International Trade Blog

While some countries do not experience the full power of the global economic crisis some are hit the hardest. The biggest losers as always are the simple people. If a cut in salary can be considered lucky, many people have lost their jobs and only source of income.

What will you do if you do not have any money? While a small percentage may choose such drastic measures as suicide, most people will do anything to feed themselves and their family. They may accept illegal or dangerous jobs and some, normally honest people, might even turn to criminals. While I do not approve I on some level understand them. For the past six months fraudulence and scam cases have multiplied. People are stealing everything that is not tied to something. Everyday there is a story in the news about a robbery and what is the most frightening fact is that people have become more violent. There have been stories in news about robberies which ended in homicide and not that the robbers stole millions. Today the violence levels are so high that people are willing to hurt others for mere scraps. And all this happened during the summer months. I do not know what will happen during winter.

The same situation applies to scams. Currently the most popular scam in my country is to offer people jobs in foreign countries. When the person has paid the necessary money bought the ticket and traveled to their destination they find out that there is no job for them and the company who offered them the job has mysteriously vanished. Many people have been cheated this way. The funny part is that no matter the numerous stories in news about such scams people still get scammed.

The situation is very serious. If last year people joked about people who work for minimal wage then today most of them would kill for such an opportunity.

After four quarters of steadily decrease in economic activity, the second quarter of this year offers good signs for the overall economy of Japan. Does this mean that Japan has conquered the global economic crisis? Not yet, but they have embarked on the right way to do so.

As most national banks the Bank of Japan has been pumping huge amounts of money into the national economy to stabilize and improve the situation. Now they have decided is the right time to stop all these actions because they could hinder the natural recovery of Japan. So now the banks main objective is to strengthen the national currency. The yen has already improved its value against the US dollar. While this could hurt the export sector as one of Japans main markets is the USA, in the long term it is believed that it will benefit the whole country. Seems quite a risky step as export levels are already down and Japan is very dependent on the economic situation of USA. Although the technological and quality levels of Japan’s goods are up to date they should be vary of one fact. What if USA switches its full attention to China? Granted the quality levels cannot be compared to Japan, but the costs and quantity can be very attractive for US importers. None the less these are finally some good news for Japan. If the global situation keeps improving then Japan surely will overcome the global crisis and reach total recovery.

Of course this will not happen overnight, but these are the first good signs. I really do hope that Japan succeeds in their recovery plans as I believe that Japan is a vital part of overall global recovery. The faster this happen the better for us all.

While most of the people tremble before the global economic crisis for some it is nothing special. And why should it be? They have experienced this crisis all their life and have survived it.

I am of course speaking about people it the third world countries. Maybe not only the third world as most post soviet countries are in the same position. Let’s look at the post soviet era countries. While most of them have valuable natural resources the quality of life has not changed very much since the soviet times. During the soviet times the salaries were quite small and even if you were a lucky one with a bigger government official’s salary there was still the utter lack of goods. It did not matter how much money you had as there was simply nothing to do with it. Shops were empty, private business was more or less illegal and real estate market did not exist as such. So it was basically a crisis. None the less people survived I would even say more; they were happy. Yes they did not have very much, but nobody had and it was ok. Ok yes there was one thing different from today. There was virtually no unemployment. The government spends a humongous amount of money, but everyone who was willing had a job and was played for it. Of course from the economical side point it was a total catastrophe as the economy could not sustain itself and eventually collapsed.

After the independence was gained not that much changed. Yes a handful of people became very rich even obscenely rich, but most people still had low salaries and were forced to struggle. Of course now the difference was that the shops were full of good. If only there was the necessary money to actually benefit from this fact. But no matter what people survived and still were quite happy.

The general idea behind this entire rumble is that no matter what we will survive. Sooner or latter the crisis will fade and the quality of life begin to rise, but of course not for everyone. That’s just the way of life.

As the global economic crisis is still roaming the world one might think that now would be the time to come together, forget private ambitions and work towards a common goal. Yeah one might think…

If this would be an ideal world with an ideal society then maybe it would be possible, but sadly this is not the fact. While these truly are hard times, these are also times of various possibilities. Of course in an ideal society everyone would do their outmost to combat the crisis in every possible way. Today more often then not everybody fights for themselves. While this might be ok for private entrepreneurs and larger companies, at least it would be justifiable, it is totally wrong when government officials start to use this crisis for their own benefit. While some politicians use the crisis as propaganda to increase their party ratings others simply gain financial benefits. Is it morally correct to proclaim that now everybody must tighten their belts and accept huge cuts in salary for the benefit of overall economy while at the same time the salary levels of government official remain ridiculously high. How can you order a family to survive with minimal income while you yourself have never experienced that? I, as a private person, might understand that it is necessary to decrease costs and thus decrease wages, but only if I see that the official who have ordered it do the same. While this may not be text book corruption I still perceive this as corruption if an official uses his post to gain unfair financial benefits in the time of crisis. If the overall situation is normal I have nothing against higher salaries for government officials, after all they represent our country and must be rewarded. Sadly in most cases government officials have now forgotten who they represent and only thinking about their personal ambitions.

I really do hope that the situation will change, but I fear that this will not happen in my lifetime. On some level I even understand these people. It is very hard to let go if you have gained something valuable, even if it is for the good of us all. This is the nature of humans.

While still a lot of people experience the wrath of the global economic crisis some governments and analysts have already proclaimed that the crisis is over and we are on a way to a recovery. One of these statements was made in UK.

Of course it sounds great and very encouraging, but there are problems with this statement and UK trade union has pointed out these problems, and warns people to be very careful. True some stock prices have shown improvement which means that really there are some positive changes happening, but it is still too soon to speak about a recovery. Well we might speak about it, but then only in theory. How can one speak about a recovery if the unemployment levels are still very high and salary levels so low? The government is sponsored by inhabitants of a country and not the other way round. If the people do not have the money and are fighting with threats of poverty how can we speak about a recovery. Only when these factors will begin to change then it is time to really speak about the end of crisis. But some governments tend to forget that.

Of course we must think positive and hope that we will recover as fast as possible. We cannot rely on some experts who say that now the crisis is over and everything will be good now. This does not happen in real life. We, the simple people, do not care about stock prices and GDP growth indexes, all we care about is quality of life and as long as we have to struggle to survive all talks about a recovery is wishful thinking. I really do hope that the crisis is almost beaten, but on the other hand I am very afraid of what will happen in the course of next few months.

Although the global economic crisis is still roaming around the world, many governments start to issue statements that the crisis is over and recovery is there. Sound nice, but what does this actually mean?

Various analysts all over the world predict total recovery by 2010 and increase of GDP. If it will be true then it is great news for everyone. Salaries will raise, unemployment levels will drastically decrease, the overall quality of life will reach unseen heights. Sounds like utopia doesn’t it? Ok let’s say that the crisis has been beaten and we are on the way to recovery. This really should mean that employers should increase wages, but I do not think that it will happen so soon. It is very easy to cut salaries, but much harder to raise them. That is the simple nature of human beings. Even if the economic situation improves employers tend to be very ‘’careful’’ with raising wages. And why shouldn’t they be? They have suffered through the crisis, had a legitimate opportunity to cut costs be decreasing salaries and now nobody can order them to reset the salaries to previous levels. This means more profit and as the economic situation still seams fragile employees will still be afraid to lose work and obey the employer. So basically we could celebrate the fact of recovery, but we will not receive any actual benefit from it, at least not as soon as we expected.

Granted the unemployment level should improve as companies who have recovered will hire new employees, but then again the salary level will not reach previous levels. None the less this is still good news as more and more people will be able to earn at least a minimum wage to survive and feed their families.

The improvement of the quality of life takes even longer as it is directly connected with salary levels and the overall employment level. Granted the crisis had one positive effect. It decreased the overall costs of food and clothes and some services which previously had reached ridiculous heights.

The general consensus is that yes we can speak about recovery, but only on paper. In real life we will probably experience it only in 2011, of course only if the prognosis does not change and we do not encounter another crisis. Let’s hope for the best scenario.

Trade is as old as world because since the beginning of time people have traded one thing for another. While in Middle and Renaissance ages international trade was considered as trade of natural resources, latter people understood that it is quite wise and profitable to improve a resource or item to increase its value and thus make more money by selling it.

Of course simple trade of natural resources can be very profitable as there are no added costs, just the cost of producing it, but it is only profitable for large countries or corporations with access to an abundance of natural resources. For smaller countries and companies it is actual more profitable to trade items with added value. A simple example – you can trade iron ore which is quite simple to produce and is fairly cheap or you can turn this iron ore into steel. That requires additional time and cost, but the added value significantly increases its value. For countries with few or no natural resources this is the only way to conduct a profitable and sensible trade. So they import fairly cheap raw materials and turn them into items with added value. Generally in long term the trade in value added items is considered more viable. It is also a more efficient usage of raw materials and rare natural resources. Currently many governments encourage their companies to produce and export more value added items. Some governments even offer special beneficial programs for manufacturers of high value added goods.

Well you might say that trade is trade no matter what you trade, but you must remember that sooner or latter we will have used up all natural resources. So a value added goods trade is a better option in the long term. It might be a bit harder to do than simple trade, but in long term the profits will be much higher. But after all what you do is up to you. This is just an opinion.

The major experts predict that by 2010 the economy of UK will recover. A bold prediction you might say, but it actually seems that they might be right. At least it is positive thinking finally.

The experts forecast a 1.1% growth of economy in 2010. Compared to 0.6% forecast this year the increase is clearly visible. Unemployment levels will reach 3 million as opposed to the forecasted 3.2 millions. A recovery seams very possible, but it won’t be easy to sustain it due to the large UK debts. Although not clearly visible, but most experts are sure that the economy has already started to recover. This trend can be seen not only in UK, but also other countries. So there must be some hard truth behind it all. The experts agree that this recession is somewhat worse than the one in 1990, but not as worse as the one in 1980. Now the only things that could slow down the recovery are; high unemployment, low consumer spending and fragile banking sector. The general idea behind decreasing government debt is to cut back public spending. Of course that will be quite an unpopular action, but is a necessary thing to do.

In general these are very good news. Of course the recovery will not occur in one day. I think we all understand that. It is a long term project which can be achieved only by working together towards a common goal. Let’s hope that 2010 is the year when the global economic crisis will be defeated all across the world.

The current main objective is to defeat the global economic crisis and many governments have come up with various plans on how to do that. Sometimes the actions might seem cruel, but if there is a long term benefit then it is understandable.

All is all this thesis does not sound so bad, but unfortunately some governments have decided that the only way to defeat the crisis is to raise taxes. Sometimes it really feels like the government official who make these decisions do not really understand how the economy works in real life. Of course it looks great on paper; raising taxes will provide increased income. Sadly in real life it does not work like that. Companies are struggling and unemployment levels are rising so higher tax rates will only force people to adapt shadow economy, meaning envelope salaries, evasion of taxes and other thing that will actually harm the economy. Sadly some government officials still seem not to understand the situation. In fact the government should think about lowering of taxes to promote more economic activity. As I read various news items I see that some governments have realized this fact and are actually doing the right thing.

This is the time when politicians should forget about party ratings and cease all political game to come and work together. They must understand that raising taxes means raising the dissent level of the population. A high dissent level may turn into hostility between government officials and general public. That would only decrease the stability which is a vital part of a possible recovery. I do really hope that at least someone will realize this and finally does something real instead just talking about what should be done.

We tend to accuse governments and large corporations for causing the global economic crisis and on some level it is true, but we must be able to admit that we also helped to create this economic recession. But more often than not, it is easier to point the finger to others rather than ourselves.

What did really happen? What were the main causes of the global economic crisis? We were actually living quite good and then suddenly almost like out of nothing the crisis hit us. And boy did it hit us hard! Of course at some degree governments are responsible, but I do not view them as the sole origin of the crisis. They only partially created this humongous problem. I cannot speak for the whole world, but in the context of my own native country I must admit that we, the everyday consumers, caused the crisis on some level. The inflated prices in construction and real estate sectors were significant factors. The salaries and costs were pushed to unseen heights and people believing that it can only get better started to spend and live above the real situation. Huge leasing loans became an ordinary thing. People loaned large amounts of money to invest in the booming real estate sector. When the crisis hit they were left with enormous debts without real possibility to sell the accumulated real estate as the sector was the first to crush. Banks and other financial institutions demanded the return of the assets, but that was an impossible undertaking as there simply was no more money to return. This lack of money directly influenced the construction sector and caused its collapse. A lot of people lost their jobs and income meaning even less money to spend. This only allowed the crisis to gain strength.

Now the government is forced to decrease the overall costs and raise taxes to increase income. A foolish act if you ask me as it probably will have quite the opposite effect. The main idea behind all this is that we must admit that the global economic crisis was not caused just by one country, government or person. We all are partially responsible and this should not the time of finger pointing.