Marketing Management
TWO ECONOMIES,
DIFFERENT REMEDIES
Southern Taiwan University of
Technology
L/O/G/O
www.themegallery.com
GROUP V
CHAMBUU
MARIE
SUDIANA
MARKO
ANJA
TRAN THI
BATTULGA
NIKKI
COLYN
MARINIC
GRGIC
THANH
巴圖
MARTINEZ
許毓殷
馬可
安利敏
M997Z207
馬妳琪
M997Z237
M997Z206
M997Z205
LOAN
陳氏青鑾
M997Z208
M997Z215
Contents
1 The socialist system’s advantages
2
Critics arguments
3
Chines strategy favors StateOwned Companies
4
America September 7,2010
5
U.S economy situation
6 Remedy problems of U.S economy
The socialist system’s advantages
• Chinese government has pumped
public money into companies that it
expects to upgrade the industrial
base and employ more people.
• China surpassed Japan to become
the world’s second-large economy.
• China state-directed development
model is enormously appealing to
poor countries.
The socialist system’s advantages
Political system of China
The system of China enable to make decisions
efficiently, organize effectively and concentrate
resources to accomplish large undertakings.
Economic policy of China
China’s always had major industrial policy
Reforms of China
1980s reforms that unleashed China’s private sector
and the 1990s reforms that dismantled great
sections of the sate-run sector are being partly
undone.
CRITICS ARGUMENT
Yao Yang – “ The
problem is that the
reforms of the first 20
years, from 1978-’90s,
actually did not touch
the power of the
government. So after
the other reforms were
finished, you actually
find the government is
expanding, because
there is no check and
balance on its power.”
Reforms that
led to growth
are being
undone.
Others argue that
the government
continue to
expand public
sector even if
they lose money
causing a worn
out capital from
government
budget
Some people
believe that the
government,
being over
confident with a
top-down
economy strategy
might push
growth rates
down well before
2020
Chinese Strategy favors
State-Owned Companies
• In 2009- expansion of the government role in
corporate sector
• “They´re producing yogurt. They´re into real
estate.”
• 8000 state-owned investment companies
• Case of Zhejiang Geely Holding Group
• Reasons for state´s involvement in business??
necessity for
state´s growth
mercenaries
Chinese Strategy favors
State-Owned Companies
• Global market vs. Local market- who needs government?
• “ profound inequality”
• State-owned conglomerates are becoming new political
power centers
• Some restrictions for state-owned companies to enter
the real estate or lending areas
• China´s top-down strategy is successful (i.e. Japan and
South Korea)
• Two questions:
? For how long can state control those vast areas of the
economy?
? If that strategy stop working, will China be able to
change it?
America september 7,2010
• Internet explosion in 1990s
• Borrowing against rising values –
spending on furniture>COLAPSE of
American housing prices
• hope & fear – growth or new recession
• Economic growth in 2nd quarter
slowed>qovernment can’t deliver right
intervention > ?
America september7,2010
• Investing against new elections
( November )
• Dramatic expansion of debt during
Bush administration (tax cuts and two
wars)
• Increased fears among creditor like
China and Japan of rising interest rate
> inflation(rising prices)
• Merchant lose faith in US$ > demend
more money for oil, electronics etc.
US Economy Situation
•
•
•
•
•
Great Recession
Dearth of Policy
Economic Stagnation
Deflation
Economic Turndown
US Economy Situation
The US economy has suffered a real estate
collapse, a stock market crash, a banking
crisis, a near systemic collapse on a global
scale, a credit crisis, the worst economic
downturn in the US since the Great
Depression, and an unprecedented global
recession.
Following two sequential
economic bubbles, the dot-com bubble and
the real estate bubble.
US Economy Situation
Both inflation and deflation are occurring at the
same time. The US gross domestic product and
consumer spending are declining while stock
prices are rising; that government spending is
rising while tax revenues are falling; that
consumers are deleveraging and that the flow
of credit has slowed while the total of debts and
liabilities in the US economy continues to rise;
that the US dollar is falling while price inflation
remains nominal; that interest rates are near
zero for banks but rising for consumers.
US Economy Situation
Inflation, of course, is simply an increase in the
money supply rather than rising prices, which is
one of the effects of inflation. Deflation is simply a
reduction in the money supply rather than falling
prices, which are one of the effects of
deflation. Nonetheless, the effects of inflation
can always be seen in the long run in consumer
prices, i.e., the dollar looses value as a function
of monetary inflation thus prices tend to rise.
The Federal Government’s
Role in Economy
• Monetary policy
• Fiscal Policy
• Regulation
Direct Effect of Economic
Turndown’s on Consumers
• High unemployment
• High underemployment (part-time work instead of full-time,
lower wages than abilities warrant, and discouraged and
stopped looking for work)
• Decrease in consumer revolving credit (credit cards)
• Increased savings
• Decreased wealth, including home values, stock, mutual funds,
401k’s, etc
• Low consumer confidence
• The result of all the above – decreased consumer spending
Remedy for problems of U.S economy
The ways to attack
deflation
To inject credit in
to the economy.
The Fed reserve
The Fed relieved
adjusts a benchmark American banks of
overnight rate for
trouble in troubled
banks.
investments.
Ideas of experts
Alan Blinder
Bens.Bernace:
At first: dismissed the idea “American’s
political system would allow the country
to sink in to a Japan’s style quagmire”.
Now: he says a lost decade now looms as
“ a much bigger risk”.
The issue is not whether we have the
tools to help support economic activity
and guard against deflation. It is instead
whether, at any given juncture, the
benefits of each tool, intern of
additional stimulus…
TWO ECONOMIES,
DIFFERENT REMEDIES
Q&A
Thank You!
L/O/G/O
www.themegallery.com