Economics help blog – Page 249

Nationalisation of UK Banks?

16 January 20208 October 2008 by Tejvan Pettinger

The government has announced a bold move to buy upto £50bn worth of shares in major UK banks. The cost will be borne by the UK taxpayer and averages at around £2,000 per UK taxpayer. £50bn is a huge sum for the treasury when you consider the annual NHS budget for 07/08 was £89bn. The …

The argument against bailing out banks

23 January 202030 September 2008 by Tejvan Pettinger

The House of Representatives voted against the initial $700bn bailout. Though some bailout is likely to go through in a different form. The Problem with the bailout was: Buying worthless assets, won’t solve the causes of the credit crunch. It won’t solve the problem of home repossessions, falling house prices and the fact banks have …

Questions on Dollar Collapse

22 January 202030 September 2008 by Tejvan Pettinger

In response to an essay on – Is a Dollar collapse likely? These are some readers questions “US debt is high, but so is European debt”. Could you perhaps elaborate on that or point me to articles that discuss European debt? National debt in EU countries is a real problem. Countries like Italy already have …

Should we worry about water running out?

1 February 202026 September 2008 by Tejvan Pettinger

Readers Question: Should we worry about water running out? In a way, water is a renewable resource. From a global perspective, water is almost infinite in supply. However, there can be serious water shortages in local areas. This is becoming an increasing problem due to population growth, climate change and rapid economic growth. Also, it …

Indian Economy 2009

15 August 201318 September 2008 by Tejvan Pettinger

After several years of rapid growth, 2009, will prove a testing year for India.

Inflation Inflation continues to pose a threat. Inflation peaked at 12% in early August ’08. Inflation, is being caused by rapid growth (demand pull factors) but, also the cost push inflation factors (rising oil prices). Hopefully, the fall in oil prices and higher interest rates will reduce inflation without causing too much of a slowdown.

Economic Growth. After reaching growth of 9.8% in 2007/08, growth is expected to slow down to 7%. This might not be a bad thing as it will avoid inflationary pressures building further. However, some worry the global credit crunch could reduce growth much more.

Global Recession and Indian Economy. It appears that Europe, Japan and the US are entering into recession. Falling house prices, crisis in the financial system, and lower confidence could lead to a sharp downturn, with the worst still to come.

Many argue, that India’s growth is not so dependent on growth in the West. However, the Indian stockmarkets have been hit by the global crisis. India’s growing service sector and manufacturing sector would be adversely impacted by a global downturn. However, I still feel that India’s economic success is not dependent on growth in the West, and at worst India’s growth rate will be less than hoped for.

Vulnerable British Banks 2008

22 January 202016 September 2008 by Tejvan Pettinger

Given concerns over the financial system, many British savers may be anxious about the future of British banks. Yesterday, shares in HBOS fell 18% (at one point in the day it had fallen 35%.) Shares in Barclays and Royal Bank of Scotland also posted double digit falls. British banks are not directly exposed to the …

Forecasts for Australian Dollar 2009

16 January 202015 September 2008 by Tejvan Pettinger

Readers Question: Do you have any predictions for the AUS$ against the GBP in 2009? Thanks

Both, the Australian and UK economy faces a year of uncertainty and sluggish growth. It is really a question of which will be weakest. However, I think the Australian economy and currency will be hit harder than many in Australia would like to believe. I think this could drag the Aus $ lower, even against the weak £ sterling.

In past years, the Australian economy has been outperforming many others such as UK, US and Eurozone. However, I think this masks underlying problems.

There has been a shrinking in the manufacturing base.
Strong economy has been based on the demand for commodities. Increasingly, Australia’s strength is dependent upon demand from China and Asia.
The growth in demand for commodities has squeezed other areas of the economy as resources have been funnelled into mining. This, however, makes the Aus economy more vulnerable to swings in the price of commodities and fortunes of China / Asia.

There is a good article here about the vulnerability of an unbalanced Australian economy.

Economics vs Business Studies at A Level

3 September 2008 by Tejvan Pettinger

Readers Question: could you please help me. should i take business or ecomomics at A level? i have got an A in business at gcse but im not sure which one to take.

I often get asked, which is the better subject – Economics or Business Studies.

I have taught a little business studies (though never studied it), but my main preference is for Economics.

Many have a feeling that Economics is more of an ‘academic subject’ and therefore more valued by Universities. It is one of those things that have slipped into popular belief, and it is hard to evaluate whether Universities really do value Economics more than Buiness Studies. My feeling is that, if they do prefer Economics it will be marginal at best.

There is some overlap between Economics and Business Studies. – some macroeconomics (called external influences in business) and concepts like economies of scale. But, generally they are stand alone subjects. Business studies examines management techniques and accounting practises such as profit and loss / cash flow e.t.c.