Now Italian are in hands of Economists

After Greece , Italy is second biggest victim of debt crisis. There is huge political drama in the country . Silvio Berlusconi has to resign from post of Prime Minister due to financial crisis . In new cabinet , most members have good knowledge of economics. Mario Monty formed a new government that would remain in office until the next scheduled elections in 2013. He was European Commissioner and is a good economist. Italy has a very high level of debt and that is making problems for Italian economy.
Italian debt stands at about 120% of its GDP. Most people believe that picture of Italy is much brighter than Spain or Ireland. Unlike Spain or Ireland ,Italian people took very less debt. Most part of debt is on Government. Government did not spent to much in last 5-10 years but Italy saw very low GDP growth in last 10 years less than .80% .
Now first step Government has to take to reduce deficits and repay loans it took.European Union is ready to support Italy with eurozone bailout fund.

Agreement on bailout fund

European countries agreed on finance package for saving Greece Economy. European Union agree on increasing bailout fund from 400 b to 1 trillion Euro. There was uncertainty about the package. Banks also have to sacrifice and loose huge money. This is very bad for banking sector that is already facing serious challenge due to downturn . But problem is big and Greece is not only victim of debt crises. Many other countries also have serious problems. After Greece , Italy may be next victim. Italy has big debt even bigger than Greece but main difference is that most of Italy ‘s debt is internal . There is also news that China may invest money in some scheme related to bail out fund.

WEAKNESS OF GLOBAL ECONOMY

World economy is sick and in bad condition. Recession is knocking at the door of Europe. Now condition of USA is little better than Europe. Greece economy is in critical condition. European leaders are unable to find solution of problem.
People in Greece are on road and protesting policies of state. In this week most European index almost lost 4%. IMF is trying to find solution of problem but it is very difficult. These conditions have arisen questions on success of common currency. There is one relief , crude oil is going down. This may help economy.
Problem can not be solved in 1or 2 years , it needs much more time and strict policies for many years.

Financial Problem of world

World economies are facing serious financial problem. A few years ago we faced recession and world did not recover from last recession. Credit rating of America decreased due to bad financial policies of White House. Stock markets of world down sharply. Situation of GREECE, SPAIN is not different. This can damage coordination of economy and can create new recession. This monetary crisis is also responsible at some level for inflation. Inflation rate is very high all around the world. Consumer prices in China in this July rose unexpected 6.5% . Most investors are losing faith in stock markets, realty and in currency reserves. This is the reason why gold is going up and up. Although if it is just a monetary problem , it can be solved easily by adopting new economic policies. But it may be partly resource and competition problem and difficult to find solution. In spite of degrading of US, its unemployment rate decreased from 9.2 to 9.1 in July.
Let there is hope, if crude oil remain below $100 in next year.

debt problem continues in Greece

Financial problems of Greece is not ending. 110Billion euro package is approved by European union to help Greece but this does not seem enough. Problem is deeper. Actually Greece itself created problem and it has to solve it by its own efforts. European Union is helping at mass level.
All parties should support reforms programs. It is not time of politics.
Greece has more than 300 billion debt.
Problem will be solved but it will take time .

P for Population, P for Problem , P for Poverty

P for Population, P for Problem , P for Poverty

Problem is second name of population, but third p means politicians do not think so. Population makes them popular. Most economist and politicians are not aware about population problem. Today is Population Day. Increasing population is a big problem. Poor countries like India, Bangladesh , China etc are already overpopulated and facing shortage problems. Actually in long run, result of population growth are very dangerous. But we do not take any problem seriously until we fully face it.
World resources are limited and we can make adjustment with them at certain level. Law of variable proportion already apply on many countries of world. If Japan or England do not feel any problem from overpopulation , this does not mean America will feel same economic condition with population density of 300 or above. These countries are small and their population is very less compared with world population. We are cutting trees and polluting rivers. We can not adjust such a huge population. Think what would be picture of India and China if their population density is same as Australia or Canada. World leaders should seriously think about this problem.
I think biggest achievement of communist China is one child policy.
World community should not ignore it.

Inflation or decreasing resources?

Today world’s main economic problem is inflation including rising energy prices. There is different between inflation and reducing resources . Inflation is commonly a result of monetary polices , but reducing resources are not result of monetary policies. Reducing resources are more dangerous . Due to overpopulation and highly exploitation of resources , prices of these resources are increased.
Oil, Coal , water etc all are used without any care. All world leaders should think about it. Rising petroleum prices are not just a inflationary problem it is actually a problem of decreasing resources. It is really a critical stage to think about it. In general most countries of world are overpopulated and feeling resource shortage which will wide in coming years. We are polluting water, air, soil and finishing plants. It is very important issue and world community should not ignore it.

Australian and Canadian dollar become more valuable than American dollar

Now dollar means not just American dollar. It may be Australian or Canadian Dollar.
In past American dollar always valued much higher than Australian or Canadian dollar.
But now time changed. In these days other dollars are on record high against American dollar. Monetary policies of US are much softer than Canada or Europe. Economy of Australia is performing very well. It has very low unemployment rate comparable to America. Increased value of Australian dollar also show traders s confidence in Australian dollar.

Businesses are performing little better in this year

Recession created troubles for business houses. Now situation is little better. Companies are showing good results. Apple’s profit rises up to 95% in first quarter of this year. This show consumer confidence. Although nokia ‘s profit decreases 1% but it was above expectation. Net profit of American giant General Electric rose more than 79% in first quarter of this year than first quarter of previous years . In previous year , recession hit most businesses. Now effect of recession is decreasing and companies are performing better.

Inflation is a big challenge for central banks

Inflation is a major concern today. World economy is suffering from high rate of inflation. Main cause of inflation is rising crude oil prices and financial packages given by governments to help economy in recession time. Interest rates are at very low rage. In US inflation rate increased from 2.2 to 2.7 in March. In China inflation is reached very high above 5% in March. Chinese consumers are suffering from high housing and food prices . Chinese central bank is trying to keep liquidity in control. Inflation is already record high in England.
Economists believe that crude oil may remain above $100 or go up.
Gold and silver are at record high. Currencies are showing weakness. So in future controlling inflation is a big challenge for central banks.
Increasing interest rates may hit economic growth. Crude oil prices are out of control. It is a big challenge.

Employment rate is not improving in Spain , Oil prices making problems

According to Spanish Labor department , unemployed numbers touched 4.7 million this month. Conditions are not similar in America or other countries as other economies are showing recovery . Big portion of Spanish labor is unemployed. About 20% of population is unemployed. Rate is one of highest in the century. Spain has socialist government and socialist polices are also responsible for delay in recovery. In other major European countries unemployment rate is falling. One reason of slow recovery is Spanish construction boom which is ended. In past economy depended highly on construction sector. This sector takes more time to improve than other consumption sector. Oil is reaching new highly of 2years. It reached above $108 and it may slow or stop economic recovery. Conditions in Libya made situations worst.

Unemployment rate decreases in US, Europe & debate of nuclear energy in Germany

After Feb, US employment rate increased again in March. European economy is also showing recovery singals. US unemployment rate fell to 8.8 from 8.9. Europe also registered increase in employment. This employment will create demand in economy which is key to growth. But there are fears of increasing inflation. Oil & commodity prices can increase inflation rate. Inflation may hurt this employment growth. Outlook of economy is good. There is a debate about nuclear energy in Germany. A local German govt. order a company to suspend energy production in a nuclear plant for some month. Germany already have much energy consumption. Such activities would damage economic growth as Germany does not have enough energy resources.We hope nuclear energy would not be discouraged in Germany as it is not good for economic growth
.

Is Libya so important for us?

America is busy in Libya. America is suffering from recession. GDP is not performing well. Then in spite of thinking about our economy , administration is busy in Libya. Unlike Iran & South Korea , Libya has no effect on America. Then why America giving so much importance to Libya? China & Russia are not taking interest in these things. There main target is growth. But some western countries do not want to think about their future but want to keep busy themselves in pity maters. Keeping oil price low with political pressure is not a solution of crude. It may be more dangerous for us.
American administration should really think about it . America already knows there is no risk from Libya having dangerous weapons. Then what is need to participate in such activities? This is harmful for American image. We will get nothing from it except hate from world. Is Libya so important for us or our economy is more important for us.

Outlook of Insurance sector after Japanese quake

Outlook of insurance sector may change after damage of assets worth more than $ billions. Swiss Re is being considered biggest victim of this event. American giant AIG
also has to face big claims. But exact figure is not declared by companies. Earlier earthquake in New Zealand also created liabilities for Swiss Re. But is just an accident and does not happen regularly. Confidence in insurance sector can return with time.
Japan has v. big GDP. Loss of assets is not main problem. Main problem is decreasing confidence. Japanese economy was not in good situation even before this quake. Now it is time to watch what steps Government take to handle this situation.

Will Japan’s quake would discourage nuclear energy uses

Japan ‘s nuclear crises enforced word to think about their nuclear reactors.
It is not first event but it is most critical event in history. No one can imagine it.
Actually nuclear energy is very important in modern economy.We cannot think
about better future without nuclear energy specially at present. Crude oil may
be guest of a decade. Crude oil already above $100 and would go much high ,
how it can be substitute of nuclear energy. Nuclear energy provides about
13-16% of world electricity and most countries were planning to increase it.
France already produces more than 80% of electricity from nuclear reactors.
Major economies are already in back gear, and cannot bear this burden.
Japan is highly quake risky location. But many other countries have not
such background. Yes some countries will take some steps to discourage
nuclear energy but in long run we have to accept nuclear energy.Until we find
a good substitute of crude, we cannot leave nuclear energy.

Japan after quake

Earthquake made a series of trouble for Japan. After a long period of
recession , a next problem knocked at door of Japan. Biggest effect quake
on economy may be interruption of power supply. Most nuclear plants have to shut down.
Industrial production will also reduce due to shortage of power supply. Budget deficit may increase due to reconstruction activities. Japan has largest public debt among all industrial nations. It is generally believed that Nikkei would open negative of Monday. Most economist believe that effect of such disasters would be in short run. In long run, economy can easily fill its gap if other conditions remains good.

Recovery signals: Prudential, EATS reports big profits

After increasing employment data in US, two other good news are coming from Europe.Big defense giant EADS have shown a profit for 2010. The company had given bad results for 2009. It returned to profit this year. It was a big victim of downturn.
Another European giant Prudential have also shown good results. Pre tax profit almost doubled. Result of both companies are being seen as a recovery from downturn.
This will surely boost confidence in investors specially in Europe. But oil prices are still
a big problem. Although oil prices little decreased on promise for extra production from Saudi Arab. Dow Jones & NASDAQ responded positively.

Crude oil touched $106 level

Crude oil touched $106 level. Now world is feeling high inflationary pressure. Most
countries are already fed up with high inflation rate. High crude price will pick oil into
fire. Time will tell at witch level price stabilizes . At the moment it is difficult to estimate.
Most economists estimates oil price may stabilize in rage of $ 90-110. Situation of Libya is major reason behind it. Libya is a big oil exporter of Africa. Supply of oil decreased in these days. Europe is main importer of oil from Libya.
SOME HAVE PAIN & SOME HAVE GAIN – it may be a problematic time for major economies of world but some countries have reasons for celebrations. Rising price are beneficial for them . Saudi Arab, Russia ,Iran, Venezuela, UAE etc are main producer of oil. Now they would have more profit margin. Impact of rising price will be positive on them. But exchange economic effect may be negative. Exchange economic effect is a affect on one economy result of relations with other economy. For example if America went into recession. It may reduce Russian export to America. It may decrease other country ‘s investment in Russia.
It will also give one lesson. It will force people to think about alternatives of oil. In long run you can not depend on oil. Unlike law of energy, law of oil is different.
Law oil tells oil can never be created, it just can be wasted. France is really a good example how we can do better.

US unemployment rate in Feb

There is a good news after long time. US employment rate in February is under 9% . Unemployment rate for February is 8.9%. It was unexpected . A few days numbers of consumer spending were not good. But is a big relief for government .It is interesting to watch , will unemployment rate fall in coming month.
Crude oil reached above $100/barrel. Crude oil may effect economy.
Household income in January had risen 1%. But this was not converted into consumer spending . This was converted into saving. This saving was also positive for economy. More clarity will come in next quarter. Overall it is good news but would be better if it comes without tax cuts.

Unemployment : Biggest challenge for Obama

Unemployment rate in America is very high. There is very little growth in GDP.
In January unemployment rate was about 9%. Highest unemployment rate was
in 1982 above 10%. Now it is very big challenge for whole America how to face it.
Cheap labor of emerging economies like China & India have given a thread to demand of labor. Rate of crude oil may increase problem in future. Unemployment rate in Canada in January was above 7% . Problem is more deeper in America than Canada.
Canada has a very small economy compare to America. It has huge oil reserves & export side is strong. It is very easy to achieve low employment rate than America.
Highest employment rate of Canadian history were in 1982 above 13%.
It is biggest challenge for America.

FUTURE OF AMERICA

America is no longer a superpower. It is just a biggest power. Its economy already reached at peak many years before. Now chances of high GDP growth are very less.
On the other hand, China is rising as an economic power. Its GDP is growing at very high rate. In future China can overtook America as biggest power. America should learn from Europe. Due to huge availability of natural recourses, American forgot the cost of resources. They forgot saving. Americans already drilled much of their oil. Oil is going to be finished in some years. Europe is taking care of future but America closed his eyes.
France is an example who makes electricity from nuclear energy . Who are dependence on oil, would pay its cost on future. America must think about renewable energy.
There is no option. Regulations on financial institutes and banks are also weak compare to Europe. Population growth is still projected. America must think about future to make it friendly.