"What a great site! I'm impressed by the great stuff you've pulled together. It merely confirms my long-held belief that economics CAN be interesting....
All the best"-
Charlie Wheelan,
aka The Naked Economist
How interconnected is our world? Take a look at the hit our financial markets took when the Chinese government decided there was excess speculation in their market.
18 comments:
Anonymous
said...
Yes, as we were discussing in our Fed meeting, foreign productivity and economic health does have a huge impact on our lives. I mean the rush to sell the chinese stocks because of this slight setback makes total sense since we have so much invested in China's booming economy. I guess since China's market has recently advanced and has only grown, it was bound to fall on the side of error at some point, therefore causing shock around the world. I guess that's why the Dow Jones industrial average is highly regarded as a significant economic indicator (our economy afterall does exist overseas as well).
This is unfortulatly one of the downsides of globalization. As we become more interconected with economies around the world the ability of these economies to grow increases. But at the same time theses countries will fall together. In adition if the major countries all fall into depresion at the same time, there may not be any country able to spend the world out of a global depression.
As the world becomes increasingly globalized, we rely more heavily on each other. The fact that China's decisions have such a huge effect on our own economy is both a curse and a blessing. Globalization leads to increased productivity thanks to comparative advantage, and we wouldn't enjoy many of our benefits today if it weren't for China's cheaply produced goods. However, this interdependance has its downfalls. If China's interests were to stop coinciding with our own, our economy could be hurt badly, as illustrated in the Dow Jones.
This mini-crash that we experienced (on my birthday, which leads me to beleive I am bad luck economically) shows a lot about how interconnected the economies of different countries around the world are. It also shows how powerful the economy of China is becoming. Until the recent past, it seems that China would have little effect over our economy, and it would be slight fluctuations in our economy that would be affecting the rest of the world. Although we certainly still affect other world economies, it is interesting and a little unsettling to see how the economy of China, and thus other large industrializing countries (China being the most important), can affect our economy so quickly and so drastically.
The domino affect drastically hit our economy and stock market as we saw the largest drop in the dow jones in four years. Because we rely on other countries so much if they start to slide economically we will also be pulled down as well as almost all other countries. Even with Chinas market decrease we were able to increase the market as the day went on showing we were moving in the right direction and had a little more stability. This market crash just shows one how important foreign policy really is and how it affects our country.
i find it amazing that cause of a small computer glitch can just go and cause such a panic in the market. but i guess when your playing with other peoples money it is rather nerve racking. but this just goes to show how fast news around the world can travel now a days to. cause of the technology we can learn what happens to other markets and reflect ti in our own in a matter of hours.
this is just another example to support that technology is taking over our lives. it also showed how interconnected we are and that when you play with the other big boys in the market big stuff could go down. a simple little computer glitch put the market in a tremendous panic. it is amazing how quickly news can run from one place to another place half way around the world. it makes you wonder what the future is going to be like with all this transfer of information at the touch of a mouse thousands of miles away. its pretty exotic.
This little computer glich caused a lot of panic. Its kinda of scary to think that another great depression could possibly happen because traders get a scare and sell all of their stock at the same time. Also, the fact that Chinas economy can affect ours so profoundly just shows how interdepent the major economic nations of the world are.
I dont really understand with our advanced computers and awesome calculators that we have glitches in our system. Our country is interlocked with china, so anything that happens in china effects us. If i were a broker i would take all my stock and put it in toilet paper, (who doesnt need fresh toilet paper) not the sandpaper they put in our schools
Even though it is a good thing that the world is becoming more globalized, I find it very unsettling that a change in China's economy can affect ours so greatly. It is also very worrisome that people follow such mob mentality in the face of a crisis, just like what happened on Tuesday; a glitch caused the Dow Jones to plummet because everyone panicked.
its funny how people work. one computer glitch sends them into a panic and before you know it everyone wants nothing to do with the stock and they are all trying to get rid of it. It's Crazy how it takes such a small amount of time for the stock market to change so dramatically.
This slump does show how interconnected the world is economically. As the article stated, this didn't just effect China, but also other places in Asia, Europe, and our own country. Since the United States does import a lot of products from China (Wal-Mart), it wasn't too surprising that we did fall because of them. At least we didn't continue to fall; the Dow Jones did rise the next day. Hopefully the stock market doesn't experience any more of those huge drops and hopefully this panic doesn't turn into something big.
This crash demonstrates the increased globalization generated these days. Everyone is connected through phones, email etc. and this connection generates various other relationships between the people and governments of the world. Its only natural that a slump in another countries economy would have an effect on our economy. This vast web of connections is also frightening in that when one country expieriences failure everyone else is right there to follow and continue the chain.
The impact of china on the american economy shows that the united states has to become more independent. america should not be that affected because of another country. as for the quick dip due to the glitch...amazing how people are so in tune with everything and ironically not because they didnt realize it was just a computer glitch
Scenarios like this one illustrate a very mysterious aspect of economics: human psychology. Our market economy is a huge paradox. If we believe it will prosper in will, but if we believe it will suffer, it also will. It is a self fulfilling prophecy because it is all based on psychology and expectations.
The small crash that happened demonstrates how interconnected all the economies of different countries around the world are.It makes perfect sense that a slump in another countries economy would have an effect on our economy. Hopefully the stock market will not experience any more of the huge drops and hopefully all of the kinks will get worked out and the panic will not turn into a big del.
its crazy to think how much each economy effects the other and also how drastic the domino effect is. also as soon as people panic they make the situation so much worse.
i like how the world economy is becomeing more interconnected but it is also kind of scary how much china can affect ours so much and its just as scary thinking that a computer glitch can send the stock market into that kind of a panic.i wonder what would have happened if when everyone at the sotckmarket got the glitch from china didnt panic
18 comments:
Yes, as we were discussing in our Fed meeting, foreign productivity and economic health does have a huge impact on our lives. I mean the rush to sell the chinese stocks because of this slight setback makes total sense since we have so much invested in China's booming economy. I guess since China's market has recently advanced and has only grown, it was bound to fall on the side of error at some point, therefore causing shock around the world. I guess that's why the Dow Jones industrial average is highly regarded as a significant economic indicator (our economy afterall does exist overseas as well).
This is unfortulatly one of the downsides of globalization. As we become more interconected with economies around the world the ability of these economies to grow increases. But at the same time theses countries will fall together. In adition if the major countries all fall into depresion at the same time, there may not be any country able to spend the world out of a global depression.
As the world becomes increasingly globalized, we rely more heavily on each other. The fact that China's decisions have such a huge effect on our own economy is both a curse and a blessing. Globalization leads to increased productivity thanks to comparative advantage, and we wouldn't enjoy many of our benefits today if it weren't for China's cheaply produced goods. However, this interdependance has its downfalls. If China's interests were to stop coinciding with our own, our economy could be hurt badly, as illustrated in the Dow Jones.
This mini-crash that we experienced (on my birthday, which leads me to beleive I am bad luck economically) shows a lot about how interconnected the economies of different countries around the world are. It also shows how powerful the economy of China is becoming. Until the recent past, it seems that China would have little effect over our economy, and it would be slight fluctuations in our economy that would be affecting the rest of the world. Although we certainly still affect other world economies, it is interesting and a little unsettling to see how the economy of China, and thus other large industrializing countries (China being the most important), can affect our economy so quickly and so drastically.
The domino affect drastically hit our economy and stock market as we saw the largest drop in the dow jones in four years. Because we rely on other countries so much if they start to slide economically we will also be pulled down as well as almost all other countries. Even with Chinas market decrease we were able to increase the market as the day went on showing we were moving in the right direction and had a little more stability. This market crash just shows one how important foreign policy really is and how it affects our country.
i find it amazing that cause of a small computer glitch can just go and cause such a panic in the market. but i guess when your playing with other peoples money it is rather nerve racking. but this just goes to show how fast news around the world can travel now a days to. cause of the technology we can learn what happens to other markets and reflect ti in our own in a matter of hours.
this is just another example to support that technology is taking over our lives. it also showed how interconnected we are and that when you play with the other big boys in the market big stuff could go down. a simple little computer glitch put the market in a tremendous panic. it is amazing how quickly news can run from one place to another place half way around the world. it makes you wonder what the future is going to be like with all this transfer of information at the touch of a mouse thousands of miles away. its pretty exotic.
This little computer glich caused a lot of panic. Its kinda of scary to think that another great depression could possibly happen because traders get a scare and sell all of their stock at the same time. Also, the fact that Chinas economy can affect ours so profoundly just shows how interdepent the major economic nations of the world are.
I dont really understand with our advanced computers and awesome calculators that we have glitches in our system. Our country is interlocked with china, so anything that happens in china effects us. If i were a broker i would take all my stock and put it in toilet paper, (who doesnt need fresh toilet paper) not the sandpaper they put in our schools
Even though it is a good thing that the world is becoming more globalized, I find it very unsettling that a change in China's economy can affect ours so greatly. It is also very worrisome that people follow such mob mentality in the face of a crisis, just like what happened on Tuesday; a glitch caused the Dow Jones to plummet because everyone panicked.
its funny how people work. one computer glitch sends them into a panic and before you know it everyone wants nothing to do with the stock and they are all trying to get rid of it. It's Crazy how it takes such a small amount of time for the stock market to change so dramatically.
This slump does show how interconnected the world is economically. As the article stated, this didn't just effect China, but also other places in Asia, Europe, and our own country. Since the United States does import a lot of products from China (Wal-Mart), it wasn't too surprising that we did fall because of them. At least we didn't continue to fall; the Dow Jones did rise the next day. Hopefully the stock market doesn't experience any more of those huge drops and hopefully this panic doesn't turn into something big.
This crash demonstrates the increased globalization generated these days. Everyone is connected through phones, email etc. and this connection generates various other relationships between the people and governments of the world. Its only natural that a slump in another countries economy would have an effect on our economy. This vast web of connections is also frightening in that when one country expieriences failure everyone else is right there to follow and continue the chain.
The impact of china on the american economy shows that the united states has to become more independent. america should not be that affected because of another country. as for the quick dip due to the glitch...amazing how people are so in tune with everything and ironically not because they didnt realize it was just a computer glitch
Scenarios like this one illustrate a very mysterious aspect of economics: human psychology. Our market economy is a huge paradox. If we believe it will prosper in will, but if we believe it will suffer, it also will. It is a self fulfilling prophecy because it is all based on psychology and expectations.
The small crash that happened demonstrates how interconnected all the economies of different countries around the world are.It makes perfect sense that a slump in another countries economy would have an effect on our economy. Hopefully the stock market will not experience any more of the huge drops and hopefully all of the kinks will get worked out and the panic will not turn into a big del.
its crazy to think how much each economy effects the other and also how drastic the domino effect is. also as soon as people panic they make the situation so much worse.
i like how the world economy is becomeing more interconnected but it is also kind of scary how much china can affect ours so much and its just as scary thinking that a computer glitch can send the stock market into that kind of a panic.i wonder what would have happened if when everyone at the sotckmarket got the glitch from china didnt panic
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