http://www.bloomberg.com/apps/news?pid=20601087&sid=ad5QN8Oo7QpA&refer=home
Summary:
The U.S. economy is shrinking at a faster pace than previously estimated as consumer spending plunged, companies cut inventories and exports sank. Gross domestic product contracted at a 6.2 percent annual pace from October through December, more than economists anticipated and the most since 1982, according to revised figures from the Commerce Department today in Washington. Recession is forecasted o persist for at least the first half of this year in United States. Bill Cheney, chief economist said that the economy doesn’t seem to stop shrinking and seems to continue and get worsen till the middle of year.
Connection:
According to the textbook, the shrink of GDP means that the value of final goods and services produced in United States in the last quarter has declined. That is mostly due to the decline of customer spending which is due to the shrink of the companies causes the people begin to save up money to pass through the days that they might be laid off and become unemployed. The continuous decline of the GDP results a drop in economic activity the recession in United States
Reflection:
This is not surprising, my mom has “forecasted” that United States will go into recession when the problems of Mortgages and the credit default swaps in U.S was first revealed, which was two years ago. The shrink of the U.S. economy leads almost the whole world into recession, which might have influenced a lot of people. The Americans are now trying to recover the “disappeared” billions of American dollars, yet I wonder why they didn’t just announce the problem two years ago which wouldn’t roll the problem as a snowball as big as now. Instead of announcing the problem, they use “credit default swaps” to recover the problem, which I can’t tell the differences between their actions with a shopaholic who use credit card to recover another bill.
Monday, February 23, 2009
Monday, November 24, 2008
Chapter 3 - Price Floors
http://www.chinadaily.com.cn/bizchina/2009-01/14/content_7394763.htm
Summary:
The Civil Aviation Administration of China (CAAC) is setting a floor price for the air tickets. The airlines that offer tickets at less than the minimum price that CAAC has set could have routes cancelled by CAAC as their names of airlines are on the list that CAAC publishes every 15 days. CAAC is setting the price floor to prevent a price war among the airlines since the domestic airlines have offered the discounts of 70-80 percent off to attract customers so their planes will not be cancelled by CAAC due to the emptiness of planes and that lead them to lost more than seven billion Yuan (approximately one billion in Canadian dollars). Also CAAC wants to prevent airlines counter-attacking airlines that are offering big discounts on flights since some airlines have asked ticket agents to stop selling tickets from certain airlines.
Connection:
According to chapter 3, price floor could be legislated if the equilibrium price is too low and making it illegal to sell the product at a price below the legal minimum. In this case, CAAC decided to set a price floor for airlines and set the punishment for airlines that sell tickets lower than the minimum price. For the airlines that aren’t selling at the equilibrium price or higher, their “illegal” routes could be cancelled and for the surplus, the routes that aren’t having a certain amount of customers will be cancelled too. The CAAC has basically balanced the disequilibrium situation.
Reflection:
My uncle loves to travel and he used to travel places when the economy is in recession so then he would have less expenditure. Over the last few months, he has travelled through at least fifteen places in China since the internal airlines of China were fighting against each other by their prices and customer services. The 70-80 percent lower prices attracted my uncle, yet the CAAC set the price floor for the airlines distract my uncle attention of places to travel from China to England and Paris. My uncle has commented on the price floor that CAAC has set, he agrees that CAAC is making the right decision as to prevent to keep losing money, but as a traveller, he thinks that travelling in China is not a good deal anymore whereas travelling in England and Paris are great deals since the exchange rate of Hong Kong dollars to pounds have been lowered due to the value of pound has dropped.
Summary:
The Civil Aviation Administration of China (CAAC) is setting a floor price for the air tickets. The airlines that offer tickets at less than the minimum price that CAAC has set could have routes cancelled by CAAC as their names of airlines are on the list that CAAC publishes every 15 days. CAAC is setting the price floor to prevent a price war among the airlines since the domestic airlines have offered the discounts of 70-80 percent off to attract customers so their planes will not be cancelled by CAAC due to the emptiness of planes and that lead them to lost more than seven billion Yuan (approximately one billion in Canadian dollars). Also CAAC wants to prevent airlines counter-attacking airlines that are offering big discounts on flights since some airlines have asked ticket agents to stop selling tickets from certain airlines.
Connection:
According to chapter 3, price floor could be legislated if the equilibrium price is too low and making it illegal to sell the product at a price below the legal minimum. In this case, CAAC decided to set a price floor for airlines and set the punishment for airlines that sell tickets lower than the minimum price. For the airlines that aren’t selling at the equilibrium price or higher, their “illegal” routes could be cancelled and for the surplus, the routes that aren’t having a certain amount of customers will be cancelled too. The CAAC has basically balanced the disequilibrium situation.
Reflection:
My uncle loves to travel and he used to travel places when the economy is in recession so then he would have less expenditure. Over the last few months, he has travelled through at least fifteen places in China since the internal airlines of China were fighting against each other by their prices and customer services. The 70-80 percent lower prices attracted my uncle, yet the CAAC set the price floor for the airlines distract my uncle attention of places to travel from China to England and Paris. My uncle has commented on the price floor that CAAC has set, he agrees that CAAC is making the right decision as to prevent to keep losing money, but as a traveller, he thinks that travelling in China is not a good deal anymore whereas travelling in England and Paris are great deals since the exchange rate of Hong Kong dollars to pounds have been lowered due to the value of pound has dropped.
Wednesday, November 19, 2008
Chapter 2
http://news.bbc.co.uk/2/hi/business/7737507.stm
Summary:
"Sellers are beginning to face up to the reality that their houses are not worth as much now as they were 12 months ago," said Chris Brown, president of the NAEA. As the Global banking crisis slowly appears on the British and Americans' economy, everyone is now noticing that a recession is coming up soon or already started which means the stock market is crushing and the prices of houses are dropping either. That leads the owners of the houses start selling their houses to prevent losing money since their houses' values are now dropping and the values of houses might drop lower than the prices that they bought in. "Buyers are now holding all the cards and sellers need to realize that if they want to sell in this market then they may have to accept an offer they wouldn't have even considered six months ago," said Daniel Lee of Globrix. Eventually, buyers are now deciding to sit back and just keep eyes on the houses and the stock market.
Connection:
According to the text book, there are a few factors that affect the buyers' demand of buying houses. The three factors that affect the most are the expectation of future prices, number and characteristics of buyers and expectation of future incomes. Firstly, most of the buyers have noticed that the prices of houses have dropped a lot and it will probably drop continuously in the next few months as the stock market is crushing and it usually follows what the stock market does, so then buyers have better advantages on the price. Secondly, as the stock market is crushing, more buyers are coming out and selling their houses. As the stock market crushing, more sellers will come out and as the situation getting worst, sellers will think that they should get rid of their houses as soon as possible which means that they will lower the prices of their houses when selling. Lastly, the expectation of future incomes which affects the most that scares off buyers because people are scare that they might loss their jobs or their incomes might be less due to the Global banking crisis.
Reflection:
If the prices of the houses drop a bit before the Global banking crisis appears, I believe that many people would have bought it and won’t become the situation like now. As the prices of the houses drop, I think the owners of the houses are the ones that worried and upset, but for the other ones like buyers would be appreciated. For my dad and mom, they are appreciated this situation, but they aren’t planning to buy houses at this time since they think that the prices will get even lower in the future. They are planning to buy apartments in British as investments when the prices of houses drop till to the same level as the values of houses during SARS. On the other hand, I believe these situation of the stock market and the dropping of the values of houses have frightened a lot of business people since these situations are implying that reccession is coming up soon.
Summary:
"Sellers are beginning to face up to the reality that their houses are not worth as much now as they were 12 months ago," said Chris Brown, president of the NAEA. As the Global banking crisis slowly appears on the British and Americans' economy, everyone is now noticing that a recession is coming up soon or already started which means the stock market is crushing and the prices of houses are dropping either. That leads the owners of the houses start selling their houses to prevent losing money since their houses' values are now dropping and the values of houses might drop lower than the prices that they bought in. "Buyers are now holding all the cards and sellers need to realize that if they want to sell in this market then they may have to accept an offer they wouldn't have even considered six months ago," said Daniel Lee of Globrix. Eventually, buyers are now deciding to sit back and just keep eyes on the houses and the stock market.
Connection:
According to the text book, there are a few factors that affect the buyers' demand of buying houses. The three factors that affect the most are the expectation of future prices, number and characteristics of buyers and expectation of future incomes. Firstly, most of the buyers have noticed that the prices of houses have dropped a lot and it will probably drop continuously in the next few months as the stock market is crushing and it usually follows what the stock market does, so then buyers have better advantages on the price. Secondly, as the stock market is crushing, more buyers are coming out and selling their houses. As the stock market crushing, more sellers will come out and as the situation getting worst, sellers will think that they should get rid of their houses as soon as possible which means that they will lower the prices of their houses when selling. Lastly, the expectation of future incomes which affects the most that scares off buyers because people are scare that they might loss their jobs or their incomes might be less due to the Global banking crisis.
Reflection:
If the prices of the houses drop a bit before the Global banking crisis appears, I believe that many people would have bought it and won’t become the situation like now. As the prices of the houses drop, I think the owners of the houses are the ones that worried and upset, but for the other ones like buyers would be appreciated. For my dad and mom, they are appreciated this situation, but they aren’t planning to buy houses at this time since they think that the prices will get even lower in the future. They are planning to buy apartments in British as investments when the prices of houses drop till to the same level as the values of houses during SARS. On the other hand, I believe these situation of the stock market and the dropping of the values of houses have frightened a lot of business people since these situations are implying that reccession is coming up soon.
Thursday, September 25, 2008
Chapter 1
http://www.enviroliteracy.org/article.php/1300.html
Summary:
The article I read is about the future supply of oil should be determined as scarcity or not, even though oil has been indicated to be scarcity from a long time ago, but still remaining the same amount or even more productions. To determine when oil supplies will become scarce, economists think that they needed to know how many oil is there, but the total amount of oil resources is subject to uncertainty. Also, economists think as oil levels decline, pressure that would otherwise naturally force oil out of a well declines. On the other hand, economists argue that long before the physical supply of conventional oil is exhausted, an increase in prices will spur innovation and development of substitutes for oil. When the cost of oil is low, there are few efforts to develop alternative energy technologies or to increase exploration for new sources.
Connections:
This article is connected with scarcity that we have talked about in chapter one. Oil has been involved in our everyday life and it seems to be a thing that we can’t live without. Oil is not only needed to have the cars operating, it is also needed by factories to run their machines. We have high demand on the oil, , but it has limited resource which implies us that oil is becoming or already became a scarce and now the scientists are trying to invent or find something to replace oil in our lives. In addition, according to the high demand and the limited supply of oil, the price of oil will probably increase continuously.
Reflections:
As some of the people thought and said, oil is irreplaceable since the resource of oil in a country is directly related to the economics of the country. If the one's oil is considered as not enough for the whole country or running out, the country's economy will probably not as good as when the oil was abundant. Nevertheless, some professionals said that we might be able to use some other products to replace oil but to invent or develop new products to replace oil needs a huge amount of money effort and takes time. Oil is an important product for countries, but doesn’t act such important role to me. Before reading this article, I have already planned not to get my license and neither car since the price of oil is too high which I don’t think it worth and after reading this article, it just ensures my decision.
Summary:
The article I read is about the future supply of oil should be determined as scarcity or not, even though oil has been indicated to be scarcity from a long time ago, but still remaining the same amount or even more productions. To determine when oil supplies will become scarce, economists think that they needed to know how many oil is there, but the total amount of oil resources is subject to uncertainty. Also, economists think as oil levels decline, pressure that would otherwise naturally force oil out of a well declines. On the other hand, economists argue that long before the physical supply of conventional oil is exhausted, an increase in prices will spur innovation and development of substitutes for oil. When the cost of oil is low, there are few efforts to develop alternative energy technologies or to increase exploration for new sources.
Connections:
This article is connected with scarcity that we have talked about in chapter one. Oil has been involved in our everyday life and it seems to be a thing that we can’t live without. Oil is not only needed to have the cars operating, it is also needed by factories to run their machines. We have high demand on the oil, , but it has limited resource which implies us that oil is becoming or already became a scarce and now the scientists are trying to invent or find something to replace oil in our lives. In addition, according to the high demand and the limited supply of oil, the price of oil will probably increase continuously.
Reflections:
As some of the people thought and said, oil is irreplaceable since the resource of oil in a country is directly related to the economics of the country. If the one's oil is considered as not enough for the whole country or running out, the country's economy will probably not as good as when the oil was abundant. Nevertheless, some professionals said that we might be able to use some other products to replace oil but to invent or develop new products to replace oil needs a huge amount of money effort and takes time. Oil is an important product for countries, but doesn’t act such important role to me. Before reading this article, I have already planned not to get my license and neither car since the price of oil is too high which I don’t think it worth and after reading this article, it just ensures my decision.
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