Humor: Economy based cartoons

As every Tuesday, cartoons, because we can laugh too when we talk about economics:












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Economy Lesson: Dollarization, a third way for Greek Crisis?

Tommy, one of our comenters, yesterday was surprised as he saw that Greek bailout arrived in form of €110 bn help and said that probably European Union and IMF will never get back the money. The exclusion or not of Greece from Eurozone made a lively discussion, but some experts suggested a third way: Dollarization.

• What's dollarization?

Is the process of changing the currency of a country to a foreign one, or use a foreign currency in parallel of the domestic currency.

• Benefits

The benefits of a dollarization process are numerous, being the main benefit a greater stability in the value of the new currency in exchange or addition of the domestic currency and also promoting fiscal discipline. This is generally used to stop inflation, reducing buying power of inhabitants of a country.

Other lesser reasons are to promote diplomacy with other countries using the same currency, or because the country is surrounded and/or have a big immigration of near countries, such as Andorra.

• Drawbacks

The country 'dollarized' loses his influence on his own currency, as they adopted other one instead of the domestic one.

• Countries using a foreigner currency

List of countries using U.S. Dollar:

British Virgin Islands, Cambodia (Cambodian Riel and US Dollars), East Timor, Ecuador, El Salvador, Liberia, Marshall Islands, Federated States of Micronesia, Palau, Panama, Turks and Caicos Islands, Zimbabwe

List of countries using U.S. Dollar:

Andorra, Kosovo, Monaco, Montenegro, San Marino, Vatican City.


Would have Greece had to change Euro to U.S. Dollar instead of asked for a 'Rescue package'? Share

News: European debt crisis, who owes money?

Yes, yesterday European Union and IMF helped Greece with a "rescue package" of €110 bn. But are these efforts enough to stop the debt of the Eurozone states? Sadly, no.

European countries are linked to each other with an intensity that can be confusing. New York Times helped us to draw the spiderweb that's the European chain of debt.

Click to enlarge it. Image by: New York Times

I hope now, European chain of debt is clearly than before. And, of course, is easy to understand why Germany wants Greece out of European Union, right?

Related Articles:

Euro Currency: Current state of the Euro at 2010

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News: Greek bailout arrives: Are €110 bn enough or would you like some more?

Finally, Greece short-term problems are solved. As you might know, Greece asked for a rescue package of €45 bn, €30 bn by Eurozone members and €15 of IMF. Even having to pay €300 bn to his investors, immediate repayment of €8'5 bn with May 19 as deadline, the government urge for an injection of money was high enough to go mad.

Luckily for Greek government, Greece signed today a rescue package of €110 bn ($147 bn) from Eurozone partners and IMF.

• Conditions?

- Rescue package should be paid in 3 years

- 16 Eurozone members contribute with €80 bn, IMF lends €30

- Eurozone loans carry an interest rate of 5%

- IMF loans carry an interest rate of 3%

- Several austerity measures and high government spending cuts, that are currently creating trouble at the country.

Not being a condition by itself, but a help, Greek next steps should be save €30 bn between 2010 and 2013. Also, Greek government promised to freeze public-sector wages, raise 'sin' taxes as tobacco and alcohol, increase value added taxes, new taxes on business, raise retirement ages to 67 years (now the retirement age is 65 years) and cut pension payments.

Because these last actions, protestors marched yesterday against government actions and against European-IMF rescue package.

• Impact on currencies

As Greek (and other European countries) economy are having trouble, Euro strength fades away. But also, other currencies are suffering. Australian dollar slipped to $0.92, Canadian dollar to C$1.016, and American dollar was down by 0.04 percent.

On the bright side, yen raised to ¥94,07.

Read more about Greek situation at our Greek debt crisis guide.

Related articles:

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Economy Lesson: The Assault on Saving, by Henry Hazlitt

From time immemorial proverbial wisdom has taught the virtues of saving, and warned against the consequences of prodigality and waste. This proverbial wisdom has reflected the common ethical as well as the merely prudential judgments of mankind. But there have always been squanderers, and there have apparently always been theorists to rationalize their squandering.

The classical economists, refuting the fallacies of their own day, showed that the saving policy that was in the best interests of the individual was also in the best interests of the nation. They showed that the rational saver, in ma king provision for his future, was not hurting, but helping, the whole community. But today the ancient virtue of thrift, as well as its defense by the classical economists, is once more under attack, for allegedly new reasons, while the opposite doctrine of spending is in fashion.

In order to make the fundamental issue as clear as possible, we cannot do better, I think, than to start with the classic example used by Bastiat. Let us imagine two brothers, then, one a spendthrift and the other a prudent man, each of whom has inherited a sum to yield him an income of $50,000 a year. We shall disregard the income tax, and the question whether both brothers really ought to work for a living or give most of their income to charity, because such questions are irrelevant to our present purpose.

Alvin, then, the first brother, is a lavish spender. He spends not only by temperament, but on principle. He is a disciple (to go no further back) of Rodbertus, who declared in the middle of the nineteenth century that capitalists “must expend their income to the last penny in comforts and luxuries,” for if they “determine to save... goods accumulate, and part of the workmen will have no work.” Alvin is always seen at the night clubs; he tips handsomely; he maintains a pretentious establishment, with plenty of servants; he has a couple of chauffeurs, and doesn’t stint himself in the number of cars he owns; he keeps a racing stable; he runs a yacht; he travels; he loads his wife down with diamond bracelets and fur coats; he gives expensive and useless presents to his friends.

To do all this he has to dig into his capital. But what of it? If saving is a sin, dissaving must be a virtue; and in any case he is simply making up for the harm being done by the saving of his pinchpenny brother Benjamin.

It need hardly be said that Alvin is a great favorite with the hat check girls, the waiters, the restaurateurs, the furriers, the jewelers, the luxury establishments of all kinds. They regard him as a public benefactor. Certainly it is obvious to everyone that he is giving employment and spreading his money around.

Compared with him brother Benjamin is much less popular. He is seldom seen at the jewelers, the furriers or the night clubs, and he does not call the head waiters by their first names. Whereas Alvin spends not only the full $50,000 income each year but is digging into capital besides, Benjamin lives much more modestly and spends only about $25,000 Obviously, think the people who see only what hits them in the eye, he is providing less than half as much employment as Alvin, and the other $25,000 is as useless as if it did not exist.

But let us see what Benjamin actually does with this other $25,000 He does not let it pile up in his pocketbook, his bureau drawers, or in his safe. He either deposits it in a bank or he invests it. If he puts it either into a commercial or a savings bank, the bank either lends it to going businesses on short term for working capital, or uses it to buy securities. In other words, Benjamin invests his money either directly or indirectly. But when money is invested it is used to buy or build capital goods—houses or office buildings or factories or ships or trucks or machines. Any one of these projects puts as much money into circulation and gives as much employment as the same amount of money spent directly on consumption.

“Saving,” in short, in the modem world, is only another form of spending. The usual difference is that the money is turned over to someone else to spend on means to increase production. So far as giving employment is concerned, Benjamin’s “saving” and spending combined give as much as Alvin’s spending alone, and put as much money in circulation. The chief difference is that the employment provided by Alvin’s spending can be seen by anyone with one eye; but it is necessary to look a little more carefully, and to think a moment, to recognize that every dollar of Benjamin’s saving gives as much employment as every dollar that Alvin throws around.

A dozen years roll by. Alvin is broke. He is no longer seen in the night clubs and at the fashionable shops; and those whom he formerly patronized, when they speak of him, refer to him as something of a fool. He writes begging letters to Benjamin. And Benjamin, who continues about the same ratio of spending to saving, not only provides more jobs than ever, because his income, through investment, has grown, but through his investment he has helped to provide better-paying and more productive jobs. His capital wealth and income are greater. He has, in brief, added to the nation’s productive capacity; Alvin has not.

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List of countries by unemployment rate

Today, I'm going to list countries by their unemployment rates. Due the form of government or sovereign issues there are countries unlisted (as North Korea or Northern Cyprus), but almost every state is listed.

The information is based on CIA information, but the newest dates are from different (reliable) sources:

Unemployment rate by Country

Country / Region	Unemployment rate (%)	Source / date of information
Nauru	90.00	2004
Zimbabwe	90.00	2009 (June)
Liberia	85.00; 88% among young Liberians	2009 (July)
Turkmenistan	70.00	2008 (November)
Cocos (Keeling) Islands (Australia)	60.00	2000
Mozambique	60.00	2009
Tajikistan	60.00%; 80-90% among youth	2008 (August)
Djibouti	59.00	2007
Zambia	50.00	2000
Senegal	48.00; 30% among adults aged 24 and under	2007
Lesotho	45.00	2002
Gaza Strip	44.00	2009 (April)
Nepal	42.00	2004
Afghanistan	40.00	2008 est.
Kenya	40.00	2009
Swaziland	40.00	2009 (June)
Yemen	35.00	2009 (June)
Republic of Macedonia	33.8	2008
Marshall Islands	30.90	2000
Cameroon	30.00	2001
Equatorial Guinea	30.00	1998
Mali	30.00	2004
American Samoa (United States)	29.80	2005
Honduras	27.80	2007
Canary Islands	26.91	2009 (4th Trimestral)
Mayotte (France)	25.40	2005
Grenada	24.50	2009 (June)
South Africa	23.5	2009 (April)
Dominica	23.00	2000
Micronesia	22.00	2000
Cape Verde	21.00	2000
Gabon	21.00	2006
Spain	20.05	2010 (April)
Bosnia and Herzegovina	20.00	2007
Comoros	20.00	1996
East Timor	20.00	2006
Mauritania	20.00	2004
Saint Lucia	20.00	2003
Latvia	19.7	2009 (September)
Serbia	18.80	2007
Sudan	18.70	2002
Iraq	18.00%; 28% among youth; 83% among women	2009 (February)
Kyrgyzstan	18.00	2004
Saint Vincent and the Grenadines	18.00	2009 (June)
New Caledonia (France)	17.10	2004
Netherlands Antilles (Netherlands)	17.00	2002
Puerto Rico (United States)	16.50	Aug. 2009
West Bank	16.30	2008 (June)
Dominican Republic	15.40	2008
Pakistan	15.2	2009)
Wallis and Futuna (France)	15.20	2003
Saudi Arabia	15.00	2009 (June)
Montenegro	14.70	2007
Saint Helena (United Kingdom)	14.00	1998
Tunisia	14.00	2008
Ireland	13.80	2010 (March)
Lithuania	13.8	2009 (June)
Georgia	13.60	2006 est.
Colombia	13.5	2009 (April)
Estonia	13.3	2009 (June)
Cook Islands (New Zealand)	13.10	2005
Jordan	13.00	2009
Libya	13.00	2005 (May)
Tonga	13.00	2003/2004
Turkey	13.00	2009 (October)
Algeria	12.90	2008 est.
Poland	12.9	2010 (March)
Slovakia	12.88	2010 (March)
Jamaica	12.70	2008
United Arab Emirates	12.7	2008
Albania	12.50	2008 est.
Iran	12.50	2009 (May)
Hungary	11.8	2010 (April)
French Polynesia (France)	11.70	2005
Antigua and Barbuda	11.00	2001
Ghana	11.00	2000
Nigeria	10.54	2009
Saint Pierre and Miquelon (France)	10.30	1999
Morocco	10.2	2009
France	10.0	2009 (December)
Lebanon	10.00	2009 (July)
Turks and Caicos Islands (United Kingdom)	10.00	1997 est.
Russia	9.9	2009 (May)
Czech Republic	9.7	2010 (March)
United States	9.70	2010 (March)
Croatia	9.60	2009 (September)
India	9.50	2009
Suriname	9.50	2004
Burma	9.40	2008
European Union	9.3	2009 (October)
Greenland (Denmark)	9.30	2005
Greece	9.2	2009 (June)
Portugal	9.2	2009 (September)
Chile	9.10	2009 (Nov)
Guyana	9.0	2009 (July)
Syria	9.00	2008
Argentina	8.8	2009 (April-June
Peru	8.8	2009 (April)
Egypt	8.70	2008
Belize	8.50	2007
Finland	8.5	2009 (November)
Romania	8.36	2010 (March)
Canada	8.3	2010 (January)
Ecuador	8.3	2009 (July)
Guam (United States)	8.30	2007
Indonesia	8.25	2009 (July)
Anguilla (United Kingdom)	8.00	2002
Barbados	8.0	2009 (July)
Central African Republic	8.00	2001
Mauritius	8.00	2008
Sweden	8.0	2009 (November)
United Kingdom	8.0	2010 (February)
Uzbekistan	8.00	2008 (December)
Belgium	7.9	2009 (September)
Iceland	7.7	2009 (August)
Bulgaria	7.60	2009 (September)
Fiji	7.60	1999
Israel	7.6	2009 (March)
The Bahamas	7.60	2006
Bolivia	7.50	2008 (December)
Botswana	7.50	2007
Germany	7.5	2010 (January)
Philippines	7.5	2009 (April)
Italy	7.4	2009 (July)
Kazakhstan	7.4	2009 (May)
Uruguay	7.38	2009 (January)
New Zealand	7.3	2009 (December)
Malta	7.20	2009 (September)
Armenia	7.10	2009
Aruba (Netherlands)	6.90	2005
Brazil	6.80	2009 (December)
Virgin Islands (United States)	6.80	2008 (March)
Luxembourg	6.6	2009 (September)
Venezuela	6.60	2009 (December)
El Salvador	6.40	2008
Panama	6.30	2008
Montserrat (United Kingdom)	6.00	1998
Cyprus	5.9	2009 (September)
Slovenia	5.9	2009 (September)
Taiwan (Republic of China)	5.82	2009 (May)
Costa Rica	5.60	2008
Australia	5.50	2009 (December)
Cayman Islands (United Kingdom)	5.50	2010
Japan	5.5	2009 (August)
Paraguay	05.40	2008
Austria	5.3	2010 (January)
Faroe Islands (Denmark)	5.30	2010
Hong Kong	5.3	2009 (June)
Mexico	5.2	2009 (July)
Sri Lanka	5.20; 18.3% among youth	2009 (June)
Namibia	5.00	2008 (December)
Oman	5.00	2008 (May)
South Korea	5.00	2010 (January)
Saint Kitts and Nevis	4.50	1997
China, People's Republic of	4.3	Jan 2009 est.
Denmark	4.20	2010 (March)
Palau	4.20	2005
Vietnam	4.20	2007
Brunei	4.00	2006
Niue (New Zealand)	4.00	2008
Nicaragua	3.90	2008
Northern Mariana Islands (United States)	3.90	2001
Trinidad and Tobago	3.90	2008
British Virgin Islands (United Kingdom)	3.60	1997
Netherlands	3.6	2009 (September)
Switzerland	3.6	2009 (June)
Bahrain	3.5	2009 (March)
Cambodia	3.5	2007
Macau (China)	3.5	2009 (May)
Malaysia	3.5	2009 (July)
Norway	3.3	2009 (december)
Singapore	3.3	2009 (June)
Guatemala	3.20	2005
Gibraltar (United Kingdom)	3.00	2005
Mongolia	2.80	2007
San Marino	2.80	2004
Bangladesh	2.50	2008
Bhutan	2.50	2004
Isle of Man	2.50	2009 (July)
Laos	2.40	2005
Jersey (United Kingdom)	2.20	2006
Kuwait	2.20	2004
Ukraine	2.2	2009 (July)
Bermuda	2.10	2004
Moldova	2.10	2007
Thailand	2.1	2009 (April)
Kiribati	2.00	1992
Papua New Guinea	01.90	2004
Cuba	1.80	2008
Vanuatu	1.70	1999
Liechtenstein	1.50	2007 (December)
Belarus	0.9	2009 (March)
Guernsey (United Kingdom)	0.90	2006 March
Azerbaijan	0.8	2008
Qatar	0.60	2008
Andorra	0.00	2009 (June)
Monaco	0.00	2005

Click to enlarge it

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