Readers Question: Do the US have to depend on others to buy their bonds? The US doesn’t have to rely on other countries to buy their bonds. If there is sufficient domestic demand for buying US bonds, there is no need to rely on foreign investors. However, at the moment, about 30% of US bonds …
An Overview of the Indian economy in 2012 and its prospects for the future. (Depressed by events in Europe, a look at an economy with a very different economic outlook). Summary In the past few years, the Indian economy has been growing rapidly – (e.g. 8.5%2010-11). However, this growth has led to an increase in …
Despite the weakness of the UK economy, the Pound is forecast to rise against the Euro, due to the ongoing uncertainty surrounding the debt crisis in the Eurozone. With Greece and other countries at risk of default, and even facing the prospect of a Euro break up, the Pound Sterling looks relatively attractive – despite …
Since 2007, the UK has experienced a variety of economic shocks which have caused a prolonged period of economic stagnation, high unemployment and uncertainty. In 2011, the economic recovery proved much weaker than expected, yet inflation was stubbornly high. In 2012, fundamental weaknesses are likely to keep the UK economy depressed with high unemployment and …
Readers Question: Why can’t a debt-crippled and deficit-induced state, go on with its most normal economic activities (by borrowing the needed money to make sure that no or at the most, unproductive spendings are curbed, no tax rates up, and no austerity measures) in a bid to emerge out of debt & deficit potholes sooner …
Readers Question Can a fiscal stimulus package reduce the extent of the recession? Fiscal stimulus involves a combination of lower tax cuts and higher spending. In theory the tax cuts will increase disposable income and therefore encourage consumer spending, leading to higher aggregate demand and economic growth. Fiscal stimulus is typically financed by higher government …
A key test in understanding economics is being able to interpret data. If you really want you can present data in a way which supports your argument. Therefore, always be careful about how you look at data. This is an example of how you could view employment statistics in the US. Total employment This graph …
Readers Question: If the markets decide the UK is not such a safe haven and bond yields rise will pension funds heavily weighted in Gilts tend to fall? Yes. If investors feel that the UK is not a safe haven (they feel increased risk of UK government default). Then investors will sell UK bonds, this …