Unemployment Matters More Than GDP Or Inflation
The 2008 - 2012 global recessions that roam the world caused global economic decline that start in the December 2007. The event was commented by Paul Krugman (Winner of Nobel Memorial Prize in Economics) as seemingly the beginning of "a second Great Depression" (Krugman, 2009)  . Therefore, there is a certain research value on this event.
The effects of this event on unemployment and inflation rate were covered widely by the media as it is the major concern for all society. In this assignment, "Macroeconomics in the News" the theme of "unemployment and inflation in Euro zone" will be a series of information sharing from news articles that was extracted from the internet.
UNEMPLOYMENT AND INFLATION IN EURO ZONE
ARTICLE NO.1 (Unemployment and Inflation Rise in Euro Zone)
According to David Jolly, unemployment rate in the EU rose to 10.1% in January 2012 from 10.0% in December 2011 putting 24.3 million people out of work. The number is higher than in the United States (8.3%) and Japan (4.6%). The highest unemployment rate in EU nation is Spain 23.3% followed by Greece 19.9%, while the lowest is Austria and The Netherlands with an unemployment rate of 4.0% and 5.0% respectively. On the other hand, Germany suffered only 6.8% of jobless rate which is the lowest the nation has been in years. Ken Wattret, chief euro zone economist at BNP Paribas, said the state of jobless in EU is unlikely to be temporary.
The European Central Bank (ECB) also failed to control the EU inflation which the inflation rate increased from 2.6% in January 2012 to 2.7% in February 2012. The increase of energy prices and real estates are the blame for the inflation said Ben May (economist with Capital Economics). To worsen the case, ECB lends about $1.3 trillion making the money supply to grow rapidly and cause inflation.
ARTICLE NO.2 (Unemployment matters more than GDP or inflation)
According to Mehdi Hasan, the unemployment rate in Euro Zone had risen to a record high of 10.7%. This causes the suicidal rate to increase. There were not many suitable decisions were made to overcome the problem due to the restlessly fiddle over the over borrowing limits, fiscal compacts, and changes of treaty by the EU's leaders.#p#分页标题#e#
On the other hand, fiscal stimulus that was carry out by The United States work out but the EU's leader relentless to give this a try to save their economy. Furthermore, when rate of unemployment reduced, deficits can be reducing too. As when people have their jobs, taxes can be paid, there will be output for the country and government will be spending less in social welfare payments.
Unemployment are creating huge social problem in the EU. But the leaders are unable to make wise decision to reduce the dole  and save people out of the jobless state.
ARTICLE NO.3 (Is the UK's slow growth and high unemployment really caused by the Eurozone crisis?)
The British Government claims that the slump economic growth and high unemployment are cause by the economic crisis in the Eurozone. According to Polly Curtis, the Eurozone crisis was not affecting the export of United Kingdom to the Eurozone as statistic show there 17.8% hike.
There are few reasons contribute to the slow growth. One of it is confidence level due to the Eurozone crisis. Another is the mountain of debt that the government owes. On the other hand, economic policies to cut spending and increase taxes have gone too fast and too far.
CAUSE OF UNEMPLOYMENT IN EURO ZONE
Money was spend in the wrong place
According to Article No.2, the governor of Bank of England had pass a creation of £325bn of new money to bail out banks instead of using just around £26bn - £50bn to create more job. Based on an assumption made, a new job created will cost £26,000 which is a median salary for UK worker; and if the money is injected to create jobs, a million people will gain salary every month.
Unsuitable government spending cuts and taxes increment
According to Article No.3, government spending and taxes play a main contributing factor in determining the rate of unemployment. When government spending reduced, firms' income will go down as demand is the market reduced. Furthermore, when taxes rose, cost will increase and workers will be lay off to save cost. In Greece, the EU imposed cuts and it left one in five people to be unemployed.
UNATTENDED ECONOMIC POLICIES
According to Article No.2, due to the global financial crisis, The United States' economy got a great hit too. By imposing a fiscal stimulus policies by the government economists, The US private sector job growth for 23 months continuously, with 3.7 million new jobs created. The American Recovery and Reinvestment Act were imposed by The US president, Barack Obama and unemployment benefit claims are at a record's low. If the EU government are able to impose such policy, unemployment will be overcome.
EFFECTS OF UNEMPLOYMENT IN EURO ZONE#p#分页标题#e#
According to Article No.2, the suicidal rate in Greece had climbed 40%. Unemployment actually represents human dignity and self-worthy. An unemployed person has to face many problem such as financial hardship, emotional stress, depression, lethargy loss of morale and status, shame, sickness and premature death (Psychological Effects of Unemployment and Underemployment, 2012)  . These will leads to worse scenario such as rising crime and social disorder where protest will inevitable took place for example in the Spain where tens of thousands of protestant go on street to protest against austerity and grim economy.
WORSEN COUNTRY'S ECONOMY
According to Article No.2, as unemployment rate increase, budget deficits will increase. As more people are jobless, government's income will be reduce for example income taxes due to many jobless people has no income; others indirect taxes will take a hit too as the power of consuming reduce due to the people do not have income. Government transfer payment such as social welfare will increase too as jobless people are qualified to obtain welfare payments.
PERSONAL VIEW ON UNEMPLOYMENT IN EURO ZONE
The 3 reasons that causes unemployment stated above were shown that the main effects are rooted from the leaders and the policies.
Based on 2.2.1, many policies makers put those powerful and influence parties as their top priority, neglecting the minor powers which are the commoners that built up a large number. Although bankers play an important role in an economy, the injection to bail out should be distributed evenly as the people make up the country. When the people gain income from their job, power to purchase will increase and push the productivity higher as demand increase.
Furthermore, the plan to get people back to work can help the country to cut borrowings. When people are in work, income taxes can be collect and transfer payment such as unemployment welfare benefits can be cut down. The country's income will increase to release from the debt, repay the debt interest and stop borrowing money from foreign source.
On the other hand, unemployment is not only about economy. It involves real human being which cannot the measured accurately. Long term unemployment will bring down a person's morale and the enthusiasm in fighting for a brighter future. This can bring down a government in no time as when the unsatisfactory of the people are bring to a limit will cause riot and crumble the nation's sovereignty.
CAUSE OF INFLASION IN EURO ZONE
INCREASE OF ENERGY PRICE AND HOUSING BUBBLE
According to Article No.1, one of the major causes is due to price hike in global energy price and real estate price. As the cost of basic necessities increase, other product and services experience price hike too. This cause the real income to be lower and the power of consuming lowers too.#p#分页标题#e#
UN-COMPETITIVENESS OF DECISIONS
According to Article No.2, the leaders in manipulating the country's economy also contribute the rise of inflation. This may cause the country's currency to drop and purchasing power goes down. Over printing of the money will create more money in the market leaving a side effect where there are a lot of money while lack of product and services.
LACK OF GLOBAL CONFIDENCE
According to Article No.3, when a country's economy had gone into a recession, foreign investor and potential investor will not inject their capital into the country as they fear to face losses. When lack of investment, productivity will go down and the country' will be lack of product and services.
PERSONAL VIEW ON INFLATION IN EURO ZONE
In this capitalize economy, the controlling power lies on the hand of the rich, where the rich got richer and the poor live an unworthy life although efforts were inputted.
To obtain more wealth, real estate has been the arena to gulp profits and seizing control over the commoners. Due to the land for development are getting lesser and a place to call home is a necessity, real estate properties were bought and resold at a astronautically price to gain fast profit. When people spend most of their income for a place to sleep and another half of the income for transportation, the rate of consumption in other product and services will be reduce. When the demand for products and services reduced, firms will face losses and may declare bankruptcy which put the economy in a state where money are more than what it can buy in the market.
On the other hand, creating money out of thin air will cause the money supply in the market to go out of control. This situation had been face by Malaysians during the Japanese insurgency back in the World War II where the currency that issued was not taken count of the current economy situation.
In irony, the basic of economics thought us to cut borrowings is by having people back to work and pay taxes. But the government seems having a hard time to understand this theory. The US successfully in having a cut in unemployment and back on track in no time by imposing a suitable fiscal policy while the European are having a protest on the stand of their leaders.
A wise action taken by former Malaysia Prime Minister, Dr. Mahathir in facing the 1997 Asian Financial Crisis. Where he refuses to accept loan from the IMF and stabilised the currency to save the economy. When a country is in debt, most of the nation's income will be giving out to clear it although the crisis was long over; while stabilising the nation's currency can help in foreign business transaction and stimulate the growth of the economy. Although many economist claimed that the decision will put the country in deep water and proposed to accept the help from IMF, against all odds Dr. Mahathir stands firm and injected funds to help people to get back to work (Lu)  . This action shows that a leader's decision and management is the crucial key to prevent inflation in getting worse.#p#分页标题#e#
Unemployment and inflation are tightly link as shown above. Both are the main concern for the commoners that stand a huge role in a nation. Nations' leaders and economists should put this as their main priority in facing economic crisis.
Back to basic, one's nation economy is based on its basis. This economic crisis shown great powers will not only stays in a person's hand; in this case, over confidence and over expectation towards those great nations in the EU reveals the vulnerability and the empty shells of those arrogant great powers.
Lastly, we must always remember that the same knife cut bread and finger. Over manipulating of austerity policies may bring much profit, but in the same time it will tumble the balance of the market. Hence every decision must be planned in able to counter measure crisis that cause huge wound.
Unemployment and Inflation Rise in Euro Zone
By DAVID JOLLY
PARIS - Unemployment in the euro zone has risen to its highest level since the introduction of the common currency even as inflation climbed, economic reports showed Thursday, underscoring the challenge facing European finance officials as they met in Brussels.
The jobless rate in the 17 euro nations rose in January to 10.7 percent from 10.6 percent in December reaching the highest level since the introduction of the euro in 1999,Eurostat, the statistical agency of the European Union, reported from Luxembourg. Flagging economies like Italy and Greece were responsible for much of the increase.
For all 27 European Union countries, the jobless rate ticked up to 10.1 percent in January from 10.0 percent in December, Eurostat said, with a total of 24.3 million men and women out of work.
Eurostat also reported that euro zone inflation edged up in February to 2.7 percent, from 2.6 percent in January. The European Central Bank tries to hold increases in the general level of prices to just under 2 percent; it has not met that target for 15 consecutive months.
The data were released as European finance officials were meeting in Brussels to discuss measures aimed at putting the region's economy back on firm footing.
Eurostat did not provide a breakdown of the inflation data in the preliminary report, but Ben May, an economist with Capital Economics, attributed the increase to rising energy prices. Mr. May noted in a report that euro zone inflation "has recently slowed less sharply than that in the U.K. and U.S., perhaps suggesting that the economic slowdown is not having quite the downward influence that we anticipated."
The E.C.B. has lent banks about trillion , or $1.3 trillion in three-year loans at a 1 percent interest rate over the last few months. That, along with money-printing by other major central banks, has renewed fears in some quarters that the money supply may be growing too rapidly, with a potential for higher inflation.#p#分页标题#e#
But the global monetary authorities have been largely in agreement that deflationary pressure from declining real estate prices and deleveraging by households and financial institutions is the greater danger.
The unemployment rate in Europe remains higher than that in the United States, where the rate was at 8.3 percent in January, and in Japan, where it was 4.6 percent in December.
European countries nonetheless diverge widely: Spain again topped the list with a 23.3 percent jobless rate, followed by Greece, at 19.9 percent in November. That compares with just 4.0 percent unemployment in Austria and 5.0 percent in the Netherlands.
And in Germany, where the seasonally adjusted jobless rate stood at 6.8 percent in February, the job market is the strongest it has been in years.
"The labor market data is interesting mainly for the divergence across regions," Ken Wattret, chief euro zone economist at BNP Paribas, said bv telephone from London. "It looks like unemployment is improving in the United States while Europe is getting worse."
"It's unlikely to be temporary," Mr. Wattret said.
He said there were grounds for optimism in a report on European manufacturing released Thursday. An index of euro zone purchasing managers compiled by Markit Economics, a financial data firm, rose to 49.0, a six-month, from 48.8 in January.
Mr. Wattret said that while a number below 50 suggests the sector was continuing to contract in February, "if you look at the underlying momentum, I think it will rise further."
"I think we're in one of those phases where manufacturing is improving globally," Mr. Wattret said, noting some signs of improvement in the United States. "But Europe typically lags."
"Don't get carried away," he added, noting that for 2012 the euro zone would show, "at best, a negligible growth rate, but compared with where we were in October-November" - amid fears of a euro collapse - "that would be a pretty good outcome."
ARTICLE NO.2 (Hasan, 2012)
Source: Hasan, M. (2012). Unemployment matters more than GDP or inflation. The Guardian.
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Unemployment matters more than GDP or inflation
Jobless figures are the one major economic indicator that measures people. And they demonstrate the toll in misery across Europe
guardian.co.uk,Sunday 4 March 2012 21.00 GMT
Illustration by Andrzej Krauze
There is a spectre haunting Europe - the spectre of mass unemployment. On Thursday it was announced that the eurozone's unemployment rate had risen to a record high of 10.7% in January. That's 16.9 million people out of work across the 17-nation euro area.
Across the 27-member European Union unemployment is also topping 10% for the first time: a jaw-dropping 24.3 million jobless. The sheer size of the continent's growing army of unemployed workers is difficult to comprehend.
Spain holds the EU record, with unemployment at 23.3%, or 5.3 million people - and rising. "This is the terrible cancer of our society," said Rafael Zornoza Boy, the bishop of Cadiz, last week. Yet prime minister Mariano Rajoy's new (and conservative) government's pleas to give Madrid some leeway on spending cuts fell on deaf ears atFriday's EU summit of fiscal self-flagellists in Brussels. Then there is poor Greece, where EU-imposed cuts have left one in five unemployed and have driven up the suicide rate by 40%. Austerity is, literally, killing Europeans.
Poll after poll shows voters across the EU care much more about the jobs deficit than they do about the budget deficit. Nonetheless, the proverbial Martian, landing in Brussels last week, would have been stunned to witness the complacency and indifference of the continent's political elites to the crisis of spiralling joblessness. EU leaders continue to fiddle - over borrowing limits, fiscal compacts, treaty changes - as their economies crash and burn. The austerity gamble hasn't paid off. Fiscal consolidation has failed to spur growth or boost employment.
Fiscal stimulus, on the other hand, works. The US has had 23 consecutive months of private-sector job growth, with 3.7m new jobs created over the past two years thanks to Barack Obama's American Recovery and Reinvestment Act. US unemployment benefit claims are now at a four-year low.
But Europe's political and financial elites - led by austerity junkies such as "Merkozy", the European Central Bank's Mario Draghi and, of course, our very own David Cameron - pretend not to notice. Here on the jobless side of the Atlantic, the only solution to austerity-induced unemployment, it seems, is more austerity. In Brussels, eurozone finance ministers threatened to impose swingeing fines on those member states, such as Spain and the Netherlands, that may miss their budget deficit targets. If insanity, as Albert Einstein is said to have once remarked, is doing the same thing over and over again and expecting different results, then our leaders have gone mad.
The irony is that mass unemployment itself is the biggest barrier to deficit reduction. Basic economics teaches us that the best way to cut borrowing levels is to get people back to work and paying taxes. Or as John Maynard Keynes put it: "Look after unemployment and the budget will look after itself."#p#分页标题#e#
But Europe's crisis isn't just about economics. Unlike GDP or inflation, unemployment is the only major economic indicator that measures real human beings, rather than growth or prices.
Having a job isn't just about earning a living or paying taxes; it's about human dignity and self-worth. The human and social costs of unemployment are well-documented: financial hardship, emotional stress, depression, lethargy, loss of morale and status, shame, sickness and premature death. Then there is the hopelessness that often leads to rising crime, disorder and social unrest. We can probably expect a new wave of riots and violence in the continent's city centres.
The tragedy is that there is nothing unavoidable about Europe's unemployment crisis. The US is proof that even the most modest of fiscal stimuli can create jobs. But politicians in Germany, where mass unemployment in the 1930s helped the Nazis seize power, refuse to countenance any loosening of the fiscal purse strings inside the EU, arguing that such a move would increase borrowing costs and might panic the bond markets. Yet, as the Nobel-prizewinning economist Christopher Pissarides has written, "a small rise in gilt interest rates is a small price to pay for more jobs".
Here in the UK, where unemployment stands at a 17-year high of 2.7 million (or a staggering 6.3 million if the "underemployed" are included), our own do-nothing chancellor, George Osborne, continues to proclaim that "the British government has run out of money". Really? Perhaps he should have a word with Mervyn King. Over the past three years, the Bank of England governor has, with a mere tap on his keyboard, authorised the creation of £325bn of new money, out of thin air, through a process of "quantitative easing" (QE). This, however, has so far been used only to bail out the bankers. Why not use it to bail out millions of jobless Britons?
If we assume it would cost £26,000 (the median salary for UK workers) to create each new job, the cost to the government of putting a million people back to work would be £26bn - or around half of the latest £50bn tranche of QE released by the Bank last month.
How many more of Europe's jobs will be sacrificed at the altar of deficit reduction? How many more lives ruined, families impoverished and communities destroyed in pursuit of growth-choking, job-killing, self-defeating austerity? It is unacceptable for governments to stand by as dole queues lengthen. Unemployment is not a price worth paying. Nor is it a price that has to be paid.
2012 Guardian News and Media Limited or its affiliated companies. All rights reserved.
ARTICLE NO.3 (Curtis, 2011)
Source: Curtis, P. (2011). Is the UK's slow growth and high unemployment really caused by the eurozone crisis? The Guardian.#p#分页标题#e#
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Is the UK's slow growth and high unemployment really caused by the eurozone crisis?
The government has blamed the UK's economic woes on the eurozone crisis. Is that fair Polly Curtis, with your help, finds out.
Prospects for the unemployed are worse for people in London and the north-east, the TUC says. Photograph: Oli Scarff/Getty Images
The government is blaming slow economic growth and high unemployment in the UK on the eurozone crisis. Asked today about projections that unemployment could rise, and slow economic growth,Mark Hoban, the financial secretary to the Treasury, told the BBC:
The eurozone is having a chilling effect on the UK economy; we saw the CBI forecast last week, and John Cridland said because of what's happening in the eurozone, they've downgraded their forecast. So we do need to see eurozone countries stepping up to the plate.
I'm going to analyse the UK economic data on growth, exports and consumption to establish whether its fair for the government to blame slow growth and high unemployment on fragile state of the euro. Do you have any evidence or opinions on the government's analysis?
Get in touch below the line, email your views to polly.
GDP has increased by 0.5% over the past year. It fell by 0.5% in the last quarter of 2010, rose by 0.5% in the first quarter of this year, 0.1% in the second and 0.5% in the third. The Office for Budget Responsibility's independent prediction of 2.6% growth in 2011 is now entirely unachievable and the IPPR thinktank predicts that even by factoring the most optimistic projections for the last quarter of this year in, it will reach just 1.2%. My colleagues on the Guardian's datablog have published GDP figures going back several decades here. The low point came last December, preceding the current eurozone crisis.
The sluggishness of economic growth in the UK predates the current eurozone crisis
Labour has been highlighting official statistics, published last week, showing that the UK's exports to the eurozone rose by 17.5% if you compare the past three months (ending in September) with the same period last year. This is higher than to non eurozone countries inside the EU and elsewhere. You can see that data here. Labour claims this means that the eurozone can't be blamed for slow growth in exports over the past year. However, there is a notable downturn in exports to the EU of -1.4% in the three months to September compared with the three months before that, indicating that it is possible that the eurozone crisis is beginning to be felt.#p#分页标题#e#
UK exports to eurozone countries have risen sharply in the past year challenging the government's claims that the sluggish economy is the result the eurozone crisis - but that effect is now beginning to creep in.
Low unemployment also pre-dates the eurozone crisis. The figures below show that the employment rate has flatlined over the past two years, since the end of the recession.
Consumer spending in the UK has meanwhile fallen, the following chart shows, indicating domestic problems are also a factor.
There is clear evidence that the UK's economic woes predate the current eurozone crisis, which has escalated significantly in the last month.
Mark Hoban's reference to the Confederation of British Industry (above) is slightly misleading in that he appears to fudge the timing of the CBI's warning. The CBI hasdowngraded its growth expectations for this year in light of the eurozone crisis, but it's clear that the impact of the crisis is recent, rather than responsible for the longer term trend. His comments on the Today programme that the crisis in "recent weeks and months" had cast a long shadow over the UK's economy, was fairer.
I've just been speaking with Sajid Javid, the Tory MP for Bromsgrove and George Osborne's parliamentary private secretary, who explained the Conservative position. He said:
There's no question that it [the eurozone crisis] affects confidence. British businesses and entrepreneurs have had confidence sapped by the eurozone. Even if we're not part of it, the eurozone is more than 50% of the export market, our investments in euros will be impacted. It's a confidence issue.
What Labour is right about is that you can't blame everything on the eurozone crisis. The economy was run so badly for many years that Labour is to blame for many of the problems, the biggest of which is the debt mountain. If Labour is saying our sluggishness in growth is not solely down to the eurozone, then it's down to Labour. If we didn't have the largest deficit of the European countries we would be in a better position to deal with the challenges that lie ahead for all countries.
You can blame [slow growth and high unemployment] on the eurozone and Labour. It's convenient for Labour to just talk as if eurozone is the only problem. The biggest problem is Labour and how it ran our economy for a decade.