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  • The Origins of the Economic Crisis and China's Rare Earth Mineral Advantage



    Lillian: This financial crisis began around 40 years ago as a result of new emerging technologies including satellites, computers, internet as well as container ships that allowed for quick delivery. With all the new technologies in transportation and communication, company managers realized they could make more money hiring foreign workers and paying then a fraction of what an American worker makes, while using a world communication network to manage their company branches to function as one efficient machine. 
     
    Kathy: Right; technology is what gave birth to globalization, however advancements in robotics, computational capacity and software also contributed to the raise in the unemployment rate by automating work previously done by human beings.
     
    Lillian: Nevertheless I think the new technology did us more harm than good by helping other countries like India and China gain an advantage. Recently I learned that China, which benefited greatly from globalization, controls 97 percent of the world supply of rare earth minerals which allows them to be more competitive and to have greater economic and political power over today’s world markets.
     
    Kathy: Wow! I understand these minerals are necessary for the manufacturing of high tech products, especially those related to communications and the new Green Economy.  We need to find cheap easy accessible supplies of these minerals soon or we might become even more dependent on China.
     
    Lillian: Right. I wonder what is going to happen to us, it seems that our corporate managers of today are more concerned with short term profits and are taking us in the wrong direction. Unfortunately they don't seem to be focused on accessing important basic resources, investing in long term research and development, investing in better technologies as well as developing a more powerful and advanced manufacturing capacity.
     
    Kathy: I think at high management levels, in large or even small corporations are only concern with fast and hefty corporate earnings and not with loyalty to our country or its economic future.
     
    Lillian: It seems that slowly but surely our value system has been weakened.
     
    Kathy: We need to go back to our roots and work very hard, even if it means suppressing our short term goals in order to achieve the longer term ones.
    Posted Jan 05 2011, 02:51 PM by cartoon with 1 comment(s)
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  • It's Hard to Get a Job Nowadays Unless You're Creative...



    Kathy: My dad finally found a job and he has a pretty good salary although he has to work long hours.

    George: He is lucky!My dad and mom have been looking for a job for more than 2 years now and they can’t find anything at all.

    Kathy: Well, my dad realized that one has to become very creative in order to get a job in this economy. He found an employer that is growing and doing very well and they hired him on the spot!

    George: Your dad sure is a smart man! My mom and dad sent resumes to every company in town and there are no jobs available.

    Kathy: Yep! My dad found a place where he won’t have to worry about losing his job because of the economy. Where he works there is more work every day, more than you can imagine, and they are about to hire again because they need more people to handle the paper work. He actually is working so hard that my mom is starting to be concerned for his health.

    George: Please tell me where your dad is working. Maybe my mom and dad can get a job there!

    Kathy: He is working at the UNEMPLOYMENT OFFICE; gosh every day they seem to be doing better!

    George: I will tell my parents so that they can get a job there too!  Gosh, I can’t wait! We are going to start getting three regular meals every day just like we used to!
    Posted Dec 20 2010, 02:59 PM by cartoon with no comments
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  • The Need for a Second Economic Stimulus and the Deficit Problem



    George: The economy is once again moving towards recession. I believe we are going to need a second economic stimulus soon.

    Alice: I think so too, however, I don’t think a new stimulus will be as effective as you think it will.

    George: Why not?

    Alice: Well, in the 1930’s the approach was excellent; Keynes was right. When the government created jobs through fiscal spending the new workers injected money into the system through consumption. That money had a multiplying effect that brought economic growth.

    George: Then why won’t doing the same thing help now?

    Alice: Because at that time when a worker spent their salary they bought American-made goods and, like waves rippling on a lake, that money stimulated other sectors of the economy. The spending of thousands of workers created a large demand for many products which brought about the hiring of more workers who in turn spent their salaries helping to bring the economy back up again.

    George: But you still haven’t told me why we can’t get the same results now?

    Alice: Because now-a-days when workers spend their salaries a large portion goes to China, Japan and other countries that export a large number of products to us.

    We end up stimulating their economies and not our own. That increases our commercial deficit to dangerous levels. We need to find a way to increase our exports to those countries so that our deficit doesn’t continue to grow!
    Posted Oct 13 2010, 03:17 PM by cartoon with no comments
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  • Our Dark Economic Future


     
    Drew: I believe the economic crisis has already lasted three years. I feel so insecure! I don’t know if my job is going to be there for me tomorrow. I wonder how much longer we are going to have to wait before things get back to normal.
     
    Janet: I read recently that the Congressional Budget Office did a thorough statistical analysis of the situation taking into consideration temporal cyclical factors as well as many other variables and made a future projective forecast of our economic future.
     
    Drew: That's interesting! What did they conclude?
     
    Janet: They said that in the next years to come the economy is going to be grow only around 2% a year and that this low level of growth could last until 2084.
     
    Drew: That doesn’t sound too good such a poor growth will perpetuate the level of unemployment we have now.
     
    Janet: You're right. I wonder if I will get a job once I finish college.
     
    Drew: Oh God! I was hoping that by next year unemployment was going to decrease and that we were going to go back to normal.
     
    Janet: I know it is awful and I better not tell you the amount of money they said we really owe or you won’t sleep tonight.
    Posted Sep 20 2010, 12:33 PM by cartoon with no comments
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  • Does the Economy Need a Stimulus or Should We Just Stop Borrowing?


    Peter: Geithner and the Obama administration have already spent so much to stimulate the economy that we have a very large debt because of the gigantic stimulus program that was implemented. It is time to leave things in the hands of private business they are the one who really know what to do.
     
    Sara: Well that is what Europe and the US have started to do, don’t you think?
     
    Peter: Yes; if deficits need to be covered by further in indebting ourselves, eventually we will have to raise interest rates to cover that debt. Higher interest rates will take away the opportunity for our private sector to make productive investments in the economy since borrowing would become more expensive.
     
    Sara: Well if you think that by creating other stimulus programs, citizens will save the money that was given to them instead of spending it, research has shown that not to be true. Although it did happen to some extent at first during 2008 - 2009 because most everyone feared their jobs could be lost and tried to save in order to protect themselves from potential unemployment, we know from previous research that most often people spend part or all of the money given to them especially if the money comes from new jobs for the unemployed, stimulating the economy and triggering the multiplying effect. Such influx of capital will drive the economy forward and therefore the IRS will increased their revenues thru taxation and the initial deficit will decrease considerably improving our fiscal strength.
     
    Peter: Well I know that strong injections of capital into the banks by the feds by reducing interest rates alone could bring down the value of those reserves significantly making loans cheaper for those that want to borrow to spend and thereby stimulate the economy.
     
    Sara: Right; you see now-a-days when banks lend money, they don’t take cash from their deposits, but rather generate a new deposit to make the loan, so the potential risk associated with new debt for the bank diminishing a bank's deposits is not there today.
     
    Peter: Are you saying then that in slow economic times where industries have idle unused industrial capacity a stimulus program could generate new jobs and pay for itself through taxes. Moving the economy forward until it gets on its feet again.
     
    Sara: Yes that’s right that is what I am saying. We have the capacity we have the need with so many unemployed citizens so we can generate the demand and get the economy moving to full capacity. And finally those with jobs could once again afford to pay the money they owe for their homes in unpaid mortgages or even buy new ones if given some time.   
    Posted Sep 08 2010, 11:30 AM by cartoon with no comments
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  • Helping to Save the Economy


    Gloria: I have become a pessimist, I just kind of, lost hope. When I think about the European debt the mediocre economic growth we have attained, high unemployment here and around the world, a weak Real Estate and construction and market and the slow down in manufacturing production I can’t help but to believe in a gloomy future for our economy.

    Mary: Right things don’t look too good.

    Gloria: At least our industrial sector is making a great deal of money.  I wonder how they do that.

    Mary: By laying off workers and making the rest of them work longer hours. Eventually that technique will backfire since the unemployed workers have no longer purchasing power and therefore cannot stimulate the economy or contribute with their taxes to the well being of everyone else. Also those working harder, as it is already known, often develop physical or mental illness due to stress.

    Gloria: Aha, That’s it! The large salary increases made by management and stock owners as a result of increase corporate earnings become mostly idle capital instead of being reinvested in productive ways, back into the economy, thereby creating more jobs and helping move the economy ahead.

    Mary: As you probably already know there is something else that can improve to help our economy and that is top management decision making. They should invest in long term projects that are worthwhile instead of only looking only for short term profit investments.

    Gloria: Right, furthermore we ought to increase investments in basic research and innovation. Banks should lend more money to creative projects that offer innovation and make us more competitive.

    Mary: Also government should invest more in roads, bridges, schools and education. We need among other things more hospitals, airports and better transportation like the new fast trains built in Europe and China. Besides all that spend in infrastructure will create more jobs and help lift the economy.

    I wonder why we don’t use all the knowledge we got from other previous recessions instead of letting greed control our behavior.
    Posted Aug 18 2010, 05:34 PM by cartoon with no comments
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  • Paul the Octopus Explains the Future of the Economy


    Arthur: On August 3, 2010 Timothy Geithner wrote an article in the NYT titled “welcome to the recovery.” In this article although Geithner recognized how devastating the economic crisis has been and that it will take a long time until full recovery is achieved he also said he felt positive about the results attained so far and optimist about the future.

    What do you have to say about that?  
     
    Paul the Octopus: I think he is way too optimistic; In order to have a decent future we have large problems to solve first, among which we have: the jobs we have lost and continue to lose because they are send abroad. Let me explain what I mean.
     
    In a NYT article of August 1, 2010 “Four Deformations of the Apocalypse” David Slockman mentioned:
     
    “Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not experienced a severe reduction in non-farm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes. It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.”
     
    Arthur: It seems then that you think we are not doing that well.

    Do you think we should use another stimulus package in spite of the present large deficit to get the economy moving forward?
     
    Paul the Octopus: I will answer your question with a paragraph from a recent August 1 2010 editorial from the NYT “What they are not telling you”:

    “We agree the situation is unsustainable. But cutting spending right now on relief and recovery efforts would worsen the economic slowdown and the suffering of millions of Americans, while making only a tiny dent in future deficits.”
     
    Arthur: I understand but don’t you think that government’s economic experts and experienced politicians are aware of what’s going on and hence will fix and straiten the economy before unemployment and poverty gets worse?
     
    Paul the Octopus: In a NYT article “defining prosperity down” dated August 2, 2010, Paul Krugman mentioned:

    “I’m starting to have a sick feeling about prospects for American workers — but not, or not entirely, for the reasons you might think.
    Yes, growth is slowing, and the odds are that unemployment will rise, not fall, in the months ahead. That’s bad. But what’s worse is the growing evidence that our governing elite just doesn’t care — that a once-unthinkable level of economic distress is in the process of becoming the new normal.

    And I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape — and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.”
     
    Arthur: Fine, I get it. You made your point; I see that you rely on economists that write in the NYT to explain what you think and therefore predict the future.
     
    Paul the Octopus: Right and they do a very good job don’t they; so good in fact that we can predict the future from what they say don’t you think?
    Posted Aug 16 2010, 05:51 PM by cartoon with no comments
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  • Paul II the Octopus Predicts a World Economic Depression for 2011 - Part 2

    Read Part 1 here.



    Part 1 can be found here.
    Posted Jul 29 2010, 04:05 PM by cartoon with no comments
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  • Paul II the Octopus Predicts a World Economic Depression for 2011


    Part 2 coming soon!
    Posted Jul 25 2010, 10:33 AM by cartoon with no comments
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  • 2011: A World Economic Depression



    Brenda: Europe’s economic austerity plan has saving the Euro as its main objective. However, once implemented, it will tank the European economy for more than a decade.

    Judy: Right. Also, many of the benefits that European workers have attained through the years will be lost. For instance: an early retirement plan, free health care for everyone and maternity pay. And that just the beginning. Most European countries will have to learn to live with high unemployment rates and no economic growth for more than a decade.

    Brenda: We are in trouble here too. Congress seems to have two lines of thought; those that think the rescue package didn’t work and that any monetary injection into the economy will be a waste of time and the others who believe that the rescue package did work, although poorly, and slowly but surely the economy will grow. The last group of Congressmen will try to rescue the economy until the deficit hits a dangerous level and it will only mildly improve the present economic conditions.

    Judy: I guess both groups in Congress will not back any new stimulus programs in the near future.

    Brenda: Yes, we won’t have any futher stimulus which will ultimately create an economic depression by 2011.

    Judy: I think you probably remember in 2009 when Obama approved the stimulus fiscal tax reduction package for 282 billion dollars, another health education and unemployment package for 224 billion and finally 275 billion in other forms of federal aid. That added up to 787 billion to stop our GDP free fall.

    Brenda: I know I remember that in the first quarter of 2009 our GDP fell 6.4 percent thanks to the rescue package. By the 2nd quarter the GDP had started to grow again. Still, unemployment remained around 10 percent which was too high for the economy to climb out of the hole.

    Judy: Unfortunately consumers used their federal aid to get rid of their debts and banks used the government’s help to buy more toxic bonds and invest in U.S. bonds instead of making more loans with reasonable interest rates available to the public. By the Fall almost all of the fiscal stimulus from the Obama administration will have come to an end. Then a world depression will haunt us. I think those that think China’s commercial demand will save us are in for a surprise. China won’t grow much next year because their economy is based mostly on exports which neither Europe or the U.S. has demand for. China’s internal demand can’t pull the world’s economy out of the doldrums. In fact, China’s internal consumption isn’t strong enough to pull itself up. I wonder exactly how bad things are going to get in 2011?
    Posted Jul 06 2010, 03:29 PM by cartoon with no comments
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  • Can the World Afford a Nuclear War?



    Eva: I just learned from one of my professors at grad school that we have more than twice the amount of military power than Russia, China, India, Japan, Europe and Brazil together. I think that is amazing don’t you?
     
    Helen: Yes, I do.
     
    Eva: And not only that but he was also explained to us that when it comes to nuclear weapons, we have great superiority to relation to everyone else too.
     
    Helen: That’s cool.
     
    Eva: I guess while we have such a superior power we don’t have to worry about being destroyed or harm in any way by another country.
     
    Helen: Well, I used to think that until recently. Last week I read an article by Alan Robock and Owen Brian Toon in the January 2010 issue of Scientific American where they explained that: “in a nuclear war in between Pakistan and India Nuclear bombs dropped on cities and industrial areas in a fight between India and Pakistan would start firestorms that would put massive amounts of smoke into the upper atmosphere. The particles would remain there for years, blocking the sun, making the earth’s surface cold, dark and dry. Agricultural collapse and mass starvation could follow. Hence, global cooling could result from a regional war, not just a conflict between the U.S. and Russia.
     
    Cooling scenarios are based on computer models. But observations of volcanic eruptions, forest fire smoke and other phenomena provide confidence that the models are correct.”
     
    Eva: You mean that we don’t even have to be involved in a nuclear war and nevertheless we can be greatly affected by it; but how much harm could such a war bring to us?
     
    Helen: Well smoke will cloak the earth blocking the sun as a result of a regional nuclear war in between Pakistan and India. Therefore as many as one billion people worldwide could die of starvation due to an agricultural collapse caused by a nuclear winter. Also in case we are lucky and survive our living conditions might become a nightmare with very low temperatures, almost no food and an increased radiation rate in the world atmosphere.
    Posted Jun 14 2010, 02:54 PM by cartoon with no comments
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  • Difficult Questions about Life and the Universe



     George: Where does the sun, the earth and all the planets come from?

     Cathy:  It's from the left over gas remaining from the explosion of giant Super Nova star.

     George: And where does the universe come from?

     Cathy: The big bang.

     George: What will happen to mankind?

     Cathy: Only God knows that

     George: Where will our jobs will go in the future.

     Cathy: To China.

    Posted Jun 14 2010, 01:48 PM by cartoon with no comments
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  • Poverty and the Economic Crisis



    Jane: Did you know that from 2000 to 2008 the number of poor people increased by 5.2 million? The total amount is now about 40 million; the new poor represents a 15% increase of poor folks.

    Jackie: Where did you get that info from?

    Jane: From a recent Brooking Institution study.

    Jackie: You mentioned from the years 2000 to 2008. What about 2009?

    Jane: Well, you're right about pointing out that year. Many workers lost there jobs and many families suffered a lot from the consequence.

    Jackie: Those numbers are frightening! We probably have way over 40 million poor if we count 2009.

    Jane: Not only that, but in 2008, $21,834 marked the federal poverty line for a family of four and about 30% of the entire US population was close to that category. If you take 2009 into consideration then the number could be even worse.

    Jackie: I wonder how we are going to get out of this terrible crisis?
    Posted Jun 14 2010, 01:27 PM by cartoon with no comments
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  • The Greek Debt and the Future of the Euro Zone


    Lillian: A few years ago investors bought bonds from Greece thinking that Germany would pick up the bill in case Greece couldn’t pay. They were in for a surprise, Germany doesn’t want to become responsible for the Greek debt. In deed on a NYT April 9 2010 article Paul Krugman wrote: “What can be done? The hope was that other European countries would strike a deal, guaranteeing Greek debt in return for a commitment to harsh fiscal austerity. That might have worked. But without German support, such a deal won’t happen.”
         
    Jane: I think that the Greek economy represents only 3% of the European Union GDP and that is rather small amount; however Spain’s GDP is 12% of the total.
     
    Lillian: You are right if Greece, Spain, Portugal, Ireland and Italy default on their debt the Euro will probably disappear.
     
    Jane: Yeah the Euro zone doesn’t even have a mechanism that allows for money transferences among its members.
     
    Lillian: You are right although if Germany and France wanted to they could save Greece anyhow.
     
    Jane: To ensure that countries belonging to the Euro zone could have a state of solvency their rules for the zone where that no Euro zone country could exceed a 60% debt of their GDP or a fiscal deficit beyond 3% however few of the countries respected the rules.
     
    Lillian: I really think Germany and France should help Greece with their debt problem otherwise they are running the risk of a domino effect taking place with other vulnerable countries like Portugal Spain, Ireland and Italy. In that case the future of the Euro zone will be in danger.
     
    Jane: Yes and the new austerity rules that the Greek government had to impose in order to pay the debt are very tough I am not sure they will be able to comply with them. As Krugman mentioned recently “the debt crisis in Greece is now in a point of no return.”  God only knows what will happen.
    Posted May 06 2010, 05:28 PM by cartoon with no comments
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  • Why Did He Leave Me?


    Peggy: Have you seen Bob lately?

    Diana: No, I haven’t.

    Peggy: I am beautiful, charming and intelligent. I also dress well and still Bob doesn’t care about me. There is definitely something wrong with him.   

    Diana: Well, you gave him such a hard time, no wonder he hasn’t called you again.

    Peggy: Yes but I am so good looking that my harsh personality shouldn’t cloud his judgment.

    Diana: He is a good looking too and a Rock Star!  He has many fabulous gals after him… I know four of them: Kim, Debby, Kelly and Susan.

    Peggy: Well if he has four instead of me then he will have four times more trouble than with me alone; don’t you think?

    Diana: Gulp!
    Posted Apr 14 2010, 06:29 PM by cartoon with no comments
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