ibeconomics

You're such a smartie Saskia! :-) Thanks for sharing this with the class.

Is this a good article for the IA?

Please come to me individually with your article ideas and also with the theories you'll use to analyze it. As much as I love you guys using Diigo, it's better you don't share your IA articles with each other as you each need a different one. (If someone else chooses this one now, you're toast. ;-)

It is very unlikely that China would do such a thing. It would trigger a sharp decrease of the dollar, thus making China's vast reserve of the american currency worthless. The Chinese are stuck with these dollars and their only solution is in fact to buy even more of them. As a chinese official said recently: ''we hate you guys (the americans), but there is really nothing we can do about it''...

You're quite right though Julien, that it's hard to see such a move being in China's best interests at the moment. But, as the Chinese economy matures maybe they will become less dependent on exports. Then they might not worry about taking actions that might devalue the dollar (and thereby make their exports seem more expensive to Americans). That's when I'd start to worry.

Frankly, the US already has major problems with public debt at 60.8% of the GDP (According to http://flagcounter.com/factbook/us). This sums up to 8.634 trillion USD of debts (using World Band figures of GDP). China's public debts are "only" 18% of the GDP which renders China in a better position debtwise. If China would decide to ask back the money owed by the US, the balance of power economically would be greatly influenced.

This illustrates the effects of censoring and hacking on the economy and reasons for market failure.

It'll be interesting to see if China makes a gesture to make Google feel more comfortable. Google is trying to excercise some influence over the government there. But Google isn't dominant there. They don't have a monopoly there, as they do elsewhere, so the government will probably call their bluff. Google thinks it was the government that hacked their site. Quite a rare occurance.

Note that the writer of this article says that gold might be a new bubble which I dont really know if it is good or bad beacuse "bubbles" tend to burst after a couple of years right?

Yeah bubbles in the economy are always bad. Sometimes when the prices goes up really high (say, for houses for example) people will say that it's a bubble, implying that it'll burst eventually and fall back to a more realistic level. There was another article in the Economist this week about housing in Australia and the UK being overvalued by 20%-50% --but it's always hard to say. Because prices are determined by what people are willing to pay. The real danger here is consumer confidence. When people get nervous look out!

Yes, China definitely knows. They are deliberately keeping the value of their currency low to make their exports seem cheaper. A lot of countries are not happy about this. Not one bit.

what do you think of this opinion? I found it interesting as I haven't heard this point being made before...

I chose this article from The Economist because it is a very up-to-date aritcle and the problems it takes up are very debateable and much disputed today. This article is mostly about the economy in the UAE especially in Dubai, but I will focus more in this comment on the desicions being made by the undescribable wealthy oil sheiks who has a major influence on the leadership in the UAE and they are also affected by the financial crisis. as we know this area has developed extremely fast during the last years and and has rapidly grown economically, therefore, very many european banks have been pumping in money as investments for the future especially British banks. but when the financial crise came, most of the sheiks didn't do much to support the investments but instead kept their money while major projects for instance in the establishing of new massive office buildings stopped instantly. this led to a big weakening of banks that had invested in Dubai and also to a very affected UAE where some sheiks keep their money and let the less wealthy people support their country without any big support. Personally I think it is bad desicions made by some sheiks because european banks might lose confidence in investing in these areas in the future even if they are doing very well. And I don't know if it is morally right to do some of these things but I understand some countries are run differently.

The fact that global demand is predicted to rise despite the rising prices just goes to show that in the world oil is an extremely necessary good. Oil I believe in this case acts almost like a Giffen good due to the fact that it defies the demand curve, if global demand increases as predicted. People are still buying oil, hoarding it, so despite the fact that oil isn't a Giffen good, due to the fact that it is not an inferior good it acts somewhat like a warped Giffen good, the fact that demand is rising I think indicates that sales will be going up, people know that oil will only get more expensive and rarer in the years to come but Can oil prices really continue to rise at the rate they are rising without affecting global demand?

I think the best alternative at the moment is natural gas, with biofuels coming in second. Solar and wind energy will increase a lot in the next decade, but depend on a lot on innovations in battery power and also in the harnessing technologies (solar cells and kites, etc).

Personally i think the best sustainable energy source available (currently in developement) is nuclear fusion. Scientists have created an artificial sun on earth which could in the future offer an immense supply of energy. Unfortunately there is still innovation to be done as this artificial sun cannot burn for long and affects the enclosure around it because of the material available at the moment not capable of being exposed to such immense heat without melting. Of course, nuclear fusion creates radioactive nuclear waste, which would create a new problem. Then again, scientists are here to solve our problems, but end up creating new ones as they go. I think in the future an alternative waste disposal would be in space, one just has to look at all the stuff already flying around out there because of humans. I agree natural gas is a rather good alternative and available at the moment at the ready, but disagree with the option of biofuels as its destruction in my opinion is larger than the benefit we derive from it. Currently I believe we have to stop ruining our planet, and although radioactive waste is a threat as well I believe innovation could overcome this problem whereas the growing back of vast areas of plants in a soil deprived of any nutrients would be more costly and difficult. Solar and wind energy are useful, although very dependant on conditions and difficult to manage with current battery technology. In a holiday home in france I go to, there is both solar and wind energy as well as a fuel-powered generator, which is by far the most efficient source of energy at the moment due to difficulties with the batteries in solar and wind-energy, which are either too full, or too empty, or simply don't work occasionally.

Note that the figure of 1 percent unit increased is taken from another source and is not mentioned in this article.