The 21st Century Economy--A Beginner's Guide: With 101 Easy-to-Master Tools for Surviving and Thriving in the New Global Marketplace (Vintage) - Softcover

Epping, Randy Charles

 
9780307387905: The 21st Century Economy--A Beginner's Guide: With 101 Easy-to-Master Tools for Surviving and Thriving in the New Global Marketplace (Vintage)
Softcover
ISBN 10: 0307387909 ISBN 13: 9780307387905
Verlag: Knopf Doubleday Publishing Group, 2009

Inhaltsangabe

A comprehensive, accessible guide to understanding today's global economy, from the author of the bestselling A Beginner's Guide to the World Economy.

While reporting on today's world, business and mainstream media alike use terms and mention trends that even the savviest consumer may find baffling. In his latest book, Randy Charles Epping uses compelling narratives and insightful analogies to clearly and concisely explain the rapidly changing way business is done in the twenty-first century, without a single chart or graph. Epping defines key ideas and commonly used words and phrases like carbon footprint, WTO, economy of scale, NAFTA, and outsourcing. He also illustrates how central banks help navigate global crises and drive the global economy, discusses the benefits of Green Economics, shows how trade wars can be avoided, and explains the virtual economy, where multimillion dollar transactions take place in the blink of an eye. Complete with 89 easy-to-master tools for surviving and thriving in the new global marketplace and an extensive glossary, The 21st Century Economy: A Beginner's Guide is essential reading for anyone interested in understanding the complex economy of the world in which we live.

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Über die Autorin bzw. den Autor

Randy Charles Epping, based in Zurich, Switzerland and São Paulo, Brazil, has worked in International Finance for over 25 years, holding management positions in European and American investment banks in London, Geneva, and Zurich. He has a master's degree in International Relations from Yale University, in addition to degrees from the University of Notre Dame and the University of Paris-La Sorbonne. He is currently the manager of IFS Project Management AG, a Switzerland-based international consulting company. He is also the president of the Central Europe Foundation, which provides assistance to students and economic organizations in Central and Eastern Europe. In addition to several other books on the world economy, he has written a novel, Trust, a financial thriller based in Zurich and Budapest. Mr. Epping holds dual U.S. and Swiss citizenship and is fluent in six languages: English, French, German, Italian, Portuguese, and Spanish.

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CHAPTER 1
WHAT IS THE FUSION ECONOMY?

The converging world economy has created a whole new paradigm for the 21st century. Global warming, credit crunches, currency meltdowns, food crises, and trade wars are just a few examples of how our everyday lives are being altered by a myriad of forces, many of which are economic in nature. And like nuclear fusion, which joins together hydrogen molecules and releases enormous amounts of energy in the process, the converging global economy is releasing a lot of new energy-we just need to figure out how to use it.

This new fusion economy brings together forces and reactions in ways that are impossible to understand using normal linear forms of approach. It used to be that we could follow a fairly simple path to arrive at an economic conclusion: A better product or a more efficient company meant more productivity, which meant a higher standard of living for all. But today, things aren't so simple. How can we say that economic growth in China or India is a good thing if it increases global pollution or leads to food scarcity? How can we say that increased access to mortgage financing is a good thing if it entices subprime borrowers to buy houses they can't afford to pay for, leading to failing banks in Europe and the United States, stock market crashes in Asia, and a worldwide credit crisis?

With hundreds of billions of dollars worth of mortgage-backed securities being traded annually, the market for subprime debt became, at one point, bigger than the entire market for U.S. Treasury bonds-the biggest bond market in the world. When banks and mortgage companies realized they could pass on the risk of the mortgages they were issuing, they became more concerned about increasing volume and less concerned about whether the borrowers could pay back their loans. Consequently, credit standards were relaxed and many poor and low-income borrowers were given mortgages to buy homes-leading to ever-increasing home prices. Many borrowers bought homes they knew they couldn't afford, but assumed that rising home prices would cover their loan commitments, allowing them to refinance at a later date, once the house's value had gone up.

When the housing market began to cool, many subprime borrowers were unable to refinance their loans and were unable to make the interest payments on their original loans. Delinquencies-borrowers' failure to make their mortgage payments-began to rise, and the value of the bonds that were based on subprime mortgages began to decline. When large numbers of these subprime borrowers started going bankrupt, the subprime mortgage securities had to be revalued downward.

In the end, the banks and investment houses around the world that had bought these mortgage-backed securities were forced to write off large portions of their debt-up to 80 percent of their original value in some cases-leading to a credit crisis that spread around the world as other banks and investment houses refused to provide the cash that the world's companies and financial institutions need to keep running. Banks around the world had to be rescued by cash-strapped governments. In the United States, Lehman Brothers, one of the largest investment banks in the country, was forced into bankruptcy, and another investment bank, Bear Stearns, had to be sold off with help from the U.S. Federal Reserve-for a fraction of its previous value. AIG, the largest insurance company in the world, also had to be bailed out by the Federal Reserve. Once the financial meltdown had started it was impossible to stop.

In addition to financial meltdowns, even cataclysmic events such as hurricanes and global warming are influenced by the expanding 21st-century economy, which is bringing forces to bear that are making it impossible to predict what will happen in the future. For example, the destruction of the Amazon rain forest, primarily for economic reasons, has led to a sharp increase in the release of carbon dioxide into the atmosphere. And industrial pollution in the United States, Europe, and China has contributed to the shrinking of the Arctic ice cap and an unprecedented melting of the permafrost, releasing even more carbon dioxide and methane gas into the atmosphere, leading to even more global warming. This greenhouse effect has led to ever higher temperatures-literally a “meltdown” in some parts of the world. And no one seems to know where it will all end.

Even efforts to reduce global warming, such as the promotion of biofuels, have led to unintended and unforeseen consequences. In addition to the use of massive amounts of water to produce sugar-or corn-based biofuels, the reduction of farmland for the production of food for human consumption led to rising shortages of rice, corn, and wheat on the world markets, resulting in riots in some countries and calls for increased protectionism in others.

The converging global economy is also shaking up traditional patterns of trade and investing. Before the 21st century, for example, people tended to limit their investments to purchases of domestic stocks and bonds. They then waited patiently for their investments to increase in value or provide a safe, fixed income over time. But in today's fusion economy, our money is being invested-whether we're aware of it or not-in pension funds, governments, and banks that buy an increasingly complex array of securities and investment vehicles.

The 21st-century economy has brought strange new correlations between investors and between markets. And the results can be catastrophic. Investors who are losing money in one sector tend to sell investments in another sector-or another part of the world-to pay their debts. When stocks fall sharply in the United States and Europe, for example, emerging-market funds from Brazil to Bangladesh can decline sharply as investors sell their shares abroad in order to raise cash to pay for losses at home. Currencies in previously healthy economies around the world often crash as speculators rush to safe haven currencies such as dollars and yen.

It has been said that a butterfly flapping its wings over Tokyo could cause a rainstorm over New York's Central Park several days later. The 21st-century economy has taken this linear correlation to another level. Causes and effects are converging, fusing together in a complex web that no one-not even the experts-are able to fully understand. Just as Metcalfe's Law, which says that the value of a network is proportional to the square of the number of its users, the expanding global economy is growing and expanding in ways we are unable to control.

And the speed of change is increasing exponentially. In today's modern economy, events have an almost immediate effect. If stocks fall sharply in China, markets around the world plunge instantly. Political events, such as an assassination or an unexpected election result-or even random events such as earthquakes or terrorist attacks-can cause the “invisible hand” of the marketplace to buy or sell precipitiously.

Like the aforementioned butterfly flapping its wings over Tokyo, even small investment decisions can affect the global marketplace. With China holding more than a trillion dollars of U.S. government securities, any sign that the dollar could lose value in the years ahead-a decision by the U.S. Federal Reserve to lower interest rates, for example, or a move in Congress to force China to revalue its currency-may set in motion political and economic changes that could end up dethroning the dollar as the world's preferred reserve currency.

At the beginning of the 21st century, the euro had already begun supplanting the dollar as the world's currency of choice-there are now more euro notes and coins in circulation than dollars. And the international bond markets have begun issuing more euro-denominated securities than dollar-denominated...

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Verlag
Knopf Doubleday Publishing Group
Erscheinungsdatum
2009
Sprache
Englisch
ISBN 10 
0307387909
ISBN 13 
9780307387905
Einband
Taschenbuch
Anzahl der Seiten
336
Kontakt zum Hersteller
Nicht verfügbar
Verantwortliche Person
gpsr@libri.de
gpsr@libri.de

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