Central Banks Propel Asia Markets by Turner - Essay Example

Task Central Banks Propel Asia Markets Summary The article, “Central Banks Propel Asia Markets” by Turner describes the injection of liquidity into Asian economies in a bid to reduce dollar costs and ease monetary conditions. The result of the injection of liquidity into several Asian economies was the rise in stock values in both the Asian countries and their counterparts in Europe and the United States. This initiative was accomplished through an agreement by the US Federal Reserve, UK central banks, the Euro zone, Canada and other countries to ease the cost of financing. This was done by softening the existing swap arrangements, a deal, which saw the increase in the dollar in Asian stock markets. The loosening of the policy concerning the dollar came because of the slow economic momentum, a factor that prompted the mentioned economies to come to their agreement. The slow economic downturn started as early as November, therefore, an economic intervention was needed to boost the stock markets in Asia, Europe and the other countries, which were included in the financing deal. Critical Analysis It is the job of policy makers to ensure that they set up appropriate policies, which will ensure that the economy is stable and money value is not lost. The policy indicated by the above scenario indicates that the actions by major world economies in the stock market have the capability to influence financial markets in the world. The lowering in dollar financing costs by the major policy deciders in both Europe and the North American continent helped to reduce the risks of global financing, which in turn increases investor confidence in the markets. Therefore, the resultant effect, the rise in stock markets in the Asian, American and European economies can be attributed to a rise in investor confidence in the stock market. This is due to the perceived reduction in investing risk and confidence that the fluctuation in dollar costs would not affect investments. This is also indicated by the assumption that market activity would be heightened by such financial boosting, and from an analysis of the results of the policy, it is evident that this assumption is met. The effect of the injection of financing into Asian economies is expected to benefit other economies, for example, the US, Canadian and European economies witnessed an increase in the indices used in the respective countries. Critical Questions 1. How does the boosting of liquidity in one country affect the stocks in another country? 2. What are the perceived benefits of the increase in liquidity in the Asian economies? Work Cited Turner, Susan. Central Banks Propel Asia Markets, 2011. Web. December 01, 2011. Available at: Portugal Hit by Downgrade and Strike Summary The article “Portugal Hit by Downgrade and Strike”, by Kowsmann describes two major events that affected Portugal’s economy in the last one week. The article states that the Portuguese economy faced a double tragedy when its debt was downgraded to junk, and a strike paralyzed operations in the country. The nationwide strike was occasioned by growing fears and discontent that austerity measures were pushing the country deep into recession. The second tragedy was the lowering of the country’s debt rating by Fitch’s Rating index, an index that describes the debt-characteristic of various economies. Portugal’s debt rating was lowered from triple-B-Minus to double-B-Plus, which means that the country is considered an ineffective credit controller. This was caused by the country’s perceived fiscal imbalances and debt figures across all sectors of the economy. Effectively, the lowering of the rating indicates that the country is no longer investment worthy, meaning that investors will be scared away from the economy. Critical Analysis The downgrading of the Portuguese economy, accompanied by the nationwide strike is not a stand-alone factor. This is evident from the current debt crisis facing almost all of Europe, a factor that indicates that the country might be heading in the direction of the bailed-out Greece and Spain. Despite the apparent calm in the Portuguese economy, the article brings out the factors that indicate that the country’s economy was not as smooth as it was previously thought to be. The unity by the citizens in the strike is also not unprecedented. The article explains that the efforts by the European Union and several major financiers of the Portuguese economy to cut the country’s debt deficit resulted in unfavorable austerity measures. The article presents the issues faced by the common citizenry in the country, including wage cuts, tax raises and other unfavorable economic conditions. The economic principles applied in the article are considerably viable, meaning that the opinions presented are economically covered. For example, it is to be expected that a reduction in debt deficit would necessitate the funding of some government expenditures to facilitate the payment of national debt. Despite the efforts by the government to reduce the debt deficit, the effects of the austerity measures are usually negative on the population, and if not properly monitored, might lead to social unrest. Critical Questions 1. Describe the relation between the debt level and the unemployment rate in a country. 2. What are the effects of slow economic growth, and how can they be countered? Work Cited Kowsmann, Patricia. Portugal Hit by Downgrade and Strike, 2011. Web. December 01, 2011. Available at: Record Levels of Unemployment for Europe’s Youth Summary The article “Record levels of unemployment for Europe’s youth” by Steinberg describes the unemployment figures in the European continent, and indicates that the worrying trends in the figures are to be feared. The article traces the unemployment rate since 2008, and states that the current rates in most European countries are the highest in history. The article gives the worrying figures for unemployment in the biggest European economies, including Germany and the UK. According to Steinberg, more than 20% of the employable youth in the Euro zone are unemployed, a figure that indicates the growing trend in the sector. Some of the results of the unemployment problem include the recent riots in London and other cities in the UK, which indicate that the unemployment is actually worrying. The article goes on to state the employment figures in other European countries, but does not give the effects and related statistics. Critical Summary An article that discusses unemployment figures is normally expected to describe the causes, effects or otherwise important factor about the figures being discussed. The article by Steinberg discusses the rising unemployment rates in European economies but does not discuss the effects or possible causes of the unemployment. A careful analysis of the article indicates that is mostly opinionated, giving persona opinions about the discussion. For example, even though he article mentions the austerity measures that most countries are outing in place, the article does not discuss the effects of these austerity measures, instead, it discusses the opinions of the author concerning the unemployment problem. The article cannot be considered a true economic article since it presents economic figures but does not discuss the deductions in an economic method. For example, an economic article that discusses unemployment would focus on the effects of the unemployment on the youth, like rise in crime rates or some related factor. This would then be explained by the application of relevant economic theories to explain these factors. This can also be done by proposing the steps that the relevant governments could take to reduce unemployment rates, or discuss the reasons why the rates would continue to increase. Despite the apparent lack of economic concern in the article, the author provides a concise presentation of the facts in the case. Critical Questions 1. Describe the factors that the relevant governments can use to reduce the unemployment figures in the affected countries. 2. Describe the effects of the austerity measures that the governments in the Euro zone are taking. Work Cited Steinberg, Stefan. Record Levels of Unemployment for Europe’s Youth, 2011. Web. December 01, 2011. Available at: Unemployment Figures Highlight Deep Divisions across Euro Zone Summary The article “Unemployment Figures Highlight Deep Divisions across Euro Zone” by Blackstone focuses on unemployment rate in Germany and how its economy could be used as a propeller to other economies in the Euro Zone. The article states that the German economy is at a two-decade low, but that it indicates the differences between European economies. This indicates that the German economy can be used to avert a recession in the other countries in the 17-member Euro Zone. With the increase in the unemployment rate across member states, central banks across the euro zone are being urged to lower interest rates to subvert the effect of the economic meltdown. The statistics presented in the article indicate that the despite the fall in European economies, the German economy is expected to grow in the forthcoming years, a factor that indicates the dependability of the German economy. However, the slow global growth is expected to slow down Germany’s momentum, a factor that is attributed to the slowing down economies of its major trading partners. Therefore, it is expected that the German economy can be sued to bolster the other economies in the region. Critical Analysis Contrary to the other article about unemployment, this article is presented in a truly economic manner, giving a proposition and supporting it with economic evidence. The proposition that the German economy can be used to bolster the other economies in the region is supported by the logical fact that, for Germany to continue its economic growth, it needs to support its trading partners. This is because the other countries in the region have falling economies, and since they are the major trading partners with Germany, they would pull down the German economy. The two countries with the highest unemployment rates in the euro zone are France and Italy, and when these countries are added to the other euro zone countries, they make-up a massive 40% of Germany’s exports. The economic downturn being felt by some of Germany’s largest trading partners could be detrimental to the German economy; therefore, the country has to help boost the other euro economies. For the German expected growth to be realized, some measures have to be taken to improve the neighboring economies. Critical Questions 1. Do you agree with the proposition that the German economy cannot improve without an improvement in the other economies in the euro zone? 2. How can Germany help to improve the other economies in the Euro zone? Work Cited Blackstone, Brian. Unemployment Figures Highlight Deep Divisions across Euro Zone, 2011. Web. December 01, 2011. Available at: Read More