America's Disappearing Money

In class this week, we've been talking a lot about injections and leakages in our economy. One very notable leakage is our involvement in the global market.

As a company, spending money anywhere but America would be considered a leakage to our economy-exactly what we don't want. We want as much money circulating in our economy as possible so as to ease ourselves out of our economic recession. That seemed to work during/after WWII, when the world relied on us to provide materials and goods for them. Our citizens were employed and working diligently in every industrial area. America was gleaming with pride, or so the old people tell me.

Today it is difficult to simply single out and describe/predict the goings-on of America's economy, for we are overwhelmingly involved in the global economy. Countries trade and rely on each other, and consequently feel the repercussions of such through the strengthening and weakening of their currencies. This article says that since the 80's, the U.S. dollar has weakened by approximately 20%. This is actually good. A weak dollar makes for a high demand for our goods on the international market.

Bob McTeer, the author of the above article says that our weak dollar will help aid us in recovering from this recession. On the flip side, a strong currency would be beneficial so as to "support our rising standard of living". So, we would preferably want a weak currency now, and a strong one once we recover again.

E-Books

The advantage of starting a new book from anywhere is something any bookstore wouldn’t be able to keep up without embracing the digital format. E-books has created big changes in the bookstore market. Now that E-books are very popular and easy to use, more and more bookstores are going out of business. Privately owned stores are being the most effected because they have to keep up with the growing demand of on-line books. What makes Barns & Nobles the number one on-line book store is that they sell over one Million digital books. Barns & Nobles one million digital book’s makes it hard for competitors to reach a point to where they can really compete with Barns & Nobles therefore making them the dominating bookstore chain. But even Barns & Nobles is losing money. They are suffering a net loss of about $63 million for the third quarter of 2010.

Resenting The Rich

"This is not class warfare; it's math," is what Obama said about his plan on raising taxes for the rich to make $1.5 trillion dollars in ten years for the US. Would imposing a higher tax rate for the wealthy in America really in the long run of things, help us out. Taking money away from the rich would have a negative effect on the economy because the wealthy would cut down on their spending. With America’s economy in a recovery this is not the time to be taking money out of the flow of money cycle of the US. Much like the problem in Greece is that their government is spending more than they are making. Does this sound familiar? American need to cut back on spending through unneeded agencies and scaling back on new spending. We need to fix the problem and not try to cover it up by increasing taxes to the rich.

Hello Greece.

Greece was about to go into default if it wasn't for a 130 billion euro bailout. The 17 countries that make up Europe came together and talked for 12 hours and came upon the agreement that would financially reinstate Greece back into the country. The news of the GDP of Greece's debt projected to come down by %120.5 by 2020 lead to an increase in the value of the euro. If it were not for this deal, Greece was going to face a very bad situation and possible relocation from the eurozone. But why would Europe want to kick out Greece? This is because Greece is not only hurting from its economic downturn, but it is also hurting the rest of the eurozone since they all use the same currency. It is not a surprise that Greece's private investors were asked to take a hit on their high interest rates dropping the face value of return by %53.5. The high interest rates on loans that Greece took out for expenditures were very burdensome and took a toll on the country's economy.

Gas Prices, Mr. Kern... Gas Prices

Referring back to one of my earlier blogs, I said that the U.S. economy could only be stimulated and successful if the American people have money to spend. So, with a huge rise in gas prices expected, that's taking more and more money out of people's pockets. Now a days, there is so much commuting and jobs where people have to drive, that it's almost impossible to go even a day without a car. Since gas is so expensive, people are going to be cutting off on other kinds of spending because they have to save money for gas. This can lead to a huge decline in the U.S.'s economic growth. High crude oil prices and the threat of Iran to cut off oil exports can cause some refineries to close down during the spring, which sends gas prices even higher! Because it is almost impossible for people not to drive, the high prices are just going to throw people's income into gas instead of other markets. Therefore, it will make the economy decline.