In this article, Alan Greenspan discusses how he would prefer a “modest” recession in order to lower the US deficit by raising taxes.

Finally! I am simply amazed at the fact that after many years the US government realizes that it must spend an amount equal to or less than its total revenues; it is a simple fact known by most elementary school students. As mentioned in the article, the US has been adding nearly a trillion dollars to its debt yearly, bringing the debt to be $16.1 trillion, which is unhealthy for the US economy in the long run. Yet, what Alan Greenspan proposes is completely ridiculous. Raise taxes? Risk another global recession? No thanks. One shouldn’t look so far ahead that they fall into a hole right in front of them. Raising taxes will increase unemployment which will lead the US’s economy back into a recession, and the rest of the world will follow suit.

The solution?

Firstly, giving tax breaks to corporations (and individuals) doesn’t always translate into higher rate of employment as firms simply pocket the profits and don’t raise production.  On the other hand, tax hikes always result in increased unemployment. Therefore, a viable solution would be to get rid of corporate subsides and tax breaks which will make firms more efficient and will lower major US government expenses at the same time.

References:

Carmichael, Kevin. “Greenspan: Recession a ‘cheap Price’ to Pay to Fix U.S. Debt.”Theglobeandmail.com. The Globe and Mail, 16 Nov. 2012. Web. 16 Nov. 2012. <http://www.theglobeandmail.com/report-on-business/economy/economy-lab/greenspan-recession-a-cheap-price-to-pay-to-fix-us-debt/article5369498/>.

Photo Credits:

Granlund, Dave. Fiscal Cliff Cartoon. N.d. Photograph. Www.davegranlund.com.Http://simple-politiks.com. SimplePolitiks, 28 Aug. 2012. Web. 18 Nov. 2012. <http://simple-politiks.com/2012/08/28/what-is-the-fiscal-cliff/>.

Fifty inch LCD TV? $400. Laptop? $300. PS3 bundle? Only $250!

Are you dreaming?

Nope, you’re in Wal-Mart.

In the past year alone, China’s corporate debt has risen from 108% to 122% of GDP, thus bringing the total debt up to 206% of GDP.

The problem with this is that majority of the companies and banks are state owned. Therefore, if companies were to default on their loans, it will really be the Chinese government who suffers along with its economy.

Additionally, this article brings to mind the 2008 rescission, which was primarily caused by the banks lending money to people who couldn’t afford a home, resulting in many homes being foreclosed. Now, it’s multiple firms who are now saddled with debt, and it’s just a matter of time before a couple of major firms default on their payments, which will cause a snowball effect. Firms will not be able to pay their debts because other firms who owe them money will not have paid them back yet. This will result in banks and firms being forced to write down billions of dollars in bad loans, in which case the government will pick up the bill, which would consequently bring the Chinese economy to a halt.

3 ways in which the Chinese government could limit its exposure include:

1) Changing banks and corporations from being state owned to privately owned, thus limiting any losses just to the corporate and financial entities and not to the government itself.

2) Slightly raising interest rates which will pressure firms to pay back loans.

3) Enforcing a stricter lending criteria.

References:

Roberts, Dexter. “Corporate China’s Black Hole of Debt.” Businessweek.com. BloombergBusinessweek, 15 Nov. 2012. Web. 15 Nov. 2012. <http://www.businessweek.com/articles/2012-11-15/corporate-chinas-black-hole-of-debt>.

In his blog post, Fredric Ho talked about Monsanto and how it obtained such a negative image through various situations such as not testing its products and using its patents to sue small farmers. As a closing statement, Ho wondered if the government should implement anti-GMO polices. I would say yes, for the following health and financial reasons:

1)      If we are just consuming GMOs, then our crops will be susceptible to the same disease as the GMOs have the same genetic engineering. If that’s the case, than humans as a whole will be venerable because of over reliance on a single type of seed. In traditional farming farmers use a variety of seeds thus preventing any single virus from ruining the whole crop yield.

2)      Big companies like Monsanto use their patents and sue family farms for processing of their patent seeds. Soon, all family farms will die off. Only behemoth corporations like Monsanto will be left in agriculture where they will use using their monopoly and charge high prices.

3)      We do not know any health complications that may result from consuming GMO products. This is due to the fact that companies do not want to invest the time and money to find out, as they are not legally required to do so. Moreover, I believe effects from GMO will not be felt in our generation but in our grandchildren’s because the full effects of the GMO products will not be felt until concentration of the GMO substances biomagnifies in our body.

Due to the above reasons, the US government should implement some measures to curb the number of GMO products in the United States.

Photo Credits:

Gould, David. Genetically Modified Food Tomatoes. N.d. Photograph. Getty Images.Treehugger.com. Treehugger, 3 Dec. 2009. Web. 1 Nov. 2012. <http://www.treehugger.com/green-food/gmo-bans-laws-and-labels-from-around-the-world.html>.