Euro Crisis For Dummies

Reading Eric Lee’s post has informed me about the severity of the Euro crisis. He noted how a) France and Germany had begun talks of recapitalization, but have not told the specifics or plans and b) Europeans are starting to notice the decline of Euros.

In class, we learned that as uncertainty or risk rises, the cost of money rises. Since Greece’s has been rolling on interest for a while, it’s getting costly for them to continue borrowing money. The bailouts have barely helped and many economists think the Eurozone may already have sunk into recession.

The question now is, how long should countries keep bailing out Greece? The IMF had estimated a cost of at least 100 billion euros to help Europe’s banks; and currently, the European Central Bank is the only institute that can help.

Broken Euro

Perhaps now, besides Eric’s conclusion of waiting for France and Germany’s action, the solution would be to follow Germany — print old currency in preparation to leave the euro. By printing deutsche marks, Germany expects export prices to jump as a result of leaving euro; but German industries seem capable of handling the price increases. They just want to leave the crisis in one piece.

Recently, I received my album ordered from Korea. The first thing I noticed when I opened the album pamphlet was the QR codes scattered throughout. When I scanned them, they led me to hidden videoclips and extra footages.

This surprise led me to wonder just how far technology had come. In class, we learned that IT has been accounted for as 50% of expenditures around the world and is worth over 3 ½ trillions. QR code, among others, is one of the new, tech-driven marketing tactics.

QR Code

We are all used to advertisement on billboards and social media, but new technology has enabled us to advertise in the wildest way. In the article, companies put a QR code on their roof so that satellite imaging can help advertise their code to users (e.g. Google Earth). When users scan the QR code, they’ll be linked to the company’s websites.

QR Code on Rooftop

In this way, QR codes can be used for sharing insights. They can also collect data about who links to the site (Measurement). From those collected information, they can identify the potential target market by pooling the results of the data (Experimentation).

It makes me wonder: how much farther can technology and telecommunications go?

Candlemakers Petition

Once upon a time (1845), in a faraway land (France), a patriot (economist) named Frédéric Bastiat had a brilliant (?) discovery.

He saw that the lighting industry was being mercilessly destroyed by a foreign “rival who … is flooding the domestic market with [light] at an incredibly low price” and asked for the government’s actions.

That wretched rival who showed no respect for the indigenous people of his country, who so perfidiously stole the income of many, was none other than – the Sun.

When I read the Lieber Case, I was reminded of the Candlemaker Petition, for in both, export dumping, or selling below domestic cost in a foreign market, was evident.

Though the petition was satirical of French Protectionism at best, it resembled the problems industries often face. When trades are being invaded by predatory pricing from an international rival, should the businesses lower and match that predatory pricing?

In class, we learned that businesses need to at least reach the break-even point. When we added up the fixed costs and overheads, price war seemed unrealistic. Perhaps the best thing to do, then, is to wait until the other side breaks? But… will the Sun ever fade?

Many of us are underage. While we weep over our lack of credit card, we don’t have to endure hidden costs in the form of  ‘negative option marketing’ like many unsuspecting citizens.

In the Strait Times article ‘ Pay unless you opt out,’citizens were forced to pay to an organization in which they had no prior contact with, unless they chose to opt out. Automatic bill paying makes checking invoices tedious; thus, when people do not notice the hidden extra cost, the company will continue charging them.

Salespeople believe negative-option marketing will ‘help achieve their short-term sales objective’, but from experience, I know that it only creates customer distaste and criticism towards the company.

My mother was once a Sears reward-card member. One day, she looked over her invoice and discovered an unknown fee. Alarmed, she called the Sears customer service who told her that it was a cost she had consented to. My mom soon realized that the so-called consent was simply her not opting out of the fee.

Negative-option marketing is shameless, but legal. Yes, shocking. A word of advice: peruse over your invoice as if it were your econ textbook. It’ll be worth your while.