Price Indexing and Economic Politics

1. I wonder if sometime in the future the price index theory will have to be rewritten or deeply readjusted: A German woman whom I met in Paris is greatly pleased with her studies there, yet she complains about the cost of living. She suggests that a good point of comparison is canned soda, which in Germany sells for about .75 euros while it averages nearly 3 euros and is around 4.50 euros plus tips in restaurants and upscales places, in general. Price indexing has been one of the bottlenecks the euro had to confront in its early stages and cause both cultural and socio-economic tensions in relation to commodities such as gas and oil, and was a factor is the French nay vote over the EU constitution. I believe that the price of gas was cheaper in countries, such as Spain, and much more expensive in Germany; therefore, making a budget to travel driving your own car or by renting a car may not be an easy task. As I recall from my study on money exchange, in the earlier stages the euro was weaker against the Japanese Yen and the dollar when not existing as actual notes, currency bills or hard coins. This has made it more difficult for other currencies such as the American dollar and British pound to take any advantage from the real diversity of values of the euro in each one of its instances. In relation to the soda market, almost a clear duopoly, as initially described by Cournot, it clearly suggests that the euro has brought great economic tensions and that working towards leveraging the prices to a more realistic value could objectively improve the economic politics in the international landscape. This is so certain that historically money exchange can greatly affect developing countries, such as South American countries, but much more African nations, which have no realistic revenues from their exports or related investments. However, conversely it may benefit European investments in developing countries, some of which are using the euro as standard in lieu of the American dollar, in particular, in the hospitality business.

2. The irrationality seems to be taking care of the South American politics and diplomacy. While Venezuela has been widely investing in war aircrafts and other related hardware for quite sometime, it is probably neglecting that a few years from now oil may become a deprecated commodity due to disrupting technologies. With the current comprehensive research on bio-fuels, solar, and other termal forms of energy, and the development of electric vehicles and other relevant powering technologies, it is quite likely that there will be less demand for oil and that this commodity will become part of a vertical specialized market rather than as it exists today, widely horizontal. Rather than warefare, I wish that there is more thought towards the planning of a country whose educational system is slightly below the average South American country as I have directly learned from friends and relatives who have had the learning experience there. My greatest concern is that the name of the economic system should no longer be an issue to disrupt the world peace. Even presidents Reagan and Gorvachev had the opportunity to fingerpoint one-another in relation to the positive and negative aspects of each system. The point is that the world needs more rational leaders and fewer arrogant dictatorships or alike. Indeed, I also believe that democracy should prevail over the socio-economic system itself.

Good News from Apple!

Everyone at Apple is applauding Steve Jobs’ return to work as CEO, after his recovery from a liver transplant. As apple consolidation as an American icon enhances in the new millennium, its product line, its creativity, and the company image provides a clear path for those who ever dream of starting a company in a garage as Jobs and Wozniak did just a few decades ago.

An important aspect of Apple growth has been product diversification and strategic channeling. About 25 years ago, just out of college, I had been trained by Xerox Corp., as the sole responsible distributor for Apple. But just a few months later I worked directly for a national Apple distributor using the new Apple Center strategy, which adjusted and reconverted to become what is today’s Apple Stores, which attracts the unique Apple nation worldwide. But as I recall as a former employee, the company had quality and customer satisfaction as the main differentiator among competing vendors.

This brief writing has been inspiring in my controversial MBA study of Harvard University papers on Apple, which encounter in discrepancy with my own personal experience. As I indicated in that study, I found out that Harvard study was rather focused in negative impressions of the company that were rather subjective. For instance, one of the most recent versions of the paper called the iPod “an instrument of deafness” while for the overall user is an instrument of fun, relaxation or excitement, but in all scenarios not such an instrument as described by Harvard study. I believe I had spent a significant amount of time researching the company business model, beyond my perception that Apple had been designed to excel as the company of the century.

Today’s Apple business model is unique and consistent, and it has over achieved a position in a preferred microcomputer and innovative technologies markets.
A little bit of Blogs Through Pictures: The following are the slides accompanying my research, as part of my strategic management study.

Latin America and the New Global Economy

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Latin America and the New Global Economy

The importance of implementing a consistent free market, which encompasses the USA and Latin American countries, is sampled by the possibility of establishing such a treaty with Colombia. The current Bush administration has made a great push for this project, which has encountered the US Senate objection, mostly from the Democrat block. The possible mutual benefits are immeasurable and would allow further control over international markets in the region, since resource used for tariffs and other fees can be allocated for that custom monitoring and auditing purposes otherwise, which enhance the process quality assurance. Perhaps, this is a long process, but I had previously written in my previous blog on the Grand Colombia, that such an idealistic market in today’s economic perception opens more possibilities that can attain that possibility must not be historic but rather rational but understood a message of free choice market for every sovereign country involved, whether historically part of that ideal union or not. The positive outcome of a free-trade agreement has more pros than cons and can benefit the Andean and Central regions, in conjunction with other Latin American markets.

I believe that there is a trend for Latin American countries to become allied with emerging economies such as China, India, or Russia. My greatest concern is that Latin American markets would have a better choice and opportunity in the all-Americas unified market than risking a backslash of these economies in relation to markets where Latin American countries can expand their economies, for example, the textile industry, could easily and unexpectedly be stabbed in the back if the free market where those economies would prevail at some point with little or “no port control”. Indeed, this vision is not about planning on protectionism. While the issue is not about political ideas, it is in fact about diversifying the markets, but enhancing the natural roots of the entire continent. Instead an open economic can significantly expand the Latin American unified markets with the United States in at least the most convenient markets. The perception that there might be drawbacks is certainly not better than expanding with those emerging economies mentioned before. The cultural differences are also an important factor, which in the end take the economy to the personal affinity level. The emergent economies currencies interdependence with the US Dollar, the Euros, the Yen, and the Pound Sterling is quite significant in terms of net revenue in either direction.

Likewise, Brazil's emerging economy could become another hub for the Andean region, in fields such as biofuels, where Brazil is an avant guarde pioneer.

The perception that the current global economic market can probably cause a stronger impact on the economic powers than the developing countries in the long-term, when developing countries can use their own level of economic maturity to move forward in their planned economic strategies, in particular, during the current global crisis. The developing countries experience is and has been repetitive, and therefore it may have less significant impact on the psychology of those economies, although they are apparently more critical in practicality. Besides, I believe that the presence of the web and the global B2B strategies could be of more benefit for developing countries and emerging economies than for those already developed, which is significantly more tangible in sectors that are cost centers, such as Information Technology.

What Latin American countries need to do is to consistently implement a well planned strategy of resource utilization and distribution that optimizes their revenue and balances the resources allocated domestically for their nations’ usage and those allocated for export. This is important when nationalization of any resources has become an issue in the best interest of each nation, or conversely when the expansion of export of a particular resource is quite desirable.

The global markets are perceived not only at the investment levels, but obviously at the labor level, independently from the socio-economic model. Labor markets are significantly affected in the United States, Asia, and developing countries more as an effect of global economic interaction than as a domestic robustness itself, i.e., the labor markets are predominantly dominated by the global economic rather than the domestic trends, aggregate economic reliability and independence, domestic price indexing, and so on. Therefore, for instance, unemployment is a direct outcome of this global interdependence, which surpasses the capacity of economic powers, i.e., more developed countries, to prevail over her trends.

An important aspect of the free-trade agreement is that money exchange will not be as costly for Latin American currencies and the residual Fisher effect on inflation would be minimized, which means better actual revenue and residual revenue, while it can positively affect the investment markets, and create the unified economic market of the Americas. Indeed, there would possibly more resources allocated to legal activities, and illegal activities could be monitored more effectively.

Although I believe that the entrance of the Euro in the global economy has had a significant impact in the overall economic interdependence for European and non-European countries, and partaking and non-partaking countries of that Euro economy, my observation that it has been the actual Euro transactional effect and not is stored value in a bank that has lead to this impact. My study started out with a simple informative brochure, which I obtained directly from a French Ministry. My conclusion derives that while the Euro was a paperless currency in its initial stage, it remained constrained in comparison to the USD and the Japanese Yen. The impression in countries members of the EU had an enormous psychological impact, and inflation was the daily topic of economic discussion.

Finally, developing countries, and Latin America in particular, need to learn that any economic phobia or excessive protectionism in the direction of any socio-economic-politic system, must be put aside, meaning that the real economy market is only the global market, the only one, and that every nation needs to carefully find the strategic g-spot of the global economy: G here stands for global!

Mixed Impressions

The house where the Angostura Congress took place. Today, Angostura is Ciudad Bolivar.

An approximate map of the Gran Colombia. Probably, a larger area includes Peru and Bolivia.

1. A recent issue of the History magazine refers to the violence in Colombia, which according to that article it has taken 70,000 lives this year. The great impact of violence in Colombia is quite historic, and it certainly affects the daily lives of those who share not only mostly the rural but also somewhat the suburban, and urban settings. Unfortunately, when the article refers historically to the Gran Colombia, it only includes Colombia, Venezuela, and Ecuador while it ignores Peru and Bolivia. Indeed, it neglects to recall that the Gran Colombia had a Constitution, and that Bolivar liberated all five nations, and that Bolivia was called “la niña mimada del Libertador” (The Liberator’s pampered babygirl). The Angostura (Ciudad Bolívar) Congress was the site where the new republic was erected. The territory also involved historically Panamá, and parts of Brazil, Costa Rica, and México. While nobody ignores San Martin’s influence in Peru’s liberation process, Bolívar was the Liberator of these South American nations and the leader who proposed a regional economic group, which has recently encountered some further interest based on renewed regional and global forces. Bolívar socio-economic and political ideas have no match to today’s world, but his clear point of view is that unity will drive the regional progress, development, and overall projection onto the global economy. This could be a principle for the American interest in a continental open market as to how to approach the joint economies of these countries in an effort to minimize or eliminate any existing constraints.

2. An election year has always proven to be a driver of recession or at least one that historically coincides with several recent recessions. The exiting government is usually to be blamed for based on the general public opinion. However, recession times are not times to fingerpoint others but rather a good time for positive and creative thinking in current matters of national and global interest. The increasing unemployment rate is critical and is the outcome of unmatched efforts to deal with more global issues in a more dynamic fashion. As it appears, increasing oil prices are a major source of economic unbalance, and it is obvious that staggering market indexes reflect the difficulty in formally modeling a pattern to approach this commodity, and to deal with the weak dollar in comparison to the stronger Euro, and derive advantage in economic sector such as tourism industry and business. For instance, Disney had reported a great year so far, and so have the oil companies, but the economy should also drive such gains not only into profitability, but also to report that an American Corporation’s EBITDA should be more consistent with the creation of new employment, and not just strictly consider the creation of new employment of net earnings. The government could start new legislation that entices companies whose earnings consistently exceed expectations to create further employment in particular is both weak sectors and economic working markets that are greatly affected by the global economic forces such as information technology, and that those new jobs have a real domestic adjustment rather than a global influence. I believe that resilient undesirable unemployment diminish the perception of development of any country. This is probably different from countries like Germany and France where unemployment for some individuals is part of a culture protesting some employment settings and opportunities. The controversial first contract policy in France is an example of the opposite, i.e., the government forcing the youth to acquire a harder working approach, in the mix of shorter-hour week strategy to diversify the workforce.

3. The US presidential candidates comments on issues such offshore drilling as supported by McCain, and recommendations by Obama for Americans to learn Spanish are quite appropriate, but they have both received mixed opinions. The former comment needs to be carefully executed in congruency with the implementation of new technologies that together reduce the US dependency on oil exporting countries. Meanwhile, the latter comment by Obama is quite appropriate as well. Not only should English-speaking Americans cultivate the Spanish language, but also the vast majority of Spanish-speaking Americans should start learning to speak and write Spanish properly. While studies suggest that the Latin American nation uses effectively a very small percent of her high intellectual capacity, not speaking the mother language properly makes it so more difficult, and several studies conclude so. Soon, I will discuss this issue with an economic perspective in a future article. A few months ago, I had referred to in a literary article that there is a need for a unique American institution that protects specifically the Spanish language, and controls the mix of the two languages for good, without diminishing the importance of natural street slang as a natural language process.

Announcing... The Global Economy Forum Blog

Introductory Comments on the Global Economy

1. A. Greespan has advised Americans how the global economy has affected the USA rates. He has stated that the convergence and impact of global economies has enormously affected the domestic economic markets such as real estate market. The number of foreclosures is quite large, and with an increasing rate, banks have reached a peak level that only benefits the boom of cash flow to foreclosure attorneys. Likewise, the real estate market is receiving the impact of having itself guarded the economic markets a few years ago when the real estate prices ballooned.

The fact is that foreclosures are mostly a direct result of unemployment and lack of job continuity for most American, or other personal circumstances.

Today, I do not see much logic seeing foreclosure attorneys getting richer while financial institutions cannot cope with the relevant backlogs and more American will be literally living on the streets.

2. Global Warming has been frequently blamed on green gases or on the convergent impact of the unbalance between those green gases and other environmental contaminants. It is my opinion that there are other factors, such as the inappropriate disposal of buried radioactive materials, and I also make the hypothesis that they are a key factor in major natural disasters such as earthquakes and tsunamis. Therefore, developed countries that work with nuclear plants without maintaining the highest level of quality assurance in disposing of radioactive materials are greatly accelerating the not so natural global warming process. While nuclear energy will continue to grow as a major source of energy supply, as it is already percent-wise in some countries, implementing quality assurance process that improve the disposal of radioactive material. Furthermore, and some physicist colleagues could agree that what still do not know about subatomic quantum physics is key to understanding why radioactive residue is a major factor in worldwide contamination and subsequently in global warming.