Some big questions for Europe’s trade position.

April 18, 2014 Leave a comment

EU US TradeWith Europe keen on a transatlantic deal with the US, there have also been calls for a separate EU-China trade pact. Although they have shown a lot of enthusiasm to the US deal, the pact with China has been met with scepticism.

Here are the facts:

* China has overtaken the US as the biggest single trader
* China will overtake the EU as the biggest single trader in 2020
* China will surpass the EU in global GDP by 2020
* By 2020 the biggest destination for German exports will be China
* By 2020 the second biggest destination for French exports will be China
* Italy and Germany will export more to developing markets their euro-zone partners.

Therefore if Euro countries start to trade more with countries outside Europe the commitment to a single currency may weaken. With countries less or more reliant on exports and imports the exchange rate will not satisfy all members. If it is going to work Euro members economy’s will have to become more affiliated and better equipped to withstand unbalanced shocks from external partners.

Categories: Euro, Trade Tags: ,

Global GDP – 2007 – 2013. It’s a Chinese Roadshow

April 16, 2014 Leave a comment

Here is an image from The Economist which shows how the global economy is very reliant on China. Some key points from the graph:

* Since 2010 China has contributed 35% of global growth
* Developing economies overall have contributed over 70% of global growth during the same period.
* Developed economies are responsible for approximately 25%

World GDP composition

Welfare benefits the wealthy – #GlobalPOV Project

April 14, 2014 Leave a comment

It is time for America to reconsider who is dependent on welfare. Poverty is not only the lack of income and wealth but also the poverty of power. A key part of the poverty of power is to be defined as dependent: dependent on charity, handouts, welfare. Yet, it is the wealthy, not the poor, who are dependent on government subsidies. To transform dependency into self-determination is the work of poor people’s movements. To demonstrate the dependency of the wealthy on welfare as well as on the labour of the poor must be our collective work.

The #GlobalPOV Project is a program of the Global Poverty and Practice (GPP) Minor. Based at the Blum Center for Developing Economies, University of California, Berkeley, the GPP Minor creates new ways of thinking about poverty, inequality and undertaking poverty action.

Categories: Development Economics Tags:

AS Revision for June resit exam – Externalities

April 14, 2014 Leave a comment

Here is another video from Phil Holden concerning negative externalities. Remember the following:

Externalities are common in virtually all economic activities. They are defined as third party (or spill over) effects arising from the production and/or consumption of goods and services for which no appropriate compensation is paid.

Externalities can cause market failure if the price mechanism does not take into account the full social costs and social benefits of production and consumption. The study of externalities by economists has become extensive in recent years, not least because of concerns about the link between the economy and the environment.

THE DIFFERENCE BETWEEN PRIVATE AND SOCIAL COSTS

Externalities create a divergence between the private and social costs of production.

SOCIAL COST = PRIVATE COST + EXTERNALITY

* Private costs are the costs to a ‘firm of producing a good or service and to an individual of consuming a product.

* External costs are the spill over effects on third parties.

* Social costs are obtained by adding the private and external costs together. They reflect the total cost to society of an economic decision.

Categories: Externalities Tags:

Trading in the Fast Lane

April 13, 2014 Leave a comment

Trading in fast laneAnother image from the NYT adaptation of Michael Lewis’ new book ‘Flash Boys’. In the microseconds it takes a high-frequency trader — depicted in blue — to reach the various stock exchanges housed in these New Jersey towns, the conventional trader’s order, theoretically, makes it only as far as the red line. The time differences — now under investigation by New York’s attorney general — can be financially advantageous in a number of ways. Credit Graphic: CLEVERºFRANKE. Data source: IEX.

Categories: Financial Markets Tags:

High Frequency Trading – what is a millisecond?

April 9, 2014 Leave a comment

Every mili second countsContinuing with the theme of High Frequency Trading here is a graphic from the New York Times which gives you a description of what a millisecond is. The importance of speed in HFT is imperative if you are going to make money. Below is an extract from Kevin Slavin’s TED talk (See video clip below) which shows the lengths that some will go to get closer to the internet.

‘the algorithms of Wall Street are dependent on one quality above all else, which is speed. And they operate on milliseconds and microseconds. And just to give you a sense of what microseconds are, it takes you 500,000 microseconds just to click a mouse. But if you’re a Wall Street algorithm and you’re five microseconds behind, you’re a loser. So if you were an algorithm, you’d look for an architect like the one that I met in Frankfurt who was hollowing out a skyscraper — throwing out all the furniture, all the infrastructure for human use, and just running steel on the floors to get ready for the stacks of servers to go in — all so an algorithm could get close to the Internet.’

Changing of the guard on world exports of NZ sheep

April 7, 2014 Leave a comment

How things change for New Zealand lamb farmers. In 1961 86% of lamb produce went to the UK but by 2013 that figure was only 18%. The market has developed since that day and with cheaper distribution costs and more demand from South East Asia lamb farmers have looked to closer markets. Some interesting facts:

* NZ exports sheep to 120 markets
* The regulatory issues from China was not quality but paperwork
* 140,000 tonnes of sheep meat sent from NZ this year – only 3.5% of the total sheep market
* China took all the mutton from NZ farmers this season

NZ Sheep Market 1960-2013

Source: The NZ Farmers Weekly

Categories: Growth, Trade Tags: ,
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