http://www.metronews.ca/vancouver/canada/article/548951--ottawa-gets-canadians-advice-on-foreign-ownership-of-telecom-companies--page0
Summary:
A recent article talks about the possibility of the telecom industry opening up its doors to foreign investment. The government is aiming to create more competition in this industry which is dominated by the three major companies – Bell, Rogers, and Telus. The government provided three options for increased foreign investment. Firstly, increase the foreign voting shares limit from the current 20% to 49%. Secondly, fully lift ownership restrictions on small telecom companies with market share of 10% or less. Lastly, remove all foreign ownership restrictions. Foreign investment will encourage competition, which leads to lower prices for consumers. Grant, a telecom analyst, stated that Canadians paid the highest prices for wireless communication in the world!
Connection:
The connection between the article and our text is foreign ownership. The government wants to open up the telecom industry to foreign ownership, aiming to create more competition and attract more investment into Canada. In fact, foreign ownership will have several benefits, such as increased capital investment, advanced foreign technology, increased employment, and increased competition. Last of all, the most important one for consumers, are lower prices, because the telecom companies will have less market price control when another member is brought into play. They have “mutual interdependence” in an oligopolistic relationship, as stated in the book.
Reflection:
I believe that opening up our telecom industry to foreign ownership is a great idea. I agree with Mr. Grant because we Canadians are indeed paying the highest wireless communication prices in the world! We are being overcharged because the few telecom companies have too much market price control. Eliminating restrictions on foreign ownership for telecom companies will create more competition, therefore bringing down our telecommunication prices. Of the three options that the government provided, I personally prefer the first suggestion – increasing foreign ownership voting shares limits to 49%. This will have positive effects to competition, but does not remove all restrictions as if we were selling Canada.
Monday, June 14, 2010
Tuesday, April 27, 2010
Chapter 8 - Stabilization Policy
http://www.cbc.ca/money/story/2010/04/23/inflation-rate.html
Summary:
A recent article talks about the issue of inflation in Canada. The annual inflation of consumer prices increased by 1.4% from March/09 to March/10. There is a small decline of inflation from February, which was 1.6%. Also, gasoline prices have continued to increase for the fifth straight month, increasing 17.2% this March from the previous year. On average, energy prices increased 5.8%. In general, prices of food, cars, and communication devices increased, but on the other hand, mortgage interests, energy, and clothing decreased. Canada’s economy has been growing faster than economists predicted, leading to an The Bank of Canada's decision to increase interest rates to control the inflation.
Connection:
The connection of the article to our text is inflation and the monetary policy. The Bank of Canada increases the interest rates to control inflation. Stabilizing the economy through the use of adjusting interest rates is an example of the monetary policy. The Bank of Canada’s decision to increase interest rates, as part of the monetary policy, shows that inflation is becoming an issue and needs to be controlled. Interest rates also mean the “cost of money”, so when interests rates are high, the “price of money” is also higher. The law of supply and demand also works in this case. The increase in “price” will result in a decrease in demand. When demand goes down, inflation will also go down.
Reflection:
From this inflation that we are seeing, Canada’s economy is doing fine and we are definitely not still wrapped up in the recession. I find the issue of unemployment and inflation very interesting because they are both equally bad economic issues and the government will solve the issue that is occurring right now. It is a cycle. When we are in a good economic time, the government will use the stabilization policy to control the inflation. In this case, we are in a time of inflation, and the government is increasing interest rates as part of the monetary policy.
Tuesday, April 6, 2010
Chapter 5 - Economic Indicators
http://www.newswire.ca/en/releases/archive/April2010/01/c7166.html
Summary:
A recent article I found talks about the financial worries that many Canadians are having about the near future of the economy. 65% of Canadians are worried about their finances. Of that, 27% worry about paying off their debt, 18% about retirement, and 22% about losing their job. On the other hand, 44% of Canadians actually believe their financial situation will improve in the next year of so. Craig Wright, the senior vice-president of RBC forecasts a real GDP growth of 3.1% this year because of “solid consumer spending, historically low interest rates, and improved credit markets,” so the economy is recovering very well.
Connection:
Summary:
A recent article I found talks about the financial worries that many Canadians are having about the near future of the economy. 65% of Canadians are worried about their finances. Of that, 27% worry about paying off their debt, 18% about retirement, and 22% about losing their job. On the other hand, 44% of Canadians actually believe their financial situation will improve in the next year of so. Craig Wright, the senior vice-president of RBC forecasts a real GDP growth of 3.1% this year because of “solid consumer spending, historically low interest rates, and improved credit markets,” so the economy is recovering very well.
Connection:
The article, like chapter 5 in our text, talks about the two things that are important to all Canadians – unemployment, and inflation. Like I said in the above, about one fifth of Canadians are worried about losing their jobs because of the future increase of interest rates and the strengthening of the Canadian dollar. This is in fact a cause and effect. Because the Canadian dollar is so strong, it will cause inflation, and the government raises the interest rate to control this inflation. One thing I find interesting in the article is the use of the term, “real GDP growth.” This is because GDP growth is not always correct due to inflation. For “real” GDP growth to happen, this growth must be greater than the increase of inflation.
Reflection:
Although I was not surveyed in the RBC Canadian Consumer Outlook Index, I would fall under the 44% of Canadians that believe their financial situation will improve in the next year. The interest rate hike will not affect me because my family is not paying a mortgage right now. In addition, I believe the strengthening of the Canadian dollar will benefit me instead because it is a great investment opportunity. Also, none of my family members are worried about losing their jobs in the near future. My father is self-employed, and my mother has a very stable job working at the bank. All in all, I sleep very well at night because I do not have to worry about my finances.
Tuesday, March 2, 2010
Chapter 7: Money and the Candian Banking System
http://www.american.com/archive/2010/february/due-north-canadas-marvelous-mortgage-and-banking-system
Summary
A very recent article mentions the stability and safety of Canadian banks over any other banks. While almost 200 American banks failed during the 2008 meltdown, not even one Canadian bank closed down. One reason for Canadian banks’ safety is the responsibility of borrowers. If the borrower is unable to pay the mortgage, Canadian banks can legally take the borrower’s future wages. This action of seizing wages is unpopular in America. In addition, the Canadian bank industry is concentrated in the 5 large banks out of a total of 82 Canadian banks, as opposed to the 8,000 diversified banks in America.
Connection
The article relates to our Everyday Economics section 7.2, as Canada indeed has one of the soundest banking systems in the world. In addition to the article, the text includes several other reasons for the stability of Canadian Banks. For example, failing banks would merge with larger banks to maintain public confidence in the Canadian banks. Another reason is the deposit insurance. Because Canadians are automatically covered by insurance when they deposit money into a chartered bank, they will not panic withdraw when chartered banks have problems. Also, the reserve ratio helps stabilize the chartered Canadian banks. A percentage of assets have to be sent to the Bank of Canada, where they are kept in ‘reserve’.
Reflection
I feel very proud of our Canadian banking system. Prior to the 2008 meltdown, people have been complaining about our conservative ways of banking. Now people can see that only the best can stand out in bad times. When hundreds of banks of banks close down worldwide in 2008, not one Canadian bank closed down. All the above features of the Canadian banking system add to the public confidence of our system. It is because we have such closely monitored and stiff regulations in Canada that our banks are so safe, so next time you are rejected of a mortgage, feel proud of our Canadian banking system.
Summary
A very recent article mentions the stability and safety of Canadian banks over any other banks. While almost 200 American banks failed during the 2008 meltdown, not even one Canadian bank closed down. One reason for Canadian banks’ safety is the responsibility of borrowers. If the borrower is unable to pay the mortgage, Canadian banks can legally take the borrower’s future wages. This action of seizing wages is unpopular in America. In addition, the Canadian bank industry is concentrated in the 5 large banks out of a total of 82 Canadian banks, as opposed to the 8,000 diversified banks in America.
Connection
The article relates to our Everyday Economics section 7.2, as Canada indeed has one of the soundest banking systems in the world. In addition to the article, the text includes several other reasons for the stability of Canadian Banks. For example, failing banks would merge with larger banks to maintain public confidence in the Canadian banks. Another reason is the deposit insurance. Because Canadians are automatically covered by insurance when they deposit money into a chartered bank, they will not panic withdraw when chartered banks have problems. Also, the reserve ratio helps stabilize the chartered Canadian banks. A percentage of assets have to be sent to the Bank of Canada, where they are kept in ‘reserve’.
Reflection
I feel very proud of our Canadian banking system. Prior to the 2008 meltdown, people have been complaining about our conservative ways of banking. Now people can see that only the best can stand out in bad times. When hundreds of banks of banks close down worldwide in 2008, not one Canadian bank closed down. All the above features of the Canadian banking system add to the public confidence of our system. It is because we have such closely monitored and stiff regulations in Canada that our banks are so safe, so next time you are rejected of a mortgage, feel proud of our Canadian banking system.
Friday, January 22, 2010
Ch 3: The Role of Government in a Market Economy / Ch 4: Government in Canada
http://www.thestar.com/news/ontario/hst/article/738403
Summary
The article talks about the benefits of the harmonized sales tax. Critics explain that HST is not a major cash grab by the government, will scarcely affect consumers, and will greatly benefit businesses. Economists who have carefully studied the long-term effect of HST estimate that the increase in our cost of living is insignificant, by about 0.4%. They estimate the households with incomes above $100,000 will lose about $389 annually, which is very marginal. They also estimate that HST, creating about 600,000 new jobs over 10 years, will raise annual incomes by 8.8%. HST will stimulate businesses in B.C. and Ontario, making them more cost-competitive than before.
Connection
The article relates to our text, naturally, because it talks about taxes. HST is a direct tax imposed on consumers, making the end users, us, pay the 13% sales tax. Because it is a sales tax, it would use the ability-to-pay approach because if you can purchase something, you, of course, have the ability to pay. The harmonized sales tax is a great way to stimulate the economy and business in B.C. and Ontario. Businesses will be more cost-competitive, bringing many benefits to consumers also. The third-party effects are to attract new foreign investors in the HST provinces.
Reflection
I never understood why there were so many people that violently opposed HST. There are many studies done that show the positive long-term effects of HST, as seen in the article. So many people oppose HST because they do not understand the concept. Although we will be paying the full 13% sales tax, we can achieve lower retail prices and stimulate businesses to create more jobs. As said in the article, economists speculate that it will not greatly affect the lifestyles of people. For the majority of people, their cost of living will only increase by a marginal 0.4%. I don’t believe that an insignificant figure like that should cause an uproar in the province.
Summary
The article talks about the benefits of the harmonized sales tax. Critics explain that HST is not a major cash grab by the government, will scarcely affect consumers, and will greatly benefit businesses. Economists who have carefully studied the long-term effect of HST estimate that the increase in our cost of living is insignificant, by about 0.4%. They estimate the households with incomes above $100,000 will lose about $389 annually, which is very marginal. They also estimate that HST, creating about 600,000 new jobs over 10 years, will raise annual incomes by 8.8%. HST will stimulate businesses in B.C. and Ontario, making them more cost-competitive than before.
Connection
The article relates to our text, naturally, because it talks about taxes. HST is a direct tax imposed on consumers, making the end users, us, pay the 13% sales tax. Because it is a sales tax, it would use the ability-to-pay approach because if you can purchase something, you, of course, have the ability to pay. The harmonized sales tax is a great way to stimulate the economy and business in B.C. and Ontario. Businesses will be more cost-competitive, bringing many benefits to consumers also. The third-party effects are to attract new foreign investors in the HST provinces.
Reflection
I never understood why there were so many people that violently opposed HST. There are many studies done that show the positive long-term effects of HST, as seen in the article. So many people oppose HST because they do not understand the concept. Although we will be paying the full 13% sales tax, we can achieve lower retail prices and stimulate businesses to create more jobs. As said in the article, economists speculate that it will not greatly affect the lifestyles of people. For the majority of people, their cost of living will only increase by a marginal 0.4%. I don’t believe that an insignificant figure like that should cause an uproar in the province.
Subscribe to:
Posts (Atom)