Finance & Economics
Finance & Economics
Fair Observer's analysis of important economic and financial issues, events and trends in global markets and the world economy.
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360° Analysis / emerging markets / Euro crisis / liquidity / United States / Europe / Finance & Economics / BRICBy Ulrich VolzUlrich Volz says that emerging countries need to brace themselves for a world of high global liquidity and volatile capital. The world economy has been in a state of fragility since the outbreak of the global financial crisis in September 2008. While most emerging countries navigated the crisis with relative success and staged strong recoveries in 2009, many advanced countries – not least in Europe – are still struggling with recession or tremors in their banking systems. Since 2010, the European banking and sovereign debt crisis has not only caused jitters in the global financial markets but has also sparked worries about contagious effects around the world, increasing the...
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By Gunnar BeckGunnar Beck argues that Germany has suffered immensely because of the euro and supporting failing European economies like Greece is against its self-interest. William Rees-Mogg wrote in the venerable London publication, The Times on June 8 that he could “not see how German policy on the single currency can be defended. They enjoyed the restaurant meal but they do not want to pay the bill. Now the bill has been left lying on the table.” With this quote (those with an online subscription to The Times can read the full article here), the former editor of The Times articulated a familiar view. Leaving aside Rees-Mogg’s thinly disguised anti-German sentiment and blatantly...
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Catherine Lei examines the role of the US dollar as the world’s reserve currency and whether it might be in danger of losing that role. Background Most national economies rely on a reserve system, according to which the federal government holds in reserves a substantial amount of a foreign currency to use as the basis for international exchange. The gold standard was the original reserve system. Paper notes of local currencies are ultimately exchangeable for gold in this system. England was the first nation to officially adopt the gold standard in 1821. One by one, other countries also adopted gold as the backing for their national currency reserve systems. An international gold...
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By Naim AmeurDespite an improvement in the business climate in post-revolution Tunisia, further administrative and communicative reforms are necessary to encourage entrepreneurship. The Tunisian revolution ended the corrupted regime of former President Zine al-Abidine Ben Ali in January 2011. The small country in the Maghreb then elected a National Constituent Assembly in order to devise a political system based on democracy and balanced powers, and the writing of a new constitution. However, the revolution has generated a slowdown in the economy, increased inflation and growing unemployment. In addition, social demands from activists and sit-ins have deepened the economic recession. Tunisia's...
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An analysis of how to create a balance of domestic interests in Africa and the interests of globalization. As managing director of Goldman Sachs' South African office, Colin Coleman has witnessed, and advised, the execution of countless business contracts across Africa. Each deal -- from China's US$9 billion copper deal with the Congo to Walmart's US$2.4 billion purchase of South African retailer Massmart -- highlights the tenuous balance between domestic interests and foreign investment, and raises a set of key questions. "How do you create a balance of domestic interests in Africa and the interests of globalization?" Coleman asked. "How do you create a balance...
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As a number of countries throughout Africa transition from conflict to democratic rule, many governments are seeking to speed development. Whether delivering an engine for a river barge in South Sudan or bringing bottles of Coke to an Ethiopian village, overcoming infrastructure challenges in Africa can be a story of both speed and sluggishness. A glance at the mobile phone industry reveals an Africa leapfrogging over much of the world, connecting remote regions with state-of-the-art telecom networks. Yet, when it comes to some of the basics - roads, airports, and electricity - much of Africa still struggles. At the Wharton Africa Business Forum 2011, a number of experts in African...
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By John BrutonThe bailout of Spain’s banks over the past weekend was necessary, but it may not be sufficient. The construction bubble in Spain left the nation deeply in debt. Spanish banks have not properly acknowledged this debt, and this has sapped investor confidence in them. Real estate prices in Spain have not fallen as much as they have in Ireland, nor has competitiveness in Spain’s housing market improved. Unit labour costs remain high, although Spanish exports have been fairly buoyant. The new Spanish Government has introduced sweeping labour market reforms that will improve Spanish growth potential in the next few years. But this is not immediate enough to kick start the Spanish...
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By Zin LinnReforms in Burma are only possible if the government acknowledges the military and business leadership’s corruption. President Thein Sein of the Republic of the Union of Myanmar(Burma) delivered a speech on May 11, 2012 concerning his plan for national development in Burma. He claimed that the first stage of reform was already established, a visible change of foreign exchange rate unification was being made with assistance of international financial institutions such as the IMF, the World Bank and the Asia Development Bank (ADB). Burma began to reform its monetary system in April 2012 when the Central Bank created a managed floating rate for its national currency, the Kyat, in order...
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Translated from German by Annika Schall During the last few months we witnessed intense and, at times, fierce electoral campaigning in our neighboring country France. This campaigning dominated the discussion in the media and public with a constant flow of articles, comments, polls, and status reports. Campaigns are intense and have their quirks. French campaigns are no exception and foreigners not only find the candidates surprising and strange but also policy debates whether they deal with employment, purchasing power, welfare, taxes, the budget, education, immigration or internal security. What is important to note is that Europe only became an issue and a scapegoat in the final stages...