Ch8 Blog

http://www.dose.ca/news/story.html?id=43be2aed-e622-43b7-a0a5-b9f632b71ad9

Summary

This topic is about the disastrous earthquake that happened in SzeChuan China. Japan has gave out a helping hand to China in $4.8 million of goods and cash. The death toll resulting in the quake is continuing to rise by tens of thousands as according to the Xinhua news agency. It stated that about 18,645 people were burried under torn down buildings and debris in the city of Mianyang, which was the epicenter of the earthquake. China government has requested aid in many foreign countries. The Japanese Foreign Minister ,Masahiko Komura, has announced Tokyo's aid which will be disbursed through the Chinese government and international organisations, and is willing to offer further aid if it is necessary. The United States, Britain, the European Union, South Korea and Taiwan have also offered assistance since the disaster, but China still hasn't accepted Taiwan's offer. Moreover, the International Olympic Committee on had also decided to donate $1.0 million and the United Nations also offered support.

Relation to the Chapter
After this earthquake, I beleive it will affect China's economy greatly. First of all, I believe China will be owing a lot of money from many countries, regardless of all the aids, they still won't have enough money to rebuild all the damage buildings. Thus, as according to the monetary policy, Chinese government may increase tax in order to increase tax revenue, so that they can have enough to pay others back. As they are increasing tax, people would be likely to spend more and save less, which can also save the country from being in a recession.

Personal Reflection
I feel very sad and sorry for those who are suffering in China, especially those students who got trapped in the schools, since this topic is on the news everyday. Moreover, I think this has greatly affected the moods of all people around the world, seeing so many lives taken away because of this tremor. I am very glad to see that the world is co-operating together to help save China, since the article has mentioned that many countries are offering aids and rescue teams over to China; this warms my heart. I am hoping that Canada can also help fundraise and give out our helping hand as a whole over to China.

Chapter 7

http://www.canada.com/windsorstar/news/business/story.html?id=33448932-b05d-4841-9f6e-a3c4e15eb97c&k=86761
Summary
In New York in the states, the economy there has recently been in risk of going into a recession. Thus, the Federal government did major reductions on interest rates. This has affected some businesses and households when the cuts were announced. Also, there were recent information which shows that there's a deepening of housing contraction. The government hopes that by making a series of interest rate cuts, it will keep the economy from going down right into a recession. Most economists predicted that the short-term interest rate will be cut by a 50 basis points to three percent; however, the reduction came to a surprise of 75 basis point cut when the stocks in the states headed to a significant selloff ami global stock market turmoil. Since then, the interest rate has dropped right down to 2.25%. Because of the downward slope on interest rates, price pressures on some goods affected many, thus the officials acknowledge these price raises and expected inflation, which can help increase the supply of money in the economy. In the article, it has also stated that the two mainfactors that can keep the United States out of a recession will be the healthiness of the labour market and consumers' ability to increase their spendings enough to eliminate the weakness in other parts of the economy.

Relation to the chapter
In the chapter, it has mentioned how the government uses the monetary policy to eliminate inflation and unemployment rate. This is the influence of interest rates, it acts like a stimulant or a . In this particular article, since US governemnt is trying to stop US from going into recession, monetary policy has came into affect. By influencing the interest rates, this can stimulate the spendings of consumers and increase the supply of money circulation in the economy. Having the economic activites increase, the economy in US will improve.

Personal Reflection
I think one of the main reasons to why the US is heading to recession is because of the war they are in right now. The government is spending too much into military and other criterias. It is evident that the major reductions in interest rates have affected many items in the market, like our basic foods such as eggs, oil and rice. I remember last time when i went to the states in march 2008. I was in walmart, and there was a sign up saying" consumers are only allowed to purchase 2 boxes of eggs". I was wondering why, and until now i have found out this is all because of the US economy's hitting the red. Luckily, Canada's economy hasn't been influenced much by the US. But I think that the US economy will improve and will not be in risk as to heading to recession very soon.

Chapter 6

http://www.nationalpost.com/rss/Story.html?id=253921

Summary
The Bank Of Canada is expecting to cut interest rates so that it can help ease the fears in the markets and prevent the US economy from taking Canadian stocks down following it. Bush quickly attempts to create an economic boon in US with the fiscal policy, he decreased the interest. This makes canadian economists predicts that the Bank of Canada will also lower the rates by 4% in January 2008, and by March 2008 it will be a 3.75% cut in rates. Benjamin Tal states that there is no choice, and having interest cuts are inevitable in order to balance out the economy. Market volatility has grown stronger since there are fears of global recession around. Moreover, the economy in Europe has grown a lot slower. He also stated that "credit crunch" is the number one cause for the cutting down on rates because US economy is gradually decreasing in speed of growth, there are obviously difficulties in that market. Because of this, investors can foresee that the percentage of rate cuts will increase.

Relation to the chapter
Cutting down on interest rates do relates to the chapter, because this is a factor that causes a countrie's GDP to change. Usually the economy in a country is doing bad, they can decrease interest rates, just like how the situation it's talking about in this article. The reason to this is because having the interest rates decrease, less people will want to save money in their banks, and they will be attracted to take out the money and spend more into the economy. This is one of the fiscal policies which governments follow in which the article has also mentioned.

Relfection
I personally think this is a really good way to boost the economy up, or to prevent it from going into a recession for this situation. I consider this a very good and smart strategy. In daily lives, i can also see the interest rates going up and down all the time, and i have always wondered why? What causes interests rates to go up and down? How does this affect us? After all these years, i finally got my answer. This all relates to the economy of one's country, and how it acts as a stimulant to the growth of economy.

Chapter 5

http://www.cbc.ca/news/story/2000/10/19/nb_gascost001019.html
Summary
The gas price in New Brunswick has raised to its highest price ever, which disappointed many people who are attempting to switch from using fuel to gas. It has been said that having natural gas in New Brunswick will be a "magic elixir" to aid the growth of the province's economy, however it is affected by the high price, since the gas of price has increased 86% in just the past year.( from $2.85 per million BTUs to $4.04 per million BTUs) In the same year, having the oil price shoot up, the price of gas grew even faster. Don Barnett, the Assistant Deputy Minister of Natural Resources, stated that we can look at the rapid raise in price in two ways. One of the reason is that drilling for gas needs a huge amount of money and so that is why prices raise. The bad side of the raise in price is the effection it has on us consumers. Moreover he think that they should increase the supply of gas and so that the price can be brought down. However, the Irving Oil. which is a company selling oil in New brunswick is not able to lower the price. Regardless of the rapid raise in price, natural gas is still very attractive due to its efficiency.

Relation to the chapter
This article is related to the chapter with regards to the mentioning of rising price, which is related to inflation. Recalling the facts from the chapter, there are two types of inflation - cost push , and demand pull. Moreover, having the price of gas rising affects how a customer spends with regards to the amount of income they have. These are all topics discussed in the chapter. I think gas price's raise is a demand pull inflation, since gas is a valuable resourse which is not renewable, and that everyone is using it nowadays because of its usefulness and efficiency, the demand is rising quite fast. Because of that, the price raises. On the other hand, it is also a cost push inflation because since drilling for these gases uses up a great amount of money; thus, the cost of exploration of gases pushes the price of the gas up.

Personal Reflection
I think it is evident that the price of gases has rised at a rapid speed. It has been a lot of years since I have seen the gas price boards saying 30 cents. Nowadays, it is always either 1.10 or more. I agree with Don Barnett with regards to the reason of why the gas price is rising so fast. I think it is also because of the speed in which people consumes it. Moreover, gas is a nonrenewable resource, the supply is limited. Thus the prise is raising that fast. I think if people wants to save up money, maybe it is a good idea to switch to something else like electricity. That way, people can have an alternative to help save up money.

Ch 4 Blog

Summary

http://www.fin.gc.ca/news06/06-061e.html

Jim Flaherty, Minister of Finance, has proposed a Tax Fairness Plan for Canadians. This plan is thought to be equalizing the balance and fairness between income trust and corporations. Moreover, the purpose of this plan is to help make sure that Canada's economy is continuing to propser and grow. Recently, there has been a continuing trend with coporate tax avoidance. Many major Canadian companies have intended to seek more favourable tax treament by capitalizing on some available tax rules. However, although these do help offer those companies with short term tax benefits, it is threatening Canada's long term economic growth by shifting burden onto those hardworking individuals and families. This has a great impact to the revenue for federal government to invest in Canadians because billions of dollars were earned less. This would also mean less revenue for provinces and territories. The measures in the Tax Fairness Plan includes for example a reduction in general income tax rate by 1/2 percent when it reaches January 1 2011. Measures in this plan presents a major tax reduction.

Relations to the chapter
This article relates to the chapter for it is also about government charging taxes on Canadians. The chapter has also mentions tax reductions with regards to income. To some extent, it benefits some canadians like those who are earning a lot, but it is a burden to those who aren't earning as much. People are always trying to seek for a plan that is fair for everyone. It also relates to the chapter by stating how it effects Canadian's economy with regards to the tax collected.

Personal Reflection
I personally think that this plan is quite a good idea to help stabilize Canadian's economic growth. For i think being equal is very important, although i willbe nice to those companies to pay less of a tax burden, however what about those who are not earning as much? They still need to pay for their own living and want to save more. I really don't think is it fair to shift burden to those invidvuals and families. Moreover, Canada's government is earning less too, when it is earning less, less will be invested in areas of services, thus this really prevents Canada's economy to prosper and grow.

Chapter 3

"Pension gap growing between rich and poor"

http://www.financialpost.com/Story.html?id=125304

Summary
The continuance of growing inequality employment earnings is becoming a threat, which created a bigger gap of pension value between the rich and the poor. This is also an issue in the way of equalizing the impact of the Canada and Quebec Pension Plans. Nowadays, Canadians are better prepared to get retired compared to citizens back then, and that is the main cause of the growing gap (of the pension coverage) between the rich and the poor. It was evident that 20% of families with the high earnings have increased ($4,200 or 6.7 times greater) the sum of contributions to pension plans and Registered Retirement Savings Plans since the mid1980s; however, at the same time, the contributions of the 20% with the lowest incomes have declined. By 2004, highest income families' contribution had increased to at least $7,700 or 9.2 times greater. Andrew Jackson recommends to double the CPP benefits because it would giver everyone who are participating in the workforce a much higher amount of basic benefits. This also means that there will be a reduction in the cost of funding those employer plans. The National Union of Public and Gerneral Employees have proposed to force employers who do not provide a pension plan to pay extra CPP fees to finance CPP coverage for their workers.

Relation to the chapter
As we have learned that in this chapter, there is something called income distribution, and pension plans are also included in that category. I think this article relates to the chapter is how it states about the issues dealing with pension programmes. There is an unequal balance between the rich and the poor, and that they are trying to balance it out, so that it can let all people have an equal chance to participate and contribute to the free market system. This involvement with the government allows people who are jobless or retired have the equal opportunity to contribute to the economy of Canada.

Personal Reflection
In my opinion, I think the gap of pension plan between the rich and the poor should be solved as soon as possible. One, i think its a matter of fairness. I do not think it is really fair if this issue will cause reduction retirement coverage on other people like the elderly. I agree with National Union of Public and General Employees' proposal that employers should be force to pay extra CPP premium to support a better pension plan for their workers. This is a very aggressive way of solving the problem, but most importantly i think it is effective.