Week Nine Article

Central Banker Calls Euro Zone Structure ‘Unsustainable’

New York Times http://www.nytimes.com/2012/06/01/business/global/greek-banks-regain-access-to-european-central-bank-loans.html?_r=1&ref=global-home 

The European Central Bank president, Mario Draghi, said that the survival of the Euro is at stake.  Draghi warned political leaders that the Central Bank was at the limits of its powers and that it is now up to political leaders to take action.  Draghi stated that the structure of the euro is “unsustainable unless further steps are undertaken.” The article reports that Europe is in need of a similar bailout that was implemented in the 2008 crisis, but this time Europe faces more obstacles than the US because of all the different European economies. Draghi made comments that put blame on political leaders for delaying action.

With Greece in danger of falling out of the euro zone and Spain in danger of a banking crisis, Turkey may also be in position for negative affects.   If the euro zone fails, the economic affects will be felt throughout Europe and probably the rest of the world.  Turkey is very close to the Euro zone and would definitely be affected by an economic crisis in Europe.  My research on the financial stability of Turkey showed that their economy is very sensitive to foreign demand. If Greece and Spain fail, certainly foreign demand for Turkey will fall and they will see huge affects on GDP.

Reflection

a. I think understanding complexity in economics is going to be most applicable to understanding how the world works.  Rivoli's text on the T-shirt's travels illustrate the complexity of markets and the role of politics in shaping markets.  The concepts that we learned in class will be helpful to develop a fuller understanding of economics but I think it is most important to understand that globally economics are immensely complicated.
b. I am more interested in learning about markets like the cotton market.  It was interesting to me to learn about the factors that have made the American cotton market successful for so long. As an educated citizen I think it is important to understand these interactions and to be able to distinguish what is actually contributing to success.
c.   To a student considering taking this class I would advise them to go beyond the requirements of the class and try to learn as much as possible about their specific country.  Throughout the quarter I would advise to try to develop an understanding about how economies are related to one another.