International Business Article Critique
Markets Swoon on Recession Fears
The first article is obtained from the Wall Street Journal and it is about the fears, which exist concerning Market Swoons. Governments all over the world are trying to cope with the distresses, which are as a result of recession. Since there has been a default of debt in Greece, most investors are running to the United States. The treasury of the United States is helping many investors, who have left behind their foreign currencies, corporate bonds, among others. The plummeting of stocks has occurred since the global flight of investors started. This is the same as what was taking place in the 1940’s when the slowdown of the economy was occurring. All over the world, economic weakness of markets is inevitable (Browning & Cheng, 2011. 1). Blame is being placed on central banks and governments that have not solved this problem. The economic stimulus has ensured that the Federal Reserve Stocks have stumbled greatly. The Asian markets have been affected the most as their stock value process is declining drastically. This is in the period of September 2011.
According to this article recession is a problem, which needs to be addressed, before the impact affects the world adversely. There are many countries, which have been recently affected, and this has been witnessed in their financial markets and banking systems. The later have to be preserved, in order to be beneficial. Only the American dollar and the treasury are not affected as much as others. Cooper and oil are not being bought as before, as the raw material demand is declining. Also, the Industrial Average of the Dow Jones has fallen and is now at 10733.83. Countries, which are in the bear market include: Germany and France. This is because of the fallen average of transportation (Browning & Cheng, 2011. 1). Policy makers have a role to play to ensure that the recession’s impact does not increase even further. This is for the purpose of ensuring that a global economy double dip does not take place. The recession of South Korea is the worst in Asia as its economy has gone to as low as 4.4%. This article gives an insight as to how the different markets in the world have been affected and what ought to be done. The authors of the article have made sure that the activities of the stock market are known.
Democracy in America Monetary policy and exchange rates
This second article is obtained from the Economist and it is about the American issues of democracy, based upon exchange rates and the monetary policy. According to the article, there is an argument, which is raised, and it concerns the economy. Exhaustion of monetary policies occurs when a liquidity trap affects an economy. This argument is not true to some extent due to some issues, which have been affected further. In any business, profits are essential, but not many companies are aware of this (The Economist, 2011.1). An announcement was made by the National Bank of Switzerland whereby, the exchange rate will be at a minimum of francs 1.20. This means that euros will be bought and francs will be printed in large quantities. This article is gives an insight as to how monetary policies are efficient in solving problems related to American democracy. Through determination and following the model used by the Swiss, it is possible to come up with an effective monetary policy.
The author of the article believes that exchange rates are not as controversial as monetary policies. When aggregate demand expands, there is a depreciation of currency. The people of Switzerland are taking advantage of this to improve their economy. The Americans believe that currency manipulation is being done by the Chinese. Thus, there is a need to believe that goals of exchange rates can be met by having a central bank, which is efficient. Also, the manipulation of the exchange rates needs to be known in order to improve the economy of America. Aggregate demand is not as important as exchange rates. There are many factors, which influence how exchange rates function, such as opinion climate and authority that exist. There is a problem, which might occur, if the Swiss model is not taken seriously. It is possible that there might be a sum dash, which is either negative or zero inflationary (The Economist, 2011.1). This is for the purpose of ensuring that the currencies have as much power as possible. The international markets of currency are extremely complex and this worries many policy makers. It is likely that countries, which do not have an effective monetary policy, often are affected by inflation which ensures that rates are high. Inflation is often referred to as a war whereby, developed countries are the ones with more advantage. There should be collaboration of an international level to ensure that global imbalances do not exist. The world should not engage in wars of a financial nature, which will lead to currency being affected. This article is thus educative in matters related to exchange rates and monetary policies.
The Economist. Democracy in America Monetary policy and exchange rates. Retrieved on 23 September 2011 from http://www.economist.com/blogs/democracyinamerica/2011/09/monetary-policy-and-exchange-rates
Browning, E. & Cheng, J. Markets Swoon on Recession Fears. The Wall Street Journal. Retrieved on 23 September 2011 from http://online.wsj.com/article/SB10001424053111903791504576587150257111860.html?mod=WSJ_hp