Politicians discussing tax reform, economists commenting on the greek debt crisis, and pressures on Nike to pay higher wages all have one thing in common: Austerity. With the need for budget cuts and federal budget reform to prove Aaa credit worthiness, U.S. politicians are entering into deep tax debates, which could be tabled as election season approaches. Although recent actions, such as an announcement to sell off half the post office buildings on American soil and plans to sell of the bits and crumbles of AIG, assure me that at least my government does something besides argue over taxes or election season. Economists and political commentators addressing the greek debt crisis are worried the EU austerity package will continue to cause great uncertainty in the market for years to come. Global capitalism has officially taken over and if you don’t jump on the bandwagon, you could be left on the side of the curb hitchin’ a ride. Every morning the U.S. markets move in high correlation to the German (DAX) markets, which open several hours before the 9:30 am ring. The quick selloff of high risk assets in favor of “safer” assets due to the EU debt restructuring programs, which drastically increase market volatility, exemplifies global interconnectedness. If the EU and American governments don’t work alongside each other in this GLOBAL financial crisis there could be dire consequences. Strict austerity measures usually correlate highly to decreased standards of living for the lower waged workers, so companies like Nike will see an increased pressure to carry the responsibly to pay fair wages. Nike was just an example of a company on the cutting edge out to increase profit margins when they got slammed with allegations of paying low wages and violating human rights. Now and in the next few years, the company may experience the media attacks it experienced in the 90’s as austerity actions plague global markets, although the roll back prices and low wages of Walmart will likely experience more domestic media attention.
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