EURO CRISIS

THE EURO CRISIS AND INTERNATIONAL LIQUIDITY PROBLEMS

Author--Debesh Bhowmik

Publisher--Synergy Books India

(www.synergybooksindia.com

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The book is the post- doctoral work of the author and Clem Tisdell, The Emeritus Professor of Economics of The University of Queensland ,Australia has written the foreword.

Euro crisis is the hottest topic in the world economic affairs or rather in international liquidity problem because debt crisis of Euro Area particularly in some countries created the financial crisis in EU from which the existence of Euro becomes questionable, although it was originated from US financial crisis during 2008.Existence of currency area and single currency depend on the suitable and realistic policies to revive Euro to its original path of progress towards monetary and economic integration. Even, the Euro has been playing a great role in maintaining the stability of international monetary system.

In this context, the book “ The Euro Crisis and International Liquidity Problems ”is very relevant in the area of international monetary issues that govern the international money. The problem of Euro crisis is not an independent issue rather it is deeply correlated with the currency hegemony in the world payment mechanism. Therefore, the book studied the historical perspective of EU and the convergence criteria, causes of Euro crisis-its various impacts, including developing countries and the implications of Euro crisis on the international monetary system , political economy concept of the crisis  are of special importance. The impact on Indian Economy is added for an extra study area . The macro fundamentals and issues in money market of Euro crisis could not be avoided with sound reasons of the genesis of the problem. The international role of Euro may throw light on the genesis of international liquidity problems as well as the euro as international money will justify the issue of international money game. The diagnostic test of the econometric analysis of the Euro crisis could not be considered as an insignificant part of the book.The problems and Prospects of the recovery of the crisis is also an important discussion of the book.

Lastly, the Euro crisis has been discussed from every corner of the economic aspect of the problem relating to international liquidity issues and its root causes. This book, The Euro Crisis and International Liquidity Problems, is a timely publication given the serious international financial and economic repercussions of the Euro Crisis and the economic suffering which it is causing within the EU itself. Furthermore, it is a crisis that has not yet been solved and consequently, its impacts and likely to be felt for several years to come.

This book containing 14 chapters tried to search the inherent causes and evolving roots of the Euro Area debt crisis which finally turned into financial crisis, as well as it showed some policy issues to revive the Stability of Euro, to increase the international liquidity for Euro, and to find out the policies to solve the debt crisis of the debt ridden countries. The Euro crisis had been related with the international monetary system and political economy concept of Euro zone which ultimately would able to clarify the genuine solution and revival process of the Euro crisis. we cannot infer immediately that capitalist integration fails or the process of capitalist integration has been confronting with severe capitalist crisis rather the co-operation of G8, IMF and ECB seem to be apparently favourable for survival of regional blocs in multilateral trade and world financial integration where key currency domination principle became less prior in curing euro crisis.  

The book would be able to attract researchers, professionals and policy makers as well as general readers.

The following chapters are included in this book:

[1] Euro Crisis : An introduction

[2] History of E.E.C.

[3] The Maastricht Treaty

[4] Euro Crisis : Macro fundamentals of Euro Area

[5] Euro Crisis : Impact on the developing countries

[6] Euro Crisis: impact on money market

[7] Euro Crisis : The diagnostic tests

[A] A short note on the behavior of US$/Euro exchange rate during 1999-2012

[B] Euro crisis : Co-integration of fiscal deficit of euro area

[C] Euro Crisis : The Nexus between growth and employment in EU

[8] Policies relating to Euro crisis

[9] Euro Crisis : Implications on International Monetary System

[10] Euro crisis: The concept of political economy

[11] Impact of Euro Crisis on Indian Economy

[12] International role of Euro

[13] The Euro as international money

[14] Conclusion

Today is the birthday of P.A.Samuelson

Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory". Economic historian Randall E. Parker calls him the "Father of Modern Economics", and The New York Times considered him to be the "foremost academic economist of the 20th century".
He was author of the largest-selling economics textbook of all time: Economics: An Introductory Analysis, first published in 1948. It was the second American textbook to explain the principles of Keynesian economics and how to think about economics, and the first one to be successful, and is now in its 19th edition, having sold nearly 4 million copies in 40 languages. James Poterba, former head of MIT's Department of Economics, noted that by his book, Samuelson "leaves an immense legacy, as a researcher and a teacher, as one of the giants on whose shoulders every contemporary economist stands". In 1996, when he was awarded the National Medal of Science, considered America's top science honor, President Bill Clinton commended Samuelson for his "fundamental contributions to economic science" for over 60 years.
He entered the University of Chicago at age 16, during the depths of the Great Depression, and received his PhD in economics from Harvard. After graduating, he became an assistant professor of economics at Massachusetts Institute of Technology (MIT) when he was 25 years of age and a full professor at age 32. In 1966, he was named Institute Professor, MIT's highest faculty honor. He spent his career at MIT where he was instrumental in turning its Department of Economics into a world-renowned institution by attracting other noted economists to join the faculty, including Robert M. Solow, Franco Modigliani, Robert C. Merton, Joseph E. Stiglitz, and Paul Krugman, all of whom went on to win Nobel Prizes.
He served as an advisor to Presidents John F. Kennedy and Lyndon B. Johnson, and was a consultant to the United States Treasury, the Bureau of the Budget and the President's Council of Economic Advisers. Samuelson wrote a weekly column for Newsweek magazine along with Chicago School economist Milton Friedman, where they represented opposing sides: Samuelson took the Keynesian perspective, and Friedman represented the Monetarist perspective. Samuelson died on December 13, 2009, at the age of 94.

During his seven decades as an economist, Samuelson's professional positions included:

• Assistant Professor of Economics at M.I.T, 1940, Associate Professor, 1944.
• Member of the Radiation Laboratory 1944–1945.
• Professor of International Economic Relations (part-time) at the Fletcher School of Law and Diplomacy in 1945.
• Guggenheim Fellowship from 1948 to 1949
• Professor of Economics at MIT beginning in 1947 and Institute Professor beginning in 1962.
• Vernon F. Taylor Visiting Distinguished Professor at Trinity University (Texas) in Spring 1989.

·         There are 388 papers to date in Samuelson's Collected Scientific Papers. Stanley Fischer (1987, p. 234) writes that taken together they are unique in their verve, breadth of economic and general knowledge, mastery of setting, and generosity of allusions to predecessors.

·         Samuelson is co-editor of Inside the Economist's Mind: Conversations with Eminent Economists (Blackwell Publishing, 2007), along with William A. Barnett, a collection of candid interviews with top economists of the 20th century.

He was influenced by Fischer,Klein,Merton,Solow,Phelps,Krugman and Stiglitz and he influenced Keynes,Schumpeter,Leontief,Haberler,Hansen,Wilson,Wicksell and Lindah

CLIMATE CHANGE IN 5200 YEARS AGO

Glaciologist Lonnie Thompson worries that he may have found clues that show history repeating itself, and if he is right, the result could have important implications to modern society. Thompson has spent his career trekking to the far corners of the world to find remote ice fields and then bring back cores drilled from their centers. Within those cores are the records of ancient climate from across the globe.       From the mountains of data drawn by analyzing countless ice cores, and a meticulous review of sometimes obscure historic records, Thompson and his research team at Ohio State University are convinced that the global climate has changed dramatically. But more importantly, they believe it has happened at least once before, and the results were nearly catastrophic to emerging cultures at the time. He outlined his interpretations and fears today at the annual meeting of the American Geophysical Union in San Francisco. A professor of geological sciences at Ohio State and a researcher with the Byrd Polar Research Center, Thompson points to markers in numerous records suggesting that the climate was altered suddenly some 5,200 years ago with severe impacts. He points to perfectly preserved plants he discovered that recently emerged from the Quelccaya ice cap in the Peruvian Andes as that glacier retreats. This monstrous glacier, some 551 feet (168 meters) deep, has shown an exponentially increasing rate of retreat since his first observations in 1963. The plants were carbon-dated to determine their age and tests indicated they had been buried by the ice for perhaps 5,200 years. That suggests that somehow, the climate had shifted suddenly and severely to capture the plants and preserve them until now. In 1991, hikers found the preserved body of a man trapped in an Alpine glacier and freed as it retreated. Later tests showed that the human  dubbed Oetzi  became trapped and died around 5,200 years ago. Thompson points to a study of tree rings from Ireland and England that span a period of 7,000 years. The point in that record when the tree rings were narrowest suggesting the driest period experienced by the trees  was approximately 5,200 years ago. He points to ice core records showing the ratio of two oxygen isotopes retrieved from the ice fields atop Africa's Mount Kilimanjaro. A proxy for atmospheric temperature at the time snow fell, the records are at their lowest 5,200 years before now. He lists the shift by the Sahara Desert from a habitable region to a barren desert; major changes in plant pollen uncovered from lakebed cores in South America, and the record lowest levels of methane retrieved from ice cores from Greenland and Antarctica and all occurred at the same time  5,200 years ago. Something happened back at this time and it was monumental, Thompson said." But it didn't seem monumental to humans then because there were only approximately 250 million people occupying the planet, compared to the 6.4 billion we now have." The evidence clearly points back to this point in history and to some event that occurred. It also points to similar changes occurring in today is climate as well, he said. To me, these are things we really need to be concerned about. The impact of a climate change of that magnitude on a modern world would be tremendous, he said. Seventy percent of the population lives in the world's tropics and major climate changes would directly impact most of them. Thompson believes that the 5,200-year old event may have been caused by a dramatic fluctuation in solar energy reaching the earth. Scientists know that a historic global cooling called the Little Ice Age, from 1450 to 1850 A.D., coincided with two periods of decreased solar activity. Evidence shows that around 5,200 years ago, solar output first dropped precipitously and then surged over a short period. It is this huge solar energy oscillation that Thompson believes may have triggered the climate change he sees in all those records. The climate system is remarkably sensitive to natural variability, he said. "It is likely that it is equally sensitive to effects brought on by human activity, changes like increased greenhouse gases, altered land-use policies and fossil-fuel dependence. Any prudent person would agree that we don't yet understand the complexities with the climate system and, since we don't, we should be extremely cautious in how much we tweak the system, he said. The evidence is clear that a major climate change is underway. Source: Ohio State University

DAVID HUME

 David Hume was a Scottish philosopher, historian, economist, and essayist known especially for his philosophical empiricism and skepticism. He was one of the most important figures in the history of Western philosophy and the Scottish Enlightenment. Hume is often grouped with John Locke, George Berkeley, and a handful of others as a British Empiricist.

    Born: May 7, 1711, Edinburgh, United Kingdom

  Died: August 25, 1776, Edinburgh, United Kingdom

Hume attended the University of Edinburgh at the unusually early age of twelve (possibly as young as ten) at a time when fourteen was normal. At first he considered a career in law, but came to have, in his words, "an insurmountable aversion to everything but the pursuits of Philosophy and general Learning; and while [my family] fanceyed I was poring over Voet and Vinnius, Cicero and Virgil were the Authors which I was secretly devouring." He had little respect for the professors of his time, telling a friend in 1735, "there is nothing to be learnt from a Professor, which is not to be met with in Books."

Hume made a philosophical discovery that opened up to him "...a new Scene of Thought," which inspired him "...to throw up every other Pleasure or Business to apply entirely to it." He did not recount what this "Scene" was, and commentators have offered a variety of speculations. Due to this inspiration, Hume set out to spend a minimum of ten years reading and writing. He came to the verge of nervous breakdown, after which he decided to have a more active life to better continue his learning.

As Hume's options lay between a travelling tutorship and a stool in a merchant's office, he chose the latter. In 1734, after a few months occupied with commerce in Bristol, he went to La Flèche in Anjou, France. There he had frequent discourse with the Jesuits of the College of La Flèche. As he had spent most of his savings during his four years there while writing A Treatise of Human Nature, he resolved "to make a very rigid frugality supply my deficiency of fortune, to maintain unimpaired my independency, and to regard every object as contemptible except the improvements of my talents in literature". He completed the Treatise at the age of 26.

Through his discussions on politics, Hume developed many ideas that are prevalent in the field of economics. This includes ideas on private property, inflation, and foreign trade. Referring to his essay "Of the Balance of Trade," Paul Krugman has remarked "... David Hume created what I consider the first true economic model."
In contrast to Locke, Hume believes that private property isn't a natural right. Hume argues it is justified, because resources are limited. Private property would be an unjustified, "idle ceremonial", if all goods were unlimited and available freely. Hume also believed in an unequal distribution of property, because perfect equality would destroy the ideas of thrift and industry. Perfect equality would thus lead to impoverishment.
His thought contains elements that are, in modern terms, both conservative and liberal, as well as ones that are both contractarian and utilitarian, though these terms are all anachronistic. Thomas Jefferson banned Hume's History from the University of Virginia, fearing that it "has spread universal toryism over the land".
 Yet, Samuel Johnson thought Hume "a Tory by chance... for he has no principle. If he is anything, he is a Hobbist". His central concern is to show the importance of the rule of law, and stresses throughout his political Essays the importance of moderation in politics. This outlook needs to be seen within the historical context of eighteenth century Scotland, where the legacy of religious civil war, combined with the relatively recent memory of the 1715 and 1745 Jacobite risings, fostered in a historian such as Hume a distaste for enthusiasm and factionalism that appeared to threaten the fragile and nascent political and social stability of a country that was deeply politically and religiously divided. He thinks that society is best governed by a general and impartial system of laws, based principally on the "artifice" of contract; he is less concerned about the form of government that administers these laws, so long as it does so fairly (though he thought that republics were more likely to do so than monarchies).Hume expressed suspicion of attempts to reform society in ways that departed from long-established custom, and he counselled peoples not to resist their governments except in cases of the most egregious tyranny. However, he resisted aligning himself with either of Britain's two political parties, the Whigs and the Tories
Hume's views on human motivation and action formed the cornerstone of his ethical theory: he conceived moral or ethical sentiments to be intrinsically motivating, or the providers of reasons for action. Given that one cannot be motivated by reason alone, requiring the input of the passions, Hume argued that reason cannot be behind morality.
Morals excite passions, and produce or prevent actions. Reason itself is utterly impotent in this particular. The rules of morality, therefore, are not conclusions of our reason.
Hume's sentimentalism about morality was shared by his close friend Adam Smith, and Hume and Smith were mutually influenced by the moral reflections of Francis Hutcheson.
Hume's theory of ethics has been influential in modern day metaethical theory, helping to inspire various forms of emotivism, error theory and ethical expressivism and non-cognitivism and Allan Gibbard.

His valuable works are as follows:

  A Kind of History of My Life (1734)

  A Treatise of Human Nature: (1739–40)

  An Abstract of a Book lately Published: Entitled A Treatise of Human Nature etc. (1740)

  Essays Moral and Political (first ed. 1741–2)

  An Enquiry Concerning Human Understanding (1748)

  An Enquiry Concerning the Principles of Morals (1751)

  Political Discourses, (part II of Essays, Moral, Political, and Literary within vol. 1 of the larger Essays and Treatises on Several Subjects) Edinburgh (1752).

  Political Discourses/Discours politiques (1752–1758), My Own life (1776), Of Essay writing, 1742

  Four Dissertations London (1757

  The History of England (1754–62)

  The Natural History of Religion (1757)

  "My Own Life" (1776)

  Dialogues Concerning Natural Religion (1779)