Readers Question: What would happen if India was the only exporter of gold? India would have a monopoly in the export of gold. Given the recent increase in the price of gold, this would lead to a significant increase in foreign exchange earnings for India. If the export of gold was controlled by India, it …
The Net international investment Position (IIP) measures the balance of gross assets – gross liabilities. An asset means the UK has a claim on the rest of the world. A liability means the rest of the world has a claim on the UK. There are 4 sections of net international investment. direct investment (DI) portfolio …
Readers Question: What have been the drivers of the mortgage default rate in the 2008 recession compared to the late 1980s/ 1990s? Despite the depth of the recession in 2008, the mortgage default rate in the UK has been lower in the current recession than in the early 1990s. The peak for home repossessions occurred …
Readers Question: I have been interested in the US economy in the last few months, and with current news of their $14 trillion debt problem heating up, I’m wondering could the demand for dollars go down, if they were possible to have a similar or close problems of debt issues like Greece, and if the …
Readers Question: Should Greece Leave the Euro? Arguments for and against Greece leaving the Euro. One thing is clear, the Greek situation is dire. Government debt is very high, yet extremely harsh austerity measures have only succeeded in pushing the economy back into recession and leading to much higher unemployment. Within the Eurozone, Greece is …
A two speed Europe refers to how, within the EU, economies are growing at different rates and are at different stages in the business cycle. For example, countries in the core of the Eurozone (Germany, Netherlands, France) have seen relatively good recovery since the recession. In these countries, unit labour costs have remained competitive, enabling …
Readers Question. Lastly, what effect would a poor unemployment figure (e.g. lower than expected nonfarm payroll numbers) have on a country’s currency? Is it likely to strengthen (due to lower expectations of inflation) or weaken (due to less domestic productivity and higher imports? Poor unemployment figures would probably weaken the currency. If unemployment figures are …
Readers Question: On Jan 2009 I asked a question on the greek current account deficit, the fixed EUR rate, the lack of competitiveness and the debt load and you expanded brilliantly on the dangers of the twin deficits and the deteriorating Greek credit quality. Now I just need to make a comment that all the …