‘Corruption on wheels’ in China

During the Olympic Games in Beijing, residents were impressed by the blue sky over the city. This was so because the air is very polluted in Beijing, but for the Olympic Games they did a lot effort against pollution. For example they sharply reduced the number of vehicles on the roads, about 70% of government-owned cars.

This was such a success that the Beijing Municipality decided to continue the car restrictions. But now it seems that Beijing's authorities don’t have any problems with the car restriction and operate as good as before.
This raised a big question: if they could function so well without so many cars, why did it spend so much tax money to buy and maintain so many vehicles in the first place?

Now, there is a big focus on the issue in China. If we compare the amount of money that China spends to education, 610.4 billion Yuan, and the amount of money for government-owned cars, 600 billion Yuan, I think it’s logical that the Chinese people ask questions...
A lot of the government-owned cars are not only used for what they serve, but a lot of officials also make private trips with their cars to famous holiday spots, pick their children up at school,...

Now the question is raising how many cars the Chinese government really needs. I think that’s quite logical because the people pay taxes that are used to buy cars for the Chinese government, who doesn’t need all those cars. Their tax money should better be invested in education or social security for example, instead of wasting it to unnecessary cars.
This also has an other positive aspect. China is finally doing something about their pollution. They are known as one of the most polluting countries in the world, so I think it’s a very positive fact that the people in Beijing now are asking questions if it’s really necessary to use so many cars. This only can lead to a more ‘green’ way of living and producing, which is really necessary.

source : http://www.atimes.com/atimes/China/JK25Ad01.html

India moves to cut prices on fuel

The Oil Minister of India has announced that the prices of fuel will reduce. The fuel retailers will be allowed to reduce their prices with five rupees or 10 US cent for a litre petrol and two cents for a litre diesel. With this drop, the government hopes to stimulate the economy in this global credit crisis.
For India, it's his first drop in 22 months of high prices. Price drop is also good for the government because now they could probably achieve their economic stimulus plan.Some economist say that the reducing prices also can be combined with a short-term cut of the interest rate but only for the weekend. With this move, the economist hope that people will put money on their bank or that they will buy more.

I think that the price dorp of India will give their economy a boost.The people of India will now have more money because they don't have to spend a lot of money anymore for fuel and with that money they buy more or put it on a deposit account. But I don't think that the cut of the short-term interest rate during the weekend will boost their economy, I think that it's a to short period for people to decide whether they will put their money on the bank or not.
So generally I think that India can boost their economy by dropping the price of fuel and the short-term interest rate, but they have to exist for a long time.

source: http://news.bbc.co.uk/2/hi/south_asia/7767617.stm

Will the Mumbai attacks hurt India's prospects?

After the attacks on Mumbai, the Indian financial sector is looking less and less attractive to foreigners. The situation was already very bad before the attacks, but now it’s worse. This year, investors already sold 13.4 billion dollars of equities. This is also a cause why the Sensex, the bench market, dropped with 60% since January.
Everyone thought also that the Indian economy was immune for the worldwide downturn, but India is just like all other Asian countries who felt the worldwide downturn. This is strange because India is less exposed to the global economy through export and felt the same effect as those countries who have more export.

There growth is also slowing down. At the moment there growth is about 7,5% and next year they hope to have minimum 5%, but it’s going to be hard to get this. The reason why it’s going to be hard to get that result, is the fact that the investments are decreasing. Local banks are less willing to give loans and companies have to loan more abroad.

Specialist say the growth of India in 2010 is going to be negative, but say that India still looks compelling over the long term. I agree with this because, I think now India is just like any other country, they just are trying to survive this economical recession. That is the reason why banks are less willing to give loans. The slowing down of the growth of India is not only caused by the attacks of Mumbai, but is also caused by slowing down of the world economy and the export.

Source: http://www.moneyweek.com/news-and-charts/economics/will-the-mumbai-attacks-hurt-indias-prospects-14214.aspx

Japan set to tackle lending costs

The bank of Japan held last Tuesday an emergency meeting to solve the problem of the rising borrowing cost for Japanese companies in this economical crisis. These costs are rising at their fastest pace in ten years.
The bank is under increasing pressure because they provide money to the financial markets aggressively as market rates increase due to the credit crunch.
It’s a fact that the Japanese economy is getting more worse every day. Japanese industrial output and the consumer spending has fallen deeply what encourages the fear that Japan is heading to a recession.
Despite the sad prognosis, economists say that a interest cut would be very good, but cutting further then would have an negative influence on the operations on the money markets.
It’s a good idea to reduce the lending costs because cheaper loans will encourage companies and consumers to borrow more money and they will spend it to consumer products which is exactly what’s necessary to get out of the negative spiral where they are in at the moment. Now it is upon the economist to solve this very difficult balance exercise to find the perfect interest rate that wouldn’t influence the financial market to bad but would encourage consumer spending.

Source: http://news.bbc.co.uk/2/hi/business/7758401.stm