After winding down from all the stuffing
I did to myself with traditional Thanksgiving Food that I am sure we are all
aware of; turkey, green bean casserole, marshmallow and sweet potatoes
casserole, mashed potatoes, gravy, stuffing, and cranberry sauce. Not to
mention the not so traditional foods like; dumplings, spaghetti, and Peruvian
chicken (we had a Friendsgiving as well, where friends bring a dish to share
with everyone) and the endless table of desserts, which I will not go into
because I will end up wanting to go to the fridge and start eating again.
After, all the food, I started to think whether or not I wanted to go shopping
on Black Friday; do I want to go wait in line? Should I risk the craziness that
is the Black Friday experience? Or Should I wait for Cyber Monday? So, I
decided to check online to see if I can find a cheap new iPhone 5/6 that I
could purchase. When I stumble upon some news; the Japanese Yen is decreasing
its value, compered to the peg of the US dollar. As we saw in the Globalization
lecture, global economy is like a knitted sweeter; if a threat comes lose and
it gets caught on something, it will eventually start to dissemble the sweater
until it is just a ball of yarn. This really got me thinking; if one of the
biggest economic driven countries in the world is starting to collapse, what
would happen to the rest of the super economic- powers? Will these countries
follow the pattern as well?
The fallen of the Yen over the fall
season has have an impact on the economy world wide, for instance an iPhone is
cheaper in an Apple store in Tokyo, then in an store in the US. For a long time
the rule of thumb has ben that any Apple electronic device is generally cheaper
in the US market, than a market in a developing country. For instance an iPhone
can range the price from $700- $900, in Germany, Hang Kong, Singapore, and
Italy, while in Japan the same iPhone will cost you only $649. Even though, the
price is almost similar, this distorts the concept I had about japan; I always
saw it as a high costing country like Switzerland. The yen is declining because
the Japanese Prime Minister Shinzo Abe has decided to implement (for the second
time) the “quantitative easing”, which means that Abe is going to print out more
yen, in order to try to stabilize the economy. The effect of the yen has
plummeted 10% against the dollar value, in just less than a month. One dollar
will now buy you around 118 yen. Predictions of what will happen, are useless
as paper boat however, Wall Street sees the yen, going as low as 130, depending
if Abe wins his second term, and if he decided to keep printing money.
The most intriguing thing about the
Japanese economy is that if, this will create a domino effect on neighboring countries,
just like it happened before during the Great Depression.
So, I started to look online and came
upon an article on Flipboard, which tittle read; “The Chinese Economy is Facing
a $6.8 Trillion Nightmare That Could Get Worse”. The actual shades light on how
the Chinese economy is facing a lose of $6.8 TRILLION, which were used to build
‘ghost cities’ as Ordos. Ordos is a compilation of apartment complexes that
are, well, empty. Generally building anything in a country will boost the
country’s GDP, yes it is spending, but at the end it depends on more, such, as;
where does it go? Where is it located? Is it creating jobs? Is it leading
people to find or established new jobs or educations? If it is simply, doing
nothing, it is a waste of money, and it affects the country’s economic future. This
had lead to the world’s most secretive bank to lash interest rates; one-year
deposit from 0.24 to 2.75% and the one-year lending bench rate from 0.40 points
to 5.60%. This is in results of slowing the economy down.
If globalization helps improve the
economy of other countries, as well as strengthen the global monetary system, with
such major economic powers as Japan and China facing such crumbling economic
hiccups, what are third world developing countries going to face in the future?
Nice analogy to Thanksgiving! I do agree that globalization effects economies worldwide, however, I don't think Japan's economic influence will create a domino effect. China on the other hand, does have more economic influence than Japan. The Chinese government shouldn't be wasting money on Ordos, however my question is why are they building them? There has to be a reason? If anything, building Ordos is creating jobs within the country.
ReplyDeleteI like that your blog post used examples from countries that have significant influence in the global markets in order to show that globalization does not always result in economic growth. However, I agree with Giselle that the economic situation in China does not appear to be a direct result of a domino effect caused by Japan's financial problems. I think that Japan and China (and many other countries) are facing such extensive financial crises because of the policies that their individual government leaders have chosen to pursue, such as quantitative easing or zero interest rate policies. The increased ease of international communication that results from globalization can actually be very helpful in resolving this situation. For example, states in the midst of financial crises can learn from one another in order to determine which financial policies will lead to the most immediate and effective results.
ReplyDeleteI found this post to be pretty interesting, especially from an informative aspect. From what I understand about globalization, it, in a manner, tethers economies around the world and creates the global economy. And with this, countries can either perish or flourish whenever other large economies are succeeding or failing Japan is fairly powerful, economically, but I do not think what you described will case a domino effect on surrounding countries. But I think your example does highlight a potential flaw of globalization and the question you pose about the effects on third world countries is interesting since those economies are obviously much smaller. I guess it would depend how reliant they are on the Japanese or Chinese economies.
ReplyDelete