The controlling forces of increased aggregate demand, a predictor of consumer spending, include government expenditure increase, interest rate cut, tax cut, increase in quantity of money, increased investment due to expected future profits among others. Subsequently, the major economies of the world have decided to keep interest rates (government rate, short-term rate) at very low levels so as to increase the quantity of money and supply of loanable funds. Ultimately, this would make money available for people to spend. Additionally, such policies are expected to produce an incremental geometric effect on aggregate demand, consumption expenditure and investment expenditure. Generally, the keeping of government interest rate (called fed fund rate in the U.S) low has a ripple effect in the short run and in the long run. In the short run, it lowers the short-term rates (that is rates on short-term securities like treasury bills, short-term loans from banks, e.t.c) with consequential fall in exchange rates, increases in net export (because of cheaper exports goods compared to imports) and quantity of money or loanable funds in circulation. All these are projections towards boosting aggregate expenditure or demand in the economy.

A boost in aggregate demand is expected to amplify the real GDP with subsequent price increases and the likelihood of inflation. Similarly, in the long run, long-term interest rate (such as rates on bonds issued by banks or corporation, rates on loans for financing new capital e.t.c), which is also a function of the current and future short-term rates, falls producing a positive chain effect also on consumption expenditure, investment and net exports. Also it perpetuates aggregate expenditure increase thereafter facilitating increased real GDP growth, price and inflation. On the other hand, when government rates increase, short-term and long-term rates all increase with a reduction in consumption expenditure, investments and net exports, real GDP and expected inflation. Contrarily, exchange rate is expected to increase in spite of the fact that exchange rates can also be affected by factors other than interest rate. In summary, changes brought about by the short and long run activities all constitute economic indicators of growth emanating from the scrupulous application of monetary and fiscal policies.

Experience suggests that, the time frame for the realization of these economic indicators of growth due to the impact of fiscal and monetary policies are deterministic (conservative, biased) and not stochastic (random, unbiased). However, in the current recession, these economic indicators are tending to be more stochastic than deterministic. If such trend should continue it would be very difficult for the world to predict when the recession would totally be over for economic or employment boost to return. The assumption of stochastic trend by these indicators is the driving force behind the reason why the huge government spending (the stimulus), the tax & interest rate cuts which are strategies based on economic growth models (Keynesian model and the likes) are failing to yield the expected conspicuous impact. The fact is the economic models on which these policies are made are based on deterministic assumptions of impact which does not allow for much economic contingency.

It is conclusive that the outcome of the models namely the economic indicators are becoming stochastic in nature. Obviously, this calls for optimization of the models using deterministic input (fiscal and monetary policies) producing a stochastic output namely the economic indicators. Otherwise, the impact of government spending, interest rate and tax cuts may not be feasible as expected (both short term and long term) because of the stochastic characteristics of the outcome. Again, the predictability of the economic growth models would continue to present a myopic view of the state of the future economy until the world seeks for optimized economic models with the potential for stochastic outcome. The optimized models should have an appreciable degree of sensitivity to change behaving more like Monte Carlo simulation models. In the absence of such kind of models, there is the tendency for people to continue to blame governments and those in authority and even economists for inaccurate decisions and predictions. Optimist may argue that the outcome of the application of the fiscal and monetary policies is indeterminate with regards to time and this supports the stochastic characteristic assumption of these economic indicators.

Strangely enough, the governments of the major economies in the world currently are torn between recession and inflation. They are more interested in keeping short-term interest rate low primarily to keep their economies from going into deeper recession. The low interest rate puts “breaks” on the economy somehow slowing down the recession. In addition, low interest rate is to create more employment (through increased aggregate expenditure) so as to lower the unemployment rate whilst placing less emphasis on possible inflation rise. Like was said before, these policies have failed to produce the expected gratifying positive outcome.

Unfortunately, countries with lower interest rate present a business environment that turns away foreign investors from investing in their economy producing a substantial net outflow of funds from the country and also exerting a downward pressure on the value of their currency. That is to say a lower interest rate apart from increasing employment produces a weak currency which puts an upward pressure on the country’s inflation which in turn puts further downward pressure on the currency. Conversely, high interest rate puts downward pressure on inflation which in turn puts further upward pressure on the currency’s value. This substantiates the interdependency between interest rate, inflation and currency rates. The truth is that increased confidence in the world economy has not been persuasive as expected and the world is also witnessing stagnancy in employment and increasing unemployment rates. Nevertheless, if a country’s unemployment rate is rising, the demand for imports would decrease which in turn puts upward pressure on the value of its currency. All in all the preceding reflections on the world economy are known economic facts which should create a world of mixed feelings as the predictive models are no longer piquant as expected.

Now, increasing government spending (stimulus, bailout e.t.c) and reducing taxes on income all targeted towards increased aggregate expenditure, real GDP and employment also immensely adds to the budget deficit. The government can pursue conventional measures such as using bonds sale to raise funds to reduce the budget deficit and also unconventional measures namely international borrowing to meet its socio-economic obligations or goals. However, bonds sale calls for future interest payments and principal at maturity and all these combined with international borrowing compounds a government’s financial problems and its country’s economic problems. Some argue that governments cannot and must not default on its obligations. But a country in serious deficit problems may be compelled to succumb to default in the long run due to mounting socio-economic obligations and debt cum interest payments. Deficits may be passed from one generation to another but that is not sustainable as more “cracks” would be created in the economic ceiling with possible future collapse. Such a state of government would deteriorate the country’s credit rating and make it difficult in future to raise funds from bonds sale, domestic and international loan sources.

Next, when these sources of funding are exhausted, the options available for the government would be to increase taxes (predominantly income tax, corporate tax and social security tax), reduce spending and as a last resort print money to pay its creditors. If this action plan is not pursued, the budget deficit would continue to grow with consequences of devaluation of the currencies, reduced investment because of “crowding” effect on loanable funds. Again, this gradually slows down GDP growth and increases unemployment. Rationally, a continued increase in budget deficit must stimulate the interim application of painstaking, austerity measures and fiscal discretionary policies including but not limited to reduction of government spending on goods and services and tax hikes. This should be followed by the monetary policy of an increase in interest rate. The double effect of decreased aggregate demand and the reduction of any threatening inflationary pressure reflected in improved price stability is the expected result. Additionally, it will induce an increase in private savings because of public expectation of higher taxes in future. However, it would certainly lead to increased unemployment rate.

Meanwhile, default of the application of these discretional fiscal and monetary policies could produce devastating consequences. First, to be added to the rising unemployment would be rising inflation predominantly cost-pushed from the rising oil prices culminating in higher raw material prices. Demand-pulled inflation is also possible because of increased quantity of money due to low interest rate. Second, the net effect of the rising unemployment and rising inflation would be stagflation – an unpleasant condition that occurs when an economy experiences high unemployment rate and rising inflation. Economies such as that of the U.S experienced stagflation in late 1970s and early 1980s and this is a sign that no country is exempted from a possible inflation. Furthermore, a high degree of expectation of future immense acceleration in inflation causing inflation “fever” combined with a government’s deliberate decision to increase a country’s money supply by printing money to pay its bills can create a “sister” inflation called hyperinflation – technically an inflation rate of more than 100% per year. The economic state of Zimbabwe is an example of hyperinflation where people have to carry large sums of money just to buy a roll of bath tissue.

Technically, the major economies in the world system today can conclude that inflation is under control now. However, what the world is witnessing now is an inflation uncertainty “fever” causing people to invest in assets like gold, diamond as a means of hedging against high losses of purchasing power from possible inflation (predominantly stagflation). Gold prices are up now and is likely to go up should the oil price continue to go up. The current world economic situation has created a model of positive correlation between gold and oil prices and it is expected that investments into these commodities would increase in the short run. Logically, the investor diversification into gold and oil securities may be right. Why? Because the rising oil prices and any possible uncertainty rise in tensions in the Middle East & Oil regions besides climatic threats may even escalate the prices of oil to the extreme. The resultant could be stagflation. Real wage rates would be severely affected as inflation rate would greatly exceed nominal wage rate. Under these conditions, the working population would be worse-off even in the midst of increases in wage rate. Presently, the other potential defect of the current gold securities rush is the reduction in funds for the acquisition of physical capital (machinery, factories and technological research) needed for productivity and GDP growth of the economy. That is to say funds which could have been used to increase capital assets for productivity and economic growth or expansion are now being diverted into gold and mineral assets.

Again and interestingly, some proponents may argue that the recent growth in GDP of countries is the resultant of the low interest rate, the multiplier effect of government spending (on goods and services) and tax cuts on aggregate demand. First, the assertions are based on known historical evaluations of these policies. Second, the assertions are true if the economic models on which they are based can be precise in prediction of the magnitude of the aggregate demand increase based on a given magnitude of increased government spending and tax cuts. Now, like it has been said already, the setbacks of these models in this time of recession are their inability to determine when and whether the needed impact of the discretionary polices has been achieved. As a matter of fact, impact assessment of the model-based policies show no convincing results. So the euphoria created by the sentiments of the world’s economic rebound may be deceptive judging from the current world economy and the uncertainty that lies ahead. That means recent reports from credible sources like OECD organization about world’s economy rebound should be received with caution.

Another dimension very disturbing is the politicizing of fiscal and monetary policies used in running of an economy. This is in particular reference to the incumbent and the opposition party in charge of the affairs of a country. The application of fiscal and monetary policies based on political ideology and not on requisite, sound economic principles can lead to untimely application, wastage of resources and economic failure in the long run. Regrettably, such schisms are still prevalent not only in the socialists and communists world today but in some capitalist as well. The danger here in the case of capitalism is when the economic policy makers (called the Fed in the U.S) come under the control of the incumbent or the opposition inadvertently stripping the economic decision makers of their autonomy. The effect of this is three fold. First, it impedes decision making leading to the production of ad hoc decisions which can hurt the economy. Second, it downplays the ability of the decision makers. Third, it obstructs continuity in policies that gradually leads to the restoration of health to the economy. Realistically, the decision makers may be subject to censoring in terms of their deliberations but anything further than that can lead to manipulation of their policies by the incumbent or the powers that be. So it is necessary that the powers that be desist from seeking much influence and rather work with the decision makers for the common good of the masses.

The Center Cannot Hold

In spite of all these expected developments, currently it is unemployment which is on the minds of people. Though people are concerned about rising budget deficit and possible future inflationary pressures after the current recessionary pressures are over, it is the rising unemployment rate or increased joblessness that is on the minds of people. Unemployment is at the center and unfortunately it is degenerating although the progress of the other economic indicators has been mixed. Factually, governments cannot predict the trend of unemployment in the years ahead. The status quo of the world’s economy is that most countries have achieved appreciable GDP growth after several macro-economic policy changes but unemployment rate continues to rise. For example the recent announcement by the federal government of 3.5% GDP growth in the U.S was welcome good news yet unemployment rate now stands at 10.2% and is expected to increase.

The challenge facing world governments is to pursue appropriate strategies that stimulate the business and investments environments for increased employment so as to get unemployment to bottom out with subsequent reduction of unemployment rate from double digits to single digits. For example the U.S government would have to come up with strategies that reduce the unemployment rate from 10.20% to single digits such as 4.5% (almost halving it) without increasing significantly the budget deficit which is a grave threat to economic growth. Interestingly, the strategies by world governments would call for investments to be focused on some virgin sectors of the world economy. The virgin sectors of the world economic system include energy, cleaner or green technology, education, biotechnology, medical field research among others. They are called virgin sectors not because they are new or undiscovered but that there is greater room for research, development and rejuvenation for sustainable economic growth. Pragmatically, the virgin sectors are highly technology-oriented and are likely to yield greater returns besides capital (physical and human) accumulation and productivity increase. Hypothetically, the virgin sectors are likely to be the backbone for an upcoming new green world economy. Though investment in this sector of the new world economy may not yield the expected impact in the short term, it will be the pioneering force for the greening of the world economy and its sustainability. One also should not forget the fact that mankind’s continued existence on this earth depends to a greater extent on the greening of the world economy and its sustainability. Propaganda by environmentalist is an attestation to that effect.

In fact, the awareness by the masses of this distinctive sector should spark a new era of career change or professional development pursuits. In the short term, the search for these educational or career changes could spiral frictional and most importantly structural unemployment rates which are inherent components of unemployment. Nevertheless, in the long term, it would lead to the production of the required expertise for the greening of the new world economy. The current unemployment rate even though very unpleasant can be a blessing if the victims of unemployment can take advantage of it to educate, re-train and acquire new skills and expertise in the virgin sectors for the new green world economy. Also, mass pursuits of credentials in the virgin sectors would in turn expand the investment climate helping to reduce unemployment in the long run. The fact is that the new world economic system is heading for a labor force with multi-skill characteristics. The unemployed cannot continue to lament over their situation. They should seek deployment into the virgin sectors by acquiring the requisite skills and education in preparation for entry into the new green world economy. Unemployed people with certain original skills and backgrounds can take advantage of their predicaments to turn their tragedy into triumph.

They can train, educate in the virgin sectors which may or may not be different from their original education or skills so as to become multi-skilled. An engineer who has been laid off can become multi-skilled by training or educating as a business analyst, economist, accountant e.t.c. Experience and statistical data has shown that multi-skilled workers are more productive and it is expedient that companies create incentives for their employees to acquire the needed skills and education to become multi-skilled. A construction worker who has been laid off can educate and re-train ready for the new green economy. According to the U.S Bureau of Labor Statistics occupational outlook, the virgin sectors are expected to grow at least faster than average for all others sectors of the economy [U.S labor Statistics website]. That is why more multi-skilled personnel would be needed in the green sector. Professions such as geoscientist, environmental engineers & scientist, biotechnologist, researchers, ecologists are few examples of few occupations in the virgin sectors. Also, governments should come up with strategies that encourage training and education in the virgin sectors as it seeks to supports the sector by encouraging privatization and liberalization of the sector market.

In conclusion, the world economic system has fallen apart in the last few years in spite of the radical changes in discretional fiscal and monetary policies. The economic models are not yielding results as expected as evidenced from their impact assessment. This is also substantiated by the economic indicators assumption of stochastic characteristics instead of the presumed deterministic nature. Meanwhile, at the center of these economic uncertainty and inconsistencies is the unemployed who have been impacted greatly by the detrimental outcome. Fortunately, there is still hope if they can be undaunting enough to enter the virgin sectors of the economy through the acquisition of the appropriate training and educational credentials. Apparently, the virgin sectors are the driving force for the greening of the new world economy and for its sustainability and the world cannot wait to see this revolution.

Charles Horace Ampong [MSc(Eng), MBA(Finance)]

GLG Councils Consultant

Author: Charles Ampong
Article Source: EzineArticles.com

Charles Ampong

Holder of masters degrees in engineering and business management - professional strengths in engineering, management, finance, economics accounting and marketing having worked as an engineer and analyst and currently a consultant for GLG Councils.

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“This is an attack on the Euro-zone by certain other interests, political or financial.” – Greek Prime Minister Papandreou.

When it comes to the crisis in Greece, it seems as if everyone has an opinion. The burgeoning Grecian debt crisis has been used as the final scapegoat for a thousand-point drop in the stock market, while Greece itself has been proclaimed a ‘plague of bad debt,’ which unless dealt with swiftly, threatens to over run the European market. Probe a little deeper under this mess, however, and you will find an aggressive and fixated media, credit and investment fraud, as well as shady attempts to destroy the Euro. But before we can delve into the seedier side of this murky issue, we must first understand what caused the Grecian crisis, and just how international banking and debtor nations work, if only on a basic level.

Greek Prime Minister George Papandreou (center) arriving for an EU summit in Brussels

Cracks in the Greek economy began to appear in 2009, as growth turned negative for the first time since 1993. Although Greece managed to remain above the Euro level, it suffered from over-lending, a corrupt government, and bureaucracy stifling growth. In the early part of 2009, the loans to savings ratio topped 100%. By the end of 2009, the greater global crisis coupled with uncontrolled spending at local levels, due largely in part to the 2008 election, left Greece faced with its most severe economic crisis since 1993. Greece claimed the infamous position of having the second highest budget deficit after Ireland, and the second highest debt to GDP ratio in the European Union. The budget deficit stood at 13.6% of GDP; coupled with rising debt levels of 115% of GDP in 2009, led to increased borrowing to pay off debts, resulting in a severe economic crisis.

Most governments are currently relying on the greatest of economic opiates; paper money. Debtor economies of the Western world require more and more paper money to survive, which in turn is made increasingly more worthless by inflation. International bankers who create money without foundation, and loan it to the nations of the world, have made immense fortunes from the interest on such loans. When the interest grows too much to pay off, then the nation borrows even more money to feed their addiction to debt repayment. This of course means that more loans are given in ever higher amounts as the currency they are issued in is worth less and less.

Even the most powerful of nations cannot escape the debt-trap. The United States, for example, will now find it mathematically impossible to pay off her debt. Among other nations caught in the trap of spiralling debt, are Italy, Germany, Australia, and Spain. Greece was no exception in following the well tried and tested formula above; the country ran into trouble and it borrowed money in an attempt to extricate itself from rising debt. Simple. But as the country sought to borrow more-and-more cash, however, tough ‘austerity measures’ were put into place. Now why would that be?

But instead of letting the Grecian market collapse, the international banks who loaned it money preformed a quick dialysis. They would jump-started the Greek economy with funding, and in that way they (the bankers) could continue to profit from the suffering of a nation. To this end, a 750 billion Euro ‘bail-out’ was orchestrated, between the IMF and the European Union. Olli Rehn, the European Commissioner for Economic and Financial affairs went as far as to say that ““We will defend the Euro, no matter what it takes.” What he neglected to mention was the 5% interest rate attached to the bailout. An unrealistically high rate of interest by all assessments.

Shortly after Rehn’s announcement, ECB stated that they would begin a process of ‘Quantitative Easing‘–the purchase of large amounts of corporate debt and loans via Grecian bonds. What confounded me at the time is just why ECB were attempting to ‘stabilize’ a region using a method that had proved unsuccessful for the Japanese years before during their very well-documented economic crisis.

The funds given to Greece would keep the country afloat in the short-term, but the eventual collapse would be that much worse, for no matter where you look for news of the Grecian crisis, talks of a ‘domino effect’ are never far behind. Those countries currently most affected by the crisis are extremely concerned about the picture that the American and British media have been painting. In Spain, President José Luis Rodríguez Zapatero launched an investigation using his nation’s intelligence agency, and while the measure was considered ‘over the top,’ and a ‘laughable’ disguise of insecurity in the anglo-media, Zapatero’s choice showed more than a glimmer of reason.

Unsurprisingly, many ‘financial experts’ aligned themselves with hedge-fund managers and their cronies, including Jeffery Frankel, a Harvard University economist who said, “What we have seen is that contagion has gone global.” According to Rintaro Tamaki, “All the financial markets are now in turmoil … The impact of the Greek crisis has gone beyond the Euro area.” Anders Borg, the Financial Minister of Sweden was on board the financial-apocalypse boat, adding “We now see herd behavior in the markets that are really pack behavior, wolfpack behavior.” Even more shocking, however, an article in The Guardian stated how “Riots and strikes in Greece could be repeated in other countries which have yet to adopt their own austerity packages.” Other countries which have yet to adopt their own austerity packages? With this sort of spin on the issue being given by the Anglo-media, it is no small wonder that Spain feels as if it stands on shaky ground. But this doesn’t have to be so. Greece doesn’t have to be the all destroying harbinger of financial apocalypse, unless they want it to be. I’ll repeat myself here; Greece is not the first domino unless the international bankers say it is.

The hedge-fund managers said ‘it is’ back on February 8^th. An ‘idea-dinner’ held at the Manhattan town house of Monness, Crespi, Hardt & Co, a boutique investment bank. Among those attending were George Soros (Soros Fund Management), SAC advisors, David Einhorn of Greenlight Capital and Donald Morgan of Brigade Capital. During the course of the meeting, they saw fit to bet against the Euro, Greece and other southern European countries now afflicted by the crisis at hand. Donald Morgan in particular was certain that Greek debt could ‘infect’ the rest of the world. Merril-Lynch, Bank of America, Barclays, Goldman-Sachs, and other banks that still exist only because of public funds taken from taxpayers, are at the core of the financial melt-down in Greece.

The consequences of a second, bigger melt-down in Greece, and the destruction of the Euro by large financial concerns would be enormous; as would be the profits for a few select individuals. Investors are betting up to twenty times their holdings, in a market that dwarfs the daily trading volume of the British pound, which itself suffered underneath similar ‘bearish’ moves. George Soros led the charge that devastated the British Pound in 1992, and wouldn’t think twice about destroying the Euro via Greece.  Do you think they wouldn’t do such a thing? The U.S. Department of Justice has already warned them not to destroy any documents pertaining to the meeting. Soros hasn’t been too shy of the media circuit spotlight, stating that the ‘euro could fall apart’ mere days after the secretive dinner meeting. I don’t believe that Attorney General Eric Holder will pursue the issue with much vigor, as he assisted in the pardoning of both Marc Rich and Pincus Green. What does come with some level of reassurance is that those Spanish and Italian judges who have seen their countries so terribly afflicted by the current situation may pursue legal recourse.

Speaking of austerity packages, Mervyn King, governor of the Bank of England went as far to say that “….whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be.” In the United States, Federal Reserve Chairman Ben Bernanke spoke along similar lines. Bernanke claimed last April that “To avoid large and ultimately unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defence, or some combination of the above.” Of course, the American contribution to the Grecian bailout comes a year after a statement Bernanke made concerning cutting retirement and healthcare funds ‘That’s where the money is.’ Money that couldn’t be spent. So apparently America must cut social funding, yet there is enough money lying around to go ahead and assist in the Grecian bailout caused by investors from America? We have so far spent 6.8 billion dollars. Those are funds that were considered ‘unspendable’ for social programs but perfectly fine to assist in driving a country further into a hole, absolute madness.

While hedge-fund managers carry much of the blame, credit rating agencies don’t have their hands clean of the matter either. Without the role they played, it is entirely possible that some of the deals made would not have been accepted. Credit rating agencies such as Moody’s, S&P, and Fitch have each played a critical role in the crisis. It is important to note that out of those three companies, S&P and Moody’s are solely based in America. Fitch is based in both New York and London. Similar to how credit rating agencies gave toxic assets and loans packages triple-A ratings here in the United States; credit rating fraud was no different in Greece. Triple-A ratings are the highest possible ratings, which are only supposed to be given to loans with minimal risk. When we look at some of the packages given, we can see a web of fraud. This fraud was an attempt to deliberately mislead Greece and further damage the Euro. As if this wasn’t enough, further damage to the Euro was incurred when Greek stocks and bonds were being traded at junk-level weeks before earning that designation.

The credit rating agencies can easily explain how investment banking managed to do so much damage to Greece. Goldman-Sachs in particular has had a high level of involvement in the Grecian crisis. Beginning in 2002, Goldman-Sachs was one of the many banks that offered cross-currency swaps. During these cross-currency swaps, Grecian debt was swapped from Euro to dollars and yen, and would then be changed back to the original currencies at a later date. If all these institutions wanted to do was to hurt the Euro, it wouldn’t be difficult. The acquiring of Grecian debt, switching it to a stable currency and then changing it back would be devastating. It would not only damage the value of the Euro, but would deliver a blow to the infrastructure of the Greek nation.

While cross-currency swaps are common for nations, Goldman-Sachs set the exchange rates at fake levels. As a result, Greece got a much higher sum than the actual market value of $10 billion dollars or yen. Goldman-Sachs managed to add an astounding amount of credit, up to $1 billion dollars for the Greeks without the Greeks knowing about it. The best part is that while the trade took place, it isn’t on any books. Due to the deals made during the Grecian government’s deals with Goldman-Sachs, Goldman now also owns the rights to airport fees and lottery proceeds in Greece for years. Furthermore, Goldman-Sachs as well other banks speculating in the Greek market used credit default swaps as a way to bet on the Grecian collapse. The purpose of credit default swaps is a method for a large investor such as Goldman-Sachs to obtain financial protection in case its investments go bad, in theory at least.

Amazingly, credit swaps are unregulated. Coupling this with the fact that there are no limits as to how many can be created and issued, the market can surge rapidly several times over compared to the original assets being insured. The final nail in the coffin of integrity being that investors whom are arranging the swap don’t actually need to have the ownership they are arranging the swap to cover. Therefore, it becomes profitable to bet on the lendee defaulting as you receive even more funds for a failed venture. It’s similar to everyone else on a street buying fire protection on someone’s house and then collecting when it gets burned down. Something that would be illegal in the insurance racket is perfectly legal in investment banking and Wall Street.

Even that wimpiest of Wall Street critics, Ben Bernanke, managed to get the guts to say something about the mess. “Using these instruments in a way that intentionally destabilizes a company or a country is — is counter-productive, and I’m sure the S.E.C. will be looking into that.” Even though Bernanke managed to give a mild protest, I have next to no faith that Goldman will get much more than a wag of the finger for this or any other ‘questionable’ business it has conducted. A lack of punishment will of course only reinforce this behaviour. As Marshall Auerback, a professor of economics at the University of Missouri-Kansas City stated “As [credit default swap] prices rise and Greece’s credit rating collapses, the interest rate it must pay on bonds rises–fuelling a death spiral because it cannot cut spending or raise taxes sufficiently to reduce its deficit.”

While the forces that acted to worsen the Greek crisis get away, the Grecian working class is brutalized. The measures implemented to slow the inevitable are quite familiar. Lower wages, reduced workforce in the public sector, cuts in benefits, rising gas prices, tax increases, bonus cuts….out of all those affected, the real losers are working people of Greece. The VAT is already being increased for a second time, now up to 23%. Whatever your take on the Grecian crisis is, the fact that ‘austerity’ measures in other nations are being called for is worrisome to say the least. Nothing has been fixed. The rich have gotten richer, the poorer have gotten poorer, and the inevitable collapse will be that much more catastrophic. The bond maturities for Greece range between 10-15 years, I believe that this will have an astronomical impact on its deficit when the debt comes to fruition, and without another round of emergency funds, Greece may very well default under the pressure. Certainly, now after Greece owes the world $300 Billion, a Grecian collapse a decade down the road would certainly be felt. More so than if it happened before the bailouts, back-room deals and slough of chicanery Greece has bumbled through. The EU Chief stated that ‘democracy could disappear’ in those countries most afflicted by the crisis. Greece may be the very tip of a particularly troublesome iceberg, a floating sepulcher in a sea of greed, guile, and corruption.

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Evan Arnold

The Chartered Institute of Building (CIOB) has urged Britain’s new coalition government to invest in the construction industry.

Chief executive of the CIOB Chris Blythe said that there needs to be a sustained programme of national investment in the construction industry if Britain is to return to a pattern of consistent economic growth.

Mr Blythe claimed that for every pound spent on construction output, £2.84 is generated in total economic activity and 92 pence of every pound spent on construction is retained in the UK.

“The physical infrastructure of this country underpins the entire economic and social infrastructure. Investment in the built environment can spread the benefits of an economic stimulus to all parts of the UK,” he added.

Mr Blythe went on to say that it is crucial that the coalition government encourages people to enrol in electrical courses, plumbing courses and commercial gas courses as this will assist economic recovery.

“The last recession taught us that if we neglect training and educating our workforces we will suffer in the long-term; and hinder our ability to react to any upturn in the economy,” he said.

As environmental technologies increase in popularity more people may be required to take green energy courses in order to understand how to install of energy efficient forms of heating and lighting, according to Chris Blythe.

“There is also a huge opportunity to develop the low carbon skills that the industry needs to meet the green agenda,” he added.

The CIOB joined forces with the Construction Industry Council and released a manifesto for the built environment which highlights the importance of the construction industry to the economy.

The ‘Building the Future Economy’ document also looks at the construction industry’s role in developing a low carbon economy, whether through the refurbishment of the existing building stock or the development of new buildings and infrastructure.

Goals of the manifesto included the promotion of future job creation and skills development in the workforce by sustaining training and apprenticeships during the economic downturn.

The organisations would also like the government to appoint a full-time Minister of Construction and promote access to construction jobs to all sections of society in order to achieve a diverse vibrant industry.

The National Inspection Council for Electrical Installation Contracting has also said that more women should be encouraged to take electrical courses as it would benefit the sector and the construction industry as a whole.

Able Skills provides electrical courses and plumbing courses at its dedicated training centre. Able Skills is an accredited centre securing approval to deliver qualification training from City & Guilds, Construction Awards Alliance, EAL, NICEIC and CITB for gas training and assessment.

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Jack Dee

I've been an IT consultant for over 15 years. Strange to get paid for doing what you love. May be in danger of being called a geek... but who cares? I actually enjoy every opportunity to drive through the concepts, design, and creative framework on even personal web-based projects. My other passion is travel: 72 cities in 35 countries at the last count.

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