Economy Live

As the clock struck midnight, Cyprus and Malta scrapped Cypriot Pound and Maltese Lira respectively. These two nations become the latest entrants in the euro-zone.

With these two EU newcomers adopting Euro, the number of nations in which the currency is used increases to fifteen. Also the two nations acquire a say in determining European Central Bank Policy. Cyprus’ President Tassos Papadoupoulos said in a ceremony marking the transition to the new currency:

We’re sorry to say goodbye to the pound but it’s with joy that we welcome the euro. Happy new year with a happy new currency.

However, the Turkish Lira will remain the currency in northern Cyprus, which lies outside the EU.

Strong customer desire at times help in fighting any downward spiraling of demand in the face of rising prices. The demand for Italian pizzas and pasta has not fallen despite the rising price of wheat and cheese in the country of its origin. Undaunted by the rising prices of the pizzas and pastas, the Italians have not reduced their penchant for the good food. According to Gustavo Piga, an economics professor at University of Tor Vergata, Rome, the Italians prefer to starve and die than go without their pasta.

The improved security position in Iraq has had its effect, at least on the oil fields. The IEA (International Energy Agency) reports that the Iraqi crude outputs are running well above their pre-war numbers. The latest report puts crude production in Iraq at 2.32 million barrels per day.

IEA has attributed this rise to the improved security condition in Iraq since the summer ’surge.’ The Paris based agency said that this level of output is the highest in three years of US presence there. After the 2003 invasion the output was stuck at 1.7-2 million barrels per day. The monthly oil report by IEA put the figure at 1.9 million barrels per day in the first quarter of 2007.

Though it has always been stated that the primary needs of man are food, clothing and shelter, the most essential thing of these necessary for human survival and existence is food without which life would almost be impossible. This fact has been proved by the figures of death recorded during famines which sweep away the entire population of the land it strikes. The food packets being dropped during natural calamities are another proof that denotes its importance. Taking these factors in account, it becomes obvious that food is an inevitable and necessary factor required by the rich and poor alike for satiating one of the basic human requirements of hunger for survival. However, when the prices of such a basic and essentially required commodity starts increasing, conflict amongst the masses is predictable.

The Britons have been contemplating the fact that they are loosing most of their jobs to foreign workers. If you can just imagine all those dishwashers and day laborers in Britain, it will be clear to you. With various other European countries joining the European Union, it has become easier for citizens of EU nations to work in Britain. As a result, the English are loosing jobs to foreign workers.

Since Labor came to power, migrants took four out of five jobs in Britain. At least that’s what the statistics say. Due to this, about 10,000 Britons have lost their jobs - mostly labor oriented. According to the British statistics Commission, the newly employed foreign labor is about 50%.

With the vast oil reserves of Iraq at its disposal and having acquired supremacy over the world, US faces the worst recession this year with the prices of commodities rising every day. The food assistance program recorded the highest increase with 28 million people using food stamps to buy food. The food assistance program launched in 1960 finds the highest number of takers this year as the country fights hard to feed its people.

The spurt in oil prices has hurt the global economies, with its epicenter in some African countries. Here, we are here not talking about oil-rich nations like Nigeria, but of the 13 non-oil-producing African countries, including South Africa, Ghana, Tanzania, Ethiopia and Senegal.

With the oil prices threatening to cross the $100 mark, these countries have found that the increased fuel costs have shaved off 3 percent of their GDP. More importantly, they are also nullifying the amounts these countries have received as foreign aid. In a nut-shell, it is back to square one for them. They do not have funds for development purposes. As a result the poor are finding no relief and unrest is breeding fast.

In an unprecedented move five major central banks of rich nations including the Bank of England, the US Federal Bank, European Central Bank and the central banks of Canada and Switzerland have come together to inject new money into the global economy to ease the financial crunch that is threatening recession in the western economies.

Up to $110 billion in cash loans will be available to the world money market in the form of cash loans to be made available though auctions.

The pertinent question that now arises is whether the new money supply can uplift the growth trajectory of the global economies. The financial crises in the developed economies have assumed a global dimension with the financial institutions reluctant to lend money especially to each other.

The global implication of the US sub-prime crises that triggered the mortgage market and consequent financial crises could be gauged from the fact that for the first time in a hundred years a British bank, Northern Rock collapsed. Tight lending policies adhered to by western lending institutions to prevent further financial losses have arrested the growth rate of these economies.

Since the commercial banks of rich nations are interlinked with each other, they have now decided to move in unison to prevent a banking crisis turning in to a recession. The prices of the stocks of the financial and banking sectors are also showing poor performance.

If the current move of the major global central banks fails then their confidence will be at stake. The banks are currently holding lots of debt and their burden would only increase worsening the current situation.

Source:BBC
Image:Londonsguide

When we think of America, we tend to think big. The US is always about big houses and big cars. Big muscle cars use the reign the roads back in the 60’s. Now, the suburbans, Dodge Ram trucks rule the Main streets of most towns. But, the proposed legislation might change the face of American cities pretty soon. It will make Americans convert to smaller cars.

A typical American car is ‘big’. The bill that’s about to be passed in the House of Representatives is about to put an end to the automobile showboating. No more big cars will be on the roads! This is due to the CAFE or the Corporate Average Fuel Economy legislation. The current CAFE standard is 27.5 mph, which has been achieved by most American automakers.

The sub-prime loss is all set to plunge the US economy to its worst ever crisis. In a latest review conducted by the ratings agency, Moody, the Wall Street banks have suffered a combined loss of about $110 billion on bonds backed by high-risk sub-prime mortgages.

Moody reviewed the fall out of the sub-prime lending crisis on the big US insurers like MBIA, Ambac, who guarantee a mortgage bond’s interest payments in the event of a default on the home loans that back them. The bond insurers are now left with insufficient fund to make payments on some of the bonds they insure.