Economy Live

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.

The sub-prime rate crisis in the US has plunged its housing sector to an unprecedented crisis. The mortgage market difficulties is set to trigger a global effect with David Miles, the chief UK economist of Morgan Stanley warning the UK government that the housing prices in the country will plummet by 10% next year. This would be the biggest annual decline since 1969.

The predicted drop in property prices will result from the combination of the five Bank of England interest rises. Last week Mervyn King, the governor of the Bank of England warned that financial strains would force major banks to reduce supply of credit by increasing the cost of borrowing.

Nationwide Building Society figures showed last week that in twelve years property prices fell at the highest rate on last November. In addition, the mortgage approval levels fell to the lowest level since February 2005.

Economists warn of rather grim pictures that will also increase economic disparity in the country and strangely, the financial strength of the aged will actually improve. Older people who bought houses when the house prices were low will be comparatively well off compared to the younger generations. People over sixty years of age will own two-thirds of Britain’s housing wealth within two decades. Soaring house prices will see an explosion of wealth of aged homeowners.

After deducting mortgage debt, the average pensioner homeowner is sitting on housing wealth worth ₤265,000. By contrast, their children are finding it increasingly difficult to own a house.

Source:daily mail
Image:mariner’s house

Mobile Money Transfer service in India is what Bharti Airtel and Western Union are eyeing. This will allow people to send money to India using mobile phone, though it is still to be approved by regulatory committee.

Gopal Vittal, director marketing and communications, Bharti Airtel Limited said

We are delighted to work with Western Union in this path-breaking initiative and be at the forefront of enabling international remittance over mobile for our 50 million mobile phone customers in India. This will help us move money via mobile in a fast and convenient way, supporting low-value transactions.

Western Union operates in India through 45,000 Agent locations, including 8,500 post offices and more than 14,000 bank branches spread across 5,000 towns and cities.