International Financial Markets - Article Example

?International financial markets The article by Barrionuevo et al discusses the Greek financial crisis with reference to the financial markets. Barrionuevo and his colleagues state that the handling of this crisis by the European Union and all the other organizations involved in helping Greece solve the crisis, has not been handled correctly. They state that they have missed the whole point of how financial markets work and that only by considering the trend in these markets would they be able bring the Greek crisis to an end. Four considerations, which those involved in helping Greece recover, have been recognized. Among these is the fact the assumption that the problem with Greece is based on liquidity instead of solvency. While there might be a problem with liquidity in Greece, the problem that is affecting it most is solvency, something that is not being considered. Instead, the IMF and the European Union are treating the crisis as one of liquidity and they have taken steps to counter it as such. This has not helped Greece recover and may, in fact have made the problem worse than it already was. A second issue about how financial markets work that has been ignored is the fact that the Greek debt will be sustainable in the future and that the economy will eventually absorb all the debt that it currently has. What has not been considered is that financial markets do not work well with uncertainties (such as future sustainability) and instead, they only gain confidence if action and their results are seen immediately. The third issue that has come to affect the Greek economy is that its government was given loans way before a plan on how to spend the money given was made. This ensured that there would be a problem with how the money was spent, because it ended up being lost because of unplanned spending. The fourth issue discussed in the article is that fact that while Greece has been promised enough financial support to end its crisis effectively, it has become almost impossible to implement its recovery program because most of the money has yet to be received. Instead, most of the money received has been given in bits and this has made it impossible for the economy to recover. This has made the financial markets wary of taking part in the Greek economy as its future has become uncertain. When one considers the points brought up in the article, one concludes that the Greek financial crisis is something that can be solved if only the people and organizations involved would work faster than they already are to end it. The only way through which this crisis can be solved is if the financial markets can regain the confidence they once had in the Greek economy. The support of these markets would ensure that the flow of money into Greece would become stable and that its liquidity and solvency problems would end. The only way open for the Greek economy to be saved is for all the money that was promised to be made available at once to ensure stability in the financial markets. International monetary systems The article by Jack Ewing discusses the international monetary systems, dealing specifically with the Eurozone, which has for the last few years had to deal with various economic crises. Among these is that fact that many of the countries in this zone have are in either recession or are about to enter one. This has seriously threatened the Euro and until recently, many had even questioned if this monetary system was viable. There had been fears that because of the financial crisis encountered by Greece, then this country would withdraw from the Eurozone, thus leading others into abandoning the currency. However, this was not the case, and in fact, the year 2012 saw a recovery in confidence for this monetary system as it continued to perform well. The countries whose economies were expected to collapse such as Spain and Italy did not turn out as expected despite remaining deep in recession. This encouraged the continued confidence in the Euro and the belief that things would be much worse if this monetary were to be abandoned. The leaders in the countries, which use the Euro, have taken steps to ensure the survival of this monetary system against any of the situations that would arise to make it unstable. Among these is the establishment of a fund that will be used to bail out any country in the zone that is affected by an economic crisis. This has ensured investor confidence in the Eurozone, hence creating a situation where the monetary system will be able to be sustained for a long time without any difficulty. Another action that the European leadership has put in place has been giving the European Central Bank the power to supervise all the leading banks in Europe so that none of them is caught in situations that might be detrimental to their customers’ welfare. While action has been taken to ensure the sustainability of the monetary system, most of these have come at the expense of the working people, because it is their taxes, which are to be used in bailouts, as they themselves have had to accept lower incomes than they used to earn before the crisis. It is highly commendable that the European leaders have put aside their many differences and worked together to ensure that the monetary system has remained stable and competitive in the global market. It has created a situation where investors have remained confident in the currency as well as most of the economies that use it despite the economic problems currently plaguing them. In addition, the Euro has withstood the test of time since it was introduced as the main currency of the European Union and it is possible that its use has cushioned the countries using it against a recession that would have been much worse had it not been in use. One would therefore say that the monetary system of Europe is much stronger today than it previously was. International marketing The article by Darren Henderson is mainly concerned with providing an insight into how local agents can help small businesses to excel at an international level. Henderson makes the point that many small businesses tend to fear going international because of the fear of using up valuable resources in marketing, something that is difficult for them to do. Therefore, he suggests that they get in touch with agents in the countries they would like to expand to. This will ensure that they have a foothold in these countries and by ensuring that these agents work for a commission for every customer they bring in, these companies would considerably cut the costs of marketing. In fact, the cost of marketing would almost be nonexistent because it is the agents who work for them that would bear the cost of finding customers for them. In this way, the businesses would be able to expand internationally with little or no fear concerning going into a new market they will not have to deal with matters at a local level but their agents. Since the agents will be working for a commission, it is only logical that they will have to work extremely hard to ensure that they bring in customers and market the business in such a way as suits the locals. However, in order to ensure the success of an international marketing venture, especially for a small business, it is imperative that the agent who is picked can be trusted to do what is required of him. This can only be achieved if the prospective agent is recommended by a trustworthy source. Once the agent has been selected, he must be treated as part of the team and not as an outsider. This will ensure that the agent comes to be loyal to the business, making him work in its best interests instead of his own. The business should dedicate a lot of time and effort, especially at the beginning of a business venture, to ensure that it cultivates a good relationship with its agents. Among the things the business should make its agents aware of are the objectives of the business as well as the work that is ongoing and the marketing initiatives that are being planned. When one considers this article, one will find an immense deal of ideas about small businesses being able to conduct their activities and market themselves in other countries. This is despite the fact that many of them do not have the resources, which big businesses have for marketing as well as expansion to countries outside their own regions. The use of agents to market small businesses for a commission is indeed an ingenious idea that enables these businesses to conduct their activities at nearly the same level as big businesses. One would say that if small businesses could consider this marketing idea, then they would end up growing tremendously and might just end up giving their larger competitors a run for their money. Works Cited Barrionuevo, Jose M., et al. “How to Pay Greece’s Creditors and Rebuild Its Economy.” New York Times Nov. 6, 2012. Web. 3 Dec. 2013. Ewing, Jack. “In Europe, Focus Begins to Shift to the Speed of a Nascent Recovery.” New York Times Dec. 30 2012. Web. 3 Dec. 2013. Henderson, Darren. “How agents can help small businesses to export.” The Guardian Dec. 5 2012. Web. 3 Dec. 2013. Read More