Global economy crisis

Monday, March 16, 2009

I am not an economist, what ever I had written is just out my own thoughts.

As per a recent article in the a leading new paper, "Global imbalance" are the cause for economic crisis. The US is running a huge deficits and countries such as Japan & China needed an outlet to deploy their surpluses. These surplus money had found its way into US and since the interest rate was low it inflated the real estate prices, shares and asset and finally the bubble burst. This rather, I would say as one dimension of economic problem.

There are accusation that China is undervaluing its currency to increase it export and remain competitive, on other hand US,UK, Japanese currency are getting stronger(against Indian currency) but unfortunately the job losses seems to be maximum at these countries as well as the economy is in bad shape in those countries. Ideally, if countries economy is in bad shape then, I believe the currency should depreciate.

Also, I feel for 1$, one could get much higher value commodity/service in countries like India , China compared to what the money can buy in US,UK or Japan, naturally any business man would like a source his goods or service from that part of the world.

Even in your very house, if you look around you would only see international brand electronic products, hence in this era faster information exchange , easier airtravel , GATT/WTO agreement any commodity particularly consumer electronics, which has price tag above $100 and less than 10 kgs in weight (call it 100/10 rule) has to mass produced (there could be very few expection) and entire world is the market and if the manufacturer concentrate a particular region then the manufacturer could become extinct or acquired due to competition. Hence, product manufacturer has to optimize all categories of cost, this would naturally lead to locating manufacturing plants and jobs in low cost countries.

In my opinion, when there job losses and the economy is showing shunted growth, and if the country currency gets stronger it might end up in creating multiple problems.

I welcome reader's comments.

Post a Comment

  © Blogger template Noblarum by 2009

Back to TOP  

Visit to discover Indian blogs Blog Ratings International Business Blogs - BlogCatalog Blog Directory Blog Flux Directory blogarama - the blog directory Top Blogs - Increase SEO of Your Blog, Blogging Resources Computers Blog Directory