Economics-Entry 6

Troy Resources Makes Takeover Bid for Azimuth Resources

Wall Street Journal, March 28, 2013

http://blogs.wsj.com/dealjournalaustralia/2013/03/28/troy-resources-makes-takeover-bid-for-azimuth-resources/?mod=wsj_nview_latest

Summary

Troy Resources, one of the biggest global gold mining company, tries to augment its market share over its rival Azimuth resources in South America by making takeover bid. It is prospected that South America possess plentiful amount of gold reserves; therefore, Troy tries to buy Azimuth to get more share of gold mines.

Opinion

Troy Resources is trying to take over the entire gold mine industry. I do not really know whether oligopoly of government is naturally efficient or not. If the market is solely dominated by fewer people, gold price would not get dominated by producers; however, it would be less efficient to increase competition among producers. I hope market dominance may be beneficial for gold market.

Economics-Entry 5

Cyprus rejects bank levy, bailout in doubt

CNN, March 19, 2013
http://money.cnn.com/2013/03/19/news/economy/cyprus-bailout-europe/index.html?hpt=ibu_c2

Summary

Cyprus is experiencing a bank crisis due to undue taxation on bank deposits. As a result of abrupt taxation policy, Cyprus people suddenly got into trouble and confused what to do. The primary reason Cyprus government proposed unprecedented tax on deposits was to receive bailout from EU; however, its attempt to gain financial support led uncontrollable upheaval in Cyprus economy. For Cyprus, low tax on deposit is the incentives that attract investors; therefore, increasing taxation rate would be fatal for Cyprus' economic and resource development, including natural gas reservoir. Russia already perceived Cyprus' intention and stopped financial support on Cyprus since 2011. For the most part, Cyprus is facing a huge dilemma: to get bail out or to reject deposit taxation.

My Opinion

Bailout is the most important for Cyprus that is experiencing huge financial problem. All the banks are in default, and it is impossible for Cyprus to sustain its life solely based on investment of other country, which now won't even attempt to invest. Though it may create significant crash in Cyprus' economy, bailout is necessary for Cyprus; therefore, despite the unreasonable demand of EU, Cyprus should accept their demand and receive bailout as soon as possible. For now, it is necessary to deal with an urgent problem first.

Economics-Entry 4

'Anti-Bloomberg' bill stops overregulation
 

March 14th, 2013, CNN
http://edition.cnn.com/2013/03/13/opinion/smith-anti-bloomberg-bill/index.html?hpt=ibu_c2

Summary

Anti-bloomberg Act, an act of regulating the selling of high-caloric beverages in restaurants, is facing a great opposition from consumers and producers. Government's stance is that such food is threatening health of American, so it is necessary for government to intervene selling of health-threatening foods. However, there are many alternative ways of promoting healthy life of people instead of limiting people's rights to pursuit happiness and market. Because of this act, many stores are closing their business, and this indiscrete intervention is delaying economic development. For the most part, government can make better and more reasonable agenda, including renovation of sidewalks or encouraging consumption of vegetable and healthy food. Government's regulation on selling fo high-caloric beverage is only provoking opposition of people and not producing any beneficial result.

My Opinion

Approving Anti-bloomberg Act is a huge dillema for Congress. Nobody can deny that high-caloric beverages are catalyzing obesity of American population. However, is it reasonable for government to harshly regulate selling of drinks, like cigarettes? The significant difference between cigarette and drinks is their popularity. Sodas and coke are one of the most popular beverages that American has loved for a long time; therefore, dramatic reduction of drink would cause (and actually is causing) significant oppositions among soda consumers and producers. For the most part, such a radical change is not a good method, but it would be better for the society to refrain from such drinks step by step, such as exhortaion or campaigning. Regulation would not only be disproductive in health issue but also in economy as well.

Economics Entry-3

Why China Need to Spend more on welfare?

CNN, March 5, 2013
http://edition.cnn.com/2013/03/05/opinion/china-economy-gan/index.html?iref=allsearch

Summary

Chinese government potentially can grow much rapidly and explosively; however, inequality between rich and poor is decreasing people's purchasing power, leading to shrink of Chinese economy. Since China adapted market economy system, financial gap between high class and lower class people has been drastically increased, and this gap is one of the China's biggest social problem. In addition to socially deteriorating China, rising gap between rich and poor is even worsening China's economy, and it has become the most serious problem that Chinese government should cope with as soon as possible. Some experts suggest Chinese government for a vigorous transfer or social welfare system that may redistribute wealth concentrated on high class. Such reformation will not only improve the life quality of people but also the Chinese economy as a whole.

My Opinion

Chinese economy is one of the significant power in world economy. As the major economic power, China is obliged to sustain economic development for the health of world economy, and it is necessary for Chinese society not only for internal economic growth but also for the world economy. I knew that Chinese society has serious social gap between rich and poor; however, I did not know that such gap is serious enough to threaten the purchasing power of the society. For sustainable and sounding economic development, Chinese government should deal with this issue ASAP, and display its potential fully. (And it is somewhat ironic that communism government is actually negligent of social inequality...:( )