Select any American current macroeconomic topic occurring this quarter to analyze in light to the course content.
The current markets tend to be filled with a lot of surprises. When the times were moving towards the presidential elections in the United States, many of the investors in the country became nervous because theyknew that there was a possibility for Trump to emerge victorious. Ever since the presidential results were announced in the nation, there has been a very dramatic turnaround of events in the past few weeks, where a market capitalization for theprevailing global equities has indeed risen. Contrary to that scenario, the government bondshave drastically fallen by some margin. Looking at it by then, the markets had deeper concerns that Trump’s tax cuts altogether with his infrastructure spending would not only bring growth but alsoinflation in prices for the comedies in the country.
First, there has been a witnessing ofthe presidents early actions where he has mainly focused on the existing trade. He has gone ahead to abandonsome of the famous dealsthat had been done officially by the former government and he has promised to renegotiate a fresh. He has also reiterated the nations rethinking of the policy known as one China. This indeed has brought about a loss of some enthusiasm by several investors, making the dollar drop back slightly against other currencies and the treasury bondshave touched an all-time low in the recent times.
The most interesting part about this view of the current business world would be regarded as beingdivided in the way they are reacting to this Trump case. Many corporate leaders have decided to learn on how to continue their normal livesin the Trump era; this being achieved through normalizingTrump in their current day to day jargon. Some are considering this as a necessity in their survival within the tricky market while othersare doing it out of genuine enthusiasm. They are all aware that Trump wants to cut their personal taxes, not forgetting their corporate taxes in general.
More serious is the fact that the presidentwill make America abandon its economic leadership in the sense that some of the already negotiated policies that are being viewed as negative were very good for the country since theyhelped the nation champion for its rights to be able to gain some ofthe free markets it currently has. Some of the major investors have been worried in the sense that they think of the Trump administration being capable of destroying the American credibility in the global setting. It has always been on the forefront for many markets and if all this negotiated policies are going to be dropped by the trump regime, then it will be a presiding moment for tough time ahead for business. This will definitely hand over the realm of economic leadership to the other rivals likethe Russian and the Chinese governments and it will be viewed as a victory in certain historic proportions. Looking at all these implications, none of allthese undertakingsare sincerely going to bring about the foreseen growth in the market as Trump has been putting it across. The markets are not going to be completely rallied on tax cuts or try to make a push through on a short-term growth as he has been depicting, but it will only bring about dis-quietness within the financial and market sectors.To say the least, the existing markets will eventually become spooked by the endeavors of Trump.
Select any foreign (non-American) current macroeconomic topic occurring this quarter to analyze in light to the course content.
Brexit will Make Doing Business Become Tricky
There has been a lot of uncertainty since the vote of Brexit and Theresa May becoming the prime minister in July last year.She has been told by businesses several times togive clarity of her intentions and goals for the Brexit, but every time May hastried to give clarifications, the investors do react to the information by selling the sterling. This has been happening so because May has always shown that she has a preference towardsa hard line stand, which is for Brexit to remove Britain away from the single market of the European Union.Matter of fact, the only time that the pound has risen since Brexit was on the 17th of January, the day when sheout rightly spoke of her own detailed thinking and gave her goals for Brexit. This must have been partly because the markets could have been surprised pleasantly by May’s language to set out clearly a dream for bringing a liberal and an open future, the right direction that the country needs. Moreover, she also spoke by using a self – elaborateslogan in the name of making Britain global again and also expressed out her wish to continue the friendly relations that Britain had earlier forged with the wider Europe.
Looking at such a move by Britain, one might come up with a liberal view that the post-Brexit future for Britain would be an escape from the various protectionist features that happens to exist in the European unionmarket and they move on to openthere economy for the other parts of the world to trade. This would be a move that would signal lowered taxes, no trade regulations or governor at all which would grant them a free markethence making a freer trade for them. The thought was to open up Britain and make it be capable to compete with others all over the globe and not only the nations in theEuropean Union.
The major trouble that is so much apparent from such a move by Britain is that, after May made all this pleasing rhetoric, nothing is being pursued at all for them to attain their vision. The major priority that she has is putting up controls on the immigration in Britain. All this is being done without keeping in mind thatthe businesses of current times often depend on moving people around on a very short notice.The same also applies to the high-tech parts industry. Another drawback of such a move towards Brexit might be envisioned as a reduction in free deals as one can no longer trust any deal that would be negotiated by Britain. This is because this Brexit had an insistence to escapebeing undera European Court for Justice. This will be a hindrance to acquisition of any free trade deals since any of such deals needs a provision for a neutral place to settle any dispute that may arise in it. This would also mean that any effort to help in securing accessto a European Union market or any member from the European Union for that matter will be an uphill task after the post-Brexit. It will also create its own barrier and prevent the free access that Britain had to the single market, especially when it comes to things to do with industries like car manufacturing and all the financial services they will be in need of.
- Watch the entire video which is linked in Module #8:”The Battle of Ideas,” Episode I from The Commanding
Heights, one is struck by a big contrast between that which is to God within everyone andthat, which is of control to everyone.This video of The Commanding Heights makes an introduction to the rampant greed that is normally witnessed even in the current government systems hence the economies of such unfortunate nations will continue to dwindle away.The champions of greed always wanted something and they always got what they wanted, be it to a varying degree, or even got something forparting with totally nothing at all. This can be considered to be redistribution and not creation. The systems in the government in the old times were considered to be unsustainable and often did collapse at any given time with tremendous cost implications on the economy and also the human beings. In the modern economies that happen to be capitalist, most people often get something by giving almost nothing, or worse still, nothing at all. This might be at a much less cost or may be no cost at all because capitalism can largely be considered as being voluntary or even diverse(Claude, 51).
The perceptionin the early days of the century was that governments could make decisions on its own for it to be able to sustain its market. This could be through the use of various principles. The problem was that these very same principles could not work properly or fast enough and help the governments alleviate poverty. The systems were also not efficient enough to help in the distribution of income together with the wealth in the nation. In such a government, (for a country after another country) it used to happen that strings attached to the nation’s economy would be pulled day in day out, as though a puppet show was being run by them. Towards the ending of a century, some of these governments started realizing thatthe concept of manipulating their own economy could not be sustained for a longer period of time and continue working properly (Claude, 51).Great economies became devastates and an increasing number of nations begun to be driven into utter poverty. A very good example is The Soviet of Union and The Socialist Republic. The government of The Soviet of Union and The Socialist Republic did not have anyknowledge thatthere were billions of money worth in transactions that was being controlled by a few peopleand that this small group of people had become mad to gain power using the government resources and money. This phenomenon of corruption was rampant in the government and that it is the main component that indeed led to the breakdown of the then Soviet of Union and The Socialist Republic.
Nowadays, there happens to be a sweeping trend in the world which has been helping the creation of free markets everywhere. Whenever a government decides to assumes overall control to commanding heights in the country, it implies that powerful politicians are fighting against a powerful market. A consideration should also be made always for one to understand that the market is always the outcome to represent the decisions that have been brought about by so many individuals, and each of them acts in their own self – interests. A transaction like buying or selling within a market considered being freeshould always happen without coercion.
Claude, Diebotlt, Catherine, Kyrtsou and Olivier, Darne. New Trends inMacroeconomics.
Berlin: Springer, 2005