Who to balme?-The HW

I think it is an interesting topic because we are always blaming the government for everything and the economic crisis is not the exception to the rule.
Regularly I hear people in the radio or in the restaurants talking about the economic crises, that the economy this and the economy that, and they always blame our government for it. But then I think, who is it responsible for it? I think that to be able to answer the question we first need to know how banks work.
We know that a bank works basically by winning the trust and confidence of people, and that if one of these is broken very bad things can occur, like for example leading us to an economic crisis. Like the example that we saw were a bank had declare that they were not going to be able to keep lending money, up to this point everything was completely fine with the bank. Later after that announcement the people started too freaked out and started to withdrawal all their money at the same time all of their money from banks. Because of this the blanks started to run out of money c cause in theory they have the money but since they invested that money the banks weren´t able to give back to all people all of their money, leading to an economic crises.
And who is it that because of one bank the rest started to fall apart? Well, because of the paranoia that the people had and because as we know banks borrow money from other banks.
Therefore I think that the ones that should be blamed is us, cause at the end we are the ones that in first place started to stop paying our mortgages and the ones that were withdrawing all the money from the banks. Maybe if banks could have predicted people’s behavior they would never had made those announcements and the money from the banks would have never been withdrawal.

Homework Economic crisis

I think we should blame everyone! I think that the first ones that we should blame is us, the ordinary people. I say this because, first it was our need to have more material stuff that bring us to borrow lots of money to the banks. Money that the people didn’t had so they would never ever pay back the money to the banks. Then, here the banks are the ones that we should blame. Why? Well, because the banks started to borrow credits and money to people that they knew that will never pay them up. People like inmigrants and people that have a very small quantity of money. Why did the banks did this? I don’t know. I think they did it because they could. Now, in my opinion here is where the governments are to blame. If the governments had come up with laws and regulations to manage better the money this problem would have never happened. Now, for example if the government would have said that instead of borrowing 90 percent of the money of the savers they would save i don’t know maybe 50 percent of the money it would have been less off a problem and no one would be in a reccesion or coming out of an economic crisis. I think that we should change our points of views and governments and banks work together to manage the money better.

CEPAL predicted that Mexico will be one of the most afected countries beacuse of the crisis.

Since the beggining ot the crisis our Mexican president told us that this crisis will barley affect us Mexicans. Even today beggining of 2010 Mexico is still suffering the conosequences of the crisis. It is known that te economic crisis(2008-2009) is the worst recession that Mexico have faced in the last 70 years! But I do not understand how our Mexican government let things go this way, what I mean by saying this way is that Mexico is facing a lot of problems that are related to economy which is unemployment and extreme poverty. But how do all this problems started? It is known that Mexico is one of the countries with the highest dependence in commerce with the United States. This why Mexico immediatley started feeling changes in its economy. The changes Mexico was experiencing where affecting in a dominal way all sector of economy in the Mexican economy. But what happen when you are noticing that you are not selling tomatoes, or maybe you are not selling textiles; normally you stop producing it in high quantities. A smaller production needs less workes, so this is how unemployment started appearing. Mexico have a weak economy that is why we had so many problems. Also I think that the problem with petroleum have a lot to do with economy. Since all this problems started comming out Mexico searched for new alternatives like increase taxtation, and created new taxes. But how do this help us? I think this does not help us at all it makes us a burocratic country. Our government is making a fool of us by trying to bill us for his problems and his sense of not being worried when the crisis started by saying anything is going to happen to our country because of the crisis. But know I will go all the way to his place and ask him Mr. President what will you do if you where the one with no job or with no money?

Also Mexico had great opportunity of job in its touristic areas, but what happend it also came down beacuse of all thing thing of the crisis! So what is opur government or our president doing! He should be trying to help his country instead of trying to capture people that they know they are not able to capture(drug dealers) because even they are more prepared than our governent and that is somenthing they should shame on it. Even before our government lie to us saying us that the United States crisis will not affect us, CEPAL have already wrote that Mexico will be the country most affected with the crisis.

HOMEWORK - The Economic Crisis: Who is to blame?

As the world economy verges towards some kind of recovery, albeit a fragile one, analysts continue to look back trying to understand why experts didn’t see the signs of crisis in the first place, there remains a lot of questions about exactly what caused the crisis, and more specifically, who is to blame.

We appear to live in a world where blame is thrown around like a tennis ball – a tennis ball that everybody seems to have an allergy to. But the blame has to land somewhere, or at least, there has to be some notion of collective responsibility, and action to ensure that we as a society are prepared for economic crises in the future.

We must stop short of saying however that collective action is the ultimate solution to the crisis. Coordination between countries already existed somewhat beforehand – the problem is however, that some countries were lax on their rules, whilst others changed them altogether, perhaps somewhat provoking the kind of risk-taking conditions that could lead to a crisis, then what would have otherwise occurred in a more risk-averse environment.

But as the world digests what has occurred (and is still going on) since 2007, blame is an unavoidable part of the menu. As the crisis evolves from one that initially started out through record levels of borrowing in the US, inside the rather large bubble of the housing market, with loans characterised as high risk, to a crisis that resulted in massive Keynesian government intervention all over the world, the question is “What next?”

A simple yet accurate way of portraying the crisis to come is “How are governments going to finance their extensive borrowing?” Although ultimately this question is focused towards the United States and United Kingdom, the perilous result of extensive borrowing is all too evident in Greece at the moment of writing. The European Union finally came forward on Thursday 25th March 2010 to offer a package designed to “save” Greece, but the underlining lack of agreement in the Union, as well as questions about its ability to be able to do what it says it is going to do, is highlighted clearly by the fact that the International Monetary Fund is involved. There is no clearer indication that the Eurozone appears unable to manage its own problems – but of course, the whole issue is linked to whether Greece should have entered the Eurozone in the first place.

What is pertinent at this stage is to take stock of just where we’ve been, where we are, and where we’re going. We may examine these stages through the context of the eternal background question of “Who is to blame?”

One may be tempted to blame those who borrowed money in the first place. If ordinary people had been responsible in their personal finances, they might not have found themselves in the dangerous situation of possible default, and the snowball effect of debt that this brings – in many cases, leading to personal bankruptcy. What has happened to us a society? Didn’t we learn from our grandparents and older generations that you only spent what you had? Didn’t we learn that you never “lived beyond your means?” What happened to make us disregard one of the basic laws of personal economics? Did we just become greedy? Did we just want to live now, and not worry about debt because it’s gone when we’re gone? How do we explain individuals’ behaviour?

Sub-prime borrowers would have been classified as such for various reasons. Perhaps they had a bad credit history, or perhaps the hadn’t built sufficient economic connections to be offered a competitive interest rate (as might have been the case for immigrants arriving in the United States) One way or the other, house prices are but a reflection of the overall economic environment, and when there is economic growth, prices rise. This in turn fuels demand for borrowing, with the major motivation for buying to get on the property ladder before it’s too late, or just to make a profit from selling later.

Either way, people wanted to borrow. When times are good, and jobs are generated, there are also more deposits into the financial system in the first place. People feel more secure to borrow, and confident of the future. Who can blame them for that? At the end of the day, choices were made, and consequences have to be followed. The consequences are today, with record foreclosures and levels of personal debt, and consequences shall continue to come.

This is where we might want to introduce the banks into this equation. After all, they fuelled the borrowing by providing it, and low interest rates, although good for demand on the one hand, are not necessarily good for making a long-term profit. For a high return therefore, one must be prepared to take more risks. Were the banks really irresponsible, or just following their business model? With lots of cash available in the financial system, and risk appropriately calculated, what’s the issue?

It seems like one could finish their analysis there, but let’s dig a little deeper. Let’s not forget that banks are not lending their own money to make a profit – but OUR money. And let’s go straight to the point of where the banks must have some liability – securitisation. The supposed financial innovation of packaging sub-prime mortgage debt with lower-risk debt, having it graded as the latter, and selling it to other financial institutions without disclosing the exact content of the debt, calls to mind various adjectives that one could use to describe such behaviour. The subsequent actions of hiding sub-prime debt off-balance sheet brings further colourful descriptions of these financial institutions that are charged with protecting our money and diversifying risk, not storing risk for eventual exposure and collapse.

The final part of this economic crisis equation is governments. They have been accused of deregulating the financial services industry to the point where such innovations such as securitisation were not illegal. Although we can fairly acknowledge that it is one of the responsibilities of government to promote commerce, trade and overall economic development, they also have a responsibility to maintain well-being. If one thing is clear, the fall in world wealth, particularly in the developed world, could not be described as meeting this responsibility – and a certain amount of understatement is needed as one speaks this fact through gritted teeth. So why did the government deregulate and put us all at risk? Is the crisis their fault then?

But governments have two angles that need to be analysed. Deregulation is one, and the other is what has happened as the extent of sub-prime exposure became obvious. Governments, spooked by the massive loss of confidence, particularly between banks themselves, have been desperately trying to save the world economy. The end result at the time of writing is the kind of intervention that socialists could only dream of beforehand. Government intervention is here – and ever-more resources are falling under their control. Is this right in a free-market economy? Is this what Keynes intended when he said that governments should intervene in the economy to stimulate demand?

Not disregarding governments’ motives of wanting to restore confidence and economic growth, as the only sure way to recovery, the consequences of their actions could be to provoke another crisis - a crisis that would not now originate from personal debt, but government debt. Some countries, such as Greece, Spain and Portugal, and increasingly the United Kingdom, are in serious, serious trouble. And it is wrong of people to think that governments have the capacity to solve all problems – the institution of Government has to pay its debts like anyone else. But the same governments are under pressure to not cease public spending – not only because it could be political suicide (Greece, Spain and the UK are all currently ruled by left-wing governments) but also because the act of Government borrowing, ironically, is the only mechanism stopping various economies from slipping back into a serious recession. In other words, increasing debt is supporting government intervention plans with a view to economic growth. And governments are desperately hoping that growth will come – because it is the only real way that debts can be repaid. Fail that, and tax rises and the associated social consequences are all that would be left - anyone else for a dose of IMF medicine?

To close this post therefore, the central substance of its subject remains. Who is to blame for this crisis? Given that governments have stemmed recession only through massive borrowing and cash injections, will growth now come? Will this be enough in the long-term to bring overall public debts down? Finally, how will we prevent such a crisis happening again? These relevant questions all remain for both now and the immediate future. Let’s just hope that these questions still do not exist in their current potent form for our children and grandchildren. So the questions are: “What can we do now?” “What should we have done?” and “What should we go on to do?” Lots of reflection to do, and comments extremely welcome.

Thank you for reading.

Baseball player gets megacontract (8 years/ 184 million USD)

It is not rare now day that the best athletes get contracts that involves a scandalous amount of money. Tiger Woods, the best golfer in the world earns more than 100 million per year, but this amount of money is also because of the publicity, not only earnings from tournaments.

But what did impress me during the weekend was the contract that a 26 years old baseball player got in the middle of an economic crisis that is still going on around the world. This contract was a 8 year and 184 million dollars deal, this means that the player will earn 23 million dollars a year, about 22.5 million more than the United States President.

Then I asked myself: "did crisis never hit sports?" How is possible that banks are running out of money and they must be supported by money and that it is being very hard to give loans meanwhile a baseball organization gives almost 200 million to a single person (well, 10% goes to the player's agent).

It is true that sports teams earn a lot of money from publicity and TV rights, also by ticket sales obviously, but market is in a hard situation now, attendance in baseball parks are decreasing because of the economic situation, really, what Joe Mauer just signed do not make sense to me, even that he was the Most Valuable Player in the American League, the best hitter, and guess what, he is a catcher! For those who don't know about baseball, catchers are known for being bad hitters.

It is true that Mauer is a phenomenon, he is one of the best players in the game right now, and fortunately for him, the Minnesota Twins, the team he supported since he was a little kid (Joe Mauer born in Minneapolis, Minnesota where he plays professional baseball now) the team for whom he has played in the past 6 years, apparently, has not been tackled by the economic crisis.

About what we saw in class

Since economic crisis started at late 2007, I have read as much I can to comprehend the situation. But only with a couple of classes dedicated in a full way to the recession, I was able understand what really caused the problem.

Watching the video of how people were taken out of their houses (I forgot the correct term that we saw in class) and people literally fighting for a job opportunity, indeed, made me feel sad. Sad because it was something that could be avoided if people in charge of making loans in the banks were more responsible.

I remember a teacher of mine who is economist and taught me History of Mexico. Someway or another he will end up speaking about economy. When this crisis just began in the late 2007, my professor used to talk us about what will happen in a few months.

He told us that prices will rise up due the devaluation of the dollar and that the basic basket will rise in a significant way. First it was hard to believe, but it was a matter of time to start seeing the effects of the crisis.

Economic Crisis in Mexico

When this economic recession started in the United States, few people worried about what could happen in other countries, fewer people though what could happen in Mexico with this crisis. When there is a problem about economics in the US, it is impossible to ignore that it will affect also our country.

When president Calderon said at the beginning of 2008 that Mexico would not feel the effect of this crisis, I almost laugh. How a country like ours that exports almost a 80% of it products to the United States (the country that started this crisis) will not even "feel" the big economic recession.

Today I found a note in the newspaper La Jornada, that Mexico will be the last country of Latin America that will go out from the crisis, and also that was the most affected during 2009 according to BID (Banco Interamericano de Desarrollo).

This organism determined Mexican economy will need at least one more year than other Latin America nations to recover the growing and GDP (Gross Domestic Product) levels. This is obviously because our economy depends a lot on the United States, the same thing happen with most of Central America countries like Panama and Costa Rica.

It has been tough situation for all the world, is unbelievable that there was people that said "nothing will happen here in Mexico, this is a 'gringos' situation". We are now watching the results, we just need to keep handling the best we can our capital, do not ask for loans if we know we don't will be able to pay them. The nightmare will over in a year, we need to keep holding it.

Earth Drowned in Oil

Imagine how our lives would change if the oil fields in the world went dry tomorrow or even more interesting: What would happen to us if an organization seized control of all the oil reserves in the world. How would you be affected and how would you react to such a crisis? The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned.

Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by OECD countries. Oil production in 33 out of 48 out countries has now peaked, including Kuwait, Russia and Mexico. Global oil production is now also approaching an all time peak and can potentially end our Industrial Civilization. The most distinguished and prominent geologists, oil industry experts, energy analysts and organizations all agree that big trouble is brewing.

The world is not running out of oil itself, but rather its ability to produce high-quality cheap and economically extractable oil on demand.global oil production can be expected to decline steadily at about 2-3% a year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic rises. And the scramble to control oil resources intensifies Just kiss your lifestyle goodbye

Tough spot for Greece

Greece was in the ancient world one of the main civilizations, they had great thinkers and made many advances in sciences and philosophy. Today, I’m sure the Greeks are nothing less of what they used to be, but sadly they’re not having the same luck. Greece is going through a very bad budget deficit brought about by many debts the Greeks have; Greece's national debt stands at about 300bn Euros. This budget deficit has forced the government to make many cuts both in wages and public spending. The economic crisis through which Greece is going will most likely affect the whole European Union.

Certainly the Greeks will be affected by all of this; many are complaining and going into strike due to the lack of support by the government. It is very bad that there are such great differences among all the economic levels of the European Union. These kinds of differences are likely to destabilize the Euro’s value and even reduce it. If Greek economy goes “over the cliff” it is likely to take with it Spain and create a chain of falling economies. It is imperative that the Greece does something about this, but also they have to be supported by the European Union because this also affects them.

There are several things that can be done about this deficit. Greece can begin by reducing its spending and making all those who evade taxes pay. They have to be very strict when dealing with taxes. The European Union should boost Greece’s economy and help it regain its strength. Reaching this goal will be tough because the Greeks have begun to complain and go into strikes. They should do the total opposite, they should be united and work hard to make their economy go up and reach their previous economic level.