Economic++Currency

 =**Economic Currency**=

__**Introduction**__ The U.S. and many other countries are suffering from an "economic depression". This means inflation, recession, and globalization are the rising subjects today. People can no longer ignore these problem because they are now directly impacting us through gas, food prices, and (for those who travel) the weakness of the American dollar compared with the euro and British pound. These issues are real and something must be done to stop the impending catastrophe from happening. This article reveals how the economy is weakening and what may be in store for us. user:justine_12

__**Currency Exchange**__ Right now the exchange rates are not looking good for the dollar. The dollar has dropped considerably from where it used to be. In 2005 the dollar was worth 0.74206 euros but now it is worth 0.684791 euros. The Treasury Secretary Henry Paulson, Federal Reserve chairman Ben Bernanke, and their counterparts from the G7, a group of seven financial ministers, are discontented with its present status. They see that the dollar is falling in value compared to one of its main competitors, the euro. It has long been a fear that foreign investors might dump their holdings in the US Treasury's due to the dollar's decline. Now the United Arab Emirates has decided to move its foreign-exchange reserves away from the declining dollar. This past week, the U.S.-Canadian exchange rate put the dollar on the same level as the loony (The Canadian dollar). [|**Dollar fell further against Rupee**] The dollar's fall in value will be detrimental to our society. A country's employment levels, level of business activity, and gross domestic product (GDP) are highly dependent on the country's money demand. The unemployment rate is the highest it has been in nearly two years, and the fewer employed people the less the society will spend on goods and services. People lose jobs or are unable to attain jobs due to reduction in their bill's value. Gas prices are rocketing up so much that people have driven 4.3% less miles per month than they have in the past year. Independent truckers have gone on strike for they are no longer making money due to gas prices. What will happen to the employment rate when gas costs seven or more dollars per gallon? Also, economists expect slower growth in consumer spending, business investment, exports and inventory building. They have predicted that there will be little or no improvement in a housing market that has been the worst in 16 years. AMR Corporation   , the parent company of American Airlines and American Eagle, announced that will be taking some where around 40 to 45 mainline aircraft and 35 to 40 regional jets out of the airways and ending some of its present routes, due to the escalating fuel costs.

The dollar has once again fallen to the euro and the British pound when the Federal reserve announced that it was again cutting interest rates. The euro presently buys $1.5615, when it previously bought $1.5564. The bond increased from $1.9847 to $1.9877, yet Japan's yen has fallen to ¥103.95, down from ¥104.55.

The euro is now becoming more desirable and is being used by more countries. In the European countries that are currently using euro, there has been the fastest growth rate in their economies since 2000. The euro continues rallying support for instelf in Middle Eastern countries as well. The central bank of United Arab Emirates (UAE) announced that it would shift 10% of its reserves from dollars to euros. The euro has set a new high against Japan's yen, and it has also been speculated by the European Central Bank's officials that people will have higher interest rates in the euro zone than they have had in the past.  user:koja 



**__Inflation__**
Inflation is the general rise of prices on goods and services over time. The U.S. has been experiencing extreme inflation, especially in oil and food prices. I have also discovered that there is also a rising cost of certain metals such as aluminum, copper, and gold. These rises in costs are insane, right? It seems as if insane is becoming the new "normal". How will people cope with this new "normal"?

The rising food costs have a huge impact on Americans, having already been hit by the still rising gas prices. Certain food products have increased dramatically. The price of eggs is up by 30%, milk and flour are up by 13%, while rice rose nearly 10%. Rice has been the rising topic in the food industry. The rice prices have recently increased to $1,000 per metric ton. It is not only the actual price that is going up, but also the cost of export-quality rice. That itself has risen an extraordinary 173% in the past year. There has also been a difference in the price of corn, which could evidently be cause by the demand for ethanol. Corn is currently about $3.10 a bushel, compared to the $1.98 a bushel in 2006. The inflation of this crop can seriously pose a potential problem because it is the No. 1 crop. Yet the U.S. is not the only country that has these rising prices. Food riots have occurred in Egypt, Haiti, Yemen, Bangladesh, and other nations. There is not one, but many factors that are pushing up the food prices. Worldwide economic growth and restrictions on food export are just a couple of examples. The increase in global food consumption along with the rising needs for corn and soybeans for alternative fuels is also a reason why these food prices could possibly last another two years. That's right, two more years with these ridiculous prices for a necessity to live.

Let's not forget about the rise in gas prices, I mean who seriously could forget. Gas prices are nearly up 20% or an extra 65 cents a gallon, and this has no sign of slowing down. Now in Alaska, the average price of regular gas has increased to $4.18, a national high. Oil prices have yet again fluctuated and are now about $132 a barrel. Growing demand of oil is also making the oil prices rise. Gas is now a necessity in many different countries and to get their hands on it they are even more willing to pay the higher prices. Americans are slowly starting to adapt to these prices. They have started switching to smaller cars, making fewer trips to unnecessary places such as the mall, and taking public transportation wherever possible. Although expensive, alternatives to gas powered cars are hybrids, ethanol-powered, and cars that run on electricity. As stated before, ethanol is also raising the price of corn and soybeans to power these cars. Hybrids are cars that have two motors, one gasoline powered motor and one electric motor. Although there are many pros to this invention, a hybrid car only ends up saving you $2,300 over a ten year period since you already spending so much on the initial car.

In spite of the incredibly rising prices on food and gas, gold has taken a turn backwards. Instead of rising in price, gold has fallen from $950 to $870 an ounce. It is hard to believe that only earlier this year, gold was $1,000 an ounce. That was able to buy more than ten barrels of oil. But with today's price at $870, it only buys about seven and a half barrel's of oil. Gold's weakest point was in 2005, where it only bought about six barrels. Obviously this is a concerning factor because of the incredibly rising price of oil.

The U.S. is not the only country with this problem. Inflation is also a top issue in Latin America. They have already seen a double-digit inflation and questions are being raised about how the government is handling the situation. Who is to blame? In her first four months in office, President of Argentina, Fernandez de Kirchner's approval rating has fallen from 42% to 30%. Some citizens are even taking action. Farmers in Argentina called a second strike in a short two months over the export taxes. Over the last five years, inflation across Latin America has been under control, but now they are sort of in a state of shock at how much their economy has changed. user:justine_12
 * < In six months, I believe the economy will... ||
 * < Be in better shape ||< 28% ||< [[image:http://money.cnn.com/POLLSERVER/images/blue.gif width="28" height="20"]] ||
 * < Be in worse shape ||< 53% ||< [[image:http://money.cnn.com/POLLSERVER/images/blue.gif width="52" height="20"]] ||
 * < Won’t change one bit ||< 19% ||< [[image:http://money.cnn.com/POLLSERVER/images/blue.gif width="18" height="20"]] ||
 * < I am most concerned about the cost of… ||
 * < Gas ||< 61% ||< [[image:http://money.cnn.com/POLLSERVER/images/blue.gif width="61" height="20"]] ||
 * < Food ||< 16% ||< [[image:http://money.cnn.com/POLLSERVER/images/blue.gif width="16" height="20"]] ||
 * < Housing ||< 8% ||< [[image:http://money.cnn.com/POLLSERVER/images/blue.gif width="7" height="20"]] ||
 * < Health care ||< 15% ||< [[image:http://money.cnn.com/POLLSERVER/images/blue.gif width="14" height="20"]] ||

There are many different views on the possibility of a recession in the US in 2008. If this were to happen, there would certainly be a significant global impact. The US has a huge role in the world's economy. It is involved in about 21% of the world economy. Impact on the U.S. recession can spread through many factors. Some of these factors are less spending by American consumers and companies reducing demand for imports. Another one of these factors is the crisis of the U.S. sub-prime mortgage market has pushed up credit costs worldwide and forced European and Asian banks to write down billions of dollars in holdings. Also the dropping U.S. stock prices drag down markets elsewhere such as in Europe and Asia. Economists say that the economy goes through series of expansion and contraction. The US has gone through 32 cycles of expansion and contraction; they average about 17 months of contractions and 38 months of expansion. They have been less common and shorter in the recent years. Since 1980 there have only been seven recessions.  China is the world's biggest exporter of goods around the world. If a economic recession were to occur the economy of many countries would surely suffer. The United States imports many of it goods from china. China is one of our leading importers and exporters. China exports 43% of the toys into the US and 38% of the clothes. In 2007 the US spent 321 billion dollars on trade with China. Many of the countries in the Middle East have the United States and other world powers in the palm of their hands. If they were to cut off the supply of oil infestucture in the United States and other world powers would collapse. The oil companies have America in a choke-hold. They keep jacking up the price of oil and there is nothing the United States can do about it. It won't be long before people cant afford to drive to work. This would and is putting a strain on the economy.  The World Trade Organization is the enforcer of the rules of trade between nations at a near-global level. The Federal Reserve has responded to potential slow downs by lowering the target Federal funds rate during recessions and other periods of lower growth. In fact, the Federal Reserve's lowering has even predated recent recessions. The declining frequency of recessions in the past two decades and the reduction in declines in GDP suggest that the Federal Reserve has been successful in moderating contractions. Nearly all of the world's countries are now members of the WTO.user:tennant2010
 * __Recession__**

__**Globalization**__ In general, globalization is the process of transforming something into a global process where people are unified and function together in a single society. This idea is applied to the economy, technology, culture, and politics of many countries. Based on a technological and economical point of view, globalization has its many pros and cons.

Globalization can benefit an economy in many ways. It increases the growth in productivity in countries that have certain advantages in producing specific goods and services. This causes global competition and importation of goods, steadying the prices of many products, which makes inflation less likely to damage economic growth. Also, an open economy between countries encourages innovation and new ideas from all over the world, helping the world to advance. Globalization gives countries access to foreign investments, which keeps interest rates low.

Unfortunately, globalization can also lead to negative outcomes in certain situations. Many negative situations are most related to employment issues. Many people lose their jobs due to imports or because of production shifts abroad to other countries such as Guam, China or India. There is always someone overseas with the same capabilities who will work for a lot less than the average employee. The average employee in America is a man around 30 years of age earning about $30,000 a year. His job normally includes health insurance among other benefits, which can cost his employer quite a sum of money. Employers know that the average employee in foreign countries will work for less, and massive layoffs occur. In most cases, an employee will rebound by using past work experiences to fill out applications/resumes to try to get a new job. Sometimes it doesn’t really work out and it’s much harder for an aging person to start a new job. This leads to bankruptcy, homelessness, and other negative consequences. For those that do find a new job, oftentimes these jobs pay far less than their previous salary. If termination isn’t an option for the employees, a pay-cut is. Lower pay does not work well with the cost of living steadily increasing. Wealthier, more advanced countries tend to cope better than countries that are less well off, especially those that are affected by natural disasters.

Offshore outsourcing is a major occurrence within today's economy. All economic activity and jobs are divided into two basic categories, goods and services. Most goods-producing jobs can be transferred to any country as long as there are enough resources within that country. This is happening in the US right now. Many jobs are being relocated overseas because there are people willing to do the same exact job for just as, if not more, efficiently, for less money. It seems that the only possible jobs left are those within the service industry because those cannot be outsourced. Jobs in medicine, consumer services, government services, and others are considered service jobs. These are jobs that can only be done properly in direct contact and cannot be done through a computer or any other resource in connection to another country. The service industry accounts for more than three-fourths of the gross domestic product (GDP) in the US, at least three-fifths worldwide, and one-third of the global labor force. user:rachael_05  <span style="FONT-FAMILY: Arial,Helvetica,sans-serif"><span style="FONT-FAMILY: Arial,Helvetica,sans-serif"> <span style="FONT-FAMILY: Arial,Helvetica,sans-serif">    <span style="FONT-FAMILY: Arial,Helvetica,sans-serif">

__**Economic Responsibility**__ When a country is struck with disaster, its economy suffers. Resources are lost, production stops, and many people die. While wealthier countries can recover from disaster and sometimes even produce more prosperously, it is the poorer countries that are more negatively affected. They don’t have enough resources to rebuild their economy on their own. Citizens in areas in China and Myanmar are currently going through this type of crisis. An earthquake struck central China, causing massive chaos to the country. With its after-affects still occurring, the country now has to focus on rebuilding and helping victims. Meanwhile, its economy suffers because some areas of production have been destroyed and are only just being rebuilt. Not only are specific countries affected, but some disasters can have worldwide effects. For instance, weather patterns in Asia have had a negative effect on rice production, which has a worldwide effect. It caused rice prices to go up and a food shortage in many countries.

It is the economic responsibility of other nations and individuals within those nations to help and support those in need. Not only is it morally correct, but it can only benefit the economy as a whole. In his documentary Sicko, Michael Moore says, "Those who have power must use it to meet the needs of their community." Although Moore was talking about healthcare, his idea is easily used to describe the social responsibility that belongs to those with the capacity to bring about change. Looking at it from a global standpoint, the countries that are better off should use their resources to aid those affected by natural disasters. America, with a better economy than most other countries, has already donated to many relief organizations. The American Red Cross has already given $189,000 as a starting relief fund for the victims of the Myanmar cyclones. America has also donated in the past with a large $350 million sum to the tsunami relief from 2005.

However, the nation as a whole should not be the only support for victims. Individuals must take part as well. Even a small donation to an admirable organization can help improve the well being of many people. Not only will it improve the economy of other countries, but it will also improve imports and exports. If victimized countries are helped, they can recover more quickly allowing for production to start up again more quickly. This allows for the import and export business to thrive much better and faster than it would have without the aid of other countries. Once again taking into account the current disasters of earthquakes in China and cyclones in Myanmar, people must effect change in the world now more than ever. There are many different relief organizations, some more reliable than others, that need support. The Myanmar Burma Relief Organization (MBRO), American Red Cross, and Mercy Corps are such organizations, not to mention the many relief funds set up for past tragedies that will never be forgotten, such as Hurricane Katrina. user:rachael_05

__**Solution**__ There is no clear cut solution for economic recession, but efforts are being made to find one. The US is trying to solve this problem with finances. They released stimulate money to individuals in hope that the public would spend it on US goods. A problem with this is that the individual might spend his stimulus money out of country or use it to pay off their credit. This would not aid the economy putting the government still further into debt. Another problem with stimulus money is a possibility that the money would not reach some of the recipients due to lack of information or miscommunication. This could occur because of the person's retirement, lack of electronics, or any other prohibiting facts. In order to prevent this, a branch of the government called the Internal Revenue Services helps people get their rebates. They did this by providing eligible recipients with packets that could be used to get stimulus money. If this was done correctly the economy would be jump started out of the recession. The government would regain its losses from new taxes and the economy would be strong again.

There is another solution which was suggested by John McCain, yet this idea was overlooked. His idea was to cut corporation tax. Though this idea seems strange because it gives money to a business and not an individual it might the power to solve the recession. The way this idea is suppose to work is that when the corporation gets a tax break the investors get more money and employees get better wages and both are spent on more goods. When the corporation starts doing better, due of the goods it is selling, the stock market will also improve. This would stimulate more capital investment and more jobs. More jobs would mean high productivity with higher wages and lower prices for customers. The money the government was failing to receive would come from other forms of tax and overall more money would be received. A critic of this plan would point to the fact that you could just give the tax break to the individual. This would not work because the economy’s wealth would not be distributed evenly and the economy would shrink.

Foreclosures have increased dramatically in the past few weeks due to the increasing debt. Here in California 1,000 homes are being auctioned of every weekend. A solution has been drafted by the Patrick administration that will try to prevent as many foreclosures as possible. The lenders will be made to hold off the foreclosure as long as possible, reduce loan amounts, and not. If the foreclosure does happen the lender must pay for moving expenses, pay the people an amount of money, and pay for an organization to help the foreclosure victims find a new home. In Massachusetts the Senate passed a bill to help protect against foreclosure by cracking down on mortgage fraud. The Bill made much harsh laws that could put away a person committing mortgage fraud for five years. With these conditions it is possible for safe buying and the foreclosure rate should decrease.user:tay2000

__**Editorial**__ Economic recession is a major issue that must be made known to the masses. There is no clear consensus on an exact solution, but changes to the way we live must be made. People have grown too comfortable with their circumstance, which has had a negative effect on the national and global economy. In order to end the downward spiral of our nation's economy, change must be made and work must be done. It is partly our responsibility to maintain a stable economy to the best of our ability. The government's involvement has the biggest impact on how we live. We as only citizens cannot completely control our economy's fate. It is also up to our government to get us out of this "economic depression". If they don't, they may be facing bigger challenges to come. For now, we should start adapting to these changes because they could be here for a while. user:rachael_05 user:justine_12

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