Currency war

It is not unknown the great Chinese economic growth, but maybe is not so known the cold war which is being fought between USA and China due to the currency devaluation to increase their exports.

Some specialists do not want to call it war, but the truth is that the “old red phone” is now of the hook

United States has been living above its possibilities, its expenses were much higher than its returns, however, now is trying to save, but the consumption is lower, for that, exporting is so important, to keep the economic growth, that is the reason why USA is trying to devalue the Dollar, to make it cheaper for the other countries and make their purchases in America cheaper.

At the same time, the Dollar devaluation is not in the interest of China, because its currency would be more expensive and its exports will decrease and it will have to increase the intern consumption and save less that is why China is also trying to devaluate the Yuan and buying American debt, and here is another reason why the Americans do not want the dollar to increase its value, because they will have to pay less for its debt.

Summarizing, China wants to devaluate its currency, other Asian countries which do not want to have a disadvantage (including Japan) are doing the same, USA does not stay behind, so, who is losing more in this war is the Euro because countries like Greece, Spain, Portugal, Ireland and Italy do not want a revaluated Euro, because the need to export to avoid their economic problems. If the Euro price increases, they sell less. In this war, nobody wants to lose.

Let’s hope this war to finish, because the history tells us that in the thirties, the consequences of a similar war were not very positive.

Should we fire government employees?

Despite of the current economic crisis, Goldman Sachs and J.P.Morgan have announced a new recession in 2012, besides the low Spanish production. In these saving and cutting times some voices are claiming to be able to fire government employees in the case of a bad economic situation or low productivity. Should we fire government employees? Greece has been the first country to announce a massive public employees dismiss.


Everybody has had to tighten their belts, I think that the fact of firing people due to their low productive or the economic crisis is totally logic and advisable

If a private sector employee is not productive and could be fired, why a public one can’t? The public administration is that, public, and it is very bad managed specially if we take into account that in Spain, we have a government employees excess and a poor production, paying an employee for doing nothing have no sense.

I do not share the idea of being invulnerable just for passing an exam and receiving a salary for your entirely life and doing nothing in return. In the other hand, it is very sad to have that dream, my target is not just receiving a salary but also consider myself useful, satisfied with what I do and have the chance of growing and learning, knowing that I am not stealing anybody.

I’d outsource some public functions, this way we could save a great amount of money and specially we would be more competitive and increase our low productivity.

Is Google a dangerous monopolist?

Thirteen years after its foundation, Google Inc. is one of the most profitable and successful companies in the world. What started being a search engine, today has a wide range of products and services like Google Earth, Gmail, Maps, Youtube, Google Chrome, etc. but, isn’t it dangerous that a company holds that power? Does it affect to the market freedom?

The main power of Google is its search engine, overwhelming leader in the world which act like an information filter , if something does not appear in Google, it does not exist, it provides or hides the information they want, it could make a company, organization or person disappear, and soon it will be more powerful than the Governments.

 

Besides, between all the services it provides, the user register and give and could save a lot of personal information, these are the most dangerous problems. What consequences could have the fact of that a company could hold that amount of personal information? Actually, Google is having some legal problems about the user’s privacy.  Right now all those questions are in the air; Google is growing so fast and is so international that it is very difficult to guess what will happen in the future. Its technology capacity and specially its free services are making that Google increases its market share. The Google reality is full of lights but with some darks that we should take into account.

 

In my opinion, taking a look at the market shares in the world (90.1% in the UK, 61% in the USA, and 92.5 in Germany) Google is a monopoly, because I think that a monopoly situation is not only caused by the number of competitors but also by the market share, besides I consider that is a very dangerous monopoly because Google could make a decision and cause a company goes out of business, especially if it is a web which profits depends on the visits and advertising, if Google deletes that company from its search, the company would simply disappear, and the same will happen with organization or even people.

 

Google has a wider and better range of services than its competitors and with its search engine it favors the use its services and products, just a click, and it is true that all those vantages have been achieved starting with equal opportunities in the market, Google is what it is due to its own merits, there are no exit barriers in the market but there are currently many entry barriers motivated to all the power concentrated by just one company, and that makes impossible to face Google, but this is not the main problem, the main problem is the great amount of personal information which Google owns and that amount will be higher due to its increase in the storage capacity which could be much more superior than the governmental centers of the USA. How could be it stopped? I think that if we do not stop it, we will sorry of giving that power to a company.

Chinese shops

Chinese immigrants come to Spain for some simple reasons that would make anybody migrate. On one hand we could find a communist politic system that although is showing an opened-image, is oppressive and control the life of its citizens. The economic situation is not better, more tan 26m people live on the poverty line, so If they don’t have freedom and there’s poverty, what do they have? The immigration hope that obviously does not only go to Spain, the most preferred places are Taiwan, where there are more than 25m Chinese, Malaysia, Indonesia, USA, the UK and some European countries like ours.

They come to Spain with their life savings, starting their business, illegally in the majority of the cases, where they invest all their money without paying taxes and social security

The products they sell are bought in Chine, with a lower price, they have workdays that seems don’t have finish, and you will never see them enjoying their free time. Let me say that they come to work like Chinese, and collect money like they do with the rice in Chine, to go back to Chine an live like a Chinese emperor.

Every single company opened in Spain must have an administration hedge, licenses, being a juridical person, all the employers must have a social security hedge,etc, in the Chinese Shops don’t obey the law, so they don’t pay taxes, and if we take into account that their product cost are very low, they have a very important competitive advantage over the Spanish Shops. So, it’s very easy to understand why the Chinese come to Spain to entrepreneur.

The Spanish entrepreneurs try to defend from this competence saying that Spanish products have a better quality, but don’t the people who buy in Chinese shops know it? In my opinion Chinese shops are a very good option if you need something that doesn’t require a good quality or when the other shops are closed, cause they seem to be always open.

The Chinese competence is getting specialized, now we can find “zara” clother, with its logo having a much lower price and a very similar esthetic appearance.

Responsibilities for the controllers after the strike

After an intense weekend motivated by the wild and covert strike of the air traffic controllers, it is time to ask what measures could be carried out against them.

When the agreement between the State and the Air Traffic Controllers expired in 2005, many tension have arisen between them, but what has happened this weekend has gone too far, the controllers started a strike, leaving their job on Friday at 17:00 without saying anything about the strike, it could be justified or not, but it is illegal and has left more than 600,000 people in the airport depriving them of their freedom to fly with the moral and economic losses, specially in a country like Spain, where the tourism in the main income source.

We have to take into account that the workers and the jobs are not all equal, there are some labors that should not be taken with irresponsibility and immorality, because they could cause to the society and the economy a greater damage than what could be caused by other sectors.

Now, the Government has to face, after declaring the alert state, the first time during the democracy, is what punishments are going to be kept against the controllers.

Four hundred and forty two disciplinary proceeding have been opened and the results could be from the final expulsion of the job, to close the process without any penalty to job and salary suspension.

A Judicial process has been opened in the prosecution of Madrid to decide which controllers have committed a crime and will interview all of them, the penalties could reach eight years in prison.

Since this work was militarized, the controllers are consider militaries and if they don’t follow the orders, they will be judged under the Military Penal Code. In the 91 article, military sedition is considered “who refuse to obey the order received and labors or threat, offend a superior could be punished from one to eight to ten years of prison, in the case of mere executors, with two to fifteen in the case of promoters, the leader in charge of sedition. " "If the facts were to take place at risk the safety of the ship or aircraft against insurgents or rebels, resorting to weapons or assaulting a superior, the penalties will be from ten to twenty years of prison"

In the other hand, individual complains seek a compensation for damages either through civil or criminal. A practice that would be very complicated, but in my opinion would be fair, is that drivers respond to the damage with their personal wealth, so, I think the next time that they would like to make an illegal wild strike, the will think about that twice.

Inditex; Finance and fashion

The Galician group, funded and chaired by Amancio Ortega, continues its career to strengthen its position as one of the largest textile groups in the world. This great success is caused for two main reasons, textile and financial.

Inditex is formed by nine companies which satisfy the needs of a great amount of people with different styles and ages. Those companies are Zara, the main brand of the group (1.422 shops), Zara Kids (209), Pull and Bear (640), Massimo Dutti (507), Bershka (665), Stradivarius (533), Oysho (402), Zara Home (263) y Uterqüe (64).

It also has a marketing policy which is very close to the consumer that allows it to detect the trends for the next season and bring them to its production and distribution channels, doing it much faster that the majority of its competitors.

There is a great international diversification what has given to Inditex an important prestige, being present in in seventy four countries and employing more than one hundred thousand people, but the most important is the capacity of Inditex to adapt to the needs of each country, so the clothes which could be purchased in London is not same that it could be bought in Madrid.

To all of this, we must add, that the last second of September, Zara opened its online shop, being this the distribution channel with more possibilities and that will probably increase its sells, what has made that the Inditex shares rose, the 62% of the Bloomberg analyst recommend to purchase shares, the 26% recommend to maintain them and only the 12% recommend to sell them.

All these factors have meant that what began as a small textile workshop in La Coruña, to become a world reference with an innovative approach, sensitive to changes in the market, adventurous and definitely different.

Brazil, World power in the 2,020

According to a study published by the Council of the U.S. Intelligence, a dependet agency of the CIA, Brazil will be a world power in the 2,020


This year, Brazil will have economic growth exceeding 6%, higher than the world average, due to  a policy based on reducing costs and encourage private sector investments.

A year ago, when the world was suffering the consequences of the global economic crisis, Brazil made an exhaustive study of the public accounts, and its debt dropped, and it became a creditor economy from a debtor one.

Currently, the South American country has a number of sector of investments with a great rate of return and low risk in its favor. These sectors are basically the oil, gas, electric energy, railways, agriculture and building construction where Coutinho (President, National Bank of Economic and Social Development of Brazil, BNDES) said that the Government of Lula Da Silva has had a great contribution which let Brazil protect itself against of the effects of the housing bubble explosion. There are three main reasons to believe in Brazil;

1. Commodities; For the next fifty years, it is expected that a half of population world growth will be produced by eight countries, where Brazil is the only one that does not increase exponentially the commodities’ consumption, what would give it an advantage in the world trade. The meat demand made by China will represent the 40% of the world production, besides; urbanization will demand more raw materials like iron, mineral that Brazil produces in great amounts and Brazil is the first tropical country that is able to supply the meat market. For ten years, the economic politic tended to extend the livestock and the results were excellent and it is expected a production improvement in the future.
2. Oil; The fact of having a great reserve of black gold makes Brazil a strategic country with many advantages  over the traditional oil suppliers of the Middle East Region.
3. Demography;  Thanks to the reduction of the fertility rate that went from being 6.2 children per woman in 1,964, to 1.8 children in the present, Brazil will be able to increase the quality of the State services (education, health, etc). This decrease of the fertility will make possible the improvement of the education quality, reason why a production improvement is expected.

This study argues that Brazil will not lose its status as an American partner, but notes that if it really wants to get that position, it must get closer to Europe and Asia.

According to another study published by PricewaterhouseCooper, the emergent countries will have a great grow by the end of the 2,050, having a better position than the European countries. United States will be leading the world followed by China, India, Japan, Brazil, Indonesia, Mexico, Germany, United Kingdom, France, Russia, Italy, Turkey, Canada, Spain, Korea and Australia.

And who knows whether after the poor state of the economy of the European Union due to the low contribution of the countries of the enlargement of 2007 and poor economic and political actions of the PIGS (Portugal, Ireland, Greece and Spain) countries such as Germany, Britain and France will regret having been part of the European Union or have given such aid or consent of both extensions.