Thursday, October 27, 2011

EU's Deal with Greece

Today, the European Union came to an agreement on how to handle Greece's debt. They stuck a deal with private banks/investors; a "voluntary" 50% reduction in Greece's debt. This had a very positive effect on markets around the world, causing the value of the Euro to increase from $1.32 to $1.40 in a matter of hours. This is a good sign for the future of the European economy as well as the possibility that Russia and China might take on an active role in Europe's financial rescue.

Some good articles to look at are:
The New York Times...
http://www.nytimes.com/2011/10/28/world/europe/europe-in-accord-on-basics-of-plan-to-save-the-euro.html?_r=1&ref=world
and if you subscribe to The Wall Street Journal...
http://online.wsj.com/article/SB10001424052970203687504576654901570712070.html?mod=world_newsreel

Tuesday, October 4, 2011

Response to "The Breakdown" Podcast

This podcast is about the recent history of America's financial institutions, as well as the present institution. Chris Hayes starts with the financial institution in place from about 1936 to 1980. Towards the middle of the podcast Hayes lists 3 aspects of that institution:
1) More localism (Affected by the locals, not Wall Street)
2) Finance as a means versus an end (More focused on customers than Wall Street
3) Short term versus long term (Able to make long-term decisions without the quarterly reports of Wall Street)
Hayes then moves on from the "golden era" of finance to the 1980s to the present. It is mentioned that there is a "wave of deregulation." Basically, this means that there is decreased concentration of businesses in the banking sector; leading to the rise of a few major banks. Banks become more closely connected to Wall Street. Debt becomes a "corporate weapon." (Becomes more popular among banks) More focus on stocks versus unemployment, and short term versus long term. Describe this as the "shareholder revolution." According to Hayes, this is where we are today.

In my opinion, if we can find a middle ground between our current financial institution and the "golden era," then the economy might return to it previous glory (and beyond).