A Universal Currency: The Road to Success or Economic Catastrophe?9 July 1977
D.I.N. - One of our very own global finance experts here at D.I.N. has brought up an interesting proposition: a universal currency. This means that, no matter what country you went to, you could use the same cash without the hassle of traveler's checks or exchange rates. But why would this work? The exchange rates in different countries vary based on each country's economy and inflation, etc, so wouldn't a common currency tie countries with failing economies to countries with strong systems, thereby dragging the world down into a depression? Take Greece for example. If the U.S. and Greece were to share a currency (thereby enabling more trade relations) and a natural disaster wiped out all of Greece's olive plantations, there would be some serious economic ramifications and it is likely that inflation would occur because the natural response would be to print more money to stimulate the economy. However, our expert says that it stands to reason that this is not necessarily the case. The proper plan would design the system so that all countries involved must decide on inflation and have unilaterally imposed taxes. So, in our scenario, Greece would just become very poor and the other countries could decide whether or not to increase inflation because, as stated earlier, they are all linked by currency and trade. A universal currency would lower trade, and travel, barriers, thereby leading to mutual benefits as well as a strong network of countries in times of financial crisis. Instead of relying on government bailouts and printing more money, there is a network of countries who must have an interest in keeping the economy afloat and must also, therefore, assist. A universal currency is obviously not going to happen immediately, the world is still recovering from the world wars and the cold war and must allow various economies to balance out before undergoing such a dramatic change. "Great Harvest" Push in Cuba Fails20 May, 1970
D.I.N. - Havana, Cuba- Since 1963, Cuba has been preparing to produce Ten Million Tons of sugar in a single year. Leader Fidel Castro believed that producing that much sugar will give the country the money it needs to diversify its economy. Castro has prepared for this Great Harvest, or the Ten Million Ton Sugar Harvest, by requiring every Cuban to spend time cutting sugar cane, along with improving sugar transportation and factory efficiency. However, this record breaking sugar harvest was not to be, the Cubans only managed to collect 8.5 million tons. Though not an insignificant amount, when paired with the low prices of sugar, almost equal to the amount it cost to produce, the Cubans ended up making very little money, and therefore the Great Harvest was a failure. As a result of wasting manpower and time in order to produce an extraordinary amount of sugar, and then failing, Cuba’s economy has only gotten worse; it is still reliant on sugar, and has very little money to spend as a way to relieve its reliance on the crop. The profits that it did make on other items that it could sell were gone with the complete focus on sugar, and so the Great Harvest left Cuba worse off than before. |
STOCKS STILL DOWN AFTER LAST YEAR'S CRASH
20 January 1988
D.I.N. - On October 19th last year, stock markets around the world experienced major decline.
What economists are now calling "Black Monday" began with Hong Kong markets and spread to Europe and then the United States. By the end of last October, stock markets in Hong Kong had fallen 45.5%, Australia 41.8%, Spain 31%, the United Kingdom 26.45%, the United States 22.68%, and Canada 22.5%. New Zealand also suffered majorly and, like most of the world, still has not recovered. The week before the crash was especially damaging to the Dow Jones as it dropped a record 95.46 points on one day, 58 points the next, and the day before the crash a whopping 108.35 points. To put the severity of Black Monday into perspective, on October 19th the DJIA (Dow Jones Industrial Average) plummeted 508 points.
The cause of this crash is still unknown but there are many theories regarding the drop. One is that investors began paying attention to a rash of Securities and Exchange Commission investigations into Wall Street and investors abroad and at home began to pull their money out of stocks and into bonds. The SEC is a regulatory body established by President Franklin Roosevelt to prevent a second stock market crash like the one that caused the depression. Another theory is that new computer systems overloaded the market, buying and selling so many stocks at such large volumes that the slight downturn was exacerbated. The computers had been programmed to begin selling when the market started to decline. Because there are so many computers on Wall Street now, the sheer number of trades seized up the NYSE computers and left traders completely blind.
Although the crash was most likely caused by a combination of these factors, the simple fact remains: the market is still suffering. Some are purporting that computers be banished from stock exchanges around the world, or at least regulated by some body (such as the SEC). Whatever the fix, it is not certain that it could stop this from happening again. Educating investors and traders would most likely be the best step to preventing another crash and another Great Depression.
D.I.N. - On October 19th last year, stock markets around the world experienced major decline.
What economists are now calling "Black Monday" began with Hong Kong markets and spread to Europe and then the United States. By the end of last October, stock markets in Hong Kong had fallen 45.5%, Australia 41.8%, Spain 31%, the United Kingdom 26.45%, the United States 22.68%, and Canada 22.5%. New Zealand also suffered majorly and, like most of the world, still has not recovered. The week before the crash was especially damaging to the Dow Jones as it dropped a record 95.46 points on one day, 58 points the next, and the day before the crash a whopping 108.35 points. To put the severity of Black Monday into perspective, on October 19th the DJIA (Dow Jones Industrial Average) plummeted 508 points.
The cause of this crash is still unknown but there are many theories regarding the drop. One is that investors began paying attention to a rash of Securities and Exchange Commission investigations into Wall Street and investors abroad and at home began to pull their money out of stocks and into bonds. The SEC is a regulatory body established by President Franklin Roosevelt to prevent a second stock market crash like the one that caused the depression. Another theory is that new computer systems overloaded the market, buying and selling so many stocks at such large volumes that the slight downturn was exacerbated. The computers had been programmed to begin selling when the market started to decline. Because there are so many computers on Wall Street now, the sheer number of trades seized up the NYSE computers and left traders completely blind.
Although the crash was most likely caused by a combination of these factors, the simple fact remains: the market is still suffering. Some are purporting that computers be banished from stock exchanges around the world, or at least regulated by some body (such as the SEC). Whatever the fix, it is not certain that it could stop this from happening again. Educating investors and traders would most likely be the best step to preventing another crash and another Great Depression.