12 months of economics in 1200 words! An economic snapshot new years eve special!

For the Year of 2011

January:         The year began with the revelation that the UK’s inflation was shooting up 3.7% prompting speculation that the Bank of England would be forced to raise its interest rates within the next few months. The bad news didn’t stop there, The UK’s economy shrank by a massive 0.5% in the previous quarter.

            Elsewhere things weren’t looking great for the Euro with a chilling prediction being made by Biktor Orban, Hungary’s prime minister, telling the world that they would have to “save the euro over the next six months.”  While across the pond the US were busy signing a record export deal with, the rapidly expanding, China.

His helmet may be made of bread but his point is a valid one!

            Thousands of Tunisians took the streets of their country, rising up against their president, Ben Ali. Marking the first, of many, despots to be overthrown in 2011.

February:      Another month, another revolution. This time it was the turn of Egypt as they rose up against tyrant number 2, president Mubarak. Rioting and strikes cost the country a lot financially and, at this point, was waiting to show any results.

Inflation in the UK continued to rise, this time by 4%, higher than in the past 2 years and the Bank of England now announced the probability of raising interests were highly likely, all but, confirming all the previous speculation. Also, good news kept rolling in for China, as it over took Japan as the worlds 2^nd largest economy.

            Meanwhile, Colonel Gadhafi, despot number 3, was feeling the heat, as, inspired by the year’s plethora of dictator overthrowing’s Libya decided to rebelled against him.

March:           This month arrived with the news of an economic collapse, that of Charlie Sheen, another megalomaniac, and his acting career. Suddenly the, then, highest paid actor, earning $1.8million per episode of 2½ men, was out of a job and soon found himself touring.

Japan is rocked by horrific floods!

            More importantly, elsewhere Japan’s year got considerably worse with a massive tsunami hitting the country, rocking their financial markets and leaving them in a economically unstable situation.

            Ratings agencies begin their massacres with Greece’s economic rating dropping to B1 and Spain’s to Aa2.

April:              Similar to Jaws, the toothy, shark like ratings agency’s developed a taste for blood, I mean downgrading and were quickly at it, like a shark into meat. Standard & Poor bit into the US debt outlook and changed it form stable to negative for the first time since 1941.

            Finally, however, China’s economy started to show potential cracks, cutting its interest rates again, sparking fears of it overheating. No worries though, they’re still on track to becoming the dominant nation by the end of the century.

May:                These desperate financial times called for an inspirational leader. In unrelated news head of the International Monetary Fund was arrested for sexual assault, prompting his resignation. Brilliant! Portugal negotiated a £70billion bailout deal and the OECD kept on about the idea of the UK raising its interest rates to prevent inflation. Still nothing on that.

June:                A Berlin meeting is held between Angela Merkel and Nicolas Sarkozy to discuss how to “save the Euro in 45 minutes.” The Euro’s falling apart and all tabloids can do is make it sound like the world’s worst action movie, typical.

            As the Euro was portrayed as a ticking time bomb, it was remarkably close to the truth. With Greek bonds hitting record levels with riots tormenting their streets, putting increased pressure onto their government.

Could the Euro tumble down like a Jenga tower?

            The possibility of Greece teetering on the precipice of collapse caused the UK stock markets to fall, despite the IMF being support of the UK’s austerity measures.

July:                 Biktor Orban, remember him? Turns out his six month prediction was pretty close as, “at the 11^th hour”, a solution emerged to save the Greek economy, a “Marshall plan”.

            The IMF got a new head, French Finance minister Christine Lagarde. Another European as head didn’t get a great welcome from developing nations calling for the position to be filled based on competence rather than nationality. Accusations of favouritisms as the Euro hangs in the balance, great.

            Mean whilst back at home second quarter GDP figures arrived, and they weren’t great. But thankfully, Britain as an optimistic nation hoped that a combination of the Royal Wedding, snow fall, hot weather and the Olympics would make up for it.

                         Roll on August.

August:           In the UK the Monetary Policy Committee members were suddenly in agreement, leaving the great presences of Weale and Dale to suddenly cease with their protests as a unanimous vote was passed for the interest rates to remain at their all time low of 0.5%. Despite all the fuss made about over the early months of the year.

            It’s only downhill after Bin laden’s death, months earlier, for Obama’s presidency as his presidency is shaken as Standard & Poor’s threat is made good and the US is downgraded to a AA+ rating, with them saying that the deficit reduction plan being too tame.

2011's answer to James Bond!

September:    The month when the adverts for Christmas begin! In answer to the great summer blockbuster “45 minutes to save the Euro” a sequel is planned for release in the late Christmas run, as world leaders start doubting whether they have indeed saved the euro. Central banks poured thousands of US dollars, in a co-ordinated action to boost market confidence, into the financial system.

            The UK public sector cuts send unemployment through the 2.5million barrier and the UK economic growth forecast is cut, despite the IMF backing the June austerity plans.

October:         Sarkozy flies to Germany to meet with Prime Minister Angela Merkel, missing the birth of his first child. So, assuming Sarkozy isn’t just really terrified of maternity wards, things were serious. Despite this, Europe’s leaders claim victory with an increasing bailout fund- the EFSF, now at about 1trillion euros.

            The bank of England pumps £75billion into the UK banks to prevent flattening, more than most economists were predicting.

Can Mario rescue the Princess?

November:      Sure enough the optimism of October is shattered by November and indeed the “victory” suffered a massive set back as Silvio Berlusconi is forced out, despot number 4 gone, as interest rates rise 7% and like predicted and Italian named Mario comes to rescue, only this one isn’t a plumber. Unwanted leader number 5 also fell, with George Papandreou, Greek Prime minister departing as his referendum is crushed.

            Britain had some good news though, we grew by 0.5% and inflation started to fall. Happy? Don’t be, the UK will barely grow next year.

December:      After much anticipation the sequel to this year’s euro crisis drops and in a shock plot twist British Prime Minister David Cameron drops out of the fiscal compact ending the film on a cliff hangar. Was this the right move for the UK? Was the fiscal right for Europe? Stay tuned for the inevitable third film in the trilogy.

            In other news US and Chinese relations continue souring as Beijing imposed additional duties on US cars. Also, the US got an early Christmas present in the death of despot number 6, Kim Jong Il, causing Korean Stocks to fall, ending the worst year for enemies of the United States.

            Getting into the festive spirit the IMF rounded the year off with a happy new year message: the world’s at risk of sliding into a 1930-style slump!

Have a happy new year, if your lucky, the world might end!

24 hours of economics in 240 words! An economic snapshot number 11

For December 30th

0:39 a.m.  Economists have predicted a return to the recession for Europe estimating the likelihood of a Eurozone breakup at 30%-40%

3:28 a.m.  South Koreas inflation rate has stayed above the target of 4% with consumer prices rising 4.2%.

5:20 a.m.  Japan has delayed its sales tax increase, form 5% to 8%, as opposition increases.

11:30 a.m. Nationwide has predicted the house price stagnation to continue with house value falling 0.2% in December.

2011 hasn't been a great year for the Stock Markets

11:57 a.m. Newbury flood defences are to be scrapped unless the £1.5million is collected, the project still needing £89,000 to be pledged.

0:33 p.m.  Hungary has passed a controversial central bank law causing the EU and IMF to cut their aid talks, where Hungary was seeking 15020billion euros.

1:14 a.m. Hawkin’s Bazaar has gone into administration despite earning a reported £60million in turnover. The Tobar group employs 380 people.

2:09 p.m.  Former WWII prisoner of War camp is to be repaired for £500,000.

3:23 p.m.  Spain has outlined 8.9billion euros in its new austerity measures, involving spending cuts and tax rises.

7:27 p.m.  The Euro was valued nearing the end of this year $1.2960 after it reached it’s 15-month low of $1.2858 falling below the Yen for the first time in ten years!

9:29 p.m.   The UK stock market, The FTSE 100, ended the year 5.6% down from where it was this time last year. France and Germany too saw falls up to 18%.

Twitenomics! The economy according to the people of the Internet.

The past week has been a remarkably slow one in terms of economics, certainly in comparison to weeks previously, but that hasn’t stopped the thousands of people world wide flocking onto Twitter, Facebook and all sorts to express their opinion on the economy.

First up was the news of Brazil overtaking the UK as the world’s sixth centre for economics and, as I s the way with the BBC’s Facebook page, it was soon overrun with people all keen for a debate on the topic. First up was Sabin Yadav with a remarkably intelligent response who, over the course of 50 odd words, mentioned how “BRICS had been able to maintain healthy growth rates” and also mentioned how, although it being the more economically wealthy nations, it would no be considered “as developed… since it has to do a lot in terms of equitable distribution and of the wealth it has been generating.” But just as you think there’s hope for the budding internet economist along comes Rob Snow who does his best to summarize the story in as few words as possible. “Ex-Nazis”. Wow, not only is it completely unrelated and remarkably predigests, but it’s also wrong! Brazil sided with the allies in World War 2! Unable to end on such a negative note I feel I need to let Marina Ferreira lighten the mood with her light heartened comment, “They see us growin’… They hatin’”. Well said Marina.

            On Twitter, however, the majority of Britain’s high profile business people were morning the loss of lingerie chain La Senza, as it entered administration. Theo Paphitis, Dragons Den star, mentioning that he “just heard sad news that LaSenzaUK, which was once my baby, has filed for administration.” Mr Paphitis once reportedly owned a £100million stake in the lingerie brand. This topic also made an appearance on Lord Sugar’s twitter with him remarking following “not getting an answer from Theo Paphitis,” that he wondered “who will nick the high-street lingerie chain La Senza from the administrator?” Mean whilst, elsewhere on twitter all self made and self proclaimed business woman Katy Price was most concerned that her Day 22 sunglasses were on sale for £10 mentioning it four times. One might almost think she wanted people to buy them.

            While the business elite, and Katy Price, might be all well and good the real person to get economic opinion is Jimmy Carr who’s twitter is flooded with more economic opinion than Branson, Sugar and Bannetine put together! This week Jimmy mentioned the NHS’ pricing scheme for Viagra, pointing out that they’re “selling Viagra £21 for 4. Hands up everyone who’s tried Viagra…I said hands.” He also brought up Nick Clegg’s fighting talk about the Eurozone Crisis saying “If there’s one man you don’t want to make angry it’s the spineless Lib Dem doormat.” His economic insight did not stop there with, in response to China being granted normal trade relations with the US on 27/12/2011, he remarked “Dec 27 2011 China buys the United States.” Oh Jimmy.

24 hours of economics in 240 words! An economic snapshot number 10

For December 29^h

0:25 a.m.  Ireland’s struggling economy is said to force a new wave of emigration.

0:31 a.m.  Dick Place, Edinburgh, has been named the “most expensive street” by the RBS.

1:59 a.m.  South Korea’s industrial output shrank in November with output falling by 0.4%.

3:23 a.m.  India and Japan have signed the new $15billion currency swap, similar to Japanese and Chinese agreement, to boost co-operation.

5:31 a.m.  Vietnam’s economy’s growth has slowed growing 5.9%, down from 6.8% in 2010.

Allegations of bribery have been made against Deutsche Telekom

6:27 a.m.  Further speculation of Yahoo’s decreased stake in Alibaba was fuelled when the company hired a lobbying firm.

9:28 a.m.  Debt experts today warned people to come forward if faced with unmanageable Christmas debt.

10:08 a.m. Alexander Dennis, a bus firm, has dropped a potential takeover of rivals Optare.

10:33 a.m. Hastings Direct, insurance company, has created 200 new jobs, in addition to the current 1,100 employees.

11:39 a.m. Harlow Foodbank is looking for larger premises in 2012 to meet increased demand; the firm currently supplies 186 people a month.

11:50 a.m. An Eating disorder association in Wessex has had £50,000 cut by health trust.

1:41 p.m.  Hungary’s government abandons part of planned bond auction.

2:57 p.m.  Firms appeal against Wigtownshires rejection for plans of an 11-tubine project.

5:25 p.m.   Italy’s long term borrowing costs have remained high after they raised €7billion in medium and long-term debt.

10:27 p.m. Deutsche Telkon are to pay $95million to settle bribery charges.

24 hours of Economics in 240 words! An economic snapshot number 9

For December 28^th

4:15 a.m.  A Chinese dairy has had to destroy all stock after it’s milk was tainted, causing its stocks to fall 21%.

5:22 a.m.  Japan’s production has fallen 4% after flooding in Thailand damaged suppliers and a strong yen.

7:31 a.m.  Tokyo Electric Power Company’s shares fell by 12% after fears of it being nationalized.

9:32 a.m.  Samsung and 6 other LCD manufactures were accused of fixing prices and maintain, despite a £357million payout, that this wasn’t the case.

Gas pipes are to start being layer across Turkish boarders!

11:14 a.m. Iran has threatened to block the Hormuz straight oil route unless the West doesn’t impose sanctions on its nuclear programme.

0:15 p.m. Unemployment is expected to rise by 210,000 next year*.

1:01 p.m.  Train manufacturer Bombadier has been given a £188million contract.

3:18 p.m.  4 Big Society projects are to receive £3.1million from dormant bank accounts.

4:20 p.m.  Italy’s borrowing costs have fallen suddenly during it’s latest debt auction, with debt being half it’s previous interest rate.

5:19 p.m.  Turkey has approved a South Stream pipeline which will transport Russian gas to Europe, a lucrative market, under the black sea and over Turkish boarders.

5:23 p.m.  Cyprus has announced a significant gas reserve find, which will help boost its economy, but may well increase tensions with Turkey.

7:00 p.m.  Bet fair has voided all bets made at a recent race, Leopardstown, due to a “technical failure”

7:59 p.m.  D2 Jeans has gone into administration, making 200 employees redundant.

* Discover more about unemployment here http://banterland.blogspot.com/2011/12/economic-problem-for-dummies-todays_28.html

An Economic Problem for Dummies! Todays problem: Unemployment.

Ever since the recession hit in the late naughties, i feel so compromised calling it that, unemployment levels have been going through the roof. This is due to, primarily, the recession making jobs harder to find. There was little increase, overall, in the increase of the flow of workers out of jobs, with the marginal increase due to companies laying off potentially unnecessary employees to help restrict spending. This means that jobs were especially hard to find and this is was because growth in companies slowed considerably as firms didn't want to make any moves and decided that, assuming their economic position was sound, they didn't need to make any larger profits and they would be better off maintaining their current revenue levels by having pay cuts and some layoffs of unnecessary jobs. It is also found that the majority of layoffs in the early recession went into jobs without any long periods of unemployment, as employers were unwilling to risk employing new workers.

So that explains the initial rise in unemployment but things aren't currently looking much more positive. But why is that? Growth has for the most part resumed, if at a slow pace, and we are no longer in recession, yet the percentage of jobless people continues to rise. In America 14million people are officially jobless and with 11million working for less than they would like, you have the equivalent of Texas being either unemployed or underemployed.
Despite the general world wide unemployment conundrum some countries, like Germany, the place to be in these times of hardship, have actually recorded lower unemployment rates than before the downturn happened. So that's something to feel good about. Maybe, eventually, we can all be in Germany's sound state. You can feel better about this situation now.
Just kidding! Since the joblessness of current times is actually an especially dangerous kind. A disproportionate number of those out of a job are the youthful. Doesn't seem too bad right? Wrong, youth joblessness increases that chances of lower wages in the future and greatly increases the likelihood of future unemployment. Plus, nowadays, those out of a job will remain unemployed for considerably longer times, it's becoming chronic, with the average time period for unemployment now being 40 weeks, up from 17 before the downturn. This brings with it detachment from the work place and other bad side effects.
Unemployment is hampering our economy damaging finances, increasing social volatility and reducing growth rates. So it's pretty important to fix it. But how? It won't be easy, although that's a given other wise I wouldn't have to be writing this article.
The main cause of the current unemployment is severity of the recession and the instability of the recovery so one primary concern should be to encourage growth as a growing economy will need to support its growth with more jobs, which will help decrease the unemployment rates. The governments will need to agree with the bond markets to put in measures to bring the deficits into their control in order to help secure growth. It's also been proved, by the almighty German economy, that shortening work hours, by using subsides, encourages firms to keep employees as well as subsidising the use of certain, new capital goods, as it will encourage the spending on them from firms and thereby increase the jobs in capital's production. It has however been proved that subsidies in green capital goods do little to help the joblessness. Alas, raising the retirement age would leave more space for growth, for the short term at least, so, for the sake of the economy, you should work longer. Although this would be unpopular with the electorate, so politicians seem reluctant to do this.
In conclusion, this sad situation although a potential long term headache that could damage the economy in many ways, is potentially solvable and it should be many of the governments' prime focuses as it is currently holding the economy back.

24 hours of news in 240 words! An economic snapshot number 8!

For December 27^th

3:31 a.m.  China has gained access to, potentially, 87 million barrels of oil after having an exploration bid approved by Afghanistan oil, which will allow them to extract the Afghan oil.

4:47 a.m.  South Koreas consumer confidence, having been hurt by fears of its economy and the Eurozone crisis, has had its worst fall in 9 months.

6:47 a.m.  After China and Japan’s currency swap agreement, India and japan are set to unveil a similar plan.

Record EU cash deposits amount to 412 billion euros!

8:09 a.m.  It’s been announced that Chinese industrial firms’ profits have risen only by 24.4% which is 0.9% less than last year.

11:14 a.m. Petroplus shares have fallen by 40%, meaning an 80% drop from last year, after a credit freeze of $1billion.

0:33 p.m.  Over 140 small businesses in Tees Valley have been given grants of up to £3,500 from UK Steel Enterprise.

3:51 p.m.  House prices in US fell in October by 1.2% despite record low mortgage interest rates.

5:11 p.m.  Tokyo Electric Power Company has been requested, by Japan’s energy minister Yukio Edano, to implement temporary state control.

6:25 p.m.  The European Central Bankhas recorded record cash deposits from European bank, amounting to €412billion.

8:15 p.m.  Sears and Kmart to close 120 stores after its shares have fallen by 27%.

11:36 p.m.  The US consumer confidence has risen for the second month in a row after rising nearly 10 points to 64.5 to 55.2 in December.

24 hours of Economics in 240 words! An economic snapshot number 7

For December 26^th

3:22 a.m.  China and Japan are to implement a direct currency exchange whereby it promotes direct exchange for companies and boosts bilateral trade.

4:09 a.m.  Japan has approved a $1.2trillion draft of its state budget, cutting spending for the first time in 6 years, it’s the most in-dept. nation!

8:17 a.m.  Samsung has paid £600million for its stake in Sony’s LCD joint venture.

8:58 a.m.  India’s GVK shares’ have increased by 8% amidst speculation of it buying a stake in Singapore-based Changi, for a 26% stake.

9:22 a.m.  It has been reported that first time buyers of properties has dropped to its lowest level for the past 35 years in Scotland.

Chinese and Japanese leaders have negotiated an exchange agreement

10:16 a.m. Five Northern Ireland courts closing could save a potential £400,000.

12:25 a.m. The Brazilian economy has overtaken the UK’s according to the Centre of Economics and Business Research.

3:52 p.m.  The new police scheme to protect drinkers on boxing day is go be implemented in Cubmria.

10:07 p.m. Stores have enjoyed strong Boxing Day sales, with the West End taking £15million in the first 3 hours of the sales.

10:57 p.m. Saudi Arabia has posted an $81billion budget surplus more than doubling the figures suggested with it expected to fall to $184billion, falling by $3billion.

11:45 p.m. Cuba has announced that it is expanding its free market reforms as it tries to increase its private sector. This is to boost their bilateral trade and cut costs for their companies after their trade stood at £218billion last year.

An Economic Problem for Dummies! Todays problem: Making Santa a viable business!

It’s snow joke!

Santa consults his naughty list, possibly with the aims of keeping his costs down.

Economics is, by definition, the allocation of scarce resources to fulfil infinite wants and nothing is more applicable than the allocation of scarce resources to make presents so as to fulfil the infinite wants of children’s Christmas presents. Christmas is an economic problem on a grand scale with it being the largest time of trade. But despite this one key aspect of Christmas has yet to be made into a business. I am talking, of course, about Jolie old Saint Nick. But how could Santa be made into a profitable business, surely all sorts of complications arise when creating the largest, international firm in the world.

Santa delivers to all children world wide, that’s 1.8 billion people and the average cost of a child’s total presents at Christmas, in the West, is £129, so what other costs are involved for father Christmas, aside from the 2.3 trillion pounds of Christmas presents, and how can he make these costs up? Well Santa has to successfully manage nine reindeers and maintain them throughout the year with food and enclosure, this would cost Santa about £12489 in total. Then there’s Santa’s workforce, the elves, whom it is estimated Father Christmas who, assuming each elf could make 10 toys a day, he’d need 500 hundred of. 500 elves at minimum wage would be about £17300. Those are just a few costs that would need to be considered, not including elf housing, the factory for making the toys, the tools, the sleigh or the wrapping paper.

From this, however, we can conclude Santa would have quite a few trillion pounds revenue to make in 24 hours to stand any chance of making a profit. Santa could make money by offering a charge for each present although it would have to be an amount that most people would be prepared to pay to prevent them from buying the presents themselves. This would be difficult as he would have to carefully source all of his materials to ensure he could make the presents for less than the high street value and it couldn’t be a unit price because different families would be prepared to pay different amounts of money.

He could offer a subscription service, similar to mobile phone carriers, whereby people would pay a subscription to have up to 10 presents without exceeding the limit on the assumption that most children’s wish lists would be less costly than the service. This would however leave the possibility for children to ask for extremely extravagant gifts, which would be hard for Father Christmas to deliver and could be more costly than the service. Santa would therefore have to implement restrictions on the service, with criteria like:

1.     It can’t weight over 100Kg

2.     It must be physically possible

3.     It has to be legal

4.     It cannot be a limited resource

And so on…

Another possibility would be to take the Google approach and make manufacturers pay to have their gifts take priority. For example, if a 10,000 children asked for a games console, Sony could pay Santa 1million pounds to give them a PS3 rather than an Xbox or a Wii. This would give the manufacturer advertisement and would give them dominance over the market, so the children’s friends would then buy that console so as to fit in. Santa could then play the firms off against each other in an auction style to raise the prices higher.

Santa is always a prominent advertiser of Coke

            Advertisement could be another route, with Santa giving up space on his sleigh to companies’ logos, he could use branded wrapping paper and cards from those companies and get them exposure. The down side with this is that people tend not to see Saint Nicholas and therefore advertisement on his sleigh wouldn’t be the best. He and his elves could also appear in films, TV and adverts for large fees, some movie stars are paid millions for each film and there are over 50 Christmas themed films out on the market so if Santa made appearances in them, plus franchises like the Santa Claus movies could help get Santa a lot more money. Plus the use of his likeness, in things like Coca Cola’s Christmas advertising campaigns.

            The truth is Santa could combine these, making people pay for their gifts, give priorities and advertise, so as to maximise revenue. This would make sense as none of these three compete with each other so could be used in harmony. This only scratches the surface of the potential for Santa, I haven’t even mentioned keeping costs down by putting most kids on the naughty list and giving them coal or floating Santa on the stock market.

Merry Christmas!