudging numbers is common place; the Greek government even did this when getting into the European Union. This continual breaking of laws led Greece to its economic downturn. The government and the people cheated their way into a financial ditch.

Greece's problems threaten the EEU because the financial rigor involved in joining the union gave investors and bankers a fake sense of security in Greece's financial stability. This caused other nations and private investors to loan money and put money into Greece and these groups will not be paid back. That is a significant loss for countries teetering on the edge of bankruptcy. Also, government bonds lost value which will cause the Euro will depreciate. This in turn causes any investment in Euros to decrease in purchasing power, thus affecting all of the countries using the Euro.

The formula for short run national income is, GDP=G+I+C+NX. With this bailout plan, government spending is reduced, lowering G, and taxes are raised, which takes money out of the pockets of people who could spend it, lowering C. This will cause overall GDP to decrease as well. The reason why people are opposing these measures are because:

1. People always want more money, raising taxes will cut into that.
2. A reduction in government spending encompasses many areas, like labor, wages, and public domain goods (roads, retirement, public education, etc). Obviously all of these will significantly affect the public. Any government worker will detest the lowering in wages and will not enjoy layoffs. Any person with children will not enjoy the public school quality decreasing (even more) and any older person will dislike retirement ages being older. This policy will affect everyone in Greece.

Week 8 Post

In the article, Tourism Revenues Increase by 10.5%, the author talks about how by the end of April, tourism in Jordan increased by 10.5% from March's revenues and 20.6% from the year before. This is good for Jordan's economy because it allows for more jobs in the tourism industry and it help's Jordan's GDP. Tourism is considered a service export in GDP, so, the rise in tourism in Jordan increases net exports which increases GDP.

Speaking of increased tourism in Jordan, the king of Jordan is building a Star Trek theme park! It began construction March of this year. It is planned to have four hotels and 17 attractions. Because this is the first of its kind for this franchise, and because there are many hardcore Star Trek fans throughout the world, it is very possible to see tourism in Jordan significantly peak again once this project is finished. I guess a king's childhood tv show will lead to some spectacular increases in Jordan's GDP.

Walmart in China

 Excuse me for the lack of punnery today, I have a rather nasty migraine today and do not seem to be mentally coherent. This may be a jumble of things that don't make sense. Sorry

a. "As it happened, just at this time, growing numbers of Chinese were also becoming worried, even frightened and angry, about pollution, adulterated foods, and the corruption that kept local government agencies from taking remedial actions. And because more and more Chinese were not only erupting into spontaneous protests as a way to get action, but also looking to NGOs rather than to the government for relief, and because even the press had become more activist, the government became concerned about the impact of environmental damage on the stability of the country. The number of scares involving illegal chemical additives in food was creating particular alarm. In 2008, milk products were found to contain melamine, a coal-based industrial chemical that, when ingested, can cause kidney stones and renal failure. (Melamine had been regularly used to give milk powder and baby formula a seemingly higher protein content.) As a result, some 300,000 Chinese consumers were sickened and at least six infants died. The Chinese government reorganized its food-inspection system in response, and its new Food Safety Law went into effect in 2009. Nonetheless, the dairy industry was hit again with scandals this year. In the spring, hundreds were sent to the hospital when hogs from 16 provinces were found to have been fed a “lean meat powder” containing the toxic chemical additives ractopamine or clenbuterol, to produce less-fatty pork. In Guangdong province, authorities discovered and destroyed 45 tons of vermicelli noodles adulterated with industrial wax and ink; in Shenyang, police seized 40 tons of bean sprouts that had been illegally bathed in urea, sodium nitrite, antibiotics, and the plant hormone 6-benzyladenine, to make them grow faster and appear fresher. The food-safety situation became so serious that on April 14, Premier Wen Jiabao took the unprecedented step of speaking out, saying the recent scandals indicated that “dishonesty and moral degradation” had become a serious problem." 

This passage is a very strong reminder that governmental regulations of food products is not where it is in the US. This is why Walmart's strong food standards has been so beneficial for the Chinese people. They are relieved to know that Walmart is a safe haven for food and they don't have to worry as much about the food that they consume there.

b. In the article, Schell writes about how Walmart's business practices and China's government practices actually correspond. because of this, the Chinese people find comfort in Walmart's presence. Because many food markets in China are inconsistent and do not sell quality product, the fact that Walmart is a safe presence is a good thing in China. This safety allows for a beneficial interaction between the average Chinese citizen and Walmart. This reliability allows Walmart to be successfully integrated into Chinese culture. Also, the Walmarts in China are helping push the 'green' movement in China, thus allowing this movement to be more widespread. If this message comes from a reliable store and the government, the movement must also be reliable. Also, because this movement is important in Chinese culture, by Walmart reflecting this, it allows for more sales. Walmart also pressured its supplies to follow suit. So, in this aspect, Walmart's presence helped set the green movement into action in China.

c. Many multinational firms impact style trends in cultures today and also reflect the current trends. Nike dictates the 'cool' shoe to wear by having popular sports players wear the shoes. Popular clothing lines dictate the 'in' colors, shapes and fashions. If these business continually change the 'in' product, people will have incentives to continually change their wardrobe. Currently, many food manufacturers are responding to the health food and organic movement by advertising their products as pure or healthy. Because corporations want to make money, if they reflect important issues in society, they can see an increase in sales. Currently, healthy and organic attracts customers.

Week 7 weekly blog post

The article Jordan's economy may grow by 3 percent in 2012, describes how Jordan's Deputy Central Bank Governor Maher Sheikh Hasan expects the Jordan's GDP to grow between 2.8 percent to 3 percent this year compared with 2.6 percent last year. 
The nation's higher energy bill caused the government to look to lower public spending. Sheikh Hasan wants energy rationing, because he says that anything sold at less than its real cost causes more demand of it. If the government does this, Hasan says inflation will rise, which will add to the Jordan's financial issues.


This is good because any increase in GDP will greatly effect the nation's rather small GDP. 

If the government rations the energy bill, it may be a good idea. In the supply and demand curves of this market, there would be a shortage of energy, because there cannot really be a shortage of energy, excess energy is used. If the energy is rationed, it would return the supply and demand curve of this market to equilibrium and lower the energy bill (because excess energy will not be consumed now.

EGT Consulting

Looking at the top two percent of people financially, there is a minimum wage earnings of $6169.15 and a maximum of $52879.44. This means that not everyone in the top two percent of Jordan’s population have incomes of $30,000 per year, and such be able to buy a car. This means that there is small potential market in Jordan for cars. The demand for cars in Jordan is even smaller. The Jordanian competitive profile of cars states, “[t]he Jordanian market, however, is rather limited in the capacity it offers to automotive manufacturers, contributing… into fewer than 15 thousand cars demanded annually”. This shows that in the already limited market for cars, there is not a high demand for cars. Because of this and the very slight upward trend in Jordan’s GDP, the market for scooters is the most viable market in Jordan.

Some Markets Have Some Bazaar Items for Sale

John McMillan's fourth chapter of Reinventing the Bazaar: A Natural History of Markets is a fascinating chapter about the correlation between the spread of information and economics.

a. The passage I found most interesting was about how, in India, vendors would water down their milk and how this caused a 25% decrease in sales. Because it was impossible for the average consumer to tell the quality of the milk they were purchasing, they were not sure if the milk they were purchasing was good quality or bad. This lead the consumer to only want to pay a small amount for their milk, they just had to assume most of the vendors were selling bad milk. This lead to all of the vendors that were selling good milk to go out of business; receiving the bad milk's pay for their milk wasn't enough to keep them open. This lead to 100% of the vendors selling bad quality milk. This apparently happens a lot in India, there are tons of bad quality goods that could even poison the unlucky consumer. I found this fascinating.

b. Transaction costs are any cost that come from shopping within a market. These include the actual price of the item, along with hidden costs, like time and effort. An example of this is trying to find a job. Because searching for a job is very time consuming and requires a lot of effort, unemployment becomes an issue; it's not because there aren't any jobs, it's because you may take a week to apply to five jobs that fit you, only to be rejected and have to start over. You could be doing other things instead. The 'transaction' of getting a job has tons of transaction costs.

c. Imperfectly distributed information leads to overpricing of goods. Because you do not know you can get the same quality (or even a better quality) good for cheaper, you will be more inclined to pay more because the search costs to find these items may make them more expensive. This discrepancy helps the seller of the good because they are able to charge above market price for a good and hurts the buyer. The lack of information also leads to an inefficient market because transactions can occur between the wrong people, you may end up buying something that is not as suited for what you need compared to another product in the market, or not even happen if the search costs are too high.

Fez

In the prologue of A Fez of the Heart, Jeremy Seal depicts his voyage through Pomegranate, Turkey.

A. I found the passage about the fez incredibly interesting.  In Turkey, wearing the fez is illegal but in Pomegranate, a popular tourist area, they are sold and worn to travelers. Even though fezes are legal to wear for attracting tourists, it still made the locals feel uneasy. I find this a fascinating example about how quickly tourist attractions can lost their culture. Before, wearing a fez was a sign of power, of strong sultans and now it has degenerated into a tourist trinket, something to be purchased and then placed in a closet to forget.

B. This article shows how when trying to market a city, culture can easily be lost. Initially, Pomegranate was a city of strong Muslim beliefs, so much that they would stone people who entered the city in a bikini. Now, the key advertisement for Pomegranate is pictures of topless women. The citizens in Pomegranate realized that they could earn money by giving up their strict cultural beliefs. Now, their old culture is preserved and looked at like history pieces to show the contrast between then and now. Seal quotes a farmer's son, "'life used to be fun,' Halil told me. 'Now it's just business." In its twenty-year transformation, it seemed that Pomegranate had lost more than it had gained, and it was hard to see what could reclaim it". This statement is exactly the connection between culture and economics. Culture is lost when trying to make a city marketable for a larger audience. That's why when people travel to discover the true culture of a place, they don't go to the tourist attractions; they won't find what they're looking for in those places.

C. The two large travel destinations in Jordan are Amman, and Aqaba. Aqaba is a popular location for travelers because it is a beach city. In addition to beaches, Aqaba also borders the dead sea. The dead sea is a fun place for anyone to visit. There is so much salt in it that you float without trying! Not only is this a religious site, but it is a beautiful sea that has tons of spas nearby that advertise the healing effects of the dead sea salt and mud. In Jordan, they lack large quantities of water, so, this is the only beach location in the area. Amman is the capital of Jordan and one of the few large cities. Many people travel to Amman for religious reasons; to visit large mosques and temples. There are museums, and royal sites dispersed around the entire city. Another advertising point of Amman is that through the modern luxuries that you can find there, there is also the traditional and quaint stores that people can visit.