David's World

By SHAWN POGATCHNIK, Associated Press – 1 hr 18 mins ago

DUBLIN – Debt-crippled Ireland formally applied Sunday for a massive EU-IMF loan to stem the flight of capital from its banks, joining Greece in a step unthinkable only a few years ago when Ireland was a booming Celtic Tiger and the economic envy of Europe.

European Union finance ministers quickly agreed in principle to the bailout, saying it "is warranted to safeguard financial stability in the EU and euro area." But all sides said further weeks of negotiations loomed to define the fund’s terms, conditions and precise size.

Ireland’s crisis, set off by its foundering banks, drove up borrowing costs not only for Ireland but for other weak links in the eurozone such as Spain and Portugal. Ireland’s agreement takes some pressure off those countries, but they still may end up needing bailouts of their own.

The European Central Bank — which oversees monetary policy for the 16-nation eurozone and first raised alarm bells about a renewed cash crisis in Dublin banks — said the aid would "contribute to ensuring the stability of the Irish banking system." Sweden and Britain, not members of the euro currency, said they also were willing to provide bilateral loans to Ireland.

Irish Finance Minister Brian Lenihan spent much of Sunday talking to other eurozone financial chiefs about conditions they would place on the emergency aid package taking shape.

Lenihan said Ireland needed less than euro100 billion ($140 billion) to use as a credit line for its state-backed banks, which are losing deposits and struggling to borrow funds on open markets. He said the loan facility could last anywhere from three to nine years.

International Monetary Fund director Dominique Strauss-Kahn said his organization "stands ready to join this effort, including through a multiyear loan." He said IMF experts already in Dublin would "hold swift discussions on an economic program with the Irish authorities, the European Commission, and the European Central Bank."

Ireland has been brought to the brink of bankruptcy by its fateful 2008 decision to insure its banks against all losses — a bill that is swelling beyond euro50 billion ($69 billion) and driving Ireland’s deficit into uncharted territory.

The country had long resisted a bailout, but Lenihan said it was now painfully clear that Ireland needed "financial firepower" immediately to complement its own cutthroat plans for recovery.

This country of 4.5 million now faces at least four more years of deep budget cuts and tax hikes totaling at least euro15 billion ($20.5 billion) just to get its deficit — bloated this year to a European record of 32 percent of GDP — back to the eurozone’s limit of 3 percent by 2014.

The European Central Bank and other eurozone members had been pressing behind the scenes for Ireland — long struggling to come to grips with the true scale of its banking losses — to accept a bailout that would reassure investors the country won’t, and can’t, go bankrupt.

The economically struggling governments of Spain and Portugal, in particular, had criticized Ireland’s recent determination to keep going it alone. Ireland’s inability to stop its financial bleeding has fueled investor fears of wider eurozone defaults and driven up those countries’ borrowing costs on bond markets.

But even with Ireland seeking aid, financial analysts say Spain and Portugal remain on course for potential bailouts of their own. Spain is fighting Europe’s highest unemployment rate and Portugal is seen as doing too little to restructure an unusually uncompetitive economy.

Ireland’s move comes just six months after the EU and IMF organized a euro110 billion ($150 billion) bailout of Greece and declared a euro750 billion ($1.05 trillion) safety net for any other eurozone members facing the risk of imminent loan defaults. It demonstrates that creating the three-layered fund didn’t, by itself, reassure global investors that it would be safe, or smart, to keep lending to the eurozone’s weakest members.

Economists question whether the economies of Ireland, Portugal, Spain and Greece will grow sufficiently to build their tax bases and permit them to keep financing, never mind paying down, their debts. The euro, however, has shown some resiliency in the tumult so far, remaining relatively strong against the U.S. dollar.

Lenihan said Ireland most needed a "contingency" fund from which Irish banks could borrow. He said the funds would "not necessarily" be used and emphasized that the government’s own operations are fully funded through mid-2011.

The rapid pace of Sunday’s humiliating Irish U-turn surprised many analysts, given how Lenihan and Ireland’s deeply unpopular prime minister, Brian Cowen, appeared in recent days to be in denial that Ireland needed a cent of foreign aid.

More than 30 banking experts from the IMF, ECB and European Commission began arriving in Dublin only on Thursday to begin poring over the books and projections of the government, treasury and banks, a mammoth task expected to take weeks.

Ireland’s precipitous fall has been tied to the fate of its overgrown banks, which received access to mountains of cheap money once Ireland joined the eurozone in 1999. The Dublin banks bet the bulk of their borrowed funds on rampant property markets in Ireland, Britain and the United States, a strategy that paid rich dividends until 2008, when investors began to see the Irish banking system as a house of cards.

When the most reckless speculator, Anglo Irish Bank, faced bankruptcy in September 2008, it and other Irish banks persuaded Lenihan and aides that they faced only short-term cash problems, not a terminal collapse of their loan books.

Lenihan announced that Ireland would insure all deposits — and, much more critically, the banks’ massive borrowing from overseas investors — against any default, an unprecedented move.

At the time, Lenihan billed his fateful decision as "the cheapest bailout in history" and claimed it wouldn’t cost the Irish taxpayer a penny. The presumption was that confidence would return and Ireland’s lending would resume its runaway trend.

But in the two years since, Lenihan has nationalized Anglo and two other small banks and taken major stakes in the country’s two dominant banks, Allied Irish and Bank of Ireland. The flight of foreign capital began accelerating again in the summer amid renewed doubts that the government understood the full scale of its losses.

Lenihan and the Irish Central Bank responded in September by estimating the final bill at euro45 billion to euro50 billion ($62 billion to $69 billion). Investors, initially relieved to have a figure, quietly resumed their withdrawal from Irish banks and bond markets in mid-October, driving up the borrowing costs for Portugal and Spain, which face their own deficit and debt crises.

Over the past two months Cowen and his 15-member Cabinet have been drafting a four-year austerity plan for Ireland that is expected to be unveiled later this week.

It seeks to close the gap between Ireland’s spending, currently running at euro50 billion, and depressed tax revenues of just euro31 billion. It proposes the toughest steps in the 2011 budget, when euro4.5 billion will be cut from spending and euro1.5 billion in new taxes imposed — steps that threaten to drive Ireland’s moribund economy into recession and civil unrest.

Both Cowen and Lenihan have stressed that Ireland’s 12.5 percent rate of tax on business profits — its most powerful lure for attracting and keeping 600 U.S. companies with bases in Ireland — will not be touched no matter what happens.

France, Germany and other eurozone members have repeatedly criticized the rate as unfair and say it should be raised now given the depth of Ireland’s red ink.

However, IMF and EU leaders negotiating the bailout terms with Ireland have said they don’t intend to dictate any specific tax reforms to Ireland, only to ensure that targets for cutting spending and raising taxes overall are met. Ireland’s right to set its own tax rates also has been enshrined in a series of EU treaties, making any strong-arm tactics now unlikely.

Ireland’s 2011 budget, however, could yet be torpedoed by its own divided lawmakers.

The budget faces a difficult passage through parliament when it is unveiled Dec. 7. Cowen has an undependable three-vote majority that is expected to disappear by the spring as byelections, or special elections, are held to fill seats.

Cowen and his long-dominant Fianna Fail party are languishing at record lows in opinion polls. The latest survey published in the Sunday Business Post newspaper said Fianna Fail has just 17 percent support, whereas the two main opposition parties, Fine Gael and Labour, command 33 percent and 27 percent respectively. Those two parties are widely expected to form a center-left government after Cowen loses his majority, which would force an early election.

Reflecting the national mood, the Sunday Independent newspaper displayed the photos of Ireland’s 15 Cabinet ministers on its front page, expressed hope that the IMF would order the Irish political class to take huge cuts in positions, pay and benefits — and called for Fianna Fail’s destruction at the next election.

"Slaughter them after Christmas," the Sunday Independent’s lead editorial urged.

By SHAWN POGATCHNIK, Associated Press – 20 mins ago

DUBLIN – The governor of the Central Bank of Ireland said Thursday he expects his debt-crippled country to accept a loan worth tens of billions of euros (dollars) soon from the European Union and International Monetary Fund.

Patrick Honohan made his frank assessment as forensic accountants and financial specialists from the EU and IMF landed in Dublin to identify the size of the hole in state and bank finances and the measures needed to reassure markets that Ireland won’t default on debts.

Those doubts have risen since September when Finance Minister BrianLenihan raised the government’s estimated cost of bailing out five Irish banks to at least euro45 billion ($62 billion). That gargantuan bill has driven Ireland’s 2010 deficit to 32 percent of GDP, a post-war European record. Ireland is planning a four-year austerity plan, including a 2011 budget with euro4.5 billion in cuts and euro1.5 billion in new taxes, in response.

Honohan, speaking in Frankfurt where was attending a meeting of theEuropean Central Bank board, said he expected the EU-IMF loan — if approved by the Irish government — to provide a financial "buffer" for Irish banks that would not be used. He compared it to similar U.S. moves in 2008 to inject banks with cash that reassured investors and was eventually repaid.

"It’s true that our banks need additional confidence. … There have been substantial outflows of capital from Irish banks since April," Honohan said in an interview with Irish state broadcasters RTE.

As foreign investors have withdrawn or failed to renew deposits in Dublin banks, the ECB and Irish Central Bank have filled the gap with loans estimated to total euro130 billion. The ECB’s lending to Ireland has grown in recent months to represent nearly a quarter of the Frankfurt bank’s total lending in the 16-nation eurozone. An EU-IMF cash injection would be designed to reverse the foreign outflow of capital.

Honohan said it was "desirable that the (Irish) banks should have more capital available to show to the markets: Look, this is beyond question."

The governor, who is independent of the government, said he expected Ireland and the EU-IMF delegation to agree terms and conditions on aloan worth "tens of billions" that "will be made available and drawn down as necessary."

"The capital is probably not required at all," he said, adding it would most likely be "shown but not used." It "goes in as buffer and comes out again when it’s not needed."

The talks in Dublin could last days and will be held with Ireland’s Department of Finance, Central Bank,National Treasury Management Agency and other agencies.

Globalization in Italy has had a huge impact on the countries economy. Over the past 9 years Italy’s GPD growth has gone; –5.0% (2009), –1.0% (2008), 1.5% (2007), 1.8% (2006), 0.5% (2005), 1.5% (2004), 0.0% (2003), 0.5% (2002), 1.8% (2001). The most recent drop in the GPD growth has been due to the Global Crisis, and as one can see Italy is struggling to recover from the crisis that hit in 2008. During that crisis Italy had to deal with a budget deficit of 2.6% and high public debt of 105.6%. Italy is part of European Monetary Union, in this union they have to keep a budget deficit beneath 3% ceiling. They are projected to grow high above that 3% ceiling in 2010. Even before the global crisis Italy was only able to have an average economic growth of 0.8% between 2001-2008. Then the it dropped 1.0% in ‘08, which is said to be due to the crisis’s effect on imports and exports. But then as the crisis really hit Europe in ‘09 that deficit dropped 5.0%.  Italy is a big import of food, along with products used to manufacture goods because Italy is a huge manufacturing exporter. In 2009, their exports netted $402.9 Billion f.o.b. their leading partners where; Germany 12.8%, France 11.8%, Spain 6.5%, U.S. 6.3%, U.K. 5.3%. Their imports netted $408.6 billion f.o.b. with leading partners being Germany 16.0%, France 8.6%, China 6.3%, Netherlands 5.4%, Russia 4.3%, Spain 4.3%, Belgium 3.8%. This would explain why Italy has been hit harder in 2009 rather than 2008 when the crisis began, because Italy’s main trade is within Europe, which means ones the crisis hit Europe Italy was hit hard and they complete imports and exports dropped. 60.1% of Italy’s total trades come from within Europe. This explains why Italy’s most recent events with globalization make it seem that its impact has been a negative one for the Country. Which is why in Italy their has been double digit declines in support for trade since 2002, and international trade is a HUGE part of globalization.

As a whole Italy’s national unemployment rate is at its lowest level since 1992. Yet, unemployment is low in the north and high in the south parts of Italy. Women and younger adults have a higher rate of unemployment than to men. Most of the unemployment problems in the south are due to inadequate infrastructure, corruption, and organized crime. Their are Unions, which represents 40% of the work force as a whole. There are 4 major ones which include; General Italian Confederation of Labor(CGIL), Italian Confederation of Workers’ Unions(CISL), Italian Union of Labor(UIL), and General Union of Labor(UGL). Together those 4 unions represent 35% of the workforce. So although the crisis of ‘08 did not help the unemployment rate of Italy, it is to be noted that Globalization has not had as much of a negative effect on unemployment as it has on the economy as a whole.

So most people would argue that Globalization has had a negative effect on Italy’s economy the past couple years, and they would not be wrong. Although, if you continue to look back, Italy’s GPD was not dropping and continued to rise at a level of 0.8% per year. Now although that is not great, it also is not bad. Globalization has not been a complete disaster. Since WWII Italy has grown from an economy based on agriculture to an industrial country. they are the world’s sixth-largest market economy. That in large part is due to Globalization, because trades opened up and foreign and domestic industries began to grow, and so did their manufacturing production. Globalization is about specializing in what one country does best and exporting those resources and importing the resources that one’s country is not as good at making. Italy’s terrain is not meant for farming, and also do not have a substantial amounts of iron, coal, and/or oil. So the country began to import those resources and create goods out of those, and sent them to countries that have not specialized in manufacture items. Italy took the idea of specializing in what they do best, and ran with it, to become the sixth-largest industrial economy. So to say that Globalization has only had a negative impact on this country is not accurate statement. Globalization has set this country up where they need to be in order to keep up with other growing countries. While there is now a set back, the earlier years has prevent this event from being much worse off than it is now.

As for if i believe the trend will continue? No, i do no think it will. Because Italy has made a name for them selves in this world, and that will help them get out of this whole that they are currently in. The countries GPD has been going up and down for the past 10 years and will continue that trend as the country continues to grow. As for the countries unemployment, that will not get better until the government becomes more stable and they can get a grip of the crisis going on in the south portions of the country. The countries unemployment is not due to Globalization which is why i do not believe it will get better, i believe i will decline some more or at least stable before it begins to get better.  As a whole the country will continue to grow, and will continue to make a name for its self.

Geography:

• Location:
  • Southern Europe, a peninsula extending into the central Mediterranean Sea, northeast of Tunisia
• Geographic coordinates:
  • 42 50 N, 12 50 E
• Map reference:
  • Europe
• Area:
  • Total: 301,340 sq km
  • Land: 294,140 sp km
  • Water: 7,200 sq km
• Land boundaries:
  • Total: 1,899.2 km
  • Border countries: Austria 430 km, France 488 km, Slovenia 199 km, Switzerland 740 km
• Coastline:
  • 7,600 km
• Maritime claims:
  • Territorial sea: 12 nm
  • Continental shelf: 200 m depth or to the depth of exploitation
• Climate:
  • Current Weather: predominantly Mediterranean, Alpine in far north, hot dry in south
• Terrain:
  • Mostly rugged and mountainous; some plains, coastal lowlands

Government:

• Government type:
  • Republic
• Capital:
  • name: Rome
  • Geographic coordinates: 41 54 N. 12 29 E
• Administrative divisions:
  • 15 regions:
    • Abruzzo
    • Basilicata
    • Calabria
    • Emilia-Romagna
    • Lazio
    • Liguria
    • Lombardia
    • Marche
    • Molise
    • Piemonte
    • Puglia
    • Toscana
    • Umbria
    • Venteo
• Independence:
  • 17 March 1861(Italy was not finally unified untl 1870)
• National holiday:
  • Republic Day, 2 June
• Constitution:
  • Passed 11 December 1947
• Legal system:
  • Based on civil law system; appeals treated as new trials; judicial review under certain conditions in Constitutional Court; has not accepted compulsory ICJ jurisdiction
• Suffrage:
  • 18 years of age; universal(except in senatorial elections, where minimum age is 25)
• Flag description:
  • three equal vertical bands of green (hoist side), white, and red; design inspired by the French flag brought to Italy by Napoleon in 1797; colors are those of Milan (red and white) combined with the green uniform color of the Milanese civic guard

People:

• Population:
  • 58,126,212
• Age Structure:
  • 0-14 years: 13.5%
  • 15-64 years; 66.3%
  • 65 years and over: 20.2%
• Median age:
  • Total: 43.7 years
  • Male: 42.3 years
  • Female: 45.3 years
• Population growth rate:
  • -0.047%
• Birth rate:
  • 8.18 births/1,000 population
• Death rate:
  • 10.72 deaths/1,000 population
• Sex ratio:
  • At birth: 1.066 male/female
  • Under 15 years: 1.06 male/female
  • 15-64 years: 1.03 male/female
  • 65 years and over: 0.72 male/female
  • Total population: 0.96 male/female
• Languages:
  • Italian(official)
  • German(parts of Trentino-Alto Adige region)
  • French(small French-speaking minority in Valle d’Aosta region)
  • Slovene(in Trieste-Gorizia region
• Literacy:
  • Definition: age 15 and over can read and write
  • Total population: 98.4%
  • Male: 98.8%
  • Female: 98%
• Ethnic groups:
  • Italian(includes small clusters of German-. French-. and Slovene-Italians in the north and Albanian-Italians and Greek-Italians in the south)
• Religions:
  • Roman Catholic: 90% (about 1/3 practicing)
  • Other 10%: Protestant and Jewish communities and a growing Muslim immigrant community

When i read chapters 5 and 10, in the book In Defense of Globalization by Jadish Bhagwati, i realized that some of the things that the critics have been saying are being shot down, well at least in his eyes. In chapter 5 he talks about how free trade is good, and how many benefits can come from. He feels that with free trade poorer countries will begin to benefit by other countries be able to increase their economy by trading with them. He says that “

“I have always argued for freer trade, not as an objective but rather
(in the context of poor nations such as India, from where I come) as an often powerful
weapon in the arsenal of policies that we can deploy to fight poverty”. (78)

He then goes on to say that will free trade being around, wages will begin to raise, due to the need for jobs. These ideas are more defended/argued in chapter 11, where he talks about how countries need to “race to the top” instead of what the critics are saying “race to the bottom”. He argues that opening free trade will not kill and lower the standard of living in richer countries.  He argues that in fact multination corporations do not go out looking for countries with a bad work environment, and tend to stay away from them(as much as possible). Which then in reality this will help countries improve their working environment so that multination companies will come into their country and boast there standard of living, This is why he argues that it needs to be a “race to the top”.

All in all he is in major favor of free trade and believes that there are more benefits than consequences in free trade.

I believe this image fits globalization because as you can see cities are being formed anywhere now. This image shows a city that was formed right next to mountain cliffs, which shows you how much the world is changing, and how rapidly things are growing. Globalization is changing the way countries not only look but also how they act. It is taking countries that are used to having plenty of country space, to having less and less space without seeing a city. This is why i believe this image captures globalization.

1. Will globalization have a greater impact on the world to come, than military strength will?

The reason I think this is an important question about globalization is because they way the world is shaping up these days it seems like the country that has biggest and strongest military power is the world that rules everything. Yet, about 10 years ago, globalization through societies and economies looked like the way to go. All these people in the beginning of the new century was saying how globalization will have a major affect on the world to come, but now it is seeming like that is not so true anymore.

2. Is globalization good or bad for a country?

I think this is a good question because when it comes to sports globalizing is a good thing because it becomes more well known; therefore, more popular. But is that really the case for a country, because it could ruin one countries economy while boosting another. Yet at the same time it can help advance technology and enhance political relations. This contradiction seems like it makes it a difficult question to answer, yet an important one to answer when trying to learn all about globalization.
3. What is the true meaning of globalization?

Globalization can be such a broad topic that not everyone knows exactly what it means or even how it works. Which is why I believe this will be a perfect question to get answered in this class. Because they only way one can truly understand and comprehend a topic is to not only know but understand how it works.

Globalization to me means the connection between countries through economics, their culture, along with their society. Globalization to me is how world stays connected to each other, because I feel with out globalization the world would be a completely different place. Globalization has helped countries learn new ideas, and has helped fix societies. So with out it i feel that many things would not have progressed as quickly or the same way. Without globalization the world would a darker place to live in.