Metal Production

Choose one of the following topic and discuss about it.

a. By 2010 China accounted for 97 percent of global rare earth metal production crucial in the manufacture of a wide range of high-technology products including wind turbines, iPhones, industrial magnets, and the batteries used in hybrid cars. However, also in 2010 China imposed tight quotas on the exports of rare earth metals. Which groups benefited most from imposing an export quota on rare earth metals? Did it give the Chinese domestic manufacturers a significant cost advantage? Did it result in dramatically increased quality and environmental standards? Do you think countries such as Australia, Canada, and the United States should reconsider their environmental restrictions on the production of rare earth metals? The restrictions imposed by China on rare earth metals has resulted in some companies (e.g., Toyota, Renault, Tesla) starting to look for alternatives. They plan to use parts that do not include rare earth metals. Is this a good solution? Please document all of your findings and conclusions using footnotes and bibliography.

b. During the first half of the 2000s, the Japanese yen was relatively weak against the U.S. dollar. This was a boon for Japan’s export-led economy. However, for the next four years after 2008 the yen strengthened relentlessly against the dollar hitting an all-time record high of 75.31 yen to the dollar on October 31, 2011. The weakness of the yen during the early to mid 2000s was due to the so-called carry trade. This financial strategy involved borrowing in Japanese yen, where interest rates were close to zero, and investing the loans in higher

yielding assets, typically U.S. treasury bonds. Because the investment strategy involved selling borrowed yen to purchase dollar-denominated assets, it drove the value of the yen lower. However, after the financial crisis of 2007-2008, massive bank infusion of American dollars into banks resulted in lower interest rates thereby nullifying the carry trade causing the Japanese Yen to rise causing a Japanese financial crisis. Why did the yen carry trade work during the early 2000s? What drove an increase in the value of the yen between 2008 and 2011? Why did the policy of Japan’s Abe government to purchase government securities help drive down the value of the yen? Explain how that worked. Do you think the Japanese government is engaging in currency manipulation? If so, what should other nations do about this? Who in Japan benefits from devaluation of the yen, and who does it hurt? Please document all of your findings and conclusions using footnotes and bibliography.

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