Ecn 360 - International Economy

International Economy

Laurie A. Andria

Grand Canyon University

ECN360 Intermediate Economics

June 13, 2011

International Economy

A rumble, then followed by crashes and devastation. All can be linked to what you may feel, hear, and see when an earthquake happens, but this is also what occurs when the economy has an eruption at the core. Like an earthquake, the shocks are not just felt in the immediate area, but also by surrounding states and across oceans to other countries. There are many types of events that can bring on a recession such as war, natural disasters, sickness and the drastic changes of the stock market. The problem is that when these events occur the country is often trying to put out fires as quickly as they are happening and the problems increase before they begin to be corrected. There's never a good plan in place and the constant turmoil creates havoc that takes a toll on everything and everyone.

To prevent a global recession, there needs to be a strategy constructed and carried out through rigorous tests to find the weak links and make them stronger. Reacting to natural disasters seems to be the hardest area to tackle because there's no way to predict what is coming in terms of a disaster. There are warnings for tsunamis, hurricanes, but there is still the unknown affects or the severity of what they may bring. With recent events it is time to come together as a world and not just the selfish approach that has been done for so long. Two proposals come to mind: financial and medical relief.

Financial Assistance

Financial assistance needs to come in two ways: business and personal. Business needs to have contacts throughout their country as well as other continents so that they are assured that business will continue and that financial ruin will not occur. Often when there is a crisis, the location is in a time still and daily transactions cannot be executed due to outages or lack of availability to personnel or equipment. Once there is a declared disaster, the group elected to look over this type of situation can immediately step in and make business decisions while working along with the rules governed by the Central Bank. As the global centerpiece of finance, the Central Bank can be a guiding point of interest rates and keeping the value of the country's currency as to prevent from the actual value dropping. This can protect the value of stocks as well to avoid a crash that would ripple out to other stocks and bonds. Keeping in mind that countries each have their own currency and way of reporting, this could work out as a fail-safe procedure to for future occurrences.