Ever since GM filed for bankruptcy on June 1 2009, General Motors has been promoting that the new GM is better company that the old GM. Executives and others are determined to fix GM once and for all. GM declared they "clearly reflect consumer confidence in GM's long-term viability", even though they were down 30% from a year earlier. The current CEO of GM, Fritz Henderson does not blame this decline on the company’s shortcomings but instead he blames it on the expansion of strong global competitors with lower operating and legacy costs. He also blames GM’s fall on the deepening recession. GM also considered partnership with Renault Nissan but didn’t get the deal as GM asked for a huge cash payment. Oil prices rose to $150 a barrel and pushed GM to desperate measures. Hummer was sold to a Chinese heavy equipment manufacturer on June 2. But with everything collapsing together, GM had no choice but to file for bankruptcy and as the US government for financial assistance.
Friday, June 12, 2009
Monday, May 4, 2009
Chapter 8 Blog
Summary
With the currently economy in the ruins, the political parties have no problem pointing their fingers at the other for this disaster. With the federal election soon coming up, the tensions between the parties are stronger than ever. Liberal Leader, Michael Ignatieff, accused the Harper government of ruling the worst collapse of employment to record (300,000 in first 3 month of 2009). The Conservative government fought back. They pointed out that the Liberal party plans to increase taxes to repay the deficit caused by the economic stimulus programs created by the Tory government. The conservative party also points out that raising taxes kills jobs and is the opposite of what they want to do. Both parties are confident that they can do a better job of raising the nations economy than the other, it is hard to see which one is truly better.
Connections
In this chapter, we learned about the stabilization policy. The policy is to deal with many problems in the economy and also an unsteady economy. One of the approaches to a stabilization policy is called a fiscal policy. It is what the Conservative government is planning to do. The conservatives are planning to increase government spending to increase jobs and lessen the unemployment rate. They also plan to lower taxes to increase the countries GDP which would increase the countries demand for goods and services. The liberal has the opposite plan. They plan to increase taxes and cut government spending and use the money to pay off older debits. However, reducing government spending would lead to fewer jobs and higher unemployment rates. Both of these are examples of discretionary fiscal policy as they are changes in government spending and taxation for improvement of the economy.
Personal Reflection
I think both parties shouldn’t be blaming each other for the poor economy. The poor economy was bond to happen no matter who was in control of the country. For the Liberal to accuse the Conservative of having caused and allowed this poor economy was not right. I agree with the Conservatives way of trying to get the country out of the economic turmoil but it is hard to know if they would actually follow through on it. Since it is right before a federal election, the parties often start making empty promises. Also a fiscal policy takes a long time to influence the economy. So even if the Conservative has a good plan, it may be a little too late to apply it.http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090420/battle_lines_090420/20090420?hub=Politics
Tuesday, March 31, 2009
Chapter 7 Blog
http://www.cbc.ca/consumer/story/2009/04/02/credit-senate.html
Summary
Credit card interest rates has always been higher than bank rates in Canada but with the bank rate falling down to a mere 0.5 percent in the recent month, people are wondering why credit card rate is still at the high of 19.9 per cent. Such people include the Senator of New Brunswick, Pierrette Ringuette. She believes it is all due to greed of the credit card company. The reason the Canadian Bankers Association gives for the credit rate being so high is due to the delinquency rate. Since the recession, the rate has gone up to 4.5 per cent from the 1 per cent before. Companies have suggested regulating the fee that merchants pay each time the credit card is used but credit card companies are quick to dismiss such suggest. They say that regulating merchant fees would hurt small businesses as they would have to pay same amount as big companies while their profit is lower.
Connection
This chapter discusses money and the ways money can be held in Canada. Money doesn’t necessarily mean cash. It can take many forms. They can be turned into numbers on a debit card and can be burrowed through a credit card. When one purchases something on a credit card, they do not actually spend their own money. It is instantly burrowed and to be paid back later. Credit cards are handy and allow people to purchase things without having to actually to have the money. It is good for people in a recession since cash is not around and things still need to be bought. But many people in the recession are unable to pay off their credit card right away and instead have to keep the money burrowed off the credit card at extremely high interest rates. The high rates are seen by some for credit card companies to make money while some are saying they are doing it to keep up with the recession.
Reflection
With the way people normally shop, more and
more people are already using credit cards other than cash or debit. It is much easier to carry around and people feel more secure with credit cards than with cash. We have created a habit of buy now and pay later. So once the recession started, people are still buying and not thinking of paying. Many people are still shopping like the recession never happened and are using money they do not have. Some declare bankruptcy after they have accumulated so much debt due to the high interest rate of credit interest. I think it’s fair that the credit card company have such high interest rates to cushion themselves against the money they could lose due to the instability of some of their clients.
Monday, March 9, 2009
Chapter 6
http://www.economist.com/finance/displayStory.cfm?story_id=13240636&source=hptextfeature
Chapter 6
Summary
Japanese households use to be one of the world’s biggest savers and because of that, they had a massive trade surplus. But they are no longer, as they now save less than the American households based on income. The saving rates have fallen from 18% of income in 1980 to about 1% in 2008. This is due to the growing numbers of people aged 65 and over. The ratio of Japanese aged over 65 to those of working age rose from 14% in 1980 to an estimated 34% in 2008. It is forecast to increase to 49% by 2020. With so many people in the retired field, less money are being put into savings as they are pulled out of the bank and used as an retirement plan. Another issue that is causing Japans saving rate to decrease is a decress in income. Japan’s trade balances are no longer in the surplus zone but instead moved to the deficit zone due to the world recession. The low demand and the strengthening yen have destroyed Japan’s exports. In the six months to January, it had an annualised trade deficit of ¥4 trillion ($39 billion), compared with a surplus of almost ¥11 trillion a year earlier. Although in January, there was still deficit showen, experts expect a surplus for the year as a whole but as much as 1% of GDP would have been reduced compared to the peak of 4.8% in 2007.
Connection
In this chapter, we learned about the positive and negative effects savings can have on one country’s economy. On the positive side, the more money one puts into the bank for savings, the more there is for the country to lend out for investments. With that, the interest rates would be lowered for those that want to burrow money. The negative side would be reduced consumption due to savings. The more one saves, the less there is for them to spend. The factors for increased savings are higher incomes, which is what is described in the article. When people are young and working, they consumed but put a large sum of their earning into a savings account to themselves for retirement. Once they reach retirement, their income have significantly dropped and they are pulling money out of the bank thus decreasing their savings or are dissaving. That is the problem for Japan because the percentage of people being over 65 is on the rise as baby boomers are reaching retirement age.
Reflection
It is a vicious cycle as the recession is forcing people to stop saving as many are becoming unemployed and are digging deep into their savings account to survive. Although many are reaching into their saving to live, it is still not enough. The banks are making the interest to go down as the banks want to encourage people to start burrowing money and spending. I think in a time like this, savings is as important as spending. With little being put into savings, there are less money going into the bank that can be lend out to investments that can help bail us out of the recession. Also, with savings being a huge part of one countries GDP, a decrease of it affects the countries economic state greatly.
*Comment on Raymond C
Chapter 6
Summary
Japanese households use to be one of the world’s biggest savers and because of that, they had a massive trade surplus. But they are no longer, as they now save less than the American households based on income. The saving rates have fallen from 18% of income in 1980 to about 1% in 2008. This is due to the growing numbers of people aged 65 and over. The ratio of Japanese aged over 65 to those of working age rose from 14% in 1980 to an estimated 34% in 2008. It is forecast to increase to 49% by 2020. With so many people in the retired field, less money are being put into savings as they are pulled out of the bank and used as an retirement plan. Another issue that is causing Japans saving rate to decrease is a decress in income. Japan’s trade balances are no longer in the surplus zone but instead moved to the deficit zone due to the world recession. The low demand and the strengthening yen have destroyed Japan’s exports. In the six months to January, it had an annualised trade deficit of ¥4 trillion ($39 billion), compared with a surplus of almost ¥11 trillion a year earlier. Although in January, there was still deficit showen, experts expect a surplus for the year as a whole but as much as 1% of GDP would have been reduced compared to the peak of 4.8% in 2007.
Connection
In this chapter, we learned about the positive and negative effects savings can have on one country’s economy. On the positive side, the more money one puts into the bank for savings, the more there is for the country to lend out for investments. With that, the interest rates would be lowered for those that want to burrow money. The negative side would be reduced consumption due to savings. The more one saves, the less there is for them to spend. The factors for increased savings are higher incomes, which is what is described in the article. When people are young and working, they consumed but put a large sum of their earning into a savings account to themselves for retirement. Once they reach retirement, their income have significantly dropped and they are pulling money out of the bank thus decreasing their savings or are dissaving. That is the problem for Japan because the percentage of people being over 65 is on the rise as baby boomers are reaching retirement age.
Reflection
It is a vicious cycle as the recession is forcing people to stop saving as many are becoming unemployed and are digging deep into their savings account to survive. Although many are reaching into their saving to live, it is still not enough. The banks are making the interest to go down as the banks want to encourage people to start burrowing money and spending. I think in a time like this, savings is as important as spending. With little being put into savings, there are less money going into the bank that can be lend out to investments that can help bail us out of the recession. Also, with savings being a huge part of one countries GDP, a decrease of it affects the countries economic state greatly.
*Comment on Raymond C
Wednesday, February 18, 2009
Chapter 5
http://canadianlabour.ca/stunning-job-losses-mean-ei-must-be-improved
Summary
In the first month of 2009, 129 000 jobs were lost were lost in Canada. That makes 230,000 jobs lost in the past three month and puts our unemployment rate at 7.2%. It is back to the same unemployment rate back in 2004. 114,000 of the jobs that were lost in January were full time, and 15,100 were part time, with loss occurring in both private and public sectors. The significant lost in January was due to decreased demand for manufacturing caused by the current recession. This is an especially difficult time to be laid off because the government has changed their EI (Employment Insurance) rules and making it much more difficult for one to qualify and cutting the benefits for those that do qualify. Canada now has 1,310,100 unemployed with another 100,000 added to that sum from January alone.
Connections
In this Chapter, we have learned the different types of unemployment that can be caused at different times. In our current state of economy, the type of unemployment shown is the Demand- Deficient Unemployment. The recession has caused a low demand in the products and services that consumers want therefore less labor are needed to produce the lower amounts of goods. Companies are not looking into hiring more workers and are starting to cut jobs to meet the declining profit. The other thing mentioned in the chapter is Employment Insurance. It is a program that provides monetary benefits to a person who becomes unemployed. It is compulsory and is taken out of ones every pay cheque. The benefits received are based on how much contribution one has made on the job. The current problem with EI is that with so many people getting laid off, not enough money is being put in to pay off all the EI. The government then has to put in tax money to make up the deficit. But with the economy in such bad condition, it is not likely many of those unemployed are going to get their job back anytime soon. So the government has tightened the rules and making it much more difficult for those unemployed to get a helping hand.
Conclusion
The economy is still in shambles and getting worse as more and more people are losing jobs. Each day, tens of thousands of people are getting laid off which is exactly the opposite thing we need happening in a time like this. In a time like this, we especially need to be creating more jobs to help repair the shaking economy. We also see just how big of a problem unemployment is for a country. If one becomes unemployed, his or her income is reduced or ceased which makes it harder for them to support themselves or the family they have. They then would need to rely on government help such as welfare to support their needs. If this type of unemployment continues, the whole social system of the country can collapse and the results are catastrophic.
Summary
In the first month of 2009, 129 000 jobs were lost were lost in Canada. That makes 230,000 jobs lost in the past three month and puts our unemployment rate at 7.2%. It is back to the same unemployment rate back in 2004. 114,000 of the jobs that were lost in January were full time, and 15,100 were part time, with loss occurring in both private and public sectors. The significant lost in January was due to decreased demand for manufacturing caused by the current recession. This is an especially difficult time to be laid off because the government has changed their EI (Employment Insurance) rules and making it much more difficult for one to qualify and cutting the benefits for those that do qualify. Canada now has 1,310,100 unemployed with another 100,000 added to that sum from January alone.
Connections
In this Chapter, we have learned the different types of unemployment that can be caused at different times. In our current state of economy, the type of unemployment shown is the Demand- Deficient Unemployment. The recession has caused a low demand in the products and services that consumers want therefore less labor are needed to produce the lower amounts of goods. Companies are not looking into hiring more workers and are starting to cut jobs to meet the declining profit. The other thing mentioned in the chapter is Employment Insurance. It is a program that provides monetary benefits to a person who becomes unemployed. It is compulsory and is taken out of ones every pay cheque. The benefits received are based on how much contribution one has made on the job. The current problem with EI is that with so many people getting laid off, not enough money is being put in to pay off all the EI. The government then has to put in tax money to make up the deficit. But with the economy in such bad condition, it is not likely many of those unemployed are going to get their job back anytime soon. So the government has tightened the rules and making it much more difficult for those unemployed to get a helping hand.
Conclusion
The economy is still in shambles and getting worse as more and more people are losing jobs. Each day, tens of thousands of people are getting laid off which is exactly the opposite thing we need happening in a time like this. In a time like this, we especially need to be creating more jobs to help repair the shaking economy. We also see just how big of a problem unemployment is for a country. If one becomes unemployed, his or her income is reduced or ceased which makes it harder for them to support themselves or the family they have. They then would need to rely on government help such as welfare to support their needs. If this type of unemployment continues, the whole social system of the country can collapse and the results are catastrophic.
Thursday, January 22, 2009
Chapter 4
http://timestranscript.canadaeast.com/news/article/529923
Summery
The article discusses a survey discussing whether New Brunswick should switch to a flat tax rate system instead of the progressive system it has now. It would attract new workers, as they would have to pay less tax and take home more money. But many are rejecting the idea because they believe those that earn more should pay more. Many that agree with the flat tax plan say that worker with a higher income still pay more tax even on the flat tax plan since 10% of $100,000 is more than 10% of $10,000. Not surprising that most people like the idea of paying less tax and having more money in their pocket to spend whatever way they like.
Connection
Chapter 4 talks about the tax brackets in Canada and the different taxing ways there are. Canada currently uses Progressive taxation. So the percentage of taxes paid is different among different incomes. The higher the income is, the higher the percent of tax one would have to pay. A lot of people do not think that’s fair due to the tax bracket and the marginal tax. One that makes more money doesn’t necessary get to take home more money, as most of the money would be paid off in taxes. A lot of people in New Brunswick are debating the idea of a Flat tax, which means there is a fixed percentage of tax one would have to pay. It challenges the current progressive taxation ways and makes people think about future taxation plans.
Reflection
This is a bit of a debate for myself. On one hand, I don’t like the current progressive taxation in Canada. I think it discourages people to take better positions and higher income because in the end, the raise isn’t all that much. If we were to have a flat taxation plan, the rich would still pay more than the poor. It would encourage people to take higher incomes and not worry about the money going to tax. It also avoids the tax bracket, which is a problem with the progressive taxation plan due to the fact that some people are just on the boarder and paying more but not earning quiet as much. The problem with the flat taxation is that there would be less tax going to the government and many benefits that we have now would be lost. This is especially troubling for the poor as they are the ones that are benefiting the most from all the public services. It is defiantly not an easy debate.
Summery
The article discusses a survey discussing whether New Brunswick should switch to a flat tax rate system instead of the progressive system it has now. It would attract new workers, as they would have to pay less tax and take home more money. But many are rejecting the idea because they believe those that earn more should pay more. Many that agree with the flat tax plan say that worker with a higher income still pay more tax even on the flat tax plan since 10% of $100,000 is more than 10% of $10,000. Not surprising that most people like the idea of paying less tax and having more money in their pocket to spend whatever way they like.
Connection
Chapter 4 talks about the tax brackets in Canada and the different taxing ways there are. Canada currently uses Progressive taxation. So the percentage of taxes paid is different among different incomes. The higher the income is, the higher the percent of tax one would have to pay. A lot of people do not think that’s fair due to the tax bracket and the marginal tax. One that makes more money doesn’t necessary get to take home more money, as most of the money would be paid off in taxes. A lot of people in New Brunswick are debating the idea of a Flat tax, which means there is a fixed percentage of tax one would have to pay. It challenges the current progressive taxation ways and makes people think about future taxation plans.
Reflection
This is a bit of a debate for myself. On one hand, I don’t like the current progressive taxation in Canada. I think it discourages people to take better positions and higher income because in the end, the raise isn’t all that much. If we were to have a flat taxation plan, the rich would still pay more than the poor. It would encourage people to take higher incomes and not worry about the money going to tax. It also avoids the tax bracket, which is a problem with the progressive taxation plan due to the fact that some people are just on the boarder and paying more but not earning quiet as much. The problem with the flat taxation is that there would be less tax going to the government and many benefits that we have now would be lost. This is especially troubling for the poor as they are the ones that are benefiting the most from all the public services. It is defiantly not an easy debate.
Monday, November 24, 2008
Chapter 3 Blog
Article:http://www.economist.com/world/britain/displaystory.cfm?story_id=12641944
With the increase in life span and obesity rates in wealthy countries, the demand for organs are growing rapidly. But the amount of organ donors have not increases at the same rate. In Britain, 3000 people received life saving organ transplants in 2007 while 1000 have died waiting for donors. 8000 are still on the waiting list. With a problem like this, the British government is looking to shifting into a ‘presumed consent’ system that most European countries use. Instead of willing donors signing up to donate, the presumed consent system is the opposite. Everyone is assumed donors unless they register their objection. But many question just how much this system would help, if at all.
The article deals with the government control over a countries organ market. The government can apply rules that influence the amount of organs that is being put out into the system. This affects the market because the more organs that are available the less there is for the need for people to go to other countries and get the transplants illegally. Also with more organs for transplants, less people would be on the waiting list. It saves the government taxes because it costs the government money to keep patients on waiting lists and many other problems may arise during the wait, which leads to more taxes being spent.
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